<PAGE>   1
                       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 1-11656

                        GENERAL GROWTH PROPERTIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


           DELAWARE                                          42-1283895
-------------------------------                        ----------------------
(STATE OR OTHER JURISDICTION OF                           (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                          IDENTIFICATION NO.)

       55 W. MONROE - SUITE 3100
          CHICAGO, ILLINOIS                                      60603
---------------------------------------                      -------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)                        (ZIP CODE)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 551-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:


        TITLE OF EACH CLASS          NAME OF EACH EXCHANGE ON WHICH REGISTERED
   ----------------------------      -----------------------------------------
   COMMON STOCK, $.10 PAR VALUE               NEW YORK STOCK 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     .
                                                     -----     -----

/ /       Indicate by a check mark if disclosure of delinquent filers pursuant
     to Item 405 of Regulation S-K (Section  229.405 of this chapter) 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.

As of March 25, 1997, the aggregate market value of the 27,798,947 shares of
Common Stock held by non-affiliates of the registrant was $854,817,620 based
upon the closing price on the New York Stock Exchange composite tape on such
date.  (For this computation, the registrant has excluded the market value of
all shares of its Common Stock reported as beneficially owned by executive
officers and directors of the registrant and certain other stockholders; such
exclusion shall not be deemed to constitute an admission that any such person
is an "affiliate" of the registrant.)  As of March 25, 1997, there were
30,789,185 shares of Common Stock outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the proxy statement for the annual stockholders meeting to be
held on May 15, 1997 are incorporated by reference into Part III.

<PAGE>   2
PART I
ITEM 1.  BUSINESS

     GENERAL

     General Growth Properties, Inc. (the "Company") was formed in 1986 by
Martin Bucksbaum and Matthew Bucksbaum.  On April 15, 1993, an initial public
offering (the "IPO") of the common stock (the "Common Stock") of the Company
and certain related transactions were completed.  During May 1995, the Company
completed a follow-on stock offering of 4,500,000 shares of Common Stock.  In
connection with the IPO, the Company and Messrs. Bucksbaum, members of their
family and trusts for the benefit of them and their families (collectively, the
"Bucksbaums") formed GGP Limited Partnership (the "Operating Partnership").  As
a result of the IPO and related transactions, the Company and the Operating
Partnership owned 1% and 99%, respectively, of eighteen property partnerships,
each of which owned an enclosed mall shopping center.  The Operating
Partnership also owned 100% of three additional shopping centers.  At December
31, 1996, the Company and the Operating Partnership owned 1% and 99%,
respectively, of twenty-five property partnerships, and the Operating
Partnership owned 100% of five additional shopping centers and a 50% interest
in Quail Springs Mall (the thirty-one centers are the "Original Centers").
Currently, the Company owns a 63% general partnership interest in the Operating
Partnership, and various minority interests, primarily the Bucksbaums, own the
remaining 37% limited partnership interest.  The Company, as general partner of
the Operating Partnership, is engaged in the ownership, operation, management,
leasing, acquisition, development, expansion and financing of enclosed mall
shopping centers.  See the Consolidated Financial Statements and Notes thereto
included in Item 8 of this Annual Report on Form 10-K for certain financial
information required by this Item 1.

     On February 11, 1994, the Company, through the Operating Partnership,
acquired 40% of the outstanding stock of CenterMark Properties, Inc.
("CenterMark"). CenterMark owned interests in sixteen enclosed regional
shopping centers and three power centers (collectively, the "CenterMark
Centers") and other real estate, including fourteen free-standing department
stores net leased to May Company and a 116-unit apartment project in LaJolla,
California.  On December 19, 1995, the Company sold 25% of its 40% interest in
CenterMark for $72.5 million and granted the buyer an option to purchase its
remaining interest.  On June 28, 1996, the option was exercised by the buyer to
purchase the remaining interest in two transactions. See "Recent Developments -
CenterMark Acquisition and Disposition" below.

     On December 22, 1995 the Company, through the Operating Partnership's
ownership of stock in GGP/Homart, Inc. ("GGP/Homart") acquired a 38.2% interest
in substantially all of the regional mall assets and liabilities that were
owned by Homart Development Co., an indirect wholly-owned subsidiary of Sears,
Roebuck & Co.  GGP/Homart currently owns interests in twenty-six shopping
centers (the "Homart Centers") and one property under development.  Together,
the Original Centers, the CenterMark Centers and the Homart Centers comprise
the Operating Partnership portfolio ("the "Portfolio Centers").

     During 1996, the Operating Partnership, acting through GGP Management,
Inc., acquired General Growth Management, Inc. ("GGMI").  GGMI  is an affiliate
of the Company and is currently the largest third party owned regional mall
management company in the United States.  See "Acquisition of GGMI" below.

RECENT DEVELOPMENTS

     CENTERMARK ACQUISITION AND DISPOSITION

     On February 11, 1994, the Company, through the Operating Partnership,
together with Westfield U.S. Investments Pty. Limited ("Westfield") and five
real estate investment funds sponsored by Goldman Sachs & Co. acquired all of
the outstanding stock of CenterMark (the "CenterMark Stock") for approximately
$1 billion (including both assumption of existing and new mortgage indebtedness
aggregating approximately $542 million).  On December 19, 1995, the Company
sold 25% of its 40% interest in CenterMark to Westfield for $72.5 million, and
also granted Westfield an option which was exercisable on or before September
30, 1996, to purchase its remaining CenterMark stock for $217.5 million.  On
June 28, 1996, Westfield exercised its option to acquire the remaining 30% of
the outstanding CenterMark Stock.  The first payment of $87 million was
received on July 1, 1996, and the second payment of $130.5 million was received
on January 2, 1997.  The aggregate financial statement gain from the sale
transactions approximated $143 million.


                                      -2-
<PAGE>   3
     HOMART REGIONAL MALL PORTFOLIO ACQUISITION

     On December 22, 1995, the Company through the Operating Partnership,
jointly with four other investors formed GGP/Homart to acquire Homart
Development Company from Sears, Roebuck & Co.  The Company acquired 38.2% of
the stock of GGP/Homart for approximately $179 million including certain
transaction costs.  The Company also committed to invest up to an additional
$30.6 million to fund new projects as well as certain redevelopment costs.  As
of December 31, 1996, the Company had contributed $17.2 million of the
additional equity.  On January 21, 1997, an additional $5.7 million of capital
was contributed to GGP/Homart by the Company.  GGP/Homart holds interests in
twenty-six regional shopping malls and one property currently under development
in Waterbury, Connecticut.  On October 2, 1996, GGP/Homart opened West Oaks
Mall, a new development, located in Ocoee, (Orlando) Florida.  The Company
obtained a $125 million interim loan to facilitate the acquisition of its
interest in GGP/Homart.  On January 31, 1996, the interim loan was reduced to
$75 million with $50 million of excess proceeds from a $340 million
refinancing.  The remaining $75 million was repaid in July, 1996, with the
proceeds from the sale of the Company's interest in CenterMark.

     PROPERTY ACQUISITIONS AND DEVELOPMENTS

     ACQUISITIONS

     During the fourth quarter of 1996, the Company acquired 100% ownership in
five properties, Park Mall, Sooner Fashion Mall, Lakeview Square, Lansing Mall
and Westwood Mall, and a 50% interest in  Quail Springs Mall. Park Mall in
Tucson, Arizona was acquired on October 4, 1996, for 1,000,000 shares of newly
issued common stock and $24 million in cash.  Sooner Fashion Mall and 50% of
Quail Springs Mall, in Norman and Oklahoma City, Oklahoma, respectively, were
acquired on November 27, 1996, for 895,928 newly issued common shares, the
assumption of $8.6 million of mortgage debt and the payment of $16.7 million in
cash.  On December 6, 1996, the Company acquired Lakeview Square, Lansing Mall
and Westwood Mall, all located in south central Michigan, for an aggregate
purchase price of $132.2 million which consisted of $92.4 million of mortgage
debt assumption ($4.4 million of which was retired at closing) and 1,445,000
newly issued Operating Partnership Units.

     DEVELOPMENTS

     During 1996, the Company acquired two new development sites located in
Iowa City, Iowa and Grand Rapids, Michigan.  The Iowa City site is currently
under development and is scheduled to open in July 1998.  In February of 1996,
the Company opened Eagle Ridge Mall in Winterhaven, Florida, which had
previously been under development.

     ACQUISITION OF GGMI

     On December 22, 1995, the Company formed GGP Management, Inc. ("GGP
Management") to manage, lease, develop and operate enclosed malls.  In August
1996, the Operating Partnership, acting through GGP Management, completed the
acquisition of General Growth Management, Inc. for approximately $51.5 million.
The Operating Partnership issued 453,791 Operating Partnership Units
(approximately $11.6 million) and sold 1,555,855 shares of common stock it
acquired from the Company (approximately $39.9 million) to GGP Management in
connection with the acquisition of GGMI.  The Operating Partnership extended a
loan to GGP Management to purchase the Company's common stock.  This loan bears
interest at a rate of 14% per annum and is reflected on the consolidated
balance sheet.  In connection with the acquisition, GGP Management was merged
into GGMI at closing. GGMI currently manages, leases, and performs various
other services for the Original Centers, GGP/Homart and other properties owned
by unaffiliated parties.

     THE SHOPPING CENTER BUSINESS

     Success in the highly competitive real estate shopping center business
depends upon many factors, including general economic conditions, increases or
decreases in operating expenses and interest rates, changes in demographics,
and competitive pressures.  The Portfolio Centers compete with numerous
shopping alternatives in seeking to attract retailers to lease space as
retailers themselves face increasing competition from discount shopping
centers, outlet malls, discount shopping clubs, direct mail and telemarketing.
Management believes that the shopping center business is evolving from having
primarily a development-orientation to one which has more of a
operations-oriention. This evolution necessitates the implementation of new
approaches to shopping center management and


                                      -3-
<PAGE>   4

leasing.  Management's strategies include the integration of mass merchandise
retailers with traditional department stores, specialty leasing,
entertainment-oriented tenants, proactive property management and leasing,
strategic expansions and acquisitions, and selective new shopping center
developments. These approaches should enable the Company to operate and grow
successfully in today's value-oriented environment. Most of the Original Centers
are strategically located nationwide in middle markets where they have strong
competitive positions.  The Original Centers' geographic diversification should
mitigate the effects of regional economic conditions and local factors. The
CenterMark Centers and the Homart Centers are primarily concentrated in areas
not served by the Original Centers.  In addition, most of the CenterMark Centers
and Homart Centers are located in major markets which further diversify the
Portfolio Centers in terms of geographic region and market type of the Company's
enclosed mall shopping centers.

     As used herein, the term "GLA" refers to gross retail space, including
anchors and mall tenant areas; 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 Stores" refers to stores (other than
anchors) that are typically specialty retailers who lease space in shopping
centers; and the term "Freestanding GLA" means gross leasable area of
freestanding retail stores or convenience stores located along the perimeter of
a center's parking area.

     BUSINESS OF THE COMPANY

     The Portfolio Centers currently consist of the Original Centers, a
portfolio of thirty-one enclosed mall shopping centers in twenty states and the
twenty-six Homart Centers located in fifteen states and through January 2,
1997, the nineteen CenterMark centers located in eight states.  Thirty-two of
the fifty-seven Original Centers and Homart Centers have been expanded,
renovated or developed since 1990 and several other centers are currently being
redeveloped and/or expanded.  In addition, over $350 million was spent by the
former owners of the CenterMark Centers from 1989 to 1993 to modernize,
redevelop, expand and remerchandise many of the properties.

     The Company is the asset manager of the Original Centers, making all key
strategic decisions. It retains final authority over all operating matters and
supervises GGMI, the property manager of the Original Centers. GGMI performs
day-to-day property management functions including leasing, construction
management, data processing, maintenance, accounting, marketing, promotion and
security at the Original Centers pursuant to the management agreement.

     The Company, along with its stockholders in GGP/Homart, makes all key
strategic decisions for the Homart Centers.  The Company is the asset manager
of the Homart Centers, executing the strategic plans and overseeing the
day-to-day activites performed by GGMI.  GGMI is currently the property manager
for twenty-one of the Homart Centers, and the joint venture partners manage the
other five Homart Centers.

     The goal for each Portfolio Center is to maximize the sales of their
retail tenants, thereby increasing both the potential to receive both
percentage rents from existing tenants and higher minimum rents from new
tenants.  Management believes that sales will be maximized by maintaining a
quality relationship with retailers, generating high customer traffic and
incorporating new strategies such as the use of entertainment tenants,
theaters, ice rinks and museums.

     Company management believes that per share growth in its "Funds from
Operations", which is defined as net income (loss) before non-cash expenses and
certain gains or losses on sales and investments, is the key factor in
enhancing stockholder value.  It is management's objective to achieve growth in
Funds from Operations through development of new shopping centers, acquisition
of additional shopping centers, expansions, renovations, leasing vacant space,
and proactive management to increase cash flow in the exisiting Portfolio
Centers.  Funds from Operations can also be affected by external factors, such
as inflation or increases in disposable consumer income.

     CENTERMARK'S BUSINESS

     CenterMark is engaged in owning, operating, managing, leasing, expanding
and redeveloping regional shopping centers and power centers and other related
properties.  CenterMark currently owns interests in the nineteen CenterMark
Centers, fourteen separate department store properties net leased to The May
Company and certain other real estate investments.

     The CenterMark Centers are located primarily in major metropolitan areas,
including suburbs of Los Angeles and San Diego, California; Hartford,
Connecticut; Portland, Oregon; St. Louis, Missouri; and Washington D.C.  The



                                      -4-
<PAGE>   5

CenterMark Centers contain approximately 15.8 million square feet of total GLA,
including approximately 60 Anchors operating under 17 trade names and more than
1,800 Mall Stores operating under approximately 960 trade names.

     GGP/HOMART'S BUSINESS

     GGP/Homart is primarily engaged in owning, operating, expanding and
redeveloping regional shopping centers.  GGP/Homart currently owns interests in
twenty-six existing centers and one center under construction in Waterbury,
Connecticut.

     The Homart Centers are located primarily in major metropolitan areas,
including suburbs of San Diego and San Francisco, California; Phoenix, Arizona;
Houston and Dallas - Fort Worth, Texas; Philadelphia, Pennsylvania; Miami/Ft.
Lauderdale, Florida; and Washington, D.C.  The Homart Centers contain
approximately 22.7 million square feet of total GLA and approximately 7.9
million square feet of Mall Stores. There are approximately 109 Anchors and
more than 2,500 Mall Stores in the Homart Centers.

     As of December 31, 1996, GGP/Homart owned 100% of sixteen Homart Centers
and varying percentages of the other eleven Homart Centers.

     THE PORTFOLIO CENTERS

     Sixty-one of the seventy-five Portfolio Centers are enclosed mall shopping
centers with at least two major department stores as Anchors and a wide variety
of smaller Mall Stores.  At most of the Portfolio Centers, additional
Freestanding Stores are located along the perimeter of the parking area.  Each
Portfolio Center provides ample surface parking for shoppers.  The Portfolio
Centers:

          - range in size between approximately 340,000 and 1,373,000 square
          feet of total GLA and between approximately 125,000 and 530,000
          square feet of Mall and Freestanding GLA.  The smallest Portfolio
          Center has approximately 40 stores, and the largest has over 175
          stores;

          - have approximately 287 Anchors, operating under approximately 64
          trade names; and

          - have approximately 7,000 Mall and Freestanding Stores.


     The average size of the 75 Portfolio Centers is approximately 795,000
square feet of GLA, including all Anchors, Mall Stores and Freestanding Stores.
The average Mall and Freestanding GLA per Portfolio Center is approximately
310,000 square feet.

     As of December 31, 1996, the Original Centers contain approximately 20.9
million square feet of GLA consisting of Anchors (whether owned or leased),
Mall Stores and Freestanding Stores.  The CenterMark Centers and the Homart
Centers contain GLA of approximately 15.8 million square feet and 22.7 million
square feet, respectively.

     The Company's share of total revenues from the Portfolio Centers and GGMI
increased from $229.1 million in 1995 to $363.4 million in 1996.  No single
Portfolio Center generated more than 8% of the Company's total 1996 pro rata
revenues.  In 1996, total Mall Store sales at all of the Portfolio Centers
increased by approximately 4.7%.  The Portfolio Centers weighted average Mall
Store rent per square foot from leases that expired in 1996 was $18.79.  As a
result of market rents being higher than the rents under many of the expiring
leases, the weighted average Mall Store rent per square foot on new and renewal
leases during 1996 was $23.71, or $4.92 per square foot more than the
above-indicated average for expiring leases.

     Total mortgage debt on the Original Centers including 50% of Quail
Springs' debt at December 31, 1996 was approximately $1,177.1 million.  Of this
amount, $401.7 million was variable rate debt, and the remaining $775.4 million
was fixed rate debt.  The weighted average interest rate on the Company's debt
was approximately 7.18% as of December 31, 1996.  The Company's share of
mortgage debt on the Homart Centers (38.2% of the debt on centers owned
entirely by GGP/Homart and 38.2% of GGP/Homart's share of debt on joint venture
properties) was approximately $324.4 million at December 31, 1996.  $110.4
million was variable rate debt, and $214.0 million was fixed rate debt.  The
weighted average interest rate of the Company's share of debt attributable to
the Homart Centers was approximately 7.51% as of December 31, 1996.  The
Company's pro rata share of total consolidated


                                      -5-
<PAGE>   6

debt was $1,501.5 million as of December 31, 1996, and its weighted average
interest rate was approximately 7.25%.

     In most cases, the land underlying the Portfolio Centers is owned in fee;
however, in five of the Original Centers, all or part of the underlying land is
owned by a third party that leases the land pursuant to a ground lease.  The
Company leases the land under Knollwood Mall and Rio West Mall.  It also leases
a portion of the Fallbrook Mall land and a portion of the SouthShore and
Bayshore parking areas.  The leases contain various  purchase options in favor
of the Company and typically provide for a right of first refusal in favor of
the Company in the event of a proposed sale of the property by the Landlord.
In addition, Prince Kuhio Plaza, one of the Homart Centers, is located on land
leased pursuant to a long-term ground lease.

     ANCHORS

     Anchors have traditionally been a major factor in the public's image of an
enclosed shopping center.  Anchors are generally department stores whose
merchandise appeals to a broad range of shoppers.  Anchors either own their
stores, the land under them and adjacent parking areas, or enter into long-term
leases at rates that are generally lower than the rents charged to Mall Store
tenants.  Although the Portfolio Centers receive a smaller percentage of their
operating income from Anchors than from Mall Stores, strong Anchors play an
important part in maintaining customer traffic and making the Portfolio Centers
desirable locations for Mall Store tenants. Anchors accounted for approximately
6% of the Portfolio Centers' pro rata consolidated minimum rent during 1996.

     The following table indicates the parent company of each Anchor and sets
forth the number of stores and square feet owned or leased by each Anchor at
the Original Centers and the Homart Centers as of December 31, 1996.


                                      -6-
<PAGE>   7
                        GENERAL GROWTH PROPERTIES, INC.
                              PORTFOLIO ANCHORS(1)
                            As of December 31, 1996
<TABLE>
<CAPTION>
                                                                   Total                   Square Feet
                                Name                               Stores                    (000's)
-----------------------------------------------------------        ------                  -----------
<S>                                                                  <C>                       <C>
Sears                                                                47                        5,648
JCPenney                                                             45                        4,181
Dayton Hudson
         Daytons                                                      2                          269
         Hudsons                                                      3                          304
         Mervyns                                                     18                        1,482
         Target                                                      14                        1,455
                                                                  -----                      -------
                  Sub-Total Dayton Hudson                            37                        3,510
                                                                  -----                      -------
Dillards                                                             24                        3,580
May Department Stores Company
         Filenes                                                      4                          682
         Filenes Home Store                                           1                           36
         Foleys                                                       6                        1,064
         Lord & Taylor                                                3                          335
         Robinsons-May                                                3                          497
                                                                  -----                      -------
                  Sub-Total May Department Stores Company            17                        2,614
                                                                  -----                      -------
Proffitt's
         Younkers                                                     4                          355
         Herbergers                                                   1                           71
         Parisian                                                     1                           95
                                                                  -----                      -------
                  Sub-Total Proffitt's                                6                          521
                                                                  -----                      -------
Federated Department Stores
         Burdines                                                     2                          283
         Lazarus                                                      1                           50
         Macys                                                        6                        1,030
         Richs                                                        1                          240
         The Bon Marche                                               1                          100
                                                                  -----                      -------
                  Sub-Total Federated Department Stores              11                        1,703
                                                                  -----                      -------
Montgomery Ward & Co.
         Montgomery Ward                                              5                          617
         Lechmere                                                     1                           69
                                                                  -----                      -------
                  Sub-Total Montgomery Ward & Co.                     6                          686
                                                                  -----                      -------
Harcourt General
         Neiman-Marcus                                                1                          132
Mercantile Stores
         Bacons                                                       1                          187
         Castner Knott                                                1                          101
         Gayfer's                                                     1                          213
         Joslins                                                      1                          171
         JB White                                                     1                          181
                                                                  -----                      -------
                  Sub-Total Mercantile Stores                         5                          853
                                                                  -----                      -------
Kohls                                                                 2                          177
TJ Maxx                                                               2                           76
Burlington Coat Factory                                               1                          101
KMart                                                                 4                          357
Wal-Mart                                                              2                          197
All About Sports                                                      1                          335
Elder-Beerman                                                         2                          142
Emporium                                                              1                           50
Gottschalks                                                           1                          173
Hills Department Store                                                2                          175
Ross Dress For Less                                                   3                           96
Service Merchandise                                                   1                           34
Bealls                                                                2                           47
Belk                                                                  1                          122
Belk-Lindsey                                                          1                           82
Belk Men's                                                            1                           34
Boscov                                                                1                          185
Dicks Sporting Goods                                                  1                           80
Harris                                                                1                          150
Jordan Marsh                                                          1                          210
Liberty House                                                         1                           50
Oshman's Sporting Goods                                               1                           64
Saks Fifth Avenue                                                     1                          120
Scheels All Sports                                                    1                           50
Steinbachs                                                            1                           55
Strawbridge & Clothier                                                1                          218
The Bon Ton                                                           1                           82
Toys R Us                                                             1                           47
Woolworth                                                             1                           50
</TABLE>

                                       7
<PAGE>   8

     MALL AND FREESTANDING STORES

     The Portfolio Centers have an aggregate of approximately 7,000 Mall and
Freestanding Stores.  As of December 31, 1996, national or regional chains
leased approximately 91% of the space occupied in the Portfolio Centers
consisting of Mall Stores and Freestanding Stores.  Among the retailers with
the largest representation in  Mall and Freestanding Stores are: The Limited,
Limited Express, Lerner, Lane Bryant, Victoria's Secret, Structure, Payless
Shoesource, Kay-Bee Toys, Wilson's Leather, Thom McAnn, Casual Corner,
LensCrafters, Kinney, Foot Locker, Northern Reflections, Champs.

     The Portfolio Centers derived approximately 92% of their 1996 revenues
from Mall and Freestanding Stores, which comprise approximately 40% of the
Portfolio Centers' total GLA.  No single retailer accounted for more than 8% of
leased Mall and Freestanding GLA or more than 8% of the 1996 annualized base
rent.

     Current Mall and Freestanding Store leases have an average remaining term
of approximately seven years.  Generally, they provide for tenants to pay rent
comprised of two elements: minimum and percentage rent.  Minimum or base rent
is often subject to increases according to a schedule agreed upon at the time
of lease inception.  In many cases, the base rent is adjusted for inflation by
increases tied to changes in the Consumer Price Index.  Percentage rent is
additional rent based on  a percentage of the tenants' sales over certain
stated levels.  In some cases, tenants pay only a fixed minimum rent, and in a
few cases, tenants pay only percentage rents.   Most leases for Mall Stores
contain provisions that allow the Portfolio Centers to recover their costs for
common area maintenance, property taxes and other expenditures related to
day-to-day operations.  Some Anchors also contribute to the recovery of these
costs.

     EXPANSIONS AND RENOVATIONS

     Most of the Portfolio Centers were designed to allow for expansion and
growth through the addition of new Anchors or Mall and Freestanding Stores.
Six Original Centers and five Homart Centers are in the process of an
expansion, Anchor addition or renovation.  The expansion and renovation of a
Portfolio Center often increases customer traffic, trade area penetration and
typically improves the competitive position of the property.

     ACQUISITIONS

     The Company continues to seek desirable properties for acquisition.  In
1996, the Company also acquired interests in six other properties for
approximately $230 million.  The Company's management believes that it,
together with the Operating Partnership, have the following competitive
advantages and reasons to acquire enclosed shopping malls:


   -    The funds necessary for a cash acquisition of a shopping center can be
        obtained by the Company and the Operating Partnership from a combination
        of sources, including mortgage or unsecured financing or the issuance of
        public debt or equity.

   -    The Company and the Operating Partnership have the flexibility to pay
        for an acquisition with a combination of cash, Common Stock or limited
        partnership units in the Operating Partnership.  This creates the
        opportunity for tax-advantaged transactions for sellers.

   -    Management's expertise allows it to evaluate proposed acquisitions for
        their increased profit potential.  Additional profit can originate from
        many sources including expansions, remodeling, remerchandising, and more
        efficient management of the property.


                                       8
<PAGE>   9


     DEVELOPMENT

     The Company, through the Operating Partnership, intends to pursue
development when warranted by the potential financial returns.  During 1996,
the Company acquired 100% of two new development sites located in Iowa City,
Iowa and Grand Rapids, Michigan.  The Company and its affiliates are currently
developing an enclosed shopping center in Waterbury, Connecticut and completing
predevelopment work on the site recently acquired in Iowa City, Iowa.  Brass
Mill Mall, a 950,000 square foot enclosed regional mall and Brass Mill Commons,
a 200,000 square foot power center, located in Waterbury Connecticut are
scheduled to open in the fall of 1997.  Coral Ridge Mall, a 1,000,000 square
foot enclosed regional mall located in Iowa City, Iowa, is scheduled to open in
the summer of 1998.

     ENVIRONMENTAL MATTERS

     Under various federal, state and local laws and regulations, an owner of
real estate is liable for the costs of removal or remediation of certain
hazardous or toxic substances on such property.  These laws often impose such
liability without regard to whether the owner knew of, or was responsible for,
the presence of such hazardous or toxic substances.  The costs of remediation
or removal of such substances may be substantial, and the presence of such
substances, or the failure to promptly remediate such substances, may adversely
affect the owner's ability to sell such real estate or to borrow using such
real estate as collateral.  In connection with its ownership and operation of
the Portfolio Centers, the Company, the Operating Partnership or the relevant
Property Partnership, may be potentially liable for such costs.

     All of the Portfolio Centers have been subject to Phase I environmental
assessments, which are intended to discover information regarding, and to
evaluate the environmental condition of, the surveyed and surrounding
properties.  The Phase I assessments included an historical review, a public
records review, a preliminary investigation of the site and surrounding
properties, screening for the presence of asbestos, polychlorinated biphenyls
("PCBs") and underground storage tanks and the preparation and issuance of a
written report, but do not include soil sampling or subsurface investigations.
Where the Phase I assessment so recommended, a Phase II assessment was
conducted to further investigate any issues raised by the Phase I assessment.
In each case where Phase I and/or Phase II assessments resulted in specific
recommendations for remedial actions, management has either taken or scheduled
the recommended action.

     Neither the Phase I nor the Phase II assessments have revealed any
environmental liability that the Company believes would have a material effect
on the Company's business, assets or results of operations, nor is the Company
aware of any such liability.  Nevertheless, it is possible that these
assessments do not reveal all environmental liabilities or that there are
material environmental liabilities of which the Company is unaware.  Moreover,
no assurances can be given that (i) future laws, ordinances or regulations will
not impose any material environmental liability or (ii) the current
environmental condition of the Portfolio Centers will not be affected by
tenants and occupants of the Portfolio Centers, by the condition of properties
in the vicinity of the Portfolio Centers (such as the presence of underground
storage tanks) or by third parties unrelated to the Operating Partnership or
the Company.

     EMPLOYEES

     As of March 25, 1997, the Company and GGMI had approximately 3,000
full-time employees.  None of the employees are subject to a collective
bargaining agreement and the Company has not experienced a labor-related work
stoppage.

     QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST AND TAXABILITY OF
     DISTRIBUTIONS

     The Company currently qualifies as a real estate investment trust pursuant
to the requirements contained under Sections 856-858 of the Internal Revenue
Code of 1986, as amended (the "Code").  If, as the Company contemplates, such
qualification continues, the Company will not be taxed on its real estate
investment trust taxable income.  During 1996, the Company distributed (or was
deemed to have distributed) 100% of its taxable income to stockholders.  Cash
distributions in the amount of $1.72 per share were paid in 1996.  Of that
amount, $.808 (47.0%) was ordinary income, based on the taxable income of the
Company and $.912 (53.0%) was a long-term capital gain from the sale of a
portion of the CenterMark stock.

                                       9
<PAGE>   10


ITEM 2.  PROPERTIES

     The Company's investment in real estate as of December 31, 1996 consisted
of its interests in the Portfolio Centers, development in progress and certain
other real estate .  As described elsewhere herein, as of December 22, 1995,
the Company acquired, through the Operating Partnership, 38.2% of GGP/Homart.
GGP/Homart owns interests in the Homart Centers and certain other real estate
assets.  The Company completed the sale of its remaining interest in CenterMark
on January 2, 1997.  As a result of the sale, the Company no longer has an
ownership interest in the CenterMark Centers.

     The following tables set forth certain information regarding the Original
Centers and the Homart Centers as of December 31, 1996.  The first table
depicts the Original Centers and the second table depicts the Homart Centers.


                                       10
<PAGE>   11
                                ORIGINAL CENTERS
<TABLE>
<CAPTION>
                                                 TOTAL GLA/MALL
                                    YEAR        AND FREESTANDING
      NAME OF CENTER/         OPENED/REMODELED        GLA                                                                 ANCHOR
        LOCATION(1)             OR EXPANDED      (SQUARE FEET)                           ANCHORS                         VACANCIES
----------------------------  ----------------  ----------------  -----------------------------------------------------  ---------
<S>                           <C>               <C>               <C>                                                    <C>
Bayshore Mall                      1987/            616,036/      Gottschalks, JCPenney, Sears, Mervyn's, Ross Dress
  Eureka, California                1989            346,021       for Less                                                 None

Bellis Fair Mall                   1988/            764,124/
  Bellingham, Washington            N/A             350,961       The Bon Marche, JCPenney, Sears, Target, Mervyn's        None

Birchwood Mall                     1990/            607,048/
  Port Huron, Michigan              1991            280,994       Younkers, JCPenney, Sears, Target                        None

Capital Mall                       1978/            537,513/
  Jefferson City, Missouri          1985            307,828       Dillard's, JCPenney, Sears                               None

Chapel Hills Mall                  1982/            957,251/
  Colorado Springs, Colorado        1986            420,234       Joslin's, Sears, Mervyn's, KMart, JCPenney, Dillard's    None

Colony Square Mall                 1981/            548,851/
  Zanesville, Ohio                  1987            290,847       Lazarus, Elder-Beerman, JCPenney, Sears                  None

Columbia Mall                      1985/            727,013/
  Columbia, Missouri                1987            311,569       Dillard's, JCPenney, Sears, Target                       None

Eagle Ridge Mall                   1996/            615,357/
  Winter Haven, Florida             N/A             317,638       Dillard's, JCPenney, Sears                               None

Fallbrook Mall
  West Hills, California           1966/          1,017,869/      JCPenney, Target, Mervyn's,  KMart, Burlington Coat
  (Los Angeles, California)         1985            465,855       Factory                                                  None

Fox River Mall                     1984/          1,090,016/
  Appleton, Wisconsin               1991            525,320       Dayton's, Younkers, JCPenney, Sears, Target              None

Gateway Mall                       1990/            640,508/
  Springfield/Eugene, Oregon        1990            357,243       The Emporium, Sears, Target                              None

Grand Traverse Mall                1992/            578,277/
  Traverse City, Michigan           N/A             312,989       Hudson's, JCPenney, Target, TJ Maxx                      None

Greenwood Mall                     1979/            772,802/
  Bowling Green, Kentucky           1987            393,749       Castner Knott, JCPenney, Sears, Dillard's                None

Knollwood Mall
  St. Louis Park, Minnesota        1955/            511,496/
  (Minneapolis, Minnesota)          1981            300,896       Montgomery Ward, Kohl's, TJ Maxx                         None

Lakeview Mall                      1993/            614,230/
  Battle Creek, Michigan            N/A             322,637       Hudson's, JCPenney, Sears                                None

Lansing Mall                       1969/            830,213/
  Lansing, Michigan                 N/A             386,811       Hudson's, JCPenney, Mervyn's, Montgomery Ward            None

Lockport Mall                      1971/            345,894/
  Lockport, New York               1984             125,497       Montgomery Ward, Hills, Bon  Ton                         None

Mall of the Bluffs
  Council Bluffs, Iowa             1986/            587,193/
  (Omaha, Nebraska)                1988             353,559       Dillard's, JCPenney, Target                              None

Natick Mall                        1966/           1,138,252/
  Natick, Massachusetts             1994            431,066       Sears, Filene's, Lord & Taylor, Macy's, Jordan Marsh     None

Oakwood Mall                       1986/            753,400/      Dayton's, JCPenney, Target, Sears, Scheel's All
  Eau Claire, Wisconsin             1991            288,324       Sports                                                   None

Park Mall                          1974/            857,274/
  Tucson, Arizona                   N/A             338,961       Sears, Dillard's, Macy's                                 None

Piedmont Mall                      1984/            659,866/
  Danville, Virginia                1995            187,168       Belk, Hills, JCPenney, Sears, Belk Mens                  None

</TABLE>

                                       11
<PAGE>   12
                               ORIGINAL CENTERS
<TABLE>
<CAPTION>

                                                 TOTAL GLA/MALL
                                    YEAR        AND FREESTANDING
      NAME OF CENTER/         OPENED/REMODELED        GLA                                                                 ANCHOR
        LOCATION(1)             OR EXPANDED      (SQUARE FEET)                           ANCHORS                         VACANCIES
----------------------------  ----------------  ----------------  -----------------------------------------------------  ---------
<S>                           <C>               <C>               <C>                                                    <C>
The Pines                          1986/            607,874/
  Pine Bluff, Arkansas              1990            268,165       Dillard's, JCPenney, Sears, Wal-Mart                     None

Quail Springs Mall (2)             1980/           1,016,395/
  Oklahoma City, Oklahoma           N/A             328,542       Dillard's, Foley's, JCPenney, Sears                      None

Rio West Mall                      1981/            366,121/
  Gallup, New Mexico                1991            184,988       Beall's, JCPenney, KMart                                 None

River Falls Mall
  Clarksville, Indiana             1990/           744,405/
  (Louisville, Kentucky)            N/A             399,367       Bacons, Wal-Mart, Toys "R" Us, All About Sports          None

River Hills Mall                   1991/            647,235/
  Mankato, Minnesota               1996             285,186       Herberger's, JCPenney, Target, Sears                     None

Sooner Fashion Square              1976/            466,165/
  Norman, Oklahoma                  N/A             199,933       Dillard's, JCPenney, Sears, Service Merchandise          None

SouthShore Mall                    1981/            339,825/
  Aberdeen, Washington              N/A             150,498       JCPenney, Sears, KMart                                   None

Westwood Mall                      1972/            465,218/
  Jackson, Michigan                 N/A             147,124       Elder-Beerman, JCPenney, Montgomery Ward                 None

West Valley Mall                   1995/            557,715/
  Tracy, California                 N/A             281,097       Gottschalks, JCPenney, Target, Ross Dress for Less       None

MALLS UNDER DEVELOPMENT
-----------------------
Coral Ridge Mall                   1998/            900,000/
  Iowa City, Iowa                   N/A             300,000       Dillard's, Younkers, Sears, JCPenney, Target             None
</TABLE>

(1)  In some cases, where a center's location is part of a larger metropolitan
     area, the metropolitan area is identified in parentheses.

(2)  The Company owns 50% of Quail Springs Mall.


                                      12
<PAGE>   13
                                HOMART CENTERS

<TABLE>
<CAPTION>
                                                                   TOTAL GLA/MALL
                                       YEAR          OWNERSHIP    AND FREESTANDING
        NAME OF CENTER/          OPENED/REMODELED   INTEREST %           GLA                                                ANCHOR
          LOCATION(1)              OR EXPANDED     OF GGP/HOMART  (SQUARE FEET) (2)                ANCHORS                 VACANCIES
-------------------------------  ----------------  -------------  -----------------  ------------------------------------  ---------
<S>                              <C>               <C>            <C>                <C>                                   <C>
                                                                                     Dillard's, JCPenney, Mervyn's,
Arrowhead Towne Center                1993/                          1,135,603/      Montgomery Ward,
  Glendale, Arizona                    1996            33.3            397,656       Robinson's-May                          None

Bay City Mall                         1991/                           527,246/       Sears, Target, JCPenney,
  Bay City, Michigan                   1993             100            211,595       Younkers                                None

Chula Vista Center                    1960/                           884,314/       Macy's, Sears, JCPenney,
  Chula Vista, California              1994             100            302,364       Mervyn's                                None

Columbiana Centre                     1990/                           789,018/       Sears, Parisian's, Dillard's,
  Columbia, South Carolina             1992             100            251,130       J. B. White                             None

Deerbrook Mall
  Humble, Texas                       1984/                          1,199,864/      Sears, Mervyn's, Macy's,
  (Houston, Texas)                     N/A              100            362,936       Foley's, JCPenney                       None

Eden Prairie Center                   1976/                           863,399/       Sears, Target, Kohl's,
  Eden Prairie, Minnesota              1994             100            325,973       Mervyn's                                None
  (Minneapolis, Minnesota)

Lakeland Square                       1988/                           904,910/       Sears,  Mervyn's, Belk-Lindsey,
  Lakeland, Florida                    1994             50             291,780       Dillard's, JCPenney, Burdines           None

Meriden Square                        1971/                           725,265/       Sears, JCPenney, Filene's               None
  Meriden, Connecticut                1993              50             290,439
  (Hartford, Connecticut)

Moreno Valley Mall                    1992/                          1,034,788/      Sears, Robinson's-May,
  Moreno Valley, California            N/A              100            429,254       JCPenney, Harris'                       None

Neshaminy Mall                        1968/                           945,779/       Sears, Strawbridge & Clothier,
  Bensalem, Pennsylvania               N/A              50             308,988       Boscov's, Woolworth                     None

Newgate Mall                          1981/                           688,856/       Sears, Mervyn's, Dillard's,
  Ogden, Utah                          1994             100            275,692       Oshman's                                None

New Park Mall                         1980/                          1,107,837/      Sears, Macy's, Mervyn's,
  Newark, California                   1993             50             388,005       JCPenney                                None

North Point Mall
  Alpharetta, Georgia                 1993/                          1,362,574/      Sears, JCPenney, Lord & Taylor,
  (Atlanta, Georgia)                   N/A              100            396,287       Mervyn's, Rich's, Dillard's             None

The Parks at Arlington                1988/                          1,190,857/      Sears, Dillard's, Mervyn's,
  Arlington, Texas                     N/A              N/A            359,912       Foley's, JCPenney                       None


The Pavilions at Buckland Hills       1990/                           963,120/       Sears, Filene's, JCPenney, Lord &
  Manchester, Connecticut              1994             N/A            327,284       Taylor, Filene's Home Store, Dick's     None
                                                                                     Sporting Goods

Pembroke Lakes Mall                   1992/                          1,063,859/      Sears, Burdine's, JCPenney,
  Pembroke Pines, Florida              N/A              100            337,235       Mervyn's, Dillard's                     None

Prince Kuhio Plaza                    1985/                           475,765/       Sears, Liberty House, Woolworth,
  Hilo, Hawaii                         N/A              100            166,191       JCPenney                                None

Rolling Oaks Mall                     1988/                           758,584/
  San Antonio, Texas                   1992             50             297,727       Sears, Dillard's, Foley's, Beall's      None

Sequoia Mall and Tower Plaza          1975/                           345,940/
  Visalia, California                  N/A              100            172,940       Sears, Mervyn's, Ross Dress for Less    None

Steeplegate Mall                      1990/                           446,598/
  Concord, New Hampshire               N/A              100            162,655       Sears, JCPenney, Steinbach               One

Superstition Springs Center           1990/                          1,075,054/      Sears, JCPenney, Dillard's,
  East Mesa, Arizonia                  1994            33.3            368,361       Mervyn's, Robinson's-May                None

Tysons Galleria                       1988/                           808,771/       Macy's, Saks Fifth Avenue,
  McLean, Virginia                     N/A              100            296,838       Neiman Marcus                           None

</TABLE>


                                       13
<PAGE>   14
                                HOMART CENTERS

<TABLE>
<CAPTION>
                                                                   TOTAL GLA/MALL
                                       YEAR          OWNERSHIP    AND FREESTANDING
        NAME OF CENTER/          OPENED/REMODELED   INTEREST %           GLA                                                ANCHOR
          LOCATION(1)              OR EXPANDED     OF GGP/HOMART  (SQUARE FEET) (2)                ANCHORS                 VACANCIES
-------------------------------  ----------------  -------------  -----------------  ------------------------------------  ---------
<S>                              <C>               <C>            <C>                <C>                                   <C>

Vista Ridge Mall                      1989/                           1,052,617/      Sears, Dillard's, Foley's,
  Lewisville, Texas                    1991              80             379,555       JCPenney                                None

Washington Park Mall                  1984/                            351,486/
  Bartlesville, Oklahoma               1986             100             157,190       Sears, Dillard's, JCPenney              None

West Oaks Mall
  Ocoee, Florida                      1996/                          1,015,160/
  (Orlando, Florida)                   N/A              100             312,626       Dillard's, Sears, JCPenney, Gayfers     None

The Woodlands Mall
  The Woodlands, Texas                1994/                           1,028,033/      Sears, Dillard's, Mervyn's,
  (Houston, Texas)                     N/A               50             350,082       Foley's                                 None

MALLS UNDER DEVELOPMENT
-----------------------
Brass Mill Center/Commons             1997/                           1,185,199/      Sears, Filene's, Lechmere,
  Waterbury, Connecticut               N/A              100             528,608       JCPenney                                None
</TABLE>

(1) In cases where a Center's location is part of a larger metropolitan area,
    the metropolitan area is identified in parenthesis.
(2) Includes square footage added in redevelopment/expansion projects.
(3) GGP/Homart's participation is subordinated to certain preferred returns to
    its Joint Venture Partners.

     For other information concerning the Original Centers and the Homart
Centers see "Item 1 - Business - Business of the Company" and "Item 1 -
Business - GGP/Homart's Business", and for information concerning the mortgage
debt encumbering the Original Centers see Note 7 to the Consolidated Financial
Statements appearing in Item 8 of this Annual Report on Form 10-K.


     ITEM 3.  LEGAL PROCEEDINGS

     The Company, the Operating Partnership and the Property Partnerships are
not currently involved in any material litigation nor, to the Company's
knowledge, is any material litigation currently threatened against the Company,
the Operating Partnership, the Property Partnerships or their properties,
CenterMark, or GGP/Homart other than routine litigation arising in the ordinary
course of business, most of which is expected to be covered by liability
insurance.  For information about certain environmental matters, see "Item 1 -
Business - Environmental Matters."


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

     No matters were submitted to the Company's stockholders during the fourth
quarter of fiscal 1996.


                                       14
<PAGE>   15
     PART II

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

     The Common Stock is listed on the New York Stock Exchange ("NYSE") and
trades under the symbol "GGP".  As of March 25, 1997, the 30,789,185
outstanding shares of Common Stock were held by approximately 965 stockholders
of record.  The closing price per share of Common Stock on the NYSE on such
date was $30.75 per share.

     Set forth below are the high and low sales prices per share of Common
Stock as reported on the composite tape, and the distributions per share of
Common Stock declared for each such period.


<TABLE>
<CAPTION>
                            Price
        1996          ------------------    Declared
   Quarter Ending      High        Low    Distribution
--------------------  ------------------  ------------
<S>                   <C>       <C>       <C>
March 31, 1996          $24.00    $20.63          $.43
June 30, 1996           $24.63    $20.63          $.43
September 30, 1996      $26.00    $23.50          $.43
December 31, 1996       $32.75    $23.88          $.43

<CAPTION>

                            Price
        1995          ------------------    Declared
   Quarter Ending      High        Low    Distribution
--------------------  ------------------  ------------
<S>                    <C>       <C>        <C>
March 31, 1995          $22.63    $20.38          $.41
June 30, 1995           $21.75    $19.38          $.41
September 30, 1995      $20.63    $19.00          $.41
December 31, 1995       $21.63    $18.50          $.43

<CAPTION>

                            Price
        1994          ------------------    Declared
   Quarter Ending      High        Low    Distribution
--------------------  ------------------  ------------
<S>                   <C>        <C>         <C>
March 31, 1994          $21.50    $19.63          $.39
June 30, 1994           $22.00    $19.25          $.39
September 30, 1994      $22.63    $19.50          $.39
December 31, 1994       $22.63    $19.25          $.41
</TABLE>


                                       15


<PAGE>   16
     Set forth below is certain information about sales made by the Company
and/or the Operating Partnership of securities during the fourth quarter of
1996, which sales were not registered under the Securities Act of 1933, as
amended.  The sales were all made in connection with the acquisition of the
malls and interests therein indicated below, were effected in reliance upon the
exemption contained in Section 4 (2)  of the Securities Act pf 1933, as amended
and/or Regulation D promulgated thereunder, and were not underwritten
offerings.

<TABLE>
<CAPTION>
                                                                                Offering Price or
  Date            Issuer           Security     Amount         Purchaser        Consideration
--------------------------------------------------------------------------------------------------
<S>             <C>             <C>           <C>         <C>                  <C>
 10/04/96        Company         Common Stock  1,000,000  K-GAM Limited         Park Mall
                                                          Partnership

 11/27/96        Company         Common Stock    895,928  The Equitable Life    Sooner Fashion Mall
                                                          Assurance Society     and 50% of Quail
                                                          of the United         Springs Mall
                                                          States

 12/06/96        Operating       Units         1,445,000  Forbes-Cohen          Lakeview Square,
                 Partnership                              Properties,           Lansing Mall and
                                                          Lakeview Square       Westwood Mall
                                                          Associates and
                                                          Jackson Properties
</TABLE>


                                       16
<PAGE>   17
SELECTED FINANCIAL DATA
     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table sets forth selected financial data for the Company and
should be read in conjunction with the Consolidated Financial Statements and
notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in this Annual Report.



<TABLE>
<CAPTION>
                                             1996                 1995           1994           1993          1992
                                          ----------           ----------     ----------    ----------   -----------
<S>                                      <C>                  <C>            <C>           <C>           <C>
OPERATING DATA
  Revenue                                 $  217,405           $  167,396     $  152,583    $  142,210    $  119,050
  Operating Expenses                          75,954               63,968         63,118        55,073        46,379
  Depreciation and Amortization               39,809               30,855         28,190        25,377        22,074
  Interest Expense, Net                       66,439               46,334         42,995        37,495        47,249
  Equity in Net Income (Loss) of
    Unconsolidated Affiliates                 17,589                9,274          6,096             -          (620)
  Gain on the sale of a portion of
    CenterMark                                43,821               33,397              -             -             -
  Net Income (Loss)
    Before Minority Interest                  96,613               68,910         24,376        24,265         2,728
  Minority Interests (1)                     (34,580)             (25,856)        (9,518)       (9,823)       (2,728)
  Extraordinary Item                          (2,291)                   -           (693)       (1,832)            -
  Net Income                                  59,742               43,054         14,165        12,610             -
  Earnings Per Share Before
    Extraordinary Item                          2.20                 1.69            .65           .63             -
  Net Earnings Per Share                        2.12                 1.69            .62           .55             -
  Distributions Declared Per Share              1.72                 1.66           1.58          1.05             -

FUNDS FROM OPERATIONS
     (Unaudited)
  Funds From Operations (2)
    Operating Partnership                 $  108,526           $   81,214     $   69,610    $   47,810    $   25,422
  Minority Interest                          (39,841)             (30,915)       (27,927)      (19,189)      (25,422)
  Funds From Operations
    Company                                   68,685               50,299         41,683        28,621             -
  Funds From Operations per share               2.44                 1.97           1.83          1.58           N/A

BALANCE SHEET DATA
  Investment in Real Estate Assets        $1,639,440           $1,547,621     $  996,125    $  786,008    $  668,979
  Total Assets                             1,757,717            1,455,982        906,533       789,455       629,500
  Total Debt                               1,169,493            1,027,932        607,561       453,437       728,310
  Stockholders' Equity/(Deficit)             330,267              229,383        154,426       173,013      (116,237)

CASH FLOW DATA
  Operating Activities                    $   52,688           $   60,660     $   48,936    $   53,077    $   24,313
  Investing Activities                       (14,771)            (469,204)      (145,253)     (111,408)      (38,358)
  Financing Activities                       (40,268)             421,225         96,380        52,587        16,421

</TABLE>

(1) Current minority holders (primarily the Bucksbaums) who were previously the
    sole stockholders of the Company.

(2) Represents net income (loss) before minority interest excluding straight
    line rent plus real estate depreciation and amortization and adjusted for
    equity in net income (loss) of unconsolidated affiliates (including related
    depreciation and amortization).  Funds From Operations does not represent
    cash flow from operations as defined by Generally Accepted Accounting
    Principles (GAAP) and is not necessarily indicative of cash available to
    fund all cash requirements.


                                       17
<PAGE>   18

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

     The following discussion should be read in conjunction with the
Consolidated Financial Statements and the notes thereto appearing later in this
Annual Report.


     CERTAIN INFORMATION ABOUT THE PORTFOLIO CENTERS

     As of December 31, 1996, the Company owned 100% of thirty enclosed
regional shopping centers and 50% of Quail Springs Mall (the "Original
Centers") and, through the Operating Partnership, owned 14% of the stock of
CenterMark Properties, Inc. and 38.2% of the stock of GGP/Homart, Inc.
CenterMark owns interests in nineteen shopping centers (the "CenterMark
Centers") and other properties.  GGP/Homart owns interests in twenty-six
shopping centers (the "Homart Centers") and one center under development.
Together, the Original Centers, the CenterMark Centers and the Homart Centers
comprise the operating partnership portfolio (the "Portfolio Centers").
Virtually all of the Company's revenues are derived from fixed minimum rents,
percentage rents and recoveries of operating expenses from its tenants.

     On December 31, 1996, the Portfolio Centers were approximately 85.4%
leased.  Excluding certain shopping centers that are currently undergoing
redevelopment, the occupancy of the remaining centers on December 31, 1996, was
approximately 86.3%.

     Comparable mall store sales averaged $260 per square foot at the Portfolio
Centers in 1996.  In 1996, total mall store sales at the Portfolio Centers
increased by 4.7% over 1995, and comparable mall store sales increased by 2.2%
over 1995.

     After appropriate weighting based upon the relative contributions to total
1996 portfolio net operating income made by each of the Original Centers, the
Homart Centers and the CenterMark Centers, the average Mall Store rent per
square foot from leases that expired in 1996 was $18.79.  The Portfolio Centers
benefited from increasing rents inasmuch as the weighted average mall store
rent per square foot on new and renewal leases executed during 1996 was $23.71,
or $4.92 per square foot above the average for expiring leases.

RESULTS OF OPERATIONS

COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995

     Total 1996 revenues increased by $50.0 million or 29.9% to $217.4 million
from $167.4 million in 1995. Of this increase, $44.4 million was generated from
increased minimum rents, tenant recoveries, percentage rents and other income.
A majority of the increases came from new developments that were placed in
service during 1995 and five properties that were acquired in 1996.  The
remaining $5.6 million was generated by straight line rents of $1.9 million and
fee revenue of $3.7 million.  The fee revenue was primarily generated by asset
management services performed for GGP/Homart.

     Total 1996 operating expenses, including depreciation and amortization,
increased by $20.9 million or 22.1% to $115.8 million in 1996 compared to $94.8
million in 1995. This increase consists of $3.0 million of real estate taxes
and management fees, $8.9 million of depreciation expense, $1.7 million
increase in provision for doubtful accounts and $7.3 million of property
operating and general and administrative expenses from all properties,
including five properties acquired during the fourth quarter of 1996.

     Net interest expense increased by $20.1 million or 43.4% to $66.4 million
in 1996 compared to $46.3 million in 1995.  The acquisitions and development of
new properties, net of interest cost savings as a result of the use of the
CenterMark sale proceeds, accounted for a $27.7 million increase.  Additional
interest cost savings due to lower interest rates reduced net interest expense
by $4.3 million.  Interest income increased by $3.3 million of which $2.8
million was interest income from GGMI.

     Equity in net income of unconsolidated affiliates increased by $8.3
million, from $9.3 million in 1995 to $17.6 million in 1996, or an 89%
increase.  Approximately $8.7 million of the increase is attributable to the
Company's 38.2% interest in GGP/Homart's net income. The increase of $0.8
million in CenterMark's net income


                                       18
<PAGE>   19

was due to changing from the equity method to the cost method of accounting as a
result of the Company's reduced ownership interest in CenterMark (see Note 3 of
notes to consolidated financial statements).  The Company's investment in Quail
Springs Mall accounted for a $0.1 million increase and GGMI accounted for a
decrease of approximately $1.3 million.  In addition, the Company had a gain of
$43.8 million on the sale of a portion of its interest in CenterMark on July 1,
1996.  As of that date, the Company's interest in CenterMark was reduced to 14%.

     Net income increased by $16.6 million in 1996 to $59.7 million from $43.1
million in 1995.  The increase resulted from a larger gain on CenterMark in the
amount of $6.6 million (net of minority interest share) and a combination of
the aforementioned items.

COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994

     Total 1995 revenues increased by $14.8 million or 9.7% to $167.4 million
compared to $152.6 million in 1994.  Of this increase, $8.9 million or 6.0%
came from increased revenues generated by twenty-one of the Original Centers
that were owned throughout the two-year period.  Of this increase, $5.8 million
was generated by higher minimum rents, $2.3 million was derived from additional
costs recovered from tenants, and the remaining $0.8 million was from higher
percentage rents and other income.  The remaining $5.9 million increase in
total revenues, or 3.7% came from new acquisitions, developments and other
sources for 1995.  Of this increase from new sources, $5.1 million was
generated from minimum rents, tenant recoveries, percentage rents and other
income from Piedmont Mall, West Valley Mall and Natick Mall.  The other $0.8
million of revenues from new sources were primarily gross fees received for
other asset management, property management and other services performed for
GGP/Homart, Inc.

     Total 1995 operating expenses, including depreciation and amortization,
increased by $3.5 million or 3.8% to $94.8 million in 1995 compared to $91.3
million in 1994.  Of this increase, $0.9 million or 1% was from higher expenses
for twenty-one of the Original Centers that were owned throughout the two-year
period.  The $0.9 million net increase was from a combination of $0.7 million
of increased real estate taxes, $1.7 million of increased property operating
expenses and $2.1 million of higher depreciation expense, less a $1.9 million
reduction in management fees and a $1.7 million reduction in the provision for
doubtful accounts.  The remaining $2.6 million increase in total expenses, or
2.8%, was from expenses on properties added in 1995 (Piedmont, West Valley and
Natick) and from incremental general and administrative expenses for providing
services.  The $2.6 million increase consists of $0.3 million of real estate
taxes and management fees, $0.5 million of depreciation expense and $1.8
million of additional property operating and general and administrative
expenses.

     Net interest expense for 1995 was $46.3 million, an increase of $3.3
million or 7.7% over 1994 net interest expense of $43.0 million.  $1.4 million
or 3.2% of the increase was attributable to new borrowings for Piedmont, West
Valley and Natick Malls, which were not owned in 1994.  The other $1.9 million
or 4.5% of increased interest expense was primarily from higher interest rates
on variable rate loans of approximately $1.5 million.  The remaining $0.4
million of increased interest expense was from interest on new financing used
to acquire GGP/Homart near the end of 1995.

     Equity in net income of unconsolidated affiliates increased by $3.2
million, from $6.1 million in 1994 to $9.3 million in 1995, or a 52% increase.
$2.5 million, or 41% of the increase was from higher earnings from CenterMark,
and the remaining $0.6 million, or 9% of the increase was the Company's 38.2%
share of net income from GGP/Homart which was purchased near the end of 1995.
In addition, the Company had a gain of $33.4 million on the sale of 25% of its
interest in CenterMark on December 19, 1995.  As of that date, the Company's
interest in CenterMark was reduced to 30%.

     Net income increased by $28.9 million in 1995, to $43.1 million from $14.2
million in 1994.  The increase resulted from the gain of $20.7 million (net of
minority interest share) plus an $8.2 million net increase resulting from a
combination of the aforementioned items.



                                       19
<PAGE>   20
COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS

     In order to portray the sources of the Company's Funds from Operations in
a more meaningful and useful manner, the Company Portfolio results and funds
from operations depicted below reflect 100% of the revenues and expenses of the
Original Centers and GGMI combined with the Company's share of CenterMark's and
GGP/Homart's portfolio results.  The Company Portfolio results are a line item
pro rata consolidation of 100% of the revenues and expenses of the Original
Centers and GGMI, with the Company's share of the comparable revenue and
expenses of the wholly owned CenterMark Centers and GGP/Homart Centers and the
Company's share of CenterMark's and GGP/Homart's various percentage interests
of the revenues and expenses of the centers that are owned in part by
unaffiliated joint venture partners.  Interest expense and general and
administrative costs that relate to the acquisition, management and oversight
of the Company's ownership of CenterMark and GGP/Homart are charged entirely
against the Company's direct operations.  These expenses cannot be charged on
CenterMark's and GGP/Homart's books because the other stockholders in
CenterMark and GGP/Homart are not affiliated with the Company.

     The Company's share of CenterMark's and GGP/Homart's Funds from Operations
does not represent the net effective incremental contribution to the Company
made by the CenterMark and GGP/Homart centers.  Accordingly, management
believes the following schedule of the relative share of Company Portfolio net
operating income (basically Funds from Operations before interest expense)
contributed by each of the Original Centers, the CenterMark Centers and the
GGP/Homart Centers provides a better indication of the significance of each
portfolio to the Company's overall funds from operations.  The net operating
income from the Company's Portfolio is essentially equivalent to earnings
before interest, taxes, depreciation and amortization (EBITDA).  EBITDA from
the Company's property management affiliate is included below with the Original
Centers.


<TABLE>
<CAPTION>
                                            THREE MONTHS                        FOR THE YEAR
                                               ENDED                               ENDED            % OF
  NET OPERATING INCOME BY PORTFOLIO      DECEMBER 31, 1996     % OF TOTAL    DECEMBER 31, 1996     TOTAL
--------------------------------------   -----------------     ----------    -----------------    ------
<S>                                          <C>              <C>              <C>               <C>
Original Centers and GGMI                      $39,699           70%              $140,526          68%
CenterMark (a)                                   5,532            9%                25,977          12%
38.2% of GGP/Homart (b)                         11,844           21%                40,798          20%
                                               -------          ----              --------         ----
Company Portfolio Net Operating Income         $57,075          100%              $207,301         100%
                                               =======          ====              ========         ====
</TABLE>

(a) Reflects the Company's share of CenterMark's Net Operating Income.
(b) Reflects the Company's share of GGP/Homart's Net Operating Income.

The Company Portfolio results and Funds from Operations reflected below
for the three and twelve months ended December 31, 1996 and 1995 do not
purport to project results for any future period.



                                       20
<PAGE>   21
              COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
         FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 1996 AND 1995
            (In thousands, except for per share amounts - Unaudited)

<TABLE>
<CAPTION>
                                                  Three Months Ended           For the Year Ended
                                                      December 31,                December 31,
                                                  1996          1995           1996            1995
                                               ---------      ---------      ---------       --------
<S>                                            <C>           <C>            <C>             <C>
Revenues
   Minimum rents (a)                           $ 60,431       $ 42,285       $210,130        $144,520
   Tenant recoveries                             24,251         19,808         96,263          72,381
   Percentage rents                               2,298          1,294          7,786           5,745
   Other                                          1,918          1,689          6,665           5,874
   Fees                                          16,833            613         42,544             613
                                               --------       --------       --------        --------
     Total revenues                            $105,731       $ 65,689       $363,388        $229,133
Operating expenses (b)                          (47,928)       (25,582)      (153,065)        (83,044)
General and administrative                         (728)          (710)        (3,022)         (2,811)
                                               --------       --------       --------        --------
   Net operating income                          57,075         39,397        207,301         143,278
Interest expense, net                           (25,117)       (16,115)       (98,775)        (62,064)
                                               --------       --------       --------        --------
Operating Partnership funds from operations    $ 31,958       $ 23,282       $108,526        $ 81,214
Less:  FFO allocable to Operating
        Partnership unitholders                $ 11,502       $  8,617       $ 39,841        $ 30,915
                                               --------       --------       --------        --------
Company funds from operations                  $ 20,456       $ 14,665       $ 68,685        $ 50,299
                                               ========       ========       ========        ========
FFO per share                                  $    .68       $    .54       $   2.44        $   1.97
                                               ========       ========       ========        ========
</TABLE>


                               COMPANY PORTFOLIO
             RECONCILIATION OF FUNDS FROM OPERATIONS TO NET INCOME
                       (Dollars in thousands - Unaudited)

<TABLE>
<CAPTION>
                                                                 Three Months Ended         For the Year Ended
                                                                    December 31,                December 31,
                                                                 1996          1995          1996          1995
                                                               --------      --------      --------      --------
<S>                                                           <C>           <C>           <C>           <C>
Operating Partnership funds from operations (from above)       $ 31,958      $ 23,282      $108,526      $ 81,214
Depreciation and amortization of real estate costs              (16,697)      (12,526)      (62,083)      (48,698)
Straight-line rent (not included in FFO, so it is added
   back in order to reconcile to GAAP net income)                 1,633           645         6,195         2,997
Gain on sales                                                        27        33,397        43,975        33,397
Allocations to Operating Partnership unitholders                 (5,826)      (16,575)      (34,580)      (25,856)
Extraordinary item (c)                                                -             -        (2,291)            -
                                                               --------      --------      --------      --------
   Net income                                                  $ 11,095      $ 28,223      $ 59,742      $ 43,054
                                                               ========      ========      ========      ========
</TABLE>

(a)  Excluding straight-line rents for the three and twelve months ended
     December 31, 1996 and 1995, of $1,633 and $6,195 and $645 and $2,997,
     respectively.

(b)  Excluding depreciation and amortization of capitalized real estate costs
     other than financing fees/costs.

(c)  Charges related to early retirement of debt.


                                       21
<PAGE>   22

        BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
                  FOR THE THREE MONTHS ENDED DECEMBER 31, 1996
            (In thousands, except for per share amounts - Unaudited)

<TABLE>
<CAPTION>
                                                 Original    GGP/
                                                 Centers    Homart    CenterMark      GGMI         Total
                                                ---------  -------    ----------    --------     ---------
<S>                                            <C>       <C>          <C>          <C>          <C>
Revenues
   Minimum rents (a)                            $ 40,865  $ 13,610     $ 5,956      $      -     $ 60,431
   Tenant recoveries                              17,142     5,452       1,657             -       24,251
   Percentage rents                                1,518       525         255             -        2,298
   Other                                           1,051       676         191             -        1,918
   Fees                                              992         -           -        15,841       16,833
                                                --------  --------     -------      --------     --------
      Total revenues                              61,568    20,263       8,059        15,841      105,731
Operating expenses (b)                           (23,639)   (8,419)     (2,527)      (13,343)     (47,928)
General and administrative                          (728)        -           -             -         (728)
                                                --------  --------     -------      --------     --------
   Net operating income                           37,201    11,844       5,532         2,498       57,075
Interest expense, net                            (16,362)   (4,787)     (2,485)       (1,483)     (25,117)
                                                --------  --------     -------      --------     --------
Operating Partnership funds from operations     $ 20,839  $  7,057     $ 3,047      $  1,015     $ 31,958
                                                ========  ========     =======      ========     ========
Funds from operations per share/unit                                                             $   0.68
                                                                                                 ========
</TABLE>



                 FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
            (In thousands, except for per share amounts - Unaudited)

<TABLE>
<CAPTION>
                                                 Original    GGP/
                                                 Centers    Homart    CenterMark      GGMI         Total
                                                ---------  -------    ----------    --------     ---------
<S>                                            <C>       <C>          <C>          <C>          <C>
Revenues
  Minimum rents (a)                             $136,476  $ 46,955     $ 26,699     $      -     $ 210,130
  Tenant recoveries                               63,146    21,505       11,612            -        96,263
  Percentage rents                                 5,409     1,448          929            -         7,786
  Other                                            3,940     2,089          636            -         6,665
  Fees                                             4,560         -            -       37,984        42,544
                                                --------  --------     --------     --------     ---------
    Total revenues                               213,531    71,997       39,876       37,984       363,388
Operating expenses (b)                           (75,741)  (31,199)     (13,899)     (32,226)     (153,065)
General and administrative                        (3,022)        -            -            -        (3,022)
                                                --------  --------     --------     --------     ---------
  Net operating income                           134,768    40,798       25,977        5,758       207,301

Interest expense, net                            (66,499)  (19,396)     (10,057)      (2,823)      (98,775)
                                                --------  --------     --------     --------     ---------
Operating Partnership funds from operations     $ 68,269  $ 21,402     $ 15,920     $  2,935     $ 108,526
                                                ========  ========     ========     ========     =========

Funds from operations per share/unit                                                              $   2.44
                                                                                                  ========

</TABLE>

(a)  Excluding straight-line rent of $1,633 and $6,195 for the three and twelve
     months ended December 31, 1996.

(b)  Excluding depreciation and amortization of capitalized real estate costs
     other than financing fees/costs.



                                       22
<PAGE>   23


                         OTHER COMPANY PORTFOLIO DATA
          AS OF AND/OR FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
        (In thousands, except for per square foot amounts - Unaudited)


<TABLE>
<CAPTION>
                                   Original    GGP/                    Total or
                                   Centers   Homart(a)  CenterMark(a)   Average
                                   --------  ---------  -------------  --------
<S>                                <C>       <C>        <C>            <C>
Occupancy of centers not
under redevelopment                   84.5%      86.1%        90.4%        86.3%

Tenant allowances                  $ 8,483    $ 5,676     $  5,237     $ 19,396
Annualized sales per sq. ft.       $   237    $   281     $    270     $    260
Average rent per sq. ft.
   of new/renewal leases           $ 20.14    $ 25.72     $  27.93     $  23.71
Average rent per sq. ft.
   of expiring leases              $ 18.70    $ 21.61     $  16.15     $  18.79

% change in total sales                3.3%       7.5%         3.6%         4.7%

(a) Data is for 100% of the non-anchor GLA in each portfolio, including those centers that are owned in joint ventures with others.
</TABLE>

    TOTAL PORTFOLIO DEBT MATURITY AND CURRENT AVERAGE INTEREST RATE SUMMARY
                            AS OF DECEMBER 31, 1996
                      (Dollars in Thousands - Unaudited)


<TABLE>
<CAPTION>
                  Original Centers(a)        GGP/Homart(b)       Total Portfolio Debt
                  -------------------  ------------------------  --------------------
                              Current                   Current              Current
                   Maturing   Average   Maturing        Average  Maturing    Average
       Year       Amount (c)    Rate   Amount (c)        Rate    Amount (c)    Rate
----------------  ----------  -------  ----------       -------  ----------  --------
<S>               <C>         <C>      <C>              <C>      <C>         <C>
1997              $  301,441    6.71%  $        -            -   $  301,441    6.71%
1998                 111,739    7.50%      34,380         7.18%     146,119    7.42%
1999                 125,588    8.90%     125,077         7.70%     250,665    8.30%
2000                       -        -      11,460         7.15%      11,460    7.15%
2001                 152,000    6.41%           -             -     152,000    6.41%
Subsequent           486,375    7.20%     153,447         7.46%     639,822    7.26%
                  ----------  -------  ----------       -------  ----------  --------
Totals            $1,177,143    7.18%  $  324,364         7.51%  $1,501,507    7.25%
                  ==========  =======  ==========       =======  ==========  ========
Floating Rate(d)  $  401,739    6.88%  $  110,327         7.71%  $  512,066    7.06%
Fixed Rate           775,404    7.32%     214,037  (e)    7.41%     989,441    7.34%
                  ----------  -------  ----------       -------  ----------  --------
Totals            $1,177,143    7.18%  $  324,364         7.51%  $1,501,507    7.25%
                  ==========  =======  ==========       =======  ==========  ========

(a) Includes the Company's 50% share ($8,620) of Quail Springs debt.
(b) GGP/Homart debt reflects the Operating Partnership's share of its total portfolio debt.
(c) Maturing amount reflects the December 31, 1996 balance as if it was due on the final maturity date.
(d) The interest rate used for floating rate debt is the rate as of December 31, 1996.
(e) Includes $34,381 of floating rate debt with a 9% cap on the all-in rate through maturity in December 1998.
</TABLE>



                                     -23-
<PAGE>   24


COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS (FFO)
FOR THE YEARS ENDED DECEMBER 31, 1996,
1995 AND 1994

In order to portray the sources of the Operating Partnership's FFO in a more
meaningful and expansive manner, the Company portfolio results depicted below
reflect 100% of the revenues and expenses of the thirty properties which are
wholly-owned by the Operating Partnership combined with the operating results
of GGMI, 38.2% of GGP/Homart's portfolio results, the Company's share (see
Note 3) of CenterMark's portfolio results and 50% of Quail Springs Mall, all
from the respective dates of acquisition.  In effect, the Company portfolio
results are a line item pro rata consolidation of 100% of the revenues and
expenses from its wholly-owned properties, GGMI, 38.2% of the comparable
revenues and expenses of the wholly-owned GGP/Homart properties, its share of
GGP/Homart's various percentage interests in the revenues and expenses of its
unconsolidated affiliates, the Company's share of the comparable revenues and
expenses of the wholly-owned CenterMark properties and the Company's share of
CenterMark's various percentage interests in the revenues and expenses of its
unconsolidated affiliates and 50% of the revenues and expenses of Quail
Springs Mall.



<TABLE>
<CAPTION>
PORTFOLIO RESULTS (A) AND FUNDS FROM OPERATIONS
-----------------------------------------------
(Dollars in thousands, except Per Share Amounts -
Unaudited)
                                                            1996        1995        1994
                                                         ---------   ---------    ---------
<S>                                                      <C>         <C>          <C>
Revenues
     Minimum rents                                       $ 210,130   $ 144,520    $ 134,426
     Tenant recoveries                                      96,263      72,381       70,199
     Percentage rents                                        7,786       5,745        5,917
     Other                                                   6,665       5,874        3,689
     Fees                                                   42,544         613
                                                         ---------   ---------    ---------
           Total revenues                                  363,388     229,133      214,231
Operating expenses (b)                                    (156,087)    (85,855)     (87,322)
                                                         ---------   ---------    ---------
Net operating income                                       207,301     143,278      126,909
Interest expense, net                                      (98,775)    (62,064)     (57,299)
                                                         ---------   ---------    ---------
           Funds from operations (c)                     $ 108,526   $  81,214    $  69,610
                                                         =========   =========    =========
Funds from operations per share (c) (d)                  $    2.44   $    1.97    $    1.83
                                                         =========   =========    =========

<CAPTION>
RECONCILIATION OF FFO TO NET INCOME DETERMINED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES:
-----------------------------------------
<S>                                                      <C>         <C>          <C>
Funds from operations (from above)                       $ 108,526   $  81,214    $  69,610

Depreciation and amortization                              (62,083)    (48,698)     (45,733)
Pro forma adjustments (a)                                                               499
Straight line rents                                          6,195       2,997
Gain on sales                                               43,975      33,397
Allocations to Operating Partnership Unitholders           (34,580)    (25,856)      (9,518)
Extraordinary item - charges related to early
retirement of debt                                          (2,291)                    (693)
                                                         ---------   ---------   ----------
      Net income                                         $  59,742   $  43,054   $   14,165
                                                         =========   =========   ==========
Net income - per share (d)                               $    2.12   $    1.69   $      .62
                                                         =========   =========   ==========
(a)  Portfolio results for 1994 include adjustments to account for the acquisition of 40% of CenterMark as though it occurred
     on January 1, 1994.
(b)  All expenses other than depreciation and amortization of real estate assets.
(c)  No income from straightlining rents or gains on outparcel sales is included in funds from operations.
(d)  Assuming full conversion of the Operating Partnership units into shares of the Company's common stock for a total of
     44,470,761, 41,209,291 and 38,040,085 weighted average shares outstanding for the years ended December 31, 1996,  1995
     and 1994 respectively.
</TABLE>




                                     -24-
<PAGE>   25



LIQUIDITY AND CAPITAL RESOURCES

     The principal sources of funding for development, acquisitions, expansion,
and renovation programs at the Portfolio Centers have historically been funds
from operations, construction loans, intermediate and permanent debt financing
and proceeds from equity offerings.

     On April 15, 1993, the Company completed its IPO, resulting in net cash
proceeds to the Company of approximately $383 million, most of which was used
to repay outstanding debt.  In January 1994, the Operating Partnership
established a $208.5 million line of credit, and approximately $140 million of
it was used, in addition to $42 million of cash on hand, to acquire 40% of the
stock of CenterMark.

     On May 23, 1995, the Company completed a follow-on stock offering of 4.5
million shares of its Common Stock at $20.75 per share.  Net proceeds after
underwriting discounts and other costs were approximately $88 million.  On July
1, 1995, the Operating Partnership issued an additional 832,936 units in
connection with the acquisition of Piedmont Mall. During 1996, 1,833,949
additional units were issued as consideration (net of conversions from
operating partnership units to common stock).  The Bucksbaums received an
additional 453,791 units when the Company purchased GGMI.  On December 6, 1996,
1,445,000 units were issued as a portion of the purchase price for Lakeview
Square, Lansing Mall and Westwood Mall (see Note 5 of notes to consolidated
financial statements).  During 1996, 64,842 units that were issued during 1995
in connection with the acquisition of Piedmont Mall, were converted to a like
amount of shares of Common Stock.

     The Company issued a total of 3,516,625 common shares during 1996.  During
the year 64,842 units were converted to common shares and 1,555,855 and
1,895,928 common shares were issued in connection with the acquisition of GGMI
and ownership interests in two malls.  After these transactions, there were
30,789,185 shares of common stock outstanding and 17,934,410 units outstanding
as of December 31, 1996.  Assuming full conversion of the Operating Partnership
units into shares of the Company, there would be 48,723,595 shares of common
stock outstanding.

     During 1995, the Company opened a $120 million construction loan facility
to complete the development of new malls in Tracy, California (West Valley
Mall) and Winter Haven, Florida (Eagle Ridge Mall).  Approximately $111.7
million of this facility was drawn as of December 31, 1996.  The remaining
available loan proceeds will be sufficient to fund the additional leasing costs
for both projects.

     On December 19, 1995, the Operating Partnership sold 25% of its interest
in CenterMark for $72.5 million.  Concurrently with the sale of stock, the
Operating Partnership granted the buyer an option to purchase its remaining
CenterMark stock for $217.5 million.  On June 28, 1996, the buyer's option to
purchase the Operating Partnership's remaining interest in  CenterMark was
exercised. The first payment of $87 million was received in July and was used
to retire the interim loan arranged as part of the GGP/Homart acquisition.  The
second installment of $130.5 million was received on January 2, 1997, and was
used to pay down existing loans (see Note 7 of notes to consolidated financial
statements).

     Effective on December 22, 1995, the Operating Partnership purchased a
38.2% interest in GGP/Homart and 100% of Natick Mall.  The equity investment
made for both acquisitions was approximately $261 million.  In addition, a $183
million 7 year loan with interest at 6% was obtained for Natick Mall.  There
were three sources of funds for the $261 million of year-end investments,
namely a $125 million interim bank loan, a $63.5 million draw on the Company's
line of credit and the $72.5 million of proceeds from the sale of CenterMark
stock.  On January 31, 1996, the interim loan was reduced to $75 million when
the Company closed on a $340 million permanent nonrecourse loan on nine
properties.  Existing loans on the properties totaled $290 million, and the $50
million of excess loan proceeds were used to reduce the aforementioned interim
loan.

     On October 15, 1996, approximately $200 million of mortgage debt on seven
of the Original Centers matured.  These mortgages were replaced with a $250
million short term, floating rate loan at LIBOR plus 100 basis points.  The
excess proceeds were used to pay down a credit facility arranged by the Company
during 1996.


                                     -25-

<PAGE>   26


     The GGP/Homart and Quail Springs Mall investments are accounted for on the
equity method.  Accordingly, indebtedness on the books of those entities is not
reflected on the Company's balance sheet.  The Operating Partnership's 38.2%
share of GGP/Homart's debt at December 31, 1996, was approximately $324 million
and its 50% share of Quail Springs Mall debt at December 31, 1996, was $8.6
million.  Accordingly, together with its direct mortgage debt of $1,169
million, total "consolidated pro rata debt" at December 31, 1996, was
approximately $1,502 million.  At December 31, 1996, the stock market value of
the common stock and partnership units outstanding (48,723,595 x $32.25 share)
was approximately $1,571 million.

     The Company is comfortable with this level of debt given that a
substantial majority of the financing is (or is presently expected to be
converted to) long-term fixed rate debt.  EBITDA to interest expense coverage
is expected to be at least 2.0 times, leaving a substantial cushion for
unanticipated costs.  There are no current plans to raise additional equity
capital.  However, if additional capital is required, the Company believes that
it will be able to obtain an interim bank loan, obtain mortgage financing on
unencumbered assets or raise additional equity capital. The Company will
continue to constantly monitor its capital structure and plans to make new
investments if they can be acquired and financed in a manner that is likely to
increase stockholder value.

     In order to remain qualified as a real estate investment trust for federal
income tax purposes, the Company must distribute 100% of capital gains and at
least 95% of its taxable income to stockholders.  The following factors, among
others, will affect funds from operations and, accordingly, influence the
decisions of the Board of Directors regarding distributions: (i) scheduled
increases in base rents  of existing leases; (ii) changes in minimum base rents
and/or percentage rents attributable to replacement of existing leases with new
or replacement leases; and (iii) changes in occupancy rates at existing
Portfolio Centers and procurement of leases for newly developed Portfolio
Centers.  The Company anticipates that its funds from operations, together with
existing loan facilities and additional borrowing capacity, will provide
adequate liquidity to conduct its operations, fund administrative and operating
costs and interest payments and allow distributions to the Company's
stockholders in accordance with the Internal Revenue Code's requirements for
qualification as a real estate investment trust and to avoid any Company or
entity level federal income or excise tax.

     During 1996, the Company distributed approximately 70% of its funds from
operations.  Of the distributions paid to Company stockholders in 1996,
approximately 47.0% were taxable as ordinary income and approximately 53.0%
were taxable as long-term capital gain, due to the sale of a portion of the
CenterMark stock.  The Company currently plans to maintain its policy of
increasing its distributions at a slower rate of growth than increases, if any,
in Funds from Operations.  Despite this general policy, the Company's Board of
Directors will continue to evaluate the level of distributions on a quarterly
basis and will typically consider increasing the quarterly distribution after
the results of each year's operations have been reviewed.  Given the critical
importance of the holiday selling season, the Board of Directors plans to make
its typical annual evaluation of a possible distribution increase on or about
the end of the first quarter of each year, after the results of the previous
year's holiday selling season have been thoroughly analyzed.

ECONOMIC CONDITIONS

     Since April 1993, inflation has been relatively low and has not had a
significant detrimental impact on the Company.  Should inflation rates increase
in the future, substantially all of the tenants' leases contain provisions
designed to mitigate the negative impact of inflation.  Such provisions include
clauses enabling the Company to receive percentage rents based on tenants'
gross sales, which generally increase as prices rise, and/or escalation
clauses, which generally increase rental rates during the terms of the leases.
In addition, many of the leases are for terms of less than 10 years which may
enable the Company to replace or renew expiring leases with new leases at
higher base and/or percentage rents, if rents of the existing leases are below
the then-existing market rates.  Finally, most of the leases require the
tenants to pay their share of certain operating expenses, including common area
maintenance, real estate taxes and insurance, thereby reducing the Company's
exposure to increases in costs and operating expenses resulting from inflation.

     A number of local, regional and national retailers filed for bankruptcy
protection during the last three years.  During 1996, more stores closed due to
bankruptcy and/or poor performance than in the prior year.  Most of the
bankrupt retailers reorganized their operations and/or sold stores to stronger
operators.  Although some leases were terminated by virtue of the lease
cancellation rights afforded by the bankruptcy laws, the



                                     -26-
<PAGE>   27

impact on Company earnings was negligible.  Over the last three years, the
provision for doubtful accounts has averaged only $1.8 million per year, which
represents approximately 1% of average total revenues of $179 million.  The
difficult retail sales climate has probably contributed to the relatively flat
average occupancy.  The Company may be able to increase earnings if retail
sales improve, market rental rates rise and currently vacant space can be
leased.

     At the end of 1996, the Company had approximately $1.5 billion of
consolidated pro rata debt (including the Company's share of GGP/Homart's
debt).  The weighted average interest rate on the consolidated pro rata debt
was approximately 7.25% at year end, a 50 basis point reduction from the prior
year.  During 1996, the Company decreased its ratio of  floating rate debt to
total debt by approximately 10% to 34%.  The Company continues to seek fixed
rate loans in an effort to capitalize on the relatively low current fixed
interest rate environment. Approximately $512 million of the total consolidated
pro rata debt at year end bears interest at various floating rates.
Construction financing accounts for $137 million of the $512 million of
floating rate debt.  On January 2, 1997, the Company retired $110 million of
the floating rate debt with the proceeds from the CenterMark transaction (see
Note 3 of notes to consolidated financial statements).  The Company is in the
process of arranging permanent fixed rate financing for approximately half of
the remaining floating rate debt.

     On December 22, 1995, the Company acquired 38.2% of GGP/Homart which
currently has interests in twenty-six malls and one under development. The
Company currently has an interest in 75 shopping centers. The Company's
portfolio has been diversified both geographically and by property type (both
major and middle market properties) and this may mitigate the impact of a
potential downturn at a particular property or in a particular region of the
country.

     The shopping center business is still seasonal in nature.  Mall stores
typically achieve higher sales levels during the fourth quarter because of the
holiday selling season.  Although the Company has a year-long temporary leasing
program, most of the rents received from short-term tenants are collected
during the months of November and December.  Thus, occupancy levels and revenue
production are generally highest in the fourth quarter of each year and lower
during the first and second quarters of each year.  Total sales reported by
retailers at the Company's properties increased by almost 3.4% in 1995 and 4.7%
in 1996, indicating that the centers are maintaining their respective share of
sales dollars in the finite retail market.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Refer to the Index to Financial Statements and Financial Statement
Schedules for the required information.


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

     None.


PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

     There is hereby incorporated by reference the information which appears
under the captions "Election of Directors" and "Executive Officers" in the
Company's definitive proxy statement for its 1997 Annual Meeting of
Stockholders.


ITEM 11.  EXECUTIVE COMPENSATION

     There is hereby incorporated by reference the information which appears
under the caption "Compensation of Executive Officers" in the Company's
definitive proxy statement for its 1997 Annual Meeting of Stockholders;



                                     -27-
<PAGE>   28
provided, however, that neither the Report of the Compensation Committee of the
Board of Directors on Executive Compensation nor the Performance Graph set
forth therein shall be incorporated by reference herein, in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, or in any of the Company's future
filings.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     There is hereby incorporated by reference the information which appears
under the captions "Common Stock Ownership of Certain Beneficial Owners" and
"Common Stock Ownership of Management" in the Company's definitive proxy
statement for its 1997 Annual Meeting of Stockholders.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     There is hereby incorporated by reference the information which appears
under the caption "Compensation Committee Interlocks and Insider Participation"
in the Company's definitive proxy statement for its 1997 Annual Meeting of
Stockholders.


PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

     (a)  Financial Statements and Financial Statement Schedules.

     The financial statements and schedules listed in the accompanying Index to
Consolidated Financial Statements and Financial Statement Schedules are filed
as part of this Annual Report on Form 10-K.

     (b)  Exhibits.

          See Exhibit Index on page S-1

                                     -28-
<PAGE>   29
                                  SIGNATURES

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


                                    GENERAL GROWTH PROPERTIES, INC.


                                    By:       /s/ Matthew Bucksbaum
                                       -------------------------------------
                                    Matthew Bucksbaum, Chairman of the Board
                                    and Chief Executive Officer

                                    Date:  March  27, 1997


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


/s/ Robert Michaels          President and Director        March 27, 1997
--------------------------
Robert Michaels

/s/ John Bucksbaum           Executive Vice President -    March 27, 1997
--------------------------   Director
John Bucksbaum

/s/ Bernard Freibaum         Executive Vice President -    March 27, 1997
--------------------------   Chief Financial Officer and
Bernard Freibaum             Principal Accounting Officer


/s/ Anthony Downs            Director                      March 27, 1997
--------------------------
Anthony Downs

/s/ Morris Mark              Director                      March 27, 1997
--------------------------
Morris Mark

/s/ Beth Stewart             Director                      March 27, 1997
--------------------------
Beth Stewart

/s/ Lorne Weil               Director                      March 27, 1997
---------------------------
A. Lorne Weil






                                     -29-
<PAGE>   30
                  INDEX TO CONSOLIDATED FINANCIAL STATEMENT
                     AND CONSOLIDATED FINANCIAL STATEMENT
                                   SCHEDULE

     The following financial statements and financial statement schedule are
included in Item 8 of this Annual Report on Form 10-K:

General Growth Properties, Inc.


<TABLE>
<CAPTION>
   Financial Statements                                               Page(s)
   --------------------                                               -------
   <S>                                                                <C>

   Report of Independent Accountants                                     F-2

   Consolidated Balance Sheets as of December 31, 1996 and 1995          F-3

   Consolidated Statements of Operations for the years ended
          December 31, 1996, 1995 and 1994.                              F-4

   Consolidated Statements of  Stockholders' Equity
           for the years ended December 31, 1996, 1995 and 1994          F-5

   Consolidated Statements of Cash Flows for the years ended
          December 31, 1996, 1995 and 1994                               F-6

   Notes to Consolidated Financial Statements                    F-7 to F-21


   Financial Statement Schedule
   ----------------------------

   Report of Independent Accountants                                    F-22

   Schedule III - Real Estate and Accumulated Depreciation              F-23

   All other schedules are omitted since the required information is not
   present or is not present in amounts sufficient to require submission of
   the schedule or because the information required is included in the
   consolidated financial statements and notes hereof.

</TABLE>



                                     F-1
<PAGE>   31








                       REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors and Stockholders
General Growth Properties, Inc.


We have audited the accompanying consolidated balance sheets of General Growth
Properties, Inc. as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1996.  These financial statements
are the responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects the consolidated financial position of General Growth
Properties, Inc. as of December 31, 1996 and 1995 and the consolidated 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.



Chicago, Illinois                                       Coopers & Lybrand L.L.P.
February 11, 1997


                                     F-2
<PAGE>   32
                        GENERAL GROWTH PROPERTIES, INC.
                          CONSOLIDATED BALANCE SHEETS
              (Dollars in Thousands, except for Per Share Amounts)

                                    ASSETS
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,      December 31,
                                                                             1996              1995
                                                                         ------------      ------------
<S>                                                                      <C>               <C>
Investment in real estate:
   Land                                                                  $     173,263     $    144,517
   Buildings and equipment                                                   1,337,366        1,054,695
   Less accumulated depreciation                                              (188,744)        (153,275)
   Developments in progress                                                     44,439           49,680
                                                                         -------------     ------------
      Net property and equipment                                             1,366,324        1,095,617
   Investment in Quail Springs Mall                                             15,077
   Investment in CenterMark                                                     64,769          120,082
   Investment in GGP/Homart                                                    193,270          178,647
                                                                         -------------     ------------
      Net investment in real estate                                          1,639,440        1,394,346

Cash and cash equivalents                                                       15,947           18,298
Tenant accounts receivable, net                                                 25,384           14,831
Deferred expenses, net                                                          30,078           24,752
Investment in and note receivable from
   General Growth Management, Inc.                                              37,737
Prepaid and other assets                                                         9,131            3,755
                                                                         -------------     ------------
                                                                         $   1,757,717     $  1,455,982
                                                                         =============     ============

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Mortgage notes payable                                                   $   1,168,522     $  1,025,130
Notes and contracts payable                                                        971            2,802
Distributions payable                                                           20,744           18,650
Accounts payable and accrued expenses                                           44,747           43,389
Accounts payable and accrued expenses - affiliates                                  89            1,211
                                                                         -------------     ------------
                                                                             1,235,073        1,091,182
                                                                         -------------     ------------

Minority interest in Operating Partnership                                     192,377          135,417
                                                                         -------------     ------------

Commitments and contingencies

Stockholders' equity:
   Preferred stock: $100 par value; 5,000,000 shares authorized;
      none issued
   Common stock: $.10 par value; 70,000,000 shares authorized;
      30,789,185 shares issued and outstanding
          (27,272,560 as of December 31, 1995)                                   3,079            2,727
   Additional paid-in capital                                                  595,628          506,107
   Retained earnings (deficit)                                                (268,440)        (279,451)
                                                                         -------------     ------------
      Total stockholders' equity                                               330,267          229,383
                                                                         -------------     ------------
                                                                         $   1,757,717     $  1,455,982
                                                                         =============     ============

      The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>





                                      F-3
<PAGE>   33
                        GENERAL GROWTH PROPERTIES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
              (Dollars in Thousands, except for Per Share Amounts)

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED DECEMBER 31,
                                                                                      1996       1995        1994
                                                                                   ---------   ---------   ---------
<S>                                                                                <C>         <C>         <C>
Revenues:
  Minimum rents                                                                    $ 140,468   $ 103,915   $  94,931
  Tenant recoveries                                                                   63,040      54,072      50,085
  Percentage rents                                                                     5,412       4,793       4,266
  Other                                                                                3,925       3,811       3,301
  Fee Income                                                                           4,560         805
                                                                                   ---------   ---------   ---------
     Total revenues                                                                  217,405     167,396     152,583
                                                                                   ---------   ---------   ---------

Expenses:
  Real estate taxes                                                                   16,332      13,012      12,140
  Management fees to affiliate                                                         2,713       2,463       4,362
  Property operating                                                                  51,466      45,075      41,605
  Provision for doubtful accounts                                                      2,421         607       2,266
  General and administrative                                                           3,022       2,811       2,745
  Depreciation and amortization                                                       39,809      30,855      28,190
                                                                                   ---------   ---------   ---------
    Total expenses                                                                   115,763      94,823      91,308
                                                                                   ---------   ---------   ---------

Operating income                                                                     101,642      72,573      61,275

Interest expense                                                                     (70,272)    (46,852)    (43,612)
Interest income                                                                        3,833         518         617
Equity in net income (loss) of unconsolidated affiliates:
  Quail Springs Mall                                                                     110
  CenterMark                                                                           9,397       8,628       6,096
  GGP/Homart                                                                           9,355         646
  General Growth Management, Inc.                                                     (1,273)
Gain on the sale of a portion of CenterMark stock                                     43,821      33,397
                                                                                   ---------   ---------   ---------

    Income before allocation to minority
       interest and extraordinary item                                                96,613      68,910      24,376

Income allocated to minority interest                                                (34,580)    (25,856)     (9,518)
                                                                                   ---------   ---------   ---------
Income before extraordinary item                                                      62,033      43,054      14,858
Extraordinary item                                                                    (2,291)                   (693)
                                                                                   ---------   ---------   ---------
Net income                                                                         $  59,742   $  43,054   $  14,165
                                                                                   =========   =========   =========

Earnings per share before extraordinary item                                       $    2.20   $    1.69   $     .65
Extraordinary item                                                                      (.08)                   (.03)
                                                                                   ---------   ---------   ---------
Net earnings per share                                                             $    2.12   $    1.69   $     .62
                                                                                   =========   =========   =========

   The accompanying notes are an integral part of the conolidated financial statements.

</TABLE>




                                      F-4
<PAGE>   34
                        GENERAL GROWTH PROPERTIES, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
             (Dollars in Thousands, except for Per Share Amounts)


<TABLE>
<CAPTION>
                                                                        Additional   Retained        Total
                                                     Common Stock        Paid-in     Earnings     Stockholders'
                                                  Shares      Amount     Capital     (Deficit)       Equity
                                                ----------    -------   ---------   -----------   ------------
<S>                                             <C>          <C>        <C>         <C>          <C>
Balance, December 31, 1993                      22,772,560    $ 2,277   $ 427,997   $ (257,261)   $    173,013

  Net income                                                                            14,165          14,165
  Capital contribution, net of minority
    interest                                                                3,229                        3,229
  Cash distributions declared
    ($1.58 per share)                                                                  (35,981)        (35,981)
                                                ----------    -------   ---------   -----------   ------------

Balance, December 31, 1994                      22,772,560      2,277     431,226     (279,077)        154,426

  Net income                                                                            43,054          43,054
  Issuance of common stock:
    Follow-on offering, less $5,482
      of offering costs                          4,500,000        450      87,443                       87,893
  Cash distributions declared
    ($1.66 per share)                                                                  (43,428)        (43,428)
  Adjustment for minority interest
    in operating partnership                                              (12,562)                     (12,562)
                                                ----------    -------   ---------   -----------   ------------

Balance, December 31, 1995                      27,272,560    $ 2,727   $ 506,107   $ (279,451)   $    229,383

  Exercise of stock options                         66,667          7       1,381                        1,388
  Purchase and retirement of common stock          (66,667)        (7)     (1,443)                      (1,450)
  Net income                                                                            59,742          59,742
  Cash distributions declared
    ($1.72 per share)                                                                  (48,731)        (48,731)
  Acquisitions:
    General Growth Management, Inc.
      less $38 of issuance costs                 1,555,855        156      39,675                       39,831
    Real estate investments                      1,895,928        190      49,511                       49,701
  Conversion of operating partnership
    units to common stock                           64,842          6       1,315                        1,321
  Adjustment for minority interest
    in operating partnership                                                 (918)                        (918)
                                                ----------    -------   ---------   -----------   ------------

Balance, December 31, 1996                      30,789,185    $ 3,079   $ 595,628   $ (268,440)   $    330,267
                                                ==========    =======   =========   ===========   ============

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

</TABLE>


                                     F-5

<PAGE>   35
                        GENERAL GROWTH PROPERTIES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                             YEAR ENDED DECEMBER 31,
                                                                                      1996             1995              1994
                                                                                ------------      ----------        -----------
<S>                                                                             <C>              <C>                <C>
Cash flows from operating activities:
   Net income                                                                   $    59,742      $    43,054        $    14,165
   Adjustments to reconcile net income to net cash
           provided by operating activities:
       Minority interest                                                             34,580           25,856              9,518
       Gain on the sale of a portion of CenterMark stock                            (43,821)         (33,397)
       Extraordinary items                                                            2,291                                 693
       Equity in net income of unconsolidated affiliate                             (17,589)          (9,274)            (6,096)
       Provision for doubtful accounts                                                2,421              607              2,266
       Depreciation                                                                  35,469           26,104             24,324
       Amortization                                                                   4,340            4,751              3,867
   Net changes in:
       Tenant accounts receivable                                                   (12,974)          (6,723)            (1,510)
       Prepaid and other assets                                                     (20,258)          (1,963)             9,282
       Accounts payable and accrued expenses                                          8,487           11,645             (7,573)
                                                                                ------------      ----------        -----------
           Net cash provided by operating activities                                 52,688           60,660             48,936
                                                                                ------------      ----------        -----------
Cash flows from investing activities:
   Acquisition/development of real estate and improvements
           and additions to properties                                             (121,138)        (379,976)           (37,100)
   Decrease in short-term investments                                                                                    61,832
   Collection of notes receivable from affiliates                                    12,649
   Proceeds from the sale of a portion of CenterMark stock                           87,000           72,500
   Distributions received from CenterMark                                            21,531           23,462             14,600
   Distributions received from GGP/Homart                                            13,791
   Investment in CenterMark                                                                                            (181,521)
   Investment in GGP/Homart                                                         (19,058)        (178,001)
   Increase in deferred expenses                                                     (9,546)          (7,189)            (3,064)
                                                                                ------------      ----------        -----------
           Net cash used in investing activities                                    (14,771)        (469,204)          (145,253)
                                                                                ------------      ----------        -----------
Cash flows from financing activities:
   Cash distributions paid to common stockholders                                   (47,604)         (41,037)           (35,070)
   Cash distributions paid to minority interest                                     (27,861)         (25,494)           (23,511)
   Gross proceeds from sale of common stock                                                           93,375
   Payment of stock issuance costs                                                      (38)          (5,482)
   Proceeds from issuance of mortgage and other notes payable                       705,815          506,450            190,000
   Principal payments on mortgage and other notes payable                          (668,107)        (105,728)           (35,876)
   Retirement of common stock (net of sale proceeds)                                    (62)
   Increase in deferred financing costs                                              (2,411)            (859)            (3,895)
   Prepayment penalty on early retirement of debt                                                                          (693)
   Capital contribution                                                                                                   5,425
                                                                                ------------      ----------        -----------
           Net cash provided by financing activities                                (40,268)         421,225             96,380
                                                                                ------------      ----------        -----------
Net change in cash and cash equivalents                                               (2,351)         12,681                 63
Cash and cash equivalents at beginning of year                                        18,298           5,617              5,554
                                                                                ------------      ----------        -----------
Cash and cash equivalents at end of year                                        $     15,947      $   18,298        $     5,617
                                                                                ============      ==========        ===========
Supplemental disclosure of cash flow information:
   Interest paid                                                                $    73,386      $    51,310        $    42,985
   Interest capitalized                                                               5,947            5,409                913

Supplemental schedule of non-cash investing and financing activities:
   Acquisition of real estate and General Growth Management, Inc. (1996)            244,787           37,558
   Operating partnership units and stock issued as consideration for
           additional real estate investments                                        89,438           17,908
           acquisition of General Growth Management, Inc.                            51,497
   Mortgage debt assumed as consideration for additional real
           estate investments                                                       103,852           19,650



                       The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


                                      F-6
<PAGE>   36
                        GENERAL GROWTH PROPERTIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                (Dollars in thousands, except Per Share Amounts)

1.   ORGANIZATION AND BASIS OF PRESENTATION

     ORGANIZATION

     General Growth Properties, Inc. (the "Company"), a Delaware corporation,
     was formed in 1986 to own and operate enclosed mall shopping centers.  On
     April 15, 1993, the Company completed its initial public offering of
     18,975,000 shares of common stock and a business combination involving
     entities under varying common ownership.  Proceeds from the initial public
     offering were used to acquire a majority interest in GGP Limited
     Partnership (the "Operating Partnership") which was formed to succeed to
     substantially all of the interests in eighteen enclosed mall general
     partnerships (the "Property Partnerships") owned and controlled by the
     Company and its original stockholders, Martin and Matthew Bucksbaum, and
     trusts established for the benefit of the stockholders' families (the
     "Bucksbaums"). The proceeds were used to repay existing indebtedness and
     acquire three additional centers (the "IBM Centers").

     In May of 1995, the Company completed a follow-on stock offering of
     4,500,000 common shares.  Net proceeds were used to reduce the outstanding
     balance of the Company's credit facility.

     OPERATING PARTNERSHIP

     The Operating Partnership commenced operations on April 15, 1993 and at
     December 31, 1996, owned a 99% general partnership interest in the
     eighteen Property Partnerships, two recently developed properties, Natick
     Mall and four properties acquired during 1996 (see Note 5).  In addition,
     the Operating Partnership owned the three IBM Centers, Piedmont Mall and
     Park Mall (see Note 5).  At December 31, 1996, the Operating Partnership
     also owned a 14% interest in CenterMark Properties, Inc. (see Note 3), a
     38.2% interest in GGP/Homart, Inc. (see Note 4), a 100% economic interest
     in General Growth Management, Inc. (see Note 6) and a 50% interest in
     Quail Springs Mall (see Note 5).  At December 31, 1996, the Company owned
     a 63% general partnership interest in the Operating Partnership and
     various minority interests own the remaining 37% limited partnership
     interest.

     The minority interest in the Operating Partnership is held primarily by
     trusts for the benefit of families of the original stockholders which
     initially owned and controlled the Company and is represented by units of
     limited partnership interests ("Units"). The Units can be exchanged, with
     certain restrictions, for shares of the Company on a one-for-one basis.
     The Bucksbaum's Units can be exchanged for cash, at the Company's
     election, if the Bucksbaums own 25% or more of the outstanding common
     stock of the Company at the time of the exchange. The Unitholders also
     share equally with the stockholders on a per share basis in any
     distributions by the Operating Partnership.




                                      F-7
<PAGE>   37
                        GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)

Changes in Operating Partnership Units for the three years ending December 31,
1996, are as follows:

<TABLE>
<CAPTION>
                                                                   Units
                                                               -----------
<S>                                                            <C>
December 31, 1993                                               15,267,525
                                                               -----------
December 31, 1994                                               15,267,525
  Acquisition of Piedmont Mall                                     832,936
                                                               -----------
December 31, 1995                                               16,100,461
  Acquisition of General Growth
    Management, Inc. (issued to Bucksbaums)                        453,791
  Acquisition of Lakeview Square, Lansing and Westwood Malls     1,445,000
  Conversion to common stock                                       (64,842)
                                                               -----------
December 31, 1996                                               17,934,410
                                                               ===========
</TABLE>



     BASIS OF PRESENTATION

     The accompanying consolidated financial statements include the accounts of
     the Company and the Operating Partnership consisting of the twenty-five
     Property Partnerships, five directly owned centers and the unconsolidated
     investments in CenterMark Properties, Inc., GGP/Homart, Inc., General
     Growth Management, Inc. and Quail Springs Mall.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     REVENUE RECOGNITION

     Minimum rent revenues are recognized on an accrual basis over the terms of
     the related leases which approximates a straight-line basis.  Percentage
     rents are recognized on an accrual basis. Recoveries from tenants for
     taxes, insurance and other shopping center operating expenses are
     recognized as revenues in the period the applicable costs are incurred.

     The Company provides an allowance for doubtful accounts against the
     portion of accounts receivable which is estimated to be uncollectible.
     Accounts receivable in the accompanying consolidated balance sheets are
     shown net of an allowance for doubtful accounts of $5,117 and $2,259 as of
     December 31, 1996 and 1995, respectively.

     CASH AND CASH EQUIVALENTS

     For purposes of the consolidated statements, the Company considers all
     highly liquid investments purchased with original maturities of three
     months or less to be cash equivalents. The carrying amount approximates
     fair value due to the short maturity of these investments.

     DEFERRED EXPENSES

     Deferred expenses consist principally of financing fees and leasing
     commissions which are amortized over the terms of the respective
     agreements.  Deferred expenses in the accompanying consolidated balance
     sheets are shown net of accumulated amortization of $21,996 and $20,827 as
     of December 31, 1996 and 1995, respectively.




                                     F-8
<PAGE>   38
                       GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


               (Dollars in thousands, except Per Share Amounts)


     PROPERTIES

     Real estate assets are stated at cost.  Interest and real estate taxes
     incurred during construction periods are capitalized and amortized on the
     same basis as the related assets.  Statement of Financial Accounting
     Standards No. 121, "Accounting for the impairment of long-lived assets and
     for long-lived assets to be disposed of" was issued in 1995 and requires
     the real estate assets of the Company to be reviewed for impairment.
     Based principally on a review of cash flows, management has determined
     that the fair value of its real estate assets exceeds their carrying
     value.  Depreciation expense is computed using the straight-line method
     based upon the following estimated useful lives:


<TABLE>
<CAPTION>
                                                   YEARS
                                                   -----
                       <S>                         <C>
                       Buildings and Improvements  40
                       Equipment and fixtures      10
</TABLE>


     Construction allowances paid to tenants are capitalized and depreciated
     over the average lease term. Maintenance and repairs are charged to
     expense when incurred.  Expenditures for improvements are capitalized.

     INVESTMENT IN AFFILIATES

     The Company acquired a 40% interest in CenterMark Properties, Inc.
     ("CenterMark") in February 1994 and a 38.2% interest in GGP/Homart, Inc.
     ("GGP/Homart") in December 1995.  In December 1995, and July 1996 the
     Company sold 25% and 40%, respectively, of its 40% interest in CenterMark
     resulting in a 14% interest at December 31, 1996.  During 1996, the
     Company acquired a 95% non-voting preferred stock interest in General
     Growth Management, Inc. ("GGMI") and a 50% interest in Quail Springs Mall.
     The Company accounts for its investment in affiliates using the equity
     method whereby the cost of an investment is adjusted for the Company's
     share of equity in net income or loss from the date of acquisition and
     reduced by distributions received. Due to currently unpaid and accrued
     preferences on the preferred stock, the Operating Partnership was entitled
     to 100% of the earnings and cash flow generated by GGMI in 1996.
     Subsequent to the July 1996 sale, the investment in CenterMark is
     accounted for using the cost method whereby distributions received are
     included in income instead of its share of equity in net income or loss.

     INCOME TAXES

     The Company elected to be taxed as a real estate investment trust under
     sections 856-860 of the Internal Revenue Code of 1986, commencing with its
     taxable year beginning January 1, 1993.  In order to qualify as a real
     estate investment trust, the Company is required to distribute at least
     95% of its ordinary taxable income and 100% of capital gains to
     stockholders and to meet certain asset and income tests as well as certain
     other requirements.  As a real estate investment trust, the Company will
     generally not be liable for Federal income taxes, provided it satisfies
     the necessary requirements.  As a result, Federal income taxes on the net
     income of the Company are payable personally by the stockholders of the
     Company.  Accordingly, the consolidated statements of operations do not
     reflect a provision for income taxes.  State income taxes are not
     significant. The Property Partnerships were not liable for Federal income
     taxes, as each partner recognized its proportionate share of the Property
     Partnerships' income or loss in its tax return.

     During 1996, the Operating Partnership acquired control of GGMI, a taxable
     subchapter C Corporation.  As a result, state and Federal income taxes on
     its net taxable income are payable by GGMI.



                                     F-9

<PAGE>   39
                        GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)


     EARNINGS PER SHARE

     Per share amounts are based on the weighted average of common and common
     equivalent shares (stock options) outstanding of 28,145,091 for 1996,
     25,521,875 for 1995 and 22,772,560 for 1994.

     ESTIMATES

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions. These estimates and assumptions affect the reported amounts
     of assets and liabilities and the 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.

     MINORITY INTEREST

     Income before minority interest is allocated to the limited partners (the
     "Minority Interest") based on their ownership percentage of the Operating
     Partnership.  The ownership percentage is determined by dividing the
     numbers of Operating Partnership Units held by the Minority Interest by
     the total Operating Partnership Units outstanding. The issuance of
     additional shares of common stock or Operating Partnership Units changes
     the percentage ownership of both the Minority Interest and the Company.
     Since a Unit is convertible into common stock and thus equivalent to a
     common share, such transactions are treated as capital transactions and
     result in an allocation between stockholders' equity and Minority Interest
     in the balance sheet to account for the change in the ownership of the
     underlying equity in the Operating Partnership.

3.   CENTERMARK ACQUISITION AND DISPOSITION

     On February 11, 1994, the Company, jointly with two other unaffiliated
     parties, acquired 100% of the stock of CenterMark from The Prudential
     Insurance Company of America. The Company and Westfield U.S. Investments
     Pty. Limited each acquired 40% of the stock of CenterMark and several real
     estate investment funds sponsored by Goldman Sachs & Co. acquired the
     remaining 20%.  The Company's portion of the cash purchase price for the
     CenterMark stock, including certain transaction costs, was approximately
     $182,000. CenterMark elected real estate investment trust status for
     income tax purposes. The CenterMark portfolio includes interests in
     several major regional shopping malls and power centers.

     The Company sold 25% of its interest in CenterMark on December 19, 1995,
     to Westfield U.S. Investments  Pty. Limited for a purchase price of
     $72,500.  As a result of the sale, the Company's  ownership was reduced to
     30% of the outstanding CenterMark stock.  Concurrently with the sale of
     the stock, the Company also granted Westfield U.S. Investments Pty.
     Limited an option to purchase the remainder of the Company's CenterMark
     stock ("Option Stock") for $217,500.

          On June 28, 1996, Westfield U.S. Investments, Pty. Limited exercised
     its option to acquire the remaining 30% of the outstanding CenterMark
     stock in two transactions.  The first payment in the amount of $87,000 was
     received on July 1, 1996, and the second payment in the amount of $130,500
     was received on January 2, 1997.  Proceeds from the first payment were
     used to repay the remaining balance outstanding on the Company's interim
     loan facility that was utilized in connection with the acquisition of
     GGP/Homart (see Note 4).  The proceeds received from the second
     payment were primarily used to repay existing indebtedness (see Note
     7) in 1997 and will result in a gain of approximately $66,000.


                                     F-10


<PAGE>   40
                        GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)


4.   GGP/HOMART ACQUISITION

     On December 22, 1995, the Company jointly with four other investors
     acquired 100% of the stock of GGP/Homart, Inc. ("GGP/Homart") from Sears,
     Roebuck and Co.  The other investors in GGP/Homart are the New York State
     Common Retirement Fund, the Equitable Life Insurance Company of Iowa, USG
     Annuity & Life Company and The Trustees of the University of Pennsylvania.
     The Company acquired 38.2% of GGP/Homart for approximately $179,000
     including certain transaction costs.  The stockholders of GGP/Homart
     agreed to contribute up to $80,000 of additional capital as required,
     through the end of 1997.  As of December 31, 1996, the stockholders had
     contributed $45,000 of additional capital.  On January 21, 1997, an
     additional $15,000 of capital was contributed by the stockholders.
     GGP/Homart owns interests in twenty-six regional shopping malls and one
     property currently under development.  The Operating Partnership arranged
     a $125,000 interim loan facility in conjunction with the acquisition of
     GGP/Homart.  On July 1, 1996, the interim loan facility was retired with
     proceeds from the sale of a portion of the CenterMark stock (see Note 3).
     GGP/Homart elected real estate investment trust status for income tax
     purposes.

     On October 2, 1996, GGP/Homart opened West Oaks Mall, a new development,
     located in Ocoee, (Orlando) Florida.  GGP/Homart currently has one
     property under development, Brass Mill Center and Commons.  Brass Mill
     Center is located in Waterbury, Connecticut, and is scheduled to open in
     the fall of 1997.

     The following is summarized financial information for GGP/Homart since the
     date of acquisition.

<TABLE>
<CAPTION>
                                                        DECEMBER 31,    December 31,
Balance Sheet as of                                        1996             1995
-------------------                                     ------------    ------------
<S>                                                     <C>             <C>
Assets:
  Net investment in real estate                         $  1,007,008    $    832,910
  Investment in real estate partnerships                     179,228         229,128
  Other assets                                                55,957          45,689
                                                        ------------    ------------
                                                        $  1,242,193    $  1,107,727
                                                        ============    ============

Liabilities and Stockholders' Equity:
  Mortgage and other notes payable                      $    689,773    $    546,505
  Accounts payable and accrued expenses                       83,547         111,869
  Stockholders' equity                                       468,873         449,353
                                                        ------------    ------------
                                                        $  1,242,193    $  1,107,727
                                                        ============    ============

<CAPTION>
                                                                                 Period from
                                                           YEAR ENDED        December 22 through
                                                      DECEMBER 31, 1996       December 31, 1995
                                                      -----------------      -------------------
<S>                                                   <C>                     <C>
Summary of Operations
  Revenues                                            $         145,689      $          4,782
  Operating costs                                               (62,002)               (2,040)
  Depreciation and amortization                                 (20,824)                 (455)
  Interest expense                                              (40,575)               (1,248)
  Equity in net income of real estate partnerships                2,434                   314
  Minority interest                                                (239)                    -
                                                      -----------------      ----------------
  Net income                                          $          24,483      $          1,353
                                                      =================      ================

                   Significant accounting policies used by GGP/Homart are the same as those used by the Company.


</TABLE>


                                     F-11
<PAGE>   41
                       GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)

5.    PROPERTY ACQUISITIONS AND DEVELOPMENTS

      ACQUISITIONS

      During the fourth quarter of 1996, the Company acquired 100% ownership in
      five properties, Park Mall, Sooner Fashion Mall, Lakeview Square, Lansing
      Mall and Westwood Mall, and a 50% interest in  Quail Springs Mall.  On
      October 4, 1996, Park Mall in Tucson, Arizona was acquired for one
      million shares of newly issued common stock and the payment of $23,995 in
      cash.  Sooner Fashion Mall and 50% of Quail Springs Mall, in Norman and
      Oklahoma City, Oklahoma, respectively, were acquired on November 27,
      1996, for 895,928 newly issued common shares, the assumption of $8,636 of
      mortgage debt and the payment of $16,695 in cash.  On December 6, 1996,
      the Company acquired Lakeview Square, Lansing Mall and Westwood Mall, all
      located in south central Michigan for an aggregate purchase price of
      $132,148.  The purchase price consisted of $92,411 of mortgage debt
      assumption, of which $4,436 was retired at closing, and 1,445,000 newly
      issued Operating Partnership Units.

      During 1995, the Operating Partnership acquired 100% ownership interests
      in two enclosed regional malls, Piedmont Mall in Danville, Virginia and
      Natick Mall in Natick, Massachusetts. Piedmont Mall was acquired on July
      1, 1995, by assuming $19,650 of mortgage debt, issuing $17,908 (832,936
      Units) of Operating Partnership Units and the payment of approximately
      $1,700 in cash.  Natick Mall was acquired on December 22, 1995, in
      conjunction with the GGP/Homart transaction, for an aggregate purchase
      price of approximately $265,000 consisting of $82,000 in cash and a
      mortgage loan for $183,000.

      The acquisitions were accounted for utilizing the purchase method and
      accordingly, are included in the Operating Partnership's results of
      operations from the dates of acquisition.

      DEVELOPMENTS

      During 1996, the Company acquired two new development sites located in
      Iowa City, Iowa, and Grand Rapids, Michigan.  The Iowa City site is
      currently under development and is scheduled to open in the summer of
      1998.

      The Company had two properties under development during 1995, West Valley
      Mall in Tracy, California and Eagle Ridge Mall in Winter Haven, Florida.
      West Valley opened during the fourth quarter of 1995 and Eagle Ridge
      opened in February of 1996.  In September of 1995, the Company arranged a
      $120,000 construction loan facility for both developments, collateralized
      in part by mortgages on West Valley and Eagle Ridge.

6.    ACQUISITION OF GENERAL GROWTH MANAGEMENT, INC.

      On December 22, 1995, the Company formed GGP Management, Inc. to manage,
      lease, develop and operate enclosed malls.  In August 1996, the Operating
      Partnership, acting through GGP Management, completed the acquisition of
      GGMI for approximately $51,500.  The Operating Partnership issued
      approximately  $11,600 (453,791 Units) of Operating Partnership Units and
      sold $39,900 of common stock (1,555,855 shares) to GGP Management in
      order to acquire GGMI.  A loan from the Operating Partnership to GGP
      Management to purchase the Company's common stock bears interest and is
      reflected on the consolidated balance sheet.  In connection with the
      acquisition, GGP Management was merged into GGMI at closing. GGMI
      manages, leases, and performs various other services for the Original
      Centers, GGP/Homart and other properties owned by unaffiliated parties.




                                     F-12

<PAGE>   42
                        GENERAL GROWTH PROPERTIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                (Dollars in thousands, except Per Share Amounts)


7.    MORTGAGE NOTES PAYABLE

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


<TABLE>
<CAPTION>
                         Carrying Amount Of Notes
                               December 31,                     Period       Estimated       Final
Property Pledged         ------------------------   Interest    Payment   Balloon Payment   Maturity
 as Collateral              1996         1995         Rate       Terms      at Maturity       Date
----------------------------------------------------------------------------------------------------
<S>                    <C>            <C>           <C>         <C>         <C>          <C>
Bellis Fair(a)         $   73,000     $        -      7.340%          (b)     $ 45,380      02/15/16
Birchwood                  39,549         39,940      8.750%      323 (c)       38,323      09/01/99
Colony Square              (l)            22,614
Columbia                   (l)            45,277
Eagle Ridge(d)             55,584         37,167        (e)           (f)       55,584      09/30/98
Fallbrook                  (l)            41,429
Fox River                  (l)            58,088
Gateway                    (o)            41,676
Grandville                 11,441                     8.500%          (f)       11,441         (g)
Knollwood                  15,561         15,814        (h)       149 (c)                   06/01/16
Lakeview Square            27,561                    10.000%      268 (c)       23,430      06/15/06
Lansing                     1,096                    13.250%       19 (c)          841      07/01/99
Lansing                       125                     9.750%        3 (c)                   01/01/02
Lansing                    13,648                     9.250%      146 (c)        8,240      09/01/04
Lansing                       787                     9.880%        9 (c)                   10/01/10
Lansing                    31,957                     9.350%      281 (c)                   06/15/20
Lockport                   (l)             6,990      6.500%
Mall of the Bluffs         36,655         37,018      8.750%      299 (c)       35,510      09/01/99
Natick                    183,000        183,000      6.000%          (i)      177,463      12/22/02
Oakwood                    35,691         36,044      8.750%      291 (c)       34,584      09/01/99
Piedmont                   14,075         14,075      8.000%          (j)                   11/15/17
Piedmont                    3,040          3,115      8.000%          (k)                   11/15/13
Piedmont                                   2,224
Rio West                   (l)            13,470
River Falls                (o)            40,000
SouthShore                 (l)             9,931
West Valley(d)             56,155         43,758        (e)           (f)       56,155       09/30/98
Westwood                   12,597                      9.850%     102 (c)       11,930       11/01/99
Interim Loan Facility                    125,000
Credit Facility            40,000                       (e)           (f)       40,000       02/01/97
Six properties                           208,500
Seven properties(l)       250,000                       (m)           (f)      250,000       10/15/97
Three properties(n)       115,000                      6.880%         (b)      104,877       02/15/06
Five properties(o)        152,000                      6.410%         (f)      152,000       02/15/01
                       ----------     ----------
                       $1,168,522     $1,025,130
                       ==========     ==========
</TABLE>

(a)     Bellis Fair is cross collateralized with the properties in notes (n)
        and (o).
(b)     The loan requires payments of interest only through February 15, 2001.
        After this date payments of principal and interest are required through
        maturity.
(c)     Amount represents the monthly payment of interest plus principal.
(d)     Each of these two properties has a $60,000 construction loan.
(e)     The interest rate is 150 basis points above LIBOR (LIBOR was 5.375% at
        December 31, 1996).
(f)     The loan requires monthly payments of interest only.
(g)     Note is due and payable when a construction loan is arranged for the
        project.
(h)     This mortgage consists of two notes: one with an original principal
        balance of $16,175 that bears interest at 9.75% and a second note with
        an original principal balance of $1,500 that bears interest at 10.375%.
(i)     The loan requires monthly payments of $915 of interest for the first
        five years and payments of $1,179 of principal and interest for the
        remaining two years.
(j)     The bond requires monthly payments of $94 of interest through 11/30/16,
        the principal amount will amortize over the last 12 months.
(k)     The bond requires monthly payments of interest and principal that vary
        from $13 to $32.
(l)     Seven properties are cross collateralized for the non recourse
        facility; Colony Square, Columbia, Fallbrook, Fox River, Lockport, Rio
        West and SouthShore.
(m)     The interest rate is 100 basis points above LIBOR (LIBOR was 5.375% at
        December 31, 1996).
(n)     The three properties are Chapel Hills, Grand Traverse and Pines Mall.
        The loans are cross-collateralized with the properties in notes (a) and
        (o).
(o)     The five properties are Bayshore, Capital, Gateway, Greenwood and River
        Falls Mall.  The loans are cross- collateralized with the properties in
        notes (a) and (n).


                                      F-13
<PAGE>   43
                       GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)


      Based on borrowing rates available to the Company at the end of 1996 for
      mortgage loans with similar terms and maturities, the fair value of the
      mortgage notes payable approximates carrying value at  December 31, 1996
      and 1995.

      Principal amounts due under mortgage notes payable mature as follows:


<TABLE>
<CAPTION>
                    Year            Amount Maturing
                    ----            ---------------
                    <S>             <C>
                    1997                 $  304,531
                    1998                    115,138
                    1999                    125,047
                    2000                      2,391
                    2001                    154,637
                    Subsequent              466,778
                                    ---------------
                    Total                $1,168,522
                                    ===============
</TABLE>

      Land, buildings and equipment related to such mortgages, with an
      aggregate cost as of December 31, 1996, of approximately $1,527,754, have
      been pledged as collateral for the above debt.  Certain property
      partnership assets are cross-collateralized or cross-defaulted pursuant
      to certain mortgage notes.

      CREDIT FACILITY

      In January 1994, the Operating Partnership arranged a $208,500 credit
      facility collateralized in part by six original centers, with an initial
      term of two years and two one-year extension options.  Approximately
      $140,000 was borrowed as the initial draw on this facility to fund a
      portion of the cash purchase price paid by the Operating Partnership for
      its interest in CenterMark (see Note 3).  In May 1995, the outstanding
      balance of the credit facility was reduced with the proceeds of the
      Operating Partnership's follow-on stock offering. The facility was
      retired on January 31, 1996 with the proceeds from a permanent mortgage
      financing.  In December 1995, the Operating Partnership arranged a
      $125,000 interim loan facility to complete the GGP/Homart transaction.
      The interim loan facility was retired during 1996 with a permanent
      mortgage financing and proceeds of the CenterMark sale (see Note 3).

      CONSTRUCTION LOAN FACILITY

      In September 1995, the Operating Partnership closed a $120,000
      construction loan facility collateralized in part by two new developments
      in Winter Haven, Florida and Tracy, California.  The loan proceeds will
      be used to pay for construction and all other development costs of both
      projects.

      PERMANENT MORTGAGE FINANCING

      On January 31, 1996, the Operating Partnership closed a $340,000
      multi-property loan package with Principal Mutual Life Insurance Company.
      The financing is non recourse and consists of cross collateralized first
      mortgages on nine wholly owned Original Centers as described in notes
      (a), (n) and (o) in the above table.  The five year loans can be extended
      for five additional years.  Proceeds were used to repay $340,000 of
      floating rate debt, consisting of approximately $290,000 of existing
      loans related to the credit facility, Gateway and River Falls mortgages,
      and $50,000 of interim financing which was used in connection with the
      acquisition of GGP/Homart.



                                     F-14
<PAGE>   44
                       GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)




      UNSECURED LINE OF CREDIT

      In August 1996, the Operating Partnership established a short-term
      revolving line of credit of $40,000.  The unsecured line of credit was
      arranged for new developments, expansions, working capital and potential
      acquisitions.

      NON RECOURSE BRIDGE LOAN FACILITY

      On October 15, 1996, the Operating Partnership arranged a $250,000 one
      year bridge loan facility from Goldman Sachs Mortgage Company.  The
      proceeds from this loan were used to pay off approximately $197,000 of
      maturing loans on seven wholly owned properties and to pay down the
      Operating Partnership's unsecured line of credit.  The Operating
      Partnership is in the process of arranging a permanent loan to replace
      the bridge loan prior to its maturity on October 15, 1997.

      SUBSEQUENT FINANCING ACTIVITY

      On January 2, 1997, the Operating Partnership received $130,500 of
      proceeds from the sale of CenterMark (see Note 3).  The proceeds were
      used to payoff and/or reduce a $12,597 mortgage collateralized by
      Westwood Mall, the unsecured line of credit balance of $40,000 and
      $70,000 of the $250,000 non recourse bridge facility.  The remaining
      proceeds were used for working capital.

8. NOTES AND CONTRACTS PAYABLE

      Notes and contracts payable as of December 31, 1996, consist of notes
      totaling $971 payable in connection with certain real estate tax special
      assessments. The special assessment notes require periodic payment of
      interest at rates between 6% and 12.75% and mature at varying dates
      between 1997 and 2004.  The special assessment notes and land contract
      represent insignificant amounts, and it is not practical to estimate the
      fair value due to lack of market information.

      As of December 31, 1996 and 1995, the Operating Partnership had
      outstanding letters of credit of $6,200 and $6,247, respectively, in
      connection with special assessments and liability insurance requirements.




                                     F-15
<PAGE>   45
                       GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)



9. RENTALS UNDER OPERATING LEASES

      The Company receives rental income from the leasing of retail shopping
      center space under operating leases.  The minimum future rentals based on
      operating leases held as of December 31, 1996, are as follows:


<TABLE>
<CAPTION>
                    Year                                 Amount
                    ----                                --------
                    <S>                                 <C>
                    1997                                $138,322
                    1998                                 132,169
                    1999                                 124,370
                    2000                                 116,715
                    2001                                 105,477
                    Thereafter                           513,714
</TABLE>

      Minimum future rentals do not include amounts which may be received from
      certain tenants based upon a percentage of their gross sales or as
      reimbursement of shopping center operating expenses.

      No single tenant collectively accounts for more than 10% of the Company's
      total revenues.  The tenant base includes national and regional retail
      chains and local retailers, and consequently the Company's credit risk is
      concentrated in the retail industry.

10.   TRANSACTIONS WITH AFFILIATE

      GGMI has been contracted to provide management, leasing, development and
      construction management services to the property partnerships.  In
      addition, certain shopping center advertising and payroll costs of the
      property partnerships are paid by GGMI and reimbursed by the Company.
      Total costs included in the consolidated financial statements related to
      agreements with GGMI are as follows:


<TABLE>
<CAPTION>
                               Year Ended December 31,
                               1996      1995      1994
                             --------  --------  --------
<S>                          <C>       <C>       <C>
Management and Leasing Fees   $ 7,956   $ 8,514   $ 7,015
Cost Reimbursements            23,641    20,049    18,763
Development Costs               1,529     1,637     1,204
</TABLE>

      Interest paid and accrued to GG Development, including amounts
      capitalized, was $1,169 for the year ended December 31, 1994.  In
      December 1996, the Operating Partnership acquired a development site
      located in Grand Rapids, Michigan from GG Development for $11,441.  GG
      Development was liquidated subsequent to the acquisition.

11.   GROUND LEASES

      The Company leases the Knollwood Mall land, Rio West Mall land, a portion
      of the Fallbrook Mall building and land and a portion of the SouthShore
      and Bayshore parking areas from third parties. The leases generally
      require fixed annual payments plus participation rentals. Rental expense
      including participation rent related to these leases was $590, $526 and
      $525 for the years ended December 31, 1996, 1995 and 1994, respectively.
      The leases provide for a right of first refusal in favor of the Company
      in the event of a proposed sale of the property by the landlord.

                                      F-16
<PAGE>   46
                       GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)

12. STOCK INCENTIVE PLAN

      The Company's Stock Incentive Plan provides incentives  to attract and
      retain officers and key employees.  The Stock Incentive Plan originally
      consisted of 1,000,000 shares of common stock available for grant.  On
      May 21, 1996, the number of shares under the plan were increased to
      2,000,000.  Options are granted by the Compensation Committee of the
      Board of Directors at an exercise price of not less than 100% of the fair
      market value of the Common Stock on the date of grant.  The term of the
      option is fixed by the Compensation Committee, but no option shall be
      exercisable more than 10 years after the date of the grant. Options
      granted to employee-officers are for 10-year terms and are exercisable in
      either 33 1/3% or 20% annual increments from the date of the grants.
      Options granted to non-employee directors are exercisable in full
      commencing on the date of grant and expire on the tenth anniversary of
      the date of the grant.

      A summary of the status of the Company's stock options as of December 31,
      1996, 1995 and 1994 and changes during the year ended on those dates is
      presented below.

<TABLE>
<CAPTION>
                                                   1996                      1995                         1994
                                           ----------------------     -------------------          --------------------
                                                       Weighted                  Weighted                      Weighted
                                                       Average                   Average                       Average
                                                       Exercise                  Exercise                      Exercise
                                           Shares      Price          Shares        Price          Shares        Price
                                           -----------------------    -------------------          --------------------
<S>                                        <C>             <C>       <C>            <C>            <C>         <C>
Outstanding at beginning of year             425,500     $ 19.50       173,500   $ 20.89             160,000   $ 21.58
        Granted                              502,000     $ 27.97       312,000   $ 19.02             163,500   $ 20.81
        Exercised                            (66,667)    $ 20.81
        Forfeited                            (33,333)    $ 20.81
        Cancelled                                                      (60,000)  $ 21.03            (150,000)  $ 21.54
                                           -----------------------    -------------------          --------------------
Outstanding at end of year                   827,500     $ 24.48       425,500   $ 19.50           $ 173,500   $ 20.89
                                           =======================    ===================          ====================
Exercisable at end of year                   267,500                   161,500                        55,500
Options available for future grants        1,105,833                   574,500                       826,500

Weighted average per share fair value
        of options granted during the year               $  2.28                 $  1.53
</TABLE>




   The fair value of each option grant for 1996 and 1995 was estimated on the
   date of grant using the Black-Scholes option pricing model with the
   following assumptions:


<TABLE>
<CAPTION>
                                   1996               1995
                                 ---------          ---------
<S>                              <C>                <C>
Risk free interest rate          5.78%              5.68%
Dividend yield                   7.75%              7.75%
Expected life                     4.0 years          4.0 years
Expected volatility              18.8%              18.8%
</TABLE>




                                     F-17
<PAGE>   47
                       GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)


   The following table summarizes information about stock options outstanding
   at December 31, 1996:


<TABLE>
<CAPTION>
                        Options Outstanding            Options Exercisable
                 ----------------------------------  -----------------------
                               Weighted
                                Average    Weighted                Weighted
                   Number      Remaining   Average     Options     Average
   Range of      Outstanding  Contractual  Exercise  Exercisable   Exercise
Exercise Prices  at 12/31/96     Life       Price    at 12/31/96    Price
---------------  -----------  -----------  --------  -----------  ----------
<S>              <C>          <C>          <C>       <C>          <C>
$19.00 - $28.00    827,500     9.3 years     $24.48    267,500        $22.46
</TABLE>

   The Company has applied Accounting Principles Board Opinion 25 and selected
   interpretations in accounting for its plan.  Accordingly, no compensation
   costs have been recognized.  Had compensation costs for the Company's  Plan
   been determined based on the fair value at the grant date for options
   granted in 1996 and 1995 in accordance with the method required by Statement
   of Financial Accounting Standards No. 123, "Accounting for Stock-Based
   Compensation," the Company's net income and net income per share would have
   been reduced to the pro forma amounts as follows:



<TABLE>
<CAPTION>
                                    Year Ended December 31,
                                       1996          1995
                                   ------------  ------------
<S>                   <C>          <C>           <C>
Net Income            As Reported       $59,742       $43,054
                      Pro Forma         $59,536       $42,991

Net Income per share  As Reported       $  2.12       $  1.69
                      Pro Forma         $  2.12       $  1.69
</TABLE>






                                     F-18
<PAGE>   48
                       GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)


13. EXTRAORDINARY ITEMS

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

14. DISTRIBUTIONS PAYABLE

      On December 17, 1996, the Company declared a cash distribution of $.43
      per share payable January 31, 1997, to stockholders of record on December
      31, 1996, totaling $13,239.  In addition, a distribution of $7,505 will
      be paid to the limited partners of the Operating Partnership.

      On December 15, 1995, the Company declared a cash distribution of $.43
      per share payable January 31, 1996, to stockholders of record on December
      29, 1995, totaling $11,727.  In addition, a distribution of $6,923 was
      paid to the limited partners of the Operating Partnership.

      On December 30, 1994, the Company declared a cash distribution of $.41
      per share payable January 31, 1995, to stockholders of record on January
      17, 1995, totaling $9,337.  In addition, a distribution of $6,259 was
      paid to the limited partners of the Operating Partnership.


     The allocations of the distributions declared and paid for income tax
purposes are as follows:


<TABLE>
                               YEAR ENDED DECEMBER 31,
                               1996      1995      1994
                             --------  --------  --------
          <S>                <C>       <C>       <C>
          Ordinary Income       47.0%     51.6%     53.2%
          Capital Gain          53.0      48.4         -
          Return of Capital        -         -      46.8
                             -------   -------   -------
                               100.0%    100.0%    100.0%
                             =======   =======   =======
</TABLE>

15. COMMITMENTS AND CONTINGENCIES

      In the normal course of business, from time to time, the Company is
      involved in legal actions relating to the ownership and operations of its
      properties.  In management's opinion, the liabilities, if any, that may
      ultimately result from such legal actions are not expected to have a
      materially adverse effect on the consolidated financial position, results
      of operations or liquidity of the Company.

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






                                     F-19
<PAGE>   49
                       GENERAL GROWTH PROPERTIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Dollars in thousands, except Per Share Amounts)


16. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

      Due to the impact of the acquisition of 100% of Lakeview Square Mall,
      Lansing Mall, Westwood Mall, Park Mall, and Sooner Mall and 50% of Quail
      Springs Mall, which occurred in the fourth quarter of 1996, the follow-on
      stock offering in 1995, acquisitions of Natick Mall and 38.2% of
      GGP/Homart in 1995, the acquisition of 40% of CenterMark in 1994 and the
      sale of 25% and 40% of the Company's interest in CenterMark during 1995
      and 1996, historical results of operations may not be indicative of
      future results of operations.  The pro forma condensed consolidated
      statements of operations for 1996 include adjustments for the acquisition
      of 100% of the five operating properties, 50% of Quail Springs Mall and
      the disposition of 40% of the original 40% interest in CenterMark
      Properties as if they had occurred on January 1, 1996. The pro forma
      condensed consolidated statements of operations for 1995 include
      adjustments for the acquisition of 100% of the five operating properties,
      50% of Quail Springs Mall, GGP/Homart, the follow-on stock offering,
      Natick Mall and the disposition of 65% of the original 40% interest in
      CenterMark Properties as if they had occurred on January 1, 1995. The pro
      forma condensed consolidated statements of operations for 1994 include
      adjustments for the follow-on stock offering, the acquisitions of Natick
      Mall, 38.2% of GGP/Homart and the sale of 25% of the Company's interest
      in CenterMark as if these transactions had occurred on January 1, 1994.
      The pro forma information is based upon the historical consolidated
      statements of operations and does not purport to present what actual
      results would have been had the offerings, acquisitions, sale and related
      transactions, in fact, occurred at the previously mentioned dates, or to
      project results for any future period.

<TABLE>
<CAPTION>
                                                                            1996               1995              1994
                                                                         ----------         ----------         ---------
<S>                                                                   <C>                <C>                <C>
Total revenues                                                            $ 242,633          $ 228,030         $ 159,646
                                                                         ----------         ----------         ---------
Expenses:
  Property operating                                                         80,700             76,188            61,088
  Management fees                                                             3,130              4,208             4,671
  Depreciation and amortization                                              43,687             40,423            29,230
                                                                         ----------         ----------         ---------
Total expenses                                                              127,517            120,819            94,989
                                                                         ----------         ----------         ---------
Operating income                                                            115,116            107,211            64,657
Interest expense, net                                                       (72,997)           (74,168)          (49,496)
Equity in net income/(loss) of unconsolidated affiliates
  Quail Springs Mall                                                            998                927
  CenterMark                                                                 10,350              8,023             4,573
  GGP/Homart                                                                  9,355              9,075             7,924
  General Growth Management, Inc.                                            (1,273)
                                                                         ----------         ----------         ---------
                                                                             61,549             51,068            27,658
Minority interest in operating partnership                                   22,952             19,202             9,929
                                                                         ----------         ----------         ---------
Pro forma net income (a)                                                  $  38,597          $  31,866         $  17,729
                                                                         ==========         ==========         =========
Pro forma earnings per share (b)                                          $    1.30          $    1.09         $    0.65
                                                                         ==========         ==========         =========
</TABLE>


(a)    The pro forma adjustments include management fee and depreciation
       modifications and acquisition and disposition activity described in the
       above paragraph.  The equity income from CenterMark reflects the
       reductions in ownership interest offset by the change from the equity
       method of accounting to the cost method in 1996 and 1995.  Pro forma net
       income is before extraordinary item.
(b)    Earnings per share are based upon 29,717,353,  29,168,488 and 27,272,560
       pro forma average shares of common stock outstanding for the years ended
       December 31, 1996, 1995 and 1994, respectively.

                                      F-20
<PAGE>   50
17.    QUARTERLY FINANCIAL INFORMATION (UNAUDITED)


<TABLE>
<CAPTION>
         Year Ended                                       First            Second           Third            Fourth
     December 31, 1996                                   Quarter          Quarter          Quarter           Quarter       Total
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>              <C>         <C>              <C>             <C>
Total Revenues                                          $ 56,367          $ 56,934        $ 51,569         $ 52,535      $217,405

Income before minority interest                            9,810            11,607          58,275           16,921        96,613

Net income applicable to common shares                     4,705             7,275          36,667           11,095        59,742

Net earnings per share(a)                                   0.18              0.27            1.33             0.36          2.12

Distributions declared per share                            0.43              0.43            0.43             0.43          1.72

Weighted average shares outstanding (in thousands)        27,273            27,273          27,554           30,180        28,221
</TABLE>

(a)     Earnings per share for the four quarters do not add up to the annual
        earnings per share due to the issuance of additional stock and the gain
        on the sale of a portion of CenterMark stock in the third quarter.

<TABLE>
<CAPTION>
         Year Ended                                       First            Second           Third            Fourth
     December 31, 1995                                    Quarter          Quarter         Quarter           Quarter       Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>                <C>              <C>           <C>
Total Revenues                                           $ 39,180         $ 38,490        $ 42,509         $ 47,217      $167,396

Income before minority interest                             6,420            7,659          10,033           44,798        68,910

Net income applicable to common shares                      3,836            4,733           6,262           28,223        43,054

Net earnings per share                                       0.17             0.19            0.23             1.03          1.69

Distributions declared per share(b)                          0.41             0.41            0.41             0.43          1.66

Weighted average shares outstanding (in thousands)         22,773           24,701          27,273           27,273        25,522
</TABLE>

(b)     Earnings per share for the four quarters do not add up to the annual
        earnings per share due to the issuance of additional stock and the gain
        on the sale of a portion of CenterMark stock in the fourth quarter.


                                     F-21
<PAGE>   51
                       REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders
General Growth Properties, Inc.

Our report on the consolidated financial statements of General Growth
Properties, Inc. is included as page F-2 of this Form 10-K.  In connection with
our audits of such financial statements, we have also audited the related
financial statement schedule listed in the Index to Consolidated Financial
Statements on page F-1 of this Form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information required to
be included therein.



Chicago, Illinois                               Coopers & Lybrand L.L.P.
February 11, 1997






                                      F-22
<PAGE>   52
                        General Growth Properties, Inc.
            Schedule III - Real Estate and Accumulated Depreciation
                            As of December 31, 1996

<TABLE>
<CAPTION>
   Col. A                  Col. B               Col. C                Col. D                             Col. E
                                                                 Costs Capitalized              Gross Amounts at Which
                                             Initial Cost     Subsequent to Acquisition       Carried at Close of Period
                                         ----------------------  ------------------------  ----------------------------------
                                                 Building and                    Carrying          Building and
 Description          Encumbrances (a)    Land  Improvements (b) Improvements    Costs (c)  Land   Improvements   Total(d)(e)
----------------      ----------------   ------ ---------------  ------------  -----------  -----  -------------  -----------
<S>                        <C>          <C>         <C>           <C>          <C>         <C>       <C>          <C>
Bayshore Mall,
  Eureka, CA               $ 37,250      $3,004      $27,399       $19,478       $ 2,887    $3,005    $49,764       $52,769

Bellis Fair Mall,
  Bellingham, WA             73,000       7,616       47,040         5,752         6,122     7,485     58,914        66,399

Birchwood Mall,
  Port Huron, MI             39,549       1,769       34,575         4,621         1,967     3,043     41,163        44,206

Capital Mall
  Jefferson City, MO         16,500       4,200       14,201         2,340             0     3,913     16,541        20,454

Chapel Hills
  Colorado Springs, CO       36,750       4,300       34,017        10,159            37     4,300     44,213        48,513

Colony Square Mall
  Zanesville, OH             27,000       1,000       24,500         8,112             0     1,243     32,612        33,855

Columbia Mall
  Columbia, MO               56,000       5,383       19,663         6,263         1,369     5,383     27,295        32,678

Eagle Ridge Mall
  Lake Wales, FL             55,584       7,620       49,561             0         4,626     7,620     54,187        61,807

Developments in Progress     11,441      41,051        3,388             0             0    41,051      3,388        44,439

Fallbrook Mall,
  West Hills, CA             51,000       6,117       10,076        53,939         1,628     6,117     65,643        71,760

Fox River Mall
  Appleton, WI               88,000       2,701       18,291        21,041         1,820     2,701     41,152        43,853

Gateway Mall,
  Springfield, OR            30,750       8,728       34,707         4,910         7,521     8,728     47,138        55,866

General Growth Properties
Chicago, IL                  40,000           0        1,035          (946)            0         0         89            89

Grand Traverse Mall,
  Grand Traverse, MI         51,500       3,530       20,776        17,987         3,644     3,534     42,407        45,941

Greenwood Mall
  Bowling Green, KY          39,500       3,200       40,202         9,595             0     3,200     49,797        52,997

Knollwood Mall,
  St. Louis Park, MN         15,561           0        9,748        21,680         1,767         0     33,195        33,195

Lakeview Square Mall
  Battle Creek, MI           27,561       3,579       32,210             0             0     3,579     32,210        35,789

<CAPTION>

                         Col. F            Col. G         Col. H               Col. I
                      Accumulated         Date of          Date           Life Upon Which
 Description          Depreciation      Construction     Acquired      Depreciation is Computed
---------------       ------------     -------------    ----------     ------------------------
<S>                     <C>            <C>             <C>                <C>

Bayshore Mall,           $11,374         1986-1987                                (f)
  Eureka, CA

Bellis Fair Mall,         15,369         1987-1988                                (f)
  Bellingham, WA

Birchwood Mall,            8,153         1989-1990                                (f)
  Port Huron, MI

Capital Mall               1,599                           1993                   (f)
  Jefferson City, MO

Chapel Hills               3,619                           1993                   (f)
  Colorado Springs, CO

Colony Square Mall         8,837                           1986                   (f)
  Zanesville, OH

Columbia Mall              9,468         1984-1985                                (f)
  Columbia, MO

Eagle Ridge Mall             476         1995-1996                                (f)
  Lake Wales, FL

Developments in Progress       0                                                  (f)

Fallbrook Mall,           17,615                           1984                   (f)
  West Hills, CA

Fox River Mall            11,461         1983-1984                                (f)
  Appleton, WI

Gateway Mall,             10,066         1989-1990                                (f)
  Springfield, OR

General Growth Properties     58                                                  (f)
Chicago, IL

Grand Traverse Mall,       6,639          1990-1991                               (f)
  Grand Traverse, MI

Greenwood Mall             4,426                           1993                   (f)
  Bowling Green, KY

Knollwood Mall,           10,422                           1978                   (f)
  St. Louis Park, MN

Lakeview Square Mall         137                           1996                   (f)
  Battle Creek, MI

</TABLE>


                                     F-23
<PAGE>   53
                        General Growth Properties, Inc.
            Schedule III - Real Estate and Accumulated Depreciation
                            As of December 31, 1996

<TABLE>
<CAPTION>
   Col. A                  Col. B               Col. C                Col. D                             Col. E
                                                                 Costs Capitalized              Gross Amounts at Which
                                             Initial Cost     Subsequent to Acquisition       Carried at Close of Period
                                         ----------------------  ------------------------  ----------------------------------
                                                 Building and                    Carrying          Building and
 Description          Encumbrances (a)    Land  Improvements (b) Improvements    Costs (c)  Land   Improvements   Total(d)(e)
----------------      ----------------   ------ ---------------  ------------  -----------  -----  -------------  -----------
<S>                        <C>          <C>         <C>           <C>          <C>         <C>       <C>          <C>
Lansing Mall
  Lansing, MI                 47,613      6,978         62,800          0            0       6,978      62,800        69,778

Lockport Mall,
  Lockport, NY                 7,000        800         10,000      3,449           24         800      13,473        14,273

Mall of the Bluffs,
  Council Bluffs, IA          36,655      1,860         24,016      6,101        2,529       2,084      32,646        34,730

Natick Mall
  Natick, MA                 183,000     65,745        198,359        345            0      65,745     198,704       264,449

Oakwood Mall,
  Eau Claire, WI              35,691      3,267         18,281     11,426        1,712       3,267      31,419        34,686

Park Mall
  Tucson, AZ                       0      4,996         44,994          0           10       4,996      45,004        50,000

Piedmont Mall,
  Danville, VA                17,115      2,000         38,000        530           21       2,000      38,551        40,551

The Pines,
  Pine Bluff, AR              26,750      1,489         17,627      6,002        1,365       1,276      24,994        26,270

Rio West Mall,
  Gallup, NM                   9,000          0         19,500      2,852            0           0      22,352        22,352

River Falls Mall,
  Clarksville, IN             28,000      3,178         54,610      3,439        5,282       3,182      63,331        66,513

River Hills Mall,
  Mankato, MN                      0      3,714         29,014     14,226        2,584       3,781      45,824        49,605

Sooner Fashion  Mall
  Norman, OK                       0      2,700         24,300          0            0       2,700      24,300        27,000

SouthShore Mall,              12,000
  Aberdeen, WA                              650         15,350      3,621            0         650      18,971        19,621

West Valley Mall,
  Tracy, CA                   56,155      9,295         47,789          0        6,964       9,295      54,753        64,048

Westwood Mall
  Jackson, MI                 12,597      2,658         23,924          0            0       2,658      23,924        26,582
                          ----------   --------     ----------   --------      -------    --------  ----------    ----------
   Grand Totals           $1,168,522   $213,128     $1,049,953   $236,922      $53,879    $214,314  $1,340,754    $1,555,068
                          ==========   ========     ==========   ========      =======    ========  ==========    ==========

<CAPTION>

                         Col. F            Col. G         Col. H               Col. I
                      Accumulated         Date of          Date           Life Upon Which
 Description          Depreciation      Construction     Acquired      Depreciation is Computed
---------------       ------------     -------------    ----------     ------------------------
<S>                     <C>            <C>             <C>                <C>
Lansing Mall
  Lansing, MI                264                          1996                  (f)

Lockport Mall,
  Lockport, NY             3,317                          1986                  (f)

Mall of the Bluffs,
  Council Bluffs, IA      10,016         1985-1986                              (f)

Natick Mall
  Natick, MA               5,124                          1995                  (f)

Oakwood Mall,
  Eau Claire, WI           8,870         1985-1986                              (f)

Park Mall
  Tucson, AZ                 141                          1996                  (f)

Piedmont Mall,
  Danville, VA             1,281                          1995                  (f)

The Pines,
  Pine Bluff, AR           7,355         1985-1986                              (f)

Rio West Mall,
  Gallup, NM               5,530                          1986                  (f)

River Falls Mall,
  Clarksville, IN         13,396         1989-1990                              (f)

River Hills Mall,
  Mankato, MN              7,179         1990-1991                              (f)

Sooner Fashion  Mall
  Norman, OK                  60                          1996                  (f)

SouthShore Mall,
  Aberdeen, WA             5,012                          1986                  (f)

West Valley Mall,
  Tracy, CA                1,378            1995                                (f)

Westwood Mall
  Jackson, MI                102                          1996                  (f)
                        --------
   Grand Totals         $188,744
                        ========

</TABLE>

                                     F-24
<PAGE>   54
                        General Growth Properties, Inc.
                             Notes to Schedule III
                             (Dollars in Thousands)

(a) See description of mortgage notes payable in Note 7 of Notes to
    Consolidated Financial Statements.
(b) Initial cost for constructed malls is cost at end of first complete
    calendar year subsequent to opening.
(c) Carrying costs consists of capitalized construction-period interest and
    taxes.
(d) The aggregate cost of land, buildings and equipment for federal income tax
    purposes is approximately $1 billion.

<TABLE>
<CAPTION>
(e)                                         Reconciliation of Real Estate
                                      -------------------------------------------
                                           1996            1995           1994
                                      -----------       ----------    -----------
 <S>                                 <C>               <C>           <C>
 Balance at begining of year          $ 1,248,892       $  823,108    $   786,008
 Additions                                306,176          425,784         37,100
                                      -----------       ----------    -----------
 Balance at close of year             $ 1,555,068       $1,248,892    $   823,108
                                      ===========       ==========    ===========
<CAPTION>

                                     Reconciliation of Accumulated Depreciation
                                     ---------------------------------------------
                                          1996             1995           1994
                                      -----------       ----------     -----------
<S>                                  <C>               <C>            <C>
 Balance at begining of year          $   153,275       $  127,170     $  102,846
 Depreciation Expense                      35,469           26,105         24,324
                                      -----------       ----------     ----------
 Balance at close of year             $   188,744       $  153,275     $  127,170
                                      ===========       ==========     ==========
</TABLE>


(f) Depreciation is computed based upon the following estimated lives:

 Buildings, improvements and carrying costs      40 years
 Tenant allowances                               10-40 years
 Equipment and fixtures                          10 years



                                      F-25
<PAGE>   55
                                 EXHIBIT INDEX

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     10(a)  Amended and Restated Agreement of Limited Partnership of the
Operating Partnership.(6)

     10(b)  First Amendment to Amended and Restated Agreement of Limited
Partnership.(5)

     10(c)  Second Amendment to Amended and Restated Agreement of Limited
Partnership.(5)

     10(d)  Third Amendment to Amended and Restated Agreement of Limited
Partnership.(9)

     10(e)  Fourth Amendment to Amended and Restated Agreement of Limited
Partnership.(9)

     10(f)  Fifth Amendment to Amended and Restated Agreement of Limited
Partnership.(9)


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<PAGE>   56
     10(g)  Sixth Amendment to Amended and Restated Agreement of Limited
Partnership.(9)

     10(h)  Seventh Amendment to Amended and Restated Agreement of Limited
Partnership.(9)

     10(i)  Eighth Amendment to Amended and Restated Agreement of Limited
Partnership.(9)

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

     10(k) Agreement Concerning Indemnification between the Company, the
Operating Partnership and the Limited Partners of the Operating Partnership.(6)

     10(l) Agreement of Limited Partnership of GG Development.(3)

     10(m) Letter Agreement dated December 30, 1992, among the partners of GG
Development with respect to assignment of interests to the Operating
Partnership.(3)

     10(n)  Form of Management Agreement between the Property Manager and a
Property Partnership.(3)

     10(o)  Form of Management Agreement between the Property Manager and the
Operating Partnership.(3)

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

     10(q)* General Growth Properties, Inc. 1993 Stock Incentive Plan, as
amended.(5)

     10(r) Forms of Cash Flow Support Agreements between the Operating
Partnership and the partners of GG Development.(3)

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

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

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

     10(v) Form of Indemnification Agreement between the Company and its
directors and officers.(3)

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

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

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

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

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



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<PAGE>   57
10(bb) Stock Purchase Agreement, as amended, by and among The Prudential
Insurance Company of America, GGP Limited Partnership, Westfield U.S.
Investment, Pty. Limited  and Whitehall Street Real Estate Limited Partnership
III dated as of December 13, 1993.(7)

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

     10(dd) Form of Stock Purchase Agreement by and among GGP Limited
Partnership, Westfield U.S. Investments Pty. Limited and Westfield Corporation,
Inc.(2)

     10(ee) Form of GGP Option Agreement by and among GGP Limited Partnership,
Westfield U.S. Investments Pty. Limited and CenterMark Properties, Inc.(2)

     10(ff) GGP Agreement, dated May 13, 1996, by and among GGP Limited
Partnership, Westfield U.S. Investments Pty. Limited and CenterMark Properties,
Inc.(4)

     10(gg)*  Form of Option Agreement between the Company and certain executive
officers.

     21       List of Subsidiaries.

     23       Consent of Coopers & Lybrand L.L.P. - Independent Accountants.

     24       Powers of Attorney

     27       Financial Data Schedule

     *A compensatory plan or arrangement required to be filed.

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

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

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

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

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

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

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

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

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


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