Fairholme Funds Each Agree to Make Equity Investments in General Growth Properties, Inc.

MIAMI, April 6 /PRNewswire-FirstCall/ -- 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.

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.

SOURCE Fairholme Funds, Inc.