<PAGE>   1
 
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                       SECURITIES AND EXCHANGE COMMISSION
    
   
                             WASHINGTON, D.C. 20549
    
                            ------------------------
   
                                  FORM 10-K/A
    
   
                               (AMENDMENT NO. 2)
    
                            ------------------------
   
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
      ACT OF 1934 [FEE REQUIRED]
    
 
   
       FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR
    
 
   
[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT
       OF 1934 [NO FEE REQUIRED]
    
 
   
       FOR THE TRANSITION PERIOD FROM  _________ TO  _________
    
 
   
                        COMMISSION FILE NUMBER 33-98364
    
   
                           SIMON PROPERTY GROUP, L.P.
    
   
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
    
 
   
<TABLE>
<S>                                           <C>
                        DELAWARE                                35-1903854
         (STATE OR OTHER JURISDICTION                        (I.R.S. EMPLOYER
      OF INCORPORATION OR ORGANIZATION)                    IDENTIFICATION NO.)
          115 WEST WASHINGTON STREET                              46204
               INDIANAPOLIS, INDIANA                            (ZIP CODE)
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
    
 
   
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (317) 636-1600
    
 
   
        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
    
   
        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
    
                            ------------------------
 
   
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.  YES   X    NO  _____
    
 
   
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K.  [ ].
    
 
   
                      DOCUMENTS INCORPORATED BY REFERENCE
    
 
   
NONE.
    
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<PAGE>   2
 
   
     Simon Property Group, L.P. hereby amends its Annual Report on Form 10-K for
the year ended December 31, 1995, filed with the Commission on April 1, 1996,
and first amended on April 27, 1996. This amendment restates the Consolidated
Balance Sheets and Consolidated Statements of Changes in Partners' Equity to
properly reflect the limited partners' equity interest in the Registrant.
    
 
   
                                   SIGNATURES
    
 
   
     Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
    
 
   
                                            SIMON PROPERTY GROUP, L.P.
    
 
   
                                            By: SIMON DeBARTOLTO GROUP, INC.,
    
   
                                              General Partner
    
 
   
                                            By /s/  JAMES M. BARKLEY
    
   
                                             James M. Barkley
    
   
                                             Secretary/General Counsel
    
 
   
November 18, 1996
    
 
                                        2
<PAGE>   3
 
   
                                    PART IV
    
 
   
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
    
 
   
<TABLE>
<CAPTION>
                                                                                     PAGE NO.
                                                                                     --------
<S>         <C>                                                                      <C>
(a)         (1) Financial Statements
            Report of Independent Public Accountants...............................      4
            Simon Property Group, L.P. Consolidated Balance Sheets as of December
            31, 1995 and 1994......................................................      5
            Simon Property Group, L.P. Consolidated Statements of Operations for
            the years ended December 31, 1995 and 1994, and for the period from
            inception of operations (December 20, 1993) to December 31, 1993 and
            Simon Property Group (the Predecessor) Combined Statement of Operations
            for the period from January 1, 1993 to December 19, 1993...............      6
            Simon Property Group, L.P. Consolidated Statements of Changes in
            Partners' Equity for the years ended December 31, 1995 and 1994, and
            for the period from inception of operations (December 20, 1993) to
            December 31, 1993 and Simon Property Group (the Predecessor) Combined
            Statements Owners' Deficit for the period from January 1, 1993 to
            December 19, 1993......................................................      7
            Simon Property Group, L.P. Consolidated Statements of Cash Flows for
            the years ended December 31, 1995 and 1994, and for the period from
            inception of operations (December 20, 1993) to December 31, 1993 and
            Simon Property Group (the Predecessor) Combined Statement of Cash Flows
            for the period from January 1, 1993 to December 19, 1993...............      8
            Notes to Financial Statements..........................................      9
            (2) Financial Statement Schedules
            Report of Independent Public Accountants...............................     34
            Schedule III--Schedule of Real Estate and Accumulated Depreciation.....     35
            Notes to Schedule III..................................................     39
            (3) Exhibits
            The Exhibit Index attached hereto is hereby incorporated by reference
            to this Item...........................................................     40
(b)         Reports on Form 8-K
            None.
</TABLE>
    
 
                                        3
<PAGE>   4
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Simon Property Group, Inc.:
 
We have audited the accompanying consolidated balance sheets of SIMON PROPERTY
GROUP, L.P. (a Delaware limited partnership) and subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of operations, partners'
equity and cash flows for the years ended December 31, 1995 and 1994, and for
the period from inception of operations (December 20, 1993) to December 31, 1993
and the combined statements of operations, owners' deficit and cash flows of
SIMON PROPERTY GROUP (the Predecessor) for the period from January 1, 1993 to
December 19, 1993. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Simon Property
Group, L.P. and subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1995 and 1994, and for the period from inception of
operations (December 20, 1993) to December 31, 1993, and the combined results of
operations and cash flows of the Predecessor for the period from January 1, 1993
to December 19, 1993, in conformity with generally accepted accounting
principles.
 
   
As explained in Note 12 to the financial statements, Simon Property Group, L.P.
has given retroactive effect to reclassify the limited partners' interest in
Simon Property Group, L.P.
    
 
                                          ARTHUR ANDERSEN LLP
 
Indianapolis, Indiana
   
November 13, 1996
    
 
                                        4
<PAGE>   5
 
   
                                 BALANCE SHEETS
    
 
   
                    SIMON PROPERTY GROUP, L.P. CONSOLIDATED
    
 
   
                             (DOLLARS IN THOUSANDS)
    
 
   
<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                        ------------------------
                                                                           1995         1994
                                                                        -----------  -----------
<S>                                                                     <C>          <C>
ASSETS:
  Investment properties, at cost....................................     $2,162,161   $1,900,027
  Less -- accumulated depreciation..................................        152,817       70,916
                                                                         ----------   ----------
                                                                          2,009,344    1,829,111
  Cash and cash equivalents.........................................         62,721      105,139
  Tenant receivables and accrued revenue, net.......................        144,400      146,555
  Notes receivable and advances due from Management Company.........        102,522       75,405
  Investment in partnerships and joint ventures, at equity..........        117,332       39,632
  Deferred costs, net...............................................         81,398       85,878
  Other assets......................................................         30,985       27,174
  Minority interest.................................................          7,734        7,966
                                                                         ----------   ----------
          Total assets..............................................     $2,556,436   $2,316,860
                                                                         ==========   ==========
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES:
  Mortgages and other notes payable.................................     $1,980,759   $1,938,091
  Accounts payable and accrued expenses.............................        113,131      102,750
  Accrued distributions.............................................         48,594       40,807
  Cash distributions and losses in partnerships and joint ventures,
     at equity......................................................         54,120       96,696
  Investment in Management Company..................................         20,612       16,875
  Other liabilities.................................................         19,582       19,948
                                                                         ----------   ----------
     Total liabilities..............................................      2,236,798    2,215,167
                                                                         ----------   ----------
COMMITMENTS AND CONTINGENCIES (Note 15 )
LIMITED PARTNERS' EQUITY INTEREST, 37,282,628 and 37,497,150 units
  outstanding, respectively, at redemption value (Note 12)..........        908,764      909,306
                                                                         ----------   ----------
PARTNERS' EQUITY:
  Preferred units, 4,000,000 authorized, issued and outstanding.....         99,923           --
  General Partner, 58,360,195 and 48,412,445 units outstanding,
     respectively...................................................        135,710       57,307
  Adjustment to reflect Limited Partners' equity interest at
     redemption value (Note 12).....................................      (822,072)    (864,920)
  Unamortized restricted stock award................................        (2,687)           --
                                                                         ----------   ----------
     Total partners' equity (deficit)...............................      (589,126)    (807,613)
                                                                         ----------   ----------
          Total liabilities, limited partners' equity interest and
            partners' equity (deficit)..............................     $2,556,436   $2,316,860
                                                                         ==========   ==========
</TABLE>
    
 
        The accompanying notes are an integral part of these statements.
 
                                        5
<PAGE>   6
 
   
                            STATEMENTS OF OPERATIONS
    
 
   
                    SIMON PROPERTY GROUP, L.P. CONSOLIDATED
    
   
                         SIMON PROPERTY GROUP COMBINED
    
 
   
                (DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
    
 
   
<TABLE>
<CAPTION>
                                                                          SIMON PROPERTY                      SIMON
                                                                            GROUP, L.P.                     PROPERTY
                                                              ---------------------------------------         GROUP
                                                                                                        -----------------
                                                                 FOR THE YEAR        FOR THE PERIOD      FOR THE PERIOD
                                                              ENDED DECEMBER 31,    FROM DECEMBER 20,    FROM JANUARY 1,
                                                              -------------------        1993 TO             1993 TO
                                                                1995       1994     DECEMBER 31, 1993   DECEMBER 19, 1993
                                                              --------   --------   -----------------   -----------------
<S>                                                           <C>        <C>        <C>                 <C>
REVENUE:
  Minimum rent............................................    $307,849   $255,721       $   9,041           $ 218,492
  Overage rent............................................      23,278     25,463             638              19,442
  Tenant reimbursements...................................     191,535    162,706           4,800             145,484
  Other income............................................      30,995     29,786           3,945              22,451
                                                              --------   --------        --------            --------
    Total revenue.........................................     553,657    473,676          18,424             405,869
                                                              --------   --------        --------            --------
EXPENSES:
  Property operating......................................     102,624     91,792           1,781              96,682
  Depreciation and amortization...........................      92,739     75,945           2,051              60,243
  Real estate taxes.......................................      53,766     44,403           1,335              39,333
  Repairs and maintenance.................................      27,633     23,430             447              20,722
  Advertising and promotion...............................      13,519     12,633             336               9,868
  Provision for credit losses.............................       2,939      4,238              --               3,741
  Other...................................................       9,301      6,937             196               5,455
                                                              --------   --------        --------            --------
    Total operating expenses..............................     302,521    259,378           6,146             236,044
                                                              --------   --------        --------            --------
OPERATING INCOME..........................................     251,136    214,298          12,278             169,825
INTEREST EXPENSE..........................................     150,224    122,980           3,548             156,909
NON-RECURRING INTEREST EXPENSE............................          --     27,184              --                  --
                                                              --------   --------        --------            --------
INCOME BEFORE MINORITY INTEREST...........................     100,912     64,134           8,730              12,916
MINORITY INTEREST.........................................      (2,681)    (3,759)            (58)             (3,558)
GAIN ON SALE OF ASSETS, NET...............................       1,871         --              --                  --
                                                              --------   --------        --------            --------
INCOME BEFORE UNCONSOLIDATED ENTITIES.....................     100,102     60,375           8,672               9,358
INCOME (LOSS) FROM UNCONSOLIDATED ENTITIES................       1,403        (67)             35              (2,446)
                                                              --------   --------        --------            --------
INCOME BEFORE EXTRAORDINARY ITEMS.........................     101,505     60,308           8,707               6,912
EXTRAORDINARY ITEMS.......................................      (3,285)   (17,980)        (30,481)             26,189
                                                              --------   --------        --------            --------
NET INCOME (LOSS).........................................      98,220     42,328         (21,774)             33,101
PREFERRED UNIT REQUIREMENT................................       1,490         --              --                  --
                                                              --------   --------        --------            --------
NET INCOME (LOSS) AVAILABLE TO UNITHOLDERS................    $ 96,730   $ 42,328       $ (21,774)          $  33,101
                                                              ========   ========        ========            ========
NET INCOME (LOSS) AVAILABLE TO UNITHOLDERS ATTRIBUTABLE
  TO:
  General Partner.........................................    $ 57,781   $ 23,377       $ (11,366)
  Limited Partners........................................      38,949     18,951         (10,408)
                                                              --------   --------        --------
                                                              $ 96,730   $ 42,328       $ (21,774)
                                                              ========   ========        ========
EARNINGS PER UNIT:
    Income before extraordinary items.....................    $   1.08   $   0.71       $    0.11
    Extraordinary items...................................       (0.04)     (0.21)          (0.39)
                                                              --------   --------        --------
    Net income (loss).....................................    $   1.04   $   0.50       $   (0.28)
                                                              ========   ========        ========
</TABLE>
    
 
        The accompanying notes are an integral part of these statements.
 
                                        6
<PAGE>   7
 
   
         STATEMENTS OF CHANGES IN PARTNERS' EQUITY AND OWNERS' DEFICIT
    
 
                    SIMON PROPERTY GROUP, L.P. CONSOLIDATED
                         SIMON PROPERTY GROUP COMBINED
 
   
                             (DOLLARS IN THOUSANDS)
    
 
SIMON PROPERTY GROUP
 
<TABLE>
<S>                                                                                         <C>
Owners' deficit, December 31, 1992........................................................  $ (565,566)
Contributions.............................................................................      13,913
Distributions.............................................................................    (170,877)
Net income................................................................................      33,101
                                                                                             ---------
Owners' deficit, December 19, 1993........................................................  $ (689,429)
                                                                                             =========
</TABLE>
 
--------------------------------------------------------------------------------
 
   
<TABLE>
<CAPTION>
                                   PREFERRED UNITS         GENERAL PARTNER       UNAMORTIZED                  LIMITED PARTNER
                                 --------------------   ----------------------   RESTRICTED                ----------------------
                                   UNITS      AMOUNTS     UNITS       AMOUNTS    STOCK AWARD     TOTAL       UNITS       AMOUNTS
                                 ----------   -------   ----------   ---------   -----------   ---------   ----------   ---------
<S>                              <C>          <C>       <C>          <C>         <C>           <C>         <C>          <C>
SIMON PROPERTY GROUP, L.P.
Balance at inception...........          --   $   --            --   $      --     $    --     $      --           --   $      --
Limited Partners'
  contributions................          --       --            --          --          --            --   37,497,150    (689,429)
General Partner
  contributions................          --       --    40,950,000     767,756          --       767,756           --          --
Adjustment to allocate net
  equity of the Operating
  Partnership..................          --       --            --    (726,869)         --      (726,869)          --     726,869
Adjustment to reflect limited
  partners' equity interest at
  Redemption Value (Note 12)...          --       --            --    (821,341)         --      (821,341)          --     821,341
Net loss, inception of
  operations (December 20,
  1993) to December 31, 1993...          --       --            --     (11,366)         --       (11,366)          --     (10,408)
                                  ---------   -------   ----------   ---------     -------     ---------   ----------   ---------
Balance at December 31, 1993...          --       --    40,950,000   $(791,820)    $    --     $(791,820)  37,497,150   $ 848,373
                                  ---------   -------   ----------   ---------     -------     ---------   ----------   ---------
General Partner
  contributions................          --       --     7,462,445     164,334          --       164,334           --          --
Adjustment to allocate net
  equity of the Operating
  Partnership..................          --       --            --     (69,650)         --       (69,650)          --      69,650
Adjustment to reflect limited
  partners' equity interest at
  redemption value (Note 12)...          --       --            --     (43,579)         --       (43,579)          --      43,579
Distributions..................          --       --            --     (90,275)         --       (90,275)          --     (71,247)
Net income.....................          --       --            --      23,377          --        23,377           --      18,951
                                  ---------   -------   ----------   ---------     -------     ---------   ----------   ---------
Balance at December 31, 1994...          --   $   --    48,412,445   $(807,613)    $    --     $(807,613)  37,497,150   $ 909,306
                                  ---------   -------   ----------   ---------     -------     ---------   ----------   ---------
Preferred unit contributions,
  net..........................  4,000,000..  99,923            --          --          --        99,923           --          --
General Partner
  contributions................          --       --     9,470,977     216,545          --       216,545           --          --
Limited Partners'
  contributions................          --       --            --          --          --            --      120,000     (16,869)
Acquisition of Limited
  Partners' interest and
  other........................          --       --       333,462       5,036          --         5,036     (334,522)       (301)
Stock incentive program........          --       --       143,311       3,608      (3,605)            3           --          --
Amortization of stock incentive
  program......................          --       --            --          --         918           918           --          --
Adjustment to allocate net
  equity of the Operating
  Partnership..................          --       --            --     (94,035)         --       (94,035)          --      94,035
Adjustment to reflect limited
  partners' equity interest at
  redemption value (Note 12)...          --       --            --      42,848          --        42,848           --     (42,848)
Distributions..................          --       --            --    (110,532)         --       110,532           --     (73,508)
Net income.....................          --       --            --      57,781          --        57,781           --      38,949
                                  ---------   -------   ----------   ---------     -------     ---------   ----------   ---------
Balance at December 31, 1995...   4,000,000   $99,923   58,360,195   $(686,362)    $(2,687)    $(589,126)  37,282,628   $ 908,764
                                  =========   =======   ==========   =========     =======     =========   ==========   =========
</TABLE>
    
 
        The accompanying notes are an integral part of these statements.
 
                                        7
<PAGE>   8
 
   
                            STATEMENTS OF CASH FLOWS
    
 
   
                    SIMON PROPERTY GROUP, L.P. CONSOLIDATED
    
   
                         SIMON PROPERTY GROUP COMBINED
    
 
   
                             (DOLLARS IN THOUSANDS)
    
 
<TABLE>
<CAPTION>
                                                                         SIMON PROPERTY
                                                                          GROUP, L.P.                    SIMON PROPERTY
                                                           ------------------------------------------         GROUP
                                                                                                        -----------------
                                                               FOR THE YEAR          FOR THE PERIOD      FOR THE PERIOD
                                                            ENDED DECEMBER 31,     FROM DECEMBER 20,     FROM JANUARY 1,
                                                           ---------------------        1993 TO              1993 TO
                                                             1995        1994      DECEMBER 31, 1993    DECEMBER 19, 1993
                                                           ---------   ---------   ------------------   -----------------
<S>                                                        <C>         <C>         <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................  $  98,220   $  42,328       $  (21,774)          $  33,101
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities --
    Depreciation and amortization........................    101,262      83,196            2,139              64,160
    (Gain) loss on extinguishments of debt...............      3,285      17,980           30,481             (26,189)
    Gain on sale of assets, net..........................     (1,871)         --               --              (8,885)
    Straight-line rent...................................     (1,126)     (4,326)            (159)             (4,721)
    Minority interest....................................      2,681       3,759               58               3,558
    Equity in income of unconsolidated entities..........     (1,403)         67              (35)              2,446
  Changes in assets and liabilities --
    Tenant receivables and accrued revenue...............      5,502      (3,908)          (6,323)              6,187
    Deferred costs and other assets......................    (14,290)      1,099          (16,351)            (22,096)
    Accounts payable, accrued expenses and other
      liabilities........................................      2,076     (12,172)          18,993               9,630
                                                           ---------   ---------        ---------           ---------
    Net cash provided by operating activities............    194,336     128,023            7,029              57,191
                                                           ---------   ---------        ---------           ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisitions...........................................    (32,547)   (227,312)        (225,894)                 --
  Capital expenditures...................................    (98,220)    (42,765)              --             (46,677)
  Cash of consolidated joint ventures....................      4,346       8,924               --                  --
  Proceeds from sale of assets...........................      2,550          --               --              12,218
  Investments in unconsolidated entities.................    (77,905)     (1,056)              --              (1,508)
  Distributions from unconsolidated entities.............      6,214       5,842               --              46,119
  Investments in and advances to Management Company......    (27,117)    (10,405)          (3,500)                 --
                                                           ---------   ---------        ---------           ---------
    Net cash provided by (used in) investing
      activities.........................................   (222,679)   (266,772)        (229,394)             10,152
                                                           ---------   ---------        ---------           ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Minority interest contributions........................         --          --               --               1,937
  Minority interest distributions........................     (3,680)     (2,148)              --             (44,165)
  Partnership contributions..............................    242,377     106,773          767,756              12,406
  Partnership distributions..............................   (177,726)   (120,711)              --            (137,126)
  Mortgage and other note proceeds, net of transaction
    costs................................................    456,520     405,430          259,000             148,687
  Mortgage and other note principal payments.............   (531,566)   (256,081)        (588,876)            (74,943)
  Due (to) from affiliates and other repayments..........         --          --         (144,298)             22,587
                                                           ---------   ---------        ---------           ---------
    Net cash provided by (used in) financing
      activities.........................................    (14,075)    133,263          293,582             (70,617)
                                                           ---------   ---------        ---------           ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.........    (42,418)     (5,486)          71,217              (3,274)
CASH AND CASH EQUIVALENTS, beginning of period...........    105,139     110,625           39,408              42,682
                                                           ---------   ---------        ---------           ---------
CASH AND CASH EQUIVALENTS, end of period.................  $  62,721   $ 105,139       $  110,625           $  39,408
                                                           =========   =========        =========           =========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                        8
<PAGE>   9
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                         NOTES TO FINANCIAL STATEMENTS
             (DOLLARS IN THOUSANDS, EXCEPT PER UNIT/SHARE AMOUNTS)
 
1.  ORGANIZATION
 
   
     Simon Property Group, L.P. (the "Simon Operating Partnership") was formed
as a Delaware limited partnership in 1993 in connection with Simon Property
Group, Inc.'s (the "Company") initial public offering (the "IPO"). On December
20, 1993, the Company raised $767,756 in net proceeds through the Company's IPO
and debt of $259,000 was issued in a concurrent private financing transaction.
The proceeds were contributed to the Simon Operating Partnership in exchange for
40,950,000 units of partnership interest ("Units") representing a 52.2%
partnership interest. As the sole general partner of the Simon Operating
Partnership, the Company has full, exclusive and complete responsibility and
discretion in the management and control of the Simon Operating Partnership. The
Simon Operating Partnership was formed prior to consummation of the Company's
IPO and is the successor entity to Simon Property Group (the "Predecessor").
    
 
   
     Simultaneously with the offering, Melvin Simon and Herbert Simon and
certain of their affiliates (collectively, the "Simons"), along with certain
third-party investors' interests (collectively, "Simon Property Group"),
exchanged, directly or indirectly, fee and partnership interests in certain
properties and the management, development and leasing activities related to the
properties for limited partnership interests in the Simon Operating Partnership.
The Simon Operating Partnership also acquired certain third-party investors'
interests in Simon Property Group properties for cash (collectively, the
"Business Combination"). Purchase accounting was applied to the acquisition of
all third-party investors' interests for which cash consideration was paid.
Assets and liabilities related to interests acquired from the Simons and all
third-party investors receiving Units were recorded at their predecessor cost.
    
 
     As used herein, the term Units does not include units of partnership
interests entitled to preferential distribution of cash ("Preferred Units") (See
Note 3).
 
   
     The Simon Operating Partnership is engaged primarily in the ownership,
operation, management, leasing, acquisition, expansion and development of real
estate properties, primarily regional malls and community shopping centers. As
of December 31, 1995, the Simon Operating Partnership owns or holds an interest
in 122 income-producing properties, which consist of 62 regional malls, 55
community shopping centers, two specialty retail centers and three mixed-use
properties (the "Properties"). The Simon Operating Partnership also owns
interests in two regional malls and one specialty retail center currently under
construction and seven parcels of land held for future development.
    
 
   
     The Simon Operating Partnership is subject to risks incident to the
ownership and operation of commercial real estate. These include, among others,
the risks normally associated with changes in the general economic climate,
trends in the retail industry, creditworthiness of tenants, competition for
tenants, changes in tax laws, interest rate levels, the availability of
financing, and potential liability under environmental and other laws. Like most
retail properties, the Simon Operating Partnership's regional malls and
community shopping centers rely heavily upon anchor tenants. As of December 31,
1995, 126 of the approximately 396 anchor stores in the Properties were occupied
by JCPenney, Inc., Sears Roebuck & Co. and Dillard Department Stores, Inc. An
affiliate of JCPenney, Inc. is a limited partner in the Simon Operating
Partnership.
    
 
2.  BASIS OF PRESENTATION
 
   
     The accompanying consolidated financial statements of the Simon Operating
Partnership include the accounts of all entities owned or controlled by the
Simon Operating Partnership. All significant intercompany amounts have been
eliminated. These financial statements have been prepared in accordance with
generally accepted accounting principles, and accordingly contain certain
estimates by management in determining the Simon Operating Partnership's assets,
liabilities, revenues and expenses.
    
 
                                        9
<PAGE>   10
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
   
     The accompanying financial statements of the Predecessor have been
presented on a combined historical cost basis because of the affiliated
ownership and common management and because the related Properties were
contributed to the Simon Operating Partnership as a part of the Business
Combination described above. The Simons have operations which were not
contributed to the Simon Operating Partnership and, therefore, the financial
statements are not intended to represent the financial position and results of
operations of the Simons. In management's opinion, the combined financial
statements include the assets, liabilities, revenues and expenses associated
with the operations of the Properties transferred to the Simon Operating
Partnership. Minority interests were provided in the accompanying combined
financial statements for those partners' interests which were not exchanged for
Units or which were purchased for cash in connection with the Business
Combination.
    
 
   
     Properties which are wholly owned ("Wholly Owned Properties") or owned less
than 100% and are controlled by the Simon Operating Partnership ("Minority
Interest Properties") have been consolidated. Control is demonstrated by the
ability of the general partner to manage day-to-day operations, refinance debt
and sell the assets of the partnership without the consent of the limited
partner and the inability of the limited partner to replace the general partner.
Investments in partnerships and joint ventures which represent non-controlling
14.7% to 50.0% ownership interests ("Joint Venture Properties") and the
investment in the Management Company (see Note 8) are accounted for using the
equity method of accounting. These investments are recorded initially at cost
and subsequently adjusted for net equity in income (loss) and cash contributions
and distributions.
    
 
   
     Effective April 1, 1994, the Simon Operating Partnership demonstrated its
ability to control the operating activities of The Forum Shops at Caesars
("Forum"). Subsequent to April 1, 1994, Forum is included in the accompanying
financial statements using the consolidated method of accounting. Prior to the
demonstration of control, Forum was reflected in the accompanying financial
statements using the equity method of accounting.
    
 
   
     Effective July 1, 1995, the Simon Operating Partnership relinquished its
ability to solely direct certain activities related to the control of North East
Mall. As a result, the Property is no longer being consolidated, and is now
accounted for using the equity method of accounting.
    
 
   
     Net operating results of the Simon Operating Partnership are allocated
after the preferred distribution (see Note 3) based on its partners' ownership
interests. The Company's weighted average ownership interest in the Simon
Operating Partnership during 1995 and 1994 was 60.3% and 55.2%, respectively. At
December 31, 1995 and 1994, the Company's ownership interest was 61.0% and
56.4%, respectively.
    
 
                                       10
<PAGE>   11
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The following schedule identifies each Property included in the
accompanying consolidated financial statements and the method of accounting
utilized for each Property as of December 31, 1995:
 
<TABLE>
<S>                                  <C>                             <C>
CONSOLIDATED METHOD:
Regional Malls
Alton Square                         Greenwood Park Mall             North Towne Square
Amigoland Mall                       Heritage Park Mall              Northwoods Mall
Anderson Mall                        Hutchinson Mall                 Orange Park Mall
Barton Creek Square                  Independence Center             Prien Lake Mall
Battlefield Mall                     Ingram Park Mall                St. Charles Towne Center
Broadway Square                      Irving Mall                     South Park Mall
Century Consumer Mall                Jefferson Valley Mall           Southgate Mall
Charles Towne Square                 LaPlaza Mall                    Southtown Mall
Cielo Vista Mall                     Lincolnwood Town Center         Sunland Park Mall
College Mall                         Longview Mall                   Tippecanoe Mall
Crossroads Mall                      Machesney Park Mall             Towne East Square
East Towne Mall                      Markland Mall                   Towne West Square
Eastgate Consumer Mall               McCain Mall                     University Mall (Arkansas)
Eastland Mall                        Memorial Mall                   University Mall (Florida)
Forest Mall                          Midland Park Mall               Valle Vista Mall
Forest Village Park Mall             Miller Hill Mall                West Ridge Mall
Fremont Mall                         Mounds Mall                     White Oaks Mall
Golden Ring Mall                     Muncie Mall                     Wichita Mall
                                                                     Windsor Park Mall
Community Centers
Arvada Plaza                         Fox River Plaza                 Mounds Mall Cinema
Aurora Plaza                         Greenwood Plus                  New Castle Plaza
Bloomingdale Court                   Griffith Park Plaza             North Ridge Plaza
Bridgeview Court                     Hammond Square                  North Riverside Park Plaza
Brightwood Plaza                     Ingram Plaza                    Northland Plaza
Bristol Plaza                        Lake Plaza                      Northwood Plaza
Buffalo Grove Towne Center           Lake View Plaza                 Park Plaza
Celina Plaza                         Lincoln Crossing                Regency Plaza
Cohoes Commons                       Maplewood Square                St. Charles Towne Plaza
Cook's Discount Department Store     Markland Plaza                  Teal Plaza
Countryside Plaza                    Martinsville Plaza              Tippecanoe Plaza
East Towne Commons                   Marwood Plaza                   Wabash Village
Eastland Plaza                       Matteson Plaza                  West Ridge Plaza
Forest Plaza                         Memorial Plaza                  White Oaks Plaza
                                                                     Wood Plaza
Specialty Retail Centers             Mixed-Use Properties
The Forum Shops at Caesars           O'Hare International Center
Trolley Square                       Riverway
</TABLE>
 
                                       11
<PAGE>   12
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<S>                                  <C>                             <C>
EQUITY METHOD:
Regional Malls                       Community Centers               Mixed-Use Property
Circle Centre                        Cobblestone Court               The Fashion Centre at Pentagon City
Lakeline Mall                        Crystal Court
North East Mall                      Fairfax Court
Rolling Oaks Mall                    Gaitway Plaza
Ross Park Mall                       Ridgewood Court
Seminole Towne Center                Royal Eagle Plaza
Smith Haven Mall                     The Plaza at Buckland Hills
                                     The Yards Plaza
                                     Village Park Plaza
                                     West Town Corners
                                     Westland Park Plaza
                                     Willow Knolls Court
</TABLE>
 
     The deficit minority interest balance in the accompanying Consolidated
Balance Sheets represents outside partners' interests in the net equity of
certain investment properties. Deficit minority interests were recorded when a
partnership agreement provided for the settlement of deficit capital accounts
before distributing the proceeds from the sale of partnership assets and/or from
the intent (legal or otherwise) and ability of the partner to fund additional
capital contributions.
 
3.  FORMATION AND SIGNIFICANT OWNERSHIP TRANSACTIONS
 
   
     On December 20, 1993, the Company completed the Business Combination and
the IPO of 37,750,000 shares of its common stock. The net proceeds of the
offering ($767,756) and a concurrent borrowing of $259,000 were used to acquire
the sole general partner's interest in the Simon Operating Partnership.
    
 
   
     Proceeds from the offering and concurrent borrowing were used by the Simon
Operating Partnership as follows:
    
 
          1. To pay $727,905 of mortgage and other indebtedness of the
     Properties, including $144,298 of loans made by the Simons in lieu of
     third-party financings.
 
          2. To pay costs related to significant modification of debt terms and
     prepayment penalties related to the early extinguishment of debt of
     $40,512. An extraordinary loss of $30,481 was generated during the period
     from December 20, 1993 to December 31, 1993 relating to the early
     extinguishment of debt.
 
          3. To purchase certain interest-rate protection agreements totaling
     $4,687.
 
          4. To acquire certain third-party investors' interest in the
     Properties for $135,894.
 
          5. To invest $19,500 in the Management Company, of which $16,000 was
     used to repay debt. The debt repayment is included in item 1 above.
 
          6. To acquire fee and partnership interests in twelve parcels of
     undeveloped land and two mortgage notes related to two parcels of
     undeveloped land for $90,000, of which $37,009 was paid to the Simons to
     repay loans made by the Simons related to the parcels in lieu of
     third-party financing. Certain parcels of undeveloped land and two mortgage
     notes were transferred to the Management Company in exchange for a $48,000
     note receivable.
 
          7. To pay transfer taxes and other expenses associated with the
     transfer of the Properties ($5,200) and the purchase of ground leases
     ($1,116).
 
          8. To acquire certain property equipment for $2,861 and to pay
     organization costs of $1,785.
 
                                       12
<PAGE>   13
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
          9. To establish $13,296 of working capital.
 
   
     On January 14, 1994, the Company sold an additional 5,662,500 shares of
common stock, generating net proceeds of $118,235 as a result of the
underwriters' exercising the over-allotment option granted to them in connection
with the IPO. The net proceeds were contributed to the Simon Operating
Partnership in exchange for 5,662,500 Units and the Company's ownership of the
Simon Operating Partnership by 3.2% to 55.4%. The majority of the proceeds were
added to operating cash with a portion ($40,900) used to repay debt (including
related costs).
    
 
   
     On January 31, 1995, the Company filed a shelf registration with the
Securities and Exchange Commission covering 15,000,000 shares of common stock of
the Company. On April 19, 1995, 6,000,000 of these shares were sold in an
underwritten offering. On May 17, 1995, the underwriters closed on a portion
(241,854 shares) of the over-allotment option granted them in connection with
the above offering. Proceeds from these transactions were contributed to the
Simon Operating Partnership in exchange for 6,241,854 Units and subsequently
used to repay debt. These transactions increased the Company's ownership of the
Simon Operating Partnership 2.8% to 60.5%.
    
 
   
     On February 10, 1995, one of the limited partners in the Simon Operating
Partnership exchanged 212,114 Units for 212,114 shares of common stock of the
Company. The issuance of the additional shares increased the Company's ownership
of the Simon Operating Partnership by 0.2% to 56.6%.
    
 
   
     On July 31, 1995, the Company filed a shelf registration statement that
became effective October 17, 1995 for 4,205,438 shares of common stock of the
Company. The shares relate to the shares issuable upon conversion of Units held
by existing limited partners of the Simon Operating Partnership (3,005,438
shares) and to the 1,200,000 shares of common stock issued in connection with
the Crossroads Mall transaction.
    
 
   
     On October 27, 1995, the Company completed a $100,000 private placement of
4,000,000 shares of Series A preferred stock. Dividends on the preferred stock
are paid quarterly at the greater of 8.125% per annum or the dividend rate
payable under the underlying common stock of the Company. The holders of the
preferred stock have the right to convert the preferred stock into common stock
after two years at an initial conversion ratio equal to 0.9524. The Company may
redeem the preferred stock after five years upon payment of premiums that
decline to $25.00 per share over the following seven years. The holders of the
preferred stock are entitled to vote on all matters submitted to a vote of
holders of common stock of the Company, based on the number of shares of common
stock into which the preferred stock can be converted. The Company contributed
the proceeds of the private placement to the Simon Operating Partnership in
exchange for 4,000,000 Preferred Units. The Simon Operating Partnership will pay
preferred distributions to the Company equal to the dividends paid on the
preferred stock.
    
 
   
     On December 21, 1995, one of the limited partners in the Simon Operating
Partnership exchanged 121,348 Units for 121,348 shares of common stock of the
Company. The issuance of the additional shares increased the Company's ownership
of the Simon Operating Partnership by 0.1% to 61.0%.
    
 
4.  ACQUISITIONS AND REAL ESTATE INVESTMENT ACTIVITY
 
  MSA Realty Corporation ("MSAR")
 
   
     On September 1, 1994, the Company issued an additional 1,799,945 shares of
common stock in conjunction with the merger of MSAR. Each outstanding share of
MSAR common stock as of August 31, 1994 was converted into 0.31 shares of the
Company's common stock. The acquisition price, including related transaction
costs, was $48,031. The Company's investment in MSAR was contributed to the
Simon Operating Partnership for 1,799,945 Units, which increased the Company's
ownership of the Simon Operating Partnership by 1.0% to 56.4%. As a result of
the acquisition, the Simon Operating Partnership now owns 100% of fourteen
centers in which it previously held a 50% interest and substantially all of the
ownership interest in
    
 
                                       13
<PAGE>   14
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
   
one community shopping center in which it held a minority interest. In addition,
the Simon Operating Partnership obtained a non-controlling 50% interest in a
regional mall. The MSAR transaction was accounted for using the purchase method
of accounting. The purchase price in excess of the net assets acquired of
$26,507 was allocated to investment properties. The Simon Operating
Partnership's interest in the assets and liabilities of these centers prior to
this transaction is reflected at predecessor cost. Subsequent to September 1,
1994, each of the Properties involved in this merger was accounted for using the
consolidated method of accounting.
    
 
     Simultaneous with the merger, a debt restructuring with Metropolitan Life
Insurance Company related to the fourteen centers was completed resulting in the
repayment of approximately $45,000 of loan principal and discharging the
mortgages on four of the centers. In addition, the interest rate was reduced
from 9.98% to 8.75% on the remaining debt of approximately $145,000. A
prepayment penalty of $5,000 was incurred in conjunction with this activity and
has been classified as an extraordinary item in the Consolidated Statements of
Operations.
 
  Independence Center
 
   
     On December 1, 1994, the Simon Operating Partnership acquired Independence
Center in Independence, Missouri. Included in the purchase are approximately 47
acres of undeveloped land adjacent to the mall. Under the terms of the sale, the
Simon Operating Partnership paid $51,413 including transaction costs, funded
through the use of the Simon Operating Partnership's credit facilities.
    
 
  Broadway Square, Orange Park Mall and University Mall
 
   
     On December 29, 1994, the Simon Operating Partnership acquired Broadway
Square in Tyler, Texas; Orange Park Mall in Jacksonville, Florida; and
University Mall in Pensacola, Florida. Under the terms of the sale, the Simon
Operating Partnership paid $153,874, including transaction costs, funded through
the use of the Simon Operating Partnership's credit facilities. Included in the
purchase price were approximately 14 acres and 10 acres of undeveloped land
adjacent to Orange Park Mall and University Mall, respectively.
    
 
  White Oaks Mall
 
   
     At the time of the IPO, the Teacher's Retirement System of the State of
Illinois ("TRS") held an option to put its 50% general and limited partnership
interests in White Oaks Mall in Springfield, Illinois, to the Simon Operating
Partnership. TRS exercised this option on January 23, 1995, and the purchase
closed February 23, 1995. The Units which TRS received upon exercise of the
options were exchanged for 2,022,247 shares of common stock of the Company. The
Simon Operating Partnership now owns 77% of White Oaks Mall. The issuance of the
additional shares increased the Company's ownership interest in the Simon
Operating Partnership by 1.0% to 57.6%. The White Oaks Mall transaction, valued
at $45,000, was accounted for using the purchase method of accounting. The
purchase price in excess of the net assets acquired of $10,905 was allocated to
investment properties. The Simon Operating Partnership's interest in the assets
and liabilities of this Property prior to this transaction is reflected at
predecessor cost. Effective February 23, 1995, White Oaks Mall was being
accounted for in the accompanying consolidated financial statements using the
consolidated method of accounting. It was previously accounted for using the
equity method of accounting.
    
 
  Crossroads Mall
 
   
     Prior to July 31, 1995, the Simon Operating Partnership held a 50% joint
venture interest in Crossroads Mall in Omaha, Nebraska. On July 31, 1995, the
Simon Operating Partnership acquired the remaining 50% ownership in the Property
from the Simons in exchange for 120,000 Units. The acquisition was reflected at
predecessor cost. Concurrent with the acquisition, a debt restructuring was
completed which included the issuance of 1,200,000 shares of common stock of the
Company to the lender (New York State Teachers'
    
 
                                       14
<PAGE>   15
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
   
Retirement System) in exchange for a $30,000 reduction of the outstanding loan
balance which included accrued interest. In addition, the effective interest
rate on the remaining balance of $41,400 was reduced from 10.5% to 7.75%. As a
result of this transaction, the Simon Operating Partnership issued 1,200,000
Units to the Company. As a result of these transactions, the Company's ownership
interest in the Simon Operating Partnership increased by 0.4% to 60.9%. The loan
matures on July 31, 2002. Effective July 31, 1995, Crossroads Mall was included
in the accompanying consolidated financial statements using the consolidated
method of accounting. It was previously accounted for using the equity method of
accounting.
    
 
  The Shops at Sunset Place
 
   
     On August 15, 1995, the Simon Operating Partnership acquired for $11,406, a
controlling 75% joint venture interest in The Shops at Sunset Place in South
Miami, Florida. The joint venture is formulating plans to redevelop the site
into a specialty retail center. The acquisition was financed using borrowings
from the Simon Operating Partnership's unsecured revolving credit facility. This
site is included in the accompanying consolidated financial statements using the
consolidated method of accounting.
    
 
  East Towne Mall
 
   
     Prior to September 25, 1995, the Simon Operating Partnership held a 45.0%
joint venture interest in East Towne Mall in Knoxville, Tennessee. On September
25, 1995, the Simon Operating Partnership acquired the remaining interest for
$18,500 and the assumption of 55% of the $75,000 of existing mortgage debt. In
connection with the transaction, the Simon Operating Partnership refinanced the
$75,000 mortgage. These transactions were funded through a new loan of $55,000
and $38,500 in borrowings from the Simon Operating Partnership's unsecured
revolving credit facility. The transaction was accounted for using the purchase
method of accounting. The purchase price in excess of the net assets acquired of
$21,982 was allocated to investment properties. Effective September 25, 1995,
East Towne Mall was included in the accompanying consolidated financial
statements using the consolidated method of accounting. It was previously
accounted for using the equity method of accounting.
    
 
  The Source
 
   
     On December 22, 1995, a joint venture, in which the Simon Operating
Partnership has a non-controlling 50% joint venture interest, acquired a
development project located in Westbury (Long Island), New York, for $30,253.
This acquisition was financed using borrowings from the Simon Operating
Partnership's unsecured revolving credit facility. The joint venture will
develop a 730,000-square-foot value-oriented retail center, which commenced
construction in February 1996 and is expected to open in the fall of 1997. This
joint venture is being accounted for using the equity method of accounting.
    
 
  Smith Haven Mall
 
   
     On December 28, 1995, a joint venture in which the Simon Operating
Partnership owns a non-controlling 25% interest, purchased Smith Haven Mall, a
1.3 million square-foot regional mall located in Lake Grove (Long Island), New
York, for $221,000. The Simon Operating Partnership's share of the purchase
price ($55,725) was financed using borrowings from the Simon Operating
Partnership's unsecured revolving credit facility. This joint venture is being
accounted for using the equity method of accounting.
    
 
  Mills Developments
 
   
     On December 29, 1995, the Simon Operating Partnership entered into
arrangements with The Mills Corporation to develop value-oriented regional malls
in Ontario (Los Angeles), California; Grapevine (Dallas), Texas; and Chandler
(Phoenix), Arizona. The Ontario, California project consists of a 1.4 million
square-foot regional mall under construction and is expected to open in the fall
of 1996. The remaining sites
    
 
                                       15
<PAGE>   16
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
are in the preconstruction stages of development. These projects are being
accounted for using the equity method of accounting.
 
  Arborland Mall
 
   
     Effective September 30, 1995, the Simon Operating Partnership sold its 1%
ownership in Arborland Mall to its existing partner. Arborland was accounted for
using the equity method of accounting.
    
 
  Pro Forma
 
   
     The following unaudited pro forma summary financial information combines
the consolidated results of operations of the Simon Operating Partnership as if
the IPO and Business Combination (excluding the over-allotment option), the
acquisitions of MSAR, Independence Center, Broadway Square, Orange Park Mall,
University Mall, White Oaks Mall, Crossroads Mall, East Towne Mall, and Smith
Haven Mall, the consolidation of Forum, the deconsolidation of North East Mall,
and the add-on offering of common stock had occurred as of January 1, 1995, 1994
and 1993, after giving effect to certain adjustments, including interest and
related expenses associated with debt incurred to finance the acquisitions,
depreciation expense related to the Properties acquired, general and
administrative costs to manage the Properties acquired and the additional
contingent interest paid of $27,184 in connection with the refinancing of one of
the Properties as described in Note 9. Preparation of the pro forma summary
information was based upon assumptions deemed appropriate by the Simon Operating
Partnership. The pro forma summary information is not necessarily indicative of
the results which actually would have occurred if the transactions discussed
above had been consummated at the beginning of the periods presented, nor does
it purport to represent the future financial position and results of operations
for future periods.
    
 
<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                         ----------------------------------------
                                                            1995           1994           1993
                                                         ----------     ----------     ----------
<S>                                                      <C>            <C>            <C>
Total Revenue..........................................  $  565,706     $  555,152     $  531,657
                                                         ==========     ==========     ==========
Net income available to Unitholders....................     102,648         95,488         68,409
                                                         ==========     ==========     ==========
Net Income available to Unitholders attributed to:
General Partner........................................      62,513         57,789         39,746
                                                         ==========     ==========     ==========
Limited Partners.......................................      40,135         37,699         28,663
                                                         ==========     ==========     ==========
Net income per Unit....................................  $     1.07     $     1.00     $     0.76
                                                         ==========     ==========     ==========
Weighted average number of Units outstanding...........  95,609,354     95,272,018     89,831,696
                                                         ==========     ==========     ==========
</TABLE>
 
5.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Investment Properties
 
   
     Investment operating Properties are recorded at the lower of cost
(Predecessor cost for Properties acquired from promoters in connection with the
Business Combination) or net realizable value. Net realizable value of
investment properties for financial reporting purposes is reviewed for
impairment on a Property-by-Property basis whenever events or changes in
circumstances indicate that the carrying amount of investment properties may not
be recoverable. Impairment of investment properties is recognized when estimated
undiscounted operating income is less than the carrying value of the Property.
To the extent an impairment has occurred, the excess of carrying value of the
Property over its estimated net realizable value will be charged to income. The
Simon Operating Partnership will adopt SFAS No. 121 (Accounting for Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of) on January 1,
1996, and believes that the adoption will not have a material impact upon its
financial statements. Investment properties include costs of
    
 
                                       16
<PAGE>   17
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
acquisition, development, construction, tenant improvements, interest and real
estate taxes incurred during construction, certain capitalized improvements and
replacements, and certain allocated overhead.
 
     Depreciation on buildings and improvements is provided utilizing the
straight-line method over an estimated original useful life of 10 to 45 years,
resulting in an average composite life of approximately 30 years. Depreciation
on tenant improvements is provided utilizing the straight-line method over the
life of the related lease.
 
     Certain improvements and replacements are capitalized when they extend the
useful life, increase capacity, or improve the efficiency of the asset. All
other repair and maintenance items are expensed as incurred.
 
  Capitalized Interest
 
   
     Interest is capitalized on projects during periods of construction.
Interest capitalized by the Simon Operating Partnership for the years ended
December 31, 1995 and 1994 was $1,515 and $1,586 respectively; for the period
from December 20, 1993 to December 31, 1993, capitalized interest was not
significant. Interest capitalized by the Predecessor for the period from January
1, 1993 to December 19, 1993 was $86.
    
 
  Deferred Costs
 
     Deferred costs consist primarily of financing fees incurred to obtain
long-term financing, costs of interest-rate protection agreements, and internal
and external leasing commissions and related costs. Deferred financing costs,
including interest-rate protection agreements, are amortized on a straight-line
basis over the terms of the respective loans or agreements. Deferred leasing
costs are amortized on a straight-line basis over the terms of the related
leases. At December 31, 1995 and 1994, deferred costs consisted of the
following:
 
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                     ---------------------
                                                                       1995         1994
                                                                     --------     --------
    <S>                                                              <C>          <C>
    Deferred financing costs.......................................  $ 68,042     $ 60,568
    Leasing costs and other........................................    88,094       88,467
                                                                     --------     --------
                                                                      156,136      149,035
    Less-accumulated amortization..................................    74,738       63,157
                                                                     --------     --------
              Deferred costs, net..................................  $ 81,398     $ 85,878
                                                                     ========     ========
</TABLE>
 
   
     Included in interest expense in the accompanying Consolidated Statements of
Operations of the Simon Operating Partnership is amortization of deferred
financing costs of $8,523 and $7,251 for the years ended December 31, 1995 and
1994, respectively, and $88 for the period from December 20, 1993 to December
31, 1993. Included in interest expense in the accompanying Combined Statement of
Operations of the Predecessor is amortization of deferred financing costs of
$3,917 for the period from January 1, 1993 to December 19, 1993.
    
 
  Revenue Recognition
 
   
     The Simon Operating Partnership, as a lessor, has retained substantially
all of the risks and benefits of ownership of the investment properties and
accounts for its leases as operating leases. Minimum rents are accrued on a
straight-line basis over the terms of their respective leases. Overage rents are
recognized when earned.
    
 
     Reimbursements from tenants for real estate taxes and other recoverable
operating expenses are recognized as revenue in the period the applicable
expenditures are incurred.
 
                                       17
<PAGE>   18
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Allowance for Credit Losses
 
   
     A provision for credit losses is recorded based on management's judgment of
tenant creditworthiness. The activity in the allowance for credit losses of the
Simon Operating Partnership for the years ended December 31, 1995 and 1994, and
for the period from December 20, 1993 to December 31, 1993, and for the
Predecessor for the period from January 1, 1993 to December 19, 1993 was as
follows:
    
 
<TABLE>
<CAPTION>
                                                BALANCE AT     PROVISION      ACCOUNTS     BALANCE AT
                                                BEGINNING      FOR CREDIT     WRITTEN        END OF
                   PERIOD ENDED                 OF PERIOD        LOSSES         OFF          PERIOD
    ------------------------------------------  ----------     ----------     --------     ----------
    <S>                                         <C>            <C>            <C>          <C>
    December 31, 1995.........................    $2,943         $2,939         (1,623)      $$4,259
                                                  ======         ======        =======       ======
    December 31, 1994.........................    $   --         $4,238         (1,295)      $$2,943
                                                  ======         ======        =======       ======
    December 20, 1993 to December 31, 1993....    $   --         $   --       $     --       $   --
                                                  ======         ======        =======       ======
    January 1, 1993 to December 19, 1993......    $4,318         $3,741         (4,086)      $$3,973
                                                  ======         ======        =======       ======
</TABLE>
 
  Income Taxes
 
     As a partnership, the allocated share of income or loss for each year is
included in the income tax returns of the partners, accordingly, no accounting
for income taxes is required in the accompanying consolidated financial
statements. State and local taxes are not material.
 
     Prior to the Business Combination, substantially all of the Properties were
owned by partnerships and joint ventures whose partners were required to include
their respective share of profits and losses in their individual tax returns.
Certain of the Properties were held by corporations which were subject to
federal and state income taxes. These corporations were included in the
consolidated tax returns filed by Melvin Simon & Associates, Inc. ("MSA") for
which no federal income taxes were due. Accordingly, no federal income tax
provision (benefit) was reflected in the accompanying Combined Statement of
Operations. State income taxes were not significant.
 
   
     Taxable income of the Simon Operating Partnership for the year ended
December 31, 1995 is estimated to be $122,127, and was $44,683 for the year
ended December 31, 1994. Reconciling differences between book income and tax
income primarily result from timing differences consisting of (i) depreciation
expense, (ii) prepaid rental income and (iii) straight-line rent. Furthermore,
the Simon Operating Partnership's share of income or loss from the affiliated
Management Company is excluded from the tax return of the Simon Operating
Partnership.
    
 
  Per Unit Data
 
   
     The net income (loss) per Unit is based on the weighted average number of
Units outstanding during the period. The weighted average number of Units used
in the computation for 1995, 1994 and 1993 was 92,666,469; 84,509,597; and
78,447,150, respectively. Units held by limited partners in the Simon Operating
Partnership may be exchanged for shares of common stock of the Company on a
one-for-one basis in certain circumstances (see Note 12). The stock options
outstanding under the Stock Option Plans (See Note 11) and the Preferred Units
have not been considered in the computations of per Unit data, as they did not
have a dilutive effect.
    
 
                                       18
<PAGE>   19
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
   
     The Simon Operating Partnership declared distributions per Unit of $1.97
and $1.90 in 1995 and 1994, respectively. The following is a summary of
distributions per Unit which represent a return of capital measured using
generally accepted accounting principles:
    
 
<TABLE>
<CAPTION>
                                                         FOR THE YEAR ENDED DECEMBER
                                                                     31,
                                                         ----------------------------
              DISTRIBUTIONS PER UNIT                      1995                  1994
    -------------------------------------------          ------                ------
    <S>                                                  <C>                   <C>
    From book net income.......................          $ 1.04                $ 0.50
    Representing return of capital.............             .93                  1.40
                                                          -----                 -----
    Total Distributions........................          $ 1.97                $ 1.90
                                                          =====                 =====
</TABLE>
 
     On a federal income tax basis, 25% of the 1995 distributions and 55% of the
1994 distributions represented return of capital.
 
  Statements of Cash Flows
 
     For purposes of the Statements of Cash Flows, all highly liquid investments
purchased with an original maturity of 90 days or less are considered as cash
and cash equivalents. Cash equivalents are carried at cost, which approximates
market. Cash equivalents consist of commercial paper, bankers acceptances,
Eurodollars, repurchase agreements and Dutch auction securities.
 
   
     Cash paid for interest by the Simon Operating Partnership, net of any
amounts capitalized, for the year ended December 31, 1995 was $142,345. Cash
paid for interest by the Simon Operating Partnership, net of any amounts
capitalized, for the year ended December 31, 1994 was $140,106, including a
$27,184 non-recurring interest charge; and for the period from December 20, 1993
to December 31, 1993, was $3,316. Cash paid for interest by the Predecessor, net
of any amounts capitalized, for the period from January 1, 1993 to December 19,
1993 was $157,387.
    
 
     Net working capital generated by the Properties as of December 19, 1993 was
retained by the investors in the Properties at that time. The unpaid amount of
working capital was $4,072 as of December 31, 1994, and is included in accounts
payable in the accompanying Consolidated Balance Sheet. At December 31, 1995,
all working capital amounts had been repaid.
 
  Non-Cash Transactions
 
     The following is a summary of significant non-cash transactions.
 
   
     As described in Note 2, effective April 1, 1994, the Simon Operating
Partnership reflected Forum using the consolidated method of accounting.
    
 
   
     As described in Note 4, on September 1, 1994, the Simon Operating
Partnership issued 1,799,945 Units in conjunction with the merger of MSAR. On
February 23, 1995, the Simon Operating Partnership issued 2,022,247 Units in
connection with the acquisition of an additional joint venture interest in White
Oaks Mall. On July 31, 1995, the Simon Operating Partnership issued 120,000
Units in exchange for the Simons' 50% interest in Crossroads Mall. The Simon
Operating Partnership issued 1,200,000 Units of common stock in connection with
the reduction of the outstanding loan and accrued interest at Crossroads Mall.
    
 
     Accrued and unpaid distributions as of December 31, 1995 and 1994 were
$47,104 and $40,807, respectively. Accrued and unpaid distributions on Preferred
Units as of December 31, 1995 were $1,490. There were no Preferred Units in 1994
and, therefore, no Preferred Unit distributions were declared or outstanding in
1994.
 
                                       19
<PAGE>   20
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Reclassifications
 
     Certain reclassifications have been made to the prior-year financial
statements to conform to the current-year presentation. These reclassifications
have no impact on net operating results previously reported.
 
6.  INVESTMENT PROPERTIES
 
     Investment properties consist of the following:
 
<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                  -------------------------
                                                                     1995           1994
                                                                  ----------     ----------
    <S>                                                           <C>            <C>
    Land........................................................  $  283,722     $  267,213
    Buildings and improvements..................................   1,860,203      1,619,909
                                                                  ----------     ----------
         Total land, buildings and improvements.................   2,143,925      1,887,122
    Furniture, fixtures and equipment...........................      18,236         12,905
                                                                  ----------     ----------
         Investment properties at cost..........................   2,162,161      1,900,027
    Less -- accumulated depreciation............................     152,817         70,916
                                                                  ----------     ----------
         Investment properties at cost, net.....................  $2,009,344     $1,829,111
                                                                  ==========     ==========
</TABLE>
 
     Building and improvements include $40,676 and $8,377 of construction in
process at December 31, 1995 and 1994, respectively.
 
7.  INVESTMENT IN PARTNERSHIPS AND JOINT VENTURES
 
   
     Summary financial information of partnerships and joint ventures accounted
for using the equity method, and a summary of the Simon Operating Partnership's
or Simon Property Group's investment in and share of income (loss) from such
partnerships and joint ventures follows. See Notes 2 and 4 for a discussion of
certain acquisition and real estate investing activities which impact the
financial information of the Joint Venture Properties. This information also
reflects the openings of Circle Centre, Seminole Towne Center and Lakeline Mall
during 1995.
    
 
                                       20
<PAGE>   21
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
   
<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                                      ------------------------
                           BALANCE SHEETS                                1995          1994
--------------------------------------------------------------------  ----------     ---------
<S>                                                                   <C>            <C>
ASSETS:
                                                                      $1,156,066     $ 741,900
  Investment properties at cost, net................................
                                                                          52,624        65,547
  Cash and cash equivalents.........................................
                                                                          35,306        39,332
  Tenant receivables................................................
                                                                          32,626        13,161
  Other assets......................................................
                                                                      ----------     ----------
                                                                      $1,276,622     $ 859,940
          Total assets..............................................
                                                                      ==========     ==========
LIABILITIES AND PARTNERS' EQUITY:
                                                                      $  410,652     $ 366,926
  Mortgages and other notes payable.................................
                                                                         127,322        76,663
  Accounts payable, accrued expenses and other liabilities..........
                                                                      ----------     ----------
                                                                         537,974       443,589
     Total liabilities..............................................
                                                                         738,648       416,351
  Partners' equity..................................................
                                                                      ----------     ----------
                                                                      $1,276,622     $ 859,940
          Total liabilities and partners' equity....................
                                                                      ==========     ==========
SIMON OPERATING PARTNERSHIP'S SHARE OF:
                                                                      $  290,802     $ 152,797
          Total assets..............................................
                                                                      ==========     ==========
                                                                      $   63,212     $ (57,064)
          Partners' equity (deficit)................................
                                                                      ==========     ==========
</TABLE>
    
 
   
<TABLE>
<CAPTION>
                                                                         FOR THE          FOR THE
                                                                       PERIOD FROM      PERIOD FROM
                                             FOR THE YEAR ENDED        DECEMBER 20,      JANUARY 1,
                                                DECEMBER 31,             1993 TO          1993 TO
                                            ---------------------      DECEMBER 31,     DECEMBER 19,
        STATEMENTS OF OPERATIONS              1995         1994            1993             1993
----------------------------------------    --------      -------      ------------     ------------
<S>                                         <C>           <C>          <C>              <C>
REVENUE:
  Minimum rent..........................    $ 83,905      $92,380         $3,584          $ 96,518
  Overage rent..........................       2,754        3,655            197             5,804
  Tenant reimbursements.................      39,500       45,440          1,905            50,378
  Other income..........................      13,980       10,131             87             6,433
                                            --------      -------         ------          --------
     Total revenue......................     140,139      151,606          5,773           159,133
OPERATING EXPENSES:
  Operating expenses and other..........      46,466       55,949          2,218            60,407
  Depreciation and amortization.........      26,409       26,409            985            28,918
                                            --------      -------         ------          --------
     Total operating expenses...........      72,875       82,358          3,203            89,325
                                            --------      -------         ------          --------
OPERATING INCOME........................      67,264       69,248          2,570            69,808
INTEREST EXPENSE........................      28,685       38,124          1,446            44,280
EXTRAORDINARY ITEMS.....................      (2,687)          --             --                --
                                            --------      -------         ------          --------
NET INCOME..............................      35,892       31,124          1,124            25,528
THIRD-PARTY INVESTORS' SHARE OF NET
  INCOME................................      30,752       30,090          1,081            26,619
                                            --------      -------         ------          --------
SIMON OPERATING PARTNERSHIP'S OR SIMON
  PROPERTY GROUP'S SHARE OF NET INCOME
  (LOSS)................................    $  5,140      $ 1,034         $   43          $ (1,091)
                                            ========      =======         ======          ========
</TABLE>
    
 
     The net income or net loss for each partnership and joint venture is
allocated in accordance with the provisions of the applicable partnership or
joint venture agreement. The allocation provisions in these
 
                                       21
<PAGE>   22
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
agreements are not always consistent with the ownership interest held by each
general or limited partner or joint venturer, primarily due to partner
preferences.
 
8.  INVESTMENT IN MANAGEMENT COMPANY
 
   
     M.S. Management Associates (Indiana), Inc., ("M.S. Management"), a wholly
owned subsidiary of MSA, an affiliate of the Simons, provided management,
development and leasing services to the Predecessor and other properties. In
connection with the Business Combination, MSA, indirectly, exchanged the
management, development and leasing contracts related to the Simon Operating
Partnership's Wholly Owned Properties and certain assets for Class B common
stock of the Company. The management, development and leasing activities related
to the non-wholly owned and other third-party properties are now conducted by
M.S. Management Associates, Inc., a Delaware corporation, (the "Management
Company"), which, through a series of transactions in connection with the
Business Combination, became the parent company of M.S. Management.
    
 
   
     The Simon Operating Partnership's initial investment in the Management
Company was evidenced by $2,000 in common stock (representing 80% of the
outstanding common stock of the Management Company including 5% of the
outstanding voting common stock), $17,500 of participating 8% preferred stock
and a $22,000 note receivable. The remaining 20% of the outstanding common stock
of the Management Company (representing 95% of the voting common stock) is owned
directly by the Simons. The Simon Operating Partnership also sold to the
Management Company four parcels of undeveloped land and two mortgage notes
related to two parcels of undeveloped land in exchange for a note receivable in
the amount of $48,000. The Simon Operating Partnership was granted options, at
no cost, by the Management Company to reacquire the four parcels of undeveloped
land at a price equal to the actual cost incurred by the Management Company to
acquire and carry such parcels to the exercise date of the respective option.
The option agreements expire in December 2003 and carry rights of first refusal.
The net assets of M.S. Management acquired in the Business Combination are
recorded at predecessor cost, which resulted in a carryover-basis adjustment to
equity of $35,219. Because the Simon Operating Partnership exercises significant
influence over the financial and operating policies of the Management Company,
it is reflected in the accompanying statements using the equity method of
accounting.
    
 
   
     During 1994, the Simon Operating Partnership advanced the Management
Company $10,405, which bears interest at 11%. The Management Company repaid
$5,000 by transferring a financial instrument to the Simon Operating
Partnership. During 1995, the Simon Operating Partnership advanced a net of
$27,500 to the Management Company which bears interest at 11%. The proceeds were
used to acquire a $27,500 mortgage note due from The Source, in which the Simon
Operating Partnership has a noncontrolling 50% interest. The mortgage bears
interest at 11% and will be repaid by the partnership's construction financing
scheduled to close in the first quarter of 1996. The Management Company also
liquidated in 1995 its interest in a certain partnership investment which held a
9.8-acre parcel of land in Rosemont, Illinois. The sale of that parcel resulted
in a loss of $958 to the Management Company. Further, an undeveloped two-acre
parcel of land in Washington, D.C., for which the Management Company held a
mortgage, was sold in December 1995. The Management Company recorded a loss in
connection with this transaction of $3,949.
    
 
     At December 31, 1995 and 1994, total notes receivable and advances due from
the Management Company were $102,522 and $75,405, respectively. Unpaid interest
income receivable from the Management Company at December 31, 1995 and 1994 was
$84 and $2,826, respectively. Unpaid preferred dividends receivable from the
Management Company at December 31, 1995 and 1994 were $0 and $350, respectively.
These interest and preferred dividend receivables are reflected in tenant
receivables and accrued revenue in the accompanying Consolidated Balance Sheets.
 
                                       22
<PAGE>   23
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
   
     Summarized financial information of the Management Company accounted for
using the equity method, and a summary of the Simon Operating Partnership's
investment in and share of income (loss) from the Management Company follows:
    
 
   
<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                   ---------------------
                                 BALANCE SHEETS                                      1995         1994
---------------------------------------------------------------------------------  --------     --------
<S>                                                                                <C>          <C>
ASSETS:
  Current assets.................................................................  $ 40,964     $ 16,841
  Undeveloped land and mortgage notes............................................    45,769       43,000
  Other assets...................................................................    13,813       12,577
                                                                                   --------     --------
         Total assets............................................................  $100,546     $ 72,418
                                                                                   ========     ========
LIABILITIES AND SHAREHOLDERS' DEFICIT:
  Current liabilities............................................................  $ 18,435     $ 13,103
  Notes payable and advances due to the Simon Operating Partnership at 11%, due
    2008.........................................................................   102,522       75,405
                                                                                   --------     --------
    Total liabilities............................................................   120,957       88,508
  Shareholders' deficit..........................................................   (20,411)     (16,090)
                                                                                   --------     --------
         Total liabilities and shareholders' deficit.............................  $100,546     $ 72,418
                                                                                   ========     ========
THE SIMON OPERATING PARTNERSHIP'S SHARE OF:
         Total assets............................................................  $ 80,437     $ 57,934
                                                                                   ========     ========
         Shareholders' deficit...................................................  $(20,612)    $(16,875)
                                                                                   ========     ========
</TABLE>
    
 
   
<TABLE>
<CAPTION>
                                                                                  FOR THE          FOR THE
                                                            FOR THE YEAR        PERIOD FROM      PERIOD FROM
                                                           ENDED DECEMBER       DECEMBER 20,      JANUARY 1,
                                                                 31,              1993 TO          1993 TO
                                                          -----------------     DECEMBER 31,     DECEMBER 19,
                STATEMENTS OF OPERATIONS                   1995      1994           1993             1993
--------------------------------------------------------  -------   -------     ------------     ------------
<S>                                                       <C>       <C>         <C>              <C>
REVENUE:
  Management fees.......................................  $20,106   $18,587        $  707          $ 31,747
  Development and leasing fees..........................   15,451     9,683           763             6,874
  Cost-sharing income and other.........................    7,561    10,077           214             2,691
                                                          --------  --------       ------           -------
         Total revenue..................................   43,118    38,347         1,684            41,312
EXPENSES:
  Operating expenses....................................   31,163    27,944         1,388            40,944
  Depreciation..........................................    2,275     1,406            51             1,723
  Interest..............................................    7,694     8,623           253                --
    Total expenses......................................   41,132    37,973         1,692            42,667
                                                          --------  --------       ------           -------
OPERATING INCOME (LOSS).................................    1,986       374            (8)           (1,355)
                                                          --------  --------       ------           -------
LOSS ON DISPOSITION OF ASSETS...........................   (4,907)       --            --                --
NET INCOME (LOSS).......................................   (2,921)      374            (8)           (1,355)
                                                          --------  --------       ------           -------
PREFERRED DIVIDENDS.....................................    1,400     1,400            --                --
NET LOSS AVAILABLE FOR COMMON SHAREHOLDERS..............  $(4,321)  $(1,026)       $   (8)         $ (1,355)
                                                          ========  ========       ======           =======
SIMON OPERATING PARTNERSHIP'S SHARE OF NET LOSS.........  $(3,737)  $(1,101)       $   (8)
                                                          ========  ========       ======
</TABLE>
    
 
                                       23
<PAGE>   24
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
   
     The Simon Operating Partnership manages all Wholly Owned Properties, and,
accordingly, it reimburses the Administrative Services Partnership ("ASP") for
costs incurred, including management, leasing, development, accounting, legal,
marketing, and management information systems. Substantially all employees
(other than direct field personnel) are employed by ASP which is owned 1% by the
Simon Operating Partnership and 99% by the Management Company. The Management
Company's Statements of Operations report costs net of amounts reimbursed by the
Simon Operating Partnership. The Simon Operating Partnership's share of
allocated common costs was $21,874 and $15,619 for 1995 and 1994, respectively.
    
 
   
     Common costs are allocated based on payroll and related costs. In
management's opinion, allocations under the cost-sharing arrangement are
reasonable. The Simon Operating Partnership's share of common costs and
management fees for the twelve days ended December 31, 1993 were not
significant. Allocated property operating expenses related to management,
development, leasing, financing and advisory services totaled $16,379 for the
period from January 1, 1993 to December 19, 1993.
    
 
   
     The Management Company provides management, leasing, development,
accounting, legal, marketing and management information systems services to MSA,
Minority Interest Properties, Joint Venture Properties and non-owned managed
properties. Management, development and leasing fees charged to the Simon
Operating Partnership relating to the Minority Interest Properties were $5,353
and $2,352 for the years ended December 31, 1995 and 1994, respectively. Fees
for services provided by the Management Company to MSA were $4,572 and $7,239
for the years ended December 31, 1995 and 1994, respectively, and are included
in cost-sharing income and other in the Management Company's Statements of
Operations.
    
 
   
     Amounts payable by the Simon Operating Partnership under the cost-sharing
arrangement and management contracts were $1,175 and $2,499 at December 31, 1995
and 1994, respectively, and are reflected in accounts payable and accrued
expenses in the accompanying Consolidated Balance Sheets.
    
 
9.  INDEBTEDNESS
 
     Mortgages and other notes payable consists of the following:
 
<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                  -------------------------
                                                                     1995           1994
                                                                  ----------     ----------
    <S>                                                           <C>            <C>
    Unsecured revolving credit facility, with variable interest
      rate of 7.18% at December 31, 1995, due August 7, 1998....  $  196,000     $       --
    Term loan, unsecured, with variable interest rate, due
      September 21, 1996........................................          --         75,000
    $100,000 Revolving loan, secured by Properties, with
      variable interest rate, due March 15, 1997................          --         87,899
    $150,000 Revolving loan, unsecured, with variable interest
      rate, due November 30, 1997...............................          --        124,139
    Mortgages and other notes payable with fixed interest rates
      ranging from 5.81% to 10.00% (weighted average rate of
      7.81%) at December 31, 1995, due at various dates through
      2026......................................................   1,232,360      1,189,900
    Mortgages and other notes payable with variable interest
      rates ranging from 4.67% to 7.19% (weighted average rate
      of 6.55%) at December 31, 1995, due at various dates
      through 2000..............................................     530,000        461,153
    Construction loan with variable interest rate of 7.79% at
      December 31, 1995 due on February 1, 1999.................      22,399             --
                                                                  ----------     ----------
                                                                  $1,980,759     $1,938,091
                                                                  ==========     ==========
</TABLE>
 
                                       24
<PAGE>   25
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Credit Facilities
 
   
     On August 7, 1995, the Simon Operating Partnership closed on a new $400,000
unsecured revolving credit facility which replaced the Simon Operating
Partnership's secured and unsecured lines of credit. The new facility currently
bears interest at London Interbank Offering Rate ("LIBOR") plus 132.5 basis
points, an improvement of 67.5 basis points over the previous unsecured
facility, and an improvement of 17.5 basis points over the previous secured
facility. Further, the new facility removes the first mortgages and negative
pledges on certain of the Simon Operating Partnership's Properties and provides
for different pricing based upon the Simon Operating Partnership's investment
grade rating. This facility contains financial covenants relating to
debt-to-market capitalization, minimum earnings before interest, taxes,
depreciation and amortization ("EBITDA") ratios and a minimum equity value.
Significant borrowings on the line include an initial draw of $144,000 used to
pay off the existing revolving credit facilities and purchase a controlling 75%
interest in The Shops at Sunset Place, a draw of $38,500 for the acquisition of
the remaining ownership interest of East Towne Mall, a draw of $87,000 of which
approximately $55,700 was used to acquire a 25% interest in the joint venture
which purchased Smith Haven Mall, with the remainder used to acquire a 50%
partnership interest in a parcel of land to be used to develop a regional mall
in Westbury (Long Island), New York. A significant pay-down occurred on October
27, 1995, when the Company completed a $100,000 private placement of 4,000,000
shares of convertible preferred stock. In exchange for Preferred Units, the net
proceeds were contributed by the Company to the Simon Operating Partnership and
$99,000 was used to pay down the balance on the unsecured revolving credit
facility. The facility is subject to renewal in August 1998. As of December 31,
1995, $196,000 was outstanding on the line, with $204,000 available.
    
 
     The term loan which carried interest at LIBOR plus 175 basis points (7.75%
at December 31, 1994) was paid off, resulting in an extraordinary loss of $248.
This payoff was accomplished with proceeds from the Company's 6,000,000 share
add-on offering.
 
     The secured revolving loan which carried interest at LIBOR plus 150 basis
points (7.625% at December 31, 1994) was paid off, resulting in an extraordinary
loss of $733. This payoff was accomplished with proceeds from the new unsecured
revolving credit facility.
 
     The unsecured revolving loan which carried interest at LIBOR plus 200 basis
points (8.217% at December 31, 1994) was paid off, resulting in an extraordinary
loss of $1,332. This payoff was accomplished with the remaining proceeds of the
6,000,000 share add-on offering, the related underwriter's over-allotment option
of 241,845 shares, and the use of the new unsecured revolving credit facility.
 
  Fixed and Variable Mortgages
 
   
     Fixed-rate and variable-rate mortgages as of December 31, 1995 were
$1,762,360. The following is a summary of significant mortgage debt activity. On
December 1, 1994, the Simon Operating Partnership refinanced two mortgages
totaling $49,816. These loans would have matured May 28, 2020, and carried
interest at 11.0% and 13.5%. Under the terms of the debt agreements, the lender
was entitled to additional contingent interest to be determined by 50% of the
appreciated value of the Property, which totaled $27,184 as of the refinancing
date. The prepayment totaling $77,000 was accomplished using a $50,000 bridge
loan and $27,000 in cash. The bridge loan carried interest at a variable rate
and had a maturity date of December 1, 1995. The $27,184 contingent interest
payment relating to this transaction is considered unusual because none of the
debt agreements relating to the other Properties have similar equity
participation features. Therefore, the additional contingent interest paid has
been reflected as a separate line in the Consolidated Statements of Operations.
On February 6, 1995, a $50,000 secured financing was obtained and the bridge
loan was repaid. This financing, secured by one of the Properties, bears
interest at a variable rate and matures January 12, 2000. An interest rate cap
was purchased which caps LIBOR at 8.70% and expires January 12, 2000. The cost
of the interest-rate protection agreement of $1,050 will be amortized over the
life of the agreement. Refinancing and
    
 
                                       25
<PAGE>   26
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
other activities related to East Towne Mall, Crossroads Mall and White Oaks Mall
which impact mortgage debt are described in Notes 2 and 4.
 
     Many of the investment properties are pledged as collateral to secure the
related mortgage notes. The mortgage notes are non-recourse but have a partial
guarantee by the Simons and other limited partners of approximately $426,777.
The mortgages and other notes payable are generally due in monthly installments
of principal and interest or interest only and mature at various dates through
January 1, 2026.
 
     Certain of the mortgage indebtedness contain cross-default and
cross-collateralization features pertaining to certain groups of Properties.
Under the cross-default provisions, a default under any mortgage included in the
cross-defaulted package constitutes a default under all such mortgages and can
lead to acceleration of the indebtedness due on each Property within the
collateral package. Pursuant to the cross-collateralization feature, the excess
of the value of a Property over the mortgage indebtedness specific to that
Property serves as additional collateral for indebtedness against each other
Property within that particular financing package.
 
     With respect to certain loans, the lender participates in a percentage of
gross revenues above a specified base or after deduction of debt service and
various expenses. Contingent interest incurred under these arrangements was
$1,929 and $1,527 for the years ended December 31, 1995 and 1994, respectively,
$94 for the period from December 20, 1993 to December 31, 1993, and $2,800 for
the period from January 1, 1993 to December 19, 1993.
 
  Construction Loan
 
   
     On February 22, 1995, the Simon Operating Partnership closed a $60,000
construction loan for Cottonwood Mall in Albuquerque, New Mexico. This loan
bears interest at the lower of the prime rate plus 25 basis points or LIBOR plus
200 basis points and matures February 1, 1999. The loan contains an option
provision to extend the maturity one year. As of December 31, 1995, $22,399 was
outstanding.
    
 
  Debt Maturity and Other
 
     As of December 31, 1995, scheduled principal repayments on indebtedness
were as follows:
 
<TABLE>
        <S>                                                                <C>
        1996.............................................................  $  159,982
        1997.............................................................     119,023
        1998.............................................................     431,984
        1999.............................................................     250,013
        2000.............................................................     240,225
        Thereafter.......................................................     779,532
                                                                           ----------
                                                                           $1,980,759
                                                                           ==========
</TABLE>
 
     Certain mortgages and notes payable may be prepaid but are generally
subject to payment of a yield maintenance premium.
 
   
     The unconsolidated partnerships and joint ventures have $410,652 of
mortgage and other notes payable at December 31, 1995. The Simon Operating
Partnership's share of this debt was $167,644 at December 31, 1995. This debt
becomes due in installments over various terms extending to January 1, 2017,
with interest rates ranging from 6.13% to 10.07% (weighted average rate of 7.40%
at December 31, 1995). The debt matures $5,219 in 1996, $241 in 1997, $60,267 in
1998, $98,786 in 1999, $21,758 in 2000 and $224,381 thereafter.
    
 
     Net extraordinary gains (losses) of $(3,285) and $(17,980) for the years
ended December 31, 1995 and 1994, respectively, and $(30,481) for the period
from December 20, 1993 to December 31, 1993, and $26,189
 
                                       26
<PAGE>   27
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
for the period from January 1, 1993 to December 19, 1993 were incurred,
resulting from the early extinguishment or refinancing of debt.
 
  Interest-rate Protection Agreements
 
   
     The Simon Operating Partnership has entered into certain interest-rate
protection agreements, in the form of "cap" or "swap" arrangements, with respect
to the majority of its variable-rate mortgage and other notes payable. Cap
arrangements, which effectively limit the amount by which variable interest
rates may rise, have been entered into for $395,879 principal amount of debt.
Swap arrangements, which effectively fix the Simon Operating Partnership's
interest rate on the respective borrowings, have been entered into for $155,688
principal amount of debt. Costs of the caps ($8,499) are amortized over the life
of the agreements. The unamortized balance of the cap arrangements was $5,916 as
of December 31, 1995. Each cap and swap arrangement, with the exception of two,
has a maturity which coincides with the related debt maturity. The Simon
Operating Partnership's hedging activity as a result of interest swaps and caps
resulted in interest savings of $3,528 and $863 for the years ended December 31,
1995 and 1994, respectively. This did not materially impact the Simon Operating
Partnership's weighted average borrowing rate. Following is a summary of the cap
and swap arrangements outstanding as of December 31, 1995:
    
 
<TABLE>
<CAPTION>
      INTEREST-RATE PROTECTION     NOTIONAL
              AGREEMENT             AMOUNT        INTEREST RATE       CAP/SWAP MATURITY
    -----------------------------  --------     ------------------    -----------------
    <S>                            <C>          <C>                   <C>
    Caps:........................  $100,000     (1)                   March 13, 1997
                                     95,676     LIBOR up to 5.00%     December 31, 1998(2)
                                     35,774     LIBOR up to 5.00%     December 31, 1998(2)
                                     89,000     (3)                   December 23, 1996
                                     25,429     LIBOR up to 5.00%     December 31, 1998
                                     50,000     LIBOR up to 8.70%     January 12, 2000
                                   --------
         Total Caps..............   395,879
    Swaps:.......................    30,000     LIBOR up to 5.15%     February 28, 1997
                                     63,450     LIBOR up to 4.81%     December 27, 1996
                                     62,238     LIBOR up to 5.12%     January 3, 1997  (4)
                                   --------
         Total Swaps.............   155,688
                                   --------
         Total Caps and Swaps....  $551,567
                                   ========
</TABLE>
 
---------------
(1) LIBOR is initially capped at 7.5% through maturity; however, if LIBOR should
     equal or exceed 8.75% between monthly reset dates, then LIBOR will be
     capped at 8.5% for that period only.
 
(2) The principal amounts of the two-tranche debt facility being capped are
     $85,571 and $45,879.
 
(3) LIBOR cap rate may fluctuate, initially capped at 7.00% through December 23,
     1996. If LIBOR increases more than 60 basis points between monthly reset
     dates, the cap will be increased by 0.25% but shall not exceed 8.25%.
     Payment for any reference period is limited to 9.00% less the
     then-applicable cap. The principal amount of the debt is $89,701.
 
(4) The counterparty has the option to extend the swap up to the debt maturity
     of December 31, 1997. The principal amount of the debt is $77,200.
 
  $500,000 Shelf Registration
 
   
     On December 15, 1995, a shelf registration for $500,000 of non-convertible
investment grade debt securities of the Simon Operating Partnership became
effective. The securities may be offered from time to time as needed, at prices
and terms to be stated at the time of such offerings.
    
 
                                       27
<PAGE>   28
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
10.  RENTALS UNDER OPERATING LEASES
 
   
     The Simon Operating Partnership receives rental income from the leasing of
retail and mixed-use space under operating leases. Future minimum rentals to be
received under non-cancelable operating leases for each of the next five years
and thereafter, excluding tenant reimbursements of operating expenses and
percentage rent based on tenant sales volume, as of December 31, 1995, are as
follows:
    
 
<TABLE>
        <S>                                                                <C>
        1996.............................................................  $  286,460
        1997.............................................................     266,589
        1998.............................................................     249,073
        1999.............................................................     222,135
        2000.............................................................     191,628
        Thereafter.......................................................     698,559
                                                                           $1,914,444
</TABLE>
 
   
     Approximately 2.8% of future minimum rents to be received are attributable
to leases with JCPenney, Inc., an affiliate of a limited partner in the Simon
Operating Partnership.
    
 
11.  STOCK OPTION PLANS
 
   
     The Company and the Simon Operating Partnership adopted an Employee Stock
Plan (the "Employee Plan"). The Company also adopted a Director Stock Option
Plan (the "Director Plan" and, together with the Employee Plan, the "Stock
Option Plans") for the purpose of attracting and retaining eligible officers,
directors and employees. The Company has reserved for issuance 4,595,000 shares
of common stock under the Employee Plan and 100,000 shares of common stock under
the Director Plan. If stock options granted in connection with the Stock Option
Plans are exercised at any time or from time to time, the partnership agreement
requires the Company to sell to the Simon Operating Partnership, at fair market
value, shares of the Company's common stock sufficient to satisfy the exercised
stock options. The Company also is obligated to purchase Units for cash in an
amount equal to the fair market value of such shares.
    
 
  Employee Plan
 
   
     The Employee Plan is currently administered by the Company's Compensation
Committee (the "Committee"). During the ten-year period following the adoption
of the Employee Plan, the Committee may, subject to the terms of the Employee
Plan and in certain instances subject to board approval, grant to key employees
(including officers and directors who are employees) of the Simon Operating
Partnership or its "affiliates" (as defined in the Employee Plan) the following
types of awards: stock options (including options with a reload feature), stock
appreciation rights, performance units and shares of restricted or unrestricted
common stock. Awards granted under the Employee Plan become exercisable over the
period determined by the Committee. The exercise price of an option may not be
less than the fair market value of the shares of the common stock on the date of
grant. The options vest 40% on the first anniversary of the date of grant, an
additional 30% on the second anniversary of the grant date and become fully
vested three years after the grant date. The options expire ten years from the
date of grant.
    
 
  Director Plan
 
     Directors of the Company who are not also employees of the Company or its
"affiliates" (as defined in the Director Plan) participate in the Director Plan.
Under the Director Plan, each eligible director is automatically granted options
("Director Options") to purchase 5,000 shares of common stock upon the
director's initial election to the Board of Directors and 3,000 shares of common
stock upon each reelection of
 
                                       28
<PAGE>   29
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
the director to the Board of Directors. The exercise price of the options is
equal to 100% of the fair market value of the Company's common stock on the date
of grant. Director Options become exercisable on the first anniversary of the
date of grant or at such earlier time as a "change in control" of the Company
occurs and will remain exercisable through the tenth anniversary of the date of
grant (the "Expiration Date"). Prior to their Expiration Dates, Director Options
will terminate 30 days after the optionee ceases to be a member of the Board of
Directors.
 
     Information relating to the Stock Option Plans from inception through
December 31, 1995 is as follows:
 
<TABLE>
<CAPTION>
                                               DIRECTOR PLAN                    EMPLOYEE PLAN
                                         --------------------------     -----------------------------
                                                      OPTION PRICE                      OPTION PRICE
                                         OPTIONS       PER SHARE         OPTIONS         PER SHARE
                                         -------     --------------     ----------     --------------
<S>                                      <C>         <C>                <C>            <C>
SHARES UNDER OPTION AT DECEMBER 20,
  1993.................................       --     $           --             --     $           --
Granted................................   25,000              22.25        735,000              22.25
                                          ------     --------------      ---------     --------------
SHARES UNDER OPTION AT JANUARY 1,
  1994.................................   25,000              22.25        735,000              22.25
Granted................................   15,000              27.00      1,363,272      23.44 - 25.25
Exercised..............................       --                 --             --                 --
Forfeited..............................       --                 --        (28,125)             23.44
                                          ------     --------------      ---------     --------------
SHARES UNDER OPTION AT DECEMBER 31,
  1994.................................   40,000      22.25 - 27.00      2,070,147      22.25 - 25.25
Granted................................   15,000              24.94             --                 --
Exercised..............................       --                 --         (6,876)             23.44
Forfeited..............................       --                 --        (49,137)     23.44 - 25.25
                                          ------     --------------      ---------     --------------
SHARES UNDER OPTION AT DECEMBER 31,
  1995.................................   55,000     $22.25 - 27.00      2,014,134     $22.25 - 25.25
                                          ======     ==============      =========     ==============
Options exercisable at December 31,
  1995.................................   40,000     $22.25 - 27.00      1,027,464     $22.25 - 25.25
                                          ======     ==============      =========     ==============
SHARES AVAILABLE FOR GRANT AT DECEMBER
  31, 1995.............................   45,000                         1,580,866
                                          ======                         =========
</TABLE>
 
  Stock Incentive Program
 
   
     In October 1994, under the Employee Plan of the Company and the Simon
Operating Partnership, the Company's Compensation Committee approved a five-year
Stock Incentive Program, under which restricted stock award shares have been
granted to certain employees at no cost. The outstanding restricted stock award
shares vest in four installments of 25% each on January 1 of each year following
the year in which the restricted shares are awarded. The cost of restricted
stock awards, based on the stock's fair market value at the determination dates,
is charged to shareholders' equity and subsequently amortized against earnings
of the Simon Operating Partnership over the vesting period.
    
 
     On March 22, 1995, an aggregate of 1,000,000 shares of restricted stock was
awarded to 50 executives, subject to the performance standards and other terms
of the Stock Incentive Program, described above. During 1995, 144,196 shares of
common stock were granted under the Stock Incentive Program and subsequently,
885 of these shares were forfeited, leaving 143,311 shares of common stock
outstanding under restricted stock awards at December 31, 1995. Forfeited shares
under the Stock Incentive Program are available for reissuance under the
Employee Plan. Approximately $918 was amortized in 1995 relating to this
program.
 
                                       29
<PAGE>   30
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
12.  PARTNERSHIP AGREEMENT AND EXCHANGE RIGHTS
 
   
     In December 1995, Unitholders approved the amendment and restatement of the
Simon Operating Partnership's partnership agreement to allow for the issuance of
Preferred Units, and certain other changes to the agreement.
    
 
   
     Pursuant to the Simon Operating Partnership Agreement, limited partners in
the Simon Operating Partnership have the right at any time after December 1994
to exchange all or any portion of their Units for shares of common stock of the
Company on a one-for-one basis or cash, as selected by the Company's Board of
Directors. If the Company selects to use cash, the Company can cause the Simon
Operating Partnership to redeem the units. The amount of cash to be paid if the
exchange right is exercised and the cash option is selected will be based on the
trading price of the Company's common stock at that time. The Company has
reserved 37,282,628 shares of common stock for possible issuance upon the
exchange of Units.
    
 
   
     Such limited partners' exchange rights are not to be included in partners'
equity. Accordingly, the accompanying consolidated balance sheets have been
retroactively reclassified to reflect the limited partners' interest in the
Simon Operating Partnership, measured at redemption value. This reclassification
results in a reduction of partners' equity of $822,072 and $864,920 as of
December 31, 1995 and 1994, respectively.
    
 
   
     In connection with the merger of the Company and DeBartolo which was
completed August 9, 1996, the Simon Operating Partnership agreement was amended
eliminating the exchange right provision. However, the limited partners' in the
Simon Operating Partnership exchanged their interest for limited partnership
units of Simon DeBartolo Group L.P.(SDG LP). SDG LP became the primary operating
partnership of the Company following the merger. Further SDG LP extended
exchange rights to its limited partners' similar to the rights previously held
by the limited partners of the Simon Operating Partnership. On November 13,
1996, an agreement was reached between the Company and SDG, LP which restricts
the Company's ability to cause SDG, LP to redeem for cash the limited partners'
units without contributing cash to SDG, LP as partners' equity sufficient to
effect the redemption. If sufficient cash is not contributed, the Company will
be deemed to have elected to acquire the limited partners' units for shares of
the Company's common stock. Accordingly, prospectively the limited partners'
interest in the Simon Operating Partnership and SDG, LP will be reflected in the
partnerships consolidated balance sheets as partners' equity at historical
carrying value. Previous transfers of limited partners' equity interest will be
reversed. This reversal occurred in the separate financial statements of the
Simon Operating Partnership, effective August 9, 1996.
    
 
13.  EMPLOYEE BENEFIT PLAN
 
  401(k) Plan
 
   
     The Simon Operating Partnership and affiliated entities maintain a
tax-qualified retirement savings plan for eligible employees which contains a
cash or deferred arrangement permitting participants to defer up to a maximum of
12% of their compensation, subject to certain limitations. Participants' salary
deferrals will be matched at specified percentages and annual contributions of
3% of eligible employees' compensation will be made. The Simon Operating
Partnership contributed $1,716, $1,628 and $39 to the plan in 1995, 1994 and for
the period from December 20, 1993 to December 31, 1993, respectively.
    
 
   
     Except for the 401(k) plan, Simon Operating Partnership offers no other
postretirement or postemployment benefits to its employees.
    
 
     MSA had two defined contribution plans (the "Plans") for the benefit of
eligible employees. Both Plans covered the Properties' employees as well as
other employees of MSA. MSA made a required contribution to the Retirement Plan
and a discretionary contribution to the Matching Savings Plan pursuant to the
terms of both Plans. Under the Matching Savings Plan, employees could elect to
defer a portion of their salary, for which MSA made a matching contribution. MSA
could also make additional discretionary contributions. The
 
                                       30
<PAGE>   31
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
Predecessor's share of amounts contributed by MSA to the Plans totaled
approximately $1,587 for the period from January 1, 1993 to December 19, 1993.
 
14.  FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value for all financial instruments. The carrying values of cash and
cash equivalents, accounts and notes receivable, accounts payable and accrued
expenses are reasonable estimates of their fair values because of the short
maturity of these financial instruments. The carrying value of variable-rate
mortgages and other loans and interest-rate protection agreements represents
their fair values. The fair value of fixed-rate mortgages and other notes
payable approximates their carrying value at December 31, 1994. The fair value
and carrying value of fixed-rate mortgages and other notes payable at December
31, 1995 was approximately $1,375,000 and $1,232,000, respectively. At December
31, 1995 and 1994, the estimated discount rates were 7.00% and 7.63%,
respectively. The fair value of the interest-rate protection arrangements at
December 31, 1995 was $3,900.
 
15.  COMMITMENTS AND CONTINGENCIES
 
  Litigation
 
   
     The Simon Operating Partnership currently is not subject to any material
litigation other than routine litigation and administrative proceedings arising
in the ordinary course of business. On the basis of consultation with counsel,
management believes that these items will not have a material adverse impact on
Simon Operating Partnership's financial position or results of operations.
    
 
  Financing Commitments
 
   
     On February 13, 1996, the Simon Operating Partnership acquired a 50% joint
venture interest in The Tower Shops at Stratosphere, a 122,000-square-foot
entertainment and retail development project currently under development in Las
Vegas, Nevada. The entity has a 15% equity commitment of approximately $6,350 to
construction costs, before the remaining construction costs totaling
approximately $36,000 will be advanced by the lender.
    
 
   
     The Simon Operating Partnership has agreed to funding commitments of up to
$15,000 relating to the construction of the Ontario Mills project.
    
 
  Lease Commitments
 
   
     As of December 31, 1995, a total of 27 of the Properties are subject to
ground leases. The termination dates of these ground leases range from 1998 to
2085. These ground leases generally require payments by the Simon Operating
Partnership of a fixed annual rent, or a fixed annual rent plus a participating
percentage over a base rate. Ground lease expense incurred by the Simon
Operating Partnership for the years ended December 31, 1995 and 1994 was $6,700
and $5,808, respectively, and was $102 for the period from December 20, 1993 to
December 31, 1993. Ground lease expense incurred by the Predecessor for the
period from January 1, 1993 to December 19, 1993 was $4,168.
    
 
                                       31
<PAGE>   32
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     Future minimum lease payments due under such ground leases for each of the
next five years ending December 31 and thereafter are as follows:
 
<TABLE>
        <S>                                                                 <C>
        1996............................................................    $  3,581
        1997............................................................       3,806
        1998............................................................       3,799
        1999............................................................       3,805
        2000............................................................       3,815
        Thereafter......................................................     145,206
                                                                            --------
                                                                            $164,012
                                                                            ========
</TABLE>
 
  Environmental Matters
 
   
     Substantially all of the Properties have been subjected to Phase I
environmental audits. Such audits have not revealed nor is management aware of
any environmental liability that management believes would have a material
adverse impact on Simon Operating Partnership's financial position or results of
operations. Management is unaware of any instances in which it would incur
significant environmental costs if any or all Properties were sold, disposed of
or abandoned.
    
 
  Other
 
   
     The Simon Operating Partnership's partner in Rolling Oaks Mall has the
right to transfer its ownership interest to the Simon Operating Partnership in
exchange for Units based on the fair market value of the ownership interest at
the time of the exchange. This right expires on January 1, 2002. Rolling Oaks
Mall is a Joint Venture Property accounted for using the equity method of
accounting.
    
 
16.  NEW ACCOUNTING PRONOUNCEMENTS
 
   
     In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which requires entities to measure compensation costs related to
awards of stock-based compensation using either the fair value method or the
intrinsic value method. Under the fair value method, compensation expense is
measured at the grant date based on the fair value of the award. Under the
intrinsic value method, compensation expense is equal to the excess, if any, of
the quoted market price of the stock at the grant date over the amount the
employee must pay to acquire the stock. Entities electing to measure
compensation costs using the intrinsic value method must make pro forma
disclosures, beginning after the effective date of January 1, 1996, of net
income and earnings per Unit as if the fair value method has been applied. The
Simon Operating Partnership has elected to account for stock-based compensation
programs using the intrinsic value method consistent with existing accounting
policies and, therefore, the standard will not have an effect on the
consolidated financial statements.
    
 
                                       32
<PAGE>   33
 
              SIMON PROPERTY GROUP, L.P. AND SIMON PROPERTY GROUP
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
17.  QUARTERLY FINANCIAL DATA (UNAUDITED)
 
     Summarized quarterly 1995 and 1994 data is as follows:
 
<TABLE>
<CAPTION>
                                               FIRST      SECOND     THIRD      FOURTH
                                              QUARTER    QUARTER    QUARTER    QUARTER     TOTAL
                                              --------   --------   --------   --------   --------
<S>                                           <C>        <C>        <C>        <C>        <C>
1995
Total revenue                                 $129,490   $130,765   $138,042   $155,360   $553,657
Operating income............................    58,865     58,115     64,191     69,965    251,136
Income before extraordinary items...........    22,207     23,528     26,946     28,824    101,505
Net income available to Unitholders.........    22,207     23,280     24,310     26,933     96,730
Net income before extraordinary items per         0.26       0.25       0.28       0.29       1.08
  Unit......................................
Net income per Unit.........................  $   0.26   $   0.25   $   0.25   $   0.28   $   1.04
1994
Total revenue...............................  $104,987   $111,809   $120,528   $136,352   $473,676
Operating income............................    45,540     49,473     51,485     67,800    214,298
Income before extraordinary items...........    17,809     19,053     21,694      1,752     60,308
Net income (loss) available to                  15,528     12,179     15,577       (956)    42,328
  Unitholders...............................
Net income before extraordinary items per         0.21       0.23       0.26       0.02       0.72
  Unit......................................
Net income (loss) per Unit..................  $   0.19   $   0.14   $   0.18   $  (0.01)  $   0.50
</TABLE>
 
     Due to the cyclical nature of earnings available to Unitholders and the
issuance of additional Units, the sum of the quarterly earnings per Unit in 1994
varies from the annual earnings per Unit. Income before extraordinary items in
the fourth quarter of 1994 included $27,184 of a non-recurring interest payment.
 
   
18.  SUBSEQUENT EVENTS
    
 
  The Forum Shops at Caesars
 
   
     On February 23, 1996, the Simon Operating Partnership borrowed the initial
$100,000 tranche from a $184,000 two tranche loan facility for Forum and retired
the existing $89,701 mortgage debt for Forum. The initial funding bears interest
at LIBOR plus 100 basis points and matures in February 2000. The remaining
proceeds will be used to provide funds for the approximately 250,000-square-foot
expansion of this Property.
    
 
  Smith Haven Mall
 
     On March 8, 1996, the joint venture which owns Smith Haven Mall entered
into an agreement to finance $115,000 of the purchase price of Smith Haven Mall
with a 10-year interest-only mortgage which carries interest at 113 basis points
over 10-year treasury bills. Proceeds from the loan will be used to repay a
portion of the partners' equity contributions made at the time of the Property
acquisition.
 
  Definitive Agreement to a Merger with DeBartolo Realty Corporation
 
     On March 26, 1996, the Company and DeBartolo Realty Corporation
("DeBartolo") announced that they have reached an agreement in principle,
approved by their respective boards of directors, to merge the two companies.
Under the terms of the agreement, DeBartolo shareholders will receive 0.68
shares of the Company's common stock for each share of DeBartolo common stock
owned. The transaction is subject to the approval of the shareholders of both
companies and customary regulatory and other conditions. A definitive agreement
was signed on March 28, 1996.
 
  Distributions Declared
 
     On March 22, 1996, the Board of Directors of the Company approved a $0.4925
distribution on each Unit payable on April 26, 1996 to Unitholders of record on
April 12, 1996.
 
                                       33
<PAGE>   34
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
   
                                ON SCHEDULE III
    
 
To Simon Property Group, Inc.:
 
     We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of SIMON PROPERTY GROUP, L.P. included in
this Form 10-K, and have issued our report thereon dated February 14, 1996. Our
audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule is the responsibility of Simon
Property Group, L.P.'s management and is presented for purposes of complying
with the Securities and Exchange Commissions rules and is not part of the basic
financial statements. The schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
 
                                          ARTHUR ANDERSEN LLP
 
Indianapolis, Indiana
   
November 13, 1996
    
 
                                       34
<PAGE>   35
 
                           SIMON PROPERTY GROUP, L.P.
 
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1995
   
                             (DOLLARS IN THOUSANDS)
    
                                                                    SCHEDULE III
   
<TABLE>
<CAPTION>
                                                                                                                GROSS
                                                                                                               AMOUNTS
                                                                                                                 AT
                                                                                                                WHICH
                                                                                         COST CAPITALIZED      CARRIED
                                                                                           SUBSEQUENT TO         AT
                                                                                                                CLOSE
                                                                                                                 OF
                                                                   INITIAL COST             ACQUISITION        PERIOD
                                                              ----------------------   ---------------------   -------
                                                                         BUILDINGS               BUILDINGS
                                                                            AND                     AND
               NAME, LOCATION                 ENCUMBRANCES     LAND     IMPROVEMENTS    LAND    IMPROVEMENTS    LAND
--------------------------------------------  -------------   -------   ------------   ------   ------------   -------
<S>                                           <C>             <C>       <C>            <C>      <C>            <C>
REGIONAL MALLS
Alton Square, Alton, IL.....................     $     0      $   154     $  7,641     $    0     $    559     $   154
Amigoland Mall, Brownsville, TX.............           0        1,045        4,518          0          198       1,045
Anderson Mall, Anderson, SC.................      19,000        1,838       18,122      1,363        1,816       3,201
Barton Creek Square, Austin, TX.............      64,293        4,413       20,699        771       13,172       5,184
Battlefield Mall, Springfield, MO...........      51,721        4,040       29,783      3,225       26,199       7,265
Broadway Square, Tyler, TX..................           0       11,470       32,450          0          466      11,470
Century Consumer Mall, Merrillville, IN.....           0        2,190        9,589          0          402       2,190
Charles Town Square, Charleston, SC.........           0          593        2,825        500          334       1,093
Cielo Vista Mall, El Paso, TX...............      59,296        1,307       18,512        608       12,063       1,915
College Mall, Bloomington, IN...............      43,973        1,012       16,245        722       13,039       1,734
Crossroads Mall, Omaha, NE..................      41,440          884       37,293        409       20,237       1,293
East Towne Mall, Knoxville, TN..............      55,000        5,269       22,965      3,699       18,827       8,968
Eastgate Consumer Mall, Indianapolis, IN....      25,429          425        4,722        187        2,657         612
Eastland Mall, Tulsa, OK....................      30,000        3,124       24,035        518        5,508       3,642
Forest Mall, Fond Du Lac, WI................      12,800          757        4,498          0          572         757
Forest Village Park, Forestville, MD........      20,600        1,212        4,625        757        3,179       1,969
Fremont Mall, Fremont, NE...................           0           26        1,280        265          621         291
Golden Ring Mall, Baltimore, MD.............      29,750        1,130        8,955        572        5,921       1,702
Greenwood Park Mall, Greenwood, IN..........      36,829        2,606       23,500      5,275       49,760       7,881
Heritage Park, Midwest City, OK.............           0          620        6,213          0          584         620
Hutchinson Mall, Hutchison, KS..............      11,523        1,777       18,427          0        2,154       1,777
Independence Center, Independence, MO.......           0        5,591       45,822          0          995       5,591
Ingram Park Mall, San Antonio, TX...........      56,681          820       17,182        169        9,661         989
Irving Mall, Irving, TX.....................      43,734       11,490       17,479      2,533        4,820      14,023
Jefferson Valley Mall, Yorktown, NY.........      50,000        4,869       30,304          0        2,226       4,869
La Plaza, McAllen, TX.......................      51,015        2,194        9,828          0        1,117       2,194
Lincolnwood Town Center, Lincolnwood, IL....      63,079       11,197       64,540         28          616      11,225
Longview Mall, Longview, TX.................      22,100          278        3,602        124        1,971         402
Machesney Park Mall, Rockford, IL...........           0          613        7,460        120        1,894         733
Markland Mall, Kokomo, IN...................      10,000            0        7,568          0          566           0
Mc Cain Mall, N. Little Rock, AK............      26,522            0        9,515          0        5,330           0
Memorial Mall, Sheboygan, WI................           0          175        4,881          0          242         175
Midland Park Mall, Midland, TX..............      22,500          704        9,613          0        1,100         704
Miller Hill Mall, Duluth, MN................      34,500        2,537       18,114          0          669       2,537
Mounds Mall, Anderson, IN...................           0            0        2,689          0          699           0
Muncie Mall, Muncie, IN.....................      24,000          210        5,964          0          858         210
North Towne Square, Toledo, OH..............      23,500          579        8,382          0          918         579
Northwoods Mall, Peoria, IL.................           0        1,202       12,779      1,449       16,555       2,651
Orange Park Mall, Orange Park, FL...........           0       13,345       65,173          0          566      13,345
 
<CAPTION>
 
                                               BUILDINGS
                                                  AND                   AMORTIZED       DATE OF
               NAME, LOCATION                 IMPROVEMENTS    TOTAL    DEPRECIATION   CONSTRUCTION
--------------------------------------------  ------------   -------   ------------   ------------
<S>                                           <C>            <C>       <C>            <C>
REGIONAL MALLS
Alton Square, Alton, IL.....................    $  8,200     $ 8,354      $  798          1993(Note 3)
Amigoland Mall, Brownsville, TX.............       4,716       5,761         702          1974
Anderson Mall, Anderson, SC.................      19,938      23,139       1,758          1972
Barton Creek Square, Austin, TX.............      33,871      39,055       2,770          1981
Battlefield Mall, Springfield, MO...........      55,982      63,247       4,011          1976
Broadway Square, Tyler, TX..................      32,916      44,386         986          1994(Note 3)
Century Consumer Mall, Merrillville, IN.....       9,991      12,181       1,364          1992(Note 3)
Charles Town Square, Charleston, SC.........       3,159       4,252         377          1976
Cielo Vista Mall, El Paso, TX...............      30,575      32,490       3,482          1974
College Mall, Bloomington, IN...............      29,284      31,018       3,173          1965
Crossroads Mall, Omaha, NE..................      57,530      58,823         780          1994(Note 3)
East Towne Mall, Knoxville, TN..............      41,792      50,760         586          1984
Eastgate Consumer Mall, Indianapolis, IN....       7,379       7,991       1,926          1991(Note 3)
Eastland Mall, Tulsa, OK....................      29,543      33,185       2,519          1986
Forest Mall, Fond Du Lac, WI................       5,070       5,827         683          1973
Forest Village Park, Forestville, MD........       7,804       9,773         786          1980
Fremont Mall, Fremont, NE...................       1,901       2,192         128          1983
Golden Ring Mall, Baltimore, MD.............      14,876      16,578       1,622          1974(Note 3)
Greenwood Park Mall, Greenwood, IN..........      73,260      81,141       5,743          1977
Heritage Park, Midwest City, OK.............       6,797       7,417         812          1978
Hutchinson Mall, Hutchison, KS..............      20,581      22,358       1,784          1985
Independence Center, Independence, MO.......      46,817      52,408       1,444          1994(Note 3)
Ingram Park Mall, San Antonio, TX...........      26,843      27,832       2,701          1979
Irving Mall, Irving, TX.....................      22,299      36,322       3,373          1971
Jefferson Valley Mall, Yorktown, NY.........      32,530      37,399       2,846          1983
La Plaza, McAllen, TX.......................      10,945      13,139       1,033          1976
Lincolnwood Town Center, Lincolnwood, IL....      65,156      76,381       5,201          1990
Longview Mall, Longview, TX.................       5,573       5,975         763          1978
Machesney Park Mall, Rockford, IL...........       9,354      10,087       1,091          1979
Markland Mall, Kokomo, IN...................       8,134       8,134         532          1983
Mc Cain Mall, N. Little Rock, AK............      14,845      14,845       1,930          1973
Memorial Mall, Sheboygan, WI................       5,123       5,298         499          1980
Midland Park Mall, Midland, TX..............      10,713      11,417       1,117          1980
Miller Hill Mall, Duluth, MN................      18,783      21,320       1,700          1973
Mounds Mall, Anderson, IN...................       3,388       3,388         374          1964
Muncie Mall, Muncie, IN.....................       6,822       7,032         990          1975
North Towne Square, Toledo, OH..............       9,300       9,879       1,447          1980
Northwoods Mall, Peoria, IL.................      29,334      31,985       2,981          1983(Note 3)
Orange Park Mall, Orange Park, FL...........      65,739      79,084       1,929          1994(Note 3)
</TABLE>
    
 
                                       35
<PAGE>   36
 
                           SIMON PROPERTY GROUP, L.P.
 
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 1995
 
   
                             (DOLLARS IN THOUSANDS)
    
 
                                                                    SCHEDULE III
   
<TABLE>
<CAPTION>
                                                                                                               GROSS
                                                                                                              AMOUNTS
                                                                                                                 AT
                                                                                                               WHICH
                                                                                       COST CAPITALIZED       CARRIED
                                                                                         SUBSEQUENT TO        AT CLOSE
                                                                                                                 OF
                                                               INITIAL COST               ACQUISITION          PERIOD
                                                         ------------------------   -----------------------   --------
                                                                    BUILDINGS AND             BUILDINGS AND
             NAME, LOCATION               ENCUMBRANCES     LAND     IMPROVEMENTS     LAND     IMPROVEMENTS      LAND
----------------------------------------  ------------   --------   -------------   -------   -------------   --------
<S>                                       <C>            <C>        <C>             <C>       <C>             <C>
Prien Lake Mall, Lake Charles, LA.......            0       1,926          2,829        725         2,049        2,651
South Park Mall, Shreveport, LA.........       24,748         855         13,691         74         1,788          929
Southgate Mall, Yuma, AZ................            0       1,817          7,974          0         2,937        1,817
Southtown Mall, Ft. Wayne, IN...........            0       2,059         13,288          0           828        2,059
St Charles Towne Center Waldorf, MD.....       77,200       9,328         52,974      1,180         8,484       10,508
Sunland Park Mall, El Paso, TX..........       40,469       2,896         28,900          0         1,580        2,896
Tippecanoe Mall, Lafayette, IN..........       48,205       4,771          8,474      5,354        29,529       10,125
Towne East Square, Wichita, KS..........       58,138       9,495         18,479      2,042         6,479       11,537
Towne West Square, Wichita, KS..........       40,250         988         21,203         76         2,948        1,064
University Mall, Little Rock, AK........            0         123         17,411          0           286          123
University Mall, Pensacola, FL..........            0       4,741         26,657          0           303        4,741
Valle Vista Mall, Harlingen, TX.........       35,126       1,398         17,266        372         6,637        1,770
West Ridge Mall, Topeka, KS.............       50,552       5,837         34,132        197         2,220        6,034
White Oaks Mall, Springfield, IL........       16,500       3,024         35,692      1,153        12,816        4,177
Wichita Mall, Wichita, KS...............            0           0          4,535          0           285            0
Windsor Park Mall, San Antonio, TX......       15,123       1,194         16,940        130         2,654        1,324
COMMUNITY SHOPPING CENTERS
Arvada Plaza, Arvada, CO................            0          70            342          0         1,724           70
Aurora Plaza, Aurora, CO................            0          35          5,754          0           186           35
Bloomingdale Court, Bloomingdale, IL....       29,009       9,735         26,184          0           481        9,735
Bridgeview Court, Bridgeview, IL........            0         308          3,676          0             0          308
Brightwood Plaza, Indianapolis, IN......            0          65            128          0           136           65
Bristol Plaza, Bristol, VA..............            0          61            325          0             1           61
Grove Towne Center, Buffalo Grove, IL...            0       2,044          6,602          0           779        2,044
Celina Plaza, El Paso, TX...............            0         138            815          0            13          138
Cohoes Commons, Rochester, NY...........            0       1,698          8,426          0            51        1,698
Cook's Discount, Ardmore, OK............            0          80            280          0             1           80
Countryside Plaza, Countryside, IL......            0       1,243          8,507          0           433        1,243
East Towne Commons, Knoxville, TN.......            0       3,921          5,345          0         1,599        3,921
Eastland Plaza, Tulsa, OK...............            0         908          3,709          0             5          908
Forest Plaza, Rockford, IL..............       17,354       4,353         16,818          0           162        4,353
Fox River Plaza, Elgin, IL..............       12,654       2,907          9,453          0            48        2,907
 
<CAPTION>
 
                                          BUILDINGS AND                ACCUMULATED      DATE OF
             NAME, LOCATION               IMPROVEMENTS      TOTAL      DEPRECIATION   CONSTRUCTION
----------------------------------------  -------------   ----------   ------------   ------------
<S>                                       <C>             <C>          <C>            <C>
Prien Lake Mall, Lake Charles, LA.......         4,878         7,529          528         1972
South Park Mall, Shreveport, LA.........        15,479        16,408        1,799         1975
Southgate Mall, Yuma, AZ................        10,911        12,728          870         1988(Note 3)
Southtown Mall, Ft. Wayne, IN...........        14,116        16,175        1,582         1969
St Charles Towne Center Waldorf, MD.....        61,458        71,966        5,629         1990
Sunland Park Mall, El Paso, TX..........        30,480        33,376        3,428         1988
Tippecanoe Mall, Lafayette, IN..........        38,003        48,128        2,341         1973
Towne East Square, Wichita, KS..........        24,958        36,495        2,858         1975
Towne West Square, Wichita, KS..........        24,151        25,215        2,858         1980
University Mall, Little Rock, AK........        17,697        17,820        1,894         1967
University Mall, Pensacola, FL..........        26,960        31,701          802         1994(Note 3)
Valle Vista Mall, Harlingen, TX.........        23,903        25,673        2,195         1983
West Ridge Mall, Topeka, KS.............        36,352        42,386        3,197         1988
White Oaks Mall, Springfield, IL........        48,508        52,685        1,533         1977
Wichita Mall, Wichita, KS...............         4,820         4,820          582         1981
Windsor Park Mall, San Antonio, TX......        19,594        20,918        1,974         1976
COMMUNITY SHOPPING CENTERS
Arvada Plaza, Arvada, CO................         2,066         2,136          169         1966
Aurora Plaza, Aurora, CO................         5,940         5,975          661         1966
Bloomingdale Court, Bloomingdale, IL....        26,665        36,400        1,228         1987
Bridgeview Court, Bridgeview, IL........         3,676         3,984          255         1988
Brightwood Plaza, Indianapolis, IN......           264           329           36         1965
Bristol Plaza, Bristol, VA..............           326           387           64         1966
Grove Towne Center, Buffalo Grove, IL...         7,381         9,425          396         1988
Celina Plaza, El Paso, TX...............           828           966           72         1977
Cohoes Commons, Rochester, NY...........         8,477        10,175          823         1984
Cook's Discount, Ardmore, OK............           281           361           54         1969
Countryside Plaza, Countryside, IL......         8,940        10,183          982         1977
East Towne Commons, Knoxville, TN.......         6,944        10,865          394         1990
Eastland Plaza, Tulsa, OK...............         3,714         4,622          299         1987
Forest Plaza, Rockford, IL..............        16,980        21,333          704         1985
Fox River Plaza, Elgin, IL..............         9,501        12,408          397         1985
</TABLE>
    
 
                                       36
<PAGE>   37
 
                           SIMON PROPERTY GROUP, L.P.
 
             REAL ESTATE AND ACCUMULATED DEPRECIATION -- CONTINUED
                               DECEMBER 31, 1995
 
   
                             (DOLLARS IN THOUSANDS)
    
 
                                                                    SCHEDULE III
<TABLE>
<CAPTION>
                                                                                                               GROSS
                                                                                                              AMOUNTS
                                                                                                                 AT
                                                                                                               WHICH
                                                                                       COST CAPITALIZED       CARRIED
                                                                                         SUBSEQUENT TO        AT CLOSE
                                                                                                                 OF
                                                               INITIAL COST               ACQUISITION          PERIOD
                                                         ------------------------   -----------------------   --------
                                                                    BUILDINGS AND             BUILDINGS AND
             NAME, LOCATION               ENCUMBRANCES     LAND     IMPROVEMENTS     LAND     IMPROVEMENTS      LAND
----------------------------------------  ------------   --------   -------------   -------   -------------   --------
<S>                                       <C>            <C>        <C>             <C>       <C>             <C>
Greenwood Plus, Greenwood, IN...........            0       1,350          1,792          0           259        1,350
Griffith Park Plaza, Griffith, IN.......            0           0          2,412          0            68            0
Hammond Square, Sandy Springs, GA.......            0           0             27          0             1            0
Ingram Plaza, San Antonio, TX...........            0         421          1,802          4            22          425
Lake Plaza, Waukegan, IL................            0       2,868          6,420          0           152        2,868
Lake View Plaza, Orland Park, IL........       22,169       4,775         17,586          0           198        4,775
Lincoln Crossing, O'Fallon, IL..........          997       1,079          2,692          0             0        1,079
Maplewood Square, Omaha, NE.............            0         466          1,249          0            17          466
Markland Plaza, Kokomo, IN..............            0         210          1,258          0           188          210
Martinsville Plaza, Martinsville, VA....            0           0            584          0            45            0
Marwood Plaza, Indianapolis, IN.........            0          52          3,597          0            31           52
Matteson Plaza, Matteson, IL............       11,159       1,830          9,737          0            49        1,830
Memorial Plaza, Sheyboygan, WI..........            0         250            436          0           129          250
Mounds Mall Cinema, Anderson, IN........            0          88            158          0             1           88
New Castle Plaza, New Castle, IN........            0         130          1,621          0           318          130
North Ridge Plaza, Joliet, IL...........            0       2,831          7,699          0            36        2,831
North Riverside Park Plaza,
  N. Riverside, IL......................        7,908       1,062          2,490          0           136        1,062
Northland Plaza, Columbus, OH...........            0       4,490          8,893          0            18        4,490
Northwood Plaza, Fort Wayne, IN.........            0         304          2,922          0           202          304
Park Plaza, Hopkinsville, KY............            0         300          1,572          0            19          300
Regency Plaza, St. Charles, MO..........        1,878         616          4,963          0           123          616
St. Charles Towne Plaza, Waldorf, MD....       30,887       8,835         19,008          0            64        8,835
Teal Plaza, Lafayette, IN...............            0          99            878          0             8           99
Tippecanoe Plaza, Lafayette, IN.........            0         265            440        305           576          570
Wabash Village, West Lafayette, IN......            0           0            976          0            22            0
West Ridge Plaza, Topeka, KS............        4,612       1,491          4,620          0            12        1,491
White Oaks Plaza, Springfield, IL.......       12,345       3,265         14,267          0            83        3,265
Wood Plaza, Fort Dodge, IA..............            0          45            380          0           655           45
SPECIALITY RETAIL CENTER
The Forum Shops at Caesars,
  Las Vegas, NV.........................       89,701           0         72,866          0         5,307            0
Trolley Square, Salt Lake City, UT......       27,141       4,899         27,539        263         2,024        5,162
 
<CAPTION>
 
                                          BUILDINGS AND                ACCUMULATED      DATE OF
             NAME, LOCATION               IMPROVEMENTS      TOTAL      DEPRECIATION   CONSTRUCTION
----------------------------------------  -------------   ----------   ------------   ------------
<S>                                       <C>             <C>          <C>            <C>
Greenwood Plus, Greenwood, IN...........         2,051         3,401          319         1979(Note 3)
Griffith Park Plaza, Griffith, IN.......         2,480         2,480          264         1979
Hammond Square, Sandy Springs, GA.......            28            28            2         1974
Ingram Plaza, San Antonio, TX...........         1,824         2,249          227         1980
Lake Plaza, Waukegan, IL................         6,572         9,440          263         1986
Lake View Plaza, Orland Park, IL........        17,784        22,559          717         1986
Lincoln Crossing, O'Fallon, IL..........         2,692         3,771          118         1990
Maplewood Square, Omaha, NE.............         1,266         1,732          147         1987
Markland Plaza, Kokomo, IN..............         1,446         1,656          189         1975
Martinsville Plaza, Martinsville, VA....           629           629          133         1980
Marwood Plaza, Indianapolis, IN.........         3,628         3,680          242         1962
Matteson Plaza, Matteson, IL............         9,786        11,616          528         1988
Memorial Plaza, Sheyboygan, WI..........           565           815           97         1966
Mounds Mall Cinema, Anderson, IN........           159           247           20         1975
New Castle Plaza, New Castle, IN........         1,939         2,069          219         1966
North Ridge Plaza, Joliet, IL...........         7,735        10,566          414         1985
North Riverside Park Plaza,
  N. Riverside, IL......................         2,626         3,688          311         1977
Northland Plaza, Columbus, OH...........         8,911        13,401          369         1988
Northwood Plaza, Fort Wayne, IN.........         3,124         3,428          324         1977
Park Plaza, Hopkinsville, KY............         1,591         1,891          149         1968
Regency Plaza, St. Charles, MO..........         5,086         5,702          197         1988
St. Charles Towne Plaza, Waldorf, MD....        19,072        27,907          846         1987
Teal Plaza, Lafayette, IN...............           886           985           64         1986
Tippecanoe Plaza, Lafayette, IN.........         1,016         1,586          219         1962
Wabash Village, West Lafayette, IN......           998           998          119         1976
West Ridge Plaza, Topeka, KS............         4,632         6,123          226         1988
White Oaks Plaza, Springfield, IL.......        14,350        17,615          572         1986
Wood Plaza, Fort Dodge, IA..............         1,035         1,080          101         1967
SPECIALITY RETAIL CENTER
The Forum Shops at Caesars,
  Las Vegas, NV.........................        78,173        78,173        6,775         1992
Trolley Square, Salt Lake City, UT......        29,563        34,725        2,869         1986(Note 3)
</TABLE>
 
                                       37
<PAGE>   38
 
                           SIMON PROPERTY GROUP, L.P.
 
             REAL ESTATE AND ACCUMULATED DEPRECIATION -- CONTINUED
                               DECEMBER 31, 1995
 
   
                             (DOLLARS IN THOUSANDS)
    
 
                                                                    SCHEDULE III
<TABLE>
<CAPTION>
                                                                                                               GROSS
                                                                                                              AMOUNTS
                                                                                                                 AT
                                                                                                               WHICH
                                                                                       COST CAPITALIZED       CARRIED
                                                                                         SUBSEQUENT TO        AT CLOSE
                                                                                                                 OF
                                                               INITIAL COST               ACQUISITION          PERIOD
                                                         ------------------------   -----------------------   --------
                                                                    BUILDINGS AND             BUILDINGS AND
             NAME, LOCATION               ENCUMBRANCES     LAND     IMPROVEMENTS     LAND     IMPROVEMENTS      LAND
----------------------------------------  ------------   --------   -------------   -------   -------------   --------
<S>                                       <C>            <C>        <C>             <C>       <C>             <C>
MIXED-USE PROPERTIES
O Hare International Center,
  Rosemont, IL..........................       27,500         172         60,287          1         3,601          173
Riverway, Rosement, IL..................      131,450       8,738        129,175         16         4,262        8,754
LAND HELD FOR DEVELOPMENT
Cottonwood Mall, Albuquerque, NM........       22,399           0              0      5,993        36,233        5,993
The Shops at Sunset Place,
  South Miami, FL.......................            0      11,898          3,884          0             0       11,898
                                           ----------    --------     ----------    -------      --------     --------
                                           $1,784,759    $242,543    $ 1,488,831    $41,179     $ 371,372     $283,722
                                           ==========    ========     ==========    =======      ========     ========
 
<CAPTION>
 
                                          BUILDINGS AND                ACCUMULATED      DATE OF
             NAME, LOCATION               IMPROVEMENTS      TOTAL      DEPRECIATION   CONSTRUCTION
----------------------------------------  -------------   ----------   ------------   ------------
<S>                                       <C>             <C>          <C>            <C>
MIXED-USE PROPERTIES
O Hare International Center,
  Rosemont, IL..........................        63,888        64,061        7,238         1986
Riverway, Rosement, IL..................       133,437       142,191       13,718         1988
LAND HELD FOR DEVELOPMENT
Cottonwood Mall, Albuquerque, NM........        36,233        42,226            0         1993
The Shops at Sunset Place,
  South Miami, FL.......................         3,884        15,782            0         1995
                                            ----------    ----------     --------
                                           $ 1,860,203    $2,143,925     $147,341
                                            ==========    ==========     ========
</TABLE>
 
                                       38
<PAGE>   39
 
                           SIMON PROPERTY GROUP, L.P.
 
                 NOTES TO SCHEDULE III AS OF DECEMBER 31, 1995
                             (DOLLARS IN THOUSANDS)
 
(1) RECONCILIATION OF REAL ESTATE PROPERTIES:
 
     The changes in real estate assets for the years ended December 31, 1995 and
1994 are as follows:
 
<TABLE>
<CAPTION>
                                                                     1995           1994
                                                                  ----------     ----------
    <S>                                                           <C>            <C>
    Balance, beginning of year..................................  $1,887,122     $1,346,142
      Net book value of real estate exchanged...................          --             --
      Acquisitions..............................................      32,547        205,249
      Improvements..............................................      73,097         52,429
      Disposals.................................................     (12,722)        (1,733)
      Consolidation.............................................     163,881        285,035
                                                                  ----------     ----------
    Balance, close of year......................................  $2,143,925     $1,887,122
                                                                  ==========     ==========
</TABLE>
 
     The aggregate net book value for federal income tax purposes as of December
31, 1995 was $1,826,759.
 
(2) RECONCILIATION OF ACCUMULATED DEPRECIATION:
 
     The changes in accumulated depreciation and amortization for the years
ended December 31, 1995 and 1994 are as follows:
 
<TABLE>
<CAPTION>
                                                                     1995           1994
                                                                  ----------     ----------
    <S>                                                           <C>            <C>
    Balance, beginning of year..................................  $   68,222     $    1,830
    Depreciation expense........................................      79,126         66,440
    Disposals...................................................          (7)           (48)
                                                                    --------        -------
    Balance, close of year......................................  $  147,341     $   68,222
                                                                    ========        =======
</TABLE>
 
   
     Depreciation of the Simon Operating Partnership's investment in buildings
and improvements reflected in the statements of operations is calculated over
the estimated original lives of the assets as follows:
    
 
     Buildings -- typically 35 years
 
     Improvements -- shorter of lease term or useful life
 
(3) NOT DEVELOPED/CONSTRUCTED BY THE SIMONS. THE DATE OF CONSTRUCTION REPRESENTS
ACQUISITION DATE.
 
                                       39
<PAGE>   40
 
   
                               INDEX TO EXHIBITS
    
 
   
<TABLE>
<CAPTION>
                                                                                      SEQUENTIAL
EXHIBITS                                                                              PAGE NO.
---------                                                                             --------
<C>        <S>                                                                        <C>
   ***3.1  Second Amended and Restated Agreement of Limited Partnership of the
           Operating Partnership. (Previously filed as Exhibit 10.1.)
     *4.1  Secured Promissory Note and Open-End Mortgage and Security Agreement from
           Simon Property Group, L.P. in favor of Principal Mutual Life Insurance
           Company (Pool 1).
     *4.2  Secured Promissory Note and Open-End Mortgage and Security Agreement from
           Simon Property Group, L.P. in favor of Principal Mutual Life Insurance
           Company (Pool 2).
   ***4.3  Credit Agreement dated as of August 8, 1995 among the Operating Partnership
           and Morgan Guaranty Trust Company of New York, Union Bank of Switzerland
           and Chemical Bank as Lead Agents.
    *10.1  Noncompetition Agreement dated as of December 1, 1993 between the Company
           and each of Mclvin Simon and Herbert Simon. (Previously filed as Exhibit
           10.2.)
    *10.2  Noncompetition Agreement dated as of December 1, 1993 between the Company
           and David Simon. (Previously filed as Exhibit 10.3.)
    *10.3  Restriction and Noncompetition Agreement dated as of December 1, 1993 among
           the Company and the Management Companies. (Previously filed as Exhibit
           10.4.)
    *10.4  Simon Property Group, L.P. Employee Stock Plan. (Previously filed as
           Exhibit 10.5.)
    *10.5  Simon Property Group, Inc. Director Stock Option Plan. (Previously filed as
           Exhibit 10.6.)
    *10.6  Indemnity Agreement dated as of December 1, 1993 between the Company and
           its directors and officers. (Previously filed as Exhibit 10.7.)
    *10.7  Option Agreement to acquire the Excluded Retail Properties. (Previously
           filed as Exhibit 10.10.)
    *10.8  Option Agreement to acquire the Excluded Properties--Land. (Previously
           filed as Exhibit 10.11.)
    *10.9  Registration Rights Agreement dated as of December 1, 1993 between the
           Company, certain Limited Partners and certain other parties. (Previously
           filed as Exhibit 10.12.)
   *10.10  Option Agreements dated as of December 1, 1993 between the Management
           Company and the Operating Partnership. (Previously filed as Exhibit 10.20.)
   *10.11  Option Agreement dated as of December 1, 1993 to acquire Development Land.
           (Previously filed as Exhibit 10.22.)
   *10.12  Option Agreement dated December 1, 1993 between the Management Company and
           the Operating Partnership. (Previously filed as Exhibit 10.25.)
   *10.13  Option Agreement dated December 1, 1993 between Simon Enterprises, Inc. and
           the Operating Partnership. (Previously filed as Exhibit 10.26.)
   *10.14  Lock-Up Agreement dated December 20, 1993 between MSA and the Operating
           Partnership. (Previously filed as Exhibit 10.27.)
   *10.15  Indemnification Agreement dated December 1, 1993 between MSA and the
           Operating Partnership. (Previously filed as Exhibit 10.28.)
  **10.16  Purchase and Sale Agreement dated December 1, 1994 between the Operating
           Partnership and LaSalle Street Fund Incorporated. (Previously filed as
           Exhibit 10.30.)
  **10.17  Purchase and Sale Agreement dated December 29, 1994 between the Operating
           Partnership and Corporate Property Investors. (Previously filed as Exhibit
           10.31.)
 ***10.18  Operating Agreement of Summit Mall Company, L.L.C. dated February 23, 1995.
           (Previously filed as Exhibit 10.19.)
 ***10.19  Series A Preferred Stock Purchase Agreement between the Company and
           Algemeen Burgerlijk Pensioenfonds dated as of October 27, 1995. (Previously
           filed as Exhibit 10.20.)
     21.1  List of Subsidiaries of the Company.                                          41
     23.1  Consent of Arthur Andersen LLP.                                               42
</TABLE>
    
 
---------------
   
  * Included as an exhibit (numbered as indicated) to the Company's Form 10-K
    for the fiscal year ended December 31, 1993, File No. 1-12618, and
    incorporated herein by reference.
    
   
 ** Included as an exhibit (numbered as indicated) to the Company's Form 10-K
    for the fiscal year ended December 31, 1994, File No. 1-12618, and
    incorporated herein by reference.
    
   
*** Included as an exhibit (numbered as indicated) to the Company's Form 10-K
    for the fiscal year ended December 31, 1995, File No. 1-12618, and
    incorporated herein by reference.
    
 
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