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December 3, 2009Dear Pershing Square Investor:The funds generated strong performance for the third quarter and year-to-date as set forthbelow:

For the QuarterYear to DateJuly 1 - September 30January 1 - September 30Since Inception

Pershing Square, L.P.

01/01/04 - 09/30/09Gross Return14.4%27.4%348.2%Net of All Fees12.0%23.8%221.4%

Pershing Square II, L.P.

01/01/05 - 09/30/09Gross Return16.6%27.9%214.5%Net of All Fees13.7%23.7%142.6%

Pershing Square International, Ltd.

01/01/05 - 09/30/09Gross Return14.3%29.3%187.5%Net of All Fees11.4%25.0%124.9%

Indexes (including dividend reinvestment)

01/01/04 - 09/30/09S&P 500 Index15.6%19.3%6.8%NASDAQ Composite Index15.9%35.6%10.8%Russell 1000 Index16.0%21.1%9.4%Dow Jones Industrial Average15.8%13.5%7.3%

Portfolio Update

During the quarter, nearly all of our portfolio companies generated improved operatingperformance as the economy began to stabilize and corporate cost containment measures took effect. Because we do not believe that we have a competitive advantage in predicting short-termmarket or economic conditions, we generally choose to invest in businesses that will excel inalmost any economic environment. Even so, given that our funds have investments which aregenerally more long than short; an improving economy will assist the funds’ performance.We expect, however, that investment selection, rather than macro factors or stock marketmovements, will continue to be the principal determinant of our performance as the substantialmajority of our historic (and anticipated) profits have come from the narrowing of valuation

Past performance is not necessarily indicative of future results. Please see the additional disclaimers and notes to performance results at the endof this letter.

2discrepancies between the prices we have paid for our investments (or received in shorting asecurity) and fair value.Below we have summarized General Growth Properties Inc. (“GGP”) and Target, two of lastquarter’s most significant contributors to fund performance:

General Growth Properties Inc.

GGP was the largest contributor to fund performance during the quarter, and has continued toappreciate substantially during the fourth quarter. GGP’s unsecured debt is trading at or slightlybelow par, and its common stock is trading at approximately $7.60 per share, up more than 20times from our initial purchase price. GGP’s bond and stock price performance have been drivenby the company’s continued progress in bankruptcy court, increased valuations of REITs, recentreductions in shopping mall capitalization rates, and Simon Property Group’s public expressionsof interest in acquiring the company.The most material development in the bankruptcy process occurred after the end of the quarter,when GGP announced an agreement with approximately $9.7 billion of its secured creditors toextend the maturities of their debts at an average interest rate of 5.35%. This agreement issubject to court approval and certain other conditions, and is anticipated to be consummated byyear end. With $9.7 billion of the company’s secured creditors consensually agreeing to extendtheir maturities, it is likely, in Pershing Square’s view, that the balance of the company’s securedcreditors will fall in line on similar terms rather than risk litigation in bankruptcy court.Yesterday, Fitch Ratings, which rates the GGP mortgage bonds and the special servicers whonegotiated on their behalf, applauded the settlement by stating:

The successful resolution substantially alleviates the risk of rating downgrades for the transactions andillustrates the effectiveness of bankruptcy remote structures. Removing the loans from bankruptcy withtheir mortgages intact is an important test of the Special Purpose Entity structure, which is a keycomponent in structured finance.

Fitch’s blessing for the terms of the extensions should further increase the likelihood that theother GGP secured creditors will choose to join the settlement. In fact, recent press reports havesuggested that the GGP restructuring will likely become a model for other real estate mortgageextension negotiations that are underway as hundreds of billions of mortgages continue to maturewithout an active commercial mortgage market for these debts to be refinanced.Once GGP has extended the substantial majority of its secured debts, the company will be wellpositioned to emerge from bankruptcy as an independent company. Alternatively, it might besold to a strategic buyer or a private equity firm, or a U.S., foreign or other investmentconsortium, if a sale would achieve a higher value for GGP stakeholders. Despite this dynamic,we believe the stock trades at a substantially lower valuation than Simon Property Group becausemany market participants and other analysts have incorrectly assumed that GGP’s unsecuredcreditors will meaningfully dilute shareholders’ ability to achieve a substantial recovery.GGP’s creditors are only entitled to a fixed claim equal to the face value of their obligations plusaccrued interest. Any residual value above the company’s secured and unsecured creditors willinure entirely to the benefit of the company’s shareholders. As a result, proper stewardship of the recapitalization/sales process should allow the company to achieve full value for its common

3stockholders. We expect that GGP will be the second or third largest REIT by market cap onceit emerges from bankruptcy and will therefore be a must-own company for all of the variousREIT funds and index portfolios. Thus, we believe an independent exit from bankruptcy will befeasible and could be achieved at high values.Alternatively, we believe that the bankruptcy process will create a once-in-a-lifetime opportunityfor an outside investor to acquire a substantial minority, controlling, or 100% stake in one of only two high-quality national shopping mall platforms. The uniqueness of the asset, the factthat GGP’s largest competitor has publicly expressed interest in acquiring the company, and thefact that there are a sufficient number of well-capitalized potential buyers who will likely pursuethe opportunity suggest that the bankruptcy auction process will be highly competitive. In lightof the leveraged nature of the company’s balance sheet, each dollar per share of value is onlyapproximately a 1% change in enterprise value. As a result, small changes in purchase price forthe GGP enterprise in a competitive auction translate into outsized gains of incremental value forequity holders.While the company has made tremendous progress in bankruptcy, Chapter 11 is an inherentlydistracting and time-consuming process for any company, particularly one of the scale of GGP.While the company’s assets are of the highest quality and management and employees areextremely talented and highly motivated, competitor sniping and the distraction of bankruptcyinevitably lead to some degree of underperformance for any company in bankruptcy. WhileGGP has delivered solid results during the bankruptcy, we expect the company’s performancewill materially improve after the company’s successful emergence. At that point, managementwill be reenergized and no longer distracted, and the company will be extremely well-positionedfrom a strategic and financial point of view.We believe that the combination of: (1) a unique and highly desirable company, (2) what willlikely be a best-in-class capital structure of largely non-recourse, long-dated, fixed, low-costleverage, (3) a competitive auction/capital raise process, and (4) the dynamics of the company’sleveraged equity structure create the potential for enormous value creation for GGP investorscompared with current trading prices. That said, at present, there remain significant uncertaintiesabout the potential outcomes for GGP security holders.As one of the largest equity owners of the company with representation on the company’s boardof directors and as a substantial bond holder, we are well positioned to assist GGP in maximizingvalue for all of the company’s stakeholders.

Target Corporation

We ran a proxy contest at Target, among other reasons, to improve the company’s corporategovernance. In our recent investor letters, we expressed our belief that Target would take stepsto make governance improvements before next year’s annual meeting. During the third quarter,Target announced that beginning in 2011, the company would eliminate its staggered board,requiring that all of its directors be elected annually. Most investors view staggered boards as animpediment to a change of control, although in Target’s case, the sheer scale of the businessmakes this consideration less meaningful. The real world benefit of an annually elected board isthat it makes each director potentially subject to competition for his or her seat each year.