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Chelsea Property Group, Inc. (ticker: CPG, exchange: New York Stock Exchange) News Release - 12-Jun-2003
Chelsea Acquires The Crossings Factory Stores; Tannersville, Pennsylvania Property Is Among the Industry's Best
ROSELAND, N.J.--(BUSINESS WIRE)--June 12, 2003--Chelsea Property Group, Inc. (NYSE: CPG) announced today that it completed the acquisition of The Crossings Factory Stores, located in Tannersville, Pennsylvania, from privately-held Outletter Associates.
The purchase price was $111.3 million, including closing costs and the assumption of a $61.0 million 5.85% mortgage due March 2013. An additional $5.0 million will be payable upon completion of a 21,000 square-foot expansion of the center (subject to permits), expected to be delivered by mid-2004. The first-year unlevered return on the purchase is estimated at approximately 8.5%, increasing to 9% upon completion of the expansion.
Opened in 1991 with an initial phase of 120,000 square feet of gross leasable area, The Crossings is a 391,000 square-foot, 108-store outlet center located on Interstate 80 at Exit 299 (Route 611), 12 miles west of the Pennsylvania/New Jersey border at the Delaware Water Gap. The center's average tenant sales in 2002 were $385 per square foot, making it one of the most productive properties in the outlet industry, while occupancy costs averaged less than 8% of sales. Current occupancy is 98%, with tenants including Polo Ralph Lauren, GAP, Coach, Nautica, Timberland and Tommy Hilfiger.
The Crossings is the leading outlet center in its trade area - which includes northeastern Pennsylvania and northern New Jersey - and stands at one of the most heavily traveled entry points to the Poconos. More than 2.1 million people live within a 45-mile radius, and the average daily car count on Interstate 80 at the location is approximately 50,000.
Chelsea also disclosed recently that it has optioned land off Interstate 80, ten miles east of The Crossings, and is in the early stages of exploring the development of a new Premium Outlet(R) center to serve the same region. Management believes that the two centers would firmly establish Chelsea's presence in the Poconos market and complement each other in terms of tenant mix and customer appeal.
David Bloom, Chairman and Chief Executive Officer, said, "Over the years, we have heard from many of the industry's core tenants that The Crossings has consistently ranked in the top ten of all their outlet locations. We are very pleased to be adding it to our portfolio, and consider it to have important strategic value as well as strong internal growth potential."
Chelsea Property Group, Inc. is a fully integrated, self-administered and self-managed real estate investment trust (REIT) that wholly or partially owns 59 Premium Outlet and other shopping centers - containing approximately 14.9 million square feet of gross leasable area - in 31 states and Japan. The Company's leading properties include Woodbury Common Premium Outlets, near New York City; Orlando Premium Outlets, in Orlando, Florida; Wrentham Village Premium Outlets, near Boston; and Gotemba Premium Outlets, near Tokyo. See www.cpgi.com for more information.
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 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: credit risk; the Company's ability to lease its properties; retail, real estate and economic conditions; competition; access to capital; 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.
CONTACT: Chelsea Property Group, Inc.
Leslie T. Chao / Michael J. Clarke
973/228-6111
SOURCE: Chelsea Property Group, Inc.
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