MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

The following is a general summary of the federal income tax considerations anticipated to be material to prospective holders of GGP preferred or common stock. This summary is based upon interpretations of the Internal Revenue Code of 1986, as amended, existing, temporary and currently proposed regulations promulgated under the Code, judicial decisions and administrative rulings as of the date of this prospectus, all of which are subject to change or differing interpretations, including changes and interpretations with retroactive effect. The discussion below does not address all federal income tax considerations, or any state, local or foreign tax consequences. Your tax treatment may differ depending upon your particular situation. Also, the discussion does not address various tax rules that may apply to stockholders subject to special treatment under the Code, such as foreign persons, traders and dealers in securities, tax-exempt entities, insurance companies and other financial institutions, persons that hold the preferred or common stock as part of a straddle, hedge or conversion transaction, or holders subject to the alternative minimum tax, except to the extent discussed below under "-- Taxation of Tax-Exempt U.S. Stockholders" and "-- Taxation of Non-U.S. Stockholders". In addition, this discussion is limited to persons who hold the preferred or common stock as a capital asset within the meaning of Section 1221 of the Code.

You should consult with your own legal and tax advisors regarding the tax consequences arising from the receipt, holding or disposition of GGP preferred or common stock.

TAXATION OF GGP

GENERAL

This section is a summary of certain federal income tax matters of general application pertaining to REITs and their stockholders under the Code. The provisions of the Code pertaining to REITs are highly technical and complex and sometimes involve mixed questions of fact and law. This summary is qualified in its entirety by the applicable Code provisions, regulations, and administrative and judicial interpretations thereof, all of which are subject to change, possibly retroactively.

In the opinion of Neal, Gerber & Eisenberg LLP, our tax counsel, beginning with GGP's taxable year ended December 31, 1993, GGP has been organized and operated in conformity with the requirements for qualification as a REIT under the Code. GGP intends to continue to operate in a manner that will enable it to continue to so qualify. No assurance can be given, however, that GGP has so qualified or will continue to so qualify. GGP's ability to qualify as a REIT under the requirements of the Code and the regulations promulgated thereunder is dependent upon its ability to meet on a continuing basis, through actual annual operating results, the various requirements under the Code with regard to, among other things, the sources of its gross income, the composition and values of its assets, its distribution levels and its diversity of stock ownership.

If GGP qualifies as a REIT, GGP generally will not be subject to federal corporate income tax on its net income that is currently distributed to its stockholders. This treatment substantially eliminates the "double taxation" (at the corporate and stockholder levels) that generally results from investment in a corporation. However, notwithstanding GGP's qualification as a REIT, GGP will be subject to federal income tax as follows:

- GGP will be taxed at regular corporate rates on any undistributed REIT taxable income, including undistributed net capital gains.

- GGP may, under certain circumstances, be subject to the "alternative minimum tax" on its items of tax preference.

- If GGP has net income from prohibited transactions (which are, in general, certain sales or other dispositions of property held primarily for sale to customers in the ordinary course of business other than foreclosure property), such income will be subject to a 100% tax.

- If GGP has (a) net income from the sale or other disposition of "foreclosure property" (defined generally as property acquired through foreclosure or after a default on a loan secured by the property

or a lease of the property) which is held primarily for sale to customers in the ordinary course of business, or (b) other nonqualifying income from foreclosure property, GGP will be subject to tax at the highest corporate rate on this income.

- If GGP should fail to satisfy the 75% gross income test or the 95% gross income test (as discussed below), but has nonetheless maintained its qualification as a REIT because certain other requirements have been met, GGP will be subject to a 100% tax on an amount equal to (a) the gross income attributable to the greater of (i) the excess of 75% of its gross income over the amount of such income attributable to sources which qualify under the 75% gross income test (discussed below) and (ii) the excess of 90% of its gross income over the amount of such income attributable to sources which qualify under the 95% income test (discussed below), multiplied by (b) a fraction intended to reflect its profitability.

- If GGP should fail to distribute during each calendar year at least the sum of (a) 85% of its REIT ordinary income for such year, (b) 95% of its REIT capital gain net income for such year (other than certain long-term capital gains that GGP elects to retain and pay the tax thereon), and (c) any undistributed taxable income from prior periods, GGP would be subjected to a 4% excise tax on the excess of such required distribution over the amounts actually distributed.

- A 100% excise tax may be imposed on some items of income or expense that are directly or constructively paid between a taxable REIT subsidiary (as described below) and a REIT if and to the extent that the Internal Revenue Service ("IRS") successfully adjusts the reported amounts of these items.

- If GGP acquires assets from a subchapter C corporation in a "conversion transaction" (i.e., a transaction in which the adjusted tax basis of the assets in its hands is determined by reference to the adjusted tax basis of such assets in the hands of the subchapter C corporation), GGP generally would be subject to tax at the highest regular corporate tax rate on any "built-in gain" it recognizes on the disposition of any such converted property during the ten-year period beginning on the day on which GGP acquires such property. Similarly, if GGP acquires the stock of a subchapter C corporation for which a REIT election is made (a "New REIT"), such New REIT generally would be subject to tax at the highest regular corporate tax rate on any "built-in gain" it recognizes on the disposition during the ten-year period beginning on the first day of the REIT's first taxable year of any of the assets it owned at the beginning of such period. Built-in gain generally is the amount by which an asset's fair market value exceeds its adjusted basis (each determined as of (a) the acquisition date, in the case of GGP's acquisition of subchapter C corporation assets or (b) as of the beginning of the ten year recognition period, in the case of GGP's acquisition of the stock of a subchapter C corporation for which a REIT election is made). In lieu of the treatment described above, the transferring or electing subchapter C corporation may elect to recognize any net built-in gain that would have been realized if the subchapter C corporation had sold such assets to an unrelated party at fair market value.

Furthermore, notwithstanding GGP's status as a REIT, GGP may have to pay certain state and local income taxes because not all states and localities treat REITs the same as they are treated for federal income tax purposes. GGP could also be subject to foreign taxes on investments and activities in foreign jurisdictions. In addition, certain of GGP's subsidiaries are subchapter C corporations, the earnings of which are subject to federal corporate income tax. Finally, GGP could also be subject to tax in certain situations and on certain transactions not presently contemplated.

REQUIREMENTS FOR QUALIFICATION AS A REIT

The Code defines a REIT as a corporation, trust or association:

(1) that is managed by one or more trustees or directors;

(2) the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;

(3) which would be taxable as a domestic corporation, but for the provisions of Sections 856 through 860 of the Code;

(4) which is neither a financial institution nor an insurance company subject to certain provisions of the Code;

(5) the beneficial ownership of which is held by 100 or more persons;

(6) in which, during the last half of each taxable year, not more than 50% in value of the outstanding stock is owned, directly or indirectly, by or for five or fewer individuals (as defined in the Code to include certain entities); and

(7) which meets certain other requirements described below (including tests with respect to the nature of its income and assets and the amount of its distributions).

The Code provides that the first four conditions must be met during the entire taxable year, and that the fifth condition must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. For purposes of the sixth condition, certain tax-exempt entities (but generally excluding trusts described in Section 401(a) and exempt under Section 501(a) of the Code) are treated as individuals.

We believe that GGP has been organized and operated in a manner so as to satisfy each of the above conditions. In addition, with regard to the fifth and sixth conditions described above, GGP's certificate of incorporation provides certain restrictions regarding transfers of its shares, which provisions are intended to assist it in satisfying these share ownership requirements. For more information regarding these restrictions, see "Description of Capital Stock -- Restrictions on Ownership and Transfer of Capital Stock." These restrictions, however, may not ensure that GGP will, in all cases, be able to satisfy these share ownership requirements. If GGP fails to satisfy these share ownership requirements (or otherwise fails to meet the conditions described above), it will fail to qualify as a REIT. See "-- Failure to Qualify as a REIT." However, if GGP complies with certain rules contained in applicable Treasury Regulations (described in further detail below) that require GGP to ascertain the actual ownership of its shares, and GGP does not know, or would not have known through the exercise of reasonable diligence, that it failed to meet the requirement described in the sixth condition described above, GGP will be treated as having met this requirement.

To monitor compliance with the share ownership requirements, GGP is required to maintain records regarding the actual ownership of its shares. To do so, GGP must demand written statements each year from the record holders of certain percentages of its stock in which the record holders are to disclose the actual owners of the shares (i.e., the persons required to include in gross income the REIT dividends). A stockholder who fails or refuses to comply with the demand must submit a statement with its tax return disclosing the actual ownership of the shares and certain other information.

In addition, GGP must use a calendar year for federal income tax purposes, satisfy all relevant filing and other administrative requirements established by the IRS that must be met to elect and maintain REIT status, and comply with the recordkeeping requirements of the Code and regulations promulgated thereunder. GGP has had and will continue to have a calendar year, and believes that it has satisfied and will continue to satisfy the relevant filing, administrative, recordkeeping, and other requirements established by the IRS, the Code, and regulations promulgated thereunder that must be met to elect and maintain REIT status.

GROSS INCOME TESTS

In order to maintain qualification as a REIT, GGP must satisfy two gross income requirements on an annual basis. First, at least 75% of GGP's gross income (excluding gross income from prohibited transactions, i.e., certain sales of property held primarily for sale to customers in the ordinary course of business) for each taxable year must be derived directly or indirectly from investments relating to real property or mortgages on real property (including "rents from real property," dividends from other REITs and, in certain circumstances, interest) or from certain types of temporary investments. Second, at least 95% of GGP's gross income

(excluding gross income from prohibited transactions) for each taxable year must be derived from such real property investments, and from dividends, interest and gain from the sale or disposition of stock or securities (or from any combination of the foregoing).

Rents that GGP receives will qualify as "rents from real property" in satisfying the gross income requirements described above, only if certain conditions, including the following, are met. First, the amount of rent generally must not depend in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from qualifying as "rents from real property" solely by reason of being based on a fixed percentage or percentages of receipts or sales. Second, except for rents received from a taxable REIT subsidiary, rents received from a tenant will not qualify as "rents from real property" if the REIT (or an actual or constructive owner of 10% or more of the REIT) actually or constructively owns 10% or more of the tenant. Amounts received from the rental of up to 10% of a property to a taxable REIT subsidiary will qualify as "rents from real property" so long as at least 90% of the leased space of the property is rented to third parties (i.e., persons other than taxable REIT subsidiaries or related parties) and the rents received are substantially comparable to rents received from other tenants of the property for comparable space. Third, if rent attributable to personal property leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property will not qualify as "rents from real property."

In addition, for rents received to qualify as "rents from real property," a REIT generally must not operate or manage the property or furnish or render services to the tenants of such property, other than through an independent contractor from which the REIT derives no revenue or through a taxable REIT subsidiary. A REIT is permitted to directly perform services that are "usually or customarily rendered" in connection with the rental of space for occupancy only and are not otherwise considered rendered to the occupant of the property. Moreover, a REIT may provide non-customary services to tenants of, or operate or manage, a property without disqualifying all of the rent from the property if the payment for such services or operation or management of the property does not exceed 1% of the total gross income from the property. For purposes of this test, the income received from such non-customary services or operation or management is deemed to be at least 150% of the direct cost of providing the services or providing the operation or management.

Although the Operating Partnership and other affiliates of GGP may perform development, construction and leasing services for, and may operate and manage, certain properties directly without using an "independent contractor," we believe that, in almost all instances, the only services to be provided to lessees of these properties will be those usually or customarily rendered in connection with the rental of space for occupancy only. To the extent any noncustomary services or operation or management are provided, such services, operation or management will generally (although not necessarily in all cases) be performed by a taxable REIT subsidiary. In any event, we intend that the amounts received by GGP for noncustomary services or operation or management that may constitute "impermissible tenant service income" from any one property will not exceed 1% of the total amount collected from such property during the taxable year.

GGP's share of any dividends received from its corporate subsidiaries (and from other corporations in which GGP owns an interest) will generally qualify under the 95% gross income test but not under the 75% gross income test. We do not anticipate that GGP will receive sufficient dividends to cause it to exceed the limit on nonqualifying income under the 75% gross income test.

If the IRS successfully asserts that any amount of interest, rent, or other deduction of a taxable REIT subsidiary for amounts paid to GGP exceeds amounts determined at arm's length, the IRS's adjustment of such an item could affect GGP's ability to satisfy the income tests described above (in addition to the fact that a 100% excise tax would be imposed on the portion that is excessive, as described above under "Taxation of GGP -- General"). Similarly, any prohibited transaction income (as described below under "Taxation of GGP -- Prohibited Transactions") may also adversely affect GGP's ability to satisfy the income tests for qualification as a REIT.

Taking into account GGP's actual and anticipated sources of nonqualifying income, we believe that GGP's aggregate gross income from all sources has satisfied and will continue to satisfy the income tests applicable to GGP. However, GGP may not always be able to maintain compliance with the gross income

tests for REIT qualification despite periodic monitoring of its income. If GGP fails to satisfy one or both of the 75% or 95% gross income tests for any taxable year, GGP may nevertheless qualify as a REIT for such year if it is entitled to relief under certain provisions of the Code. These relief provisions generally will be available if GGP's failure to meet such tests was due to reasonable cause and not due to willful neglect, GGP attached a schedule of the sources of its income to its return, and any incorrect information on the schedule was not due to fraud with intent to evade tax. It is not possible, however, to state whether in all circumstances GGP would be entitled to the benefit of these relief provisions. If these relief provisions are inapplicable to a particular set of circumstances involving GGP, GGP will not qualify as a REIT. See "-- Failure to Qualify as a REIT." As discussed above in "-- Taxation of GGP -- General," even where these relief provisions apply, GGP would be subject to a penalty tax based upon the amount of its non-qualifying income.

ASSET TESTS

At the close of each quarter of its taxable year, GGP must meet certain tests relating to the nature and diversification of its assets. First, at least 75% of the value of GGP's total assets at the end of each calendar quarter must consist of real estate assets, cash or government securities. In addition, at the close of each calendar quarter, GGP generally must satisfy the following requirements: (a) not more than 25% of the value of its total assets may be represented by securities (other than government securities or other assets that qualify for the 75% test described in the preceding sentence); (b) not more than 20% of the value of its total assets may be represented by securities of one or more "taxable REIT subsidiaries"; and (c) except with respect to any "taxable REIT subsidiary" and securities that qualify for the 75% test described in the preceding sentence, (i) not more than 5% of the value of GGP's total assets may be represented by the securities of any one issuer, (ii) GGP may not hold securities possessing more than 10% of the total voting power of the outstanding securities of any one issuer, and (iii) GGP may not hold securities having a value of more than 10% of the total value of the outstanding securities of any one issuer, other than certain "straight debt obligations" that are exempt from the 10% value test, as described in more detail below.

Securities, for purposes of the asset tests, may include debt that GGP holds. However, debt GGP holds in an issuer will not be taken into account for purposes of the 10% value test if the debt securities meet the "straight debt" safe harbor and either (a) the issuer is an individual, (b) the only securities of the issuer that GGP holds are straight debt, or (c) if the issuer is a partnership, GGP holds at least a 20% profits interest in the partnership. Debt will meet the "straight debt" safe harbor if the debt is a written unconditional promise to pay on demand or on a specified date a sum certain in money (i) which is not convertible, directly or indirectly, into stock and (ii) the interest rate or the interest payment dates of which are not contingent on the profits, the borrower's discretion or similar factors.

After initially meeting the asset tests after the close of any calendar quarter, GGP will not lose its status as a REIT if it fails to satisfy the asset tests at the end of a later calendar quarter solely by reason of changes in the relative values of its assets. If a failure to satisfy the asset tests results wholly or partly from the acquisition of securities or other property during a calendar quarter, the failure can be cured by a disposition of sufficient non-qualifying assets within 30 days after the close of that calendar quarter. We intend to maintain adequate records of the value of GGP's assets to ensure compliance with the asset tests and to take any available actions within 30 days after the close of any calendar quarter as may be required to cure any noncompliance with the asset tests. We cannot ensure, however, that these steps always will be successful. If we were to fail to cure any such noncompliance with the asset tests within this 30-day period, GGP would fail to qualify as a REIT. See "-- Failure to Qualify as a REIT."

Except where an exception to the asset tests is expected to apply, we believe that (a) commencing with its taxable year ended December 31, 1993, GGP has satisfied the asset tests in effect with respect to its qualification as a REIT, and (b) as of the time of this prospectus:

- at least 75% of the value of GGP's total assets consists of real estate assets, cash or government securities;

- the aggregate value of securities held by GGP (exclusive of securities counted for purposes of the 75% asset test) does not exceed 25% of the total value of GGP's assets;

- the aggregate value of the securities of GGP's taxable REIT subsidiaries does not exceed 20% of the total value of its assets;

- the aggregate value of securities of any one issuer held by GGP (exclusive of securities counted for purposes of the 75% asset test and interests in taxable REIT subsidiaries) does not exceed 5% of the total value of GGP's assets;

- GGP complies with the 10% voting securities limitation and 10% value limitation with respect to securities held by GGP (exclusive of securities counted for purposes of the 75% asset test and interests in taxable REIT subsidiaries, and taking into account the "straight debt" exceptions with respect to certain issuers).

With respect to GGP's compliance with each of these asset tests, however, we cannot provide any assurance that the IRS might not disagree with our determinations, or that the IRS will be unsuccessful if it contends that GGP has violated one of the asset tests described above. If the IRS could successfully assert that GGP had failed to comply with the applicable asset tests, GGP would fail to qualify as a REIT. See "-- Failure to Qualify as a REIT."

APPLICATION OF THE ASSET AND GROSS INCOME TESTS TO PARTNERSHIPS, QUALIFIED
REIT SUBSIDIARIES AND TAXABLE REIT SUBSIDIARIES

In the case of a REIT which is a partner in a partnership, such as GGP, regulations provide that a REIT will be deemed to own its proportionate share of the assets of the partnership and will be deemed to earn the income of the partnership attributable to such share. For purposes of satisfying the asset and income tests described above, the character of the gross income and assets in the hands of the partnership remains the same when allocated to a REIT. Accordingly, GGP's proportionate share of the assets, liabilities and items of income of the Operating Partnership will be treated as assets, liabilities, and items of income of GGP for purposes of its qualification as a REIT, and are so treated for purposes of the description in this prospectus.

Similarly, for purposes of the asset and income tests, a REIT is deemed to directly own the income and assets of any "qualified REIT subsidiary." A qualified REIT subsidiary is any corporation, 100% of whose stock is held by GGP and which has not elected to be treated as a "taxable REIT subsidiary," as discussed below. Because a REIT is deemed to directly own the income and assets of any "qualified REIT subsidiary," references herein to GGP's income and assets include the income and assets of each qualified REIT subsidiary owned by GGP.

The Code provides that for taxable years beginning after December 31, 2000, REITs may own up to 100% of the voting power and value of securities in taxable REIT subsidiaries. A corporation is treated as a taxable REIT subsidiary if a REIT owns stock in the corporation and the REIT and the corporation jointly elect such treatment and certain other conditions are met. In the event such an election is made, any corporation (other than a REIT or a qualified REIT subsidiary) of which the taxable REIT subsidiary owns directly or indirectly more than 35% of the total voting power or value of the outstanding securities is also treated as a taxable REIT subsidiary.

Although the activities and income of taxable REIT subsidiaries are subject to corporate-level tax, taxable REIT subsidiaries are permitted to engage in activities that the REIT could not engage in itself. Additionally, under certain limited conditions, income received by a REIT from a taxable REIT subsidiary may qualify as rent. See the discussion under "-- Taxation of GGP -- Income Tests" above. As discussed more fully under "-- Taxation of GGP -- Asset Tests," not more than 20% of the fair market value of a REIT's assets can consist of securities of taxable REIT subsidiaries, and stock of a taxable REIT subsidiary is not a qualified asset for purposes of the 75% asset test.

The amount of interest that a taxable REIT subsidiary may deduct on related party debt is limited. In general, a taxable REIT subsidiary may not deduct interest payments made in any year to an affiliated REIT to the extent that such payments exceed 50% of the taxable REIT subsidiary's adjusted taxable income for that year (although the taxable REIT subsidiary may carry forward to, and deduct in, a succeeding year the disallowed interest amount if the 50% test is satisfied in that year). Further, a 100% excise tax applies to any

interest payments by a taxable REIT subsidiary to its affiliated REIT to the extent the interest rate is set above a commercially reasonable level.

The Code allows the IRS to reallocate costs between a REIT and its taxable REIT subsidiary. Any deductible expenses allocated away from a taxable REIT subsidiary would increase its tax liability, and the amount of such increase would be subject to interest charges. Further, any amount by which a REIT understates its deductions and overstates those of its taxable REIT subsidiary will, subject to certain exceptions, be subject to a 100% excise tax.

DISTRIBUTION REQUIREMENTS

In order to qualify as a REIT, GGP must distribute to its stockholders dividends (other than capital gains dividends) in an amount at least equal to
(1) the sum of (a) 90% (95% for taxable years prior to 2001) of its REIT taxable income (as computed without regard to net capital gains or the dividends-paid deduction) and (b) 90% (95% for taxable years prior to 2001) of its net income (after tax) from foreclosure property, minus (2) the sum of certain non-cash items, for each taxable year.

Such distributions generally must be made in the taxable year to which they relate, or in the following taxable year if declared before GGP timely files its tax return for such year and if paid with or before the first regular dividend payment after such declaration. To the extent that GGP distributes less than 100% of its "REIT taxable income," as adjusted (but satisfies the distribution requirements), it will be subject to tax on such income at ordinary corporate tax rates. In any year, GGP may elect to retain, rather than distribute, its net long-term capital gains and pay tax on such gains. In such a case, GGP's stockholders would include their share of such undistributed long-term capital gains in income and receive a credit for their share of the tax paid by GGP. GGP's stockholders would then increase the adjusted basis of their GGP shares by the difference between the designated amounts included in their long-term capital gains and the tax deemed paid with respect to their shares.

GGP believes that it has made, and intends to make, timely distributions sufficient to satisfy the foregoing annual distribution requirement. It is possible, however, that GGP, from time to time, may not have sufficient cash to meet the 90% distribution requirement due to timing differences between (a) the actual receipt of cash (including receipt of distributions from the Operating Partnership), and (b) the inclusion of certain items in income by GGP for federal income tax purposes. In the event that such timing differences occur, in order to meet the 90% distribution requirement, GGP may find it necessary to arrange for short-term, or possibly long-term, borrowings, or to pay dividends in the form of taxable distributions of property.

Under certain circumstances, GGP may be able to rectify a failure to meet the 90% distribution requirement for a year by paying "deficiency dividends" to stockholders in a later year, which may be included in GGP's deduction for dividends paid for the earlier year. Thus, GGP may be able to avoid being taxed on amounts distributed as deficiency dividends; however, GGP will be required to pay interest based on the amount of any deduction taken for deficiency dividends.

In addition, if GGP should fail to distribute during each calendar year (or in the case of distributions with declaration and record dates falling in the last three months of the calendar year, by the end of January immediately following such year) at least the sum of: (a) 85% of its REIT ordinary income for such year; (b) 95% of its REIT capital gain net income for such year (excluding retained long-term capital gains); and (c) any undistributed taxable income from prior periods, GGP would be subject to a 4% excise tax on the excess of such required distribution over the amounts actually distributed. GGP believes that it has made, and GGP intends to make, timely distributions sufficient to satisfy this annual distribution requirement.

PROHIBITED TRANSACTIONS

As discussed above in "-- Taxation of GGP -- General," any gain realized by GGP on the sale of any property held as inventory or other property held primarily for sale to customers in the ordinary course of business (including GGP's share of any such gain realized by the Operating Partnership, either directly or through its subsidiaries) generally will be treated as income from a prohibited transaction that is subject to a

100% penalty tax. Under existing law, whether property is held as inventory or primarily for sale to customers in the ordinary course of a trade or business is a question of fact that depends on all the facts and circumstances surrounding the particular transaction. The Operating Partnership intends to hold its properties for investment with a view to long-term appreciation, to engage in the business of acquiring, developing and owning its properties and to make occasional sales of the properties as are consistent with the Operating Partnership's investment objectives. However, the IRS may successfully contend that some or all of the sales made by the Operating Partnership or its subsidiaries are prohibited transactions. GGP would be subject to the 100% penalty tax on its allocable share of the gains resulting from any such sales.

FAILURE TO QUALIFY AS A REIT

Failure of GGP to qualify during any taxable year as a REIT could, unless certain relief provisions were available, have a material adverse effect upon investors. If disqualified for taxation as a REIT for a taxable year, GGP would also be disqualified for taxation as a REIT for the next four taxable years, unless the failure was due to reasonable cause rather than willful neglect and certain other conditions were met. In addition, if disqualified for taxation as a REIT for a taxable year, GGP would be subject to federal income tax at corporate rates on all of its taxable income and would not be able to deduct dividends paid, which could result in a discontinuation of or substantial reduction in distributions paid to stockholders. Dividends would also be subject to the regular tax rules applicable to dividends received by stockholders of corporations. Should the failure to qualify be determined to have occurred retroactively in an earlier tax year of GGP, the imposition of a substantial federal income tax liability on GGP attributable to nonqualifying tax years may adversely affect GGP's ability to make distributions to its stockholders.

TAX ASPECTS OF GGP'S INVESTMENT IN THE OPERATING PARTNERSHIP

Substantially all of GGP's investments are held through the Operating Partnership. In turn, the Operating Partnership holds a substantial portion of its real estate properties through subsidiary partnerships (including limited liability companies that GGP treats as partnerships for federal income tax purposes). In general, partnerships are "pass-through" entities that are not subject to federal income tax. Rather, partners are allocated their proportionate shares of the items of income, gain, loss, deduction and credit of a partnership, and are potentially subject to tax thereon, without regard to whether the partners receive a distribution from the partnership. As discussed above, GGP will include in its income its share of the foregoing items of the Operating Partnership (and its subsidiary partnerships) for purposes of the various REIT income tests and in the computation of its REIT taxable income. Moreover, for purposes of the REIT asset tests, GGP will include its proportionate share of assets held by the Operating Partnership (and its subsidiary partnerships). See "-- Taxation of GGP -- Application of the Asset and Gross Income Tests to Partnerships, Qualified REIT Subsidiaries and Taxable REIT Subsidiaries."

ENTITY CLASSIFICATION

GGP's interests in the Operating Partnership and the subsidiary partnerships involve special tax considerations, including the possibility of a challenge by the IRS with respect to the status of the Operating Partnership or a subsidiary partnership as a partnership (as opposed to an association taxable as a corporation) for federal income tax purposes. If the Operating Partnership or a subsidiary partnership were treated as an association, it would be taxable as a corporation and therefore subject to an entity-level tax on its income. In such a situation, the character of GGP's assets and items of gross income would change and preclude it from satisfying the asset tests and possibly the income tests (see "-- Taxation of GGP -- Asset Tests" and "-- Taxation of GGP -- Income Tests"). This, in turn, would prevent GGP from qualifying as a REIT. See "-- Failure to Qualify as a REIT" for a discussion of the effect of GGP's failure to meet these tests for a taxable year. In addition, a change in the Operating Partnership's or a subsidiary partnership's status for tax purposes might be treated as a taxable event. If so, GGP might incur a tax liability without receiving any related cash distributions.

The continued classification of the Operating Partnership and each subsidiary partnership as a partnership for federal income tax purposes will depend upon the Operating Partnership and each such subsidiary

partnership not being classified as a "publicly traded partnership" ("PTP") taxable as a corporation within the meaning of Section 7704 of the Code. Under
Section 7704 of the Code, a partnership is classified as a PTP if interests in the partnership are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof. If so classified, the PTP is taxable as a corporation unless it qualifies for a special "90% qualifying income exception" under Section 7704(c) of the Code. Under that exception, a PTP is not subject to corporate-level tax if 90% or more of its gross income consists of dividends, interest, "rents from real property" (as that term is defined for purposes of the REIT rules, with certain modifications), gain from the sale or other disposition of real property, and certain other types of qualifying income.

If a PTP fails to meet the 90% qualifying income exception for a taxable year, and (a) the IRS determines that the failure was inadvertent, (b) the partnership takes steps to once again comply with the 90% qualifying income exception, and (c) the partnership makes such adjustments (including with respect to the partners) or payments as may be required by the IRS, then the partnership will be treated as continuing to satisfy the 90% qualifying income exception.

There is a risk that the ability of the holders of units in the Operating Partnership and certain of its subsidiary partnerships to exchange their units in such partnerships for GGP shares could cause the interests in the Operating Partnership and/or such subsidiary partnerships to be viewed as readily tradable on a secondary market or the substantial equivalent thereof. In that event, unless certain safe harbor provisions of the applicable regulations continue to be available and are satisfied, the Operating Partnership and/or certain of its subsidiary partnerships would be classified as a PTP. However, any such entity that became classified as a PTP would not be subject to corporate-level tax provided it met the 90% qualifying income exception. In this regard, the tax rules that define the 90% qualifying income exception are very similar to those that define the 95% qualifying gross income test with which REITs, such as GGP, must comply. We believe that the proposed method of operations of the Operating Partnership and its subsidiary partnerships would permit them to meet the 90% qualifying income test. However, there can be no assurance that the Operating Partnership and/or its subsidiary partnerships will be able to avoid classification as a PTP that is taxable as a corporation in subsequent taxable years.

TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES

As discussed above, a partnership is not a taxable entity for federal income tax purposes. Rather, a partner is required to take into account its allocable share of a partnership's income, gains, losses, deductions and credits for any taxable year of the partnership ending within or with the taxable year of the partner, without regard to whether the partner has received or will receive any distributions from the partnership. Although a partnership agreement will generally determine the allocation of income and losses among partners, such allocations will be disregarded for federal income tax purposes if they do not comply with the provisions of Section 704(b) of the Code and the regulations promulgated thereunder as to substantial economic effect.

If an allocation is not recognized for federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partners' interests in the partnership, which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. The allocations of taxable income and loss of the Operating Partnership and subsidiary partnerships are intended to comply with the requirements of Section 704(b) of the Code and the regulations promulgated thereunder.

Under the Code and the regulations, income, gain, loss and deduction attributable to appreciated or depreciated property that is contributed to a partnership in exchange for an interest in the partnership must be allocated in a manner such that the contributing partner is charged with, or benefits from, respectively, the unrealized gain or unrealized loss associated with the property at the time of the contribution. The amount of such unrealized gain or unrealized loss is generally equal to the difference between the fair market value of the contributed property at the time of contribution, and the adjusted tax basis of such property at the time of contribution (a "Book-Tax Difference"). Such allocations are solely for federal income tax purposes and do

not affect the book capital accounts or other economic or legal arrangements among the partners. Where a partner contributes cash to a partnership that holds appreciated property, the regulations provide for a similar allocation of such items to the other partners.

In general, investors contributing appreciated properties to the Operating Partnership or other subsidiary partnerships will be allocated lower amounts of depreciation deductions for tax purposes and increased taxable income and gain on the sale by the Operating Partnership or other subsidiary partnerships of the contributed properties. While this will tend to eliminate the Book-Tax Difference over the life of these partnerships, the foregoing special allocations do not always entirely rectify the Book-Tax Difference on an annual basis or with respect to a specific taxable transaction such as a sale. Thus, the carryover basis of the contributed properties in the hands of the Operating Partnership or other subsidiary partnerships may cause GGP to be allocated lower depreciation and other deductions, and possibly greater amounts of taxable income in the event of a sale of such contributed assets in excess of the economic or book income allocated to it as a result of such sale. This may cause GGP to recognize taxable income in excess of cash proceeds, which might adversely affect its ability to comply with the REIT distribution requirements. See "-- Taxation of GGP -- Distribution Requirements."

TAXATION OF TAXABLE U.S. STOCKHOLDERS

GENERAL

As used below, the term "U.S. Stockholder" means a holder of shares of capital stock who (for United States federal income tax purposes) is: a citizen or resident of the United States; a corporation, partnership or other entity created or organized in or under the laws of the United States or of any state thereof or in the District of Columbia, unless, in the case of a partnership, regulations provide otherwise; an estate the income of which is subject to United States federal income taxation regardless of its source; or a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust.

As long as GGP qualifies as a REIT, distributions made to its stockholders out of current or accumulated earnings and profits (and not designated as capital gain dividends) will be taxable to its taxable U.S. Stockholders as ordinary income. U.S. Stockholders that are corporations will not be entitled to the dividends-received deduction with respect to such distributions. In general, such distributions received by U.S. Stockholders will not qualify for the reduced maximum tax of 15% on dividends (effective through 2008). However, U.S. Stockholders that are individuals in general are taxed at the reduced maximum tax of 15% on dividends designated by and received from GGP to the extent that the dividends are attributable to (i) income retained by GGP in the prior taxable year on which GGP was subject to corporate level income tax (less the amount of tax); (ii) dividends received by GGP from taxable REIT subsidiaries or other taxable subchapter C corporations; or (iii) income in the prior taxable year from the sales of "built-in gain" property acquired by GGP from subchapter C corporations in carryover basis transactions (less the amount of corporate tax on such income).

Distributions that are designated by GGP as capital gain dividends will generally be taxable to its U.S. Stockholders as long-term capital gains (to the extent they do not exceed GGP's actual net capital gain for the taxable year) without regard to the period for which the U.S. Stockholder has held its stock. Corporate stockholders may be required to treat up to 20% of certain capital gain dividends as ordinary income. Subject to certain limitations, capital gains dividends received by a U.S. Stockholder that is an individual may be eligible for the 15% capital gains rate of tax (effective through 2008). However, in certain circumstances, capital gains attributable to the sale of depreciable real property held for more than a year may be subject to a 25% maximum federal income tax rate for taxpayers who are individuals. Distributions in excess of GGP's current and accumulated earnings and profits generally will not be taxable to a U.S. Stockholder to the extent that such distributions do not exceed the adjusted basis of the U.S. Stockholder's shares, but rather, will be a nontaxable reduction in such stockholder's adjusted basis in such shares to the extent thereof and thereafter will be taxed as capital gain.

Any dividend declared by GGP in October, November or December of any year payable to a stockholder of record on a specified date in any such month will be treated as both paid by GGP and received by the stockholder on December 31 of such year, provided that the dividend is actually paid by GGP during January of the following calendar year.

Stockholders holding capital stock at the close of GGP's taxable year will be required to include, in computing their long-term capital gains for the taxable year in which the last day of GGP's taxable year falls, such amount as GGP may designate in a written notice mailed to its stockholders. For this purpose, GGP may not designate amounts in excess of its undistributed net capital gain for the taxable year. Each stockholder required to include such a designated amount in determining such stockholder's long-term capital gains will be deemed to have paid, in the taxable year of the inclusion, such stockholder's share of the tax paid by GGP in respect of such undistributed net capital gains. Stockholders subject to these rules will be allowed a credit or a refund, as the case may be, for the tax deemed to have been paid by such stockholders. Stockholders will increase their basis in their capital stock by the difference between the amount of such includable gains and the tax deemed paid by the stockholder in respect of such gains.

Stockholders may not include in their individual income tax returns any net operating losses or capital losses of GGP. Instead, such losses would be carried over by GGP for potential offset against its future income (subject to certain limitations). Taxable distributions from GGP and gain from a stockholder's disposition of GGP's capital stock will not be treated as passive activity income and, therefore, stockholders generally will not be able to apply any "passive activity losses" (such as losses from certain types of limited partnerships in which the stockholder is a limited partner) against such income. In addition, taxable distributions from GGP and gain from the disposition of GGP's capital stock generally will be treated as investment income for purposes of the investment interest limitations, except qualified dividend income and net capital gain generally will not be taken into account for the investment interest limitation. GGP will notify the stockholders after the close of its taxable year as to the portions of the distributions attributable to that year that constitute ordinary income, return of capital, and capital gain. In general, any gain or loss realized upon a taxable disposition of the capital stock by a stockholder who is not a dealer in securities will be treated as long-term capital gain if the capital stock has been held for more than one year and otherwise as short-term capital gain or loss. Long-term capital gain of an individual U.S. Stockholder with respect to the sale of stock is generally subject to a maximum tax rate of 15%. However, any loss upon a sale or exchange of capital stock by a stockholder who has held such stock for six months or less (after applying certain holding period rules) will be treated as long-term capital loss to the extent of distributions from GGP that are required to be treated by such stockholder as long-term capital gain. All or a portion of any loss realized upon a taxable disposition of GGP's capital stock may be disallowed if other shares of its capital stock are purchased within 30 days before or after the disposition.

TAX TREATMENT OF CONVERSION OF PREFERRED STOCK

By their terms, shares of the Series H Preferred Stock of GGP are convertible into GGP's common stock on the basis of 48.6558 shares of GGP common stock for one share of Series H Preferred Stock, but subject to adjustment for anti-dilution. See "Description of Capital Stock -- Description of Series H Preferred Stock -- Conversion." A holder of Series H Preferred Stock in GGP that elects to convert some or all of its Series H Preferred Stock into GGP common stock generally should not recognize gain or loss with respect to the conversion for federal income tax purposes, except (a) gain or loss will be recognized with respect to any cash received in lieu of fractional shares and (b) the fair market value of any shares of common stock attributable to dividend arrearages will be treated as a constructive distribution and taxed similar to an actual distribution as described above (see "-- Taxation of Taxable U.S.
Stockholders -- General"). The adjusted tax basis of the common stock (including fractional share interests) so acquired (other than common stock treated as a constructive distribution) will be equal to the tax basis of the shares of preferred stock exchanged and the holding period of such common stock will include the holding period of the preferred stock exchanged. The tax basis of any common stock treated as a constructive distribution will be equal to its fair market value on the date of the exchange.

DEEMED DISTRIBUTIONS

The conversion price at which the Series H Preferred Stock is converted to shares of common stock is subject to adjustment in certain circumstances. Adjustments (or failures to make adjustments) to the conversion price that have the effect of increasing the proportionate interest of any holders of GGP capital stock in GGP's assets or earnings can give rise to deemed distributions to those holders. However, adjustments to conversion price made pursuant to a bona fide reasonable adjustment formula which has the effect of preventing the dilution of the interest of the holders of the Series H Preferred Stock generally will not be considered to result in a constructive distribution of stock.

The tax consequences of receiving a deemed distribution are generally the same as those of receiving an actual distribution. See "-- Taxation of Taxable U.S. Stockholders -- General." Thus, as a result of a deemed distribution, a holder might recognize taxable dividend income despite the fact that such holder does not receive any cash or property.

TAX TREATMENT OF SALES OR OTHER DISPOSITIONS

Upon a sale or other disposition of preferred or common stock (other than a conversion of preferred stock into common stock pursuant to a conversion privilege), a U.S. Stockholder generally will recognize capital gain or loss equal to the difference between the amount considered realized for tax purposes (i.e., the sum of the cash and fair market value of other property received) and the adjusted tax basis in the shares sold or disposed of. This capital gain or loss will be long-term if the holding period for the shares sold or disposed of is more than one year. Long-term capital gain of an individual U.S. Stockholder with respect to the sale of stock is generally subject to a maximum tax rate of 15%.

BACKUP WITHHOLDING AND INFORMATION REPORTING

GGP will report to its U.S. Stockholders and to the IRS the amount of dividends paid during each calendar year, and the amount of tax withheld, if any. Under the backup withholding rules, a U.S. Stockholder may be subject to backup withholding at the fourth lowest rate of tax specified in Section 1(c) of the Code (which at the time of this prospectus was equal to 28%) with respect to dividends paid unless such holder: (a) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact; or (b) provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with applicable requirements of the backup withholding rules. A stockholder that does not provide us with a correct taxpayer identification number may also be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the stockholder's income tax liability or may entitle the stockholder to a refund, provided that the required information is furnished to the IRS. In addition, GGP may be required to withhold a portion of capital gain distributions to any stockholders that fail to certify their non-foreign status to GGP.

TAXATION OF TAX-EXEMPT U.S. STOCKHOLDERS

The IRS has ruled that amounts distributed as a dividend by a REIT will be treated as a dividend by the recipient and excluded from the calculation of unrelated business taxable income when received by a tax-exempt entity. Based on that ruling, provided that a tax-exempt stockholder has not held its shares as "debt financed property" within the meaning of the Code and the shares are not otherwise used in an unrelated trade or business, dividend income on GGP stock should not be unrelated business taxable income to a tax-exempt stockholder, except as described below. Likewise, gain from the sale of shares should not constitute unrelated business taxable income unless such shares are "debt financed property" or were used in an unrelated trade or business. For tax-exempt stockholders which are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans exempt from federal income taxation under Sections
501(c)(7), (c)(9), (c)(17) and (c)(20) of the Code, respectively, income from an investment in GGP shares will constitute unrelated business taxable income unless such amounts are properly set aside or placed in reserve for certain purposes.

Notwithstanding the above, however, a portion of the dividends paid by a "pension-held REIT" may be treated as unrelated business taxable income as to any pension trust which is described in Section 401(a) of the Code and holds more than 10%, by value, of the interests in the REIT. Tax-exempt pension funds that are described in Section 401(a) of the Code are referred to below as "qualified trusts."

A REIT is a "pension-held REIT" if (a) it would not have qualified as a REIT but for the provisions of Section 856(h)(3) of the Code which provides that stock owned by a qualified trust shall be treated as owned by the beneficiaries of the trust, rather than by the trust itself, for certain purposes; and (b) either at least one qualified trust holds more than 25%, by value, of the interests in the REIT, or one or more qualified trusts, each of which owns more than 10%, by value, of the interests in the REIT, hold in the aggregate more than 50%, by value, of the interests in the REIT. The percentage of any REIT dividend paid by a pension-held REIT to a qualified trust that is treated as unrelated business taxable income is equal to the ratio of (i) the unrelated business taxable income earned by the REIT, treating the REIT as if it were a qualified trust and therefore subject to tax on unrelated business taxable income, to (ii) the total gross income (less certain expenses) of the REIT. A de minimis exception applies where the percentage is less than 5% for any year. Based on the current estimated ownership of GGP common and preferred stock, and as a result of certain limitations on transfer and ownership of common and preferred stock contained in GGP's certificate of incorporation, GGP does not believe that it is, and does not expect to be, classified as a "pension-held REIT."

TAXATION OF NON-U.S. STOCKHOLDERS

The rules governing United States federal income taxation of the ownership and disposition of capital stock by persons that are, for this purpose, nonresident alien individuals, foreign corporations, foreign partnerships or foreign estates or trusts (collectively, "Non-U.S. Stockholders") are complex, and we do not attempt to provide more than a brief summary of these rules in this section. Accordingly, the discussion below does not address all aspects of United States federal income tax and does not address state, local or foreign tax consequences that may be relevant to a Non-U.S. Stockholder in light of its particular circumstances. In addition, this discussion is based on current law, which may change, and assumes that GGP qualifies for taxation as a REIT. Prospective Non-U.S. Stockholders should consult with their own tax advisers to determine the impact of federal, state, local and foreign income tax laws with regard to an investment in GGP capital stock, including any reporting requirements.

Distributions by GGP to a Non-U.S. Stockholder that are neither attributable to gain from sales or exchanges by GGP of United States real property interests nor designated by GGP as capital gains dividends will be treated as dividends of ordinary income to the extent that they are made out of GGP's current or accumulated earnings and profits. These distributions will ordinarily be subject to United States federal income tax on a gross basis, that is, without allowance of deductions, at a 30% rate, or any lower rate that may be specified by an applicable income tax treaty, unless the dividends are treated as effectively connected with the conduct by the Non-U.S. Stockholder of a United States trade or business. GGP expects to withhold United States federal income tax at the rate of 30% on the gross amount of any distributions of this kind made to a Non-U.S. Stockholder unless (a) a lower treaty rate applies and any required form or certification evidencing eligibility for that reduced rate is filed with GGP or (b) the Non-U.S. Stockholder files an IRS Form W-8ECI with GGP claiming that the distribution is effectively connected income. Dividends that are effectively connected with a United States trade or business will be subject to tax on a net basis, that is, after allowance of deductions, at graduated rates, in the same manner as domestic stockholders are taxed with respect to dividends of this kind. Withholding generally does not apply to these dividends. An additional branch profits tax at a 30% rate, or any lower rate that may be specified by an applicable income tax treaty, may also apply to any dividends of this kind received by a Non-U.S. Stockholder that is a corporation.

Distributions in excess of GGP's current and accumulated earnings and profits (other than those arising from the disposition of a United States real property interest, as discussed below) will not be taxable to a Non-U.S. Stockholder to the extent that they do not exceed the adjusted basis of the stockholder's GGP capital stock, but rather will reduce the adjusted basis of the GGP capital stock. To the extent that these distributions exceed the adjusted basis of a Non-U.S. Stockholder's GGP capital stock, they will give rise to gain from the sale or exchange of GGP capital stock, the tax treatment of which is described below. However,

GGP cannot be certain at the time of a distribution that no earnings or profits will exist because events which take place prior to the end of the year could create earnings and profits when none currently exist. Thus, GGP currently intends to withhold at a rate of 30%, or a lower applicable treaty rate, on the entire amount of any distribution. However, a Non-U.S. Stockholder may seek a refund of these amounts from the IRS if it is subsequently determined that the distribution was, in fact, in excess of GGP's current and accumulated earnings and profits, and the amount withheld exceeded the Non-U.S. Stockholder's United States tax liability, if any, with respect to the distribution.

United States federal income taxation generally will not apply to distributions to a Non-U.S. Stockholder that are designated by GGP at the time of distribution as capital gains dividends, other than those arising from the disposition of a United States real property interest, unless (a) the investment in the capital stock is effectively connected with the Non-U.S. Stockholder's United States trade or business, in which case the same treatment will apply to the Non-U.S. Stockholder as to U.S. Stockholders with respect to the gain, except that a stockholder that is a foreign corporation may also have to pay the 30% branch profits tax, as discussed above, or (b) the Non-U.S. Stockholder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and has a "tax home" in the United States, in which case the nonresident alien individual will have to pay a 30% tax on the individual's capital gains.

Under the Foreign Investment in Real Property Tax Act ("FIRPTA"), distributions to a Non-U.S. Stockholder that are attributable to gain from sales or exchanges by GGP of United States real property interests, whether or not designated as a capital gain dividend, will cause the Non-U.S. Stockholder to be treated as recognizing the gain as income effectively connected with a United States trade or business. Non-U.S. Stockholders would thus generally be taxed at the same rates applicable to U.S. Stockholders, or might have to pay a special alternative minimum tax in the case of nonresident alien individuals. GGP is required to withhold 35% of any distribution of this kind. That amount is creditable against the Non-U.S. Stockholder's United States federal income tax liability. Also, a 30% branch profits tax might apply to a gain of this kind in the hands of a Non-U.S. Stockholder that is a corporation, as discussed above.

United States federal income tax generally will not apply to gain recognized by a Non-U.S. Stockholder upon the sale or exchange of capital stock unless the shares constitute a "United States real property interest" within the meaning of FIRPTA. The capital stock will not constitute a "United States real property interest" so long as GGP is a "domestically controlled REIT." A "domestically controlled REIT" is a REIT in which at all times during the specified testing period less than 50% in value of its stock is held directly or indirectly by Non-U.S. Stockholders. However, gain from the sale or exchange of capital stock to which FIRPTA does not otherwise apply will be taxable to a Non-U.S. Stockholder if (a) the investment in the capital stock is effectively connected with the Non-U.S. Stockholder's United States trade or business, in which case the same treatment will apply to the Non-U.S. Stockholder as to U.S. Stockholders with respect to the gain, except that a stockholder that is a foreign corporation may also have to pay the 30% branch profits tax, as discussed above, or (b) the Non-U.S. Stockholder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and has a "tax home" in the United States, in which case the nonresident alien individual will have to pay a 30% tax on the individual's capital gains.

We believe that GGP is, and will continue to be, a "domestically controlled REIT," and therefore that taxation under FIRPTA generally will not apply to the sale of GGP capital stock by Non-U.S. Stockholders. However, because GGP's capital stock is publicly traded, GGP might not continue to be a "domestically controlled REIT." If GGP fails to qualify as a "domestically controlled REIT," United States taxation under FIRPTA still would not apply to gain arising from the sale or exchange by a Non-U.S. Stockholder of capital stock as a sale of a "United States real property interest," if (a) the capital stock is "regularly traded," as defined by applicable regulations, on an established securities market such as the NYSE, and (b) the selling Non-U.S. Stockholder held 5% or less of the value of the outstanding class or series of shares being sold at all times during a specified testing period. If taxation under FIRPTA applied to gain on the sale or exchange of GGP capital stock, the Non-U.S. Stockholder would have to pay regular United States income tax with respect to the gain in the same manner as a U.S. Stockholder, or might have to pay any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals, and the purchaser of GGP capital stock would be required to withhold and remit to the IRS 10% of the purchase price.

Certain issues may arise pertaining to information reporting and backup withholding with respect to Non-U.S. Stockholders. For example, GGP may be required to withhold a portion of capital gains distributions to any stockholders who fail to certify their foreign status on Form W-8BEN. Non-U.S. Stockholders should consult their tax advisors with respect to any information reporting and backup withholding requirements.

LEGISLATIVE OR OTHER ACTIONS AFFECTING REITS

The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. New federal tax legislation or other provisions may be enacted into law or new interpretations, rulings or Treasury Regulations could be adopted which could adversely affect an investment in GGP or the Operating Partnership.

STATE, LOCAL AND FOREIGN TAXES

The Operating Partnership and its partners and GGP and its stockholders may be subject to state, local or foreign taxation in various jurisdictions, including those in which it or they transact business, own property or reside. The state, local or foreign tax treatment of the Operating Partnership and its partners and GGP and its stockholders may not conform to the federal income tax consequences discussed above. Consequently, prospective investors should consult their own tax advisors regarding the application and effect of state, local and foreign tax laws on an investment in the Operating Partnership or GGP.