ROSELAND, N.J.--(BUSINESS WIRE)--Nov. 12, 2002--Chelsea Property Group, Inc. (NYSE: CPG) today reported its operating results for the third quarter ended September 30, 2002.

Third quarter funds from operations (FFO) before minority interest rose 19% to $32.7 million from $27.4 million in the third quarter of 2001. Adjusted for a 2-for-1 stock split in May 2002, diluted FFO per share rose 6% to $0.71 from $0.67. FFO attributable to real estate operations rose 26% to $36.5 million from $28.9 million, or 11% on a per-share basis, to $0.79 from $0.71. Rental revenues from wholly-owned properties rose 51% to $52.4 million from $34.6 million, and total revenues from wholly-owned properties rose 46% to $71.5 million from $49.1 million. FFO from unconsolidated investments declined to $2.9 million from $5.6 million due to the purchase and consolidation by Chelsea of Simon Property Group's 50% interest in Orlando Premium Outlets on April 1, 2002, and of Fortress Investment Group's 51% interest in four joint-venture properties on August 20, 2002, partially offset by higher income from Chelsea Japan. The loss attributable to the Company's investment in Chelsea Interactive was $3.8 million, compared to $1.5 million in the year-earlier quarter. Third quarter earnings before interest, depreciation and amortization (EBITDA) rose 27% to $51.4 million from $40.6 million.

Third quarter revenue, income and FFO comparisons were positively impacted by internal rent growth; the completion since June 30, 2001 of expansions totaling approximately 200,000 square feet at three operating Premium Outlet(R) centers (Napa, Allen and Rinku); the acquisition in September 2001 of 31 retail properties from Konover Property Trust; the acquisitions in April 2002 of an outlet center in Edinburgh, Indiana, and Simon's 50% interest in Orlando Premium Outlets; and the acquisition in August 2002 of Fortress Investment Group's 51% interest in Premium Outlet centers in Gilroy (California), Michigan City (Indiana), Waterloo (New York) and Kittery (Maine). Also during the quarter, the Company realized a gain of $10.9 million (not included in FFO or EBITDA) in connection with the sale of a portion of its interests in Value Retail PLC and affiliates.

For the year to date, FFO rose to $91.0 million from $74.5 million, up 22%; split-adjusted diluted FFO per share rose to $2.00 from $1.87, up 7%; FFO attributable to real estate operations rose to $101.3 million from $77.9 million, up 30%, or to $2.22 per share from $1.95 per share, up 14%; rental revenues from wholly-owned properties rose to $141.7 million from $97.8 million, up 45%; total revenues from wholly-owned properties rose to $193.2 million from $140.2 million, up 38%; FFO from unconsolidated investments decreased to $12.5 million from $15.2 million; the loss from Chelsea Interactive increased to $10.3 million from $3.5 million; and EBITDA rose to $140.6 million from $112.8 million, up 25%.

Same-space sales (weighted average sales per square foot reported in space open for the full duration of both comparison periods) at Chelsea's U.S. Premium Outlet centers were up 2% for the third quarter of 2002 and 1% for the year to date compared to the corresponding periods in 2001.

Year to date, the Company has completed acquisitions covering approximately 2.3 million square feet of gross leasable area (GLA), including the purchases in April of the Edinburgh, Indiana center and Simon's 50% interest in Orlando Premium Outlets; and the purchase in August of Fortress' 51% interest in the four centers mentioned earlier. Four non-core outlet centers acquired from Konover in 2001, totaling approximately 430,000 square feet of GLA, were sold in June and July, 2002.

GLA in service at September 30, 2002, including joint venture projects, totaled 12.5 million square feet, unchanged from a year earlier. The U.S. Premium Outlet center portfolio remained 98% leased at September 30, 2002.

The Company currently has a record amount of simultaneous construction underway, including Chicago Premium Outlets, a 435,000 square-foot single-phase center located on Interstate 88 approximately 30 miles west of Chicago; Las Vegas Premium Outlets, a 430,000 square-foot single-phase center near downtown Las Vegas, Nevada; the 190,000 square-foot first phase of Sano Premium Outlets, north of Tokyo, Japan; and the 175,000 square-foot second phase of Gotemba Premium Outlets, a highly successful project west of Tokyo. The Chicago and Las Vegas centers are 50/50 joint ventures with Simon Property Group, and Chelsea has a 40% ownership interest in the Sano and Gotemba centers through its investment in Chelsea Japan Co., Ltd.

On September 30, the Company announced that it agreed to acquire two outlet centers (Albertville, Minnesota, and Johnson Creek, Wisconsin) from JMJ Properties, Inc. for $89.5 million. Earlier today, the Company announced that it signed a definitive agreement to acquire four outlet properties from New Plan Excel Realty, Inc. (NYSE: NXL) for $193 million. Both transactions will be discussed further during the Company's third-quarter conference call (see below).

David Bloom, Chairman and Chief Executive Officer, said, "Our operating results again reflect strong growth, driven both by acquisitions completed in the past year and internal growth. We continue to see good opportunities to acquire individual properties as well as larger portfolios, while projects currently under construction domestically and in Japan, totaling more than 1.2 million square feet of leasable space, will add significantly to our operating assets and income in 2003 and 2004. At the same time, our existing portfolio continues to perform very well in spite of a very challenging retail environment."

Chelsea Property Group, Inc. is a fully integrated, self-administered and self-managed real estate investment trust (REIT) that wholly or partially owns 54 Premium Outlet(R) and other retail shopping centers - containing 12.5 million square feet of GLA - in 28 states and Japan. The company's leading properties include Woodbury Common Premium Outlets, near New York City; Wrentham Village Premium Outlets, near Boston; Orlando Premium Outlets, in Orlando, Florida; Desert Hills Premium Outlets, near Palm Springs, California; and Gotemba Premium Outlets, near Tokyo, Japan. Please see www.cpgi.com for more information.

Chelsea's third-quarter conference call with investors and analysts will be held on Wednesday, November 13, 2002 at 2:00 p.m. eastern time. The call may be accessed by dialing 800-633-8410 (U.S. callers) or 212-748-2727 (international callers) and referencing reservation No. 20996232. A replay of the call will be available through November 20, 2002 by dialing 800-633-8284 (U.S. callers) or 402-977-9140 (international callers) with the same reservation number.

Statements in this news release that are not strictly historical are "forward-looking" statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Chelsea Property Group believes that the expectations reflected in such statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Forward-looking statements involve known and unknown risks that may cause actual results to differ materially from expected results. Risk factors include, without limitation, the receipt of regulatory entitlements for and completion of development projects, in the United States or abroad; the availability and cost of capital and foreign currency; credit risk; the Company's ability to lease its properties; retail, real estate and economic conditions; risks inherent to being a partner in joint ventures; risks inherent to developing and marketing a technology based business; competition; and other risks detailed from time to time in Chelsea Property Group's reports to the Securities and Exchange Commission. The Company accepts no responsibility for updating forward-looking statements.

CHELSEA PROPERTY GROUP, INC.

STATEMENTS OF OPERATIONS - Unaudited
(In thousands, except per share data)

                          Three Months Ended      Nine Months Ended
                             September 30,           September 30,
                           2002        2001        2002        2001
                       ----------- ----------- ----------- -----------
Revenues:
Base rent (a)             $46,968     $30,528    $128,776     $87,930
Percentage rent             5,402       4,051      12,952       9,851
Expense reimbursements     16,128      11,581      43,265      34,002
Other income                2,991       2,905       8,207       8,403
                       ----------- ----------- ----------- -----------
Total revenues             71,489      49,065     193,200     140,186
Expenses:
Operating and
 maintenance               19,389      12,779      53,779      37,505
Depreciation and
 amortization              15,045      12,174      42,229      35,479
General and
 administrative             1,558         622       4,996       3,053
Other                       1,027         473       3,221       1,713
                       ----------- ----------- ----------- -----------
Total expenses             37,019      26,048     104,225      77,750
Income before
 unconsolidated
 investments, interest
 expense and minority
 interest                  34,470      23,017      88,975      62,436
Income from
 unconsolidated
 investments                2,032       3,953       8,784      10,509
Loss from Chelsea
 Interactive               (3,790)     (1,477)    (10,266)     (3,447)
Gain on sale of
 unconsolidated
 investment                10,911           -      10,911           -
Interest expense          (13,098)     (8,891)    (33,691)    (26,326)
                       ----------- ----------- ----------- -----------
Income before minority
 interest                  30,525      16,602      64,713      43,172
Less minority interest     (5,467)     (3,717)    (12,607)    (10,213)
                       ----------- ----------- ----------- -----------
Net income                 25,058      12,885      52,106      32,959
Preferred dividends          (835)     (1,047)     (2,588)     (3,141)
                       ----------- ----------- ----------- -----------
Net income - common
 shareholders             $24,223     $11,838     $49,518     $29,818
Net income per common
 share (diluted) (b)        $0.61       $0.34       $1.26       $0.89
Funds from operations
 (FFO) (c)                $32,660     $27,415     $90,989     $74,498
FFO per common share -
 real estate                $0.79       $0.71       $2.22       $1.96
Internet loss per
 common share               (0.08)      (0.04)      (0.22)      (0.09)
                       ----------- ----------- ----------- -----------
FFO per common share
 (diluted)                  $0.71       $0.67       $2.00       $1.87
Dividends per common
 share                     $0.485       $0.39      $1.375       $1.17
----------------------------------------------------------------------
(a) Base rent includes straight-line rent of $993 and $534 in the
    third quarters of 2002 and 2001, respectively, and $2,441 and
    $1,181 for the nine months ended September 30, 2002 and 2001,
    respectively.

(b) Basic earnings per share were $0.64 and $0.36 in the third
    quarters of 2002 and 2001, respectively, and $1.31 and $0.92 for
    the nine months ended September 30, 2002 and 2001, respectively.

(c) FFO per common share is defined as income before minority
    interest, gain or loss on a sale or writedown of asset and
    depreciation and amortization, reduced by amortization of deferred
    financing costs, depreciation of non-real estate assets, and
    preferred dividends.
----------------------------------------------------------------------

CALCULATION OF FFO
(Amounts in thousands)

                          Three Months Ended      Nine Months Ended
                             September 30,           September 30,
                           2002        2001        2002        2001
                       ----------- ----------- ----------- -----------
Net income - common
 shareholders             $24,223     $11,838     $49,518     $29,818
Add:
Depreciation and
 amortization - wholly-
 owned                     15,045      12,174      42,229      35,479
Depreciation and
 amortization - joint
 ventures                     871       1,628       3,673       4,700
Amortization of
 deferred financing
 costs and depreciation
 of non-real estate
 assets                      (573)       (480)     (1,741)     (1,326)
Gain on sale of
 unconsolidated
 investment               (10,911)          -     (10,911)          -
Preferred unit
 distributions             (1,462)     (1,462)     (4,386)     (4,386)
Minority interest           5,467       3,717      12,607      10,213
                       ----------- ----------- ----------- -----------
FFO                       $32,660     $27,415     $90,989     $74,498
Ownership interests:
REIT common shares         39,610      34,320      39,253      33,534
Partnership units held
 by minority interest       6,273       6,310       6,285       6,378
                       ----------- ----------- ----------- -----------
Weighted average
 shares/units
 outstanding               45,883      40,630      45,538      39,912



CHELSEA PROPERTY GROUP, INC.           
SELECTED BALANCE SHEET DATA - Unaudited
(In thousands, except center data)

                                               Sept. 30,     Dec. 31,
                                                 2002         2001
                                             ------------ ------------

Real estate assets, before depreciation       $1,541,298   $1,127,906
Cash and cash equivalents                         13,693       24,604
Total assets                                   1,430,684    1,099,308
Total liabilities                                966,806      624,246
Minority interest                                114,472      115,639
Stockholders' equity                             349,406      359,423
Shares and units outstanding at period-end        44,230       43,840

DEBT DATA:
Unsecured bank debt                               97,035        5,035
Mortgage debt                                    307,677      170,209
8.375% Notes due 2005                             49,915       49,892
7.25% Notes due 2007                             124,833      124,809
8.625% Notes due 2009                             49,930       49,923
8.25% Notes due 2011                             148,780      148,670
6.875% Notes due 2012                             99,189            -
Interest coverage ratio - trailing 12 months        4.2x         4.3x

OPERATING DATA:  (sq ft in thousands)
Gross leasable area at period-end                 12,517       12,574
Weighted average GLA during period                12,683        9,349
Lease-up at period-end Domestic Premium
 Outlets                                             98%          98%
Number of centers (including two
 international)                                       54           57
Number of states and foreign countries                29           29