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
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