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 FAIRX FAIRHOLME
Thank you for your interest in The Fairholme Fund.
Please note that the disclosures present on this page supersede the disclosures present on the enclosed reprints.
Average annual total returns as of 12/31/2010: 1 Year 5 Year 10 Year
Fairholme Fund 25.47% 9.97% 11.46%
Morningstar Large Value Average 13.66% 1.43% 3.07%
S&P 500 15.06% 2.29% 1.41%
30 Day SEC Yield 0.259%
Expense Ratio 1.01% *
Cumulative Returns as of 12/31/2010: 1 Year 5 Year 10 Year
Fairholme Fund 25.47% 60.80% 196.02%
S&P 500 15.06% 11.99% 15.07%

Performance information quoted above represents past performance and does not guarantee future results. The investment return and
principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original
cost. Current performance may be higher or lower than the performance quoted herein. The fund imposes a 2.00%
redemption fee on shares held less than 60 days. Performance data does not reflect the redemption fee. If reflected, total returns would be
reduced. Current month end performance may be obtained by calling Shareholder Services at 866-202-2263 or visiting our website
www.fairholmefunds.com.

Price to earnings ratio is a common tool for comparing the prices of different common stocks and is calculated by dividing the current market price of
a stock by the earnings per share. Book value is the net asset value of a company, calculated by subtracting total liabilities from total assets. The ad-
viser defines free cash flow as the cash a company would generate annually from operations after all cash outlays necessary to maintain the business
in its curent condition. Dividend Yield is the yield a company pays out to its shareholder in the form of dividends. While the fund is no-load, a man-
agement fee and other expenses still apply. Please refer to the prospectus for further details.

The opinions expressed are those of the author and/or Fairholme Capital Management, L.L.C. and should not be considered a forecast of
future events, a guarantee of future results, nor investment advice.

Investing in the Fund involves risk including loss of principal. The Fund is non-diversified, which means that the Fund invests in a smaller
number of securities when compared to more diversified funds. Therefore, the Fund is exposed to greater individual stock volatility than a
diversified fund. The Fund also invests in foreign securities which involve greater volatility and political,
economic and currency risks and differences in accounting methods. The Fund may also invest in “special situations” to achieve its
objectives. These strategies may involve greater risks than other fund strategies. Investments in debt securities typically
decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Lower-rated and non-rated
securities present greater loss to principal than higher-rated securities.

Fund holdings and/or sector weighting are subject to change and should not be considered recommendations to buy or sell any securities.
Current and future portfolio holdings are subject to risk.

Top Ten Holdings by Issuer as of August 31, 2010

(Holdings may include both equity and fixed income securities of certain issuers mentioned below. Top holdings exclude cash and equivalents**)

General Growth Properties, Inc./ 13.7% Citigroup, Inc. 5.1%

The Rouse Co. Bank of America Corp. 5.1%
American International Group, Inc. 10.1% Morgan Stanley 5.0%
Sears Holdings Corp. 5.4% AmeriCredit Corp. 4.3%
Berkshire Hathaway, Inc. 5.3% The St. Joe Co. 3.7%
The Goldman Sachs Group, Inc. 5.2%

The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year
(if applicable) Morningstar Rating metrics.

Established in 1988, the Morningstar Fund Manager of the Year award recognizes portfolio managers who demonstrate excellent investment skill and
the courage to differ from the consensus to benefit investors. To qualify for the award, managers’ funds must have not only posted impressive returns
for the year, but the managers also must have a record of delivering outstanding long-term performance and of aligning their interests with sharehold-
ers’. The Fund Manager of the Year award winners are chosen based on Morningstar’s proprietary research and in-depth evaluation by its fund ana-
lysts.

Since 2005, GuruFocus.com names its Investment Guru of the Year every year. It is done in December of each year with a democratic process con-
trolled by GuruFocus users. The process involves two steps. In the first step, GuruFocus.com asks users to nominate their choices for Investment Guru
of the Year. The top 5-6 nominees will be put into a poll, and GuruFocus users will be able to vote for their Investment Guru of the Year. The voting
usually lasts a week and the nominee who receives the most votes will be named Investment Guru of the Year.

The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. In-
vestors cannot invest directly in an index or average. Each Morningstar average represents a universe of funds with similar
investment objectives. References to other mutual funds does not constitute an offer of these securities. Must be preceded or accompanied by a
prospectus.
The Fund Manager of the Decade award, which was awarded for the first time in 2010, recognizes fund managers who have achieved superior risk-
adjusted results over the past 10 years and have an established record of serving shareholders well. While the awards focus on performance over
the past decade, Morningstar takes into consideration other factors, including the fund manager’s strategy, approach to risk, size of the fund, and
stewardship. Both individual fund managers and management teams are eligible, and being a previous winner of the Morningstar Fund Manager of
the Year award isn’t a prerequisite. Morningstar’s fund analysts select the Fund Manager of Decade award winners based on Morningstar’s propri-
etary research and in-depth evaluation.
* Includes acquired fund fees of .01%. Acquired fund fees and expenses are those incurred indirectly by the Fund as a result of investments in shares of one or more in-
vestment companies, including, but not limited to, money market funds.
**Cash and equivalents include commercial paper, U.S. Treasury Bills, money market funds and deposit accounts.
Fairholme Distributors, Inc.
W W W. F A I R H O L M E F U N D S . C O M
FAIRHOLME

FOR IMMEDIATE RELEASE

FAIRHOLME CAPITAL MANAGEMENT, L.L.C.

FAIRHOLME FUNDS, INC.

Miami, FL
January 10, 2011

FAIRHOLME CAPITAL MANAGEMENT, L.L.C. ISSUES STATEMENT ON ACQUISITION

OF CHINA PACIFIC INSURANCE (GROUP) CO. LTD COMMON SHARES

Fairholme Capital Management L.L.C. on behalf of The Fairholme Fund (NASDAQ:FAIRX), The
Fairholme Allocation Fund (NASDAQ: FAAFX), each a series of Fairholme Funds, Inc. and certain
institutional accounts acquired over US$650 million of China Pacific Insurance (Group) Co. Ltd.
common shares listed on The Hong Kong Exchange (HKSE:2601).

We appreciate this long-term opportunity to participate in one of the largest financial services
groups in The People’s Republic of China.

The transaction occurred through Goldman Sachs Group Inc's Hong Kong office.

Fairholme Capital Management, L.L.C. is registered with the United States Security and Exchange Commission as
an investment adviser. As of January 7, 2011, the firm has approximately $22 billion of assets under management.
Fairholme Funds, Inc. is registered with the United States Security and Exchange Commission. Investing in the
mutual funds involves risk including loss of principal. Fairholme Funds’ investment objectives, risks, charges, and
expenses should be considered carefully before investing. The Fund’s prospectus contains this and other important
information about the Funds and may be obtained by calling shareholder services at 866-202-2263 or visiting our
website at www.fairholmefunds.com. Read it carefully before investing.

The Fairholme Fund and The Fairholme Allocation Fund are non-diversified, which means that both invest in a
smaller number of securities when compared to more diversified funds. Therefore, the Funds are exposed to greater
individual stock volatility than a diversified fund. The Funds also invest in foreign securities which involve greater
volatility and political, economic and currency risks and differences in accounting methods. The allocation of
investments among the different asset classes, such as equity or fixed-income classes, may have a more significant effect
on the Funds’ net asset value when one of these classes is performing more poorly than others. The Funds may invest
in lower-rated securities, which may have greater market risk. These strategies expose the Funds and their
shareholders to greater risk of loss from adverse developments affecting any portfolio company.

Shares of the Funds are offered through Fairholme Distributors, Inc., a member of The Financial Industry Regulatory
Authority, which is the largest independent regulator for all securities firms doing business in the United States.
 The St. Joe Company
133 South WaterSound Parkway
WaterSound, Florida 32413
866-417-7133

FOR IMMEDIATE RELEASE

THE ST. JOE COMPANY EXPANDS BOARD OF DIRECTORS

Appoints Bruce R. Berkowitz and Charles M. Fernandez

of Fairholme Capital Management

WaterSound, FL – December 16, 2010 – The St. Joe Company (NYSE: JOE) today announced
that Bruce R. Berkowitz and Charles M. Fernandez have been elected to the Company’s Board
of Directors, effective as of January 1, 2011. The Board will then be comprised of nine members,
eight of whom are independent. Messrs. Berkowitz and Fernandez are the Managing Member
and President, respectively, of Fairholme Capital Management, L.L.C.

“We are delighted to add Bruce and Charles to St. Joe’s Board of Directors,” said Hugh M.
Durden, Chairman of the Board of Directors. “Bruce and Charles, both of whom bring strong
experience and valuable strategic insight to our team, have a deep understanding of our business
and its inherent long-term potential. These attributes, coupled with their capital markets
expertise, will be immensely valuable to St. Joe going forward. We look forward to their
meaningful contributions to the Company.”

Mr. Berkowitz said, “St. Joe has uniquely valuable assets and some of the most attractive,
concentrated and well-managed real estate in the U.S. The value is in its development expertise,
communities, infrastructure, entitlements, master plans, timberlands and most importantly the
Company’s long-term vision. I am confident that St. Joe is well-positioned to succeed and look
forward to working with management and the Board to deliver long-term value to all
shareholders.”

Mr. Fernandez said, “With its enviable balance sheet and restructured operations, St. Joe is well-
positioned to maximize the value of its properties and assets. I look forward to joining the Board
and contributing to the effort.”

Mr. Berkowitz is the Managing Member of Fairholme Capital Management. He is also the
President and a Director of Fairholme Funds, Inc. and has been the lead manager of the
Fairholme portfolio management team since its inception. Mr. Fernandez is the President of
Fairholme Capital Management and is the Vice President and a Director of Fairholme Funds,
Inc. He has served as a member of the Fairholme portfolio management team since January
2008.

Investment research firm Morningstar recently recognized Mr. Berkowitz as the U.S. stock
manager of the decade. Client assets managed by Mr. Berkowitz at Fairholme Capital
Management are currently valued at approximately $20 billion. Advisory clients of Fairholme
Capital Management hold approximately 29% of the outstanding shares of common stock of St.
Joe.

About St. Joe

The St. Joe Company, a publicly held company currently based in WaterSound, is one of
Florida's largest real estate development companies and Northwest Florida's largest private
landowner. St. Joe is primarily engaged in real estate development and sales, with significant
interests in timber. More information about the Company can be found on its website at
www.joe.com.

Forward-Looking Statements
Statements in this press release that are not historical facts are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, including statements
about our beliefs, plans, goals, expectations and intentions. Forward-looking statements involve
risk and uncertainty, and there can be no assurance that the results described in such statements
will be realized. Such statements are based on our current expectations and we undertake no
obligation to publicly update or reissue any forward-looking statements. Risk factors that may
cause the actual results to differ are described in this press release and in various documents we
have filed with the U.S. Securities and Exchange Commission, including our Annual Report on
Form 10-K for the year ended December 31, 2009, and our Quarterly Reports on Form 10-Q.

© 2010, The St. Joe Company. "St. Joe", and the "Taking Flight" design are service marks of
The St. Joe Company.

St. Joe Investor Contact:

David Childers
904.301.4302
dchilders@joe.com

St. Joe Media Contacts:

James McCusker – ICR, Inc.
203.682.8245
jmccusker@icrinc.com

Bo Park – ICR, Inc.

646.277.1222
bo.park@icrinc.com
This news release is not intended as a recommendation to buy, hold or sell securities
issued by The St. Joe Company. Fairholme Distributors Inc.—the distributor of
Fairholme Funds—is not a broker, dealer or market-maker in stocks and bonds.
 1

WealthTrack Transcript
8/27/10- #709

CONSUELO MACK: This week on WealthTrack’s Great Investor series, Morningstar’s

Fund Manager of the Decade Bruce Berkowitz is always diving for hidden investment
treasures, but could his recent deep dive into financial stocks blow up in his face? A rare
interview with Fairholme Fund’s Bruce Berkowitz is next on Consuelo Mack
WealthTrack.

Hello and welcome to this Great Investor edition of WealthTrack. I’m Consuelo Mack.
This week we have a rare TV interview with one of the hottest mutual fund managers
around. He is Bruce Berkowitz, portfolio manager of the Fairholme Fund which he
founded in 1999, and whose assets are now climbing toward $20 billion. The five star
Fairholme Fund is ranked in the top one percent of all large blend funds by Morningstar
for the past three, five and ten year periods.1 Over the past ten years, it has delivered
average annualized returns of over 12%. That’s 13 percentage points a year better than
the S&P 500.

But market and peer beating performance are not the only reason that Morningstar named
Berkowitz Domestic Stock Fund Manager of the Year in 2009 and its first Domestic
Equity Fund Manager of the Decade. It also considered his ability to minimize the risks
he took to achieve those results. And it’s that risk avoidance quality that some say he has
now lost with his most recent investment choices. As money has poured into Fairholme,
Berkowitz has been making a huge bet on some of the most battered financial companies.
Just under 60% of his stock holdings are in companies such as AIG, Citigroup, Bank of
America, Goldman Sachs, CIT Group and bond insurer, MBIA.

Now the recent history of the group is certainly dramatic. Before the financial crisis, the
S&P financial sector accounted for over 22% of the S&P 500 index. By August 2010, its
position had shrunk to just over 16%. From peak to trough- October 9, 2007 to March 9,
2009- the financial sector fell about 83% versus a nearly 57% decline for the S&P 500
overall. The recovery that followed was even more spectacular. From the low of March
2009 to the 2010 high on April 23rd, the S&P financials soared 170% versus 80% for the
overall market.

But despite that huge recovery, from the 2007 market peak to the April 2010 high,
financials were still down about 53% versus some 22% for the market. Is this flight from
financials warranted or are there overlooked treasures in these pariahs? In a recent
interview, I asked Bruce Berkowitz why he has invested so heavily in what even he calls
“mostly hated” financials.

BRUCE BERKOWITZ: There are two parts to the investment equation. There's sort of
what you give and what you get. So we'll start out with what you get. We've had this
most extreme period in the financial history of the United States. Some say we came very
close to another Depression. And the U.S. government and its agencies just did a great
1
Please see the last page of the transcript for further information regarding the Morningstar RankingTM
 2

job of pulling us away from that cliff. And, for the last couple of years, companies have
gone through tremendous stress, the financials. But today, their balance sheets are
stronger than ever, their earnings power, their pre-tax, pre-provisioning power is stronger
than ever. And, you have to think about loans and the life of loans. You know, most loans
go for between two and five years, whether it's an individual loan, commercial. So there's
been this two-year stress period of burning through all these bad loans. And at the same
time, they've had these two years of good loans, because they're in very stressful periods.
That's normally when they put on their best loans.

So, the financial system came to the brink. U.S. Treasury, New York Fed, Congress did
amazing job. I mean, with hindsight, you know, you could criticize a little here and there.
But they did an amazing job. Now it's up to private enterprise to take it over from here.
And traditionally, that's going to be our banks and our brokers leading the way on this
nascent recovery. And there are going to be fits, and there are going to be starts. But
again, the balance sheets are strong; the potential earnings power is used. They've battled
hard, and it's a trite saying, but whatever doesn't kill you makes you stronger is quite true.
And for those financial institutions still standing, and the ones we've invested in, will get
through this period and move on to a more normal earnings period.

CONSUELO MACK: So, what's the biggest risk that you're taking, in having this sort
of a concentration in these companies that have been through the grinder?

BRUCE BERKOWITZ: Well, the biggest risk would be the correlation risk, that they
all don't do well. Which would mean, you know, a severe double dip in the entire
financial system of the United States, totally melts down, malfunctions, no longer exists.
So, it's hard to see that.

But, on the other hand, when you take a look at our fund today, one-sixth of the fund now
is cash equivalent. Another one-sixth of the fund is in fixed income securities. So, we're
only two-thirds invested. So we have billions of dollars of cash ready to take advantage
of whatever further stresses may come our way. And, you know, we're right. And then, as
I was mentioning to you, the other part of the equation is what you give. And by "most
hated," I meant that the financial institutions are not very popular today, given what's
happened in the past couple of years, and their price reflects it. So, we're paying a
pessimistic price for institutions that are essential to the country, and that will lead us, as
they usually do, out of the recession.

CONSUELO MACK: Some of your competitors, including Don Yachtman, of the

Yachtman Funds, who has a terrific track record as well, you know, recently told me that
he doesn't understand what you're doing because he feels that financials are black boxes.
That, in fact, you can't possibly know what Citigroup's loan portfolio really looks like.
And that, he feels that you're taking a tremendous amount of risk that is kind of contrary
to what your prior practices have been. You don't think they're black boxes? I mean, you
actually think that you know what Citigroup owns and what its debts are?
 3

BRUCE BERKOWITZ: It's our belief that enough time has gone by now, as I've said,
that you've had the vintages, the various loans for a given year. You start to see, you
know, the bad parts, the delinquent loans. You get to see the cash yields on the bad debt.
You know, one thing that's nice about getting older is that you start to see certain cycles
before, and this is very reminiscent of '91, '92, when people thought Wells Fargo was
going to go under because of commercial real estate. Citigroup, again. And, it's perverse
psychology. You've had so much strain in the system, so many balance sheets;
individuals have been hurt, that it's just very hard to look at them in a positive way.

But, with time, you start to see the patterns and the recovery, and you also have to give
credit to the regulators, to the auditors, to the executives, to the oversight committees of
the Congress. I mean, these institutions have been studied in the last two years. They're
under a microscope. Every element has been studied. And when you're in stress mode,
and when your institutions are shrinking, it's very difficult to hide bad news. Everything
comes out in shrink mode. But the good news is, when you're shrinking, cash flows build
up. You're able to pay off the bad debts, and you're able to fight another day. And, you
see it now with the institutions.

CONSUELO MACK: Bruce Berkowitz and the Fairholme Fund's rule number one is
don't lose money. And then, rule number two and number three is pay attention to rule
number one. So, given the current strategy that you're following, in the Fairholme Fund,
are you still adhering to the rule number one and two and three, of don't lose money?

BRUCE BERKOWITZ: We believe we are. At the prices that we're paying for
securities, we just don't see the downside. We don't see death, we don't see bankruptcy,
we don't see significant losses. In the case of the banks, we've been buying below book
values. We've been buying single-digit earnings yields. I mean, at some point, the banks
will start to have a more normal earnings period.

It's amazing, when you think of a Bank of America and all of the organizations they have
merged with over time, including Merrill Lynch and MBNA, it's tremendous. The
amount of value and wealth is just tremendous in a Bank of America and in fact, it's
essential to the rebuilding of the country's balance sheet. And so is Morgan Stanley and
Goldman Sachs, and Citigroup and Regions Financial and CIT. All the companies that
we purchased during their stressful periods.

CONSUELO MACK: So, Bruce, what would convince you to sell? I mean, is it going to
be a price decision with some of these companies?

BRUCE BERKOWITZ: It's going to be a price decision.

CONSUELO MACK: It is a price decision.

BRUCE BERKOWITZ: It's going to. It's just so cheap, relative to what you're getting.
And eventually, if we're right in our understanding and we don't have that dreaded double
dip, going back into the Great Depression, then there'll be a more normalized earning
 4

period. And then, that'll be a tough part to determine, at what point our investments start
to equate to T-bill type returns.

CONSUELO MACK: And so, when you look at, you know, a Citigroup, for instance.
Let's just take them one at a time. I mean, it's value now. Do you think that there's still a
lot of value left?

BRUCE BERKOWITZ: Yes. Citigroup has the ability to earn a dollar a share, which
would put it at $10, let's just say. And you compare it to where it's trading today, four.
Under four.

CONSUELO MACK: And Bank of America, again, same?

BRUCE BERKOWITZ: All the same.

CONSUELO MACK: Same equation.

BRUCE BERKOWITZ: With Merrill Lynch, with all the operations they've purchased.
Citigroup, with its International Banking Franchise.

CONSUELO MACK: Bruce, AIG.

BRUCE BERKOWITZ: A great company that stumbled, for various reasons, that still
has intact franchises, that still has the ability to repay taxpayers, New York Fed, the U.S.
Treasury, and will hopefully emerge a smaller, yet streamlined organization, with
charters and the old Sun America. And, we're, you know, sad, but some very valuable
divisions will be sold. AIA, Alico. But we see the company having the ability to pay back
taxpayers over time.

CONSUELO MACK: The other, you know, company that I'm really intrigued with, for
two reasons, MBIA, which a cousin of mine actually co-founded and left many years ago.
I'm not a shareholder. But MBIA has now been split up into two companies. It's in
litigation over that decision to have two different companies. I mean, why MBIA? You
know, what's the attraction? What's the value there, first of all?

BRUCE BERKOWITZ: Well, the value, if you ask the individuals and institutions who
have probably received between four and five billion dollars of proceeds from MBIA, for
guaranteeing the bonds--

CONSUELO MACK: Municipal bonds, right.

BRUCE BERKOWITZ: --they'll tell you that MBIA's had tremendous value, and they
have kept their word to all of their insurers. They continue to keep their word. And,
unlike a rating agency, what I like about MBIA is, besides giving the investor the good
housekeeping sale, they're also putting their money where their mouth is. And as they
continue to pay, and I believe be the advocate for individual investors, how can an
 5

individual investor claim, if they have to follow or they're unhappy about something, they
just don't have the scale to talk with counterparties, where MBIA is going to be their
advocate. So when all is said and done, we expect MBIA to regain their franchise value.

CONSUELO MACK: In the municipal bond insurance business?

BRUCE BERKOWITZ: In the municipal bond area, and in other areas also, where it
makes sense for them to do business. Granted, all the financial institutions made the
mistake of starting out with a very good idea and slowly changing it to the point where
you've reached an illogical extreme.

Now, with hindsight, you can actually say, well, how could the banks and insurers, how
could they have gone from A to B to C to D? It makes no sense now. But, there were
slow changes. So I think everyone realizes mistakes of the past, and they're going to get
back down to their basic business. And, a little bit of luck, they'll be able to get the right
price for the product, the insurance. And they've clearly shown that the insurance is
worthwhile, and they've clearly kept their word about paying the insureds. So, it's now
just a question of working through it. And even if they don't write another bit of business,
which I believe they will, the runoff value alone of the institution is such that I don't see
how our shareholders lose money.

CONSUELO MACK: Let me ask you about a recent Wall Street Journal article about
you. It talked about how you were breaking Wall Street's rules and making other mutual
fund managers look bad, by doing all the things they say can't be done. And this is your
style. Can't time the market- do you time the market?

BRUCE BERKOWITZ: No. We don't predict. We price. So if timing the market means
we buy stressed securities when their prices are way down, then yes. Guilty as charged.
But, again, we're trying to compare what we're paying for something, versus what we
think, over time, we're going to get for the cash we're paying. And, we try not to have too
many predetermined notions about what it's going to be. And then we go, once we come
up with a thesis about an idea, we then try and find as many knowledgeable professionals
in that industry, and pay them to destroy our idea, and tell us--

CONSUELO MACK: You try to kill your investments before you invest them.

BRUCE BERKOWITZ: Right. We're not interested in talking to anyone who’ll tell us
why we're right. We want to talk to people to tell us why we're wrong, and we're always
interested to hear why we're wrong. Because one day someone's going to do our
shareholders a big favor and tell us why we're wrong, and we're going to be wrong. We
want our ideas to be disproven.

CONSUELO MACK: Another Wall Street kind of conventional wisdom that, again, this
Wall Street Journal article said that you are breaking this conventional wisdom, is that
you shouldn't hold a lot of cash in equity funds. Well, the Fairholme Fund has a history of
holding a lot of cash. And I remember you telling me that cash is your financial valium.
 6

BRUCE BERKOWITZ: Yes. Well, the worst situation is if you're backed into a corner
and you can't get out of it, whether for illiquidity reasons, shareholders may need money,
or you have an investment that, as usual, you're a little too early, and you don't have the
money to buy more, or you don't have the flexibility. That's a nightmare scenario. And
this is nothing new. I mean, the great investors never run out of cash. It's just as simple as
that. And we've learned this is nothing new. We haven't re-created the wheel here, but we
always want to have a lot of cash, because cash can become awfully valuable when no
one else has it.

CONSUELO MACK: The third thing that you're doing that supposedly is making other
mutual fund managers mad, Bruce, is that they're saying you shouldn't put too much
money into a few stocks. And, you know, your top 10 holdings or something represent
two-thirds of your fund, currently?

BRUCE BERKOWITZ: Yes. Almost all of the equities. Probably all of the equities,
which would be about two-thirds. A little under two-thirds of the fund.

CONSUELO MACK: So, is this going to be something that shareholders of the

Fairholme Fund, they'd just better get used to the idea that you're going to, heavily focus
the portfolio?

BRUCE BERKOWITZ: I think we always have focused. And we're very aware of
correlations. And, look what we faced in the last two years. When times get tough,
everything's correlated. So, we're wary. But we've always had the focus. Our top four,
five positions have always been the major part of our equity holdings, and that will
continue.

CONSUELO MACK: There’s a saying on Wall Street as well, is that size is the enemy
of performance. Investors have been flocking to the Fairholme Fund because of your
stellar performance, at a time when most other equity funds are losing investors. So what
can you tell, especially the newer owners of the Fairholme Fund, about the way you're
going to run their portfolio?

BRUCE BERKOWITZ: Everything that we do for our funds, we do with the

shareholders in mind. We try and put ourselves into the shoes of our shareholders. And
we do that by being large shareholders of the funds. And what I could tell our
shareholders is, we think about this every day. And, the important point is that, as the
economy still is at the beginning of a recovery, and there's still much to do, and continued
stresses, we can put the money to work. The danger's going to be when times get better,
and there's nothing to do, and the money keeps flocking in. That obviously is going to be
a point we're going to have to close down the fund. But, close down everything.

But of course, it's more than that. Because if we continue to perform, which I hope we do,
16 billion's going to become 32, and 32's going to become 64. And then it's not really an
issue about closing down the fund. It's just the size. But I have no idea if we'll all be
 7

investing five or 10 years from now. It's a high-class problem which we're focused on,
and I hope that we will take the right actions before our shareholders tell us what the right
action is. And a lot of our shareholders are concerned about it. It's a question that comes
up all the time.

CONSUELO MACK: About size.

BRUCE BERKOWITZ: Of size. Right. But right now size matters.

CONSUELO MACK: And right now, has the size, you know, as you approached 20
billion under management, has the size affected the way you can do business yet?

BRUCE BERKOWITZ: Yes. It's made a real contribution. How else could we have
committed almost $3 billion to GGP, or to have done an American Credit securitization
on our own, or help on a transformation transaction with Hertz, or offer other companies
to be of help in their capital structure, or invest in CIT, or be able to go in with reasonable
size? It's helped, and we think it will continue to help, and we hope it'll be noticeable to
most people over time.

CONSUELO MACK: You're going to be a target. The more successful you are, the
more of a target you are for the naysayers. So, the comparisons now are being made that
they look at other super investors, like, you know, Bill Miller or Bill Nygren, or Ken
Heebner. And they say, these people had, you know, multi-year, spectacular runs, and
then had a couple, two or three years of disastrous results. Do those comparisons worry
you? Do you feel like, you know, gee, you know, my time's coming too? Is that a
concern?

BRUCE BERKOWITZ: What worries me is knowing that it's usually a person's last
investment idea that kills them.

CONSUELO MACK: Explain.

BRUCE BERKOWITZ: Well, as you get bigger, you put more into your investments.
And, that last idea, which may be bad, will end up losing more than what you've made
over decades. So I'm more concerned for our shareholders than I am for myself. That is
why, if you look at the fund today, to me, it looks more conservatively positioned than it's
ever been. We're two-thirds invested in equities today. That is not exactly what I would
call a kamikaze strategy. And when you look at the prices that we're paying for securities
and look at the prices where they were five or 10 years ago- granted, they may not be
exactly the same companies- it looks like we're getting some bargains.

But we have too much respect for our shareholders. And we say to ourselves every day,
we don't mind if our shareholders fire us for underperforming on the up side. But it would
be tremendously disappointing if we made some kind of bonehead maneuver which cost
our shareholders a lot of money. That would be tough to live with. And that's more
important than the money.
 8

CONSUELO MACK: Now, you know one thing that will happen is that a lot of the
people that are coming in after you've had this, you know, string of 13% annualized
returns over the last 10 years is that they're going to expecting that kind of performance.
So if they don't get that kind of performance, you're going to see a lot of that money
leave, correct? Or is there some way that you think that you can avoid that from
happening to you, what seems to happen to just about every successful investor out there

BRUCE BERKOWITZ: I'm hoping- I mean, famous last words, but I'm hoping we can
come close to that performance. I mean, I just don't want my mother to fire me again.
That's all.

CONSUELO MACK: When did your mother fire you?

BRUCE BERKOWITZ: Oh, about 2008, when times were tough.

CONSUELO MACK: So Bruce, it's time for me to ask you the question about the one
investment that everyone should have in a long-term diversified portfolio, and I know the
one investment that you would choose is your own fund, the Fairholme Fund, because
that's what you invest in. But you can't recommend your own fund. So what would you
have us own some of in a long-term diversified portfolio?

BRUCE BERKOWITZ: I think the one very interesting investment we have today is
MBIA. If you believe the numbers and the auditors, the company has a value
significantly above where it's trading today, even if it just runs off and doesn't write
another dollar of business. The company has some tremendous arbitrage possibilities, and
they're really taking the right business actions. But, small. Small part of the fund, because
it's a small company. And by law, the Fairholme Fund, we can only own 9.9% of an
insurance company. So it's not a relatively large position for the fund. But it is a most
intriguing, controversial investment which we believe is going to do quite well. And we
have a lot of faith in Jay Brown and his team.

CONSUELO MACK: Controversial it is. And for a risk-averse guy, a lot of people are
looking at your portfolio at the Fairholme Fund and saying, what is he doing? But I think
you've just given us the best answers that you possibly can on why you think that you're
following your traditional, risk less, or less risk type of approach. So Bruce Berkowitz,
great to have you here on Wealth Track again. Thanks so much for joining us.

BRUCE BERKOWITZ: Thank you. It's been great.

CONSUELO MACK: As Berkowitz told us as he was leaving the interview, the really
interesting conversation will be next year when we find out how the financials have done!

And that concludes this edition of WealthTrack. I hope you can join us next week when I
sit down with T. Rowe Price chairman and fund manager Brian Rogers, a “Great
Investor” with an excellent track record and a philosophy of old-time American values.
 9

Until then to watch this program again, go to our website, wealthtrack.com to see it as a
podcast or streaming video. Thank you so much for visiting with us and make the week
ahead a profitable and a productive one

©2010 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is
proprietary to Morningstar and/or its content providers; (2) may not be copied or
distributed; and (3) is not warranted to be accurate, complete or timely. Neither
Morningstar nor its content providers are responsible for any damages or losses arising
from any use of this information. Past performance is no guarantee of future results. For
each fund with at least a three-year history, Morningstar calculates a Morningstar
RatingTM based on a Morningstar Risk-Adjusted Return measure that accounts for
variation in a fund monthly performance (including the effects of sales charges, loads,
and redemption fees), placing more emphasis on downward variations and rewarding
consistent performance. The top 10% of funds in each category receive 5 stars, the next
22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and
the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund
within this scale and rated separately, which may cause slight variations in the
distribution percentages.) The Overall Morningstar Rating for a fund is derived from a
weighted average of the performance figures associated with its three-, five-, and ten-
year (if applicable) Morningstar Rating metrics. The Fairholme Fund was rated against
the following numbers of U.S. domiciled Large Blend funds over the following time
periods: 1,723 funds in the last three years, 1,422 funds in the last five years, 761 funds
in the last ten years and 1,723 overall. With respect to these Large Blend funds, The
Fairholme Fund received a Morningstar Rating of five stars for the three-year, five-year,
ten-year and overall periods. Past performance is no guarantee of future results.
 FAIRHOLME LETTER TO GENERAL GROWTH PROPERTIES, INC.

Miami, FL – April 22, 2010 – Fairholme Capital Management L.L.C. on behalf of The
Fairholme Fund (Ticker: FAIRX) and The Fairholme Focused Income Fund (Ticker: FOCIX),
each a series of Fairholme Funds, Inc. sent the attached letter to Adam Metz, CEO of General
Growth Properties, Inc. (“GGP”)

Information about Fairholme Capital and the Funds

Fairholme Capital Management, L.L.C is registered with the SEC as an investment adviser
and, as of March 31, 2010, has approximately $16.5 billion of assets under management.
Fairholme Capital is the investment manager of each of The Fairholme Fund and The
Fairholme Focused Income Fund. Operating and investment decisions for Fairholme Capital
and the Funds are made by Bruce R. Berkowitz, in consultation with Charles M. Fernandez.
Mr. Berkowitz is the founder and Managing Member of Fairholme Capital and the President
and a Director of Fairholme Funds, Inc. Mr. Charles M. Fernandez is the President of
Fairholme Capital and a Vice-President and a Director of Fairholme Funds, Inc.

The Funds investment objectives, risks, charges, and expenses should be considered carefully
before investing. The prospectus contains this and other important information about the
Funds, and may be obtained by calling shareholder services at 866-202-2263 or visiting our
website at www.fairholmefunds.com. Read it carefully before investing.

Investing in The Fairholme Fund involves risk including loss of principal. The Fairholme Fund
is non-diversified, which means that it invests in a smaller number of securities when
compared to more diversified funds. Therefore, the Fund is exposed to greater individual stock
volatility than a diversified fund. The Fairholme Fund also invests in foreign securities which
involve greater volatility and political, economic and currency risks and differences in
accounting methods.

The Fairholme Focused Income Fund is a non-diversified mutual fund, which means that the
Fund invests in a smaller number of securities when compared to more diversified funds. This
strategy exposes the Fund and its shareholders to greater risk of loss from adverse
developments affecting portfolio companies. The Fund’s investments are also subject to
interest rate risk, which is the risk that the value of a security will decline because of a change
in general interest rates. Investments subject to interest rate risk will usually decrease in value
when interest rates rise and rise in value when interest rates decline. Also, securities with long
maturities typically experience a more pronounced change in value when interest rates
change.

Shares of the Funds are offered through the Funds’ distributor, PFPC Distributors, Inc.
 FAIRHOLME CAPITAL MANAGEMENT LLC

4400 BISCAYNE BLVD

MIAMI, FLORIDA 33137

TEL 305 358 3000

FAIRHOLME FAX 305 358 8002

FAIRHOLME.NET

April 22, 2010

Mr. Adam Metz

Chief Executive Officer
General Growth Properties, Inc.
110 North Wacker Drive
Chicago, Illinois 60606

Dear Adam,

There have been some rumors about our intentions, so please allow me to reiterate that
Fairholme is not willing to invest in GGP if equity ownership is concentrated in the hands of
Simon Property Group ("SPG"), passive or not. Our concern is not antitrust or execution risk.
We are not experts in those areas. We simply find the value proposition for the public float
unsupportable assuming successful execution of anything like the SPG proposal. We continue
to support a stand-alone GGP and hope for a long-term relationship.

Do not hesitate to call if I can be of assistance.

With kind regards,

Bruce R. Berkowitz
Founder and Managing Member

Ignore the Crowd.

 FAIRHOLME FUNDS EACH AGREE TO MAKE EQUITY INVESTMENTS IN
GENERAL GROWTH PROPERTIES, INC.

Miami, FL – April 6, 2010 – The Fairholme Fund (Ticker: FAIRX) and The Fairholme Focused
Income Fund (Ticker: FOCIX), each a series of Fairholme Funds, Inc., today announced that, on
March 31, 2010, each Fund entered into a definitive agreement to acquire new equity capital of
the reorganized General Growth Properties, Inc. (Ticker: GGP) on terms substantially similar to
those contained in a proposal announced on March 9, 2010. The investment manager of each of
FAIRX and FOCIX is Fairholme Capital Management, LLC (“Fairholme Capital”).

FAIRX would acquire approximately 268.5 million shares of GGP (at a cost of approximately
$2.685 billion), and provide funding of approximately $61.8 million in connection with the $250
million rights offering of General Growth Opportunities (“GGO”), a subsidiary of GGP to be
formed and subsequently spun-off to GGP shareholders. FOCIX would acquire approximately
2.9 million shares of GGP (at a cost of approximately $29 million) and provide funding of
approximately $0.67 million in connection with the GGO rights offering. Each commitment to
purchase shares of GGP may be terminated at the option of GGP at any time prior to the hearing
on its plan of reorganization and also may be reduced by up to 50% at the option of GGP if GGP
obtains binding commitments to replace the Funds’ investments with new equity capital at a net
per share price greater than $10.50. In return for their respective commitments, FAIRX will
receive warrants to purchase approximately 42.4 million shares of GGP and 19.8 million shares
of GGO, and FOCIX will receive warrants to purchase approximately 0.45 million shares of
GGP and 0.21 million warrants to purchase shares of GGO, in each case subject to customary
antidilution adjustments. Contrary to the terms of the initial proposal, neither Fund will have any
GGP or GGO board appointment rights.

The terms of the transaction are specified in the agreement between each Fund and GGP, and
such agreement is subject to U.S. Bankruptcy Court approval.

Information about Fairholme Capital and the Funds

Fairholme Capital is registered with the SEC as an investment adviser and, as of March 31, 2010,
has approximately $16.5 billion of assets under management. Fairholme Capital is the
investment manager of each of The Fairholme Fund and The Fairholme Focused Income Fund.
Operating and investment decisions for Fairholme Capital and the Funds are made by Bruce R.
Berkowitz, in consultation with Charles M. Fernandez. Mr. Berkowitz is the founder and
Managing Member of Fairholme Capital and the President and a Director of Fairholme Funds,
Inc. Mr. Charles M. Fernandez is the President of Fairholme Capital and a Vice-President and a
Director of Fairholme Funds, Inc.

The Funds investment objectives, risks, charges, and expenses should be considered carefully
before investing. The prospectus contains this and other important information about the Funds,
and may be obtained by calling shareholder services at 866-202-2263 or visiting our website at
www.fairholmefunds.com. Read it carefully before investing.

NY12528:447235.1D
Investing in The Fairholme Fund involves risk including loss of principal. The Fairholme Fund
is non‐diversified, which means that it invests in a smaller number of securities when compared
to more diversified funds. Therefore, the Fund is exposed to greater individual stock volatility
than a diversified fund. The Fairholme Fund also invests in foreign securities which involve
greater volatility and political, economic and currency risks and differences in accounting
methods.

The Fairholme Focused Income Fund is a non-diversified mutual fund, which means that the
Fund invests in a smaller number of securities when compared to more diversified funds. This
strategy exposes the Fund and its shareholders to greater risk of loss from adverse developments
affecting portfolio companies. The Fund’s investments are also subject to interest rate risk,
which is the risk that the value of a security will decline because of a change in general interest
rates. Investments subject to interest rate risk will usually decrease in value when interest rates
rise and rise in value when interest rates decline. Also, securities with long maturities typically
experience a more pronounced change in value when interest rates change.

Shares of the Funds are offered through the Funds’ distributor, PFPC Distributors, Inc.

NY12528:447235.1D
 FAIRHOLME PROPOSES EQUITY INVESTMENT IN
GENERAL GROWTH PROPERTIES, INC.

Miami, FL – March 9, 2010 - Fairholme Capital Management, L.L.C. on behalf of The

Fairholme Fund (Ticker: FAIRX) and The Fairholme Focused Income Fund (Ticker: FOCIX),
each a series of Fairholme Funds, Inc., today announced a proposal pursuant to which the
Funds would acquire approximately 271.3 million shares (or approximately $2.713 billion) of
new equity capital of the reorganized General Growth Properties, Inc. (Ticker: GGP) at
$10.00 per share to facilitate GGP’s emergence from bankruptcy. In addition, under the
proposal, the Funds would provide funding of approximately $67.5 million in connection with
the $250 million rights offering of General Growth Opportunities, a new subsidiary of GGP,
at $5 per share. The Funds currently hold approximately $1.83 billion in face amount of
GGP’s unsecured indebtedness.

The proposal responded to a request by GGP of its largest stakeholders concerning their
interest in making a commitment to subscribe for new common stock of GGP upon the
effectiveness of GGP’s anticipated plan of reorganization, with the proceeds to be applied to
redeem existing unsecured creditors at par plus accrued interest and to provide funds to pay
for emergence costs and working capital needs after emergence. The proposal was designed
to respond to GGP’s additional request that the commitment be consistent with the parallel
equity investment proposed by Brookfield Asset Management Inc. on February 24, 2010.

The proposal, which is described in the letter and indicative terms attached hereto as Annex
A, involves commitments by the Funds and Pershing Square, each severally but not jointly,
and in accordance with the terms and conditions described in the term sheet. The proposal is
not binding. Any binding commitment will be reflected only in mutual agreed definitive
documentation.

Information About Fairholme Capital and the Funds

Fairholme Capital Management, L.L.C. is registered with the SEC as an investment adviser
and, as of March 9, 2010, has approximately $15 billion of assets under management.
Fairholme Capital is the investment manager of the Fairholme Funds, Inc. and its series The
Fairholme Fund and The Fairholme Focused Income Fund, each of which is an Investor under
the terms attached hereto as Annex A. Operating and investment decisions for Fairholme
Capital and the Funds are made by Bruce R. Berkowitz, in conjunction with Charles M.
Fernandez. Mr. Berkowitz is the founder and Managing Member of Fairholme Capital and
the President and a Director of Fairholme Funds, Inc. Mr. Charles M. Fernandez is the
President of Fairholme Capital and a Vice-President and a Director of Fairholme Funds, Inc.

The Funds investment objectives, risks, charges, and expenses should be considered carefully
before investing. The prospectus contains this and other important information about the
Funds, and may be obtained by calling shareholder services at 866-202-2263 or visiting our
website at www.fairholmefunds.com. Read it carefully before investing.
Investing in the Fairholme Fund involves risk including loss of principal. The Fairholme
Fund is non‐diversified, which means that the Fairholme Fund invests in a smaller number of
securities when compared to more diversified funds. Therefore, the Fairholme Fund is
exposed to greater individual stock volatility than a diversified fund. The Fairholme Fund
also invests in foreign securities which involve greater volatility and political, economic and
currency risks and differences in accounting methods.

The Fairholme Focused Income Fund is a non-diversified mutual fund, which means that the
Fund invests in a smaller number of securities when compared to more diversified funds. This
strategy exposes the Fund and its shareholders to greater risk of loss from adverse
developments affecting portfolio companies. The Fund’s investments are also subject to
interest rate risk, which is the risk that the value of a security will decline because of a change
in general interest rates. Investments subject to interest rate risk will usually decrease in
value when interest rates rise and rise in value when interest rates decline. Also, securities
with long maturities typically experience a more pronounced change in value when interest
rates change.

Shares of the Funds are offered through the Funds’ distributor, PFPC Distributors, Inc.
 BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE Phone: (866) 444-6820 Operator: BPC31511 Date: 8-MAR-2010 14:46:49.39
Name: PERSHING SQUARE CAPI
[E/O] CRC: 56094 BPC C97466 799.02.01.00 0/1
C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 1
Description: Exhibit 99.2 EDGAR 2 *C97466/7990201/1*

ANNEX A

March 8, 2010

General Growth Properties, Inc.

110 N. Wacker Drive
Chicago, Illinois 60606
Attn: Adam S. Metz and Thomas Nolan

$3.925 Billion Common Stock Commitment

for Stand-Alone Plan of Reorganization

Dear Adam and Tom:

As you know, Fairholme Capital Management, LLC (“Fairholme”) is the largest unsecured creditor of General Growth
Properties, Inc. (the “Company”), holding approximately $1.83 billion in face amount of unsecured indebtedness, and
Pershing Square Capital Management, L.P. (“Pershing Square”) is the largest economic owner, with a 25%
economic stake in GGP equity (including approximately 7.5% of the common stock outstanding) and $434 million in
face amount of unsecured indebtedness.

You have asked if we, as your largest debt and equity stakeholders, are interested in making a commitment to
subscribe for new common stock of the Company upon the effectiveness of the Company’s anticipated plan of
reorganization, with the proceeds to be applied to redeem existing unsecured creditors at par plus accrued interest
and to provide funds to pay for emergence costs and working capital needs after emergence. You have asked us for
a commitment that is designed to be consistent with the parallel equity investment proposed by Brookfield Asset
Management Inc. in their letter of February 24, 2010 (the “Brookfield Proposal”), but is also capable of being adapted
as circumstances change.
Date: 8-MAR-2010 14:46:49.39

In response to your request, we would like to propose to commit, severally but not jointly, $3.925 billion of new equity
capital at a value of $15 per current share on the terms and conditions described in the term sheet attached as
*C97466/7990201/1*

Annex A. Our proposal includes:

BPC C97466 799.02.01.00 0/1

• a commitment to purchase $3.8 billion of common stock of the reorganized Company (“New GGP”),
after giving effect to the distribution of General Growth Opportunities, at a price of $10 per share;

• a commitment to provide the currently unfunded $125 million of capital to backstop a $250 million
rights offering by General Growth Opportunities at a price of $5 per share.
Operator: BPC31511
Phone: (866) 444-6820

EDGAR 2
BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE

[E/O] CRC: 56094

C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 1
Name: PERSHING SQUARE CAPI

Description: Exhibit 99.2

 BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE Phone: (866) 444-6820 Operator: BPC31511 Date: 8-MAR-2010 14:46:49.39
Name: PERSHING SQUARE CAPI
[E/O] CRC: 25285 BPC C97466 799.02.02.00 0/1
C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 2
Description: Exhibit 99.2 EDGAR 2 *C97466/7990202/1*

Highlights

We would like to highlight the following items in our proposal:

• Ample Liquidity. When taken together with the Brookfield Proposal, our commitments would provide a total
of $6.3 billion of committed equity capital for New GGP in addition to $250 million of committed equity
capital for GGO. Combined with $1.5 billion of unsecured indebtedness, for which we expect a commitment
can be available shortly, New GGP will have $7.8 billion in cash proceeds, sufficient (i) to pay in cash all
unsecured creditors at par plus accrued interest, (ii) to pay exit costs and (iii) to provide appropriate working
capital for New GGP upon emergence, without requiring the asset sales contemplated by the Brookfield
Proposal. GGO will also be fully funded with a $250 million rights offering backstop from Pershing Square,
Fairholme, and Brookfield.

• Flexibility to Manage Cost of Capital. Our $3.8 billion of commitments with respect to New GGP may be
cutback by the Company in favor of future equity capital raises at a lower cost of capital, subject to a
minimum purchase by Fairholme and Pershing Square totaling $1.9 billion. In addition, as with the
Brookfield Proposal, we would be willing to permit up to $500 million of incremental equity capital to be
raised by New GGP on terms that are mutually acceptable to all parties. In light of the fact that New GGP
will likely be the second or third largest REIT as ranked by equity market capitalization upon emergence, we
believe there will be a large demand for New GGP stock, even at values higher than $10 per share.

• Funding Certainty. As your largest stakeholders, we are familiar with the Company and, more importantly,
our interests are aligned with yours. Accordingly, there will be no due diligence condition to our
commitments and we will work to keep other conditions to a minimum as described on Annex A. We
anticipate no regulatory or antitrust concerns. We do not believe any proposal from a third party without
Date: 8-MAR-2010 14:46:49.39

significant current interests in the Company can provide similar certainty of funding.
*C97466/7990202/1*

• Confirmation Certainty. The Investors include both the Company’s largest equity owner and two of its
largest creditors. We expect broad support from all of the Company’s main constituencies, including
BPC C97466 799.02.02.00 0/1

employees and business partners. Since creditors will receive par plus accrued interest under any expected
plan of reorganization, stockholder support is the key element for any plan confirmation and any capital
raising or change-in-control transaction. We believe that the Brookfield Proposal (or any similar proposal),
when coupled with our commitments, provides substantially higher short term and long term value than a
sale of the Company now and will achieve overwhelming shareholder support.
Operator: BPC31511

• No Exclusivity; Complete Freedom to Take Better Proposal. Our proposal leaves the Company completely
free to pursue better alternatives. The proposal includes no overbid protections, break fees, exclusivity
provisions or similar “deal protections”.

• No Cash Fees. We seek no commitment fees, ticking fees or other fees, other than reimbursement for our
out-of-pocket expenses. In exchange for its approximately $2.78 billion commitment, Fairholme will
received $15 strike price warrants on GGP. Pershing Square will receive no upfront commitments fees or
Phone: (866) 444-6820

warrants for its approximately $1.15 billion commitment unless and until its proposed commitment is
funded.

• Speed. As you know, we are deeply familiar with the Company. We are prepared to execute and deliver
definitive documents for submission to the Court for approval as soon as practicable, preferably by next
week. We can proceed at the same time as the Brookfield Proposal or before it, as you wish.
EDGAR 2
BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE

[E/O] CRC: 25285

C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 2
Name: PERSHING SQUARE CAPI

Description: Exhibit 99.2

 BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE Phone: (866) 444-6820 Operator: BPC31511 Date: 8-MAR-2010 14:46:49.39
Name: PERSHING SQUARE CAPI
[E/O] CRC: 60976 BPC C97466 799.02.03.00 0/1
C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 3
Description: Exhibit 99.2 EDGAR 2 *C97466/7990203/1*

Suggested Next Steps

We believe it would take no more than a week to reach agreement on definitive documentation for submission to the
Bankruptcy Court for approval. As discussed above, we require no exclusivity agreement, whether during this initial
period or afterwards, and are willing to proceed in parallel with any other proposal you are considering.

Once our commitments are reflected in definitive documents approved by the Court, we also are flexible on schedule
for consummation of the plan of reorganization. We support a prompt exit but have structured our commitments to
provide the Company with the option to extend through December 31, 2010 as necessary.

There can be little doubt that this is a poor time to sell a newly relisted REIT. GGP has suffered from the worst
recession since the Great Depression and from the last two years of its financial distress, including bankruptcy. We
are convinced that GGP’s operations will improve when it emerges from bankruptcy and benefits from an
improvement in the economy. We respectfully submit, as your largest stakeholders, that the long-term value of GGP
is significantly greater as a stand-alone company than the proceeds generated by a sale to a third party. The newly
reorganized GGP, with the benefit of strong sponsorship and with the longest dated, lowest-cost, non-recourse
capital structure in the REIT industry, offers extraordinary potential for intermediate and long-term investors.

****

Please understand that, notwithstanding anything to the contrary contained herein, this letter is only an expression of
our serious interest and is not intended to, and shall not, constitute a binding agreement of either of us or any of our
respective affiliates, or an offer by either of us or any of our respective affiliates to enter into a binding agreement, or
create any legal obligations on the part of either of us or any of our respective affiliates with respect to any of the
matters set forth herein. Please also understand that we defer entirely to the Company with respect to how and when
Date: 8-MAR-2010 14:46:49.39

to solicit stakeholder acceptance of its plan of reorganization. Any solicitation of a plan of reorganization must be
made only after appropriate disclosure and in compliance with applicable laws and, accordingly, this letter is not
*C97466/7990203/1*

intended to, and shall not, constitute a solicitation of any holder of claims or interests.
BPC C97466 799.02.03.00 0/1

Thank you for your time and consideration. We look forward to discussing our proposal with you. If you have
questions, you are welcome to contact either of the undersigned or external legal counsel Andy Dietderich at Sullivan
& Cromwell LLP (212-558-3830; dietdericha@sullcrom.com).
Operator: BPC31511
Phone: (866) 444-6820

EDGAR 2
BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE

[E/O] CRC: 60976

C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 3
Name: PERSHING SQUARE CAPI

Description: Exhibit 99.2

 BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE Phone: (866) 444-6820 Operator: BPC31511 Date: 8-MAR-2010 14:46:49.39
Name: PERSHING SQUARE CAPI
[E/O] CRC: 45161 BPC C97466 799.02.04.00 0/1
C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 4
Description: Exhibit 99.2 EDGAR 2 *C97466/7990204/1*

Sincerely,

FAIRHOLME CAPITAL MANAGEMENT, LLC

By: /s/ Bruce R. Berkowitz

Bruce R. Berkowitz
Managing Member

PERSHING SQUARE CAPITAL MANAGEMENT, L.P.

By: PS Management GP, LLC
Its: General Partner

By: /s/ William A. Ackman

William A. Ackman
Managing Member
Date: 8-MAR-2010 14:46:49.39

*C97466/7990204/1*
BPC C97466 799.02.04.00 0/1
Operator: BPC31511
Phone: (866) 444-6820

EDGAR 2
BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE

[E/O] CRC: 45161

C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 4
Name: PERSHING SQUARE CAPI

Description: Exhibit 99.2

 BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE Phone: (866) 444-6820 Operator: BPC31511 Date: 8-MAR-2010 14:46:49.39
Name: PERSHING SQUARE CAPI
[E/O] CRC: 5790 BPC C97466 799.02.05.00 0/3
C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 5
Description: Exhibit 99.2 EDGAR 2 *C97466/7990205/3*

ANNEX A

Indicative Terms for Equity Commitments

The following summary has been prepared to facilitate the preparation of a definitive commitment agreement on the
terms below (“Commitment Agreement”). The summary is not binding, and any binding commitment will be reflected
only in mutually agreed definitive documentation.

Investors Fairholme Capital Management, LLC, on behalf of one or more of its managed
funds or affiliates of such managed funds (“Fairholme”) and Pershing Square
Capital Management, L.P., on behalf of one or more of its managed funds or
affiliates of such managed funds (“Pershing Square” and, together with
Fairholme, the “Investors”).

The obligations of the Investors under the Commitment Agreement will be several
and not joint.

Stock Purchase Each Investor will agree to subscribe for and purchase from the reorganized
Company (“New GGP”) on or shortly after the effectiveness of the plan of
reorganization of the Company (the “Plan”), its Pro Rata Share (as defined below)
of 380 million shares of New GGP’s common stock (“New Common Shares”),
subject to the terms and conditions in the Commitment Agreement. The
subscription price for the New Common Shares will be $10.00 per share, net to
New GGP, payable in cash in immediately available funds on the date of
issuance.
Date: 8-MAR-2010 14:46:49.39

The “Pro Rata Share” will be approximately 71.4% for Fairholme and 28.6% for
Pershing Square.
*C97466/7990205/3*
BPC C97466 799.02.05.00 0/3

The Company may, at its sole discretion, reduce the amount of New Common
Shares to be purchased by up to 50% by irrevocable written notice to the
Investors at any time prior to the 30th day prior to the date of issuance of the New
Common Shares. Any reduction will be allocated among the Investors in
accordance with their Pro Rata Shares.
Operator: BPC31511

GGO Rights Offering Each Investor also will agree to commit up to $67.5 million to backstop a common
Backstop stock rights offering by a newly formed company (“GGO”) holding the assets and
properties described in the Brookfield Proposal at an initial value of $5 per
common share, net to GGO, subject to a total of $250 million of backstop
commitments being provided by the Investors and Brookfield Asset Management
Inc. on the terms and conditions described in the Brookfield Proposal.
Phone: (866) 444-6820

The Investors will be entitled to receive a minimum allocation of $50 million in

GGO Shares from the GGO rights offering, and will receive back-stop
consideration in an amount equal to 5% of their $125 million total amount of
backstop commitments, payable in GGO Shares at a price per share equal to the
price per share offered in the rights offering. The Investors intend to allocate
backstop commitments and consideration between them on an equal pro rata
basis.
EDGAR 2
BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE

[E/O] CRC: 5790

C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 5
Name: PERSHING SQUARE CAPI

Description: Exhibit 99.2

 BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE Phone: (866) 444-6820 Operator: BPC31511 Date: 8-MAR-2010 14:46:49.39
Name: PERSHING SQUARE CAPI
[E/O] CRC: 47736 BPC C97466 799.02.06.00 0/3
C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 6
Description: Exhibit 99.2 EDGAR 2 *C97466/7990206/3*

Commitment Term The Investor commitments will have a drop dead date of December 31, 2010,
subject to extension rights as may be mutually agreed.

Adjustments All share prices take into effect the January 28, 2010 distribution of Common
Shares but otherwise are subject to anti-dilution adjustments.

Corporate Governance The Investors would be entitled to appoint one member of a nine member board
of directors of New GGP and two members of a nine member board of directors
of GGO, with the remaining selected by the Company in consultation with the
Investors.

Transferability The common shares and warrants acquired as described herein will be freely
transferable subject to applicable securities laws. A registration rights agreement
acceptable to the Investors will provide them and their assignees with the right to
continuous sale of those common shares and warrants off an effective shelf
registration statement from time to time, to the extent registration is necessary for
resale under applicable law and subject to customary exclusions and limitations to
be agreed.

Participation Rights In addition, the Investors would have participation rights on all further equity
raises that may be conducted by the Company after the effectiveness of the Plan
as may be necessary to maintain their then-current percentage ownership of New
GGP and GGO capital stock on a fully-diluted basis as of the date of each such
equity raise.
Date: 8-MAR-2010 14:46:49.39

*C97466/7990206/3*

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BPC C97466 799.02.06.00 0/3
Operator: BPC31511
Phone: (866) 444-6820

EDGAR 2
BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE

[E/O] CRC: 47736

C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 6
Name: PERSHING SQUARE CAPI

Description: Exhibit 99.2

 BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE Phone: (866) 444-6820 Operator: BPC31511 Date: 8-MAR-2010 14:46:49.39
Name: PERSHING SQUARE CAPI
[E/O] CRC: 54348 BPC C97466 799.02.07.00 0/4
C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 7
Description: Exhibit 99.2 EDGAR 2 *C97466/7990207/4*

Warrants As a condition to the effectiveness of the Commitment Agreement and as

consideration for the options of the Company thereunder, the Company will grant
to Fairholme transferable warrants to purchase 60 million shares of existing
common equity of GGP (a) at an exercise price of $15 per share (the “Warrants”),
(b) having an expiry date of seven years from their issuance, (c) with customary
anti-dilution adjustments (i.e. adjusting the strike price and number of underlying
shares) covering all quarterly or other dividends (whether in cash or in kind) as
well as other dilutive events, (d) with a redemption right for holders, upon a
change of control or similar event, for an amount in cash equal to the Black-
Scholes value of the Warrant, taking into account the remaining life of the
Warrants as if the change of control had not occurred and using a Black-Scholes
volatility input of 20% (provided that in the event of a change of control that is a
public merger into listed common stock, the acquirer will have the right to
maintain the warrants outstanding in respect of the merged entity, with customary
adjustments), (e) containing other customary terms, (f) providing for a cashless
exercise/net share settlement mechanism and (g) benefiting from registration
rights for both the Warrants and the underlying equity securities.1

Upon consummation of the Plan (which will include stockholder approval of the
issuance of underlying common stock to the extent required by NYSE rules), the
Warrants will be cancelled and the Company will issue new warrants to the
Investors (a) to purchase 60 million New Common Shares at an exercise price
equal to $10 per share, and (b) to purchase 40 million GGO Shares at an
exercise price equal to $5 per share, in each case having an expiration seven
years after the consummation of the Plan and other terms consistent with the
Date: 8-MAR-2010 14:46:49.39

initial Warrants. Warrants with respect to New Common Shares will be allocated
among the Investors in accordance with their Pro Rata Share, and warrants with
*C97466/7990207/4*

respect to GGO Shares will be allocated to the Investors equally.

BPC C97466 799.02.07.00 0/4

Pershing Square has agreed that, unless and until the Plan is confirmed, no
warrants will be issuable to Pershing Square.

1 To the extent required by the NYSE rules, the definitive agreement providing for the Warrants will provide that,
until shareholders approve the sale of common shares pursuant to the Warrants, the Warrants will not be
Operator: BPC31511

exercisable for common shares but instead will be exercisable for participating convertible preferred shares
having terms to be agreed by the Company and the Investors with the goal that the value per preferred share
will at all times be at least equal to the value per common share.
Phone: (866) 444-6820

-3-
EDGAR 2
BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE

[E/O] CRC: 54348

C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 7
Name: PERSHING SQUARE CAPI

Description: Exhibit 99.2

 BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE Phone: (866) 444-6820 Operator: BPC31511 Date: 8-MAR-2010 14:46:49.39
Name: PERSHING SQUARE CAPI
[E/O] CRC: 32618 BPC C97466 799.02.08.00 0/2
C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 8
Description: Exhibit 99.2 EDGAR 2 *C97466/7990208/2*

No Bid Protections No exclusivity, no-shop provisions, overbid requirements, commitment, break or

other similar fees. The Company and the Investors would agree to a formal ‘go-
shop’ including matching rights and a three business day negotiation period
immediately following the receipt of a new or modified superior proposal in which
the Investors could make adjustments in the terms and conditions of their
commitments for consideration by GGP.

Conditions There would be no due diligence condition precedent. The Investors

commitments would be subject to customary terms and conditions to be mutually
agreed, including without limitation: (a) execution and delivery of the Commitment
Agreement, other definitive agreements, documents and undertakings, and
issuance of the Warrants, in form and substance satisfactory to the Company and
the Investors, (b) the absence of a ‘material adverse change’ (to be defined
identically with the similar condition in the Brookfield Proposal), (c) either (1)
confirmation and effectiveness of the Plan on the terms described in the
Brookfield Proposal and otherwise reasonably acceptable to the Investors (with
such changes to the Brookfield Proposal and waiver of the conditions thereto as
the Investors approve), or (2) confirmation of an alternative plan of reorganization
that Investors agree in their sole discretion is no less favorable to them, (d) no
issuance of equity securities of New GGP or GGO (or related rights or securities)
at a per share valuation less than $11.00 per share for New GGP and $5.00 per
share for GGO, in each case net to the issuer, (e) entry of final orders of the Court
approving the Commitment Agreement and Warrants and confirming the Plan in
form and substance satisfactory to the Company and the Investors, and (f) the
accuracy of representations and warranties, compliance with covenants and other
Date: 8-MAR-2010 14:46:49.39

conditions precedent as customary for private placements of public equity

securities by parties at arm’s-length and such other conditions precedent as either
*C97466/7990208/2*

the Company or the Investors may reasonably request.

BPC C97466 799.02.08.00 0/2

-4-
Operator: BPC31511
Phone: (866) 444-6820

EDGAR 2
BOWNE INTEGRATED TYPESETTING SYSTEM Site: BOWNE PURE COMPLIANCE

[E/O] CRC: 32618

C97466.SUB, DocName: EX-99.2, Doc: 3, Page: 8
Name: PERSHING SQUARE CAPI

Description: Exhibit 99.2