EXHIBIT 13.1
------------





                     URBAN SHOPPING CENTERS, INC.

                          1999 ANNUAL REPORT














                     URBAN SHOPPING CENTERS, INC.
    900 NORTH MICHIGAN AVENUE  SUITE 1500  CHICAGO, ILLINOIS  60611


<PAGE>


                           TABLE OF CONTENTS


Featured Properties


Letter to Shareholders


Property Locations


Financial Highlights


Management's Discussion


Financial Statements


Notes to Financial Statements


Independent Auditors' Report


Selected Financial Data


Quarterly Financial Summary


Board of Directors / Officers


Shareholder Information




<PAGE>


                          FEATURED PROPERTIES


     SHOPPING IS A PRINCIPAL FORM OF SOCIAL INTERACTION AND ENTERTAINMENT.
IT IS MORE THAN A DESIRE OR STRONG NEED TO PURCHASE ANYTHING; THE SHOPPING
EXPERIENCE IS ABOUT BEING PART OF A COMMUNAL ENVIRONMENT.  THE MALL ITSELF
IS A DESTINATION, A PLACE TO MEET.  HISTORICALLY, PEOPLE HAVE ALWAYS
CREATED PLACES TO GATHER, TO BE WITH ONE ANOTHER.  FADS AND FASHION WILL
CHANGE, ECONOMIC GOOD TIMES AND BAD WILL COME AND GO, BUT THE NEED FOR A
PLACE TO GATHER WILL REMAIN BECAUSE IT IS A RESPONSE TO THE HUMAN DESIRE TO
CONNECT WITH OTHERS AND THE CULTURES THEY REPRESENT.

     URBAN SHOPPING CENTERS, INC. is a self-administered real estate
investment trust (REIT) in the business of owning, acquiring, managing,
leasing, developing and redeveloping regional and super-regional malls
throughout the United States.  Urban Shopping Centers commenced operations
in October 1993 and is listed on The New York Stock Exchange and The
Chicago Stock Exchange (Symbol:  URB).

     Urban Shopping Centers currently owns a portfolio consisting of
interests in twenty-two retail properties comprised of more than 20 million
square feet of space and also has under development an approximately 1.1
million square foot regional mall near Sacramento, California, an
approximate 1.4 million square foot regional mall in Durham, North Carolina
and an approximate 350,000 square foot community center in Tampa, Florida.
The company opened Brandon TownCenter in Tampa, Florida in 1995, Wolfchase
Galleria in Memphis, Tennessee in 1997 and Citrus Park Town Center in
Tampa, Florida on March 3, 1999.  the company's portfolio, excluding recent
development, produced sales per square foot of $418 in 1999, which ranks
among the highest in the industry.

     Urban Shopping Centers owns interests in several of the premier
shopping centers in the United States, including Oakbrook Center (Oak
Brook, Illinois), Water Tower Place (Chicago, Illinois), Copley Place
(Boston, Massachusetts), San Francisco Shopping Centre (San Francisco,
California), Century City Shopping Center (Los Angeles, California),
Houston Galleria (Houston, Texas) and Old Orchard Center (Skokie,
Illinois), as well as in Urban Retail Properties Co., its property
management, leasing and development affiliate.  Urban Retail Properties Co.
is one of the nation's largest retail property managers, managing more than
60 million square feet of regional malls and community centers in 26 states
and the District of Columbia.

FOX VALLEY CENTER

     In November 1998, Urban completed its nine-month renovation of Fox
Valley Center in Chicago's western suburb of Aurora, Illinois.  Urban
designed the $13 million in improvements to be consistent with the center's
rapidly expanding and demographically affluent trade area.  During the
project, all interior elements, including the floors, lighting, food court
and restrooms were updated.  One of the renovation's most popular additions
is a children's play area that features a thirty-foot sculpture designed as
a climbing structure for younger shoppers.  Since the renovation, Urban has
been able to attract various new tenants to Fox Valley including: Delia's,
Pacific Sunwear, Charlotte Russe and Abercrombie & Fitch's new children's
apparel store.

HAWTHORN CENTER

     In 1997, Urban acquired this regional mall which is located in one of
Chicago's fastest growing northern suburbs.  Urban's remerchandising
efforts over the past few years have further strengthened Hawthorn Center
as the dominant retail destination for the residents and workers located in
the center's affluent and rapidly growing trade area.  Urban has recently
added various tenants to the center, including Miller's Outpost, Banana
Republic and Mario Tricoci Hair Salon and Day Spa.  Urban continues to
fine-tune and upgrade Hawthorn's tenant mix to meet the requirements of a
market that demands more upscale tenants and is projected to enjoy
substantial population growth for years to come.


<PAGE>


WOODLAND HILLS MALL

     Urban acquired Woodland Hills, Mall in Tulsa, Oklahoma in December
1998.  Woodland Hills Mall is the dominant mall in eastern Oklahoma and
offers over eighty stores exclusive to the area.  Urban believes that
Woodland Hills Mall was an excellent acquisition because the center has the
same type of market dominance and powerful sales performance enjoyed by
many of the other centers in its portfolio.  Additionally, because Urban
already owned the other dominant mall in the state (Penn Square Mall in
Oklahoma City), there are excellent opportunities to work with tenants that
might have an interest in maintaining a presence at both malls.

CITRUS PARK TOWN CENTER

     Urban's most recent development opened in March 1999 with 100 percent
of its retail space leased.  Citrus Park Town Center was the first mall in
Tampa to offer under one roof such favorites as Pottery Barn, Williams-
Sonoma, Brooks Brothers, Finish Line and Restoration Hardware.  The center
also features several tenants unique to the Tampa Bay area such as
Harold's, Golf America, Georgiou and Johnny Rockets.  Citrus Park Town
Center's one-of-a-kind architectural design captures all the timeless
pleasures of "Main Street USA" with its dramatic two-story storefronts,
splashing fountains, abundance of natural light and whimsical food court.
This distinct design, coupled with an outstanding lineup of national
retailers, makes for an inviting atmosphere that has become one of Tampa's
premier gathering destinations.

CENTURY CITY SHOPPING CENTER

     In June 1999, Urban acquired Century City Shopping Center located in
Los Angeles, California.  This center is a 781,000 square foot open-air
regional mall anchored by Bloomingdale's, Macy's and one of the nation's
highest grossing AMC theatres.  Century City Shopping Center, which is
located around the most affluent areas of west Los Angeles, further
enhances Urban's position as one of the nation's premier owners of upscale
shopping centers.  The center enjoys a solid reputation of retail
excellence as demonstrated by its strong tenant mix and exceptional sales
productivity.  Urban's anticipated tenant repositioning, aggressive
management and marketing, and construction of additional retail space
should further enhance Century City Shopping Center's position as the
premier shopping experience in the west Los Angeles area.





<PAGE>


              <GRAPHIC CONTAIN PHOTOS FROM LEFT TO RIGHT
                   OF THE INDIVIDUALS LISTED BELOW>

Matthew S. Dominski, Chief Executive Officer, Urban Shopping Centers, Inc.

Adam S. Metz, President, Urban Shopping Centers, Inc.

Ross B. Glickman, President - Leasing, Urban Retail Properties Co.

James L. Czech, Executive Vice President, Urban Shopping Centers, Inc.;
President - Development, Urban Retail Properties Co.; and President, Urban
Retail International LLC

Joseph M. Shrader, President - Management, Urban Retail Properties Co.




<PAGE>


                     SO, WHO WANTS TO GO SHOPPING?




To Our Shareholders:


     We are pleased to report to you about Urban Shopping Centers, Inc.'s
performance in 1999. The highlights of our performance include: the ongoing
success of our long-term growth strategy, which continues to produce
double-digit earnings growth; an unleveraged, same all earnings growth rate
of 8%, which reflects our industry-leading expertise at operating and
managing dominant regional malls; the opening of our third new mall
development in six years, on time, on budget and 100 percent leased with
many of America's premier retailers; the acquisitions of Century City
Shopping Center in Los Angeles and an interest in Houston Galleria, two of
the country's highest profile regional malls, both of which we believe have
substantial revenue growth potential; construction on schedule for our next
mall development in Roseville, California, scheduled to open on August 25,
2000, and groundbreaking at our site in Durham, North Carolina, our next
development to follow Roseville.

     We continue to focus on managing our portfolio for strong,
risk-adjusted growth. We believe our portfolio of dominant regional malls,
located in markets with superior demographics, will continue its proven
record of performance in all economic conditions. It is clearer now than
ever before that upper and upper middle income customers are attracted to
our malls because they have been created as desirable shopping
destinations, and retailers want to be in our properties to service those
customers.

1999 IN REVIEW

DEVELOPMENT

     The newest example of our expertise in mall development is the Citrus
Park Town Center, a 1.1 million square foot regional mall in Tampa,
Florida. The mall opened on time and on budget last March with four anchor
department stores, approximately 120 specialty shops and a multiplex
theater. It has a "Main Street" interior design that makes it one of the
most distinct regional malls in the country.

     The property is performing beyond our first-year expectations and,
combined with Brandon TownCenter (opened in 1995), we now dominate the
fastest growing areas in greater Tampa. Its innovative design, retail mix,
entertainment and restaurant components have made Citrus Park a true
shoppers' destination while enhancing Urban Shopping Centers' reputation as
a premier developer.

     Galleria at Roseville near Sacramento is the next project in our
development pipeline. Scheduled to open on August 25, 2000, Roseville will
be an approximate 1.1 million square foot property located in one of the
most demographically desirable regions of California. In addition to
Nordstrom, Macy's, JCPenney and Sears as anchor stores, Roseville will also
have many national retailers who have already found success at our other
properties, including J. Crew, Crate & Barrel, Talbots, Ann Taylor,
Abercrombie & Fitch and Pottery Barn, among others.

     Work is also underway at The Streets at Southpoint in Durham, North
Carolina. Southpoint will be a two-level, approximately 1.4 million square
foot mall anchored by Belk, Hecht's, JCPenney, Nordstrom (the first
Nordstrom in the Carolinas) and Sears. Southpoint is our first foray into
the Carolinas' marketplace and it offers many of the same site and
demographic characteristics as our previous successful developments.  The
center is scheduled to open in early March 2002.



<PAGE>


ACQUISITIONS

     We believe Century City Shopping Center and Houston Galleria were
excellent acquisitions for Urban. They are a perfect fit with our strategic
goal to find complementary properties to our existing portfolio. They are
at the highest end of the quality and sales productivity spectrum of all
the properties we have analyzed in recent years and both offer considerable
revenue growth potential.

     Houston Galleria is clearly the dominant shopping destination in its
region. The mall has the size - approximately 1.6 million square feet - and
type of location we look for. It is currently generating over $625 million
in annual sales and we think we can apply our expertise to improve that
figure. The mall is currently only about 84 percent occupied, and the
existing rents, relative to sales volume, are lower than the rest of our
nationwide portfolio.  The property also includes land for up to 750,000
square feet of additional retail space, including two new anchor department
stores. Our current goal is to apply our renovation, leasing and
development experience to eventually create a property producing in excess
of $1 billion in annual sales.

     Century City Shopping Center is at the heart of possibly the most
affluent population center in California and is the retail destination of
choice for the West Side of Los Angeles. It is close to both the homes and
offices of upper income, highly educated people who already look upon it as
a part of their quality of life.

     There is an opportunity for expansion - approximately 72,000 square
feet - and strong potential for additional leasing. Using our leasing
experience and our established working relationships with a number of
national retailers, we plan to upgrade the tenant mix, improving both rents
and mall sales.

EXISTING PORTFOLIO

     One of the key components of our ongoing growth strategy has been the
acquisition of mall properties that fit our demographic profile and offer
upside revenue potential.  Fox Valley Center and Hawthorn Center in
suburban Chicago, both of which we acquired in 1997, are excellent examples
of our success with such properties.

      Late in 1998, we completed $13 million in extensive renovations to
Fox Valley. The property is now the uncontested leader in its suburban
region. The sales numbers that were generated in 1999 exceeded our own
expectations. We also have been able to introduce various high quality
tenants to Hawthorn Center and are continuing to see productivity increases
there as well.

     Overall, our existing portfolio remains one of the best leased and
most productive in the regional mall industry.

1999 FINANCIAL OVERVIEW

     In 1999, diluted funds available for distribution (FAD) per common
share grew 12.8% from $2.98 in 1998 to $3.36 in 1999.  The continued
success of our operating strategy has allowed us to post a record of
strong, consistent FAD growth since going public in 1993. Including 1999's
results, Urban Shopping Centers has increased diluted FAD per common share
at an annual compounded rate of 10.8% since 1994.

PROPERTY RESULTS

     Mall tenant sales for the year increased 6% to $2.59 billion compared
to $2.45 billion in 1998. Sales per square foot were $418 in 1999, an
increase of 5% compared to 1998. The total mall Gross Leasable Area
occupied was 91.7% at December 31, 1999. At year-end our regional mall
portfolio was 93.4% leased.



<PAGE>


DIVIDENDS, PAYOUT RATIO AND FINANCIAL FLEXIBILITY

     The continued strength and superior performance of our assets enabled
our Board of Directors to increase the quarterly dividend in February 1999
to 56 cents per share. The Board was again pleased to approve another
dividend increase, to 59 cents per share per quarter or $2.36 per share
annually, at their meeting in February 2000. This represents an increase of
5.4% over the previous annual dividend of $2.24 per share. As long as we
are successful at reinvesting our capital, it is our ongoing goal to
increase the company's dividend annually - increasing our yield to
shareholders - while maintaining a conservative payout ratio.  By retaining
a portion of our earnings, we have maintained our financial flexibility and
are able to take advantage of the growth opportunities offered through
development and acquisition. Our payout ratio for 1999 was 65% compared to
70% in 1998.

CAPITAL STRUCTURE

     Since becoming a public company, Urban Shopping Centers has been
committed to maintaining a strong financial position. An important part of
our strategy is to maintain a capital structure that allows us to achieve
the following objectives - minimize cost of capital, provide flexibility
and capacity for growth and manage maturity and interest rate risk.

     During 1999, we worked towards achieving our financial goals in the
following ways:

     .     Minimized our exposure to interest rate risk by fixing the
interest rate on over 90% of our debt. At year-end, our debt had a weighted
average cost of 7.12%.

     .     Staggered the maturity dates of the more than $740 million of
debt financing and refinancing completed in 1999, thus managing our debt
rollover risk. At year-end, our debt had a weighted average maturity of
seven years.

     .     Continued our trend of a strong interest coverage ratio. This
ratio stood at 2.3:1 at year-end.

     On the equity side, our operating partnership, Urban Shopping Centers,
L.P., completed two private placements of cumulative redeemable perpetual
preferred partnership units for total proceeds of $125 million. We feel
that this type of security represents an attractive source of equity given
the current weakness in the common equity market.

THE OUTLOOK FOR 2000

     Looking ahead to 2000, you can expect that Urban Shopping Centers will
continue to focus on those strengths which have been the basis of our
growth to date - developing, acquiring, renovating and managing dominant
regional malls. We've already outlined for you here our development
pipeline for the next few years. We will look at acquisitions selectively,
making sure that they fit with our existing portfolio and make good sense
from a financial perspective.

     We also remain committed to managing our existing portfolio for
internal growth. The investors and analysts who have understood our
investment appeal have consistently told us that our internal growth
performance sets Urban Shopping Centers apart from our competition. The
pace of developments and acquisitions in particular may vary; however, the
core growth is ultimately the driver of the consistency of our portfolio.
We will still monitor each of our properties on a space-by-space basis to
ensure maximum productivity. We are always looking for ways to enhance
merchandising mix, increase tenant sales and change tenant mix at each mall
in our portfolio.



<PAGE>


     Hopefully, we have provided you with the necessary insight into our
1999 results and our plans for the future. If you have any questions,
please call our Investor Relations Department at (312) 915-2000. Thank you
for your continued support.


Sincerely,


/s/ Matthew S. Dominski
------------------------------
Matthew S. Dominski
Chief Executive Officer



/s/ Adam S. Metz
------------------------------
Adam S. Metz
President




<PAGE>


                     URBAN SHOPPING CENTERS, INC.
                          1999 ANNUAL REPORT



                          PROPERTY LOCATIONS

                                                Total
Property                 Location              Sq. Ft.      Ownership
--------                 --------            ----------     ---------
1 Oakbrook Center        Oak Brook, Illinois  2,010,000          100%
2 Old Orchard Center     Skokie, Illinois     1,712,000          100%
3 Houston Galleria       Houston, Texas       1,595,000           67%
4 Fox Valley Center      Aurora, Illinois     1,417,000          100%
5 The Streets at
  Southpoint (1)         Durham,
                         North Carolina       1,388,000          100%
6 Hawthorn Center        Vernon Hills,
                         Illinois             1,234,000          100%
7 MainPlace              Santa Ana,
                         California           1,116,000          100%
8 Galleria at
   Roseville (1)         Roseville,
                         California           1,100,000          100%
9 Citrus Park
  Town Center            Tampa, Florida       1,099,000          100%
10 Woodland Hills Mall   Tulsa, Oklahoma      1,093,000           50%
11 Wolfchase Galleria    Memphis, Tennessee   1,087,000          100%
12 Penn Square Mall      Oklahoma City,
                         Oklahoma             1,075,000          100%
13 Brandon TownCenter    Tampa, Florida         980,000          100%
14 Miami International
   Mall                  Miami, Florida         973,000           40%
15 Coral Square Mall     Coral Springs,
                         Florida                941,000           50%
16 Century City
   Shopping Center       Los Angeles,
                         California             781,000          100%
17 Water Tower Place     Chicago, Illinois      727,000           55%
18 Valencia Town Center  Valencia, California   675,000           25%
19 San Francisco
   Shopping Centre       San Francisco,
                         California             495,000           50%
20 Copley Place          Boston, Massachusetts  369,000           33%
21 The Plaza at
   Citrus Park (1, 2)    Tampa, Florida         350,000          100%
22 The Plaza at
   Brandon TownCenter    Tampa, Florida         243,000          100%
23 Service Merchandise
   Plaza                 Columbus, Ohio         193,000          100%
24 New York Square       Aurora, Illinois       116,000          100%
25 Westheimer Triangle   Houston, Texas         104,000           67%

1. Under construction

2. Phase one opened in fall 1999


       <GRAPHIC CONTAINS USA MAP INDICATING PROPERTY LOCATIONS>


<PAGE>


<TABLE>
                                            FINANCIAL HIGHLIGHTS

                    ($000's omitted, except per share, per square foot and ratio amounts)
<CAPTION>
                                                                 Years ended December 31
                                                      -----------------------------------------------
                                                            1999             1998             1997
                                                        -----------      -----------      -----------
<S>                                                    <C>              <C>              <C>
Total tenant sales (1)(2) . . . . . . . . . . . . .     $ 3,669,489      $ 2,534,264      $ 1,926,202
Mall tenant sales (1)(2)(3) . . . . . . . . . . . .     $ 2,705,382      $ 1,810,894      $ 1,435,921
Sales per square foot (1)(3)(4)(5). . . . . . . . .     $       418      $       377      $       361
Property revenues (6) . . . . . . . . . . . . . . .     $   328,915      $   268,761      $   205,027
Interest expense coverage ratio (7) . . . . . . . .           2.3:1            2.5:1            2.5:1
Income before extraordinary items (8) . . . . . . .     $    31,101      $    29,307      $    22,904
Diluted funds from operations (FFO) (9) . . . . . .     $   106,326      $    91,972      $    73,596
Diluted funds available for distribution
  (FAD) (9) . . . . . . . . . . . . . . . . . . . .     $   108,073      $    92,301      $    72,330
Weighted-average diluted shares and
  units outstanding . . . . . . . . . . . . . . . .      32,124,711       30,952,162       27,100,075
Weighted-average common and unit voting common
  shares outstanding  . . . . . . . . . . . . . . .      17,910,152       17,744,072       17,440,454
Weighted-average common shares and units outstanding     26,895,136       26,529,664       25,367,282
Common and unit voting common shares outstanding
  at end of period  . . . . . . . . . . . . . . . .      17,931,419       17,788,128       17,667,343
Common shares and units outstanding at
  end of period . . . . . . . . . . . . . . . . . .      26,951,538       26,713,034       26,439,629
Total debt at end of period . . . . . . . . . . . .    $  1,522,866      $ 1,059,209      $   954,447
Debt to total market capitalization (10). . . . . .           60.1%            50.8%            47.6%
Occupancy (11). . . . . . . . . . . . . . . . . . .           91.7%            93.3%            91.6%
Leased (11) . . . . . . . . . . . . . . . . . . . .           93.4%            94.1%            92.8%

The chart below shows the calculation of diluted funds
from operations for the years 1997 through 1999:

                                                            1999             1998             1997
                                                        -----------      -----------      -----------
Income before extraordinary items and
  minority interest . . . . . . . . . . . . . . . .     $    48,978      $    42,847      $    35,464
Plus depreciation and amortization. . . . . . . . .          48,417           39,512           31,435
Plus Company's share of depreciation and
  amortization from unconsolidated partnerships
  and Urban Retail Properties Co. . . . . . . . . .          12,553            9,177            6,502
Plus incentive unit dividends . . . . . . . . . . .             556              436              195
Less perpetual preferred unit distributions . . . .          (4,178)          --                --
Diluted funds from operations . . . . . . . . . . .     $   106,326      $    91,972      $    73,596



<PAGE>


The chart below shows the calculation of diluted funds
available for distribution for the years 1997 through 1999:
                                                            1999             1998             1997
                                                        -----------      -----------      -----------
Diluted funds from operations . . . . . . . . . . .     $   106,326      $    91,972      $    73,596
Plus non-cash effect of Oakbrook Center straight-
  line ground rent and related interest . . . . . .           3,458            3,293            3,332
Less adjustment to reflect actual cash
 received from Urban Retail Properties Co.. . . . .            (995)            (639)            (105)
Plus write-off of assets (12) . . . . . . . . . . .           1,921              186              581
Less straight-line rent adjustments (13). . . . . .          (2,104)          (1,720)          (1,401)
Less other gains (12) . . . . . . . . . . . . . . .            (533)            (791)          (3,673)
Diluted funds available for distribution. . . . . .      $  108,073      $    92,301      $    72,330

<FN>
(1)  Only for those tenants who report sales.

(2)  1998 excludes Woodland Hills Mall, which was acquired on December 21, 1998.

(3)  Excludes anchors and movie theaters.

(4)  Represents twelve-month sales per square foot as defined by the International Council of Shopping Centers.

(5)  1999 excludes Citrus Park Town Center, which opened on March 3, 1999 and includes the 1999 property
acquisitions as if they had been in the portfolio the entire year. 1998 excludes Woodland Hills Mall, which was
acquired on December 21, 1998 and Wolfchase Galleria, which opened on February 26, 1997. 1997 excludes Wolfchase
Galleria and includes the 1997 property acquisitions as if they had been in the portfolio the entire year.

(6)  Represents the Company's consolidated revenues and its share of revenues from unconsolidated partnerships.

(7)  Represents the ratio of diluted funds available for distribution before interest expense (including the
Company's share of unconsolidated partnerships) to interest expense (excluding deferred interest related to the
Oakbrook Center ground lease).

(8)  Represents income before extraordinary items and dividends on preferred stock.

(9)  FFO and FAD should not be considered as an alternative to net income or any other GAAP measurement of
performance as an indicator of operating performance or as an alternative to cash flows from operating, investing
or financing activities as a measure of liquidity.

(10) Based upon a closing price of $27-1/8, $32-3/4 and $34-7/8 per share as of December 31, 1999, 1998 and 1997,
respectively.

(11) Occupancy and leased percentage of the regional malls as of December 31 of each year.  1998 excludes
Woodland Hills Mall, which was acquired on December 21, 1998.

(12) Includes the Company's share of unconsolidated partnerships and of Urban Retail Properties Co.

(13) Includes the Company's share of unconsolidated partnerships.
</TABLE>


<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere in
this Annual Report. Historical and percentage relationships set forth in
the Consolidated Financial Statements and Notes should not be taken as
indicative of future operations of the Company.

REVIEW OF OPERATIONS

     Urban Shopping Centers, Inc. is in the business of owning, acquiring,
managing, leasing, developing and redeveloping retail shopping centers.
Strong performance of the Company's portfolio produced a 17.1% increase in
1999 diluted funds available for distribution to $108.1 million from 1998
diluted funds available for distribution of $92.3 million. The 1998 diluted
funds available for distribution increased 27.6% from 1997 diluted funds
available for distribution of $72.3 million. Presented below is a
discussion of sales, occupancy and rents at the properties.

     Except as noted, this information is presented for all regional malls
on a combined basis.

<GRAPHIC - LINE CHART INDICATING TOTAL TENANT SALES AND MALL TENANT SALES
FOR '95 THROUGH '99>

SALES

     Management closely follows the level of retail sales at its
properties. Such sales affect profitability because they determine the
amount the tenant can afford to pay the landlord for total charges. Some of
the specific sales figures the Company follows are discussed below and
shown in the graph above.

TOTAL TENANT SALES AND MALL TENANT SALES

     Management generally considers increasing total tenant sales to be an
indication that a property is attracting more customers and providing a
greater benefit to its tenants. Mall tenant sales indicate the amount of
sales generated by the mall tenants. During 1999, mall tenants contributed
approximately 91% of the Company's total regional mall shopping center
revenues. The above graph illustrates total tenant sales and mall tenant
sales at the Company's regional malls for 1995 through 1999.

     Excluding Citrus Park Town Center, which opened on March 3, 1999 and
including the 1998 and 1999 property acquisitions as if they had been in
the portfolio for both years, aggregate annual sales volume at the regional
malls for those mall shops and anchors that report sales has increased 4.5%
to $3.55 billion in 1999 from $3.40 billion in 1998. On the same basis,
mall tenant sales (excluding anchors and movie theaters) increased 6.0% for
the same period.

SALES PER SQUARE FOOT

     Sales per square foot is reported based upon the International Council
of Shopping Centers definition and represents total non-anchor reported
sales divided by the total square feet occupied by the tenants reporting
those sales.  Excluding Citrus Park Town Center, which opened on March 3,
1999 and including the 1998 and 1999 property acquisitions as if they had
been in the portfolio for both years, sales per square foot at the regional
malls increased 5.0% to $418 in 1999 as compared to $398 in 1998. We
believe our sales per square foot continue to be among the highest in the
industry. Our sales level reflects the quality and viability of our
centers.



<PAGE>


TENANT OCCUPANCY

     Tenant occupancy is one measure which reflects the demand for space at
our properties. The chart below shows the mall gross leasable area ("GLA")
occupancy rate at the regional malls for 1995 through 1999. Including all
regional malls, occupancy was 91.7% at December 31, 1999 compared to 93.1%
at December 31, 1998. On the same basis, the mall GLA was 93.4% leased at
December 31, 1999 compared to 93.9% at December 31, 1998. Our occupancy and
leased percentages have been very consistent over the last five years.

<GRAPHIC - LINE CHART INDICATING OCCUPANCY AND LEASED RATES AT DECEMBER 31,
1995 THROUGH DECEMBER 31, 1999>

IN PLACE RENTS

     The average in place rents for the Company's regional malls increased
5.5% to $33.08 per square foot at December 31, 1999 from $31.37 per square
foot at December 31, 1998. 1998 excludes properties acquired in 1999 and
Woodland Hills Mall, which was acquired on December 21, 1998. The
December 31, 1998 average in place rents increased 2.8% from $30.52 per
square foot at December 31, 1997.

     OCCUPANCY COSTS

     Occupancy costs generally consist of (i) minimum rent (the contractual
amount a tenant must pay), (ii) percentage rent (the percentage of sales
revenue a tenant must pay as additional rent) and (iii) expense recoveries
(the amount a tenant must pay to reimburse the landlord for the costs of
operating the mall), including real estate taxes. Typically, when occupancy
costs for any specific tenant exceed a certain percentage of such tenant's
annual sales, the tenant may not be profitable. Generally, tenants in more
productive regional malls are able to afford higher occupancy costs. The
following table sets forth the Company's regional mall occupancy costs (as
a percentage of sales) for the last five years. Despite the Company's
leasing efforts and increased emphasis on expense recoveries, because of
strong sales growth, occupancy costs decreased in 1999.

Years ended
December 31         1999       1998      1997
                     (1)        (2)       (3)      1996       1995
                   ------     ------    ------    ------     ------
Mall tenant
 sales (4). . .    $2,164     $1,811    $1,253    $  945     $  915
Percent of sales:
 Minimum rents.      8.3%       8.5%      8.6%      8.3%       8.2%
Percentage rents       4%        .5%       .4%       .4%        .4%
Expense re-
 coveries (5) .      3.3%       3.4%      3.4%      3.0%       2.8%
In-line tenant
 occupancy
 costs (6). . .     12.0%      12.4%     12.4%     11.7%      11.4%

(1)  1999 excludes Century City Shopping Center and Houston Galleria, which
were acquired on June 10 and November 15, 1999, respectively.

(2)  1998 excludes Woodland Hills Mall, which was acquired on December 21,
1998.

(3)  1997 excludes San Francisco Shopping Centre, Copley Place, Fox Valley
Center and Hawthorn Center, all acquired in 1997.

(4)  In millions. Excludes sales from anchor tenants and movie theaters.

(5)  Represents principally real estate tax and common area maintenance
charges.

(6)  Total mall tenant occupancy costs divided by total mall tenant sales
(excluding anchor tenants and movie theaters).



<PAGE>


RESULTS OF OPERATIONS

1999 COMPARED TO 1998

     Shopping center revenues increased $43.2 million to $240.8 million in
1999 from $197.6 million in 1998. Shopping center revenues increased as a
result of (i) the opening of Citrus Park Town Center on March 3, 1999 and
(ii) the acquisition of Century City Shopping Center on June 10, 1999.
Minimum rents, percentage rents and recoveries from tenants increased as a
result of increases in average occupancy, rents and sales in 1999 as
compared to 1998.

     Shopping center expenses, including depreciation and amortization,
increased $20.9 million to $134.9 million in 1999 from $114.0 million in
1998. This increase was primarily attributable to (i) the opening of Citrus
Park Town Center on March 3, 1999 and (ii) the acquisition of Century City
Shopping Center on June 10, 1999.

     Mortgage and other interest expense increased $16.4 million to $60.2
million in 1999 from $43.8 million in 1998.  This increase was primarily
attributable to (i) fundings on the loans at Citrus Park Town Center, (ii)
the acquisition of Century City Shopping Center on June 10, 1999, (iii) the
new mortgage at Penn Square Mall and (iv) the refinancing of the MainPlace
indebtedness on September 29, 1999.

     General and administrative expense increased $1.4 million to $6.2
million in 1999 from $4.8 million in 1998. This increase was primarily the
result of additional compensation expense related to the Company's 1996
Incentive Unit Program and increased salaries and related benefits.

     Write-off of assets represents the write-off of unamortized tenant
allowances and lease commissions related to tenant move-outs.

     Income from unconsolidated partnerships increased $2.1 million to
$12.9 million in 1999 from $10.8 million in 1998. This increase was
primarily attributable to (i) the Company's acquisition of a 50% equity
interest in Woodland Hills Mall on December 21, 1998, (ii) an increase at
Water Tower Place due to a decrease in mortgage interest as a result of a
decrease in the floating interest rate and (iii) an increase at San
Francisco Shopping Centre due to increased minimum rents as a result of the
re-merchandising of tenants. These increases were partially offset by a
decrease at Miami International Mall due to the gains on sale of land in
1998.

     Income from the Management Company increased $0.9 million to $1.2
million in 1999 from $0.3 million in 1998.  This increase was primarily
attributable to (i) an increase in management fees and lease commissions as
a result of new management contracts in 1999 and (ii) a decrease in
mortgage interest as a result of the restructuring of indebtedness. These
increases were partially offset by (i) an increase in compensation expense
as a result of the 1996 Incentive Unit Program and increased salaries and
related benefits and (ii) an increase in income tax expense as a result of
increased operating income in 1999.

     Other gains of $0.6 million and $0.5 million in 1999 and 1998,
respectively, represent the gains on sale of land at Wolfchase Galleria.

     The extraordinary items, net of taxes and minority interest, of $1.6
million in 1999 resulted from the prepayment penalty and the write-off of
unamortized upfront expenses related to the repayment of indebtedness at
the Management Company and the write-off of unamortized upfront expenses
related to the repayment of the construction loan at Citrus Park Town
Center.



<PAGE>


1998 COMPARED TO 1997

     Shopping center revenues increased $45.2 million to $197.6 million in
1998 from $152.4 million in 1997. Minimum rents, percentage rents and
recoveries from tenants increased as a result of (i) the acquisitions of
Fox Valley Center and Hawthorn Center on November 14, 1997 and (ii)
Wolfchase Galleria having been open for a full year in 1998 as compared to
ten months in 1997. Minimum rents, percentage rents and recoveries from
tenants increased as a result of increases in average occupancy, rents,
sales and real estate taxes in 1998 as compared to 1997. Other revenues
increased at MainPlace and Old Orchard Center primarily as a result of
lease termination fees received in 1998.

     Shopping center expenses, including depreciation and amortization,
increased $28.0 million to $114.0 million in 1998 from $86.0 million in
1997. This increase was primarily attributable to (i) the acquisitions of
Fox Valley Center and Hawthorn Center on November 14, 1997, (ii) Wolfchase
Galleria having been open for a full year in 1998 as compared to ten months
in 1997, (iii) increases at Old Orchard Center and Oakbrook Center as a
result of increased real estate taxes and (iv) an increase in management
fees as a result of the January 1, 1998 termination of management contracts
with the Operating Partnership for certain of the Company's consolidated
properties, which fees were eliminated in consolidation. New management
contracts were entered into with the Management Company, which is not
consolidated.

     Mortgage and other interest expense increased $9.9 million to $43.8
million in 1998 from $33.9 million in 1997. This increase was primarily
attributable to (i) the acquisitions of Fox Valley Center and Hawthorn
Center on November 14, 1997, (ii) Wolfchase Galleria having been open for a
full year in 1998 as compared to ten months in 1997 and (iii) an increase
at MainPlace as a result of the new swap agreement on May 1, 1998. These
increases were partially offset by a decrease at Old Orchard Center as a
result of the refinancing of its indebtedness on December 11, 1997.

     General and administrative expense increased $1.5 million to $4.8
million in 1998 from $3.3 million in 1997. This increase was primarily the
result of additional compensation expense related to the Company's 1996
Incentive Unit Program and reimbursement to the Management Company for
certain employees.

     Income from unconsolidated partnerships increased $4.6 million to
$10.8 million in 1998 from $6.2 million in 1997.  This increase was
primarily attributable to (i) the investment in a partnership resulting in
a 50% preferred ownership interest in San Francisco Shopping Centre on
June 17, 1997, (ii) the purchase of a one-third equity interest in Copley
Place on August 1, 1997, (iii) the gains on sale of land at Miami
International Mall on June 18 and November 2, 1998 and (iv) an increase in
minimum rents, recoveries from tenants and other shopping center revenues
at Miami International Mall.

     Income from the Management Company increased $0.7 million to $0.3
million in 1998 from a $0.4 million loss in 1997. This increase was
primarily attributable to (i) an increase in management fees as a result of
the management contracts for certain of the Company's consolidated
properties being terminated with the Operating Partnership on January 1,
1998 and new management contracts being entered into with the Management
Company, (ii) a decrease in mortgage interest as a result of the
restructuring of indebtedness, (iii) a fee received in December 1998 for
acquisition and development feasibility consulting services performed and
(iv) an increase in time recoveries as a result of the development of
Citrus Park Town Center. These increases were partially offset by an
increase in compensation expense as a result of the 1996 Incentive Unit
Program and an increase in depreciation expense as a result of the purchase
of computer hardware and software during 1997.

     Other gains of $0.5 million in 1998 represent the gain on sale of land
at Wolfchase Galleria.



<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

FINANCIAL CONDITION

     Net cash flows from operating activities increased $25.0 million in
1999 from 1998. Net cash flows from operating activities increased $11.1
million in 1998 from 1997.  These increases were primarily attributable to
increases in rental operations discussed above.

     Net cash flows used in investing activities increased $227.4 million
in 1999 from 1998. This increase was primarily attributable to (i) the
investment in a partnership resulting in a two-thirds equity interest in
the retail component of Houston Galleria on November 15, 1999, (ii) the
acquisition of Century City Shopping Center on June 10, 1999, (iii) the
acquisition of land in Durham, North Carolina in June 1999 for the
development of The Streets at Southpoint, (iv) an increase in additions to
investment properties at Citrus Park Town Center as a result of the
consolidation of this entity beginning in November 1998 and (v) the
continuing construction costs incurred at Galleria at Roseville in 1999.
These increases were partially offset by the acquisition of a 50% equity
interest in Woodland Hills Mall on December 21, 1998. Net cash flows used
in investing activities decreased $97.6 million in 1998 from 1997. This
decrease was primarily attributable to (i) the acquisitions of Fox Valley
Center and Hawthorn Center in November 1997, (ii) the investment in a
partnership resulting in a 50% preferred interest in San Francisco Shopping
Centre in June 1997, (iii) the acquisition of land in Roseville, California
in June 1997 and (iv) an increase in cash distributions from San Francisco
Shopping Centre, Copley Place and Coral Square Mall in 1998. These
decreases were partially offset by (i) the acquisition of a 50% equity
interest in Woodland Hills Mall on December 21, 1998, (ii) an increase in
cash contributions to Citrus Park Town Center during 1998 and (iii)
proceeds from the sale of the Burdines store at Brandon TownCenter in
September 1997.

     Net cash flows from financing activities increased $207.1 million in
1999 from 1998. This increase was primarily attributable to an increase in
the proceeds from (i) the issuance of a $100.0 million permanent loan at
Citrus Park Town Center in June 1999, (ii) the issuance of $40.0 million
and $85.0 million in perpetual preferred partnership units of the Operating
Partnership in May and October 1999, respectively, (iii) the issuance of
$20.0 million of indebtedness for the construction of The Plaza at Citrus
Park in June 1999 and (iv) the issuance of an additional $30.0 million of
indebtedness at MainPlace in September 1999; partially offset by the
repayment of the construction loan at Citrus Park Town Center in June 1999.
Net cash flows from financing activities decreased $105.6 million in 1998
from 1997. This decrease was primarily attributable to a decrease in
proceeds from the issuance of preferred stock and an increase in cash
distributions to limited partners of the Operating Partnership and
dividends paid to shareholders. These decreases were partially offset by
additional fundings from the Company's lines of credit.

     At December 31, 1999, the Company and its consolidated ventures had
cash and short-term investments of $4.1 million.

     Beginning with the dividend declared and paid in the first quarter of
2000, the Company increased its quarterly dividend to $0.59 per share, up
5.4% from $0.56 per share previously.

CAPITALIZATION

     At December 31, 1999, the Company's debt (including the Company's
share of debt of unconsolidated partnerships and the Management Company)
totaled $1.52 billion of which $1.46 billion was fixed rate debt and $65.3
million was floating rate debt. Of the total fixed rate debt, $64.0 million
was fixed through short-term interest rate swap agreements, all of which
matured by March 15, 2000.



<PAGE>


     On December 21, 1999, the Company closed a $102.0 million construction
loan facility for Galleria at Roseville. This facility has a two-year term
with three one-year extension options. This loan will initially bear
interest on a floating basis at LIBOR + 1.65%. As of December 31, 1999,
there was no outstanding balance on this loan.

     On November 15, 1999, the Company, through a partnership in which it
owns a two-thirds interest, acquired the retail component of Houston
Galleria. A portion of the acquisition was financed by a $225.0 million
non-recourse loan which bears interest at a fixed rate of 7.93% and matures
on December 1, 2005.

     On September 29, 1999, the Company refinanced the MainPlace $80.0
million of indebtedness with a new $110.0 million loan. Of the total $110.0
million, $80.0 million bears interest at a fixed rate of 7.00% through an
interest rate swap agreement and $30.0 million bears interest at LIBOR +
1.30% (7.78% at December 31, 1999). This loan matures on September 29,
2000; however, it may be extended for two one-year periods.

     On June 29, 1999, the Company signed an agreement with a lender for
$100.0 million of indebtedness secured by Citrus Park Town Center. This
loan bears interest at a fixed rate of 6.89% and matures on June 30, 2009.
In connection with the funding of this new loan, the Company repaid the
$72.6 million then outstanding balance on the construction loan at Citrus
Park Town Center. In addition, during the second quarter of 1999, the
Company terminated its position in an $80.0 million, ten-year treasury lock
which hedged the Citrus Park Town Center loan commitment for a net gain of
$3.2 million, which will be amortized as an offset to interest expense over
ten years.

     Also on June 29, 1999, the Company secured a loan with a lender with a
commitment of $30.0 million, to be used for the construction of The Plaza
at Citrus Park. As of December 31, 1999, $20.0 million was outstanding on
this loan. The loan matures on June 29, 2000; however, it may be extended
for two six-month periods. This loan bears interest on a floating basis at
LIBOR + 1.40%; however, on November 26, 1999, the Company entered into an
interest rate swap agreement for this indebtedness thereby fixing the
all-in rate at 7.26% through February 26, 2000.

     On June 10, 1999, the Company acquired Century City Shopping Center. A
portion of the acquisition was financed by a nine-year, $160.0 million
non-recourse loan. This loan bears interest at a blended fixed rate of
7.58% and matures on July 1, 2008.

     On February 25, 1999, the Company secured $75.0 million in financing
for Penn Square Mall. This loan bears interest at a fixed rate of 7.03% and
matures on March 1, 2009.

     Also on February 25, 1999, the Management Company obtained a $20.0
million bank loan. This loan bears interest on a floating basis at LIBOR +
1.20% and matures on February 25, 2004. On August 25, 1999, the Company
entered into an interest rate swap agreement for the Management Company
indebtedness thereby fixing the all-in rate at 7.01% through February 25,
2000. On March 1, 1999, Penn Square Mall and the Management Company prepaid
their indebtedness of $31.0 million and $20.0 million, respectively. The
indebtedness had a scheduled maturity date of August 1, 2001. The
Management Company incurred a penalty of approximately $2.0 million due to
this prepayment of indebtedness.

     On January 11, 1999, Water Tower Joint Venture completed a one year
extension of its $170.0 million of indebtedness. Subsequent to year-end
1999, this indebtedness was further extended to February 1, 2001.

     On January 14, 1999, S. F. Shopping Centre Associates, L.P. extended
the loan maturity on its $53.5 million of indebtedness to July 1, 2003.
Subsequent to year-end 1999, this indebtedness was increased to $65.8
million and the maturity was extended to July 1, 2004; however, it may be
further extended for one additional year.



<PAGE>


     On November 6, 1996, the Company entered into an agreement with a
lender for a one-year $5.0 million unsecured revolving line of credit,
which on January 30, 1998 was amended to increase the line to $7.5 million
and extend the maturity to January 29, 1999. On January 29, 1999, this line
was further amended to increase the line to $10.0 million, extend the
maturity to January 28, 2000 and change the interest rate to the Reference
Rate - 1.5625% (6.93% at December 31, 1999).  Subsequent to year-end 1999,
this line was further amended to increase the line to $13.0 million and
extend the maturity to January 26, 2001. As of December 31, 1999, $8.3
million was outstanding.

     As of December 31, 1999, $62.0 million was outstanding on the
Company's $107.5 million secured, revolving line of credit. During the
fourth quarter of 1999, the Company entered into an interest rate swap
agreement on $25.0 million of its floating rate indebtedness thereby fixing
the all-in rate at 6.79% through March 15, 2000.

     Although there can be no assurances, the Company believes that
operating cash flows will be sufficient to service all Company debt and
anticipates repayment or refinancing when such amounts are due in the
ordinary course of its business. The Company's interest expense coverage
ratio (including the Company's share of unconsolidated partnerships
interest expense and excluding deferred interest related to the Oakbrook
Center ground lease) was 2.3:1 at December 31, 1999 compared to 2.5:1 at
December 31, 1998. At December 31, 1999, the Company's debt to total market
capitalization (which includes the market value of issued and outstanding
shares of capital stock of the Company and of partnership interests in the
Operating Partnership not held by the Company, plus Company debt) was
approximately 60% as illustrated by the table at the end of Management's
Discussion and Analysis of Financial Condition and Results of Operations.

     On October 1, 1999, the Company issued $85.0 million of Series D
Cumulative Redeemable Preferred Partnership Units (the "Series D Preferred
Units") in the Operating Partnership at $25.00 per unit. The Series D
Preferred Units are entitled to fully cumulative distributions at a rate of
9.45% per annum. The Series D Preferred Units, which may be called by the
Company at par on or after October 1, 2004, have no stated maturity or
mandatory redemption and are not convertible into any other securities of
the Operating Partnership. The holders of the Series D Preferred Units may
exchange them at any time on or after October 1, 2009 for shares of a new
series of preferred stock of the Company with similar terms.

     On May 27, 1999, the Company issued $40.0 million of Series C
Cumulative Redeemable Preferred Partnership Units (the "Series C Preferred
Units") in the Operating Partnership at $50.00 per unit. The Series C
Preferred Units are entitled to fully cumulative distributions at a rate of
9.125% per annum. The Series C Preferred Units, which may be called by the
Company at par on or after May 27, 2004, have no stated maturity or
mandatory redemption and are not convertible into any other securities of
the Operating Partnership. The holders of the Series C Preferred Units may
exchange them at any time on or after May 27, 2009 for shares of a new
series of preferred stock of the Company with similar terms.

     The Company believes that its cash generated from property operations
will provide the necessary funds on a short-term and long-term basis for
its operating expenses, interest expense on outstanding indebtedness and
recurring capital expenditures and all dividends to the shareholders
necessary to satisfy the real estate investment trust ("REIT")
requirements.  Sources of capital for future acquisitions, development and
non-recurring capital expenditures, such as major building renovations and


<PAGE>


expansions, as well as for scheduled principal payments, including balloon
payments, on the outstanding indebtedness are expected to be obtained from
the following sources: (i) excess funds available for distribution, (ii)
working capital reserves, (iii) additional Company or property financing,
(iv) proceeds from the sale of assets, including outparcels and (v)
additional equity raised in the public or private markets (including the
issuance of additional common stock, unit voting common stock, convertible
preferred stock, convertible preferred units, perpetual preferred units
and/or common units). Accordingly, the Company expects that it may incur
additional indebtedness. In light of current economic conditions, relative
costs of debt and equity capital, market values of properties, growth and
acquisition opportunities and other factors, the Company may consider a
change in its ratio of debt to total market capitalization accordingly.

CAPITAL INVESTMENTS

     The Company's newest super-regional mall development, Citrus Park Town
Center in Tampa, Florida, opened 100% leased on March 3, 1999. The anchor
tenants are Burdines, Dillard's, JCPenney and Sears. Citrus Park Town
Center also contains more than 120 specialty shops and restaurants and an
approximately 90,000 square foot state-of-the-art movie theatre. In
addition, the first phase of The Plaza at Citrus Park, an approximately
350,000 square foot community center opposite the regional mall, opened in
fall of 1999. The remaining phases of the center are scheduled to open in
summer and fall of 2000.

     The Company's latest development project is the 1.1 million square
foot Galleria at Roseville near Sacramento, California.  Galleria at
Roseville has four committed anchors with JCPenney, Macy's, Nordstrom and
Sears and remains on schedule to open on August 25, 2000.

     The Company's next scheduled development project is The Streets at
Southpoint in Durham, North Carolina. The official groundbreaking for the
mall took place in September 1999. The two-level 1.4 million square foot
regional mall will feature Belk, Hecht's, JCPenney, Nordstrom and Sears as
anchors along with an entertainment component featuring an IMAX theater.
The Streets at Southpoint is currently scheduled to open in early March
2002.

     The Company is also beginning an expansion project at Old Orchard
Center in Skokie, Illinois with plans for the addition of a six-screen,
state-of-the-art theater with stadium seating and two new restaurants. The
new theatre will increase the total number of screens at the center to
thirteen. In conjunction with the expansion, a new 400 car, one-level
parking deck will also be added. Work on the expansion began in February
2000 and is expected to be completed by April 2001.

     At December 31, 1999, amounts spent on construction in progress and
land for development related to The Plaza at Citrus Park, Galleria at
Roseville, The Streets at Southpoint and our prorata share of Houston
Galleria totaled $94.2 million.

     At December 31, 1999, there are approximately twenty-three, nine, six
and twenty-three acres of outparcel land, respectively, at Brandon
TownCenter, Citrus Park Town Center, Galleria at Roseville and Wolfchase
Galleria available for future sale or development.



<PAGE>


ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("Statement
133") was issued by the Financial Accounting Standards Board ("FASB") in
June 1998. SFAS No. 137 "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133, an
Amendment of FASB Statement No. 133" ("Statement 137"), was issued in June
1999. Statement 137 defers the effective date of Statement 133 for one
year. Statement 133, as amended, is now effective for all fiscal quarters
of all fiscal years beginning after June 15, 2000. The effective date of
this statement for the Company is January 1, 2001. Statement 133
standardizes the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts. Under the standard,
entities will be required to carry all derivative instruments in the
balance sheet at fair value. The accounting for changes in fair value
(i.e., gains or losses) of a derivative instrument depends on whether it
has been designated and qualifies as part of a hedging relationship and, if
so, on the reason for holding it. The Company uses interest rate swap
agreements and treasury locks as part of its interest rate risk management
strategy. These derivatives are used to hedge cash flow exposure and under
Statement 133 the effective portion of the gain or loss on the derivative
instrument will be reported initially as a component of other comprehensive
income and subsequently reclassified into earnings when the hedged
transaction affects earnings. Any amounts excluded from the assessment of
hedge effectiveness as well as the ineffective portion of the gain or loss
will be reported in earnings immediately.

     The Company does not anticipate early adoption of Statement 133, as
amended; however, it is estimated that adoption of Statement 133, as
amended, will result in the Company recording a derivative instrument asset
of $8.1 million and transition adjustment income of $8.1 million in other
comprehensive income at January 1, 2001 in its consolidated financial
statements.

     The Company expects that the adoption of Statement 133, as amended,
will increase the volatility of reported earnings and other comprehensive
income. In general, the amount of volatility will vary with the level of
derivative activities during any period.

YEAR 2000

     The Company has not experienced any material disruption in its
operations or properties in connection with the century change and does not
expect any such disruptions in the future.  The Company has not needed to
implement contingency plans.

     The Company's historical costs for remediation have not been material
and the Company does not anticipate that its future costs of remediation
will be material. Although the cost of replacing the Company's information
technology mission-critical systems was substantial, those replacements
were made to improve operational efficiency and were not accelerated due to
the year 2000 problem. The Company has not delayed any material projects as
a result of the year 2000 problem. The foregoing discussion is equally
applicable to the Management Company, except that at third party-owned
properties managed by the Management Company, remediation costs are the
obligation of and at the discretion of the property owner.

FINANCIAL MARKET RISK DISCLOSURE

     The Company is exposed to interest rate changes primarily as a result
of its indebtedness. The Company's interest rate risk management objective
is to limit the impact of interest rate changes on earnings and cash flows
and to lower its overall borrowing costs. To achieve its objective, the
Company may enter into derivative financial instruments such as interest
rate swaps, caps and treasury locks in order to mitigate its interest rate
risk on a related financial instrument. Because of the Company's objectives


<PAGE>


discussed above, the Company limits its exposure to increases in interest
rates; however, the Company also does not benefit fully from decreases in
interest rates. Furthermore, as interest rates increase and decrease, the
implicit value of the derivative instrument rises and falls, respectively.
This rise and fall in the implicit value of an interest rate swap agreement
does not impact the fixed payment agreed to under the swap agreement. The
Company does not enter into derivative or interest rate transactions for
speculative purposes.

     The Company manages its exposure to changes in floating interest rates
by limiting exposure to floating rate changes in any one year. The Company
manages liquidity risk by staggering the maturities of its indebtedness.
The Company increases its loan prepayment flexibility through the use of
variable rate debt and derivatives versus fixed rate debt. The Company
manages its exposure to counterparties by diversifying its exposure to
counterparties and entering into swap agreements and treasury locks only
with parties which have a specified credit rating.

     The Company's interest rate risk is monitored using a variety of
techniques. Fixed rate debt matures and bears average interest rates as
follows: 2000 - $26.7 million at 7.40%; 2003 - $18.4 million at 6.91%; and
thereafter - $998.3 million at 7.24%. Variable rate debt matures and bears
average interest rates (based on the December 31, 1999 LIBOR rate) as
follows:  2000 - $293.8 million at 7.63%; 2003 - $26.8 million at 7.11%;
and thereafter - $159.0 million at 6.83%.

     The Company utilizes principally variable-to-fixed interest rate swaps
to mitigate its interest rate risk on the above variable rate debt.
Notional amounts of outstanding interest rate swaps have the following
maturities and provide for the following average fixed payment rates to
hedge the indicated underlying variable rates: 2000 - $97.5 million at
7.03% and 7.63%; 2002 - $50.0 million at 7.34% and 7.61%; 2003 - $10.0
million at 7.41% and 7.61%; and thereafter - $256.8 million at 6.51% and
7.11%.

     The above average balances include the Company's share of
unconsolidated entities debt and swaps. The fair value of fixed and
variable rate debt at December 31, 1999 is estimated at $1.45 billion. The
fair value of interest rate swap agreements was $10.5 million at
December 31, 1999.

     As the above information incorporates only those exposures that exist
as of December 31, 1999, it does not consider those exposures or positions
which could arise after that date. Moreover, because firm commitments are
not presented, the information represented therein has limited predictive
value. As a result, the Company's ultimate realized gain or loss with
respect to interest rate fluctuations will depend on the exposures that
arise during the period, the Company's hedging strategies at the time and
interest rates.

FORWARD-LOOKING STATEMENTS

     Certain statements set forth herein contain forward-looking
statements, including, without limitation, statements relating to the
timing and anticipated capital expenditures of the Company's development
programs and acquisitions. Although the Company believes that the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, the actual results may differ materially from those
set forth in the forward-looking statements.  Certain factors that might
cause such differences include general economic conditions, local real
estate conditions, construction delays due to the unavailability of
construction materials, weather conditions or other delays beyond the
control of the Company. Consequently, such forward-looking statements
should be regarded solely as reflections of the Company's current operating
and development and acquisition plans and estimates. These plans and
estimates are subject to revision from time to time as additional
information becomes available, and actual results may differ from those
indicated in the referenced statements.


<PAGE>


<TABLE>
                                     DEBT TO TOTAL MARKET CAPITALIZATION
                            ($000's omitted, except share and per share amounts)
<CAPTION>
                                                                 100%                            Pro Rata
                                                              Balance of                         Share of
                                               Annual          Mortgage                          Mortgage
                              Maturity        Interest          Notes           Ownership         Notes
                                Date            Rate           Payable          Interest         Payable
                             ----------      ----------       ----------       ----------       ----------
<S>                         <C>             <C>              <C>              <C>              <C>
Consolidated entities:          (1)
  Operating Partnership       Apr. 2000          (1)           $  62,000           100.0%       $   62,000
  Operating Partnership
    (2)                       June 2000          (2)              20,000           100.0%           20,000
                                 (3)
  MainPlace                  Sept. 2000          (3)             110,000           100.0%          110,000
                                 (4)
  Operating Partnership       Jan. 2001          (4)              8,300            100.0%            8,300
  Oakbrook Center             Oct. 2004           6.14%          140,000           100.0%          140,000
  Fox Valley Center           Nov. 2006           6.75%           85,528           100.0%           85,528
  Wolfchase Galleria          June 2007           7.80%           78,223           100.0%           78,223
  Century City                                   (5)
    Shopping Center           June 2008           7.58%          160,000           100.0%          160,000
  Hawthorn Center             Nov. 2008           6.75%           77,864           100.0%           77,864
  Penn Square Mall            Mar. 2009           7.03%           74,511           100.0%           74,511
  Citrus Park Town
    Center (6)                June 2009           6.89%           99,576           100.0%           99,576
  Old Orchard Center          Dec. 2009           6.98%          164,450           100.0%          164,450
                                                              ----------                        ----------
                                                               1,080,452                         1,080,452
Unconsolidated entities:
(7)
  Coral Square Mall           Dec. 2000           7.40%           53,300            50.0%           26,650
  Water Tower Place          Feb. 2001           (8)             170,000            55.0%           93,500
  Miami International            (8)
    Mall                      Dec. 2003           6.91%           45,920            40.0%           18,368
  Management Company          Feb. 2004          (9)              20,000            95.0%           19,000
  San Francisco
    Shopping Centre (10)      July 2004           6.90%           53,531            50.0%           26,766
                                (10)
  Houston Galleria            Dec. 2005           7.93%          225,000            66.7%          150,000
  Copley Place                Aug. 2007           7.44%          190,536            33.3%           63,512
  Woodland Hills Mall         Jan. 2009           7.00%           89,236            50.0%           44,618
                                                              ----------                        ----------
                                                                 847,523                           442,414
                                                              ----------                        ----------
Company debt                                                                                    $1,522,866
                                                                                                ==========


<PAGE>


                                                                 100%                            Pro Rata
                                                              Balance of                         Share of
                                               Annual          Mortgage                          Mortgage
                              Maturity        Interest          Notes           Ownership         Notes
                                Date            Rate           Payable          Interest         Payable
                             ----------      ----------       ----------       ----------       ----------
Convertible preferred
  units (convertible
  into 1,018,182
  common units) (11)                                                                            $   28,000
Convertible preferred
  stock (convertible
  into 3,772,915 shares
  of common stock) (12)                                                                         $  125,000
Perpetual preferred
  units (13)                                                                                    $  125,000
Market value of equity
  interests as of
  December 31, 1999,
  based upon 26,951,538
  common shares/units
  at $27-1/8% per share                                                                         $  731,060
Total market capitalization                                                                     $2,531,926
                                                                                                ==========
Company debt to total
  market capitalization                                                                                60%
                                                                                                ==========

<FN>

     (1)   This line of credit, subject to lenders' approval, may be extended for an additional one or two-year
period and is currently subject to a floating rate of LIBOR + 0.85% (7.35% at December 31, 1999).

     (2)   This indebtedness represents outstanding borrowings under a loan for $30,000, which will be used to
fund the construction of The Plaza at Citrus Park. This loan may be extended for two six-month periods. The loan
bears interest on a floating basis at LIBOR + 1.40%; however, at December 31, 1999, it was fixed at a rate of
7.26% through an interest rate swap agreement which matured on February 26, 2000.

     (3)   On September 29, 1999, the Company refinanced this indebtedness. The new indebtedness matures on
September 29, 2000; however, it may be extended for two one-year periods. Of the $110,000, $80,000 bears interest
at a fixed rate of 7.00% through an interest rate swap agreement and $30,000 bears interest at LIBOR + 1.30%
(7.78% at December 31, 1999).

     (4)   This line of credit bears interest at the Reference Rate -1.56% (6.93% at December 31, 1999).
Subsequent to year-end 1999, this line of credit was increased to $13,000 and the maturity extended to January 26,
2001.

     (5)   As of August 5, 1999, the aggregate $160,000 was fixed at a blended interest rate of 7.58%.



<PAGE>


     (6)   The Company terminated its position in an $80,000 treasury lock for a net gain of $3,200, which will
be amortized as an offset to interest expense over ten years.

     (7)   Excludes Valencia Town Center as the Company is a limited partner and is currently not entitled to any
cash distributions until the outside partner has received a return on and of its contributions to the partnership.

     (8)   Subsequent to year-end 1999, the Company extended this loan maturity to February 1, 2001. Of the total
$170,000, $160,000 bears interest at LIBOR + 1.125% and $10,000 bears interest at LIBOR + 1.500% (7.60% and 7.98%,
respectively, at December 31, 1999).

     (9)   This loan bears interest on a floating basis at LIBOR + 1.20%; however, at December 31, 1999, it was
fixed at a rate of 7.01% through an interest rate swap agreement which matured on February 25, 2000.

     (10)  Subsequent to year-end 1999, this indebtedness was increased to $65,781 and the maturity was extended
to July 1, 2004; however, it may be further extended for one additional year.

     (11)  The convertible preferred units have a liquidation preference of $27.50 per unit, a distribution rate
of 7.0%, a redemption price of $27.50 per unit and a conversion price of $27.50 per unit to common units which in
turn are convertible into common stock. After December 18, 2003, the preferred units may be redeemed at the option
of the Company for cash or may be converted at the option of the holder into common units. See Note 1 of Notes to
Consolidated Financial Statements.

     (12)  Of the $125,000, $100,000 have a liquidation preference of $33.34 per share, a quarterly dividend
equal to the greater of (i) $0.50 per share or (ii) the dividend then payable on the shares of common stock, a
redemption price of $33.34 per share (after November 13, 2003) and a conversion price of $33.34 per share. The
remaining $25,000 have a liquidation preference of $32.32 per share, a quarterly dividend equal to the greater of
(i) $0.525 per share or (ii) the dividend then payable on the shares of common stock, a redemption price of $32.32
per share (after December 29, 2004) and a conversion price of $32.32 per share. See Consolidated Statements of
Stockholders' Equity.

     (13)  Of the $125,000, $40,000 have an issuance price of $50.00 per unit, cumulative distributions at a rate
of 9.125% per annum, no stated maturity or mandatory redemption and are not convertible into any other securities
of the Operating Partnership. The remaining $85,000 have an issuance price of $25.00 per unit, cumulative
distributions at a rate of 9.45% per annum, no stated maturity or mandatory redemption and are not convertible
into any other securities of the Operating Partnership. See Management's Discussion and Analysis of Financial
Condition and Results of Operations - Capitalization.


</TABLE>


<PAGE>


<TABLE>

                                         CONSOLIDATED BALANCE SHEETS
                            ($000's omitted, except share and per share amounts)
<CAPTION>
                                                                                  December 31,
                                                                             1999             1998
                                                                          ----------       ----------
<S>                                                                      <C>              <C>
ASSETS

Investment properties:
  Land, including peripheral land parcels . . . . . . . . . . . . .      $   209,304      $   157,045
  Buildings and improvements. . . . . . . . . . . . . . . . . . . .        1,433,252        1,095,431
  Equipment, furniture and fixtures . . . . . . . . . . . . . . . .            5,944            4,065
  Construction in progress. . . . . . . . . . . . . . . . . . . . .           75,568          101,188
                                                                          ----------       ----------
                                                                           1,724,068        1,357,729

Accumulated depreciation. . . . . . . . . . . . . . . . . . . . . .         (207,720)        (163,845)

Investment properties, net of accumulated depreciation. . . . . . .        1,516,348        1,193,884
Investment property held for sale . . . . . . . . . . . . . . . . .           13,083            --
Investments in unconsolidated partnerships. . . . . . . . . . . . .          230,367          135,052
Investment in the Management Company. . . . . . . . . . . . . . . .           49,967           48,552
Cash and short-term investments . . . . . . . . . . . . . . . . . .            4,125              422
Receivables:
  Tenant, net of allowance for doubtful accounts of
    $4,121 and $3,836 in 1999 and 1998, respectively. . . . . . . .           17,558           16,143
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3,039            2,835
Deferred expenses and other assets. . . . . . . . . . . . . . . . .           13,831           14,522
                                                                          ----------       ----------
                                                                          $1,848,318       $1,411,410
                                                                          ==========       ==========


<PAGE>


                                   CONSOLIDATED BALANCE SHEETS - CONTINUED
                            ($000's omitted, except share and per share amounts)


                                                                                  December 31,
                                                                             1999             1998
                                                                          ----------       ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Mortgage notes payable. . . . . . . . . . . . . . . . . . . . . .       $1,080,452       $  765,501
  Land sale-leaseback proceeds. . . . . . . . . . . . . . . . . . .           75,000           75,000
  Deferred lease accrual. . . . . . . . . . . . . . . . . . . . . .           22,874           20,733
  Accounts payable and other liabilities. . . . . . . . . . . . . .           68,982           51,270
  Investments in unconsolidated partnerships. . . . . . . . . . . .           43,074           42,893

Commitments and contingencies
                                                                          ----------       ----------

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . .        1,290,382          955,397

Minority interest . . . . . . . . . . . . . . . . . . . . . . . . .          245,017          129,739
Stockholders' equity:
  Preferred stock, $.01 par value, authorized 5,000,000
    shares, issued and outstanding 3,772,915 shares
    in 1999 and 1998 (liquidation preference of $125,000) . . . . .               38               38
  Common stock, $.01 par value, authorized 140,000,000
    shares, issued and outstanding 17,523,484 shares
    in 1999 and 17,380,193 shares in 1998 . . . . . . . . . . . . .              176              174
  Unit voting common stock, $.01 par value,
    authorized 5,000,000 shares, issued and outstanding
    407,935 shares in 1999 and 1998 . . . . . . . . . . . . . . . .                4                4
  Additional paid-in capital. . . . . . . . . . . . . . . . . . . .          495,196          489,880
  Retained earnings (deficit) . . . . . . . . . . . . . . . . . . .         (182,495)        (163,822)
                                                                          ----------       ----------
          Total stockholders' equity. . . . . . . . . . . . . . . .          312,919          326,274
                                                                          ----------       ----------

                                                                          $1,848,318       $1,411,410
                                                                          ==========       ==========









<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                            ($000's omitted, except share and per share amounts)

<CAPTION>
                                                                      Years Ended December 31,
                                                                1999           1998            1997
                                                             ----------     ----------     ----------
<S>                                                         <C>           <C>            <C>
Revenues:
  Shopping center revenues:
    Minimum rents . . . . . . . . . . . . . . . . . . .      $  142,879     $  118,290     $   94,812
    Percentage rents. . . . . . . . . . . . . . . . . .           9,200          7,322          5,575
    Recoveries from tenants . . . . . . . . . . . . . .          76,282         65,108         47,493
    Other . . . . . . . . . . . . . . . . . . . . . . .          12,402          6,866          4,480
                                                             ----------     ----------     ----------

                                                                240,763        197,586        152,360
  Interest income . . . . . . . . . . . . . . . . . . .             971          1,103          1,620
                                                             ----------     ----------     ----------
                                                                241,734        198,689        153,980
Expenses:
  Shopping center expenses. . . . . . . . . . . . . . .          84,096         72,538         52,138
  Mortgage and other interest . . . . . . . . . . . . .          60,226         43,751         33,876
  Ground rent . . . . . . . . . . . . . . . . . . . . .           4,484          4,596          4,689
  Depreciation and amortization . . . . . . . . . . . .          50,784         41,463         33,866
  General and administrative. . . . . . . . . . . . . .           6,171          4,829          3,269
  Write-off of assets . . . . . . . . . . . . . . . . .           1,668            186            140
                                                             ----------     ----------     ----------
                                                                207,429        167,363        127,978
                                                             ----------     ----------     ----------
          Operating income. . . . . . . . . . . . . . .          34,305         31,326         26,002

Income from unconsolidated partnerships . . . . . . . .          12,858         10,778          6,227
Income (loss) from the Management Company . . . . . . .           1,183            264           (438)
                                                             ----------     ----------     ----------
          Income before other gains, minority
            interest and extraordinary items. . . . . .          48,346         42,368         31,791

Other gains . . . . . . . . . . . . . . . . . . . . . .             632            479          3,673
Minority interest . . . . . . . . . . . . . . . . . . .         (17,877)       (13,540)       (12,560)
                                                             ----------     ----------     ----------
          Income before extraordinary items . . . . . .          31,101         29,307         22,904

Extraordinary items (net of taxes and minority interest)        (1,618)         --             (5,719)
                                                             ----------     ----------     ----------


<PAGE>


                              CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
                            ($000's omitted, except share and per share amounts)


                                                                      Years Ended December 31,
                                                                1999           1998            1997
                                                             ----------     ----------     ----------

          Net income. . . . . . . . . . . . . . . . . .          29,483         29,307         17,185

Dividends on preferred stock. . . . . . . . . . . . . .          (8,452)        (6,359)          (811)
                                                             ----------     ----------     ----------
          Income applicable to common and
            unit voting common stock. . . . . . . . . .      $   21,031     $   22,948     $   16,374
                                                             ==========     ==========     ==========

Basic income per common and unit voting common share:
  Before extraordinary items. . . . . . . . . . . . . .      $     1.26     $     1.29     $     1.27
  Extraordinary items . . . . . . . . . . . . . . . . .            (.09)        --               (.33)
                                                             ----------     ----------     ----------
          Net income. . . . . . . . . . . . . . . . . .      $     1.17     $     1.29     $     0.94
                                                             ==========     ==========     ==========
Diluted income per common and unit voting common share:
  Before extraordinary items. . . . . . . . . . . . . .      $     1.25     $     1.27     $     1.25
  Extraordinary items . . . . . . . . . . . . . . . . .            (.09)        --               (.33)
                                                             ----------     ----------     ----------
          Net income. . . . . . . . . . . . . . . . . .      $     1.16     $     1.27     $     0.92
                                                             ==========     ==========     ==========
Weighted-average common and unit voting
 common shares outstanding:
  Basic . . . . . . . . . . . . . . . . . . . . . . . .      17,910,152     17,744,072     17,440,454
  Diluted . . . . . . . . . . . . . . . . . . . . . . .      18,096,529     18,013,943     17,707,581
                                                             ==========     ==========     ==========

Dividends declared and paid per common and
  unit voting common share. . . . . . . . . . . . . . .      $     2.24     $     2.10     $     2.03
                                                             ==========     ==========     ==========











<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                            ($000's omitted, except share and per share amounts)

<CAPTION>
                                              Common Stock and Unit
                           Preferred Stock     Voting Common Stock   Additional  Retained
                         -------------------- ----------------------  Paid-In    Earnings
                          Shares     Amount     Shares      Amount    Capital    (Deficit)     Total
                        ---------- ---------- ----------  ---------- ---------- ----------  ----------
<S>                    <C>        <C>        <C>         <C>        <C>        <C>         <C>

Balances at
  December 31, 1996 . .                       17,081,336  $      171 $  326,495$ (132,003)  $  194,663
Shares issued in
 connection with:
  Private placement
   (1). . . . . . . . .  2,999,400       $ 30     --          --         98,929     --          98,959
  Issuance of
    common stock. . . .                          177,316           2      5,739     --           5,741
  Issuance of unit
    voting common
    stock . . . . . . .                           69,197           1      2,265     --           2,266
  Conversion of
    units . . . . . . .                          127,656           1      1,433     --           1,434
  Stock option
    plan. . . . . . . .                          211,838           2      4,852     --           4,854
Net income. . . . . . .                           --          --         --         17,185      17,185
Dividends declared
  and paid. . . . . . .                           --          --         --        (35,471)    (35,471)
Reallocation of
  minority interest . .                           --          --         20,025     --          20,025
                        ---------- ---------- ----------  ---------- ---------- ----------  ----------
Balances at
  December 31, 1997 . .  2,999,400         30 17,667,343         177    459,738   (150,289)    309,656

Shares issued in
 connection with:
  Private placement
    (2) . . . . . . . .    773,515          8     --          --         24,594     --          24,602
Stock option plan . . .                           85,573           1      1,876     --           1,877
Incentive unit plan . .                           35,212      --          1,222     --           1,222
Net income. . . . . . .                           --          --         --         29,307      29,307
Dividends declared
  and paid. . . . . . .                           --          --         --       (42,840)     (42,840)
Reallocation of
  minority interest . .                           --          --          2,450     --           2,450
                        ---------- ---------- ----------  ---------- ---------- ----------  ----------



<PAGE>


                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - CONTINUED
                            ($000's omitted, except share and per share amounts)


                                              Common Stock and Unit
                           Preferred Stock     Voting Common Stock   Additional  Retained
                         -------------------- ----------------------  Paid-In    Earnings
                          Shares     Amount     Shares      Amount    Capital    (Deficit)     Total
                        ---------- ---------- ----------  ---------- ---------- ----------  ----------
Balances at
  December 31, 1998 . .  3,772,915         38 17,788,128        178     489,880   (163,822)    326,274
Shares issued in
 connection with:
  Stock option plan . .                           70,950           1      1,600     --           1,601
  Incentive unit plan .                           72,341           1      2,316     --           2,317
Net income. . . . . . .                           --          --         --         29,483      29,483
Dividends declared
  and paid. . . . . . .                           --          --         --        (48,156)    (48,156)
Reallocation of
  minority interest . .                           --          --          1,400     --           1,400
                        ---------- ---------- ----------  ---------- ---------- ----------  ----------
Balances at
  December 31, 1999 . .  3,772,915 $       38 17,931,419  $      180 $  495,196 $ (182,495) $  312,919
                        ========== ========== ==========  ========== ========== ==========  ==========



<FN>
     (1)   On November 13, 1997, in connection with the Company's acquisitions of Fox Valley Center and Hawthorn
Center, the Company issued $100,000 in cumulative convertible redeemable preferred stock ("Preferred Stock") with
a liquidation preference of $33.34 per share. Quarterly dividends on the Preferred Stock are equal to the greater
of (i) $0.50 per share or (ii) the quarterly dividend then payable on the shares of common stock into which the
Preferred Stock is convertible. The Preferred Stock is convertible into common stock, at the option of the holder,
at a conversion price of $33.34 per share (subject to antidilution adjustments) at anytime after August 1998.
After six years, the Preferred Stock may be redeemed, at the option of the Company, for cash at a redemption price
of $33.34 per share.

     (2)   On December 29, 1998, in connection with the Company's acquisition of a 50% equity interest in
Woodland Hills Mall, the Company issued $25,000 in Preferred Stock with a liquidation preference of $32.32 per
share. Quarterly dividends on the Preferred Stock are equal to the greater of (i) $0.525 per share or (ii) the
quarterly dividend then payable on the shares of common stock into which the Preferred Stock is convertible. The
Preferred Stock is convertible into common stock, at the option of the holder, at a conversion price of $32.32 per
share (subject to antidilution adjustments) at anytime after September 1999. After six years, the Preferred Stock
may be redeemed, at the option of the Company, for cash at a redemption price of $32.32 per share.



See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                            ($000's omitted, except share and per share amounts)

<CAPTION>
                                                                      Years Ended December 31,
                                                                1999           1998            1997
                                                             ----------     ----------     ----------
<S>                                                         <C>           <C>            <C>
Cash flows from operating activities:
  Net income. . . . . . . . . . . . . . . . . . . . . .      $   29,483     $   29,307     $   17,185
  Adjustments to reconcile net income
   to net cash provided by operating activities:
    Depreciation and amortization . . . . . . . . . . .          50,784         41,463         33,866
  Write-off of assets . . . . . . . . . . . . . . . . .           1,668            186            140
  Provision for losses on accounts receivable . . . . .           1,058          1,402            972
  Income from unconsolidated partnerships . . . . . . .         (12,858)       (10,778)        (6,227)
  Loss (income) from the Management Company,
    net of distributions. . . . . . . . . . . . . . . .          (1,183)          (264)           438
  Minority interest . . . . . . . . . . . . . . . . . .          17,877         13,540         12,560
  Other gains . . . . . . . . . . . . . . . . . . . . .            (632)          (479)        (3,673)
  Extraordinary items . . . . . . . . . . . . . . . . .           1,618         --              5,719
  Changes in other assets and liabilities . . . . . . .          14,938          3,378          5,693
                                                             ----------     ----------     ----------
          Net cash provided by operating activities . .         102,753         77,755         66,673
                                                             ----------     ----------     ----------
Cash flows from investing activities:
  Additions to investment properties, net of change
    in related payables . . . . . . . . . . . . . . . .        (100,696)       (50,607)       (43,794)
  Acquisition of investment properties and
    development parcels . . . . . . . . . . . . . . . .        (122,927)        --           (101,382)
  Acquisition of partnership interests. . . . . . . . .         (99,623)       (34,924)       (31,400)
  Proceeds from sale of investment property,
    net of selling costs. . . . . . . . . . . . . . . .          --             --             16,933
  Proceeds from sale of land parcels, net of
    selling costs . . . . . . . . . . . . . . . . . . .             824            490          2,296
  Cash contributions to unconsolidated partnerships
    and the Management Company. . . . . . . . . . . . .          (6,265)       (25,743)       (28,022)
  Cash distributions from unconsolidated partnerships
    and the Management Company. . . . . . . . . . . . .          21,683         31,824          9,071
  Net sales and maturities (purchases) of short-term
    investments . . . . . . . . . . . . . . . . . . . .             113             (3)         --
  Other . . . . . . . . . . . . . . . . . . . . . . . .             714            192           (109)
                                                             ----------     ----------     ----------
          Net cash used in investing activities . . . .        (306,177)       (78,771)      (176,407)
                                                             ----------     ----------     ----------


<PAGE>


                              CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                            ($000's omitted, except share and per share amounts)


                                                                      Years Ended December 31,
                                                                1999           1998            1997
                                                             ----------     ----------     ----------
Cash flows from financing activities:
  Proceeds from issuance of debt, net of
    issuance costs. . . . . . . . . . . . . . . . . . .         552,280        160,566        487,601
  Proceeds from issuance of common stock,
    unit voting common stock and preferred stock,
    net of issuance costs . . . . . . . . . . . . . . .           3,495         27,513        105,751
  Proceeds from issuance of perpetual preferred
    partnership units, net of issuance costs. . . . . .         121,786         --              --
  Repayment of debt . . . . . . . . . . . . . . . . . .        (396,377)      (124,655)      (433,864)
  Cash distributions to unitholders . . . . . . . . . .         (25,788)       (20,417)       (18,291)
  Dividends paid. . . . . . . . . . . . . . . . . . . .         (48,156)       (42,840)       (35,471)
                                                             ----------     ----------     ----------
          Net cash provided by financing activities . .         207,240            167        105,726
                                                             ----------     ----------     ----------
Net increase (decrease) in cash and cash equivalents. .           3,816           (849)        (4,008)

Cash and cash equivalents at beginning of year. . . . .             294          1,143          5,151
                                                             ----------     ----------     ----------
Cash and cash equivalents at end of year. . . . . . . .      $    4,110     $      294     $    1,143
                                                             ==========     ==========     ==========

Supplemental disclosure of cash flow information:
  Cash paid for mortgage and other interest,
    net of amounts capitalized. . . . . . . . . . . . .      $   55,193     $   42,363     $   32,798
                                                             ==========     ==========     ==========






<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>


              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         ($000's omitted, except share and per share amounts)


1.  Organization and Basis of Presentation

ORGANIZATION

     The Company is in the business of owning, acquiring, managing,
leasing, developing and redeveloping regional and super-regional malls
located throughout the United States.  Substantially all of the Company's
assets and interests in investment properties (the "Properties") are held
by, and substantially all of its operations are conducted through, Urban
Shopping Centers, L.P. (the "Operating Partnership").

     As of December 31, 1999, the Company, which is the sole general
partner of the Operating Partnership, owns approximately 67% of the common
units ("Units") in the Operating Partnership. JMB Realty Corporation ("JMB
Realty") and certain of its affiliates ("JMB Partners") and certain other
unaffiliated parties own limited partnership interests in the Operating
Partnership representing approximately 33% of the Units and also own
$28,000 of convertible preferred units and $40,000 and $85,000 of Series C
Cumulative Redeemable Preferred Partnership Units and Series D Cumulative
Redeemable Preferred Partnership Units ("perpetual preferred units"),
respectively (included in minority interest in the accompanying
consolidated balance sheets). The convertible preferred units have a
liquidation preference of $27.50 per unit, a distribution rate of 7.0%, a
redemption price of $27.50 per unit and a conversion price of $27.50 per
unit to common units which in turn are convertible into common stock. After
December 18, 2003, the preferred units may be redeemed at the option of the
Company for cash or may be converted at the option of the holder into
Units. Each Unit may be exchanged for one share of common stock. Of the
$125,000 of perpetual preferred units, $40,000 have a distribution rate of
9.125% and $85,000 have a distribution rate of 9.45%. Five years after
issuance, the perpetual preferred units may be called by the Company at
par. The holders of the perpetual preferred units may exchange them at any
time after ten years for shares of a new series of preferred stock of the
Company. In general, for financial reporting purposes, the net profits and
losses of the Operating Partnership after preferred unit distributions are
allocated to the general and limited partners in accordance with their
percentage ownership. The Company operates as a real estate investment
trust ("REIT") for Federal income tax purposes.

     Upon the issuance of common stock, unit voting common stock or Units
in the Operating Partnership, the excess book value is reallocated
proportionately between minority interest and stockholders' equity.

BASIS OF PRESENTATION

     The accompanying consolidated financial statements include the
accounts of the Company, the Operating Partnership and all controlled
affiliates. The effect of all significant intercompany balances and
transactions have been eliminated in the consolidated presentation.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT PROPERTIES

     Investment properties are stated at cost less accumulated
depreciation. Depreciation is recorded using the straight-line method,
based on estimated useful lives of 3-40 years.

     Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives.



<PAGE>


     Development costs, including interest and real estate taxes incurred
in connection with construction or expansion of certain investment
properties, are capitalized as a cost of the investment property and
depreciated over the estimated useful life of the related asset. During
1999, 1998 and 1997, the Company incurred interest of $66,055, $47,495 and
$35,640, respectively, and capitalized interest of $5,829, $3,744 and
$1,764, respectively.

     At December 31, 1999, the Company has classified Service Merchandise
Plaza as an investment property held for sale. Service Merchandise Plaza in
Columbus, Ohio, is an approximately 193,000 square foot community center
anchored by Service Merchandise, Circuit City and Office Depot. The Company
is selling Service Merchandise Plaza at this time because it is a non-core
asset which is not integral to the Company's strategy of owning and
operating dominant high quality regional malls and adjacent retail
facilities. Revenues of $2,655, $2,119 and $1,661, expenses of $1,308,
$1,089 and $1,058, and net income of $1,347, $1,030 and $603, for the years
ended December 31, 1999, 1998 and 1997, respectively, related to Service
Merchandise Plaza are included in the accompanying consolidated statements
of operations.

     The Company evaluates its investment properties periodically to assess
whether any impairment indications are present, including recurring
operating deficits and significant adverse changes in legal factors or
business climate that affect the recovery of recorded asset value. If any
investment property is considered impaired, a loss is provided to reduce
the carrying value of the property to its estimated fair value.

CASH AND SHORT-TERM INVESTMENTS

     Cash aggregated $4,110 and $294 at December 31, 1999 and 1998,
respectively. Short-term investments (generally with original maturities of
one year or less) are generally held to maturity and aggregated $15 and
$128 at December 31, 1999 and 1998, respectively. Short-term investments
are recorded at cost which approximates market.

DEFERRED EXPENSES

     Deferred mortgage loan fees and expenses (including the cost of
interest rate swap agreements related to specific mortgage loans) are
amortized on a straight-line basis over the terms of the related mortgage
notes or the terms of the interest rate swap agreements. Deferred leasing
commissions and costs are amortized over the terms of the related leases.

REVENUE RECOGNITION

     Although certain leases of the Company provide for tenant occupancy
during periods for which no rent is due and/or increases exist in minimum
lease payments over the term of the lease, the Company generally accrues
rental income for the full period of occupancy on a straight-line basis.
Accrued rents receivable relating to such leases of $13,207 and $11,350
have been included in tenant receivables in the accompanying consolidated
balance sheets at December 31, 1999 and 1998, respectively.

     Pursuant to Staff Accounting Bulletin No. 101 "Revenue Recognition in
Financial Statements" issued by the Securities and Exchange Commission in
December 1999 and the Emerging Issues Task Force's consensus on Issue 98-9
"Accounting for Contingent Rent in Interim Financial Periods," the Company
defers recognition of contingent rental income (i.e., percentage/excess
rent) in interim periods until the specified target (i.e., breakpoint) that
triggers the contingent rental income is achieved. The Company implemented
the consensus as of May 21, 1998. This consensus affects timing of revenue
recognition for interim financial periods and it did not have any
significant effect on the Company's net income for the full calendar years
1999 and 1998.



<PAGE>


GENERAL AND ADMINISTRATIVE EXPENSES

     Certain general and administrative expenses are allocated among the
Company, the Operating Partnership and the Management Company pursuant to a
corporate services agreement among the three parties.

DERIVATIVES

     The Company uses interest rate swap agreements and treasury locks as
part of its interest rate risk management strategy.  These off-balance
sheet derivatives are classified as synthetic alterations. The criteria
that must be satisfied by synthetic alteration accounting are as follows:
(i) the liability to be converted has exposure to interest rate risk and
(ii) the derivative is designated and effective as a synthetic alteration
of the liability.

     Accrual accounting is applied for these derivatives treated as
synthetic alterations, and income and expense are recorded as adjustments
of interest expense. Fees, if any, related to these off-balance sheet
investment products are amortized on the interest method over the life of
the derivative. If the balance of the liability falls below that of the
derivative, the excess portion of the derivative is marked to market and
the resulting gain or loss included in income, as applicable. If a
derivative is terminated independent of the underlying debt, the gain or
loss is deferred and amortized over the remaining life of the derivative.
If a treasury lock is terminated, the gain or loss is deferred and
amortized over the life of the new debt.

     Derivatives that do not satisfy the criteria above would be carried at
market value with changes in market value to be recognized as current
income or expense.

     The carrying value of the Company's interest rate swap agreements
(included in deferred expenses and other assets in the accompanying
consolidated balance sheets) is $1,682 and $2,030 as of December 31, 1999
and 1998, respectively. The fair value of these interest rate swap
agreements is estimated at $9,792 and ($10,559) as of December 31, 1999 and
1998, respectively. The fair value is estimated based upon management's
good faith estimate.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The fair value of mortgage notes payable at December 31, 1999 is
estimated at $1,023,204 based upon prevailing market rates for comparable
indebtedness. Management believes that the carrying amount of mortgage
notes payable at December 31, 1998 approximates fair value.  Management
believes its guarantees on certain indebtedness will not require payments.
Other financial instruments are described under "Derivatives" above, or are
either carried at amounts which approximate their fair value or are not
considered significant.

INCOME TAXES

     No provision has been made for Federal income taxes for the Company in
the accompanying consolidated financial statements because the Company has
operated as a REIT. Under the applicable provisions of the Internal Revenue
Code, a REIT will generally not be subject to Federal income tax on that
portion of its REIT taxable income it currently distributes to its
shareholders so long as it distributes at least 95% of its taxable income
to its shareholders and complies with certain other requirements.



<PAGE>


PER SHARE DATA

     The table below presents the dividend allocation for tax purposes.

                                      1999       1998        1997
Dividends declared and
  paid per share                      $2.24      $2.10       $2.03
Ordinary income                         92%        99%         68%
Return of capital                        7%        --          25%
Long-term capital gain                   1%         1%          5%
Unrecaptured section 1250 gain          --         --           2%

     The difference between basic and diluted weighted-average common and
unit voting common shares represents the dilutive effect of outstanding
stock options.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

3.   ACQUISITIONS

HOUSTON GALLERIA

     On November 15, 1999, the Company, through a partnership owned
two-thirds by it and one-third by institutional funds advised by Walton
Street Capital, LLC, acquired the retail component of Houston Galleria, a
mixed use development in Houston, Texas. The aggregate purchase price for
the property and related assets was approximately $375,100 of which a
portion was financed by a $225,000 non-recourse first mortgage loan. The
Company's share of the equity was funded, in part, from proceeds of the
sale on October 1, 1999 of $85,000 of Series D Cumulative Redeemable
Preferred Partnership Units.

CENTURY CITY SHOPPING CENTER

     On June 10, 1999, the Company acquired Century City Shopping Center in
Los Angeles, California.  As consideration for the shopping center and
related assets, which the Company acquired subject to non-recourse
indebtedness of $160,000, the Company paid $108,000 in cash, net of
prorations.

     In connection with the acquisition, the Company issued $3,200 of Units
and $40,000 of Series C Cumulative Redeemable Preferred Partnership Units.
The non-recourse indebtedness and the issuance of Units have not been
reflected in investing and financing activities in the accompanying
consolidated statement of cash flows.

WOODLAND HILLS MALL

     On December 21, 1998, the Company acquired a 50% equity interest in
Woodland Hills Mall in a transaction valued at $40,620 paid through the
issuance of 144,495 Units, plus $34,924 in cash. The issuance of Units has
not been reflected in investing and financing activities in the
accompanying consolidated statement of cash flows. The remaining interest
was acquired by an unaffiliated third party.



<PAGE>


FOX VALLEY CENTER AND HAWTHORN CENTER

     On November 14, 1997, the Company acquired all of the ownership
interests in partnerships owning Fox Valley Center, Hawthorn Center and
four peripheral outlet properties. The aggregate purchase price for all six
properties was approximately $260,000. A portion of the acquisitions was
financed by two non-recourse, fixed rate secured loans aggregating
approximately $163,000. The balance of the acquisitions was funded through
the Company's issuance on November 13, 1997 of $100,000 of Preferred Stock.

COPLEY PLACE

     On August 1, 1997, the Company acquired a one-third equity interest in
Copley Place from JMB Realty in a transaction valued at $42,333 paid
through the issuance of 1,282,828 Units. In connection with the
transaction, JMB Realty also purchased 53,451 shares of unit voting common
stock from the Company for $1,764 in cash. The remaining interest in Copley
Place is owned by an unaffiliated third party.  Concurrent with this
transaction, Copley Place secured financing in the amount of $195,000.

CITRUS PARK VENTURE

     On July 24, 1998, Citrus Park Venture, which owns a 163-acre land
parcel which is the site of Citrus Park Town Center, in Tampa, Florida, was
reorganized pursuant to Florida law as Citrus Park Venture Limited
Partnership ("Citrus Park"). Prior to November 17, 1998, the Management
Company owned a 50% economic interest in Citrus Park (and prior to July 24,
1998, in its predecessor). On November 17, 1998, the Management Company's
interest in the partnership was liquidated through the distribution of
certain land parcels at Citrus Park thereby providing the Company with 100%
ownership of Citrus Park. The effect of consolidating the Company's
interest in Citrus Park as of November 17, 1998, has not been reflected in
the accompanying consolidated statement of cash flows. On August 1, 1997,
the Company acquired rights to the 50% economic interest associated with
the Management  Company's ownership in the partnership from an affiliate of
JMB Realty in exchange for 243,513 Units in the Operating Partnership and
10,146 shares of unit voting common stock, valued at $8,212 in aggregate.
Such affiliate of JMB Realty owns 100% of the common stock of the
Management Company which entitles it to 95% of the land sale proceeds. Also
on August 1, 1997, the Company exercised its option and purchased 68 acres
of land adjacent to the site for the regional mall from an affiliate of JMB
Realty in exchange for 177,316 shares of common stock valued at $5,741.
This land was transferred, through sale and contribution, to Citrus Park
Venture. This land is being used for the development of a community center,
The Plaza at Citrus Park, and for other commercial uses.

SAN FRANCISCO SHOPPING CENTRE

     On June 17, 1997, the Company made an investment in a partnership of
approximately $31,400 in cash resulting in a preferred 50% ownership
interest in San Francisco Shopping Centre. The transaction is structured so
that the Company has the option, after approximately eight years, to make
an additional investment in the partnership resulting in the Company owning
substantially all of the interests in San Francisco Shopping Centre.
Concurrent with the investment, a new loan of $73,600 was secured, of which
$61,350 was funded at closing.  In October 1997, $7,819 was paid down on
the outstanding balance of $61,350. Subsequent to year-end 1999, this
indebtedness was increased to $65,781.


4.   INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS

     The accompanying consolidated financial statements include investments
in certain partnerships, with ownership percentages ranging from 25.0% to
66.7%, in which the Company does not own a controlling interest. These
investments are reported using the equity method. To the extent the
Company's investment basis differs from its share of the capital of an
unconsolidated partnership, such difference is amortized over the
depreciable lives of the unconsolidated partnership's investment assets.


<PAGE>


                                                 December 31,
                                               1999         1998
                                            ----------   ----------
Assets:
  Investment properties, net. . . . . . .   $1,228,195   $  860,634
  Other assets. . . . . . . . . . . . . .       72,989       46,934
                                            ----------   ----------
                                             1,301,184      907,568
                                            ----------   ----------
Less liabilities:
  Mortgage notes payable. . . . . . . . .      867,523      645,904
  Other liabilities . . . . . . . . . . .       50,597       30,045
                                            ----------   ----------
          Total capital . . . . . . . . .      383,064      231,619
Less outside partners' capital. . . . . .      195,771      139,460
                                            ----------   ----------
Total investments in unconsolidated
  partnerships. . . . . . . . . . . . . .   $  187,293   $   92,159
                                            ==========   ==========

Total investments in unconsolidated partnerships are presented in the
accompanying consolidated balance sheets as follows:

Assets - Investments in unconsolidated
  partnerships. . . . . . . . . . . . . .   $  230,367   $  135,052
Liabilities - Investments in
  unconsolidated partnerships . . . . . .       43,074       42,893
                                            ----------   ----------
                                            $  187,293   $   92,159
                                            ==========   ==========

                                     Years ended December 31
                                  1999          1998         1997
                              ----------    ----------   ----------
Revenues:
  Shopping centers. . . . .   $  193,695    $  161,963   $  115,583
  Interest income . . . . .          962         1,258          609
Expenses:
  Shopping centers. . . . .       85,030        73,074       52,831
  Mortgage and other
    interest and ground
    rent. . . . . . . . . .       50,072        43,536       32,673
  Depreciation and
    amortization. . . . . .       29,328        18,136       16,331
  Write-off of assets . . .          463        --            --
                              ----------    ----------   ----------
     Income before other
       gains and extra-
       ordinary item. . . .       29,764        28,475       14,357

Other gains . . . . . . . .       --             1,457        --
                              ----------    ----------   ----------
     Income before extra-
        ordinary item . . .       29,764        29,932       14,357

Extraordinary item. . . . .       --            --             (228)
                              ----------    ----------   ----------
Net income. . . . . . . . .   $   29,764    $   29,932   $   14,129
                              ==========    ==========   ==========
Company's share of:
  Mortgage and other
    interest and ground rent  $   23,412    $   19,250   $   14,370
  Depreciation and
    amortization. . . . . .       13,136         9,737        6,957
  Write-off of assets . . .          154         --           --
  Other gains . . . . . . .       --               583        --
  Income before extra-
    ordinary item . . . . .       12,858        10,778        6,227
                              ==========    ==========   ==========


<PAGE>


5.   INVESTMENT IN THE MANAGEMENT COMPANY

     Generally, the Company's preferred stock investment in the Management
Company entitles it to 95% of the distributions, profits and losses form
the management, leasing and development business (as defined) and 5% of the
net distributions, profits and losses from the land parcels (as defined).
The Company's consolidated financial statements present its investment in
the Management Company under the equity method of accounting.

     Summarized financial information for the Management Company is
presented below.
                                                   December 31
                                               1999         1998
                                            ----------   ----------
Assets:
  Investments in land parcels . . . . . .   $   14,221   $   15,171
  Cash, cash equivalents and
    short-term investments. . . . . . . .       11,551        4,324
  Receivables and deferred expenses . . .       16,140       17,332
                                            ----------   ----------
                                            $   41,912   $   36,827
                                            ==========   ==========
Liabilities:
  Notes payable (1) . . . . . . . . . . .   $   20,000   $   20,000
  Accounts payable and other liabilities.        5,681        4,777
                                            ----------   ----------
                                                25,681       24,777
  Owners' equity. . . . . . . . . . . . .       16,231       12,050
                                            ----------   ----------
                                            $   41,912   $   36,827
                                            ==========   ==========


                                      Years ended December 31
                                 1999          1998         1997
                              ----------    ----------   ----------
Revenues. . . . . . . . . .   $   43,890    $   41,244   $   36,891
Expenses:
  Management, leasing and
    development services. .       39,028        34,686       31,134
  Mortgage and other
    interest. . . . . . . .        1,386         4,578        5,692
  Land parcels. . . . . . .           41         2,646          396
  Depreciation and
    amortization. . . . . .        1,528         1,463          559
  Write-off and write-down
    of assets (2) . . . . .          104        --            8,812
                              ----------    ----------   ----------
                                  42,087        43,373       46,593
                              ----------    ----------   ----------

     Operating income (loss)       1,803       (2,129)       (9,702)
Income tax benefit
  (provision) . . . . . . .         (491)          629          561
Loss on sale of land. . . .         (99)          (271)       --
Extraordinary items
  (net of taxes). . . . . .       (1,788)       --            --
                              ----------    ----------   ----------
     Net loss . . . . . . .   $     (575)   $   (1,771)  $   (9,141)
                              ==========    ==========   ==========



<PAGE>


     (1)   On December 1, 1998, the notes payable of the Management
Company were reduced by $50,000. The reduction was effected by (i) the
Operating Partnership's $10,000 note of the Management Company being
contributed to the Management Company and the preferred shareholder (Penn
Square Mall Limited Partnership) directly assuming from the Management
Company the payment obligation of $31,000 of its $51,000 of indebtedness
and (ii) the Management Company distributing in kind to its common
shareholder assets valued at $6,700 in partial payment of $9,000 notes
payable to that shareholder and that shareholder contributing the balance
of those notes held by it to the Management Company. On February 25, 1999,
the Management Company refinanced its $20,000 of indebtedness. The new loan
bears interest on a floating basis at LIBOR + 1.20%; however, at December
31, 1999, it was fixed at a rate of 7.01% through an interest rate swap
agreement which matured on February 25, 2000.

     (2)   Write-downs in 1997, represent reduction of the carrying value
in an outstanding mortgage loan due to the uncertainty of realizing the
carrying value upon repayment.

     The Management Company provides management, leasing and development
services to certain of the Company's consolidated and unconsolidated
investment properties, to affiliated entities and to third parties.  In
1999, 1998 and 1997, management, leasing and development revenues of
$5,956, $6,412 and $7,116, respectively, resulted from services provided to
affiliated entities.  In addition, the Management Company received
reimbursements (at cost) of property level payroll and other operating
expenses from affiliated entities for activities performed in their behalf.

Such reimbursements were $20,179, $18,978 and $16,499 during 1999, 1998 and
1997, respectively.

     Prior to 1998, a lawsuit was filed against the Management Company and
other JMB Realty affiliates alleging a breach of agreements made prior to
the Company's formation with respect to a vacant land parcel which was
contributed by JMB Realty affiliate to the Management Company as part of
the Company's formation.  During 1998, the case was settled.  The
settlement amount of $20,000 was paid by a JMB Realty affiliate and all
legal fees and other costs in connection with the litigation totaling
approximately $2,600 were contributed to the Management Company by a JMB
Realty affiliate.

     As of December 31, 1999, the Company has an option to purchase one
remaining development parcel from the Management Company at the lower of
fair market value or 110% of allocable costs (all terms as defined) until
October 2000.  In addition, the sale or development of this development
parcel by the Management Company is subject to a right of first offer in
favor of the Company on the same conditions as described above.

6.   MORTGAGE NOTES PAYABLE

     Mortgage notes payable consist of the following at December 31, 1999
and 1998:

                                               1999         1998
                                            ----------   ----------
Non-recourse mortgage loans payable,
  secured by certain investment properties
  (1)(2)(3); bearing interest at rates
  ranging from 6.14% to 7.80%; with maturities
  ranging from September 2000 through
  December 2009. Interest rates associated
  with certain of the loans have been
  fixed through interest rate swap
  agreements. . . . . . . . . . . . . . .   $  990,152    $  628,678


<PAGE>


                                               1999         1998
                                            ----------   ----------
Line of credit, secured by Brandon
  TownCenter, The Plaza at Brandon TownCenter,
  Bed Bath and Beyond outparcel at Brandon
  TownCenter, New York Square, Service
  Merchandise Plaza and Bed Bath and Beyond
  outparcel at Wolfchase Galleria (4);
  currently bearing interest at LIBOR +
  0.85% (7.35% at December 31, 1999);
  payable interest only through April 30,
  2000 (maturity) . . . . . . . . . . . .       62,000       56,800

Unsecured line of credit (5); bearing
  interest at the Reference Rate -1.56%
  (6.93% at December 31, 1999); payable
  interest only through January 26, 2001
  (maturity). . . . . . . . . . . . . . .       8,300         3,750

Loan payable (6); bearing interest at
  LIBOR + 1.40% (7.26% at December 31, 1999,
  through an interest rate swap agreement);
  payable interest only through June 29,
  2000 (maturity) . . . . . . . . . . . .       20,000        --

Construction loan payable, secured by
  Citrus Park Town Center (7); bearing
  interest at LIBOR + 1.20% (6.41% at
  December 31, 1998); payable interest
  only through repayment on June 29, 1999       --           45,273

Non-recourse mortgage loan payable,
  secured by the Management Company's
  interest in certain management contracts
  and a guarantee by Penn Square Mall
  Limited Partnership (8); bearing
  interest at 7.54%; payable interest
  only through repayment on March 1,
  1999. . . . . . . . . . . . . . . . . .       --           31,000
                                            ----------   ----------
                                            $1,080,452   $  765,501
                                            ==========   ==========

     (1)   On September 29, 1999, the Company refinanced the MainPlace
$80,000 of indebtedness with a $110,000 loan. The new loan is for an
initial one-year period and may be extended for two one-year periods.

     (2)   On June 29, 1999, the Company refinanced its outstanding
indebtedness secured by Citrus Park Town Center. In connection with the
refinancing, the Company wrote off the unamortized balance of deferred
financing costs of $486, net of minority interest, which is reflected as an
extraordinary item in the accompanying consolidated statement of
operations.

     (3)   On February 25, 1999, the Company secured $75,000 in financing
for Penn Square Mall. On March 1, 1999, the Company prepaid the $31,000 of
indebtedness assumed by the Company in 1998.

     (4)   On July 26, 1995, the Company signed an agreement with a group
of lenders for the establishment of a $90,000 secured, revolving line of
credit (the "Line"), which on November 25, 1998 was amended to increase the
line to $107,500. The Line is an obligation of the Operating Partnership
and is guaranteed by the Company. The Line has an initial three-year term
and, subject to lenders' approval, may be extended for an additional one or
two-year period.



<PAGE>


     (5)   On November 6, 1996, the Company entered into an agreement with
a lender for a one-year $5,000 unsecured revolving line of credit, which on
January 30, 1998 was amended to increase the line to $7,500 and extend the
maturity to January 29, 1999. On January 29, 1999, this line was further
amended to increase the line to $10,000, extend the maturity to January 28,
2000 and change the interest rate to the Reference Rate -1.56%. Subsequent
to year-end 1999, this line was further amended to increase the line to
$13,000 and extend the maturity to January 26, 2001.

     (6)   On June 29, 1999, the Company secured a loan with a lender with
a commitment of $30,000, to be used for the construction of The Plaza at
Citrus Park. This loan is for an initial one-year period and may be
extended for two six-month periods.

     (7)   On August 8, 1998, the Company executed a loan agreement with a
lender to finance $86,100 of the remaining construction costs at Citrus
Park Town Center. This loan was repaid on June 29, 1999.

     (8)   On December 1, 1998, the Company assumed payment obligation of
$31,000 of the Management Company's $51,000 of indebtedness. Such amount
has not been reflected in investing and financing activities in the
accompanying consolidated statement of cash flows. This obligation was
repaid on March 1, 1999.

     Maturities of long-term debt for the five years 2000 through 2004 are
$205,489, $6,260, $6,729, $7,233 and $147,727, respectively.

     As of December 31, 1999, the Company has an option to purchase one
remaining development parcel from the Management Company at the lower of
fair market value or 110% of allocable costs (all terms as defined) until
October 2000. In addition, the sale or development of this development
parcel by the Management Company is subject to a right of first offer in
favor of the Company on the same conditions as described above.  As of
December 31, 1999, interest rate swap agreements in the aggregate amount of
$368,500 are in place to hedge exposure to interest rates on the Company's
floating rate indebtedness. These interest rate swap agreements have fixed
interest rates ranging from 5.68% to 6.29% and have maturities ranging from
February 1, 2000 to December 1, 2005. The Company is exposed to credit loss
in the event of non-performance by the third parties to the interest rate
swap agreements (which $155,000 are AA+, $65,000 are AA, $120,000 are AA-
and $28,500 are A rated by Standard and Poor's Ratings Group).

7.   LEASES

     AS PROPERTY LESSOR

     At December 31, 1999, the Company's principal consolidated assets are
fourteen operating shopping center properties. Management has determined
that all leases relating to these properties are properly classified as
operating leases; therefore, rental income is reported when earned. Leases
with tenants range in term from one to 66 years and generally provide for
fixed minimum rents and reimbursement of operating costs. In addition,
leases with shopping center tenants provide for additional rent based upon
percentages of tenant sales volumes.

     Minimum lease payments to be received in the years 2000 through 2004,
and thereafter, under the above lease agreements are $151,117, $144,500,
$138,919, $129,743, $119,995 and $384,248, respectively.



<PAGE>


AS PROPERTY LESSEE

     Oak Brook Urban Venture (a consolidated venture) is subject to a
ground lease that expires in December 2040 but may be extended through
December 2089. The Oakbrook ground lease produced land sale-leaseback
proceeds of $75,000. Ground rent on the Oakbrook ground lease is 5%
annually ($3,750), although to the extent net cash flow is not sufficient
to service the annual ground rent, such amount is deferred subject to a
minimum annual payment of $1,400, escalating to $1,800 in the year 2000.

     In each of the years 1999, 1998 and 1997, Oak Brook Urban Venture
reported rent expense of $3,750 of which payment of $2,150 was deferred in
1999 and 1998 and $2,350 was deferred in 1997. Interest has been accrued
and deferred of $1,308, $1,143 and $982 for 1999, 1998 and 1997,
respectively, on the deferred balance. The total deferred interest and
ground lease rent obligation included in the accompanying consolidated
balance sheet at December 31, 1999 is $28,442. Payments of amounts in
excess of the minimum annual payment is contingent upon availability of
defined cash flow in future periods. The Oakbrook ground lease is
subordinate in right of payment to all existing mortgage loans and
partnership advances (including advances owed to the Company), except for
the minimum annual payment, which is senior to the partnership advances.
Upon sale of the property, the ground lessor is entitled to a 10%
cumulative return on its invested capital to the extent sale proceeds are
available to satisfy such return. The ground lessor has the option,
commencing in year 2010 (2007 under certain circumstances) to put the
property to the Company for cash or, at the Company's option, Units or
shares of common stock, at a price based, in general, upon rent for the
twelve calendar month period preceding the exercise of the put.

     A substantial portion of Penn Square Mall is on land subject to a
ground lease expiring in 2060. The lease currently provides for minimum
rent equal to the greater of: (i) annual rents of $607, subject to
adjustment based on the Consumer Price Index every fifth lease year with
the next adjustment in 2001, or (ii) 3/8 % of the gross annual retail
sales, plus 4 5/8 % of the gross annual rents from non-retail tenants of
Penn Square Mall.

8.   TRANSACTIONS WITH AFFILIATES (not disclosed elsewhere)

     Costs and expenses for services provided by the Management Company and
the Operating Partnership to the Company's investment properties, including
the Company's share of unconsolidated investment properties, were as
follows:
                                        Years ended December 31,
                                   --------------------------------
                                      1999       1998        1997
                                    --------   --------    --------
Property management and
  leasing services (1). . . . . .   $  9,736   $  7,635    $  5,770

Development services. . . . . . .      2,469      2,125       1,365
                                    --------   --------    --------
                                    $ 12,205   $  9,760    $  7,135
                                    ========   ========    ========

     (1)   Management services of $1,656 for the year ended December 31,
1997 provided by the Operating Partnership to Brandon TownCenter, The Plaza
at Brandon TownCenter, MainPlace, New York Square, Old Orchard Center, Penn
Square Mall, Service Merchandise Plaza and Wolfchase Galleria, and included
above, have been eliminated in consolidation. On January 1, 1998, these
management contracts were terminated and new management contracts were
entered into with the Management Company.



<PAGE>


     The Company has purchase options, until October 2000, with respect to
interests in certain improved retail properties in which JMB Partners has
an interest. In addition, these interests may not be sold by JMB Partners
without first offering such interests to the Company at the lower of the
option price or the then fair market value of such property.

9.   OPTIONS AND EMPLOYEE BENEFIT PLANS

OPTION PLAN

     In 1993, the Company adopted a stock option plan (the "Option Plan")
which provides for the granting of options to directors, officers and key
employees of the Company and the Management Company to purchase a specified
number of shares of common stock or Units ("Options"). Under the Option
Plan, the total number of shares of common stock available to be issued
upon exchange of Units issued under the Option Plan is equal to 1,500,000.
The Options are granted at the market value on the day of the grant.

     At December 31, 1999, there were 143,901 additional shares available
for grant under the Option Plan. No significant options were granted in
1999, 1998 or 1997.

     The Company has elected to continue to apply the provisions of APB
Opinion No. 25 in accounting for its Option Plan and, accordingly, no
compensation cost has been recognized for its Options in the consolidated
financial statements. Had the Company determined compensation cost based
upon the fair value at the grant date for these Options under SFAS No. 123,
the effects on the Company's net income and net income per share would not
have been material.

     Stock option activity during the periods indicated was as follows:

                                                           Weighted-
                                                            Average
                                Number of    Number of     Exercise
                                 Shares        Units        Price
                               ----------   ----------    ----------

Balances at
 December 31, 1996. . . . . .      69,135    1,062,878    $  22.3277
  Granted . . . . . . . . . .       7,500       --           30.1250
  Exercised . . . . . . . . .      --         (211,838)      22.9130
  Canceled. . . . . . . . . .      --              (67)      20.7500
                               ----------   ----------    ----------

Balances at
 December 31, 1997. . . . . .      76,635      850,973       22.2572
  Granted . . . . . . . . . .      10,350       12,150       34.2292
  Exercised . . . . . . . . .     (16,000)     (69,573)       21.927
  Canceled. . . . . . . . . .      --           --             --
                               ----------   ----------    ----------

Balances at
 December 31, 1998. . . . . .      70,985      793,550       22.6015
  Granted . . . . . . . . . .      28,100       94,400       30.7545
  Exercised . . . . . . . . .     (10,000)     (60,950)      22.5557
  Canceled. . . . . . . . . .      --           --             --
                               ----------   ----------    ----------
Balances at
 December 31, 1999. . . . . .      89,085      827,000    $  23.6952
                               ==========   ==========    ==========

     At December 31, 1999, the range of exercise prices and
weighted-average remaining contractual life of outstanding Options was
$20.3125-$34.8125 and 5.33 years, respectively.

     At December 31, 1999 and 1998, the number of Options exercisable was
783,585 and 786,703, respectively, and the weighted-average exercise price
of these Options was $22.4498 and $22.4299, respectively.


<PAGE>


1999 INCENTIVE STOCK PROGRAM AND 1996 INCENTIVE UNIT PROGRAM

     In 1999, the Company adopted and the shareholders approved, the 1999
Incentive Stock Program (the "1999 Program") which provides for the award
of up to 620,000 Incentive Stock awards to officers and key employees of
the Company and the Management Company. Incentive Stock may be earned 25%
in each of the calendar years 2000 through 2003 subject to the Company
achieving annual and cumulative performance targets in its funds available
for distribution for each year. The determination of whether the
performance target for any year has been achieved is to be made not later
than March 31 of the following year (the "Determination Date"). Awards are
subject to vesting over a three-year period commencing on the first day of
the calendar year subsequent to the year in which the Incentive Stock was
earned, provided that the participant remains in the employ of the Company
or its affiliates on each such vesting date.

     On May 6, 1997, the Shareholders approved the Company's 1996 Incentive
Unit Program (the "1996 Program") which provides for the award of up to
525,000 Incentive Units. Awards for 525,000 Incentive Units were granted in
1996. Participants under the 1996 Program earned awards of 130,750
Incentive Units in each of 1999, 1998 and 1997. The Company recognizes
deferred compensation expense for earned awards as of each year's
Determination Date. Such amounts are amortized to expense over the related
vesting periods. Compensation expense for this plan for 1999, 1998 and 1997
was $4,073, $2,946 and $1,260, respectively, which is inclusive of the
Company's share of the Management Company.

SAVINGS AND RETIREMENT PLANS

     The Company and the Management Company participate in the JMB Realty
Corporation Employee Savings Plan and the Core Retirement Award Program. In
1999, 1998 and 1997, the Company and the Management Company contributed in
aggregate $21, $98 and $96, respectively, to the JMB Realty Corporation
Employee Savings Plan, and $254, $544 and $511, respectively, to the Core
Retirement Award Program. On August 1, 1998, the Company and the Management
Company implemented the Deferred Cash Compensation Plan (the "Plan"). This
Plan replaces the JMB Realty Corporation Employee Savings Plan for highly
compensated employees of the Company and the Management Company. This plan
is not qualified under section 401(a) of the Internal Revenue Code of 1986.
In 1999 and 1998, the Company and the Management Company contributed in the
aggregate $423 and $24, respectively, to this Plan.

10.  DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

     During 1998, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company defines
each of its regional malls and community centers as an individual operating
segment and has determined that all of the regional malls and community
centers exhibit substantially identical economic characteristics and meet
the other criteria specified by SFAS No. 131 which permits the malls to be
aggregated into one reportable segment. The Management Company is viewed by
management as a separate segment and does not meet the quantitative
measures required for separate disclosure.

     The Company separately assesses and measures the operating results of
its regional malls based on net operating income ("NOI"). NOI is calculated
as shopping center revenues less shopping center expenses adjusted for
straight-line rent and non-real estate depreciation. NOI for the Company's
unconsolidated partnerships is measured at the Company's ownership share.



<PAGE>


     The following table summarizes the revenues, NOI and assets for the
Company's reportable segment.

                                  1999         1998          1997
                               ----------   ----------    ----------
Revenues:
Shopping center revenues. . .  $  327,513   $  267,142    $  203,118
  Company's share of
    unconsolidated
    partnerships. . . . . . .     (86,750)     (69,556)      (50,758)
  Interest income . . . . . .         971        1,103         1,620
                               ----------   ----------    ----------
Consolidated revenue. . . . .  $  241,734   $  198,689    $  153,980
                               ==========   ==========    ==========
NOI:
Shopping center NOI . . . . .  $  203,430   $  161,991    $  125,915
  Unconsolidated shopping
    center NOI. . . . . . . .     (48,900)     (38,722)      (27,180)
  Interest income . . . . . .         971        1,103         1,620
  Straight-line rent
    adjustments . . . . . . .       1,531        1,369         1,136
  Real estate depreciation
    and amortization. . . . .     (48,417)     (39,512)      (31,435)
  Non-shopping center
    expenses. . . . . . . . .     (74,310)     (54,903)      (44,054)
  Income from unconsolidated
    partnerships and the
    Management Company. . . .      14,041       11,042         5,789
                               ----------   ----------    ----------
Consolidated income before
  gains, minority interest
  and extraordinary items . .  $   48,346   $   42,368    $   31,791
                               ==========   ==========    ==========
ASSETS:
  Total shopping center
    assets. . . . . . . . . .  $1,794,226   $1,362,436    $1,264,650
     Investment in
        Management Company. .      49,967       48,552        15,058
        Cash. . . . . . . . .       4,125          422         1,268
                               ----------   ----------    ----------
Consolidated assets . . . . .  $1,848,318   $1,411,410    $1,280,976
                               ==========   ==========    ==========

     Information relative to the Company's expenditures for additions to
long-lived assets has been included in the investing activities report-ed
in the consolidated statements of cash flows.

11.  CONTINGENCIES

LITIGATION

     The Company and its unconsolidated partnership investments and the
Management Company are parties to a variety of legal proceedings arising in
the ordinary course of their business. It is management's opinion that the
ultimate resolution of these matters will not have a material adverse
impact on the financial condition, results of operations or liquidity of
the Company.

12.  SUBSEQUENT EVENTS

     On January 4, 2000, Water Tower Joint Venture extended the maturity on
its $170,000 of indebtedness to February 1, 2001.

     On January 4, 2000, S.F. Shopping Centre Associates, L.P. increased
its outstanding indebtedness by $12,250 and extended the maturity on its
total indebtedness to July 1, 2004.

     On January 28, 2000, the Company increased its unsecured line of
credit to $13,000 and extended the maturity to January 26, 2001.


<PAGE>


                     INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholders
Urban Shopping Centers, Inc.:

     We have audited the accompanying consolidated balance sheets of Urban
Shopping Centers, Inc. and consolidated partnerships (the Company) as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in
the three-year period ended December 31, 1999. These consolidated financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
the Company as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted
accounting principles.




/S/ KPMG LLP
KPMG LLP

Chicago, Illinois
February 4, 2000


<PAGE>


<TABLE>
                                     SELECTED FINANCIAL DATA (Unaudited)

                                 ($000's omitted, except per share amounts)
<CAPTION>
                                                       Years ended December 31
                                 -----------------------------------------------------------------------
                                         1999          1998          1997          1996          1995
                                     -----------   -----------   -----------    ----------    ----------
<S>                                 <C>           <C>           <C>            <C>           <C>
Operating data: (1)
Total revenues. . . . . . . . . . .  $   241,734   $   198,689   $   153,980    $   97,044    $   91,627
Income before other gains,
  minority interest and
  extraordinary items . . . . . . .       48,346        42,368        31,791        27,330        24,099
Income before extraordinary
  items and dividends on
  preferred stock . . . . . . . . .       31,101        29,307        22,904        19,969        18,644
Basic income per common and
  unit voting common share
  before extraordinary items. . . .         1.26          1.29          1.27          1.42          1.35
Diluted income per common and
  unit voting common share
  before extraordinary items. . . .         1.25          1.27          1.25          1.42          1.35
Dividends declared and paid
  per common and unit voting
  common share. . . . . . . . . . .         2.24          2.10          2.03          1.98          1.94

Balance sheet data: (1)
Total assets. . . . . . . . . . . .   $1,848,318    $1,411,410    $1,280,976   $   904,076    $  598,507

Mortgage notes payable and
  land sale-leaseback
  proceeds. . . . . . . . . . . . .    1,155,452       840,501       741,908       514,886       326,000
Stockholders' equity. . . . . . . .      312,919       326,274       309,656       194,663       134,509

<FN>
     (1)   This information should be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Included in income before extraordinary items and dividends on preferred
stock, are (i) a $632 gain on sale of land at Wolfchase Galleria in 1999, (ii) a $479 gain on sale of land at
Wolfchase Galleria in 1998, (iii) a $1,821 gain on sale of land at Wolfchase Galleria in 1997, (iv) a $1,852 gain
on sale of the Burdines store at Brandon TownCenter in 1997, (v) a $3,372 gain on sale of four outparcels at
Wolfchase Galleria in 1996 and (vi) a $4,496 gain on sale of two Company purchase options in 1995.
</TABLE>


<PAGE>


<TABLE>
                                   QUARTERLY FINANCIAL SUMMARY (Unaudited)

                                 ($000's omitted, except per share amounts)

<CAPTION>
                                     1999 Quarters                             1998 Quarters
                      ---------------------------------------- -----------------------------------------
                         First    Second      Third    Fourth     First     Second     Third     Fourth
                       --------  --------   --------  --------  --------   --------  --------   --------
<S>                   <C>       <C>        <C>       <C>       <C>        <C>       <C>        <C>
Total revenues. . . .  $ 49,892  $ 58,204   $ 63,167  $ 70,471  $ 46,908   $ 47,872  $ 48,875   $ 55,034
Income before
 extraordinary
 items and dividends
 on preferred                                   (3)                            (4)
 stock. . . . . . . .     6,099     6,699      7,553    10,750     4,540       6,915    6,683     11,169
                           (1)       (2)        (3)                            (4)
Net income. . . . . .     4,967     6,213      7,553    10,750     4,540       6,915    6,683     11,169
Basic income per
 common and unit
  voting common
  share . . . . . . .      0.16      0.23       0.30      0.48      0.16       0.30      0.29       0.54
Diluted income per
  common and unit
  voting common
   share. . . . . . .      0.16      0.23       0.30      0.48      0.16       0.30      0.29       0.53
Dividends declared
 and paid . . . . . .     0.560     0.560      0.560     0.560     0.525      0.525     0.525      0.525
Common stock price:
  High. . . . . . . .       $33  $33-3/16    $32-1/8   $29-1/8       $36     $34-1/4 $34-3/16    $33-7/16
  Low . . . . . . . .    28-1/4   27-9/16         29        24    32-1/8     31-1/2    30-1/8      30-7/8

<FN>
     (1)   Includes the Company's share of extraordinary items, net of taxes and minority interest, of $1,132
relative to the prepayment penalty and the write-off of deferred expenses in connection with the refinancing of
debt at the Management Company.

     (2)   Includes the Company's share of extraordinary items, net of minority interest, of $486 relative to the
write-off of deferred expenses in connection with the refinancing of indebtedness at Citrus Park Town Center.

     (3)   Includes the Company's share of gain on sale of land at Wolfchase Galleria, net of minority interest,
of $423.

     (4)   Includes the Company's share of gain on sale of land at Wolfchase Galleria, net of minority interest,
of $322.

</TABLE>


<PAGE>


                          BOARD OF DIRECTORS


Neil G. Bluhm (3)
Co-Chairman of the Board of Directors

Judd D. Malkin (2)
Co-Chairman of the Board of Directors

James B. Digney (1)
Senior Vice President,
Metropolitan Life Insurance Company

Matthew S. Dominski (3)
Chief Executive Officer,
Urban Shopping Centers, Inc.

Susan Getzendanner (2)
Partner,
Skadden, Arps, Slate, Meagher & Flom (Illinois)

John E. Neal(2)
Head - Commercial Real Estate, Bank One

Phillip B. Rooney (3)
Vice Chairman,
The ServiceMaster Company

John G. Schreiber (1)
President,
Schreiber Investments
and Partner,
Blackstone Real Estate Advisors

Henry T. Segerstrom (1, 2)
Managing Partner,
C.J. Segerstrom & Sons

Matthew S. Dominski
Chief Executive Officer

Adam S. Metz
President

James L. Czech
Executive Vice President; President - Development,
Urban Retail Properties Co.;
and President,
Urban Retail International LLC

James H. Lyman
Executive Vice President, Chief Financial Officer and Director of
Acquisitions,

Michael G. Hilborn
Senior Vice President, General Counsel and Secretary

Michael A. Goldberg
Senior Vice President and Treasurer



(1)  Audit Committee Member
(2)  Executive Compensation Committee Member
(3)  Nominating Committee Member Officers


<PAGE>


                        SHAREHOLDER INFORMATION

ANNUAL MEETING

     The 2000 Annual Meeting of Shareholders will be held at 10:00 a.m.
local time on Thursday, May 11, 2000 at:

     American National Bank & Trust Company
     120 South LaSalle Street, 7th floor
     Chicago, Illinois.

SHARE INFORMATION

     In 1999, shares of Urban Shopping Centers traded at a high of $33-3/16
and a low of $24.

     Urban Shopping Centers is listed on The New York Stock Exchange and
The Chicago Stock Exchange (Symbol: URB). As of February 7, 2000, there
were 18,054,253 shares outstanding held by approximately 530 shareholders
of record.

DIVIDEND

     Urban Shopping Centers most recently declared a quarterly cash
dividend of 59 cents per share on February 10, 2000.  The dividend equates
to an annual dividend of $2.36. The dividend was paid on March 7, 2000 to
shareholders of record on February 22, 2000.

     Of the total dividends paid on common shares in 1999, 91.79% was
ordinary income, .89% was long-term capital gain and 7.32% was return of
capital for tax purposes.

TRANSFER AGENT

     EquiServe, First Chicago Trust Division
     P. O. Box 2500
     Jersey City, New Jersey 07303
     Phone: (800) 446-2617


DIVIDEND REINVESTMENT PLAN

     Registered shareholders are eligible to reinvest their dividends
through the company's authorized DirectSERVICE Program with all applicable
brokerage commissions and transaction fees paid by Urban Shopping Centers.
The DirectSERVICE Program also allows both existing and new shareholders to
purchase shares through voluntary cash payments.

     For information on this program, please contact:

     EquiServe, First Chicago Trust Division
     at 1-800-446-2617 (for registered shareholders)
     or 1-800-992-4566 (for non-registered shareholders).

FOR ADDITIONAL INFORMATION

     Urban Shopping Centers, Inc.
     c/o Investor Relations
     900 N. Michigan Avenue, Suite 1500
     Chicago, Illinois 60611
     Phone: (312) 915-2000
     Facsimile: (312) 915-2001



<PAGE>


MANAGEMENT

Joseph M. Shrader
President

Palmer W. Cameron
Executive Vice President and Director of Technical Services

Charles J. Gill
Executive Vice President and Regional Manager

David S. Kattar
Executive Vice President and Regional Manager

Robert D. Oliver
Executive Vice President and Regional Manager

Timothy W. Olson
Executive Vice President and Regional Manager

Robert W. Powell, Jr.
Executive Vice President and Regional Manager

Mary L. Schlachter
Executive Vice President and Regional Manager

LEASING

Ross B. Glickman
President

Susan Cadieux-Smith
Executive Vice President

R. Webber Hudson
Executive Vice President

Max S. Reiswerg
Executive Vice President

Steven B. Warsaw
Executive Vice President

John F. Bergh
Senior Vice President

Fred M. Heichman
Senior Vice President

Lisa Lasota-Poole
Senior Vice President

Michael A. Law
Senior Vice President

Doyle P. Liesenfelt
Senior Vice President

Kimberly A. Pohlen
Senior Vice President

Daniel J. Pollard
Senior Vice President

Wendy J. Silverman
Senior Vice President



<PAGE>


Steven M. Weiss
Senior Vice President

Arnold D. Blake
Vice President

Danna L. Diamond
Vice President

Paul E. Geddis
Vice President

Kiril G. Foushee
Vice President

Steve A. Greenwood
Vice President

Judith J. Jacobs
Vice President

Nancy L. Jones
Vice President

Tisha A. Maley
Vice President

Jeanne A. Morrison
Vice President

Paul Motta
Vice President

J. Michael Nagy
Vice President

Susan K. Ramsey
Vice President

David S. Reiner
Vice President

Karen A. Schubert
Vice President

Dee A. Torres
Vice President

Stewart T. Waller
Vice President

Lynn S. Warren
Vice President

Mark A. Williamson
Vice President

LEASE ADMINISTRATION

LaBonney Taylor
Vice President



<PAGE>


DEVELOPMENT

Michael S. Levin
Executive Vice President

Oscar Reid
Executive Vice President

Rohan S. Andrew
Senior Vice President

James J. Farrell
Senior Vice President

Mark A. Flom
Senior Vice President

Richard J. Kobe
Senior Vice President

Robert W. Lenke
Senior Vice President

W. Wayne Litzau
Senior Vice President

Charles C. Porter
Senior Vice President

Jan C. Porter
Senior Vice President

Adrian A. Hogg
Vice President

Thomas D. Howes
Vice President

Robert McHale
Vice President

John C. Parapetti
Vice President

Victor H. Pildes
Vice President

John R. Plunkett
Vice President

Christopher M. West
Vice President

MARKETING

Cynthia S. Bohde
Senior Vice President

Lisa A. Bell
Vice President

Constance Dyer
Vice President

Evan C. Geroux, Jr.
Vice President

J. Charlene Slack
Vice President


<PAGE>


CORPORATE

Avrum R. Miller
Executive Vice President

Len W. Tobiaski
Executive Vice President / Controller

Mark Brown
Senior Vice President / Chief Information Officer

Michael T. Laing
Senior Vice President

Kathy A. Senten
Senior Vice President

Gail M. Silver
Senior Vice President

Pamela S. Bordner
Vice President

Sherry K. Cooper
Vice President

Patrick R. Dunne
Vice President

Thomas R. Field
Vice President

John R. Houren
Vice President

Joseph S. McCarthy, Jr.
Vice President

Paul J. Olimpio
Vice President

Karen Ruthman
Vice President

Charles E. Schulze
Vice President

Mary C. Sheridan
Vice President

Mindy W. Sherman
Vice President

Harold J. Wagner
Vice President

TENANT COORDINATION

Martha J. Spatz
Senior Vice President

Peter V. Irie
Vice President