Fourth quarter funds from operations (FFO) before minority interest rose 19% to $40.8 million from $34.4 million in the fourth quarter of 2001. Adjusted for a 2-for-1 stock split in May 2002, diluted FFO per share rose 10% to $0.85 from $0.77, respectively. FFO attributable to real estate operations during the quarter rose 21% to $43.9 million from $36.3 million, or 12% on a per share basis, to $0.91 from $0.81. Including the $34.4 million non-recurring charge for Chelsea Interactive, the net loss to common shareholders was $7.8 million, or $0.20 per share, compared to net income available to common shareholders of $17.8 million, or $0.47 per diluted share, in the 2001 fourth quarter. The charge did not affect FFO.

For the full year, FFO rose 21% to $131.8 million from $108.9 million in 2001, and diluted FFO per share rose 8% to $2.85 from $2.65, respectively. FFO attributable to real estate operations rose 27% to $145.2 million from $114.2 million, or 13% on a per share basis, to $3.14 from $2.78. Including the Chelsea Interactive write-down, full-year net income available to common shareholders declined 12% to $41.7 million from $47.6 million, and diluted earnings per share declined 23% to $1.05 from $1.37.

Fourth quarter rental revenues from wholly-owned assets rose 35% to $64.0 million from $47.5 million in 2001, and total revenues from wholly-owned assets rose 35% to $90.0 million from $66.7 million, respectively. Fourth quarter income from unconsolidated entities declined to $1.0 million from $4.5 million, primarily as a result of the Company's buyouts and consolidations of partnership interests in five joint venture projects during the first three quarters of 2002, partially offset by higher income from Chelsea Japan. The fourth quarter operating loss from Chelsea Interactive rose to $3.1 million from $1.9 million, while earnings before interest, depreciation and amortization (EBITDA) rose 25% to $61.7 million from $49.2 million.

For the full year, rental revenues from wholly-owned assets rose 42% to $205.7 million from $145.3 million in 2001; total revenues from wholly-owned assets rose 37% to $283.2 million from $206.9 million; income from unconsolidated entities declined to $9.8 million from $15.0 million; the operating loss attributable to Chelsea Interactive was $13.4 million; and EBITDA rose 25% to $202.3 million from $162.0 million.

Fourth quarter and full-year comparisons were positively impacted by internal rent growth; higher percentage rents; a full-year contribution from properties acquired from Konover Property Trust in September 2001; the expansions of five properties in the United States and Japan during 2001 and 2002; the purchase in April 2002 of Simon Property Group's 50% interest in Orlando Premium Outlets; and the purchase in August 2002 of Fortress Investment Group's 51% interest in four properties (Gilroy, California; Michigan City, Indiana; Waterloo, New York; and Kittery, Maine). During the year, Chelsea re-tenanted or renewed approximately one million square feet of space at an average base rent of $24.23 per square foot, 13% higher than the average expiring rent of $21.46 per square foot.

During the fourth quarter, Chelsea completed the acquisitions of two mid-western properties (Albertville, Minnesota; and Johnson Creek, Wisconsin) for $89.5 million, and four other outlet centers (Jackson, New Jersey; Osage Beach, Missouri; St. Augustine, Florida; and Branson, Missouri) for $193 million. Including joint venture projects, the Company's portfolio grew 14% during 2002, ending the year at 14.4 million square feet of gross leasable area (GLA). The Premium Outlet(R) portfolio (including Japan), comprising 8.4 million square feet of GLA, was 99% leased at December 31, 2002 compared to 98% a year earlier.

Same-space sales (weighted average sales per square foot reported in space open for the full duration of both comparison periods) in the domestic Premium Outlet portfolio were up 3% for the quarter and 2% for the full year. Weighted average domestic Premium Outlet sales were $383 per square foot in 2002, up 1% from $379 per square foot.

At year-end, Chelsea had a record 1.2 million square feet of construction underway, including Las Vegas Premium Outlets, a 435,000 square-foot single-phase center near downtown Las Vegas, Nevada (scheduled to open summer 2003); Chicago Premium Outlets, a 438,000 square-foot single-phase center located on Interstate 88 west of Chicago (spring 2004); the 180,000 square-foot first phase of Sano Premium Outlets, located north of Tokyo, Japan (March 14, 2003); and the 170,000 square-foot second phase of Gotemba Premium Outlets, located west of Tokyo (summer 2003). The Las Vegas and Chicago centers are 50/50 joint ventures with Simon Property Group (NYSE: SPG), and Chelsea has a 40% interest in the Sano and Gotemba centers through its investment in Chelsea Japan Co., Ltd., a Tokyo-based joint venture with Mitsubishi Estate Co., Ltd. and Nissho Iwai Corp.

During the last twelve months, Chelsea completed $500 million of long-term capital transactions to support its growth, including $250 million of 10-year notes (June and December 2002); $120 million of new common stock (November 2002); operating partnership units in CPG Partners, L.P. valued at $45 million (November 2002); and the assumption of $85 million of long-term mortgages (August 2002). At year-end 2002, the Company had approximately $102 million available under its $200 million bank credit facility.

David Bloom, Chairman and Chief Executive Officer, said, "2002 was another solid year for Chelsea. In spite of challenging economic, retail and tourism conditions worldwide, we again delivered strong financial performance while positioning ourselves for further growth. We had a record year in terms of acquisition activity - closing transactions valued at $530 million - and are now clearly the dominant outlet company by every key measure including portfolio size, market capitalization and asset quality. Furthermore, despite our growth, our balance sheet is still one of the strongest among REITs and we remain prepared to capitalize on further acquisition opportunities as they arise.

"Our development program is also proceeding on a large scale, with construction well underway on Chelsea's next generation of Premium Outlet centers. These new projects - located in strong markets in the United States and Japan - are being developed and leased to our usual high standards, and we look forward to their contributing significant growth beginning this year," he added.

Commenting on Chelsea Interactive, Mr. Bloom said, "While online sales have been improving and new brands have been added to its platform, we believe that it is unlikely that Chelsea Interactive will be able to achieve sufficient cash flow to reach breakeven and self-fund new brands before we reach our stated $60 million funding limit. Therefore we are reserving the balance of our commitment - approximately $7 million - to cover operating needs over the next 12-24 months as well as potential wind-down costs. At the same time, we continue to be in active discussions with prospective technology and/or financial partners who may provide additional financing to and/or acquire Chelsea Interactive. At present, we are optimistic that these discussions will lead to a long-term continuation of Chelsea Interactive's operations. However, there can be no assurance of success, and consequently, we felt that the prudent step would be to write down our existing investment."

The Company's most recent guidance for 2003 FFO was $3.08 per share. The Company is increasing its guidance to approximately $3.40 per share, with the increase attributed roughly evenly to lower expected losses from Chelsea Interactive as a result of the fourth-quarter write-down and higher expected results from real estate operations. The increase assumes, among other things, that the Company's core portfolio and new development projects perform as expected, and that there are no unanticipated changes in world economic and market conditions that may affect the Company's business.

The Company's quarterly conference call with investors and analysts will be held on Tuesday, March 4, 2003, at 2:00 p.m. eastern time. The call may be accessed by dialing 800-299-8538 (U.S. callers) or 617-786-2902 (international callers) and referencing reservation No. 16424621. A replay of the call will be available through March 11, 2003 by dialing 888-286-8010 (U.S. callers) or 617-801-6888 (international callers) and referencing reservation No. 5326874.

Chelsea Property Group, Inc. is a fully integrated, self-administered and self-managed real estate investment trust (REIT) that wholly or partially owns 58 Premium Outlet and other shopping centers - containing 14.4 million square feet of GLA - in 30 states and Japan. The Company's leading properties include Woodbury Common Premium Outlets, near New York City; Orlando Premium Outlets, in Orlando, Florida; Desert Hills Premium Outlets, near Palm Springs, California; Wrentham Village Premium Outlets, near Boston; and Gotemba Premium Outlets, near Tokyo, Japan. Please 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, the receipt of regulatory entitlements for and completion of development projects, in the United States or abroad; construction risks; 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; commercial and technological risks related to the Company's investment in e-commerce enabling technology; 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.
STATEMENT OF OPERATIONS - Unaudited
(In thousands, except per share data)
                          Three Months Ended        Year  Ended
                             December 31,           December 31,
                           2002        2001       2002        2001
                       ----------- ----------- ----------- -----------
Revenues:
Base rent (a)             $52,896     $39,299    $181,672    $127,229
Percentage rent            11,065       8,198      24,017      18,049
Expense reimbursements     22,508      16,557      65,773      50,559
Other income                3,545       2,615      11,752      11,018
                       ----------- ----------- ----------- -----------
Total revenues             90,014      66,669     283,214     206,855
Expenses:
Operating and
 maintenance               26,163      20,286      79,942      57,791
Depreciation and
 amortization              16,046      13,075      58,275      48,554
General and
 administrative             2,079       1,565       7,075       4,618
Other                       1,111       1,099       4,332       2,812
                       ----------- ----------- ----------- -----------
Total expenses             45,399      36,025     149,624     113,775
Income before
 unconsolidated
 investments, interest
 expense and minority
 interest                  44,615      30,644     133,590      93,080
Income from
 unconsolidated
 investments                1,018       4,516       9,802      15,025
Loss from and
 impairment of Chelsea
 Interactive              (37,490)     (1,890)    (47,756)     (5,337)
Gain on sale of
 unconsolidated
 investments, net of
 writedown in 2001              -         617      10,911         617
Interest expense          (15,002)    (10,539)    (48,693)    (36,865)
                       ----------- ----------- ----------- -----------
(Loss) income before
 minority interest         (6,859)     23,348      57,854      66,520
Less minority interest       (111)     (4,493)    (12,718)    (14,706)
                       ----------- ----------- ----------- -----------
Net (loss) income          (6,970)     18,855      45,136      51,814
Preferred dividends          (834)     (1,047)     (3,422)     (4,188)
                       ----------- ----------- ----------- -----------
Net (loss) income -
 common shareholders      ($7,804)    $17,808     $41,714     $47,626
Net (loss) income per
 common share (diluted,
 except for quarter
 ended December 31,
 2002) (b)                 ($0.20)      $0.47       $1.05       $1.37
Funds from operations
 (FFO) (c)                $40,782     $34,364    $131,771    $108,862
 FFO per common share -
  Real estate               $0.91       $0.81       $3.14       $2.78
 Internet loss per
  common share              (0.06)      (0.04)      (0.29)      (0.13)
                       ----------- ----------- ----------- -----------
FFO per common share
 (diluted)                  $0.85       $0.77       $2.85       $2.65
Dividends per common
 share                      $0.485      $0.39       $1.86       $1.56
(a) Base rent includes straight-line rent of $1,431 and $580 in the
    fourth quarters of 2002 and 2001, respectively, and $3,872 and
    $1,761 for the years ended December 31, 2002 and 2001,
    respectively.
(b) Basic (loss) earnings per share were ($0.20) and $0.48 in the
    fourth quarters of 2002 and 2001, respectively, and $1.09 and
    $1.41 for the years ended December 31, 2002 and 2001,
    respectively.
(c) FFO per common share is defined as income before minority
    interest, gain or loss on sale or writedown of assets and
    depreciation and amortization, reduced by amortization of deferred
    financing costs, depreciation of non-real estate assets, and
    preferred dividends.

CHELSEA PROPERTY GROUP, INC.
CALCULATION OF FFO -  Unaudited
(Amounts in thousands)
                         Three Months Ended         Year Ended
                            December 31,            December 31,
                          2002        2001        2002        2001
                       ----------- ----------- ----------- -----------
Net (loss) income -
 common shareholders      ($7,804)    $17,808     $41,714     $47,626
Add:
Depreciation and
 amortization - wholly-
 owned                     16,046      13,075      58,275      48,554
Depreciation and
 amortization - joint
 ventures                     493       1,264       4,166       5,964
Amortization of
 deferred financing
 costs and depreciation
 of non-real estate
 assets                      (660)       (481)     (2,401)     (1,807)
Net gain on sale or
 writedown of assets         (312)       (333)    (11,223)       (333)
Impairment loss -
 Chelsea Interactive       34,370           -      34,370           -
Preferred unit
 distributions             (1,462)     (1,462)     (5,848)     (5,848)
Minority interest             111       4,493      12,718      14,706
                       ----------- ----------- ----------- -----------
FFO                       $40,782     $34,364    $131,771    $108,862
Ownership interests:
REIT common shares         41,282      38,148      39,798      34,710
Partnership units held
 by minority interest       6,847       6,304       6,426       6,358
                       ----------- ----------- ----------- -----------
Weighted average
 shares/units
 outstanding               48,129      44,452      46,224      41,068
SELECTED BALANCE SHEET DATA - Unaudited      December 31, December 31,
(In thousands, except center data)               2002         2001
                                             ------------ ------------
Real estate assets, before depreciation       $1,837,174   $1,127,906
Cash and cash equivalents                         22,551       24,604
Total assets                                   1,703,030    1,099,308
Total liabilities                              1,107,756      624,246
Minority interest                                139,443      115,639
Stockholders' equity                             455,831      359,423
Shares and units outstanding at period-end        49,047       43,840
DEBT DATA:
Unsecured bank debt                              103,035        5,035
Mortgage debt                                    306,455      170,209
Unsecured notes due 2005 - 2013                  621,330      373,294
Interest coverage ratio - trailing 12 months        4.1x         4.3x
OPERATING DATA:  (sq ft in thousands)
Gross leasable area at period end                 14,386       12,574
Gross leasable area at period end - Premium
 Outlets                                           8,395        8,273
Weighted average GLA during period                12,758        9,349
Weighted average GLA during period - Premium
 Outlets                                           8,352        8,195
Lease-up at period-end - Domestic Premium
 Outlets                                              99%          98%
Number of centers (including two
 international)                                       58           57
Number of states and foreign countries                31           29

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