SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
(Mark one)
|x|   ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE
      ACT OF 1934 For the fiscal year ended December 31, 1996.
                                    OR

| |   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
      SECURITIES EXCHANGE ACT OF 1934

     For the transition period from ___________________ to _________________
     Commission File Number  33-73988


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
             (Exact Name of Registrant as Specified in Its Charter)

                Delaware                                38-3097317
     (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)                 Identification No.)

         200 East Long Lake Road
         Suite 300, P.O. Box 200
       Bloomfield Hills, Michigan                       48303-0200
 (Address of principal executive office)                (Zip Code)

Registrant's telephone number, including area code:  (810) 258-6800
Securities registered pursuant to Section 12(b) of the Act: None

                                                   Name of each exchange

Securities registered pursuant to Section 12(g) of the Act:  None

      Indicate by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  12 months  (or for such  shorter  periods  that the
registrant was required to file such report(s)) and (2) has been subject to such
filing requirements for the past 90 days. Yes  X  No    .
                                              ---    ---

 |X|         Indicate  by a  check  mark  if  disclosure  of  delinquent  filers
       pursuant to Item 405 of Regulation S-K is not contained herein,  and will
       not be contained,  to the best of registrant's  knowledge,  in definitive
       proxy or information statements  incorporated by reference in Part III of
       this Form 10-K or any amendment to this Form 10-K.


                       DOCUMENTS INCORPORATED BY REFERENCE

       Portions of the proxy statement of Taubman  Centers,  Inc. for the annual
meeting  of  shareholders  to be held in 1997 (the "TCO  Proxy  Statement")  are
incorporated by reference into Part III.



<PAGE>



                                     PART I

Item 1.  BUSINESS

The Taubman Realty Group Limited Partnership

  The Taubman Realty Group Limited Partnership  ("TRG"),  which was organized in
1985,  is an operating  partnership  that engages in the  ownership,  operation,
management,  leasing,  acquisition,   development,   redevelopment,   expansion,
financing, and refinancing of regional shopping centers. TRG owns as its primary
assets  interests in regional  retail  shopping  centers (the "Taubman  Shopping
Centers"  or the  "Centers").  TRG also owns  development  projects  for  future
regional shopping centers (the "Development  Projects") and approximately 99% of
The Taubman  Company  Limited  Partnership  (the  "Manager"),  which manages the
Taubman Shopping  Centers and provides  services to TRG and its managing general
partner,  Taubman Centers,  Inc.  ("TCO").  Certain Taubman Shopping Centers are
partially owned through joint ventures (the "Joint Ventures").  See the table on
pages 12 and 13 of this report for  information  regarding the Taubman  Shopping
Centers and TRG's interests in them.

  TCO is a real estate  investment  trust, or REIT,  under the Internal  Revenue
Code of 1986, as amended (the "Code"). In order to satisfy the provisions of the
Code applicable to REITs,  TCO must distribute to its  shareholders at least 95%
of  its  REIT  taxable  income  and  meet  certain  other  requirements.   TRG's
partnership  agreement  provides  that  TRG  will  distribute,   at  a  minimum,
sufficient  amounts to its  partners  such that TCO's pro rata share will enable
TCO to pay shareholder  dividends (including capital gains dividends that may be
required  upon TRG's sale of an asset) that will satisfy the REIT  provisions of
the Code.

Recent Developments

  For a  discussion  of business  developments  that  occurred in 1996,  see the
response to Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

The Shopping Center Business

  There are several types of retail shopping centers,  varying primarily by size
and marketing strategy.  Retail shopping centers range from neighborhood centers
of less than 100,000 square feet of GLA to regional and super-regional  shopping
centers.  Retail  shopping  centers in excess of 400,000  square feet of GLA are
generally referred to as "regional" shopping centers, while those centers having
in  excess  of  800,000  square  feet  of  GLA  are  generally  referred  to  as
"super-regional"  shopping centers. In this annual report on Form 10-K, the term
"regional shopping centers" refers to both regional and super-regional  shopping
centers. The term "GLA" refers to gross retail space, including anchors and mall
tenant areas,  and the term "Mall GLA" refers to gross retail  space,  excluding
anchors.  The term "anchor"  refers to a department  store or other large retail
store.  The term "mall  tenants"  refers to stores (other than anchors) that are
typically specialty retailers and lease space in shopping centers.

  Most regional shopping centers compete for consumer retail dollars by offering
fashion merchandise, hard goods, and services, generally in an enclosed, climate
controlled  environment with convenient parking.  Regional shopping centers have
differing   strategies  with  regard  to  price  levels  of  the  merchants  and
merchandise offered, from very high-end presentations,  on the one extreme, to a
strategy of leasing exclusively to outlet stores, at the other.


                                        1

<PAGE>



  Regional shopping centers usually have two or more anchors. Anchors either own
their stores, the land under them, and adjacent parking areas, or they lease the
ground or buildings  from shopping  center owners for long periods at rates that
are  substantially  lower than the rents  charged to mall  tenants.  In enclosed
regional shopping  centers,  anchors are usually located at the ends of enclosed
common area corridors.  This layout is intended to maximize  pedestrian  traffic
for the mall  tenant  stores.  Mall GLA is leased to a wide  variety  of smaller
stores.  In a regional  shopping center,  substantially all revenues are derived
from Mall GLA.

  The  anchors  and the owner of the  shopping  center  typically  enter into an
agreement  among  themselves,  generally  referred to as a  reciprocal  easement
agreement,   covering,   among  other  things,   operational  matters,   initial
construction, and future expansions.

  Mall tenants usually pay rent comprised of several elements. The first element
is a fixed base, or "minimum", rent,  often subject to increases  according to a
schedule agreed upon at the time of lease inception. In addition, this base rent
is often  supplemented by increases based upon inflation,  often tied to changes
in the Consumer Price Index.  Finally,  tenants  generally are required to pay a
percentage  of their sales in addition to these other  elements of rent,  to the
extent sales of the tenant exceed certain negotiated levels.

  Both anchors and mall tenants generally  contribute funds to pay for upkeep of
common areas,  property  taxes,  advertising,  and other  expenditures  (such as
security, utilities, and cleaning) that are related to the day-to-day operations
of the shopping center.

  As lease terms  expire,  shopping  center owners may have the  opportunity  to
change base rents,  to revise lease terms and conditions,  to relocate  existing
tenants,  to reconfigure or expand tenant spaces, and to introduce new retailers
and retail concepts to the shopping center.

  The regional  shopping  center  industry in the United States has  significant
barriers to entry. In addition,  new regional  shopping center  developments are
inhibited by several factors.  Such barriers and inhibiting  factors include the
following:

  o most major markets are already served by regional retail centers;

  o land for suitable  sites has become more  difficult  and more  expensive to
    assemble;

  o due to growing environmental concerns and demands from local governments and
    citizen groups, zoning and environmental  approvals have become increasingly
    time consuming, expensive, and difficult to obtain;

  o many of the strong national  specialty  retailers  needed to occupy Mall GLA
    are already well represented in existing regional shopping centers; and

  o department  stores are generally  not willing to deal with  non-established
    developers.

    While  consumers make  purchases  through a variety of retail  formats,  TRG
  believes that the Taubman Shopping  Centers,  and other dominant  regional and
  super-regional  shopping  centers,  will  continue  in  the  future  to  be an
  attractive  shopping  destination  for  significant  numbers of consumers.  By
  providing  a  convenient  shopping  environment  offering  access  to a  broad
  selection of retailers, services, and food establishments,  these centers have
  generated high levels of customer  traffic and, as a consequence,  high tenant
  sales.  The  ability  of  tenants  to achieve  higher  sales  levels  than are
  generally  achieved  at  smaller  centers  or  stand-alone  locations  in turn
  supports higher levels of rent than at less productive locations.


                                        2

<PAGE>



Business of TRG

  TRG is engaged in the ownership, operation,  management, leasing, acquisition,
development,  redevelopment,  expansion,  financing, and refinancing of regional
shopping centers and interests therein.

  The Taubman Shopping Centers:

  o are strategically  located in major metropolitan  areas, many in communities
    that are among the most  affluent in the country,  including  New York City,
    Chicago, Los Angeles, San Francisco, Detroit, Phoenix, and Washington, D.C.;

  o range in size between 438,000 and 2.3 million square feet of GLA and between
    133,000  and  971,000  square  feet of Mall GLA.  The  smallest  Center  has
    approximately 50 stores,  and the largest has  approximately  250 stores. Of
    the 21 Centers, 18 are super-regional shopping centers;

  o have  approximately  2,900  stores  operated  by  its  mall  tenants  under
    approximately 1,000 trade names;

  o have 77 anchors, operating under 18 trade names;

  o lease   approximately  79%  of  Mall  GLA  to  national  chains,   including
    subsidiaries  or  divisions of The Limited (The  Limited,  Limited  Express,
    Victoria's  Secret,  and others),  The Gap (The Gap,  Banana  Republic,  and
    others), and Woolworth Corporation  (Footlocker,  Kinney Shoes, and others);
    and

  o are among the most productive  (measured by mall tenants' average per square
    foot  sales) in the United  States.  In 1996,  mall  tenants in the  Taubman
    Shopping  Centers  portfolio  as of December 31, 1996 had average per square
    foot sales of $365, which is substantially  greater than the average for all
    regional shopping centers.

  The most  important  factor  affecting  the revenues  generated by the Taubman
Shopping  Centers is leasing to mall tenants  (primarily  specialty  retailers),
which represents over 90% of revenues.  Anchors account for  approximately 5% of
revenues  because many own their stores and, in general,  those that lease their
stores do so at rates substantially lower than those in effect for mall tenants.

  TRG's  ownership  is  concentrated  in large and  highly  productive  regional
shopping  centers.  Of its 21 Centers,  15 had annual rent rolls in 1996 of over
$10 million and 17 had  sales-per-square-foot  in excess of $300.  TRG  believes
that this level of productivity in the Taubman Shopping Centers is indicative of
their strong competitive  position and is, in significant part,  attributable to
TRG's business strategy and philosophy. TRG believes that large shopping centers
(including  regional and  especially  super-regional  shopping  centers) are the
least  susceptible to direct  competition  because (among other reasons) anchors
and large specialty retail stores do not find it economically attractive to open
additional stores in the immediate  vicinity of an existing location for fear of
competing  with  themselves.  In addition to the advantage of size, TRG believes
that the  Centers'  success can be  attributed  in part to their other  physical
characteristics, such as design, layout, and amenities.


                                        3

<PAGE>



Business Strategy And Philosophy

  TRG believes that the regional  shopping  center business is not simply a real
estate  development  business,  but  rather  an  operating  business  in which a
retailing  approach  to the  on-going  management  and  leasing  of the  Taubman
Shopping Centers is essential. Thus TRG:

  o offers a large,  diverse  selection of retail  stores in each Center to give
    customers a broad selection of consumer goods and variety of price ranges;

  o endeavors to increase  overall mall  tenants'  sales,  and thereby  increase
    achievable rents, by leasing space to a constantly  changing mix of tenants;
    and

  o seeks to anticipate trends in the retailing  industry and emphasizes ongoing
    introductions  of new retail concepts into the Centers.  Due in part to this
    strategy,  a number of successful retail trade names have opened their first
    mall stores in the Taubman Shopping Centers. TRG believes that its execution
    of this  leasing  strategy  is unique in the  industry  and is an  important
    element in building and  maintaining  customer  loyalty and increasing  mall
    productivity.


  The Taubman  Shopping  Centers  compete for retail consumer  spending  through
diverse,  in-depth  presentations  of  predominantly  fashion  merchandise in an
environment  intended  to  facilitate  customer  shopping.  While  some  Taubman
Shopping Centers include stores that target high-end,  upscale  customers,  each
Center  is  individually  merchandised  in  light  of  the  demographics  of its
potential customers within convenient driving distance.

  TRG's leasing  strategy  involves  assembling a diverse mix of mall tenants in
each of the  Taubman  Shopping  Centers in order to attract  customers,  thereby
generating  higher  sales by mall  tenants.  High sales by mall tenants make the
Taubman Shopping Centers attractive to prospective  tenants,  thereby increasing
the rental rates that prospective  tenants are willing to pay. TRG implements an
active leasing strategy to increase the Taubman Shopping  Centers'  productivity
and to set minimum rents at higher  levels.  Elements of this  strategy  include
terminating leases of under-performing  tenants,  renegotiating existing leases,
and not leasing space to  prospective  tenants that (though viable or attractive
in certain ways) would not enhance a Taubman Shopping Center's retail mix.

  TRG's  strategy  is  carried  out by the  Manager,  which  is  more  than  99%
beneficially  owned  by TRG and  which  has been  engaged  to  provide  property
management  and leasing  services for each Taubman  Shopping  Center  (including
wholly and  partially  owned  Centers)  and to provide  corporate,  development,
administrative,  and  acquisition  services  for  TRG  and  TCO.  The  Manager's
predecessor was a leading  developer and manager in the regional shopping center
business for more than 25 years.

Potential For Growth

  TRG's  strategy  is to  increase  the  amount of cash  flow.  In  addition  to
increased  cash flow through the growth in mall tenant  sales and market  rental
rates, TRG believes that its cash flow will increase over time due to expansions
of the Centers, acquisitions, and development of new centers.


                                        4

<PAGE>



Expansions of the Taubman Shopping Centers
------------------------------------------

  Most of the  Taubman  Shopping  Centers  have  been  designed  to  accommodate
expansions.  Expansion  projects can be as  significant  as new shopping  center
construction  in terms of scope and cost,  requiring  governmental  and existing
anchor store approvals,  design and engineering activities,  including rerouting
utilities,  providing additional parking areas or decking,  acquiring additional
land, and relocating anchors and mall tenants (all of which must take place with
a minimum of  disruption  to  existing  tenants  and  customers).  In 1996,  for
example,  Sears became the fourth anchor at Marley  Station and the fifth anchor
at Stoneridge.  Additionally,  construction is in process on expansions of three
of the Taubman Shopping Centers:

  o Westfarms -- the addition of  approximately  135,000 square feet of Mall GLA
    and Nordstrom as an anchor will open in the summer of 1997;

  o Biltmore  Fashion  Park --  over  30,000  square  feet  of new  Mall  GLA is
    scheduled to open beginning in the spring of 1997; and

  o Cherry Creek -- a newly  constructed  Lord & Taylor will open in the fall of
    1997.  Additionally,  a 132,000  square foot  expansion of the Mall GLA will
    open in the fall of 1998.

  Consolidation of department stores has also strengthened  TRG's portfolio,  as
retailers  continue to be  attracted  to TRG's  dominant  and highly  productive
locations.  Recent department store conversions  include Macy's at both Biltmore
Fashion  Park and Paseo  Nuevo,  and Lord & Taylor at both  Lakeforest  and Fair
Oaks. Also, Bloomingdale's at Beverly Center opened in March of 1997. When these
projects are  completed,  13 of TRG's 21  properties  will have  benefited  from
expansions or anchor conversions since 1995.

Acquisitions
------------

  In 1996, TRG completed three acquisitions  totaling over $150 million. TRG has
completed approximately $400 million of acquisitions in the four years since TCO
has been public.

  In  December  1996,  TRG  acquired  La Cumbre  Plaza (La  Cumbre),  a regional
shopping  center located 3.5 miles north of downtown Santa Barbara,  California.
The 478,000 square foot open-air Center is anchored by Robinsons-May  and Sears.
In June 1996, TRG acquired Paseo Nuevo,  a regional  shopping  center located in
downtown Santa Barbara.  The 438,000 square foot open-air  Center is anchored by
Macy's and Nordstrom.  Together,  La Cumbre and Paseo Nuevo dominate an affluent
market that stretches 60 miles along the California coastline.

  Additionally,  in July 1996, TRG completed  transactions  that resulted in the
acquisition  of the 75% interest in Fairlane  Town Center  previously  held by a
Joint Venture Partner.  In connection with the transaction,  TRG issued units of
partnership interest to the former Joint Venture Partner.

  See "Management's  Discussion and Analysis of Financial  Condition and Results
of Operations -- Results of Operations -- Acquisitions and Disposition" and Note
3 to the  Consolidated  Financial  Statements  of TRG for further  discussion of
these acquisitions.

  TRG  believes  it will  have  additional  opportunities  to  acquire  regional
shopping  centers,  or interests  therein,  and will have certain  advantages in
doing so.

  o First, the management  expertise of the Manager will enhance the leasing and
    operation of newly acquired  regional  shopping  centers.  If  opportunities
    exist to expand,  remodel, or re-merchandise the center through new leasing,
    the  Manager's  expertise  will assist TRG in making an informed  and timely
    evaluation  of  the  economic  consequences  of  such  activities  prior  to
    acquisition, as well as facilitate implementation of such activities.


                                        5

<PAGE>



  o Second,  a center  can be  acquired  for any  combination  of cash or equity
    interests in TRG or (subject to certain  limitations) TCO, possibly creating
    the  opportunity for  tax-advantaged  transactions  for the seller,  thereby
    reducing  the  price  that  might  otherwise  have to be paid in an all cash
    transaction  or making an  opportunity  available  that would not  otherwise
    exist. TRG is able to offer partnership  interests in itself in exchange for
    shopping center  interests,  allowing  sellers to diversify their interests,
    attain  liquidity not otherwise  available,  possibly defer taxes that might
    otherwise be due if the  interests  were instead sold for cash,  maintain an
    investment in the regional  shopping center  business,  and resolve concerns
    sellers  otherwise may have regarding future management of their properties.
    For  instance,  Biltmore  Fashion  Park's  selling  group  included  private
    investors who found it tax efficient to accept TRG partnership units as part
    of the consideration when TRG acquired the Center in 1994.

Development of New Centers
--------------------------

  TRG believes that it has attractive  development  opportunities and intends to
continue to pursue an active program of regional  shopping  center  development.
TRG  believes  that  it has the  expertise,  through  the  Manager,  to  develop
economically  attractive regional shopping centers through intensive analysis of
local  retail  opportunities,  and that its  expertise  in this  regard  is more
important than  macroeconomic  conditions in determining the scope and number of
opportunities available to it.

  Development  of new Taubman  Shopping  Centers is expected to be an  important
source of growth in revenues and operating income before interest,  depreciation
and amortization.  In 1996, two projects moved forward from the  pre-development
phase. Construction began on Arizona Mills in Tempe, Arizona (20 miles southwest
of downtown Phoenix) with the August 1996  groundbreaking.  Arizona Mills, a 1.2
million square foot value-oriented mall, will open in November 1997. The project
is a  joint  venture  in  which  TRG  has  a  37%  interest.  In  January  1996,
groundbreaking  ceremonies  were held for MacArthur  Center,  a new center being
developed  by TRG in Norfolk,  Virginia,  which is expected to total 1.1 million
square feet. The  three-level  center,  scheduled to open in the spring of 1999,
will  initially  be  anchored  by  Nordstrom  and  Virginia's   first  Dillard's
Department  Store.  The  project  is a  joint  venture  in  which  TRG has a 70%
interest.  Construction also continued on The Mall at Tuttle Crossing (northwest
Columbus,  Ohio),  which will open in July 1997.  Sears,  JCPenney,  Lazarus and
Marshall Field's will anchor this new 980,000 square foot center.

  TRG's  policies with respect to  development  activities are designed to limit
the risks otherwise associated with development.  For instance, TRG entered into
an agreement to lease  Memorial City Mall, a center  adjacent to one of the most
affluent  residential  areas in  Houston,  Texas,  while  TRG  investigates  the
redevelopment  opportunities  of the center (see  "Management's  Discussion  and
Analysis of Financial  Condition  and Results of  Operations  --  Liquidity  and
Capital   Resources  --  Capital   Spending"  for  further   discussion  of  the
transaction).  Also,  TRG generally does not intend to acquire land early in the
development  process, but will instead generally acquire options on land or form
partnerships with landholders holding potentially  attractive development sites,
typically exercising options only once it is prepared to begin construction.  In
addition, TRG does not intend to begin construction until a sufficient number of
anchor  stores have agreed to operate in the shopping  center,  such that TRG is
confident  that the  projected  sales and rents from Mall GLA are  sufficient to
earn a return on  invested  capital in excess of TRG's cost of  capital.  Having
historically followed these two principles, TRG's experience indicates that less
than 20% of the costs of the  development of a regional  shopping center will be
incurred prior to the construction  period;  however,  no assurance can be given
that TRG will continue to be able to so minimize pre-construction costs.

  While TRG anticipates that it will continue to evaluate  development  projects
using criteria,  including  financial  criteria for rates of return,  similar to
those  employed in the past,  no  assurances  can be given that the adherence to
these policies will produce comparable  results in the future. In addition,  the
costs  of  shopping  center  development  opportunities  that are  explored  but
ultimately  abandoned  will,  to some  extent,  diminish  the overall  return on
development projects.


                                        6

<PAGE>



Major Tenants

  The combined  operations of The Limited,  Inc. accounted for approximately 11%
of leased Mall GLA as of December 31, 1996 and for approximately 10% of the 1996
base rent.  The largest of these,  in terms of square  footage and rent,  is The
Limited, which accounted for approximately 2.5% of leased Mall GLA and 1996 base
rent. No other single retail  company  accounted for more than 4% of leased Mall
GLA or more than 5% of the 1996 base rent.

Lease Expirations

  The following table shows lease expirations (based on information available as
of December 31, 1996) for the next ten years for the Taubman Shopping Centers in
operation at that date:

<TABLE>
<CAPTION>
                                                                                          Percent of
                                                     Annualized Base  Annualized Base    Total Leased
                                      Approximate        Rent Under      Rent Under      Square Footage
Lease Expiration  Number of Leases    Leased Area     Expiring Leases  Expiring Leases   Represented by
      Year            Expiring     in Square Footage   (in thousands)  Per Square Foot  Expiring Leases
      ----            --------     -----------------   --------------  ---------------  ---------------
<S>   <C>               <C>             <C>               <C>               <C>              <C>
      1997 (1)           136            320,218           $ 10,452         $ 32.64            3.9%
      1998               288            608,078             26,263           43.19            7.4%
      1999               288            704,553             28,630           40.64            8.6%
      2000               370            894,452             34,526           38.60           11.0%
      2001               335            851,364             33,472           39.32           10.4%
      2002               314            869,814             34,030           39.12           10.7%
      2003               306            988,516             37,261           37.69           12.1%
      2004               258            899,900             36,476           40.53           11.0%
      2005               234            897,336             33,698           37.55           11.0%
      2006               117            454,290             17,989           39.60            5.6%

(1)  Excludes leases that expire in 1997 for which renewal leases or leases with
     replacement tenants have been executed as of December 31, 1996.
</TABLE>

  TRG believes that the  information in the table is not indicative of what will
occur in the future because of several  factors,  but principally  because TRG's
leasing  policies  and  practices  create a  significant  level  of early  lease
terminations at the Taubman Shopping Centers. For example, the average remaining
term of the leases  that were  terminated  during  the  period  1991 to 1996 was
approximately  1.9 years. The average term of leases signed during 1995 and 1996
was approximately 7.4 years.

  In addition,  mall tenants at Taubman Shopping Centers may seek the protection
of the bankruptcy  laws,  which could result in the termination of such tenants'
leases and thus cause a  reduction  in the cash flow  generated  by the  Taubman
Shopping Centers. Prior to 1992, such bankruptcies had not affected more than 3%
of leases in the Taubman  Shopping  Centers in any one calendar  year.  In 1996,
approximately  2.8% of leases were so affected compared to 3.2% in 1995, 3.1% in
1994, 4.0% in 1993 and 4.5% in 1992. Since 1991, the annual provision for losses
on accounts receivable has been less than 2% of TRG's annual revenues.

Occupancy

  Average Mall GLA occupancy rates of the Taubman  Shopping Centers for the last
five years are as follows:

                 Year                  Average Mall GLA Occupancy
                 ----                  --------------------------
                 1992                             88.1%
                 1993                             86.5%
                 1994                             86.6%
                 1995                             88.0%
                 1996                             87.4%

  Historically,  average  annual  occupancy for TRG as a whole has been within a
narrow band. In the last ten years,  average annual occupancy has ranged between
86.5% and 88.8%.


                                        7

<PAGE>



Rental Rates

  As leases have expired in the Taubman Shopping Centers, TRG has generally been
able to rent the available space, either to the existing tenant or a new tenant,
at rental rates that are higher than those of the expired leases. In a period of
increasing sales, rents on new leases will tend to rise as tenants' expectations
of future growth become more optimistic. In periods of declining sales, rents on
new  leases  will grow more  slowly or will  decline  for the  opposite  reason.
However,  Center revenues nevertheless increase as older leases roll over or are
terminated early and replaced with new leases negotiated at current rental rates
that are  usually  higher  than the  average  rates  for  existing  leases.  The
following  table  contains  certain  information  regarding per square foot base
rent,  excluding renewals,  at Taubman Shopping Centers that have been owned and
open for five years.

                                          Store         Store      Difference
                              All       Closings      Openings       Between
                              Mall       During        During      Opening and
                             Tenants      Year          Year      Closing Rents
                            --------   -----------   -----------   ------------
                             Average     Average       Average       Average
                              Base     Annualized    Annualized    Annualized
                              Rent      Base Rent     Base Rent     Base Rent
                            --------   -----------   -----------   ------------
1992 (1)...................  $30.61       $27.91        $38.16       $10.25
1993 (1)...................  $32.64       $29.56        $35.86       $ 6.30
1994 (2)...................  $34.72       $30.46        $41.02       $10.56
1995 (3)...................  $36.33       $32.96        $41.27       $ 8.31
1996 (3)...................  $37.90       $33.39        $42.39       $ 9.00

(1)  Includes 16 centers owned and open prior to January 1, 1989.
(2)  Includes 17 centers owned and open prior to January 1, 1990.
(3)  Includes 18 centers owned and open prior to January 1, 1991.

  TRG anticipates  that the spread between opening and closing rents will narrow
in 1997.  This  statistic is difficult to predict in part because  TRG's leasing
policies  and  practices  may result in early  lease  terminations  with  actual
average  closing  rents which may vary from the average  rent per square foot of
scheduled lease expirations. In addition, the opening or closing of large tenant
spaces,  which  generally  pay a lower rent per square foot,  can  significantly
change the spread in a given year. The spread between  opening and closing store
rents narrowed in 1993,  principally  due to the timing of openings and closings
of certain large tenants.


                                        8

<PAGE>



Anchors

  The following table summarizes  certain  information  regarding the anchors at
the Taubman Shopping Centers.

                          Number of         1996 GLA
  Name                  Anchor Stores      (Thousands)      % of GLA
  ----                  -------------      -----------      --------
Sears                        13(1)            2,788           12.0%

Federated
    Macy's                   11               1,926
    Lazarus                   1(1)              480
    Bloomingdale's            2                 379
                            ---               -----
      Total                  14               2,785           12.0%

JCPenney                     13(1)            2,423           10.5%

May Company
    Lord & Taylor             8               1,016
    Hecht's                   3                 525
    Filene's                  2                 379
    Filene's Men's Store/
       Furniture Gallery      1                  80
    Foley's                   1                 178
    Robinsons-May             1                 150
                            ---               -----
      Total                  16               2,328           10.0%

Dayton Hudson
    Hudson's                  5               1,040
    Marshall Field's          2(1)              508
                            ---               -----
      Total                   7               1,548            6.7%

Nordstrom                     4(1)              702            3.0%

Saks                          5                 450            1.9%

Jacobson's                    2                 221            1.0%

Neiman Marcus                 2                 216            0.9%

Crowley's                     1                 115            0.5%
                            ---              ------           ----

    Total                    77              13,576           58.6%
                            ===              ======           ====

------------------------


(1) One or more additional  stores will be added in connection with an expansion
    or development of a new Center.  See "Business -- Business of TRG --
    Potential for Growth -- Expansions of the Taubman Shopping Centers" and " --
    Development of New Centers."


                                        9

<PAGE>



  Although  during the past eight years  department  store  companies  owning 18
anchors at 11 Centers have filed for bankruptcy,  none of the anchors at Taubman
Shopping Centers are now owned by companies in bankruptcy.  Of those 18 anchors,
12  are  now  owned  and  operated  by   Federated   Department   Stores,   Inc.
("Federated").  Federated  closed  the  Emporium  at  Hilltop  in  1996.  TRG is
considering alternate uses of the anchor space. Two other anchor stores formerly
owned by Woodward & Lothrop  Incorporated  were  acquired by the May  Department
Stores Company ("May Company"). After remodeling,  these stores, which closed in
November  1995,  reopened in 1996 as Lord & Taylor  stores (an  existing  Lord &
Taylor  store at one of these  Centers has  closed,  and May Company and TRG are
considering  various  options  for the  store).  The  former  sites of two other
anchors, B. Altman and Bonwit Teller, are part of the completed expansion of The
Mall at Short Hills, which added  approximately  100,000 square feet of Mall GLA
and three anchors:  Nordstrom;  Neiman Marcus; and Saks Fifth Avenue. The former
site of another  anchor  (Sage-Allen  at Westfarms)  opened as a Filene's  Men's
Store/Furniture Gallery in 1995.

Environmental Matters

  All of the Taubman  Shopping  Centers  presently  owned by TRG (not  including
option  interests in the Development  Projects or any of the real estate managed
by the  Manager  but not  included  in TRG's  portfolio)  have been  subject  to
environmental   assessments.   TRG  and  the   Manager  are  not  aware  of  any
environmental  liability  relating to the Taubman  Shopping Centers or any other
property in which they have or had an interest (whether as an owner or operator)
that TRG  believes  would  have a  material  adverse  effect on TRG's  business,
assets, or results of operations.  No assurances can be given, however, that all
environmental liabilities have been identified or that no prior owner, operator,
or current occupant has created an  environmental  condition not known to TRG or
the  Manager.  Moreover,  no  assurances  can be  given  that (i)  future  laws,
ordinances,  or regulations will not impose any material environmental liability
or that (ii) the current environmental condition of the Taubman Shopping Centers
will not be affected by tenants and occupants of the Taubman  Shopping  Centers,
by the condition of properties in the vicinity of the Taubman  Shopping  Centers
(such as the  presence  of  underground  storage  tanks),  or by  third  parties
unrelated to TRG or the Manager.

  With respect to the matters described below, while there can be no assurances,
TRG believes that such matters will not have a material  adverse effect on TRG's
business, assets, or results of operations.

  Hilltop  is  located in a region in  Richmond,  California  that has been used
extensively to store various petroleum  products.  Three petroleum storage tanks
were previously  located on Hilltop's site. In connection with the  construction
of Hilltop,  numerous  borings and drillings were conducted,  and no evidence of
petroleum  discharges  was  identified.  In  addition,   extensive  grading  and
excavation were performed  during such  construction,  and no material  residual
contamination  from  the  storage  tanks  was  noted.  TRG is not  aware  of any
environmental  liability  associated  with the storage  tanks that were formerly
located on the Hilltop site.

  Beverly  Center is located over an oil field and several  abandoned oil wells,
and is adjacent to an active oil production  facility that operates numerous oil
and gas wells.  In the Los  Angeles  basin,  where  Beverly  Center is  located,
pockets of methane gas may be found in oil fields;  however,  elevated levels of
methane have not been detected at Beverly Center.


                                       10

<PAGE>



  Cherry  Creek is situated  on land that was used as a landfill  prior to 1950.
Because  of the past use of the site as a  landfill,  the site is  listed on the
United  States   Environmental   Protection   Agency's   ("EPA")   Comprehensive
Environmental  Response,  Compensation  and Liability  Information  System list.
Various  soil and  groundwater  samples  have been  taken on and near the Cherry
Creek site since 1979. In addition, in 1991 and 1992, as part of a review of all
former  landfill sites in the Denver area,  including the Cherry Creek site, the
EPA and the Colorado  Department  of Health  completed a series of  groundwater,
soil,  and surface  water tests around the border of the Cherry Creek  property.
Although a single sample taken in 1988 found  elevated  levels of cadmium in the
groundwater at Cherry Creek, and groundwater  samples taken in connection with a
former gasoline station on the property indicate elevated levels of benzene,  no
other samples taken have  indicated  any levels of  contamination  that exceeded
applicable  environmental  standards.  In  addition,  the results of the samples
taken by the EPA and the Colorado  Department of Health  indicate no evidence of
contamination.

  Paseo  Nuevo is  located  in an area of  known  groundwater  contamination  by
tetrachloroethylene  ("PCE"). The groundwater under and around the site has been
monitored for six years before, during, and after construction of the center. No
on-site sources of PCE were identified during  construction.  The Regional Water
Quality Control Board has given approval to discontinue the monitoring  program,
because the PCE levels remained relatively constant over the six-year period and
do not exceed the state standard for PCE in drinking water.

  There  are  asbestos  containing  materials  ("ACMs")  at most of the  Taubman
Shopping  Centers,  primarily  in the form of floor  tiles,  roof  coatings  and
mastics.  The floor  tiles,  roof  coatings  and mastics are  generally  in good
condition.  Fire-proofing material containing asbestos is present at some of the
Taubman  Shopping  Centers in limited  concentrations  or in limited areas.  The
Manager has developed and is implementing an operations and maintenance  program
that details  operating  procedures with respect to ACMs prior to any renovation
and that requires  periodic  inspection  for any change in condition of existing
ACMs.

Personnel

  TRG  has  engaged   the  Manager  to  provide  all  real  estate   management,
acquisition, development, and administrative services required by (or of) TRG or
any of its properties.

  As of  December  31,  1996,  the  Manager  had 410  full-time  employees.  The
following  table  provides a breakdown of employees by  operational  areas as of
December 31, 1996:

                                                   Number Of Employees
                                                   -------------------

           Property Management...............             173
           Leasing...........................              63
           Development.......................              40
           Financial Services................              72
           Other ............................              62
                                                         ----
                 Total.......................             410
                                                         ====

The Manager considers its relations with its employees to be good.

Item 2.  PROPERTIES

Taubman Shopping Centers

Ownership

  The following table sets forth certain  information  about each of the Taubman
Shopping Centers. The table is in alphabetical order. The Joint Venture partners
have  ongoing  rights with regard to the  disposition  of TRG's  interest in the
Joint Ventures, as well as the approval of major matters.


                                       11

<PAGE>

<TABLE>
<CAPTION>
                                               Sq. Ft of GLA/                                       Percent of Mall
                                                  Mall GLA        Year Opened/  TRG's % Ownership    GLA Occupied    1996 Rent (2)
     Center (1)               Anchors           as of 12/31/96      Expanded     as of 12/31/96     as of 12/31/96  (in Thousands)
     ----------               -------         ------------------  ------------   -----------------  ---------------  --------------
<S>                      <C>                         <C>           <C>                <C>                 <C>           <C>
Beverly Center           Bloomingdale's,             903,000/          1982            70%(4)             91%           $24,510
Los Angeles, CA          Macy's (3)                  595,000

Biltmore Fashion Park    Macy's, Saks                518,000/       1963/1992(6)      100%                97%             9,505
Phoenix, AZ              Fifth Avenue                279,000 (5)

Briarwood                Hudson's, JCPenney,         990,000/       1973/1980         100%                94%            12,072
Ann Arbor, MI            Jacobson's, Sears           369,000

Cherry Creek             Foley's, Lord & Taylor,     884,000/          1990            50%                97%            18,224
Denver, CO               Neiman Marcus, Saks         430,000 (7)(8)
                         Fifth Avenue

Columbus City Center     Jacobson's, Lazarus,      1,210,000/          1989           100%                96%            16,264
Columbus, OH             Marshall Field's            416,000

Fair Oaks                Hecht's, JCPenney,        1,378,000/       1980/1987/         50%(9)             78%            18,572
Fairfax, VA              Lord & Taylor, Sears        562,000          1988
(Washington, D.C.
 Metropolitan Area)

Fairlane Town Center     Hudson's, JCPenney,       1,519,000/       1976/1978/        100%                80%            14,738
Dearborn, MI             Lord & Taylor, Saks         629,000          1980
(Detroit                 Fifth Avenue, Sears
 Metropolitan Area)

Hilltop                  JCPenney, Macy's, Sears   1,116,000/       1976/1991         100%                80%             6,836
Richmond, CA                                         387,000
(San Francisco
 Metropolitan Area)

La Cumbre Plaza          Robinsons-May, Sears        478,000/       1967/1989(6)      100%                98%                  (6)
Santa Barbara, CA                                    178,000

Lakeforest               Hecht's, JCPenney,        1,109,000/       1978/1992         100%                84%            13,244
Gaithersburg, MD         Lord & Taylor, Sears        439,000
(Washington, D.C.
 Metropolitan Area)

----------------------------

(1)  The table includes only centers in operation at December 31, 1996. Excluded
     from this table are The Mall at Tuttle Crossing, which will open in July
     1997, and Arizona Mills, which will open in November 1997. Also excluded is
     Memorial City Mall, a development project. Centers are owned in fee other
     than: Beverly Center, Cherry Creek, Columbus City Center, La Cumbre Plaza
     and Paseo Nuevo, which are held under ground leases  expiring  between 2028
     and 2083 (exclusive of three ten-year  renewal options at Columbus City
     Center), and a portion of the parking area at Hilltop (the ground lease of
     which  expires in 2073).
(2)  Includes  minimum and percentage rent for the year ended December 31, 1996.
     Excludes rent from certain peripheral properties.
(3)  Bloomingdale's,  formerly The  Broadway,  opened in March  1997.
(4)  TRG has an option to acquire the remaining 30%.  The results of Beverly
     Center are  consolidated  in TRG's  financial  statements.
(5)  Construction is in process to utilize over 30,000 square feet of a former
     anchor space for new mall  tenants.  The stores are expected to open
     beginning in the spring of 1997.
(6)  Biltmore Fashion Park was acquired in December  1994.  La Cumbre  Plaza was
     acquired in December  1996.
(7)  GLA excludes  approximately 166,000 square feet for the renovated buildings
     on adjacent  peripheral  land.
(8)  A newly constructed Lord & Taylor store will open in the fall of 1997, and
     an expansion of the Center of approximately 132,000 square feet of Mall GLA
     will open in the fall of 1998.
(9)  Includes a nominal interest of substantially less than 1% held by the
     Company.
</TABLE>

                                       12

<PAGE>

<TABLE>
<CAPTION>
                                                Sq. Ft of GLA/                                      Percent of Mall
                                                   Mall GLA       Year Opened/  TRG's % Ownership    GLA Occupied    1996 Rent (2)
     Center (1)              Anchors            as of 12/31/96      Expanded     as of 12/31/96     as of 12/31/96  (in Thousands)
     ----------              -------          ------------------  ------------   -----------------  ---------------  --------------
<S>                      <C>                      <C>              <C>               <C>                 <C>           <C>
Lakeside                 Crowley's, Hudson's,      1,489,000/       1976/1980          50%                86%           $16,422
Sterling Heights, MI     JCPenney, Lord &            528,000
(Detroit                 Taylor, Sears
 Metropolitan Area)

Marley Station           Hecht's, JCPenney,        1,088,000/       1987/1994/        100%                79%             9,780
Anne Arundel County, MD  Macy's, Sears               375,000          1996
(Washington, D.C.
 Metropolitan Area)

Meadowood Mall           JCPenney, Macy's            898,000/       1979/1995         100%                90%             9,362
Reno, NV                 (two locations), Sears      321,000

Paseo Nuevo              Macy's, Nordstrom           438,000/         1990(11)        100%                83%             2,246(11)
Santa Barbara, CA                                    133,000(10)

Stamford Town Center     Filene's, Macy's,           875,000/         1982             50%(12)            90%            16,429
Stamford, CT             Saks Fifth Avenue           382,000

Stoneridge               JCPenney, Macy's          1,293,000/       1980/1990/        100%                90%            14,653
Pleasanton, CA           (two locations),            451,000          1996
(San Francisco           Nordstrom, Sears
 Metropolitan Area)

The Mall at Short Hills  Bloomingdale's, Macy's,   1,373,000/       1980/1994/        100%                94%            29,770
Short Hills, NJ          Neiman  Marcus,             551,000          1995
                         Nordstrom, Saks Fifth
                         Avenue

Twelve Oaks Mall         Hudson's, JCPenney,       1,224,000/       1977/1980          50%                95%            18,587
Novi, MI                 Lord & Taylor, Sears        486,000
(Detroit
 Metropolitan Area)

Westfarms                Filene's, Filene's          992,000/         1974             79%                86%            15,181
West Hartford, CT        Men's Store/Furniture       397,000(13)
                         Gallery, JCPenney,
                         Lord & Taylor(13)

Woodfield                JCPenney, Lord & Taylor,  2,296,000/       1971/1972/         50%                85%            34,274
Schaumburg, IL           Marshall Field's,           971,000          1995
(Chicago                 Nordstrom, Sears
 Metropolitan Area)

Woodland                 Hudson's, JCPenney,       1,096,000/      1968/1974/          50%                89%            12,877
Grand Rapids, MI         Sears                       371,000       1984/1989
                                                   ---------


                       Total GLA/Total Mall GLA:  23,167,000/
                                                   9,250,000
                   Average GLA/Average Mall GLA:   1,103,000/
                                                     440,000
----------------------------

(10)  GLA excludes approximately 23,000 square feet of second level commercial
      office and performing arts area.
(11)  Paseo Nuevo was acquired in June 1996.
(12)  Includes a nominal interest of substantially less than 1% held by the
      Company.
(13)  An expansion of the Center of approximately  135,000 square feet of Mall
      GLA and the addition of Nordstrom as an anchor will open in the summer of
      1997.
</TABLE>

                                       13

<PAGE>



Mortgage Debt

  The  following  table sets forth certain  information  regarding the mortgages
encumbering the Taubman  Shopping  Centers as of December 31, 1996. All mortgage
debt in the table below is nonrecourse to TRG. Biltmore,  Hilltop and Stoneridge
are also  encumbered by assessment  bonds totaling  approximately  $5.5 million,
which are not included in the table.

<TABLE>
<CAPTION>
                             Weighted     Principal
                              Average      Balance       Annual Debt                 Balance Due      Earliest
Centers Consolidated in      Interest   as of 12/31/96     Service       Maturity    on Maturity     Prepayment
TRG's Financial Statements     Rate        (000's)         (000's)         Date        (000's)          Date
--------------------------     ----        -------         -------         ----        -------          ----
<S>                          <C>          <C>           <C>              <C>          <C>        <C>
Beverly Center                 8.36%      $146,000      Interest Only    07/15/04     $146,000   30 Days' Notice(1)
Columbus City Center           7.00%         8,175                725    08/01/19            0       At Any Time(2)
Stoneridge                   Floating(3)    44,897(3)   Interest Only           (3)     45,000                  (3)

Centers Owned by Joint
Ventures/TRG's % Ownership
--------------------------

Cherry Creek (50%)           Floating(4)   130,000      Interest Only    08/01/98      130,000    4 Days' Notice(2)
Fair Oaks (50%)                9.00%        39,865              4,304    12/01/16            0          12/01/97(5)
Lakeside (50%)                 6.47%        88,000      Interest Only    12/15/00       88,000   30 Days' Notice(1)
Stamford Town Center (50%)    11.69%(6)     56,291              7,207    12/01/17            0          01/01/00(7)
Twelve Oaks Mall (50%)       Floating(8)    49,924      Interest Only    10/15/01       50,000   30 Days' Notice(2)
Westfarms (79%)                7.85%       100,000      Interest Only    07/01/02      100,000          07/01/98(9)
                             Floating(10)   19,729(10)  Interest Only    07/01/02       19,729    4 Days' Notice(2)
Woodfield (50%)              Floating(11)  172,000      Interest Only    10/13/98      172,000   30 Days' Notice(2)
Woodland (50%)                 8.20%        66,000      Interest Only    05/15/04       66,000   30 Days' Notice(1)

------------------------

(1)   Debt may be prepaid with a yield maintenance prepayment penalty.
(2)   Prepayment can be made without penalty.
(3)   Commercial paper facility. The maximum availability under the facility is
      $75 million.  Commercial paper is generally sold with a 30 day maturity.
(4)   The rate is capped at 7.25% through January 1998 and from February 1998 to
      maturity at 9.1% including credit spread, based on one month LIBOR.
(5)   The mortgage will be prepayable on 12/01/97 (the earliest prepayment date)
      with a penalty of 5% of outstanding  principal.  This penalty declines  by
      one-half of 1% each year after the earliest prepayment date, reducing to a
      minimum prepayment penalty of 1%.
(6)   The lender  is  entitled to  contingent  interest  equal  to 20% of annual
      applicable receipts in excess of approximately $9.0 million. 
(7)   The mortgage has a prepayment penalty of 6%, declining by one-half of 1% 
      for each year after the earliest prepayment date, reducing to a minimum 
      penalty of 1%, plus an amount equal to ten times the greater of (i)
      contingent interest payable for the year immediately  preceding prepayment
      or (ii) the average amount of contingent interest for  the  three  years
      immediately prior to prepayment.
(8)   The rate is capped at 9.0% until maturity, including credit spread, based
      on one month LIBOR. 
(9)   If the loan is prepaid between 7/1/98 and 1/3/02 there is a yield 
      maintenance prepayment penalty.
(10)  The loan is a construction facility with a maximum availability of $55
      million.  The rate on the construction facility is capped at 9.6% until 
      July 1997, and thereafter until maturity at 9.95%, plus credit spread.
(11)  The interest rate on $93.5 million was swapped to maturity at an effective
      annual rate of 5.4%. The rate on the balance of the financing, which has 
      been capped at a maximum annual rate, including credit spread, of 6.5% to
      maturity by an interest  rate  agreement,  floats at a rate of three month
      LIBOR plus 0.5%.
</TABLE>

  For additional  information  regarding the Taubman  Shopping Centers and their
operation, see the responses to Item 1 of this report.

                                       14

<PAGE>



Item 3.  LEGAL PROCEEDINGS

  Neither TRG, the  Consolidated  Businesses,  nor any of the Joint  Ventures is
presently  involved in any material  litigation nor, to TRG's knowledge,  is any
material  litigation  threatened against TRG or any of their properties.  Except
for routine  litigation  involving present or former tenants of Taubman Shopping
Centers  (generally  eviction  or  collection  proceedings),  substantially  all
litigation is covered by TRG's and the Joint Ventures' liability insurance.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  None


                                     PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

  None


                                       15

<PAGE>

Item 6.  SELECTED FINANCIAL DATA

  The following  table sets forth selected  financial data for TRG and should be
read in  conjunction  with  the  financial  statements  and  notes  thereto  and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations included in this report.

<TABLE>
<CAPTION>
                                                                Year Ended December 31
                                               ----------------------------------------------------------
                                                  1992        1993        1994        1995        1996
                                                  ----        ----        ----        ----        ----
                                                       (In thousands of dollars, except as noted)
<S>                                            <C>         <C>         <C>         <C>         <C>
STATEMENT OF OPERATIONS DATA:
I.TRG
  Revenues:
    Minimum rents                               81,829      98,102     111,373     130,418     150,577
    Percentage rents                             4,712       4,323       3,788       5,617       6,073
    Expense recoveries                          48,881      60,497      68,075      75,293      85,502
    Other                                       19,458      14,185      13,898      17,590      20,577
                                               -------     -------     -------     -------     -------
    Total Revenues                             154,880     177,107     197,134     228,918     262,729
  Operating Costs:
    Recoverable and other operating             77,854      91,194     100,809     108,908     124,626
    Interest:
      GM Loan  (1)                              81,613
      Partner Loans interest income (1)        (73,233)
      Mortgage notes and other                  36,041      45,337      47,732      65,858      70,454
    Depreciation and amortization               21,317      25,403      27,653      32,393      35,770
                                               -------     -------     -------     -------     -------
    Total Operating Costs                      143,592     161,934     176,194     207,159     230,850
  Equity in income before extraordinary
    items of unconsolidated Joint Ventures      51,638      54,153      51,263      57,940      52,215
                                               -------     -------     -------     -------     -------
  Income before extraordinary items             62,926      69,326      72,203      79,699      84,094
  Extraordinary items (2)                                   (9,454)    (44,731)     16,627      (1,328)
                                               -------     -------     -------     -------     -------
  Net Income                                    62,926      59,872      27,472      96,326      82,766
                                               =======     =======     =======     =======     =======
  Income before extraordinary items per
    unit of partnership interest                             1,119       1,164       1,255       1,290
  Net income per unit of partnership interest                  966         443       1,516       1,270
  Weighted average number of units of
    partnership interest outstanding                        61,981      62,028      63,521      65,109
  Number of units of partnership interest
    outstanding at end of period                61,981      61,981      63,521      63,521      69,998
  Distributions paid to beneficiaries (3)      210,460     110,939     113,479     116,225     119,099

II. JOINT VENTURES
  Revenues:
    Minimum rents                              162,148     156,180     157,374     166,244     157,212
    Percentage rents                             6,806       5,980       4,808       3,629       3,951
    Expense recoveries                         103,742      99,006      96,711     101,455      95,244
    Other (4)                                    7,645       7,397       9,922      11,474       8,930
    Gain on disposition of Bellevue (2)(4)                                           8,342
                                               -------     -------     -------     -------     -------
    Total Revenues                             280,341     268,563     268,815     291,144     265,337
  Operating Costs: (4)
    Recoverable and other operating            108,245      99,767      99,161     100,560      94,571
    Interest                                    47,219      43,975      52,278      58,572      53,548
    Depreciation and amortization               28,799      24,104      23,511      24,682      22,949
                                               -------     -------     -------     -------     -------
    Total Operating Costs                      184,263     167,846     174,950     183,814     171,068
                                               -------     -------     -------     -------     -------
  Income before extraordinary items             96,078     100,717      93,865     107,330      94,269
                                               =======     =======     =======     =======     =======
  TRG share of income before
    extraordinary items                         51,638      54,153      51,263      57,940      52,215
                                               =======     =======     =======     =======     =======

<PAGE>
<CAPTION>
                                                                  As of December 31
                                               ----------------------------------------------------------
                                                  1992        1993        1994        1995        1996
                                                  ----        ----        ----        ----        ----
                                                       (In thousands of dollars, except as noted)
<S>                                            <C>         <C>         <C>         <C>       <C>       
BALANCE SHEET DATA (AT END OF PERIOD):
I.TRG
  Real estate before accumulated
     depreciation                              485,208     665,978     843,960     926,207   1,126,873
  Total assets                                 412,195     574,456     739,811     804,356     969,283
  Total debt and capital lease
   obligation (5)                              523,830     695,517     872,158     969,667   1,041,254




                                            16

<PAGE>
                                                                Year Ended December 31
                                               ----------------------------------------------------------
                                                  1992        1993        1994        1995        1996
                                                  ----        ----        ----        ----        ----
                                                       (In thousands of dollars, except as noted)
<S>                                            <C>         <C>         <C>         <C>         <C>   
SUPPLEMENTAL INFORMATION:
  Consolidated Businesses' contribution         77,026      85,913      96,325     120,010     138,103
  Joint Ventures' contribution                  90,491      88,801      90,332      96,120      91,708
                                               -------     -------     -------     -------     -------
     EBITDA (6)                                167,517     174,714     186,657     216,130     229,811

  Consolidated Businesses' contribution         44,421      45,337      47,732      65,858      70,454
  Joint Ventures' contribution                  24,025      22,070      26,590      30,396      27,738
                                               -------     -------     -------     -------     -------
     TRG's Beneficial Interest Expense (6)      68,446      67,407      74,322      96,254      98,192

  Consolidated Businesses' contribution         32,605      40,576      48,593      52,123      65,744
  Joint Ventures' contribution                  66,466      66,731      63,742      65,724      63,970
                                               -------     -------     -------     -------     -------
     Distributable Cash Flow (6)                99,071     107,307     112,335     117,847     129,714

  Consolidated Coverage Ratio (7)                  2.5         2.6         2.5         2.2         2.3

  Ratio of Earnings to Fixed Charges (8)           1.4         1.9         1.7         1.7         1.7

OPERATING DATA:
  Mall tenant sales (9)(10)                  2,434,590   2,483,342   2,561,555   2,739,393   2,827,245
  Number of shopping centers at end
     of period                                      19          19          20          19          21
  Ending Mall GLA in thousands of
     square feet (10)                            8,827       8,823       9,088       8,996       9,250
  Average occupancy (10)                          88.1%       86.5%       86.6%       88.0%       87.4%
  Ending occupancy (10)                           88.6%       88.7%       89.3%       89.4%       88.0%
  Leased space(10)(11)                            90.6%       90.1%       90.9%       90.6%       89.0%
  Average base rent per square foot: (12)
    All mall tenants                           $ 30.61     $ 32.64     $ 34.72     $ 36.33     $ 37.90
    Stores closing during year (13)            $ 27.91     $ 29.56     $ 30.46     $ 32.96     $ 33.39
    Stores opening during year (13)            $ 38.16     $ 35.86     $ 41.02     $ 41.27     $ 42.39
    Difference between opening and 
    closing rents                              $ 10.25     $  6.30     $ 10.56     $  8.31     $  9.00

------------------

 (1) The GM Loan was repaid and the Partner Loans were  distributed  in November
     1992 as part of TRG's reconfiguration.
 (2) In 1995, Bellevue Associates,  an unconsolidated Joint Venture,  recognized
     extraordinary  and ordinary  gains related to the  disposition  of Bellevue
     Center and the extinguishment of debt. TRG's share of the extraordinary and
     ordinary  gains were $18.9  million  and $5.0  million,  respectively.  See
     Management's  Discussion and Analysis of Financial Condition and Results of
     Operations  (MD&A)-Results  of Operations - Acquisitions  and  Disposition.
     Also  included in  extraordinary  items are  extraordinary  charges in 1993
     through  1996  related to the  extinguishment  of debt.  
 (3) 1992 includes  distributions  totaling $95 million made to certain partners
     in connection with TRG's  reconfiguration.  
 (4) Amounts are reported net of  intercompany  profits.  
 (5) Includes a capital  lease  obligation of $14.4 million and $39.8 million at
     December  31,  1995  and  1996,  respectively.  The  sum  of  100%  of  the
     Consolidated  Businesses'  debt and TRG's pro rata share of the debt of its
     unconsolidated  Joint  Ventures  was  $1.346  billion  and  $1.398  billion
     (excluding  capital lease obligations of $14.4 million and $42.3 million at
     December 31, 1995 and 1996, respectively) at December 31, 1995 and December
     31,  1996,  respectively.  
 (6) EBITDA,  Beneficial  Interest  Expense,  and  Distributable  Cash  Flow are
     defined and discussed in MD& -Liquidity and Capital Resources-Distributions
     beginning  on page 30.  Distributable  Cash Flow was restated for 1995 from
     the previously  reported amount of $119.9 million, to reflect the deduction
     of non-real estate depreciation and amortization,  as specified in NAREIT's
     definition of Funds from Operations.  A reconciliation  of TRG's net income
     to   Distributable   Cash  Flow  is  presented  on  page  31.   EBITDA  and
     Distributable  Cash Flow do not  represent  cash flow from  operations,  as
     defined by  generally  accepted  accounting  principles,  and should not be
     considered  to be an  alternative  to net income as a measure of  operating
     performance  or to cash flows as a measure  of  liquidity.  
 (7) Defined as EBITDA divided by TRG's  Beneficial  Interest  Expense. 

<PAGE>

 (8) The Ratio of  Earnings  to Fixed  Charges is  computed  by  dividing  fixed
     charges into income before extraordinary  items,  adjusted for Consolidated
     Businesses' and TRG's pro rata share of the Joint Ventures' amortization of
     interest  costs  previously   capitalized  and  fixed  charges  other  than
     capitalized  interest.  Fixed charges include Consolidated  Businesses' and
     TRG's pro rata share of the Joint Ventures'  interest costs,  the estimated
     interest  component of rent expense,  and certain other items. 
 (9) Based on reports of sales  furnished by mall tenants.
(10) Except for 1994  ending  Mall  GLA,  ending  occupancy, and  leased  space,
     statistics  for 1994 and prior  years do not include the effect of Biltmore
     Fashion  Park,  which was acquired  December 21, 1994.  Statistics  include
     Bellevue  Center  through  October 1995.  Statistics for 1996 include Paseo
     Nuevo for the  second  half of the year.  Statistics  for 1996,  other than
     ending Mall GLA,  ending  occupancy,  and leased  space,  do not include La
     Cumbre  Plaza,  which was acquired  December 17,  1996.  Statistics  do not
     include  Memorial  City  Mall,  a  development  project.  
(11) Leased space comprises both occupied space and space that is leased but not
     yet occupied.
(12) 1992 and 1993 amounts include 16 centers owned and open prior to January 1,
     1989.  1994 amounts  include 17 centers  owned and open prior to January 1,
     1990.  1995 and 1996  amounts  include 18  centers  owned and open prior to
     January 1, 1991. 
(13) Information represents average annualized base rents.
</TABLE>

                                       17

<PAGE>



Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

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

  The following discussion should be read in conjunction with Selected Financial
Data and the  Consolidated  Financial  Statements  of The Taubman  Realty  Group
Limited Partnership (TRG) and the Notes thereto.

General Background and Performance Measurement

  The Taubman Realty Group Limited Partnership (TRG) is an operating partnership
that engages in the full range of  activities  of the regional  shopping  center
business.  These  activities  include  the  ownership,  operation,   management,
leasing,  expansion,  acquisition,  development,  redevelopment,  financing, and
refinancing of regional shopping centers.  TRG's Managed Businesses include: (i)
wholly owned Taubman Shopping Centers,  development projects for future regional
shopping  centers  (Development   Projects)  and  The  Taubman  Company  Limited
Partnership (the Manager), (collectively, the Consolidated Businesses); and (ii)
Taubman  Shopping   Centers   partially  owned  through  joint  ventures  (Joint
Ventures).

  TRG consolidates the wholly owned Taubman  Shopping  Centers,  the Development
Projects, and the Manager. The Joint Ventures are accounted for under the equity
method in TRG's Consolidated Financial Statements.

  Certain  aspects  of  the  performance  of the  Managed  Businesses  are  best
understood by measuring  their  performance as a whole,  without regard to TRG's
ownership interest. For example, mall tenant sales and shopping center occupancy
trends fit this  category  and are so analyzed  below.  In  addition,  trends in
certain  items of revenue  and  expense  are often best  understood  in the same
fashion, and the discussions following take this approach when appropriate. When
relevant,  these  items  are  also  discussed  separately  with  regard  to  the
Consolidated Businesses and the Joint Ventures.

Mall Tenant Sales and Center Revenues

  Over  the long  term,  the  level of mall  tenant  sales  is the  single  most
important  determinant of revenues of the Taubman  Shopping Centers because mall
tenants  provide  over 90% of these  revenues  and  because  mall  tenant  sales
determine  the  amount  of  rent,  percentage  rent,  and  recoverable  expenses
(together,  total occupancy costs) that mall tenants can afford to pay. However,
levels of mall tenant sales can be  considerably  more volatile in the short run
than total occupancy costs.

  TRG  believes  that the  ability of tenants  to pay  occupancy  costs and earn
profits over long periods of time  increases as sales per square foot  increase,
whether through inflation or real growth in customer spending. Because most mall
tenants have certain fixed expenses, the occupancy costs that they can afford to
pay and still be profitable are a higher percentage of sales at higher sales per
square foot.

  The following table summarizes occupancy costs, excluding utilities,  for mall
tenants as a percentage of mall tenant sales.

                                         1994          1995          1996
                                         ----          ----          ----
Mall tenant sales (in thousands)   $2,561,555    $2,739,393    $2,827,245
Sales per square foot                     335           346 (1)       365

Minimum rents                            10.2%         10.4%         10.4%
Percentage rents                          0.3           0.3           0.3
Expense recoveries                        4.3           4.4           4.5
                                         ----          ----          ----
Mall tenant occupancy costs              14.8%         15.1%         15.2%
                                         ====          ====          ====

(1) Sales per square foot was $352, excluding Bellevue Center.


                                       18

<PAGE>



Occupancy

  Historically,  average  annual  occupancy for TRG as a whole has been within a
narrow band. In the last ten years,  average annual occupancy has ranged between
86.5% and 88.8%.

Rental Rates

  As leases have expired in the Taubman Shopping Centers, TRG has generally been
able to rent the available space, either to the existing tenant or a new tenant,
at rental rates that are higher than those of the expired leases. In a period of
increasing sales, rents on new leases will tend to rise as tenants' expectations
of future  growth  become  more  optimistic.  In  periods  of  slower  growth or
declining  sales,  rents on new leases will grow more slowly or will decline for
the opposite reason.  However,  Center revenues  nevertheless  increase as older
leases roll over or are terminated early and replaced with new leases negotiated
at current  rental  rates that are usually  higher  than the  average  rates for
existing leases. The following table contains certain information  regarding per
square foot base rent, excluding renewals, at Taubman Shopping Centers that have
been owned and open for five years.

                                          Store         Store      Difference
                              All       Closings      Openings       Between
                              Mall       During        During      Opening and
                             Tenants      Year          Year      Closing Rents
                            --------   -----------   -----------   ------------
                             Average     Average       Average       Average
                              Base     Annualized    Annualized    Annualized
                              Rent      Base Rent     Base Rent     Base Rent
                            --------   -----------   -----------   ------------
1994 (1)                     $34.72       $30.46        $41.02        $10.56
1995 (2)                     $36.33       $32.96        $41.27        $ 8.31
1996 (2)                     $37.90       $33.39        $42.39        $ 9.00

(1)  Includes 17 centers owned and open prior to January 1, 1990.
(2)  Includes 18 centers owned and open prior to January 1, 1991.

  TRG anticipates  that the spread between opening and closing rents will narrow
in 1997.  This  statistic is difficult to predict in part because  TRG's leasing
policies  and  practices  may result in early  lease  terminations  with  actual
average  closing  rents which may vary from the average  rent per square foot of
scheduled lease expirations. In addition, the opening or closing of large tenant
spaces,  which  generally  pay a lower rent per square foot,  can  significantly
change the spread in a given year.

Seasonality

  The regional shopping center industry is seasonal in nature,  with mall tenant
sales  highest in the  fourth  quarter  due to the  Christmas  season,  and with
lesser, though still significant,  sales fluctuations associated with the Easter
holiday and  back-to-school  events.  While  minimum  rents and  recoveries  are
generally not subject to seasonal  factors,  most leases are scheduled to expire
in the first quarter,  and the majority of new stores open in the second half of
the year in anticipation of the Christmas selling season. Accordingly,  revenues
and occupancy levels are generally highest in the fourth quarter.


                                       19

<PAGE>



  The following  table  summarizes  certain  quarterly  operating data for TRG's
Managed Businesses for 1996:

                              1st       2nd       3rd      4th
                           Quarter   Quarter    Quarter  Quarter    Total
                             1996      1996      1996      1996      1996
                          --------------------------------------------------
                                            (in thousands)
Mall tenant sales         $591,677  $617,821  $627,791  $989,956  $2,827,245
Revenues                   129,764   128,497   129,730   138,250     526,241

Occupancy
  Average occupancy           87.8%     87.3%     86.8%     87.6%       87.4%
  Ending occupancy            87.7%     87.3%     86.8%     88.0%       88.0%
Leased space                  89.5%     88.2%     87.6%     89.0%       89.0%

  Because the  seasonality of sales contrasts with the generally fixed nature of
minimum rents and  recoveries,  mall tenant  occupancy costs (the sum of minimum
rents,   percentage  rents  and  expense  recoveries)   relative  to  sales  are
considerably  higher in the first  three  quarters  than they are in the  fourth
quarter.  The following table summarizes  occupancy costs,  excluding utilities,
for mall tenants as a percentage of sales for each quarter of 1996:

                              1st       2nd       3rd      4th
                           Quarter   Quarter    Quarter  Quarter    Total
                             1996      1996      1996      1996      1996
                          --------------------------------------------------
Minimum rents                12.3%     11.7%     11.7%      7.6%     10.4%
Percentage rents              0.3       0.3       0.3       0.3       0.3
Expense recoveries            5.6       5.0       4.6       3.5       4.5
                             ----      ----      ----      ----      ----
Mall tenant occupancy costs  18.2%     17.0%     16.6%     11.4%     15.2%
                             ====      ====      ====      ====      ====

Results of Operations

Equity Transactions

  In  December  1996,  TRG issued  3,048  units of  partnership  interest to its
managing  general  partner,  Taubman  Centers,  Inc. (TCO),  for the $75 million
proceeds  from TCO's  December  1996  offering of 5.97 million  shares of common
stock.  TRG bore all expenses of TCO's offering which have been accounted for as
a reduction  of the  proceeds  from TRG's  issuance  of units.  TRG used the net
proceeds  to pay down  short  term  floating  rate debt and to acquire La Cumbre
Plaza (see below).  Also in December 1996,  TCO exchanged  common shares for TRG
units of partnership  interest newly issued under TRG's  incentive  option plan.
Additionally  in 1996,  TRG  issued  3,096  units  of  partnership  interest  in
connection  with the  acquisition  of the  remaining  interest in Fairlane  Town
Center (see below). As a result of these transactions,  at December 31, 1996 TRG
had 69,998 units of partnership interest outstanding.

Acquisitions and Disposition

  The  following  discussion  of  TRG's  acquisitions  contains  forward-looking
statements  regarding  the  impact of these  acquisitions  on EBITDA  (EBITDA is
defined and described in Liquidity and Capital Resources -- Distributions).  The
actual  impact  may  vary  based  on a  variety  of  factors,  including  actual
occupancy,  rents achieved and operating expenses of the Centers.  See Note 3 to
TRG's   consolidated   financial   statements  for  further  discussion  of  the
acquisitions.

Acquisition of La Cumbre Plaza
------------------------------

  In December 1996,  TRG acquired a 100%  leasehold  interest in La Cumbre Plaza
(La Cumbre) located in Santa Barbara, California for $22.25 million in cash. The
acquisition  was  funded  with  proceeds  from  an  issuance  of  TRG  units  of
partnership  interest (see Equity Transactions  above). The operating results of
La  Cumbre  have  been  consolidated  in  TRG's  financial  statements  from the
acquisition  date.  The  acquisition  had an immaterial  effect on net income in
1996.  The  acquisition  is expected to add EBITDA in excess of $2.8  million in
1997.


                                       20

<PAGE>



Acquisition of Remaining Interest in Fairlane Town Center
---------------------------------------------------------

  In July 1996, TRG completed  transactions  that resulted in the acquisition of
the 75% interest in Fairlane Town Center  (Fairlane)  previously held by a Joint
Venture Partner.  In connection with the  transaction,  TRG issued to the former
Joint Venture  Partner 3,096 units of  partnership  interest,  exchangeable  for
approximately  6.1 million  shares of TCO's  common  stock,  which had a closing
price of  $10.75  per  share on the day  prior to the  issuance  date.  TRG also
assumed  mortgage debt of  approximately  $26 million,  representing  the former
Joint  Venture  Partner's  beneficial  interest  in the $34.6  million  mortgage
encumbering  the property.  TRG used unsecured debt to fund the repayment of the
9.73% mortgage and the prepayment  penalty of  approximately  $1.2 million.  The
operating  results  of  Fairlane  have  been  consolidated  in  TRG's  financial
statements  from the acquisition  date.  Prior to the  acquisition  date,  TRG's
interest  in  Fairlane  was  accounted  for under the  equity  method as a Joint
Venture.  The acquisition is expected to  incrementally  add  approximately  $11
million to EBITDA over the twelve months following the purchase date.

Acquisition of Paseo Nuevo
--------------------------

  In June 1996, TRG acquired a 100% leasehold  interest in Paseo Nuevo,  located
in Santa  Barbara,  California,  for $37 million in cash. TRG borrowed under its
existing lines of credit to fund the acquisition. The operating results of Paseo
Nuevo have been consolidated in TRG's financial  statements from the acquisition
date.  The  acquisition  had an  immaterial  effect on net  income in 1996.  The
acquisition  is  expected  to produce  EBITDA of over $3.7  million in its first
twelve months following the purchase date.

Disposition of Bellevue Center
------------------------------

  In  December  1995,  the bank  group  holding  the $99.5  million  nonrecourse
mortgage  encumbering  Bellevue  Center  acquired  title to the Center through a
nonjudicial  foreclosure  sale.  The mortgage  matured on November 1, 1995.  TRG
ceased to recognize  the results of Bellevue  Associates  (Bellevue),  TRG's 60%
owned Joint Venture that owned the Center,  as of November 1, 1995.  TRG's share
of Bellevue's net loss from operations for 1994 and the ten months ended October
31, 1995, was $1.1 million and $0.7 million, respectively.

  In  1995,  TRG  recognized  an  extraordinary  gain of  $18.9  million  on the
extinguishment  of debt and an ordinary gain of $5.0 million on the  disposition
of the Center,  which was based on the  carrying  value of TRG's  investment  in
Bellevue.

  Bellevue's  operations,  which included the effect of the below current market
mortgage  interest rate of 5.91%,  contributed  in 1994 and the ten months ended
October 31, 1995, $1.4 million and $1.1 million,  respectively, to Distributable
Cash Flow  (Distributable  Cash Flow is defined and  discussed in Liquidity  and
Capital Resources -- Distributions).

Memorial City Mall Lease

  In November  1996,  TRG entered into an agreement to lease  Memorial City Mall
(Memorial  City), a 1.4 million square foot shopping  center located in Houston,
Texas. The lease of this unencumbered property grants TRG the exclusive right to
manage,  lease and operate the  property.  TRG has the option to  terminate  the
lease  after the third full lease year by paying $2 million to the  lessor.  TRG
will use this option period to evaluate the  redevelopment  opportunities of the
Center.  As a  development  project,  Memorial  City has been  excluded from all
operating  statistics in this report,  and Memorial City's results of operations
have been  presented as a net line item in the following  tabular  comparison of
TRG's 1996 results of operations to the prior year. Memorial City is expected to
have an immaterial effect on EBITDA and net income during the option period.


                                       21

<PAGE>



Comparison of Fiscal Year 1996 to Fiscal Year 1995

Occupancy and Mall Tenant Sales

  Average  occupancy  in the Taubman  Shopping  Centers was 87.4% in 1996 versus
88.0% in 1995. Ending occupancy for the Taubman Shopping Centers at December 31,
1996 was 88.0% versus  89.4% at December 31, 1995.  Leased space at December 31,
1996 was 89.0% compared to 90.6% at the same date in 1995. Average occupancy for
1996 was somewhat  less than the previous  year's level but  comfortably  within
TRG's historic range of average annual  occupancy.  TRG expects that it will not
achieve year over year increases in average  occupancy before the fourth quarter
of 1997.

  Total sales for Taubman Shopping Center mall tenants increased in 1996 by 3.2%
to $2.83  billion  from $2.74  billion  in 1995.  Tenant  sales per square  foot
increased  by 5.2% to $365 in 1996 from $346 in 1995.  Sales per square  foot in
1995 was $352, excluding Bellevue. Mall tenant sales for Centers that were owned
and open for all of 1996 and 1995 (which excludes Paseo Nuevo and Bellevue) were
$2.81  billion,  a 3.9%  increase  over 1995.  Sales  statistics  for the fourth
quarter  of 1996  were  negatively  affected  by new  competition  near  certain
Centers.  TRG expects that the effect of the  competition on sales will moderate
after the anniversary date of the opening of the competing centers.

  Occupancy  and mall  tenant  sales  statistics  for 1996,  other  than  ending
occupancy and leased space, do not include La Cumbre.


                                       22

<PAGE>



Comparison of Fiscal Year 1996 to Fiscal Year 1995

  The following table sets forth operating results for TRG's Managed  Businesses
for 1995 and 1996, showing the results of the Consolidated  Businesses and Joint
Ventures:
<TABLE>
<CAPTION>
                                                     1995                                       1996
                                 -----------------------------------------  -----------------------------------------
                                           TRG                     TOTAL:             TRG                     TOTAL:
                                  CONSOLIDATED       JOINT        MANAGED    CONSOLIDATED        JOINT       MANAGED
                                    BUSINESSES    VENTURES(1)  BUSINESSES      BUSINESSES(2)  VENTURES(1) BUSINESSES
                                 -----------------------------------------  -----------------------------------------
                                                                (in millions of dollars)
<S>                                      <C>          <C>           <C>             <C>           <C>         <C>
REVENUES:
  Minimum rents                          130.4        166.2         296.6           149.2         157.2        306.4
  Percentage rents                         5.6          3.6           9.2             6.0           4.0          9.9
  Expense recoveries                      75.3        101.5         176.8            85.1          95.2        180.4
  Other                                   17.6         11.5          29.1            20.6           8.9         29.5
  Gain on disposition of Bellevue                       8.3           8.3
                                         -----        -----         -----           -----         -----        -----
Total revenues                           228.9        291.1         520.0           260.9         265.3        526.2

OPERATING COSTS:
  Recoverable expenses                    62.9         88.2         151.1            71.6          81.8        153.4
  Other operating                         22.5         12.3          34.8            25.4          12.8         38.2
  Management, leasing and
      development                          3.7                        3.7             4.2                        4.2
  General and administrative              19.8                       19.8            21.8                       21.8
  Interest expense                        65.8         58.6         124.4            70.5          53.5        124.0
  Depreciation and amortization           32.4         24.7          57.1            35.7          22.9         58.7
                                         -----        -----         -----           -----         -----        -----
Total operating costs                    207.1        183.8         390.9           229.2         171.1        400.3
Net results of Memorial City(2)                                                       0.2                        0.2
                                         -----        -----         -----           -----         -----        -----
                                          21.8        107.3         129.1            31.9          94.3        126.2
                                                      =====         =====                         =====        =====
Equity in income before extraordinary
  items of Joint Ventures (including 
  $5.0 million in 1995 related to the
  disposition of Bellevue)                57.9                                       52.2
                                         -----                                      -----
Income before extraordinary items         79.7                                       84.1
Extraordinary items                       16.6                                       (1.3)
                                         -----                                      -----
NET INCOME                                96.3                                       82.8
                                         =====                                      =====

SUPPLEMENTAL INFORMATION(3) 
  EBITDA contribution                    120.0         96.1         216.1           138.1          91.7        229.8
  TRG's Beneficial Interest Expense      (65.8)       (30.4)        (96.2)          (70.5)        (27.7)       (98.2)
  Non-real estate depreciation            (2.0)                      (2.0)           (1.9)                      (1.9)
                                         -----        -----         -----           -----         -----        -----
  Distributable Cash Flow
    contribution(4)                       52.1         65.7         117.8            65.7          64.0        129.7
                                         =====        =====         =====           =====         =====        =====

(1)  With the exception of the Supplemental Information, amounts represent 100%
     of the Joint Ventures. Amounts are net of intercompany profits.
(2)  The results of operations of Memorial City are presented net in this table.
     Memorial City's partial year results are not indicative of future results.
     TRG expects that Memorial City's net operating income will approximate the
     ground rent payable under the lease for the immediate future. (See  Results
     of Operations -- Memorial City Mall Lease above). 
(3)  EBITDA, TRG's Beneficial Interest Expense and  Distributable  Cash Flow are
     defined and  discussed in Liquidity and Capital Resources -- Distributions.
     EBITDA  for 1995 does not include the gain related to the disposition  of
     Bellevue Center.
(4)  Distributable  Cash Flow contribution for 1995 has been restated to reflect
     NAREIT's  clarified definition of Funds from  Operations (see Liquidity and
     Capital Resources -- Distributions).
(5)  Amounts in this table may not add due to rounding.
</TABLE>

                                       23
<PAGE>



TRG --Consolidated Businesses

  Total revenues for 1996 were $260.9 million, a $32.0 million or 14.0% increase
from 1995. Minimum rents for 1996 increased $18.8 million, of which $8.7 million
was caused by the Fairlane and Paseo Nuevo acquisitions. The results of Fairlane
have been  consolidated  in TRG's  results  subsequent to the  acquisition  date
(prior to that date  Fairlane  was  accounted  for under the equity  method as a
Joint Venture). Minimum rent also increased due to the expansions at Short Hills
and Meadowood and tenant rollovers.  The increase in expense recoveries was also
primarily  due to the Fairlane and Paseo Nuevo  acquisitions  and  recoveries of
increased  maintenance  costs and property taxes. The increase in other revenues
of $3.0 million was  primarily  due to  increases  in revenue  from  management,
leasing, and development services, rental fees on exterior advertising signs and
gains on sales of  peripheral  land,  partially  offset by a  decrease  in lease
cancellation revenue.

  Total operating  costs  increased $22.1 million,  or 10.7%, to $229.2 million.
The  increase in  recoverable  expenses  for 1996 was due to Fairlane  and Paseo
Nuevo and to increases in maintenance costs and property taxes,  including those
related to the expansion at Short Hills.  Other operating expenses increased due
to Fairlane and Paseo  Nuevo,  and an increase in the charge to  operations  for
development  pre-construction  reserves.  General  and  administrative  expenses
increased  $2.0 million due  primarily to increases in  compensation,  including
costs of the new long-term  performance  compensation plan and the allocation of
internal  acquisition costs,  travel, and professional fees in 1996, offset by a
decrease  resulting  from a $0.8  million  charge  in  1995  for  severance  and
termination  benefits.  Interest expense increased $4.7 million due primarily to
an increase in debt levels,  including  debt used to finance the  acquisition of
Paseo Nuevo and capital  expenditures and the assumption of debt relating to the
Fairlane acquisition,  and a decrease in capitalized interest,  partially offset
by decreased  interest rates.  The increase in depreciation and amortization was
due primarily to the acquisitions of Fairlane and Paseo Nuevo and the expansions
at Short Hills and Meadowood.

  Revenues  and expenses as  presented  in the  preceding  table differ from the
amounts  shown  in  TRG's   consolidated   income   statements  by  the  amounts
representing  Memorial City's revenues and expenses,  which are presented in the
preceding table as a net amount.

Joint Ventures

  Total revenues for 1996 were $265.3 million,  a $25.8 million or 8.9% decrease
from 1995, primarily  representing a $23.8 million decrease caused by the change
in Fairlane from a Joint Venture to a Consolidated  Business and by the November
1995  disposition  of  Bellevue.  Minimum  rent  decreases  due to Fairlane  and
Bellevue  were offset by increases  due to the expansion at Woodfield and tenant
rollovers.  Expense recoveries decreased primarily due to Fairlane and Bellevue,
offset by increases at other  Centers.  Other income  decreased due to a gain on
the sale of  peripheral  land in 1995 and  decreased  interest  income  in 1996,
offset by an increase in lease cancellation revenue in 1996.

  Total operating  costs decreased by $12.7 million,  or 6.9%, to $171.1 million
for 1996,  representing  a $19.9 million  decrease due to Fairlane and Bellevue,
offset by  increases  at other  Centers.  Recoverable  expenses  decreased  $6.4
million due to Fairlane and Bellevue,  offset by increases in maintenance  costs
and property taxes.  Other  operating  costs  increased $0.5 million  reflecting
increases in property  management  costs,  promotion and advertising  costs, bad
debt expense and a nonrecurring  $0.5 million payment to an anchor at one of the
Centers,  offset by decreases  due to Bellevue and  Fairlane.  Interest  expense
decreased  $5.1  million  due to a  decrease  in debt  related to  Fairlane  and
Bellevue and an increase in capitalized interest,  partially offset by increases
due to an increase in debt used to finance  capital  expenditures  and to higher
interest rates on certain debt refinanced in 1995.  Operating costs as presented
in the preceding table differ from the amounts shown in the combined, summarized
financial  statements  of the  unconsolidated  Joint  Ventures  (Note 4 to TRG's
financial statements) by the amount of intercompany profit.


                                       24

<PAGE>



  As a result of the foregoing,  income before  extraordinary items of the Joint
Ventures was $94.3 million in 1996, a decrease of 12.1% from 1995.  TRG's equity
in income  before  extraordinary  items of the  Joint  Ventures  decreased  $5.7
million, or 9.8%, to $52.2 million for 1996.

Net Income

  As a  result  of  the  foregoing,  TRG's  income  before  extraordinary  items
increased by $4.4 million,  or 5.5%,  to $84.1  million for 1996.  In 1996,  TRG
recognized a $(1.3)  million  extraordinary  charge related to the prepayment of
Fairlane's  debt. In 1995,  TRG recognized an $18.9 million  extraordinary  gain
related to the  disposition  of  Bellevue  and $(2.2)  million in  extraordinary
charges  related  to the  prepayment  of  debt  at TRG  and at one of its  Joint
Ventures.  Net income for 1996 was $82.8  million,  compared to $96.3 million in
1995.

Comparison of Fiscal Year 1995 to Fiscal Year 1994

Occupancy and Mall Tenant Sales

  Average  occupancy  in the Taubman  Shopping  Centers was 88.0% in 1995 versus
86.6% in 1994. Ending occupancy for the Taubman Shopping Centers at December 31,
1995 was 89.4% versus  89.3% at December 31, 1994.  Leased space at December 31,
1995 was 90.6% compared to 90.9% at the same date in 1994.

  Occupancy rates increased in part due to a change in the method of calculating
occupancy  statistics to be consistent  with  International  Council of Shopping
Centers guidelines. The change increased reported average occupancy for the year
by  approximately  one percent.  The acquisition of Biltmore also contributed to
the increases.

  Total sales for Taubman  Shopping  Centers mall  tenants  increased in 1995 by
6.9% to $2.74 billion from $2.56  billion in 1994.  Tenant sales per square foot
increased  by 3.3% to $346 in 1995 from $335 in 1994.  Tenant  sales per  square
foot reached  $352 in 1995,  excluding  Bellevue.  Mall tenant sales for Centers
that were owned and open for all of 1995 and 1994 (which  excludes  Bellevue and
Biltmore) were $2.61 billion, a 4.0% increase over 1994.

                                       25

<PAGE>



Comparison of Fiscal Year 1995 to Fiscal Year 1994

  The following table sets forth operating results for TRG's Managed  Businesses
for 1994 and 1995, showing the results of the Consolidated  Businesses and Joint
Ventures:

<TABLE>
<CAPTION>
                                                     1994                                       1995
                                 -----------------------------------------  -----------------------------------------
                                           TRG                     TOTAL:             TRG                     TOTAL:
                                  CONSOLIDATED       JOINT       MANAGED     CONSOLIDATED       JOINT        MANAGED
                                    BUSINESSES    VENTURES(1)  BUSINESSES      BUSINESSES    VENTURES(1)  BUSINESSES
                                 -----------------------------------------  -----------------------------------------
                                                                (in millions of dollars)
<S>                                      <C>          <C>           <C>            <C>            <C>          <C>
REVENUES:
  Minimum rents                          111.3        157.4         268.7          130.4         166.2         296.6
  Percentage rents                         3.8          4.8           8.6            5.6           3.6           9.2
  Expense recoveries                      68.1         96.7         164.8           75.3         101.5         176.8
  Other                                   13.9          9.9          23.8           17.6          11.5          29.1
  Gain on disposition of Bellevue                                                                  8.3           8.3
                                         -----        -----         -----          -----         -----         -----
Total revenues                           197.1        268.8         465.9          228.9         291.1         520.0

OPERATING COSTS:
  Recoverable expenses                    58.4         83.5         141.9           62.9          88.2         151.1
  Other operating                         21.0         15.6          36.6           22.5          12.3          34.8
  Management, leasing and 
      development                          3.5                        3.5            3.7                         3.7
  General and administrative              17.9                       17.9           19.8                        19.8
  Interest expense                        47.7         52.3         100.0           65.8          58.6         124.4
  Depreciation and amortization           27.7         23.5          51.2           32.4          24.7          57.1
                                         -----        -----         -----          -----         -----         -----
Total operating costs                    176.2        174.9         351.1          207.1         183.8         390.9
                                          20.9         93.9         114.8           21.8         107.3         129.1
                                                      =====         =====                        =====         =====
Equity in income before extraordinary
  items of Joint Ventures (including 
  $5.0 million in 1995 related to the
  disposition of Bellevue)                51.3                                      57.9
                                         -----                                     -----
Income before extraordinary items         72.2                                      79.7
Extraordinary items                      (44.7)                                     16.6
                                         -----                                     -----
NET INCOME                                27.5                                      96.3
                                         =====                                     =====

SUPPLEMENTAL INFORMATION(2) 
  EBITDA contribution                     96.3         90.3         186.6          120.0          96.1         216.1
  TRG's Beneficial Interest Expense      (47.7)       (26.6)        (74.3)         (65.8)        (30.4)        (96.2)
  Non-real estate depreciation                                                      (2.0)                       (2.0)
                                         -----        -----         -----          -----         -----         -----
  Distributable Cash Flow
    contribution(3)                       48.6         63.7         112.3           52.1          65.7         117.8
                                         =====        =====         =====          =====         =====         =====


(1)  With the exception of the Supplemental Information, amounts represent 100%
     of the Joint Ventures.  Amounts are net of intercompany profits.  
(2)  EBITDA, TRG's Beneficial Interest Expense and Distributable Cash Flow are
     defined and discussed in Liquidity and Capital Resources -- Distributions.
     EBITDA for 1995 does not include the gain related to the disposition  of
     Bellevue Center.
(3)  Distributable Cash Flow contribution for 1995 has been restated to reflect
     NAREIT's clarified definition of Funds from  Operations (see Liquidity and
     Capital Resources -- Distributions).
(4)  Amounts in this table may not add due to rounding.
</TABLE>

                                       26

<PAGE>



TRG --Consolidated Businesses
-----------------------------

  In December 1994, TRG acquired Biltmore, a regional shopping center located in
Phoenix,  Arizona,  for $81.5 million in cash and 1,540 TRG units of partnership
interest  (exchangeable for  approximately  three million shares of TCO's common
stock).  TRG  borrowed  $81.5  million to fund the cash  portion of the purchase
price.  The  operating  results  of  Biltmore  have been  consolidated  in TRG's
financial   statements  from  the  acquisition  date.  The  acquisition  had  an
immaterial effect on net income in 1994 and 1995.

  Total revenues for 1995 were $228.9 million, a $31.8 million or 16.1% increase
from 1994,  of which $13.7  million was due to Biltmore.  Minimum rents for 1995
increased   $19.1   million,   of  which  $7.8  million  was  due  to  Biltmore.
Additionally,  minimum  rents  increased  because  of tenant  rollovers  and the
expansion at Short Hills.  The increase in percentage  rent was due primarily to
Biltmore.  The increase in expense  recoveries was caused by higher  recoverable
expenses  and  Biltmore.   Other  income   increased   primarily  due  to  lease
cancellation income, interest income, and insurance recoveries.

  Total  operating  costs increased by $30.9 million or 17.5%, to $207.1 million
for 1995,  of which  $4.7  million  was due to  Biltmore's  operating  expenses,
excluding interest and depreciation and amortization.  The $4.5 million increase
in recoverable  expenses for 1995 was primarily due to Biltmore and increases in
property  taxes and  maintenance  costs.  General  and  administrative  expenses
increased by $1.9 million,  primarily due to a $0.8 million charge for severance
and  termination  benefits and increases in  professional  fees and office rent.
Interest  expense  for 1995  increased  by  $18.1  million  primarily  due to an
increase  in debt  levels,  including  debt used to finance the  acquisition  of
Biltmore  and  capital  expenditures,   and  to  increases  in  interest  rates.
Depreciation and amortization  also increased,  primarily due to the acquisition
of Biltmore and the expansion at Short Hills.

Joint Ventures
--------------

  Total revenues for 1995 were $291.1 million,  a $22.3 million or 8.3% increase
from  1994,  of  which  $8.3  million  was due to a gain on the  disposition  of
Bellevue.  The increase in minimum rents was caused by tenant  rollovers and the
expansions  at  Woodfield  and Cherry  Creek,  offset by an  approximately  $1.4
million decrease due to Bellevue.  The increase in expense recoveries was due to
the increase in recoverable  expenses.  Other income increased  primarily due to
lease cancellation  income and interest income. The $8.3 million gain related to
the disposition of Bellevue represents the difference between the fair value and
the carrying value of the Center (net of accumulated  intercompany profit). As a
result,  this  amount  differs  from the  amount  included  in  revenues  in the
combined,  summarized  financial statements of the unconsolidated Joint Ventures
(Note 4 to TRG's financial statements).

  Total operating  costs  increased by $8.9 million,  or 5.1%, to $183.8 million
for  1995.  Recoverable  expenses  increased  $4.7  million,  primarily  due  to
increases in property taxes and maintenance  costs.  Interest expense  increased
$6.3  million,  primarily  due to  increased  debt  levels and  interest  rates.
Operating  costs as  presented  in the  preceding  table differ from the amounts
shown in the combined,  summarized  financial  statements of the  unconsolidated
Joint  Ventures  (Note  4 to  TRG's  financial  statements)  by  the  amount  of
intercompany profit.

  As a result of the foregoing,  income before  extraordinary items of the Joint
Ventures  was $107.3  million in 1995,  an  increase  of 14.3% from 1994.  TRG's
equity in income  before  extraordinary  items of the Joint  Ventures  was $57.9
million in 1995, an increase of 12.9% from 1994.


                                       27

<PAGE>



Net Income
----------

  As a result of the foregoing, TRG's income before extraordinary items for 1995
increased by $7.5 million,  or 10.4%, to $79.7 million.  In 1995, TRG recognized
an $18.9 million  extraordinary  gain related to the  extinguishment  of debt at
Bellevue and $(2.2) million in  extraordinary  charges related to the prepayment
of debt at TRG and at one of its Joint  Ventures.  TRG also  recognized  $(44.7)
million in  extraordinary  charges in 1994,  consisting  primarily of prepayment
penalties,  related to the  extinguishment of debt. Net income in 1995 was $96.3
million, compared to $27.5 million in 1994.












                                       28

<PAGE>



Liquidity and Capital Resources

  As of December  31,  1996,  TRG had a cash  balance of $7.9  million.  TRG had
available  for  general  partnership  purposes  an  unsecured  revolving  credit
facility of $200  million,  which was  scheduled to expire in May 1998. In March
1997, TRG completed the  renegotiation  of terms increasing the facility to $300
million,  reducing the current  contractual  interest rate by 60 basis points to
LIBOR plus 90 basis points and extending the maturity until March 2000. Included
in the credit  facility is a competitive  bid option program which allows TRG to
hold auctions,  among the banks  participating  in the facility,  for short term
borrowings of up to $150 million.  There were no borrowings  under this facility
at December 31, 1996. TRG also has available an unsecured bank line of credit of
up to $30 million with  borrowings of $10.1  million at December 31, 1996.  This
line expires in August 1998. TRG also has available a secured  commercial  paper
facility of up to $75 million,  with  borrowings  of $45 million at December 31,
1996.  Commercial paper is generally sold with a 30 day maturity.  This facility
is supported by a line of credit  facility,  which is renewable  quarterly for a
twelve month period.

  Proceeds from short term  borrowings of $121.2  million  provided  funding for
1996 compared to $67.7 million in 1995. The proceeds in 1996 were used primarily
for the $37  million  acquisition  in June  1996 of Paseo  Nuevo  and the  $65.6
million acquisition in July 1996 of the 75% interest in Fairlane previously held
by TRG's Joint Venture Partner, and related acquisition costs. Proceeds of $65.6
million  from the  issuance of TRG units of  partnership  interest to the former
Joint  Venture  Partner  were used to repay short term  borrowings.  Also during
1996,  proceeds of $81.4  million from the issuance of TRG units of  partnership
interest  were used to pay down short term  floating rate debt and for the $22.3
million   acquisition   of  La  Cumbre  (see  Results  of  Operations  -  Equity
Transactions and Acquisitions and Disposition).

  During 1996, TRG issued $154 million of unsecured  notes under its medium-term
note program compared to $133.4 million in 1995. In 1996, the notes were used to
pay down TRG's  floating rate bank lines as well as to pay off the $34.6 million
mortgage on Fairlane and the related  prepayment  penalty of approximately  $1.2
million, leaving the wholly owned property unencumbered. In 1995, the notes were
used to pay down floating rate debt under TRG's revolving  credit  facilities as
well as to pay off the $22.6  million  mortgage  securing a wholly owned Center.
TRG has issued a total of $287 million of medium-term  notes since the program's
inception in 1995 under TRG's $500 million shelf registration statement.

  Scheduled  principal payments on installment notes were $793 thousand and $897
thousand in 1996 and 1995, respectively.

  At December 31, 1996,  TRG's debt and its  beneficial  interest in the debt of
its Joint  Ventures  (excluding  $42.3  million  of capital  lease  obligations)
totaled $1,398.4 million. As shown in the following table, there was no unhedged
floating  rate debt at December  31, 1996.  Interest  rates shown do not include
amortization of debt issuance costs and interest rate hedging costs. These items
are  reported  as  interest  expense  in TRG's  results  of  operations.  In the
aggregate,  these costs accounted for 0.37% of the effective rate of interest on
TRG's  beneficial  interest  in debt at  December  31,  1996.  Included in TRG's
beneficial  interest  in  debt  at  December  31,  1996  is  debt  used  to fund
development and expansion costs.  TRG's  beneficial  interest in assets on which
interest is being  capitalized  totaled  $157.0 million as of December 31, 1996.
TRG's beneficial interest in capitalized interest was $8.9 million for 1996.


                                       29

<PAGE>



                                          Beneficial Interest in Debt
                                ------------------------------------------------
                                    Amount    Interest LIBOR  Frequency   LIBOR
                                (In millions   Rate at  Cap   of Rate      at
                                 of dollars)  12/31/96  Rate   Resets   12/31/96
                                 ----------   --------  ----   ------  ---------

Total beneficial interest 
 in fixed rate debt             1,113.2(1)    7.55%(2)
Floating rate debt hedged via
 interest rate caps:
    Through July 1997              31.6(3)    6.77 (2)  9.60% Monthly      5.53%
    Through January 1998          100.0       6.17 (2)  6.50  Monthly      5.53
    Through January 1998           65.0       6.31      6.50  Monthly      5.53
    Through July 1998              24.3       6.17 (2)  8.35  Monthly      5.53
    Through October 1998           39.3       6.06      6.00  Three Months 5.56
    Through October 2001           25.0       6.06      8.55  Monthly      5.53
                                -------
Total beneficial interest
 in debt                        1,398.4       7.29 (2)
                                =======

(1) Includes TRG's $100 million  floating rate notes due in November 1997, which
    were swapped to a fixed rate of 6.15% until  maturity.  The interest rate on
    the  refinancing  of this debt is  hedged  via an  interest rate cap for the
    period  November  1997 to December  1998 at a three  month LIBOR cap rate of
    6.5%.
(2) Denotes weighted average interest rate.
(3) This debt is additionally hedged via an interest rate cap for the period 
    July 1997 through July 2002 at a one month LIBOR cap rate of 9.95%.

  TRG's loan  agreements and indenture  contain  various  restrictive  covenants
including  limitations  on the amount of secured and unsecured  debt and minimum
debt service coverage ratios,  the latter being the most restrictive.  TRG is in
compliance with all of such covenants.

  In January  1997,  Arizona  Mills,  L.L.C.  closed on a secured  $145  million
construction  facility  maturing in 2002.  The loan bears  interest at one month
LIBOR plus 1.3%. The loan is hedged until maturity at a one month LIBOR cap rate
of 9.5%.  The payment of the  principal  and interest is recourse to each of the
owners of Arizona Mills, L.L.C. to the extent of their ownership percentage. TRG
owns a 37% interest in Arizona Mills, L.L.C.

Distributions

  A  principal  factor  considered  by TRG in  deciding  upon  distributions  to
partners is an amount,  which TRG defines as  Distributable  Cash Flow, equal to
EBITDA less TRG's Beneficial  Interest Expense and non-real estate  depreciation
and  amortization.  This  measure  of  performance  is  influenced  not  only by
operations but also by capital structure.  EBITDA is defined as TRG's beneficial
interest in revenues,  less operating costs before  interest,  depreciation  and
amortization,  meaning  TRG's  pro  rata  share of this  result  for each of the
Managed Businesses, after recording appropriate intercompany eliminations. TRG's
Beneficial  Interest Expense is defined as 100% of the interest expense of TRG's
Consolidated  Businesses and TRG's pro rata share of the interest expense on the
debt of the Joint Ventures.  EBITDA and Distributable Cash Flow do not represent
cash  flows  from  operations,  as  defined  by  generally  accepted  accounting
principles,  and should not be considered to be an  alternative to net income as
an indicator  of operating  performance  or to cash flows from  operations  as a
measure of liquidity.

  In March 1995,  the  National  Association  of Real Estate  Investment  Trusts
(NAREIT)  issued a  clarification  of the  definition of Funds from  Operations.
Because  Distributable  Cash Flow is  intended  to be  equivalent  to Funds from
Operations,  beginning in 1996, TRG modified its  calculation  of  Distributable
Cash Flow to be consistent with NAREIT's clarified definition.  As a result, TRG
adjusted the depreciation  and  amortization  amount added back to net income to
include only depreciation and amortization of assets uniquely significant to the
real estate industry.  Distributable Cash Flow for 1995 has been restated in the
table below to reflect the clarified definition.


                                       30

<PAGE>
  The following table  summarizes  TRG's  Distributable  Cash Flow for the years
ended December 31, 1995 and 1996:
<TABLE>
<CAPTION>
                                                 Year ended                             Year ended
                                              December 31, 1995                     December 31, 1996
                                    -------------------------------------  -----------------------------------
                                              TRG                                   TRG
                                     CONSOLIDATED       JOINT              CONSOLIDATED       JOINT
                                       BUSINESSES   VENTURES(1)   TOTAL      BUSINESSES   VENTURES(1)   TOTAL
                                    ------------------------------------  ------------------------------------
                                                                (in millions of dollars)
<S>                                         <C>        <C>         <C>            <C>        <C>        <C>
TRG's Net Income(2)(3)                                             96.3                                  82.8
Gain on disposition of Bellevue(3)                                 (5.0)
Extraordinary items(3)(4)                                         (16.6)                                  1.3
Depreciation and amortization(4)(5)                                45.2                                  47.5
TRG's Beneficial Interest Expense(4)                               96.2                                  98.2
                                                                  -----                                 -----
EBITDA                                      120.0       96.1      216.1           138.1       91.7      229.8
TRG's Beneficial Interest Expense(4)        (65.8)     (30.4)     (96.2)          (70.5)     (27.7)     (98.2)
Non-real estate depreciation                 (2.0)                 (2.0)           (1.9)                 (1.9)
                                            -----      -----      -----           -----      -----      -----
Distributable Cash Flow(6)                   52.1       65.7      117.8            65.7       64.0      129.7
                                            =====      =====      =====           =====      =====      =====

(1)  Amounts represent TRG's beneficial interest in the operations of its Joint 
     Ventures.
(2)  Includes TRG's share of gains on peripheral land sales of $1.7 million and
     $1.0  million in 1995 and 1996, respectively.  
(3)  In 1995, TRG recognized an ordinary gain of $5.0 million and an 
     extraordinary gain of $18.9 million related to the disposition of Bellevue.
     Extraordinary charges related to the extinguishment of debt, primarily 
     consisting of prepayment penalties, were recorded in 1995 and 1996.
(4)  Amounts represent TRG's and TRG's beneficial interest in the Joint 
     Ventures' extraordinary items, depreciation and amortization, and interest
     expense.
(5)  Includes $3.2 million and $3.3  million  of  amortization  of mall  tenant
     allowances in 1995 and 1996, respectively.  
(6)  Distributable Cash Flow and Funds from Operations have been restated from
     the previously reported amounts for 1995 of $119.9 million and $41.5 
     million, respectively.
(7)  Amounts may not add due to rounding.
</TABLE>

  For 1996,  EBITDA and  Distributable  Cash Flow were $229.8 million and $129.7
million,  compared to $216.1 million and $117.8 million,  as restated,  in 1995.
TRG  distributed  $119.1  million to its  partners  in 1996,  compared to $116.2
million in 1995.

  The Partnership  Committee of TRG makes an annual determination of appropriate
distributions   for  each  year.  The  determination  is  based  on  anticipated
Distributable  Cash Flow,  as well as  financing  considerations  and such other
factors  as  the  Partnership  Committee  considers  appropriate.  Further,  the
Partnership  Committee has decided that the growth in distributions will be less
than the growth in Distributable Cash Flow for the immediate future.

  Except under unusual  circumstances,  TRG's  practice is to  distribute  equal
monthly  installments of the determined  amount of distributions  throughout the
year.  Due  to  seasonality  and  the  fact  that  cash  available  to  TRG  for
distributions  may be  more  or less  than  net  cash  provided  from  operating
activities  plus  distributions  from Joint  Ventures  during the year,  TRG may
borrow  from  unused  credit  facilities  (described  above)  to  enable  it  to
distribute the amount decided upon by the TRG Partnership Committee.

  Distributions  by each Joint Venture may be made only in  accordance  with the
terms of its  partnership  agreement.  TRG acts as the managing  partner in each
case and, in general,  has the right to determine  the amount of cash  available
for  distribution  from the Joint Venture.  In general,  the provisions of these
agreements  require the  distribution  of all available cash (as defined in each
partnership agreement), but most do not allow borrowing to finance distributions
without approval of the Joint Venture Partner.

  As a result,  distribution  policies of many Joint  Ventures will not parallel
those of TRG.  While TRG may not,  therefore,  receive as much in  distributions
from each Joint Venture as it intends to  distribute  with respect to that Joint
Venture, TRG does not believe this will impede its intended  distribution policy
because  of TRG's  overall  access  to  liquid  resources,  including  borrowing
capacity.
                                       31
<PAGE>

  Any inability of TRG or its Joint Ventures to secure  financing as required to
fund  maturing  debts,  capital  expenditures  and  changes in working  capital,
including development activities and expansions,  may require the utilization of
cash to satisfy such  obligations,  thereby possibly  reducing  distributions to
partners of TRG.

  In  addition,  if the GM Trusts  exercise  their  rights under the Cash Tender
Agreement (see Liquidity and Capital  Resources -- Cash Tender Agreement below),
TRG will be  required  to pay the GM  Trusts  $10.9  million  and may  borrow to
finance such expenditures.

Capital Spending

  Capital  spending for routine  maintenance of the Taubman  Shopping Centers is
generally recovered from tenants. Capital spending by the Managed Businesses not
recovered from tenants is summarized in the following table:

                                                        1995
                                    --------------------------------------------
                                    Consolidated      Joint     TRG's Share of
                                      Businesses  Ventures(1)  Joint Ventures(1)
                                    --------------------------------------------
                                              (in millions of dollars)

Development, renovation, and expansion:
  Existing centers                          33.2         41.7            25.4
  New centers                               15.0
Pre-construction development activities,
  net of charge to operations                9.8
Mall tenant allowances                       3.5          1.9             1.0
Corporate office improvements                1.5
Other                                        0.3          0.6             0.2
                                            ----         ----            ----
Total                                       63.3         44.2            26.6
                                            ====         ====            ====



                                                        1996
                                    --------------------------------------------
                                    Consolidated      Joint      TRG's Share of
                                      Businesses  Ventures(1)  Joint Ventures(1)
                                    --------------------------------------------
                                              (in millions of dollars)

Development, renovation, and expansion:
  Existing centers                           5.2         40.3            30.5
  New centers                                6.6         66.7            27.2
Pre-construction development activities,
  net of charge to operations                4.1
Mall tenant allowances                       4.5          5.2             2.5
Corporate office improvements                1.5
Other                                        2.3          1.4             0.8
                                            ----        -----            ----
Total                                       24.2        113.6            61.0
                                            ====        =====            ====

(1) Costs are net of intercompany profits

  In 1995 and 1996, TRG's share of mall tenant allowances per square foot leased
during the year,  excluding expansion space and new developments,  was $7.72 and
$9.96,  respectively.  In addition,  TRG's share of its Consolidated Businesses'
and Joint Ventures' capitalized leasing costs,  excluding new developments,  was
$6.7 million, or $10.40 per square foot leased during the year in 1995, and $8.5
million or $10.47 per square foot leased during the year in 1996.

  An expansion  at  Westfarms,  which will open in the summer of 1997,  will add
approximately  135,000  square  feet of mall  GLA and  Nordstrom  as an  anchor.
Approximately  75% of  this  space  has  been  leased  or  has  leases  out  for
signatures.  The expansion is expected to cost  approximately  $100 million.  An
expansion at Cherry Creek will include a newly  constructed Lord & Taylor store,
which will open in the fall of 1997,  and the addition of 132,000 square feet of
mall GLA, which will open in the fall of 1998. The expansion is expected to cost
approximately $50 million. TRG has a 79% and 50% ownership interest in Westfarms
and Cherry Creek, respectively.

                                       32

<PAGE>



  Additionally,  a project is now under  construction  to add over 30,000 square
feet of new mall tenant  space in the  building  vacated  when Saks Fifth Avenue
moved to the I. Magnin site at Biltmore.  The new stores are presently  expected
to open beginning in the spring of 1997. The project is expected to cost between
$5 and $10 million.

  The Mall at  Tuttle  Crossing,  a 980,000  square  foot  Center  in  northwest
Columbus,  Ohio,  will be anchored by Marshall  Field's,  Lazarus,  JCPenney and
Sears. TRG is leasing the land and mall buildings from Tuttle Holding Co., which
owns the land on which the Center is being  built.  TRG will make ninety  annual
minimum lease  payments of $4.4 million  beginning when the Center opens in July
1997. Substantially all of each payment in the first ten years of operation will
be recognized as interest  expense.  TRG will also pay additional  rent based on
achieved  levels of net  operating  income,  a measure of operating  performance
before rent payments,  as specified in the agreement (NOI);  100% of the portion
of NOI which is over $11.6 million but less than or equal to $14.4 million,  30%
of the portion of NOI between  $14.4 million and $18.3  million,  and 50% of the
portion of NOI over $18.3 million.  TRG estimates this  additional  rent,  which
will be recognized as other operating expense, will approximate $2 million to $3
million annually  beginning in 1999.  Substantially all of the Center's mall GLA
has been  leased.  The Center is expected to cost  approximately  $115  million,
including capital lease assets of $55 million.

  Arizona Mills, an enclosed value  super-regional  mall in Tempe,  Arizona,  is
opening in November 1997. TRG has a 37% ownership interest in Arizona Mills. The
1.2 million square foot  value-oriented  mall is expected to cost  approximately
$180 million.

  MacArthur Center, a new Center being developed by TRG in Norfolk, Virginia, is
expected  to open in the  spring of 1999.  The Center is  expected  to total 1.1
million  square feet and will  initially be anchored by Nordstrom and Dillard's.
This Center will be owned by a joint venture in which TRG has a 70% interest and
is projected to cost approximately $150 million.

  In 1996,  TRG entered  into an agreement  to lease  Memorial  City Mall, a 1.4
million square foot shopping center located in Houston,  Texas. Memorial City is
anchored by Sears, Foley's,  Montgomery Ward and Mervyn's. TRG has the option to
terminate  the  lease  after the third  full  year by paying $2  million  to the
lessor.   TRG  is  using  this  option  period  to  evaluate  the  redevelopment
opportunities  of the  Center.  Under the terms of the lease,  TRG has agreed to
invest a minimum of $3  million  during the three  year  option  period.  If the
redevelopment  proceeds,  TRG is required to invest an additional $22 million in
property  expenditures not recoverable from tenants during the first 10 years of
the lease term.

  Assuming no acquisitions,  planned capital spending by the Managed  Businesses
not recovered from tenants for 1997 is summarized in the following table:

                                                        1997
                                    --------------------------------------------
                                    Consolidated      Joint      TRG's Share of
                                      Businesses  Ventures(1)  Joint Ventures(1)
                                    --------------------------------------------
                                              (in millions of dollars)

Development, renovation, and expansion      61.5 (2)    225.1 (3)       120.3
Mall tenant allowances                       5.8          3.7             2.2
Pre-construction development and
  other                                     10.7 (4)      1.0             0.6
                                            ----        -----           -----

Total                                       78.0        229.8           123.1
                                            ====        =====           =====

(1) Costs are net of intercompany profits.
(2) Includes  costs  related  to  leasehold improvements  at The Mall at  Tuttle
    Crossing;  excludes  capital lease assets (see Note 9 to TRG's  consolidated
    financial statements).
(3) Includes  costs related to expansion projects at Westfarms and Cherry Creek.
    Also includes construction costs for MacArthur Center and Arizona Mills.
(4) Includes  costs to explore the  possibilities  of  building an enclosed  1.7
    million square foot value super-regional mall in Auburn Hills, Michigan.
    Also includes the costs to evaluate the redevelopment of Memorial  City and
    required property expenditures under the terms of the lease.


                                       33
<PAGE>



  TRG's share of costs for  development and expansion  projects  scheduled to be
completed in 1998 and 1999 is  anticipated  to be as much as $60 million in 1998
and $19 million in 1999.

  TRG's   estimates   regarding   capital   expenditures   presented  above  are
forward-looking  statements  and  certain  significant  factors  could cause the
actual  results to differ  materially,  including  but not limited to: 1) actual
results of negotiations with anchors, tenants and contractors; 2) changes in the
scope of projects;  3) cost overruns;  4) timing of expenditures;  and 5) actual
time to complete projects.

Capital Resources

  TRG believes that its net cash provided by operating activities, together with
distributions  from the Joint  Ventures,  the  unutilized  portion of its credit
facilities  and its ability to generate  cash from the  issuance of  medium-term
notes under TRG's shelf registration  statement,  other securities  offerings or
mortgage  financings,  assure  adequate  liquidity to conduct its  operations in
accordance with its distribution and financing policies.

  The financing of TRG is intended to maintain an investment grade credit rating
for  TRG  and  (i)  minimize,  to the  extent  practical,  secured  indebtedness
encumbering  TRG's wholly owned  properties,  (ii)  mitigate  TRG's  exposure to
increases  in  floating  interest  rates,  (iii)  assure that the amount of debt
maturing in any future year will not pose a significant  refinancing  risk, (iv)
provide for additional capital and liquidity resources, and (v) maintain average
maturities  for TRG's  debt  obligations  of between  five and ten years.  TRG's
intent to continue to minimize  secured  indebtedness  is  dependent  on actions
taken by credit rating agencies and market conditions.

  TRG  expects to  finance  its  capital  requirements,  including  development,
expansions and working capital,  with available cash, borrowings under its lines
of credit and cash from future  securities  offerings under its medium-term note
program, other securities offerings,  or mortgage financings.  TRG's acquisition
activities are discretionary in nature, and will only be undertaken by TRG after
arranging  adequate  financing on terms that are consistent with TRG's financing
policies.  TRG's Joint  Ventures  expect to finance  development  and  expansion
spending with secured debt to the extent it is available.

Cash Tender Agreement

  A. Alfred  Taubman  and the GM Trusts each have the annual  right to tender to
TCO units of partnership  interest in TRG (provided that the aggregate  value is
at least $50  million)  and cause TCO to purchase  the  tendered  interests at a
purchase  price  based  on a  market  valuation  of  TCO  on  the  trading  date
immediately preceding the date of the tender (the Cash Tender Agreement).  At A.
Alfred Taubman's  election,  his family, and Robert C. Larson and his family may
participate  in tenders.  The GM Trusts will be entitled to receive  from TRG an
amount  (not to  exceed  $10.9  million  in the  aggregate  over the term of the
Partnership)  equal to 5.5% of the amounts  that TCO pays to the GM Trusts under
the Cash Tender Agreement.

  Although certain partners in TRG have pledged,  and other partners may pledge,
their units of partnership  interest,  TRG is not aware of any present intention
of any partner to sell its interest in TRG.


                                       34
<PAGE>



Item 8.  FINANCIAL STATEMENTS

  The Financial Statements of The Taubman Realty Group Limited Partnership,  and
the Independent  Auditors' Reports thereon are filed pursuant to this Item 8 and
are included in this report at Item 14.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

  Not applicable.

                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

  The  material   appearing  in  the  TCO  Proxy  Statement  under  the  caption
"Management--Directors  and Executive  Officers" is incorporated by reference as
part of the information  requested by this item. TRG is managed by a Partnership
Committee  consisting of 13 members,  10 of whom also serve as Directors of TCO,
TRG's Managing  General  Partner.  One  additional  member has been nominated to
serve as a Director.  The following is information  concerning  members of TRG's
Partnership Committee that is not contained in the TCO Proxy Statement.

  Joseph F. Azrack,  49, is a GM Trusts  Designee and a member of the  Executive
Committee.  Mr. Azrack is President and Chief  Executive  Officer of AEW Capital
Management,  L.P., a Boston based real estate  investment  advisory  firm. He is
also a member of that firm's  Board of  Directors.  Mr.  Azrack is a Director of
LaQuinta Inns and; Evans Withycombe  Residential,  Inc., which is engaged in the
investment and  development of  apartments;  and UDC Homes,  Inc., a homebuilder
active in Arizona and California. He is past Chairman of the Pension Real Estate
Association.  Mr. Azrack is also a member of the National  Realty  Committee,  a
Trustee of the Urban Land Institute,  and past adjunct  professor of Real Estate
Finance at Columbia University's Graduate School of Business Administration.

  Thomas H.  Nolan,  Jr.,  39, is a GM Trusts  Designee  and a  Director  of AEW
Capital  Management,  L.P.  He is a  Director  of  Portfolio  Management  and is
responsible  for  overseeing  the  management of large,  multi-asset  investment
portfolios.  Mr.  Nolan  joined AEW in 1984.  Mr.  Nolan is also a  Director  of
Bedford Property  Investors,  Inc. and UDC Homes,  Inc., a homebuilder active in
Arizona and California. He is a Certified Public Accountant.

Item 11.  EXECUTIVE COMPENSATION

  The information  required is hereby  incorporated by reference to the material
appearing in the TCO Proxy Statement under the caption "Management--Compensation
of Executive Officers" and "--Compensation of Directors".

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  The information  required by this item is hereby  incorporated by reference to
the  material  appearing  in the table and  related  footnotes  of the TCO Proxy
Statement under the caption "Security Ownership of Certain Beneficial Owners and
Management". TCO owns 25,676 Units of Partnership interest,  representing 36.68%
of TRG.  The  members  of the  Partnership  Committee  not  listed  in the table
incorporated by reference do not own any interests in TRG.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  The information  requested by this item is hereby incorporated by reference to
the  material   appearing  in  the  TCO  Proxy   Statement   under  the  caption
"Management--Certain Transactions" and "--Certain Employment Arrangements".


                                       35

<PAGE>



                                     PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

   14(a)(1) The  following  financial  statements  of The Taubman  Realty  Group
            Limited Partnership and the Independent Auditors' Report thereon are
            filed with this report:

            THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            Independent Auditors' Report ..................................F-2
            Consolidated Balance Sheet as of December 31, 1995 and 1996....F-3
            Consolidated Statement of Operations for the years ended
              December 31, 1994, 1995 and 1996.............................F-4
            Consolidated Statement of Accumulated Deficiency in Assets for
              the years ended December 31, 1994, 1995 and 1996.............F-5
            Consolidated Statement of Cash Flows for the years ended
              December 31, 1994, 1995 and 1996.............................F-6
            Notes to Consolidated Financial Statements.....................F-7


   14(a)(2) The following is a list of the financial statement schedules 
            required by Item 14(d).

            THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            Schedule II - Valuation and Qualifying Accounts...............F-25
            Schedule III - Real Estate and Accumulated Depreciation.......F-26

            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP LIMITED
            PARTNERSHIP
            Independent Auditors' Report..................................F-29
            Combined Balance Sheet as of December 31, 1995 and 1996.......F-30
            Combined Statement of Operations for the years ended
              December 31, 1994, 1995 and 1996............................F-31
            Combined Statement of Accumulated Deficiency in Assets for the
              three years ended December 31, 1994, 1995 and 1996..........F-32
            Combined Statement of Cash Flows for the years ended
              December 31, 1994, 1995 and 1996............................F-33
            Notes to Combined Financial Statements........................F-34

            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP LIMITED
            PARTNERSHIP
            Schedule II - Valuation and Qualifying Accounts...............F-42
            Schedule III - Real Estate and Accumulated Depreciation.......F-43







                                       36

<PAGE>


   14(a)(3)

    *  2(a) -- Purchase and Sale Agreement By and Between The Pacific Telesis
               Group Master  Pension Trust and The Taubman  Realty Group Limited
               Partnership,  dated July 17, 1996 (without exhibits or schedules,
               which  will be  supplementally  provided  to the  Securities  and
               Exchange  Commission  upon its request)  (incorporated  herein by
               reference  to Exhibit  2(a) filed with the  Registrant's  Current
               Report on Form 8-K dated July 19, 1996).

    *  2(b) -- Subscription  Agreement  By and Between  The Pacific  Telesis
               Group Master  Pension Trust and The Taubman  Realty Group Limited
               Partnership  dated July 18, 1996 (without  exhibits or schedules,
               which  will be  supplementally  provided  to the  Securities  and
               Exchange  Commission  upon its request)  (incorporated  herein by
               reference  to Exhibit  2(b) filed with the  Registrant's  Current
               Report on Form 8-K dated July 19, 1996).

       3(a) -- The Amended and Restated Agreement of Limited Partnership  of The
               Taubman  Realty Group  Limited  Partnership  (excluding  exhibits
               filed  separately)  (incorporated  herein by reference to Exhibit
               3(a) filed with the Registrant's  Registration  Statement on Form
               S-4 (File No. 33-73988) (the "Registration Statement")).

       4(a) -- Amended and  Restated Indenture dated as of March 4, 1994 between
               The Taubman Realty Group Limited  Partnership  and Chemical Bank,
               as Trustee  (incorporated  herein by  reference  to Exhibit  4(a)
               filed with Amendment No. 1 to the Registration Statement).

       4(b) -- Officers' Certificate  designating  the terms of the 7% Notes due
               2003 (incorporated herein by reference to Exhibit 4(b) filed with
               Amendment No. 1 to the Registration Statement).

       4(c) -- Officers'  Certificate  designating  the terms of the 8% Notes
               due 1999 (incorporated  herein by reference to Exhibit 4(f) filed
               with  the  Registrant's  Quarterly  Report  on Form  10-Q for the
               quarter  ended  June 30,  1994 (the  "1994  Second  Quarter  Form
               10-Q")).

       4(d) -- Indenture dated as of July 22, 1994 among  Beverly Finance Corp.,
               La Cienega  Associates,  the Borrower,  and Morgan Guaranty Trust
               Company of New York, as Trustee (incorporated herein by reference
               to Exhibit 4(g) filed with the 1994 Second Quarter Form 10-Q).

       4(e) -- Deed of  Trust,  with  assignment  of  Rents,  Security Agreement
               and Fixture  Filing,  dated as of July 22, 1994,  from La Cienega
               Associates, Grantor, to Commonwealth Land Title Company, Trustee,
               for the benefit of Morgan  Guaranty Trust Company of New York, as
               Trustee, Beneficiary (incorporated herein by reference to Exhibit
               4(h) filed with the 1994 Second Quarter Form 10-Q).


                                       37

<PAGE>



       4(f) -- Revolving Loan Agreement dated as of April 29, 1994, among The 
               Taubman Realty Group Limited Partnership, as Borrower, Union Bank
               of  Switzerland,  (New York  Branch),  as Bank and Union  Bank of
               Switzerland  (New York  Branch),  as  Administrative  Agent  (the
               "Revolving Loan Agreement")  (incorporated herein by reference to
               Exhibit 4(i) filed with the 1994 Second  Quarter  Form 10-Q),  as
               amended by an Amendment to the  Revolving  Loan  Agreement  dated
               August 10, 1994 (incorporated herein by reference to Exhibit 4(g)
               filed with the Registrant's Quarterly Report on Form 10-Q for the
               quarter  ended  September  30, 1994 (the "1994 Third Quarter Form
               10-Q"))  and as  modified  by a Letter  Agreement  modifying  the
               Revolving Loan Agreement dated June 20, 1995 (incorporated herein
               by  reference  to  exhibit  4(g)  filed  with  the   Registrant's
               Quarterly Report on Form 10-Q for the quarter ended June 30, 1995
               (the "1995 Second Quarter Form 10-Q")).


       4(g) -- Officers'  Certificate  designating  the  terms of the Floating
               Rate Notes due 1997 (incorporated  herein by reference to Exhibit
               4(h) filed with the 1994 Third Quarter Form 10-Q).

       4(h) -- Medium-Term  Notes  due  June 15,  2002  (incorporated herein by
               reference to Exhibit 4(i) filed with the 1995 Second Quarter Form
               10-Q).

   ** 10(a) -- The Taubman Realty Group Limited Partnership 1992 Incentive 
               Option Plan  (incorporated  herein by reference to Exhibit  10(a)
               filed with the Registration Statement).

      10(b) -- Corporate Services Agreement between Taubman Centers, Inc. and 
               The  Taubman   Company   Limited   Partnership   (the  "Manager")
               (incorporated herein by reference to Exhibit 10(b) filed with the
               Registration Statement).

      10(c) -- Master Services Agreement between The Taubman Realty Group 
               Limited  Partnership  and the  Manager  (incorporated  herein  by
               reference   to  Exhibit   10(c)   filed  with  the   Registration
               Statement).

   ** 10(d) -- Financial Performance Incentive Plan (incorporated herein by 
               reference  to Exhibit  10(d) filed with the  Registrant's  Annual
               Report on Form 10-K for the year ended  December  31, 1994 ("1994
               Form 10-K")).
   ** 10(e) -- Supplemental Retirement Savings Plan (incorporated  herein by 
               reference to Exhibit 10(e) filed with the 1994 Form 10-K).

   ** 10(f) -- The Taubman Company Long-Term Performance Compensation Plan
               (incorporated herein by reference to Exhibit 10(g) filed with the
               Registrant's  Annual  Report  on Form  10-K  for the  year  ended
               December 31, 1995).


                                       38

<PAGE>



      12    -- Statement Re:  Computation of Ratio of Earnings to Fixed Charges.

      21    -- Subsidiaries of The Taubman Realty Group Limited Partnership.

      23    -- Consent of Deloitte & Touche LLP.

      24    -- Powers of Attorney.

      27    -- Financial Data Schedule.


*  Certain  portions of this document have been omitted and  separately filed
   with the Securities and Exchange  Commission with a request for  confidential
   treatment.

** A management  contract or  compensatory  plan or  arrangement  required to be
   filed pursuant to Item 14(c) of Form 10-K.


                                       39

<PAGE>



14(b) Current Reports on Form 8-K.

      TRG  voluntarily  filed a current report on Form 8-K dated May 14, 1996 to
      report that TRG had signed an  agreement to acquire  Paseo Nuevo  shopping
      center, which is located in Santa Barbara, California.

      TRG voluntarily  filed a current report on Form 8-K dated June 27, 1996 to
      report the completion of TRG's acquisition of Paseo Nuevo.

      TRG filed a current  report of Form 8-K dated July 19, 1996,  (the "8-K"),
      to  report  the   acquisition   of  interests  in  Fairlane   Town  Center
      ("Fairlane"),  a regional  shopping center located in Dearborn,  Michigan.
      The  8-K  included  the  following  financial  statements  and  pro  forma
      information regarding the acquisition of Fairlane:

      Independent Auditors' Report.

      Fairlane  Town  Center,   Historical  Summaries  of  Revenues  and  Direct
      Operating  Expenses  for  Each of the  Three  Years  in the  Period  Ended
      December 31, 1995.

      The  Taubman  Realty  Group  Limited  Partnership,   Pro  Forma  Condensed
      Consolidated Balance Sheet, March 31, 1996 (unaudited).

      The  Taubman  Realty  Group  Limited  Partnership,   Pro  Forma  Condensed
      Consolidated  Statement  of  Operations,  Year  Ended  December  31,  1995
      (unaudited).

      The  Taubman  Realty  Group  Limited  Partnership,   Pro  Forma  Condensed
      Consolidated  Statement of  Operations,  Three Months Ended March 31, 1996
      (unaudited).

      The Taubman  Realty  Group  Limited  Partnership,  Statement  of Estimated
      Taxable Operating Results of Fairlane Town Center and Estimated Cash to be
      Made  Available by  Operations  of Fairlane Town Center for a Twelve Month
      Period Ended March 31, 1996 (unaudited).

14(c) The list of  exhibits  filed with this  report is set forth in response to
      Item  14(a)(3).  The  required  exhibit  index  has  been  filed  with the
      exhibits.

14(d) The  financial  statement  schedules of The Taubman  Realty Group  Limited
      Partnership  and the  financial  statements  and the  financial  statement
      schedules of the Unconsolidated Joint Ventures of The Taubman Realty Group
      Limited  Partnership  listed at Item  14(a)(2) are filed  pursuant to this
      Item 14(d).


                                       40

<PAGE>















                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP


                        CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF DECEMBER 31, 1995 AND 1996 AND FOR
            EACH OF THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996















                                      F-1

<PAGE>






                          INDEPENDENT AUDITORS' REPORT





Partners
The Taubman Realty Group Limited Partnership


  We have audited the  accompanying  consolidated  balance sheets of The Taubman
Realty Group Limited  Partnership  and  subsidiaries as of December 31, 1995 and
1996,  and  the  related  consolidated  statements  of  operations,  accumulated
deficiency  in assets,  and cash flows for each of the three years in the period
ended  December  31, 1996.  Our audits also  included  the  financial  statement
schedules  listed  in the  Index  at Item 14.  These  financial  statements  and
financial  statement  schedules  are  the  responsibility  of the  Partnership's
management.  Our  responsibility  is to  express  an  opinion  on the  financial
statements and financial statement schedules based on our audits.

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

  In our opinion, such consolidated  financial statements present fairly, in all
material  respects,  the financial  position of The Taubman Realty Group Limited
Partnership  and  subsidiaries as of December 31, 1995 and 1996, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period ended December 31, 1996 in conformity with generally accepted  accounting
principles.  Also, in our opinion,  such  financial  statement  schedules,  when
considered in relation to the basic consolidated financial statements taken as a
whole,  present  fairly  in all  material  respects  the  information  set forth
therein.



DELOITTE & TOUCHE LLP

Detroit, Michigan
February 17, 1997


                                      F-2

<PAGE>



                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEET
                                 (in thousands)




                                                           December 31
                                                     ----------------------
                                                        1995        1996
                                                        ----        ----

Assets:
  Properties (Notes 5 and 8)                         $  926,207  $1,126,873
    Accumulated depreciation and amortization           200,440     234,030
                                                     ----------  ----------
                                                     $  725,767  $  892,843

  Cash and cash equivalents                              16,836       7,902
  Accounts and notes receivable, less allowance
    for doubtful accounts of $381 and $393
    in 1995 and 1996                                     14,192      20,751
  Accounts receivable from related parties (Note 10)      5,234       6,293
  Deferred charges and other assets (Notes 6 and 9)      42,327      41,494
                                                     ----------  ----------
                                                     $  804,356  $  969,283
                                                     ==========  ==========

Liabilities:
  Unsecured notes payable (Note 8)                   $  632,575  $  786,705
  Mortgage notes payable (Note 8)                       160,496     159,703
  Other notes payable  (Note 8)                         162,178      54,997
  Capital lease obligation (Note 9)                      14,418      39,849
  Accounts payable and other liabilities (Note 7)        82,603      84,505
  Distributions in excess of net income of
    unconsolidated Joint Ventures (Note 4)              154,933     135,662
                                                     ----------  ----------
                                                     $1,207,203  $1,261,421

Commitments and Contingencies
  (Notes 9, 11, 13 and 15)

Accumulated Deficiency in Assets                       (402,847)   (292,138)
                                                     ----------  ----------
                                                     $  804,356  $  969,283
                                                     ==========  ==========




                       See notes to financial statements.


                                      F-3

<PAGE>



                 THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

                     CONSOLIDATED STATEMENT OF OPERATIONS
                       (in thousands, except unit data)


                                                Year Ended December 31
                                           -------------------------------
                                              1994       1995      1996
                                              ----       ----      ----

Revenues:
  Minimum rents                            $111,373   $130,418   $150,577
  Percentage rents                            3,788      5,617      6,073
  Expense recoveries                         68,075     75,293     85,502
  Other                                       8,981     12,227     13,044
  Revenue from management, leasing and
    development services (Note 10)            4,917      5,363      7,533
                                           --------   --------   --------
                                           $197,134   $228,918   $262,729
                                           --------   --------   --------

Operating Costs:
  Recoverable expenses                     $ 58,355   $ 62,910   $ 72,093
  Other operating                            20,974     22,512     26,518
  Management, leasing and
    development services                      3,538      3,696      4,212
  General and administrative                 17,942     19,790     21,803
  Interest expense                           47,732     65,858     70,454
  Depreciation and amortization              27,653     32,393     35,770
                                           --------   --------   --------
                                           $176,194   $207,159   $230,850
                                           --------   --------   --------
Income before equity in income
  of unconsolidated Joint Ventures
  and before extraordinary items           $ 20,940   $ 21,759   $ 31,879
Equity in income before extraordinary
  items of unconsolidated Joint Ventures
  (including $5,005 in 1995, related to
  the disposition of Bellevue) (Note 4)      51,263     57,940     52,215
                                           --------   --------   --------
Income before extraordinary items          $ 72,203   $ 79,699   $ 84,094
Extraordinary items (Notes 4 and 8)         (44,731)    16,627     (1,328)
                                           --------   --------   --------
Net Income                                 $ 27,472   $ 96,326   $ 82,766
                                           ========   ========   ========

Allocation of net income:
  General Partners                         $ 22,489   $ 77,077   $ 64,804
  Limited Partners                            4,983     19,249     17,962
                                           --------   --------   --------
                                           $ 27,472   $ 96,326   $ 82,766
                                           ========   ========   ========

Earnings per Unit of Partnership
  Interest (Note 1):
  Income before extraordinary items        $  1,164   $  1,255   $  1,290
  Extraordinary items                          (721)       261        (20)
                                           --------   --------   --------
  Net Income                               $    443   $  1,516   $  1,270
                                           ========   ========   ========

Weighted Average Number of Units of
  Partnership Interest Outstanding           62,028     63,521     65,109
                                           ========   ========   ========




                       See notes to financial statements.


                                      F-4

<PAGE>



                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

           CONSOLIDATED STATEMENT OF ACCUMULATED DEFICIENCY IN ASSETS
                  Years Ended December 31, 1994, 1995 and 1996
                                 (in thousands)





                                         General      Limited
                                         Partners     Partners      Total
                                        ----------   ----------  ----------

Balance, January 1, 1994                $(267,826)   $(58,771)   $(326,597)
Change of ownership (Notes 2 and 3)        31,973      (2,317)      29,656
Distributions                             (93,059)    (20,420)    (113,479)
Net income                                 22,489       4,983       27,472
                                        ---------    --------    ---------
Balance, December 31, 1994              $(306,423)   $(76,525)   $(382,948)
Distributions                             (93,000)    (23,225)    (116,225)
Net income                                 77,077      19,249       96,326
                                        ---------    --------    ---------
Balance, December 31, 1995              $(322,346)   $(80,501)   $(402,847)
Change of ownership (Notes 2 and 3)       124,813      22,229      147,042
Distributions                             (93,513)    (25,586)    (119,099)
Net income                                 64,804      17,962       82,766
                                        ---------    --------    ---------
Balance, December 31, 1996              $(226,242)   $(65,896)   $(292,138)
                                        =========    ========    =========




                       See notes to financial statements.


                                      F-5

<PAGE>



                 THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                (in thousands)


                                                 Year Ended December 31
                                            -------------------------------
                                                1994       1995      1996
                                                ----       ----      ----

Cash Flows From Operating Activities:
 Income before extraordinary items          $  72,203  $  79,699  $  84,094
 Adjustments to reconcile income before
   extraordinary items to net cash
   provided by operating activities:
   Depreciation and amortization               27,653     32,393     35,770
   Income before extraordinary items in
     excess of distributions from
     unconsolidated Joint Ventures                          (206)
   Provision for losses on accounts
    receivable                                  1,323        818      1,295
   Amortization of deferred financing costs     1,900      2,250      2,024
   Other                                          785      3,062        615
   Gains on sales of land                        (891)      (818)    (1,041)
 Increase (decrease) in cash attributable
   to changes in assets and liabilities:
   Receivables, deferred charges and
    other assets                               (9,909)   (11,254)    (8,448)
   Accounts payable and other liabilities      11,096      5,501     (1,275)
                                            ---------  ---------  ---------
Net Cash Provided By Operating Activities   $ 104,160  $ 111,445  $ 113,034
                                            ---------  ---------  ---------

Cash Flows From Investing Activities:
 Purchase of interests in Centers (Note 3)  $ (82,096)            $(125,904)
 Additions to properties                      (67,752) $ (70,691)   (25,472)
 Proceeds from sales of land                    1,767      1,966      1,936
 Contributions to unconsolidated
  Joint Ventures                                                    (21,397)
 Distributions from unconsolidated Joint
   Ventures in excess of income before
   extraordinary items                         32,020                11,720
                                            ---------  ---------  ---------
Net Cash Used In Investing Activities       $(116,061) $ (68,725) $(159,117)
                                            ---------  ---------  ---------

Cash Flows From Financing Activities:
 Debt proceeds                              $ 613,117  $ 200,747  $ 275,212
 Debt payments                                (67,853)   (13,689)  (229,212)
 Extinguishment of debt                      (415,010)  (105,827)   (35,964)
 Debt issuance costs                           (5,408)    (1,599)      (830)
 Issuance of units of partnership
  interest (Notes 2 and 3)                                          147,042
 Cash distributions                          (113,479)  (116,225)  (119,099)
                                            ---------  ---------  ---------
Net Cash Provided By (Used In)
 Financing Activities                       $  11,367  $ (36,593) $  37,149
                                            ---------  ---------  ---------

Net Increase (Decrease) In Cash             $    (534) $   6,127  $  (8,934)

Cash and Cash Equivalents
 at Beginning of Year                          11,243     10,709     16,836
                                            ---------  ---------  ---------

Cash and Cash Equivalents at End of Year    $  10,709  $  16,836  $   7,902
                                            =========  =========  =========

                       See notes to financial statements.


                                      F-6

<PAGE>



                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       Three Years Ended December 31, 1996


Note 1 - Summary of Significant Accounting Policies

General

  The Taubman Realty Group Limited  Partnership  (TRG) engages in the ownership,
operation,   management,  leasing,  acquisition,   development,   redevelopment,
expansion,  financing  and  refinancing  of  regional  retail  shopping  centers
(Taubman Shopping Centers) and interests  therein.  The Taubman Shopping Centers
are located primarily in major metropolitan areas in the United States including
New York City, Chicago, Los Angeles, San Francisco,  Detroit,  Washington,  D.C.
and Phoenix. Taubman Centers, Inc. (TCO) is the managing general partner of TRG.
The GMPTS Limited Partnership  (GMPTS), TG Partners Limited Partnership (TG) and
Taub-Co Management, Inc. are also general partners.

  At  December  31,  1996,  TRG  had  69,998  units  of   partnership   interest
outstanding,  of which 54,209 units represent general partnership interests.  At
December  31,  1996,  TRG was owned  36.68% by TCO,  36.18% by GMPTS,  20.23% by
certain  present and former key executives (and certain of their family members)
of the  predecessor  to The Taubman  Company  Limited  Partnership,  the Manager
(collectively,  the Taubman  Group),  and TG, and 6.91% by certain  former joint
venture  partners and certain of the former  owners of Biltmore.  The members of
the Taubman Group (other than TG and Taub-Co Management, Inc.), the former joint
venture partners and the former owners of Biltmore are limited partners of TRG.

  At both  December  31,  1994 and 1995,  TRG had  63,521  units of  partnership
interest  outstanding  (of which  50,828  units at  December  31,  1994 and 1995
represented general partnership interests).  At both December 31, 1994 and 1995,
TRG was owned 35.10% by TCO,  39.87% by GMPTS,  22.29% by the Taubman  Group and
TG, and 2.74% by a former joint venture partner and certain of the former owners
of Biltmore.

  Net income and losses and  distributions  of TRG are  allocated to the general
and limited partners of TRG in accordance with their percentage  ownership.  The
financial  statements  include only those  assets,  liabilities,  and results of
operations  which relate to the business of TRG. No provision  has been made for
income  taxes  since  these  taxes  are  the  responsibility  of the  individual
partners.

Basis of Presentation

  The  consolidated  financial  statements  include the  accounts of TRG and its
consolidated  subsidiaries.  Investments in entities unilaterally  controlled by
ownership or contractual  agreements are  consolidated;  investments in entities
not unilaterally  controlled (Joint Ventures) are accounted for under the equity
method.

  The Manager,  which is approximately  99% beneficially  owned by TRG, provides
all property  management and leasing  services for all Taubman  Shopping Centers
and provides  corporate,  development  and  acquisition  services.  Intercompany
balances and profits are eliminated in consolidation.

  Dollar  amounts  presented  in tables  within  the  notes to the  consolidated
financial statements are stated in thousands of dollars, except for unit data in
Notes 3, 11 and 14 or as otherwise noted.


                                      F-7

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Revenue Recognition

  Shopping  center space is generally  leased to specialty  retail tenants under
short and intermediate  term leases which are accounted for as operating leases.
Minimum rents are recognized on an accrual basis as earned,  the result of which
does not differ  materially from a straight-line  method.  Percentage  rents are
recognized on an accrual basis as earned.  Expense recoveries,  which include an
administrative fee, are recognized as revenue in the period applicable costs are
chargeable to tenants.

Depreciation and Amortization

  Buildings,  improvements  and equipment,  stated at cost,  are  depreciated on
straight-line or double-declining  balance bases over the estimated useful lives
of the assets,  which range from 5 to 50 years.  Tenant  allowances and deferred
leasing  costs are  amortized  on a  straight-line  basis  over the lives of the
related leases.

Earnings Per Unit of Partnership Interest

  The computation of net income per unit of partnership interest is based on net
income and the weighted average number of partnership units outstanding. The TRG
units of partnership  interest  issuable under TRG's incentive option plan (Note
11) have not been  included  in the  computation  because  the  number  of units
issuable  (using the treasury stock method) had a minimal effect on earnings per
partnership unit.

Capitalization

  Costs related to the acquisition, development, construction and improvement of
properties are capitalized. Interest costs are capitalized until construction is
substantially  complete.  Properties  are reviewed for  impairment  if events or
changes in  circumstances  indicate that the carrying  amounts of the properties
may  not  be  recoverable.   Costs  of  potentially   unsuccessful   development
pre-construction  activities  are  provided  for by  charges to  operations  and
written off if abandoned.

Cash and Cash Equivalents

  Cash  equivalents  consist of highly liquid  investments with a maturity of 90
days or less at the date of purchase.

Deferred Charges

  Direct  financing  and interest  rate hedging costs are deferred and amortized
over the terms of the related  agreements  as a component  of interest  expense.
Direct costs related to leasing  activities are  capitalized  and amortized on a
straight-line  basis over the lives of the related  leases.  All other  deferred
charges are amortized on a straight-line  basis over the terms of the agreements
to which they relate.

Stock-based Compensation Plans

  Stock-based  compensation  plans are  accounted  for under APB  Opinion 25 and
related interpretations.


                                      F-8

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Interest Rate Hedging Agreements

  Premiums paid for interest  rate caps are  amortized to interest  expense over
the terms of the cap agreements.  Amounts  received under the cap agreements are
accounted  for on an accrual  basis,  and  recognized as a reduction of interest
expense. The differential to be paid or received on swap agreements is accounted
for on an accrual basis and recognized as an adjustment to interest expense.

Use of Estimates

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

Fair Value of Financial Instruments

  The following  methods and assumptions were used to estimate the fair value of
financial instruments:

   The carrying  value  of  cash  and  cash  equivalents,  accounts  and  notes
       receivable, and accounts payable approximates fair value due to the short
       maturity of these instruments.

   The fair value of TRG's debt is estimated  based on quoted  market  prices if
       available,  or on the current rates  available to TRG for debt of similar
       terms and  maturity and the  assumption  that debt will be prepaid at the
       earliest possible date.

   The fair value of interest  rate hedging  instruments  is the amount that TRG
       would receive or pay to terminate  the  agreement at the reporting  date,
       taking into account current interest rates.


Note 2 - Equity Transactions

  In December 1996,  TRG issued 3,048 units of  partnership  interest to TCO for
the $75 million proceeds from TCO's December 1996 equity offering.  TRG bore all
expenses of TCO's offering,  which have been accounted for as a reduction of the
proceeds from TRG's  issuance of units.  Also in December  1996,  TRG issued 333
units of  partnership  interest in  connection  with the  exercise of  incentive
options (Note 11).  Concurrently under TCO's continuing offer to exchange shares
of common stock for certain  partnership  interests in TRG,  TCO  exchanged  652
thousand  shares  of  common  stock  for  the  newly  issued  333  units  of TRG
partnership  interest.  TRG used the net proceeds  from the issuance of units to
pay down short term  floating rate debt and to acquire La Cumbre Plaza (Note 3).
Additionally  in 1996,  TRG  issued  3,096  units  of  partnership  interest  in
connection  with the  acquisition  of the  remaining  interest in Fairlane  Town
Center (Note 3).

  In December 1994, TRG issued 1,540 units of partnership interest in connection
with the acquisition of Biltmore Fashion Park (Biltmore) (Note 3).


                                      F-9

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 3 - Acquisitions

Acquisition of La Cumbre Plaza

  In December  1996,  TRG acquired La Cumbre Plaza (La Cumbre) in Santa Barbara,
California  for  $22.25  million in cash.  The Center is subject to four  ground
leases  (three of which  are  participating).  The  leases  expire in 2028.  The
acquisition was accounted for at fair value. The operating  results of La Cumbre
have been consolidated in TRG's financial  statements from the acquisition date.
The pro forma effect of the  acquisition on 1995 and 1996 operating  results was
immaterial.

Acquisition of Remaining Interest in Fairlane Town Center

  In July 1996, TRG completed  transactions  that resulted in the acquisition of
the 75% interest in Fairlane Town Center (Fairlane),  previously held by a Joint
Venture Partner.  In connection with the transactions,  TRG issued to the former
Joint Venture  Partner 3,096 units of  partnership  interest,  exchangeable  for
approximately 6.1 million shares of TCO common stock,  which had a closing price
of $10.75  per share on the day prior to the  issuance  date.  The units  issued
represent  limited   partnership  units.  TRG  also  assumed  mortgage  debt  of
approximately  $26  million,  representing  the former Joint  Venture  Partner's
beneficial interest in the $34.6 million mortgage encumbering the property.  TRG
used  unsecured  debt to fund the repayment of the 9.73% mortgage and prepayment
penalty of approximately  $1.2 million.  The acquisition,  which resulted in TRG
owning 100% of Fairlane,  was accounted for at fair value. The operating results
of  Fairlane  have been  consolidated  in TRG's  financial  statements  from the
acquisition  date. Prior to the acquisition date, TRG's interest in Fairlane was
accounted for under the equity method as a Joint Venture.

  Pro forma results of TRG's operations,  assuming the Fairlane  acquisition had
occurred on January 1, 1995, are as follows:
                                                       Pro Forma
                                                 ---------------------
                                                       Year Ended
                                                      December 31
                                                      -----------
                                                    1995        1996
                                                    ----        ----

    Revenues                                     $ 257,258   $ 277,739
    Income before extraordinary items               87,029      87,158
    Net income                                     103,656      85,830

    Earnings per unit of partnership interest:
         Income before extraordinary items         $ 1,306     $ 1,304
         Net income                                  1,556       1,284
     
  The pro forma results are not  necessarily  indicative of what actual  results
would have been had the  acquisition  occurred on January 1, 1995,  nor are they
necessarily indicative of future results.

Acquisition of Paseo Nuevo

  In June 1996, TRG acquired  Paseo Nuevo located in Santa Barbara,  California,
for $37 million in cash. The Center is owned subject to two participating ground
leases with remaining  terms of  approximately  70 years.  The  acquisition  was
recorded  at fair  value.  The  operating  results  of  Paseo  Nuevo  have  been
consolidated  in TRG's financial  statements from the acquisition  date. The pro
forma effect of the acquisition on 1995 and 1996 net income was immaterial.


                                      F-10

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Acquisition of Biltmore Fashion Park

  In December 1994, TRG acquired  Biltmore Fashion Park  (Biltmore),  a regional
shopping center located in Phoenix, Arizona, for $81.5 million in cash and 1,540
TRG units of partnership interest  (exchangeable for approximately three million
shares of TCO common stock, having a closing price of $9.875 on the day prior to
the purchase date). The units issued represent  limited  partnership  interests.
TRG also assumed  assessment  bond  obligations  of  approximately  $3.6 million
encumbering the Center.  The bond service costs are recovered from tenants.  The
acquisition was accounted for at fair value.  The operating  results of Biltmore
have been consolidated in TRG's financial  statements from the acquisition date.
The  pro  forma  effect  of  the  acquisition  on  1994  operating  results  was
immaterial.


Note 4 - Investments in Joint Ventures

  Following are TRG's  investments  in various real estate Joint  Ventures which
own regional retail shopping  centers.  TRG is also the managing general partner
of these Joint Ventures. TRG's interest in each Joint Venture is as follows:

                                                                   TRG's %
                                                                  Ownership
                                                                    as of
         Joint Venture           Taubman Shopping Center      December 31, 1996
     ---------------------       -----------------------      ------------------

     Arizona Mills, L.L.C.       Arizona Mills (under              35% (Note 15)
                                   construction)
     Fairfax Associates          Fair Oaks                         50
     Lakeside Mall Limited       Lakeside                          50
       Partnership
     Rich-Taubman Associates     Stamford Town Center              50
     Taubman-Cherry Creek        Cherry Creek                      50
       Limited Partnership
     Taubman MacArthur           MacArthur Center (under           70
       Associates Limited          construction)
       Partnership               
     Twelve Oaks Mall            Twelve Oaks Mall                  50
       Limited Partnership
     West Farms Associates       Westfarms                         79
     Woodfield Associates        Woodfield                         50
     Woodland                    Woodland                          50

  Arizona Mills, L.L.C. is developing Arizona Mills, a value super-regional mall
in  Tempe,  Arizona,  which  will  open  in  November  1997.  Taubman  MacArthur
Associates  Limited  Partnership  is  developing  MacArthur  Center in  Norfolk,
Virginia.  MacArthur  Center is  expected  to open in the  spring  of 1999.  TRG
transferred  to these Joint  Ventures  its  accumulated  pre-construction  costs
related to these projects (Note 5).

  In  December  1995,  the bank  group  holding  the $99.5  million  nonrecourse
mortgage  encumbering  Bellevue  Center  acquired  title to the Center through a
nonjudicial  foreclosure  sale.  The mortgage  matured on November 1, 1995.  TRG
ceased to recognize  the results of Bellevue  Associates  (Bellevue),  TRG's 60%
owned Joint Venture that owned the Center,  as of November 1, 1995.  TRG's share
of Bellevue's net loss from operations for 1994 and the ten months ended October
31, 1995, was $1.1 million and $0.7 million, respectively.


                                      F-11

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


  As a result of the foreclosure and debt extinguishment, Bellevue recognized an
extraordinary gain of approximately  $31.4 million,  representing the difference
between the carrying value of the debt and the fair value of the Center,  net of
related transaction costs on the extinguishment of debt, and an ordinary gain of
approximately  $4.4  million,  representing  the excess of the fair value of the
Center over its carrying value.  TRG's share of the  extraordinary  gain and its
gain on the disposition of the Center,  which was based on the carrying value of
TRG's investment in Bellevue, were $18.9 million and $5.0 million, respectively.
The carrying value of TRG's investment in Bellevue differed from TRG's 60% share
of Bellevue's  net deficiency in assets due to the  elimination of  intercompany
profits on sales of services.

  In May 1994,  West  Farms  Associates  (Westfarms)  redeemed  a  portion  of a
deceased Joint Venture Partner's interest for $12.7 million. As a result,  TRG's
ownership of Westfarms increased to approximately 79%.

  TRG reduces its investment in Joint Ventures to eliminate intercompany profits
on sales of services that are  capitalized by the Joint  Ventures.  As a result,
the  carrying  value of TRG's  investment  in Joint  Ventures is less than TRG's
share  of the  deficiency  in  assets  reported  in  the  Balance  Sheet  of the
Unconsolidated Joint Ventures of the Taubman Realty Group Limited Partnership by
$4.8 million and $8.6 million in 1995 and 1996. These  differences are amortized
over the useful lives of the related assets.


                                      F-12

<PAGE>
                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

  Combined  balance  sheet and results of  operations  information  is presented
below for all Joint  Ventures,  followed  by TRG's  beneficial  interest  in the
combined information. Beneficial interest is calculated based on TRG's ownership
interest in each of the Joint Ventures.

                                                       December 31
                                                  ----------------------
                                                     1995        1996
                                                     ----        ----
Assets:
  Properties                                      $ 373,803    $ 461,658
  Other assets                                      109,668       71,278
                                                  ---------    ---------
                                                  $ 483,471    $ 532,936
                                                  =========    =========
Liabilities and partners'
 accumulated deficiency in assets:
  Debt                                            $ 741,121    $ 724,162
  Capital lease obligation                                         5,000
  Other liabilities                                  50,227       53,817
  TRG accumulated deficiency in assets             (150,117)    (127,097)
  Joint Venture Partners'
   accumulated deficiency in assets                (157,760)    (122,946)
                                                  ---------    ---------
                                                  $ 483,471    $ 532,936
                                                  =========    =========

TRG accumulated deficiency in assets (above)      $(150,117)   $(127,097)
Elimination of intercompany profit                   (4,816)      (8,565)
                                                  ---------    ---------
Distributions in excess of net income
 of unconsolidated Joint Ventures                 $(154,933)   $(135,662)
                                                  =========    =========

                                                Year Ended December 31
                                            ------------------------------
                                              1994       1995       1996
                                              ----       ----       ----
Revenues                                    $268,815   $287,180   $265,337
                                            --------   --------   --------
Recoverable and other operating expenses    $103,784   $106,859   $100,164
Interest expense                              51,836     57,857     52,994
Depreciation and amortization                 24,177     25,471     23,837
                                            --------   --------   --------
Total operating costs                       $179,797   $190,187   $176,995
                                            --------   --------   --------
Income before extraordinary items           $ 89,018   $ 96,993   $ 88,342
Extraordinary items                           (3,468)    30,761
                                            --------   --------   --------
Net income                                  $ 85,550   $127,754   $ 88,342
                                            ========   ========   ========

Net income attributable to TRG              $ 43,266   $ 68,498   $ 47,413
Extraordinary items attributable to TRG        1,949    (18,327)
Realized intercompany profit                   6,048      7,769      4,802
                                            --------   --------   --------
Equity in income before extraordinary
  items of unconsolidated Joint Ventures    $ 51,263   $ 57,940   $ 52,215
                                            ========   ========   ========

                                                Year Ended December 31
                                            ------------------------------
                                              1994       1995       1996
                                              ----       ----       ----
TRG's beneficial interest in 
unconsolidated Joint Ventures' operations:
  Revenues less recoverable
   and other operating expenses             $ 90,332   $ 96,120   $ 91,708
  Ordinary gain on disposition of Bellevue                5,005
  Interest expense                           (26,590)   (30,396)   (27,738)
  Depreciation and amortization              (12,479)   (12,789)   (11,755)
                                            --------   --------   --------
  Income before extraordinary items         $ 51,263   $ 57,940   $ 52,215
                                            ========   ========   ========

                                      F-13

<PAGE>



                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 5 - Properties

  Properties,  including peripheral land and development pre-construction costs,
at December 31, 1995 and 1996 are summarized as follows:


                                                 1995            1996
                                                 ----            ----
Land                                         $  49,468      $   65,127
Buildings, improvements and equipment          798,553         957,185
Construction in process                         28,135          32,886
Assets under capital lease (Note 9)             14,418          39,849
Peripheral land                                  9,959           7,414
                                             ---------      ----------
                                             $ 900,533      $1,102,461
Development pre-construction costs
(See below)                                     25,674          24,412
                                             ---------      ----------
                                             $ 926,207      $1,126,873
                                             =========      ==========


  Depreciation expense for 1994, 1995 and 1996 was $21.8 million,  $26.6 million
and $29.6  million.  Peripheral  land  consists  primarily of  undeveloped  land
generally  adjacent to the Taubman  Shopping  Centers.  Construction  in process
includes costs related to expansions and other  improvements at various existing
centers and leasehold improvements for The Mall at Tuttle Crossing (Note 9).

  TRG  actively  pursues  opportunities  for  the  development  of new  regional
shopping  centers.  Development  pre-construction  activities,  including market
research,  site location,  environmental  work,  zoning permits and obtaining of
anchor  commitments,  may  take  years  to  accomplish  and  ultimately  may  be
abandoned.  TRG provides a reserve for the cost of such potentially unsuccessful
pre-construction activities.

  The activity in development pre-construction costs and the related reserve for
1995 and 1996 is summarized as follows:


                                           Costs      Reserve       Net
                                           -----      -------       ---
Balance, January 1, 1995                  $31,536    $ (8,348)    $23,188
Costs incurred                             16,595                  16,595
Charged to operations                                  (6,814)     (6,814)
Transfers to construction in process       (7,295)                 (7,295)
Costs of projects written off              (4,964)      4,964
                                          -------    --------     -------
Balance, December 31, 1995                $35,872    $(10,198)    $25,674
Costs incurred                             12,556                  12,556
Charged to operations                                  (8,501)     (8,501)
Transfers to investments in
 Joint Ventures                            (5,317)                 (5,317)
Costs of projects written off              (6,223)      6,223
                                          -------    --------     -------
Balance, December 31, 1996                $36,888    $(12,476)    $24,412
                                          =======    ========     =======


                                      F-14

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 6 - Deferred Charges and Other Assets

  Deferred charges and other assets at December 31, 1995 and 1996 are summarized
as follows:

                                              1995            1996
                                              ----            ----
Leasing                                    $ 34,173        $ 38,353
Accumulated amortization                    (19,618)        (21,284)
                                           --------        --------
                                           $ 14,555        $ 17,069
Prepaid ground rent (Note 9)                 10,911           6,122
Deferred financing costs, net                 9,494           9,343
Other, net                                    7,367           8,960
                                           --------        --------
                                           $ 42,327        $ 41,494
                                           ========        ========


Note 7 - Other Liabilities

  In November 1992, the General Motors  Hourly-Rate  Employes  Pension Trust and
the General Motors Salaried Employes Pension Trust (GM Trusts), which indirectly
own  interests  in TRG,  entered  into an  agreement  with TCO (the Cash  Tender
Agreement)  pursuant to which the GM Trusts have certain  rights to cause TCO to
purchase  their  interests  in TRG. TRG will pay the GM Trusts an amount (not to
exceed $10.9 million in the aggregate over the term of the Partnership) equal to
5.5% of the  amounts  that  TCO pays to the GM  Trusts  under  the  Cash  Tender
Agreement.


Note 8 - Debt

Unsecured Notes Payable

  Unsecured  notes  payable  at  December  31,  1995  and 1996  consists  of the
following:

                                                   1995         1996
                                                   ----         ----

  7% Notes due 2003                             $199,644     $199,679
  8% Notes due 1999                              199,933      199,950
  Floating Rate Notes due 1997                    99,900       99,955
  Medium-Term Notes:
   Floating rate notes:
     Three month LIBOR plus 0.80% due 1998                   $ 20,000
     Three month LIBOR plus 0.77% due 1998                     14,000
     Three month LIBOR plus 0.90% due 1999                     20,000
     Three month LIBOR plus 1.05% due 2001                     30,000
   Fixed rate notes:
     7.38% Notes due 2000                       $ 13,000       13,000
     7.31% Notes due 2000                          2,000        2,000
     7.19% Notes due 2000                          5,000        5,000
     7.22% Notes due 2001                          8,400        8,400
     8.00% Notes due 2001                                      69,976
     7.40% Notes due 2002                          5,000        5,000
     7.50% Notes due 2002                         99,698       99,745
                                                --------     --------
   Total Medium-Term Notes                      $133,098     $287,121
                                                --------     --------
  Total Unsecured Notes Payable                 $632,575     $786,705
                                                ========     ========


                                      F-15

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


  In 1995, TRG entered into a swap agreement to effectively change the character
of its  Floating  Rate  Notes due 1997 to a fixed rate  obligation  at a rate of
6.15% from three month LIBOR plus 0.5%.

  TRG has issued $287 million of Medium-Term Notes since the program's inception
in 1995 under TRG's $500 million shelf registration statement.

  TRG's loan  agreements and indenture  contain  various  restrictive  covenants
including  limitations  on the amount of secured and unsecured  debt and minimum
debt service coverage ratios,  the latter being the most restrictive.  TRG is in
compliance with all covenants.

Mortgage Notes Payable

  Mortgage  notes  payable  at  December  31,  1995  and  1996  consists  of the
following:

                                              1995        1996
                                              ----        ----

      Fixed rate, amortizing               $ 14,496    $ 13,703
      Fixed rate, nonamortizing             146,000     146,000
                                           --------    --------
                                           $160,496    $159,703
                                           ========    ========

  Mortgage debt is  collateralized by properties with a net book value of $148.2
million as of December 31, 1996. Of the December 31, 1996 balance, $13.7 million
is due in monthly  installments  with  maturities at various dates through 2019,
and fixed interest  rates between 6.00% and 7.20% or a weighted  average rate of
6.79%. The remainder of the balance represents an 8.36% note due in 2004.

  The following table presents scheduled  principal payments on mortgage debt as
of December 31, 1996.

                        1997                  $    838
                        1998                       896
                        1999                       738
                        2000                       563
                        2001                       602
                        Thereafter             156,066
                                              --------
                        Total                 $159,703
                                              ========




                                      F-16

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Other Notes Payable

  Other notes payable at December 31, 1995 and 1996 consists of the following:

                                                            1995       1996
                                                            ----       ----
  Commercial  paper,  face amount of $45 million,
    supported by a line of credit facility up to
    $75 million, secured by deed of trust on one
    Taubman Shopping Center, 5.50% stated interest
    rate at December 31, 1996                            $ 74,878   $ 44,897
  Notes payable to banks
    Line of credit,  unsecured,  maximum  borrowing
      available of $200 million, interest at LIBOR
      plus 1.50%, maturing May 1998 (see below)            76,500
    Line of credit, unsecured, maximum borrowing
      available of $30 million, interest based on a
      variable bank borrowing rate, 6.50% at
      December 31, 1996, maturing August 1998              10,800     10,100
                                                         --------   --------
                                                         $162,178   $ 54,997
                                                         ========   ========

  Commercial  paper is generally  sold with a 30 day  maturity.  The  underlying
credit facility is renewable quarterly for a twelve month period.

  As of December 31, 1996, TRG had available for general partnership purposes an
unsecured  revolving  credit  facility of $200  million,  which was scheduled to
expire in May 1998.  In March 1997,  TRG completed  the  renegotiation  of terms
increasing  the  facility to $300  million,  reducing  the  current  contractual
interest rate by 60 basis points to LIBOR plus 90 basis points and extending the
maturity until March 2000.  Included in the credit facility is a competitive bid
option program which allows TRG to hold auctions,  among the banks participating
in the facility,  for short term borrowings of up to $150 million.  The facility
agreements contain various restrictive  covenants,  including limitations on the
amount of secured and unsecured debt and minimum debt service  coverage  ratios,
the latter being the most restrictive. TRG is in compliance with all covenants.

Interest Expense

  Interest  paid in 1994,  1995 and 1996,  net of  amounts  capitalized  of $7.1
million,  $6.9  million and $5.7  million in 1994,  1995 and 1996,  approximated
$47.7 million, $62.2 million and $69.8 million.

Extraordinary Items

  In 1996,  TRG  recognized  an  extraordinary  charge to income of $1.3 million
primarily  consisting of a prepayment  penalty related to the  extinguishment of
debt at a wholly owned Center. In 1995, TRG recognized an extraordinary  gain of
approximately  $18.9 million,  related to the extinguishment of debt at Bellevue
(Note 4) and $2.2  million of  extraordinary  charges,  consisting  primarily of
prepayment  penalties,  related to the extinguishment of debt of TRG and a Joint
Venture. TRG recognized  extraordinary  charges to income in 1994, consisting of
prepayment   penalties   of   approximately   $44.7   million   related  to  the
extinguishment of secured debt of TRG and certain of its Joint Ventures.


                                      F-17

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Interest Rate Hedging Instruments

  TRG enters into interest rate  agreements to reduce its exposure to changes in
the cost of its  floating  rate debt.  As of December 31,  1996,  the  following
interest rate cap agreements were outstanding:


      Notional                  Frequency
       Amount        LIBOR       of Rate
   (in millions)    Cap Rate     Resets                    Term
   -------------    --------    --------      ------------------------------
       $ 100          6.0%       Monthly       January 1996 to January 1997
          75          6.0%       Monthly       January 1996 to January 1997
         100          6.5%       Monthly       January 1997 to January 1998
         100          6.5%    Three Months    November 1997 to December 1998

  TRG also has a swap agreement  which hedges TRG's Floating Rate Notes due 1997
(see Unsecured Notes Payable above).

  TRG  is  exposed  to  credit  risk  in  the  event  of  nonperformance  by the
counterparties  to its  interest  rate  cap  and  swap  agreements,  but  has no
off-balance  sheet risk of loss. TRG anticipates  that its  counterparties  will
fully perform their obligations under the agreements.


Fair Value of Financial Instruments Related to Debt

  The estimated fair values of TRG's financial  instruments at December 31, 1995
and 1996 are as follows:


                                                December 31
                               --------------------------------------------
                                        1995                   1996
                               --------------------   ---------------------
                               Carrying      Fair      Carrying      Fair
                                 Value       Value       Value       Value
                               --------    --------    --------    --------
Unsecured notes payable        $632,575    $651,200    $786,705    $794,828
Mortgage notes payable          160,496     175,018     159,703     168,229
Other notes payable             162,178     162,178      54,997      54,997
Interest rate instruments:
  In a receivable position          294          33         964         412
  In a payable position              19        (718)        (17)        (76)


                                      F-18

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Beneficial Interest in Debt and Interest

  TRG's beneficial  interest in the debt (excluding capital lease  obligations),
capitalized interest, and interest expense (net of capitalized interest) of TRG,
its consolidated  subsidiaries and its unconsolidated Joint Ventures (Note 4) is
summarized as follows:

                                          TRG's Share    TRG's         TRG's
                                   Joint    of Joint  Consolidated  Beneficial
                                 Ventures   Ventures  Subsidiaries   Interest
                                 --------   --------  ------------   -------
Debt as of:
  December 31, 1995              $741,121  $ 390,680   $  955,249  $1,345,929
  December 31, 1996               724,162    396,962    1,001,405   1,398,367


Capitalized interest:
                 1994             $ 3,604    $ 1,801      $ 7,098     $ 8,899
                 1995               3,481      1,799        6,852       8,651
                 1996               4,790      3,187        5,682       8,869

Interest expense
(net of capitalized interest):
                 1994            $ 51,836   $ 26,590     $ 47,732    $ 74,322
                 1995              57,857     30,396       65,858      96,254
                 1996              52,994     27,738       70,454      98,192


Note 9 - Leases

Operating Leases

  Shopping  center  space is leased to tenants and certain  anchors  pursuant to
lease agreements.  Tenant leases typically provide for guaranteed  minimum rent,
percentage  rent and other  charges to cover  certain  operating  costs.  Future
minimum rent under operating leases in effect at December 31, 1996 for operating
centers,  assuming no new or renegotiated  leases or option extensions on anchor
agreements, is summarized as follows:

                     1997                 $ 169,067
                     1998                   160,302
                     1999                   146,228
                     2000                   123,528
                     2001                   106,405
                     Thereafter             338,880

  Minimum rent received from former related parties was $2.1 million in 1994.

  Revenues  derived  from  the  combined  operations  of  The  Limited  provided
approximately  9.5%,  8.2% and 8.0% of total  revenues  in 1994,  1995 and 1996,
respectively.  Amounts  due from The  Limited  at  December  31,  1995 were $134
thousand. There were no amounts due from The Limited at December 31, 1996.


                                      F-19

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


  Certain Taubman Shopping Centers,  as lessees,  have ground leases expiring at
various dates through the year 2076. In addition,  the Manager leases its office
facilities.  Rental  payments  under ground and office leases were $7.1 million,
$7.3 million and $8.0 million in 1994, 1995 and 1996.  Included in these amounts
are related party office rental payments of $2.3 million,  $2.8 million and $3.0
million in 1994, 1995 and 1996.

  The following is a schedule of future minimum rental  payments  required under
operating  leases.  These amounts exclude  adjustments every five years based on
the Consumer  Price Index or a factor  defined in the lease for one property,  a
10%  participation in cash flow for years 2022 to 2076 and  supplemental  ground
rent under the lease of another  property,  and participation in cash flows over
amounts specified in leases of two other  properties.  Contingent rental expense
was $65 thousand in 1996.  Future  minimum  rental  payments are  summarized  as
follows:

                     1997                   $ 9,205
                     1998                     8,318
                     1999                     8,388
                     2000                     8,219
                     2001                     7,890
                     Thereafter             199,970

   The table above  includes $2.6  million,  $2.8  million,  $2.9 million,  $2.8
million,  $2.5 million and $8.4 million of related party amounts in 1997,  1998,
1999, 2000, 2001 and thereafter.

   Included in  deferred  charges is  approximately  $6.1  million  representing
lump-sum  payments  for base rent on two parcels of adjacent  land (a  leasehold
interest in a third parcel was sold in 1996).  These costs are being  charged to
operations over the 87 and 99 year terms of the leases.

Memorial City Mall Lease

   In November  1996, TRG entered into an agreement to lease Memorial City Mall,
located in Houston,  Texas. The lease of this  unencumbered  property grants TRG
the exclusive right to manage,  lease and operate the property.  The annual rent
is  initially $7 million.  TRG has the option to  terminate  the lease after the
third full lease year by paying $2 million to the lessor. Accordingly, the lease
will be accounted for as an operating  lease during the option period.  TRG will
use this  option  period to  evaluate  the  redevelopment  opportunities  of the
center.

   If TRG does not exercise its option to terminate  the lease at the end of the
third full lease year, the lease continues for another 52 years and provides for
increases  in rent every ten years based on 75% of the  increase in the Consumer
Price  Index  between  1996 and the then  current  year.  Under the terms of the
lease,  TRG has agreed to invest a minimum  of $3 million  during the three year
option  period.  If the  redevelopment  proceeds,  TRG is  required to invest an
additional $22 million in property  expenditures  not  recoverable  from tenants
during the first 10 years of the lease term.


                                      F-20

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Capital Lease Obligation

   In November  1995,  TRG completed an agreement with Tuttle Holding Co., which
owns the land on which The Mall at Tuttle Crossing is located, to lease the land
and mall  buildings,  which are currently  under  construction.  The term of the
lease is from the date of  signing  the  lease to 90 years  from the date of the
opening of the Center. The Center will open in July 1997. Minimum lease payments
of $4.4 million will be due annually  after the opening of the Center.  TRG will
also pay  additional  rent based on achieved  levels of net operating  income as
specified in the agreement (NOI); 100% of the portion of NOI which is over $11.6
million  but less  than or equal to $14.4  million,  30% of the  portion  of NOI
between  $14.4  million  and $18.3  million,  and 50% of the portion of NOI over
$18.3 million.

   As of December 31, 1996, future minimum lease payments for this capital lease
are as follows:

       1997                                             $   1,943
       1998                                                 4,430
       1999                                                 4,430
       2000                                                 4,430
       2001                                                 4,430
       Remainder                                          379,037
                                                        ---------
       Total minimum obligation                         $ 398,700
       Less interest                                     (343,379)
                                                        ---------
       Net minimum obligation                           $  55,321
       Less amounts related to assets not
         yet constructed                                  (15,472)
                                                        ---------
       Capital lease obligation at December 31, 1996    $  39,849
                                                        =========


Note 10 - Transactions with Affiliates

  The  revenue  from  management,  leasing and  development  services is derived
primarily from  transactions with affiliates.  Accounts  receivable from related
parties    includes    amounts   related   to   reimbursement   of   third-party
(non-affiliated) costs.

  Other related party transactions are described in Notes 9, 11 and 15.


Note 11 - The Manager

  The  Manager,  The Taubman  Company  Limited  Partnership,  provides  property
management, leasing and development services to the Taubman Shopping Centers and
affiliates.

  The Manager has a voluntary  retirement  savings plan  established in 1983 and
amended and restated effective January 1, 1994 (the Plan). The Plan is qualified
in accordance with Section 401(k) of the Internal  Revenue Code (the Code).  The
Manager  contributes  an  amount  equal  to 2% of  the  qualified  wages  of all
qualified employees and matches employee  contributions in excess of 2% up to 7%
of  qualified   wages.   In  addition,   the  Manager  may  make   discretionary
contributions  within the limits prescribed by the Plan and imposed in the Code.
Costs  relating  to the Plan were $1.5  million in each of the three years ended
December 31, 1994, 1995 and 1996.


                                      F-21

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


  TRG has an incentive  option plan for  employees  of the  Manager.  Currently,
4,500 units of  partnership  interest  may be issued  under the plan.  Incentive
options generally become  exercisable to the extent of one-third of the units on
each of the third, fourth, and fifth anniversaries of the date of grant. Options
expire ten years from the date of grant.

   A summary of the status of the plan as of December 31, 1994,  1995, and 1996,
and changes during the years ending on those dates is presented below:

<TABLE>
<CAPTION>
                              1994                       1995                     1996
                     ------------------------   -----------------------   ----------------------
                             Weighted-Average          Weighted-Average         Weighted-Average
                              Exercise Price            Exercise Price           Exercise Price
   Options           Units       Per Unit       Units     Per Unit        Units    Per Unit
  ---------          -----       --------       -----     --------        -----    --------
<S>                  <C>         <C>            <C>       <C>             <C>      <C>
Outstanding at
 beginning
 of year             3,249       $ 22,253       3,659     $ 22,460        4,119    $ 22,073
Granted                429         24,036         472       19,088
Exercised                                                                  (333)     22,000
Cancelled              (19)        22,429         (12)      22,541         (250)     21,850
                       ---                        ---                     -----
Outstanding at
  end of year        3,659         22,460       4,119       22,073        3,536      22,095
                     =====                      =====                     =====
Options vested
  at year end        224           22,364       1,195       22,092        1,908      22,187
</TABLE>

  The weighted  average fair value per unit of options  granted  during 1995 was
$2.7 thousand.  There were no grants in 1996.  TRG used a binomial  option price
model to  determine  the grant  date fair  values of the 1995  grants.  The 1995
calculations of fair value are based on the following assumptions:  a volatility
rate of 22%,  a  risk-free  rate of return of  approximately  8%, and a dividend
yield of  approximately  9%.  Options  outstanding  at December  31, 1996 have a
remaining  weighted-average  contractual life of 6.3 years and range in exercise
price from $18.5 thousand to $27.4 thousand.

  TRG applies APB Opinion 25 and related  Interpretations  in accounting for the
plan. The exercise price of all  outstanding  options granted under the plan was
equal to market value on the date of grant. Accordingly, no compensation expense
has been  recognized  for the  plan.  Had  compensation  cost for the plan  been
determined  based on the fair value of the  options at the grant  dates for 1995
awards (there were no grants in 1996) under the plan  consistent with the method
of FASB  Statement  123, the pro forma effect on TRG's earnings and earnings per
unit of partnership interest would not have been material.

  Effective  January 1, 1996, the Manager adopted The Taubman Company  Long-Term
Performance  Compensation  Plan.  Annually,  eligible  employees will be granted
contingent  notional TRG units of partnership  interest,  the ultimate number of
which will be based on the employee's performance. These awards, which will vest
on the  third  anniversary  of the  date  of  grant,  will  also  accrue  deemed
distributions  in the form of  additional  notional  units each time TRG makes a
distribution  to its partners.  Upon vesting,  additional  notional units may be
granted based on the performance of the employee and the Manager and/or TRG. The
awards will be paid to the employee in cash upon vesting,  based on the value of
TRG's units of partnership interest, unless the employee elects to defer payment
as provided in the plan.  The cost of this plan was  approximately  $2.0 million
for 1996.



                                      F-22

<PAGE>



                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 12 -  Supplemental Disclosures of Non-Cash Activities

Supplemental disclosures of non-cash investing and financing activities:

                                              Year Ended December 31
                                           ----------------------------
                                           1994        1995        1996
                                           ----        ----        ----

  Issuance of units of partnership
    interest  in connection with
    the purchase of  Biltmore
    Fashion Park                         $ 29,656
  Capital lease obligation                           $ 14,418    $ 25,431


Note 13 - Contingencies

  TRG is currently involved in certain litigation arising in the ordinary course
of business.  Management  believes that this litigation will not have a material
adverse effect on TRG's assets or results of operations.


Note 14 - Quarterly Financial Data (Unaudited)

  The  following is a summary of quarterly  results of  operations  for 1995 and
1996.

                                                            1995
                                            ----------------------------------
                                            First     Second  Third    Fourth
                                            Quarter  Quarter  Quarter  Quarter
                                            ----------------------------------
                                             (in thousands, except unit data)

  Revenues                                  $53,485  $55,602  $58,052  $61,779
  Equity in income of
   unconsolidated Joint Ventures             14,028   12,690   11,867   19,355
  Income before extraordinary items          19,460   17,260   17,809   25,170
  Net Income                                 19,460   15,035   17,809   44,022
  Per Unit of Partnership Interest:
    Income before extraordinary items          $306     $272     $280     $397
    Net Income                                  306      237      280      693


                                                            1996
                                            ----------------------------------
                                            First     Second  Third    Fourth
                                            Quarter  Quarter  Quarter  Quarter
                                            -----------------------------------
                                             (in thousands, except unit data)

  Revenues                                  $59,732  $59,817  $66,077  $77,103
  Equity in income of
   unconsolidated Joint Ventures             13,363   12,748   13,552   12,552
  Income before extraordinary item           20,868   18,500   20,940   23,786
  Net Income                                 20,868   18,500   19,612   23,786
  Per Unit of Partnership Interest:
    Income before extraordinary item           $329     $291     $317     $353
    Net Income                                  329      291      297      353


                                      F-23

<PAGE>


                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15 - Subsequent Event

  TRG's ownership interest in Arizona Mills, L.L.C. increased in January 1997 to
37% as a result of Arizona  Mills,  L.L.C.'s  redemption of a former  owner's 5%
interest  for $2.8  million  (the former  owner is an  affiliate of a partner in
TRG).  Also in January  1997,  Arizona  Mills,  L.L.C.  closed on a secured $145
million  construction  facility maturing in 2002. The loan bears interest at one
month LIBOR plus 1.3%.  The loan is hedged  until  maturity at a one month LIBOR
cap rate of 9.5%.  The payment of the principal and interest is recourse to each
of the owners of Arizona Mills to the extent of their ownership percentage.





                                      F-24

<PAGE>



                                                                     Schedule II
                  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
                        Valuation and Qualifying Accounts
              For the years ended December 31, 1994, 1995 and 1996
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                    Additions
                                                           --------------------------
                                           Balance at      Charged to      Charged to                      Balance
                                            beginning       costs and        other                         at end
                                             of year        expenses        accounts      Write-offs       of year
                                            ---------      ----------      ----------    ------------     ---------
<S>                                          <C>              <C>            <C>            <C>            <C>
Year ended December 31, 1994:
  Allowance for doubtful receivables         $   647          1,323              0          (1,468)        $   502
                                             =======          =====          =====          ======         =======

  Development pre-construction reserve       $ 3,959          4,389              0               0         $ 8,348
                                             =======          =====          =====          ======         =======

Year Ended December 31, 1995:
  Allowance for doubtful receivables         $   502            818              0            (939)        $   381
                                             =======         ======          =====          ======         =======

  Development pre-construction reserve       $ 8,348          6,814              0          (4,964)        $10,198
                                             =======          =====          =====          ======         =======

Year ended December 31, 1996:
  Allowance for doubtful receivables         $   381          1,295             42(1)       (1,325)        $   393
                                             =======          =====          =====          ======         =======

  Development pre-construction reserve       $10,198          8,501              0          (6,223)        $12,476
                                             =======          =====          =====          ======         =======



(1)  Represents the balance of Fairlane's  allowance for doubtful receivables as
     of the date of TRG's  acquisition  of  additional  interests  in  Fairlane.
     Subsequent  to the  acquisition  date,  the accounts of Fairlane  have been
     consolidated in TRG's financial statements.
</TABLE>


                                      F-25

<PAGE>
<TABLE>
<CAPTION>
                                                      THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP                      Schedule III
                                                       REAL ESTATE AND ACCUMULATED DEPRECIATION
                                                                    December 31, 1996
                                                                     (in thousands)

                                                                                             Gross Amount at Which
                                       Initial Cost                                      Carried at Close of Period
                                        to Company                Cost          ---------------------------------------
                                    -------------------       Capitalized                                   Accumulated     Total
                                            Buildings and      Subsequent                                  Depreciation    Cost Net
                                    Land     Improvements    to Acquisition    Land       BI&E      Total      (A/D)        of A/D
                                    ----     ------------    --------------    ----       ----      -----     -------       ------
<S>                                <C>        <C>             <C>             <C>       <C>         <C>         <C>         <C>
Taubman Shopping Centers:
 Beverly Center, Los Angeles, CA   $     0    $131,187        $ 16,162        $     0   $  147,349  $  147,349  $ 43,832    $103,517
 Biltmore, Phoenix, AZ              18,000      96,864             829         18,000       97,693     115,693     6,220     109,473
 Briarwood, Ann Arbor, MI            4,027      47,761           6,111          4,027       53,872      57,899    26,209      31,690
 Columbus City Center,
  Columbus, OH                           0      57,996             554              0       58,550      58,550    13,865      44,685
 Fairlane Town Center,
  Dearborn, MI                      14,067      88,320             559         14,067       88,879     102,946     6,784      96,162
 Hilltop, Richmond, CA               2,522      36,554           6,830          2,522       43,384      45,906    15,871      30,035
 La Cumbre Plaza, Santa Barbara, CA      0      23,159               0              0       23,159      23,159        34      23,125
 Lakeforest, Gaithersburg, MD        4,047      18,153           6,124          4,047       24,277      28,324    15,139      13,185
 Marley Station, Glen Burnie, MD     3,692      45,538          10,966          3,692       56,504      60,196    25,121      35,075
 Meadowood Mall, Reno, NV            1,890      14,116          13,508          1,890       27,624      29,514    11,795      17,719
 Paseo Nuevo, Santa Barbara, CA          0      35,210              17              0       35,227      35,227       561      34,666
 The Mall at Short Hills,
  Short Hills, NJ                   16,000     116,315         121,580         16,000      237,895     253,895    30,257     223,638
 Stoneridge, Pleasanton, CA            882      25,265          15,777            882       41,042      41,924    22,465      19,459
 Other:
 Manager's Office Facilities             0           0          20,605              0       20,605      20,605    15,710       4,895
 Peripheral Land                     7,414           0               5          7,414            5       7,419         0       7,419
 Construction in Process and
  Development Pre-construction
  Costs                                  0      52,147           5,151              0       57,298      57,298         0      57,298
 Assets under Capital Lease              0      39,849               0              0       39,849      39,849         0      39,849
 Other                                   0       1,120               0              0        1,120       1,120       167         953
                                   -------    --------        --------        -------   ----------  ----------  --------    --------
TOTAL                              $72,541    $829,554        $224,778        $72,541   $1,054,332  $1,126,873  $234,030    $892,843
                                   =======    ========        ========         =======  ==========  ==========  ========    ========

<CAPTION>
                                                        Date of
                                                     Completion of
                                                    Construction or  Depreciable
                                       Encumbrances   Acquisition       Life
                                       ------------   -----------       ----
<S>                                     <C>              <C>         <C>
Taubman Shopping Centers:
 Beverly Center, Los Angeles, CA        $146,000         1982        40 Years
 Biltmore, Phoenix, AZ                     3,183(1)      1994        40 Years
 Briarwood, Ann Arbor, MI                      0         1973        33 Years
 Columbus City Center,
  Columbus, OH                             8,175         1989        31 Years
 Fairlane Town Center,
  Dearborn, MI                                 0         1996        40 Years
 Hilltop, Richmond, CA                       982(1)      1976        50 Years
 La Cumbre Plaza, Santa Barbara, CA            0         1996        40 Years
 Lakeforest, Gaithersburg, MD                  0         1978        31 Years
 Marley Station, Glen Burnie, MD               0         1987        40 Years
 Meadowood Mall, Reno, NV                      0         1979        40 Years
 Paseo Nuevo, Santa Barbara, CA                0         1996        40 Years
 The Mall at Short Hills,
  Short Hills, NJ                              0         1980        40 Years
 Stoneridge, Pleasanton, CA               46,260(1)(2)   1980        40 Years
Other:
 Manager's Office Facilities                   0
 Peripheral Land                               0
 Construction in Process and
  Development Pre-construction
  Costs                                        0
 Assets under Capital Lease               39,849
 Other                                         0
                                        --------
TOTAL                                   $244,449
                                        ========
</TABLE>
<PAGE>
                                                          (Schedule III (cont.))

The changes in total real estate  assets for the three years ended  December 31,
1996 are as follows:

                                     1994       1995        1996
                                     ----       ----        ----

    Balance, beginning of year     $665,978   $843,960   $  926,207
      Acquisitions                  114,864                 150,522
      New development
       and improvements              67,752     85,109       50,903
      Disposals                      (4,634)    (2,862)      (3,808)
      Transfers In, net (3)                                   3,049
                                   --------   --------   ----------
    Balance, end of year           $843,960   $926,207   $1,126,873
                                   ========   ========   ==========

The changes in accumulated  depreciation  and  amortization  for the three years
ended December 31, 1996 are as follows:

                                     1994        1995       1996
                                     ----        ----       ----

    Balance, beginning of year    $(156,524)  $(175,358)  $(200,440)
      Depreciation for year         (21,770)    (26,574)    (29,570)
      Disposals                       2,936       1,492       1,290
      Transfers In (3)                                       (5,310)
                                  ---------   ---------   ---------
    Balance, end of year          $(175,358)  $(200,440)  $(234,030)
                                  =========   =========   =========


                                      F-26

<PAGE>



                                                          (Schedule III (cont.))



(1) Includes  assessment bonds  payable  encumbering  the  Centers  of $3,183 at
    Biltmore, $982 at Hilltop, and $1,363 at Stoneridge.
(2) Encumbrances include $44,897 of commercial paper, secured by a deed of trust
    on  Stoneridge, classified as "Other Notes Payable" in the December 31, 1996
    Balance Sheet of The Taubman Realty Group Limited Partnership.
(3) Primarily represents consolidation in 1996 of TRG's original 25% interest in
    Fairlane's assets (costs of acquiring the remaining 75% interest are 
    included in  Acquisitions above), net of transfers of pre-construction costs
    to construction in process of two Joint Ventures.


                                      F-27
<PAGE>















            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP

                          COMBINED FINANCIAL STATEMENTS
                      AS OF DECEMBER 31, 1995 AND 1996 AND
          FOR EACH OF THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996















                                     F - 28

<PAGE>






                          INDEPENDENT AUDITORS' REPORT





Partners
The Taubman Realty Group Limited Partnership

  We  have audited  the  accompanying  combined balance sheets of Unconsolidated
Joint   Ventures  of  The  Taubman   Realty  Group  Limited   Partnership   (the
"Partnership")  as of  December  31,  1995 and 1996,  and the  related  combined
statements of operations,  accumulated  deficiency in assets, and cash flows for
each of the three years in the period ended  December 31, 1996.  Our audits also
included the financial statement schedules listed in the Index at Item 14. These
financial statements and financial statement schedules are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedules based on our audits.

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

  In our opinion,  such combined  financial  statements  present fairly,  in all
material respects,  the financial  position of Unconsolidated  Joint Ventures of
The Taubman  Realty Group Limited  Partnership as of December 31, 1995 and 1996,
and the results of their  operations  and their cash flows for each of the three
years in the  period  ended  December  31,  1996 in  conformity  with  generally
accepted accounting  principles.  Also, in our opinion, such financial statement
schedules,   when  considered  in  relation  to  the  basic  combined  financial
statements  taken  as a whole,  present  fairly  in all  material  respects  the
information set forth therein.





DELOITTE & TOUCHE LLP

Detroit, Michigan
February 17, 1997

                                     F - 29

<PAGE>



            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP

                             COMBINED BALANCE SHEET
                                 (in thousands)






                                                  December 31
                                             ---------------------
                                                1995        1996
                                                ----        ----
Assets:
  Properties (Notes 2, 4 and 6)              $ 570,066   $ 650,149
    Accumulated depreciation and 
    amortization                               196,263     188,491
                                              --------     -------
                                             $ 373,803   $ 461,658

  Cash and cash equivalents                     51,344      25,924
  Accounts and notes receivable, less 
    allowance for doubtful accounts of 
    $157 and $90 in 1995 and 1996               12,892       7,142
  Note receivable from Joint Venture Partner 
    (Note 6)                                     1,900       1,600
  Deferred charges and other assets 
    (Notes 3 and 6)                             43,532      36,612
                                             ---------   ---------
                                             $ 483,471   $ 532,936
                                             =========   =========

Liabilities:
  Mortgage notes payable (Note 4)            $ 738,468   $ 721,809
  Other notes payable (Note 4)                   2,653       2,353
  Capital lease obligation (Note 5)                          5,000
  Accounts payable and other liabilities        50,227      53,817
                                             ---------   ---------
                                             $ 791,348   $ 782,979
Commitments (Note 5)

Accumulated deficiency in assets:
  TRG                                        $(150,117)  $(127,097)
  Joint Venture Partners                      (157,760)   (122,946)
                                             ---------   ---------
                                             $(307,877)  $(250,043)
                                             ---------   --------- 
                                             $ 483,471   $ 532,936
                                             =========   =========


                       See notes to financial statements.


                                     F - 30

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP

                        COMBINED STATEMENT OF OPERATIONS
                                 (in thousands)




                                                 Year Ended December 31
                                             ------------------------------
                                                1994       1995      1996
                                                ----       ----      ----

Revenues:
  Minimum rents                              $157,374   $166,244   $157,212
  Percentage rents                              4,808      3,629      3,951
  Expense recoveries                           96,711    101,455     95,244
  Other                                         9,922     11,444      8,930
  Gain on disposition of Bellevue (Note 1)                 4,408
                                             --------   --------   --------
                                             $268,815   $287,180   $265,337
                                             --------   --------   --------
Operating Costs:
  Recoverable expenses (Note 6)              $ 83,531   $ 88,250   $ 81,799
  Other operating (Note 6)                     20,253     18,609     18,365
  Interest expense (Note 4)                    51,836     57,857     52,994
  Depreciation and amortization                24,177     25,471     23,837
                                             --------   --------   --------
                                             $179,797   $190,187   $176,995
                                             --------   --------   --------

Income before extraordinary items            $ 89,018   $ 96,993   $ 88,342
Extraordinary items (Notes 1 and 4)            (3,468)    30,761
                                             --------   --------   --------
Net Income                                   $ 85,550   $127,754   $ 88,342
                                             ========   ========   ========

Allocation of net income:
Attributable to TRG                          $ 43,266   $ 68,498   $ 47,413
Attributable to Joint Venture Partners         42,284     59,256     40,929
                                             --------   --------   --------
                                             $ 85,550   $127,754   $ 88,342
                                             ========   ========   ========


                       See notes to financial statements.


                                     F - 31

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP

             COMBINED STATEMENT OF ACCUMULATED DEFICIENCY IN ASSETS
                  Years ended December 31, 1994, 1995 and 1996
                                 (in thousands)




                                                 Joint Venture
                                         TRG        Partners       Total
                                         ---     -------------     -----


Balance, January 1, 1994              $(132,488)   $(138,321)   $(270,809)
Cash contributions                        1,132        1,166        2,298
Cash distributions                      (77,238)     (75,363)    (152,601)
Redemption of Joint Venture 
  Partner's interest (Note 1)                          2,631        2,631
Net income                               43,266       42,284       85,550
                                      ---------    ---------    ---------
Balance, December 31, 1994            $(165,328)   $(167,603)   $(332,931)
Cash distributions                      (53,287)     (49,413)    (102,700)
Net income                               68,498       59,256      127,754
                                      ---------    ---------    ---------
Balance, December 31, 1995            $(150,117)   $(157,760)   $(307,877)
Cash contributions                       21,201       24,958       46,159
Non-cash contributions (Note 1)           5,942        9,750       15,692
Cash distributions                      (55,146)     (51,654)    (106,800)
TRG purchase of Fairlane interest 
  (Note 1)                                3,610       10,831       14,441
Net income                               47,413       40,929       88,342
                                      ---------    ---------    ---------
Balance, December 31, 1996            $(127,097)   $(122,946)   $(250,043)
                                      =========    =========    =========


                       See notes to financial statements.


                                     F - 32

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP

                        COMBINED STATEMENT OF CASH FLOWS
                                 (in thousands)


                                                  Year Ended December 31
                                            ----------------------------------
                                               1994        1995        1996
                                               ----        ----        ----

Cash Flows From Operating Activities:
  Income before extraordinary items         $  89,018   $  96,993   $  88,342
  Adjustments to reconcile net income                                        
   to net cash provided by operating 
   activities:
     Depreciation and amortization             24,177      25,471      23,837
     Provision for losses on accounts 
      receivable                                1,274         974       1,303
     Gains on sales of land                      (815)     (1,303)
     Gain on disposition of Bellevue 
       (Note 1)                                            (4,408)
     Other                                      1,755       2,493       2,922
  Increase (decrease) in cash attributable 
    to changes in assets and liabilities:
    Receivables, deferred
      charges and other assets                (10,233)    (10,128)     (1,811)
    Accounts payable and other liabilities      1,913       4,258       6,491
                                            ---------   ---------   ---------
Net Cash Provided By Operating Activities   $ 107,089   $ 114,350   $ 121,084
                                            ---------   ---------   ---------

Cash Flows From Investing Activities:
  Additions to properties                   $ (46,128)  $ (48,320)  $(105,031)
  Restricted cash for expansion (Note 4)       25,954      40,879       1,309
  Proceeds from sales of land                     869       1,390
  Redemption of Joint Venture Partner's
   Interest (Note 1)                          (12,743)
                                            ---------   ---------   ---------
Net Cash Used In Investing Activities       $ (32,048)  $  (6,051)  $(103,722)
                                            ---------   ---------   ---------

Cash Flows From Financing Activities:
  Debt proceeds                             $ 180,768   $ 235,030   $  20,529
  Debt payments                                (3,379)     (6,665)     (2,670)
  Extinguishment of debt                      (94,616)   (189,705)
  Debt issuance costs                          (6,828)     (6,198)
  Cash contributions from partners              2,298                  46,159
  Cash distributions to partners             (152,601)   (102,700)   (106,800)
                                            ---------   ---------   ---------
Net Cash Used In Financing Activities       $ (74,358)  $ (70,238)  $ (42,782)
                                            ---------   ---------   ---------

Net Increase (Decrease) In Cash             $     683   $  38,061   $ (25,420)

Cash and Cash Equivalents at Beginning 
 of Year                                       12,600      13,283      51,344
                                            ---------   ---------   ---------

Cash and Cash Equivalents at End of Year    $  13,283   $  51,344   $  25,924
                                            =========   =========   =========


                       See notes to financial statements.


                                     F - 33

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP
              
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                       Three Years Ended December 31, 1996



Note 1 - Summary of Significant Accounting Policies

Basis of Presentation

  The Taubman  Realty Group Limited  Partnership  (TRG) owns  interests in joint
ventures (Joint  Ventures)  which in turn own regional  retail shopping  centers
(Taubman  Shopping  Centers).  TRG has engaged the Manager (The Taubman  Company
Limited  Partnership,  which is approximately 99% beneficially  owned by TRG) to
provide all  property  management  and leasing  services  for all of the Taubman
Shopping  Centers  and  to  provide  corporate,   development,  and  acquisition
services.  For financial statement reporting purposes, the accounts of the Joint
Ventures  have been  combined  in these  financial  statements.  Generally,  net
profits and losses of the Joint  Ventures  are  allocated to TRG and the outside
partners   (Joint  Venture   Partners)  in  accordance   with  their   ownership
percentages.

  Dollar amounts presented in tables within the notes to the combined  financial
statements are stated in thousands.

Investments in Joint Ventures

  TRG's  interest  in each of the Joint  Ventures at December  31,  1996,  is as
follows:

                                                                   TRG's %
         Joint Venture           Taubman Shopping Center          Ownership
     ---------------------       -----------------------          ---------

     Arizona Mills, L.L.C.       Arizona Mills (under               35% (Note 7)
                                   construction)
     Fairfax Associates          Fair Oaks                          50
     Lakeside Mall Limited       Lakeside                           50
       Partnership
     Rich-Taubman Associates     Stamford Town Center               50
     Taubman-Cherry Creek        Cherry Creek                       50
       Limited Partnership
     Taubman MacArthur           MacArthur Center (under            70
       Associates Limited          construction)
       Partnership               
     Twelve Oaks Mall            Twelve Oaks Mall                   50
       Limited Partnership
     West Farms Associates       Westfarms                          79
     Woodfield Associates        Woodfield                          50
     Woodland                    Woodland                           50

  Arizona Mills, L.L.C. is developing Arizona Mills, a value super-regional mall
in Tempe,  Arizona,  which will open in November  1997. In 1996,  Arizona Mills,
L.L.C.  purchased for $24.8 million approximately 116 acres of land on which the
Center is being  constructed  from an  affiliate  of a  partner  in TRG and of a
former owner in Arizona Mills (Note 7).  Taubman  MacArthur  Associates  Limited
Partnership  (MacArthur) is developing  MacArthur  Center in Norfolk,  Virginia.
MacArthur  Center is expected to open in the spring of 1999.  Also in 1996,  TRG
and the  other  owners  of  Arizona  Mills and  MacArthur  contributed  non-cash
pre-construction costs related to these projects totaling $15.7 million.


                                     F - 34

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)


  In July 1996, TRG completed transactions that resulted in it acquiring the 75%
interest in Fairlane Town Center  (Fairlane)  previously held by a Joint Venture
Partner.   TRG  also  assumed  mortgage  debt  of  approximately   $26  million,
representing the former Joint Venture Partner's beneficial interest in the $34.6
million mortgage encumbering the property. The accounts of Fairlane are included
in these  combined  financial  statements  until the  acquisition  date.  On the
acquisition  date,  the book values of Fairlane's  assets and  liabilities  were
approximately $25 million and $39 million, respectively.

  In  December  1995,  the  bank  group  holding the $99.5  million  nonrecourse
mortgage  encumbering  Bellevue  Center  acquired  title to the Center through a
nonjudicial  foreclosure  sale.  The mortgage  matured on November 1, 1995.  TRG
ceased to recognize  the results of Bellevue  Associates  (Bellevue),  TRG's 60%
owned  Joint  Venture  that owned the  Center,  as of  November  1,  1995,  and,
accordingly,  the  accounts of  Bellevue  Associates  are not  included in these
combined financial statements from that date.

  As a result of the foreclosure and debt extinguishment, Bellevue recognized in
1995 an  extraordinary  gain of  approximately  $31.4 million,  representing the
difference  between  the  carrying  value of the debt and the fair  value of the
Center, net of related  transaction costs, and an ordinary gain of approximately
$4.4 million,  representing  the excess of the fair value of the Center over its
carrying  value.  The  extinguishment  of the debt and write off of the Center's
carrying value represent non-cash transactions.

  In May 1994,  West Farms  Associates  redeemed  a portion of a deceased  Joint
Venture  Partner's  interest for $12.7  million.  As a result,  TRG's  ownership
increased to approximately  79%, up from 68%. The excess of the redemption price
over the book value of the interests was allocated to properties.

Revenue Recognition

  Shopping  center space is generally  leased to specialty  retail tenants under
short and intermediate  term leases which are accounted for as operating leases.
Minimum rents are recognized on an accrual basis as earned,  the result of which
does not differ  materially from a straight-line  method.  Percentage  rents are
recognized on an accrual basis as earned.  Expense recoveries,  which include an
administrative fee, are recognized as revenue in the period applicable costs are
chargeable to tenants.

Depreciation and Amortization

  Buildings,  improvements  and equipment,  stated at cost,  are  depreciated on
straight-line or double-declining  balance bases over the estimated useful lives
of the assets  which range from 3 to 55 years.  Tenant  allowances  and deferred
leasing  costs are  amortized  on a  straight-line  basis  over the lives of the
related leases.

Capitalization

  Costs related to the acquisition,  development,  construction, and improvement
of properties are capitalized. Interest costs are capitalized until construction
is substantially  complete.  Properties are reviewed for impairment if events or
changes in  circumstances  indicate that the carrying  amounts of the properties
may not be recoverable.

Cash and Cash Equivalents

  Cash  equivalents  consist of highly liquid  investments with a maturity of 90
days or less at the date of purchase.


                                     F - 35

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)


Deferred Charges

  Direct  financing  and interest  rate hedging costs are deferred and amortized
over the terms of the related  agreements  as a component  of interest  expense.
Direct costs related to leasing  activities are  capitalized  and amortized on a
straight-line  basis over the lives of the related  leases.  All other  deferred
charges are amortized on a straight-line  basis over the terms of the agreements
to which they relate.

Interest Rate Hedging Agreements

  Premiums paid for interest  rate caps are  amortized to interest  expense over
the terms of the cap agreements.  Amounts  received under the cap agreements are
accounted  for on an accrual  basis,  and  recognized as a reduction of interest
expense. The differential to be paid or received on swap agreements is accounted
for on an accrual basis and recognized as an adjustment to interest expense.

Fair Value of Financial Instruments

  The following  methods and assumptions were used to estimate the fair value of
financial instruments:

  The  carrying  value  of  cash  and  cash  equivalents,  accounts  and  notes
    receivable, and  accounts payable approximates fair  value due to the short
    maturity of these instruments.

  The fair value of mortgage notes and other notes payable is estimated  based
    on quoted market prices if available, or  on the  current rates  available
    to  the Joint  Ventures for  debt of similar  terms and  maturity  and  the
    assumption that debt will be prepaid at the earliest possible date.

  The fair value of interest rate hedging  instruments is the  amount the Joint
    Venture  would pay or  receive to terminate  the agreement at the reporting
    date, taking into account current interest rates.

Use of Estimates

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


Note 2 - Properties

  Properties, at December 31, 1995 and 1996, are summarized as follows:

                                                1995        1996
                                              -------   ---------

   Land                                       $ 25,773    $ 23,287
   Buildings, improvements and equipment       503,124     476,283
   Construction in process                      40,502     149,912
   Peripheral land                                 667         667
                                              --------    --------
                                              $570,066    $650,149
                                              ========    ========



                                     F - 36

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)


  Depreciation expense for 1994, 1995 and 1996 was $17.1 million,  $18.4 million
and $18.0  million.  Peripheral  land  primarily  consists of  undeveloped  land
generally  adjacent to the Taubman  Shopping  Centers.  Construction  in process
includes costs related to expansions and other  improvements at various centers.
Assets  under  capital  lease of $5.0 million are included in the table above in
buildings, improvements and equipment.


Note 3 - Deferred Charges and Other Assets

  Deferred charges and other assets at December 31, 1995 and 1996 are summarized
as follows:

                                                1995        1996
                                                ----        ----

     Leasing                                   $42,582     $39,924
     Accumulated amortization                  (19,133)    (19,298)
                                               -------     -------
                                               $23,449     $20,626
     Deferred financing, net                    14,544      11,810
     Other, net                                  5,539       4,176
                                               -------     -------
                                               $43,532     $36,612
                                               =======     =======

Note 4 - Debt

Mortgage Notes Payable

  Mortgage  notes  payable  at  December  31,  1995  and  1996  consists  of the
following:

                                                 1995        1996
                                                 ----        ----

     Fixed rate, amortizing                   $132,560    $ 96,156
     Fixed rate, nonamortizing                 254,000     254,000
     Fixed rate by swap agreement               93,500      93,500
     Floating rate, swapped to fixed to 
      August 1996                              130,000
     Floating rate, capped to maturity         128,408     278,153
                                              --------    --------
                                              $738,468    $721,809
                                              ========    ========

  Mortgage debt is collateralized by substantially all real estate. The December
31, 1996  balance  includes  two fixed rate,  amortizing  notes  totaling  $96.2
million.  One of these notes has a fixed rate of 9.0% and  matures in 2016.  The
second note, which matures in 2017, has a fixed rate of 11.69% and also requires
payment of additional  interest ($1.3 million,  $1.4 million and $1.6 million in
1994,  1995, and 1996) based on operating  results.  The December 31, 1996 fixed
rate,  nonamortizing  balance includes a 6.47%, $88 million note due in 2000, an
8.2%, $66 million note due in 2004, and a 7.85%,  $100 million note due in 2002.
In  addition to the $100  million  note due in 2002,  a Joint  Venture has a $55
million construction facility to be used to finance expansion costs. At December
31, 1996,  $19.7 million was  outstanding  under this facility  which matures in
2002 and  floats  at a rate of one  month  LIBOR  plus  1.5%.  The  construction
facility was capped at 9.6% until July 1997,  and  thereafter  until maturity at
9.95%, plus credit spread.



                                     F - 37

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)


  The December  31, 1996 balance also  includes a $172 million note due in 1998.
The  interest  rate on $93.5  million of this note was swapped to maturity at an
effective  annual rate of 5.4%. The rate on the balance of the financing,  which
was  capped to  maturity  at a maximum  annual  rate of 6.5%,  including  credit
spread,  floats at a rate of three  month  LIBOR  plus  0.5%.  A portion  of the
proceeds of this financing was restricted to fund expansion costs.

  An additional  floating rate financing of $50 million is due in 2001. The rate
on the financing floats at LIBOR plus 0.45%.  The Joint Venture  purchased a cap
instrument  with a notional amount of $50 million and a seven year term. The cap
rate, including credit spread, from December 1996 until maturity is 9.00%. Up to
$50 million in additional notes may be issued in the future.

  A $130 million  secured bank financing  maturing in 1998 has options to extend
the loan up to an additional  three years.  The facility has an interest rate of
LIBOR  plus  0.75%.  The rate has been  capped at 7.25%  from  November  1996 to
February 1998 and then at 9.1% until maturity, including credit spread.

  Scheduled  principal  payments on mortgage  debt are as follows as of December
31, 1996:

                   1997                  $  1,407
                   1998                   303,559
                   1999                     1,727
                   2000                    89,914
                   2001                    52,121
                   Thereafter             273,081
                                         --------
                   Total                 $721,809
                                         ========


Other Notes Payable

  Other notes payable at December 31, 1995 and 1996 consists of the following:

                                                          1995        1996
                                                          ----        ----
      Notes payable to banks, line of credit,
         interest generally at prime (8.25% at 
         December 31, 1996), maximum borrowings 
         available up to $7.5 million to fund 
         tenant loans, allowances and buyouts
         and working capital.                            $2,584      $2,293
      Other                                                  69          60
                                                         ------      ------
                                                         $2,653      $2,353
                                                         ======      ======

Interest Expense

  Interest paid on mortgages and other notes payable in 1994, 1995 and 1996, net
of  amounts  capitalized  of  $3.6  million,  $3.5  million  and  $4.8  million,
approximated $49.6 million, $55.6 million and $49.9 million.

Extraordinary Items

  In 1995, Bellevue Associates recognized an extraordinary gain of approximately
$31.4  million  (Note 1). Other  extraordinary  charges to income  totaling $3.5
million  in 1994  and  $0.6  million  in  1995  primarily  represent  prepayment
penalties relating to the extinguishment of mortgage debt.


                                     F - 38

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)


Interest Rate Hedging Instruments

  Certain  of  the  Joint  Ventures have entered into interest rate swap and cap
agreements  to reduce  their  exposure to changes in the cost of  floating  rate
debt.  These  Joint  Ventures  are  exposed  to  credit  risk  in the  event  of
nonperformance  by  their   counterparties  to  the  agreements,   but  have  no
off-balance  sheet risk of loss.  These  Joint  Ventures  anticipate  that their
counterparties  will  be able to  fully  perform  their  obligations  under  the
agreements.

Fair Value of Debt Instruments

  The estimated  fair values of financial  instruments  at December 31, 1995 and
1996 are as follows:

                                               December 31
                             -----------------------------------------------
                                      1995                      1996
                            -----------------------    ---------------------
                             Carrying        Fair       Carrying      Fair
                               Value         Value        Value       Value
                            ---------     --------     ---------    --------
Mortgage notes payable      $738,468      $789,960     $721,809     $757,438
Other notes payable            2,653         2,653        2,353        2,353
Interest rate instruments:
  In a receivable position     4,765         3,331        4,065        3,263
  In a payable position           23          (247)           0            0


Note 5 - Leases

  Shopping  center  space is leased to tenants and certain  anchors  pursuant to
lease agreements.  Tenant leases typically provide for guaranteed  minimum rent,
percentage  rent and other  charges to cover  certain  operating  costs.  Future
minimum rent under operating leases in effect at December 31, 1996 for operating
centers,  assuming no new or renegotiated  leases or option extensions on anchor
agreements, is summarized as follows:

                      1997                 $151,705
                      1998                  146,381
                      1999                  135,721
                      2000                  120,401
                      2001                  103,685
                      Thereafter            290,246

  Minimum rent  received from former  related  parties was $2.1 million and $0.9
million in 1994 and 1995. There are no related party amounts in the table above.

  One Joint  Venture,  as lessee,  has a ground lease  expiring in 2083.  Rental
payments  under the lease were $1.7 million in each of 1994,  1995 and 1996. All
of the ground lease rental  payments and  scheduled  future  payments  represent
minimum rental expense payable to its Joint Venture Partner.



                                     F - 39

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)


  The following is a schedule of future minimum rental  payments  required under
the lease.

                      1997                $   1,790
                      1998                    1,984
                      1999                    1,984
                      2000                    1,984
                      2001                    1,984
                      Thereafter            658,475

Capital Lease Obligation

   A joint venture has entered into a lease agreement for property  improvements
with a five year term ending  December  2001.  As of December 31,  1996,  future
minimum lease payments for this capital lease are as follows:

               1997                                $ 1,246
               1998                                  1,245
               1999                                  1,246
               2000                                  1,245
               2001                                  1,246
                                                   -------
               Total minimum lease payments        $ 6,228
               Less amount representing interest    (1,228)
                                                   -------
               Capital lease obligation            $ 5,000
                                                   =======


Note 6 - Transactions with Affiliates

  Charges from the Manager and affiliates under various written  agreements were
as follows for the years ended December 31:
                                                1994        1995        1996
                                                ----        ----        ----

     Management and leasing services         $18,156     $18,668     $16,720
     Security and maintenance services        15,635      15,468      11,608
     Development services                      5,335       5,708       8,782
                                             -------     -------     -------
                                             $39,126     $39,844     $37,110
                                             =======     =======     =======

  In  1994,  Westfarms  loaned $2.4 million to one of its Joint Venture Partners
to purchase a portion of a deceased Joint Venture Partner's  interest.  The note
bears  interest  at  Westfarms'  average  borrowing  rate and  requires  monthly
principal  payments  of $25  thousand,  plus  accrued  interest.  The balance at
December  31,  1995 and 1996 was $1.9  million and $1.6  million,  respectively.
Interest income related to the loan was approximately $0.1 million in 1994, 1995
and 1996.

  Other related party transactions are described in Notes 1, 5, and 7.




                                     F - 40

<PAGE>


            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP
              NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)


Note 7 - Subsequent Events

  TRG's  ownership interest  in Arizona Mills, L.L.C.  increased in January 1997
to 37% as a result of Arizona  Mills,  L.L.C.  redemption of a former owner's 5%
interest for $2.8 million. The former owner is an affiliate of a partner in TRG.
Also in January 1997,  Arizona  Mills,  L.L.C.  closed on a secured $145 million
construction  facility  maturing in 2002.  The loan bears interest at LIBOR plus
1.3%.  The  facility is hedged  until  maturity at a one month LIBOR cap rate of
9.5%. The payment of principal and interest is recourse to each of the owners of
Arizona Mills to the extent of their ownership percentage.

                                     F - 41

<PAGE>

<TABLE>
<CAPTION>

                                                                                                                   Schedule II
            UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP
                               LIMITED PARTNERSHIP
                        Valuation and Qualifying Accounts
              For the years ended December 31, 1994, 1995 and 1996
                                 (in thousands)





                                                                    Additions
                                                           --------------------------
                                            Balance at     Charged to      Charged to                       Balance
                                             beginning      costs and        other                          at end
                                              of year       expenses        accounts       Write-offs       of year
                                              -------       --------        --------       ----------       -------
<S>                                           <C>           <C>             <C>            <C>              <C>
                                    
                                              
Year ended December 31, 1994:

  Allowance for doubtful receivables          $  502          1,274              0          (1,374)         $  402
                                              ======          =====         ======          ======          ======

Year ended December 31, 1995:

  Allowance for doubtful receivables          $  402            974              0          (1,219) (1)     $  157
                                              ======          =====         ======          ======          ======

Year ended December 31, 1996:

  Allowance for doubtful receivables          $  157          1,303              0          (1,370) (2)     $   90
                                              ======          =====         ======          ======          ======



(1)Included in this  amount is $17 which  represents  the balance of  Bellevue's allowance for doubtful  receivables as of 
   October 31, 1995, the date on which TRG ceased recognition of Bellevue's operations.
(2)Included in this  amount is $42 which  represents  the balance of  Fairlane's allowance for doubtful receivables as of the
   date of TRG's acquisition of the remaining interests in Fairlane.  As of this date, the accounts of Fairlane have been 
   consolidated in TRG's financial statements.
</TABLE>

                                     F - 42

<PAGE>
<TABLE>
<CAPTION>



                                                                                                                  Schedule III

 UNCONSOLIDATED JOINT VENTURES OF THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 1996
                                 (in thousands)



                                                                                              Gross Amount at Which
                                         Initial Cost                                     Carried at Close of Period               
                                          to Company                  Cost      ------------------------------------------
                                       -------------------       Capitalized                                  Accumulated     Total 
                                               Buildings and       Subsequent                                  Depreciation Cost Net
                                        Land    Improvements     to Acquisition  Land     BI&E       Total       (A/D)       of A/D
                                        ----   -------------     --------------  ----     ----       -----       -----      -------
<S>                                   <C>         <C>               <C>             <C>      <C>        <C>         <C>        <C> 

Taubman Shopping Centers:
 Cherry Creek, Denver, CO             $     0      $104,222     $  11,076       $    0    $115,298   $115,298   $ 29,932   $  85,366
 Fair Oaks, Fairfax, VA                 5,167        36,191         9,991         5,167     46,182     51,349     26,651      24,698
 Lakeside, Sterling Heights, MI         2,638        21,182         4,957         2,638     26,139     28,777     20,962       7,815
 Stamford Town Center, Stamford, CT     1,977        43,584        11,173         1,977     54,757     56,734     25,742      30,992
 Twelve Oaks Mall, Novi, MI               803        28,877        15,559           803     44,436     45,239     22,388      22,851
 Westfarms, Farmington, CT              5,071        38,657        10,406         5,071     49,063     54,134     18,765      35,369
 Woodfield, Schaumburg, IL              5,264        18,515        93,775         5,264    112,290    117,554     27,071      90,483
 Woodland, Grand Rapids, MI             2,367        19,078         9,040         2,367     28,118     30,485     16,980      13,505
Other Properties:
 Peripheral land                          667             0             0           667          0        667          0         667
 Construction in Process               22,770        45,243        81,899             0    149,912    149,912          0     149,912
                                      -------      --------      --------       -------    -------    -------   -------     --------
TOTAL                                 $46,724      $355,549      $247,876       $23,954   $626,195   $650,149   $188,491    $461,658
                                      =======      ========      ========       =======   ========   ========   ========    ========


<CAPTION>
                                      
                                                          
                                                           Date of
                                                         Completion of         Depreciable
                                     Encumbrances        Construction             Life
                                     ------------      ----------------       ------------
<S>                                  <C>               <C>                    <C>          
Taubman Shopping Centers:
 Cherry Creek, Denver, CO             $130,000              1990                 40 Years
 Fair Oaks, Fairfax, VA                 39,865              1980                 55 Years
 Lakeside, Sterling Heights, MI         88,000              1976                 40 Years
 Stamford Town Center, 
  Stamford, CT                          56,291              1982                 40 Years
 Twelve Oaks Mall, Novi, MI             49,924              1977                 50 Years
 Westfarms, Farmington, CT             119,729              1974                 34 Years
 Woodfield, Schaumburg, IL             172,000              1971                 33 Years
 Woodland, Grand Rapids, MI             66,000              1968                 33 Years
Other Properties:
 Peripheral land                             0
 Construction in Process                     0
                                      --------
TOTAL                                 $721,809
                                      ========
</TABLE>
<PAGE>

The changes in total real estate  assets for the three years ended  December 31,
1996 are as follows:

                                           1994         1995           1996
                                           ----         ----           ----

    Balance, beginning of year           $544,743     $600,877      $570,066
      Acquisitions                         17,446
      Improvements                         46,128       48,320       119,781 (2)
      Disposals                            (7,440)     (79,131)(1)    (4,775)
      Transfers Out                                                  (34,923)(3)
                                         --------     --------      --------
    Balance, end of year                 $600,877     $570,066      $650,149
                                         ========     ========      ========

The changes in accumulated  depreciation  and  amortization  for the three years
ended December 31, 1996 are as follows:

                                           1994         1995          1996
                                           ----         ----          ----

    Balance, beginning of year          $(184,913)   $(198,103)    $(196,263)
      Depreciation for year               (17,118)     (18,378)      (17,976)
      Disposals                             3,928       20,218 (1)     4,564
      Transfers Out                                                   21,184(3)
                                        ---------    ---------     --------- 
    Balance, end of year                $(198,103)   $(196,263)    $(188,491)
                                        =========    =========     =========

(1)Includes amounts related to the disposition of Bellevue Center. Subsequent to
   October  31,  1995,  TRG ceased   recognition   of   Bellevue's   operations,
   consequently,  the  accounts  of  Bellevue  are no longer  included  in these
   combined financial statements.
(2)Includes  TRG's  transfer  to  Arizona  Mills and  MacArthur  Center of TRG's
   accumulated pre-construction costs related to these projects.
(3)Subsequent to TRG's  purchase of the Joint Venture  Partner's  interest,  the
   accounts  of Fairlane  are no longer  included  in these  combined  financial
   statements.


                                      F-43

<PAGE>



                                  SIGNATURES

      Pursuant to the  requirements of Section 13 or 15(d) of the Securities Act
of 1934,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                              By:  THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP

                              By:  Taubman Centers, Inc., 
                                   its Managing General Partner

    Date:  March 27, 1997     By:  /s/  ROBERT S. TAUBMAN
                                   ---------------------------------------------
                                          Robert S. Taubman, President and Chief
                                          Executive Officer

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


      Signature                          Title                       Date
      ---------                          -----                       ----


         *                       Chairman of the Board           March 27, 1997
----------------------                                           --------------
A. Alfred Taubman

         *                     Vice Chairman of the Board        March 27, 1997
----------------------                                           --------------
Robert C. Larson

/s/ ROBERT S. TAUBMAN          President, Chief Executive        March 27, 1997
----------------------            Officer, and Director          --------------
Robert S. Taubman                        


/s/ LISA A. PAYNE               Chief Financial Officer          March 27, 1997
----------------------                and Director               --------------
Lisa A. Payne

/s/ RICHARD B. MCGLINN          Chief Accounting Officer         March 27, 1997
----------------------                                           --------------
Richard B. McGlinn

         *                              Director                 March 27, 1997
----------------------                                           --------------
Graham Allison

         *                              Director                 March 27, 1997
----------------------                                           --------------
Claude M. Ballard

         *                              Director                 March 27, 1997
----------------------                                           --------------
Allan J. Bloostein

         *                              Director                 March 27, 1997
----------------------                                           --------------
Jerome A. Chazen

         *                              Director                 March 27, 1997
----------------------                                           --------------
S. Parker Gilbert

         *                              Director                 March 27, 1997
----------------------                                           --------------
W. Allen Reed


*By:  /s/ LISA A. PAYNE
      -----------------
      Lisa A. Payne, as
      Attorney-in-Fact


<PAGE>



                                  EXHIBIT INDEX

                                                                     
      Exhibit                                                          
      Number                                                           


   *   2(a) -- Purchase and Sale Agreement By and Between The Pacific Telesis
               Group Master  Pension Trust and The Taubman  Realty Group Limited
               Partnership,  dated July 17, 1996 (without exhibits or schedules,
               which  will be  supplementally  provided  to the  Securities  and
               Exchange  Commission  upon its request)  (incorporated  herein by
               reference  to Exhibit  2(a) filed with the  Registrant's  Current
               Report on Form 8-K dated July 19, 1996).

   *   2(b) -- Subscription Agreement By and Between The Pacific Telesis Group
               Master  Pension  Trust  and  The  Taubman  Realty  Group  Limited
               Partnership  dated July 18, 1996 (without  exhibits or schedules,
               which  will be  supplementally  provided  to the  Securities  and
               Exchange  Commission  upon its request)  (incorporated  herein by
               reference  to Exhibit  2(b) filed with the  Registrant's  Current
               Report on Form 8-K dated July 19, 1996).

       3(a) -- The Amended and Restated Agreement of Limited Partnership of  The
               Taubman  Realty Group  Limited  Partnership  (excluding  exhibits
               filed  separately)  (incorporated  herein by reference to Exhibit
               3(a) filed with the Registrant's  Registration  Statement on Form
               S-4 (File No. 33- 73988) (the "Registration Statement")).

       4(a) -- Amended  and  Restated  Indenture  dated as of March 4, 1994
               between The Taubman Realty Group Limited Partnership and Chemical
               Bank,  as Trustee  (incorporated  herein by  reference to Exhibit
               4(a) filed with Amendment No. 1 to the Registration Statement).

       4(b) -- Officers' Certificate designating the terms of the 7% Notes  due
               2003 (incorporated herein by reference to Exhibit 4(b) filed with
               Amendment No. 1 to the Registration Statement).

       4(c) -- Officers'  Certificate  designating the terms of the 8% Notes due
               1999 (incorporated herein by reference to Exhibit 4(f) filed with
               the  Registrant's  Quarterly  Report on Form 10-Q for the quarter
               ended June 30, 1994 (the "1994 Second Quarter Form 10-Q")).

       4(d) -- Indenture dated as of July  22, 1994 among Beverly Finance Corp.,
               La Cienega  Associates,  the Borrower,  and Morgan Guaranty Trust
               Company of New York, as Trustee (incorporated herein by reference
               to Exhibit 4(g) filed with the 1994 Second Quarter Form 10-Q).





<PAGE>



                                  EXHIBIT INDEX

                                                                    
      Exhibit                                          
      Number                                 


       4(e) -- Deed of Trust, with assignment of Rents, Security Agreement and 
               Fixture  Filing,  dated  as of July  22,  1994,  from La  Cienega
               Associates, Grantor, to Commonwealth Land Title Company, Trustee,
               for the benefit of Morgan  Guaranty Trust Company of New York, as
               Trustee, Beneficiary (incorporated herein by reference to Exhibit
               4(h) filed with the 1994 Second Quarter Form 10-Q).

       4(f) -- Revolving Loan Agreement dated as of April 29, 1994, among The
               Taubman Realty Group Limited Partnership, as Borrower, Union Bank
               of  Switzerland,  (New York  Branch),  as Bank and Union  Bank of
               Switzerland  (New York  Branch),  as  Administrative  Agent  (the
               "Revolving Loan Agreement")  (incorporated herein by reference to
               Exhibit 4(i) filed with the 1994 Second  Quarter  Form 10-Q),  as
               amended by an Amendment to the  Revolving  Loan  Agreement  dated
               August 10, 1994 (incorporated herein by reference to Exhibit 4(g)
               filed with the Registrant's Quarterly Report on Form 10-Q for the
               quarter  ended  September  30, 1994 (the "1994 Third Quarter Form
               10-Q"))  and as  modified  by a Letter  Agreement  modifying  the
               Revolving Loan Agreement dated June 20, 1995 (incorporated herein
               by  reference  to  exhibit  4(g)  filed  with  the   Registrant's
               Quarterly Report on Form 10-Q for the quarter ended June 30, 1995
               (the "1995 Second Quarter Form 10-Q")).

       4(g) -- Officers' Certificate designating the terms of the Floating Rate
               Notes due 1997 (incorporated  herein by reference to Exhibit 4(h)
               filed with the 1994 Third Quarter Form 10-Q).

       4(h) -- Medium-Term  Notes  due  June 15,  2002  (incorporated herein by
               reference to Exhibit 4(i) filed with the 1995 Second Quarter Form
               10-Q).

    **10(a) -- The Taubman Realty Group Limited Partnership 1992 Incentive 
               Option Plan  (incorporated  herein by reference to Exhibit  10(a)
               filed with the Registration Statement).

      10(b) -- Corporate Services Agreement between Taubman Centers, Inc. and
               The  Taubman   Company   Limited   Partnership   (the  "Manager")
               (incorporated herein by reference to Exhibit 10(b) filed with the
               Registration Statement).

      10(c) -- Master Services Agreement between The Taubman Realty Group 
               Limited  Partnership  and the  Manager  (incorporated  herein  by
               reference   to  Exhibit   10(c)   filed  with  the   Registration
               Statement).




<PAGE>



                                  EXHIBIT INDEX

                                                                    
      Exhibit                                 
      Number                       


    **10(d) -- Financial Performance Incentive Plan (incorporated herein  by  
               reference  to Exhibit  10(d) filed with the  Registrant's  Annual
               Report on Form 10-K for the year ended  December  31, 1994 ("1994
               Form 10-K")).

    **10(e) -- Supplemental Retirement Savings Plan (incorporated herein by 
               reference to Exhibit 10(e) filed with the 1994 Form 10-K).

    **10(f) -- The Taubman Company Long-Term Performance  Compensation Plan
               (incorporated herein by reference to Exhibit 10(g) filed with the
               Registrant's  Annual  Report  on Form  10-K  for the  year  ended
               December 31, 1995).

      12    -- Statement Re: Computation of Ratio of Earnings to Fixed Charges.

      21    -- Subsidiaries of The Taubman Realty Group Limited Partnership.

      23    -- Consent of Deloitte & Touche LLP.

      24    -- Powers of Attorney.

      27    -- Financial Data Schedule.

--------------------

*  Certain portions of this document have been omitted and separately filed with
   the  Securities  and  Exchange  Commission  with a request  for  confidential
   treatment.

** A management  contract or  compensatory  plan or  arrangement  required to be
   filed pursuant to Item 14(c) of Form 10-K.