<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2003

                         Commission file number 1-11656

                         GENERAL GROWTH PROPERTIES, INC.
                         -------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                       42-1283895
           --------                                       ----------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                      Identification Number)

                      110 N. Wacker Dr., Chicago, IL 60606
                      ------------------------------------
               (Address of principal executive offices, Zip Code)

                                 (312) 960-5000
                                 --------------
              (Registrant's telephone number, including area code)

                                      N / A
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                              YES  X            NO
                                  ---              ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                              YES  X            NO
                                  ---              ---

The number of shares of Common Stock, $.10 par value, outstanding on November 7,
2003 was 71,617,357.
<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                      NUMBER
                                                                                                      ------
<S>                                                                                                   <C>
PART I    FINANCIAL INFORMATION

          Item 1: Financial Statements

               Consolidated Balance Sheets
               as of September 30, 2003 and December 31, 2002.......................................     3

               Consolidated Statements of Operations and Comprehensive Income
               for the three and nine months ended September 30, 2003 and 2002.....................      4

               Consolidated Statements of Cash Flows
               for the nine months ended September 30, 2003 and 2002...............................      5

               Notes to Consolidated Financial Statements...........................................     6

          Item 2: Management's Discussion and Analysis of
               Financial Condition and Results of Operations........................................    30

               Liquidity and Capital Resources of the Company.......................................    34

          Item 3: Quantitative and Qualitative Disclosures about Market Risk........................    42

          Item 4: Controls and Procedures...........................................................    42

PART II   OTHER INFORMATION
          Item 6: Exhibits and Reports on Form 8-K..................................................    43

          SIGNATURE.................................................................................    44
</TABLE>

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                         GENERAL GROWTH PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
                                   (UNAUDITED)
        (Dollars in thousands, except for per share and per unit amounts)

<TABLE>
<CAPTION>
                                                                                    SEPTEMBER 30, 2003    DECEMBER 31, 2002
                                                                                    ------------------    -----------------
<S>                                                                                 <C>                   <C>
                                    ASSETS
Investment in real estate:
       Land                                                                         $        1,322,113    $      1,128,990
       Buildings and equipment                                                               7,319,334           5,738,514
       Less accumulated depreciation                                                        (1,038,188)           (798,431)
       Developments in progress                                                                118,861              90,492
                                                                                    ------------------    ----------------
         Net property and equipment                                                          7,722,120           6,159,565
       Investment in and loans from Unconsolidated Real Estate Affiliates                      624,997             766,519
                                                                                    ------------------    ----------------
         Net investment in real estate                                                       8,347,117           6,926,084
Cash and cash equivalents                                                                      138,331              53,640
Marketable securities                                                                                -                 476
Tenant accounts receivable, net                                                                132,485             126,587
Deferred expenses, net                                                                         139,447             108,694
Prepaid expenses and other assets                                                              103,559              65,341
                                                                                    ------------------    ----------------
                                                                                    $        8,860,939    $      7,280,822
                                                                                    ==================    ================

                                    LIABILITIES AND STOCKHOLDERS' EQUITY

Mortgage notes and other debt payable                                               $        6,054,930    $      4,592,311
Distributions payable                                                                            6,703              71,389
Network discontinuance reserve                                                                   4,116               4,123
Accounts payable and accrued expenses                                                          305,984             233,027
                                                                                    ------------------    ----------------
                                                                                             6,371,733           4,900,850
Minority interests:
       Preferred                                                                               468,614             468,201
       Common                                                                                  422,217             377,746
                                                                                    ------------------    ----------------
                                                                                               890,831             845,947

Commitments and contingencies                                                                        -                   -

Preferred Stock: $100 par value; 5,000,000 shares authorized;
       345,000 designated as PIERS (Note 1) which were convertible and
       carried a $1,000 liquidation value, none and 337,500 of which were issued
       and outstanding at September 30, 2003 and December 31, 2002, respectively                     -             337,500

Stockholders' Equity:
       Common stock: $.10 par value; 210,000,000 shares authorized;
         71,546,535 and 62,397,085 shares issued and outstanding
         as of September 30, 2003 and December 31, 2002, respectively                            7,155               6,240
       Additional paid-in capital                                                            1,877,210           1,545,274
       Retained earnings (accumulated deficit)                                                (255,496)           (315,844)
       Notes receivable-common stock purchase                                                   (6,885)             (7,772)
       Unearned compensation-restricted stock                                                   (2,220)             (2,248)
       Accumulated other comprehensive income (loss)                                           (21,389)            (29,125)
                                                                                    ------------------    ----------------
         Total stockholders' equity                                                          1,598,375           1,196,525
                                                                                    ------------------    ----------------
                                                                                    $        8,860,939    $      7,280,822
                                                                                    ==================    ================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                     3 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                      FOR THE THREE AND NINE MONTHS ENDED
                          SEPTEMBER 30, 2003 AND 2002
                                   (UNAUDITED)
          (Dollars in thousands, except per share and per unit amounts)

<TABLE>
<CAPTION>
                                                                                       THREE MONTHS ENDED       NINE MONTHS ENDED
                                                                                           SEPTEMBER 30,           SEPTEMBER 30,
                                                                                        2003         2002       2003         2002
                                                                                      ---------   ---------   ---------   ---------
<S>                                                                                   <C>         <C>         <C>         <C>
Revenues:
    Minimum rents                                                                     $ 204,972   $ 156,088   $ 548,375   $ 399,260
    Tenant recoveries                                                                    86,576      69,329     238,232     183,621
    Overage rents                                                                         6,042       4,385      16,086      11,529
    Management and other fees                                                            21,071      13,664      61,672      55,395
    Other                                                                                 8,704      13,990      21,574      20,407
                                                                                      ---------   ---------   ---------   ---------
       Total revenues                                                                   327,365     257,456     885,939     670,212
Expenses:
    Real estate taxes                                                                    23,901      16,369      64,518      43,736
    Repairs and maintenance                                                              20,584      16,103      56,853      43,368
    Marketing                                                                             9,533       7,708      25,294      18,459
    Other property operating costs                                                       39,781      30,729     109,392      78,139
    Provision for doubtful accounts                                                       2,205         785       5,718       3,672
    Property management and other costs                                                  24,272      22,415      81,420      64,293
    General and administrative                                                            1,675       1,302       6,479       4,334
    Depreciation and amortization                                                        61,734      45,923     166,017     124,300
                                                                                      ---------   ---------   ---------   ---------
       Total expenses                                                                   183,685     141,334     515,691     380,301
                                                                                      ---------   ---------   ---------   ---------
Operating income                                                                        143,680     116,122     370,248     289,911

Interest income                                                                             611         898       1,667       3,214
Interest expense                                                                        (74,670)    (60,098)   (199,638)   (157,033)
Income allocated to minority interests                                                  (27,370)    (23,205)    (74,178)    (52,848)
Equity in net income of unconsolidated affiliates                                        18,571      16,593      61,980      44,838
                                                                                      ---------   ---------   ---------   ---------
Income from continuing operations                                                        60,822      50,310     160,079     128,082
Discontinued operations, net of minority interest:
    Income from operations                                                                    -         274         225         850
    Gain on disposition                                                                     611           -       3,720           -
                                                                                      ---------   ---------   ---------   ---------
Income from discontinued operations, net                                                    611         274       3,945         850
                                                                                      ---------   ---------   ---------   ---------
Net income                                                                            $  61,433   $  50,584   $ 164,024   $ 128,932
                                                                                      ---------   ---------   ---------   ---------

Preferred stock dividends                                                                     -      (6,117)    (13,030)    (18,351)
                                                                                      ---------   ---------   ---------   ---------
Net income available to common stockholders                                           $  61,433   $  44,467   $ 150,994   $ 110,581
                                                                                      =========   =========   =========   =========
Earnings from continuing operations per share-basic                                   $    0.86   $    0.71   $    2.25   $    1.77
                                                                                      =========   =========   =========   =========
Earnings from continuing operations per share-diluted                                 $    0.85   $    0.71   $    2.24   $    1.77
                                                                                      =========   =========   =========   =========
Earnings from discontinued operations, net per share-basic                            $    0.01   $       -   $    0.06   $    0.01
                                                                                      =========   =========   =========   =========
Earnings from discontinued operations, net per share-diluted                          $    0.01   $       -   $    0.05   $    0.01
                                                                                      =========   =========   =========   =========
Earnings per share-basic                                                              $    0.87   $    0.71   $    2.31   $    1.78
                                                                                      =========   =========   =========   =========
Earnings per share-diluted                                                            $    0.86   $    0.71   $    2.29   $    1.78
                                                                                      =========   =========   =========   =========

Distributions declared per share                                                      $       -   $    0.72   $    1.44   $    2.02
                                                                                      =========   =========   =========   =========

Net income                                                                            $  61,433   $  50,584   $ 164,024   $ 128,932
Other comprehensive income, net of minority interest:
    Net unrealized gains (losses) on financial instruments                                9,295     (18,727)      7,771     (30,112)
    Minimum pension liability adjustment                                                     (9)          -         (36)          -
    Equity in unrealized gains (losses) on available-for-sale
       securities of unconsolidated affiliate                                                 -           -           -         169
                                                                                      ---------   ---------   ---------   ---------
Comprehensive income, net                                                             $  70,719   $  31,857   $ 171,759   $  98,989
                                                                                      =========   =========   =========   =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                    4 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (UNAUDITED)
        (Dollars in thousands, except for per share and per unit amounts)

<TABLE>
<CAPTION>
                                                                                     NINE MONTHS ENDED
                                                                                       SEPTEMBER 30,
                                                                                    2003            2002
                                                                                ------------    ------------
<S>                                                                             <C>             <C>
Cash flows from operating activities:
     Net Income                                                                 $    164,024    $    128,932
Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
     Minority interests                                                               74,178          53,116
     Equity in income of unconsolidated affiliates                                   (61,980)        (45,290)
     Provision for doubtful accounts                                                   5,718           3,689
     Distributions received from unconsolidated affiliates                            61,980          44,557
     Depreciation                                                                    142,732         118,095
     Amortization                                                                     29,672          10,313
     Gains on disposition, net                                                        (3,720)              -
Net Changes:
     Tenant accounts receivable                                                      (12,015)        (14,037)
     Prepaid expenses and other assets                                               (16,452)         (1,454)
     Increase in deferred expenses                                                   (45,419)        (23,821)
     Network discontinuance reserve                                                       (7)           (615)
     Accounts payable and accrued expenses                                            (2,725)         20,023
                                                                                ------------     -----------
       Net cash provided by (used in) operating activities                           335,986         293,508
                                                                                ------------    ------------

Cash flows from investing activities:
     Acquisition/development of real estate and improvements
       and additions to properties                                                  (958,890)       (830,709)
     Proceeds from sale of investment property                                        15,045               -
     Increase in investments in unconsolidated affiliates                            (20,718)       (140,806)
     Distributions received from unconsolidated affiliates in excess of income        75,164          53,687
     Proceeds from repayment of notes receivable for common stock purchases              887          15,486
     Loans from unconsolidated affiliates, net                                       (83,537)         22,141
     Net decrease in holdings of investments in marketable securities                    476         155,103
                                                                                ------------    ------------
       Net cash provided by (used in) investing activities                          (971,573)       (725,098)
                                                                                ------------    ------------

Cash flows from financing activities:
     Cash distributions paid to common stockholders                                 (135,584)       (121,052)
     Cash distributions paid to holders of Common Units                              (42,264)        (38,166)
     Cash distributions paid to holders of Preferred Units                           (30,080)        (15,709)
     Payment of dividends on PIERS                                                   (19,145)        (18,351)
     Proceeds from sale of common stock, net of issuance costs                        25,176          10,716
     Proceeds from issuance of Preferred Units                                             -          63,495
     Proceeds from issuance of mortgage notes and other debt payable               2,567,500         632,344
     Principal payments on mortgage notes and other debt payable                  (1,632,642)       (217,467)
     Increase in deferred expenses                                                   (12,683)           (247)
                                                                                ------------    ------------
       Net cash provided by (used in) financing activities                           720,278         295,563
                                                                                ------------    ------------
Net change in cash and cash equivalents                                               84,691        (136,027)
Cash and cash equivalents at beginning of period                                      53,640         160,755
                                                                                ------------    ------------
Cash and cash equivalents at end of period                                      $    138,331    $     24,728
                                                                                ============    ============

Supplemental disclosure of cash flow information:

     Interest paid                                                              $    206,708    $    156,290
                                                                                ============    ============
     Interest capitalized                                                       $      4,044    $      4,393
                                                                                ============    ============

Non-cash investing and financing activities:
     Common stock issued in exchange for PIERS                                  $    337,483    $          -
     Common stock issued in exchange for Operating Partnership Units                   8,705               -
     Assumption of debt in conjunction with acquisition of property                  447,754         811,351
     Notes receivable issued for exercised stock options                                   -           4,243
     Distributions payable                                                             6,703          70,923
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                    5 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

NOTE 1 ORGANIZATION

Readers of this quarterly report should refer to the Company's audited financial
statements for the year ended December 31, 2002 which are included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002
(Commission File No. 1-11656), as certain footnote disclosures which would
substantially duplicate those contained in the 2002 annual audited financial
statements have been omitted from this report. Capitalized terms used, but not
defined in, this quarterly report have the same meanings as in the Company's
2002 Annual Report on Form 10-K.

GENERAL

General Growth Properties, Inc., a Delaware corporation ("General Growth"), was
formed in 1986 to own and operate shopping centers. All references to the
"Company" in these Notes to Consolidated Financial Statements include General
Growth and those entities owned or controlled by General Growth (including the
Operating Partnership and the LLC as described below), unless the context
indicates otherwise. Proceeds from General Growth's April 15, 1993 initial
public offering of common stock (the "Common Stock") were used to acquire a
majority interest in GGP Limited Partnership (the "Operating Partnership"),
which was formed to succeed to substantially all of the interests in regional
mall general partnerships owned and controlled by the Company and its original
stockholders. The Company conducts substantially all of its business through the
Operating Partnership, which commenced operations on April 15, 1993.

As of September 30, 2003, the Company either directly or through the Operating
Partnership and subsidiaries owned the following entities, collectively, the
"Wholly-Owned Centers":

     -   Sixty-seven regional mall shopping centers

     -   The Victoria Ward Assets (as defined in Note 2)

     -   The JP Realty Assets (as defined in Note 2)

     -   General Growth Management, Inc. ("GGMI")

As of September 30, 2003, the Company holds ownership interests in the following
joint ventures, collectively, the "Unconsolidated Real Estate Affiliates", as
described in Note 3:

<TABLE>
<CAPTION>
                                                        NUMBER OF
                                                       REGIONAL MALL   COMPANY
                                                         SHOPPING     OWNERSHIP
         LEGAL NAME                  PORTFOLIO NAME      CENTERS      PERCENTAGE
--------------------------------------------------------------------------------
<S>                                <C>                 <C>            <C>
GGP/Homart, Inc.                   GGP/Homart               22*          50%
--------------------------------------------------------------------------------
GGP/Homart II, L.L.C.              GGP/Homart II            10           50%
--------------------------------------------------------------------------------
GGP-TRS L.L.C.                     GGP/Teachers              5           50%
--------------------------------------------------------------------------------
GGP Ivanhoe, Inc.                  GGP Ivanhoe               2           51%
--------------------------------------------------------------------------------
GGP Ivanhoe IV, Inc.               GGP Ivanhoe IV            1           51%
--------------------------------------------------------------------------------
Quail Springs Mall                 Quail Springs Mall        1           50%
--------------------------------------------------------------------------------
Town East Mall                     Town East Mall            1           50%
--------------------------------------------------------------------------------
Westlake Retail Associates, Ltd.   Circle T                  1           50%
--------------------------------------------------------------------------------
</TABLE>

*Including 3 regional mall shopping centers owned jointly with venture partners.

Together, the Wholly-Owned Centers and the Unconsolidated Real Estate Affiliates
comprise the "Company Portfolio". However, as the center being developed by
Circle T is not yet operational, it has been excluded from the definition of,
and the operational statistics for, the Company Portfolio.

                                    6 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

During May 2000, the Operating Partnership formed GGPLP L.L.C., a Delaware
limited liability company ("the LLC"), by contributing its interest in a
portfolio of 44 Wholly-Owned Centers to the LLC in exchange for all of the
common units of membership interest in the LLC. As of September 30, 2003, the
LLC, due to subsequent acquisitions by the Company, owns 49 of the Wholly-Owned
Centers. A total of 940,000 redeemable preferred units of membership interest in
the LLC (the "RPUs") have been issued by the LLC. Holders of the RPUs are
entitled to receive cumulative preferential cash distributions per RPU at a per
annum rate of 8.95% of the $250 liquidation preference thereof (or $5.59375 per
quarter) prior to any distributions by the LLC to the Operating Partnership.
Subject to certain limitations, the RPUs may be redeemed in cash by the LLC for
the liquidation preference amount plus accrued and unpaid distributions and may
be exchanged by the holders of the RPUs for an equivalent amount of redeemable
preferred stock of General Growth. Such preferred stock provides for an
equivalent 8.95% annual preferred distribution and is redeemable at the option
of General Growth for cash equal to the liquidation preference amount plus
accrued and unpaid distributions. The RPUs outstanding at September 30, 2003 and
December 31, 2002 have been reflected in the accompanying consolidated financial
statements as a component of minority interest at the current total liquidation
preference amount of $235,000.

In addition, 20,000 8.25% cumulative preferred units (the "CPUs") have been
issued by the LLC. The holders of these CPUs are entitled to receive cumulative
preferential cash distributions per CPU at a per annum rate of 8.25% of the $250
liquidation preference thereof (or $5.15625 per quarter), prior to any
distributions by the LLC to the Operating Partnership. The CPUs outstanding at
September 30, 2003 have been included in the accompanying consolidated financial
statements as a component of minority interest at the then current total
liquidation preference amount of $5,000.

As of September 30, 2003, General Growth owned an approximate 77% general
partnership interest in the Operating Partnership (excluding its preferred units
of partnership interest as discussed below). The remaining approximate 23%
minority interest in the Operating Partnership is held by limited partners that
include trusts for the benefit of the families of the original stockholders who
initially owned and controlled the Company and subsequent contributors of
properties to the Company. These minority interests are represented by common
units of limited partnership interest in the Operating Partnership (the
"Units"). The Units can be redeemed at the option of the holders for cash or, at
General Growth's election with certain restrictions, for shares of Common Stock
on a one-for-one basis. The holders of the Units also share equally with General
Growth's common stockholders on a per share basis in any distributions by the
Operating Partnership on the basis that one Unit is equivalent to one share of
Common Stock.

General Growth had issued 13,500,000 Depositary Shares, each representing 1/40
of a share of 7.25% Preferred Income Equity Redeemable Stock, Series A
("PIERS"), or a total of 337,500 PIERS. During May 2003, General Growth called
all of its outstanding PIERS and Depositary Shares for redemption on July 15,
2003. The Depositary Shares (and the related PIERS) were converted at the rate
of .6297 shares of Common Stock per Depositary Share and therefore, a total of
4,180,062 shares of Common Stock were issued on July 15, 2003 as a result of
this redemption. In order to enable General Growth to comply with its
obligations with respect to the PIERS, General Growth owned preferred units of
limited partnership interest in the Operating Partnership (the "Preferred
Units") which had rights, preferences and other privileges, including
distribution, liquidation, conversion and redemption rights, that mirrored those
of the PIERS. Accordingly, the Operating Partnership was required to make all
required distributions on the Preferred Units prior to any distribution of cash
or assets to the holders of the Units. The Depositary Shares had been
convertible at any time, at the option of the holder, into shares of Common
Stock at the rate of .6297 shares of Common Stock per Depositary Share. Although
no Depositary Shares had been converted at December 31, 2002, at June 30, 2003
holders of approximately 233,292 Depositary Shares had elected to convert to,
and such Depositary Shares were converted to, Common Stock. Holders of an
additional 6,628,508 Depositary Shares elected to convert to Common Stock
through July 14, 2003. A total of 4,320,833 shares of Common Stock were issued
as a result of such voluntary conversions. The PIERS and the Depositary Shares
had been subject to mandatory redemption by General Growth on July 15, 2008 at a
price of $1,000 per PIERS, plus accrued and

                                    7 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

unpaid dividends, if any, to the redemption date. Accordingly, the PIERS were
reflected in the accompanying consolidated financial statements at such
liquidation or redemption value.

General Growth has reserved for issuance up to 1,000,000 shares of Common Stock
under the Dividend Reinvestment and Stock Purchase Plan ("DRSP"). The DRSP, in
general, allows participants in the plan to make purchases of Common Stock from
dividends received or additional cash investments. Although the purchase price
of the Common Stock is determined by the current market price, the purchases are
made without fees or commissions. General Growth has and will satisfy DRSP
Common Stock purchase needs through the issuance of new shares of Common Stock
or by repurchases of currently outstanding Common Stock. As of September 30,
2003, an aggregate of 114,670 shares of Common Stock has been issued under the
DRSP.

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of the
Company and the Operating Partnership consisting of the Wholly-Owned Centers
(including those owned by the LLC), GGMI and the unconsolidated investments in
GGP/Homart, GGP/Homart II, GGP/Teachers, GGP Ivanhoe, GGP Ivanhoe IV, Circle T,
Quail Springs Mall and Town East Mall. Included in the consolidated financial
statements are four joint ventures, acquired in the JP Realty acquisition (Note
2), which are partnerships with non-controlling independent joint venture
partners. Income allocated to minority interests includes the share of such
properties' operations (generally computed as the respective joint venture
partner ownership percentage) applicable to such non-controlling venture
partners. All significant intercompany balances and transactions have been
eliminated.

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported revenues
and expenses during the reporting period. For example, significant estimates and
assumptions have been made with respect to useful lives of assets,
capitalization of development and leasing costs, allocations of purchase price
to acquired assets and liabilities, recoverable amounts of receivables and
deferred taxes and amortization periods of deferred costs and intangibles.
Actual results could differ from those estimates.

In the opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary for a fair statement of the financial position of the
Company as of September 30, 2003 and the results of operations for the three and
nine months ended September 30, 2003 and 2002 and cash flows for the nine months
ended September 30, 2003 and 2002 have been included. The results for the
interim periods ended September 30, 2003 and 2002 are not necessarily indicative
of the results to be obtained for the full fiscal year.

Certain amounts in the 2002 consolidated financial statements have been
reclassified to conform to the 2003 presentation.

EARNINGS PER SHARE ("EPS")

Basic per share amounts are based on the weighted average of common shares
outstanding of 65,283,370 for 2003 and 62,120,878 for 2002. Diluted per share
amounts are based on the total weighted average number of common shares and
dilutive securities (such as stock options and, for 2003, PIERS) outstanding of
71,500,041 for 2003 and 62,272,738 for 2002. However, certain stock options
outstanding were not included in the computation of diluted earnings per share
either because the exercise price of the stock options was higher than the
average market price of the Common Stock for the applicable periods and
therefore, the effect would be anti-dilutive or because the conditions which
must be satisfied prior to the issuance of any such shares were not

                                    8 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

achieved during the applicable periods. The effect of the issuance of the PIERS
is anti-dilutive with respect to the Company's calculation of diluted earnings
per share for the three and nine months ended September 30, 2002 and therefore
has been excluded. The outstanding Units have also been excluded from the
Company's calculation of diluted earnings per share as there would be no net
effect on the reported EPS amounts since the minority interests' share of income
would also be added back to net income.

The following are the reconciliations of the numerators and denominators of the
basic and diluted EPS.

<TABLE>
<CAPTION>
                                                                Three Months Ended           Nine Months Ended
                                                                   September 30,                September 30,
                                                                 2003       2002              2003             2002
                                                               ---------  ---------   ---------------------  ---------
                                                                Basic +    Basic +                            Basic +
                                                                Dilutive   Dilutive     Basic      Dilutive   Dilutive
                                                               ---------  ---------   ---------   ---------  ---------
<S>                                                            <C>        <C>         <C>         <C>        <C>
Numerators:

Income from continuing operations                              $  60,822  $  50,310   $ 160,079   $ 160,079  $ 128,082
     Dividends on PIERS (preferred stock dividends)                  - *     (6,117)    (13,030)        - *    (18,351)
                                                               ---------  ---------   ---------   ---------  ---------
     Income (loss) from continuing operations available to
       common stockholders                                        60,822     44,193     147,049     160,079    109,731
     Discontinued operations, net                                    611        274       3,945       3,945        850
                                                               ---------  ---------   ---------   ---------  ---------
Net income available to common stockholders - for basic
  and diluted EPS                                              $  61,433  $  44,467   $ 150,994   $ 164,024  $ 110,581
                                                               =========  =========   =========   =========  =========
Denominators:
Weighted average common shares
  outstanding (in thousands) - for basic EPS                      70,297     62,244      65,283      65,283     62,121
                                                                                      =========
Effect of dilutive securities - options (and PIERS for 2003*)      1,458        180                   6,217        152
                                                               ---------  ---------               ---------  ---------
Weighted average common shares
  outstanding (in thousands) - for diluted EPS                    71,755     62,424                  71,500     62,273
                                                               =========  =========               =========  =========
</TABLE>

 *    For the three months ended September 30, 2003, although the effect of the
      issuance of the PIERS is dilutive, the amount of the PIERS dividend is
      zero so no adjustment of net income is made. For the nine months ended
      September 30, 2003, the effect of the issuance of the PIERS is dilutive
      and, therefore, no adjustment of net income is made as the PIERS dilution
      is reflected in the denominator of the diluted EPS calculation.

NOTES RECEIVABLE - OFFICERS

During 1998, the Company made available to certain officers the ability to issue
promissory notes in connection with their exercise of options to purchase shares
of the Company's Common Stock. From April 9, 1998 to April 29, 2002 an aggregate
of $26,956 in advances were made to such officers in connection with their
exercise of options to purchase an aggregate of 915,000 shares of Common Stock.

As of April 30, 2002, the Company's Board of Directors terminated the future
availability of loans to officers to exercise options on the Common Stock. In
conjunction with this decision, the Company and the officers restructured the
terms of the promissory notes, including the approximately $2,823 previously
advanced in the form of income tax withholding payments made by the Company on
behalf of such officers. Each of the officers repaid no less than 60% of the
principal and 100% of the interest due under such officer's note as of April 30,
2002 and the remaining amounts, approximately $10,141 as of April 30, 2002, were
represented by amended and restated promissory notes. These amended and
restated, fully recourse notes are payable in monthly installments of principal
and interest (at a market rate which varies monthly computed at LIBOR (1.12% at
September 30, 2003) plus 125 basis points per annum) until fully repaid in May
2009 (or within 90 days of the officer's separation from the Company, if
earlier). In October 2002, a voluntary prepayment of approximately $500 was
received from one of the officers. As of September 30, 2003, the current
outstanding balance under the promissory notes was $7,709, of which
approximately $824 relating to income tax withholding payments has been
reflected in prepaid expenses and other assets and approximately $6,885 has been
reflected as a reduction of Stockholders' Equity.

                                    9 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

REVENUE RECOGNITION

Minimum rent revenues are recognized on a straight-line basis over the term of
the related leases. As of September 30, 2003, approximately $9,826 has been
recognized as straight-line rents receivable (representing the current net
cumulative rents recognized prior to when billed and collectible as provided by
the terms of the leases), all of which is included in tenant accounts
receivable, net in the accompanying consolidated financial statements. Also
included in consolidated minimum rents for the nine months ended September 30,
2003 is approximately $12,315 of accretion related to the below-market leases at
properties acquired as provided by SFAS 141 and 142. In addition, amounts
collected from tenants to allow the termination of their leases prior to their
scheduled termination dates have been included in minimum rents. Such
termination income was approximately $7,943 and $5,059, respectively, for the
nine months ended September 30, 2003 and 2002. Overage rents are recognized on
an accrual basis once tenant sales revenues exceed contractual tenant lease
thresholds. Recoveries from tenants computed as a formula related to taxes,
insurance and other shopping center operating expenses are recognized as
revenues in the period the applicable costs are incurred. The Company provides
an allowance for doubtful accounts against the portion of accounts receivable
which is estimated to be uncollectible. Such allowances are reviewed
periodically based upon the recovery experience of the Company. Management fees
primarily represent GGMI management and leasing fees due to the consolidation of
GGMI and financing fees and other ancillary services performed by the Company
for the benefit of its Unconsolidated Real Estate Affiliates. Such fees are
recognized as revenues when earned. Fees recognized by the Company in the nine
months ended September 30, 2003 and 2002 from its Unconsolidated Real Estate
Affiliates for services performed for the Unconsolidated Centers were $55,091
and $46,573, respectively.

FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments to reduce risk associated with
interest rate fluctuations. In some cases, a lender has required the Company to
reduce volatility associated with interest rate risk exposure on variable-rate
borrowings. In other instances, the Company chose to reduce its exposure to
interest rate risk. In order to limit interest rate risk on variable-rate
borrowings, the Company may enter into interest rate swap or interest rate cap
agreements to hedge specific risks.

The Company's only hedging activities are the cash flow hedges represented by
its interest rate cap and swap agreements relating to its commercial
mortgage-backed securities (Note 4). These agreements either place a limit on
the effective rate of interest the Company will bear on such variable rate
obligations or fix the effective interest rate on such obligations to a certain
rate. The Company has concluded that these agreements are highly effective in
achieving its objective of reducing its exposure to variability in cash flows
relating to these variable rate obligations in any interest rate environment for
loans subject to swap agreements and for loans with related cap agreements, when
LIBOR rates exceed the strike rates of the agreements. However, current
accounting standards also require that the Company fair value the interest rate
cap and swap agreements as of the end of each reporting period. In conjunction
with the GGP MPTC financing (as defined and more fully described in Note 4),
certain caps were purchased and sold. These purchased and sold caps do not
qualify for hedge accounting and changes in the fair values of these agreements
are reflected in interest expense. Finally, certain interest rate swap
agreements were entered into with the objective of fixing the interest rates on
the Company's variable rate financing. These swap agreements have been
designated as cash flow hedges on $500,000 of the Company's consolidated
variable rate debt. For the nine months ended September 30, 2003, the Company
has recorded approximately $7,771 of other comprehensive gain due to increases
in the current fair value of such swap agreements.

                                    10 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

COMPREHENSIVE INCOME

Comprehensive income is a more inclusive financial reporting methodology that
encompasses net income and all other changes in equity except those resulting
from investments by and distributions to equity holders. Included in
comprehensive income but not net income are unrealized gains or losses on
marketable securities classified as available-for-sale and unrealized gains or
losses on financial instruments designated as cash flow hedges (Note 4). Also
included in comprehensive income for the nine months ended September 30, 2003,
is approximately $36 representing the 2003 change in the fair value of plan
assets relating to a frozen pension plan of Victoria Ward assumed by the Company
upon acquisition (Note 2). In addition, one of the Company's unconsolidated
affiliates received common stock of a large, publicly traded real estate company
as part of a 1998 transaction. Cumulative net unrealized losses on such
securities through December 31, 2001 were $169, net of minority interest and
were reflected as accumulated equity in other comprehensive loss of
unconsolidated affiliate. During the three months ended March 31, 2002, all
holdings of such stock were sold and the remaining cumulative unrealized losses
pertaining to such stock holdings were realized.

BUSINESS SEGMENT INFORMATION

The primary business of General Growth and its consolidated affiliates is owning
and operating shopping centers. General Growth evaluates operating results and
allocates resources on a property-by-property basis and does not distinguish or
evaluate its consolidated operations on a geographic basis. Accordingly, General
Growth has determined it has a single reportable segment. Further, all material
operations are within the United States and no customer or tenant comprises more
than 10% of consolidated revenues.

STOCK INCENTIVE PLANS

General Growth has incentive stock plans designed to attract and retain officers
and key employees. During 2003, the 1993 Stock Incentive Plan expired as
provided by its terms. Accordingly, the Company, as approved in May 2003 at the
annual meeting of its stockholders, established a new incentive stock plan (the
"2003 Incentive Stock Plan") to replace the 1993 Stock Incentive Plan. The terms
of the 2003 Incentive Stock Plan are similar to those of the 1993 Stock
Incentive Plan but provide for the issuance of up to 3,000,000 shares of Common
Stock pursuant to the plan. The Company's incentive stock plans provide for
stock and option grants to employees in the form of restricted and unrestricted
stock grants, options that vest generally over a fixed period of time
(generally, grants pursuant to the 2003 Incentive Stock Plan and the 1993 Stock
Incentive Plan) and in the form of threshold-vesting stock options ("TSOs")
(generally, grants pursuant to the Company's 1998 Incentive Plan). The exercise
price of the TSOs to be granted to a participant will be the Fair Market Value
("FMV") of a share of Common Stock on the date the TSO is granted. The threshold
price (the "Threshold Price") which must be achieved in order for the TSO to
vest will be determined by multiplying the FMV on the date of grant by the
Estimated Annual Growth Rate (currently set at 7%) and compounding the product
over a five-year period. Shares of the Common Stock must achieve and sustain the
Threshold Price for at least 20 consecutive trading days at any time over the
five years following the date of grant in order for the TSO to vest. All
previously granted TSOs have vested as described below and have a ten year term.
Any future TSOs granted must vest within five years of the grant date in order
to avoid forfeiture.

                                    11 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

The following is a summary of the TSOs that have been awarded as of September
30, 2003:

<TABLE>
<CAPTION>
                                                                       TSO GRANT YEAR
                                               2003           2002          2001           2000          1999
                                            -----------    ----------     ---------     ----------    ----------
<S>                                         <C>            <C>            <C>           <C>           <C>
Exercise price                              $     50.31    $    40.74     $   34.73     $    29.97    $    31.69
Threshold Vesting
   Stock Price                              $     70.56    $    57.13     $   48.70     $    42.03    $    44.44
Fair value of options on grant date         $      3.94    $     3.38     $    2.21     $     1.49    $     1.36
Original Grant Shares                           300,000       259,675       329,996        304,349       313,964
Forfeited at September 30, 2003                 (18,526)      (39,329)      (46,478)       (71,142)      (93,995)
Vested and exchanged for cash
   at September 30, 2003                              -      (155,860)     (198,823)      (176,296)     (153,541)
Vested and exercised at September 30, 2003            -       (23,354)      (55,194)       (49,000)      (62,406)
                                            -----------    ----------     ---------     ----------    ----------
1998 Incentive Plan TSOs outstanding
   at September 30, 2003                        281,474        41,132        29,501          7,911         4,022
                                            ===========    ==========     =========     ==========    ==========
</TABLE>

On March 22, 2002, the TSOs that were granted in 2000 vested. On March 25, 2002
the Company extended a limited opportunity to employees with vested TSOs to
exchange such options directly for cash (computed as the net proceeds the
employee would have received had he or she exercised the options and then
immediately sold the resulting stock). In addition, on April 29, 2002, on
September 20, 2002 and on June 3, 2003, the TSOs granted in 1999, 2001 and 2002,
respectively, vested. Immediately following each vesting event additional
limited exchange opportunities to employees with previously vested TSOs were
extended. As a result of the vesting of the TSOs and the exchange opportunities,
the Company has recorded additional compensation expense of approximately $1,080
for the three months ended September 30, 2003 and approximately $8,405 for the
nine months ended September 30, 2003 and approximately $4,412 and $11,715,
respectively, for the three and nine months ended September 30, 2002.

On October 24, 2003, due to further increases in the Company's stock price the
then outstanding 281,024 TSOs that were granted in 2003 vested and the Company
granted an additional limited exchange opportunity to employees with previously
vested TSOs. As a result of this vesting of the 2003 TSOs and the additional
exchange opportunity, the Company estimates that additional compensation expense
of approximately $7,125 will be recorded for the fourth quarter of 2003.

                                    12 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

During the second quarter of 2002, the Company elected to adopt the fair value
based employee stock-based compensation expense recognition provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), prospectively. The Company had previously applied
the intrinsic value based expense recognition provisions set forth in APB
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). SFAS 123
states that the adoption of the fair value based method is a change to a
preferable method of accounting. The transition rules for adoption of SFAS 123
provide that prior grants of options, whether from the Company's 1993 Stock
Incentive Plan (now expired) or the 1998 Incentive Plan, are accounted for under
APB 25. Had compensation costs for such prior grants of options been recorded
under SFAS 123, the Company's net income available to common stockholders and
earnings per share would have been reduced to the proforma amounts as follows:

<TABLE>
<CAPTION>
                                                    THREE MONTHS              NINE  MONTHS
                                                 ENDED SEPTEMBER 30,       ENDED SEPTEMBER 30,
                                                2003            2002         2003       2002
                                                ----            ----         ----       ----
<S>                                           <C>             <C>         <C>         <C>
Net income available to common
  stockholders as reported                    $  61,443       $  44,467   $ 150,994   $ 110,581
  Add: stock-based compensation
    expense recorded for all options granted        842           4,445       6,641       7,816
  Deduct: stock-based compensation
    expense for all options using SFAS 123         (902)         (4,530)     (6,815)     (8,070)
                                              ---------       ---------   ---------   ---------
  Pro Forma                                   $  61,383       $  44,382   $ 150,820   $ 110,327
                                              =========       =========   =========   =========

Earnings per share - basic
  As Reported                                 $    0.87       $   0.71    $    2.31   $    1.78
  Pro Forma                                   $    0.87       $   0.71    $    2.31   $    1.78

Earnings per share - diluted
  As Reported                                 $    0.86       $   0.71    $    2.29   $    1.78
  Pro Forma                                   $    0.86       $   0.71    $    2.29   $    1.77
</TABLE>

                                    13 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

NOTE 2 PROPERTY ACQUISITIONS AND DEVELOPMENTS

On May 28, 2002, the Company acquired the stock of Victoria Ward, Limited, a
privately held real estate corporation ("Victoria Ward"). The total acquisition
price was approximately $250,000, including the assumption of approximately
$50,000 of existing debt, substantially all of which was repaid immediately
following the closing. The $250,000 total cash requirement was funded from the
proceeds of the sale of the Company's investment in marketable securities
(related to the GGP MPTC financing (Note 4)) and from available cash and cash
equivalents. The principal Victoria Ward assets include 65 fee simple acres in
Kakaako, central Honolulu, Hawaii, currently improved with, among other uses, an
entertainment, shopping and dining district which includes Ward Entertainment
Center, Ward Warehouse, Ward Village and Village Shops. At acquisition, Victoria
Ward had 17 properties subject to ground leases and 29 owned buildings
containing in the aggregate approximately 878,000 square feet of retail space,
as well as approximately 441,000 square feet of office, commercial and
industrial leaseable area (collectively, the "Victoria Ward Assets"). Victoria
Ward has elected to be taxed as a REIT for income tax purposes.

On July 10, 2002, the Company acquired JP Realty, Inc. ("JP Realty"), a
publicly-held real estate investment trust, and its operating partnership
subsidiary, Price Development Company, Limited Partnership ("PDC"), by merging
JP Realty and PDC with wholly-owned subsidiaries of the Company, with PDC
surviving the merger and all of its subsidiaries remaining in existence. The
total acquisition price was approximately $1,100,000 which included the
assumption of approximately $460,000 in existing debt and approximately $116,000
of existing cumulative preferred operating partnership units in PDC (510,000
Series A 8.75% units redeemable in April 2004, 3,800,000 Series B 8.95% units
redeemable in July 2004 and 320,000 Series C 8.75% units redeemable in May 2005)
which has been included in Minority Interest-Preferred in the accompanying
consolidated financial statements. Each unit of each series of the cumulative
redeemable preferred units in PDC has a liquidation value of $25 per unit and is
convertible at the option of the preferred unit holder in 2009 (2010 for the
Series C Units) into 0.025 shares of a newly created series of General Growth
preferred stock ($1,000 per share base liquidation preference) with payment and
liquidation rights comparable to such preferred unit. Pursuant to the terms of
the merger agreement, the outstanding shares of JP Realty common stock were
converted into $26.10 per share of cash (approximately $431,470). Holders of
common units of limited partnership interest in PDC were entitled to receive
$26.10 per unit in cash or, at the election of the holder, .522 8.5% Series B
Preferred Units (Note 1) per unit. Based upon the elections of such holders,
1,426,393 Series B Preferred Units were issued and the holders of the remaining
common units of limited partnership interest of PDC received approximately
$23,600 in cash. At acquisition, JP Realty owned or had an interest in 51
properties, including 18 enclosed regional mall centers (two of which were owned
through controlling general partnership interests), 26 anchored community
centers (two of which were owned through controlling general partnership
interests), one free-standing retail property and 6 mixed-use
commercial/business properties, containing an aggregate of over 15,200,000
square feet of GLA in 10 western states (collectively, the "JP Realty Assets").
The cash portion of the acquisition price was funded from the net proceeds of
certain new mortgage loans, a new $350,000 acquisition loan (Note 4), and
available cash and cash equivalents.

On August 5, 2002, the Operating Partnership acquired from GGP/Homart, the
Prince Kuhio Plaza in Hilo, Hawaii for approximately $39,000. Prince Kuhio Plaza
was acquired by the assumption by the Operating Partnership of the allocated
share of the GGP MPTC financing (Note 4) pertaining to Prince Kuhio Plaza
(approximately $24,000) and the payment to GGP/Homart of $7,500 in cash and
$7,500 in the form of a promissory note. Immediately following the acquisition,
GGP/Homart issued a dividend of $15,000 to its two co-investors, paid in the
form of $7,500 in cash to NYSCRF and the $7,500 promissory note to the Operating
Partnership. Upon receipt of the promissory note as a dividend, the Operating
Partnership caused the promissory note to GGP/Homart to be cancelled.

                                    14 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

On August 26, 2002, concurrent with the formation of GGP/Teachers (Note 3), the
Company, through GGP/Teachers, acquired Galleria at Tyler in Riverside,
California, Kenwood Towne Centre in Cincinnati, Ohio and Silver City Galleria in
Taunton, Massachusetts from an institutional investor for an aggregate purchase
price of approximately $477,000. Two existing non-recourse loans on Silver City
Galleria, aggregating a total of $75,000 and bearing interest at a rate per
annum of 7.41%, were assumed and three new non-recourse mortgage loans totaling
approximately $337,000 were obtained. The new loans bear interest at a weighted
average rate per annum of LIBOR plus 76 basis points.

On September 13, 2002, the Company acquired Pecanland Mall, an enclosed regional
mall in Monroe, Louisiana, for approximately $72,000. The acquisition was funded
by approximately $22,000 of cash on hand and the assumption of a $50,000
existing non-recourse loan that bears interest at a rate per annum equal to the
sum of 3.0% plus the greater of (i) LIBOR or (ii) 3.5%. The loan is scheduled to
mature in January of 2005 (subject to a no-cost right to extend for one
additional year).

On December 4, 2002, the Company acquired Southland Mall, an enclosed regional
mall in Hayward, California. The aggregate consideration paid was approximately
$89,000. The purchase was financed with approximately $24,000 of cash on hand
and a new 5-year (assuming all no-cost options to extend are exercised) $65,000
mortgage loan that bears interest at LIBOR plus 75 basis points.

On April 30, 2003, the Company acquired Peachtree Mall, an enclosed regional
mall located in Columbus, Georgia. The purchase price was approximately $87,600,
which was paid at closing with an acquisition loan of approximately $53,000
(bearing interest at a rate per annum of LIBOR plus 85 basis points and maturing
in April 2008, assuming all no-cost extension options are exercised) and the
balance from cash on hand and amounts borrowed under the Company's credit
facilities.

On June 11, 2003, the Company acquired Saint Louis Galleria, an enclosed mall in
St. Louis, Missouri. The aggregate consideration paid for Saint Louis Galleria
was approximately $235,000 (subject to certain prorations and adjustments). The
consideration was paid from cash on hand, including proceeds from refinancings
of existing long-term debt and an approximately $176,000 acquisition loan which
initially bore interest at LIBOR plus 105 basis points. In October 2003,
pursuant to the original loan terms, the interest rate spread on the loan was
reset to 165 basis points. The loan requires monthly payments of interest only
and has a term of five years assuming all no-cost extension options are
exercised.

On June 12, 2003, the Company acquired Coronado Center, an enclosed mall in
Albuquerque, New Mexico. The aggregate consideration paid for Coronado Center
was approximately $175,000 (subject to certain prorations and adjustments). The
consideration was paid in the form of cash borrowed under an existing unsecured
revolving credit facility and an approximately $131,000 acquisition loan which
initially bore interest at LIBOR plus 85 basis points. In September 2003,
$30,000 was repaid under the acquisition loan and, pursuant to the original loan
terms, the interest rate spread on the loan was reset to 91 basis points. The
loan requires monthly payments of interest only, is scheduled to mature in
October 2005, and has a term of five years assuming all no-cost extension
options are exercised.

On July 1, 2003, the Company acquired the 49% ownership interest in GGP Ivanhoe
III, which was held by the Company's joint venture partner (an affiliate of
Ivanhoe Cambridge, Inc. of Montreal, Canada ("Ivanhoe")), thereby increasing the
Company's ownership interest to 100%. The aggregate consideration for the 49%
ownership interest in GGP Ivanhoe III was approximately $459,000 (subject to
certain prorations and adjustments). Approximately $268,000 of mortgage debt was
assumed in connection with this acquisition with the balance of the aggregate
consideration, or approximately $191,000, being funded using a combination of
proceeds from the refinancing of existing long-term debt and new mortgage loans
on previously unencumbered properties. Concurrently with this transaction, a new
joint venture, GGP Ivanhoe IV, was created between the Company and Ivanhoe to
own Eastridge Mall, which previously had been owned by GGP Ivanhoe III. The

                                    15 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

Company's ownership interest in GGP Ivanhoe IV is 51% and Ivanhoe's ownership
interest is 49%. Also, immediately following these transactions a retail
facility separate from the seven operating malls was sold by GGP Ivanhoe III to
an independent third party, generating a gain (related to the Company's
previously owned 51% ownership) of approximately $610,700, net of minority
interest.

On August 27, 2003, the Company acquired Lynnhaven Mall, an enclosed mall in
Virginia Beach, Virginia for approximately $256,500. The consideration (after
certain prorations and adjustments) was paid in the form of cash borrowed under
an existing unsecured credit facility and a $180,000 acquisition loan. The
acquisition loan currently bears interest at a rate per annum of LIBOR plus 125
basis points and matures in five years (assuming the exercise by the Company of
all no-cost extension options).

On October 14, 2003, the Company acquired Sikes Senter, an enclosed mall located
in Wichita Falls, Texas. The purchase price was approximately $61,000, which was
paid at closing with an acquisition loan of approximately $41,500 (bearing
interest at a rate per annum of LIBOR plus 70 basis points and scheduled to
mature in November 2008, assuming all no-cost extension options are exercised)
and the balance from cash on hand and amounts borrowed under the Company's
credit facilities.

On October 29, 2003, the Company acquired The Maine Mall, an enclosed mall in
Portland, Maine. The aggregate consideration paid for The Maine Mall was
approximately $270,000 (subject to certain prorations and adjustments). The
consideration was paid in the form of cash borrowed under an existing unsecured
revolving credit facility and an approximately $202,500 acquisition loan which
initially bears interest at LIBOR plus 92 basis points. The loan requires
monthly payments of interest only and matures in five years (assuming the
exercise by the Company of all no-cost extension options).

On October 31, 2003, the Company acquired Glenbrook Square, an enclosed mall in
Fort Wayne, Indiana. The aggregate consideration paid for Glenbrook Square was
approximately $219,000 (subject to certain prorations and adjustments). The
consideration was paid from cash on hand, including proceeds from refinancings
of existing long-term debt and by an approximately $164,250 acquisition loan
which initially bears interest at LIBOR plus 80 basis points. After March 2004,
depending upon certain factors, the interest rate spread per annum could vary
from 85 basis points to 185 basis points. The loan requires monthly payments of
interest only and matures in five years (assuming the exercise by the Company of
all no-cost extension options).

All acquisitions completed through September 30, 2003 were accounted for
utilizing the purchase method of accounting and accordingly, the results of
operations are included in the Company's results of operations from the
respective dates of acquisition. The Company has used estimates of future cash
flows and other valuation techniques to allocate the purchase price of acquired
property between land, buildings and improvements, tenant allowances, equipment
and other identifiable debit and credit intangibles such as amounts related to
in-place leases and acquired below-market leases. Above-market and below-market
in-place lease values for owned properties are recorded based on the present
value (using an interest rate which reflects the risks associated with the
leases acquired) of the difference between (i) the contractual amounts to be
paid pursuant to the in-place leases and (ii) the Company's estimate of fair
market lease rates for the corresponding in-place leases, measured over a period
equal to the remaining non-cancelable term of the lease. The capitalized above-
and below-market lease values are amortized as adjustments to rental income over
the remaining non-cancelable terms of the respective leases.

This allocation has resulted in the recognition upon acquisition of additional
consolidated intangible assets (acquired in-place leases) and deferred credits
(acquired below-market leases) relating to the Company's 2003 real estate
purchases of approximately $6,107 and $25,324, respectively. These intangible
assets and liabilities, and similar assets and liabilities from the Company's
2002 acquisitions including those by the Unconsolidated Real Estate Affiliates,
are being amortized over the terms of the acquired leases which

                                    16 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

resulted in additional 2003 net income, including the Company's share of such
items from its Unconsolidated Real Estate Affiliates, of approximately $9,544.
Due to existing contacts and relationships with tenants at its currently owned
properties and at properties currently managed for others, no significant value
has been ascribed to the tenant relationships which exist at the properties
acquired in 2003.

DEVELOPMENTS

The Company has an ongoing program of renovations and expansions at its
properties including significant projects currently under construction or
recently completed at the following centers:

   -   Tucson Mall in Tucson, Arizona

   -   Alderwood Mall in Lynnwood (Seattle), Washington (owned by GGP/Homart II)

   -   Altamonte Mall in Altamonte Springs (Orlando), Florida (owned by
       GGP/Homart II)

   -   The Woodlands Mall in The Woodlands (Houston), Texas (owned by
       GGP/Homart)

   -   Eastridge Mall in San Jose, California (owned by GGP Ivanhoe IV)

   -   Crossroads Center in Saint Cloud, Minnesota

During 1999, the Company formed the Circle T joint venture to develop a regional
mall in Westlake (Dallas), Texas as further described in Note 3 below. As of
September 30, 2003, the Company had invested approximately $18,120 in the joint
venture. The Company is currently obligated to fund additional pre-development
costs of approximately $539. Total development costs are not finalized or
committed but are anticipated to be funded from a construction loan that is
expected to be obtained. The retail site, part of a planned community which is
expected to contain a resort hotel, a golf course, luxury homes and corporate
offices, is currently planned to contain up to 1.3 million square feet of tenant
space including up to nine anchor stores, an ice rink and a multi-screen
theater. The construction project is currently anticipated to be completed in
2006.

On June 23, 2002, the Company commenced construction of the Jordan Creek Town
Center on a 200 acre site in West Des Moines, Iowa. As of September 30, 2003,
the Company had invested approximately $44,292 in the project, including land
costs. Total development costs are estimated to be approximately $200,000 and
are anticipated to be funded from operating cash flow, current unsecured
revolving credit facilities and/or a future project loan. At completion,
currently scheduled for August 2004, the regional mall is planned to contain up
to two million square feet of tenant space with up to three anchor stores, a
hotel and an amphitheater.

The Company also owns and/or is investigating certain other potential
development sites (representing a net investment of approximately $21,503),
including sites in Toledo, Ohio and South Sacramento, California but there can
be no assurance that development of these sites will proceed.

NOTE 3 INVESTMENTS IN AND LOANS FROM UNCONSOLIDATED REAL ESTATE AFFILIATES

The Company owns interests in unconsolidated real estate joint ventures, the
Unconsolidated Real Estate Affiliates, that own and/or develop shopping centers
and other retail and investment property. The Company uses these joint ventures
to limit its risk associated with individual properties and to reduce its
capital requirements. The joint venture ownership structure is common in the
real estate industry. Since the Company has joint interest and control of the
properties with its venture partners, accounting principles generally accepted
in the United States of America require that the Company account for these joint
ventures using the equity method.

                                    17 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

GGP/HOMART

The Company holds a 50% interest in GGP/Homart with the remaining ownership
interest held by New York State Common Retirement Fund ("NYSCRF"), the Company's
co-investor in GGP/Homart II (described below). During August 2002, as approved
by NYSCRF, GGP/Homart sold one of its properties, the Prince Kuhio Plaza to the
Company (Note 2). GGP/Homart has elected to be taxed as a REIT for income tax
purposes. The Company shares in the profits and losses, cash flows and other
matters relating to GGP/Homart in accordance with its 50% ownership percentage.
NYSCRF has an exchange right under the GGP/Homart Stockholders' Agreement which
permits it to convert its ownership interest in GGP/Homart to shares of Common
Stock of General Growth. If such exchange right is exercised, the Company may,
at its election, alternatively satisfy such exchange in cash.

GGP/HOMART II

In November 1999, the Company, together with NYSCRF, formed GGP/Homart II, a
Delaware limited liability company which is owned equally by the Company and
NYSCRF. At September 30, 2003, GGP/Homart II owns ten regional shopping malls,
one of which was acquired in March 2001 and two of which were acquired in the
fourth quarter of 2002. The remaining seven properties were contributed to
GGP/Homart II by the Company or NYSCRF as part of their initial contributions.
Certain of these seven malls were contributed subject to existing financing, as
modified by certain replacement financing ("Retained Debt"), in order to balance
the net equity values of the malls contributed by each of the venture partners.
Such contribution arrangements between the Company and NYSCRF have the effect of
the Company having an additional contingent obligation to fund any shortfalls
GGP/Homart II may incur if the non-recourse debt (approximately $164,804 at
September 30, 2003 with a current maturity of January 2007 assuming all no-cost
extension options are exercised) related to Natick Mall is not funded by
proceeds from any subsequent sales or refinancing of Natick Mall. In 2001, in
connection with the refinancing of Montclair Plaza, NYSCRF's only remaining
Retained Debt obligations were satisfied. According to the membership agreement
between the venture partners, the Company and NYSCRF share in the profits and
losses, cash flows and other matters relating to GGP/Homart II in accordance
with their respective 50% ownership percentages.

On closing of the GGP MPTC financing (as defined and described in Note 4),
approximately $190,000 of the proceeds attributable to GGP/Homart and GGP/Homart
II were loaned, rather than distributed, approximately $95,000 to each of the
Operating Partnership and NYSCRF. The GGP/Homart loan to the Operating
Partnership of approximately $16,596 was repaid in October 2002. The $78,400
loan by GGP/Homart II to the Operating Partnership currently bears interest at a
rate per annum of LIBOR plus 135 basis points on the remaining outstanding
balance of approximately $1,496 and is now scheduled to mature on March 31,
2005. During May 2002, an additional $84,000 was loaned by GGP/Homart II to the
Operating Partnership and NYSCRF, in the ratio of their respective ownership
interests. The $42,000 of loans to the Operating Partnership were comprised of
$24,000 by GGP/Homart and $18,000 by GGP/Homart II. During April 2003, the
GGP/Homart loan was repaid. The GGP/Homart II loan currently bears interest at a
rate per annum of LIBOR plus 135 basis points on the remaining outstanding
balance of approximately $18,112 and matures on March 31, 2005. The Operating
Partnership anticipates repayment of these loans from future operating
distributions from GGP/Homart II.

GGP/TEACHERS

On August 26, 2002, the Company formed GGP/Teachers, a new joint venture owned
50% by the Company and 50% by Teachers' Retirement System of the State of
Illinois ("Illinois Teachers"). Upon formation of GGP/Teachers, Clackamas Town
Center in Portland, Oregon, which was 100% owned by Illinois Teachers, was
contributed to GGP/Teachers. In addition, concurrent with its formation,
GGP/Teachers acquired Galleria at Tyler in Riverside, California; Kenwood Towne
Centre in Cincinnati, Ohio; and Silver City Galleria in

                                    18 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

Taunton, Massachusetts, as described in Note 2. The Company's share
(approximately $112,000) of the equity of GGP/Teachers was funded by a portion
of new unsecured loans that total $150,000 (see Note 4) and bear interest at
LIBOR plus 100 basis points. According to the operating agreement between the
venture partners, the Company and Illinois Teachers generally share in the
profits and losses, cash flows and other matters relating to GGP/Teachers in
accordance with their respective 50% ownership percentages. Also pursuant to the
operating agreement, and in exchange for a reduced initial cash contribution by
the Company, approximately $19,488 of debt related to the properties was deemed
to be Retained Debt and therefore, solely attributable to the Company. The
Company would be obligated to fund any shortfalls of any subsequent sale or
refinancing proceeds of the properties against their respective loan balances to
the extent of such Retained Debt.

In addition, on December 19, 2002, Florence Mall in Florence, Kentucky was
acquired by GGP/Teachers for a purchase price of approximately $97,000 including
a new $60,000 mortgage loan with an initial term of two years, that bears
interest at a rate per annum of LIBOR plus 89 basis points and matures in
January 2008 (assuming the exercise of two no-cost extension options of eighteen
months each).

GGP IVANHOE III

Prior to July 1, 2003, GGP Ivanhoe III was owned 51% by the Company and 49% by
Ivanhoe, the Company's joint venture partner in GGP Ivanhoe (described below).
The Company and Ivanhoe shared in the profits and losses, cash flows and other
matters relating to GGP Ivanhoe III in accordance with their respective
ownership percentages except that certain major operating and capital decisions
(as defined in the stockholders' agreement) required the approval of both
stockholders. Accordingly, the Company had been accounting for GGP Ivanhoe III
using the equity method.

On July 1, 2003, as described in Note 2, the Company completed a transaction to
acquire the 49% ownership interest in GGP Ivanhoe III held by Ivanhoe, bringing
the Company's ownership to 100%. Concurrent with this transaction, ownership of
one mall (Eastridge Mall) was transferred to GGP Ivanhoe IV, a newly-established
joint venture owned 51% by the Company and 49% by Ivanhoe. Accordingly, GGP
Ivanhoe III, which as of July 1, 2003 holds a 100% ownership in seven enclosed
regional malls, is fully consolidated in the Company's consolidated financial
statements and GGP Ivanhoe IV, the owner of the Eastridge Mall, became an
Unconsolidated Real Estate Affiliate.

GGP IVANHOE IV

On July 1, 2003, concurrent with the Ivanhoe III transaction described above,
the ownership of the Eastridge Mall was transferred to a new joint venture, GGP
Ivanhoe IV. GGP Ivanhoe IV, which will elect to be taxed as a REIT, is owned 51%
by the Company and 49% by Ivanhoe. The Company and Ivanhoe share in the profits
and losses, cash flows and other matters relating to GGP Ivanhoe IV in
accordance with their respective ownership percentages except that certain major
operating and capital decisions (as defined in the stockholders' agreement)
requires the approval of both stockholders. Additionally, the stockholders'
agreement provides that during the 30-day period following June 30, 2006 or the
30-day period following June 30, 2009, Ivanhoe shall have the right to require
the Company to purchase all of the GGP Ivanhoe IV common stock held by Ivanhoe
for a purchase price equal to the value of such common stock. The Company can
satisfy this obligation in any combination of cash or Common Stock. Accordingly,
the Company is accounting for GGP Ivanhoe IV using the equity method.

                                    19 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

GGP IVANHOE

GGP Ivanhoe owns The Oaks Mall in Gainesville, Florida and Westroads Mall in
Omaha, Nebraska. The Company owns a 51% ownership interest in GGP Ivanhoe and
Ivanhoe owns the remaining 49% ownership interest. The terms of the
stockholders' agreement are similar to those of the GGP Ivanhoe III and GGP
Ivanhoe IV stockholders' agreements.

TOWN EAST MALL / QUAIL SPRINGS MALL

The Company owns a 50% interest in Town East Mall, located in Mesquite, Texas
and a 50% interest in Quail Springs Mall in Oklahoma City, Oklahoma. The Company
shares in the profits and losses, cash flows and other matters relating to Town
East Mall and Quail Springs Mall in accordance with its ownership percentage.

CIRCLE T

The Company, through a wholly-owned subsidiary, owns a 50% general partnership
interest in Westlake Retail Associates, Ltd. ("Circle T"). AIL Investment, LP,
an affiliate of Hillwood Development Company, ("Hillwood") is the limited
partner of Circle T. Circle T is currently developing the Circle T Ranch Mall, a
regional mall in Dallas, Texas, scheduled for completion in 2006 as discussed in
Note 2. Development costs are expected to be funded by a construction loan to be
obtained by the joint venture and capital contributions by the joint venture
partners. As of September 30, 2003, the Company has made contributions of
approximately $18,120 to the project for pre-development costs and Hillwood has
contributed approximately $11,170, mostly in the form of land costs and related
pre-development costs. As certain major decisions concerning Circle T must be
made jointly by the Company and Hillwood, the Company is accounting for Circle T
using the equity method.

                                    20 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

SUMMARIZED COMBINED FINANCIAL INFORMATION OF UNCONSOLIDATED REAL ESTATE
AFFILIATES

The following is summarized financial information for the Company's
Unconsolidated Real Estate Affiliates as of September 30, 2003 and December 31,
2002 and for the periods ended September 30, 2003 and 2002.

BALANCE SHEETS - UNCONSOLIDATED REAL ESTATE AFFILIATES

<TABLE>
<CAPTION>
                                                  SEPTEMBER 30, 2003   DECEMBER 31, 2002
                                                  ------------------   -----------------
<S>                                               <C>                  <C>
Assets
     Land                                         $          495,995   $         558,748
     Buildings and equipment                               4,843,380           5,425,522
     Less accumulated depreciation                          (634,060)           (558,148)
     Developments in progress (*)                             92,809              59,213
                                                  ------------------   -----------------
       Net property and equipment                          4,798,124           5,485,335
     Investment in unconsolidated joint ventures               9,488              12,520
                                                  ------------------   -----------------
       Net investment in real estate                       4,807,612           5,497,855
     Cash and cash equivalents                                99,749             241,707
     Marketable securities                                         -                 523
     Tenant accounts receivable, net                          77,062              91,586
     Deferred expenses, net                                   84,836              60,614
     Prepaid expenses and other assets                        73,607              70,593
                                                  ------------------   -----------------
     Total assets                                 $        5,142,866   $       5,962,878
                                                  ==================   =================
Liabilities and Stockholders' Equity
     Mortgage notes and other debt payable        $        3,545,109   $       4,074,025
     Accounts payable and accrued expenses                   251,645             289,535
                                                  ------------------   -----------------
                                                           3,796,754           4,363,560
Stockholders' Equity                                       1,346,112           1,599,318
                                                  ------------------   -----------------
     Total liabilities and stockholders' equity   $        5,142,866   $       5,962,878
                                                  ==================   =================
</TABLE>

(*) At September 30, 2003 and December 31, 2002, amounts reflected as
development in progress includes approximately $29,290 and $28,563,
respectively, of assets of the Circle T joint venture.

                                    21 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

STATEMENTS OF OPERATIONS - UNCONSOLIDATED REAL ESTATE AFFILIATES

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED        NINE MONTHS ENDED
                                                       SEPTEMBER 30,            SEPTEMBER 30,
                                                     2003       2002          2003        2002
                                                   ---------  ---------     ---------   ---------
<S>                                                <C>        <C>           <C>         <C>
Revenues:
     Minimum rents                                 $ 127,458  $ 117,534     $ 417,532   $ 333,975
     Tenant recoveries                                63,557     63,098       209,524     168,868
     Overage rents                                     2,482      1,936         6,655       5,830
     Other                                             3,243      3,040         8,175       6,971
                                                   ---------  ---------     ---------   ---------
          Total revenues                             196,740    185,608       641,886     515,644

Expenses:
     Real estate taxes                                17,809     17,937        60,424      49,619
     Repairs and maintenance                          14,002     12,560        47,527      37,410
     Marketing                                         6,530     10,417        21,305      18,139
     Other property operating costs                   28,861     24,909        90,105      70,427
     Provision for doubtful accounts                   1,511      1,123         2,812       3,230
     Property management and other costs              11,425      9,608        36,189      28,595
     General and administrative                          356        260         1,629         538
     Depreciation and amortization                    38,161     35,436       125,256      99,281
                                                   ---------- ---------     ---------   ---------
          Total expenses                             118,655    112,250       385,247     307,239

Operating income                                      78,085     73,358       256,639     208,405
Interest income                                          883      3,962         3,638      11,185
Interest expense                                     (41,735)   (41,346)     (135,048)   (121,782)
Equity in income of unconsolidated joint ventures      1,096        921         2,827       2,795
                                                   ---------- ---------     ---------   ---------
Net Income                                         $  38,329  $  36,895     $ 128,056   $ 100,603
                                                   =========  =========     =========   =========
</TABLE>

NOTE 4 MORTGAGE NOTES AND OTHER DEBT PAYABLE

Mortgage notes and other debt payable reflected in the accompanying consolidated
balance sheets at September 30, 2003 and December 31, 2002 consisted of the
following:

<TABLE>
<CAPTION>
                                                   SEPTEMBER 30, 2003    DECEMBER 31, 2002
<S>                                                <C>                   <C>
Fixed-Rate debt:
      Mortgage notes payable                       $        3,965,767    $       2,523,701
Variable-Rate debt*:
      Mortgage notes payable                       $        1,260,663    $       1,472,310
      Credit facilities and bank loans             $          828,500    $         596,300
                                                   ------------------    -----------------
      Total Variable-Rate debt                              2,089,163            2,068,610
                                                   ------------------    -----------------
      Total                                        $        6,054,930    $       4,592,311
                                                   ==================    =================
</TABLE>

* The Company has entered into certain cash flow hedges as described below
related to a portion of this variable rate debt. The effect of these
arrangements has not been reflected in the above segregation of variable versus
fixed-rate debt.

                                    22 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

FIXED RATE DEBT
MORTGAGE NOTES AND OTHER DEBT PAYABLE

Mortgage notes and other debt payable consist primarily of fixed rate
non-recourse notes collateralized by individual or groups of properties or
equipment. Also included in mortgage notes and other debt payable are $100,000
of ten-year senior unsecured notes, bearing interest at a fixed rate of 7.29%
per annum, which were issued by PDC in March 1998 and were assumed by the
Company in conjunction with the acquisition of JP Realty (Note 2). Interest
payments on these notes are due semi-annually on March 11 and September 11 of
each year and principal payments of $25,000 are due annually beginning March
2005. The fixed rate notes bear interest ranging from 1.81% to 10.00% per annum
(weighted average of 6.42% per annum), and require monthly payments of principal
and/or interest.

Certain properties are pledged as collateral for the related mortgage notes.
Substantially all of the mortgage notes at September 30, 2003 are non-recourse
to the Company. Certain mortgage notes payable may be prepaid but are generally
subject to a prepayment penalty equal to a yield-maintenance premium or a
percentage of the loan balance. Certain loans have cross-default provisions and
are cross-collateralized. Under certain cross-default provisions, a default
under any mortgage notes included in a cross-defaulted package may constitute a
default under all such mortgage notes and may lead to acceleration of the
indebtedness due on each property within the collateral package. In general, the
cross-defaulted properties are under common ownership. However, GGP Ivanhoe debt
collateralized by two GGP Ivanhoe centers (totaling $125,000) is cross-defaulted
and cross-collateralized with debt (totaling $435,000) collateralized by eleven
Wholly-Owned Centers.

VARIABLE RATE DEBT
MORTGAGE NOTES AND OTHER DEBT PAYABLE

Variable rate mortgage notes and other debt payable at September 30, 2003
consist primarily of $492,163 of collateralized mortgage-backed securities,
$768,500 of mortgage notes secured by individual properties, and $828,500 of
unsecured debt of which $689,000 is outstanding under the Company's 2003 Credit
Facility as described below. Approximately $500,000 of the variable rate debt is
currently subject to fixed rate swap agreements as described below. The loans
bear interest at a rate per annum equal to LIBOR plus 60 to 250 basis points.

COMMERCIAL MORTGAGE-BACKED SECURITIES

In early December 2001, the Operating Partnership and certain Unconsolidated
Real Estate Affiliates completed the placement of $2,550,000 of non-recourse
commercial mortgage pass-through certificates (the "GGP MPTC"). At inception,
the GGP MPTC was collateralized by 27 malls and one office building, including
19 malls owned by certain Unconsolidated Real Estate Affiliates. During February
2003, GGP/Homart repaid approximately $65,000 and the West Oaks Mall was removed
from the collateralized group of properties. During June 2003, the Company also
repaid an aggregate of approximately $542,000 and removed an additional five
properties from the collateralized group of properties. All amounts repaid
include a previously negotiated pay-down premium (ranging from 5% to 25% of the
applicable allocated principal balance) to secure the release of the property
from the collateralized group of properties. The GGP MPTC is comprised of both
variable rate and fixed rate notes (approximately $497,016 and $344,740,
respectively at September 30, 2003) which require monthly payments of principal
and interest. The certificates represent beneficial interests in three loan
groups made by three sets of borrowers (GGP/Homart-GGP/Homart II, Wholly-Owned
and GGP Ivanhoe III). The original principal amount of the GGP MPTC was
comprised of $1,235,000 attributed to the Operating Partnership, $900,000 to
GGP/Homart and GGP/Homart II and $415,000 to GGP Ivanhoe III. The three loan
groups are comprised of variable rate notes with a 36 month initial maturity
(with two no cost 12 month no-cost extension options), variable rate notes with
a 51 month initial maturity (with two no cost 18

                                    23 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

month no-cost extension options) and fixed rate notes with a five year maturity.
The 36 month variable rate notes bear interest at rates per annum ranging from
LIBOR plus 60 to 235 basis points (weighted average equal to 79 basis points),
the 51 month variable rate notes bear interest at rates per annum ranging from
LIBOR plus 70 to 250 basis points (weighted average equal to 103 basis points)
and the five year fixed rate notes bear interest at rates per annum ranging from
approximately 5.01% to 6.18% (weighted average equal to 5.38%). The no-cost
extension options with respect to the variable rate notes are subject to
obtaining extensions of the interest rate protection agreements which were
required to be obtained in conjunction with the GGP MPTC. The GGP MPTC yielded
approximately $470,000 of net proceeds (including amounts attributed to the
Unconsolidated Real Estate Affiliates) which were utilized for other loan
repayments and temporary investments in cash equivalents and marketable
securities. On closing of the GGP MPTC financing, approximately $94,996 of such
proceeds attributable to GGP/Homart and GGP/Homart II were loaned to the
Operating Partnership. The $16,596 loan by GGP/Homart was repaid by the
Operating Partnership in October 2002. The $78,400 loan by GGP/Homart II
currently bears interest at a rate per annum of LIBOR plus 135 basis points on
the remaining outstanding balance. Although the loan is currently scheduled to
mature on March 31, 2005 (Note 3), the Operating Partnership currently expects
to repay this loan in full by the end of 2004.

Concurrent with the issuance of the certificates, the Company purchased interest
rate protection agreements (structured to limit the Company's exposure to
interest rate fluctuations), and simultaneously an equal amount of interest rate
protection agreements were sold to fully offset the effect of these agreements
and to recoup a substantial portion of the cost of such agreements. Further, to
achieve a more desirable balance between fixed and variable rate debt, the
Company initially entered into $666,933 of swap agreements. Approximately
$575,000 of such swap agreements were with independent financial services firms
and approximately $91,933 was with GGP Ivanhoe III to provide Ivanhoe with only
variable rate debt. The notional amounts of such swap agreements decline over
time to an aggregate of $25,000 at maturity of the 51 month variable rate loans
(assuming both 18 month no-cost extension options are exercised). The swap
agreements convert the related variable rate debt to fixed rate debt currently
bearing interest at a weighted average rate of 4.66% per annum. Such swap
agreements have been designated as cash flow hedges and hedge the Company's
exposure to forecasted interest payments on the related variable rate debt. As
of July 1, 2003, in conjunction with the acquisition of the remaining 49% of GGP
Ivanhoe III, the swap agreements between the Company and GGP Ivanhoe III were
cancelled (Note 2).

CREDIT FACILITIES

In conjunction with the 2002 acquisition of JP Realty, an existing $200,000
unsecured credit facility (the "PDC Credit Facility") with a balance of
approximately $120,000 was assumed. At December 31, 2002, approximately $130,000
was outstanding on the PDC Credit Facility, all of which was repaid in 2003
primarily from the proceeds from a new credit facility obtained in April 2003
described below. The PDC Credit Facility had a scheduled maturity of July 2003
and bore interest at the option of the Company at (i) the higher of the federal
funds rate plus 50 basis points or the prime rate of Bank One, NA, or (ii) LIBOR
plus a spread of 85 to 145 basis points as determined by PDC's credit rating.

In April 2003, the Company reached an agreement with a group of banks to
establish a new revolving credit facility and term loan (the "2003 Credit
Facility") with initial borrowing availability of approximately $779,000 (which
was subsequently increased to approximately $1,250,000). At closing,
approximately $619,000 was borrowed under the 2003 Credit Facility, which has a
term of three years and provides for partial amortization of the principal
balance of the term loan in the second and third years. The proceeds were used
to repay and consolidate existing financing including amounts due on the PDC
Credit Facility (which was terminated upon repayment), the Term Loan and the JP
Realty acquisition loan. The amount outstanding on the 2003 Credit Facility at
September 30, 2003 was approximately $689,000. Amounts borrowed under the 2003
Credit Facility bear interest at a rate per annum of LIBOR plus 100 to 175 basis
points depending upon the

                                    24 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

Company's leverage ratio. As of September 30, 2003, the applicable weighted
average interest rate on the 2003 Credit Facility was 2.46%.

INTERIM FINANCING

In July 2002, in conjunction with the JP Realty acquisition, the Company
obtained a new $350,000 loan from a group of banks. The loan was repaid in April
2003 with proceeds from the 2003 Credit Facility described above. The loan bore
interest at a rate per annum equal to LIBOR plus 150 basis points and was
scheduled to mature on July 9, 2003.

During August 2002, the Company, through Victoria Ward, arranged for an
aggregate of $150,000 in loans from two separate groups of banks. On August 23,
2002, the Company borrowed an initial $80,000 and, on September 19, 2002, the
Company borrowed an additional $70,000. The two-year loans provide for quarterly
partial amortization of principal, bear interest at a rate per annum of LIBOR
plus 100 basis points, and require the remaining balance to be paid at maturity
(unless extended, under certain conditions, for an additional nine months).

During June 2003, the Company obtained two new acquisition loans of totaling
approximately $307,000 for the purchases of Saint Louis Galleria and Coronado
Center as described in Note 2. The $176,000 loan collateralized by Saint Louis
Galleria currently bears interest at a rate per annum of LIBOR plus 165 basis
points and the loan collateralized by Coronado Center (approximately $101,000 as
of the date of this report) currently bears interest at a rate per annum of
LIBOR plus 91 basis points. Both loans require monthly payments of interest only
and are scheduled to mature in five years assuming the exercise by the Company
of three one-year, no-cost extension options on each of the loans.

In addition and as described in Note 2, the Company obtained four new
acquisition loans totaling approximately $588,250 for the purchases of Lynnhaven
Mall, Sikes Senter, The Maine Mall and Glenbrook Square. The loans initially
bear interest at LIBOR plus a range of 70 to 125 basis points and generally
mature in five years assuming the exercise by the Company of all no-cost
extension options.

CONSTRUCTION LOAN

In connection with the acquisition of JP Realty, the Company assumed a $47,340
construction loan of Spokane Mall Development Company Limited Partnership, and a
$50,000 construction loan of Provo Mall Development Company, Ltd., in both of
which PDC is the general partner. The loans, which bore interest at a rate per
annum of LIBOR plus 150 basis points, were scheduled to mature in July 2003 but
were replaced in January 2003 with a new long-term non-recourse mortgage loan.
The new loan, allocated $53,000 to the Provo Mall and $42,000 to the Spokane
Mall, is collateralized by the two malls, bears interest at a rate per annum of
4.42% and matures in February 2008.

LETTERS OF CREDIT

As of September 30, 2003 and December 31, 2002, the Operating Partnership had
outstanding letters of credit of approximately $11,830 and $12,104,
respectively, primarily in connection with special real estate assessments and
insurance requirements.

                                    25 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

NOTE 5 DISTRIBUTIONS PAYABLE

The following is a chart of the common and preferred distributions for the
Company paid in 2003 and 2002. Since the most recent dividend declaration
occurred subsequent to September 30, 2003, the amount paid on October 31, 2003
has not been accrued in the accompanying consolidated balance sheet. As
described in Note 1, and until redeemed on July 15, 2003, General Growth's
preferred stock dividends to its preferred stockholders were in the same amount
as the Operating Partnership's distributions to General Growth on the same dates
with respect to the Preferred Units held by General Growth.

<TABLE>
<CAPTION>
                                       COMMON DISTRIBUTIONS
------------------------------------------------------------------------------------------------------
                                                                        GENERAL          OPERATING
                                                                        GROWTH          PARTNERSHIP
DECLARATION          AMOUNT PER      RECORD            PAYMENT       STOCKHOLDERS      LIMITED PARTNERS
   DATE                SHARE          DATE              DATE            AMOUNT            AMOUNT
   ----                -----          ----              ----            ------            ------
<S>                  <C>            <C>               <C>            <C>               <C>
 10/01/03            $  0.90        10/15/03          10/31/03       $     64,402        $  17,423
 06/09/03               0.72        07/07/03          07/31/03             45,417           13,980
 03/14/03               0.72        04/03/03          04/30/03             45,230           13,994
 12/12/02               0.72        01/06/03          01/31/03             44,937           14,080
 09/17/02               0.72        10/04/02          10/31/02             44,889           14,085
 06/17/02               0.65        07/05/02          07/31/02             40,440           12,722
 03/21/02               0.65        04/15/02          04/30/02             40,346           12,722
 12/10/01               0.65        01/14/02          01/31/02             40,266           12,722
</TABLE>

<TABLE>
<CAPTION>
            PREFERRED DISTRIBUTIONS
-----------------------------------------------
  RECORD            PAYMENT          AMOUNT PER
   DATE              DATE              SHARE
   ----              ----              -----
<S>                <C>              <C>
 07/10/03          07/15/03         $  0.5252*
 04/03/03          04/15/03            0.4531
 01/06/03          01/15/03            0.4531
 10/04/02          10/15/02            0.4531
 07/05/02          07/15/02            0.4531
 04/05/02          04/15/02            0.4531
 01/04/02          01/15/02            0.4531
</TABLE>

*Final distribution as described in Note 1.

                                    26 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

NOTE 6 COMMITMENTS AND CONTINGENCIES

In the normal course of business, from time to time, the Company is involved in
legal actions relating to the ownership and operations of its properties. In
management's opinion, the liabilities if any, that may ultimately result from
such legal actions are not expected to have a material adverse effect on the
consolidated financial statements of the Company.

The Company leases land or buildings at certain properties from third parties.
Consolidated rental expense including participation rent related to these leases
was $1,826 and $1,010 for the nine months ended September 30, 2003 and 2002,
respectively. The leases generally provide for a right of first refusal in favor
of the Company in the event of a proposed sale of the property by the landlord.

The Company periodically enters into contingent agreements for the acquisition
of properties. Each acquisition is subject to satisfactory completion of due
diligence and, in the case of property acquired under development, completion of
the project.

NOTE 7 DISCONTINUED OPERATIONS - MCCRELESS MALL

On March 31, 2003, the Company sold McCreless Mall in San Antonio, Texas for
aggregate consideration of $15,000 (which was paid in cash at closing). The
Company recorded a gain of approximately $4,000 for financial reporting purposes
on the sale of the mall. McCreless Mall was purchased in 1998 as part of a
portfolio of eight shopping centers. Pursuant to SFAS 144, the Company has
reclassified the operations of McCreless Mall (approximately $859 in revenues
and $292 in net income in the nine months ended September 30, 2003 and
approximately $2,878 in revenues and $1,118 in net income in the nine months
ended September 30, 2002, respectively) to discontinued operations for the 2003
and 2002 consolidated financial statements and has reflected such amounts net of
minority interests.

NOTE 8 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In April 2002, the FASB issued Statement No. 145 "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections"
("SFAS 145"). Generally, SFAS 145 has the effect of suspending the treatment of
debt extinguishment costs as extraordinary items. SFAS 145 is effective for the
year ended December 31, 2003. Accordingly, in the comparative 2002 statements
presented in this report, the Company has reclassified to other interest costs
approximately $50 of debt extinguishment costs recorded in the nine months ended
September 30, 2002 that had been classified under previous accounting standards
as extraordinary items.

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" which is intended to improve
financial reporting of special purpose and other entities. Certain variable
interest entities that are qualifying special purpose entities will not be
required to be consolidated under the provisions of FIN 46. In addition, FIN 46
expands the disclosure requirements for the beneficiary of a significant or a
majority of the variable interests to provide information regarding the nature,
purpose and financial characteristics of the entities. The Company has certain
special purpose entities, primarily created to facilitate the issuance of its
commercial mortgage-backed securities and other securitized debt (Note 4).
Because these special purpose entities are qualifying special purpose entities,
which are exempted from consolidation, the Company does not believe these
special purpose entities will require consolidation in its financial statements.

On April 30, 2003 the FASB issued Statement No. 149 ("SFAS 149"), "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities". SFAS 149 amends
and clarifies accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities
under Statement 133. In particular, this Statement clarifies under what
circumstances a contract with an initial

                                    27 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

net investment meets the characteristic of a derivative as discussed in
Statement 133 and it clarifies when a derivative contains a financing component
that warrants special reporting in the statement of cash flows. SFAS 149 is
effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003 and is to be applied
prospectively. The implementation of SFAS 149 did not materially change the
Company's accounting for the kinds of derivatives that the Company has typically
obtained in the course of its regular financing activities.

On May 15, 2003 the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("SFAS 150"). The issuance of SFAS 150 was intended to improve the accounting
for certain financial instruments that, under previous guidance, issuers could
account for as equity. SFAS 150 requires that those instruments be classified as
liabilities in statements of financial position and also requires disclosures
about alternative ways of settling the instruments and the capital structure of
entities, all of whose shares are mandatorily redeemable. SFAS 150 affects the
issuer's accounting for a number of freestanding financial instruments. Most of
the guidance in Statement 150 was effective for all financial instruments
entered into or modified after May 31, 2003, and otherwise is effective for the
Company at the beginning of the third quarter of 2003. The implementation of
SFAS 150 did not have a significant impact on the Company's consolidated
financial statements or disclosures.

NOTE 9 PRO FORMA FINANCIAL INFORMATION

Due to the impact of the acquisitions made during 2002 and 2003 as described in
Note 2, historical results of operations may not be indicative of future results
of operations. The pro forma condensed consolidated statements of operations for
the nine months ended September 30, 2003 include adjustments for the
acquisitions made during 2003 as described in Note 2 as if such transactions had
occurred on January 1, 2003. The pro forma condensed consolidated statements of
operations for the nine months ended September 30, 2002 include adjustments for
the acquisitions made during 2003 as described in Note 2 plus the acquisitions
made in 2002, as also described in Note 2, as if such transactions had occurred
on January 1, 2002. The pro forma information is based upon the historical
consolidated statements of operations excluding extraordinary items, cumulative
effect of accounting change and income (loss) from discontinued operations and
does not purport to present what actual results would have been had the
acquisitions, and related transactions, in fact, occurred at the previously
mentioned dates, or to project results for any future period.

                                    28 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
                                   (UNAUDITED)

                              PRO FORMA INFORMATION

<TABLE>
<CAPTION>
                                                                   Nine Months Ended
                                                                     September 30,
                                                                  2003          2002
                                                                  ----          ----
<S>                                                            <C>           <C>
Total revenues                                                 $ 1,038,343   $   990,894

Expenses:
      Real estate taxes                                             79,108        72,455
      Other property operating                                     321,267       294,237
      Depreciation and amortization                                188,746       172,238
                                                               -----------   -----------
Total Expenses                                                     589,121       538,930
                                                               -----------   -----------
Operating Income                                                   449,222       451,964

Interest expense, net                                             (229,264)     (226,387)
Income allocated to minority interests                             (85,007)      (82,393)
Equity in income of unconsolidated affiliates                       61,980        47,150
                                                               -----------   -----------
Pro forma net income (a)                                           196,931       190,334
Pro forma convertible preferred stock dividends                    (13,030)      (18,351)
                                                               -----------   -----------
Pro forma net income available to common stockholders (a)      $   183,901   $   171,983
                                                               ===========   ===========
Pro forma earnings per share - basic (b)                       $      2.82   $      2.77
Pro forma earnings per share - diluted (b)                     $      2.71   $      2.76
</TABLE>

(a)  The pro forma adjustments include management fee and depreciation
     modifications and adjustments to give effect to the acquisitions activity
     described above.

(b)  Pro forma basic earnings per share are based upon weighted average common
     shares of 65,283,370 for 2003 and 62,120,878 for 2002. Pro forma diluted
     per share amounts are based on the weighted average common shares and the
     effect of dilutive securities (stock options, and for 2003, PIERS)
     outstanding of 71,500,041 for 2003 and 62,272,738 for 2002.

                                    29 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

All references to numbered Notes are to specific footnotes to the Consolidated
Financial Statements of the Company included in this quarterly report and which
descriptions are hereby incorporated herein by reference. The following
discussion should be read in conjunction with such Consolidated Financial
Statements and related Notes. Capitalized terms used, but not defined, in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations have the same meanings as in such Notes.

FORWARD-LOOKING INFORMATION

Certain statements contained in this Quarterly Report on Form 10-Q may include
certain forward-looking information statements, within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including (without limitation) statements with
respect to anticipated future operating and financial performance, growth and
acquisition opportunities and other similar forecasts and statements of
expectation. Words such as "expects", "anticipates", "intends", "plans",
"believes", "seeks", "estimates" and "should" and variations of these words and
similar expressions, are intended to identify these forward-looking statements.
Forward-looking statements made by the Company and its management are based on
estimates, projections, beliefs and assumptions of management at the time of
such statements and are not guarantees of future performance. The Company
disclaims any obligation to update or revise any forward-looking statement based
on the occurrence of future events, the receipt of new information or otherwise.

Actual future performance, outcomes and results may differ materially from those
expressed in forward-looking statements made by the Company and its management
as a result of a number of risks, uncertainties and assumptions. Representative
examples of these factors include (without limitation):

   -   general industry and economic conditions

   -   interest rate trends

   -   cost of capital and capital requirements

   -   availability of real estate properties

   -   inability to consummate acquisition opportunities

   -   competition from other companies and venues for the sale/distribution of
       goods and services

   -   changes in retail rental rates in the Company's markets

   -   shifts in customer demands

   -   tenant bankruptcies or store closures

   -   changes in vacancy rates at the Company's properties

   -   changes in operating expenses, including employee wages, benefits and
       training

   -   governmental and public policy changes

   -   changes in applicable laws, rules and regulations (including changes in
       tax laws)

   -   the ability to obtain suitable equity and/or debt financing

   -   the continued availability of financing in the amounts and on the terms
       necessary to support the Company's future business

SEASONALITY

The shopping center business is seasonal in nature. Mall stores typically
achieve higher sales levels during the fourth quarter because of the holiday
selling season, and with lesser, though still significant, sales fluctuations
associated with the Easter holiday and back-to-school events. Although the
Company has a year-long temporary leasing program, a significant portion of the
rents received from short-term tenants are

                                    30 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

collected during the months of November and December. Thus, occupancy levels and
revenue production are generally highest in the fourth quarter of each year and
lower during the first and second quarters of each year.

USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Critical accounting policies
are those that are both significant to the overall presentation of the Company's
financial condition and results of operations and require management to make
difficult, complex or subjective judgments. For example, significant estimates
and assumptions have been made with respect to useful lives of assets,
capitalization of development and leasing costs, allocations of purchase price
to acquired assets and liabilities, recoverable amounts of receivables and
deferred taxes and initial valuations and related amortization periods of
deferred costs and intangibles, particularly with respect to property
acquisitions, as further discussed below. Actual results could differ from those
estimates for a variety of reasons, certain of which are discussed below. The
Company's critical accounting policies have not changed during 2003 or 2002.
However, the Company did elect, during the second quarter of 2002, to adopt the
fair value based employee stock-based compensation expense recognition
provisions of SFAS 123, as discussed in Note 1.

INITIAL VALUATIONS AND ESTIMATED USEFUL LIVES OR AMORTIZATION PERIODS FOR
PROPERTY AND INTANGIBLES:

Upon acquisition of an investment property, the Company makes an initial
assessment of the initial valuation and composition of the assets and
liabilities acquired. These assessments consider fair values of the respective
assets and liabilities and are determined based on estimated future cash flows
using appropriate discount and capitalization rates and other commonly accepted
valuation techniques. The estimated future cash flows that are used for this
analysis reflect the historical operations of the property, known trends and
changes expected in current market and economic conditions which would impact
the property's operations, and the Company's plans for such property. These
estimates of cash flows and valuations were particularly important given the
application of SFAS 141 and 142 (Note 1) for the allocation of purchase price
between land, buildings and improvements and other identifiable intangibles. If
events or changes in circumstances concerning the property occur, this may
indicate that the carrying values or amortization periods of the assets and
liabilities may need to be adjusted. The resulting recovery analysis also
depends on an analysis of future cash flows to be generated from the property's
assets and liabilities. Changes in the Company's overall plans and its views on
current market and economic conditions may have a significant impact on the
resulting estimated future cash flows of a property that are analyzed for these
purposes. As the resulting cash flows are, under current accounting standards,
the basis for the carrying values of the assets and liabilities and any
subsequent impairment losses recognized, the impact of these estimates on the
Company's operations could be substantial. For example, the net consolidated
carrying value of the land, buildings and other assets, net of identifiable
intangible liabilities, at September 30, 2003 for acquisitions completed by the
Company in 2003 was approximately $1.64 billion.

RECOVERABLE AMOUNTS OF RECEIVABLES AND OTHER ASSETS:

The Company makes periodic assessments of the collectability of receivables and
the recoverability of other assets based on a specific review of the risk of
loss on specific accounts or amounts. This analysis places particular emphasis
on past-due accounts and considers information such as, among other things, the
nature and age of the receivables, the payment history and financial condition
of the debtor and the basis for any disputes or negotiations with the debtor.
The resulting estimate of any allowance or reserve related to the recovery of
these items is subject to revision as these factors change and is sensitive to
the effects of economic and market conditions on such debtors.

                                    31 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

CAPITALIZATION OF DEVELOPMENT AND LEASING COSTS:

The Company has historically capitalized the costs of development and leasing
activities of its properties. These costs are incurred both at the property
location and at the regional and corporate office level. The amount of
capitalization depends, in part, on the identification of certain activities to
specific projects and lease proposals. The amount of costs capitalized and the
recovery of such costs depends upon the ability to make such specific
identifications or justifiable allocations. Differences in methodologies of cost
identifications and documentation, as well as differing assumptions as to the
time incurred on different projects, can yield significant differences in the
amounts capitalized.

CERTAIN INFORMATION ABOUT THE COMPANY PORTFOLIO

As of September 30, 2003, the Company owned 100% of the Wholly-Owned Centers,
50% of the common stock of GGP/Homart, 50% of the membership interests in
GGP/Homart II, 50% of the membership interests in GGP/Teachers, 51% of the
common stock of GGP Ivanhoe, 51% of the common stock of GGP Ivanhoe IV and 50%
of Quail Springs Mall and Town East Mall. As of September 30, 2003, GGP/Homart
owned interests in twenty-two shopping centers, GGP/Homart II owned interests in
ten shopping centers, GGP/Teachers owned interests in five shopping centers, GGP
Ivanhoe owned interests in two shopping centers, and GGP Ivanhoe IV owned an
interest in one shopping center (collectively, with the Wholly-Owned Centers,
Quail Springs Mall and Town East Mall, the "Company Portfolio"). The following
data on the Company Portfolio is for 100% of the non-anchor GLA of the centers,
excluding centers currently being redeveloped and/or remerchandised.

On September 30, 2003, the Mall Store and Freestanding Store portions of the
centers in the Company Portfolio which were not undergoing redevelopment were
approximately 90.7% occupied as of such date, representing a 2.0% increase in
the occupancy percentage which existed on September 30, 2002, but representing a
decrease in occupancy percentage of 0.3% as compared to December 31, 2002. Such
minor occupancy declines are typical of the usual retail cycle and the decline
in 2003 is less than the first and second quarter declines in 2002 as compared
to December 31, 2001.

Total annualized Mall Store sales averaged $354 per square foot for the Company
Portfolio in the nine months ended September 30, 2003. Tenant sales per square
foot as of September 30, 2003 increased by 2.1% compared to the same period in
2002. Sales directly impact the amount of percentage rents certain tenants and
anchors pay. Comparable Mall Store sales are sales of those tenants that were
open the previous 12 months. Therefore, comparable Mall Store sales in the nine
months ended September 30, 2003 are of those tenants that were operating in the
nine months ended September 30, 2002. Comparable Mall Store sales in the nine
months ended September 30, 2003 decreased by 0.5% as compared to the same period
in 2002. While the Company's sales statistics have recently shown improvement,
the sales environment remains challenging and there is no assurance that these
trends will continue.

Annualized average base rent per square foot for all mall tenants at the
Company's comparable centers was $30.98 for the three months ended September 30,
2003, compared to $29.48 for the three months ended September 30, 2002. As
leases have expired in the malls, the Company has generally been able to lease
the available space. In periods of increasing sales, rents on new leases will
tend to rise as tenants' expectations of future growth become more optimistic.
In periods of slower growth or declining sales, rents on new leases will grow
more slowly or may decline for the opposite reason. However, many of the leases
expire each year which may enable the Company to replace or renew such expiring
leases with new leases at higher base and/or percentage rents, if rents under
the expiring leases are below the then-existing market rates.

The average Mall Store rent per square foot from leases that expired in the nine
months ended September 30, 2003 was $26.70. The Company Portfolio benefited from
increasing rents inasmuch as the average Mall Store rent per square foot on new
and renewal leases executed during this same period was $33.62, or $6.92 per
square foot above the average for expiring leases. This spread may not be
indicative of future periods, as this

                                    32 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

statistic is not computed on comparable tenant spaces, and can vary
significantly from quarter to quarter depending on the total amount, location,
and average size of tenant space opening and closing in the period.

Company revenues are primarily derived from tenants in the form of fixed minimum
rents, overage rents and recoveries of operating expenses. Inasmuch as the
Company's consolidated financial statements reflect the use of the equity method
to account for its investments in GGP/Homart, GGP/Homart II, GGP/Teachers, GGP
Ivanhoe, GGP Ivanhoe IV, Quail Springs Mall and Town East Mall, the discussion
of results of operations of the Company below relates primarily to the revenues
and expenses of the Wholly-Owned Centers and GGMI. In addition, the Victoria
Ward Assets were acquired in May 2002, the JP Realty Assets were acquired in
July 2002, Prince Kuhio Plaza was acquired in August 2002, Pecanland Mall was
acquired in September 2002, Southland Mall was acquired in December 2002,
Peachtree Mall was acquired in April 2003, Saint Louis Galleria and Coronado
Center were acquired in June 2003, the 49% ownership interest in GGP Ivanhoe III
was acquired in July 2003, resulting in the reclassification of the seven
properties owned by GGP Ivanhoe III as wholly-owned, and Lynnhaven Mall was
acquired in August 2003. The effect of the acquisitions on the results of the
Company's operations is included in the following discussions. McCreless Mall,
which was sold in March 2003, is included in discontinued operations, net of
minority interest for the three and nine months ended September 30, 2003 and
2002, and accordingly is excluded from the following discussions.

RESULTS OF OPERATIONS OF THE COMPANY
THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

Total revenues for the three months ended September 30, 2003 were $327.4
million, an increase of $69.9 million or 27.1% from $257.5 million in the three
months ending September 30, 2002. The acquisitions in 2003 and 2002, as
discussed in the notes above, accounted for $66.4 million or 95.0% of the
increase. Minimum rents for the three months ended September 30, 2003 were
$205.0 million, compared to $156.1 million for the same period in 2002, a 31.3%
or $48.9 million increase. Of the $48.9 million increase in minimum rents for
2003 as compared to 2002, $36.8 million was due to 2003 and 2002 acquisitions
with the remaining amount attributable to increased rents from higher
occupancies, higher base rents from lease renewals, as well as increased
specialty leasing activities. Tenant recoveries increased $17.3 million or 25.0%
from $69.3 million in the 2002 third quarter to $86.6 million in the 2003 third
quarter, with the malls acquired in the 2003 and 2002 representing virtually all
of this increase.

Total expenses, including depreciation and amortization, increased from $141.3
million for the three-month period ended September 30, 2002 to $183.7 million
for the same period in 2003. This increase of $42.4 million or 30.0% includes
$37.6 million as a result of the 2003 and 2002 acquisitions, with the balance
from properties owned for the entire time during the third quarters in 2003 and
2002. Of all the expenses categories that showed increases, the areas which
experienced the most increases include real estate taxes, from $16.4 million to
$23.9 million, an increase of $7.5 million or 45.7%; repairs and maintenance,
from $16.1 million to $20.6 million, an increase of $4.5 million or 28.0%;
property operating costs which include contract services, utilities, insurance
and administrative expenses, increased $9.1 million or 29.6% from $30.7 million
to $39.8 million; depreciation and amortization, increased $15.8 million or
34.4%, from $45.9 million to $61.7 million; as well as provision for doubtful
accounts, which increased $1.4 million or 175% from $0.8 million to $2.2
million. Portions of such increases in operating expenses are recoverable from
tenants pursuant to the terms of their leases.

Interest expense for the three months ended September 30, 2003 was $74.7
million, a $14.6 million or 24.3% increase from $60.1 million for the
three-month period ended September 30, 2002. Substantially all of this increase
is attributable to the 2003 and 2002 acquisition financing.

                                    33 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

Equity in income of unconsolidated affiliates in the three months ended
September 30, 2003 increased by $1.7 million or 10.2% from $16.6 million to
$18.3 million. Net income increased $10.8 million or 21.3% from $50.6 million to
$61.4 million mainly due to 2003 and 2002 acquisitions.

RESULTS OF OPERATIONS OF THE COMPANY
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

Total revenues for the nine months ended September 30, 2003 were $885.9 million,
an increase of $215.7 million or 32.2% from $670.2 million in the three months
ended September 30, 2002. The acquisitions in 2003 and 2002 accounted for $172.1
million or 79.8% of this increase. Minimum rents for the nine months ended
September 30, 2003 were $548.4 million, compared to $399.3 million for the
comparable period of 2002. The 37.3% or $149.1 million increase was in large
part due to 2003 and 2002 acquisitions which accounted for 70.7% or $105.4
million of this change. The remaining increases resulted from higher 2003
occupancy levels, rents from Fallbrook Mall which was under development during
most of 2002, higher rents from lease renewals and additional specialty leasing
activities. Tenant recoveries increased $54.6 million or 29.7% from $183.6
million to $238.2 million in the nine months ended September 30, 2002 and 2003
respectively. While the recently-acquired malls contributed $45.9 million or
84.1% of the increase, the remainder was from malls owned by the Company during
all of 2002 and 2003. The increase was also due to higher occupancy levels in
2003, thus yielding higher recovery rates.

Total expenses, including depreciation and amortization, increased from $380.3
million for the nine-month period ended September 30, 2002 to $515.7 million for
the same period in 2003, an increase of $135.4 million or 35.6%. The
acquisitions contributed $87.5 million or 64.6% of the increase, with the
remainder being primarily the result of operations of malls owned by the Company
during all of 2002 and 2003.

The expense categories showing the more significant increases included real
estate taxes, in which new acquisitions accounted for 67.8% or $14.1 million of
the $20.8 million increase between the first nine months in 2003 and the same
period in 2002, with balances of $64.5 million and $43.7 million respectively.
Repairs and maintenance increased 31.1%, or $13.5 million from $43.4 million to
$56.9 million, with the acquisitions accounting for $11.4 million or 84.4% of
the change. This was also true for marketing expenses, which increased $6.8
million or 36.8% from $18.5 million to $25.3 million, with $5.2 million or 76.5%
attributed to acquisitions. Of the increases between the first nine months in
2003 and 2002, property and liability insurance expenses for the entire
portfolio experienced the highest percentage of increase of almost 240.3% or
$42.3 million from $17.6 million.

Interest expense for the nine months ended September 30, 2003 was $199.6
million, an increase of $42.6 million or 27.1% from $157.0 million in 2002. Of
this increase, $30.7 million or 72.1% was due to acquisitions, while $6.2
million or 14.6% was due to additional financing, including the unsecured
revolving credit facility as described in Note 4, obtained in 2003.

Equity in income of unconsolidated affiliates in the nine months ended September
30, 2003 increased by $16.9 million or 37.7% from $44.8 million to $61.7
million. Net income increased $35.1 million or 27.2% from $128.9 million to
$164.0 million, mainly due to 2003 and 2002 acquisitions.

LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY

As of September 30, 2003, the Company held approximately $138 million of
unrestricted cash and cash equivalents. The liquidity of the Company is derived
primarily from its leases that generate positive net cash flow from operations
and distributions from unconsolidated real estate affiliates. The Company uses
operating cash flow as the principal source of internal funding for short-term
liquidity and capital needs such as tenant construction allowances and minor
improvements made to individual properties that are not recoverable through
common area maintenance charges to tenants. External funding alternatives for
longer-term liquidity

                                    34 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

needs such as acquisitions, new development, expansions and major renovation
programs at individual centers include:

   -   Construction loans

   -   Mini-permanent loans

   -   Long-term project financing

   -   Joint venture financing with institutional partners

   -   Operating Partnership level or Company level equity investments

   -   Unsecured Company level debt

   -   Secured loans collateralized by individual shopping centers

In this regard, in March 2003 the Company arranged the 2003 Credit Facility
(Note 4) to replace a previously existing unsecured credit facility with a total
available commitment of $200 million and with an outstanding balance of
approximately $110 million. The 2003 Credit Facility was finalized in April 2003
with initial borrowing availability of approximately $779 million (which was
subsequently increased to approximately $1.25 billion). At closing,
approximately $619 million was borrowed under the 2003 Credit Facility, which
has a term of three years and provides for partial amortization of the principal
balance of the term loan in the second and third years. As of September 30,
2003, the Company believes it is in compliance with any restrictive covenants
(Note 4) contained in its various financing arrangements.

In addition, the Company considers its Unconsolidated Real Estate Affiliates as
potential sources of short and long-term liquidity. In this regard, the Company
has net borrowings (in place of distributions) at September 30, 2003 of $19.6
million from GGP/Homart II. The remaining $4.7 million on a loan from GGP/Homart
was repaid in April 2003. The $19.6 million currently borrowed from GGP/Homart
II bears interest at a rate per annum of LIBOR plus 135 basis points, and is due
March 31, 2005. Such remaining loaned amount represents a portion of the
GGP/Homart II net proceeds of the GGP MPTC and other recent financings and have
been and are expected to be fully repaid from future operating distributions
from GGP/Homart II (Note 3). Also, in order to maintain its access to the public
equity and debt markets, the Company has a currently effective shelf
registration statement under which up to $2 billion in equity or debt securities
may be issued from time to time. Finally, in April 2003, the Company obtained a
revolving credit facility and term loan as described below.

On October 1, 2003, the Company's Board of Directors approved an amendment to
the Company's Charter to effectuate a three-for-one split of the Common Stock,
increase the number of authorized shares of common stock from 210 million to 875
million shares and change the par value of the Common Stock from $.10 to $.01
per share. The Charter amendment is subject to shareholder approval, which will
be sought at a November 20, 2003 special shareholder meeting. If approved by the
shareholders, the record date for the stock split is expected to be November 20,
2003 with a distribution date of December 5, 2003. When the change in par value
becomes effective, it will result in an approximate $5 million reclassification
of common stock-par value to additional paid-in capital. In addition, the
Operating Partnership currently has approximately 19 million common units
outstanding that may be exchanged by their holders, under certain circumstances,
for shares of Common Stock on a one-for-one basis. These common units are also
expected to be split on a three-for-one basis so that they continue to be
exchangeable on a one-for-one basis into shares of Common Stock. In subsequent
consolidated financial statements, all previous per share disclosure amounts
will be restated to reflect the stock split.

As of September 30, 2003, the Company had consolidated debt of approximately
$6.0 billion, of which approximately $4.4 billion is comprised of debt bearing
interest at fixed rates (after taking into effect certain interest rate swap
agreements described below), with the remaining approximately $1.6 billion
bearing interest at variable rates. In addition, the Company's pro rata share of
the debt of the Unconsolidated Real Estate Affiliates was approximately $1.9
billion, of which approximately $1.2 billion is comprised of debt bearing
interest at fixed rates (after taking into effect certain interest rate swap
agreements), with the remaining approximately $731.5 million bearing interest at
variable rates. Except in instances where certain Wholly-

                                    35 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

Owned Centers are cross-collateralized with the Unconsolidated Centers, or the
Company has retained a portion of the debt of a property when contributed to an
Unconsolidated Real Estate Affiliate (Note 3), the Company has not otherwise
guaranteed the debt of the Unconsolidated Real Estate Affiliates. Reference is
made to Notes 5 and 12 and Items 2 and 7A of the Company's Annual Report on Form
10-K for additional information regarding the Company's debt and the potential
impact on the Company of interest rate fluctuations.

At September 30, 2003, the Company had direct or indirect ("pro rata") mortgage
and other debt of approximately $7.9 billion (excluding a market value purchase
price adjustment of debt of approximately $5.8 million related to the JP Realty
acquisition and reflecting a reduction in the debt of certain consolidated
former JP Realty ventures by approximately $24.2 million to reflect the minority
partners' share of such debt of such ventures). Management of the Company
believes this pro rata presentation provides important detail relating to the
financial position of the centers owned by the Unconsolidated Real Estate
Affiliates.

The following table reflects the maturity dates of the Company's pro rata debt
and the related interest rates, after the effect of the current swap agreements
of the Company as described in Note 4.

                             COMPANY PORTFOLIO DEBT
             MATURITY AND CURRENT AVERAGE INTEREST RATE SUMMARY (a)
                            AS OF SEPTEMBER 30, 2003

                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                         WHOLLY-OWNED           UNCONSOLIDATED                COMPANY
                          CENTERS                CENTERS (b)                PORTFOLIO DEBT
                  ------------------------   ---------------------     -----------------------
                                   CURRENT                 CURRENT                   CURRENT
                                   AVERAGE                 AVERAGE                   AVERAGE
                    MATURING      INTEREST    MATURING    INTEREST      MATURING     INTEREST
 YEAR               AMOUNT(a)     RATE (c)    AMOUNT(a)   RATE (c)      AMOUNT(a)     RATE (c)
 ----             ------------    --------   -----------  --------     -----------   ---------
<S>               <C>            <C>         <C>          <C>          <C>           <C>
2003              $          -          -    $    98,000    2.34%      $    98,000     2.34%
2004                   458,684      4.58%         87,147    4.89%          545,831     4.63%
2005                   387,000      4.75%        120,829    5.61%          507,829     4.96%
2006                   962,351      4.92%        186,611    7.23%        1,148,962     5.30%
2007                   486,816      4.86%        558,819    2.37%        1,045,635     3.53%

Subsequent           3,730,103      5.04%        833,422    5.30%        4,563,525     5.09%
                  ------------    --------   -----------  --------     -----------   ---------

Total             $  6,024,954      4.95%    $ 1,884,828    4.47%      $ 7,909,782     4.84%
                  ============   =========   ===========  ========     ===========   =========

Variable Rate     $  1,589,164      2.43%    $   731,464    2.12%      $ 2,320,628     2.33%
Fixed Rate           4,435,790      5.86%      1,153,364    5.97%        5,589,154     5.88%
                  ------------    --------   -----------  --------     -----------   ---------

Total             $  6,024,954      4.95%    $ 1,884,828    4.47%      $ 7,909,782     4.84%
                  ============   =========   ===========  ========     ===========   =========
</TABLE>

   (a) Excludes principal amortization.

   (b) Unconsolidated centers debt reflects the Company's share of debt (either
       retained (Note 3) or based on its respective equity ownership interests
       in the Unconsolidated Real Estate Affiliates) relating to the properties
       owned by the Unconsolidated Real Estate Affiliates.

   (c) For variable rate loans, the interest rate reflected is the actual
       annualized weighted average rate for the variable rate debt outstanding
       during the nine months ended September 30, 2003.

Reference is made to Note 4 and Item 3 below for additional information
regarding the Company's debt and the potential impact on the Company of interest
rate fluctuations.

                                    36 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

The following summarizes certain significant investment and financing
transactions of the Company currently planned or completed since December 31,
2002:

In January 2003, the Company refinanced the mortgage loans collateralized by the
Provo Towne Centre and the Spokane Valley Mall with a new, long-term
non-recourse mortgage loan. The new $95 million loan bears interest at a rate
per annum of 4.42% and matures in February 2008.

On March 31, 2003, the Company sold McCreless Mall in San Antonio, Texas for
aggregate consideration of $15 million (which was paid in cash at closing). The
Company recorded a gain of approximately $4 million for financial reporting
purposes on the sale of the mall. McCreless Mall was purchased in 1998 as part
of a portfolio of eight shopping centers.

In April 2003, the Company reached an agreement with a group of banks to
establish a new revolving credit facility and term loan (the "2003 Credit
Facility") with initial borrowing availability of approximately $779 million
(which was subsequently increased to approximately $1.25 billion). At closing,
approximately $619 million was borrowed under the 2003 Credit Facility, which
has a term of three years and provides for partial amortization of the principal
balance of the term loan in the second and third years. The proceeds were used
to repay and consolidate existing financing including amounts due on the PDC
Credit Facility, the Term Loan and the JP Realty acquisition loan. Amounts
borrowed under the 2003 Credit Facility bear interest at a rate per annum of
LIBOR plus 100 to 175 basis points depending upon the Company's leverage ratio.
The balance at September 30, 2003 on the revolving credit facility was $0 and
the term loan was $689.0 million.

On April 30, 2003, the Company completed the acquisition of Peachtree Mall, an
811,000 square foot enclosed regional mall located in Columbus, Georgia. The
purchase price was approximately $87.6 million, which was paid at closing with a
five-year acquisition loan (assuming the exercise by the Company of all no-cost
extension options) of approximately $53 million (bearing interest at a rate per
annum of LIBOR plus 85 basis points), and the balance from cash on hand and
borrowings under the Company's credit facilities.

On June 11, 2003, the Company acquired Saint Louis Galleria, a two-level mall
containing approximately 1.2 million square feet of gross leaseable area, in St.
Louis, Missouri. The purchase price was approximately $235 million which was
funded by cash on hand, including proceeds from refinancings of existing
long-term financing and an approximately $176 million acquisition loan which
matures in October of 2005 and bears interest at a rate per annum of LIBOR plus
105 basis points (Note 2).

On June 12, 2003, the Company acquired Coronado Center, a two-level mall
containing approximately 1.2 million square feet of gross leaseable area, in
Albuquerque, New Mexico. The purchase price was approximately $175 million and
was funded by cash borrowed from the Company's revolving line of credit and by
an approximately $131 million acquisition loan which matures in October of 2005
and bore interest at a rate per annum of LIBOR plus 85 basis points. In
September 2003, $30 million was paid down and the loan now bears interest at a
rate per annum of LIBOR plus 91 basis points (Note 2).

On June 13, 2003, the Company refinanced five malls, Boulevard Mall, West Valley
Mall, Mayfair Mall, Valley Plaza Mall and Regency Square Mall, which had all
been a part of the GGP MPTC financing (see Note 4). Boulevard Mall was
refinanced with a new non-recourse $120 million loan which matures in July of
2013 and bears interest at a rate per annum of 4.27375%. West Valley Mall was
refinanced with a new non-recourse $67 million loan which matures in April of
2010 and bears interest at a rate per annum of 3.43%. Mayfair Mall (owned by GGP
Ivanhoe III which was an Unconsolidated Real Estate Affiliate until the July 1,
2003 acquisition described below) was refinanced with a new non-recourse $200
million loan which matures in July of 2008 and bears interest at a rate per
annum of 3.108%. Valley Plaza was refinanced with a new non-recourse $107
million loan which matures in July of 2012 and bears interest at a rate per
annum of 3.90%. Regency Square Mall was refinanced with a new non-recourse $106
million loan which matures in July of 2010 and bears interest at a rate per
annum of 3.5940%.

                                    37 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

On July 1, 2003, the Company acquired the 49% ownership interest in GGP Ivanhoe
III which was held by Ivanhoe, the Company's joint venture partner, thereby
increasing the Company's ownership interest to a full 100%. Concurrently with
this transaction, a new joint venture, GGP Ivanhoe IV, was created between the
Operating Partnership and Ivanhoe to own Eastridge Mall, which previously had
been owned by GGP Ivanhoe III. No gain or loss will be recognized on this
transaction by GGP Ivanhoe III. The Company's ownership interest in GGP Ivanhoe
IV is 51% and Ivanhoe's ownership interest is 49%. The aggregate consideration
for the GGP Ivanhoe III acquisition was approximately $459 million.
Approximately $268 million of existing mortgage debt was assumed in connection
with the GGP Ivanhoe III acquisition. The balance of the aggregate
consideration, or approximately $191 million, was funded using a combination of
proceeds from the refinancing of existing long-term debt and new mortgage loans
on previously unencumbered properties as described immediately below.

On July 1, 2003, the Company obtained an aggregate of five new mortgage loans on
sixteen previously unencumbered properties. Visalia Mall was financed with a new
non-recourse $49.0 million loan which matures in January of 2010 and bears
interest at a rate per annum of 3.777%. Boise Towne Plaza was financed with a
new non-recourse $12.1 million loan which matures in July of 2010 and bears
interest at a rate per annum of 4.699%. A new non-recourse loan of approximately
$38.5 million, cross-collateralized by a group of nine retail properties (Austin
Bluffs Plaza, Division Crossing, Fort Union Plaza, Halsey Crossing, Orem
Plaza-Center Street, Orem Plaza-State Street, River Pointe Plaza, Riverside
Plaza and Woodlands Village), was obtained. This mortgage loan bears interest a
rate per annum of 4.396% and is scheduled to mature in April of 2009. A new
non-recourse loan of approximately $29.4 million, collateralized by the Gateway
Crossing and the University Crossing retail properties, was obtained which
matures in July of 2010 and bears interest at a rate per annum of 4.699%.
Finally, a new non-recourse loan of approximately $87 million, collateralized by
the Animas Valley, Grand Teton and Salem Center retail properties, was obtained
which matures in July of 2008 and bears interest at a rate per annum of 3.564%.

On July 31, 2003, the Company obtained a new long-term fixed rate non-recourse
mortgage loan collateralized by The Meadows Mall. The new $112 million loan,
bearing interest at a rate per annum of 5.45282%, matures in August 2013, and
replaced a previously existing $59.6 million mortgage loan.

On August 27, 2003, the Company acquired Lynnhaven Mall, an enclosed mall in
Virginia Beach, Virginia for approximately $256.5 million. The consideration
(after certain prorations and adjustments) was paid in the form of cash borrowed
under an existing unsecured credit facility and a $180 million acquisition loan.
The acquisition loan currently bears interest at a rate per annum of LIBOR plus
125 basis points and has a term of five years (assuming the exercise by the
Company of all no-cost extension options).

On October 14, 2003, the Company completed the acquisition of Sikes Senter, a
675,000 square foot enclosed mall located in Wichita Falls, Texas. The purchase
price was approximately $61 million, which was paid at closing with a five-year
acquisition loan (assuming the exercise by the Company of all no-cost extension
options) of approximately $41.5 million (bearing interest at a rate per annum of
LIBOR plus 70 basis points), and the balance from cash on hand and borrowings
under the Company's credit facilities.

On October 29, 2003, the Company acquired The Maine Mall, a two-level mall
containing approximately 1.1 million square feet of gross leaseable area, in
Portland, Maine. The purchase price was approximately $270 million which was
funded by cash on hand, including proceeds from refinancings of existing
long-term financing and an approximately $202.5 million 5-year acquisition loan
(assuming the exercise by the Company of all no-cost extension options) which
bears interest at a rate per annum of LIBOR plus 92 basis points (Note 2).

On October 31, 2003, the Company acquired Glenbrook Square, a two-level mall
containing approximately 1.2 million square feet of gross leaseable area, in
Fort Wayne, Indiana. The purchase price was approximately $219 million and was
funded by cash borrowed from the Company's revolving line of credit and by an

                                    38 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

approximately $164 million 5-year acquisition loan (assuming the exercise by the
Company of all no-cost extension options) which bears interest at a rate per
annum of LIBOR plus 80 basis points (Note 2).

In addition, certain Unconsolidated Real Estate Affiliates completed significant
investment and financing transactions since December 31, 2002, as summarized as
follows:

On February 14, 2003, GGP/Homart purchased from the holder the portion of the
GGP MPTC financing (approximately $65 million) attributable to the West Oaks
Mall, a property 100% owned by GGP/Homart. In October 2003, a new $76 million
loan which matures in August 2013 and bears interest at a rate per annum of
5.2515% was obtained.

In March 2003, the Company, through GGP/Homart, refinanced the Pembroke Lakes
Mall $84 million mortgage with a new long-term mortgage loan. The new $144
million loan is comprised of two notes, both of which mature in April 2013 and
for which the weighted average interest rate per annum is 4.94%.

Also in March 2003, the Company, through GGP/Homart, made a $50 million
repayment on the GGP/Homart and GGP/Homart II term loans and repaid the $43.8
million mortgage secured by Columbiana Centre. An additional pay-down of
approximately $10.8 million was made in October 2003 on the GGP/Homart II loan.
A new $72 million mortgage loan, collateralized by the Columbiana Centre, was
obtained in April 2003. The new loan, maturing in May 2008, provides for
periodic amortization of principal and interest and bears interest at a rate per
annum of 4.13%.

In May 2003, the $19.2 million 7.65% mortgage loan (originally scheduled to
mature in September 2003) collateralized by Bay City Mall was repaid by
GGP/Homart. GGP/Homart currently plans to obtain replacement financing secured
by the property in late 2003 or early 2004.

Net cash provided by operating activities was $336.0 million in the first nine
months of 2003, an increase of $42.5 million from $293.5 million in the same
period in 2002, primarily due to increased earnings in 2003 as a result of
properties acquired in 2002 and 2003 including unconsolidated affiliates as
discussed above.

Net cash used by investing activities was $971.6 million in the first nine
months of 2003 compared to $725.1 million of cash used in the first nine months
of 2002. Cash flows from investing activities were impacted by the higher volume
of acquisition and development activity for the consolidated real estate
properties in the first nine months of 2003 as compared to the first nine months
in 2002 as further described in Note 2. This use of cash for investing activity
in 2002 was partially offset by the sale of the Company's $155 million of
marketable securities in May 2002.

Financing activities represented a source of cash of $720.3 million in the first
nine months of 2003, compared to a source of cash of $295.6 million in 2002. A
major contributing factor to the variance in the cash provided from financing
activity is that financing from mortgages and other debt, net of repayments of
principal on mortgage debt, yielded an additional $934.9 million in the first
nine months of 2003 versus $414.9 million in the first nine months of 2002.

In order to remain qualified as a real estate investment trust for federal
income tax purposes, General Growth must distribute or pay tax on 100% of
capital gains and at least 90% of its ordinary taxable income to stockholders.
The following factors, among others, will affect operating cash flow and,
accordingly, influence the decisions of the Board of Directors regarding
distributions: (i) scheduled increases in base rents of existing leases; (ii)
changes in minimum base rents and/or overage rents attributable to replacement
of existing leases with new or renewal leases; (iii) changes in occupancy rates
at existing centers and procurement of leases for newly developed centers; and
(iv) General Growth's share of distributions of operating cash flow generated by
the Unconsolidated Real Estate Affiliates, less oversight costs and debt service
on additional loans that have been or will be incurred. General Growth
anticipates that its operating cash flow, and potential new debt or equity from
future offerings, new

                                    39 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

financings or refinancings will provide adequate liquidity to conduct its
operations, fund general and administrative expenses, fund operating costs and
interest payments and allow distributions to General Growth preferred and common
stockholders in accordance with the requirements of the Internal Revenue
Service.

ECONOMIC CONDITIONS

In recent years, the retail sector has been experiencing declining growth due to
layoffs, eroding consumer confidence, falling stock prices, the war in Iraq, the
September 11, 2001 terrorist attacks and threats of additional terrorism.
Although the 2002 holiday season was generally stronger than economists'
predictions, the retail sector and the economy as a whole remains weak. Such
reversals or reductions in the retail market adversely impact the Company as
demand for leaseable space is reduced and rents computed as a percentage of
tenant sales declines. In addition, a number of local, regional and national
retailers, including tenants of the Company, have voluntarily closed their
stores or filed for bankruptcy protection during the last few years. Most of the
bankrupt retailers reorganized their operations and/or sold stores to stronger
operators. Although some leases were terminated pursuant to the lease
cancellation rights afforded by the bankruptcy laws, the impact on Company
earnings was negligible. In some instances, bankruptcies and store closings may
create opportunities for the Company to release spaces at higher rents to
tenants with better sales performance. The Company has demonstrated an ability
to successfully release anchor and in line store space during soft economic
cycles. In addition, some of the risk of economic downturn is mitigated by the
Company's geographical diversity. In addition, the diverse combination of the
Company's tenants is important because no single tenant comprises more than
1.54% of the Company's annualized total rents.

Over the last three years, the provision for doubtful accounts has averaged only
$3.1 million per year, which represents less than 1/2 of 1% of average total
revenues of approximately $827.6 million. In addition, the Company historically
has generally been successful in finding new uses or tenants for retail
locations that are vacated either as a result of voluntary store closing or
bankruptcy proceedings. Therefore, the Company does not expect these store
closings or bankruptcy reorganizations to have a material impact on its
consolidated financial condition or the results of its operations.

The events of September 11th also have had an impact on the Company's insurance
coverage. The Company had coverage for terrorist acts in its policies that
expired in September 2002. The coverage was excluded from its standard property
policies at the time of renewal. Accordingly, the Company obtained a separate
policy for terrorist acts. The Company's premiums, including the cost of a
separate terrorist policy, increased by 30% to 40% for property coverage and
liability coverage. These increases will impact the Company's annual common area
maintenance rates paid in the future by the Company's tenants as well as the
Company's net recoverable amounts. However, effective May 1, 2003, the Company
executed a mid-term cancellation of certain insurance policies and replaced them
with new policies which is anticipated to realize savings of approximately $2 to
$3 million over the annual premium period.

The Company has over the past 18 months experienced a significant increase in
the market price of its Common Stock. Accordingly, all options granted to date
under its incentive stock plans that vest based on the market price of the
Common Stock have vested. Such vesting caused the recognition of approximately
$3.4 million of additional compensation expense in the first quarter 2002,
approximately $3.9 million in the second quarter 2002, approximately $4.4
million in the third quarter of 2002 and approximately $4.9 million in the
second quarter of 2003 as described above and in Note 1. Further increases in
the stock price resulted in the October 2003 vesting of additional options,
which will cause the recognition of approximately $7.1 million in additional
compensation cost in the fourth quarter of 2003. In addition, the Company
adopted SFAS 123 for future grants of Common Stock options in 2002 as more fully
discussed in Note 1.

                                    40 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

As described in Note 8, the FASB, has issued certain statements, which are
effective for the current or subsequent year. The Company does not expect a
significant impact on its annual reported operations due to the application of
such new statements.

                                    41 of 44

<PAGE>

                         GENERAL GROWTH PROPERTIES, INC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has not entered into any transactions using derivative commodity
instruments. The Company is subject to market risk associated with changes in
interest rates. Interest rate exposure is principally limited to the $2.1
billion of debt of the Company outstanding at September 30, 2003 that is priced
at interest rates that vary with the market. However, $500.0 million of such
floating rate consolidated debt is subject to interest rate swap agreements, the
effect of which is to fix the interest rate the Company is required to pay on
such debt to approximately 4.66% per annum. Therefore, a 25 basis point movement
in the interest rate on the remaining approximately $1.6 billion of variable
rate debt would result in an approximately $4.0 million annualized increase or
decrease in consolidated interest expense and cash flows. The remaining debt is
fixed rate debt. In addition, the Company is subject to interest rate exposure
as a result of the variable rate debt collateralized by the Unconsolidated Real
Estate Affiliates for which similar interest rate swap agreements have not been
obtained. The Company's share (based on the Company's respective equity
ownership interests in the Unconsolidated Real Estate Affiliates) of such
variable rate debt was approximately $731.5 million at September 30, 2003. A
similar 25 basis point annualized movement in the interest rate on the variable
rate debt of the Unconsolidated Real Estate Affiliates would result in an
approximately $1.8 million annualized increase or decrease in the Company's
equity in the income and cash flows from the Unconsolidated Real Estate
Affiliates. The Company is further subject to interest rate risk with respect to
its fixed rate financing in that changes in interest rates will impact the fair
value of the Company's fixed rate financing. The Company has an ongoing program
of refinancing its consolidated and unconsolidated variable and fixed rate debt
and believes that this program allows it to vary its ratio of fixed to variable
rate debt and to stagger its debt maturities to respond to changing market rate
conditions. Reference is made to Item 2 above and Note 4 for additional debt
information.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the Company's
Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities and Exchange Act of 1934 (the "Exchange Act")).
Based on this evaluation, the CEO and the CFO concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission rules and forms.

There has been no significant change in the Company's internal control over
financial reporting during the Company's most recently completed fiscal quarter
that has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

                                    42 of 44

<PAGE>

                        GENERAL GROWTH PROPERTIES, INC.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

         31.      Certifications Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.

         32.      Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

      (b), (c) Reports on Form 8-K and proforma information.

The following reports on Form 8-K have been filed by the Company during the
quarter covered by this report.

1.   Current Report on Form 8-K dated July 14, 2003, as amended September 12,
     2003, describing the acquisitions of Saint Louis Galleria, Coronado Center,
     the 49% interest in GGP Ivanhoe III, Inc. and including certain historical
     and proforma financial information.

2.   Current Report on Form 8-K dated July 29, 2003 furnishing to the SEC under
     Item 9 the press release describing the Company's results of operations for
     its second quarter ended June 30, 2003.

                                    43 of 44

<PAGE>

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        GENERAL GROWTH PROPERTIES, INC.
                                                  (Registrant)

Date: November 7, 2003                  by: /s/: Bernard Freibaum
                                            ------------------------------------
                                             Bernard Freibaum
                                             Executive Vice President and
                                             Chief Financial Officer
                                             (Principal Accounting Officer)

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