Table of Contents

As filed with the Securities and Exchange Commission on October 21, 2011

Registration No. 333-                

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



FORM S-11
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES



Rouse Properties, Inc.
(Exact name of registrant as specified in governing instruments)

Rouse Properties, Inc.
1114 Avenue of the Americas, Suite 2800
New York, NY

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)

Michael McNaughton
Chief Operating Officer
Rouse Properties, Inc.
1114 Avenue of the Americas, Suite 2800
New York, NY
(312) 960-5000

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:

Matthew D. Bloch, Esq
Heather L. Emmel, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York
(212) 310-8000 (Phone)
(212) 310-8007 (Fax)

          Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), check the following box.    ý

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.    o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "accelerated filer," "large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý   Smaller reporting company o

CALCULATION OF REGISTRATION FEE

       
 
Title of Each Class of Securities
to be Registered

  Proposed Maximum
Aggregate Offering
Price(1)

  Amount of
Registration Fee

 

Rights to purchase common stock, par value $0.01 per share, to be distributed to stockholders of Rouse Properties, Inc. 

  N/A   $—(2)
 

Common stock, par value $0.01 per share, issuable upon exercise of rights

  $200,000,000(3)   $22,920
 
 

Total

  $200,000,000   $22,920

 

(1)
Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as amended.

(2)
No separate consideration will be received for the rights to purchase shares of Rouse Properties, Inc.'s common stock to be distributed by Rouse Properties, Inc. to the holders of its common stock. Pursuant to rule 457(g), no separate registration fee is payable with respect to the rights being offered hereby since the rights are being registered in the same registration statement as the securities to be offered pursuant thereto.

(3)
Represents the aggregate gross proceeds from the exercise of the maximum number of rights that may be issued.

          The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.


SUBJECT TO COMPLETION DATED October 21, 2011

The information in this prospectus is not complete and may be changed. These secutities may not be distributed until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS

GRAPHIC

Rouse Properties, Inc.

Subscription Rights

Shares of Common Stock

         Rouse Properties, Inc. ("Rouse") is distributing at no charge to the holders of its common stock transferable subscription rights to purchase up to an aggregate of            shares of our common stock at a cash subscription price of $            per share. We refer to this offering as the "rights offering." We are offering to each of our stockholders one subscription right for each full share of common stock owned by that stockholder as of the close of business on                    , 20    , the record date. Each subscription right will entitle its holder to purchase            shares of our common stock. Additionally, stockholders may over-subscribe for additional shares of our common stock, although we cannot assure you that we will fill any over-subscriptions.

         The total purchase price of shares offered in this rights offering will be $200.0 million. To the extent you properly exercise your over-subscription privilege for an amount of shares of common stock that exceeds the number of the unsubscribed shares available to you, the transfer agent will return to you any excess subscription payments, without interest or penalty, as soon as practicable following the expiration of the rights offering. We are not requiring a minimum individual or overall subscription to complete the rights offering. The transfer agent will hold in escrow the funds we receive from subscribing stockholders until we complete or cancel the rights offering.

         The subscription rights will expire if they are not exercised by 5:00 p.m., New York City time, on                    , 20    , the expiration date of this rights offering. We may, in our sole discretion, extend the period for exercising the subscription rights. We will extend the duration of the rights offering as required by applicable law, and may choose to extend it if we decide that changes in the market price of our common stock warrant an extension or if we decide to give investors more time to exercise their subscription rights in this rights offering. Once you have exercised your subscription right your exercise may not be revoked. Subscription rights that are not exercised by the expiration date of this rights offering will expire and will have no value. You should carefully consider whether or not to exercise your subscription rights before the expiration date.

         The rights are transferable subject to the conditions of the rights offering, as described herein. Rights not exercised before the expiration date will be void and of no value. See "The Rights Offering."

         Brookfield Asset Management Inc. and its affiliates ("Brookfield") and its consortium partners (as described herein) are expected to own approximately 40% of Rouse immediately following the spin-off described below. We expect to enter into a backstop agreement with Brookfield, pursuant to which Brookfield will commit to purchase from us, subject to the terms and conditions thereof, at the rights offering subscription price, all of the unsubscribed shares of our common stock such that the gross proceeds to us of the rights offering will be $200 million. As a stockholder of Rouse on the record date and pursuant to the backstop agreement, Brookfield also will agree to subscribe for and purchase shares of our common stock under the basic subscription right.

         There is no managing or soliciting dealer for the rights offering and we will not pay any kind of fee for the solicitation of the exercise of rights.

         Prior to the distribution of our common stock in a spin-off transaction by GGP (the "spin-off") on                , there was no public market for our common stock. Following the spin-off, our common stock began trading on the New York Stock Exchange ("NYSE") under the symbol "RSE." On                , the last reported sales price of our common stock on the NYSE was $        . We intend to list the rights on the NYSE under the symbol "RSE RT." Prior to the rights offering, there has been no public market for the subscription rights and holders may not be able to resell rights offered under this prospectus. This may affect the pricing of the rights in the secondary market, the transparency and availability of trading prices and the liquidity of the rights.

             
   
 
  Per Share
  Aggregate
 
   

Subscription Price

  $     $    
   

Estimated Expenses

             
   

Net Proceeds to Rouse

             

 

 



         An investment in our common stock involves significant risks. See "Risk Factors" beginning on page 21.



         Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.



The date of this prospectus is                        , 20      .


TABLE OF CONTENTS

 
  Page

QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING

  1

SUMMARY

 
8

RISK FACTORS

 
21

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 
34

DIVIDEND POLICY

 
35

CAPITALIZATION

 
36

USE OF PROCEEDS

 
37

PUBLIC MARKET FOR OUR COMMON STOCK

 
38

SELECTED HISTORICAL COMBINED FINANCIAL DATA

 
39

UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

 
41

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 
47

BUSINESS

 
63

THE SPIN-OFF

 
76

THE RIGHTS OFFERING

 
77

MANAGEMENT

 
87

EXECUTIVE AND DIRECTOR COMPENSATION

 
93

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 
97

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 
100

DESCRIPTION OF CERTAIN INDEBTEDNESS

 
102

DESCRIPTION OF CAPITAL STOCK

 
104

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

 
110

PLAN OF DISTRIBUTION

 
130

LEGAL MATTERS

 
131

EXPERTS

 
131

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 
131

INDEX TO FINANCIAL STATEMENTS

 
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QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING

Q:    What is the rights offering?

A:
The rights offering is a distribution at no charge to holders of our common stock of transferable subscription rights to purchase up to an aggregate of           shares of our common stock at a cash subscription price of $            per share. We are offering to each of our stockholders one subscription right for each full share of common stock owned by that stockholder as of the close of business on                    , 20    , the record date. Each subscription right will entitle its holder to purchase               shares of our common stock. Each subscription right entitles the holder to a basic subscription right and an over-subscription privilege, as described below. Brookfield's consortium (as described below) is expected to own approximately 40% of our common stock immediately following the spin-off. As a stockholder of Rouse on the record date, Brookfield is expected to agree to subscribe for and purchase shares of our common stock under the basic subscription right. We also expect to enter into a backstop agreement with Brookfield, pursuant to which Brookfield will purchase all shares not subscribed for by other stockholders. We expect to sell at least      shares and receive gross proceeds of $200 million in the rights offering.

Q:    What is the basic subscription right?

A:
The basic subscription right gives our stockholders the opportunity to purchase              shares of common stock at a subscription price of $      per whole share. We have granted to you, as a stockholder of record on the record date, one subscription right for every share of our common stock you owned at that time. Fractional shares or cash in lieu of fractional shares will not be issued in the rights offering. Instead, fractional shares resulting from the exercise of the basic subscription right will be eliminated by rounding down to the nearest whole share.

We determined the ratio of rights required to purchase one share by dividing $200,000,000 by the subscription price of $     to determine the number of shares to be issued in the rights offering and then dividing the number of shares to be issued in the rights offering by the number of shares of our common stock outstanding on the record date. Accordingly, each subscription right allows the holder thereof to subscribe for              shares of common stock at the cash price of $     per whole share. As an example, if you owned 1,000 shares of our common stock on the record date, you would receive 1,000 subscription rights pursuant to your basic subscription right that would entitle you to purchase              shares of common stock (              rounded down to the nearest whole share) at a subscription price of $     per whole share.

You may exercise all or a portion of your basic subscription right or you may choose not to exercise any subscription rights at all. However, if you exercise less than your full basic subscription right, you will not be entitled to purchase shares of common stock under your over-subscription privilege.

Q:    What is the over-subscription privilege?

A:
The over-subscription privilege of each subscription right entitles you, if you fully exercise your basic subscription right and subject to certain limitations related to REIT qualification, to subscribe for additional shares of our common stock at the same subscription price per share if any shares are not purchased by other holders of subscription rights under their basic subscription rights as of the expiration date.

Q:    What if there are an insufficient number of shares to satisfy the over-subscription requests?

A:
If there are an insufficient number of shares of our common stock available to fully satisfy the over-subscription requests of rights holders, subscription rights holders who exercised their

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Q:    Why are you engaging in the rights offering?

A:
The rights offering is being made to raise capital to provide us with additional liquidity and to satisfy certain conditions of our lenders in connection with the spin-off. See "Use of Proceeds". We believe raising capital through this rights offering as compared to other methods, such as an underwritten public offering of our common stock, has the advantage of providing our stockholders the opportunity to participate in this transaction on a pro rata basis and, if all stockholders exercise their rights, avoid dilution of their ownership interest in our company.

Q:    What happens if I choose not to exercise my subscription rights?

A:
You will retain your current number of shares of our common stock even if you do not exercise your basic subscription rights. However, if you do not exercise your basic subscription rights, the percentage of our common stock that you own will decrease, and your voting and other rights will be diluted.

Q:    Can the board of directors cancel the rights offering?

A:
Yes. Our board of directors may decide to cancel the rights offering at any time prior to the expiration of the rights offering for any reason. If the rights offering is cancelled, any money received from subscribing stockholders will be refunded promptly, without interest or deduction.

Q:    When will the rights offering expire?

A:
The subscription rights will expire, if not exercised, at 5:00 p.m., New York City time, on                    , 20    , unless we decide to extend the rights offering until some later time. See "The Rights Offering—Expiration of the Rights Offering and Extensions, Amendments and Termination." The transfer agent must actually receive all required documents and payments before that time and date in order for you to properly exercise your subscription rights. Although we will make reasonable attempts to provide this prospectus to our stockholders, the rights offering and all subscription rights will expire on the expiration date, whether or not we have been able to locate each person entitled to subscription rights.

Q:    How do I exercise my subscription rights?

A:
You may exercise your subscription rights by properly completing and signing your subscription rights certificate if you are a record holder of our common stock, or by properly completing the subscription documents received from your bank or broker-dealer if your shares of common stock are held in street name. Your subscription rights certificate, or properly completed subscription documents, as the case may be, together with full payment of the subscription price, must be received by American Stock Transfer & Trust Company, LLC, the transfer agent for this rights offering, by 5:00 p.m., New York City time, on or prior to the expiration date of the rights offering, unless delivery of the subscription rights certificate is effected pursuant to the guaranteed delivery procedures described below. We sometimes refer to American Stock Transfer & Trust Company, LLC in this prospectus as the transfer agent. American Stock Transfer & Trust Company, LLC is also the transfer agent and registrar for our common stock. All funds received

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Q:    May I transfer or sell my subscription rights if I do not want to purchase any shares?

A:
Yes. We intend to list the rights under the symbol "RSE RT" on the NYSE.

Q:    What should I do if I want to participate in the rights offering but my shares are held in the name of my broker, custodian bank or other nominee?

A:
If you hold shares of our common stock through a broker, custodian bank or other nominee, we will ask your broker, custodian bank or other nominee to notify you of the rights offering. If you wish to exercise your subscription rights, you will need to have your broker, custodian bank or other nominee act for you. To indicate your decision, you should complete and return to your broker, custodian bank or other nominee the form entitled "Beneficial Owner Election Form." You should receive this form from your broker, custodian bank or other nominee with the other rights offering materials. You should contact your broker, custodian bank or other nominee if you do not receive this form, but you believe you are entitled to participate in the rights offering.

Q:    Will I be charged a sales commission or a fee if I exercise my subscription rights?

A:
We will not charge a brokerage commission or a fee to subscription rights holders for exercising their subscription rights. However, if you exercise your subscription rights through a broker, custodian bank or nominee, you will be responsible for any fees charged by your broker, custodian bank or nominee.

Q:    Are there any conditions to my right to exercise my subscription rights?

A:
Yes. The rights offering is subject to certain limited conditions. See "The Rights Offering—Conditions, Withdrawal and Cancellation."

Q:    What is the recommendation of the board of directors regarding the rights offering?

A:
Neither we nor our board of directors are making any recommendation as to whether or not you should exercise your subscription rights. You are urged to make your decision based on your own assessment of your best interest and the rights offering and after considering all of the information herein, including the "Risk Factors" section of this prospectus. You should not view Brookfield's agreement to exercise all of its subscription rights and to provide a backstop for the rights offering as a recommendation or other indication that the exercise or sale of your subscription rights is in your best interests.

Q:    How was the $      per share subscription price established?

A:
The subscription price per share for the rights offering was determined by the disinterested members of GGP's board of directors who are not affiliated with, and do not have a financial interest in, Brookfield. This price was determined in connection with the negotiation of the backstop agreement we expect to enter into with Brookfield, which will occur prior to the spin-off

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Q:    Is it risky to exercise my subscription rights?

A:
The exercise of your subscription rights involves risks. Exercising your subscription rights means buying additional shares of our common stock and should be considered as carefully as you would consider any other equity investment. You should carefully consider the information under the heading "Risk Factors" and all other information included herein before deciding to exercise or sell your subscription rights.

Q:    Am I required to subscribe in the rights offering?

A:
No. If you do not exercise any subscription rights, the number of shares of our common stock you own will not change. However, if you choose not to exercise your subscription rights, your ownership interest in us will be diluted by other stockholder purchases. In addition, if you do not exercise your basic subscription right in full, you will not be entitled to participate in the over-subscription privilege. See "Risk Factors—Stockholders who do not fully exercise their rights will have their interests diluted."

Q:    After I exercise my subscription rights, can I change my mind and cancel my purchase?

A:
No. Once you send in your subscription rights certificate and payment you cannot revoke the exercise of your subscription rights, even if the market price of our common stock is below the $            per share subscription price. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of our common stock at a price of $      per share. Subscription rights not exercised prior to the expiration of the rights offering will expire and will have no value.

Q:    What are the United States federal income tax considerations of receiving or exercising my subscription rights?

A:
Generally, a holder should not recognize income or loss for U.S. federal income tax purposes in connection with the receipt or exercise of subscription rights in the rights offering. You should consult your tax advisor as to the particular tax consequences to you of the receipt of rights in the rights offering and the exercise, sale or lapse of the rights, including the applicability of any state, local or non-U.S. tax laws in light of your particular circumstances. See "Material United States Federal Income Tax Consequences."

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Q:    If the rights offering is not completed, will my subscription payment be refunded to me?

A:
Yes. The transfer agent will hold all funds it receives in a segregated bank account until completion of the rights offering. If the rights offering is not completed, all subscription payments that the transfer agent receives will be returned, without interest or deduction, as soon as practicable after the rights offering has expired and all prorating calculations and reductions contemplated by the terms of the rights offering have been effected. If you own shares of common stock in "street name," it may take longer for you to receive payment because the transfer agent will return payments to the record holder of your shares of common stock.

Q:    How does the backstop commitment work?

A:
Brookfield is expected to purchase from us, subject to the terms and conditions in the backstop agreement, at the rights offering subscription price, unsubscribed shares of common stock such that gross proceeds of the rights offering will be $200 million. See "The Rights Offering—The Backstop Commitment." Brookfield is expected to purchase shares (in addition to its pro rata portion of the basic subscription right and any shares it purchases pursuant to the oversubscription privilege) any shares that remain after stockholders have exercised their basic subscription rights and their oversubscription privilege.

Q:    Why is there a backstop purchaser?

A:
We sought and we expect to obtain the commitment of Brookfield to act as the backstop purchaser under the backstop agreement to ensure that we would receive a minimum level of gross proceeds from the rights offering of $200 million less expenses of the rights offering. Brookfield's obligations to purchase shares under the backstop agreement are expected to be subject to the satisfaction or waiver of specified conditions. See—"Are there any conditions on the backstop purchaser's obligations to purchase shares?"

Q:    Will Brookfield receive a fee for providing the backstop commitment?

A:
Yes. Pursuant to the backstop agreement, Brookfield is expected to receive a fee of $6.0 million as consideration for providing the backstop commitment. Also, we expect to reimburse Brookfield's third party out of pocket expenses in an amount up to $100,000.

Q:    Are there any conditions to Brookfield's obligations to purchase shares?

A:
Yes. Brookfield's obligations under the backstop commitment are expected to be subject to the satisfaction or waiver of specified conditions, including, but not limited to, our compliance with the covenants in the backstop agreement, each of our representations and warranties being true and correct in all material respects, and no material adverse change with respect to our business and operations having occurred.

Q:    When do the obligations of the backstop purchaser expire?

A:
Generally, it is expected that the backstop commitment may be terminated by Brookfield if the rights offering has not been consummated by            .

Q.    What is meant by "Brookfield's consortium"?

A.
Brookfield's consortium, as used in this prospectus, refers to Brookfield and its co-investors in GGP.

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Q:    How many shares of Rouse common stock will be outstanding after the rights offering?

A:
The number of shares of our common stock that will be outstanding immediately after the completion of the rights offering will be        shares.

Q:    How will the rights offering affect Brookfield's ownership of our common stock?

A:
Brookfield's consortium is expected to own approximately 40% of our common stock immediately following the spin-off. As a stockholder of Rouse as of the record date, Brookfield will have the right to subscribe for and purchase shares of our common stock under the basic subscription right and the over-subscription privilege. If no other subscription rights holders exercise their subscription rights in the rights offering, Brookfield's consortium is expected to own approximately            % of our common stock immediately following the rights offering and Brookfield's fulfillment of its backstop commitment, subject to certain limitations related to REIT qualification. Any shares purchased by Brookfield pursuant to the backstop agreement will be issued in a private placement transaction, exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") and, accordingly, will be restricted securities. We expect to enter into a registration rights agreement with Brookfield and certain of its consortium partners with respect to all registrable securities to be held by such parties. If all subscription rights holders fully exercise their subscription rights in the rights offering, Brookfield's consortium is expected to own approximately 40% of our common stock immediately following the rights offering. Except as a result of any increase in its ownership of common stock, Brookfield is not expected to obtain any additional governance or control rights as a result of the rights offering or the backstop commitment. See "The Rights Offering—The Backstop Commitment" and "The Rights Offering—Effects of Rights Offering on Brookfield's Stock and Ownership."

Q:    If I exercise my subscription rights, when will I receive shares of common stock purchased in the rights offering?

A:
We will deliver to the record holders who purchase shares in the rights offering certificates representing the shares of our common stock purchased as soon as practicable after the expiration date of the rights offering and after all pro rata allocations and adjustments have been completed. We will not be able to calculate the number of shares to be issued to each exercising holder until 5:00 p.m., New York City time, on the third business day after the expiration date of the rights offering, which is the latest time by which subscription rights certificates may be delivered to the transfer agent under the guaranteed delivery procedures described under "The Rights Offering—Guaranteed Delivery Procedures."

Q:    Will the rights be listed on a stock exchange or national market?

A:
The subscription rights are transferable during the course of the subscription period. We expect to list the subscription rights for trading on the New York Stock Exchange under the symbol "RSE RT" commencing shortly after the registration statement, of which this prospectus is a part, is declared effective and continuing until 12:00 p.m., New York City time, on the scheduled expiration date of this rights offering (or if the offer is extended, the extended expiration date). As a result, you may transfer or sell your subscription rights if you do not want to purchase any shares of our common stock. However, the subscription rights are a new issue of securities with no prior trading market, and we cannot provide you with any assurances as to the liquidity of any trading market for the subscription rights or the market value of the subscription rights.

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Q:    Who is the transfer agent for the rights offering?

A:
The transfer agent is American Stock Transfer & Trust Company, LLC. If your shares of common stock are held in the name of a broker, dealer, or other nominee, then you should send your applicable subscription documents to your broker, dealer, or other nominee. If you are a record holder, then you should send your applicable subscription documents, by overnight delivery, first class mail or courier service to::

American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
6201 15th Avenue
Brooklyn, New York 11219

Q:    What should I do if I have other questions?

A:
If you have questions or need assistance, please contact                    , the information agent for the rights offering, at:                    . Banks and brokerage firms please call collect at:                    .

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SUMMARY

        The following is a summary of material information discussed in this prospectus. Because it is a summary, it may not contain all the information that is important to you. You should carefully review this entire prospectus. Except as otherwise indicated or unless the context otherwise requires, the information included in this prospectus, including the combined financial statements of Rouse Properties, Inc., which are comprised of the assets and liabilities of 30 regional shopping malls formerly owned and operated by General Growth Properties, Inc. (the "Rouse Portfolio"), before deciding to exercise your subscription rights to purchase our common stock. This prospectus assumes the completion of all the transactions referred to in this prospectus in connection with the spin-off. Unless the context otherwise requires, references in this prospectus to "Rouse," "we," "us," "our" and "our company" refer to Rouse Properties, Inc. and its subsidiaries. References in this prospectus to "GGP" and the "Successor" refer to General Growth Properties, Inc., a Delaware corporation, and its consolidated subsidiaries (other than Rouse and its subsidiaries), unless the context otherwise requires.

        This prospectus describes the businesses to be transferred to us by GGP in the separation as if the transferred businesses were our business for all historical periods described. References in this prospectus to our historical assets, liabilities, financial results, businesses or activities of our business are generally intended to refer to the historical assets, liabilities, financial results, businesses or activities of the transferred businesses as the businesses were conducted as part of GGP and its subsidiaries prior to the separation.


Our Business

        Our mission is to own and manage dominant Class B regional malls in secondary and tertiary markets, and to reposition Class B regional malls in primary markets. We plan to increase the value of our properties by executing tailored business plans designed to improve their operating performance. We believe that the creation of an employee-focused organization with dedicated capital will create high risk-adjusted returns for our stockholders.

        Our portfolio consists of 30 regional malls in 19 states totaling over 21 million square feet of retail and ancillary space. We are the 8th largest publicly-traded regional mall owner in the United States based on total square footage. Our portfolio includes regional malls with a historical record of steady occupancy and solid performance in the markets that they serve. These malls function as town centers and are located in one-mall markets, devoid of mall competition and have a high penetration of the trade area. In addition, our portfolio includes regional malls that we believe have significant growth potential through lease-up, repositioning and/or redevelopment. Some properties may require re-tenanting and re-constitution of the merchandising mix in order to provide new and relevant shopping and entertainment opportunities for the consumer.

        We actively manage all of our properties, performing the day-to-day functions, operations, leasing, maintenance, marketing and promotional services. Our platform is national in scope and we believe it positions us to capitalize on existing department store and broad in-line retailer relationships across our portfolio.

        Our malls are anchored by operators across the retail spectrum, including departments stores such as Macy's, JC Penney, Sears, Dillard's, Walmart and Target; mall shop tenants like Hollister, Victoria's Secret, Bath & Body Works, Aeropostale, American Eagle, Children's Place, Gap/Old Navy, Footlocker, Maurices and Forever 21; restaurants ranging from food court leaders like Sarku Japan, Panda Express and Chick Fil A; best in class fast-casual chains like Chipotle, Panera Bread and Starbucks; and proven sit down restaurants including On The Border, Buffalo Wild Wings, Red Robin and multiple Darden concepts.

        Our portfolio is also balanced, with no single tenant representing more than 4% of our total revenue in 2010.

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        We plan to elect to be treated as a real estate investment trust ("REIT") in connection with the filing of our federal income tax return for the 2011 taxable year, subject to our ability to meet the requirements of a REIT at the time of election, and we intend to maintain this status in future periods.

        For the year ended December 31, 2010, after combining Rouse's predecessor and successor operations, we generated operating income, real estate property net operating income ("NOI"), core net operating income ("Core NOI"), and funds from operations ("FFO") of $85.2 million, $158.3 million, $161.5 million and $40.5 million, respectively, and for the six months ended June 30, 2011, we generated operating income, NOI, Core NOI and FFO of $22.4 million, $66.6 million, $75.5 million and $25.4 million, respectively. See "—Summary Historical Combined Financial Data" for a discussion of our use of NOI, Core NOI and FFO, which are non-GAAP measures, and reconciliations of NOI and Core NOI to operating income and FFO to net income (loss).

        A more detailed summary of our portfolio is presented under "Business—Properties."


Competitive Strengths

        We believe that we can distinguish ourselves through the following competitive strengths:

        Size and Geographic Scope.    We have a nationally diversified mall portfolio totaling over 21 million square feet, and we are one of the top 10 regional mall owners in the United States, based on total square footage. The map below illustrates the locations of each of our properties.

GRAPHIC

        Strategic Relationships with Tenants.    Our operations are national in scope and we have relationships with a wide range of tenants, which include anchor stores, sit-down restaurants, movie theatres, national in-line tenants and local retailers. We believe that these relationships provide us with a competitive advantage.

        Experienced Operational Management Team.    Our operational management team includes experienced members of GGP's former operational management team who have been intimately involved with our mall properties. Our executive management team has an average of 24 years of experience in the real estate industry and members of our leasing team have an average of 14 years of leasing experience. Prior to joining Rouse, our Chief Operating Officer, Michael McNaughton, served as GGP's Executive Vice President of Asset Management. Mr. McNaughton has over 22 years of experience in the retail real estate industry and has extensive experience implementing value add and asset repositioning strategies. Brian

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Harper, our Executive Vice President of Leasing, has over 13 years of experience in the retail real estate industry, including work with ground up development, asset repositions, distressed real estate and leasing. Brian Jenkins, our Executive Vice President of Development, has over 25 years of retail real estate experience and has played key roles in the leasing, development and asset management of a number of successful retail properties both in the United States and Europe. We believe that under the leadership of our executive operational management team, our operational team is well positioned to execute our strategic plans and unlock value in our properties. We intend to hire additional industry-leading senior executives, including a chief executive officer, with real estate management expertise to complement our seasoned operational management team.


Business Strategy

        Our objective is to achieve high growth in NOI, Core NOI and FFO by leasing, operating and repositioning retail properties with locations that are either market dominant (the only mall within an extended distance to service the trade area) or trade area dominant (positioned to be the premier mall serving the defined regional consumer). We plan to control costs and to deliver an appropriate tenant mix, higher occupancy rates and increased sales productivity, resulting in higher minimum rents. In order to achieve our objective and to become the national leader in the regional Class B mall space, we intend to implement the following strategies:

        Tailored Strategic Planning and Investment.    We have identified value creation initiatives for each of our properties, taking into account customer demographics and the competitive environment of the property's market area, with a focus on increasing occupancy to the mall with a sustainable occupancy cost. We have identified opportunities to invest significant capital (approximately $230 million by the end of 2015) to reposition and refresh certain of our properties, but we will sequence long-term redevelopment projects with leasing activity. Examples of value creation initiatives include, but are not limited to:

We believe that through execution of these initiatives we will position our properties for maximum stability and financial growth. We believe these capital investments will assist in increasing our revenues significantly and deliver solid net operating income growth over the medium term, and we are targeting improved occupancy rates of over 93% (consistent with historical levels) and annual net operating income of over $200 million by the end of 2015. For a discussion of factors that could have an impact on our ability to realize these goals, see "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements." To support our future liquidity needs, we expect to enter into agreements with Brookfield with respect to a $100 million revolving subordinated credit facility and a backstop agreement pursuant to which (i) Brookfield will agree to exercise its pro rata subscription right with respect to this $200 million rights offering and (ii) Brookfield will purchase any shares not purchased upon the expiration of the rights offering at the rights offering price. We cannot assure you that this or any other financing will be available on terms acceptable to us or at all.

        Improve Tenant Mix and the Performance of Our Properties.    We intend to proactively optimize the tenant mix of our malls by matching it to the consumer shopping patterns and needs and desires of the demographics in a particular market area, which we believe will strengthen our competitive position

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and increase tenant sales and consumer traffic. Additionally, as our occupancy rates rise we expect to convert selected temporary tenants to long-term tenants. To enhance the experience of our shoppers, we will actively market to our customers and seek to create shopping experiences that exceed their expectations. We believe our portfolio's lease expiration schedule over the next five years will provide an increase in NOI as the new rental rates will be higher than the expiring rents which are below our portfolio's average effective gross rent per square foot during the recession of the last two years. The increased revenue potential, coupled with an expected increase in overall occupancy, is a cornerstone of our growth model.

        Leverage Our National Platform.    We expect to maintain national contracts with certain vendors and suppliers for goods and services at generally more favorable terms than individual contracts. National retailers will benefit from our national platform for leasing, which will provide them with the efficiency of negotiating leases at multiple locations with just one landlord. This national platform will help position our properties as attractive destinations for retailers.

        Actively Manage Our Portfolio.    We intend to actively manage our portfolio of properties, executing our tailored initiatives and recycling capital, continually seeking opportunities to add value to our assets. We intend to seek and consider acquisition or disposition opportunities that would support our business strategy.

        Improve Key Metrics.    As of June 30, 2011, our portfolio sales per square foot were $279 and occupancy was at approximately 88%, both of which are below our peer group average. We believe the factors contributing to this performance stem from the positioning of the properties within the GGP portfolio. As a "pure play" B mall company (i.e., having an exclusive focus on owning and operating B malls), we believe that the enhanced strategies and initiatives described in this prospectus will alter the trajectory of our portfolio of malls and enhance these metrics and the value of our properties.


Risks Associated with Our Business

        You should carefully consider the matters discussed in the "Risk Factors" section beginning on page 21 of this prospectus. Some of these risks include:


Executive Offices

        Our principal executive offices are located at 1114 Avenue of the Americas, Suite 2800, New York, New York 10110. Our main telephone number is                    . Our website address is www.rouseproperties.com. None of the information on our website or any other website identified herein is part of this prospectus.

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THE RIGHTS OFFERING SUMMARY

        The following summary describes the principal terms of the rights offering, but it is not intended to be a complete description of the offering. See the information under the heading "The Rights Offering" in this prospectus for a more detailed description of the terms and conditions of the rights offering.

Subscription Rights

 

We will distribute to each stockholder of record on                        , 20    , at no charge, one transferable subscription right for each share of our common stock then owned. Each right will entitle its holder to purchase      shares of our common stock. The rights will be evidenced by a transferable rights certificate. As a result of the backstop commitment described below, we expect to sell all of the shares and receive gross proceeds of $200.0 million in the rights offering.

Basic Subscription Right

 

Each right will entitle the holder to purchase            shares of our common stock at a subscription price of $            per whole share and fractional shares resulting from the exercise of the basic subscription right will be eliminated by rounding down to the nearest whole share. The transfer agent will return any excess payments by mail without interest or deduction promptly after the expiration of the rights offering.

Over-subscription Privilege

 

Each rights holder who elects to exercise its basic subscription right in full may also subscribe for additional shares at the same subscription price per share. If an insufficient number of shares is available to fully satisfy the over-subscription privilege requests, the available shares will be distributed proportionately among rights holders who exercised their over-subscription privilege based on the number of shares each rights holder subscribed for under the basic subscription right, subject to certain limitations related to REIT qualification. The transfer agent will return any excess payments by mail without interest or deduction promptly after the expiration of the rights offering.

Subscription Price

 

$            per share, payable in cash. To be effective, any payment related to the exercise of a subscription right must clear before the rights offering expires. The subscription price does not necessarily bear any relationship to the book value of our assets or our past operations, cash flows, losses, financial condition, net worth or any other established criteria used to value securities.

Record Date

 

                        , 20    .

Expiration Date

 

5:00 p.m., New York City time, on                        , 20    , unless we extend the rights offering period. Rights not exercised before the expiration date will be void and of no value and will cease to be exercisable for Rouse common shares.

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Backstop Commitment

 

We expect to enter into a backstop agreement with Brookfield, pursuant to which Brookfield is expected to purchase from us, subject to the terms and conditions thereof, at the rights offering subscription price, unsubscribed shares of our common stock such that the gross proceeds of the rights offering will be $200 million. If Brookfield is the only holder of rights who exercises its rights in the rights offering and the conditions to Brookfield's obligation to act as backstop purchaser under the backstop agreement are satisfied, we expect to issue an aggregate of            shares of common stock to Brookfield. Under such circumstances, Brookfield's consortium's ownership percentage of our outstanding common stock would increase to approximately      % after giving effect to this rights offering. Except as a result of any increase in its ownership of common stock, Brookfield is not expected to obtain any additional governance or control rights as a result of the rights offering or the backstop commitment. See "The Rights Offering—The Backstop Commitment."

Listing and Trading

 

The rights will be in fully transferable form.

 

Prior to the completion of the spin-off on                        , 20    , there was no public market for our common stock. Our common stock is listed on the NYSE under the symbol "RSE."

 

Prior to the rights offering, there has been no public market for the subscription rights. We intend to list the rights under the symbol "RSE RT" on the NYSE. The listing of the rights on the NYSE is subject to the fulfillment of all listing requirements of the NYSE. If the listing requirements are fulfilled, we expect that the rights will be listed on the NYSE on            , 20    . The rights will cease trading at 12:00 p.m. (noon), New York City time, on the expiration date, unless we terminate or extend the offering. We cannot provide you with any assurances as to the liquidity of any trading market for the subscription rights or the market value of the subscription rights.

Procedure for Exercising Rights

 

To exercise your subscription rights, you must take the following steps:

 

•       If you are a registered holder of our common stock, the transfer agent must receive your payment for each share of common stock subscribed for pursuant to your subscription right at the initial subscription price of $            per share and properly completed subscription rights certificate before 5:00 p.m., New York City time, on            , 20    . You may deliver the documents and payments by mail or commercial carrier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested.

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•       If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank, or other nominee, or if you would prefer that an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank, or other nominee to exercise your subscription rights on your behalf and deliver all documents and payments to the transfer agent before 5:00 p.m., New York City time, on            , 20    .

 

•       If you wish to purchase shares of our common stock through the rights offering, please promptly contact any broker, dealer, custodian bank, or other nominee who is the record holder of your shares. We will ask your record holder to notify you of the rights offering. You should complete and return to your record holder the appropriate subscription documentation you receive from your record holder.

 

•       If you cannot deliver your subscription rights certificate to the transfer agent prior to the expiration of the rights offering, you may follow the guaranteed delivery procedures described under "The Rights Offering—Guaranteed Delivery Procedures."

No Revocation

 

All exercises of subscription rights are irrevocable, even if you later learn of information that you consider to be unfavorable to the exercise of your subscription rights. You should not exercise your subscription rights unless you are certain that you wish to purchase shares of common stock at a subscription price of $      per share.

United States Federal Income Tax Considerations

 

Generally, a holder should not recognize income or loss for U.S. federal income tax purposes in connection with the receipt or exercise of subscription rights in the rights offering. You should consult your tax advisor as to the particular tax consequences to you of the receipt of rights in the rights offering and the exercise, sale or lapse of the rights, including the applicability of any state, local or non-U.S. tax laws in light of your particular circumstances. For a detailed discussion see "Material United States Federal Income Tax Consequences."

Issuance of Our Common Stock

 

DRS Statements representing the shares purchased in the rights offering will be issued as soon as practicable after the expiration of the rights offering.

Use of Proceeds

 

The rights offering is being made to raise capital to provide us with additional liquidity. See "Use of Proceeds."

Transfer Agent

 

American Stock Transfer & Trust Company, LLC

Shares Outstanding Before the Rights Offering

 

            shares of our common stock were outstanding as of the record date.

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Shares Outstanding After Completion of the Rights Offering

 

We expect approximately            shares of our common stock will be outstanding immediately after completion of the rights offering.

Risk Factors

 

Before you exercise your subscription rights to purchase our common stock, you should carefully consider the risks described in the section entitled "Risk Factors," beginning on page 21 of this prospectus.


Interests of Our Officers, Directors and Principal Stockholders in the Rights Offering

        Brookfield's consortium is expected to own approximately 40% of our common stock immediately following the spin-off. Two of our seven directors are, or recently were, employees of or advisors of Brookfield. In addition, we expect to enter into a services agreement with Brookfield, pursuant to which Brookfield employees Rael Diamond and Timothy Salvemini will act as our Chief Financial Officer and V.P. Finance, respectively, for a period of up to 12 months. We sought and expect to obtain the commitment of Brookfield to act as the backstop purchaser for this offering. Pursuant to the backstop agreement, Brookfield is expected to agree to purchase from us, at the subscription price, unsubscribed shares of common stock such that gross proceeds of the rights offering will be $200 million. As consideration for providing the backstop commitment, we expect to pay Brookfield a fee in the amount of $6.0 million and to reimburse Brookfield's third party out of pocket expenses in an amount up to $100,000. See "The Rights Offering—The Backstop Commitment."

        If Brookfield is the only holder of rights who exercises its rights in the rights offering and the conditions to Brookfield's obligation to act as backstop purchaser under the backstop agreement are satisfied, Brookfield's consortium's ownership percentage of our outstanding common stock would increase to approximately      % after giving effect to this rights offering. Except as a result of any increase in its ownership of common stock, Brookfield is not expected to obtain any additional governance or control rights as a result of the rights offering or the backstop commitment. See "The Rights Offering—The Backstop Commitment" and "The Rights Offering—Effects of Rights Offering on Brookfield's Stock and Ownership."

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Summary Historical Combined Financial Data

        The following table sets forth the summary historical combined financial and other data of our business, which was carved-out from the financial information of GGP, as described below. We were formed for the purpose of holding certain assets and assuming certain liabilities of GGP. Prior to the effective date of the Form 10 registration statement, of which this prospectus forms a part, and the completion of the spin-off, we did not conduct any business and did not have any material assets or liabilities. In April 2009, GGP's predecessor ("Old GGP" or the "Predecessor") and certain of its domestic subsidiaries (together with Old GGP, the "GGP Debtors") filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code ("Chapter 11"). On November 9, 2010 (the "Effective Date"), GGP emerged from Chapter 11 bankruptcy after receiving a significant equity infusion from investors and other associated events. As a result of the emergence from bankruptcy and the related equity infusion, the majority of equity in GGP changed ownership, which triggered the application of acquisition accounting to the assets and liabilities of GGP. As a result, the application of acquisition accounting has been applied to the assets and liabilities of the Rouse Properties, Inc. and therefore the following tables have been presented separately for the Predecessor and Successor for the year ended December 31, 2010. See Note 1 to our combined financial statements for the year ended December 31, 2010 included elsewhere in this prospectus for additional detail. The operating data for the fiscal years ended December 31, 2010, 2009 and 2008 and the balance sheet data as of December 31, 2010 and 2009 has been derived from our audited combined financial statements included elsewhere in this prospectus. The financial data as of and for the six months ended June 30, 2011 and 2010 has been derived from our unaudited interim combined financial statements included elsewhere in this prospectus, each of which have been prepared on a basis consistent with our audited financial statements. Such financial data is presented on a combined basis as all of the assets pertaining to such data are owned and controlled by GGP. In the opinion of management, our unaudited interim combined financial statements as of and for the six months ended June 30, 2011 and 2010 include all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly our financial position and results of operations for these periods. The interim results of operations are not necessarily indicative of operations for a full fiscal year.

        Our combined financial statements were carved-out from the financial information of GGP. Our historical financial results reflect allocations for certain corporate expenses which include, but are not limited to, costs related to property management, human resources, security, payroll and benefits, legal, corporate communications, information services and restructuring and reorganization. Costs of the services that were allocated or charged to us were based on either actual costs incurred or a proportion of costs estimated to be applicable to us based on a number of factors, most significantly, our percentage of GGP's adjusted revenue and assets and the number of properties. We believe these allocations are reasonable; however, these results do not reflect what our expenses would have been had we been operating as a separate stand-alone public company. The corporate cost allocations for the period from November 10, 2010 through December 31, 2010 and the period from January 1, 2010 through November 9, 2010 were $1.7 million and $6.7 million, respectively. For the years ended 2009 and 2008 the allocations were $7.3 million and $6.6 million, respectively. The six months ended June 30, 2011 and 2010 include corporate cost allocations of $5.7 million and $3.6 million, respectively. Effective with the separation, we will assume responsibility for all of these functions and related costs and anticipate our costs as a stand-alone entity will be higher than those allocated to us from GGP. The historical combined financial information presented is not indicative of the results of operations, financial position or cash flows that would have been obtained if we had been an independent, stand-alone entity during the periods shown or of our future performance as an independent, stand-alone entity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Overview—Basis of Presentation."

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        The historical results set forth below do not indicate results expected for any future periods. The summary historical combined financial information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the unaudited and audited combined financial statements and notes thereto included elsewhere in this prospectus.

 
  Historical  
 
  Successor   Predecessor   Successor   Predecessor  
 
  Six Months Ended
June 30,
  November 10 -
December 31
  January 1 -
November 9
  Year Ended
December 31,
 
 
  2011   2010   2010   2009   2008  
 
  (In thousands)
 

Operating Data:

                                     

Revenues

  $ 115,354   $ 129,007   $ 35,540   $ 219,741   $ 276,232   $ 308,756  

Depreciation and amortization

    (38,486 )   (30,102 )   (11,019 )   (53,413 )   (74,193 )   (67,689 )

Provisions for impairment

                    (81,854 )   (5,941 )

Other operating expenses

    (54,399 )   (51,921 )   (16,912 )   (88,739 )   (110,060 )   (110,042 )
                           

Operating income

    22,469     46,984     7,609     77,589     10,125     125,084  
                           

Interest expense, net

    (35,314 )   (43,543 )   (10,393 )   (88,598 )   (72,071 )   (75,527 )

Reorganization items

        9,036         (9,515 )   32,671      

Provision for income taxes

    (288 )   (290 )   (82 )   (506 )   (877 )   (467 )
                           

Net (loss) income

  $ (13,133 ) $ 12,187   $ (2,866 ) $ (21,030 ) $ (30,152 ) $ 49,090  
                           

 

 
  Historical  
 
  Successor   Predecessor   Successor   Predecessor  
 
  Six Months Ended
June 30,
  November 10 -
December 31
  January 1 -
November 9
  Year Ended
December 31,
 
 
  2011   2010   2010   2009   2008  
 
  (In thousands)
 

Cash Flow Data:

                                     

Operating activities

  $ 41,470   $ 25,358   $ 7,365   $ 41,103   $ 85,708   $ 113,894  

Investment activities

    (9,691 )   (2,705 )   (14,300 )   (9,248 )   (8,218 )   (21,309 )

Financing activities

    (33,464 )   (22,690 )   2,333     (25,786 )   (77,497 )   (92,459 )

Other Financial Data:

                                     

NOI(1)

  $ 66,603   $ 80,688   $ 20,644   $ 137,687   $ 177,925   $ 205,528  

Core NOI(1)

  $ 75,551   $ 79,694   $ 24,357   $ 137,136   $ 177,537   $ 206,300  

FFO(2)

  $ 25,353   $ 42,289   $ 8,153   $ 32,383   $ 44,041   $ 116,779  

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  Historical  
 
  Successor   Successor   Predecessor  
 
   
  As of
December 31,
 
 
  As of
June 30,
2011
 
 
  2010   2009  
 
  (In thousands)
 

Balance Sheet Data:

                   

Investments in real estate-cost

  $ 1,452,369   $ 1,434,197   $ 2,181,029  

Total assets

    1,604,132     1,644,264     1,722,045  

Total debt(3)

    1,066,373     1,216,820     1,314,829  

GGP equity

    449,330     329,862     355,987  

(1)
NOI and Core NOI do not represent income from operations as defined by GAAP. We use NOI and Core NOI as supplemental measures of our operating performance. For our definition of NOI and Core NOI, as well as an important discussion of their uses and inherent limitations, see "Real Estate Property Net Operating Income and Core Net Operating Income" below.

(2)
FFO does not represent cash flow from operations as defined by GAAP. We use FFO as a supplemental measure of our operating performance. For a definition of FFO as well as a discussion of its uses and inherent limitations see "Funds from Operations" below.

(3)
Total debt includes $65.6 million, $67.7 million and $46.7 million of non-cash market rate adjustments at June 30, 2011, December 31, 2010 and December 31, 2009, respectively.


Real Estate Property Net Operating Income and Core Net Operating Income

        We present NOI and Core NOI, as defined below, in this prospectus as supplemental measures of our performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We believe that NOI and Core NOI are useful supplemental measures of our operating performance. We define NOI as operating revenues (rental income, including lease termination fees, tenant recoveries and other income) less property and related expenses (real estate taxes, operating costs, repairs and maintenance, marketing and other property expenses). We define Core NOI as NOI excluding straight-line rent, amortization of above and below-market tenant leases and amortization of above and below market ground rent expense. Other real estate companies may use different methodologies for calculating NOI and Core NOI, and accordingly, our NOI and Core NOI may not be comparable to other real estate companies.

        Because NOI and Core NOI exclude general and administrative expenses, interest expense, impairment or other non-recoverable development costs, depreciation and amortization, reorganization items, strategic initiatives, provision for income taxes, straight-line rent, above and below-market tenant leases and above and below market ground rent expense, we believe that NOI and Core NOI provide performance measures that, when compared year over year, reflect the revenues and expenses directly associated with owning and operating regional shopping malls and the impact on operations from trends in occupancy rates, rental rates and operating costs. These measures thereby provide an operating perspective not immediately apparent from GAAP operating or net income. We use NOI and Core NOI to evaluate our operating performance on a property-by-property basis because NOI and Core NOI allow us to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on our operating results, gross margins and investment returns.

        In addition, management believes that NOI and Core NOI provide useful information to the investment community about our operating performance. However, due to the exclusions noted above, NOI and Core NOI should only be used as supplemental measures of our financial performance and not as an alternative to GAAP operating income (loss) or net income (loss). For reference, and as an aid in understanding management's computation of NOI and Core NOI, a reconciliation of NOI and

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Core NOI to combined operating income as computed in accordance with GAAP has been presented below.

 
  Historical  
 
  Successor   Predecessor   Successor   Predecessor  
 
  Six Months Ended
June 30,
  November 10 -
December 31
  January 1 -
November 9
  Year ended
December 31,
 
 
  2011   2010   2010   2009   2008  
 
  (In thousands)
 

Reconciliation of core net operating income and net operating income to operating income:

                                     
 

Core net operating income

  $ 75,551   $ 79,694   $ 24,357   $ 137,136   $ 177,537   $ 206,300  
 

Straight-line rent

    3,764     673     98     (137 )   (80 )   595  
 

Above- and below-market tenant leases, net

    (12,650 )   321     (3,793 )   688     468     (1,367 )
 

Above- and below-market ground rent expense, net

    (62 )       (18 )            
                           
 

Net operating income

  $ 66,603   $ 80,688   $ 20,644   $ 137,687   $ 177,925   $ 205,528  
                           
 

Property management and other costs

    (5,726 )   (3,602 )   (1,703 )   (6,669 )   (7,282 )   (6,601 )
 

Other

    78         (313 )   (16 )        
 

Strategic Initiatives

                    (4,471 )   (213 )
 

Provision for impairment

                    (81,854 )   (5,941 )
 

Depreciation and amortization

    (38,486 )   (30,102 )   (11,019 )   (53,413 )   (74,193 )   (67,689 )
                           
 

Operating income

  $ 22,469   $ 46,984   $ 7,609   $ 77,589   $ 10,125   $ 125,084  
                           


Funds from Operations

        Consistent with real estate industry and investment community practices, we use FFO, as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), as a supplemental measure of our operating performance. NAREIT defines FFO as net income (loss) (computed in accordance with current GAAP), excluding gains or losses from cumulative effects of accounting changes, extraordinary items and sales of depreciable properties, plus real estate related depreciation and amortization.

        We consider FFO a useful supplemental measure and a complement to GAAP measures because it facilitates an understanding of the operating performance of our properties. FFO does not include real estate depreciation and amortization required by GAAP because these amounts are computed to allocate the cost of a property over its useful life. Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, we believe that FFO provides investors with a clearer view of our operating performance, particularly with respect to our rental properties. FFO is not a measurement of our financial performance under GAAP and should not be considered as an alternative to revenues, operating income (loss), net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.

        FFO does not represent cash flow from operating activities as defined by GAAP, should not be considered as an alternative to GAAP net income (loss) and is not necessarily indicative of cash

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available to fund cash requirements. For reference, and as an aid in understanding management's computation of FFO, a reconciliation of FFO to net income (loss) has been presented below:

 
  Historical  
 
  Successor   Predecessor   Successor   Predecessor  
 
  Six Months Ended
June 30,
  November 10 -
December 31
  January 1 -
November 9
  Year Ended
December 31,
 
 
  2011   2010   2010   2009   2008  
 
  (In thousands)
 

FFO

  $ 25,353   $ 42,289   $ 8,153   $ 32,383   $ 44,041   $ 116,779  

Depreciation and amortization

    (38,486 )   (30,102 )   (11,019 )   (53,413 )   (74,193 )   (67,689 )
                           

Net (loss) income

  $ (13,133 ) $ 12,187   $ (2,866 ) $ (21,030 ) $ (30,152 ) $ 49,090  
                           

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RISK FACTORS

        An investment in our securities involves a high degree of risk. You should carefully consider the risks described below in addition to all other information provided to you in this prospectus in evaluating an investment in our securities. Any of the following risks could materially and adversely affect our business, result of operations and financial condition.


Risks Related to our Business

We have no operating history as an independent company upon which you can evaluate our performance, and accordingly, our prospects must be considered in light of the risks that any newly independent company encounters.

        We have no experience operating as an independent company and performing various corporate functions, including human resources, tax administration, legal (including compliance with the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and with the periodic reporting obligations of the Securities Exchange Act of 1934 (the "Exchange Act")), treasury administration, investor relations, internal audit, insurance, information technology and telecommunications services, as well as the accounting for items such as equity compensation.

        Our business will be subject to the substantial risks inherent in the commencement of a new business enterprise in an intensely competitive industry. Our prospects must be considered in light of the risks, expenses and difficulties encountered by companies in the early stages of independent business operations, particularly companies that are heavily affected by economic conditions and operate in highly competitive environments.


We may face potential difficulties in obtaining operating and development capital.

        The successful execution of our business strategy will require the availability of substantial amounts of operating and development capital both initially and over time. Sources of such capital could include bank, life insurance company, pension plan or institutional investor borrowings, public and private offerings of debt or equity, including rights offerings, sale of certain assets and joint ventures. We have identified opportunities to invest significant capital to redevelop and refresh our properties to pursue tailored strategic initiatives, but we will sequence long-term redevelopment projects with leasing activity. We believe these capital investments will assist in increasing our revenues significantly and deliver solid net operating income growth over the medium term. We cannot assure that any capital will be available on terms acceptable to us or at all in order to satisfy our short or long-term cash needs. Prior to the spin-off, GGP will ensure that Rouse has sufficient initial capital to fund its operations until a permanent capital structure is finalized. However, we do not expect GGP to have an ongoing long-term relationship with Rouse and GGP will not have any ongoing financial commitments to Rouse. See "Management's Discussion and Analysis of Financial Condition and Results of Operation—Liquidity and Capital Resources."


We may be unable to reposition or redevelop some of our properties, which may have an adverse impact on our profitability.

        Our business strategy is focused on repositioning and redeveloping our properties. In connection with these repositioning and redevelopment projects, we will be subject to various risks, including the following:

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        There can be no assurance that our repositioning and redevelopment projects will have the desired results of attracting and retaining desirable tenants and increasing customer traffic. If repositioning or redevelopment projects are unsuccessful, our investments in those projects may not be fully recoverable from future operations or sales.


We may increase our debt or raise additional capital in the future, which could affect our financial health and may decrease our profitability.

        To execute our business strategy, we will require additional capital. Debt or equity financing, however, may not be available to us on terms acceptable to us, if at all. If we incur additional debt or raise equity through the issuance of preferred stock, the terms of the debt or preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. The terms of any new debt may also impose additional and more stringent restrictions on our operations than we currently have. If we raise funds through the issuance of additional common equity, either through public or private offerings or rights offerings, your percentage ownership in us would decline if you do not ratably participate. If we are unable to raise additional capital when needed, it could affect our financial health, which could negatively affect your investment in us.


Economic conditions, especially in the retail sector, may have an adverse effect on our revenues and available cash.

        Unemployment, weak income growth, tight credit, declining consumer confidence and the need to pay down existing obligations may negatively impact consumer spending. Given these economic conditions, we believe there is a risk that the sales at stores operating in our malls may be adversely affected. This may hinder our ability to implement our strategies and may have an unfavorable effect on our operations and our ability to retain existing tenants and attract new tenants.


We may be unable to lease or re-lease space in our properties on favorable terms or at all, which may adversely affect our revenues.

        Our results of operations depend on our ability to strategically lease space in our properties, including re-leasing space in properties where leases are expiring, optimizing our tenant mix or leasing properties on more economically favorable terms. We are continually focused on our ability to lease properties and collect rents from tenants. If we are unable to lease or re-lease space in our properties this may adversely affect our operations and revenues.


Our tenants may be unable to pay minimum rents and expense recovery charges, which would have an adverse effect on our income and cash flow.

        If the sales at certain stores operating in our regional malls do not improve, tenants might be unable to pay their existing minimum rents or expense recovery charges, since these rents and charges would represent a higher percentage of their sales. If our tenants' sales do not improve, new tenants would be less likely to be willing to pay minimum rents as high as they would otherwise pay. We may

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not be able to collect rent sufficient to meet our costs. Because substantially all of our income is derived from rentals of real property, our income and cash flow would be adversely affected if a significant number of tenants are unable to meet their obligations.


Certain co-tenancy provisions in our lease agreements may result in reduced rent payments, which may adversely affect our operations and occupancy.

        Some of our lease agreements include a co-tenancy provision which allows the mall tenant to pay a reduced rent amount and, in certain instances, terminate the lease, if we fail to maintain certain occupancy levels at the mall. In addition, certain of our tenants have the ability to terminate their leases with us prior to the lease expiration date if their sales do not meet agreed upon thresholds. Therefore, if occupancy, tenancy or sales fall below certain thresholds, rents we are entitled to receive from our retail tenants could be reduced and our ability to attract new tenants may be limited.


The failure to fully recover cost reimbursements for common area maintenance, taxes and insurance from tenants could adversely affect our operating results.

        The computation of cost reimbursements from tenants for common area maintenance ("CAM"), insurance and real estate taxes is complex and involves numerous judgments including interpretation of lease terms and other tenant lease provisions. Most tenants make monthly fixed payments of CAM, real estate taxes and other cost reimbursement items. After the end of the calendar year, we compute each tenant's final cost reimbursements and issue a bill or credit for the full amount, after considering amounts paid by the tenant during the year. The billed amounts could be disputed by the tenant or become the subject of a tenant audit or even litigation. There can be no assurance that we will collect all or substantially all of this amount.


The bankruptcy or store closures of anchor stores or national tenants, may adversely affect our revenues.

        Some of our properties depend on anchor stores or national tenants, which are large tenants such as department stores and tenants with chains of stores in many of our properties, respectively, to attract shoppers. We derive significant revenues from these tenants. Our leases generally do not contain provisions designed to ensure the creditworthiness of our tenants and in recent years a number of companies in the retail industry, including some of our tenants, have declared bankruptcy or voluntarily closed certain of their stores. We may be unable to re-lease such space or to re-lease it on comparable or more favorable terms. As a result, the bankruptcy, insolvency, closure or general downturn in the business of an anchor store or national tenant, as well as requests from such tenants for significant rent relief or other lease concessions, may adversely affect our financial position, results of operations and ability to make distributions.


Our ability to change our portfolio is limited because real estate investments are relatively illiquid.

        Equity real estate investments are relatively illiquid, which may limit our ability to strategically change our portfolio promptly in response to changes in economic, financial, investment or other conditions. The real estate market is affected by many factors, such as general economic conditions, availability of financing and other factors, including supply and demand for space, that are beyond our control. Moreover, there are some limitations under federal income tax laws applicable to REITs that limit our ability to sell assets. We cannot predict whether we will be able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. The number of prospective buyers interested in purchasing malls is limited. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. In addition, economic and capital market conditions might make it more difficult for us to sell properties or might adversely affect the price we receive for properties that we do sell, as

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prospective buyers might experience increased costs of debt financing or other difficulties in obtaining debt financing.

        In addition, significant expenditures associated with each equity investment, such as mortgage payments, real estate taxes and maintenance costs, generally are not reduced when circumstances cause a reduction in income from the investment. If income from a property declines while the related expenses do not decline, our income and cash available to us would be adversely affected. If it becomes necessary or desirable for us to dispose of one or more of our mortgaged properties, we might not be able to obtain a release of the lien on the mortgaged property without payment of the associated debt. The foreclosure of a mortgage on a property or inability to sell a property could adversely affect the level of cash available to us. These factors and any others that would impede our ability to respond to adverse changes in the performance of our properties could adversely affect our financial condition and results of operations.


We operate in a competitive business.

        There are numerous shopping facilities that compete with our properties in attracting retailers to lease space and many of our competitors operate on a much larger scale than we do. In addition, retailers at our properties face continued competition from retailers at other regional malls, outlet malls and other discount shopping malls, discount shopping clubs, full-line large format value retailers, catalog companies, and through internet sales and telemarketing. Competition could adversely affect our revenues and cash flows.

        In particular, the increase in both the availability and popularity of online shopping has created a growing source of competitive pressure on the retailers at our properties. The ability of online retailers to offer a wide range of products for sale, often with substantial price and tax savings, and free or discounted shipping, allows these online retailers to compete with the retailers at our properties by offering added convenience and cost-saving incentives to consumers in both high density major metropolitan markets and rural areas. Additionally, small businesses and specialty retailers, who have previously been limited to marketing and selling their products within their immediate geographical area, are now able to reach a broader group of consumers and compete with the retailers at our properties.

        We also compete with other major real estate investors with significant capital for attractive investment opportunities. These competitors include REITs, investment banking firms and private institutional investors.

        Our ability to realize our strategies and capitalize on our competitive strengths are dependent on our ability to effectively operate a large portfolio of malls, maintain good relationships with our tenants and consumers, and remain well-capitalized, and our failure to do any of the foregoing could affect our ability to compete effectively in the markets in which we operate.


Our business is dependent on perceptions by retailers and shoppers of the convenience and attractiveness of our retail properties, and our inability to maintain a positive perception may adversely affect our revenues.

        We are dependent on perceptions by retailers or shoppers of the safety, convenience and attractiveness of our retail properties. If retailers and shoppers perceive competing retail properties and other retailing options such as the internet to be more convenient or of a higher quality, our revenues may be adversely affected.


Our significant indebtedness could have an adverse impact on our financial health and operating flexibility.

        As of June 30, 2011, our total combined contractual debt, excluding non-cash debt market rate adjustments, was $1.13 billion on an actual basis and $1.16 billion on a pro forma basis to give effect to

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the separation and related financing transactions described herein. Our significant indebtedness could have important consequences on the value of our common stock including:


Our debt obligations and ability to comply with related covenants could impact our financial condition or future operating results.

        We intend to enter into a senior secured credit facility and a subordinated revolving credit facility, which will expose us to the typical risks associated with the use of leverage. We also have property-level debt, which limits our ability to take certain actions with respect to the properties securing such debt. Increased leverage makes it more difficult for us to withstand adverse economic conditions or business plan variances, to take advantage of new business opportunities, or to make necessary capital expenditures.

        The senior secured credit facility will contain a number of covenants that, among other things, limit or restrict our ability to incur indebtedness and/or grant liens on the collateral securing the facility; restrictions on negative pledges and subsidiary distributions; with respect to mortgage collateral, there are limitations on our ability to enter into transactions relating to mergers, consolidations, sales of assets for less than fair market value and similar transactions; conduct of business; restricted distributions; transactions with affiliates; and limitation on speculative hedge agreements. In addition, we will be required to comply with three financial maintenance covenants: (1) a net indebtedness to value ratio, (2) a liquidity covenant, and (3) a minimum fixed charge coverage ratio. See "Description of Certain Indebtedness—Senior Secured Credit Facility." Failure to comply with the financial covenants in the senior secured credit facilities would result in a default under the credit agreement governing these facilities and, absent a waiver or an amendment from our lenders, permit the acceleration of all outstanding borrowings under the senior secured credit facilities. No assurance can be given that we would be successful in obtaining such waiver or amendment in this current financial climate, or that any accommodations that we were able to negotiate would be on terms as favorable as those in the senior secured credit facilities. In addition, any such default may result in the cross-default of our other indebtedness.

        A substantial portion of our cash flow could be required for debt service and, as a result, might not be available for our operations or other purpose. Any substantial decrease in cash flows or any substantial increase in expenses could make it difficult for us to meet our debt service requirements or force us to modify our operations. Our level of indebtedness may make us more vulnerable to

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economic downturns and reduce our flexibility in responding to changing business, regulatory and economic conditions.


We have a history of net losses and may not be profitable in the future.

        Our historical combined financial data was carved-out from the financial information of GGP and shows that we have a history of losses, and we cannot assure you that we will achieve sustained profitability going forward. For the six months ended June 30, 2011 and the years ended December 31, 2010, 2009 and 2008, we would have incurred net losses of $(13.1) million, $(23.9) million, $(30.2) million and net income of $49.1 million, respectively. See "Selected Historical Combined Financial Data." If we cannot improve our profitability or generate positive cash from operating activities, the trading value of our common stock may decline.


National, regional and local economic conditions may adversely affect our business.

        Our real property investments are influenced by the national, regional and local economy, which may be negatively impacted by plant closings, industry slowdowns, increased unemployment, lack of availability of consumer credit, increased levels of consumer debt, declining consumer sentiment, poor housing market conditions, adverse weather conditions, natural disasters and other factors. Similarly, local real estate conditions, such as an oversupply of, or a reduction in demand for, retail space or retail goods, and the supply and creditworthiness of current and prospective tenants may affect the ability of our properties to generate significant revenue.


Some of our properties are subject to potential natural or other disasters.

        A number of our properties are located in areas which are subject to natural or other disasters, including hurricanes, tornados, earthquakes and oil spills. For example, certain of our properties are located in California or in other areas with higher risk of earthquakes. Furthermore, some of our properties are located in coastal regions, and would therefore be affected by any future rises in sea levels.


Possible terrorist activity or other acts of violence could adversely affect our financial condition and results of operations.

        Future terrorist attacks in the United States or other acts of violence may result in declining economic activity, which could harm the demand for goods and services offered by our tenants and the value of our properties and might adversely affect the value of an investment in our securities. Such a decrease in retail demand could make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates. Terrorist activities or violence also could directly affect the value of our properties through damage, destruction or loss, and the availability of insurance for such acts, or of insurance generally, might be lower or cost more, which could increase our operating expenses and adversely affect our financial condition and results of operations. To the extent that our tenants are affected by future attacks, their businesses similarly could be adversely affected, including their ability to continue to meet obligations under their existing leases. These acts might erode business and consumer confidence and spending and might result in increased volatility in national and international financial markets and economies. Any one of these events might decrease demand for real estate, decrease or delay the occupancy of our properties, and limit our access to capital or increase our cost of raising capital.

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We could incur significant costs related to government regulation and litigation over environmental matters and various other federal, state and local regulatory requirements.

        Under various federal, state or local laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property and may be held liable to third parties for bodily injury or property damage (investigation and/or clean-up costs) incurred by the parties in connection with the contamination. These laws often impose liability without regard to whether the owner or operator knew of or otherwise caused the release of the hazardous or toxic substances. The presence of contamination or the failure to remediate contamination discovered at our properties may adversely affect our ability to sell, lease or borrow with respect to the real estate. Our properties have been subjected to varying degrees of environmental assessment at various times; however, the identification of new areas of contamination, a change in the extent or known scope of contamination or changes in cleanup requirements could result in significant costs to us.

        Other federal, state and local laws, ordinances and regulations require abatement or removal of asbestos-containing materials in the event of demolition or certain renovations or remodeling, the cost of which may be substantial for certain redevelopments. These regulations also govern emissions of and exposure to asbestos fibers in the air, which may necessitate implementation of site specific maintenance practices. Certain laws also impose liability for release of asbestos-containing materials into the air and third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with asbestos-containing materials. Asbestos-containing building materials are present at some of our properties and may be present at others. To minimize the risk of onsite asbestos being improperly disturbed, we have developed and implemented asbestos operations and maintenance programs to manage asbestos-containing materials and suspected asbestos-containing materials in accordance with applicable legal requirements.

        We also may incur costs to comply with the Americans with Disabilities Act of 1990 and similar laws, which require that all public accommodations meet federal requirements related to access and use by disabled persons. Compliance with such laws has not had a material adverse effect on our operating results or competitive position in the past, but could have such an effect in the future.


Some potential losses are not insured, which may adversely affect our profitability.

        We carry comprehensive liability, fire, flood, earthquake, terrorism, extended coverage and rental loss insurance on all of our properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate in light of the size and scope of our portfolio and business operations. There are, however, some types of losses, including lease and other contract claims, which generally are not insured. If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. If this happens, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property.


Inflation may adversely affect our financial condition and results of operations.

        While substantially all of our tenant leases contain provisions designed to partially mitigate the negative impact of inflation (such as overage rent and escalation clauses), they may not adequately do so.


A rise in interest rates may increase our overall interest rate expense.

        A rise in interest rate could have an immediate adverse impact on us due to our outstanding variable-rate debt. This risk can be managed or mitigated by utilizing interest rate protection products that generally allow us to replace variable-rate debt with fixed-rate debt. However, in an increasing

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interest rate environment the fixed rates we can obtain with such interest rate protection products will also continue to increase. In addition, in the event of a rise in interest rates, we may be unable to replace maturing debt with new debt at equal or better interest rates.


We may not be able to meet the conditions for qualification as a REIT or thereafter maintain our status as a REIT, which would deny us certain favorable tax treatment.

        We plan to elect to be treated as a REIT in connection with the filing of our federal income tax return for 2011, subject to our ability to meet the requirements of a REIT at the time of election, and we intend to maintain this status in future periods. Such election would be retroactive to the date of our formation. It is possible that we may not meet the conditions for qualification as a REIT at the time of such election. In addition, once an entity is qualified as a REIT, the Internal Revenue Code (the "Code") generally requires that such entity pay tax on or distribute 100% of its capital gains and distribute at least 90% of its ordinary taxable income to stockholders. To avoid current entity level U.S. federal income taxes, we expect to distribute 100% of our capital gains and ordinary income to stockholders annually.

        If, with respect to any taxable year, we fail to maintain our qualification as a REIT, we would not be allowed to deduct distributions to stockholders in computing our taxable income and federal income tax. If any of our REIT subsidiaries fail to qualify as a REIT, such failure could result in our loss of REIT status. If we lose our REIT status, corporate level income tax, including any applicable alternative minimum tax, would apply to our taxable income at regular corporate rates. As a result, the amount available for distribution to holders of equity securities that would otherwise receive dividends would be reduced for the year or years involved, and we would no longer be required to make distributions. In addition, unless we were entitled to relief under the relevant statutory provisions, we would be disqualified from treatment as a REIT for four subsequent taxable years.


An ownership limit, certain anti-takeover defenses and applicable law may hinder any attempt to acquire us.

        Our amended and restated certificate of incorporation and amended and restated bylaws contain the following limitations:

        The ownership limit.    Generally, for us to qualify as a REIT under the Code for a taxable year, not more than 50% in value of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer "individuals" at any time during the last half of such taxable year. Our amended and restated certificate of incorporation provides that no person may own more than 9.9% of the number or value, whichever is more restrictive, of our outstanding shares of capital stock unless our board of directors provides a waiver from the ownership restrictions. The Code defines "individuals" for purposes of the requirement described above to include some types of entities. However, our amended and restated certificate of incorporation also permits us to exempt a person from the ownership limit upon the satisfaction of certain conditions described therein.

        Selected provisions of our amended and restated certificate of incorporation.    Our amended and restated certificate of incorporation authorizes the board of directors:

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        Selected provisions of our amended and restated bylaws.    Our amended and restated bylaws contain the following limitations:

        Selected provisions of Delaware law.    We are a Delaware corporation, and Section 203 of the Delaware General Corporation Law applies to us. In general, Section 203 prevents an "interested stockholder" (as defined below), from engaging in a "business combination" (as defined in the statute) with us for three years following the date that person becomes an interested stockholder unless one or more of the following occurs:

        The statute defines "interested stockholder" as any person that is the owner of 15% or more of our outstanding voting stock or is our affiliate or associate and was the owner of 15% or more of our outstanding voting stock at any time within the three-year period immediately before the date of determination.

        Each item discussed above may delay, deter or prevent a change in control of our company, even if a proposed transaction is at a premium over the then current market price for our common stock. Further, these provisions may apply in instances where some stockholders consider a transaction beneficial to them. As a result, our stock price may be negatively affected by these provisions.


Risks Related to the Rights Offering

The subscription price determined for this offering is not necessarily an indication of the fair value of our common stock.

        The price to purchase a share of common stock in this offering is $    per share. The subscription price does not necessarily bear any relationship to the book value of our assets or our past operations, cash flows, losses, financial condition, net worth or any other established criteria used to value securities. You should not necessarily consider the subscription price to be an indication of the fair value of the common stock to be offered in this offering. After the date of this prospectus, our common stock may trade at prices above or below the subscription price.

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Stockholders who do not fully exercise their rights will have their interests diluted.

        The rights offering will result in the issuance of an additional            shares of our common stock. If you choose not to fully exercise your rights prior to the expiration of the rights offering, your proportionate voting interest will be reduced and your relative ownership interest in us will be diluted. Rights holders who do not exercise or sell their rights prior to the expiration of the rights offering will lose any value represented by their rights.

        Brookfield is expected to agree to backstop the rights offering. Pursuant to a backstop agreement between us and Brookfield, Brookfield is expected to agree to purchase from us, subject to the terms and conditions thereof, at the rights offering subscription price, unsubscribed shares of our common stock such that the gross proceeds of the rights offering will be $200 million. As a stockholder of Rouse as of the record date and pursuant to the backstop agreement, Brookfield is expected to have the right to subscribe for and purchase shares of our common stock under the basic subscription right and the right to participate in the over-subscription privilege. If no rights holders other than Brookfield were to exercise their rights in this offering, the transactions contemplated by the backstop commitment would result in the issuance of            shares of common stock to Brookfield, which would increase Brookfield's consortium's ownership percentage of our outstanding common stock to    %.


You may not revoke your subscription exercise and could be committed to buying shares above the prevailing market price.

        Once you exercise your rights, you may not revoke the exercise. The public trading market price of our common stock may decline before the rights expire. If you exercise your rights you will have committed to buying shares of our common stock potentially at a price above the prevailing market price. Moreover, you may be unable to sell your shares of common stock at a price equal to or greater than the subscription price you paid for such shares.


We may terminate the rights offering at any time prior to the expiration of the offer period, and neither we nor the transfer agent will have any obligation to you except to return your exercise payments.

        We may, in our sole discretion, decide not to continue with the rights offering or terminate the rights offering prior to the expiration of the offer period. If the rights offering is terminated, the transfer agent will return as soon as possible all exercise payments, without interest or deduction.


You must act promptly and follow instructions carefully if you want to exercise your rights.

        Eligible participants and, if applicable, brokers, banks or other nominees acting on their behalf, who desire to purchase common stock in the rights offering must act promptly to ensure that all required rights certificates are actually received prior to the expiration of the relevant rights offering and that all payments are actually received prior to the payment deadline by the transfer agent. The time period to exercise rights is limited. If you or your broker fails to complete and sign the required rights certificates, sends an incorrect payment amount or otherwise fails to follow the procedures that apply to the exercise of your rights, we may, depending on the circumstances, reject your exercise of rights or accept it only to the extent of the payment received. Neither we nor the transfer agent undertakes to contact you concerning, or attempt to correct, an incomplete or incorrect rights certificate or payment or contact you concerning whether a broker, bank or other nominee holds rights on your behalf.

        We have the sole discretion to determine whether an exercise properly follows the procedures that apply to the exercise of your rights.

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No prior market exists for the rights, and a liquid and reliable market for the rights may not develop.

        The rights are a new issue of securities with no established trading market. Unless indicated otherwise, the rights are transferable until the close of business on the last trading day before the expiration of the rights offering. Unless exercised, the rights will cease to have any value following the expiration date. We are not responsible if you elect to sell your rights and no public or private market exists to facilitate the purchase of rights. In such event, the rights will expire and will no longer be exercisable or transferable.


Significant sales of subscription rights and our common stock, or the perception that significant sales may occur in the future, could adversely affect the market price for the subscription rights and our common stock.

        The sale of substantial amounts of the subscription rights and our common stock could adversely affect the price of these securities. Sales of substantial amounts of our subscription rights and our common stock in the public market, and the availability of shares for future sale, including up to                    shares of our common stock to be issued in this rights offering, could cause the market price of our common stock to remain low for a substantial amount of time. We cannot foresee the impact of such potential sales on the market, but it is possible that if a significant percentage of such available shares and subscription rights were attempted to be sold within a short period of time, the market for our shares and the subscription rights would be adversely affected. Even if a substantial number of sales do not occur within a short period of time, the mere existence of this "market overhang" could have a negative impact on the market for our common stock and the subscription rights and our ability to raise additional capital. Pursuant to a registration rights agreement we expect to enter into with Brookfield, we will agree that upon Brookfield's request we will use our commercially reasonable efforts to effect a registration under applicable federal and state securities laws for shares of our common stock held by Brookfield. Any disposition by Brookfield, or any of our substantial shareholders, of our common stock in the public market, or the perception that such dispositions could occur, could adversely affect prevailing market prices of our common stock.


You will not be able to sell the shares of common stock you buy in the rights offering until you receive your DRS Statement or your account is credited with the common stock.

        If you purchase shares in the rights offering by submitting a subscription rights certificate and payment, we will mail you a DRS Statement as soon as practicable after                , 20    , or such later date as to which the rights offering may be extended. If your shares are held by a broker, dealer, custodian bank or other nominee and you purchase shares, your account with your nominee will be credited with the shares of our common stock you purchased in the rights offering as soon as practicable after the expiration of the rights offering, or such later date as to which the rights offering may be extended. Until your stock certificates have been delivered or your account is credited, you may not be able to sell your shares even though the common stock issued in the rights offering will be listed for trading on the New York Stock Exchange. The stock price may decline between the time you decide to sell your shares and the time you are actually able to sell your shares.


Because our management will have broad discretion over the use of the net proceeds from the rights offering, you may not agree with how we use the proceeds, and we may not invest the proceeds successfully.

        We currently anticipate that we will use the net proceeds of the rights offering for general operating, working capital and other corporate purposes. Our management may allocate the proceeds among these purposes as it deems appropriate. In addition, market factors may require our management to allocate portions of the proceeds for other purposes. Accordingly, you will be relying on the judgment of our management with regard to the use of the proceeds from the rights offering, and you will not have the opportunity, as part of your investment decision, to assess whether we are

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using the proceeds appropriately. It is possible that we may invest the proceeds in a way that does not yield a favorable, or any, return for us.


If you use a personal check to pay for the shares, it may not clear in time.

        Any personal check used to pay for shares must clear prior to the expiration date, and the clearing process may require seven or more business days. If you wish to pay the subscription price by uncertified personal check, we urge you to make payment sufficiently in advance of the time the rights offering expires to ensure that your payment is received and clears by that time.


Risks Related to Our Common Stock Generally

There may be a limited public market for our common stock, and our stock price may experience volatility.

        An active trading market for our common stock may not develop as a result of the spin-off or be sustained in the future. In addition, the stock market has from time to time experienced extreme price and volume fluctuations that often have been unrelated to the operating performance of particular companies. Changes in earnings estimates by analysts, if any, and economic and other external factors may have a significant effect on the market price of our common stock. Fluctuations or decreases in the trading price of our common stock may adversely affect the liquidity of the trading market for our common stock.


Future sales of our shares could depress the market price of our common stock.

        The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market after the spin-off or the perception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. Upon completion of the spin-off,            shares of our common stock will be outstanding. By virtue of the registration statement of which this prospectus is a part, all such shares will be freely tradable without restriction under the Securities Act except for any such shares held at any time by any of our "affiliates," as such term is defined under Rule 144 promulgated under the Securities Act. See "Description of Capital Stock—Shares Eligible for Future Sale." Pursuant to a registration rights agreement we expect to enter into with Brookfield, we will agree that upon Brookfield's request we will use our commercially reasonable efforts to effect a registration under applicable federal and state securities laws for shares of our common stock held by Brookfield. Any disposition by Brookfield, or any of our substantial shareholders, of our common stock in the public market, or the perception that such dispositions could occur, could adversely affect prevailing market prices of our common stock.


Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

        Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and the Dodd-Frank Act, are creating uncertainty for companies such as ours. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest reasonably necessary resources to comply with evolving standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities, which could harm our business prospects.

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Our substantial stockholders may exert influence over us that may be adverse to our best interests and those of our other stockholders.

        Following the spin-off, Brookfield's consortium, affiliates of Pershing Square Capital Management, L.P. ("Pershing Square") and the Blackstone Real Estate Partners VI L.P. ("Blackstone") are expected to own approximately 40.0%, 7.3% and 5.4%, respectively, of our common stock (based on their publicly reported holdings of GGP common stock). Brookfield's consortium's ownership percentage may increase as a result of the backstop agreement we expect to enter into with Brookfield for this rights offering. We expect that, pursuant to the backstop agreement, Brookfield will agree to exercise its pro rata subscription rights and to purchase any shares not purchased by other stockholders. The concentration of ownership of our outstanding common stock held by our substantial stockholders may make some transactions more difficult or impossible without the support of some or all of these investors. The interests of any of our substantial stockholders, or any of their respective affiliates could conflict with or differ from the interests of our other stockholders or the other substantial stockholders. For example, the concentration of ownership held by the substantial stockholders, even if they are not acting in a coordinated manner, could allow them to influence our policies and strategy and could delay, defer or prevent a change of control or impede a merger, takeover or other business combination that may otherwise be favorable to us and our other stockholders. A substantial stockholder or affiliate thereof may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward looking statements that are subject to risks and uncertainties. Forward looking statements give our current expectations relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward looking statements by the fact that they do not relate strictly to current or historical facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "forecast," "plan," "intend," "believe," "may," "should," "would," "could," "likely," and other words of similar expression.

        Forward looking statements should not be unduly relied upon. They give our expectations about the future and are not guarantees. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements to materially differ from any future results, performance and achievements expressed or implied by such forward looking statements. We caution you, therefore, not to rely on these forward looking statements.

        In this prospectus, for example, we make forward looking statements discussing our expectations about:

        Factors that could cause actual results to differ materially from those expressed or implied by the forward looking statements include:

        These forward looking statements present our estimates and assumptions only as of the date of this prospectus. Except as may be required by law, we undertake no obligation to modify or revise any forward looking statements to reflect events or circumstances occurring after the date of this prospectus.

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DIVIDEND POLICY

        We have not paid any dividends on our common stock. We plan to elect to be treated as a REIT in connection with the filing of our first tax return, subject to our ability to meet the requirements of a REIT at the time of election, and intend to maintain this status in future periods. A REIT must pay tax on or distribute 100% of its capital gains and distribute 90% of its ordinary taxable income to its stockholders in order to maintain its REIT status. A REIT will avoid entity level federal income tax if, among other requirements, it distributes 100% of its capital gains and ordinary taxable income. To avoid current entity level U.S. federal income taxes, we plan to distribute 100% of our capital gains and ordinary income to our stockholders annually. We have no present intention to pay any dividends on our common stock in the future other than in order to maintain our REIT status and to avoid current entity level U.S. federal income taxes, which dividends our board of directors may decide to pay in the form of cash, common stock or a combination of cash and common stock.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2011:

This table should be read together with "Use of Proceeds," "Selected Historical Combined Financial Data," "Unaudited Pro Forma Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and RPI Businesses' combined financial statements and the related notes, each included elsewhere in this prospectus.

 
  As of June 30, 2011  
(Dollars in thousands)
  Actual   Pro Forma  

Cash and cash equivalents

  $ 131   $ 219,428  
           

Debt:

             
 

Mortgages, notes and loans payable(1)

  $ 1,066,373   $ 1,091,693  
 

New Revolving Credit Facility(2)

         
           

Total Debt

  $ 1,066,373   $ 1,091,693  
           

Common stock, Pro forma                        shares authorized, $      per
            share,                        shares issued as of June 30, 2011

           

Common stockholders equity, excluding par value(3)

    449,330     643,307  
           

Total capitalization

  $ 1,515,834   $ 1,954,428  
           

(1)
Represents the expected advance on the term loan we expect to enter into concurrently with the spin-off and the secured property-level debt which will be assumed.

(2)
Represents the revolving credit facility providing for revolving loans in the amount of $50.0 million, none of which is expected to be drawn at the time of the spin-off.

(3)
Represents the $200.0 million of common stock offered by this prospectus net of $6.0 million in anticipated fees and expenses.

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USE OF PROCEEDS

        We estimate that the net proceeds to us from the sale of shares of common stock offered in the rights offering and pursuant to the backstop commitment, after deducting estimated offering expenses, will be approximately $                  million. We intend to use the net proceeds of the offering for general operating, working capital and other corporate purposes.

        Our management will retain broad discretion in deciding how to allocate the net proceeds of this offering. We will utilize the proceeds of the offering to invest in working capital to grow our business, and will invest any excess funds in liquid short-term securities. The precise amounts and timing of our use of the net proceeds will depend upon market conditions and the availability of other funds, among other factors. See "Risk Factors—Because our management will have broad discretion over the use of the net proceeds from the rights offering, you may not agree with how we use the proceeds, and we may not invest the proceeds successfully."

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PUBLIC MARKET FOR OUR COMMON STOCK

        Our common stock is traded on the NYSE under the symbol "RSE." As of                        , 20    , there were                                     shares of our common stock outstanding,            shares of our Class B Common Stock outstanding and no shares of preferred stock outstanding. On                        , 20 , the last reported sale price of our common stock was $            and the high and low sales prices for shares of our common stock were $            and $            , respectively. We do not expect these prices to be indicative of the trading price of our common stock in the future.

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SELECTED HISTORICAL COMBINED FINANCIAL DATA

        The following table sets forth the selected historical combined financial and other data of our business, which was carved-out from the financial information of GGP, as described below. We were formed for the purpose of holding certain assets and assuming certain liabilities of GGP. Prior to the effective date of the Form 10 registration statement, of which this prospectus forms a part, and the completion of the spin-off, we did not conduct any business and did not have any material assets or liabilities. In April 2009, the GGP Debtors filed voluntary petitions for relief under Chapter 11. On the Effective Date GGP emerged from Chapter 11 bankruptcy after receiving a significant equity infusion from investors and other associated events. As a result of the emergence from bankruptcy and the related equity infusion, the majority of equity in GGP changed ownership, which triggered the application of acquisition accounting to the assets and liabilities of GGP. As a result, the application of acquisition accounting has been applied to the assets and liabilities of the Rouse Properties, Inc. and therefore the following tables have been presented separately for the Predecessor and Successor for the year ended December 31, 2010. See Note 1 to our combined financial statements for the year ended December 31, 2010 included elsewhere in this prospectus for additional detail. The selected historical financial data set forth below as of December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009 and 2008 has been derived from our audited combined financial statements, which are included elsewhere in this prospectus. The selected historical combined financial data as of December 31, 2008, 2007 and 2006 and for the years ended December 31, 2007 and 2006 has been derived from our unaudited combined financial statements, which are not included in this prospectus. The income statement data for each of the six months ended June 30, 2011 and 2010 and the balance sheet data as of June 30, 2011 have been derived from our unaudited interim combined financial statements included elsewhere in this prospectus.

        Our unaudited interim combined financial statements as of June 30, 2011 and for the six months ended June 30, 2011 were prepared on the same basis as our audited combined financial statements as of December 31, 2010 and 2009 and for each of the three years in the period ended December 31, 2010 and, in the opinion of management, include all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly our financial position and results of operations for these periods. The interim results of operations are not necessarily indicative of operations for a full fiscal year.

        Our combined financial statements were carved-out from the financial information of GGP at a carrying value reflective of such historical cost in such GGP records. Our historical financial results reflect allocations for certain corporate expenses which include, but are not limited to, costs related to property management, human resources, security, payroll and benefits, legal, corporate communications, information services and restructuring and reorganization. Costs of the services that were allocated or charged to us were based on either actual costs incurred or a proportion of costs estimated to be applicable to us based on a number of factors, most significantly our percentage of GGP's adjusted revenue and assets and the number of properties. We believe these allocations are reasonable; however, these results do not reflect what our expenses would have been had we been operating as a separate stand-alone public company. The corporate cost allocations for the period from November 10, 2010 through December 31, 2010 and the period from January 1, 2010 through November 9, 2010 were $1.7 million and $6.7 million, respectively. For the years ended 2009, 2008, 2007 and 2006 the allocations were $7.3 million, $6.6 million, $9.6 million and $7.5 million, respectively. The six months ended June 30, 2011 and 2010 include corporate cost allocations of $5.7 million and $3.6 million, respectively. Effective with the separation, we will assume responsibility for all of these functions and related costs and anticipate our costs as a stand-alone entity will be higher than those allocated to us from GGP. The historical combined financial information presented will not be indicative of the results of operations, financial position or cash flows that would have been obtained if we had been an

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independent, stand-alone entity during the periods shown. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Overview—Basis of Presentation."

        The historical results set forth below do not indicate results expected for any future periods. The selected financial data set forth below are qualified in their entirety by, and should be read in conjunction with, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined financial statements and related notes thereto included elsewhere in this prospectus.

 
  Historical  
 
  Successor   Predecessor   Successor   Predecessor  
 
  Six Months Ended
June 30,
  November 10 -
December 31
  January 1 -
November 9
  Year Ended December 31,  
 
  2011   2010   2010   2009   2008   2007   2006  
 
  (In thousands)
 

Operating Data:

                                                 
 

Revenues

  $ 115,354   $ 129,007   $ 35,540   $ 219,741   $ 276,232   $ 308,756   $ 321,059   $ 316,448  
 

Depreciation and amortization

    (38,486 )   (30,102 )   (11,019 )   (53,413 )   (74,193 )   (67,689 )   (70,689 )   (73,351 )
 

Provisions for impairment

                    (81,854 )   (5,941 )   (388 )   (306 )
 

Other operating expenses

    (54,399 )   (51,921 )   (16,912 )   (88,739 )   (110,060 )   (110,042 )   (114,229 )   (108,976 )
                                   
 

Operating Income

    22,469     46,984     7,609     77,589     10,125     125,084     135,753     133,815  
                                   
 

Interest expense, net

    (35,314 )   (43,543 )   (10,393 )   (88,598 )   (72,071 )   (75,527 )   (75,039 )   (77,188 )
 

Reorganization items

        9,036         (9,515 )   32,671              
 

Provision for income taxes

    (288 )   (290 )   (82 )   (506 )   (877 )   (467 )   (173 )   (10 )
                                   
 

Net (loss) income

  $ (13,133 ) $ 12,187   $ (2,866 ) $ (21,030 ) $ (30,152 ) $ 49,090   $ 60,541   $ 56,617  
                                   

Cash Flow Data:

                                                 
 

Operating activities

  $ 41,470   $ 25,358   $ 7,365   $ 41,103   $ 85,708   $ 113,894   $ 128,173   $ 130,039  
 

Investing activities

    (9,691 )   (2,705 )   (14,300 )   (9,248 )   (8,218 )   (21,309 )   (37,842 )   (71,096 )
 

Financing activities

    (33,464 )   (22,690 )   2,333     (25,786 )   (77,497 )   (92,459 )   (90,311 )   (59,011 )

 

 
  Historical  
 
  Successor   Successor   Predecessor  
 
   
  As of December 31,  
 
  As of June 30,
2011
 
 
  2010   2009   2008   2007   2006  

Balance Sheet Data:

                                     

Investments in real estate, cost

  $ 1,452,369   $ 1,434,197   $ 2,181,029   $ 2,315,687   $ 2,298,071   $ 2,160,730  

Total assets

    1,604,132     1,644,264     1,722,045     1,874,168     1,923,641     1,759,818  

Total debt(1)

    1,066,373     1,216,820     1,314,829     1,418,589     1,310,321     1,380,598  

Total liabilities

    1,154,802     1,314,402     1,366,058     1,469,431     1,366,013     1,429,360  

GGP equity

    449,330     329,862     355,987     404,737     557,628     330,458  

(1)
Total debt includes $65.6 million, $67.7 million, $46.7 million, $(4.5) million, $(5.8) million and $(5.7) million of non-cash market rate adjustments at June 30, 2011 and December 31, 2010, 2009, 2008, 2007 and 2006, respectively.

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UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

        The following unaudited pro forma combined financial data has been developed by applying pro forma adjustments to the historical combined financial information which reflect the separation of Rouse from GGP as described in this prospectus. The unaudited pro forma combined balance sheet gives effect to the transactions described below as if they had occurred on June 30, 2011. The unaudited pro forma statements of operations gives effect to the transactions described below as if they had occurred on January 1, 2010. All significant pro forma adjustments and their underlying assumptions are described more fully in the notes to the unaudited pro forma combined financial data which should be read in conjunction with such unaudited pro forma combined financial information.

        The unaudited pro forma combined financial data gives effect to the following:

        The unaudited pro forma combined financial data is presented for illustrative purposes only and is not necessarily indicative of the results of operations or financial position that would have actually been reported had the transactions reflected in the pro forma adjustments occurred on January 1, 2010 or as of June 30, 2011, as applicable, nor is it indicative of our future results of operations or financial position. To provide a more meaningful presentation of annual data presented for the twelve months ended December 31, 2010, we have aggregated the Predecessor results with the Successor results.

        Our combined financial statements were carved-out from the financial information of GGP. Our historical financial results reflect allocations for certain corporate expenses which include, but are not limited to, costs related to property management, human resources, security, payroll and benefits, legal, corporate communications, information services and restructuring and reorganization. Costs of the services that were allocated or charged to us were based on either actual costs incurred or a proportion of costs estimated to be applicable to us based on a number of factors, most significantly, our percentage of GGP's adjusted revenue and assets and the number of properties. We believe these allocations are reasonable; however, these results do not reflect what our expenses would have been had we been operating as a separate stand-alone public company. Effective with the separation, we will assume responsibility for all of these functions and related costs and anticipate our costs as a stand-alone entity will be higher than those allocated to us from GGP. No pro forma adjustments have been made to our financial statements to reflect the additional costs and expenses described in this paragraph because they are projected amounts based on judgmental estimates and, as such, are not includable as pro forma adjustments in accordance with the requirements of Rule 11-02 of Regulation S-X.

        The unaudited pro forma combined financial data should be read in conjunction with the information contained in "Summary Historical Combined Financial Data" and the combined financial statements and related notes thereto appearing elsewhere in this prospectus.

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ROUSE PROPERTIES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2011

 
  Historical   Adjustments   Footnotes   Total  
 
  (In thousands)
 

Revenues:

                       
 

Minimum rents

  $ 74,956   $       $ 74,956  
 

Tenant recoveries

    35,938             35,938  
 

Overage rents

    1,762             1,762  
 

Other

    2,698             2,698  
                   
   

Total revenues

    115,354             115,354  
                   

Expenses:

                       
 

Real estate taxes

    12,114             12,114  
 

Property maintenance costs

    6,960             6,960  
 

Marketing

    1,574             1,574  
 

Other property operating costs

    27,591             27,591  
 

Provision for doubtful accounts

    512             512  
 

Property management and other costs

    5,726     3,189   (A)     8,915  
 

Depreciation and amortization

    38,486             38,486  
 

Other

    (78 )           (78 )
                   
   

Total expenses

    92,885     3,189         96,074  
                   

Operating income

    22,469     (3,189 )       19,280  

Interest income

    8             8  

Interest expense

    (35,322 )   (2,431 ) (B)     (37,753 )
                   

Loss before income taxes

    (12,845 )   (5,620 )       (18,465 )

Provision for income taxes

    (288 )           (288 )
                   

Net loss

  $ (13,133 ) $ (5,620 )     $ (18,753 )
                   

Weighted average number of common shares—basic and diluted

                       
                       

Basic and diluted loss per share

              (C)   $    
                       

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ROUSE PROPERTIES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2010

 
  Historical   Adjustments   Footnotes   Total  
 
  (In thousands)
 

Revenues:

                       
 

Minimum rents

  $ 170,154   $       $ 170,154  
 

Tenant recoveries

    73,885             73,885  
 

Overage rents

    4,598             4,598  
 

Other

    6,644             6,644  
                   
   

Total revenues

    255,281             255,281  
                   

Expenses:

                       
 

Real estate taxes

    23,641             23,641  
 

Property maintenance costs

    12,534             12,534  
 

Marketing

    3,739             3,739  
 

Other property operating costs

    54,405             54,405  
 

Provision for doubtful accounts

    2,631             2,631  
 

Property management and other costs

    8,372     6,378   (A)     14,750  
 

Depreciation and amortization

    64,432             64,432  
 

Other

    329             329  
                   
   

Total expenses

    170,083     6,378         176,461  
                   

Operating income

    85,198     (6,378 )       78,820  

Interest income

    57             57  

Interest expense

    (99,048 )   (5,876 ) (B)     (104,924 )
                   

Loss before income taxes and reorganization items

    (13,793 )   (12,254 )       (26,047 )

Provision for income taxes

    (588 )           (588 )

Reorganization items

    (9,515 )   9,515   (D)      
                   

Net loss

  $ (23,896 ) $ (2,739 )     $ (26,635 )
                   

Weighted average number of common shares—basic and diluted

                       
                       

Basic and diluted loss per share

              (C)   $    
                       

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ROUSE PROPERTIES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 2011

 
  Historical   Adjustments   Footnotes   Total  
 
  (In thousands)
 

Assets:

                       

Investment in real estate:

                       
 

Land

  $ 299,941   $       $ 299,941  
 

Buildings and equipment

    1,151,602             1,151,602  
 

Less accumulated depreciation

    (41,716 )           (41,716 )
 

Developments in progress

    826             826  
                   
   

Net investment in real estate

    1,410,653             1,410,653  

Cash and cash equivalents

    131     219,297   (E)     219,428  

Accounts and notes receivable, net

    12,403             12,403  

Deferred expenses, net

    21,052             21,052  

Prepaid expenses and other assets

    159,893             159,893  
                   
   

Total assets

  $ 1,604,132   $ 219,297       $ 1,823,429  
                   

Liabilities:

                       

Mortgages, notes and loans payable

  $ 1,066,373   $ 25,320   (E)   $ 1,091,693  

Accounts payable and accrued expenses

    88,429             88,429  
                   
   

Total liabilities

    1,154,802     25,320         1,180,122  
                   

Equity:

                       

GGP equity

    449,330     193,977   (E)     643,307  
                   
   

Total liabilities and equity

  $ 1,604,132   $ 219,297       $ 1,823,429  
                   

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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

A.    Property management and other costs:

        Reflects adjustments for the six months ended June 30, 2011 and the twelve months ended December 31, 2010 related to fees pursuant to a transition services agreement between Rouse and GGP. The agreement provides for various services including accounting, asset management, development, human resources, information technology, leasing, legal, marketing, public reporting and tax. The charges for the services are estimated based on an hourly fee arrangement and pass-through of out-of-pocket costs. In addition, an adjustment related to fees pursuant to a lease agreement at current market rates between Rouse and Brookfield for corporate office space located in New York.

 
  For the
six months ended
June 30, 2011
  For the
twelve months ended
December 31, 2010
 

Transition service agreement

  $ 2,633   $ 5,266  

Operating lease

    556     1,112  
           

Property management and other costs

  $ 3,189   $ 6,378  
           

B.    Interest expense:

        Reflects an adjustment of $(2,431) for the six months ended June 30, 2011 and $(5,876) for the twelve months ended December 31, 2010 related to an increase in interest expense due to the replacement of certain existing debt contemplated in conjunction with the formation of Rouse. This increase in interest expense is primarily related to increased interest rates and an increase in outstanding debt, see note E below.

C.    Pro Forma Earnings and Earnings Per Share:

        Reflects the historical number of GGP weighted average basic and diluted shares outstanding of 945,248,000 for the twelve months ended December 31, 2010 and 952,072,000 for the six months ended June 30, 2011 assuming a distribution ratio of            shares of Rouse common stock for each GGP common share. In addition, includes the issuance of            shares to be issued in our rights offering.

D.    Reorganization items:

        Expenses for all reorganization items have been eliminated as they are related to GGP's emergence from bankruptcy as of November 9, 2010 and such expenses or items would not be recurring.

E.    Capital Structure:

        Reflects an adjustment of $200.0 million as of June 30, 2011 related to the proceeds of the shares expected to be offered in the anticipated rights offering and/or backstop commitment described in this prospectus, net of $6.0 million in anticipated fees and expenses, and a $25.3 million increase to mortgage, notes and loans payable representing a new secured portfolio loan of $400.0 million less the assumed pay down of $374.7 million of mortgages at 13 properties. See "Description of Certain Indebtedness." The pro forma weighted-average interest rate is 5.20% compared to the actual weighted

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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA (Continued)


average interest rate of 4.84% as of June 30, 2011. Due to the fixed nature of the pro forma debt, we do not estimate significant variability in interest rate expense.

 
  June 30, 2011  

Rights offering and/or backstop commitment

  $ 200,000  

Fees

    (6,023 )
       

GGP equity

    193,977  

Mortgages, notes and loans payable

    25,320  
       

Cash and cash equivalents

  $ 219,297  
       

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

        This section contains forward-looking statements that involve risks and uncertainties. Our actual results may vary materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in "Risk Factors" and the matters set forth in this prospectus. See "Cautionary Statement Regarding Forward-Looking Statements."

        All references to numbered Notes are to specific footnotes to our combined financial statements for the six months ended June 30, 2011 (unaudited) and 2010 (unaudited) and the years ended December 31, 2010, 2009 and 2008, as applicable, included in this prospectus. You should read this discussion in conjunction with our combined financial statements, the notes thereto and other financial information included elsewhere in this prospectus. Our financial statements are prepared in accordance with GAAP. Capitalized terms used, but not defined, in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") have the same meanings as in such Notes.


Overview—Introduction

        Our portfolio consists of 30 regional malls in 19 states totaling over 21 million square feet of retail and ancillary space. We are the 8th largest publicly-traded regional mall owner in the United States based on total square footage. We plan to elect to be treated as a REIT, subject to meeting the requirements of a REIT at the time of election, and intend to maintain this status in future periods.

        The majority of the income from our properties is derived from rents received through long-term leases with retail tenants. These long-term leases generally require the tenants to pay base rent which is a fixed amount specified in the lease. The base rent is often subject to scheduled increases during the term of the lease. Our financial statements refer to this as "minimum rents." Certain of our leases also include a component which requires tenants to pay amounts related to all or substantially all of their share of real estate taxes and certain property operating expenses, including common area maintenance and insurance. The revenue earned attributable to real estate tax and operating expense recoveries are recorded as "tenant recoveries." Another component of income is overage rent. Overage rent is paid by a tenant when its sales exceed an agreed upon minimum amount. Overage rent is calculated by multiplying the tenant's sales in excess of the minimum amount by a percentage defined in the lease, the majority of which is typically earned in the fourth quarter.

        Our objective is to achieve high growth in NOI, Core NOI and FFO by leasing, operating and repositioning retail properties with locations that are either market dominant (the only mall within an extended distance to service the trade area) or trade area dominant (positioned to be the premier mall serving the defined regional consumer). We plan to control costs and to deliver an appropriate tenant mix, higher occupancy rates and increased sales productivity, resulting in higher minimum rent.

        We believe our portfolio's lease expiration schedule over the next five years will provide an increase in NOI as the new rental rates will be higher than the expiring rents which are below our portfolio's average effective gross rent per square foot during the recession of the last two years. The increased revenue potential, coupled with an expected increase in overall occupancy, is a cornerstone of our growth model.

        We believe that the most significant operating factor affecting incremental cash flow, NOI, Core NOI and FFO is increased rents earned from tenants at our properties. These rental revenue increases are primarily achieved by:

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Overview—Basis of Presentation

        We were formed in August 2011 for the purpose of holding certain assets and assuming certain liabilities of GGP. Following the distribution of these assets and liabilities to us, we will operate our business as a stand-alone owner and operator of regional malls. The financial information included in this prospectus was carved-out from the financial information of GGP, has been presented on a combined basis as the entities presented are under common control and ownership, and reflects the allocation of certain overhead items within property management and other costs in the accompanying combined financial statements.

        In April 2009, the GGP Debtors filed voluntary petitions for relief under Chapter 11. On the Effective Date, GGP emerged from Chapter 11 bankruptcy after receiving a significant equity infusion from investors and other associated events. As a result of the emergence from bankruptcy and the related equity infusion, the majority of equity in GGP changed ownership, which triggered the application of acquisition accounting to the assets and liabilities of GGP. As a result, the application of acquisition accounting has been applied to the assets and liabilities of Rouse and therefore the financial results presented in this MD&A have been presented separately for the Predecessor and Successor for the year ended December 31, 2010. See Note 1 for additional detail.

        The historical combined financial information included in this prospectus does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly-traded company during the periods presented or those that we will achieve in the future primarily as a result of the following factors:


Results of Operations

        To provide a more meaningful comparison between annual periods, we have aggregated the Predecessor results for 2010 with the Successor 2010 results. The Successor 2010 results reflect the application of acquisition accounting; therefore, the combined results will not be indicative of the results of operations in the Predecessor and Successor periods had they been presented consistently.

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Our revenues are primarily received from tenants in the form of fixed minimum rents, overage rent and tenant recoveries.

        We present NOI and Core NOI in this prospectus as supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. See "—Summary Historical Combined Financial Data" for a discussion of our use of NOI and Core NOI and reconciliations of NOI and Core NOI to operating income.


Six Months Ended June 30, 2011 and 2010

        The following table compares items within net operating income and Core net operating income:

 
  Successor   Predecessor    
   
 
 
  Six Months Ended
June 30,
   
   
 
 
  2011   2010   $ Change   % Change  
 
  (In thousands)
 

Property revenues:

                         
 

Minimum rents

  $ 74,956   $ 86,267   $ (11,311 )   (13.1 )%
 

Tenant recoveries

    35,938     38,203     (2,265 )   (5.9 )
 

Overage rents

    1,762     1,486     276     18.6  
 

Other

    2,698     3,051     (353 )   (11.6 )
                   
   

Total property revenues

    115,354     129,007     (13,653 )   (10.6 )
                   

Property operating expenses:

                         
 

Real estate taxes

    12,114     12,250     (136 )   (1.1 )
 

Property maintenance costs

    6,960     6,111     849     13.9  
 

Marketing

    1,574     1,261     313     24.8  
 

Other property operating costs

    27,591     27,036     555     2.1  
 

Provision for doubtful accounts

    512     1,661     (1,149 )   (69.2 )
                   
   

Total property operating expenses

    48,751     48,319     432     0.9  
                   

Net operating income

  $ 66,603   $ 80,688   $ (14,085 )   (17.5 )%
                   

Net operating income

 
$

66,603
 
$

80,688
 
$

(14,085

)
 
(17.5

)%

Non-cash components of minimum rent:

                         
 

Straight-line rent

    (3,764 )   (673 )   (3,091 )   459.3  
 

Above- and below-market tenant leases, net

    12,650     (321 )   12,971     (4,040.8 )
 

Above- and below market ground rent expense, net

    62         62     100.0  
                   
     

Total non-cash components of minimum rent

    8,948     (994 )   9,942     (1,000.2 )
                   

Core net operating income

  $ 75,551   $ 79,694   $ (4,143 )   (5.2 )%
                   

        Minimum rents include base minimum rents, percent-in-lieu rents, termination income and non-cash revenues such as straight-line rent and amortization of above- and below-market tenant leases. Minimum rents decreased $11.3 million for the six months ended June 30, 2011 compared to 2010 primarily due to a $13.0 million decrease in above-and below-market rent amortization, which was partially offset by a $3.1 million increase in straight-line rent, reflecting the impact of the application of the acquisition method of accounting in the fourth quarter of 2010. In addition, long-term tenant revenues decreased $1.1 million in the six months ended June 30, 2011 compared to 2010.

        Tenant recoveries decreased $2.3 million for the six months ended June 30, 2011 primarily due to a reduction in recoverability ratios at certain properties and a reduction of recoverable expenses, such as marketing and promotional expenses.

        Other revenues include all other property revenues, primarily vending, marketing and promotional revenues.

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        Property maintenance costs increased $0.8 million for the six months ended June 30, 2011 primarily due to increased spending on mall upkeep, including equipment and supplies.

        Other property operating costs increased $0.6 million for the six months ended June 30, 2011 primarily due to an increase in contract services for landscapers, cleaning and security, and professional services.

        The provision for doubtful accounts decreased $1.1 million for the six months ended June 30, 2011 primarily due to improved collections of outstanding accounts receivable in the six months ended June 30, 2011 in addition to the higher allowances in the same period of 2010 related to tenant bankruptcies and weaker economic conditions.


Summary of NOI to FFO

        We present FFO in this prospectus as a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. See "—Summary Historical Combined Financial Data" for a discussion of our use of FFO and a reconciliation of net income (loss) to FFO. The following table reconciles NOI and FFO with net (loss) income:

 
  Successor   Predecessor    
   
 
 
  Six Months Ended
June 30,
   
   
 
 
  2011   2010   $ Change   % Change  
 
  (In thousands)
 

Net operating income

  $ 66,603   $ 80,688   $ (14,085 )   (17.5 )%

Property management and other costs

    (5,726 )   (3,602 )   (2,124 )   59.0  

Other

    78         78     100.0  

Depreciation and amortization

    (38,486 )   (30,102 )   (8,384 )   27.9  
                   
 

Operating income

    22,469     46,984     (24,515 )   (52.2 )
                   

Interest income

    8     3     5     166.7  

Interest expense

    (35,322 )   (43,546 )   8,224     (18.9 )

Provision for income taxes

    (288 )   (290 )   2     (0.7 )

Reorganization items

        9,036     (9,036 )   (100.0 )
                   
 

Net (loss) income

  $ (13,133 ) $ 12,187   $ (25,320 )   (207.8 )

Depreciation and amortization

    38,486     30,102     8,384     27.9  
                   
 

FFO

  $ 25,353   $ 42,289   $ (16,936 )   (40.1 )%
                   

        Property management and other costs increased $2.1 million for the six months ended June 30, 2011 primarily due to an increase in overhead costs allocated to the properties.

        Other for the six months ended June 30, 2011 includes the reversal of previously accrued bankruptcy costs and gains on settlements, which were partially offset by post-emergence costs.

        Depreciation and amortization increased $8.4 million for the six months ended June 30, 2011 primarily due to the impact of the application of the acquisition method of accounting in the fourth quarter of 2010.

        Net interest expense decreased $8.2 million for the six months ended June 30, 2011 primarily due to a $5.9 million reduction of amortization of the market rate adjustments related to the fair value of debt primarily associated with a decrease in market rate adjustments at Mall St. Vincent and Southland Center, partially offset by increases of market rate adjustments and amortization of certain other properties. In addition, interest expense decreased $2.3 million primarily due to the repayment of debt for Mall St. Vincent and Southland Center on April 25, 2011.

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        Reorganization items under the bankruptcy filings are expense or income items that were incurred or realized in connection with the bankruptcy of the GGP Debtors. These items include professional fees and similar types of expenses incurred that are directly related to the bankruptcy filings, gains or losses resulting from activities of the reorganization process, including gains related to recording the mortgage debt at fair value upon emergence from bankruptcy and interest earned on cash accumulated by the GGP Debtors. See Note 1 for additional detail. Bankruptcy-related items incurred after the Effective Date are reported within other expense.


Year Ended December 31, 2010 and 2009

        The following table compares items within net operating income:

 
  Twelve Months Ended December 31    
   
 
 
  2010   2009    
   
 
 
  Successor   Predecessor    
  Predecessor    
   
 
 
  Period from
November 10
through
December 31
  Period from
January 1
through
November 9
  Year Ended
December 31
  Year ended
December 31
  $ Change   % Change  
 
  (In thousands)
 

Property revenues:

                                     
 

Minimum rents

  $ 22,751   $ 147,403   $ 170,154   $ 184,330   $ (14,176 )   (7.7 )%
 

Tenant recoveries

    9,498     64,387     73,885     80,511     (6,626 )   (8.2 )
 

Overage rents

    1,736     2,862     4,598     4,406     192     4.4  
 

Other

    1,555     5,089     6,644     6,985     (341 )   (4.9 )
                           
   

Total property revenues

    35,540     219,741     255,281     276,232     (20,951 )   (7.6 )
                           

Property operating expenses:

                                     
 

Real estate taxes

    3,046     20,595     23,641     24,590     (949 )   (3.9 )
 

Property maintenance costs

    2,017     10,517     12,534     12,269     265     2.2  
 

Marketing

    1,383     2,356     3,739     3,452     287     8.3  
 

Other property operating costs

    8,072     46,333     54,405     55,337     (932 )   (1.7 )
 

Provision for doubtful accounts

    378     2,253     2,631     2,659     (28 )   (1.1 )
                           
   

Total property operating expenses

    14,896     82,054     96,950     98,307     (1,357 )   (1.4 )
                           

Net operating income

  $ 20,644   $ 137,687   $ 158,331   $ 177,925   $ (19,594 )   (11.0 )%
                           

Net operating income

  $ 20,644   $ 137,687   $ 158,331   $ 177,925   $ (19,594 )   (11.0 )%

Non-cash components of minimum rent:

                                     
 

Straight-line rent

    (98 )   137     39     80     (41 )   (51.3 )
 

Above- and below-market tenant leases, net

    3,793     (688 )   3,105     (468 )   3,573     (763.5 )
 

Above- and below-market ground rent expense, net

    18         18         18     100.0  
                           
   

Total non-cash components of minimum rent

    3,713     (551 )   3,162     (388 )   3,550     (915.0 )
                           
 

Core net operating income

  $ 24,357   $ 137,136   $ 161,493   $ 177,537   $ (16,044 )   (9.0 )%
                           

        Minimum rents include base minimum rents, percent-in-lieu rents, termination income and non-cash revenues such as straight-line rent and amortization of above- and below-market tenant leases. Minimum rents decreased $14.2 million for the year ended December 31, 2010 compared to

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2009 primarily due to a $8.8 million decrease in long-term tenant revenues, a $1.7 million decrease in temporary rental revenues, and a $3.6 million decrease in above- and below-market rent amortization reflecting the impact of the application of the acquisition method of accounting in the fourth quarter of 2010. In addition, termination income decreased $0.7 million to $0.9 million for the year ended December 31, 2010 compared to $1.6 million for the year ended December 31, 2009. These decreases were partially offset by a $1.0 million increase in percent in lieu income.

        Tenant recoveries for the year ended December 31, 2010 as compared to the year ended December 31, 2009 decreased $6.6 million primarily due to the conversion of certain tenants to gross leases. In addition, recoveries related to marketing and promotional revenue decreased $0.8 million for the year ended December 31, 2010 compared to the year ended December 31, 2009.

        Other revenues include all other property revenues, primarily vending, marketing and promotional revenues.

        Real estate taxes decreased $0.9 million for the year ended December 31, 2010 primarily due to significant savings at two properties.

        Other property operating costs decreased $0.9 million due to a decrease in utility expense at three properties, and was partially offset by an increase in landscaping, cleaning and security costs.


Summary of NOI to FFO

        The following table reconciles items below with net operating income:

 
  Twelve Months Ended December 31    
   
 
 
  2010   2009    
   
 
 
  Successor   Predecessor    
  Predecessor    
   
 
 
  Period from
November 10
through
December 31
  Period from
January 1
through
November 9
  Year Ended
December 31
  Year Ended
December 31
  $ Change   % Change  
 
  (In thousands)
 

Net operating income

  $ 20,644   $ 137,687   $ 158,331   $ 177,925   $ (19,594 )   (11.0 )%

Property management and other costs

    (1,703 )   (6,669 )   (8,372 )   (7,282 )   (1,090 )   15.0  

Other

    (313 )   (16 )   (329 )       (329 )   (100 )

Strategic initiatives

                (4,471 )   4,471     (100.0 )

Provisions for impairment

                (81,854 )   81,854     (100.0 )

Depreciation and amortization

    (11,019 )   (53,413 )   (64,432 )   (74,193 )   9,761     (13.2 )
                           
 

Operating income

    7,609     77,589     85,198     10,125     75,073     741.5  
                           

Interest income

    1     56     57     18     39     216.7  

Interest expense

    (10,394 )   (88,654 )   (99,048 )   (72,089 )   (26,959 )   37.4  

Provision for income taxes

    (82 )   (506 )   (588 )   (877 )   289     (33.0 )

Reorganization items

        (9,515 )   (9,515 )   32,671     (42,186 )   (129.1 )
                           
 

Net loss

  $ (2,866 ) $ (21,030 ) $ (23,896 ) $ (30,152 ) $ 6,256     (20.8 )

Depreciation and amortization

    11,019     53,413     64,432     74,193     (9,761 )   (13.2 )
                           
 

FFO

  $ 8,153   $ 32,383   $ 40,536   $ 44,041   $ (3,505 )   (8.0 )%
                           

        Property management and other costs increased $1.1 million for the year ended December 31, 2010 primarily due to an increase in overhead costs allocated to the properties.

        Strategic initiatives for the year ended December 31, 2009 is primarily due to the allocation of professional fees for restructuring that were incurred prior to filing for Chapter 11 protection. Similar fees incurred after filing for Chapter 11 protection are recorded as reorganization items.

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        Other for the year ended December 31, 2010 included the reversal of previously accrued bankruptcy costs and gains on settlements, which were partially offset by post-emergence costs.

        We recorded impairment charges of $81.9 million for the year ended December 31, 2009 due to the results of our evaluations for impairment (Note 1). These impairment charges consisted of $75.8 million related to five operating properties, $4.7 million related to goodwill and $1.4 million related to the write-off of non-recoverable development costs as certain previously planned or proposed projects terminated in 2009.

        The decrease in depreciation and amortization of $9.8 million primarily resulted from the decrease in the carrying amount of building and equipment due to the impairment charges recorded in 2009.

        Net interest expense changed $27.0 million for the year ended December 31, 2010 primarily due to the amortization of the market rate adjustments related to the fair value of debt upon the emergence of certain GGP Debtors from Chapter 11.

        Reorganization items changed $42.2 million for the year ended December 31, 2010 compared to 2009. Professional fees and other expenses related to the bankruptcy increased $29.1 million for the year ended December 31, 2010 as the Plan was developed and finalized. In addition, gains recognized subject to compromise decreased $13.6 million as properties emerged from bankruptcy in 2009 and 2010.


Year Ended December 31, 2009 and 2008

        The following table compares items within net operating income:

 
  Year Ended December 31,    
   
 
 
  Predecessor   Predecessor    
   
 
 
  2009   2008   $ Change   % Change  
 
  (In thousands)
 

Property revenues:

                         
 

Minimum rents

  $ 184,330   $ 204,783   $ (20,453 )   (10.0 )%
 

Tenant recoveries

    80,511     89,665     (9,154 )   (10.2 )
 

Overage rents

    4,406     5,840     (1,434 )   (24.6 )
 

Other

    6,985     8,468     (1,483 )   (17.5 )
                   
   

Total property revenues

    276,232     308,756     (32,524 )   (10.5 )
                   

Property operating expenses:

                         
 

Real estate taxes

    24,590     24,236     354     1.5  
 

Property maintenance costs

    12,269     11,584     685     5.9  
 

Marketing

    3,452     5,005     (1,553 )   (31.0 )
 

Other property operating costs

    55,337     60,567     (5,230 )   (8.6 )
 

Provision for doubtful accounts

    2,659     1,836     823     44.8  
                   
   

Total property operating expenses

    98,307     103,228     (4,921 )   (4.8 )
                   

Net operating income

  $ 177,925   $ 205,528   $ (27,603 )   (13.4 )%
                   

Net operating income

  $ 177,925   $ 205,528   $ (27,603 )   (13.4 )%

Non-cash components of minimum rent:

                         
 

Straight-line rent

    80     (595 )   675     (113.5 )
 

Above- and below-market tenant leases, net

    (468 )   1,367     (1,835 )   (134.2 )
                   
   

Total non-cash components of minimum rent

    (388 )   772     (1,160 )   (150.3 )
                   

Core net operating income

  $ 177,537   $ 206,300   $ (28,763 )   (13.9 )%
                   

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        Minimum rents decreased $20.5 million for the year ended December 31, 2009 primarily due to a $16.4 million decrease in long-term tenant revenues and a $4.7 million decrease in temporary rental revenues, both resulting from a decrease in tenant occupancy for the year ended December 31, 2009. In addition, the straight line rent adjustment increased $0.7 million for the year ended December 31, 2009 and termination income decreased $3.1 million to $1.6 million for the year ended December 31, 2009 compared to $4.7 million for the year ended December 31, 2008. Partially offsetting these decreases is increased percent in lieu revenue of $2.4 million as we entered into percent in lieu leases with tenants who may have difficulty in making their fixed rent payments due to deteriorating economic conditions. Lastly, above and below market accretion increased $1.8 million.

        The decrease in tenant recoveries of $9.2 million is primarily attributable to the decrease in certain property operating expenses, the decline in occupancy and tenants converting to gross leases in 2009.

        The $1.4 million decrease in overage rent was primarily due to a decrease in comparable tenant sales as a result of the challenging economic environment during 2009 impacting many of our tenants throughout our portfolio.

        Other revenues include all other property revenues primarily vending, marketing and promotional revenue. The decrease of $1.5 million is primarily attributable to lower sponsorship, show and display revenue in the year ended 2009.

        Marketing expenses decreased $1.6 million in the year ended 2009 as a result of continued company-wide efforts to consolidate marketing functions and reduce advertising spending. The largest savings were the result of reductions in advertising costs, contract services and payroll.

        Other property operating costs decreased $5.2 million for the year ended 2009 primarily due to reductions in property specific payroll costs, professional fees, decreased security expense, lower insurance costs, and lower office expenses due to our 2009 implementation of cost savings programs.

        The provision for doubtful accounts increased $0.8 million for the year ended December 31, 2009 due to an increase in tenant bankruptcies and increased aging of tenant receivables resulting from the economic conditions.


Summary of NOI to FFO

        The following table reconciles items below with net operating income:

 
  Year Ended December 31,    
   
 
 
  Predecessor   Predecessor    
   
 
 
  2009   2008   $ Change   % Change  
 
  (in thousands)
 

Net operating income

  $ 177,925   $ 205,528   $ (27,603 )   (13.4 )%

Property management and other costs

    (7,282 )   (6,601 )   (681 )   10.3  

Strategic initiatives

    (4,471 )   (213 )   (4,258 )   1,999.1  

Provisions for impairment

    (81,854 )   (5,941 )   (75,913 )   1,277.8  

Depreciation and amortization

    (74,193 )   (67,689 )   (6,504 )   9.6  
                   
 

Operating income

    10,125     125,084     (114,959 )   (91.9 )
                   

Interest income

    18     78     (60 )   (76.9 )

Interest expense

    (72,089 )   (75,605 )   3,516     (4.7 )

Provision for income taxes

    (877 )   (467 )   (410 )   87.8  

Reorganization items

    32,671         32,671     100.0  
                   
 

Net (loss) income

    (30,152 )   49,090     (79,242 )   (161.4 )

Depreciation and amortization

    74,193     67,689     6,504     9.6  
                   
 

FFO

  $ 44,041   $ 116,779   $ (72,738 )   (62.3 )%
                   

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        Property management and other costs increased $0.7 million for the year ended December 31, 2009 primarily due to an increase in overhead costs allocated to the properties.

        Strategic initiatives for the year ended December 31, 2009 is primarily due to the allocation of professional fees for restructuring that were incurred prior to filing for Chapter 11 protection. Similar fees incurred after filing for Chapter 11 protection are recorded as reorganization items.

        We recorded impairment charges of $81.9 million for the year ended December 31, 2009 due to the results of our evaluations for impairment (Note 1). These impairment charges consisted of $75.8 million related to five operating properties, $4.7 million related to goodwill and $1.4 million to write-off non-recoverable development costs as certain previously planned or proposed projects terminated in 2009.

        Depreciation and amortization expense increased $6.5 million related to accelerated depreciation due to the write-off of tenant allowances.

        The decrease in net interest expense of $3.5 million related to a decrease in mortgage interest of $6.5 million due to a decrease in variable rate debt on certain properties and the pay-down of the Chula Vista Mall loan. These decreases were partially offset by amortization of deferred financing expense of $3.4 million, predominantly related to the pay-down of the Chula Vista Mall loan in 2008.

        The provision for income taxes in 2009 was primarily due to an increase in the state income taxes related to our properties located in Texas.

        Reorganization items in the amount of $32.7 million were recorded in 2009. Gains on liabilities recognized subject to compromise increased $49.3 million due to the settlement of obligations during bankruptcy and were partially offset by the increase in professional fees and other expenses related to the bankruptcy of $16.3 million for the year ended December 31, 2009 as GGP was not in bankruptcy proceedings in 2008.


Liquidity and Capital Resources

        Our primary uses of cash are expected to include payment of operating expenses, working capital, debt repayment, including principal and interest, reinvestment in properties, development and redevelopment of properties, tenant allowance, dividends and restructuring costs.

        Our primary sources of cash are expected to be operating cash flow, borrowings under our senior revolving credit facility, borrowings under our subordinated revolving credit facility and the proceeds of our anticipated rights offering as described under "—Expected Financings" below.

        The successful execution of our business strategy will require the availability of substantial amounts of operating and development capital both initially and over time. Sources of such capital could include bank, life insurance company, pension plan or institutional investor borrowings, public and private offerings of debt or equity, sale of certain assets and joint ventures. We have identified opportunities to invest significant capital (approximately $230 million by the end of 2015) to reposition and refresh certain of our properties, but we will sequence long-term redevelopment projects with leasing activity. We believe these capital investments will assist in increasing our revenues significantly and deliver solid net operating income growth over the medium term, and we are targeting improved occupancy rates of over 93% (consistent with historical levels) and annual net operating income of over $200 million by the end of 2015. For a discussion of factors that could have an impact on our ability to realize these goals, see "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements."

        As of June 30, 2011, our combined contractual debt, excluding non-cash debt market rate adjustments, was approximately $1.13 billion on a historical basis and approximately $1.16 billion on a pro forma basis to give effect to the transactions described in this prospectus. Our expected aggregate

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principal and interest payments on our outstanding indebtedness as of the completion of the spin-off are expected to be approximately $39.6 million in 2011 and approximately $95.0 million in 2012.

        We believe that cash generated from operations, together with amounts available under our subordinated revolving credit facility and the funds raised by this offering will be sufficient to permit us to meet our debt service obligations, ongoing cost of operations, working capital needs, distribution requirements and capital expenditure requirements for at least the next 12 months. Our future financial and operating performance, ability to service or refinance our debt and ability to comply with the covenants and restrictions contained in our debt agreements will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. See "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements."

Expected Financings

        Senior Secured Credit Facility.    We intend to enter into a three year senior secured credit facility with a syndicate of banks that will provide borrowings on a revolving basis of up to $50.0 million, which is expected to be undrawn on the closing date, and a senior secured term loan that will provide an advance of approximately $400.0 million on the closing date. We intend to use the proceeds of the term loan facility to refinance certain mortgage debt that will not be assumed by us in connection with the separation and to pay other transaction fees and expenses. The senior secured credit facility will contain a number of covenants that, among other things, limit or restrict our ability to incur indebtedness and liens on the mortgage collateral; negative pledges; subsidiary distributions; with respect to the Mortgage Collateral, limitations on our ability to enter into transactions relating to mergers, consolidations, sales of assets for less than fair market value and similar transactions; conduct of business; restricted distributions; transactions with affiliates; and limitation on speculative hedge agreements. In addition, we will be required to comply with three financial maintenance covenants: (1) a net indebtedness to value ratio, (2) a liquidity covenant, and (3) a minimum fixed charge coverage ratio. See "Description of Certain Indebtedness—Senior Secured Credit Facility." Failure to comply with the financial covenants in the senior secured credit facilities could result in a default under the credit agreement governing these facilities and, absent a waiver or an amendment from our lenders, permit the acceleration of all outstanding borrowings under the senior secured credit facilities. Any such default may result in the cross-default of our other indebtedness. See "Risk Factors—Our debt obligations and ability to comply with related covenants could impact our financial condition or future operating results."

        Subordinated Revolving Credit Facility.    To support our future liquidity needs, prior to the spin-off, we expect to enter into a credit agreement with Brookfield, as lender, for a $100 million subordinated revolving credit facility. The terms of this facility, once determined, will be more fully described in an amendment to this prospectus.

        Rights Offering.    We are also conducting this $200 million rights offering to support our future liquidity needs. In order to ensure that we receive $200 million in gross proceeds, we expect to enter into a backstop commitment with Brookfield, pursuant to which Brookfield will agree (i) to purchase its pro-rata share of the rights offering and (ii) to purchase any remaining shares that are not subscribed for upon completion of the rights offering at the rights offering price. We will be subject to customary indemnification obligations and Brookfield's obligation to purchase the shares will be subject to customary closing conditions, including no material adverse change with respect to our business and operations having occurred. We expect that Brookfield's commitment to backstop the rights offering will expire on                        .

        We cannot assure you that the financing transactions described above or any other financing will be available on terms acceptable to us or at all. See "Risk Factors—Risks Related to our Business—We may face potential difficulties in obtaining operating and development capital."

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Summary of Cash Flows

Six Months Ended June 30, 2011 and 2010

Cash Flows from Operating Activities

        Net cash provided by operating activities was $41.5 million for the six months ended June 30, 2011 and $25.4 million for the six months ended June 30, 2010. This increase is primarily due to reorganization costs incurred during 2010. Net cash (used in) provided by certain assets and liabilities, including accounts and notes receivable, prepaid expenses and other assets, deferred expenses, and accounts payable and accrued expenses totaled $(3.8) million for the six months ended June 30, 2011 and $(9.7) million for the six months ended June 30, 2010.


Cash Flows from Investing Activities

        Net cash used in investing activities was $9.7 million for the six months ended June 30, 2011 and $2.7 million for the six months ended June 30, 2010. Cash used for acquisition/development of real estate and property additions/improvements was $9.6 million and $2.6 million for the six months ended June 30, 2011 and 2010, respectively.


Cash Flows from Financing Activities

        Net cash used in financing activities was $33.5 million for the six months ended June 30, 2011 and $22.7 million for the six months ended June 30, 2010. Principal payments exceeded new financing by $154.1 million and $18.4 million for the six months ended June 30, 2011 and 2010, respectively. In addition, we received contributions from GGP of $120.7 million for the six months ended June 30, 2011 and $6.8 million for the six months ended June 30, 2010.


Years Ended December 31, 2010, 2009 and 2008

Cash Flows from Operating Activities

        Net cash provided by operating activities was $7.4 million for the period from November 10, 2010 through December 31, 2010, $41.1 million for the period from January 1, 2010 through November 9, 2010, $85.7 million for the year ended December 31, 2009, and $113.9 million for the year ended December 31, 2008.

        Net cash (used in) provided by certain assets and liabilities, including accounts and notes receivable, prepaid expense and other assets, deferred expenses, and accounts payable and accrued expenses totaled $7.4 million for the period from November 10, 2010 through December 31, 2010, $(20.8) million for the period from January 1, 2010 through November 9, 2010, $(14.2) million in 2009, and $(13.4) million in 2008. Accounts payable and accrued expenses increased $2.6 million from November 10, 2010 through December 31, 2010. Such accounts decreased by $21.2 million from January 1, 2010 through November 9, 2010, decreased by $5.0 million during the year ended December 31, 2009, and decreased $4.6 million during the year ended December 31, 2008. In addition, accounts and notes receivable decreased by $3.4 million from November 10, 2010 through December 31, 2010, and increased $2.0 million from January 1, 2010 through November 9, 2010. Such accounts increased by $2.2 million during the year ended December 31, 2009 and increased $0.3 million during the year ended December 31, 2008.


Cash Flows from Investing Activities

        Net cash used in investing activities was $14.3 million from November 10, 2010 through December 31, 2010, $9.2 million from January 1, 2010 through November 9, 2010, $8.2 million during the year ended December 31, 2009, and $21.3 million for the year ended December 31, 2008. Cash

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used for acquisition/development of real estate and property additions/improvements was $14.3 million from November 10, 2010 through December 31, 2010, $9.2 million from January 1, 2010 through November 9, 2010, $8.3 million for the year ended December 31, 2009, and $20.3 million for the year ended December 31, 2008.


Cash Flows from Financing Activities

        Net cash provided by (used in) financing activities was $2.3 million from November 10, 2010 through December 31, 2010, $(25.8) million from January 1, 2010 through November 9, 2010, $(77.5) million for the year ended December 31, 2009, and $(92.5) million for the year ended December 31, 2008.

        Principal payments exceeded new financings by $2.6 million from November 10, 2010 through December 31, 2010, and $44.8 million from January 1, 2010 through November 9, 2010 and $53.0 million during the year ended December 31, 2009. Whereas, new financings exceeded principal payments by $109.5 million for the year ended December 31, 2008.


Contractual Cash Obligations and Commitments

        The following table aggregates our contractual cash obligations and commitments as of December 31, 2010:

 
  2011   2012   2013   2014   2015   Subsequent/
Other
  Total  

Long-term debt-principal(1)

  $ 128,337   $ 29,229   $ 85,098   $ 324,980   $ 24,730   $ 692,150   $ 1,284,524  

Interest payments(2)

    60,296     57,160     54,919     42,575     33,475     28,693     277,118  
                               

Total

  $ 188,633   $ 86,389   $ 140,017   $ 367,555   $ 58,205   $ 720,843   $ 1,561,642  
                               

(1)
Excludes $67.7 million of non-cash debt market rate adjustments.

(2)
Based on rates as of December 31, 2010. Variable rates are based on a LIBOR rate of 0.26%. Excludes $18.1 million of amortization of non-cash debt market rate adjustments.


Estimated Pro Forma Cash Obligations and Commitments as of June 30, 2011

        The following table aggregates our estimated subsequent contractual cash obligations and commitments as if the transaction had occurred on June 30, 2011:

 
  2011   2012   2013   2014   2015   Subsequent/
Other
  Total  
 
  (in thousands)
 

Long-term debt-principal(1)

  $ 9,142   $ 35,017   $ 89,539   $ 631,602   $ 15,565   $ 376,403   $ 1,157,268  

Interest payments(2)

    30,472     59,901     57,551     36,518     21,773     21,756     227,971  

Operating lease obligation

    538     1,076     1,076     1,076     1,076     6,273     11,115  
                               

Total

  $ 40,152   $ 95,994   $ 148,166   $ 669,196   $ 38,414   $ 404,432   $ 1,396,354  
                               

(1)
Excludes $65.6 million of non-cash debt market rate adjustments.

(2)
Based on rates as of June 30, 2011. Variable rates are based on LIBOR rate of 0.19%. Excludes $14.3 million of amortization of non-cash debt market rate adjustments.

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        In the normal course of business, from time to time, we are involved in legal proceedings relating to the ownership and operations of our properties. See "Business—Legal Proceedings."

        We lease land or buildings at certain properties from third parties. The leases generally provide us with a right of first refusal in the event of a proposed sale of the property by the landlord. Rental payments are expensed as incurred and have, to the extent applicable, been straight-lined over the term of the lease.


Off-Balance Sheet Financing Arrangements

        We do not have any off-balance sheet financing arrangements.


REIT Requirements

        In order to qualify as a real estate investment trust for federal income tax purposes, among other requirements, we must distribute or pay tax on 100% of our capital gains and we must distribute at least 90% of our ordinary taxable income to stockholders. To avoid current entity level U.S. federal income taxes, we plan to distribute 100% of our capital gains and ordinary income to our stockholders annually. We may not have sufficient liquidity to meet these distribution requirements. We have no present intention to pay any dividends on our common stock in the future other than in order to maintain our REIT status, which dividends our board of directors may decide to pay in the form of cash, common stock or a combination of cash and common stock.


Seasonality

        Although we have a year-long temporary leasing program, occupancies for short-term tenants and, therefore, rental income recognized, are higher during the second half of the year. In addition, the majority of our tenants have December or January lease years for purposes of calculating annual overage rent amounts. Accordingly, overage rent thresholds are most commonly achieved in the fourth quarter. As a result, revenue production is generally highest in the fourth quarter of each year.


Use of Estimates

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. For example, significant estimates and assumptions have been made with respect to: fair value (as defined below) of assets for measuring impairment of operating properties, development projects and goodwill; valuation of our debt, useful lives of assets; capitalization of development and leasing costs; recoverable amounts of receivables; and initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions. Actual results could differ from those estimates.


Critical Accounting Policies

        Critical accounting policies are those that are both significant to the overall presentation of our financial condition and results of operations and require management to make difficult, complex or subjective judgments. Our critical accounting policies are those applicable to the following:


Acquisition Adjustments

        The acquisition method of accounting has been applied to the assets and liabilities of the Successor to reflect GGP's plan of reorganization (the "Plan"). The acquisition method of accounting adjustments recorded on the Effective Date reflects the allocation of the estimated purchase price as

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presented in Note 3. Such adjustments reflect the amounts required to adjust the carrying values of our assets and liabilities, after giving effect to the transactions pursuant to the Plan, to the fair values of such remaining assets and liabilities, with the offset to common equity, as provided by the acquisition method of accounting.


Classification of Liabilities Subject to Compromise

        Liabilities not subject to compromise at December 31, 2009 included: (1) liabilities held by entities not in bankruptcy and entities that emerged from bankruptcy; (2) liabilities incurred after the Petition Date; (3) pre-petition liabilities that entities remaining in bankruptcy at such date expect to pay in full; and (4) liabilities related to pre-petition contracts that have not been rejected pursuant to section 365 of the Bankruptcy Code. Unsecured liabilities not subject to compromise at December 31, 2009 with respect to the entities that emerged were reflected at the current estimate of the probable amounts to be paid even though the amounts of such unsecured liabilities ultimately to be allowed by the Bankruptcy Court (and therefore paid at 100% pursuant to the various affective plans of reorganization) had not yet been determined. With respect to secured liabilities, GAAP bankruptcy guidance provides that mortgage loans for entities that emerged should be recorded at their estimated fair value.


Impairment—Operating Properties and Developments in Progress

        We review our real estate assets, including operating properties and developments in progress, for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

        Impairment indicators are assessed separately for each property and include, but are not limited to, significant decreases in real estate property net operating income, significant occupancy percentage changes and strategic determinations as reflected in certain bankruptcy plans of reorganization, either prospective, or filed and confirmed.

        Impairment indicators for pre-development costs, which are typically costs incurred during the beginning stages of a potential development, and developments in progress are assessed by project and include, but are not limited to, significant changes in projected completion dates, revenues or cash flows, development costs, market factors and sustainability of development projects.

        If an indicator of potential impairment exists, the asset is tested for recoverability by comparing its carrying amount to the estimated future undiscounted operating cash flow. A real estate asset is considered to be impaired when its carrying amount cannot be recovered through estimated future undiscounted cash flows. To the extent an impairment provision is necessary, the excess of the carrying amount of the asset over its estimated fair value (the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants of the measurement date) is expensed to operations. In addition, the impairment is allocated proportionately to adjust the carrying amount of the asset. The adjusted carrying amount, which represents the new cost basis of the asset, is depreciated over the remaining useful life of the asset.


Recoverable Amounts of Receivables

        We make periodic assessments of the collectibility of receivables (including those resulting from the difference between rental revenue recognized and rents currently due from tenants) based on a specific review of the risk of loss on specific accounts or amounts. The receivable analysis places particular emphasis on past-due accounts and considers the nature and age of the receivables, the payment history and financial condition of the payee, the basis for any disputes or negotiations with the payee and other information which may impact collectibility. For straight-line rents receivable, the analysis considers the probability of collection of the unbilled deferred rent receivable given our

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experience regarding such amounts. The resulting estimates of any allowance or reserve related to the recovery of these items is subject to revision as these factors change and is sensitive to the effects of economic and market conditions on such payees.


Capitalization of Development and Leasing Costs

        We capitalize the costs of development and leasing activities of our properties. These costs are incurred both at the property location and at the regional and corporate office levels. The amount of capitalization depends, in part, on the identification and justifiable allocation of certain activities to specific projects and leases. Differences in methodologies of cost identification and documentation, as well as differing assumptions as to the time incurred on projects, can yield significant differences in the amounts capitalized and, as a result, the amount of depreciation recognized.


Revenue Recognition and Related Matters

        Minimum rent revenues are recognized on a straight-lined basis over the terms of the related leases. Minimum rent revenues also include amounts collected from tenants to allow the termination of their leases prior to their scheduled termination dates and accretion related to above and below-market tenant leases on acquired properties. Straight-line rents receivable represents the current net cumulative rents recognized prior to when billed and collectible as provided by the terms of the leases. Overage rent is recognized on an accrual basis once tenant sales exceed contractual tenant lease thresholds. Recoveries from tenants are established in the leases or computed based upon a formula related to real estate taxes, insurance and other shopping center operating expenses and are generally recognized as revenues in the period the related costs are incurred.


Recently Issued Accounting Pronouncements and Developments

        As described in the notes to the combined financial statements, new accounting pronouncements have been issued which are effective for the current or subsequent year.


Economy and Inflation

        Substantially all of our tenant leases contain provisions designed to partially mitigate the negative impact of inflation. Such provisions include clauses enabling us to receive overage rent based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. In addition, many of the leases expire each year which may enable us to replace or renew such expiring leases with new leases at higher rents. Finally, many of the existing leases require the tenants to pay amounts related to all, or substantially all, of their share of certain operating expenses, including CAM, real estate taxes and insurance, thereby partially reducing our exposure to increases in costs and operating expenses resulting from inflation. In general, these amounts either vary annually based on actual expenditures or are set on an initial share of costs with provisions for annual increases.

        Inflation also poses a risk to us due to the probability of future increases in interest rates. Such increases would adversely impact us due to our outstanding variable-rate debt. In certain cases, we have previously limited our exposure to interest rate fluctuations related to a portion of our variable-rate debt by the use of interest rate cap and swap agreements. Such agreements, subject to current market conditions, allow us to replace variable-rate debt with fixed-rate debt in order to achieve our desired ratio of variable-rate to fixed-rate debt. However, in an increasing interest rate environment the fixed rates we can obtain with such replacement fixed-rate cap and swap agreements or the fixed-rate on new debt will also continue to increase.

        The real estate industry continues to recover from the recent recession and difficult capital market and retail environments. There have been some positive signs in the industry, despite continued high

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unemployment and uncertainty as to when the economy will fully recover. Although a number of regional and national retailers have announced store closings or filed for bankruptcy in 2009, 2010 and 2011, those numbers have not been significantly higher than in previous years and have not had a material impact on our overall operations.


Quantitative and Qualitative Disclosures about Market Risk

        We are subject to market risk associated with changes in interest rates both in terms of variable-rate debt and the price of new fixed-rate debt upon maturity of existing debt. As of December 31, 2010, we had consolidated debt of $1.22 billion, including $336.1 million of variable-rate debt. A 25 basis point movement in the interest rate on the variable-rate debt would result in a $0.8 million annualized increase or decrease in consolidated interest expense and operating cash flows.

        We are further subject to interest rate risk with respect to our fixed-rate financing in that changes in interest rates will impact the fair value of our fixed-rate financing. For additional information concerning our debt, and management's estimation process to arrive at a fair value of our debt as required by GAAP, reference is made to Item 7, the discussion of Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes 2 and 6. At December 31, 2010, the fair value of our consolidated debt has been estimated for this purpose to be $61.5 million higher than the carrying amount of $1.22 billion.

        We have not entered into any transactions using derivative commodity instruments.

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BUSINESS

        Our mission is to own and manage dominant Class B regional malls in secondary and tertiary markets, and to reposition Class B regional malls in primary markets. We plan to increase the value of our properties by executing tailored business plans designed to improve their operating performance. We believe that the creation of an employee-focused organization with dedicated capital will create high risk-adjusted returns for our stockholders.

        Our portfolio consists of 30 regional malls in 19 states totaling over 21 million square feet of retail and ancillary space. We are the 8th largest publicly-traded regional mall owner in the United States based on total square footage. We actively manage all of our properties, performing the day-to-day functions, operations, leasing, maintenance, marketing and promotional services. Our platform is national in scope and we believe it positions us to capitalize on existing department store and broad in-line retailer relationships across our portfolio.

        Our malls are anchored by operators across the retail spectrum, including departments stores such as Macy's, JC Penney, Sears, Dillard's, Walmart and Target; mall shop tenants like Hollister, Victoria's Secret, Bath & Body Works, Aeropostale, American Eagle, Children's Place, Gap/Old Navy, Footlocker, Maurices and Forever 21; restaurants ranging from food court leaders like Sarku Japan, Panda Express and Chick Fil A; best in class fast-casual chains like Chipotle, Panera Bread and Starbucks; and proven sit down restaurants including On The Border, Buffalo Wild Wings, Red Robin and multiple Darden concepts.

        Our portfolio is also balanced, with no single tenant representing more than 4% of our total revenue in 2010.

        We plan to elect to be treated as a REIT in connection with the filing of our federal income tax return for the 2011 taxable year, subject to our ability to meet the requirements of a REIT at the time of election, and we intend to maintain this status in future periods.


Competitive Strengths

        We believe that we can distinguish ourselves through the following competitive strengths:

        Size and Geographic Scope.    We have a nationally diversified mall portfolio totaling over 21 million square feet, and we are one of the top 10 regional mall owners in the United States, based on total square footage. The map below illustrates the locations of each of our properties.

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GRAPHIC

        Strategic Relationships with Tenants.    Our operations are national in scope and we have relationships with a wide range of tenants, which include anchor stores, sit-down restaurants, movie theatres, national in-line tenants and local retailers. We believe that these relationships provide us with a competitive advantage.

        Experienced Operational Management Team.    Our operational management team includes experienced members of GGP's former operational management team who have been intimately involved with our mall properties. Our executive management team has an average of 24 years of experience in the real estate industry and members of our leasing team have an average of 14 years of leasing experience. Prior to joining Rouse, our Chief Operating Officer, Michael McNaughton, served as GGP's Executive Vice President of Asset Management. Mr. McNaughton has over 22 years of experience in the retail real estate industry and has extensive experience implementing value add and asset repositioning strategies. Brian Harper, our Executive Vice President of Leasing, has over 13 years of experience in the retail real estate industry, including work with ground up development, asset repositions, distressed real estate and leasing. Brian Jenkins, our Executive Vice President of Development, has over 25 years of retail real estate experience and has played key roles in the leasing, development and asset management of a number of successful retail properties both in the United States and Europe. We believe that under the leadership of our executive operational management team, our operational team is well positioned to execute our strategic plans and unlock value in our properties. We intend to hire additional industry-leading senior executives, including a chief executive officer, with real estate management expertise to complement our seasoned operational management team.


Business Strategy

        Our objective is to achieve high growth in NOI, Core NOI and FFO by leasing, operating and repositioning retail properties with locations that are either market dominant (the only mall within an extended distance to service the trade area) or trade area dominant (positioned to be the premier mall serving the defined regional consumer). We plan to control costs and to deliver an appropriate tenant mix, higher occupancy rates and increased sales productivity, resulting in higher minimum rent. In

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order to achieve our objective and to become the national leader in the regional Class B mall space, we intend to implement the following strategies:

        Tailored Strategic Planning and Investment.    We have identified value creation initiatives for each of our properties, taking into account customer demographics and the competitive environment of the property's market area, with a focus on increasing occupancy to the mall with a sustainable occupancy cost. We have identified opportunities to invest significant capital (approximately $230 million by the end of 2015) to reposition and refresh certain of our properties, but we will sequence long-term redevelopment projects with leasing activity. Examples of value creation initiatives include, but are not limited to:

We believe that through execution of these initiatives we will position our properties for maximum stability and financial growth. We believe these capital investments will assist in increasing our revenues significantly and deliver solid net operating income growth over the medium term, and we are targeting improved occupancy rates of over 93% (consistent with historical levels) and annual net operating income of over $200 million by the end of 2015. For a discussion of factors that could have an impact on our ability to realize these goals, see "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements." To support our future liquidity needs, we expect to enter into agreements with Brookfield with respect to a $100 million revolving subordinated credit facility and a backstop agreement pursuant to which (i) Brookfield will agree to exercise its pro rata subscription right with respect to this $200 million rights offering and (ii) Brookfield will purchase any shares not purchased upon the expiration of the rights offering at the rights offering price. We cannot assure you that this or any other financing will be available on terms acceptable to us or at all.

        Improve Tenant Mix and the Performance of Our Properties.    We intend to proactively optimize the tenant mix of our malls by matching it to the consumer shopping patterns and needs and desires of the demographics in a particular market area, which we believe will strengthen our competitive position and increase tenant sales and consumer traffic. Additionally, as our occupancy rates rise we expect to convert selected temporary tenants to long-term tenants. To enhance the experience of our shoppers, we will actively market to our customers and seek to create shopping experiences that exceed their expectations. We believe our portfolio's lease expiration schedule over the next five years will provide an increase in NOI as the new rental rates will be higher than the expiring rents which are below our portfolio's average effective gross rent per square foot during the recession of the last two years. The increased revenue potential, coupled with an expected increase in overall occupancy, is a cornerstone of our growth model.

        Leverage Our National Platform.    We expect to maintain national contracts with certain vendors and suppliers for goods and services at generally more favorable terms than individual contracts. National retailers will benefit from our national platform for leasing, which will provide them with the efficiency of negotiating leases at multiple locations with just one landlord. This national platform will help position our properties as attractive destinations for retailers.

        Actively Manage Our Portfolio.    We intend to actively manage our portfolio of properties, executing our tailored initiatives and recycling capital, continually seeking opportunities to add value to our

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assets. We intend to seek and consider acquisition or disposition opportunities that would support our business strategy.

        Improve Key Metrics.    As of June 30, 2011, our portfolio sales per square foot were $279 and occupancy was at approximately 88%, both of which are below our peer group average. We believe the factors contributing to this performance stem from the positioning of the properties within the GGP portfolio. As a "pure play" B mall company (i.e., having an exclusive focus on owning and operating B malls), we believe that the enhanced strategies and initiatives described in this prospectus will alter the trajectory of our portfolio of malls and enhance these metrics and the value of our properties.

Our Portfolio

        Our portfolio includes regional malls with a historical record of steady occupancy and solid performance in the markets they serve. These malls function as town centers and are located in one-mall markets, devoid of mall competition and have a high penetration of the trade area, a strong consumer following and a stable projected NOI performance. Most of these malls are located in markets where consumer spending in shopping malls is generally less impacted by economic factors. These malls account for approximately 60% of the total GLA of our portfolio, and generated over 60% of our NOI for the six months ended June 30, 2011. Examples of these malls are Sikes Senter in Wichita Falls, Texas and Valley Hills Mall in Hickory, North Carolina.

        Our portfolio also includes regional malls that we believe have significant growth potential through lease-up, repositioning and redevelopment. Some properties may require re-tenanting and re-constitution of the merchandising mix in order to provide new and relevant shopping and entertainment opportunities for the consumer. These malls account for approximately 40% of the total GLA of our portfolio, and generated approximately 40% of our NOI for the six months ended June 30, 2011. Examples of these malls are Bayshore Mall in Eureka, California and The Boulevard Mall in Las Vegas, Nevada.

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Properties

        The following is a list of our properties as of June 30, 2011:

 
   
   
  GLA    
  Anchor
Stores/
Significant
Tenant
Vacancies
 
 
   
   
  Anchor
Stores/
Significant
Tenants
 
Property Count
  Name of Center   Location(1)   Total   Mall and
Freestanding
 

Arizona

 

1.

  The Mall at Sierra Vista   Sierra Vista, AZ     365,853     169,361   Cinemark, Dillard's, Sears      

California

 

2.

  Bayshore Mall   Eureka, CA     612,991     392,733   Bed Bath & Beyond, Kohl's, Sears     1  

3.

  Chula Vista Center   Chula Vista (San Diego), CA     874,241     320,141   JCPenney, Macy's, Sears, Burlington Coat Factory, Ultrastar Cinemas     1  

4.

  Newpark Mall   Newark (San Francisco Bay), CA     1,114,322     373,448   JCPenney, Macy's, Sears, Target     1  

5.

  Southland Mall   Hayward (San Francisco Bay), CA     1,264,993     524,729   JCPenney, Kohl's, Macy's, Sears     1  

6.

  West Valley   Tracy, CA     884,673     536,383   JCPenney, Movies 14, Sears, Target     1  

Florida

 

7.

  Lakeland Square Mall   Lakeland (Orlando), FL     884,075     274,037   Burlington Coat Factory, Dillard's, Men's & Home, JCPenney, Macy's, Sears      

Idaho

 

8.

  Silver Lake Mall   Coeur D'Alene, ID     325,046     152,793   JCPenney, Macy's, Sears, Timberline Trading Company      

Illinois

 

9.

  Spring Hill Mall   West Dundee (Chicago), IL     1,167,540     485,960   Carson Pirie Scott, Home Furniture Mart, JCPenney, Kohl's, Macy's, Sears      

Louisiana

 

10.

  Mall St. Vincent   Shreveport, LA     532,814     184,814   Dillard's, Sears     1  

11.

  Pierre Bossier Mall   Bossier City (Shreveport), LA     611,879     218,581   Dillard's, JCPenney, Sears, Stage     1  

Michigan

 

12.

  Birchwood Mall   Port Huron (Detroit), MI     725,093     298,959   GKC Theaters, JCPenney, Macy's, Sears, Target, Younkers      

13.

  Lansing Mall   Lansing, MI     834,812     443,642   JCPenney, Macy's, T.J. Maxx, Younkers, Best Buy, Barnes & Noble     1  

14.

  Southland Center   Taylor, MI     903,210     320,173   Best Buy, JCPenney, Macy's     1  

15.

  Westwood Mall   Jackson, MI     507,859     136,171   Elder-Beerman, JCPenney, Wal-Mart      

Minnesota

 

16.

  Knollwood Mall   St. Louis Park (Minneapolis), MN     464,619     383,935   Cub Foods, Keith's Furniture Outlet, Kohl's, T.J. Maxx      

 

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  GLA    
  Anchor
Stores/
Significant
Tenant
Vacancies
 
 
   
   
  Anchor
Stores/
Significant
Tenants
 
Property Count
  Name of Center   Location(1)   Total   Mall and
Freestanding
 
Nevada  

17.

  The Boulevard Mall   Las Vegas, NV     1,176,872     388,836   JCPenney, Macy's, Sears     1  

New Hampshire

 

18.

  Steeplegate Mall   Concord, NH     479,110     222,763   The Bon-Ton, JCPenney, Sears      

New Mexico

 

19.

  Animas Valley Mall   Farmington, NM     463,168     274,351   Allen Theatres, Dillard's, JCPenney, Ross Dress For Less, Sears      

20.

  North Plains Mall   Clovis, NM     303,188     109,107   Bealls, Dillard's, JCPenney, Sears      

North Carolina

 

21.

  Valley Hills Mall   Hickory, NC     933,668     322,152   Belk, Dillard's, JCPenney, Sears      

Ohio

 

22.

  Colony Square Mall   Zanesville, OH     492,025     284,147   Cinemark, Elder-Beerman, JCPenney, Sears      

Oklahoma

 

23.

  Washington Park Mall   Bartlesville, OK     356,691     162,395   Dillard's, JCPenney, Sears      

Oregon

 

24.

  Gateway Mall   Springfield, OR     817,624     485,956   Ashley Furniture Homestore, Cinemark 17, Kohl's, Movies 12, Oz Fitness, Ross Dress For Less, Sears, Target      

Texas

 

25.

  Collin Creek   Plano, TX     1,020,138     327,887   Amazing Jakes, Dillard's, JCPenney, Macy's, Sears      

26.

  Sikes Senter   Wichita Falls, TX     667,506     292,816   Dillard's, JCPenney, Sears, Sikes Ten Theatres      

27.

  Vista Ridge   Lewisville (Dallas), TX     1,062,721     392,511   Cinemark, Dillard's, JCPenney, Macy's, Sears      

Utah

 

28.

  Cache Valley Mall   Logan, UT     497,535     170,747   Dillard's, Dillard's Men's & Home, JCPenney      

Washington

 

29.

  Three Rivers Mall   Kelso, WA     419,477     226,244   JCPenney, Macy's, Sears     1  

Wyoming

 

30.

  White Mountain Mall   Rock Springs, WY     303,619     209,137   Flaming Gorge Harley Davidson, Herberger's, JCPenney, State Of Wyoming      

(1)
In certain cases, where a mall is located in part of a larger regional metropolitan area, the metropolitan area is identified in parenthesis.

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Property Operating Data

        For the year ended December 31, 2010, none of our properties accounted for more than 10% of our total consolidated assets and none of our properties accounted for more than 10% of our total consolidated gross revenue.


Operating Metrics

        The following table sets forth our occupancy rates and the average effective annual gross rental rate per square foot as of June 30, 2011 and as of December 31 for each of the last five years. In 2011, the difference between expiring rental rates and new rental rates has been unfavorable, driven primarily by leases approved prior to 2011 that commenced in the 2011 fiscal year. In addition, current market rents are below expiring rents for the coming fiscal year.

Year Ended
  Mall &
Freestanding GLA
  Leased GLA   Occupancy(1)   Average
Effective Gross
Rent per square
foot(2)(3)
 

2006

    9,220,133     8,583,148     93.1 % $ 38.82  

2007

    9,186,647     8,605,380     93.7 % $ 39.88  

2008

    9,144,576     8,320,291     91.0 % $ 40.54  

2009

    9,083,253     8,085,081     89.0 % $ 39.51  

2010

    9,065,852     7,996,849     88.2 % $ 39.74  

June 30, 2011

    9,084,909     7,969,510     87.7 % $ 39.09  

(1)
Occupancy represents contractual obligations for space in regional malls or predominantly retail centers and excludes traditional anchor stores.

(2)
Excludes tenants with spaces in excess of 10,000 square feet which represents approximately 10% of our total square footage.

(3)
Rent is presented on a cash basis and consists of base minimum rent, common area costs, and real estate taxes. The average effective gross rent per square foot calculation includes the terms of each lease as in effect at the time of the calculation, including any tenant concessions that may have been granted.

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Lease Expirations(1)

        The table below sets forth lease expiration data for all of our properties:

Year
  Number of
Expiring Leases
  Expiring
GLA
  Percent of
Total
  Expiring
Effective
Gross Rent
per square foot(2)(3)
 

Specialty Leasing(4)

    395     1,170,716     14.9 % $ 9.22  

2011

    135     349,874     4.5 % $ 36.89  

2012

    336     922,088     11.7 % $ 34.70  

2013

    288     1,110,180     14.1 % $ 30.47  

2014

    276     933,571     11.9 % $ 35.79  

2015

    166     592,035     7.5 % $ 34.30  

2016

    139     509,076     6.5 % $ 37.43  

2017

    103     418,103     5.3 % $ 48.26  

2018

    60     320,700     4.1 % $ 37.26  

2019

    53     381,607     4.8 % $ 27.30  

2020

    33     188,416     2.4 % $ 28.95  

Subsequent

    67     963,997     12.3 % $ 15.08  
                   

Total

    2,051     7,860,363     100.0 % $ 28.26  
                   

(1)
Represents contractual obligations for space in regional malls or predominantly retail centers and excludes traditional anchor stores.

(2)
Excluded from the expiration rate calculation are 240, or approximately 10%, of our leases that pay percentage rates. These are excluded from the calculation because these percentage rental rates are based on the tenant's future sales volume which is variable in nature and cannot be projected.

(3)
Rent is presented on a cash basis and consists of base minimum rent, common area costs and real estate taxes. The average effective gross rent per square foot calculation includes the terms of each lease as in effect at the time of the calculation, including any tenant concessions that may have been granted.

(4)
Specialty Leasing refers to arrangements with tenants on license agreements, as opposed to lease agreements, with initial terms in excess of 12 months. These license agreements are cancelable by us with 60 days notice.


Mortgage and Other Debt

        Our ownership interests in real property are materially important as a whole; however, as described above, we do not own any individual materially important property based on book value or gross revenue for 2010 and therefore do not present a description of our title to, or other interest in, our properties and the nature and amount of our mortgages in such properties.


Other Policies

        The following is a discussion of our investment policies, financing policies, conflict of interest policies and policies with respect to certain other activities. One or more of these policies may be amended or rescinded from time to time without a stockholder vote.

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Investment Policies

        We are in the business of owning and operating retail shopping malls across the United States. We plan to elect to be treated as a REIT in connection with the filing of our federal tax return for 2011, subject to our ability to meet the requirements of a REIT at the time of election, and intend to maintain this status in future periods. REIT limitations restrict us from making an investment that would cause our real estate assets to be less than 75% of our total assets. In addition, at least 75% of our gross income 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 from certain types of temporary investments. At least 95% of our income must be derived from such real property investments, and from dividends, interest and gains from the sale or dispositions of stock or securities or from other combinations of the foregoing.

        Subject to REIT limitations, we may invest in the securities of other issuers in connection with acquisitions of indirect interests in real estate. Such an investment would normally be in the form of general or limited partnership or membership interests in special purpose partnerships and limited liability companies that own one or more properties. We may, in the future, acquire all or substantially all of the securities or assets of other REITs, management companies or similar entities where such investments would be consistent with our investment policies.

Financing Policies

        The successful execution of our business strategy will require the availability of substantial amounts of operating and development capital both initially and over time. Sources of such capital could include bank, life insurance company, pension plan or institutional investor borrowings, public and private offerings of debt or equity, including rights offerings, sale of certain assets, joint ventures, retention of cash flows or a combination of these methods. Our ability to retain cash flows is limited by the requirement for REITs to pay tax on or distribute 100% of their capital gains income and distribute at least 90% of their taxable income and our desire to avoid entity level U.S. federal income tax by distributing 100% of our capital gains and ordinary taxable income. We have no present intention to pay any dividends on our common stock in the future other than in order to maintain our REIT status, which dividends our board of directors may decide to pay in the form of cash, common stock or a combination of cash and common stock. We must also take into account taxes that would be imposed on undistributed taxable income.

        If our board of directors determines to raise additional equity capital, it may, without stockholder approval, issue additional shares of common stock or other capital stock. Our board of directors may issue a number of shares up to the amount of our authorized capital in any manner and on such terms and for such consideration as it deems appropriate. Such securities may be senior to the outstanding classes of common stock. Such securities also may include preferred stock, which may be convertible into common stock or redeemable for cash at the holder's option.

        We decide upon the structure of the financing based upon the best terms then available to us and whether the proposed financing is consistent with our other business objectives. We do not have a policy limiting the number or amount of mortgages that may be placed on any particular property. Mortgage financing instruments, however, usually limit additional indebtedness on such properties and/or the direct and indirect equity interests of the entity owning such properties. Permanent financing may be structured as a mortgage loan on a single property and generally requires us to provide a mortgage interest on the property in favor of the underlying lender and in some instances will require a parent entity to provide an environmental indemnity or an indemnity related to certain bad faith acts. The originating lender of our permanent financing may not retain the loan and the same could be sold directly to another lender or in the secondary loan market. As a condition to obtaining a mortgage loan, our lenders will typically require us to form special purpose entities to own the properties, and

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act as the borrowing entity. These special purpose entities are structured so that they would not necessarily be consolidated with us in the event we would ever become subject to a bankruptcy proceeding or liquidation. Notwithstanding this bankruptcy remoteness, for accounting purposes we include the outstanding debt of special purpose entities owning consolidated properties as part of our consolidated indebtedness.

Conflict of Interest Policies

        Following the spin-off, we expect to have policies designed to reduce or eliminate potential conflicts of interest. We expect to adopt governance principles governing our affairs and the board of directors, as well as written charters for each of the standing committees of the board of directors. In addition, we expect to have a Code of Business Conduct and Ethics, which will apply to all of our officers, directors, and employees. At least a majority of the members of our board of directors must qualify as independent under the listing standards for NYSE companies. Any transaction between us and any director, officer or 5% stockholder must be approved pursuant to the related party transaction policy we expect to adopt.

Policies with Respect to Certain Other Activities

        We intend to make investments which are consistent with our qualification as a REIT, unless the board of directors determines that it is no longer in our best interests to so qualify as a REIT. We have authority to offer shares of our capital stock or other securities in exchange for property. We also have authority to repurchase or otherwise reacquire our shares or any other securities. Our policy prohibits direct or indirect personal loans to executive officers and directors to the extent required by law and stock exchange regulation.

        We intend to borrow money as part of our business, and we also may issue senior securities, purchase and sell investments, offer securities in exchange for property and repurchase or reacquire shares or other securities in the future. To the extent we engage in these activities, we will comply with applicable law. While we do not currently have a common stock repurchase program, we intend to implement one in the future.

        We will make reports to our security holders in accordance with the NYSE rules and containing such information, including financial statements certified by independent public accountants, as required by the NYSE.

        We do not currently have policies in place with respect to making loans to other persons (other than our conflict of interest policies described above) or investing in securities.


Competition

        We are among the largest mall owners in the United States focused on a regional Class B mall strategy. The nature and extent of the competition we face varies from property to property. Our direct competitors include other publicly-traded retail mall development and operating companies, retail real estate companies, commercial property developers, internet retail sales and other owners of retail real estate that engage in similar businesses.

        Within our portfolio of retail properties, we compete for retail tenants. We believe the principal factors that retailers consider in making their leasing decision include:

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        Because our revenue potential is linked to the success of our retailers, we indirectly share exposure to the same competitive factors that our retail tenants experience in their respective markets when trying to attract individual shoppers. These dynamics include general competition from other regional shopping malls, including outlet malls and other discount shopping malls, as well as competition with discount shopping clubs, catalog companies, internet sales and telemarketing.

        With respect to specific alternative retail property types, we have faced increased competition over the last several years from both lifestyle malls and power centers, in addition to other regional malls. We believe, however, that the lifestyle concept is facing substantial challenges and presents opportunities for us to grow our business for several reasons. For example, lifestyle malls do not have anchor stores and depend on a core group of in-line stores and restaurants to drive business. Once these malls lose key tenants, it becomes easier to attract other in-line retailers, especially when co-tenancy becomes an issue. Retailers are looking to expand in the highest traffic malls, and malls with anchor stores typically have high traffic.

        We intend to actively manage our portfolio and expect to enhance the credibility and desirability of our regional malls. The recent challenging economic conditions have resulted in suspensions and cancellations of many new mall projects, reducing an already small pipeline. While we operate on a much smaller scale than many of our competitors, we believe that our enhanced portfolio and the lack of a competitive pipeline will make us appealing for retailers who are reevaluating their positioning within their respective market areas.


Environmental

        Under various federal, state and local laws, ordinances and regulations, an owner of real estate is liable for the costs of removal or remediation of certain hazardous or toxic substances on such real estate. These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The costs of remediation or removal of such substances may be substantial and the presence of such substances, or the failure to promptly remediate such substances, may adversely affect the owner's ability to sell such real estate or to borrow using such real estate as collateral. In connection with our ownership and operation of our properties, we may be potentially liable for such costs. The operations of current and former tenants at our properties have involved, or may have involved, the use of hazardous materials or generated hazardous wastes. The release of such hazardous materials and wastes could result in our incurring liabilities to remediate any resulting contamination if the responsible party is unable or unwilling to do so. In addition, many of our properties are located in urban areas, and are therefore exposed to the risk of contamination originating from other sources. For example, groundwater beneath our property in Las Vegas, Nevada, is known to be contaminated as a result of releases of hazardous materials from an offsite source. We are currently working with the relevant governmental authorities to allow for sampling on our property in furtherance of the governments' efforts to determine the appropriate remedial action. While a property owner generally is not responsible for remediating contamination that has migrated onsite from an offsite source, the contaminant's presence can have adverse effects on operations and redevelopment of our properties.

        Most of our properties have been subject, at some time, to environmental assessments, that are intended to evaluate the environmental condition of our property and surrounding properties. These environmental assessments generally have included a historical review, a public records review, a visual inspection of the site and surrounding properties, a visual screening for the presence

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of asbestos-containing materials, polychlorinated biphenyls and underground storage tanks and the preparation and issuance of a written report. They have not, however, included any sampling or subsurface investigations. Soil and/or groundwater testing is conducted at our properties, when necessary, to further investigate any issues raised by the initial assessment that could reasonably be expected to pose a material concern to the property or result in us incurring material environmental liabilities. In each case where the environmental assessments have identified conditions requiring remedial actions required by law, former management has either taken or scheduled the recommended action.

        None of the environmental assessments conducted by us at the properties have revealed any environmental liability that we believe would have a material adverse effect on our overall business, financial condition or results of operations. Nevertheless, it is possible that these assessments do not reveal all environmental liabilities or that there are material environmental liabilities of which we are unaware.

        Moreover, no assurances can be given that future laws, ordinances or regulations will not impose any material environmental liability or the current environmental condition of our properties will not be adversely affected by tenants and occupants of the properties, by the condition of properties in the vicinity of our properties (such as the presence on such properties of underground storage tanks) or by third parties unrelated to us.

        Future development opportunities may require additional capital and other expenditures in order to comply with federal, state and local statutes and regulations relating to the protection of the environment. It is possible that we may not have sufficient liquidity to comply with such statutes and regulations and may be required to halt or defer such development projects. We cannot predict with any certainty the magnitude of any such expenditures or the long-range effect, if any, on our operations. Compliance with such laws has not had a material adverse effect on our operating results or competitive position in the past but could have such an effect in the future.


Employees

        We have approximately 275 employees, all of whom are temporarily leased from GGP under an employee leasing agreement until January 1, 2012 when they will become our direct employees. These employees devote all of their time to us and no longer provide services to GGP.


Legal Proceedings

        In the ordinary course of our business, we are from time to time involved in legal proceedings related to the ownership and operations of our properties. We are not currently involved in any legal or administrative proceedings that we believe are likely to have a materially adverse effect on our business, results of operations or financial condition.


Insurance

        We have comprehensive liability, fire, flood, extended coverage and rental loss insurance with respect to our portfolio of retail properties. Our management believes that such insurance provides adequate coverage.


Qualification as a Real Estate Investment Trust and Taxability of Distributions

        Rouse plans to elect to be qualified, as a REIT. If, as we contemplate, Rouse qualifies as a REIT, Rouse will not be subject to federal income tax on its real estate investment trust taxable income so long as, among other requirements, certain distribution requirements are met with respect to such income.

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THE SPIN-OFF

        Prior to this rights offering GGP distributed as a dividend substantially all of its shares of our common stock to its stockholders in a spin-off transaction. Prior to the spin-off transaction, there was no market for our common stock. Our common stock is currently listed on the NYSE under the symbol "RSE."

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THE RIGHTS OFFERING

The Subscription Rights

        We will distribute to each holder of our common stock who is a record holder of our common stock on the record date, which is                     , 20    , at no charge, one transferable subscription right for each share of our common stock owned, for a total of approximately subscription rights. The subscription rights will be evidenced by transferable subscription rights certificates. Each subscription right will allow you to purchase      shares of our common stock at a price of $                        . If you elect to exercise your basic subscription right in full, you may also subscribe, at the subscription price, for additional shares of our common stock under your over-subscription privilege to the extent that other rights holders do not exercise their basic subscription rights in full, subject to certain limitations related to REIT qulification. If a sufficient number of shares of our common stock is unavailable to fully satisfy the over-subscription privilege requests, the available shares of common stock will be sold pro rata among subscription rights holders who exercised their over-subscription privilege based on the number of shares each subscription rights holder subscribed for under the basic subscription right.

        If you hold your shares in a brokerage account or through a dealer or other nominee, please see the information included below the heading "—Beneficial Owners."

Reasons for the Rights Offering

        The rights offering is being made to raise capital to provide us with additional liquidity. See "Use of Proceeds".

The Backstop Commitment

        We expect to enter into a backstop agreement with Brookfield, pursuant to which Brookfield is expected to agree to exercise all of the subscription rights that it will directly receive as a Rouse shareholder and to purchase from us, at the subscription price of      per share, all of the shares of common stock offered pursuant to the rights offering that are not purchased by other stockholders in the rights offering. The purchase of shares by Brookfield pursuant to the backstop commitment is expected to be subject to the receipt from Brookfield of representations and covenants satisfactory to the board of directors and the waiver of the Ownership Limit. We will be subject to customary indemnification obligations and Brookfield's obligation to purchase the shares will be subject to customary closing conditions, including, but not limited to, our compliance with the covenants in the backstop agreement, each of our representations and warranties being true and correct in all material respects, and no material adverse change with respect to our business and operations having occurred. We expect that Brookfield's commitment to backstop the rights offering will expire on                        .

        Any shares purchased by Brookfield pursuant to the backstop agreement will be issued in a private placement transaction, exempt from the registration requirements of the Securities Act and, accordingly, will be restricted securities. We expect to enter into a registration rights agreement with Brookfield with respect to all registrable securities to be held by Brookfield. See "Description of Capital Stock—Restrictions on Ownership and Transfer."

Conditions, Withdrawal and Cancellation

        We may terminate the rights offering, in whole or in part, if at any time before completion of the rights offering there is any judgment, order, decree, injunction, statute, law or regulation entered, enacted, amended or held to be applicable to the rights offering that in the sole judgment of our board of directors would or might make the rights offering or its completion, whether in whole or in part, illegal or otherwise restrict or prohibit completion of the rights offering. We may waive any of these conditions and choose to proceed with the rights offering even if one or more of these events occur.

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        In addition, we reserve the right to withdraw and cancel the rights offering at any time for any reason. We also may cancel the rights offering at any time before its completion if our board of directors decides to do so in its sole discretion. If we cancel the rights offering, we will issue a press release notifying stockholders of the cancellation.

        If the rights offering is terminated, in whole or in part, all affected subscription rights will expire without value and all subscription payments received by the transfer agent will be returned promptly, without interest or deduction. See also "—Cancellation Rights."

Effect of Rights Offering on Existing Stockholders

        The ownership interests and voting interests of the existing stockholders who do not exercise their basic subscription rights will be diluted. See "Questions and Answers About the Rights Offering."

Subscription Rights

        Your subscription rights entitle you to basic subscription rights and an over-subscription privilege.

        Basic Subscription Right.    With your basic subscription rights, you may purchase        shares of our common stock per subscription right, upon delivery of the required documents and payment of the subscription price of $          per share. You are not required to exercise all of your subscription rights unless you wish to purchase shares under your over-subscription privilege. We will deliver to the record holders who purchase shares in the rights offering certificates representing the shares purchased with a holder's basic subscription right as soon as practicable after the rights offering has expired.

        Over- Subscription Privilege.    In addition to your basic subscription right, you may subscribe for additional shares of our common stock, upon delivery of the required documents and payment of the subscription price of $      per share, before the expiration of the rights offering. You may only exercise your over-subscription privilege if you exercised your basic subscription right in full and other holders of subscription rights do not exercise their basic subscription rights in full and such exercise would not cause you to own shares in excess of the Ownership Limit (see "Description of Capital Stock—Restrictions on Ownership and Transfer").

        Pro Rata Allocation.    If there are not enough shares of our common stock to satisfy all subscriptions made under the over-subscription privilege, we will allocate the remaining shares of our common stock pro rata, after eliminating all fractional shares, among those over-subscribing rights holders. "Pro rata" means in proportion to the number of shares of our common stock that you and the other subscription rights holders have purchased by exercising your basic subscription rights. If there is a pro rata allocation of the remaining shares of our common stock and you receive an allocation of a greater number of shares than you subscribed for under your over-subscription privilege or a number of shares in excess of the Ownership Limit, then we will allocate to you only the number of shares for which you subscribed or that would not be in excess of the Ownership Limit. We will allocate the remaining shares among all other holders exercising their over-subscription privileges.

        Brookfield will not be allocated any additional shares of our common stock pursuant to the backstop agreement until all of the rights holders exercising their over-subscription privileges, which may include Brookfield, have been allocated the number of additional shares for which they over-subscribed.

        Full Exercise of Basic Subscription Rights.    You may exercise your over-subscription privilege only if you exercise your basic subscription rights in full. To determine if you have fully exercised your basic subscription rights, we will consider only the basic subscription rights held by you in the same capacity. For example, suppose that you were granted subscription rights for shares of our common stock that you own individually and shares of our common stock that you own collectively with your spouse. If

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you wish to exercise your over-subscription privilege with respect to the subscription rights you own individually, but not with respect to the subscription rights you own collectively with your spouse, you only need to fully exercise your basic subscription rights with respect to your individually owned subscription rights. You do not have to subscribe for any shares under the basic subscription rights owned collectively with your spouse to exercise your individual over-subscription privilege.

        When you complete the portion of your subscription rights certificate to exercise your over-subscription privilege, you will be representing and certifying that you have fully exercised your subscription rights as to shares of our common stock that you hold in that capacity. You must exercise your over-subscription privilege at the same time you exercise your basic subscription rights in full.

        Return of Excess Payment.    If you exercised your over-subscription privilege and are allocated less than all of the shares of our common stock for which you wished to subscribe, your excess payment for shares that were not allocated to you will be returned to you by mail, without interest or deduction, as soon as practicable after the expiration date of the rights offering. We will deliver to the recordholders who purchase shares in the rights offering DRS Statements representing the shares of our common stock that you purchased as soon as practicable after the expiration date of the rights offering and after all pro rata allocations and adjustments have been completed.

Method of Subscription—Exercise of Rights

        Subscription rights are evidenced by subscription rights certificates, which may be physical certificates but will more likely be electronic certificates issued through the facilities of DTC. Except as described below under "Foreign Shareholders," the subscription certificates will be mailed to record date shareholders or, if a record date shareholder's shares are held by a depository or nominee on his, her or its behalf, to such depository or nominee. Subscription rights may be exercised by completing and signing the subscription rights certificate that accompanies this prospectus and mailing it in the envelope provided, or otherwise delivering the completed and duly executed subscription rights certificate to the transfer agent, together with payment in full for the shares at the subscription price by the expiration date of this offering, unless delivery of the subscription rights certificate is effected pursuant to the guaranteed delivery procedures. Completed subscription rights certificates and related payments must be received by the transfer agent prior to 5:00 p.m., New York City time, on or before the expiration date, at the offices of the transfer agent at the address set forth below, unless delivery of the subscription rights certificate is effected pursuant to the guaranteed delivery procedures described below.

Method of Payment

        A participating subscription rights holder may send the subscription rights certificate together with payment for the shares of our offered common stock subscribed for in the rights offering to the transfer agent based on the subscription price of $            per share of offered common stock. Except as described above under "—Guaranteed Delivery Procedures", to be accepted, the payment, together with a properly completed and executed subscription rights certificate, must be received by the transfer agent at one of the transfer agent's offices set forth below (see "—Delivery of Subscription Materials and Payment"), at or prior to 5:00 p.m., New York City time, on the expiration date. Do not send subscription rights certificates, Notices of Guaranteed Delivery or payments to us.

        All payments by a participating subscription rights holder must be in U.S. dollars by money order or check or bank draft drawn on a bank or branch located in the U.S. and payable to       . Payment also may be made by wire transfer to      , with reference to the subscription rights holder's name. The transfer agent will deposit all funds received by it prior to the final payment date into a segregated account pending pro-ration and distribution of the shares.

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        The method of delivery of subscription rights certificates and payment of the subscription price to us will be at the election and risk of the participating subscription rights holders, but if sent by mail it is recommended that such certificates and payments be sent by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the transfer agent and clearance of payment prior to 5:00 p.m., New York City time, on the expiration date. Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of certified or cashier's check or money order or wire transfer.

        Whichever of the methods described above is used, issuance of the shares purchased is subject to collection of checks and actual payment.

        If a participating subscription rights holder who subscribes for shares as part of the subscription right does not make payment of any amounts due by the expiration date, the transfer agent reserves the right to take any or all of the following actions: (i) reallocate the shares to other participating subscription rights holders; (ii) apply any payment actually received by it from the participating subscription rights holder toward the purchase of the greatest whole number of shares which could be acquired by such participating subscription rights holder upon exercise of the subscription right; and/or (iii) exercise any and all other rights or remedies to which it may be entitled, including the right to set off against payments actually received by it with respect to such subscribed for shares.

        All questions concerning the timeliness, validity, form and eligibility of any exercise of subscription rights will be determined by us, whose determinations will be final and binding. We, in our sole discretion, may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject the purported exercise of any right. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as we determine in our sole discretion. The transfer agent will not be under any duty to give notification of any defect or irregularity in connection with the submission of subscription rights certificates or incur any liability for failure to give such notification.

        Participating subscription rights holders will have no right to rescind their subscription after receipt of their payment for shares.

Receipt of Payment

        Your payment will be considered received by the transfer agent only upon:

Clearance of Uncertified Checks

        If you are paying by uncertified personal check, please note that uncertified checks may take at least seven to ten business days to clear. If you wish to pay the subscription price by uncertified personal check, we urge you to make payment sufficiently in advance of the time the rights offering expires to ensure that your payment is received by the transfer agent and clears by the rights offering expiration date. We urge you to consider using a certified or cashier's check, money order or wire transfer of funds to avoid missing the opportunity to exercise your subscription rights should you decide to exercise your subscription rights.

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Missing or Incomplete Information

        If you hold your shares of common stock in the name of a custodian bank, broker, dealer or other nominee, the nominee will exercise the subscription rights on your behalf in accordance with your instructions. Your nominee may establish a deadline that may be before the expiration date that we have established for the rights offering. If you send a payment that is insufficient to purchase the number of shares of common stock you requested, or if the number of shares you requested is not specified in the forms, the payment received will be applied to exercise your subscription rights to the fullest extent possible based on the amount of the payment received, subject to the availability of shares under the over-subscription privilege and the elimination of fractional shares. Any excess subscription payments received by the transfer agent will be returned, without interest, as soon as practicable following the expiration of the rights offering.

Expiration of the Rights Offering and Extensions, Amendments and Termination

        You may exercise your subscription rights at any time before 5:00 p.m., New York City time, on                    , 20    , the expiration date for the rights offering. We may, in our sole discretion, extend the time for exercising the subscription rights. If the commencement of the rights offering is delayed for a period of time, the expiration date of the rights offering will be similarly extended.

        We will extend the duration of the rights offering as required by applicable law, and may choose to extend it if we decide that changes in the market price of our common stock warrant an extension or if we decide to give investors more time to exercise their subscription rights in the rights offering, although we do not presently intend to do so. We may extend the expiration date of the rights offering by giving oral or written notice to the transfer agent on or before the scheduled expiration date. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., New York City time, on the next business day after the most recently announced expiration date.

        We reserve the right, in our sole discretion, to amend or modify the terms of the rights offering.

        If you do not exercise your subscription rights before the expiration date of the rights offering, your unexercised subscription rights will be null and void and will have no value. We will not be obligated to honor your exercise of subscription rights if the transfer agent receives the documents relating to your exercise after the rights offering expires, regardless of when you transmitted the documents, except if you have timely transmitted the documents under the guaranteed delivery procedures described below.

Cancellation Rights

        Our board of directors may cancel the rights offering, in whole or in part, in its sole discretion at any time prior to the time the rights offering expires for any reason (including a change in the market price of our common stock). If we cancel the rights offering, any funds you paid to the transfer agent will be promptly refunded, without interest or deduction.

Subscription Price

        The subscription price is $      per share. For more information with respect to how the subscription price was determined, see "Questions and Answers About the Rights Offering."

Instructions for Completing Your Subscription Rights Certificate

        You should read and follow the instructions accompanying the subscription rights certificates carefully.

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        You are responsible for the method of delivery of your subscription rights certificate(s) with your subscription price payment to the transfer agent. If you send your subscription rights certificate(s) and subscription price payment by mail, we recommend that you send them by registered mail, properly insured, with return receipt requested. You should allow a sufficient number of days to ensure delivery to the transfer agent prior to the time the rights offering expires. Because uncertified personal checks may take at least seven to ten business days to clear, you are strongly urged to pay, or arrange for payment, by means of a certified or cashier's check, money order or wire transfer of funds.

Delivery of Subscription Materials and Payment

        Your transfer agent for this offering is the American Stock Transfer & Trust Company, LLC. You should deliver your subscription rights certificate and payment of the subscription price or, if applicable, notices of guaranteed delivery, to the transfer agent by one of the methods described below:

American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
6201 15th Avenue
Brooklyn, New York 11219

        You may call the transfer agent at                    .

        Your delivery to an address or by any method other than as set forth above will not constitute valid delivery.

Questions About Exercising Subscription Rights

        If you have any questions or require assistance regarding the method of exercising your subscription rights or requests for additional copies of this document, the Instructions as to the Use of Rouse Subscription Rights Certificates or the Notice of Guaranteed Delivery, you should contact the transfer agent at the address and telephone number set forth above under "Questions and Answers About the Rights Offering" included elsewhere in this document.

Calculation of Subscription Rights Exercised

        If you do not indicate the number of subscription rights being exercised, or do not forward full payment of the total subscription price payment for the number of subscription rights that you indicate are being exercised, then you will be deemed to have exercised your basic subscription right with respect to the maximum number of subscription rights that may be exercised with the aggregate subscription price payment you delivered to the transfer agent. If your aggregate subscription price payment is greater than the amount you owe for your subscription, you will be deemed to have exercised your over-subscription privilege to purchase the maximum number of shares of our common stock with your over-payment. If we do not apply your full subscription price payment to your purchase of shares of our common stock, we or the transfer agent will return the excess amount to you by mail, without interest or deduction, as soon as practicable after the expiration date of the rights offering.

Regulatory Limitation

        We will not be required to issue to you shares of our common stock pursuant to the rights offering if, in our opinion, you would be required to obtain prior clearance or approval from any state or federal regulatory authorities to own or control such shares if, at the time the rights offering expires, you have not obtained such clearance or approval.

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Guaranteed Delivery Procedures

        If you wish to exercise your subscription rights, but you will not be able to deliver your subscription rights certificate to the transfer agent prior to the expiration date of the offering, then you may nevertheless exercise the subscription rights if:

        You may deliver the guarantee notice referred to above to the transfer agent in the same manner as you would deliver the subscription rights certificate. You should refer to the form titled "Notice of Guaranteed Delivery For Subscription Rights Certificate," which is provided with the "Instructions as to Use of Subscription Rights Certificates" distributed with the subscription rights certificate for the information and representations required in the guarantee notice.

Procedures for DTC Participants

        We expect that the exercise of your basic subscription right and your over-subscription privilege may be made through the facilities of the Depository Trust Company. If your subscription rights are held of record through DTC, you may exercise your basic subscription right and your over-subscription privilege by instructing DTC to transfer your subscription rights from your account to the account of the transfer agent, together with certification as to the aggregate number of subscription rights you are exercising and the number of shares of our common stock you are subscribing for under your basic subscription right and your over-subscription privilege, if any, and your subscription price payment for each share of our common stock that you subscribed for pursuant to your basic subscription right and your over-subscription privilege.

Fees and Expenses

        We are not charging any fee or sales commission to issue rights to you or to issue shares to you if you exercise your rights. If you exercise your rights through the record holders of your shares, you are responsible for paying any commissions, fees, taxes or other expenses your record holder may charge you. We will pay all fees and expenses of the transfer agent related to the rights offering and have also agreed to indemnify the transfer agent from liabilities that they may incur in connection with the rights offering.

No Fractional Rights

        We will not issue fractional subscription rights or cash in lieu of fractional subscription rights. Fractional subscription rights will be rounded down to the nearest whole number, with such adjustments as may be necessary to ensure that we will receive gross proceeds of at least $      from the rights offering.

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No Fractional Shares

        All shares of common stock will be sold at a purchase price of $      per whole share. We will not issue fractional shares. Fractional shares resulting from the exercise of basic subscription rights and the over-subscription privileges will be eliminated by rounding down to the nearest whole share. Any excess subscription payments received by the transfer agent will be returned, without interest, as soon as practicable.

Notice to Beneficial Holders/Nominees

        If you are a broker, a trustee or a depositary for securities who holds shares of our common stock for the account of others on                         , 20    , the record date, you should notify the respective beneficial owners of such shares of the rights offering as soon as possible to find out their intentions with respect to exercising their subscription rights. You should obtain instructions from the beneficial owner with respect to their subscription rights, as set forth in the instructions we have provided to you for your distribution to beneficial owners. If the beneficial owner so instructs, you should complete the appropriate subscription rights certificates and submit them to the transfer agent with the proper payment. If you hold shares of our common stock for the account(s) of more than one beneficial owner, you may exercise the number of subscription rights to which all such beneficial owners in the aggregate otherwise would have been entitled had they been direct record holders of our common stock on the record date, provided that you, as a nominee record holder, make a proper showing to the transfer agent by submitting the form entitled "Nominee Holder Certification" that we will provide to you with your rights offering materials. If you did not receive this form, you should contact the transfer agent to request a copy.

Beneficial Owners

        If you are a beneficial owner of shares of our common stock or will receive your subscription rights through a broker, custodian bank or other nominee, we will ask your broker, custodian bank or other nominee to notify you of the rights offering. If you wish to exercise your subscription rights, you will need to have your broker, custodian bank or other nominee act for you. If you hold certificates of our common stock directly and would prefer to have your broker, custodian bank or other nominee act for you, you should contact your nominee and request it to effect the transactions for you. To indicate your decision with respect to your subscription rights, you should complete and return to your broker, custodian bank or other nominee the form entitled "Beneficial Owners Election Form." You should receive this form from your broker, custodian bank or other nominee with the other rights offering materials. If you wish to obtain a separate subscription rights certificate, you should contact the nominee as soon as possible and request that a separate subscription rights certificate be issued to you. You should contact your broker, custodian bank or other nominee if you do not receive this form, but you believe you are entitled to participate in the rights offering. We are not responsible if you do not receive the form from your broker, custodian bank or nominee or if you receive it without sufficient time to respond.

Validity of Subscriptions

        We will resolve all questions regarding the validity and form of the exercise of your subscription rights, including time of receipt and eligibility to participate in the rights offering. Our determination will be final and binding. Once made, subscriptions and directions are irrevocable, and we will not accept any alternative, conditional or contingent subscriptions or directions. We reserve the absolute right to reject any subscriptions or directions not properly submitted or the acceptance of which would be unlawful. You must resolve any irregularities in connection with your subscriptions before the subscription period expires, unless we waive them in our sole discretion. Neither we nor the transfer agent is under any duty to notify you or your representative of defects in your subscriptions. A

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subscription will be considered accepted, subject to our right to withdraw or cancel the rights offering, only when the transfer agent receives a properly completed and duly executed rights certificate and any other required documents and the full subscription payment. Our interpretations of the terms and conditions of the rights offering will be final and binding.

Your Funds will be Held by the Transfer Agent Until Shares of Our Common Stock are Issued

        The transfer agent will hold your payment of the subscription price in a segregated account with other payments received from other subscription rights holders until we issue your shares of our common stock to you upon consummation of the rights offering.

Stockholder Rights

        You will have no rights as a holder of the shares of our common stock you purchase in the rights offering until DRS Statements representing the shares of our common stock are issued to you, or your account at your nominee is credited with the shares of our common stock purchased in the rights offering.

No Revocation or Change

        Once you have exercised your subscription rights or have instructed your nominee of your subscription request, you may not revoke or change your exercise or request a refund of monies paid. All exercises of subscription rights are irrevocable, even if you learn information about us that you consider unfavorable. You should not exercise your subscription rights unless you are certain that you wish to purchase shares at the subscription price. Subscription rights not exercised prior to the expiration date of the rights offering will expire and will have no value.

Listing and Trading

        Our common stock is listed on the NYSE under the symbol "RSE."

        We intend to list the rights under the symbol "RSE RT" on the NYSE. The listing of the rights on the NYSE is subject to the fulfillment of all listing requirements of the NYSE. If the listing requirements are fulfilled, we expects that the rights will be listed on the NYSE on            , 20    . The rights will cease trading at the close of trading (New York City time) on the day immediately preceding the expiration date, unless we terminate or extend the offering.

Shares of Common Stock Outstanding After the Rights Offering

        Based on the          shares of our common stock issued and outstanding as of          , 20    , approximately             shares of our common stock will be issued and outstanding following the rights offering and fulfillment of the backstop commitment. This assumes that during the rights offering, we issue no other shares of our common stock and that no options for our common stock are exercised.

Effects of Rights Offering on Brookfield's Stock and Ownership

        Even though the subscription rights will be offered on a pro rata basis to each holder of our common stock, because of Brookfield's commitment to purchase all of the shares of common stock offered pursuant to the rights offering that are not purchased by other stockholders in the rights offering, the percentage of common stock owned by other stockholders will decrease unless all of the other stockholders exercise the subscription rights they receive in full.

        Set forth below, for illustrative purposes only, are two scenarios that indicate the effect that the rights offering and related share issuance could have on Brookfield's relative interest following the

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spin-off and the rights offering. Brookfield's consortium is expected to own approximately 40% of our common stock immediately following the spin-off.

        Scenario A.    All subscription rights are subscribed for on a pro rata basis by all of the stockholders to whom the subscription rights were issued. Because all of the subscription rights distributed are exercised in the basic subscription right by holders, no shares are issuable pursuant to the over-subscription privilege and Brookfield does not need to purchase shares pursuant to the backstop commitment.

        Scenario B.    Brookfield is the only stockholder to acquire shares of our common stock, which number of shares is equivalent to the full number of shares of our common stock they were entitled to subscribe for in the rights offering in accordance with their basic subscription rights and, through their commitment to backstop the rights offering, Brookfield will acquire all of the shares offered in the rights offering.

Scenario
  Total Shares
Offered
  No. of Shares
Purchased by
Brookfield
  Cash Raised
($ million)
  Brookfield
Consortium
Voting %

A

               

B

               

Other Matters

        The rights offering is not being made in any state or other jurisdiction in which it is unlawful to do so, nor are we distributing or accepting any offers to purchase any shares of our common stock from subscription rights holders who are residents of those states or other jurisdictions or who are otherwise prohibited by federal or state laws or regulations to accept or exercise the subscription rights. We may delay the commencement of the rights offering in those states or other jurisdictions, or change the terms of the rights offering, in whole or in part, in order to comply with the securities law or other legal requirements of those states or other jurisdictions. We may decline to make modifications to the terms of the rights offering requested by those states or other jurisdictions, in which case, if you are a resident in those states or jurisdictions or if you are otherwise prohibited by federal or state laws or regulations from accepting or exercising the subscription rights you will not be eligible to participate in the rights offering.

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MANAGEMENT

        Our board of directors is responsible for the management of our business.


Board of Directors

        Our board of directors currently consists of three members. At the time of the spin-off, we expect that our board of directors will consist of at least seven members. Our board of directors will change immediately prior to the spin-off. The NYSE requires that a majority of our board of directors qualify as "independent" according to the rules and regulations of the SEC and the NYSE by no later than the first anniversary of the separation. We intend to comply with this requirement.

        The following table sets forth the names, ages, positions and starting date for each of our current directors.

Name
  Age   Director Since   Position

Steven J. Douglas