February 8, 2009Dear Pershing Square IV Investor:A few further thoughts and an update on PSIV:In my effort to get last week’s letter out promptly, I neglected to apologize. I am deeplydisappointed by PSIV’s dreadful performance and I apologize profusely for the fund’sresults to date.Over the last few days, we have spoken to both investors who wish to redeem and otherswho intend to contribute additional capital. We expect to be able to redeem any and allinvestors who choose to exit in March, in full and in cash. We will provide more detailson the timing of distributions shortly.I have spent the last few days thinking about what we can do beyond strong progress onTarget and PSIV to somehow compensate you for PSIV losses to date.Approximately 90% of the investors in PSIV are also investors in the main PershingSquare funds. Substantially all of the overlapping investors have a larger investment inthe main Pershing Square funds than in PSIV.For those PSIV investors who are investors in the main Pershing Square funds, we willraise the high water mark, thereby waiving future incentive fees on your main PershingSquare fund capital account(s) and any additions to your capital account(s) until suchtime as you have recouped your PSIV losses.By way of example, if you invested $10 million in PSIV and have lost $9 million of yourcapital, your high water mark on your main Pershing Square fund capital account(s) willgo up by $9 million and you will not pay any incentive fees until you have recouped yourentire $9 million PSIV loss. This commitment applies even in the event you remain aninvestor in PSIV and your PSIV investment increases in value. If you remain an investorin PSIV and your capital account declines further in value, you will receive an additionalcredit toward your high water mark in the main Pershing Square funds.

For the 10% of the investors that are not investors in the main Pershing Square funds, weoffer you the following: We will raise the high water mark on any future investment youmake in any Pershing Square fund or co-investment vehicle we subsequently offer so youwill not pay any incentive fees until you have recouped your PSIV losses.Our willingness to offer those investors not currently in the main Pershing Square funds afee waiver is, of course, of little value if they make no future Pershing Square investment.To their credit, some of these investors, who are for the most part other hedge funds (thatcomprised approximately $1.3 billion of the original $2 billion of fund capital), have toldme that they previously hedged a substantial portion, or in some cases 100% or more, of their exposure to Target through PSIV. Hopefully, this has helped to mitigate their PSIVlosses in the event we are never able to recompense them.Bottom line, PSIV has been one of the greatest disappointments of my career to date.That said, we continue to believe that we will ultimately be successful in our investmentin Target.I am likely now the largest individual investor in Target through my interests in thevarious Pershing Square funds including my personal commitment of an additional $25million of capital to PSIV. I and the rest of the Pershing Square team will work hard toachieve a successful outcome for all of us.On the pages which follow, we have attempted to answer investors’ most commonlyasked questions. Please call me if you have any additional questions.Sincerely,William A. AckmanPage 2 of 4

Commonly Asked questions about PSIVWill you be able to meet all redemptions in cash?

Yes, we expect to be able to meet all redemptions in full and in cash.

Does an investor need to withdraw from PSIV in order to recognize a tax loss onhis/her initial investment?

A sale and repurchase of options which are sufficiently different from the optionspreviously owned by the fund is a tax realization event. As such, an investor willget the benefit of tax loss recognition whether or not that investor withdraws fromPSIV. Please consult your own tax advisors regarding your particular taxtreatment.

If an investor wishes to add capital to or exit PSIV, when would the transactionstake place?

We expect to make distributions of 95% of withdrawing capital in March with thebalance after the completion of audited financials. Additions of capital will beaccepted contemporaneously with distributions of capital. We will providefurther details when they are available.

When will documents be distributed?

Redemption and subscription documents are currently being prepared and will bedistributed as soon as they are available.

Will new investors in PSIV dilute existing investors’ ownership in any way? WillPSIV impose a cap on new capital, to the extent necessary to fund redemptions byexisting investors?

If we receive more new commitments than withdrawals we will likely add to ourTarget position to minimize the potential for dilution. We do not intend to imposea cap on new capital.

Your letter does not seem to address the fact that TGT’s management has publiclydismissed a real estate transaction. Does Pershing Square believe that a transactionis nonetheless a possibility?

Yes. In some of our past engagements – for example with McDonald’s andWendy’s – our initial overtures and proposals to the companies were rebuffed.Ultimately, we were successful when the power of logic prevailed or alternativelya modified version of our transaction structure was developed either by us,management, or by working together with management and its advisors to arrivePage 3 of 4