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Aug. 1, 2003

Chelsea Property Group, Inc. (ticker: CPG, exchange: New York Stock Exchange) News Release - 1-Aug-2003

Chelsea Acquires Las Vegas Outlet Center; Property Complements Las Vegas Premium Outlets

ROSELAND, N.J.--(BUSINESS WIRE)--Aug. 1, 2003--Chelsea Property Group, Inc. (NYSE: CPG) announced today that it completed the acquisition of Belz Factory Outlet World - Las Vegas, a 477,000 square-foot outlet center in Las Vegas, Nevada, from entities affiliated with privately held Estein & Associates USA, Ltd. The purchase price for this property - together with a second property in Lakeland, Tennessee - was $107.5 million, of which $104.0 million was allocated to the Las Vegas center. The purchase price for the Las Vegas center included the assumption of a $24.4 million 8.12% mortgage due 2012, and implied a capitalization rate of approximately 10%.

Belz Factory Outlet World - Las Vegas opened in 1993 with an initial phase of 255,000 square feet of gross leasable area, and was expanded to its current size in 1996. It is a single-level, climate-controlled indoor mall located 2-1/2 miles south of The Strip on Las Vegas Boulevard near McCarran International Airport, with easy access to Interstate 15 via the Blue Diamond interchange, a primary entry point to Las Vegas for visitors from California. The center is 99% leased to approximately 130 tenants, including Bass, Bose, Casual Corner, L'eggs Hanes Bali, Jones New York, Lenox, Liz Claiborne, Mikasa, Nautica, Nike, Reebok, Tommy Hilfiger and Vans. It is widely considered one of the top outlet properties in the country, with 2002 sales averaging $390 per square foot and occupancy costs averaging less than 7% of sales.

In partnership with Simon Property Group, Inc. (NYSE: SPG), Chelsea has also completed Las Vegas Premium Outlets, a new 435,000 square-foot single-phase center located approximately 2-1/2 miles from the north end of The Strip. With stores opening today and grand opening events scheduled for August 8-10, Las Vegas Premium Outlets has been leased to a high-end, fashion-oriented tenant roster that will appeal to domestic and international tourists as well as the permanent residents of Las Vegas.

David Bloom, Chairman and Chief Executive Officer of Chelsea, said, "Belz Factory Outlet World and Las Vegas Premium Outlets - 'bookends' at the south and north ends of The Strip - are the two most centrally located outlet properties in Las Vegas. We believe they will cater to largely separate and distinct audiences, and that owning both centers will enable us to optimize the tenant mix at each. Las Vegas continues to be among the country's most exciting markets and we are very pleased to be establishing our presence with two strongly positioned properties that should dominate their respective market segments."

In conjunction with the acquisition of the Las Vegas center, Chelsea also purchased Belz Factory Outlet World - Lakeland, located near Memphis, Tennessee, to which $3.5 million of the purchase price was allocated. The Lakeland property is expected to be re-marketed for sale shortly.

The cash portion of the overall transaction was financed through a $100 million one-year bridge loan (extendible for an additional six months at the Company's option) provided by Wachovia Bank, N.A. at an interest rate of LIBOR plus 80 basis points. Surplus proceeds from the financing will be used for general corporate purposes.



The preceding article is Copyright Chelsea Property Group, Inc.

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