<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 FORM 10-Q/A
                              (AMENDMENT NO. 1)


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


For the quarterly period ended September 30, 1998

<TABLE>
<S>                                                                       <C>                                                   
                 SIMON PROPERTY GROUP, INC.                                             SPG REALTY CONSULTANTS, INC.            
    (Exact name of registrant as specified in its charter)                (Exact name of registrant as specified in its charter)
                                                                                                                           
                          Delaware                                                                Delaware                      
          (State of incorporation or organization)                                (State of incorporation or organization)      

                         001-14469                                                              001-14469-01                    
                   (Commission File No.)                                                   (Commission File No.)                

                         046268599                                                               13-2838638                     
            (I.R.S. Employer Identification No.)                                    (I.R.S. Employer Identification No.)        

                    National City Center                                                    National City Center                
         115 West Washington Street, Suite 15 East                               115 West Washington Street, Suite 15 East      
                Indianapolis, Indiana 46204                                             Indianapolis, Indiana 46204             
          (Address of principal executive offices)                                (Address of principal executive offices)      

                       (317) 636-1600                                                          (317) 636-1600                   
    (Registrant's telephone number, including area code)                   (Registrant's telephone number, including area code) 
                                                                                                                   

             CORPORATE PROPERTY INVESTORS, INC.                                      CORPORATE REALTY CONSULTANTS, INC.         
                (Former name of registrant)                                             (Former name of registrant)             

                Three Dag Hammarskjold Plaza                                            Three Dag Hammarskjold Plaza            
                    307 East 47th Street                                                   307 East 47th Street                 
                  New York, New York 10017                                              New York, New York 10017                
      (Former address of principal executive offices)                         (Former address of principal executive offices)   
                                                                                                                          
</TABLE>


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 / /

As of November 11, 1998, 163,574,091 shares of common stock, par value $0.0001
per share, 3,200,000 shares of Class B common stock, par value $0.0001 per share
and 4,000 shares of Class C common stock, par value $0.0001 of Simon Property
Group, Inc. were outstanding, and were paired with 1,667,780.91 shares of common
stock, par value $0.0001 per share, of SPG Realty Consultants, Inc. outstanding
on that same date.


                                       1
<PAGE>   2
                         SIMON PROPERTY GROUP, INC. AND
                          SPG REALTY CONSULTANTS, INC.

                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                          PAGE  
<S>                                                                                       <C>
PART I - FINANCIAL INFORMATION
                                                                                                
      Item 1:  Financial Statements - Introduction                                          3   
                                                                                                
      Simon Property Group, Inc. and SPG Realty Consultants, Inc.:                              
                                                                                                
           Combined Condensed Balance Sheets as of September 30, 1998 and                       
            December 31, 1997                                                               4   
                                                                                                
           Combined Condensed Statements of Operations for the three-month and
            nine-month periods ended September 30, 1998 and 1997                            5   
                                                                                                
           Combined Condensed Statements of Cash Flows for the nine-month
            periods ended September 30, 1998 and 1997                                       6   
                                                                                                
      Simon Property Group, Inc.:                                                               
                                                                                                
           Consolidated Condensed Balance Sheets as of September 30, 1998 and
            December 31, 1997                                                               7   
                                                                                                
           Consolidated Condensed Statements of Operations for the three-month
            and nine-month periods ended September 30, 1998 and 1997                        8   
                                                                                                
           Consolidated Condensed Statements of Cash Flows for the nine-month                   
            periods ended September 30, 1998 and 1997                                       9   
                                                                                                
      SPG Realty Consultants, Inc.:                                                             
                                                                                                
           Consolidated Condensed Balance Sheets as of September 30, 1998 and
            December 31, 1997                                                              10   
                                                                                                
           Consolidated Condensed Statements of Operations for the three-month
           and nine-month periods ended September 30, 1998 and 1997                        11   
                                                                                                
           Consolidated Condensed Statements of Cash Flows for the nine-month
            periods ended September 30, 1998 and 1997                                      12   
                                                                                                
      Notes to Unaudited Condensed Financial Statements                                    13   
                                                                                                
      Item 2:  Management's Discussion and Analysis of Financial Condition and
                 Results of Operations                                                     24   
                                                                                                
PART II - OTHER INFORMATION                                                                     
                                                                                                
      Item 1 - Legal Proceedings                                                           33   
                            
      Item 2 - Changes in Securities and Use of Proceeds                                   33     

      Item 4 - Submission of Matters to a Vote of Security Holders                         34

      Item 6 - Exhibits and Reports                                                        35

SIGNATURES                                                                               
</TABLE>


                                       2
<PAGE>   3
                       PART I. FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS - INTRODUCTION

      The following unaudited financial statements of Simon Property Group, Inc.
and its paired-share affiliate, SPG Realty Consultants, Inc., are provided
pursuant to the requirements of this Item. In the opinion of management, all
adjustments necessary for fair presentation, consisting of only normal recurring
adjustments, have been included. The financial statements presented herein have
been prepared in accordance with the accounting policies described in Simon
DeBartolo Group, Inc.'s Annual report on Form 10-K for the year ended December
31, 1997 and the accounting policies described in the notes to Corporate
Property Investors, Inc. and Corporate Realty Consultants, Inc.'s historical
financial statements included in their Registration Statement on Form S-4 filed
August 13, 1998, and should be read in conjunction therewith.

      As described in Note 2 to the financial statements, Corporate Property
Investors, Inc. was acquired by Simon DeBartolo Group, Inc. as of the close of
business on September 24, 1998 in a reverse purchase. Although Simon DeBartolo
Group, Inc. became a legal subsidiary of Corporate Property Investors, Inc., the
shareholders of Simon DeBartolo Group, Inc. hold the majority of the outstanding
common stock of Corporate Property Investors, Inc. Accordingly, Simon DeBartolo
Group, Inc. is the predecessor to Simon Property Group, Inc. for accounting and
reporting purposes. In connection with the acquisition, Corporate Property
Investors, Inc. and Corporate Realty Consultants, Inc. were renamed 'Simon
Property Group, Inc.' and 'SPG Realty Consultants, Inc.', respectively. See Note
1 to the financial statements for a description of the basis of presentation of
the following unaudited financial statements.


                                       3
<PAGE>   4
                         SIMON PROPERTY GROUP, INC. AND
                          SPG REALTY CONSULTANTS, INC.
                        COMBINED CONDENSED BALANCE SHEETS
         (UNAUDITED AND DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                                    September 30,       December 31,
                                                                                                        1998              1997
                                                                                                     ------------      ------------
ASSETS:
<S>                                                                                                  <C>               <C>         
         Investment properties, at cost                                                              $ 11,679,790      $  6,867,354
           Less-- accumulated depreciation                                                                645,277           461,792
                                                                                                     ------------      ------------
                                                                                                       11,034,513         6,405,562
         Goodwill                                                                                          62,227              --
         Cash and cash equivalents                                                                        102,517           109,699
         Restricted cash                                                                                    1,685             8,553
         Tenant receivables and accrued revenue, net                                                      216,202           188,359
         Notes and advances receivable from Management Company and affiliate                              111,391            93,809
         Investment in partnerships and joint ventures, at equity                                       1,206,272           612,140
         Investment in Management Company and affiliates                                                    1,334             3,192
         Other investment                                                                                  48,239            53,785
         Deferred costs and other assets                                                                  229,451           164,413
         Minority interest                                                                                 29,442            23,155
                                                                                                     ------------      ------------
              Total assets                                                                           $ 13,043,273      $  7,662,667
                                                                                                     ============      ============

LIABILITIES:
         Mortgages and other indebtedness                                                            $  7,745,917      $  5,077,990
         Accounts payable and accrued expenses                                                            413,903           245,121
         Accrued distributions                                                                             84,496             --
         Cash distributions and losses in partnerships and joint ventures, at equity                       25,836            20,563
         Other liabilities                                                                                 77,523            67,694
                                                                                                     ------------      ------------
              Total liabilities                                                                         8,347,675         5,411,368
                                                                                                     ------------      ------------

COMMITMENTS AND CONTINGENCIES (Note 11)

LIMITED PARTNERS' INTEREST IN THE OPERATING PARTNERSHIPS                                                  997,431           694,437

PREFERRED STOCK OF SUBSIDIARY                                                                             339,262              --

SHAREHOLDERS' EQUITY:

         CAPITAL STOCK OF SIMON PROPERTY GROUP, INC.:

              Series B and C cumulative redeemable preferred stock, 0 shares authorized, 0 and
                11,000,000 issued and outstanding, respectively                                              --             339,061

              Series A convertible preferred stock, 209,249 shares authorized,
                209,249 and 0 issued and outstanding, respectively                                        267,393              --

              Series B convertible preferred stock, 5,000,000 shares authorized,
                4,844,331 and 0 issued and outstanding, respectively                                      450,523              --

              Common stock, $.0001 par value, 400,000,000 shares authorized,
                and 163,574,091 and 106,439,001 issued and outstanding, respectively                           16                10

              Class B common stock, $.0001 par value, 12,000,000 shares authorized, 3,200,000
                issued and outstanding                                                                          1                 1

              Class C common stock, $.0001 par value, 4,000 shares authorized, issued and
                outstanding                                                                                  --                --
         CAPITAL STOCK OF SPG REALTY CONSULTANTS, INC.:

              Common stock, $.0001 par value, 7,500,000 shares authorized,
                1,667,780.91 issued and outstanding                                                          --               --

         Capital in excess of par value                                                                 3,094,125         1,491,908
         Accumulated deficit                                                                             (429,882)         (263,308)
         Unrealized gain on long-term investment                                                           (1,260)            2,420
         Unamortized restricted stock award                                                               (22,011)          (13,230)
                                                                                                     ------------      ------------
              Total shareholders' equity                                                                3,358,905         1,556,862
                                                                                                     ------------      ------------
              Total liabilities, limited partners' interest and shareholders' equity                 $ 13,043,273      $  7,662,667
                                                                                                     ============      ============
</TABLE>



        The accompanying notes are an integral part of these statements.

                                       4

<PAGE>   5
                         SIMON PROPERTY GROUP, INC. AND
                          SPG REALTY CONSULTANTS, INC.
                   COMBINED CONDENSED STATEMENTS OF OPERATIONS
         (UNAUDITED AND DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                   For the Three Months Ended September 30,  For the Nine Months Ended September 30,
                                                   ---------------------------------------------------------------------------------
                                                           1998                1997                1998                1997
                                                         ---------           ---------           ---------           ---------

REVENUE:
<S>                                                      <C>                 <C>                 <C>                 <C>      
      Minimum rent                                       $ 194,623           $ 152,320           $ 565,557           $ 449,693
      Overage rent                                           2,290               8,650              22,773              26,214
      Tenant reimbursements                                101,927              81,413             283,898             231,444
      Other income                                          23,498              17,400              60,742              39,901
                                                         ---------           ---------           ---------           ---------
          Total revenue                                    322,338             259,783             932,970             747,252
                                                         ---------           ---------           ---------           ---------

EXPENSES:
      Property operating                                    55,600              46,203             155,858             130,228
      Depreciation and amortization                         61,107              48,185             177,725             135,668
      Real estate taxes                                     31,428              23,816              90,387              73,166
      Repairs and maintenance                               12,424              11,107              35,974              28,653
      Advertising and promotion                             11,283               8,396              28,005              20,296
      Provision for (recovery of) credit losses             (1,857)               (135)              1,598               2,690
      Other                                                  4,816               4,639              16,993              12,818
                                                         ---------           ---------           ---------           ---------
          Total operating expenses                         174,801             142,211             506,540             403,519
                                                         ---------           ---------           ---------           ---------

OPERATING INCOME                                           147,537             117,572             426,430             343,733

INTEREST EXPENSE                                            97,331              68,940             281,751             203,934
                                                         ---------           ---------           ---------           ---------
INCOME BEFORE MINORITY INTEREST                             50,206              48,632             144,679             139,799

MINORITY INTEREST                                           (1,108)             (1,423)             (4,704)             (3,648)
GAIN (LOSS) ON SALES OF ASSETS                                 (64)               --                (7,283)                 20
                                                         ---------           ---------           ---------           ---------
INCOME BEFORE UNCONSOLIDATED ENTITIES                       49,034              47,209             132,692             136,171

INCOME FROM UNCONSOLIDATED ENTITIES                          3,817               7,077               8,797               9,590
                                                         ---------           ---------           ---------           ---------
INCOME BEFORE EXTRAORDINARY ITEMS                           52,851              54,286             141,489             145,761

EXTRAORDINARY ITEMS                                            (22)             27,215               7,002               2,501
                                                         ---------           ---------           ---------           ---------
INCOME BEFORE LIMITED PARTNERS' INTERESTS                   52,829              81,501             148,491             148,262

LESS:
LIMITED PARTNERS' INTEREST IN
      THE OPERATING PARTNERSHIPS                            15,789              27,758              45,368              48,522
PREFERRED DIVIDENDS OF SUBSIDIARY                              482                --                   482                --
                                                         ---------           ---------           ---------           ---------
NET INCOME                                                  36,558              53,743             102,641              99,740

PREFERRED DIVIDENDS                                         (7,592)             (9,101)            (22,260)            (21,914)
                                                         ---------           ---------           ---------           ---------

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS              $  28,966           $  44,642           $  80,381           $  77,826
                                                         =========           =========           =========           =========

BASIC EARNINGS PER PAIRED SHARE:
          Income before extraordinary items              $    0.25           $    0.28           $    0.67           $    0.78
          Extraordinary items                                 --                  0.17                0.04                0.02
                                                         ---------           ---------           ---------           ---------
          Net income                                     $    0.25           $    0.45           $    0.71           $    0.80
                                                         =========           =========           =========           =========

DILUTED EARNINGS PER PAIRED SHARE:
          Income before extraordinary items              $    0.25           $    0.28           $    0.67           $    0.78
          Extraordinary items                                 --                  0.17                0.04                0.02
                                                         ---------           ---------           ---------           ---------
          Net income                                     $    0.25           $    0.45           $    0.71           $    0.80
                                                         =========           =========           =========           =========
</TABLE>






        The accompanying notes are an integral part of these statements.

                                       5
<PAGE>   6
                         SIMON PROPERTY GROUP, INC. AND
                          SPG REALTY CONSULTANTS, INC.
                   COMBINED CONDENSED STATEMENTS OF CASH FLOWS

                      (UNAUDITED AND DOLLARS IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                                For the Nine Months Ended September 30,
                                                                                ----------------------------------------
                                                                                     1998                  1997
                                                                                  -----------           -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                               <C>                   <C>        
  Net income                                                                      $   102,641           $    99,740
      Adjustments to reconcile net income to net cash provided
        by operating activities--
          Depreciation and amortization                                               185,798               140,927
          Extraordinary items                                                          (7,002)               (2,501)
          (Gain) loss on sales of assets, net                                           7,283                   (20)
          Limited partners' interest in Operating Partnership                          45,368                48,522
          Straight-line rent                                                           (5,892)               (6,378)
          Minority interest                                                             4,704                 3,648
          Equity in income of unconsolidated entities                                  (8,797)               (9,590)
      Changes in assets and liabilities--
          Tenant receivables and accrued revenue                                       (3,942)               (1,341)
          Deferred costs and other assets                                             (10,516)              (18,906)
          Accounts payable, accrued expenses and other liabilities                     41,648                 8,151
                                                                                  -----------           -----------
            Net cash provided by operating activities                                 351,293               262,252
                                                                                  -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Acquisitions                                                                 (1,881,183)             (736,600)
      Capital expenditures                                                           (233,200)             (219,672)
      Change in restricted cash                                                         6,868                (8,829)
      Cash from acquisitions                                                           17,213                  --
      Net proceeds from sales of assets                                                46,087                   599
      Investments in unconsolidated entities                                          (28,726)              (63,656)
      Distributions from unconsolidated entities                                      164,914                22,199
      Investments in and advances to Management Company                               (19,915)                 --
      Other investing activity                                                           --                 (55,400)
                                                                                  -----------           -----------
          Net cash used in investing activities                                    (1,927,942)           (1,061,359)
                                                                                  -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from sales of common and convertible preferred stock, net              114,629               327,101
      Minority interest distributions, net                                            (10,991)               (2,825)
      Distributions to shareholders                                                  (205,697)             (168,263)
      Distributions to limited partners                                              (104,139)              (91,632)
      Mortgage and other note proceeds, net of transaction costs                    3,305,199             1,595,202
      Mortgage and other note principal payments                                   (1,529,534)             (852,906)
      Other refinancing transaction                                                      --                 (21,000)
                                                                                  -----------           -----------
          Net cash provided by financing activities                                 1,569,467               785,677
                                                                                  -----------           -----------

DECREASE IN CASH AND CASH EQUIVALENTS                                                  (7,182)              (13,430)

CASH AND CASH EQUIVALENTS, beginning of period                                        109,699                64,309
                                                                                  -----------           -----------
CASH AND CASH EQUIVALENTS, end of period                                          $   102,517           $    50,879
                                                                                  ===========           ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       6
<PAGE>   7
                           SIMON PROPERTY GROUP, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
         (UNAUDITED AND DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                             September 30,          December 31,
                                                                                                 1998                   1997
                                                                                             ------------           ------------
ASSETS:
<S>                                                                                          <C>                    <C>         
         Investment properties, at cost                                                      $ 11,646,393           $  6,867,354
           Less-- accumulated depreciation                                                        634,277                461,792
                                                                                             ------------           ------------
                                                                                               11,012,116              6,405,562
         Goodwill                                                                                  62,227                   --
         Cash and cash equivalents                                                                 78,971                109,699
         Restricted cash                                                                            1,685                  8,553
         Tenant receivables and accrued revenue, net                                              215,703                188,359
         Notes and advances receivable from Management Company and affiliates                     131,956                 93,809
         Investment in partnerships and joint ventures, at equity                               1,203,118                612,140
         Investment in Management Company and affiliates                                            1,334                  3,192
         Other investment                                                                          48,239                 53,785
         Deferred costs and other assets                                                          228,759                164,413
         Minority interest                                                                         29,442                 23,155
                                                                                             ------------           ------------
                 Total assets                                                                $ 13,013,550           $  7,662,667
                                                                                             ============           ============

LIABILITIES:
         Mortgages and other indebtedness                                                    $  7,744,926           $  5,077,990
         Accounts payable and accrued expenses                                                    413,903                245,121
         Accrued distributions                                                                     84,496                   --
         Cash distributions and losses in partnerships and joint ventures, at equity               25,836                 20,563
         Other liabilities                                                                         73,590                 67,694
                                                                                             ------------           ------------
                 Total liabilities                                                              8,342,751              5,411,368
                                                                                             ------------           ------------

COMMITMENTS AND CONTINGENCIES (Note 11)

LIMITED PARTNERS' INTEREST IN THE SPG OPERATING PARTNERSHIP                                       990,378                694,437

PREFERRED STOCK OF SUBSIDIARY                                                                     339,262                   --

SHAREHOLDERS' EQUITY:

         Series B and C cumulative redeemable preferred stock, 0 shares authorized, 0 and
           11,000,000 issued and outstanding, respectively                                           --                  339,061

         Series A convertible preferred stock, 209,249 shares authorized,
           209,249 and 0 issued and outstanding, respectively                                     267,393                   --

         Series B convertible preferred stock, 5,000,000 shares authorized,
           4,844,331 and 0 issued and outstanding, respectively                                   450,523                   --

         Common stock, $.0001 par value, 400,000,000 shares authorized,
           and 163,574,091 and 106,439,001 issued and outstanding, respectively                        16                     10

         Class B common stock, $.0001 par value, 12,000,000 shares authorized, 3,200,000
           issued and outstanding                                                                       1                      1

         Class C common stock, $.0001 par value, 4,000 shares authorized, issued and
           outstanding                                                                               --                     --

         Capital in excess of par value                                                         3,066,526              1,491,908
         Accumulated deficit                                                                     (420,029)              (263,308)
         Unrealized gain on long-term investment                                                   (1,260)                 2,420
         Unamortized restricted stock award                                                       (22,011)               (13,230)
                                                                                             ------------           ------------
                 Total shareholders' equity                                                     3,341,159              1,556,862
                                                                                             ------------           ------------
                 Total liabilities, limited partners' interest and shareholders' equity      $ 13,013,550           $  7,662,667
                                                                                             ============           ============
</TABLE>



        The accompanying notes are an integral part of these statements.

                                       7
<PAGE>   8


                           SIMON PROPERTY GROUP, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
         (UNAUDITED AND DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                   For the Three Months Ended September 30,  For the Nine Months Ended September 30,
                                                   ---------------------------------------------------------------------------------
                                                        1998                1997                1998                1997
                                                      ---------           ---------           ---------           ---------

REVENUE:
<S>                                                   <C>                 <C>                 <C>                 <C>      
      Minimum rent                                    $ 194,597           $ 152,320           $ 565,531           $ 449,693
      Overage rent                                        2,290               8,650              22,773              26,214
      Tenant reimbursements                             101,935              81,413             283,906             231,444
      Other income                                       23,515              17,400              60,759              39,901
                                                      ---------           ---------           ---------           ---------
           Total revenue                                322,337             259,783             932,969             747,252
                                                      ---------           ---------           ---------           ---------

EXPENSES:
      Property operating                                 55,592              46,203             155,850             130,228
      Depreciation and amortization                      61,092              48,185             177,710             135,668
      Real estate taxes                                  31,428              23,816              90,387              73,166
      Repairs and maintenance                            12,424              11,107              35,974              28,653
      Advertising and promotion                          11,283               8,396              28,005              20,296
      Provision for (recovery of) credit
        losses                                           (1,857)               (135)              1,598               2,690
      Other                                               4,812               4,639              16,989              12,818
                                                      ---------           ---------           ---------           ---------
           Total operating expenses                     174,774             142,211             506,513             403,519
                                                      ---------           ---------           ---------           ---------

OPERATING INCOME                                        147,563             117,572             426,456             343,733

INTEREST EXPENSE                                         97,329              68,940             281,749             203,934
                                                      ---------           ---------           ---------           ---------
INCOME BEFORE MINORITY INTEREST                          50,234              48,632             144,707             139,799

MINORITY INTEREST                                        (1,108)             (1,423)             (4,704)             (3,648)
GAIN (LOSS) ON SALES OF ASSETS                              (64)               --                (7,283)                 20
                                                      ---------           ---------           ---------           ---------
INCOME BEFORE UNCONSOLIDATED ENTITIES                    49,062              47,209             132,720             136,171

INCOME FROM UNCONSOLIDATED ENTITIES                       3,809               7,077               8,789               9,590
                                                      ---------           ---------           ---------           ---------
INCOME BEFORE EXTRAORDINARY ITEMS                        52,871              54,286             141,509             145,761

EXTRAORDINARY ITEMS                                         (22)             27,215               7,002               2,501
                                                      ---------           ---------           ---------           ---------
INCOME BEFORE LIMITED PARTNERS' INTEREST                 52,849              81,501             148,511             148,262

LESS:
LIMITED PARTNERS' INTEREST IN
      THE SPG OPERATING PARTNERSHIP                      15,795              27,758              45,374              48,522
PREFERRED DIVIDENDS OF SUBSIDIARY                           482                --                   482                --
                                                      ---------           ---------           ---------           ---------
NET INCOME                                               36,572              53,743             102,655              99,740

PREFERRED DIVIDENDS                                      (7,592)             (9,101)            (22,260)            (21,914)
                                                      ---------           ---------           ---------           ---------

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS           $  28,980           $  44,642           $  80,395           $  77,826
                                                      =========           =========           =========           =========

BASIC EARNINGS PER COMMON SHARE:
           Income before extraordinary items          $    0.25           $    0.28           $    0.67           $    0.78
           Extraordinary items                             --                  0.17                0.04                0.02
                                                      ---------           ---------           ---------           ---------
           Net income                                 $    0.25           $    0.45           $    0.71           $    0.80
                                                      =========           =========           =========           =========

DILUTED EARNINGS PER COMMON SHARE:
           Income before extraordinary items          $    0.25           $    0.28           $    0.67           $    0.78
           Extraordinary items                             --                  0.17                0.04                0.02
                                                      ---------           ---------           ---------           ---------
           Net income                                 $    0.25           $    0.45           $    0.71           $    0.80
                                                      =========           =========           =========           =========
</TABLE>







        The accompanying notes are an integral part of these statements.

                                       8
<PAGE>   9
                           SIMON PROPERTY GROUP, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                      (UNAUDITED AND DOLLARS IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                             For the Nine Months Ended September 30,
                                                                             ---------------------------------------
                                                                                     1998                  1997
                                                                                  -----------           -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                               <C>                   <C>        
  Net income                                                                      $   102,655           $    99,740
      Adjustments to reconcile net income to net cash provided
        by operating activities--
          Depreciation and amortization                                               185,798               140,927
          Extraordinary items                                                          (7,002)               (2,501)
          (Gain) loss on sales of assets, net                                           7,283                   (20)
          Limited partners' interest in Operating Partnership                          45,374                48,522
          Straight-line rent                                                           (5,892)               (6,378)
          Minority interest                                                             4,704                 3,648
          Equity in income of unconsolidated entities                                  (8,789)               (9,590)
      Changes in assets and liabilities--
          Tenant receivables and accrued revenue                                       (5,516)               (1,341)
          Deferred costs and other assets                                             (10,516)              (18,906)
          Accounts payable, accrued expenses and other liabilities                     41,648                 8,151
                                                                                  -----------           -----------
            Net cash provided by operating activities                                 349,747               262,252
                                                                                  -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Acquisitions                                                                 (1,881,183)             (736,600)
      Capital expenditures                                                           (233,200)             (219,672)
      Change in restricted cash                                                         6,868                (8,829)
      Cash from acquisitions                                                           17,213                  --
      Net proceeds from sales of assets                                                46,087                   599
      Investments in unconsolidated entities                                          (28,726)              (63,656)
      Distributions from unconsolidated entities                                      164,914                22,199
      Investments in and advances to Management Company                               (19,915)                 --
      Other investing activity                                                           --                 (55,400)
                                                                                  -----------           -----------
          Net cash used in investing activities                                    (1,927,942)           (1,061,359)
                                                                                  -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from sales of common and convertible preferred stock, net               92,629               327,101
      Minority interest distributions, net                                            (10,991)               (2,825)
      Distributions to shareholders                                                  (205,697)             (168,263)
      Distributions to limited partners                                              (104,139)              (91,632)
      Mortgage and other note proceeds, net of transaction costs                    3,305,199             1,595,202
      Mortgage and other note principal payments                                   (1,529,534)             (852,906)
      Other refinancing transaction                                                      --                 (21,000)
                                                                                  -----------           -----------
          Net cash provided by financing activities                                 1,547,467               785,677
                                                                                  -----------           -----------

DECREASE IN CASH AND CASH EQUIVALENTS                                                 (30,728)              (13,430)

CASH AND CASH EQUIVALENTS, beginning of period                                        109,699                64,309
                                                                                  -----------           -----------
CASH AND CASH EQUIVALENTS, end of period                                          $    78,971           $    50,879
                                                                                  ===========           ===========
</TABLE>









        The accompanying notes are an integral part of these statements.

                                       9
<PAGE>   10
                          SPG REALTY CONSULTANTS, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
         (UNAUDITED AND DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                                  September 30,        December 31,
                                                                                                       1998               1997
                                                                                                 ---------------    ---------------
ASSETS:
<S>                                                                                              <C>                <C>            
         Investment properties, at cost                                                          $        33,397    $        32,146
           Less-- accumulated depreciation                                                                11,000             10,613
                                                                                                 ---------------    ---------------
                                                                                                          22,397             21,533
         Cash and cash equivalents                                                                        23,546              4,147
         Tenant Receivables                                                                                  499                478
         Investments in joint ventures, at equity                                                          3,154             18,007
         Other                                                                                             1,158              1,898
                                                                                                 ---------------    ---------------
                 Total assets                                                                    $        50,754    $        46,063
                                                                                                 ===============    ===============

LIABILITIES:
         Mortgages and other indebtedness                                                        $           991    $         1,184
         Notes payable to affiliate                                                                       20,565             35,634
         Deferred taxes                                                                                    3,374              3,564
         Other liabilities                                                                                 1,025              1,365
                                                                                                 ---------------    ---------------
                 Total liabilities                                                                        25,955             41,747
                                                                                                 ---------------    ---------------

COMMITMENTS AND CONTINGENCIES (Note 11)

LIMITED PARTNERS' INTEREST IN THE SRC OPERATING PARTNERSHIP                                                7,053               --

SHAREHOLDERS' EQUITY:

         Common stock, $.0001 par value, respectively, 7,500,000 shares authorized,
           1,667,780.91 and 558,730.87 issued and outstanding, respectively                                  --                 --

         Capital in excess of par value                                                                   27,599             13,620
         Accumulated deficit                                                                              (9,853)            (9,304)
                                                                                                 ---------------    ---------------
                 Total shareholders' equity                                                               17,746              4,316
                                                                                                 ---------------    ---------------
                 Total liabilities, limited partners' interest and shareholders' equity          $        50,754    $        46,063
                                                                                                 ===============    ===============
</TABLE>



        The accompanying notes are an integral part of these statements.


                                       10
<PAGE>   11


                          SPG REALTY CONSULTANTS, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
         (UNAUDITED AND DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                 For the Three Months Ended September 30,    For the Nine Months Ended September 30,
                                                 ----------------------------------------    ---------------------------------------
                                                         1998              1997                        1998              1997 
                                                        -------           -------                     -------           -------
                                                                                                    
REVENUE:                                                                                            
<S>                                                     <C>               <C>                         <C>               <C>    
      Minimum rent                                      $   773           $   597                     $ 2,330           $ 2,370
      Tenant reimbursements                                 165               210                         635               779
      Management fee income                                   1               439                           4             1,304
      Other income                                           73                41                         181               232
                                                        -------           -------                     -------           -------
          Total revenue                                   1,012             1,287                       3,150             4,685
                                                        -------           -------                     -------           -------
                                                                                                    
EXPENSES:                                                                                           
      Property operating                                    759               737                       2,126             2,262
      Depreciation and amortization                         237               236                         701               660
      Management fees                                        17               396                          94             1,183
      Administrative and other                               97                72                         362               227
                                                        -------           -------                     -------           -------
          Total operating expenses                        1,110             1,441                       3,283             4,332
                                                        -------           -------                     -------           -------
                                                                                                    
OPERATING INCOME                                            (98)             (154)                       (133)              353
                                                                                                    
INTEREST EXPENSE                                            337               340                       1,013             1,025
                                                        -------           -------                     -------           -------
INCOME BEFORE GAIN ON SALE OF                                                                       
   PARTNERSHIP INTERESTS                                   (435)             (494)                     (1,146)             (672)
                                                                                                    
GAIN ON SALES OF PARTNERSHIP INTERESTS                     --                --                          --               1,259
                                                        -------           -------                     -------           -------
INCOME (LOSS) BEFORE UNCONSOLIDATED ENTITIES               (435)             (494)                     (1,146)              587
                                                                                                    
INCOME FROM UNCONSOLIDATED ENTITIES                         124               155                         398               462
                                                        -------           -------                     -------           -------
INCOME (LOSS) OF THE SRC OPERATING PARTNERSHIP             (311)             (339)                       (748)            1,049
                                                                                                    
LIMITED PARTNERS' INTEREST IN                                                                       
       THE SRC OPERATING PARTNERSHIP                         (6)             --                            (6)             --
                                                        -------           -------                     -------           -------
INCOME (LOSS) BEFORE INCOME TAXES                          (305)             (339)                       (742)            1,049
                                                                                                    
PROVISION (BENEFIT) FOR INCOME TAXES                         (3)             (124)                       (193)              361
                                                        -------           -------                     -------           -------
                                                                                                    
NET INCOME                                              $  (302)          $  (215)                    $  (549)          $   688
                                                        =======           =======                     =======           =======
                                                                                                    
BASIC AND DILUTED EARNINGS PER COMMON SHARE             $ (0.50)          $  (.38)                    $ (0.99)          $  1.21
                                                        =======           =======                     =======           =======
</TABLE>
                                                                                


                                                                                
        The accompanying notes are an integral part of these statements.


                                       11
<PAGE>   12
                          SPG REALTY CONSULTANTS, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                      (UNAUDITED AND DOLLARS IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                                        For the Nine Months Ended September 30,
                                                                                        ---------------------------------------
                                                                                              1998               1997   
                                                                                            --------           --------
CASH FLOWS FROM OPERATING ACTIVITIES:                                                      
<S>                                                                                         <C>                <C>     
  Net income (loss)                                                                         $   (549)          $    688
      Adjustments to reconcile net income to net cash provided                             
        by operating activities--                                                          
          Depreciation and amortization                                                          701                660
          Gain on sale of assets, net                                                           --               (1,259)
          Limited partners' interest in SRC Operating Partnership                                  6               --
          Equity in income of unconsolidated entities                                           (398)              (462)
      Changes in assets and liabilities--                                                  
          Tenant receivables and other assets                                                    719                662
          Deferred taxes                                                                        (190)              (299)
          Other liabilities                                                                     (331)               147
                                                                                            --------           --------
            Net cash provided by (used in) operating activities                                  (42)               137
                                                                                            --------           --------
                                                                                           
CASH FLOWS FROM INVESTING ACTIVITIES:                                                      
      Capital expenditures                                                                    (1,565)               (65)
      Net proceeds from sales of assets                                                         --                4,231
      Investments in unconsolidated entities                                                  (3,921)           (13,923)
      Distributions from unconsolidated entities                                              19,151                591
                                                                                            --------           --------
          Net cash provided by (used in) investing activities                                 13,665             (9,166)
                                                                                            --------           --------
                                                                                           
CASH FLOWS FROM FINANCING ACTIVITIES:                                                      
      Proceeds from sales of common stock, net                                                14,097             (1,388)
      Contributions from limited partners                                                      8,000
      Acquisition and retirement of common stock                                                --                 (771)
      Distributions to shareholders                                                           (1,059)              (872)
      Mortgage and other note proceeds, net of transaction costs                               2,408             12,036
      Mortgage and other note principal payments                                             (17,670)              (117)
                                                                                            --------           --------
          Net cash provided (used in) by financing activities                                  5,776              8,888
                                                                                            --------           --------
                                                                                           
CHANGE IN CASH AND CASH EQUIVALENTS                                                           19,399               (141)
                                                                                           
CASH AND CASH EQUIVALENTS, beginning of period                                                 4,147              4,797
                                                                                            --------           --------
CASH AND CASH EQUIVALENTS, end of period                                                    $ 23,546           $  4,656
                                                                                            ========           ========
</TABLE>
                                                                          








        The accompanying notes are an integral part of these statements.

                                       12
<PAGE>   13
                         SIMON PROPERTY GROUP, INC. AND
                          SPG REALTY CONSULTANTS, INC.

                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

                (Dollars in thousands, except per share amounts)


NOTE 1 - BASIS OF PRESENTATION

      The accompanying combined consolidated financial statements include Simon
Property Group, Inc. ("SPG") and subsidiaries and its paired-share affiliate SPG
Realty Consultants, Inc. ("SRC" and together with SPG, the "Company") and its
subsidiary. All significant intercompany amounts have been eliminated. The
combined balance sheets and statements of operations and cash flows reflect the
purchase of Corporate Property Investors, Inc. ("CPI") and related transactions
(the "CPI Merger") as of the close of business on September 24, 1998. Operating
results prior to the completion of the CPI Merger represent the operating
results of Simon DeBartolo Group, Inc. and subsidiaries ("SDG"), the predecessor
to SAG for financial reporting purposes.

      The accompanying consolidated financial statements for SPG include the
accounts of SPG and its subsidiaries. All significant intercompany amounts have
been eliminated. SPG's primary subsidiary is Simon Property Group, L.P. (the
"SPG Operating Partnership"), formerly known as Simon DeBartolo Group, L.P.
("SDG, LP"). The balance sheets and statements of operations and cash flows
reflect the purchase of CPI as of the close of business on September 24, 1998.
Operating results prior to the CPI Merger represent the operating results of
SDG.
                            
      The accompanying consolidated financial statements of the paired share
affiliate, SRC, include the accounts of its newly formed subsidiary, SPG Realty
Consultants, L.P. (the "SRC Operating Partnership"). Because the cash
contributed to SRC and the SRC Operating Partnership in exchange for shares of
common stock and units of ownership interests ("Units"), in connection with the
CPI Merger represented equity transactions, SRC, unlike CPI, is not subject to
purchase accounting treatment. The separate statements of SRC represent the
historical results of Corporate Realty Consultants, Inc. ("CRC"), the
predecessor to SRC, for all periods presented.

      The SRC Operating Partnership together with the SPG Operating Partnership
are hereafter referred to as the "Operating Partnerships" and together with the
Company, "Simon Group".

      The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles, which require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the reported period.
Actual results could differ from these estimations.

      Outstanding common shares of SPG are paired with 1/100th of a share of
SRC. The Company is a self-administrated and self-managed, paired-shared real
estate investment trust ("REIT"), and 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 September 30, 1998, Simon Group owned or held a combined interest in 241
income-producing properties, which consisted of 153 regional malls, 76 community
shopping centers, three specialty retail centers, six office and mixed-use
properties and three value-oriented super-regional malls in 35 states (the
"Properties"). Simon Group also owned interests in one regional mall, one
specialty retail center and one value-oriented super-regional mall under
construction, an additional two community centers in the final stages of
pre-development and eight parcels of land held for future development. In
addition, Simon Group holds substantially all of the economic interest in M.S.
Management Associates, Inc. (The "Management Company" - See Note 7). Simon Group
holds substantially all of the economic interest in, and the Management Company
holds substantially all of the voting stock of, DeBartolo Properties Management,
Inc. ("DPMI"), which provides architectural, design, construction and other
services to substantially all of the Properties, as well as certain other
regional malls and community shopping centers owned by third parties. The
Company owned 71.6% and 63.9% of the Operating Partnerships at September 30,
1998 and December 31, 1997, respectively.


NOTE 2 - CPI MERGER

      For financial reporting purposes, as of the close of business on
September 24, 1998, pursuant to the Agreement and Plan of Merger dated February
18, 1998, among Simon DeBartolo Group, Inc., Corporate Property Investors,
Inc., and Corporate Realty Consultants, Inc., the CPI Merger was consummated.
                                        

                                       13
<PAGE>   14
      Pursuant to the terms of the CPI Merger, SPG Merger Sub, Inc., a
substantially wholly-owned subsidiary of CPI, merged with and into SDG with SDG
continuing as the surviving company. SDG became a majority-owned subsidiary of
CPI. The outstanding shares of common stock of SDG were exchanged for a like
number of shares of CPI. Beneficial interests in CRC were acquired for $22,000
in order to pair the common stock of CPI with 1/100th of a share of common stock
of CRC, the paired share affiliate.

      Immediately prior to the consummation of the CPI Merger, the holders of
CPI common stock were paid a merger dividend consisting of (i) $90 in cash, (ii)
1.0818 additional shares of CPI common stock and (iii) 0.19 shares of 6.50%
Series B convertible preferred stock of CPI. Immediately prior to the CPI
Merger, there were 25,496,476 shares of CPI common stock outstanding. The
aggregate value associated with the completion of the CPI Merger is
approximately $5.9 billion including transaction costs and liabilities assumed.

      To finance the cash portion of the CPI Merger consideration, $1.4 billion
was borrowed under a new unsecured medium term bridge loan  which bears
interest at a base rate of LIBOR plus 65 basis points and matures in three
mandatory amortization payments (on June 22, 1999, March 24, 2000 and September
24, 2000). An additional $237,000 was also borrowed under the Company's
existing $1.25 billion credit facility. In connection with the CPI Merger, CPI
was renamed 'Simon Property Group, Inc.' CPI's paired share affiliate, Corporate
Realty Consultants, Inc., was renamed 'SPG Realty Consultants, Inc.' In
addition SDG and SDG, LP were renamed 'SPG Properties, Inc.', and 'Simon
Property Group, L.P.', respectively.

      Upon completion of the CPI Merger, SPG transferred the fair value of
substantially all of the CPI assets acquired, which consisted primarily of 23
regional malls, one community center, two office buildings and one regional mall
under construction (other than one regional mall, Ocean County Mall, and certain
net leased properties valued at approximately $153,100) and liabilities assumed
(except that SPG remains a co-obligor with respect to the Merger Facility) of
approximately $2.3 billion to SPG Operating Partnership or one or more
subsidiaries of the SPG Operating Partnership in exchange for 47,790,550 limited
partnership interests and 5,053,580 preferred partnership interests in SPG
Operating Partnership. The preferred partnership interests carry the same rights
and equal the number of preferred shares issued and outstanding as a direct
result of the CPI Merger. Likewise, the assets of SRC were transferred to the
SRC Operating Partnership in exchange for partnership interests.

      As a result of the CPI Merger, the Company, owns a 71.6% interest in the
Operating Partnerships as of September 30, 1998.

      The Company accounted for the merger between SDG and the CPI merger
subsidiary as a reverse purchase in accordance with Accounting Principles Board
Opinion No. 16. Although paired shares of the former CPI and CRC were issued to
SDG common stock holders and SDG became a substantially wholly owned subsidiary
of CPI following the CPI Merger, CPI is considered the business acquired for
accounting purposes. SDG is the acquiring company because the SDG common
stockholders hold a majority of the common stock of SPG, post-merger. The value
of the consideration paid by SDG has been allocated on a preliminary basis to
the estimated fair value of the CPI assets acquired and liabilities assumed
which resulted in goodwill of $62,227. Goodwill will be amortized over the
estimated life of the properties, of 35 years. The allocation of the purchase
will be finalized when SPG completes its evaluation of the assets acquired and
liabilities assumed and finalizes its combined operating plan for the Company.

      SDG, LP contributed cash to CRC and the SRC Operating Partnership on
behalf of the SDG common stockholders and the limited partners of SDG, LP to
obtain the beneficial interests in CRC, which were paired with the shares of
common stock issued by SPG, and to obtain Units in the SRC Operating Partnership
so that the limited partners of the SDG Operating Partnership would hold the
same proportionate interest in the SRC Operating Partnership that they hold in
the SDG Operating Partnership. The cash contributed to CRC and the SRC
Operating Partnership in exchange for an  ownership interest therein have been
appropriately accounted for as capital infusion or equity transactions. The
assets and liabilities of CRC have been reflected at historical cost. Adjusting
said assets and liabilities to fair value would only have been appropriate if
the SDG stockholders' beneficial interests in CRC exceeded 80%.

NOTE 3 - RECLASSIFICATIONS

      Certain reclassifications of prior period amounts have been made in the
financial statements to conform to the 1998 presentation. These
reclassifications have no impact on the net operating results previously
reported.


                                       14
<PAGE>   15
NOTE 4 -  PER SHARE DATA

      In accordance with SFAS No. 128 (Earnings Per Share), basic earnings per
share is based on the weighted average number of shares of common stock
outstanding during the period and diluted earnings per share is based on the
weighted average number of shares of common stock outstanding combined with the
incremental weighted average shares that would have been outstanding if all
dilutive potential common shares would have been converted into shares at the
earliest date possible. The weighted average number of shares of common stock
used in the computation for the three-month periods ended September 30, 1998 and
1997 was 117,149,600 and 98,785,776, respectively. The weighted average number
of shares of common stock used in the computation for the nine-month periods
ended September 30, 1998 and 1997 was 112,956,863 and 97,766,243, respectively.
The diluted weighted average number of shares used in the computation for the
three-month periods ended September 30, 1998 and 1997 was 117,474,932 and
99,170,829, respectively. The diluted weighted average number of shares used in
the computation for the nine-month periods ended September 30, 1998 and 1997 was
113,325,309 and 98,147,087, respectively.

      Combined earnings per share is presented in the financial statements based
upon the weighted average number of paired shares outstanding of the Company,
giving effect to the CPI Merger as of the close of business on September 24,
1998. Management believes this presentation provides the shareholders with the
most meaningful presentation of earnings for a single interest in the combined
entities.

      Paired Units held by limited partners in the Operating Partnerships may be
exchanged for paired shares of common stock of the Company, on a one-for-one
basis in certain circumstances. If exchanged, the paired Units would not have a
dilutive effect. All of the series of preferred stock issued and outstanding
during the comparative periods either were not convertible or their conversion
would not have had a dilutive effect on earnings per share. The increase in
weighted average shares outstanding under the diluted method over the basic
method in every period presented for the Company is due entirely to the effect
of outstanding options under the Company's stock incentive plan, including
304,210 additional options issued in connection with the CPI Merger. Basic
earnings and diluted earnings were the same for all periods presented.

NOTE 5 - CASH FLOW INFORMATION

      Cash paid for interest, net of amounts capitalized, during the nine months
ended September 30, 1998 was $256,611, as compared to $199,285 for the same
period in 1997. Unpaid distributions as of September 30, 1998 totaled $84,496
and included $83,978 to the Company's common stockholders and limited
partnership units of the SPG Operating Partnership and $518 to the holders of
the Series B Convertible Preferred stock issued in connection with the CPI
Merger. All accrued distributions were paid as of December 31, 1997. See Notes
1,4 and 9 for information about non-cash transactions during the nine months
ended September 30, 1998.

NOTE 6 - OTHER ACQUISITIONS, DISPOSITIONS AND DEVELOPMENTS

      On January 26, 1998, Simon Group acquired Cordova Mall in Pensacola,
Florida for approximately $87,300, which included the assumption of a $28,935
mortgage, which was later retired, and the issuance of 1,713,016 Units, valued
at approximately $55,500. This 874,000 square-foot regional mall is wholly-owned
by Simon Group.

      In March of 1998, Simon Group opened the approximately $13,300 Muncie
Plaza in Muncie, Indiana. Simon Group owns 100% of this 196,000 square-foot
community center. In addition, phase I of the approximately $34,000 Lakeline
Plaza opened in April 1998 in Austin, Texas. Phase II of this 360,000
square-foot community center is scheduled to open in 1999. Each of these new
community centers is adjacent to an existing regional mall in Simon Group's
portfolio.

      On April 15, 1998, Simon Group purchased the remaining 7.5% ownership
interest in Buffalo Grove Towne Center for $255. This 134,000 square-foot
community center is in Buffalo Grove, Illinois.

      Effective May 5, 1998, in a series of transactions, Simon Group acquired
the remaining 50.1% interest in Rolling Oaks Mall for 519,889 shares of SPG's
common stock, valued at approximately $17,176.

      Effective June 30, 1998, Simon Group sold Southtown Mall for $3,250 and
recorded a $7,219 loss on the transaction.

      On September 29, 1997, Simon Group completed its cash tender offer for all
of the outstanding shares of beneficial interests of The Retail Property Trust
("RPT"), a private REIT. RPT owned 98.8% of Shopping Center Associates ("SCA"),
which owned or had interests in twelve regional malls and one community center,
comprising approximately twelve million square feet of GLA in eight states (the
"SCA Properties"). Following the completion of the tender offer, the SCA
portfolio was restructured. Simon Group exchanged its 50% interests in two SCA
Properties to a third party for similar interests in two other SCA Properties,
in which it had 50% interests, with the result that SCA then owned interests in
a total of eleven Properties. Effective November 30, 1997, Simon Group also
acquired the remaining 50% ownership interest in another of the SCA Properties.
In addition, an affiliate


                                       15
<PAGE>   16
of Simon Group acquired the remaining 1.2% interest in SCA. During 1998, Simon
Group sold the community center and The Promenade for $9,550 and $33,500,
respectively. These Property sales were accounted for as an adjustment to the
allocation of the purchase price. At the completion of these transactions, Simon
Group owns 100% of eight of the nine SCA Properties, and a noncontrolling 50%
ownership interest in the remaining Property.

      PRO FORMA

      The following unaudited pro forma summary financial information excludes
any extraordinary items and combines the consolidated results of operations of
SPG and SRC as if the CPI Merger and the RPT acquisition had occurred as of
January 1, 1997, and were carried forward through September 30, 1998.
Preparation of the pro forma summary information was based upon assumptions
deemed appropriate by management. The pro forma summary information is not
necessarily indicative of the results which actually would have occurred if the
CPI Merger and the RPT acquisition had been consummated at January 1, 1997, nor
does it purport to represent the results of operations for future periods.

<TABLE>
<CAPTION>
                                                              NINE MONTHS           NINE MONTHS
                                                                 ENDED                ENDED
                                                              SEPTEMBER 30,        SEPTEMBER 30,
                                                                 1998                  1997
                                                              ------------        ---------------
<S>                                                           <C>                 <C>            
Revenue                                                       $  1,240,018        $     1,153,576
                                                              ============        ===============
Net income before Limited Partners' interest                  $    182,494        $       236,485
                                                              ============        ===============
Net income available to common shareholders                   $     90,753        $       128,162
                                                              ============        ===============
Net income per share                                          $      0 .55        $          0.84
                                                              ============        ===============
Net income per share - assuming dilution                      $      0 .55        $          0.84
                                                              ============        ===============
Weighted average number of shares of common stock              
   outstanding                                                 164,868,865            152,379,137
                                                              ============        ===============
Weighted average number of shares of common stock
   outstanding - assuming dilution                             165,237,311            152,759,981
                                                              ============        ===============
</TABLE>

NOTE 7 - INVESTMENT IN UNCONSOLIDATED ENTITIES

      Partnerships and Joint Ventures

      On February 27, 1998, Simon Group, in a joint venture partnership with The
Macerich Company ("Macerich"), acquired a portfolio of twelve regional malls and
two community centers (the "IBM Properties") comprising approximately 10.7
million square feet of GLA at a purchase price of $974,500, including the
assumption of $485,000 of indebtedness. Simon Group and Macerich, as
noncontrolling 50/50 partners in the joint venture, were each responsible for
one half of the purchase price, including indebtedness assumed and each assumed
leasing and management responsibilities for six of the regional malls and one
community center. Simon Group funded its share of the cash portion of the
purchase price using borrowings from a new $300,000 unsecured revolving credit
facility. (See Note 8)

      In March 1998, Simon Group transferred its 50% ownership interest in The
Source, an approximately 730,000 square-foot regional mall, to a newly formed
limited partnership in which it has a 50% ownership interest, with the result
that Simon Group now owns an indirect noncontrolling 25% ownership interest in
The Source. In connection with this transaction, Simon Group's partner in the
newly formed limited partnership is entitled to a preferred return of 8% on its
initial capital contribution, a portion of which was distributed to Simon Group.
Simon Group applied the distribution against its investment in The Source.

      On June 4, 1998, Simon Group, Harvard Private Capital Group ("Harvard")
and Argo II, an investment fund established by J.P. Morgan and The O'Connor
Group, announced that they have collectively committed to acquire a 44 percent
ownership position in Groupe BEG, S.A. ("BEG"). BEG is a fully integrated retail
real estate developer, lessor and manager headquartered in Paris, France. Simon
Group and its affiliated Management Company have contributed $15,000 of equity
capital for a noncontrolling 22% ownership interest and are committed to an
additional investment of $37,500 over the next 9 to 15 months, subject to
certain financial and other conditions. The agreement with BEG is structured to
allow Simon Group, Argo II and Harvard to collectively acquire a controlling
interest in BEG over time.

      In August 1998, Simon Group sold one-half of its 75% ownership in The
Shops at Sunset Place construction project. Simon Group now holds a 37.5%
noncontrolling interest in this project, which is scheduled to open in December
1998. Simon Group applied the distribution against its investment in the
project.

      Through September 30, 1998, in a series of transactions, Simon Group has
acquired additional 30% ownership interests in Lakeline Mall and Lakeline Plaza
for 319,390 Units valued at approximately $10,500 and $2,100 in cash. These
transactions


                                       16
<PAGE>   17
increased Simon Group's ownership interest in these Properties to a
noncontrolling 80%. On October 28, 1998, Simon Group acquired an additional 5%
noncontrolling ownership interest in Lakeline Mall and Lakeline Plaza for
$2,100.

      Summary financial information of Simon Group's investment in partnerships
and joint ventures accounted for using the equity method of accounting and a
summary of Simon Group's investment in and share of income from such
partnerships and joint ventures follow:

<TABLE>
<CAPTION>
                                                       September 30,      December 31,
BALANCE SHEETS                                             1998              1997
                                                       ------------       -----------
<S>                                                    <C>                <C>       
ASSETS:
  Investment properties at cost, net                    $4,131,774        $2,880,094
  Cash and cash equivalents                                144,919           101,582
  Tenant receivables                                       141,360            87,008
  Other assets                                             129,983            71,548
                                                        ----------        ----------
          Total assets                                  $4,548,036        $3,140,232
                                                        ==========        ==========

LIABILITIES AND PARTNERS' EQUITY:
  Mortgages and other indebtedness                      $2,819,094        $1,888,512
  Accounts payable, accrued expenses and other             227,631           212,543
     liabilities                                        ----------        ----------
          Total liabilities                              3,046,725         2,101,055
  Partners' equity                                       1,501,311         1,039,177
                                                        ----------        ----------
          Total liabilities and partners' equity        $4,548,036        $3,140,232
                                                        ==========        ==========

SIMON GROUP'S SHARE OF:
  Total assets                                          $1,803,056        $1,082,232
                                                        ==========        ==========
  Partners' equity                                      $  526,672        $  297,866
  Add Excess Investment (See below)                        653,764           293,711
                                                        ----------        ----------
  Simon Group's Net Investment in Joint Ventures        $1,180,436        $  591,577
                                                        ==========        ==========
</TABLE>



<TABLE>
<CAPTION>
                                              For the three months ended           For the nine months ended
                                              ---------------------------         ---------------------------
                                                      September 30,                      September 30,
                                              ---------------------------         ---------------------------
STATEMENTS OF OPERATIONS                        1998               1997             1998               1997
                                              ---------         ---------         ---------         ---------
<S>                                           <C>               <C>               <C>               <C>      
REVENUE:
  Minimum rent                                $ 108,924         $  62,613         $ 306,486         $ 168,817
  Overage rent                                      426             2,319             8,236             5,633
  Tenant reimbursements                          51,775            27,913           138,433            77,491
  Other income                                    5,985             5,384            17,205            12,747
                                              ---------         ---------         ---------         ---------
     Total revenue                              167,110            98,229           470,360           264,688

OPERATING EXPENSES:
  Operating expenses and other                   59,044            33,660           166,547            94,575
  Depreciation and amortization                  33,324            18,518            94,949            53,579
                                              ---------         ---------         ---------         ---------

     Total operating expenses                    92,368            52,178           261,496           148,154
                                              ---------         ---------         ---------         ---------

OPERATING INCOME                                 74,742            46,051           208,864           116,534
INTEREST EXPENSE                                 45,569            21,577           130,747            63,155
EXTRAORDINARY LOSSES                              2,060              --               2,102             1,182
                                              ---------         ---------         ---------         ---------
NET INCOME                                       27,113            24,474            76,015            52,197
THIRD PARTY INVESTORS' SHARE OF NET                                                                          
  INCOME                                         21,811            17,970            55,841            38,347
                                              ---------         ---------         ---------         ---------
SIMON GROUP'S SHARE OF NET INCOME             $   5,302         $   6,504         $  20,174         $  13,850
AMORTIZATION OF EXCESS INVESTMENT (SEE                                                                        
  BELOW)                                         (3,636)           (2,823)           (9,038)           (8,792)
                                              =========         =========         =========         =========
INCOME FROM UNCONSOLIDATED ENTITIES           $   1,666         $   3,681         $  11,136         $   5,058
                                              =========         =========         =========         =========
</TABLE>

      As of September 30, 1998 and December 31, 1997, the unamortized excess of
Simon Group's investment over its share of the equity in the underlying net
assets of the partnerships and joint ventures ("Excess Investment") was $653,764
and $293,711, respectively. This Excess Investment, which resulted primarily
from the CPI Merger and the August 9, 1996 acquisition, through merger (the "DRC
Merger"), of the national shopping center business of DeBartolo Realty
Corporation ("DRC"), is being amortized generally over the life of the related
Properties. Amortization included in income from unconsolidated entities for the


                                       17
<PAGE>   18
three-month periods ended September 30, 1998 and September 30, 1997 was $3,636
and $2,823, respectively. Amortization included in income from unconsolidated
entities for the nine-month periods ended September 30, 1998 and September 30,
1997 was $9,038 and $8,792, respectively.

      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 agreements are not
always consistent with the ownership interest held by each general or limited
partner or joint venturer, primarily due to partner preferences.

      The Management Company

      The Management Company, including its consolidated subsidiaries, provides
management, leasing, development, accounting, legal, marketing and management
information systems services to one wholly-owned Property, 41 non-wholly owned
Properties, Melvin Simon & Associates, Inc., and certain other nonowned
properties. Certain subsidiaries of the Management Company provide
architectural, design, construction, insurance and other services primarily to
certain of the Properties. The Management Company also invests in other
businesses to provide other synergistic services to the Properties. Simon
Group's share of consolidated net income (loss) of the Management Company, after
intercompany profit eliminations, was $2,151 and $3,396 for the three-month
periods ended September 30, 1998 and 1997, respectively, and was ($2,339) and
$4,532 for the nine-month periods ended September 30, 1998 and 1997,
respectively.

NOTE 8 - DEBT

      On February 28, 1998, Simon Group obtained an unsecured revolving credit
facility in the amount of $300,000, to finance the acquisition of the IBM
Properties (See Note 7). The new facility bore interest at LIBOR plus 0.65% and
had a maturity of August 27, 1998. Simon Group drew $242,000 on this facility
during 1998 and subsequently retired and canceled the facility using borrowing
from the Credit Facility (See below).

      On June 18, 1998, Simon Group refinanced a $33,878 mortgage on a regional
mall Property and recorded a $7,024 extraordinary gain on the transaction,
including debt forgiveness of $5,162 and the write-off of a premium of $1,862.
The new mortgage, which totals $35,000, bears interest of 7.33% and matures on
June 18, 2008. The retired mortgage bore interest at 9.25% with a maturity of
January 1, 2011.

      On June 22, 1998, Simon Group completed the sale of $1,075,000 of senior
unsecured debt securities. The issuance included three tranches of senior
unsecured notes as follows (1) $375,000 bearing interest at 6.625% and maturing
on June 15, 2003 (2) $300,000 bearing interest at 6.75% and maturing on June 15,
2005 and (3) $200,000 bearing interest at 7.375% and maturing on June 15, 2018.
This offering also included a fourth tranche of $200,000 of 7.00% Mandatory Par
Put Remarketed Securities ("MOPPRS") due June 15, 2028, which are subject to
redemption on June 16, 2008. The premium received relating to the MOPPRS of
approximately $5,302 is being amortized over the life of the debt securities.
The net proceeds of approximately $1,062,000 were combined with approximately
$40,000 of working capital and used to retire and terminate the $300,000
unsecured revolving credit facility (See Above) and to reduce the outstanding
balance of Simon Group's $1,250,000 unsecured revolving credit facility (the
"Credit Facility"). The Credit Facility has an initial maturity of September
1999 with an optional one-year extension. The debt retired had a weighted
average interest rate of 6.29%.

      In conjunction with the CPI Merger, the SPG Operating Partnership and SPG,
as co-borrowers, closed a $1,400,000 medium term unsecured bridge loan (the
"Merger Facility"). The Merger Facility bears interest at a base rate of LIBOR
plus 65 basis points and will mature at the following intervals (i) $450,000 on
the nine-month anniversary of the closing (ii) $450,000 on the eighteen-month
anniversary of the closing and (iii) $500,000 on the two-year anniversary of the
closing. The Merger Facility is subject to covenants and conditions
substantially identical to those of the Credit Facility. Simon Group drew the
entire $1,400,000 available on the Merger Facility along with $237,000 on the
Credit Facility to pay for the cash portion of the dividend declared in
conjunction with the CPI Merger, as well as certain other costs associated with
the CPI Merger. Financing costs of $9,456, which were incurred to obtain the
Merger Facility, are being amortized over the Merger Facility's average life of
18-months.

      In connection with the CPI Merger, RPT, a REIT and 99.999% owned
subsidiary of the SDG Operating Parternship, took title for substantially all of
the CPI assets and assumed $825,000 of resecured notes *the "CPI Notes"), as
described in Note 2. As a result, the CPI Notes are structurally senior in right
of payment to holders of other Simon Group unsecured notes to the extent of the
assets and related cash flow of RPT only, with over 99.999% of the excess cash
flow plus any capital event transactions available for the other Simon Group
unsecured notes. The CPI Notes pay interest semiannually, and bear interest
rates ranging from 7.05% to 9.00% (weighted average of 8.03%), and have various
due dates through 2016 (average maturity of 9.6 years). The CPI Notes contain
leverage ratios, annual real property appraisal requirements, debt service
coverage ratios and minimum Net Worth ratios. Additionally, consolidated
mortgages totaling $2,093, and a pro-rata share of $194,952 of nonconsolidated
joint venture indebtedness was assumed in the CPI Merger, and as a result of
acquiring the remaining interest in Palm Beach Mall in connection with the CPI
Merger, Simon Group began accounting for that Property using the consolidated
method of accounting, adding   


                                       18
<PAGE>   19
$50,700 to consolidated indebtedness. A net premium of $19,165 was recorded in
accordance with the purchase method of accounting to adjust the CPI Notes and
mortgage indebtedness assumed in the CPI Merger to fair value, which is being
amortized over the remaining lives of the related indebtedness.

      At September 30, 1998, Simon Group had consolidated debt of $7,745,917, of
which $5,362,285 was fixed-rate debt and $2,383,632 was variable-rate debt.
Simon Group's pro rata share of indebtedness of the unconsolidated joint venture
Properties as of September 30, 1998 and December 31, 1997 was $1,307,974 and
$770,776, respectively. As of September 30, 1998 and December 31, 1997, Simon
Group had interest-rate protection agreements related to $1,224,493 and $415,254
of its pro rata share of indebtedness, respectively. The agreements are
generally in effect until the related variable-rate debt matures. As a result of
the various interest rate protection agreements, consolidated interest savings
were $122 and $285 for the three months ended September 30, 1998 and 1997,
respectively, and were $301 and $1,371 for the nine months ended September 30,
1998 and 1997, respectively.


                                       19
<PAGE>   20
NOTE 9 - SHAREHOLDERS' EQUITY

      The following table summarizes the changes in the combined shareholders'
equity of the Company and SRC since December 31, 1997.

<TABLE>
<CAPTION>
                                            SPG              SPG            SRC           Unrealized         Capital in          
                                         Preferred         Common         Common        Gain (Loss) on      Excess of Par        
                                           Stock            Stock          Stock         Investment(1)          Value            
                                         ---------         ------         ------        --------------      -------------        
<S>                                      <C>               <C>            <C>           <C>                 <C>                  
Balance at December 31, 1997             $ 339,061         $   11         $    0         $     2,420         $ 1,491,908         
                                                                                                                                 
Common stock issued to the                                                                                                       
 public (2,957,335 shares)                                      1                                                 91,398         
                                                                                                                                 
The CPI Merger (2)                         717,916              5             --                               1,786,245         
                                                                                                                                 
Preferred stock of subsidiary             (339,061)                                                                              
                                                                                                                                 
Common stock issued in                                                                                                           
  connection with acquisitions                                                                                                   
   (519,889 shares)                                                                                               17,176         
                                                                                                                                 
Other common stock issued, net                                                                                                   
   (579,302 shares)                                                                                               18,332         
                                                                                                                                 
Amortization of stock incentive                                                                                                  
                                                                                                                                 
Adjustment to the limited                                                                                                        
 partners'  interest in the                                                                                                      
  Operating Partnerships                                                                                        (310,934)         
                                                                                                                                 
Distributions                                                                                                           
                                                                                                                                 
                                         ---------         ------         ------         -----------         -----------         
Subtotal                                   717,916             17             --              2,420            3,094,125         
                                                                                                                                 
Comprehensive Income:                                                                                                            
                                                                                                                                 
Unrealized loss on investment (1)                                                             (3,680)                            
                                                                                                                                 
Net income                                                                                                                       
                                                                                                                                 
                                         ---------         ------         ------         -----------         -----------         
Total Comprehensive Income                                                                    (3,680)                            
                                                                                                                                 
                                         =========         ======         ======         ===========         ===========         
Balance at September 30, 1998            $ 717,916         $   17         $   --         $    (1,260)        $ 3,094,125
                                         =========         ======         ======         ===========         ===========         
</TABLE>


<TABLE>
<CAPTION>
                                                                    Unamortized            Total
                                                Accumulated         Restricted          Shareholders'
                                                  Deficit           Stock Award            Equity
                                                -----------         -----------         -------------
<S>                                             <C>                 <C>                 <C>        
Balance at December 31, 1997                    $  (263,308)        $   (13,230)         $ 1,556,862
                                                                                       
Common stock issued to the                                                             
 public (2,957,335 shares)                                                                    91,399
                                                                                       
The CPI Merger (2)                                   (9,839)                               2,494,327
                                                                                       
Preferred stock of subsidiary                                                               (339,061)
                                                                                       
Common stock issued in                                                                 
  connection with acquisitions                                                         
   (519,889 shares)                                                                           17,176
                                                                                       
Other common stock issued, net                                                         
   (579,302 shares)                                                     (16,080)               2,252
                                                                                       
Amortization of stock incentive                                           7,299                7,299
                                                                                       
Adjustment to the limited                                                              
 partners'  interest in the                                                            
  Operating Partnerships                                                                    (310,934)
                                                                                       
Distributions                                      (259,376)                                (259,376)
                                                                                       
                                                -----------         -----------          -----------
Subtotal                                           (532,523)            (22,011)           3,259,944
                                                                                       
Comprehensive Income:                                                                  
                                                                                       
Unrealized loss on investment (1)                                                             (3,680)
                                                                                       
Net income                                          102,641                                  102,641
                                                                                       
                                                -----------         -----------          -----------
Total Comprehensive Income                          102,641                                   98,961
                                                                                       
                                                ===========         ===========          ===========
Balance at September 30, 1998                   $  (429,882)        $   (22,011)         $ 3,358,905
                                                ===========         ===========          ===========
</TABLE>



(1)   Amounts consist of the Company's pro rata share of the unrealized gain
      resulting from the change in market value of 1,408,450 shares of common
      stock of Chelsea GCA Realty, Inc. ("Chelsea"), a publicly traded REIT,
      which Simon Group purchased on June 16, 1997. The investment in Chelsea is
      being reflected in the accompanying consolidated condensed balance sheets
      in other investments.

(2)   In connection with the CPI Merger, 53,078,564 shares of common stock were
      issued. Notes receivable and permanent restrictions relating to common
      shares purchased by former employees of CPI of approximately $26,100 have
      been deducted from capital in excess of par.


                                       20
<PAGE>   21
      Stock Incentive Programs

      In March 1995, an aggregate of 1,000,000 shares of restricted stock was
granted to 50 executives, subject to the performance standards, vesting
requirements and other terms of the Stock Incentive Program. Prior to the DRC
Merger, 2,108,000 shares of DRC common stock were deemed available for grant to
certain designated employees of DRC, also subject to certain performance
standards, vesting requirements and other terms of DRC's stock incentive program
(the "DRC Plan"). In April 1998, 492,478 shares were awarded to executives
relating to 1997 performance, and another 24,163 awarded in August 1998. Through
September 30, 1998, 1,290,285 shares of common stock of the Company, net of
forfeitures, were deemed earned and awarded under the Stock Incentive Program
and the DRC Plan. Approximately $2,852 and $1,086 relating to these programs
were amortized in the three-month periods ended September 30, 1998 and 1997,
respectively and approximately $7,299 and $4,110 relating to these programs were
amortized in the nine-month periods ended September 30, 1998 and 1997,
respectively. The cost of restricted stock grants, based upon the stock's fair
market value at the time such stock is earned, awarded and issued, is charged to
shareholders' equity and subsequently amortized against earnings of Simon Group
over the vesting period.

      On September 24, 1998, in conjunction with the CPI Merger, a new stock
incentive plan, 'The Simon Property Group 1998 Stock Incentive Plan' ("The 1998
Plan"), was approved by a vote of the Company's shareholders. The 1998 Plan
replaced the existing Stock Incentive Program, the DRC Plan and the existing
employee and director stock option plans. The 1998 Plan provides for the grant
of equity-based awards during the ten-year period following its adoption, in the
form of options to purchase common stock of The Company, stock appreciation
rights, restricted stock awards and performance unit awards. A total of
6,300,000 shares of common stock of the Company have been approved for issuance
under The 1998 Plan, including approximately 2,230,875 shares reserved for the
exercise of options granted and award of restricted stock allocated under the
previously existing Stock Incentive Program and DRC Plan.

      Capital Stock

      In connection with the CPI Merger, SPG restated its certificate of
incorporation to, among other things, restate the number of shares and classes
of capital stock authorized for issuance. SPG is now authorized to issue up to
750,000,000 shares, par value $0.0001 per share, of capital stock. The
authorized shares of capital stock consist of 400,000,000 shares of common
stock, 12,000,000 shares of Class B common stock, 4,000 shares of Class C common
stock, 100,000,000 shares of preferred stock, including 209,249 shares of Series
A Convertible Preferred Stock and 5,000,000 shares of Class B Convertible
Preferred Stock, and 237,996,000 shares of excess common stock.

      The articles of incorporation of SRC were also restated in conjunction
with the CPI Merger. SRC is now authorized to issue up to 7,500,000 shares, par
value $0.0001 per share, of common stock. SRC's historical shares and per share
amount have been adjusted to give effect to the change in SRC's par value of
common stock from $.10 per share to $.0001 per share and to the CPI Merger
exchange ratio of 2.0818.  

      Common Stock Issuances

      During 1998, Simon Group issued 2,957,335 shares of its common stock in
private offerings generating combined net proceeds of approximately $91,398. The
net proceeds were contributed to the SPG Operating Partnership in exchange for a
like number of Units. The SPG Operating Partnership used the net proceeds for
general working capital purposes.

      Preferred Stock

      As a result of the CPI Merger, SPG has issued and outstanding 209,249
shares of 6.50% Series A Convertible Preferred Stock. Each share of Series A
Convertible Preferred Stock is convertible into 37.995 shares of common stock of
the Company, subject to adjustment under certain circumstances including (i) a
subdivision or combination of shares of common stock of the Company, (ii) a
declaration of a distribution of additional shares of common stock of the
Company, issuances of rights or warrants by the Company and (iii) any
consolidation or merger, which the Company is a part of or a sale or conveyance
of all or substantially all of the assets of the Company to another person or
any statutory exchange of securities with another person. The Series A
Convertible Preferred Stock is not redeemable, except as needed to maintain or
bring the direct or indirect ownership of the capital stock of SPG into
conformity with REIT requirements.

      In addition, 4,844,331 shares of 6.50% Series B Convertible Preferred
Stock were issued in connection with the CPI Merger. Each share of Series B
Convertible Preferred Stock is convertible into 2.586 shares of common stock of
the Company, subject to adjustment under circumstances identical to those of the
Series A Preferred Stock described above. The Company may redeem the Series B
Preferred Stock on or after September 24, 2003 at a price beginning at 105% of
the liquidation preference plus accrued dividends and declining to 100% of the
liquidation preference plus accrued dividends any time on or after September 24,
2008.


                                       21
<PAGE>   22
      Preferred Stock of Subsidiary

      In connection with the CPI Merger, SPG Properties, Inc., formerly Simon
DeBartolo Group, Inc., became a subsidiary of SPG. Accordingly, the 11,000,000
shares of Series B and Series C cumulative redeemable preferred stock issued by
SPG Properties, Inc. have been reflected outside of equity of SPG and The
Company as Preferred Stock of Subsidiary as of the date of the CPI Merger.

NOTE 10 - RELATED PARTY TRANSACTIONS

      SRC receives rental and operating expense recovery income from SPG
Operating Partnership for space leased in the New York City office building, a
portion of which SPG Operating Partnership occupies. Rental and operating
expense recovery income earned from SPG Operating Partnership and CPI, amounted
to approximately $1,660 and $1,531 for the nine months ended September 30, 1998
and 1997, respectively. In addition, SPG Operating Partnership receives ground
rent from SRC on the land, which the New York City office building is built
upon. Ground rent received for the period from the CPI Merger through September
30, 1998 was nominal.

      In preparation for the CPI Merger, on July 31, 1998, CPI, with assistance
from SPG Operating Partnership, completed the sale of the General Motors
Building in New York, New York for approximately $800,000. The SPG Operating
Partnership and certain third parties each received a $2,500 brokerage fee from
CPI in connection with the sale.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

            LITIGATION

      Richard E. Jacobs, et al. v. Simon DeBartolo Group, L.P. On September 3,
1998, a complaint was filed in the Court of Common Pleas in Cuyahoga County,
Ohio, captioned Richard E. Jacobs, et al. v. Simon DeBartolo Group, L.P. The
plaintiffs are all principals or affiliates of The Richard E. Jacobs Group, Inc.
("Jacobs"). The plaintiffs allege in their complaint that Simon DeBartolo Group,
L.P. (now Simon Property Group, L.P. or the SPG Operating Partnership) engaged
in malicious prosecution, abuse of process, defamation, libel, injurious
falsehood/unlawful disparagement, deceptive trade practices under Ohio law,
tortious interference and unfair competition in connection with the SPG
Operating Partnership's acquisition by tender offer of shares in RPT, a
Massachusetts business trust, and certain litigation instituted in September,
1997, by the SPG Operating Partnership against Jacobs in federal district court
in New York, wherein the SPG Operating Partnership alleged that Jacobs and other
parties had engaged, or were engaging in activity which violated Section 10(b)
of the Securities Exchange Act of 1934, as well as certain rules promulgated
thereunder. Plaintiffs in the Ohio action are seeking compensatory damages in
excess of $200,000, punitive damages and reimbursement for fees and expenses. It
is difficult to predict the ultimate outcome of this action and there can be no
assurance that the SPG Operating Partnership will receive a favorable verdict.
Based upon the information known at this time, in the opinion of management, it
is not expected that this action will have a material adverse effect on Simon
Group.

      Carlo Angostinelli et al. v. DeBartolo Realty Corp. et al. On October 16,
1996, a complaint was filed in the Court of Common Pleas of Mahoning County,
Ohio, captioned Carlo Angostinelli et al. v. DeBartolo Realty Corp. et al. The
named defendants are SD Property Group, Inc., a indirect 99%-owned subsidiary of
the Company, and DPMI, and the plaintiffs are 27 former employees of the
defendants. In the complaint, the plaintiffs alleged that they were recipients
of deferred stock grants under the DRC Plan and that these grants immediately
vested under the DRC Plan's "change in control" provision as a result of the DRC
Merger. Plaintiffs asserted that the defendants' refusal to issue them
approximately 661,000 shares of DRC common stock, which is equivalent to
approximately 450,000 shares of common stock of the Company computed at the 0.68
exchange ratio used in the DRC Merger, constituted a breach of contract and a
breach of the implied covenant of good faith and fair dealing under Ohio law.
Plaintiffs sought damages equal to such number of shares of DRC common stock, or
cash in lieu thereof, equal to all deferred stock ever granted to them under the
DRC Plan, dividends on such stock from the time of the grants, compensatory
damages for breach of the implied covenant of good faith and fair dealing, and
punitive damages. The complaint was served on the defendants on October 28,
1996. The plaintiffs and the Company each filed motions for summary judgment. On
October 31, 1997, the Court entered a judgment in favor of the Company granting
the Company's motion for summary judgment. The plaintiffs have appealed this
judgment and the matter is pending. While it is difficult to predict the
ultimate outcome of this action, based on the information known to date, it is
not expected that this action will have a material adverse effect on Simon
Group.

      Roel Vento et al v. Tom Taylor et al. An affiliate of the Company is a
defendant in litigation entitled Roel Vento et al v. Tom Taylor et al, in the
District Court of Cameron County, Texas, in which a judgment in the amount of
$7,800 has been entered against all defendants. This judgment includes
approximately $6,500 of punitive damages and is based upon a jury's findings on
four separate theories of liability including fraud, intentional infliction of
emotional distress, tortuous interference with contract and civil conspiracy
arising out of the sale of a business operating under a temporary license
agreement at Valle Vista Mall in Harlingen, Texas. The Company is seeking to
overturn the award and has appealed the verdict. The Company's appeal is
pending.


                                       22
<PAGE>   23
Although management is optimistic that the Company may be able to reverse or
reduce the verdict, there can be no assurance thereof. Management, based upon
the advice of counsel, believes that the ultimate outcome of this action will
not have a material adverse effect on the Simon Group.

      Simon Group currently is not subject to any other 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 Group's financial position or results of operations.

NOTE 12 - NEW ACCOUNTING PRONOUNCEMENTS

      During the second quarter of 1998, the Financial Accounting Standards
Board ("FASB") released EITF 98-9, which clarified its position relating to the
timing of recognizing contingent rent. Simon Group adopted this pronouncement
prospectively, beginning May 22, 1998, which has reduced overage rent by
approximately $5,600 through September 30, 1998.

      On June 15, 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities.
The Statement establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments embedded
in other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.

      Statement 133 will be effective for Simon Group beginning with the 1999
fiscal year and may not be applied retroactively. Management does not expect the
impact of Statement 133 to be material to the financial statements. However, the
Statement could increase volatility in earnings and other comprehensive income.

      In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, Disclosure about Segments of an Enterprise and Related Information. The
Statement establishes standards for the way public companies report information
about operating segments in annual financial statements and also requires those
enterprises to report selected information about operating segments in interim
financial reports issued to shareholders. This statement is effective for
financial statements for fiscal years beginning after December 15, 1997.
Management is currently evaluating the impact, if any, the Statement will have
on Simon Group's 1998 annual financial statements.


                                       23
<PAGE>   24
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

SIMON PROPERTY GROUP, INC. AND SPG REALTY CONSULTANTS, INC. COMBINED

      Certain statements made in this report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of Simon Group to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions, which will, among other things, affect
demand for retail space or retail goods, availability and creditworthiness of
prospective tenants, lease rents and the terms and availability of financing;
changes in the real estate and retailing markets including, among other things,
competition with other companies and technology; risks of real estate
development and acquisition; governmental actions and initiatives; and
environmental/safety requirements.

      OVERVIEW

      For financial reporting purposes, as of the cost of business on September
24, 1998, the operating results include the CPI merger described in Note 2 of
the financial statements. As a result, the consolidated results of operations
include an additional 17 regional malls, two office buildings and one community
center, with an additional six regional malls being accounted for using the
equity method of accounting. The impact on 1998 results, however, included
these Properties only in the final six days of the period.

      On September 29, 1997, Simon Group completed its cash tender offer for all
of the outstanding shares of beneficial interests of The Retail Property Trust
("RPT"). RPT owned 98.8% of Shopping Center Associates ("SCA"), which owned or
had interests in twelve regional malls and one community center, comprising
approximately twelve million square feet of GLA in eight states. Following the
completion of the tender offer, the SCA portfolio was restructured. Simon Group
exchanged its 50% interests in two SCA properties to a third party for similar
interests in two other SCA properties, in which it had 50% interests, with the
result that SCA then owned interests in a total of eleven properties. Effective
November 30, 1997, Simon Group also acquired the remaining 50% ownership
interest in another of the SCA properties. In addition, an affiliate of Simon
Group acquired the remaining 1.2% interest in SCA. On February 2, 1998, Simon
Group sold the community center for $9.6 million and on June 1, 1998, Simon
Group sold The Promenade, one of the regional malls owned by SCA for $33.5
million. At the completion of these transactions, Simon Group directly or
indirectly now owns 100% of eight of the nine SCA properties, and 50% of the
remaining property.

      The following acquisitions and Property openings (the "Property
Transactions"), also impacted Simon Group's results of operations in the
comparative periods. On August 29, 1997, Simon Group opened the 55%-owned, $89
million phase II expansion of The Forum Shops at Caesar's. On December 30, 1997,
Simon Group acquired 100% of The Fashion Mall at Keystone at the Crossing, a
651,671 square-foot regional mall, along with an adjacent 29,140 square-foot
community center, in Indianapolis, Indiana for $124.5 million. On January 26,
1998, Simon Group acquired 100% of Cordova Mall in Pensacola, Florida for
approximately $87.3 million. On May 5, 1998, in a series of transactions, Simon
Group acquired the remaining 50.1% interest in Rolling Oaks Mall for 519,889
shares of the Company's common stock, valued at approximately $17.2 million.

      New Accounting Pronouncement

      During the second quarter of 1998, the Financial Accounting Standards
Board released EITF 98-9, which clarified its position relating to the timing of
recognizing contingent rent. Simon Group adopted this pronouncement
prospectively, beginning May 22, 1998. The negative impact on earnings for the
three-month and nine-month periods ended September 30, 1998 was approximately
$4.2 million and $5.6 million, respectively. Management expects the negative
impact to reverse in the fourth quarter of 1998 and the first quarter of 1999 as
the tenants' lease years progress. Management has determined that adopting EITF
98-9 retroactively would not have had a material impact on the financial
statements, nor does management expect the adoption to have a material impact on
the 1998 annual financial statements.


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<PAGE>   25
      RESULTS OF OPERATIONS

For the Three Months Ended September 30, 1998 vs. the Three Months Ended
September 30, 1997

      Total revenue increased $62.6 million or 24.1% for the three months ended
September 30, 1998, as compared to the same period in 1997. This increase is
primarily the result of the RPT acquisition ($36.9 million), the CPI Merger
($6.7 million), the Property Transactions ($12.7 million) and approximately
$3.4 million realized from marketing initiatives throughout the portfolio from
Simon Group's new strategic marketing division, Simon Brand Ventures ("SBV").
Excluding these items, total revenues increased $2.9 million, primarily due to
a $6.9 million increase in minimum rent and an $2.8 million increase in other
income, partially offset by a $7.2 million decrease in overage rent. The
minimum rent increase results from increased occupancy levels and the
replacement of expiring tenant leases with renewal leases at higher minimum
base rents. The $2.8 million increase in other income is primarily the result
of a $4.1 million increase in gains on sales of peripheral properties, and a
$2.5 million brokerage fee received in conjunction with the sale of the General
Motors Building described in Note 10, partially offset by a $1.0 million
decrease in interest and dividend income. The decrease in overage rent is
primarily the result of a change in the timing of recognizing contingent rent
as prescribed by EITF 98-9, which is described above.

      Total operating expenses increased $32.6 million, or 22.9%, for the three
months ended September 30, 1998, as compared to the same period in 1997. This
increase is primarily the result of the RPT acquisition ($20.4 million), the
CPI Merger ($2.5 million) and the Property Transactions ($8.8 million).
Excluding these transactions, total operating expenses increased only $0.9
million.

      Interest expense increased $28.4 million, or 41.2% for the three months
ended September 30, 1998, as compared to the same period in 1997. This increase
is primarily a result of the RPT acquisition ($19.3 million), the CPI Merger
($2.8 million), the Property Transactions ($3.7 million) and incremental
interest on borrowings under the Credit Facility to acquire the IBM Properties
($4.1 million). Excluding these transactions, interest expense has decreased
$1.5 million.

      Income from unconsolidated entities decreased from $7.1 million in 1997
to $3.8 million in 1998, resulting from a decrease in Simon Group's share of
income from the Management Company ($1.2 million), and a decrease in its share
of income from partnerships and joint ventures ($2.0 million).

      The three months ended September 30, 1997 included a net extraordinary
gain of $27.2 million, resulting from gains realized on the forgiveness of debt
($31.1 million) and the write-off of net unamortized debt premium ($8.4
million), partially offset by losses on the early extinguishment of debt ($12.3
million).

      Income before limited partners' interests was $52.8 million for the three
months ended September 30, 1998, as compared to $81.5 million for the same
period in 1997, reflecting a decrease of $28.7 million, primarily for the
reasons discussed above. Income before limited partners' interests includes
income of the Company from the operations of Ocean County Mall and certain net
lease assets, income of the SPG Operating Partnership and the SRC Operating
Partnership. Income from the SPG Operating Partnership was allocated to the
Company based on the Company's preferred unit preference and ownership interest
in the SPG Operating Partnership during the period. Income of the SRC Operating
Partnership was allocated to SRC based on its ownership interest in the SRC
Operating Partnership during the period.              

For the Nine Months Ended September 30, 1998 vs. the Nine Months Ended 
September 30, 1997

      Total revenue increased $185.7 million or 24.9% for the nine months ended
September 30, 1998, as compared to the same period in 1997. This increase is
primarily the result of the RPT acquisition ($111.4 million), the CPI Merger
($6.7 million), the Property Transactions ($37.0 million) and approximately
$9.6 million realized from SBV marketing initiatives. Excluding these items,
total revenues increased $21.0 million, primarily due to a $14.3 million
increase in minimum rent and a $13.3 million increase in other income,
partially offset by a $7.7 million decrease in overage rents. The minimum rent
increase results from increased occupancy levels and the replacement of
expiring tenant leases with renewal leases at higher minimum base rents. The
increase in other income includes a $6.8 million increase in interest and
dividend income, including a $5.0 million dividend received from DPMI, a $2.5
million fee received in conjunction with the sale of the General Motors
Building described in Note 10, and a $2.7 million increase in gains on sales of
peripheral properties. The decrease in overage rent is primarily the result of
a change in the timing of recognizing contingent rent as prescribed by EITF
98-9, which is described above.

      Total operating expenses increased $103.0 million, or 25.5%, for the nine
months ended September 30, 1998, as compared to the same period in 1997. This
increase is primarily the result of the RPT acquisition ($61.1 million), the
CPI Merger ($2.5 million) and the Property Transactions ($23.7 million).
Excluding these transactions, total operating expenses

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<PAGE>   26
increased $15.7 million, primarily due to an $11.9 million increase in
depreciation and amortization and a $2.8 million increase in advertising and
promotion.

      Interest expense increased $77.8 million, or 38.2% for the nine months
ended September 30, 1998, as compared to the same period in 1997. This increase
is primarily a result of the RPT acquisition ($56.3 million), the CPI Merger
($2.8 million), the Property Transactions ($12.3 million), and incremental
interest on borrowings under the Credit Facility to acquire the IBM Properties
($9.2 million) and the Chelsea stock ($1.4 million). Excluding these
transactions, interest expense has decreased $4.2 million, primarily resulting
from a decrease in the weighted average interest rates on consolidated
indebtedness and reductions in indebtedness from capital raised in common and
preferred stock offerings.

      The $7.3 million loss on the sale of an asset in 1998 is primarily the
result of the June 30, 1998 sale of Southtown Mall for $3.3 million.

      The $7.0 million extraordinary gain in 1998 is the result of a gain on
forgiveness of debt of $5.2 million and the write-off of the premium on such
indebtedness $1.8 million. The $2.5 million gain from extraordinary items in
1997 is the result of gains realized on the forgiveness of debt ($31.1 million)
and the write-off of net unamortized debt premium ($8.4 million), partially
offset by the acquisition of the contingent interest feature on four loans
($21.0 million) and prepayment penalties and write-offs of mortgage costs
associated with early extinguishments of debt ($16.0 million).

      Income before limited partners' interest was $148.5 million for the nine
months ended September 30, 1998, as compared to $148.3 million for the same
period in 1997, reflecting a decrease of $0.2 million, primarily for the reasons
discussed above. Income before limited partners' interests includes income of
the Company from the operations of Ocean County Mall and certain net lease
assets, income of the SPG Operating Partnership and the SRC Operating
Partnership. Income from the SPG Operating Partnership was allocated to the
Company based on the Company's preferred unit preference and ownership interest
in the SPG Operating Partnership during the period. Income of the SRC Operating
Partnership was allocated to SRC based on its ownership interest in the SRC
Operating Partnership during the period.

      LIQUIDITY AND CAPITAL RESOURCES

      As of September 30, 1998, Simon Group's balance of unrestricted cash and
cash equivalents was approximately $102.5 million. In addition to its cash
balance, Simon Group has a $1.25 billion unsecured revolving credit facility
(the "Credit Facility") which had $871.8 million available after outstanding
borrowings and letters of credit at September 30, 1998. Simon Group also has
access to public equity and debt markets. The SPG Operating Partnership has a 
debt shelf registration statement currently effective, under which $850 million 
in debt securities may be issued.

      Management anticipates that cash generated from operating performance will
provide the necessary funds on a short- and long-term basis for its operating
expenses, interest expense on outstanding indebtedness, recurring capital
expenditures, and distributions to shareholders in accordance with REIT
requirements. Sources of capital for nonrecurring capital expenditures, such as
major building renovations and expansions, as well as for scheduled principal
payments, including balloon payments, on outstanding indebtedness are expected
to be obtained from: (i) excess cash generated from operating performance; (ii)
working capital reserves; (iii) additional debt financing; and (iv) additional
equity raised in the public markets.

      Sensitivity Analysis

      Simon Group's future earnings, cash flows and fair values relating to
financial instruments are dependent upon prevalent market rates of interest, 
such as LIBOR. Based upon consolidated indebtedness and interest rates at
September 30, 1998, a 1% increase in the market rates of interest would
decrease future earnings and cash flows by approximately $14.8 million per
year, and would decrease the fair value of debt by approximately $1,153
million. A 1% decrease  in the market rates of interest would increase future
earnings and cash flows by approximately $15.8 million per year, and would
increase the fair value of debt by approximately $1,679 million.

      Financing and Debt

      At September 30, 1998, Simon Group had consolidated debt of $7,745.9
million, of which $5,362.3 million is fixed-rate debt bearing interest at a
weighted average rate of 7.71% and $2,383.6 million is variable-rate debt
bearing interest at a weighted average rate of 6.21%. As of September 30, 1998,
Simon Group had interest rate protection agreements related to $1,092.4 million
of consolidated variable-rate debt. Simon Group's hedging activity, as a result
of these interest rate protection


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<PAGE>   27
agreements, resulted in interest savings of $122 thousand and $285 thousand for
the three months ended September 30, 1998 and 1997, respectively. Interest
savings were $301 thousand and $1,371 thousand for the nine months ended
September 30, 1998 and 1997, respectively. Simon Group's hedging activities did
not materially impact its weighted average borrowing rates.

      Scheduled principal payments of the Company's share of consolidated
indebtedness over the next five years is $3,659 million, with $3,943 million
thereafter. The Company and SRC's combined ratio of consolidated debt-to-market
capitalization was 49.5% at both September 30, 1998 and December 31, 1997.
                                                 
      On June 18, 1998, Simon Group refinanced a $33.9 million mortgage on a
regional mall Property and recorded a $7.0 million extraordinary gain, including
debt forgiveness of $5.2 million and the write-off of a premium of $1.8 million.
The new mortgage, which totals $35 million, bears interest of 7.33% and matures
on June 18, 2008. The retired mortgage bore interest at 9.25% with a maturity of
January 1, 2011.

      On June 22, 1998, Simon Group completed the sale of $1.075 billion of
senior unsecured debt securities. The issuance included three tranches of senior
unsecured notes as follows (1) $375 million bearing interest at 6.625% and
maturing on June 15, 2003 (2) $300 million bearing interest at 6.75% and
maturing on June 15, 2005 and (3) $200 million bearing interest at 7.375% and
maturing on June 15, 2018. This offering also included a fourth tranche of $200
million of 7.00% Mandatory Par Put Remarketed Securities due June 15, 2028,
which are subject to redemption on June 16, 2008. The net proceeds of
approximately $1.062 billion were combined with $40 million of working capital
and used to retire and terminate Simon Group's $300 million unsecured revolving
credit facility and to reduce the outstanding balance of Simon Group's Credit
Facility. The Credit Facility has an initial maturity of September 1999, which
Simon Group may, at its option, extend for up to one year. The debt retired had
a weighted average interest rate of 6.29%.

      In conjunction with the CPI Merger, the SPG Operating Partnership and SPG,
as co-obligors, closed a $1.4 billion unsecured bridge loan (the "Merger
Facility"). The Merger Facility bears interest at a base rate of LIBOR plus 65
basis points and will mature at the following intervals (i) $450 million on the
nine-month anniversary of the closing (ii) $450 million on the eighteen-month
anniversary of the closing and (iii) $500 million on the two-year anniversary of
the closing. The Merger Facility is subject to covenants and conditions
substantially identical to those of the Credit Facility. Simon Group drew the
entire $1.4 billion available on the Merger Facility, along with $237 million on
the Credit Facility, to pay for the cash portion of the dividend declared in
conjunction with the CPI Merger, as well as closing costs associated with the
CPI Merger. Financing costs of $9.5 million, which were incurred to obtain the
Merger Facility, are being amortized over 18 months.

      In conjunction with the CPI Merger, RPT, a REIT and the 99.999% owned
subsidiary of the SDG Operating Partnership, took title for substantially all of
the CPI assets and assumed $825 million of unsecured notes (the "CPI Notes"), as
described in Note 2. As a result, the CPI Notes are structurally senior in right
of payment to holders of other Simon Group unsecured notes to the extent of the
assets of RPT only, with over 99.999% of the excess cash flow plus any capital
event transactions available for the other Simon Group unsecured notes. The CPI
Notes pay interest semiannually, and  bear interest ranging from 7.05% to 9.00%
(weighted average of 8.03%), and have various due dates through 2016 (average
maturity of 9.6 years). The CPI Notes contain leverage ratios, annual real
property appraisal requirements, debt service coverage ratios and minimum Net
Worth ratios. Additionally, consolidated mortgages totaling $2.1 million, and a
pro-rata share of $92.0 million of nonconsolidated joint venture indebtedness
was assumed in the CPI Merger, and as a result of acquiring the remaining
interest in Palm Beach Mall, Simon Group began accounting for that Property
using the consolidated method of accounting, adding $50.7 million to
consolidated indebtedness. A net premium of $19.2 million was recorded in
accordance with the purchase method of accounting to adjust the CPI Notes and
mortgage indebtedness assumed in the CPI Merger to fair value, which is being
amortized over the remaining lives of the related indebtedness.

      During the second quarter, the Company issued 2,957,335 shares of its
common stock in private offerings generating aggregate net proceeds of
approximately $91.4 million. The net proceeds were contributed to the SPG
Operating Partnership in exchange for a like number of Units. The SPG Operating
Partnership used the net proceeds for general working capital purposes.

      Acquisitions and Dispositions

      Management continues to actively review and evaluate a number of
individual property and portfolio acquisition opportunities. Management believes
that funds on hand, and amounts available under the Credit Facility, together
with the net proceeds of public and private offerings of debt and equity
securities are sufficient to finance likely acquisitions. No assurance can be
given that Simon Group will not be required to, or will not elect to, even if
not required to, obtain funds from outside sources, including through the sale
of debt or equity securities, to finance significant acquisitions, if any.


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      On January 26, 1998, Simon Group acquired Cordova Mall in Pensacola,
Florida for approximately $87.3 million, which included the assumption of a
$28.9 million mortgage, which was later retired, and the issuance of 1,713,016
Units, valued at approximately $55.5 million. This 874,000 square-foot regional
mall is wholly-owned by Simon Group.

      During 1998, in a series of transactions, Simon Group has acquired
additional 35% ownership interests in Lakeline Mall and Lakeline Plaza for
319,390 Units in the SPG Operating Partnership valued at approximately $10.5
million and $4.2 million in cash. These acquisitions increased Simon Group's
ownership interest in these Properties to a noncontrolling 85%.

      On February 27, 1998, Simon Group, in a joint venture partnership with
Macerich, acquired a portfolio of twelve regional malls and two community
centers comprising approximately 10.7 million square feet of GLA at a purchase
price of $974.5 million, including the assumption of $485.0 million of
indebtedness. Simon Group and Macerich, as noncontrolling 50/50 partners in the
joint venture, were each responsible for one half of the purchase price,
including indebtedness assumed and each assumed leasing and management
responsibilities for six of the regional malls and one community center. Simon
Group funded its share of the cash portion of the purchase price using
borrowings from a new $300 million unsecured revolving credit facility, which
bore interest at LIBOR plus 0.65% and had a maturity of August 27, 1998.

      On April 15, 1998, Simon Group purchased the remaining 7.5% ownership
interest in Buffalo Grove Towne Center for $255 thousand.

      Effective May 5, 1998, in a series of transactions, Simon Group acquired
the remaining 50.1% interest in Rolling Oaks Mall for 519,889 shares of the
Company's common stock, valued at approximately $17.2 million. The SPG Operating
Partnership issued 519,889 Units to the Company as consideration for the shares
of common stock.

      Effective June 1, 1998, Simon Group sold The Promenade for $33.5 million.
No gain or loss was recognized on this transaction. Effective June 30, 1998,
Simon Group sold Southtown Mall for $3.3 million and recorded a $7.2 million
loss on the transaction.

      Portfolio Restructuring. As a continuing part of Simon Group's long-term
strategic plan, management is evaluating the potential sale of Simon Group's
non-retail holdings, along with a number of retail assets that are no longer
aligned with Simon Group's strategic criteria. If these assets are sold,
management expects the sale prices will not differ materially from the carrying
value of the related assets.

      Development, Expansions and Renovations. Simon Group is involved in
several development, expansion and renovation efforts.

      In March 1998, Simon Group opened the approximately $13.3 million Muncie
Plaza in Muncie, Indiana. Simon Group owns 100% of this 196,000 square foot
community center. In addition, phase I of the approximately $34 million Lakeline
Plaza opened in April 1998 in Austin, Texas. Phase II of this 360,000
square-foot community center is scheduled to open in 1999. Each of these new
community centers is adjacent to an existing regional mall in Simon Group's
portfolio.

      Construction continues on the following development projects: The Shops at
Sunset Place, an approximately $150 million, 37.5%-owned, destination-oriented
retail and entertainment project containing approximately 510,000 square feet of
GLA is scheduled to open in December 1998 in South Miami, Florida and Concord
Mills, an approximately $216 million, 50%-owned value-oriented super regional
mall project, is scheduled to open in the fall of 1999 in Concord (Charlotte),
North Carolina.

      As part of the CPI Merger, the SPG Operating Partnership assumed CPI's 50%
noncontrolling ownership in the approximately $246 million Mall of Georgia
development project. This approximately 1.5 million square-foot regional mall
development is located in Gwinnet County, Georgia in a suburb of Atlanta. Mall
of Georgia is scheduled to open in August 1999. Adjacent to Mall of Georgia,
Simon Group is also developing a $38 million 444,000 square-foot community
center, The Mall of Georgia Crossing.

      In addition, Simon Group began construction on The Shops at North East
Mall in Hurst, Texas during 1998. This 320,000 square-foot community center
project is adjacent to North East Mall, and is scheduled to open in the fall of
1999.

      On June 4, 1998, Simon Group, Argo II, an investment fund established by
J.P. Morgan and The O'Connor Group, and Harvard Private Capital Group
("Harvard") announced that they have collectively committed to acquire a 44
percent ownership position in Groupe BEG, S.A. ("BEG"). BEG is a fully
integrated retail real estate developer, lessor and manager headquartered in
Paris, France. Simon Group through and affiliated Management Company have
contributed $15.0 million of equity capital for a noncontrolling 22% ownership
interest and are committed to an additional investment of $37.5 million over


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the next 12 to 18 months, subject to certain financial and other conditions. The
agreement with BEG is structured to allow Simon Group, Argo II and Harvard to
collectively acquire a controlling interest in BEG over time.

      October of 1998 marked the opening of BEG's first project in Europe with
the Phase I opening of a development in Krakow, Poland. This project is 100%
leased and committed and features 390,000 square feet of selling space.

      A key objective of Simon Group is to increase the profitability and market
share of its Properties through the completion of strategic renovations and
expansions. Simon Group's share of projected costs to fund all renovation and
expansion projects in the fourth quarter of 1998 is approximately $150 million,
with an additional $400 million projected for 1999. It is anticipated that the 
cost of these projects will be financed principally with the Credit Facility,
project-specific indebtedness, access to debt and equity markets, and cash
flows from operations. Simon Group currently has six expansion and/or
redevelopment projects under construction and in the preconstruction
development stage with targeted 1998 completion dates and an additional six
with 1999 completion dates. Included in consolidated investment properties at
September 30, 1998 is approximately $221.8 million of construction in progress,
with another $261.7 million in the unconsolidated joint venture investment
properties.

      Distributions. The Company declared a distribution of the previous
quarters earnings of $0.5050 per share of common stock in each of the first
three quarters of 1998. A special distribution of $0.4721 per share was 
declared on September 15, 1998 to align the time periods of distributions for 
the Company and CPI under the definitive merger agreement. The special 
distribution is payable on November 20, 1998 to shareholders of record on 
September 23, 1998. In addition, on October 21, 1998, the Company declared a 
distribution of $0.0329 per paired-share, representing the balance of the 
Company's regular quarterly distribution of $0.5050 for the third quarter. This
distribution is also payable on November 20, 1998 to shareholders of record on 
November 6, 1998. The current annual distribution rate is $2.02 per share of 
common stock. Future common stock distributions will be determined based on 
actual results of operations and cash available for distribution. In addition, 
preferred dividends of $1.6406 per Series B preferred share and $2.9588 per 
Series C preferred share were paid during the first nine months of 1998.

      INVESTING AND FINANCING ACTIVITIES

      In March 1998, Simon Group transferred its 50% ownership interest in The
Source, an approximately 730,000 square-foot regional mall, to a newly formed
limited partnership in which it has a 50% ownership interest, with the result
that Simon Group now owns an indirect noncontrolling 25% ownership interest in
The Source. In connection with this transaction, Simon Group's partner in the
newly formed limited partnership is entitled to a preferred return of 8% on its
initial capital contribution, a portion of which was distributed to Simon Group.
Simon Group applied the distribution against its investment in The Source.

      In August 1998, Simon Group sold one-half of its 75% ownership in The
Shops at Sunset Place construction project. Simon Group now holds a 37.5% 
noncontrolling interest in this project, which is scheduled to open in December
1998. Simon Group applied the proceeds against its investment in the project.

      Cash used in investing activities for the nine months ended September 30,
1998 of $1,928 million is primarily the result of the CPI Merger and other
acquisitions of $1,881 million, $233 million of capital expenditures and $20
million of investments in and advances to the Management Company, partially
offset by the net proceeds of $46 million from the sales of Sherwood Gardens,
The Promenade and Southtown Mall and net distributions from unconsolidated
entities of $136 million, which includes $59 million associated with the
refinancing of Florida Mall, $33 million from The Source transactions described
above, $30 million associated with The Shops at Sunset Place transaction
described above and distributions of $8 million from the IBM Properties. The $20
million investment in the Management Company is primarily the $15 million
investment in Group BEG described earlier. In addition to the $1,638 million
paid in connection with the CPI Merger, acquisitions includes $240 million for
the acquisition of the IBM Properties and $3 million for the acquisition of
Cordova Mall. Capital expenditures includes development costs of $59 million,
renovation and expansion costs of approximately $129 million and tenant costs
and other operational capital expenditures of approximately $45 million.

      Cash provided by financing activities for the nine months ended September
30, 1998 was $1,569 million and includes net borrowings of $1,776 million
primarily used to fund the CPI Merger and other acquisition and development
activity and net proceeds from sales of common stock of $115 million, partially
offset by distributions of $321 million.

      EBITDA -- EARNINGS FROM OPERATING RESULTS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION

      Management believes that there are several important factors that
contribute to the ability of Simon Group to increase rent and improve
profitability of its shopping centers, including aggregate tenant sales volume,
sales per square foot, occupancy levels and tenant costs. Each of these factors
has a significant effect on EBITDA. Management believes that


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EBITDA is an effective measure of shopping center operating performance because:
(i) it is industry practice to evaluate real estate properties based on
operating income before interest, taxes, depreciation and amortization, which is
generally equivalent to EBITDA; and (ii) EBITDA is unaffected by the debt and
equity structure of the property owner. EBITDA: (i) does not represent cash flow
from operations as defined by generally accepted accounting principles; (ii)
should not be considered as an alternative to net income as a measure of
operating performance; (iii) is not indicative of cash flows from operating,
investing and financing activities; and (iv) is not an alternative to cash flows
as a measure of liquidity.

      Total EBITDA for the Properties increased from $649.5 million for the nine
months ended September 30, 1997 to $908.0 million for the same period in 1998,
representing a 39.8% increase. This increase is primarily attributable to the
RPT acquisition ($89.6 million), the IBM Properties ($31.6 million), the CPI
Merger ($5.6 million), SBV initiatives ($9.6 million) and the other Properties
opened or acquired during 1997 and 1998 ($75.3 million). Excluding these items,
EBITDA increased $46.8 million, or 7.2% resulting from aggressive leasing of new
and existing space and increased operating efficiencies. During this period
operating profit margin increased from 64.2% to 64.7%.

      FFO-FUNDS FROM OPERATIONS

      FFO, as defined by the National Association of Real Estate Investment
Trusts, means the consolidated net income of Simon Group and its subsidiaries
without giving effect to depreciation and amortization, gains or losses from
extraordinary items, gains or losses on sales of real estate, gains or losses on
investments in marketable securities and any provision/benefit for income taxes
for such period, plus the allocable portion, based on Simon Group's ownership
interest, of funds from operations of unconsolidated joint ventures, all
determined on a consistent basis in accordance with generally accepted
accounting principles. Management believes that FFO is an important and widely
used measure of the operating performance of REITs which provides a relevant
basis for comparison among REITs. FFO is presented to assist investors in
analyzing the performance. Simon Group's method of calculating FFO may be
different from the methods used by other REITs. FFO: (i) does not represent cash
flow from operations as defined by generally accepted accounting principles;
(ii) should not be considered as an alternative to net income as a measure of
operating performance or to cash flows from operating, investing and financing
activities; and (iii) is not an alternative to cash flows as a measure of
liquidity.

      The following summarizes FFO of Simon Group and reconciles combined net
income available to common shareholders to FFO for the periods presented:

<TABLE>
<CAPTION>
                                               For the Three Months                 For the Nine months
                                                Ended September 30,                 Ended September 30,
                                            ---------------------------         ---------------------------
                                              1998              1997              1998              1997
                                            ---------         ---------         ---------         ---------
<S>                                         <C>               <C>               <C>               <C>      
(In thousands)
FFO of the Simon Portfolio                  $ 123,584         $ 102,189         $ 348,448         $ 283,413
                                            =========         =========         =========         =========
Reconciliation:
Income Before Extraordinary Items           $  52,851         $  54,286         $ 141,489         $ 145,761
Plus:
   Depreciation and amortization
    from combined consolidated Properties      60,877            47,981           177,038           135,067
   Simon Group's share of
    depreciation and amortization
    and extraordinary items from                                                                           
    unconsolidated affiliates                  19,646             9,995            50,754            28,005
   Loss on the sale of real estate                 64              --               7,283              --
Less:
   Gain on the sale of real estate               --                --                --                 (20)
   Minority interest portion of
    depreciation, amortization and                                                                          
    extraordinary items                        (1,780)             (972)           (5,374)           (3,486)
   Preferred dividends (Including
    preferred dividends of Subsidiary)         (8,074)           (9,101)          (22,742)          (21,914)
                                            ---------         ---------         ---------         ---------

Combined FFO                                $ 123,584         $ 102,189         $ 348,448         $ 283,413
                                            =========         =========         =========         =========

FFO Allocable to the Company and SRC        $  79,841         $  63,173         $ 222,575         $ 174,581
                                            =========         =========         =========         =========
</TABLE>


      PORTFOLIO DATA

      The following statistics exclude Charles Towne Square, Richmond Town
Square and Mission Viejo Mall, which are all undergoing extensive
redevelopments. Statistics also do not include the Properties acquired in the 


                                       30
<PAGE>   31
CPI Merger (the "CPI Properties"), as they were only a part of the portfolio for
the final six days of the period. All 1998 year-end statistics will include the
CPI Properties. The value-oriented super-regional mall category consists of
Arizona Mills, Grapevine Mills and Ontario Mills.

      Aggregate Tenant Sales Volume. For the nine months ended September 30,
1998 compared to the same period in 1997, total reported retail sales at mall
and freestanding GLA owned by Simon Group ("Owned GLA") in the regional malls
and value-oriented super-regional malls, and all reporting tenants at community
shopping centers increased $1,916 million or 42.2% from $4,541 million to $6,457
million, primarily as a result of the RPT acquisition, the IBM Properties and
other Property additions to the portfolio ($1,598 million), increased
productivity of our existing tenant base and an overall increase in occupancy.
Retail sales at Owned GLA affect revenue and profitability levels because they
determine the amount of minimum rent that can be charged, the percentage rent
realized, and the recoverable expenses (common area maintenance, real estate
taxes, etc.) the tenants can afford to pay.

      Occupancy Levels. Occupancy levels for Owned GLA at mall and freestanding
stores in the regional malls increased from 86.0% at September 30, 1997, to
87.7% at September 30, 1998. Occupancy for value-oriented super-regional malls 
was 96.9% at September 30, 1998. Occupancy levels for community shopping 
centers decreased from 93.1% at September 30, 1997, to 90.8% at September 30, 
1998. Owned GLA has increased 29.6 million square feet from September 30, 1997,
to September 30, 1998, primarily as a result of the CPI Merger (12.4 million), 
the RPT acquisition (5.2 million), and the acquisitions of the IBM Properties 
(7.1 million), Cordova Mall, The Fashion Center at Keystone at the Crossing and
the openings of Arizona Mills, Grapevine Mills, The Source, Muncie Plaza and 
Lakeline Plaza, partially offset by the sale of Southtown Mall.

      Average Base Rents. Average base rents per square foot of mall and
freestanding Owned GLA at regional malls increased 6.3%, from $21.82 at
September 30, 1997 to $23.20 at September 30, 1998. Average base rents per
square foot of Owned GLA at value-oriented super-regional malls was $16.33 at
September 30, 1998 and average base rents of Owned GLA in the community shopping
centers decreased 3.7%, from $7.78 at September 30, 1997 to $7.47 for the same
period in 1998.

      INFLATION

      Inflation has remained relatively low during the past few years and has
had a minimal impact on the operating performance of the Properties.
Nonetheless, substantially all of the tenants' leases contain provisions
designed to lessen the impact of inflation. Such provisions include clauses
enabling Simon Group to receive percentage rentals based on tenants' gross
sales, which generally increase as prices rise, and/or escalation clauses, which
generally increase rental rates during the terms of the leases. In addition,
many of the leases are for terms of less than ten years, which may enable Simon
Group to replace existing leases with new leases at higher base and/or
percentage rentals if rents of the existing leases are below the then-existing
market rate. Substantially all of the leases, other than those for anchors,
require the tenants to pay a proportionate share of operating expenses,
including common area maintenance, real estate taxes and insurance, thereby
reducing Simon Group's exposure to increases in costs and operating expenses
resulting from inflation.

      However, inflation may have a negative impact on some of Simon Group's
other operating items. Interest and general and administrative expenses may be
adversely affected by inflation as these specified costs could increase at a
rate higher than rents. Also, for tenant leases with stated rent increases,
inflation may have a negative effect as the stated rent increases in these
leases could be lower than the increase in inflation at any given time.

      YEAR 2000 COSTS

      The Company has undertaken a project to identify and correct problems
arising from the inability of information technology hardware and software
systems to process dates after December 31, 1999. This Year 2000 project
consists of two primary components. The first component focuses on the Company's
key information technology systems (the "IT Component") and the second component
focuses on the information systems of key tenants and key third party service
providers as well as imbedded systems within common areas of approximately 230 
Properties (the
"Non-IT Component"). Key tenants include the 20 largest base rent contributors
and anchor tenants with over 25,000 square feet of GLA. Key third party service
providers are those providers whose Year 2000 problems, if not addressed, would
be likely to have a material adverse effect on the Company's operations.

      The IT Component of the Year 2000 project is being managed by the
information services department of the Company who have actively involved other
disciplines within the Company who are directly impacted by an IT Component of
the project. The Non-IT Component is being managed by a steering committee of 
25 employees, including senior executives of a number of the Company's 
departments. In addition, outside consultants have been engaged to assist in 
the Non-IT Component.


                                       31
<PAGE>   32
      STATUS OF PROJECT

            IT Component. The Company's primary operating, financial accounting
      and billing systems and the Company's standard primary desktop software
      have been determined to be Year 2000 ready. The Company's information
      services department has also completed its assessment of other "mission
      critical" applications within the Company and is currently implementing
      solutions to those applications in order for them to be Year 2000 ready.
      It is expected that the implementation of these mission critical solutions
      will be complete by September 30, 1999.
        
            Non-IT Component. The Non-IT Component includes the following
      phases: (1) an inventory of Year 2000 items which are determined to be
      material to the Company's operations; (2) assigning priority to
      identified items; (3) assessing Year 2000 compliance status as to all
      critical items; (4) developing replacement or contingency plans based on
      the information collected in the preceding phases; (5) implementing
      replacement and contingency plans; and (6) testing and monitoring of
      plans, as applicable.

            Phase (1) is ongoing and is 70% complete. Phase (2) is complete and
      Phase (3) is in process. The assessment of compliance status of key
      tenants is approximately 50% complete, the assessment of compliance status
      of key third party service providers is approximately 40% complete and the
      assessment of compliance status of inventoried components at the
      Properties is approximately 5% complete. The Company expects to complete
      phase (3) by December 31, 1998. The development of contingency or
      replacement plans (phase (4)) is scheduled to be completed by December 31,
      1998. No such plans are currently in place. Implementation of contingency
      and replacement plans (phase (5)) is scheduled to commence during the
      first quarter of 1999 with any required testing (phase (6)) to be
      completed throughout the remainder of 1999.
        
      Costs. The Company estimates that it will spend approximately $1.5 million
in incremental costs for its Year 2000 project. This amount will be incurred
over a period that commenced in January 1997 and is expected to end in September
1999. Costs incurred through September 30, 1998 are estimated at approximately
$500 thousand. Such amounts are expensed as incurred. These estimates do not
include the costs expended by the Company following its 1996 merger with
DeBartolo Realty Corporation for software, hardware and related costs necessary
to upgrade its primary operating, financial, accounting and billing systems
which allowed those systems to among other things, become Year 2000 compliant.


      Risks. The most reasonably likely worst case scenario for the Company with
respect to the Year 2000 problems would be disruptions in the Company's
operations at the Properties. This could lead to reduced sales at the Properties
and claims by tenants which would in turn adversely affect the Company's results
of operations.

      The Company has not yet completed all phases of its Year 2000 project and
the Company is dependent upon key tenants and key third party suppliers to make
their information systems Year 2000 compliant. In addition, disruptions in the
economy generally resulting from Year 2000 problems could have an adverse effect
on the Company's operations.

      SEASONALITY

      The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when tenant occupancy and retail sales
are typically at their highest levels. In addition, shopping malls achieve most
of their temporary tenant rents during the holiday season. As a result of the
above, earnings are generally highest in the fourth quarter of each year.


                                       32
<PAGE>   33
PART II - OTHER INFORMATION

      Item 1:  Legal Proceedings

      Richard E. Jacobs, et al. v. Simon DeBartolo Group, L.P. On September 3,
1998, a complaint was filed in the Court of Common Pleas in Cuyahoga County,
Ohio, captioned Richard E. Jacobs, et al. v. Simon DeBartolo Group, L.P. The
plaintiffs are all principals or affiliates of The Richard E. Jacobs Group, Inc.
The plaintiffs allege in their complaint that Simon DeBartolo Group, L.P. (now
Simon Property Group, L.P. or the SPG Operating Partnership) engaged in
malicious prosecution, abuse of process, defamation, libel, injurious
falsehood/unlawful disparagement, deceptive trade practices under Ohio law,
tortious interference and unfair competition in connection with the SPG
Operating Partnership's acquisition by tender offer of shares in RPT, a
Massachusetts business trust, and certain litigation instituted in September,
1997, by the SPG Operating Partnership against Jacobs in federal district court
in New York, wherein the SPG Operating Partnership alleged that Jacobs and other
parties had engaged, or were engaging in activity which violated Section 10(b)
of the Securities Exchange Act of 1934, as well as certain rules promulgated
thereunder. Plaintiffs in the Ohio action are seeking compensatory damages in
excess of $200 million, punitive damages and reimbursement for fees and
expenses. It is difficult to predict the ultimate outcome of this action and
there can be no assurance that the SPG Operating Partnership will receive a
favorable verdict. Based upon the information known to the Company at this time,
in the opinion of Management, it is not expected that this action will have a
material adverse effect on the Company.


      Item 2:  Changes in Securities and Use of Proceeds

      In connection with the CPI Merger, a Restated Certificate of
Incorporation of SPG ("SPG Charter") and By-laws of SPG ("SPG By-laws") and
Restated Certificate of Incorporation of SRC ("SRC Charter") and By-laws of
SRC ("SRC By-laws") were adopted. These changes effect the rights of holders
of Common Stock of SPG, the Class B Common Stock of SPG ("Class B Common
Stock"), the Class C Common Stock of SPG ("Class C Common Stock"), the 6.50%
Series A Convertible Preferred Stock of SPG and the Common Stock of SRC. The
Common Stock of SPG, the Class B Common Stock and the Class C Common Stock are
referred to herein as "SPG Equity Stock."            

      The following is a general summary of the material changes in the rights
of stockholders under these documents and does not purport to be complete and
is subject to and qualified in its entirety by reference to the SPG Charter,
the SPG By-laws, the SRC Charter, the SRC By-laws, the Certificate of
Incorporation of CPI ("CPI Charter"), By-laws of CPI ("CPI By-laws"),
Certificate of Incorporation of CRC ("CRC Charter") and By-laws of CRC ("CRC
By-laws"), each of which has been filed separately by the Company with the
Securities and Exchange Commission.                                 

         Prior to the CPI Merger, the CPI Charter and the CRC Charter contained
no restrictions on ownership. In order to maintain SPG's qualification as a real
estate investment trust, the SPG Charter imposes a limit of 18% on the ownership
of SPG Equity Stock by certain members and affiliates of the Simon family and a
limit of 8% on the ownership of SPG Equity Stock by any other stockholder. The
SRC Charter contains no ownership restrictions.

      Both the CPI Charter and the CRC Charter permitted stockholders to take
action by written consent without a meeting. The SPG Charter requires that all
actions by holders of SPG Common Stock be taken at an annual or special meeting
of stockholders, except that holders of Class B Common Stock and holders of
Class C Common Stock may act by written consent without a meeting on matters
submitted exclusively to the vote of the holders of Class B Common Stock or
Class C Common Stock. The SRC Charter permits stockholders to take action by
written consent.

      The CPI Charter provided that the Board of Directors be divided into
three classes serving staggered three-year terms. The SPG Charter provides that
certain directors are elected exclusively by the holders of Class B Common Stock
and holders of Class C Common Stock. There are currently 13 directors of SPG,
seven elected by the holders of SPG Equity Stock, four elected by the holders of
Class B Common Stock and two elected by the holders of Class C Common Stock.

      The CPI By-laws required that the stockholder's notice for stockholder
nominations or business to be made at an annual meeting be timely and received
by CPI not less than 90 days nor more than 120 days before the first anniversary
of the prior year's meeting. The CRC By-laws did not establish an advance notice
procedure. The SPG By-laws and SRC By-laws require that notice be received by
SPG or SRC, as applicable, not less than 60 days nor more than 90 days prior to
the first anniversary of the prior year's annual meeting.

      The CPI Charter permitted the removal of directors only for cause and
by an affirmative vote of at least 80% of the outstanding shares entitled to
vote. The CRC Charter provided for the removal of directors, with or without
cause, by a majority vote of the whole Board of Directors. The SPG Charter and
the SRC Charter allow for the removal of directors, with or without cause, by
the affirmative vote of the majority of all shares entitled to vote in the
election for directors (subject to the right of any holders separately entitled
to elect one or more directors in the case of the SPG Charter).

      The CPI Charter and the CRC Charter could have been amended by the
approval of the Board of Directors as permitted by law. Additionally, the
amendment of the CPI Charter regarding the composition of the Board of Directors
required the approval of 80% of the shares entitled to vote. The SPG Charter
generally may be amended by the affirmative vote of a majority of those shares
entitled to vote thereon. However, an affirmative vote of 80% is required to
amend certain sections of the SPG Charter, including provisions that eliminate
the personal liability of a director to SPG and those addressing stockholder
proposals. Moreover, amendments with respect to the composition of the Board of
Directors and the rights and restrictions of the classes of SPG Equity Stock
must be approved by 80% of those entitled to vote and by a majority of the
individual classes, voting separately. The SRC Charter has similar provisions
except that there is only one class of common stock.

      The CPI By-laws could be amended, altered or repealed by the affirmative
vote of the holders of at least 80% of the shares of outstanding stock or by a
majority of the Board of Directors. The CRC By-laws could be altered or repealed
by the majority vote of the whole Board of Directors, subject to the rights of
stockholders under the law. The SPG Charter and the SRC Charter provide that the
SPG By-laws and the SRC By-laws, respectively, may be amended, altered or
repealed by the affirmative vote of at least 80% of the stockholders or by a
vote of two-thirds of the Board of Directors, including (for SPG only) at least
a majority of the directors elected by the Class B Common Stock and at least one
director elected by the Class C Common Stock.
          




                                       33
<PAGE>   34
ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     The Special Meeting of the stockholders of SPG Properties, Inc. (formerly
SDG) was held on September 23, 1998. The matters submitted to the stockholders
for a vote included (a) the approval and adoption of an amendment to the Amended
and Restated Articles of Incorporation; and (b) the approval and adoption of the
Agreement and Plan of Merger, dated as of February 18, 1998, by and among SDG,
CPI and CRC (the "Merger Agreement").
 
     The Annual Meeting of the stockholders of SPG Properties, Inc. was held on
September 23, 1998. The matters submitted to the stockholders for a vote
included (a) the election of 11 directors to the Board of Directors; (b) the
adoption of The 1998 Plan; and (c) the ratification of the appointment of Arthur
Andersen LLP as independent accountants for the fiscal year ending December 31,
1998.
 
     The following table sets forth the results of voting on these matters.
 
<TABLE>
<CAPTION>
                                                                           NUMBER OF                NUMBER OF
                                                  NUMBER OF                  VOTES                 ABSTENTIONS
                                                    VOTES                   AGAINST/                 /BROKER
                  MATTER                             FOR                    WITHHELD                NON-VOTES
                  ------                          ---------                ---------               -----------
             SPECIAL MEETING
<S>                                         <C>                      <C>                      <C>
Approval and Adoption of Amendment to the
  Amended and Restated Articles of
  Incorporation...........................            82,878,863                1,355,684                  723,049
Approval and Adoption of the Merger Agree-
  ment....................................            84,046,177                  449,119                  462,300
 
              ANNUAL MEETING
Election of Directors:
Robert E. Angelica........................            95,847,305                1,040,344
Birch Bayh................................            95,841,972                1,045,677
Hans C. Mautner...........................            95,843,928                1,043,721
G. William Miller.........................            95,846,532                1,041,117
Pieter S. van den Berg....................            95,847,186                1,040,463
Melvin Simon..............................             3,200,000
Herbert Simon.............................             3,200,000
David Simon...............................             3,200,000
Richard S. Sokolov........................             3,200,000
Frederick W. Petri........................                 4,000
M. Denise DeBartolo York..................                 4,000
Approval of The 1998 Plan.................            69,904,382                8,984,677               17,998,590
Ratification of Appointment of
  Arthur Andersen LLP.....................            94,956,152                  143,215                1,788,282
</TABLE>
  
     Members of the Board of Directors whose term of office as a director
continued after the Annual Meeting other than those elected are J. Albert Smith,
Jr. and Philip J. Ward.
 
     The Special Meeting of the stockholders of the Company was held on
September 23, 1998. The matters submitted to the stockholders for a vote
included (a) the approval and adoption of (i) the Merger Agreement, (ii) the
transfer of substantially all of the assets of CPI to the SPG Operating
Partnership ("CPI Asset Transfer"), and (iii) the transfer of substantially all
of the assets of CRC to the SRC Operating Partnership ("CRC Asset Transfer");
(b) the adoption of an amendment to the Certificate of Incorporation of CPI; (c)
the adoption of an amendment to the Certificate of Incorporation of CRC; (d) the
adoption of the Restated Certificate of Incorporation of CPI; (e) the adoption
of the Restated Certificate of Incorporation of CRC; and (f) the adoption of The
1998 Plan.
 
     The following table sets forth the results of voting on these matters.
 
<TABLE>
<CAPTION>
                                                                           NUMBER OF                NUMBER OF
                                                  NUMBER OF                  VOTES                 ABSTENTIONS
                                                    VOTES                   AGAINST/                 /BROKER
                  MATTER                             FOR                    WITHHELD                NON-VOTES
                  ------                          ---------                ---------               -----------
             SPECIAL MEETING
<S>                                         <C>                      <C>                      <C>
Approval and Adoption of
(i) the Merger Agreement..................            25,543,310
(ii) the CPI Asset Transfer...............            25,543,310
(iii) the CRC Asset Transfer..............            25,543,310
Adoption of Amendment to the CPI
  Certificate of Incorporation............            25,543,310
Adoption of Amendment to the CRC Certifi-
  cate of Incorporation...................            25,543,310
Adoption of the Restated Certificate of
  Incorporation of CPI....................            25,543,310
Adoption of the Restated Certificate of
  Incorporation of CRC....................            25,543,310
Adoption of The Plan......................            25,543,310
</TABLE>
  


                                        34
<PAGE>   35
      Item 6:  Exhibits and Reports on Form 8-K

            (a) Exhibits

            4.1   Credit Agreement dated as of September 24, 1998 among Simon
                  DeBartolo Group, L.P., Corporate Property Investors, Inc. and
                  The Chase Manhattan Bank as Administrative Agent.

            4.2   Contribution Agreement dated as of September 15, 1998 among
                  The Retail Property Trust and Simon DeBartolo Group, L.P. and
                  Charles Mall Company Limited Partnership. 

            4.3   Third Supplemental Indenture dated as of September 23,        
                  1998 between The Retail Property Trust and The Chase
                  Manhattan Bank, as Trustee, to Indenture dated as of March
                  15, 1996.

            4.4   Third Supplemental Indenture dated as of September 23, 1998
                  between The Retail Property Trust and The Chase Manhattan
                  Bank, as Trustee, to Indenture dated as of September 1, 1993.

            4.5   Third Supplemental Indenture dated as of September 23, 1998
                  between The Retail Property Trust and The Chase Manhattan
                  Bank, as Trustee, to Indenture dated as of August 15, 1992.

            4.6   Third Supplemental Indenture dated as of September 23, 1998
                  between The Retail Property Trust and The Chase Manhattan
                  Bank, as Trustee, to Indenture dated as of April 1, 1993.

            4.4   Third Supplemental Indenture dated as of September 23, 1998
                  between The Retail Property Trust and The Chase Manhattan
                  Bank, as Trustee, to Indenture dated as of March 15, 1992.

            (b) Reports on Form 8-K

            Neither Simon Property Group, Inc., nor SPG Realty
               Consultants, Inc. filed reports on Form 8-K during the
               current period.



                                        35
<PAGE>   36
                                   SIGNATURES


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


                                       SIMON PROPERTY GROUP, INC. AND
                                       SPG REALTY CONSULTANTS, INC.

                                       /s/ John Dahl 
                                       John Dahl,
                                       Senior Vice President
                                       and Chief Accounting Officer
                                       (Principal Accounting Officer)

                                       Date: November 18, 1998


                                       36