Fitch Affirms General Growth Properties IDR at 'BB'; Outlook Stable

General Growth Properties, Inc.

--Issuer Default Rating (IDR) 'BB';

--Revolving credit facility 'BB';

--Term loan 'BB';

--Exchangeable senior notes 'BB';

--Perpetual preferred stock (indicative) 'B+'.

The Rouse Company LP

--IDR 'BB'

--Senior unsecured notes 'BB'.

Price Development Company, L.P.

--IDR 'BB+'

--Senior unsecured notes 'BB+'.

Fitch's actions affect approximately $5.8 billion of securities. The Rating Outlook is Stable.

Fitch's rating affirmations reflect the solid performance of GGP's portfolio of over 200 regional shopping malls in 45 states. The portfolio is diversified by geographic location and tenant, and also features a smooth, long-term lease maturity schedule. GGP has generated consistent comparable property NOI growth, demonstrated recently by a 3.4% increase for the nine months ended Sept. 30, 2007 over the comparable period ended Sept. 30, 2006. Overall portfolio occupancy, which was 93.2% as of Sept. 30, 2007, has been above 92.0% since GGP's acquisition of the Rouse Company, L.P. in late 2004.

The ratings are also bolstered by the strength and experience of GGP's management team, including senior officers as well as property managers. Management has recently focused its growth efforts on both ground-up development and redevelopment of existing centers. This effort includes redevelopment of anchor space which has led to the repositioning and strengthening of many assets in GGP's portfolio.

Fitch's credit concerns revolve around certain of GGP's financial metrics. Due primarily to its utilization of substantial leverage in acquiring Rouse, GGP's book value-based leverage is high, and fixed charge coverage is low, for the 'BB' rating category. GGP's leverage, defined as debt plus preferred stock divided by undepreciated book capital, stood at 82% as of Sept. 30, 2007. While leverage may fluctuate around this level over time, Fitch expects this metric to remain in the high 70% to low 80% range.

As a significant component of GGP's assets were purchased in the past three years, Fitch does not believe that the disparity between book value and market value is as large for GGP as it is for some other issuers and, as a result, Fitch places significant weight on leverage metrics utilizing book value. The company's risk-adjusted capitalization ratio is only 0.3 times (x) as of Sept. 30, 2007, due to the company's high leverage and the addition of significant development and joint venture assets over the past few years.

GGP has a sizable future development pipeline, including projects that are currently under construction as well as planned, of over $2 billion. This pipeline represents 6.3% of GGP's total undepreciated assets, up from 3.4% as of Dec. 31, 2006. While development activities contain risks not present in ownership of stabilized retail assets, these risks are somewhat offset by the fact that GGP's development track record is well-established.

GGP's operational credit metrics have declined from 2004 levels largely due to the Rouse acquisition, but have stabilized since that time. For the 12 months ended Sept. 30, 2007, on a risk-adjusted basis, Fitch calculates GGP's fixed charge coverage ratio (defined as adjusted EBITDA less straight-line rents less tenant improvements, divided by interest expense, capitalized interest and preferred distributions) was 1.3x, compared with 1.3x and 1.4x for calendar years 2006 and 2005, respectively.

The use of secured debt in the capital structure encumbering substantially all assets serves to limit flexibility in a more difficult capital raising environment. Given the recent liquidity stress in the commercial mortgage-backed securities (CMBS) market, Fitch remains concerned that GGP may face challenges in accessing the CMBS market on advantageous terms. This concern is offset to a degree by management's intention to refinance many of its properties' maturing mortgages with lower loan-to-value mortgages, as opposed to stretching for maximum loan proceeds with attendant higher spreads. Additionally, management has established a meaningful track record accessing other sources of secured financing.

Price Development Company, L.P. senior unsecured notes are notched above GGP's IDR as a result of structural characteristics that place Price noteholders in a superior security position relative to investors in other parts of GGP's capital structure. Specifically, the unencumbered asset maintenance covenant results in adequate entity-level unencumbered assets that could serve as a source of contingent liquidity for Price noteholders.

The Rouse notes do not receive the same notching benefit of the Price notes because of the potential for consolidation in a liquidation scenario. In addition, the financial covenants contained in Rouse's note indentures do not explicitly require the maintenance of unencumbered assets, although the Rouse notes provide a degree of noteholder protection via secured debt and total debt limitations within Rouse.

The Stable Outlook reflects continued growth in GGP's comparable property net operating income. Moreover, although U.S. retail sales have slowed in recent months, Fitch expects GGP's business platform to remain solid in future periods.

GGP is a Chicago-based REIT engaged in acquiring, developing, renovating and managing regional malls in major and middle markets throughout the United States. GGP also has investments in commercial office buildings and community development projects purchased in connection with the Rouse acquisition in 2004. As of Sept. 30, 2007, the company owned interests in over 200 million square feet of properties and had $31.9 billion in total undepreciated book assets.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, . Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.