<PAGE>   1
                       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, 1998


                         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
                        ---                         ---

The number of shares of Common Stock, $.10 par value, outstanding on November
12, 1998 was 35,902,572.


<PAGE>   2




                         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, 1998 and December 31, 1997.......................................   3

              Consolidated Statements of Operations for the three and nine
              months ended September 30, 1998 and 1997............................................    4

              Consolidated Statements of Cash Flows
              for the nine months ended September 30, 1998 and 1997...............................    5

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

         Item 2:  Management's Discussion and Analysis of
              Financial Condition and Results of Operations........................................  24

               Liquidity and Capital Resources of the Company......................................  28

         Item 3:  Quantitative and Qualitative Disclosures about Market Risk.......................  32


PART II  OTHER INFORMATION.

         Item 6:  Exhibits and Reports on Form 8-K.................................................  32

         SIGNATURES................................................................................  33

</TABLE>



                                     2 of 33
<PAGE>   3



PART I.       FINANCIAL INFORMATION
ITEM 1.       FINANCIAL STATEMENTS

                         GENERAL GROWTH PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
                                   (UNAUDITED)
              (Dollars in thousands, except for per share amounts)


<TABLE>
<CAPTION>
                                     ASSETS
                                                                                SEPTEMBER 30, 1998    DECEMBER 31, 1997
                                                                                ------------------    -----------------
<S>                                                                             <C>                   <C>    
Investment in Real Estate:
       Land                                                                         $   364,562             194,131
       Buildings and equipment                                                        3,150,233           1,601,351
       Less accumulated depreciation                                                   (280,699)           (233,295)
       Developments in progress                                                          65,920              68,003
                                                                                    -----------           ---------
           Net property and equipment                                                 3,300,016           1,630,190
       Investment in GGP/Homart                                                         197,769             203,142
       Investment in Property Joint Ventures                                            184,205              90,624
                                                                                    -----------           ---------
           Net Investment In Real Estate                                              3,681,990           1,923,956
Cash and cash equivalents                                                                26,176              25,898
Tenant accounts receivable, net                                                          55,228              34,849
Deferred expenses, net                                                                   56,961              42,343
Investment in and note receivable from
   General Growth Management, Inc.                                                       91,515              61,588
Prepaid expenses and other assets                                                        15,498               9,085
                                                                                    -----------           ---------
                                                                                    $ 3,927,368           2,097,719
                                                                                    ===========           =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Mortgage notes and other debts payable                                              $ 2,513,387           1,275,785
Distributions payable                                                                    34,748              24,421
Accounts payable and accrued expenses                                                   157,442              36,540
                                                                                    -----------           ---------
                                                                                      2,705,577           1,336,746
                                                                                    -----------           ---------
Minority interest in Operating Partnership                                              344,858             262,468
                                                                                    -----------           ---------
Commitments and contingencies
Convertible Preferred Stock, $1,000 liquidation value; 5,000,000 shares
  authorized; 337,500 and none issued and outstanding at September 30, 1998 and
  December 31, 1997, respectively                                                       337,500                --
                                                                                    -----------           ---------

Stockholders' Equity:
     Common stock; $0.10 par value; 210,000,000 shares authorized; 35,902,572
       shares issued and outstanding at September 30, 1998 and 35,769,454 shares
       issued and 35,634,977 outstanding at
       December 31, 1997, respectively                                                    3,590               3,577
     Additional paid-in capital                                                         794,637             738,630
     Retained earnings (deficit)                                                       (255,630)           (239,139)
     Treasury stock, at cost; none and 134,477 shares held at
       September 30, 1998 and December 31, 1997, respectively                              --                (4,563)
     Notes receivable - common stock purchase                                            (3,164)               --
                                                                                    -----------           ---------
     Total Stockholders' Equity                                                         539,433             498,505
                                                                                    -----------           ---------
                                                                                    $ 3,927,368           2,097,719
                                                                                    ===========           =========
</TABLE>


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


                                    3 of 33
<PAGE>   4



                         GENERAL GROWTH PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       FOR THE THREE AND NINE MONTHS ENDED
                           SEPTEMBER 30, 1998 AND 1997
                                   (UNAUDITED)
              (Dollars in thousands, except for per share amounts)


<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED        NINE MONTHS ENDED
                                                                 SEPTEMBER 30,             SEPTEMBER 30,
                                                              1998         1997         1998         1997
                                                            ---------    ---------    ---------    ---------
<S>                                                         <C>          <C>          <C>          <C>    
Revenues:
       Minimum rents                                        $  71,863       43,405      178,382      125,068
       Tenant recoveries                                       37,148       25,067       90,000       70,220
       Percentage rents                                         1,160        2,197        6,173        5,855
       Other                                                    1,633        1,820        4,004        4,610
       Fee Income                                               1,251        1,710        3,561        3,468
                                                            ---------    ---------    ---------    ---------
           Total Revenues                                     113,055       74,199      282,120      209,221
                                                            ---------    ---------    ---------    ---------

Expenses:
       Real Estate taxes                                        9,903        5,732       22,804       15,476
       Management fee to affiliate                              1,188          875        3,048        2,441
       Property operating                                      28,246       19,303       70,303       53,899
       Provision for doubtful accounts                            361          795        1,090        2,357
       General and Administrative                                 972          807        3,117        2,509
       Depreciation and amortization                           23,490       12,661       52,587       35,836
                                                            ---------    ---------    ---------    ---------
           Total Expenses                                      64,160       40,173      152,949      112,518
                                                            ---------    ---------    ---------    ---------
           Operating Income                                    48,895       34,026      129,171       96,703

Interest expense, net                                         (29,536)     (18,318)     (70,507)     (51,542)
Equity in net income/(loss) of unconsolidated affiliates:
       GGP/Homart                                               2,834        7,272       11,170       12,723
       Property Joint Ventures                                  3,302          444        4,936        1,082
       General Growth Management, Inc.                           (100)       1,016       (9,360)         145
Net gain on sales                                                --           --           --         58,647
                                                            ---------    ---------    ---------    ---------
Income before extraordinary item & allocation to               25,395       24,440       65,410      117,758
  minority interest
Income allocated to minority interest                          (7,355)      (8,458)     (20,774)     (42,696)
                                                            ---------    ---------    ---------    ---------
Income before extraordinary item                            $  18,040       15,982       44,636       75,062
Extraordinary Item (a)                                           --           (695)        --         (1,072)
                                                            ---------    ---------    ---------    ---------
       Net Income                                           $  18,040       15,287       44,636       73,990
                                                            ---------    ---------    ---------    ---------
Convertible Preferred Stock Dividends                          (6,117)        --         (7,316)        --
                                                            ---------    ---------    ---------    ---------
       Net income available to common stockholders          $  11,923       15,287       37,320       73,990
                                                            =========    =========    =========    =========
Earnings before extraordinary item per share-basic          $    0.33         0.48         1.04         2.37
                                                            =========    =========    =========    =========
Earnings before extraordinary item per share-diluted        $    0.33         0.48         1.04         2.36
                                                            =========    =========    =========    =========
Net earnings per share - basic                              $    0.33         0.46         1.04         2.34
                                                            =========    =========    =========    =========
Net earnings per share - diluted                            $    0.33         0.46         1.04         2.33
                                                            =========    =========    =========    =========
Distributions declared per share                            $    0.47         0.45         1.41         1.35
                                                            =========    =========    =========    =========
Weighted average common shares
   outstanding - basic (in thousands)                          35,899       33,219       35,822       31,606
                                                            =========    =========    =========    =========
Weighted average common shares
   outstanding - diluted (in thousands)                        35,990       33,279       36,022       31,761
                                                            =========    =========    =========    =========
</TABLE>

(a)  Charges related to early retirement of debt.



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



                                    4 of 33
<PAGE>   5
                         GENERAL GROWTH PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (UNAUDITED)
              (Dollars in thousands, except for per share amounts)


<TABLE>
<CAPTION>
                                                                                          NINE MONTHS ENDED
                                                                                            SEPTEMBER 30,
                                                                                        1998             1997
                                                                                     -----------      ----------
<S>                                                                                  <C>              <C>   
Cash flows from operating activities:
     Net Income                                                                      $    44,636         73,990
Adjustments to reconcile net income to net cash provided by operating activities:
     Minority interest                                                                    20,774         42,696
     Net gain on sales                                                                      --          (58,647)
     Extraordinary items - related to early retirement of debt                              --            1,072
     Equity in net income of unconsolidated affiliates                                    (6,746)       (13,950)
     Provision for doubtful accounts                                                       1,090          2,357
     Depreciation                                                                         47,403         33,041
     Amortization                                                                          5,184          2,795
Net Changes:
     Tenant accounts receivable                                                          (21,469)        (6,777)
     Prepaid expenses and other assets                                                    (6,413)       (35,680)
     Accounts payable and accrued expenses                                                28,188        (15,905)
                                                                                     -----------    -----------
         Net cash provided by (used in) operating activities                             112,647         24,992
                                                                                     -----------    -----------

Cash flows from investing activities:
     Acquisition/development of real estate and improvements
       and additions to properties                                                    (1,294,729)      (170,920)
     Increase in investments in property joint ventures                                  (92,050)       (83,464)
     Change in notes receivable from General Growth Management, Inc.                     (35,653)       (23,796)
     Proceeds received from sale of CenterMark stock                                        --          130,500
     Distributions received from GGP/Homart stock                                         16,544         15,572
     Distributions received from property joint ventures                                   3,405           --
     Increase in deferred expenses                                                       (17,359)        (5,764)
                                                                                     -----------    -----------
         Net cash provided by (used in) investing activities                          (1,419,842)      (137,872)
                                                                                     -----------    -----------

Cash flows from financing activities:
     Cash distributions paid to common stockholders                                      (49,764)       (40,941)
     Cash distributions paid to minority interest                                        (26,137)       (23,667)
     Proceeds from exercised options                                                        --              249
     Proceeds of preferred stock issuance, net of issuance costs                         322,755           --
     Proceeds of common stock issuance, net of issuance costs                               --          166,293
     Proceeds from issuance of mortgage / other notes payable                          1,670,638        331,526
     Principal payments on mortgage notes and other debt payable                        (606,559)      (324,941)
     Purchase of treasury stock                                                           (1,136)        (3,114)
     Capital contribution from minority interest                                             119           --
     Prepayment penalty on early retirement of debt                                         --           (1,072)
     Increase in deferred financing costs                                                 (2,443)        (1,279)
                                                                                     -----------    -----------
         Net cash provided by (used in) financing activities                           1,307,473        103,054
                                                                                     -----------    -----------

Net change in cash and cash equivalents                                                      278         (9,826)
Cash and cash equivalents at beginning of year                                            25,898         15,947
                                                                                     -----------    -----------
Cash and cash equivalents at end of period                                           $    26,176          6,121
                                                                                     ===========    ===========
Supplemental disclosure of cash flow information:
     Interest paid                                                                   $    89,864         60,836
     Interest capitalized                                                            $     9,087          3,883
                                                                                     -----------    -----------

Non-cash investing activities:
     Operating partnership units exchanged for treasury stock                        $     1,875           --
     Debt and other liabilities assumed as consideration to seller 
       for purchase of real estate                                                       262,816         61,863
     Notes receivable issued for exercised stock options                                   3,164           --
     Partnership units and common stock issued as consideration for purchase
       of real estate                                                                    159,685         11,490

</TABLE>


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


                                    5 of 33
<PAGE>   6



                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)




NOTE 1        GENERAL

              Readers of this quarterly report should refer to the Company's
              audited financial statements for the year ended December 31, 1997
              which are included in the Company's 1997 Annual Report on Form
              10-K (File No. 1-11656) dated March 30, 1998, as certain footnote
              disclosures which would substantially duplicate those contained in
              such audited financial statements have been omitted from this
              report.

              ORGANIZATION
              General Growth Properties, Inc., a Delaware corporation (the
              "Company"), was formed in 1986 to own and operate enclosed mall
              shopping centers. All references to the "Company" in these notes
              to consolidated financial statements include the Company and those
              entities owned or controlled by the Company (including the
              Operating Partnership as described below), unless the context
              indicates otherwise. On April 15, 1993, the Company completed its
              initial public offering and a business combination involving
              entities under varying common ownership. Proceeds from the initial
              public offering 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 enclosed 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.

              During June 1998, the Company completed a public offering of
              13,500,000 depositary shares (the "Depositary Shares"), each
              representing 1/40 of a share of 7.25% Preferred Income Equity
              Redeemable Stock, Series A, par value $100 per share ("PIERS"), of
              the Company. The Company received proceeds of approximately
              $322,755 net of approximately $14,745 of issuance costs, which
              were utilized to fund certain of the acquisitions described in
              Note 4 and for other working capital needs.

              Each owner of a Depositary Share is entitled to its pro rata share
              of all the rights and preferences of the PIERS represented
              thereby. The PIERS are convertible at any time, at the option of
              the holder, into shares of common stock of the Company at the
              conversion price of $39.70 per share of common stock. In addition,
              the PIERS have a preference on liquidation of the Company equal to
              $1,000 per PIERS (equivalent to $25.00 per Depositary Share), plus
              accrued and unpaid dividends, if any, to the liquidation date. The
              PIERS and the Depositary Shares are subject to mandatory
              redemption by the Company on July 15, 2008 at a price of $1,000
              per PIERS, plus accrued and unpaid dividends, if any, to the
              redemption date. Accordingly, the PIERS have been reflected in the
              accompanying financial statements at such liquidation or
              redemption value.

                                    6 of 33
<PAGE>   7

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)

              OPERATING PARTNERSHIP
              The Operating Partnership commenced operations on April 15, 1993
              and as of September 30, 1998, the Company together with the
              Operating Partnership owned 100% of forty-nine enclosed regional
              shopping centers (the "Wholly-Owned Centers"); 51% of GGP/Ivanhoe,
              Inc. ("GGP/Ivanhoe"), 50% of Quail Springs and Town East and 51%
              of GGP Ivanhoe III, Inc. ("GGP Ivanhoe III") (collectively the
              "Property Joint Ventures") (see Note 4); 38.2% of the stock of
              GGP/Homart, Inc. ("GGP/Homart") (see Note 3) and a 95% non-voting
              preferred stock interest in General Growth Management, Inc.
              ("GGMI") (see Note 5). As of such date, GGP/Homart owned interests
              in twenty-three shopping centers (the "Homart Centers"),
              GGP/Ivanhoe owned 100% of The Oaks Mall and the Westroads Mall,
              and GGP Ivanhoe III (through a wholly owned subsidiary) owned 100%
              of six shopping centers.

              As of September 30, 1998, the Company owned an approximate 61%
              general partnership interest in the Operating Partnership
              (excluding its preferred units of partnership interest as
              discussed below). The remaining approximate 39% 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 units of limited partnership
              interest in the Operating Partnership (the "Units"). The Units can
              be exchanged, with certain restrictions, for shares of the
              Company's common stock on a one-for-one basis. Certain Units owned
              by or for the benefit of certain officers and directors of the
              Company and their families can be exchanged for cash, at the
              Company's election, if such persons own, in the aggregate, 25% or
              more of the outstanding common stock of the Company at the time of
              the exchange. The holders of the Units also share equally with the
              Company's stockholders on a per share basis in any distributions
              by the Operating Partnership.

              In connection with the issuance of the Depository Shares and in
              order to enable the Company to comply with its obligations in
              respect to the PIERS, the Operating Partnership Agreement was
              amended to provide for the issuance to the Company of preferred
              units of partnership interest (the "Preferred Units") which have
              rights, preferences and other privileges, including distribution,
              liquidation, conversion and redemption rights, that mirror those
              of the PIERS. Accordingly, the Operating Partnership will be


                                    7 of 33
<PAGE>   8
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              required to make all required distributions on the Preferred Units
              prior to any distribution of cash or assets to the holders of the
              Units. At September 30, 1998, 100% of the Preferred Units of the
              Operating Partnership (337,500) were owned by the Company.

              BASIS OF PRESENTATION
              The accompanying consolidated financial statements include the
              accounts of the Company and the Operating Partnership consisting
              of the forty-nine centers and the unconsolidated investments in
              GGP/Homart, GGMI, GGP/Ivanhoe, Quail Springs Mall, Town East Mall
              and GGP Ivanhoe III. All significant intercompany balances and
              transactions have been eliminated.

              In the opinion of management, all adjustments (consisting of
              normal recurring adjustments) necessary to present fairly the
              financial position of the Company as of September 30, 1998 and the
              results of operations for the three and nine months ended
              September 30, 1998 and 1997 and cash flows for the nine months
              ended September 30, 1998 and 1997 have been included.

              The consolidated statements of operations for prior periods have
              been reclassified to conform with current classifications with no
              effect on results of operations.

              EARNINGS PER SHARE
              In February 1997, the Financial Accounting Standards Board issued
              Statement No. 128, "Earnings per Share," ("Statement 128") which
              became effective for both interim and annual financial statement
              periods ending after December 15, 1997. As required by Statement
              128, the Company adopted the new standards for computing and
              presenting earnings per share at the end of 1997, and has
              presented all per share data for 1998 and for all prior periods
              presented based on the computational methods specified in the
              statement.

              Basic per share amounts are based on the weighted average of
              common shares outstanding of 35,822,027 for 1998 and 31,605,784
              for 1997. Diluted per share amounts are based on the total number
              of weighted average common shares and dilutive securities (stock
              options) outstanding of 36,022,161 for 1998 and 31,761,051 for
              1997. 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, 1998 and
              therefore has been excluded as specified by Statement 128. The
              outstanding Units have been excluded from the diluted earnings per
              share



                                    8 of 33
<PAGE>   9

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              calculation as there would be no effect on the amounts since the
              minority interests' share of income would also be added back to
              net income. 

              NOTES RECEIVABLE - COMMON STOCK PURCHASE In April, May and
              September, 1998 certain officers of the Company issued to the
              Company an aggregate of $3,164 of notes in connection with their
              exercise of options to purchase an aggregate of 166,000 shares of
              the Company's common stock. The notes, which bear interest at the
              rate of 6.25% per annum, are collateralized by the shares of
              common stock issued upon exercise of such options, provide for
              quarterly payments of interest and are payable to the Company on
              demand.

              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,
                                                                1998           1997             1998             1997
<S>                                                          <C>             <C>              <C>             <C>      
Numerators:
Income before extraordinary item                             $ 18,040         15,982            44,636          75,062 
   Dividends on PIERS                                          (6,117)           --             (7,316)           --   
                                                             --------        --------         --------        -------- 
   Income available to common shareholders                                                                             
     before extraordinary item - for basic and                 11,923          15,982           37,320          75,062 
     diluted EPS                                                                                                       
Extraordinary Item                                               --              (695)            --            (1,072)
                                                             --------        --------         --------        -------- 
   Net income available to common                                                                                      
     shareholders - for basic and diluted EPS                $ 11,923          15,287           37,320          73,990 
                                                             ========        ========         ========        ======== 
                                                                                                                       
Denominators:                                                                                                          
Weighted average common shares                                 35,899          33,219           35,822          31,606 
  outstanding (in thousands) - for basic EPS                                                                           
Effect of dilutive securities - options                            91              60              200             155 
                                                             --------        --------         --------        -------- 
Weighted average common shares                                                                                         
  outstanding (in thousands) - for diluted EPS                 35,990          33,279           36,022          31,761 
                                                             ========        ========         ========        ======== 

</TABLE>

              REVENUE RECOGNITION
              Minimum rent revenues are recognized on a straight-line basis over
              the term of the related leases. Percentage rents are recognized on
              an accrual basis (see Note 11). Recoveries from tenants for 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 (including amounts
              recognized as receivable due to the recognition of minimum rents
              on a straight-line basis as described above) which is estimated to
              be uncollectible. Such allowances are reviewed periodically based
              upon the recovery experience of the Company.


                                     9 of 33
<PAGE>   10

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


NOTE 2        CENTERMARK

              On February 11, 1994, the Company acquired 40% of the stock of
              CenterMark Properties, Inc. ("CenterMark") which owned interests
              in several major regional shopping malls and power centers. The
              Company's portion of the cash purchase price for the CenterMark
              stock, including certain transaction costs, was approximately
              $182,000.

              The Company sold 25% of its interest in CenterMark on December 19,
              1995 for a price of $72,500 which reduced the Company's ownership
              to 30% of the outstanding CenterMark stock. Concurrently with the
              sale of the stock, the Company also granted an option to the buyer
              to purchase the remainder of the Company's CenterMark stock for
              $217,500.

              Pursuant to such option, the Company sold the remaining 30% of the
              outstanding CenterMark stock in two transactions with $87,000
              received on July 1, 1996 and $130,500 received on January 2, 1997.
              A portion of the gain related to such sale was recognized in 1997.


NOTE 3        GGP/HOMART

              The Company owns 38.2% of GGP/Homart with the remaining ownership
              interests owned by four institutional investors. The co-investors
              in GGP/Homart are allowed to exercise an exchange right according
              to the stockholders agreement. The exchange right is designed to
              allow a GGP/Homart stockholder to convert their ownership interest
              in GGP/Homart to a common stock ownership interest in the Company.
              GGP/Homart currently owns interests in twenty-three regional
              shopping malls. GGP/Homart has elected real estate investment
              trust status for income tax purposes.






                                    10 of 33
<PAGE>   11

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)



     Summarized below is certain financial information for GGP/Homart for the 
     three and nine months ended September 30, 1998 and 1997.


                                GGP/HOMART, INC.
               CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                        (UNAUDITED, DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED      NINE MONTHS ENDED
                                            SEPTEMBER 30,           SEPTEMBER 30,
                                           1998        1997        1998        1997
                                         --------    --------    --------    --------
<S>                                      <C>         <C>         <C>         <C>   
Revenues:
       Minimum rents                     $ 30,293      27,388      88,139      76,577
       Tenant recoveries                   12,644       9,561      35,560      32,301
       Percentage rents                       107         701       1,650       1,950
       Other                                  447       1,177       2,019       2,740
                                         --------    --------    --------    --------
           Total Revenues                  43,491      38,827     127,368     113,568

Operating expenses                        (17,789)    (15,988)    (54,966)    (47,498)
Depreciation                               (7,853)     (7,034)    (23,110)    (19,987)
                                         --------    --------    --------    --------
           Operating Income                17,849      15,805      49,292      46,083

Interest expense, net                     (12,059)    (11,149)    (35,211)    (31,844)
Equity in net income of unconsolidated
 real estate affiliates                     1,687       1,450       4,789       5,573
Gain on property sales                        335      12,994      11,050      13,675
Income allocated to minority interest        (166)        (69)       (459)       (191)
                                         --------    --------    --------    --------
           Net Income                    $  7,646      19,031      29,461      33,296
                                         ========    ========    ========    ========
</TABLE>



                                    11 of 33
<PAGE>   12


                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)



NOTE 4        PROPERTY ACQUISITIONS AND DEVELOPMENTS

              WHOLLY-OWNED PROPERTIES
              1998
              On April 2, 1998 the Company acquired a 100% ownership interest in
              Southwest Plaza located in Denver, Colorado. On May 8, 1998, the
              Company completed the acquisition of 100% of the ownership
              interest in the Northbrook Court Shopping Center located in
              Northbrook (Chicago), Illinois. The aggregate purchase price for
              Southwest Plaza and Northbrook Court, including approximately
              $149,000 of assumed debt, was approximately $261,000.

              On June 2, 1998, the Company acquired the U.S. retail property
              portfolio (the "MEPC Portfolio") of MEPC plc, a United Kingdom
              based real estate company ("MEPC"), through the purchase of the
              stock of the three U.S. subsidiaries of MEPC that directly or
              indirectly owned the MEPC Portfolio. The Company acquired the MEPC
              Portfolio for approximately $871,000 (less certain adjustments for
              tenant allowances, construction costs, MEPC U.S. Subsidiary
              liabilities and other items). The Company borrowed approximately
              $830,000 to finance the purchase price for the stock, which was
              paid in cash at closing as more fully described in Note 6. The
              MEPC Portfolio consists of eight enclosed mall shopping centers;
              The Apache Mall in Rochester, Minnesota; the Boulevard Mall in Las
              Vegas, Nevada; the Cumberland Mall in Atlanta, Georgia; the
              McCreless Mall in San Antonio, Texas; the Northridge Fashion
              Center in Northridge (Los Angeles), California; the Regency Square
              Mall in Jacksonville, Florida; the Riverlands Shopping Center in
              LaPlace, Louisiana and the Valley Plaza Mall in Bakersfield,
              California.

              On July 21, 1998 the Company acquired a 100% ownership interest in
              the Altamonte Mall in Altamonte Springs (Orlando), Florida. The
              purchase price consisted of approximately $141,000 which was paid
              in the form of 3,683,143 Operating Partnership Units and
              approximately $28,000 in cash funded from the Company's credit
              facility.

              On September 3, 1998, the Company acquired a 100% ownership
              interest in the Pierre Bossier Mall in Bossier City (Shreveport),
              Louisiana. The aggregate consideration paid for the Pierre Bossier
              Mall was approximately $52,700 (subject to prorations and certain
              adjustments) which was paid in the form of approximately $10,000
              in cash (funded from the Company's line of credit), a new mortgage
              loan (obtained from an independent third party) of approximately
              $42,000 and the assumption of approximately $700 of existing debt.
              The Company had previously loaned the sellers approximately
              $50,000 




                                    12 of 33
<PAGE>   13
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              and received an option to buy the property. In conjunction with
              the closing of the sale, the loan was fully repaid.

              On September 15, 1998, the Company acquired a 100% ownership
              interest in the Spring Hill Mall in West Dundee (Chicago),
              Illinois. The aggregate consideration paid by the Company was
              approximately $124,000 (subject to prorations and certain
              adjustments) which was paid in the form of approximately $32,000
              in cash (through the Company's line of credit facility) and a new
              10-year fixed-rate $92,000 mortgage from an independent third
              party lender. The new mortgage bears interest at 6.60% per annum.

              On September 18, 1998, the Company acquired Coastland Center in
              Naples, Florida for approximately $114,500 in cash (subject to
              prorations and certain adjustments). The aggregate consideration
              paid was borrowed under the Company's line of credit.

              On October 21, 1998 the Company acquired 100% of Mall St. Vincent
              in Shreveport, Louisiana. The aggregate consideration of
              approximately $26,400 was paid by issuing 200,052 redeemable Units
              in the Operating Partnership (of which 88,871 were immediately
              redeemed for cash (funded by the Company's line of credit) upon
              demand of the holders of such Units) and by assuming approximately
              $19,200 of fixed rate debt at an interest rate of 7.1% maturing in
              December 2007.

              In addition, in 1998 the Company, through an unconsolidated joint
              venture, acquired the U.S. Prime Property, Inc. ("USPPI")
              portfolio as described below.

              The Company financed the forgoing acquisitions through a
              combination of secured and unsecured debt, issuance of Operating
              Partnership Units and the proceeds of the PIERS as described in
              Note 1.

              1997
              On March 31, 1997, the Company acquired a 100% ownership interest
              in Market Place Mall for a cash purchase price of approximately
              $70,000. Market Place Mall is located in Champaign, Illinois.

              During the second quarter of 1997, the Company acquired 100%
              ownership of three other properties, Century Plaza Shopping
              Center, Southlake Mall and Eden Prairie Mall. Century Plaza
              Shopping Center located in Birmingham, Alabama was acquired on May
              1, 1997 for $31,800 in cash. Southlake Mall was acquired on June
              18, 1997, for a purchase price of $67,000 which consisted of
              $45,100 of mortgage debt assumption, $11,500 

                                    13 of 33
<PAGE>   14
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              of Operating Partnership Units (353,537 units), and $10,400 in
              cash. Southlake Mall is located in Atlanta, Georgia. The aggregate
              consideration paid for Eden Prairie Mall located in Minneapolis,
              Minnesota was $19,900. It included the assumption of a $16,800
              mortgage, the payment of $1,100 in cash and the assumption of
              $2,000 of short-term liabilities.

              The Company acquired a 100% ownership interest in Valley Hills
              Mall located in Hickory, North Carolina on October 23, 1997 for a
              purchase price of approximately $34,500. The purchase price
              consisted of approximately $18,900 of Operating Partnership Units
              (518,833 units) and the assumption of approximately $15,600 of
              mortgage debt.

              The acquisitions completed as of September 30, 1998 were accounted
              for utilizing the purchase method and accordingly, the results of
              operations are included in the Operating Partnership's results of
              operations from the respective dates of acquisition (for pro forma
              effect, see Note 12).

              DEVELOPMENTS
              During 1996, the Company acquired three new development sites in
              the following locations: Coralville (Iowa City), Iowa; Grand
              Rapids, Michigan and Frisco (Dallas), Texas, respectively. Coral
              Ridge Mall, located in Coralville, Iowa was substantially
              completed and opened as scheduled in July of 1998. Construction of
              the Grand Rapids Mall (Rivertown Crossings) commenced in December,
              1997 and is scheduled to open in August of 1999. Construction of
              Stonebriar Mall at the Bridges, located in Frisco, Texas commenced
              in October of 1998 with an anticipated completion date in
              the fall of 2000.

              INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
              1998
              On July 23, 1998, effective as of June 30, 1998, the Company,
              through GGP Invanhoe III, acquired USPPI through a merger of a
              wholly-owned subsidiary of GGP Ivanhoe III into USPPI (which
              changed its name to GGP Ivanhoe II, Inc. ("GGP Ivanhoe II")). The
              common stock of GGP Ivanhoe III, which will elect to be taxed as a
              REIT, is owned 51% by the Company and 49% by a joint venture
              partner. The aggregate consideration paid pursuant to the merger
              agreement was approximately $625,000 (less certain adjustments,
              including a credit of approximately $64,000 for outstanding
              mortgage indebtedness and accrued interest thereon). The
              acquisition was financed with a $392,000 interim loan bearing
              interest at LIBOR plus 90 basis points which becomes due July 1,
              1999, and capital contributions from the Company and the joint
              venture partner in proportion to their respective stock ownership.
              Pursuant to the GGP Ivanhoe III stockholders' agreement, the


                                    14 of 33
<PAGE>   15
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              Company has contributed approximately $91,290 to GGP Ivanhoe III
              (less certain interest and other credits). The Company's capital
              contributions were funded primarily from proceeds from the
              Company's line of credit facility as described in Note 6. GGP
              Ivanhoe II owns: the Landmark Mall in Alexandria, Virginia; the
              Mayfair Mall and adjacent office buildings in Wauwatosa
              (Milwaukee), Wisconsin; the Meadows Mall in Las Vegas, Nevada; the
              Northgate Mall in Chattanooga, Tennessee; Oglethorpe Mall in
              Savannah, Georgia; and the Park City Center in Lancaster,
              Pennsylvania. The properties acquired are managed by GGMI.

              The joint venture partner in GGP Ivanhoe III is an affiliate of
              Ivanhoe Inc. of Montreal, Quebec, Canada ("Ivanhoe") and is also
              the Company's joint venture partner in GGP/Ivanhoe (described
              below). The Company and Ivanhoe share in the profits and losses,
              cash flows and other matters relating to GGP Ivanhoe III, Inc. in
              accordance with their respective ownership percentages except that
              certain major operating and capital decisions (as defined in the
              stockholders' agreement) require the approval of both
              stockholders. Accordingly, the Company is accounting for GGP
              Ivanhoe III using the equity method.

              Additionally, the stockholders' agreement of GGP Ivanhoe III
              contains provisions regarding buy-sell rights of the Company and
              Ivanhoe. The stockholders' agreement further provides that Ivanhoe
              has the right (exercisable in the next millennium on certain
              specified dates) to require the Company to acquire Ivanhoe's
              interest in GGP Ivanhoe III, Inc. for a purchase price determined
              by reference to the then value of GGP Ivanhoe III. In the
              alternative, the Company has the right to market the assets to
              third parties rather than acquire Ivanhoe's interest. If the
              Company acquires Ivanhoe's interest, the consideration can be paid
              in cash, common stock of the Company, or a combination thereof as
              unilaterally determined by the Company. 

              1997
              As of September 17, 1997, GGP/Ivanhoe indirectly acquired both The
              Oaks Mall in Gainesville, Florida and Westroads Mall in Omaha,
              Nebraska. The purchase price for the two properties was
              approximately $206,000 of which $125,000 was financed through
              property level indebtedness. The Company owns 51% of the ownership
              interest in GGP/Ivanhoe. Ivanhoe owns the remaining 49% ownership
              interest in GGP/Ivanhoe.

              The Company and Ivanhoe share in the profits and losses, cash
              flows and other matters relating to GGP/Ivanhoe in accordance with
              their respective ownership percentages except that certain major
              operating and capital decisions (as defined in the stockholders'
              agreement) require the approval of both stockholders. Accordingly,
              the Company is accounting for GGP/Ivanhoe 




                                    15 of 33
<PAGE>   16
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)

              using the equity method. Additionally, the stockholders' agreement
              of GGP/Ivanhoe contains provisions regarding buy-sell rights of
              the Company and Ivanhoe.

              On June 11, 1997, the Company acquired a 50% interest in Town East
              Mall, located in Mesquite, Texas for $56,500. The consideration
              included approximately $27,500 million in cash, the assumption of
              approximately $27,900 of mortgage indebtedness and the assumption
              of $1,100 in net current liabilities.

NOTE 5        GGMI

              On December 22, 1995, GGP Management, Inc. was formed to manage,
              lease, develop and operate enclosed malls. The Operating
              Partnership owned 100% of the non-voting preferred stock ownership
              interest in GGP Management, Inc. representing 95% of the equity
              interest. Key employees of the Company held the remaining 5%
              ownership interest therein in the form of common stock which was
              entitled to all of the voting rights in GGP Management, Inc. In
              August 1996, GGP Management, Inc., acquired GGMI for approximately
              $51,500 by exchanging 1,555,855 newly issued shares of common
              stock of the Company and 453,791 Operating Partnership Units
              (contributed by the Operating Partnership) for 100% of the
              outstanding shares in GGMI. A loan of approximately $39,900 from
              the Operating Partnership to GGP Management, Inc. was used to
              purchase the Company's common stock used to acquire GGMI. The
              interest only loan bears interest at 14% and matures in 2016. Upon
              acquisition of GGMI, GGP Management, Inc. was merged into GGMI
              with GGMI as the surviving entity. The Operating Partnership
              currently holds all of the non-voting preferred stock ownership
              interest in GGMI representing 95% of the equity interest. Five key
              employees of the Company hold the remaining 5% equity interest
              through ownership of 100% of the common stock which is entitled to
              all voting rights in GGMI. GGMI cannot distribute funds to its
              stockholders until its available cash flow exceeds all accumulated
              preferred dividends owed to the preferred stockholder. Any
              dividends in excess of the preferred cumulative dividend are
              allocated 95% to the preferred stockholder and 5% to the common
              stockholders. GGMI may make principal payments on the Operating
              Partnership loan if it has sufficient cash flow. GGMI manages,
              leases, and performs various other services for the Wholly-Owned
              Centers, the Property Joint Ventures, GGP/Homart and other
              properties owned by unaffiliated parties.



                                    16 of 33
<PAGE>   17
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              On June 16, 1997, GGMI acquired an office building in downtown
              Chicago, Illinois to be used as the new corporate headquarters for
              the Company. GGMI and Company personnel took initial occupancy of
              approximately 70% of the building in April of 1998.


NOTE 6        MORTGAGE NOTES AND OTHER DEBT PAYABLE

              Mortgage notes and other debt payable at September 30, 1998 and
              December 31, 1997 consisted of the following:


<TABLE>
<CAPTION>
                                                    SEPTEMBER 30, 1998      DECEMBER 31, 1997
                                                    ------------------      -----------------
<S>                                                 <C>                     <C>           
Fixed-Rate debt                                                        
     Mortgage notes payable                             $2,028,644             1,173,042   
                                                       ----------            ----------    
Variable-Rate debt                                                                         
     Mortgage notes payable                                299,743                16,743   
     Credit facility                                       185,000                86,000    
                                                        ----------            ----------   
                                                                                           
     Total Variable-Rate debt                              484,743               102,743   
                                                        ----------            ----------   
                                                                                           
     Total mortgage notes and other debt payable        $2,513,387             1,275,785   
                                                        ==========            ==========   
                                                                               
</TABLE>

                                                                            
              FIXED RATE DEBT
              MORTGAGE NOTES PAYABLE
              Mortgage notes payable consist primarily of fixed rate
              non-recourse notes collateralized by individual or groups of
              properties. Certain mortgage notes payable may be prepaid but are
              generally subject to a prepayment penalty of a yield-maintenance
              premium or a percentage of the loan balance.


              VARIABLE RATE DEBT
              MORTGAGE NOTE PAYABLE
              Variable mortgage notes payable consist primarily of a $100,000
              loan collateralized by Northbrook Court, a $95,000 loan
              collateralized by Coral Ridge Mall, and the $63,000 portion of the
              MEPC acquisition financing as described below. The Coral Ridge
              loan was replaced by an eleven year $82,000 6.5% permanent loan in
              October, 1998. The remaining loans are generally short term in
              nature and bear interst at LIBOR (5.775% at September 30, 1998)
              plus 90 to 120 basis points. The Company expects to retire or
              refinance such obligations when due.



                                    17 of 33
<PAGE>   18
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              ACQUISITION FINANCING
              In June, 1998 the Company obtained a loan of approximately
              $830,000 to acquire the MEPC portfolio as described in Note 4. The
              Company repaid approximately $217,000 of this loan on June 10,
              1998 from the net proceeds of the public offering of the PIERS as
              described in Note 1. Subsequently, the Company fixed the annual
              interest rate with respect to approximately $550,000 of such loan
              at 6.7% per annum and the remainder (approximately $63,000) bears
              interest at the rate of 6.55% per annum, which rate will be
              adjusted monthly to equal LIBOR plus 0.9%. The loan is
              collateralized by the MEPC Portfolio and matures on July 1, 1999.

              CREDIT FACILITY
              The Company's $200,000 unsecured revolving credit facility bears
              interest at LIBOR plus 80 to 120 basis points depending upon the
              Company's leverage ratio and matures on July 31, 1999 excluding a
              one-year extension option, which can unilaterally exercised by the
              Company. The credit facility is subject to financial performance
              covenants including debt-to-market capitalization, minimum
              earnings before interest, taxes, depreciation and amortization
              ("EBITDA") ratios and minimum equity values. On September 30,
              1998, the credit facility had an outstanding balance of $185,000.

              CONSTRUCTION LOANS AND LETTERS OF CREDIT 
              Two construction loans were arranged in connection with the
              development of two regional malls. These recourse loans were
              repaid in 1997.

              As of September 30, 1998 and December 31, 1997, the Operating
              Partnership had outstanding letters of credit of $9,956 and $7,717
              respectively, primarily in connection with special real estate
              assessments and insurance requirements.


NOTE 7        EXTRAORDINARY ITEMS

              The extraordinary items resulted from prepayment costs and
              unamortized deferred financing costs related to the early
              extinguishment of mortgage notes payable.


NOTE 8        DISTRIBUTIONS PAYABLE

              On September 23, 1998 the Company declared a cash distribution of
              $.47 per share that was paid on October 30, 1998 to stockholders
              of record on October 5, 1998, totaling $16,874. In addition, a
              distribution of $10,725 was paid to the limited partners of the
              Operating Partnership. Concurrently, the 




                                    18 of 33
<PAGE>   19
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              Company declared the initial preferred stock dividend, for the
              period from June 10, 1998 through September 30, 1998, in the
              amount of $0.5588 per share, payable to preferred stockholders of
              record on October 5, 1998 and paid on October 15, 1998. As
              described in Note 1, such preferred stock dividend was in the same
              amount as the Operating Partnership's distribution to the Company
              of the same date with respect to the Preferred Units held by the
              Company.

              On June 23, 1998 the Company declared a cash distribution of $.47
              per share that was paid on July 31, 1998 to stockholders of record
              on July 15, 1998, totaling $16,871. In addition, a distribution of
              $8,989 was paid to the limited partners of the Operating
              Partnership.

              On February 20, 1998, the Company declared a cash distribution of
              $.47 per share that was paid on April 30, 1998 to stockholders of
              record on April 16, 1998, totaling $16,864. In addition, a
              distribution of $8,756 was paid to the limited partners of the
              Operating Partnership.

              On December 16, 1997, the Company declared a cash distribution of
              $.45 per share that was paid on January 30, 1998, to stockholders
              of record on December 30, 1997, totaling $16,029. In addition, a
              distribution of $8,392 was paid to the limited partners of the
              Operating Partnership.


NOTE 9        MORTGAGE NOTE RECEIVABLE

              During 1998 the Company advanced $50,000 to an unaffiliated
              developer in the form of a mortgage loan (bearing interest at 10%
              per annum) collateralized by such developer's ownership interest
              in the Pierre Bossier Mall in Shreveport, Louisiana. In connection
              with the acquisition of this mall on September 3, 1998 (Note 4),
              this mortgage note and related interest due was collected.


NOTE 10       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 materially adverse effect on
              the consolidated financial position, results of operations or
              liquidity of the Company.



                                    19 of 33
<PAGE>   20
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              The Company has entered into contingent agreements for the
              acquisition of properties. Each acquisition is subject to
              satisfactory completion of due diligence and, in the case of
              developments, completion and occupancy of the project.


NOTE 11       RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

              In June of 1997, the Financial Accounting Standards Board ("FASB")
              issued Statement No. 130, "Reporting Comprehensive Income" which
              the Company has adopted as of January 1, 1998. The Company has no
              significant items of other comprehensive income and therefore the
              adoption of this standard has not had an impact on its financial
              statements. In addition, the FASB issued Statement No. 131,
              "Disclosures about Segments of an Enterprise and Related
              Information" ("Statement 131"). Pursuant to the requirements of
              Statement 131, the additional reporting and disclosure
              requirements will be reflected in the Company's 1998 annual report
              and, on a comparative basis, in the Company's 1999 interim
              reports.

              In March 1998, the Emerging Issues Task Force ("EITF") issued a
              consensus opinion entitled "Accounting for Internal Costs Relating
              to Real Estate Property Acquisitions" ("EITF 97-11"). EITF 97-11
              was effective as of March 19, 1998 and provides that the internal
              costs of identifying and acquiring operating property should be
              expensed as incurred. The Company currently expects a nominal
              increase in expenses in future periods for such expenditures that
              were previously capitalized and reflected as property costs to be
              depreciated over the useful life of the property acquired.

              In April 1998, the Accounting Standards Executive Committee of the
              American Institute of Certified Public Accountants ("AICPA")
              issued Statement of Position 98-5, "Reporting on the Costs of
              Start-Up Activities" ("SOP 98-5") which is effective for fiscal
              years beginning after December 15, 1998. SOP 98-5 requires that
              the net unamortized balance of all start up costs and
              organizational costs be written off as a cumulative effect of a
              change in accounting principle and all future start-up costs and
              organizational costs be expensed. As the Company does not have a
              significant amount of such unamortized costs, the effect of
              adopting this statement in 1999 is not expected to be material.

              In May, 1998, the EITF issued a consensus opinion entitled
              "Accounting for Contingent Rent in Interim Financial Periods"
              ("EITF 98-9"). EITF 98-9 is effective as of May 21, 1998 and
              provides that rental income should be deferred in interim periods
              by the lessor if the triggering events that create 




                                    20 of 33
<PAGE>   21

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)


              contingent rent have not yet occurred. The Company had previously
              accrued, on an interim basis, percentage rents based on the
              prorated annual percentage rent estimated to be due from tenants.
              The Company, as provided by EITF 98-9, has prospectively adopted
              this consensus and will not record additional percentage rent in
              1998 above amounts recognized in the six months ended June 30,
              1998 ($5,013) until such triggering events occur. The effect of
              EITF 98-9 is not expected to be significant on annual financial
              results but, based upon the effective date of the consensus,
              adoption of the consensus will cause a shift in the Company's
              recognition, including amounts from the operations of GGP/Homart
              and the Property Joint Ventures, of percentage rent from interim
              quarters to the fourth quarter in 1998 and subsequent years.

              On June 1, 1998 the FASB issued a Statement No. 133 "Accounting
              for Derivative Instruments and Hedging Activities", effective for
              fiscal years beginning after June 15, 1999. As the Company does
              not currently have any investments in derivatives, the effect of
              adoption of the standard when effective is not expected to have
              any significant impact on the Company's financial statements.


NOTE 12       PRO FORMA FINANCIAL INFORMATION

              Due to the impact of the public offering of the PIERS in 1998 as
              described in Note 1 and the acquisitions during 1997 and 1998
              described in Note 4, 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, 1998 include adjustments for the public
              offering of the PIERS in 1998 and the acquisition of 100% of
              Southwest Plaza, Northbrook Court, Altamonte Mall, Pierre Bossier
              Mall, Spring Hill Mall and Coastland Mall, the eight operating
              properties in the MEPC Portfolio, and a 51% interest in the six
              operating properties owned by GGP Ivanhoe II as if such
              transactions occurred on January 1, 1998. The pro forma condensed
              consolidated statements of operations for the nine months ended
              September 30, 1997 include adjustments for the public offering of
              the PIERS in 1998 and the acquisition of 100% of the fourteen
              operating properties in 1998 and 51% of GGP Ivanhoe II and
              adjustments for the acquisition of 100% of Market Place Shopping
              Center, Century Plaza, Southlake Mall, Eden Prairie, Valley Hills,
              a 51% interest in GGP/Ivanhoe, and a 50% interest in Town East as
              if such transactions had occurred on January 1, 1997. The pro
              forma information is based upon the historical consolidated
              statements of operations excluding the non-recurring gain on the
              sale of a portion of the CenterMark stock and extraordinary item
              and 




                                    21 of 33
<PAGE>   22

                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)



              does not purport to present what actual results would have been
              had the offerings, acquisitions, and related transactions, in
              fact, occurred at the previously mentioned dates, or to project
              results for any future period.




                                    22 of 33
<PAGE>   23
                         GENERAL GROWTH PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              (Dollars in thousands, except for per share amounts)



                         PROFORMA FINANCIAL INFORMATION



<TABLE>
<CAPTION>
                                                                NINE MONTHS ENDED
                                                          SEPTEMBER 30,     SEPTEMBER 30,  
                                                              1998              1997        
                                                           ---------        ------------    
<S>                                                        <C>               <C>          
Total Revenues:                                            $ 365,723           351,934      
                                                           =========         =========      
                                                                                            
Expenses:                                                                                   
     Property operating                                    $ 127,172           127,968      
     Management fees                                           3,706             3,691      
     Depreciation and amortization                            69,290            64,457      
                                                           ---------         ---------      
Total expenses                                               200,168           196,116      
                                                           ---------         ---------      
                                                                                            
Operating income                                             165,555           155,818      
Interest expense, net                                       (107,990)         (114,209)     
Equity in net income/(loss) of unconsolidated affiliates                                    
     GGP/Homart                                               11,170            12,723      
     Property Joint Ventures                                   4,867             2,023      
     General Growth Management, Inc.                          (7,663)            2,699      
                                                                                            
Minority interest in operating partnership                   (18,526)          (17,141)     
                                                           ---------         ---------      
                                                                                            
Pro forma net income (a)                                      47,413            41,913      
Pro forma preferred stock dividends                          (18,352)          (18,352)     
                                                           ---------         ---------      
Pro forma net income available to common stockholders      $  29,061            23,561      
                                                           =========         =========      
Pro forma earnings per share - basic (b)                   $    0.81              0.75      
                                                           =========         =========      
Pro forma earnings per share - diluted (b)                 $    0.81              0.74      
                                                           =========         =========      
</TABLE> 


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

(b) Pro forma basic earnings per share are based upon weighted average common
    shares of 35,822,027 for 1998 and 31,605,786 for 1997. Pro forma diluted per
    share amounts are based on the weighted average common shares and the effect
    of dilutive securities (stock options) outstanding of 36,022,161 for 1998
    and 31,761,051 for 1997.




                                    23 of 33
<PAGE>   24




                         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 Notes
              thereto.

              On September 30, 1998, the Company together with the Operating
              Partnership owned 100% of the forty-nine Wholly-Owned Centers, 51%
              of the stock of GGP/Ivanhoe, 50% of Quail Springs and Town East,
              51% of the stock of GGP Ivanhoe II, 38.2% of the stock of
              GGP/Homart, and a non-voting preferred stock ownership interest
              (representing 95% of the equity interest) in GGMI (Note 5).
              GGP/Homart owns interests in twenty-three shopping centers,
              GGP/Ivanhoe owns interests in two shopping centers, and GGP
              Ivanhoe II owns interests in six shopping centers. Revenues are
              primarily derived from fixed minimum rents, percentage rents and
              recoveries of operating expenses from tenants. Inasmuch as the
              Company's financial statements reflect the use of the equity
              method to account for its investments in GGP/Homart, GGP/Ivanhoe,
              GGP Ivanhoe II, GGMI, Quail Springs and Town East, the discussion
              of results of operations below relates primarily to the revenues
              and expenses of the Wholly-Owned Centers. The Wholly-Owned
              Centers, the Homart Centers, GGP/Ivanhoe, GGP Ivanhoe II, Quail
              Springs and Town East are collectively known as the "Company
              Portfolio".

              The mall store and free standing store portions of the centers in
              the Company Portfolio which were not currently undergoing
              redevelopment on September 30, 1997 had an occupancy of
              approximately 84.5%. On September 30, 1998, the mall store and
              freestanding store portions of the centers in the Company
              Portfolio which are not currently undergoing redevelopment were
              approximately 87.6% occupied, which is an increase of 3.1% over
              1997.

              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, 1998 are of those
              tenants that were operating in the nine months ended September 30,
              1997. Mall store annualized sales averaged $289 per square foot
              for the Company Portfolio in the nine months ended September 30,
              1998. In the nine months ended September 30, 1998, total mall
              store sales for the Company Portfolio increased by 11.2% over the
              same period in 1997, and comparable mall store sales increased by
              5.0% over 1997.

              The average mall store rent per square foot from leases that
              expired in the nine months ended September 30, 1998 was $23.90.
              The Company Portfolio benefited from increasing rents inasmuch as
              the average mall store rent per 



                                    24 of 33
<PAGE>   25
                         GENERAL GROWTH PROPERTIES, INC.


              square foot on new and renewal leases executed during 1998 was
              $27.24 or $3.34 per square foot above the average for expiring
              leases.

              FORWARD-LOOKING INFORMATION
              Forward looking 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 or 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,
              competition from other companies and venues for the
              sale/distribution of goods and services, shifts in customer
              demands, tenant bankruptcies, 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), and the continued
              availability of financing in the amounts and the terms necessary
              to support the Company's future business.

              RESULTS OF OPERATIONS OF THE COMPANY
              THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
              Total revenues for the three months ended September 30, 1998 were
              $113.1 million, which represents an increase of $38.9 million or
              approximately 52.4% from $74.2 million in the three months ended
              September 30, 1997. Substantially all of the increase is from
              acquisitions completed during 1997 and 1998. Minimum rent for the
              three months ended September 30, 1998 increased by $28.5 million
              or 65.7% from $43.4 million in the comparable period in 1997 to
              $71.9 million. The acquisition of properties generated a $26.2
              million increase in minimum rents. Expansion space, specialty
              leasing and a combination of occupancy, rental charges and
              allowance reserve adjustments at the comparable centers accounted
              for the remaining increase in minimum rents.







                                    25 of 33
<PAGE>   26

                         GENERAL GROWTH PROPERTIES, INC.


              Tenant recoveries increased by $12 million or 47.8% from $25.1
              million to $37.1 million for the three months ended September 30,
              1998. Substantially all of the increase was generated by
              properties which were recently acquired. For the three months
              ended September 30, 1998, percentage rents decreased to $1.2
              million from $2.2 million in 1997. Acquisitions contributed an
              increase of approximately $.4 million in percentage rent. The
              effect of the adoption of EITF Consensus 98-9 (Note 11) reduced
              overage rents by approximately $1.3 million from the amount that
              would have been recognized under the Company's previous accounting
              policy for the three months ended September 30, 1998.

              Total expenses, including depreciation and amortization, increased
              by approximately $24 million, from $40.2 million in the three
              months ended September 30, 1997 to $64.2 million in the three
              months ended September 30, 1998. For the three months ended
              September 30, 1998, property operating expenses increased by $8.9
              million or 46.1% from $19.3 million in 1997 to $28.2 million in
              the third quarter of 1998, substantially all of which is
              attributable to new acquisitions. Depreciation and amortization
              increased by $10.8 million over the same period in 1997.
              Approximately $.8 million of the increase in depreciation and
              amortization was generated at comparable centers. The remaining
              $10 million was from newly acquired properties. Management fees to
              affiliates and general and administrative expenses together were
              approximately $.5 million higher than in the three months ended
              September 30, 1997.

              Net interest expense for the three months ended September 30, 1998
              was $29.5 million, an increase of $11.2 million or 61.2% from
              $18.3 million in the three months ended September 30, 1997. The
              acquisition of new properties was responsible for substantially
              all of such increase.

              Equity in net income of unconsolidated affiliates in the three
              months ended September 30, 1998 decreased by approximately $2.7
              million to $6.0 million in 1998, from $8.7 million in the three
              months ended September 30, 1997. The Company's equity in the
              earnings of GGP/Homart decreased approximately $4.4 million,
              primarily due to approximately $13 million of gain recognized by
              GGP/Homart on the sale of the Meridan Square Mall in September,
              1997. The Company's ownership interest in GGMI resulted in a
              decrease of $1.1 million, primarily due to lower fee income from
              management and development activities in 1998. Property Joint
              Ventures (see Note 1) accounted for an increase of approximately
              $2.9 million due primarily to the acquisitions of the Town East
              Mall and the two malls by GGP/Ivanhoe in 1997 as described more
              fully in Note 4.


              NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
              Total revenues for the nine months ended September 30, 1998 were
              $282.1 million, which represents an increase of $72.9 million or
              approximately 34.8% from $209.2 million in the nine months ended
              September 30, 1997. 


                                    26 of 33
<PAGE>   27



                         GENERAL GROWTH PROPERTIES, INC.


              Approximately $67.2 million or 92% of the increase is from
              acquisitions completed during 1997 and 1998. Increased revenues at
              comparable properties (properties owned at all times during
              current and prior periods) accounted for the remaining $5.7
              million or 8% of the increase. Minimum rent for the nine months
              ended September 30, 1998 increased by $53.3 million or 42.6% from
              $125.1 million in 1997 to $178.4 million. The acquisition of
              properties generated a $41.3 million increase in minimum rents.
              Expansion space, specialty leasing and a combination of occupancy,
              rental charges and allowance reserve adjustments at the comparable
              centers accounted for the remaining increase in minimum rents.
              Tenant recoveries increased by $19.8 million or 28.2% from $70.2
              million to $90.0 million for the nine months ended September 30,
              1998. Approximately $1.7 million of the increase is attributable
              to higher recoverable operating expenses at the comparable malls.
              The remaining $18.1 million increase was generated by properties
              which were recently acquired. For the nine months ended September
              30, 1998, percentage rents increased to $6.2 million from $5.9
              million in 1997. Acquisitions yielded approximately a $1.3 million
              increase in percentage rent. The effect of the adoption of EITF
              Consensus 98-9 (Note 11) reduced percentage rents by approximately
              $1.3 million from the amount that would have been recognized under
              the Company's previous accounting policy for the nine months ended
              September 30, 1998. Other revenues decreased by approximately $.6
              million or 13% to $4.0 million for the nine months ended September
              30, 1998 from $4.6 million in 1997, substantially all of which
              related to comparable centers.

              Total expenses, including depreciation and amortization, increased
              by approximately $40.4 million, from $112.5 million in the nine
              months ended September 30, 1997 to $152.9 million in the nine
              months ended September 30, 1998. For the nine months ended
              September 30, 1998, property operating expenses increased by $16.4
              million or 30.4% from $53.9 million in 1997 to $70.3 million in
              1998. Of this increase, recent acquisitions accounted for $14.8
              million, while higher recoverable operating costs at comparable
              centers contributed the remaining $1.6 million. Depreciation and
              amortization increased by $16.8 million over the same period in
              1997. Approximately $4.6 million of the $16.8 million increase in
              depreciation and amortization was generated at comparable centers.
              The remaining $12.2 million was from newly acquired or developed
              properties. Management fees to affiliates and general and
              administrative expenses together were approximately $1.2 million
              higher than in the nine months ended September 30, 1997.

              Net interest expense for the nine months ended September 30, 1998
              was $70.5 million, an increase of $19 million or 36.9% from $51.5
              million in the nine months ended September 30, 1997, substantially
              all due to indebtedness incurred in connection with the
              acquisition of new properties in 1997 and 1998.



                                    27 of 33
<PAGE>   28

                         GENERAL GROWTH PROPERTIES, INC.


              Equity in net income of unconsolidated affiliates in the nine
              months ended September 30, 1998 decreased by approximately $7.2
              million to $6.7 million in 1998, from $13.9 million in the nine
              months ended September 30, 1997. The Company's ownership interest
              in GGMI resulted in a decrease of $9.5 million, primarily due to
              the write-off of certain unamortized third-party management
              contract costs recorded at the acquisition of GGMI which relates
              to contracts terminated in the first quarter of 1998. The
              Company's equity in the earnings of GGP/Homart decreased
              approximately $1.6 million, primarily due to gain recognized on
              the September, 1997 sale of the Meridan Square Mall partially
              offset by the gain recognized on its May, 1998 sale of its
              interest in the Rolling Oaks Mall. Property Joint Ventures (see
              Note 1) accounted for an increase of approximately $3.9 million
              due primarily to the acquisitions of the Town East Mall and the
              two malls by GGP/Ivanhoe in 1997 as described more fully in Note
              4.

              LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY
              The Company uses operating cash flow as the principal source of
              funding for recurring capital expenditures such as tenant
              construction allowances and minor improvements made to individual
              properties that are not recoverable through common area
              maintenance charges to tenants. Funding alternatives for
              acquisitions, new development, expansions and major renovation
              programs at individual centers include construction loans,
              mini-permanent loans, long-term project financing, additional
              property level or Company level equity investments, unsecured
              Company level debt or secured loans collateralized by individual
              shopping centers. In such regard, subsequent to September 30,
              1998, the Company obtained replacement first mortgage financing of
              approximately $318 million for existing loans of approximately
              $254 million secured by certain individual properties in the
              Company Portfolio. In addition, the Company established a $200
              million unsecured credit facility in August of 1997 which matures
              on July 31, 1999 excluding a one-year extension option. On
              September 30, 1998, the credit facility had an outstanding balance
              of $185 million. This facility provided all of the funds necessary
              to complete the development of Coralville Mall in Iowa City, Iowa
              and, with planned financing and refinancing of certain existing
              malls, traditional construction financing and current operating
              cash flow, is expected to provide the funds to complete the malls
              under development in Grand Rapids, Michigan and Dallas, Texas and
              to fund certain other non-recurring capital expenditures or
              expansions that are currently under construction or being
              contemplated and/or evaluated. The Company acquired Southwest
              Plaza in Denver, Colorado in April 1998, Northbrook Court in
              Northbrook (Chicago), Illinois in May 1998, Altamonte Mall in
              Altamonte Springs (Orlando), Florida in July 1998, Pierre Bossier
              Mall in Bossier City (Shreveport), Louisiana, Spring Hill Mall in
              West Dundee (Chicago), Illinois, and Coastland Mall in Naples,
              Florida in September, 1998 and two portfolios of malls in June
              1998 as more fully described in Note 4. As more fully described in
              Notes 4 and 6, such acquisitions were funded by cash and cash
              equivalents on hand, short and long term debt financing, issuance
              of





                                    28 of 33
<PAGE>   29
                         GENERAL GROWTH PROPERTIES, INC.


              additional Units, joint venture contributions and a public
              offering of convertible preferred stock, as described in Note 1.
              In addition, subsequent to September 30, 1998 the Company acquired
              a 100% interest in Mall St. Vincent for $26.4 million as more
              fully described in Note 4, which note is fully incorporated herein
              by reference.

              Net cash provided by operating activities was $112.6 million in
              the first nine months of 1998, an increase of $87.6 million from
              $25.0 million in the same period in 1997. Net income before
              allocations to the minority interest decreased $51.3 million which
              was represented primarily by the $58.6 million gain on the partial
              sale of CenterMark recognized in 1997. The other significant
              change in cash provided by operating activities was a $28.2
              million net change in cash flows from operating activities related
              to accounts payable and accrued expenses in 1998.

              Net cash used by investing activities was $1,420 million in 1998
              compared to $137.9 million of cash used in 1997. Cash flow from
              investing activities was impacted by acquisitions (including
              liabilities assumed at acquisition), development and improvements
              to real estate properties, which caused a decrease in cash of
              approximately $1,295 million in 1998. The proceeds from the sale
              of CenterMark provided funds of $130.5 million in 1997. No such
              sale proceeds were realized in 1998.

              Financing activities contributed cash of $1,307 million in 1998,
              compared to a source of cash of $103 million in 1997. As described
              in Note 1, the Company completed a public offering of preferred
              stock in June, 1998. This public offering resulted in net proceeds
              of approximately $322.8 million which was primarily used to reduce
              acquisition related financing and amounts drawn on the Company's
              line of credit. Such payments are reflected in the increase in the
              use of cash for financing activities for principal payments on
              mortgage notes and other debt in 1998 as compared to 1997. An
              additional major contributing factor of cash from financing
              activity is financing from mortgages and acquisition debt which
              had a positive impact of $1,671 million in 1998 versus
              approximately $332 million in 1997. The additional financing was
              used to fund the acquisitions and redevelopment of real estate
              that was discussed above. The remaining use of cash was primarily
              accounted for by increased distributions paid during the first
              nine months of 1998.

              In order to remain qualified as a real estate investment trust for
              federal income tax purposes, the Company must distribute 100% of
              capital gains and at least 95% 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 percentage rents attributable to
              replacement of existing leases with new


                                    29 of 33
<PAGE>   30

                         GENERAL GROWTH PROPERTIES, INC.


              or renewal leases; (iii) changes in occupancy rates at existing
              centers and procurement of leases for newly developed centers; and
              (iv) the Company's share of operating cash flow generated by GGMI,
              the Property Joint Ventures, GGP/Homart and distributions
              therefrom, less oversight costs and debt service on additional
              loans that were incurred to finance a portion of the cash purchase
              price for GGP/Homart's stock and other recent company
              acquisitions. The Company anticipates that its operating cash
              flow, and potential new debt or equity from future offerings, new
              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 the Company's preferred and common stockholders in accordance
              with the requirements of the Internal Revenue Code of 1986, as
              amended, for continued qualification as a real estate investment
              trust and to avoid any Company level federal income or excise tax.

              RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
              As more fully described in Note 11, the FASB, EITF and the AICPA
              have 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.

              YEAR 2000 READINESS DISCLOSURES
              The Year 2000 problem results from the use of a two digit year
              date instead of a four digit date in the programs that operate
              computers (information technology or "IT" systems) and other
              devices (i.e. "non-IT" systems such as elevators, utility
              monitoring systems and time clocks that use computer chips).
              Systems with a Year 2000 problem have programs that were written
              to assume that the first two digits for any date used in the
              program would always be "19". Unless corrected, this assumption
              may result in problems when the century date occurs. On that date,
              these computer programs likely will misinterpret the date January
              1, 2000 as January 1, 1900. This could cause systems to
              incorrectly process critical financial and operational
              information, generate erroneous information or fail altogether.
              The Year 2000 issue effects almost all companies and
              organizations.

              THE COMPANY'S STATE OF READINESS:
              The Company recently upgraded its major information systems
              including its databases and primary accounting software which,
              when fully operational by the end of 1998, are all Year 2000
              compliant. These upgrades were performed primarily for the purpose
              of routine improvements to the Company's information systems.
              These upgrades were initiated in advance of any concern for the
              Year 2000 issue. The Company is in the process of evaluating
              several other smaller non-IT systems (i.e. time keeping systems,
              elevators, etc.) to verify that they are Year 2000 compliant. In
              addition, the Company has formed a Year 2000 Committee that
              includes senior personnel from most areas of the Company.


                                    30 of 33
<PAGE>   31

                         GENERAL GROWTH PROPERTIES, INC.


              These people are charged with the duty of determining the extent
              of the Company's exposure and taking the appropriate action to
              minimize any impact on the Company's operations. The non-IT
              systems evaluation process is expected to be completed by early
              1999. If these non-IT systems are found to be not Year 2000
              compliant, the appropriate upgrades or replacements will be
              purchased. The cost of any upgrades that may be required is not
              anticipated to be significant. In addition, the Company is
              communicating with its customers, tenants, suppliers and service
              providers to determine whether they are actively involved in
              projects to ensure that their products and business systems will
              be Year 2000 compliant. The Company's exposure is widely spread,
              with no known major direct exposure.

              COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUE:
              As the Company's IT systems Year 2000 compliance issues have
              already been addressed, the Company does not expect to incur any
              significant additional costs regarding its IT systems due to the
              Year 2000 issue. Costs to specifically remediate non-IT systems
              that are non Year 2000 compliant are not expected to be material.

              RISKS RELATING TO THE YEAR 2000 ISSUE AND CONTINGENCY PLANS:
              Although the Company is not currently aware of any specific
              significant Year 2000 issues involving third-parties, the Company
              believes that its most significant potential risk relating to the
              Year 2000 issue is in regard to such third parties. For example,
              the Company believes there could be failure in the information
              systems of certain service providers that the Company relies upon
              for electrical, telephone and data transmission and banking
              services. The Company believes that any service disruption with
              respect to these providers due to a Year 2000 issue would be of a
              short-term nature. The Company has existing back-up systems and
              procedures, developed primarily for natural disasters, that could
              be utilized on a short-term basis to address any service
              interruptions. In addition, with respect to tenants, a failure of
              their information systems could delay the payment of rents or even
              impair their ability to operate. These tenant problems are likely
              to be isolated and would likely not impact the operations of any
              particular mall or the Company as a whole. While it is not
              possible at this time to determine the likely impact of any of
              these potential problems, the Company will continue to evaluate
              these areas and develop additional contingency plans, as
              appropriate. Therefore, although the Company believes that its
              Year 2000 issues have been addressed and that suitable remediation
              and/or contingency procedures will be in place by December 31,
              1999, there can be no assurance that Year 2000 issues will not
              have a material adverse effect on the Company's results of
              operations or financial condition.



                                    31 of 33
<PAGE>   32

                         GENERAL GROWTH PROPERTIES, INC.



ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

              Not applicable


PART II. OTHER INFORMATION


ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a)   Exhibits - See Exhibit Index
              (b)   Reports on Form 8-K

              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 21, 1998 as amended by
                  Form 8-K/A dated September 29, 1998 describing under Item 2
                  the acquisition of Altamonte Mall and containing financial
                  statements and pro forma information concerning the recent
                  acquisitions of the Company.

              2.  Current report on Form 8-K dated July 23, 1998 describing
                  under Item 2 the acquisition of the USPPI Portfolio. The
                  report incorporated by reference the financial statements and
                  pro forma information filed in the Company's 8-K/A dated June
                  2, 1998.

              3.  Current report on Form 8-K dated September 30, 1998 as amended
                  by Form 8-K/A dated November 4, 1998 describing under Item 2
                  the acquisition of Spring Hill Mall and containing financial
                  statements and pro forma information concerning the recent
                  acquisitions of the Company.





                                    32 of 33
<PAGE>   33



                         GENERAL GROWTH PROPERTIES, INC.




                                    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 12, 1998          by:  /s/:   Bernard Freibaum            
                                            -----------------------------------
                                            Bernard Freibaum
                                            Executive Vice President and
                                            Chief Financial Officer
                                            (Principal Accounting Officer)





                                    33 of 33
<PAGE>   34


                         GENERAL GROWTH PROPERTIES, INC.



EXHIBIT  INDEX

     2(a) Amended and Restated Stock Purchase Agreement, dated as of October 16,
1995, by and among Sears, Roebuck and Co., Homart Development Co., Homart Newco
One, Inc. and GGP/Homart, Inc.(1)

     2(b) Amendment No. 1 to Amended and Restated Stock Purchase Agreement,
dated as of December 22, 1995, by and among Sears, Roebuck and Co., Homart
Development Co., Homart Newco One, Inc. and GGP/Homart, Inc.(1)

     2(c) Real Estate Purchase Agreement, dated as of July 31, 1995, by and
among Sears, Roebuck and Co., Homart Development Co. and GGP/Homart, Inc.(1)

     2(d) Amendment No. 1 to Real Estate Purchase Agreement, dated as of October
16, 1995, by and among Sears, Roebuck and Co., Homart Development Co. and
GGP/Homart, Inc.(1)

     2(e) Amendment No. 2 to Real Estate Purchase Agreement, dated as of
December 22, 1995, by and among Sears, Roebuck and Co., Homart Development Co.
and GGP/Homart, Inc.(1)

     2(f) Mall Purchase Agreement, dated as of December 22, 1995, by and among
Sears, Roebuck and Co., Homart Development Co. and General Growth
Properties-Natick Limited Partnership.(1)

     2(g) Contribution Agreement dated December 6, 1996, between Forbes/Cohen
Properties, a Michigan general partnership, and GGP Limited Partnership, a
Delaware limited partnership.(2)

     2(h) Contribution Agreement dated December 6, 1996, between Lakeview Square
Associates, a Michigan general partnership, and GGP Limited Partnership, a
Delaware limited partnership.(2)

     2(i) Contribution Agreement dated December 6, 1996, between Jackson
Properties, a Michigan general partnership, and GGP limited Partnership, a
Delaware limited partnership.(2)

     2(j) Sale and Contribution Agreement dated June 19, 1997, between CA
Southlake Investors, Ltd., a Georgia limited partnership, and GGP Limited
Partnership, a Delaware limited partnership.(10)

     2(k) Contribution Agreement dated June 10, 1997, among Atlantic Freeholds
II, a Nevada general partnership, Town East Mall, L.P., a Delaware limited
partnership, and Town East Mall Partnership, a Texas general partnership.(10)




                                      S-1
<PAGE>   35
                         GENERAL GROWTH PROPERTIES, INC.


     2(l) Purchase and Sale Agreement dated as of March 22, 1997, between
Century Plaza Co., an Alabama general partnership, and Century Plaza L.L.C., a
Delaware limited liability company. (10)

     2(m) Real Estate Purchase Agreement dated March 12, 1997, between Champaign
Venture, an Illinois general partnership, and Champaign Market Place L.L.C., a
Delaware limited liability company. (10)

     2(n) Stock Purchase Agreement dated as of April 17, 1998 and amended June
2, 1998, among MEPC PLC, MEPC North American Properties Limited, U.K.-American
Holdings Limited and GGP Limited Partnership. (16)

     2(o) Purchase and Sale Agreement dated May 8, 1998, among Grosvenor
International Limited, P.I.C. Investments, Northbrook Court I L.L.C. and
Northbrook Court II L.L.C. (17)

     2(p) Merger Agreement dated May 14, 1998, among GGP Limited Partnership,
GGP Acquisition L.L.C. and U.S. Prime Property, Inc. (17)

     2(q) Sale and Contribution Agreement dated April 2, 1998, between Southwest
Properties Venture and GGP Limited Partnership. (18)

     2(r). Contribution and Exchange Agreement dated as of July 10, 1998 (the
"Contribution Agreement") among Nashland Associates, HRE Altamonte, Inc.,
Altamonte Springs Mall L.P., and GGP Limited Partnership. (21)

     2(s). Purchase and Sale Agreement and Joint Escrow Instructions dated as of
August 21, 1998 by and between Spring Hill Mall Partnership (seller) and Spring
Hill Mall L.L.C., (purchaser). (22)

     2(t).Purchase and Sale Agreement dated as of the 18th day of September,
1998 by and between Coastland Center Joint Venture (seller) and Coastland
Center, L.P. (purchaser). (23)

     3(a) Amended and Restated Certificate of Incorporation of the Company. (3)

     3(b) Amendment to Amended and Restated Certificate of Incorporation of the
Company.(5)

     3(c) Amendment to Amended and Restated Certificate of Incorporation of the
Company filed on December 21, 1995.(11)

     3(d) Amendment to Amended and Restated Certificate of Incorporation of the
Company filed on May 20, 1997.(15)



                                      S-2
<PAGE>   36

                         GENERAL GROWTH PROPERTIES, INC.



     3(e) Bylaws of the Company.(5)

     3(f) Amendment to Bylaws of the Company.(5)

     4(a) Redemption Rights Agreement, dated July 13, 1995, by and among GGP
Limited Partnership, General Growth Properties, Inc. and the persons listed on
the signature pages thereof.(8)

     4(b) Redemption Rights Agreement dated December 6, 1996, among GGP Limited
Partnership, a Delaware corporation, Forbes/Cohen Properties, a Michigan general
partnership, Lakeview Square Associates, a Michigan general partnership, and
Jackson Properties, a Michigan general partnership.(2)

     4(c) Redemption Rights Agreement, dated June 19, 1997, among GGP Limited
Partnership, a Delaware limited partnership, General Growth Properties, Inc., a
Delaware corporation, and CA Southlake Investors, Ltd., a Georgia limited
partnership.(13)

     4(d) Redemption Rights Agreement dated October 23, 1997, among GGPI, GGPLP
and Peter Leibowits.(15)

     4(e) Form of Indenture.(12)

     4(f) Certificate of Designations, Preferences and Rights of 7.25% Preferred
Equity Redeemable Stock, Series A. (20)

     4(g) Redemption Rights Agreement dated April 2, 1998, among GGP Limited
Partnership, General Growth Properties, Inc. and Southwest Properties Venture.
(17)

     4(h) Indenture and Servicing Agreement dated as of November 25, 1997, among
the Issuers named therein, LaSalle National Bank, as Trustee, and Midland Loan
Services, L.P., as Servicer (the "Indenture Agreement"). (18)

     4(i) Form of Note pursuant to the Indenture Agreement. (18)

     4(j) Mortgage, Deed of Trust, Security Agreement, Assignment of Leases and
Rents, Fixture Filing and Financing Statement, date and effective as of November
25, 1997, among the Issuers, the Trustee and the Deed Trustees named therein.
(18)

     10(a) Second Amended and Restated Agreement of Limited Partnership of the
Operating Partnership. (19)

     10(b) Rights Agreement between the Company and the Limited Partners of the
Operating Partnership.(6)




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                         GENERAL GROWTH PROPERTIES, INC.



     10(c) Real Estate Management Agreement dated July 1, 1996, between General
Growth Management, Inc. and GGP Limited Partnership.(13)

     10(d)* General Growth Properties, Inc. 1993 Stock Incentive Plan, as
amended.(14)

     10(e) Form of Amended and Restated Agreement of Partnership for each of the
Property Partnerships.(3)

     10(f) Sale-Purchase Agreement dated as of December 30, 1992, by and between
Equitable and the Company.(3)

     10(g) Form of Indemnification Agreement between the Operating Partnership,
Martin Bucksbaum, Matthew Bucksbaum, Mall Investment L.P. and M. Bucksbaum
Company. (3)

     10(h) Form of Registration Rights Agreement between the Company and the
Bucksbaums. (3)

     10(i) Form of Registration Rights Agreement between the Company and certain
trustees for the IBM Retirement Plan. (3)

     10(j) Form of Incidental Registration Rights Agreement between the Company,
Equitable, Frank Russell and Wells Fargo.(3)

     10(k) Form of Letter Agreements restricting sale of certain shares of
Common Stock.(3)

     10(l)* Letter Agreement dated October 14, 1993, between the Company and
Bernard Freibaum.(6)

     10(m)* Form of Option Agreement between the Company and certain Executive
Officers.(13)


(*)  A compensatory plan or arrangement required to be filed.


     27 Financial Data Schedule


================================================================================

     (1) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated January 5, 1996.


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<PAGE>   38
                         GENERAL GROWTH PROPERTIES, INC.


     (2) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated January 3, 1996.

     (3) Previously filed as an exhibit to the Company's Registration Statement
on Form S-11 (No. 33-56640), incorporated herein by reference.

     (4) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated July 16, 1996.

     (5) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1994.

     (6) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1993.

     (7) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated February 25, 1994.

     (8) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated July 17, 1996.

     (9) Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (No. 33-23035), incorporated herein by reference.

     (10) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated June 19, 1997.

     (11) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1995.

     (12) Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (No. 333-37247) dated October 6, 1997.

     (13) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1996.

     (14) Previously filed as an exhibit to the Company's Registration Statement
on Form S-8 (No. 333-28449) dated June 3, 1997.

     (15) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1997.

     (16) Previously filed as an exhibit to the Company's current report on Form
8K dated June 17, 1998.

     (17) Previously filed as an exhibit to the Company's current report on Form
8K dated May 26, 1998.

     (18) Previously filed as an exhibit to the Company's current report on Form
8K/A dated June 2, 1998.

     (19) Previously filed as an exhibit to the Company's current report on Form
10-Q dated May 14, as amended May 21, 1998.



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<PAGE>   39
                         GENERAL GROWTH PROPERTIES, INC.


     (20) Previously filed as an exhibit to the Company's current report on Form
8-K dated August 7, 1998.

(21) Previously filed as an exhibit to the Company's current report on Form 8K
dated August 5, 1998.

     (22) Previously filed as an exhibit to the Company's current report on Form
8-K dated September 30, 1998.

     (23) Previously filed as an exhibit to the Company's current report on Form
8-K dated October 5, 1998.



                                      S-6