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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

or

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to _________________.

Commission File No. 33-98136

CPG PARTNERS, L.P.(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction
of incorporation or organization) | 22-3258100(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------- | ----------------------------------------------

103 Eisenhower Parkway, Roseland, New Jersey 07068(Address of principal executive offices - zip code)

(973) 228-6111(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days YesX No.

Indicate by check mark whether the registrant is an accelerated filer.
Yes___    No   X

There are no outstanding shares of Common Stock or voting securities.

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CPG Partners, L.P.
Index

Part I.   Financial Information

|Item 1. | Financial Statements (Unaudited) | Page
|------- | -------------------------------- | ----

| | Condensed Consolidated Balance Sheets
     as of June 30, 2003, and December 31, 2002 | 2
| | ------------------------------------------------------------------------------------- | -

| | Condensed Consolidated Statements of Income
     for the three and six months ended June 30, 2003, and 2002 | 3
| | ----------------------------------------------------------------------------------------------------------- | -

| | Condensed Consolidated Statements of Cash Flows
     for the six months ended June 30, 2003, and 2002 | 4
| | ----------------------------------------------------------------------------------------------------- | -

| | Notes to Condensed Consolidated Financial Statements | 5
| | ---------------------------------------------------- | -

|Item 2. | Management's Discussion and Analysis of Financial Condition
     and Results of Operations | 18
|------- | ------------------------------------------------------------------------------------------ | --

|Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 28
|------- | ---------------------------------------------------------- | --

|Item 4. | Controls and Procedures | 28
|------- | ----------------------- | --

Part II.   Other Information

|Item 6. | Exhibits and Reports on Form 8-K | 29
|------- | -------------------------------- | --

|Signatures | 30
|---------- | --

CPG Partners, L.P.
Consolidated Balance Sheets
(In thousands, except per unit data)

`June 30,        December 31,
                                                                                      2003              2002
                                                                                ---------------   --------------
Assets:                                                                          (Unaudited)
Rental properties:
     Land..................................................................      $   285,424      $    266,461
     Depreciable property..................................................        1,675,145         1,570,713
                                                                                ---------------   --------------
Total rental property......................................................        1,960,569         1,837,174
Accumulated depreciation...................................................         (313,794)         (284,239)
                                                                                ---------------   --------------
Rental properties, net.....................................................        1,646,775         1,552,935
Cash and cash equivalents..................................................           21,306            22,551
Restricted cash-escrows....................................................            4,525             3,455
Tenant accounts receivable (net of allowance for doubtful
      accounts of $2,317 in 2003 and $2,593 in 2002).......................            2,559             7,762
Deferred rent receivable...................................................           21,778            18,778
Investments in unconsolidated affiliates...................................           72,774            47,997
Notes receivable-related parties...........................................            2,728             2,746
Deferred costs, net........................................................           14,475            16,706
Other assets...............................................................           29,695            30,100
                                                                                --------------    --------------
Total assets...............................................................       $1,816,615       $ 1,703,030
                                                                                ===============   ==============

Liabilities and partners' capital:
Liabilities:
     Unsecured bank debt...................................................       $   83,035        $  103,035
     Unsecured notes.......................................................          621,584           621,330
     Mortgage debt.........................................................          363,348           306,455
     Construction payables.................................................            6,964             8,046
     Accounts payable and accrued expenses.................................           44,226            43,570
     Obligation under capital lease........................................            1,191             1,507
     Accrued distribution payable..........................................           28,284             4,927
     Other liabilities.....................................................           21,342            18,886
                                                                                ---------------   --------------
Total liabilities.......................................................           1,169,974         1,107,756

Commitments and contingencies

Partners' Capital:
General partner units outstanding 43,078 in 2003 and 37,946 in 2002........          514,571           462,127
Limited partners' units outstanding 7,438 in 2003 and 6,274 in 2002........           75,555            77,094
Preferred partner units outstanding, 1,300 in 2003 and 2002................           63,315            63,315
Officer loan ..............................................................             (488)             (488)
Accumulated other comprehensive loss ......................................           (6,312)           (6,774)
                                                                                ---------------   --------------
  Total partners' capital..................................................          646,641           595,274
                                                                                ---------------   --------------
Total liabilities and partners' capital....................................       $1,816,615        $1,703,030
                                                                                ===============   ==============`

The accompanying notes are an integral part of the
financial statements.

CPG Partners, L.P.
Condensed Consolidated Statements of Income
for the Three and Six Months Ended June 30, 2003, and 2002
(Unaudited)(In thousands, except per unit data)

`Three Months           Six Months
                                                              Ended June 30,         Ended June 30,
                                                          2003           2002        2003           2002
                                                     ------------   ------------ ------------- -------------
Revenues:
   Base rent........................................     $60,001        $43,181       $119,751       $81,571
   Percentage rent..................................       4,993          4,465          9,178         7,519
   Expense reimbursements...........................      20,596         14,485         39,328        27,019
   Other income.....................................       1,816          2,711          3,291         5,214
                                                     ------------   ------------ ------------- -------------
Total revenues......................................      87,406         64,842        171,548       121,323
                                                     ------------   ------------ ------------- -------------

Expenses:
   Operating and maintenance........................      24,516         18,135         47,440        34,283
   Depreciation and amortization....................      17,258         14,222         34,872        27,139
   General and administrative.......................       2,468          1,921          4,669         3,438
   Other............................................       1,632          1,085          3,068         2,191
                                                     ------------    ----------- --------------- ------------
Total expenses......................................      45,874         35,363         90,049        67,051
                                                     ------------   ------------ ------------- -------------
Income before unconsolidated investments, interest
expense, and discontinued operations................      41,532         29,479         81,499        54,272

Income from unconsolidated investments..............       2,495          2,982          3,946         6,752
Loss from Chelsea Interactive.......................        (905)        (3,776)        (1,742)       (6,476)
Interest expense.....................                    (16,553)       (10,843)       (33,187)      (20,593)

Income from continuing operations                         26,569         17,842         50,516        33,955
Income from discontinued operations.................          89            100            200           233
Gain on sale of discontinued operations.............       4,717             -           4,717            -
                                                     ------------   ------------ ------------- -------------
Net income..........................................     $        $17,942        $55,433       $34,188
Preferred unit requirement..........................      (2,296)        (2,311)        (4,592)       (4,677)
                                                     ------------   ------------ ------------- -------------
Net income available to common unitholders:........      $29,079        $15,631        $50,841       $29,511
                                                     ============   ============  ============ =============

Net income to common unitholders:
General partner.....................................     $24,705        $13,408        $43,118       $25,295
Limited partners....................................       4,374          2,223          7,723         4,216
                                                     ------------   ------------ ------------- -------------
Total.............................................       $29,079       $15,631        $50,841        $29,511
                                                     ============   ============  ============ =============
Net income per common unit:

General partner (including $0.10 net
income from discontinued operations for the three
and six months ended June 30, 2003) ...............        $0.59          $0.35          $1.03         $0.67
Limited partners (including $0.10 net income from
discontinued operations for the three and six months
ended June 30, 2003).................................      $0.59          $0.35          $1.03         $0.67

Weighted average units outstanding:
General partner......................................     42,041         37,877         41,801        37,725
Limited partners.....................................      7,442          6,281          7,501         6,290
                                                     ============   ============  ============ =============
      Total.........................................      49,483         44,158         49,302        44,015`

The accompanying notes are an integral part of the financial statements.

CPG Partners, L.P.
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 2003 and 2002
(Unaudited)
(In thousands)

`2003              2002
                                                                           ---------------   -------------
   Cash flows from operating activities
   Net income.......................................................          $55,433          $34,188
   Adjustments to reconcile net income to net cash
      provided by operating activities:
     Depreciation and amortization..................................           34,901           27,184
     Equity-in-earnings of unconsolidated investments in
         excess of distributions received...........................          (1,240)            (974)
     Loss from Chelsea Interactive..................................                -            6,476
     Loss on interest rate swap.....................................              514                -
     Gain on sale of discontinued operations........................           (4,717)               -
     Proceeds from non-compete receivable...........................                -            4,300
     Amortization of non-compete revenue............................                -           (2,568)
     Additions to deferred leasing costs............................             (439)            (228)
     Other operating activities.....................................             (116)            (446)
     Changes in assets and liabilities:
        Straight-line rent receivable...............................           (3,597)          (1,448)
        Due from affiliates.........................................             (340)          (1,617)
         Other assets...............................................            8,135            6,511
         Deferred incentive compensation.........................                   -          (14,401)
         Accounts payable and accrued expenses......................              134           (4,482)
                                                                             -------------   ------------
   Net cash provided by operating activities........................           88,668           52,495
                                                                             -------------   ------------

   Cash flows from investing activities
   Additions to rental properties...................................          (65,381)         (76,955)
   Net proceeds from sale of center.................................            7,198            4,224
   Additions to investments in unconsolidated affiliates............          (22,451)         (18,501)
   Distributions from investments in
         unconsolidated affiliates in excess of earnings............                -              337
   Additions to deferred development costs..........................             (321)          (2,844)
   Payments from related parties.....................................               18            1,104
   Loans to related parties.........................................                -             (550)
                                                                             -------------   ------------
   Net cash used in investing activities............................          (80,937)         (93,185)
                                                                             -------------   ------------

   Cash flows from financing activities
   Debt proceeds....................................................                -          177,324
   Repayment of debt................................................          (27,107)         (89,806)
   Net proceeds from sale of the Company's common stock.............           53,461            5,001
   Distributions....................................................          (34,632)         (25,177)
   Redemption of the Company's preferred stock......................                -           (9,010)
   Additions to deferred financing costs............................             (698)            (389)
                                                                             -------------   ------------
   Net cash (used in) provided by financing activities..............           (8,976)          57,943
                                                                             -------------   ------------

   Net (decrease) increase in cash and cash equivalents.............           (1,245)          17,253
   Cash and cash equivalents, beginning of period...................           22,551           24,604
                                                                             -------------   ------------
   Cash and cash equivalents, end of period.........................          $21,306          $41,857
                                                                             -------------   ------------
   Supplemental information :
   Non-cash investing activities:
   Additions to rental properties on consolidation of property
   previously held as a 50% investment in unconsolidated affiliates                 -          $68,938
                                                                             =============   ============
   Non-cash financing activities:
   Assumption of construction loan payable on consolidation
        of property previously held as a 50% investment in
   unconsolidated  affiliates                                                       -          $59,360
                                                                             =============   ============                                                                             -------------   ------------
   Assumption of mortgage debt                                                $60,747                -
                                                                             =============   ============`

The accompanying  notes are an integral part of the financial statements.

CPG Partners, L.P.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Organization and Basis of Presentation

CPG Partners, L.P. (the Operating Partnership or
OP) which commenced operations on November 2, 1993 specializes in
owning, developing, leasing, marketing and managing upscale and fashion-oriented
manufacturers outlet centers. As of June 30, 2003, the OP wholly or
partially owned 59 centers in 31 states and Japan containing approximately 14.9
million square feet of gross leasable area (GLA). The OPs
portfolio is comprised of 28 premium outlet centers containing 9.3 million
square feet of GLA (the Premium Properties) and 31 other retail
centers containing approximately 5.6 million square feet of GLA (Other
Properties) (collectively the Properties). The OPs
Premium Properties generated approximately 77% and 88% of the OPs retail
real estate net operating income for the six months ended June 30, 2003, and
2002, respectively. The Premium Properties generally are located near
metropolitan areas including New York City, Los Angeles, Boston, Washington,
D.C., San Francisco, Sacramento, Cleveland, Atlanta, Dallas, Portland (Oregon),
Tokyo and Osaka, Japan. Some Premium Properties are also located within 20 miles
of major tourist destinations including Palm Springs, the Napa Valley, Orlando,
and Honolulu.

The sole general partner in the OP, Chelsea Property Group, Inc.
(the Company) is a self-administered and self-managed Real Estate
Investment Trust.

The financial statements contain the accounts of the Operating
Partnership and its majority owned subsidiaries. Such subsidiaries represent
partnerships in which the OP has greater than a 50% ownership interest and the
ability to maintain operational control. All significant intercompany
transactions and accounts have been eliminated in consolidation.

Common ownership of the OP as of June 30, 2003, was
approximately as follows:

| | General Partner
Limited PartnersTotal | 85.3%14.7%100.0% | 43,078,0007,438,00050,516,000 | units
units
| | ------------------------------------- | ---------------- | ----------------------------- | -----------

The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and notes required by accounting principles
generally accepted in the United States for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included.
Operating results for the six month period ended June 30, 2003, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003. The balance sheet at December 31, 2002 has been derived from
the audited financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. These financial
statements should be read in conjunction with the consolidated financial
statements and accompanying notes included in the OPs Annual Report on
Form 10-K for the year ended December 31, 2002.

Certain amounts in the prior year financial statements have been
reclassified to conform to current year presentation.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Organization and Basis of Presentation (continued)

In August 2001, the FASB issued Statement of Financial
Accounting Standards No. 143, Accounting for Asset Retirement
Obligations (SFAS 143) which is effective January 1, 2003.
SFAS 143 requires the recording of the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. See note 3 to
financial statements for discussion related to the estimated future costs to be
incurred in connection with the future operations of Chelsea Interactive.

In November 2002, the FASB issued Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others (FIN 45).
FIN 45 requires certain guarantees to be recorded at fair value, instead of
recording a liability only when a loss is probable and reasonably estimatable,
as those terms are defined in FASB Statement No. 5, Accounting for
Contingencies. FIN 45 also requires a guarantor to make significant new
disclosures, even when the likelihood of making any payments under the guarantee
is remote. The disclosure requirements of FIN 45 are effective for financial
statements of interim or annual periods ending after December 15, 2002. The OP
adopted the disclosure provisions of FIN 45 effective December 31, 2002. FIN
45s initial recognition and initial measurement provisions are applicable
on a prospective basis to guarantees issued or modified after December 31, 2002.

In January of 2003, the FASB issued Interpretation No. 46,
Consolidation of Variable Interest Entities (FIN 46). FIN 46
clarifies the application of existing accounting pronouncements to certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. The provisions of FIN 46 will be immediately
effective for all variable interests in variable interest entities created after
January 31, 2003, and the OP will need to apply its provisions to any existing
variable interests in variable interest entities by no later than September 30,
2003. The OP does not believe that FIN 46 will have a significant impact on the
OPs financial statements.

2. Acquisitions and Dispositions

Acquisitions

On June 12, 2003, the OP purchased The Crossings Factory Stores, a 390,000
square-foot outlet center located in Tannersville, Pennsylvania for $111.3
million, including closing costs, and assumed a $60.7 million 5.85% mortgage
loan due 2013. An additional $5.0 million will be due to the sellers upon the
completion of a 21,000 square-foot expansion scheduled to open in late summer
2004, subject to permits. The OP is in the process of finalizing the purchase
price allocation and is considering the fair value of the mortgage assumed, the
in-place leases, land and building.

Dispositions

On June 2, 2003, the OP sold a 23,000 square-foot Premium Outlet Center located
in St. Helena, California for $7.4 million resulting in a gain of approximately
$4.7 million. The center partially secured a mortgage note due April 2010 and
$5.0 million of the sales proceeds were used to pay down the mortgage loan. The
aggregate revenues and net income of the sold property were $0.2 million and
$0.1 million for the three months ended June 30, 2003, and $0.4 million and $0.2
million for the six months ended June 30, 2003.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

3. Investments in Affiliates

The OP holds several non-controlling interests in domestic and international
joint ventures accounted for under the equity method. Equity in earnings or
losses of these affiliates and related management advisory, license, leasing and
guarantee fees earned are included in income from unconsolidated investments in
the accompanying financial statements.

As of June 30, 2003, the OPs interests in joint ventures included a 40%
interest in Chelsea Japan Co., Ltd. (Chelsea Japan), a 50% interest
in two Premium Outlet Centers with Simon Property Group, Inc.
(Simon), a 50% interest in a strategic alliance with Sordo Madaleno
y Asociados and Mr. Carlos Peralta of Mexico City (Chelsea Mexico),
minority interests in various outlet centers and development projects in Europe
operated by Value Retail PLC (Value Retail) and 100% of the
non-voting preferred stock and 50% of the non-voting common stock of Chelsea
Interactive, representing 40% of the total common stock.

In March 2003, Chelsea Japan opened the 180,000 square-foot first phase of Sano
Premium Outlets, located 40 miles north of Tokyo. Chelsea Japan has two other
centers: Gotemba Premium Outlets, located to the west of Tokyo, a 220,000
square-foot center, was expanded by an additional 170,000 square feet in July
2003; Rinku Premium Outlets, located near Osaka, is a 250,000 square-foot center
including a 70,000 square-foot second phase that opened in March
2002.

In June 2002, the OP and Simon entered into a 50/50 joint venture to develop and
operate Las Vegas Premium Outlets, a 435,000 square-foot single-phase outlet
center located in Las Vegas, Nevada, which opened on August 1, 2003. The OP is
responsible for financing its 50% share of development costs, or approximately
$48.0 million. As of June 30, 2003, the OP had contributed $36.6 million and
capitalized interest and other costs of $2.3 million.

In August 2002, the OP and Simon entered into a 50/50 joint venture to develop
and operate Chicago Premium Outlets, a 438,000 square-foot single-phase outlet
center located in Aurora, Illinois, scheduled to open in mid-2004. The OP is
responsible for financing its 50% share of the development costs, or
approximately $46.0 million. As of June 30, 2003, the OP had contributed $12.8
million and capitalized interest and other costs of $1.2 million.

At June 30, 2003, the OP had incurred approximately $1.9 million related to
pre-development costs and formation of the Chelsea Mexico joint
venture.

At June 30, 2003, the OP had minority interests ranging from 3% to 8% in several
outlet centers and outlet development projects in Europe.

At December 31, 2002, the OP recognized an impairment loss equal to the net book
value of its investment in Chelsea Interactive. The OP believes that it will not
be able to recover the net book value of its investment in Chelsea Interactive
through future cash flows before reaching the OPs $60.0 million funding
limit. Through June 30, 2003, the OP had funded $54.1 million and anticipates
that the $5.9 million funding balance may be used to further develop the
platform and/or to fund operating cash shortfalls and potential costs related to
the disposal or discontinuance of the business. A $0.9 million and $1.7 million
funding loss was reported for the three and six months ended June 30, 2003,
respectively. Future funding by the OP will be reported as a loss in the period
funding is required. The OP has signed a joint venture agreement with a third
party to restructure Chelsea Interactive, subject to the satisfaction of certain
conditions. There can be no assurance that this joint venture will be successful
or that Chelsea Interactive will be able to continue as a going
concern.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

`Chelsea       Simon-              Chelsea
                                          Japan        Ventures            Mexico        Other       Total
                                        -----------    ------------    ------------    ---------   -------------

Balance December 31, 2002                $12,471         $31,919            $  -        $3,607      $47,997
Additional
  investment...................              487          20,956           1,912            25       23,380
Income from
   unconsolidated
   investments.................            3,946               -               -             -        3,946
Distribution
    and fees...................           (2,706)              -               -             -       (2,706)
Advances (net).................               98              59               -             -          157
                                        -----------    ------------   -----------    ----------    ---------
Balance June 30, 2003.........           $14,296         $52,934          $1,912        $3,632      $72,774
                                       ===========    ============    ===========    ==========    =========`

The OPs share of income (loss) before depreciation,
depreciation expense and income (loss) from unconsolidated investments for the
three and six months ended June 30, 2003, and 2002, are as follows (in
thousands):

`For the Three Months Ended June 30,
                   -------------------------------------------------------------------------------------------------
                                     2003                                              2002
                   -------------------------------------------    --------------------------------------------------
                                                  Income                                          Income
                     Income(loss)               (loss) from        Income (loss)                (loss) from
                     before                     Unconsol.           before                        Unconsol.
                     Depreciation     Depr.     Investments       Depreciation         Depr.     Investments
                     -------------  ---------   --------------   ----------------    ---------  --------------
Chelsea Japan.....     $3,189         $694       $2,495            $1,595            $  433       $  1,162
F/C (1)...........          -            -            -             2,546               726          1,820
                     -------------  ---------   -------------     -------------      --------    -------------
  Total...........     $3,189         $694       $2,495            $4,141            $1,159         $2,982
                     =============  =========   =============     =============      ========    =============
Chelsea
Interactive.......     ($ 905)       $   -       ($ 905)          ($1,716)           $2,060        ($3,776)
                     =============  =========   =============     =============      ========    =============




                                                         For the Six Months Ended June 30,
                     -------------------------------------------------------------------------------------------
                                     2003                                              2002
                     ------------------------------------------   ----------------------------------------------
                                                 Income                                           Income
                     Income (loss)             (loss) from            Income (loss)             (loss) from
                     before                      Unconsol.          before                       Unconsol.
                     Depreciation     Depr.     Investments        Depreciation        Depr.     Investments
                      ------------  ----------  ---------------  --------------      ---------  ---------------
Chelsea Japan.....     $5,239       $1,293       $3,946            $2,887              $832        $2,055
F/C (1)...........          -            -            -             4,809             1,447         3,362
Simon-
Orlando(2)........          -            -            -             1,833               523         1,310
Other.............          -            -            -                25                 -            25
                      ------------  ----------  -------------    -------------       --------    ------------
   Total..........     $5,239        $1,293      $3,946            $9,554            $2,802        $6,752
                      ============  ==========  =============    ==============      ========    ============
Chelsea
Interactive......     ($1,742)       $    -     ($1,742)          ($2,908)           $3,568       ($6,476)
                      ============  ==========  =============    ==============     =========    ============`

|(1) | During the three and six months ended June 30, 2002, the OP had a 49% interest
in a joint venture, F/C Acquisition, that owns four Premium Outlet centers. In
August 2002, the OP became the sole owner of F/C Acquisition by acquiring the
remaining 51% undivided ownership interest from the joint venture partner, and
consolidated the operations and balance sheet from the buyout date.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | During the three months ended June 30, 2002, the OP had a 50% interest in
Orlando Premium Outlets through a 50/50 joint venture with Simon. In April 2002,
the OP became the sole owner of Orlando Premium Outlets by acquiring the
remaining 50% undivided ownership interest from Simon, and consolidated the
operations and balance sheet from the buyout date.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Notes to Condensed Consolidated Financial Statements
(Unaudited)

3. Investments in Affiliates (continued)

Condensed financial information as of June 30, 2003, and
December 31, 2002, and for the three and six months ended June 30, 2003, and
2002 for investments in unconsolidated affiliates is as follows:

`Chelsea
                                                                      Retail         Interactive
                                                                  -------------     ---------------
Property, plant and equipment (net)
     June 30, 2003............................................      $210,246         $       -
     December 31, 2002 (3)....................................       140,057                 -

Total assets
     June 30, 2003............................................       265,634                 -
     December 31, 2002 (3)....................................       190,157                 -

Long term debt
     June 30, 2003............................................        95,082                 -
     December 31, 2002........................................        75,139                 -

Total liabilities
     June 30, 2003............................................       154,947             1,656
     December 31, 2002........................................       119,886             1,548

Net income (loss)
  Three months ended:
        June 30, 2003.........................................         2,448                 -
        June 30, 2002 (1) ....................................         4,055            (3,776)

 Six months ended:
        June 30, 2003 .........................................        3,100                 -
        June 30, 2002 (1) (2)..................................        9,047            (7,337)

OP's share of net income (loss)
  Three months ended:
        June 30, 2003 .........................................          979              (905)
        June 30, 2002 (1) .....................................        1,865            (3,776)

  Six months ended:
        June 30, 2003.........................................         1,240            (1,742)
        June 30, 2002 (1) (2).................................         4,284            (6,476)

Fee income
  Three months ended:
        June 30, 2003.........................................         1,516                 -
        June 30, 2002 (1) ....................................         1,117                 -

  Six months ended:
        June 30, 2003.........................................         2,706                 -
        June 30, 2002 (1) (2).................................         2,468                 -`

|(1) | During the three and six months ended June 30, 2002, the OP had a 49% interest
in a joint venture, F/C Acquisition, that owns four Premium Outlet centers. In
August 2002, the OP became the sole owner of F/C Acquisition by acquiring the
remaining 51% undivided ownership interest from the joint venture partner, and
consolidated the operations and balance sheet from the buyout date.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | During the three months ended June 30, 2002, the OP had a 50% interest in
Orlando Premium Outlets through a 50/50 joint venture with Simon. In April 2002,
the OP became the sole owner of Orlando Premium Outlets by acquiring the
remaining 50% undivided ownership interest from Simon, and consolidated the
operations and balance sheet from the buyout date.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | At December 31, 2002, Chelsea Interactive recorded an impairment loss equal to
the carrying amount of its net assets.
|--- | ---------------------------------------------------------------------------------------------------------------------

Notes to Condensed Consolidated Financial Statements
(Unaudited)

4. Non-Compete Agreement

The OP recognized income from its non-compete agreement with The
Mills Corporation of $1.3 and $2.6 million during the three and six months ended
June 30, 2002, which is included in other income in the accompanying financial
statements.

5. Debt

Unsecured Bank Debt

The OP has a $200.0 million senior unsecured bank line of credit
(the Senior Credit Facility) with an expiration date of March 31,
2005, which the OP has the right to extend until March 31, 2006. The Senior
Credit Facility bears interest on the outstanding balance, payable monthly, at a
rate equal to the London Interbank Offered Rate (LIBOR) plus 1.05%
(2.21% at June 30, 2003) or the prime rate, at the OPs option. The LIBOR
rate spread ranges from 0.85% to 1.50% depending on the OPs Senior Debt
rating. The OP received a debt rating upgrade in July 2003, resulting in a
reduction of the LIBOR rate spread to 0.95% from 1.05%. At June 30, 2003, $78.0
million was outstanding under the Senior Credit Facility.

The OP also has a $5.0 million term loan that carries the same
interest rate and maturity as the Senior Credit Facility.

Unsecured Notes

A summary of the terms of the unsecured notes outstanding at
June 30, 2003, and December 31, 2002, is as follows (in thousands):

`June 30,       December 31,        Effective
                                                        2003             2002             Yield (1)
                                                     -------------- ---------------   -----------------

8.375%   Unsecured Notes due August 2005.......         $  49,937       $  49,922         8.44%
7.25%    Unsecured Notes due October 2007......           124,857         124,841         7.39
8.625%   Unsecured Notes due August 2009.......            49,938          49,933         8.76
8.25%    Unsecured Notes due February 2011.....           148,890         148,817         8.40
6.875%   Unsecured Notes due June 2012.........            99,869          99,825         6.90
6.00%    Unsecured Notes due January 2013......           148,093         147,992         6.18
                                                     ----------------  --------------
   Total                                                $ 621,584        $621,330
                                                     ===============   ==============`

(1)      Including discount on the notes

Notes to Condensed Consolidated Financial Statements
(Unaudited)

5. Debt (continued)

Mortgage Debt

A summary of the terms of the mortgage debt outstanding at June
30, 2003, and December 31, 2002, and the related interest rate and Net Book
Value (NBV) of the associated collateral as of June 30, 2003, are as
follows (in thousands):

`Effective
                                June 30,         December 31,       Interest
                                  2003              2002              Rate              NBV
                              -------------    ----------------    ------------   -------------
 Due July 2008 (1)                $166,236        $167,723            7.26%         $255,043
 Due April 2010 (2)                 61,975          67,250            7.26%           68,352
 Due December 2012 (3)              70,974          71,482            7.67%           74,948
 Due March  2013 (4)                64,163               -            5.10%          114,426
                              -------------    ----------------                  ------------
                                  $363,348        $306,455                          $512,769
                              =============    ================                  ============`

|(1) | The mortgage loan due July 2008 was consolidated as part of the August 2002
buyout of a joint venture partner's 51% interest in the F/C Acquisition joint
venture. The mortgage calls for a $1.2 million fixed monthly debt service
payment based on a 26-year amortization schedule. During the six months ended
June 30, 2003, the OP recognized $67,000 in debt discount amortization that is
included in interest expense in the accompanying financial statements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Chelsea Financing entered into a $70.0 million mortgage loan due April 2010
originally secured by its four properties. On June 2, 2003 the OP sold one of
the encumbered properties for $7.4 million with a NBV of $2.5 million. Proceeds
of $5.0 million were used to pay down the mortgage loan. The loan bears interest
equal to LIBOR plus 1.50% (2.82% at June 30, 2003) or prime rate plus 1.0% and
calls for quarterly principal amortization of $0.25 million through April 2005
and thereafter $0.45 million per quarter until maturity. In December 2000, the
OP entered into an interest rate swap agreement to hedge against unfavorable
fluctuations in LIBOR rates by fixing the interest rate at 7.26% until January
2006. During the six months ended June 30, 2003, and 2002, the OP recognized
interest expense of $1.5 million on the hedge that is included in interest
expense in the accompanying financial statements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The mortgage loan due December 2012 was assumed as part of a September 2001
acquisition. The loan calls for a $0.5 million fixed monthly debt service
payment based on a 26-year amortization schedule. During the six months ended
June 30, 2003, and 2002, the OP recognized $0.2 million in debt premium
amortization that is included in interest expense in the accompanying financial
statements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The mortgage loan due March 2013 was assumed as part of a June 2003 acquisition.
The stated interest rate of 5.85% was greater than that available to the OP for
comparable debt. Accordingly, the OP recorded a $3.4 million debt premium that
will be amortized over the period of the loan which reduces the effective
interest rate to 5.10%. The loan calls for a $0.4 million fixed monthly debt
service payment on a 25-year amortization schedule.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest and loan costs of approximately $1.3 million and $0.6
million were capitalized as development costs during the three months ended June
30, 2003, and 2002, respectively; and approximately $2.2 million and $1.3
million during the six months ended June 30, 2003, and 2002, respectively.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

6. Financial Instruments: Derivatives and Hedging

The OP employs interest rate and foreign currency forwards or
purchased options to hedge qualifying anticipated transactions. Gains and losses
are deferred and recognized in net income in the same period that the underlying
hedged transaction affects net income, expires or is otherwise terminated or
assigned.

At June 30, 2003 the OPs interest rate swap was reported
at its fair value and classified as an other liability of $6.9 million. At June
30, 2003, there were $6.4 million in deferred losses, recorded in accumulated
other comprehensive loss, a partners capital account. During the three
months ended June 30, 2003, the OP reclassified $0.5 million of other
comprehensive loss to other expense as a result of its $5.0 million pay down of
swapped mortgage debt in June 2003.

| | Hedge Type
Swap, Cash Flow | Notional Value
$67.0 million | Rate
  5.7625% | Maturity
1/1/06 | Fair Value
($6.9 million)
| | -------------------------- | ---------------------------- | -------------- | --------------- | -------------------------

The notional value and fair value of the above hedge provides an
indication of the extent of the OPs involvement in financial derivative
instruments at June 30, 2003, but does not represent exposure to credit,
interest rate, foreign exchange or market risk.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

7. Partners' Capital

Following is a statement of partners' capital for the six months ended June 30,
2003 (in thousands):

`Accum.
                                                                                    Other
                                    General       Limited      Preferred             Comp.        Total
                                    Partner's     Partners'    Partner's  Officer   Income       Partners'
                                    Capital       Capital      Capital    Loan      (Loss)        Capital
                                   ----------   ----------   ----------  ---------  ---------    -----------

Balance December 31, 2002......    $462,127     $77,094        $63,315    ($488)    ($6,774)      $595,274

Net income.....................      44,786      10,647             -         -           -         55,433
Other comprehensive income/(loss):
  Foreign currency translation.....       -           -             -         -         (48)           (48)
  Interest rate swap...............       -           -             -         -         511            511
                                                                                                  ----------
Total comprehensive income.........                                                                 55,896
                                                                                                  -----------
Common distributions............... (45,390)     (8,007)            -         -           -        (53,398)
Preferred distribution.............  (1,668)     (2,924)            -         -           -         (4,592)
Contributions (net of costs).......  53,461           -             -         -           -         53,461
Transfer of limited partners'
interest...........................   1,255      (1,255)            -         -           -              -
                                   ----------   ----------   ----------  ---------  ---------    -----------
Balance June 30, 2003............. $514,571     $75,555       $63,315     ($488)    ($6,312)      $646,641
                                   ==========   ==========   ==========  =========  =========    ===========`

On June 18, 2003, the Company sold 1.2 million shares of common
stock at a price of $42.10 per share, yielding net proceeds after expenses of
$49.4 million, which were used to repay borrowings under the OPs Senior
Credit Facility associated with the OPs Tannersville acquisition.

8. Distribution

On June 5, 2003, the Board of Directors of the Company declared
a $0.535 per unit distribution to unitholders of record on June 30, 2003. The
distribution, totaling $27.0 million, was paid on July 14, 2003.

9. Income Taxes

No provision has been made for income taxes in the accompanying
consolidated financial statements since such taxes, if any, are the
responsibility of the individual partners.

10. Net Income Per Partnership Unit

Net income per partnership unit is determined by allocating net
income to the general partner (including the general partners preferred
unit allocation) and the limited partners based on their weighted average
partnership units outstanding during the respective periods presented.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

11. Commitments and Contingencies

In connection with the Simon joint ventures, the OP has
committed to provide 50% of the development costs, or approximately $48.0
million for Las Vegas Premium Outlets and $46.0 million for Chicago Premium
Outlets. As of June 30, 2003, the OP had contributed $36.6 million and $12.8
million to the Las Vegas and Chicago projects, respectively.

Borrowings related to Chelsea Japan for which the Company and
the OP have provided guarantees for repayment of debt as of June 30, 2003, are
as follow:

`Total Facility        |             Outstanding
                --------------        |             -----------
                                      |                                                     Due    Interest
      Yen           US $ Equivalent   |   Yen        US $ Equivalent     US $ Guarantee     Date    Rate
      ---           ---------------   |   ---        ---------------     --------------     ----   --------
 4.0 billion (1)      $33.4 million   | 0.9 billion   $7.9 million       $7.9 million       2004    1.41%
 3.8 billion (2)       31.7 million   | 3.4 billion   28.1 million       11.2 million       2015    2.20%
 0.6 billion (2)        5.0 million   | 0.5 billion    4.5 million        1.8 million       2012    1.50%`

|1) | Facility entered into by an equity investee of the OP that has a one-year
extension option until April 1, 2005.
|-- | ---------------------------------------------------------------------------------------------------------------

|2) | Facilities entered into by Chelsea Japan, secured by Gotemba and Rinku and 40%
severally guaranteed by the OP.
|-- | --------------------------------------------------------------------------------------------------------------

In May 2002, the OP entered into a 50/50 joint venture agreement
with Sordo Madaleno y Asociados and Mr. Carlos Peralta of Mexico City to jointly
develop premium outlet centers in Mexico. Subject to leasing and entitlements,
construction on the 232,000 square-foot first phase of the outlet project is
scheduled to commence later in 2003 and open in late 2004. The site can support
a second phase containing approximately 165,000 square feet of GLA. Once Phase I
of the project has been approved, the OP will be committed to fund approximately
$14 million which is 50% of the development costs.

As of June 30, 2003, the OP had provided limited debt service
guarantees of approximately $17.3 million to Value Retail and affiliates, under
a standby facility for loans provided to Value Retail and affiliates to
construct outlet centers in Europe. The standby facility, which has a maximum
limit of $22.0 million, expired in November 2001 and outstanding guarantees
shall not survive more than five years after project completion.

At June 30, 2003, other assets includes $9.4 million and accrued
expenses and other liabilities include $12.8 million related to the 2002
deferred unit incentive program which may be paid to certain key officers in
2007.

The OP is not presently involved in any material litigation nor,
to its knowledge, is any material litigation threatened against the OP or its
properties, other than routine litigation arising in the ordinary course of
business. Management believes the cost incurred by the OP related to any of its
litigation will not be material and have been adequately provided for in the
consolidated financial statements.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

12.   Related Party Information

In 1999, the OP established a $6.0 million secured loan facility
that will expire in June 2004 for the benefit of certain unitholders. Each
borrower issued a note that is secured by OP units, bears interest at a rate of
LIBOR plus 200 basis points per annum payable quarterly and is due by the
facility expiration date. At June 30, 2003, loans made to two unitholders, who
are also officers of the Company, totaled $3.2 million, $0.5 million of which
was used to exercise Company stock options and is reflected as a reduction to
partners capital in the accompanying financial statements. Effective June
2002, the OP changed its policy to eliminate new loans to directors and
officers.

In August 1997, the OP and one of the Companys directors
entered into a Consulting Agreement pursuant to which the director agreed to
perform services for the OP in connection with the development and operation of
manufacturers outlet centers in Japan and Hawaii. The agreement provided
for payments to the director of $10,000 per month and was terminated by the OP
in December 1999. During the term of the agreement and for four years after the
termination of the agreement, the director will be entitled to deferred
compensation of 1% of the development costs, up to a maximum amount of $0.5
million per project, on all projects in which he was involved in Japan or Hawaii
either directly or as a result of Mitsubishi and/or Nissho Iwai committing to
develop such project with the OP in Japan. Fees paid under this agreement
totaled $0.3 million for the six months ended June 30, 2003. These fees are
included in investment in affiliates in the accompanying financial statements.

13. Segment Information

The OP is principally engaged in the development, ownership,
acquisition and operation of manufacturers outlet centers and has
determined that under SFAS No.131 Disclosures About Segments of an
Enterprise and Related Information it has three reportable retail real
estate segments: Premium domestic, other domestic and international. The OP
evaluates real estate performance and allocates resources based on Net Operating
Income (NOI) defined as total revenue less operating and maintenance
expense. The primary sources of revenue are generated from tenant base rents,
percentage rents and reimbursement revenue. Operating expenses primarily consist
of common area maintenance, real estate taxes and promotional expenses. The
retail real estate business segments meet the quantitative threshold for
determining reportable segments.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

13. Segment Information (continued)

`Premium         Other
(in thousands)                 Domestic        Domestic      International      Other       Total
------------------------------------------- --------------- ---------------- -----------  ------------
                                                 (1)              (2)            (3)
Total revenues
  Three months ended:
        June 30, 2003.........   $64,605        $23,248          $   -          $(447)      $87,406
        June 30, 2002.........    50,924         12,555              -          1,363        64,842

  Six months ended:
        June 30, 2003.........   126,770         45,193              -           (415)      171,548
        June 30, 2002.........    94,799         23,784              -          2,740       121,323

Interest income
  Three months ended:
        June 30, 2003.........       252             10              -             61           323
        June 30, 2002.........       257             40              -             78           375

  Six months ended:
        June 30, 2003.........       507             14              -             93           614
        June 30, 2002.........       540             64              -            171           775

Income from unconsolidated
      investments
  Three months ended:
        June 30, 2003.........         -              -          2,495           (905)        1,590
        June 30, 2002.........     1,819              -          1,163         (3,776)          (794)

  Six months ended:
        June 30, 2003.........         -              -          3,946         (1,742)        2,204
        June 30, 2002.........     4,672              -          2,080         (6,476)          276

NOI
  Three months ended:
        June 30, 2003.........    46,738         15,525          4,102         (4,278)       62,087
        June 30, 2002.........    40,453          6,017          2,148         (1,819)       46,799

  Six months ended:
        June 30, 2003.........    92,005         29,988          6,516         (7,135)      121,374
        June 30, 2002.........    77,039         10,947          3,851         (2,563)       89,274

Fixed asset additions
  Six months ended:
        June 30, 2003.........     6,711         61,424              -            661        68,796
        June 30, 2002.........    47,036         29,088              -            831        76,955

Total assets
        June 30, 2003......... 1,147,618        620,863         17,928         30,206     1,816,615
        December 31, 2002..... 1,262,190        394,984         16,077         29,779     1,703,030`

|(1) | Approximately 15% and 25% of the GLA is occupied by and approximately 7% and 13%
of annualized base rent is derived from one tenant during the 2003 and 2002
periods, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2)
(3) | Principally comprised of the OP's interest in Chelsea Japan.
Includes corporate overhead assets and results from Chelsea Interactive.
|------- | -------------------------------------------------------------------------------------------------------------------------------------

Notes to Condensed Consolidated Financial Statements
(Unaudited)

13.  Segment Information (continued)

Following is a reconciliation of net operating income to net income for the
three and six months ended June 30, 2003, and 2002 (in thousands):

`Three Months Ended      Six Months Ended
                                                                    June 30,               June 30,
                                                                   2003   2002           2003      2002
                                                              ---------- ---------     ---------   ---------
    Segment NOI...............................................  $62,087    $46,799      $121,374    $89,274
    Interest expense - consolidated...........................  (16,553)   (10,843)      (33,187)   (20,593)
    Interest expense - unconsolidated investments.............     (189)      (139)         (333)      (267)
    Depreciation and amortization expense - consolidated......  (17,269)   (14,243)      (34,901)   (27,184)
    Depreciation and amortization
                 expense - unconsolidated
    investments.................                                   (694)    (1,159)       (1,293)    (2,802)
    Depreciation and amortization
                 expense - Chelsea Interactive................        -     (2,060)            -     (3,568)
    Income tax - unconsolidated investments...................     (724)      (413)         (944)      (672)
    Gain on sale of discontinued operations...................    4,717         -          4,717         -
                                                              ----------- ------------  --------- --------------
    Net income................................................  $31,375    $17,942       $55,433    $34,188
                                                              ============ ===========  ========= ==============`

14. Fair Value of Financial Instruments

The following disclosures of estimated fair value were
determined by management, using available market information and appropriate
valuation methodologies. Considerable judgment is necessary to interpret market
data and develop estimated fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts the OP could realize on
disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.

Cash equivalents, accounts receivable, accounts payable, and
revolving credit facilities balances reasonably approximate their fair values
due to the short maturities of these items. Mortgage debt and the unsecured
notes payable have an estimated fair value based on discounted cash flow models
of approximately $1.0 billion, which exceeds the book value by $0.1 billion.
Unsecured bank debt is carried at an amount which reasonably approximates its
fair value since it is a variable rate instrument whose interest rate reprices
frequently.

Disclosure about fair value of financial instruments is based on
pertinent information available to management as of June 30, 2003. Although
management is not aware of any factors that would significantly affect the
reasonable fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since such date and current
estimates of fair value may differ significantly from the amounts presented
herein.

15. Subsequent Events

On August 1, 2003, the OP acquired Belz Factory Outlet World
 Las Vegas, a 477,000 square-foot outlet center in Las Vegas, Nevada for
$104.0 million including the assumption of a $24.4 million 8.12% mortgage loan
due 2012. As part of the same transaction, the OP acquired Belz Factory Outlet
World  Lakeland, a 319,000 square-foot outlet center near Memphis,
Tennessee for an additional $3.5 million. The Lakeland property is expected to
be marketed for sale shortly after closing. The approximately $84.0 million cash
portion of the overall transaction was financed through a $100 million one-year
bridge loan facility at an annual interest rate of LIBOR plus 0.80% that is due
on July 31, 2004 and extendible for six months until January 31, 2005 at the
OPs option. The LIBOR rate spread ranges from 0.70% to 1.35% depending on
the OPs Senior Debt rating. Surplus proceeds from the financing of
approximately $16.0 million will be used for general corporate purposes.

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations

The following discussion should be read in connection with the
accompanying unaudited condensed consolidated financial statements and notes
thereto. These financial statements include all adjustments, which in the
opinion of management are necessary to reflect a fair statement of results for
all interim periods presented, and all such adjustments are of a normal
recurring nature.

General Overview

From July 1, 2002 to June 30, 2003, the OP has grown rental
revenue by $39.8 million to $128.9 million. This was achieved by increasing
rents, expanding three wholly-owned centers and acquiring seven centers in 2002
and one center in 2003. These increases were partially offset by rent decreases
from selling three non-core centers. Increasing rents at operating centers
resulted in base rent growth of $1.6 million. The OP re-leased or renewed
approximately 1.2 million square feet of Premium Property GLA during the twelve
months ended June 30, 2003, for which initial contractual cash rents under new
leases were 12% higher than expiring leases. The expansion of three wholly-owned
centers increased base rents by $0.8 million. The acquisition of eight centers
increased rental revenue by $17.4 million. In addition, the purchase of
ownership interests in the five centers previously held as unconsolidated
investments resulted in rental revenue growth of $19.4 million and a decrease in
income from unconsolidated investments of $2.8 million. Income from
unconsolidated investments for Chelsea Japan grew due to higher earnings,
increased fees, the expansion of Rinku Premium Outlets in March 2002 and the
opening of Sano Premium Outlets in March 2003.

At June 30, 2003, the OP wholly or partially-owned 14.9 million
square feet of GLA. Since July 1, 2002, the OP has added 2.2 million square feet
(sf) of net GLA and details are as follows:

Net GLA added since July 1, 2002 is detailed as follows:

`12 months          6 months        6 months
                                                         ended              ended            ended
                                                        June 30,          June 30,        December 31,
                                                          2003             2003              2002
                                                     ---------------    -------------   ------------
Changes in GLA (sf in 000's):

New centers developed:
     Sano Premium Outlets (40% owned) ..........              180              180              -
                                                     ---------------    -------------   ------------
Centers expanded:
    Desert Hills Premium Outlets................               23                -             23
    Liberty Village Premium Outlets.............               23                -             23
    Other.......................................              (31)             (22)            (9)
                                                     ---------------    -------------   ------------
Total centers expanded..........................               15              (22)            37

Centers acquired:
    The Crossings Factory Stores................              390              390              -
    Factory Outlet Village Osage Beach .........              391                -            391
    St. Augustine Premium Outlets ..............              329                -            329
    Outlets at Albertville......................              305                -            305
    Factory Merchants Branson...................              300                -            300
    Jackson Outlet Village......................              292                -            292
    Johnson Creek Outlet Center.................              278                -            278
                                                     ---------------    -------------   ------------
Total centers acquired..........................            2,285              390          1,895

Centers sold:
    St. Helena Premium Outlets..................              (23)             (23)             -
    Three Other Properties......................             (256)                -          (256)
                                                     ---------------    -------------   ------------
Total centers sold..............................             (279)             (23)          (256)

Net GLA added during the period.................            2,201              525          1,676

GLA at end of period............................           14,911           14,911         14,386`

Results of Operations

Comparison of the three months ended June 30, 2003, to the
three months ended June 30, 2002.

Income from continuing operations increased $8.7 million, or
48.9%, to $26.6 million for the three months ended June 30, 2003, from $17.9
million for the three months ended June 30, 2002. This increase was primarily
the result of the buyout of ownership interests in four centers in 2002, the
acquisition of six centers in 2002 and one center in 2003, higher rents from
releasing and renewals, and a decrease in the loss from Chelsea Interactive,
partially offset by increases in general and administrative, interest and other
expenses.

Base rentals increased $16.8 million, or 39.0%, to $60.0 million
for the three months ended June 30, 2003, from $43.2 million for the three
months ended June 30, 2002, due to the buyout of ownership interests in four
centers in 2002 and the acquisition of six centers in 2002 and one center in
2003, higher average rents on releasing and renewals, and the expansion of two
wholly-owned centers in late 2002.

Percentage rents increased $0.5 million, or 11.8%, to $5.0
million for the three months ended June 30, 2003, from $4.5 million for the
three months ended June 30, 2002, primarily due to the buyout of ownership
interests in four centers in 2002 and the acquisition of six centers in 2002.

Expense reimbursements, representing contractual recoveries from
tenants of certain common area maintenance, operating, real estate tax,
promotional and management expenses, increased $6.1 million, or 42.2%, to $20.6
million for the three months ended June 30, 2003, from $14.5 million for the
three months ended June 30, 2002, due to the recovery of operating and
maintenance costs from increased GLA. The average recovery of reimbursable
expenses for the Premium Portfolio was 90% for the three months ended June 30,
2003, compared to 88% for the three months ended June 30, 2002. The average
recovery of reimbursable expenses for the Other Retail Centers was 70% for the
three months ended June 30, 2003, compared to 55% for the three months ended
June 30, 2002. The increase in average recovery on the Other Retail Centers is a
result of the centers acquired in 2002.

Other income decreased $0.9 million or 33.0% to $1.8 million for
the three months ended June 30, 2003, from $2.7 million for the three months
ended June 30, 2002, primarily due to the expiration of the non-compete
agreement which included income recognition of $1.3 million in 2002 partially
offset by a $0.3 million gain on an outparcel sale in 2003.

Operating and maintenance expenses increased $6.4 million, or
35.2%, to $24.5 million for the three months ended June 30, 2003, from $18.1
million for the three months ended June 30, 2002. The increase was primarily due
to costs related to increase in GLA.

Depreciation and amortization expense increased $3.1 million, or
21.3% to $17.3 million for the three months ended June 30, 2003, from $14.2
million for the three months ended June 30, 2002. The increase was due to
depreciation of the increased GLA.

General and administrative expense increased $0.6 million or
28.5% to $2.5 million for the three months ended June 30, 2003, from $1.9
million for the three months ended June 30, 2002, primarily due to increases in
deferred unit incentive program accrual, salaries and professional fees.

Other expenses increased $0.5 million or 50.4% to $1.6 million
for the three months ended June 30, 2003, from $1.1 million for the three months
ended June 30, 2002, due to a non-cash charge of $0.5 million on an interest
rate swap resulting from the pay down of a hedged mortgage loan in June 2003
related to the sale of St. Helena Premium Outlets.

Income from unconsolidated investments decreased $0.5 million or
16.3% to $2.5 million for the three months ended June 30, 2003, from $3.0
million for the three months ended June 30, 2002, due to the buyout of ownership
interest in four centers which were previously held as unconsolidated
investments partially offset by higher income and fees including a one-time
leasing fee of $0.6 million from Chelsea Japan.

The loss from Chelsea Interactive decreased $2.9 million or
76.0% to $0.9 million for the three months ended June 30, 2003, from $3.8
million for the three months ended June 30, 2002, due to the write-off of the
Companys investment at December 31, 2002. The June 30, 2003 loss
represents second quarter funding to Chelsea Interactive.

Interest expense increased $5.7 million or 52.7% to $16.5
million for the three months ended June 30, 2003, from $10.8 million for the
three months ended June 30, 2002, due to higher debt that partially financed
acquisitions and the buyouts of partners interests.

Income from discontinued operations of $0.1 million for the
three months ended June 30, 2003 and 2002, and gain on sale of discontinued
operations of $4.7 million for the three months ended June 30, 2003, relates to
the June 2003 sale of St. Helena Premium Outlets, a 23,000 square-foot Premium
Property.

Results of Operations

Comparison of the six months ended June 30, 2003, to the
six months ended June 30, 2002.

Income from continuing operations increased $16.6 million, or
48.8%, to $50.5 million for the six months ended June 30, 2003, from $34.0
million for the six months ended June 30, 2002. This increase was primarily the
result of the buyouts of ownership interests in five centers in 2002, the
acquisition of seven centers in 2002 and one center in 2003, higher rents from
releasing and renewals and decrease in the loss from Chelsea Interactive,
partially offset by increases in general and administrative, interest and other
expenses.

Base rentals increased $38.2 million, or 46.8%, to $119.8
million for the six months ended June 30, 2003, from $81.6 million for the six
months ended June 30, 2002, due to the buyouts of ownership interests in five
centers in 2002, the acquisition of seven centers in 2002 and one center in
2003, higher average rents on releasing and renewals, and the expansion of two
wholly-owned centers in late 2002.

Percentage rents increased $1.7 million, or 22.1%, to $9.2
million for the six months ended June 30, 2003, from $7.5 million for the six
months ended June 30, 2002, primarily due to the buyouts of ownership interests
in five centers in 2002 and the acquisition of seven centers in 2002.

Expense reimbursements, representing contractual recoveries from
tenants of certain common area maintenance, operating, real estate tax,
promotional and management expenses, increased $12.3 million, or 45.6%, to $39.3
million for the six months ended June 30, 2003, from $27.0 million for the six
months ended June 30, 2002, due to the recovery of operating and maintenance
costs from increased GLA. The average recovery of reimbursable expenses for the
Premium Portfolio was 89% for the six months ended June 30, 2003 compared to 88%
for the six months ended June 30, 2002. The average recovery of reimbursable
expenses for the Other Retail Centers was 69% for the six months ended June 30,
2003, compared to 54% for the six months ended June 30, 2002. The increase in
average recovery on the Other Retail Centers is a result of the centers acquired
in 2002.

Other income decreased $1.9 million or 36.9% to $3.3 million for
the six months ended June 30, 2003, from $5.2 million for the six months ended
June 30, 2002, primarily due to the expiration of the non-compete agreement
which included income recognition of $2.6 million in 2002 partially offset by an
increase in ancillary operating income and gain from an outparcel sale in 2003.

Operating and maintenance expenses increased $13.1 million, or
38.4%, to $47.4 million for the six months ended June 30, 2003, from $34.3
million for the six months ended June 30, 2002. The increase was primarily due
to costs related to increase in GLA.

Depreciation and amortization expense increased $7.7 million, or
28.5% to $34.9 million for the six months ended June 30, 2003, from $27.2
million for the six months ended June 30, 2002. The increase was due to
depreciation of the increased GLA.

General and administrative expense increased $1.3 million or
35.8% to $4.7 million for the six months ended June 30, 2003, from $3.4 million
for the six months ended June 30, 2002, primarily due to increases in deferred
unit incentive program accrual, salaries and professional fees.

Other expenses increased $0.9 million or 40.0% to $3.1 million
for the six months ended June 30, 2003, from $2.2 million for the six months
ended June 30, 2002, due to a non-cash charge of $0.5 million on an interest
rate swap resulting from the pay down of a hedged mortgage loan in June 2003
related to the sale of St. Helena Premium Outlets, and increased reserve for bad
debt and center rent expense.

Income from unconsolidated investments decreased $2.8 million or
41.6% to $3.9 million for the six months ended June 30, 2003, from $6.7 million
for the six months ended June 30, 2002, due to the buyouts of ownership
interests in five centers in 2002 which were previously held as unconsolidated
investments partially offset by higher income and fees including one-time
leasing fees of $1.1 million from Chelsea Japan.

The loss from Chelsea Interactive decreased $4.8 million or
73.1% to $1.7 million for the six months ended June 30, 2003, from $6.5 million
for the six months ended June 30, 2002, due to the write-off of the
Companys investment at December 31, 2002. The loss represents funding to
Chelsea Interactive during the six months ended June 30, 2003.

Interest expense increased $12.6 million or 61.2% to $33.2
million for the six months ended June 30, 2003, from $20.6 million for the six
months ended June 30, 2002, due to higher debt that partially financed
acquisitions and the buyouts of partners interests.

Income from discontinued operations of $0.2 million for the six
months ended June 30, 2003 and 2002, and gain on sale of discontinued operations
of $4.7 million for the six months ended June 30, 2003, relates to the June 2003
sale of St. Helena Premium Outlets, a 23,000 square-foot Premium Property.

Liquidity and Capital Resources

The OP believes it has adequate financial resources to fund
operating expenses, distributions, and planned development, construction and
acquisition activities over the short term, which is less than 12 months and the
long term, which is 12 months or more. Operating cash flow for the year ended
December 31, 2002, of $128.2 million is expected to increase with a full year of
operations from the five joint venture buyout centers and the 1.8 million square
feet of GLA added during 2002 as well as scheduled openings of approximately
800,000 square feet of new joint venture GLA in 2003 and recent acquisition
activity. The OP has adequate funding sources to complete and open all current
development projects from available cash, credit facilities and secured
construction financing. The OP also has access to the public markets through its
$800 million debt and the Companys $750 million equity shelf registration
for funding or refinancing requirements.

Operating cash flow is expected to provide sufficient funds for
distributions in accordance with REIT federal income tax requirements. In
addition, the OP anticipates retaining sufficient operating cash to fund
re-tenanting and lease renewal tenant improvement costs, as well as capital
expenditures to maintain the quality of its centers, meet funding requirements
of Chelsea Interactive and partially fund development projects.

Common distributions declared and recorded in 2003 were $53.4
million, or $1.07 per unit. The OPs dividend payout ratio as a percentage
of net income before 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
(FFO)) was 65.8%. The OPs senior unsecured bank line of credit
(Senior Credit Facility) limits aggregate dividends and
distributions to the lesser of (i) 90% of FFO on an annual basis or (ii) 100% of
FFO for any two consecutive quarters.

The OPs $200 million Senior Credit Facility expires in
March 2005 (unless extended until March 2006), bears interest on the outstanding
balance at an annual rate equal to the London Interbank Offered Rate
(LIBOR) plus 1.05% (2.21% at June 30, 2003) or the prime rate, at
the OPs option, and has an annual facility fee of 0.125%. The LIBOR rate
spread ranges from 0.85% to 1.50% depending on the OPs Senior Debt rating.
The OP received a debt rating upgrade in July 2003, resulting in a reduction of
the LIBOR rate spread to 0.95% from 1.05%. At June 30, 2003, $78.0 million was
outstanding under the Senior Credit Facility.

During 2003, the OP completed two acquisition transactions
valued at approximately $219 million. On June 12, 2003, the OP purchased The
Crossings Factory Stores, a 390,000 square-foot outlet center located in
Tannersville, Pennsylvania, for $111.3 million, including closing costs, and
assumed a $60.7 million 5.85% mortgage loan due 2013. In conjunction with the
Crossings Factory Stores acquisition, the OP completed an offering of 1.2
million shares of the Companys common stock at a price of $42.10 per share
on June 18, 2003. Net proceeds after expenses of $49.4 million were used to fund
substantially the entire cash portion of the acquisition.

On August 1, 2003, the OP acquired Belz Factory Outlet World
 Las Vegas, a 477,000 square-foot outlet center in Las Vegas, Nevada for
$104.0 million including the assumption of a $24.4 million 8.12% mortgage loan
due 2012. As part of the same transaction, the OP acquired Belz Factory Outlet
World  Lakeland, a 319,000 square-foot outlet center near Memphis,
Tennessee for an additional $3.5 million. The Lakeland property is expected to
be marketed for sale shortly after closing. The approximately $84.0 million cash
portion of the overall transaction was financed through a $100 million one-year
bridge loan facility at an annual interest rate of LIBOR plus 0.80% that is due
on July 31, 2004 and extendible for six months until January 31, 2005 at the
OPs option. The LIBOR rate spread ranges from 0.70% to 1.35% depending on
the OPs Senior Debt rating. Surplus proceeds from the financing of
approximately $16.0 million will be used for general corporate purposes.

A summary of the maturity of the OPs contractual debt
obligations (at par) as of June 30, 2003, is as follows :

`Less than         1 to 3         4 to 5         After 5
                                 Total           One Year          Years           Years          Years
                              -------------    --------------    --------------   -----------    ------------
Unsecured bank debt            $    83,035        $        -         $  83,035      $      -        $      -
Unsecured notes                    625,000                 -            50,000       125,000         450,000
Mortgage debt                      354,662             3,126            13,206       166,634         171,696
                              -------------    --------------    --------------   -----------    ------------
   Total                        $1,062,697            $3,126          $146,241      $291,634        $621,696
                              =============    ==============    ==============   ===========    ============`

Construction projects underway at June 30, 2003 included a
170,000 square-foot second phase at Gotemba Premium Outlets, which opened on
July 8, 2003; and the 435,000 square-foot Las Vegas Premium Outlets, which
opened on August 1, 2003. The 180,000 square-foot first phase of Sano Premium
Outlets, located north of Tokyo, Japan opened March 14, 2003. The OP is also
under construction on the 438,000 square-foot Chicago Premium Outlets in Aurora,
Illinois, scheduled to open in mid-2004, and the 124,000 square-foot third phase
of Outlets at Albertville, scheduled to open in March 2004. The Gotemba and Sano
projects are developments of Chelsea Japan Co., Ltd., the OPs 40%-owned
Japanese joint venture. The Las Vegas and Chicago projects are 50/50 joint
ventures with Simon. Other projects in various stages of development are
expected to open in 2004 and beyond. There can be no assurance that these
projects will be completed or opened, or that there will not be delays in
opening or completion. All current development activity is fully financed either
through project specific secured construction financing, the yen denominated
line of credit, available cash or through the Senior Credit Facility. The OP
will seek to obtain permanent financing once the projects are completed and
income has been stabilized.

In connection with the Simon joint ventures, the OP has
committed to provide 50% of the development costs, which are expected to be
approximately $48.0 million for Las Vegas Premium Outlets and $46.0 million for
Chicago Premium Outlets. As of June 30, 2003, the OP had contributed $36.6
million and $12.8 million to the Las Vegas and Chicago projects, respectively.

The OP has an agreement with Mitsubishi Estate Co., Ltd. and
Nissho Iwai Corporation to jointly develop, own and operate premium outlet
centers in Japan under the joint venture Chelsea Japan. Borrowings related to
Chelsea Japan for which the Company and the OP have provided guarantees as of
June 30, 2003, are as follows:

`Total Facility          |                Outstanding
            --------------          |            --------------------------
                                    |                                                    Due     Interest
    Yen            US $ Equivalent  |  Yen        US $ Equivalent    US $ Guarantee      Date     Rate
    ---            --------------   |  ---        ---------------    --------------      ----    -----
 4.0 billion (1)    $33.4 million   |0.9 billion   $7.9 million       $7.9 million       2004    1.41%
 3.8 billion (2)     31.7 million   |3.4 billion   28.1 million       11.2 million       2015    2.20%
 0.6 billion (2)      5.0 million   |0.5 billion    4.5 million        1.8 million       2012    1.50%`

|1) | Facility entered into by an equity investee of the OP that has a one-year
extension option until April 1, 2005.
|-- | ---------------------------------------------------------------------------------------------------------------

|2) | Facilities entered into by Chelsea Japan, secured by Gotemba and Rinku and 40%
severally guaranteed by the OP.
|-- | --------------------------------------------------------------------------------------------------------------

In May 2002, the OP, through an affiliated entity, entered into
a 50/50 strategic alliance with Sordo Madaleno y Asociados and Mr. Carlos
Peralta of Mexico City to jointly develop premium outlet centers in Mexico.
Subject to leasing and entitlements, construction on a 232,000 square-foot first
phase of an outlet project north of Mexico City is expected to commence later in
2003 and to open in late 2004. The site can support a second phase containing
approximately 165,000 square feet of GLA. Once phase one of the project has been
approved, the OP will be committed to fund approximately $14 million which is
50% of the development costs. As of June 30, 2003, the OP had incurred costs of
approximately $1.9 million related to predevelopment costs and formation of the
joint venture.

At December 31, 2002, the OP recognized an impairment loss equal
to the net book value of its investment in Chelsea Interactive. The OP believes
that it will not be able to recover the net book value of its investment in
Chelsea Interactive through future cash flows before reaching the OPs
$60.0 million funding limit. Through June 30, 2003, the OP had funded $54.1
million and anticipates that the $5.9 million funding balance may be used to
further develop the platform and to finance operating cash shortfalls and
potential costs related to the disposal or discontinuance of the business. A
$0.9 million and $1.7 million funding loss was reported for the three and six
months ended June 30, 2003 respectively. Future funding by the OP will be
reported as a loss in the period funding is required. The OP has signed an
agreement with a third party to restructure Chelsea Interactive, subject to the
satisfaction of certain conditions. There can be no assurance that this joint
venture will be successful or that Chelsea Interactive will be able to continue
as a going concern.

The OP has minority interests ranging from 3% to 8% in several
outlet centers and outlet development projects in Europe operated by Value
Retail. The OPs total investment in Europe as of June 30, 2003, was $3.6
million. The OP has also provided $17.3 million in limited debt service
guarantees under a standby facility for loans arranged by Value Retail to
construct outlet centers in Europe. The standby facility for new guarantees,
which has a maximum of $22.0 million, expired in November 2001 and outstanding
guarantees shall not survive more than five years after project completion.

To achieve planned growth and favorable returns in both the
short and long-term, the OPs financing strategy is to maintain a strong,
flexible financial position by: (i) maintaining a conservative level of
leverage; (ii) extending and sequencing debt maturity dates; (iii) managing
exposure to floating interest rates; and (iv) maintaining liquidity. Management
believes these strategies will continue to enable the OP to access a broad array
of capital sources, including bank or institutional borrowings and secured and
unsecured debt and equity offerings, subject to market conditions.

Net cash provided by operating activities was $88.7 million and
$52.5 million for the six months ended June 30, 2003, and 2002, respectively.
The increase was primarily due to increased operating cash flow generated on the
growth of the OPs GLA and decreased losses from Chelsea Interactive offset
by the payout of the deferred incentive compensation in March 2002 and the
receipt in January 2002 of the final non-compete installment. Net cash used in
investing activities decreased to $80.9 million from $93.2 for the six months
ended June 30, 2003, and 2002, respectively primarily as a result of a decrease
in joint venture and wholly owned property acquisition activity and an increase
in proceeds from sale of a center. Net cash used in financing activities
increased to $9.0 million from cash provided of $57.9 million for the six months
ended June 30, 2003, and 2002, respectively. The increase was primarily a result
of decreased debt proceeds and repayments offset by common stock issuance in
2003, preferred stock redemptions in 2002 and increased distributions in 2003.

Funds from Operations

Management believes that funds from operations (FFO)
should be considered in conjunction with net income, as presented in the
statements of income included elsewhere herein, to facilitate a clearer
understanding of the operating results of the OP. The White Paper on Funds from
Operations approved by the Board of Governors of NAREIT in October 1999 defines
FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or
losses) from debt restructuring and sales of properties, plus real estate
related depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. The OP believes that FFO is helpful to
investors as a measure of the performance of an equity REIT because, along with
cash flow from operating activities, financing activities and investing
activities, it provides investors with an indication of the ability of the OP to
incur and service debt, to make capital expenditures and to fund other cash
needs. The OP computes FFO in accordance with the current standards established
by NAREIT which may not be comparable to FFO reported by other REITS that do not
define the term in accordance with current NAREIT definition or that interpret
the current NAREIT definition differently than the OP. FFO does not represent
cash generated from operating activities in accordance with GAAP and should not
be considered as an alternative to net income (determined in accordance with
GAAP) as an indication of the OPs financial performance or to cash flow
from operating activities (determined in accordance with GAAP) as a measure of
the OPs liquidity, nor is it indicative of funds available to fund the
OPs cash needs, including its ability to make cash distributions.

`Three Months Ended          Six Months Ended
                                                                     June 30,                  June 30,
                                                               2003        2002           2003      2002
                                                            ----------  ------------   -----------  -------------

Net income to common unitholders.......................    $29,079        $15,631        $50,841      $29,511
Add (deduct):
  Depreciation and amortization - wholly owned.........     17,269         14,243         34,901       27,184
  Depreciation and amortization - joint ventures.......        694         1,159          1,293        2,802
  Amortization of deferred financing costs and
    depreciation of non-rental real estate assets......       (583)          (616)        (1,183)      (1,168)
  Gain of  sale of discontinued operations.............     (4,717)             -         (4,717)           -
                                                          ------------   ------------   -----------  -------------
FFO....................................................    $41,742        $30,417        $81,135      $58,329
                                                          ============   ============   ===========  =============
Average units outstanding .............................     49,483         44,158         49,302       44,015
Distributions declared per unit........................     $0.535         $0.485          $1.07        $0.89`

Recent Accounting Pronouncements

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires
certain guarantees to be recorded at fair value, instead of recording a
liability only when a loss is probable and reasonably estimatable, as those
terms are defined in FASB Statement No. 5, Accounting for Contingencies. FIN 45
also requires a guarantor to make significant new disclosures, even when the
likelihood of making any payments under the guarantee is remote. The disclosure
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. The OP adopted the disclosure
provisions of FIN 45 effective December 31, 2002. FIN 45s initial
recognition and initial measurement provisions are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002.

In January of 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46). FIN 46 clarifies the
application of existing accounting pronouncements to certain entities in which
equity investors do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
The provisions of FIN 46 will be immediately effective for all variable
interests in variable interest entities created after January 31, 2003, and the
OP will need to apply its provisions to any existing variable interests in
variable interest entities by no later than September 30, 2003. The OP does not
believe that FIN 46 will have a significant impact on the OPs financial
statements.

Critical Accounting Policies and Estimates

The OPs discussion and analysis of its financial condition and results of
operations are based upon the OPs consolidated financial statements which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires the
OP to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses. The OP bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

The OP believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements.

Bad Debt

The OP maintains an allowance for doubtful accounts for estimated losses
resulting from the inability of its tenants to make required rent payments. If
the financial condition of the OPs tenants were to deteriorate, resulting
in an impairment of their ability to make payments, additional allowances may be
required. The OPs allowance for doubtful accounts included in tenant
accounts receivable totaled $2.3 million and $2.6 million at June 30, 2003, and
December 31, 2002, respectively.

Valuation of Investments

On a periodic basis, management assesses whether there are any indicators that
the value of real estate properties, including joint venture properties, may be
impaired. If the carrying amount of the property is greater than the estimated
expected future cash flow (undiscounted and without interest charges) of the
asset, impairment has occurred. The OP will then record an impairment loss equal
to the difference between the carrying amount and the fair value of the asset.
The OP does not believe that the value of any of its rental properties were
impaired at June 30, 2003. The OP currently believes that it will not be able to
recover the net book value of its investment in Chelsea Interactive through
future cash flows unless Chelsea Interactive is able to achieve positive cash
flow before reaching the $60.0 million funding limit. Due to current market
conditions and the costs of operating the platform, future funding by the OP
will be reported as a loss in the period funding occurs. As of June 30, 2003,
$54.1 million had been funded and $0.9 million and $1.7 million has been
reported as a loss for the three and six month periods then ended.

Economic Conditions

Substantially all leases contain provisions, including escalations of base rents
and percentage rentals calculated on gross sales, to mitigate the impact of
inflation. Inflationary increases in common area maintenance and real estate tax
expenses are substantially reimbursed by tenants.

Virtually all tenants have met their lease obligations and the OP continues to
attract and retain quality tenants. The OP intends to reduce operating and
leasing risks by continually improving its tenant mix, rental rates and lease
terms and by pursuing contracts with creditworthy upscale and national
brand-name tenants.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The OP is exposed to changes in interest rates primarily from
its floating rate debt arrangements. In December 2000, the OP implemented a
policy to protect against interest rate and foreign exchange risk. The OPs
primary strategy is to protect against this risk by using derivative
transactions as appropriate to minimize the variability that floating rate
interest and foreign currency fluctuations could have on cash flow. In December
2000, a wholly-owned subsidiary of the OP entered into an interest rate swap
agreement effective January 2, 2001 with a financial institution for a notional
amount of $69.3 million amortizing to $64.1 million to hedge against unfavorable
fluctuations in the LIBOR rates of its secured mortgage loan facility. The hedge
effectively produces a fixed rate of 7.2625% on the notional amount until
January 1, 2006.

At June 30, 2003, a hypothetical 100 basis point adverse move
(increase) in US Treasury and LIBOR rates applied to unhedged debt would
adversely affect the OPs annual interest cost by approximately $0.8
million annually.

Following is a summary of the OPs debt obligations at June
30, 2003, (in thousands):

`Expected Maturity Date
------------------------------------------------------------------------------- ---------------------------------
                          2004     2005     2006      2007        2008       Thereafter     Total      Fair Value
                          ----     ----     ----      ----        ----       ----------     -----      ----------
Fixed Rate Debt:          -       $49,937    -      $124,857    $166,236      $581,927    $922,957     $1,046,412
Average Interest Rate:    -          8.38%   -          7.25%       6.99%         7.14%       7.19%
Variable Rate Debt:       -       $83,035    -             -           -       $61,975    $145,010      $ 145,010
Average Interest Rate:    -          2.21%   -             -           -          2.82%       2.47%`

Item 4. Controls and Procedures

The Companys chief executive officer and chief financial
officer evaluated the effectiveness of our disclosure controls and procedures
(as defined in rule 13a-14(c) under the Securities Exchange Act of 1934, as
amended) as of June 30, 2003 and, based on that evaluation, concluded that, as
of the end of the quarter covered by this report we had sufficient controls and
procedures for recording, processing, summarizing and reporting information that
is required to be disclosed in our reports under the Securities Exchange Act of
1934, as amended, within the time periods specified in the SECs rules and
forms.

During the quarter ended June 30, 2003, there have not been any
significant changes to our internal controls including any corrective actions
with regard to significant deficiencies and material weaknesses or other factors
that could significantly affect these controls.

CPG Partners, L.P.

Part II. Other Information

Item 6.      Exhibits and Reports on Form 8-K

(a)     31      Section
302 Certifications

32
     Section 906 Certifications

(b)      Current Report on Form 8K
reporting under Items 7 and 9 on an event that occurred May 6, 2003.

Signatures

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.

| | CPG PARTNERS, L.P.
By: /s/ Michael J. Clarke
      Michael J. Clarke
      Chief Financial Officer
| | --------------------------------------------------------------------------------------------------

Date:  August 12 , 2003