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


                                    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 SEPTEMBER 30, 1997

                                       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

                      CHELSEA GCA REALTY PARTNERSHIP, L.P.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

    DELAWARE                                                    22-3258100
(STATE OR OTHER JURISDICTION                               (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                          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 Yes X No __ .

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

<PAGE>
                      CHELSEA GCA REALTY PARTNERSHIP, L.P.

                                      INDEX


PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements (Unaudited)                                 Page

         Condensed Consolidated Balance Sheets
          as of September 30, 1997 and December 31, 1996                    3

         Condensed Consolidated Statements of Income
          for the three and nine months ended September 30, 1997 and 1996   4

         Condensed Consolidated Statements of Cash Flows
          for the nine months ended September 30, 1997 and 1996             5

         Notes to Condensed Consolidated Financial Statements               6

Item 2.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                            10

Signatures                                                                 16

<PAGE>
ITEM 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                      CHELSEA GCA REALTY PARTNERSHIP, L.P.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                      SEPTEMBER 30,          DECEMBER 31,
                                                                         1997                  1996
                                                                    ---------------       ---------------
                                                                      (Unaudited)
Assets:
<S>                                                                  <C>                   <C>      
Rental properties:
     Land........................................................    $ 106,840             $  80,312
     Depreciable property........................................      559,568               432,042
                                                                   ---------------       --------------
Total rental property............................................      666,408               512,354
Accumulated depreciation.........................................      (74,166)              (58,054)
                                                                   ---------------       ---------------
Rental properties, net...........................................      592,242               454,300
Cash and equivalents.............................................       11,009                 13,886
Notes receivable-related parties.................................        4,781                 8,023
Deferred costs, net..............................................       15,235                10,321
Other assets.....................................................       11,435                15,682
                                                                    ---------------       --------------
TOTAL ASSETS.....................................................    $ 634,702             $ 502,212
                                                                    ===============       ===============

LIABILITIES AND PARTNERS' CAPITAL 
Liabilities:
     Unsecured bank debt.........................................    $  87,035             $   -
     7.75% Unsecured Notes due 2001..............................       99,722                99,668
     Remarketed Floating Rate Reset Notes due 2001...............      100,000               100,000
     Construction payables.......................................       16,840                14,473
     Accounts payable and accrued expenses                              11,527                12,257
     Obligation under capital lease..............................        9,748                 9,805
     Distribution payable to unitholders                                11,780                3,038
     Rent payable................................................        1,654                 1,637
                                                                    ---------------       --------------
TOTAL LIABILITIES................................................      338,306               240,878

Commitments and contingencies

Minority interest................................................      -                       5,698

Partners' capital:
General partner units outstanding, 15,264 in                           
  1997 and 12,402 in 1996........................................      247,794               185,340                
Limited partners units outstanding, 3,433 in                                                               
  1997 and 4,808 in 1996.........................................       48,602                70,296
                                                                     ---------------       ---------------
Total partners' capital..........................................      296,396               255,636
                                                                     ---------------       ---------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL                              $ 634,702             $ 502,212
                                                                     ===============       ===============

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                      CHELSEA GCA REALTY PARTNERSHIP, L.P.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER UNIT DATA)

                                                                THREE MONTHS                         NINE MONTHS 
                                                                ENDED SEPTEMBER 30,                ENDED SEPTEMBER 30,
                                                                  1997          1996            1997          1996
                                                                ------------  ------------     ------------- -------------
REVENUES:
<S>                                                             <C>            <C>              <C>           <C>     
   Base rent..............................................      $ 18,096       $ 14,737         $ 50,945      $ 41,160
   Percentage rent........................................         2,694          2,028            5,776         3,707  
   Expense reimbursements.................................         7,215          5,958           19,641        16,812
   Other income...........................................           817            600            1,746         1,628
                                                                -----------    ----------       ----------     ---------
Total revenues...........................................         28,822         23,323           78,108        63,307
                                                                -----------    ----------        ---------     ---------
EXPENSES:
   Interest..............................................          3,785          2,484           11,343         5,910
   Operating and maintenance.............................          7,876          6,718           21,403        18,314
   Depreciation and amortization.........................          6,143          4,597           18,111        11,765
   General and administrative............................          1,019            829            2,489         2,270 
   Other.................................................            619            554            1,833         1,657   
                                                                ------------    ----------      -----------    ----------
Total expenses...........................................         19,442         15,182           55,179        39,916

Income before minority interest and extraordinary item             9,380          8,141           22,929        23,391        

Minority interest.......................................             -              (56)            (127)         (195)
                                                                ------------    -----------     ------------   ------------  
Net income before extraordinary item....................           9,380          8,085           22,802        23,196

Extraordinary item-loss on early extinguishment of debt              -                -               -           (902)
                                                               ------------    -----------     ------------   ------------ 
Net income..............................................         $ 9,380         $8,085         $ 22,802       $22,294     
                                                               =============   ============     ===========   =============
Net income:
    General partner.....................................         $ 7,658         $5,593         $ 18,411       $15,203
    Limited partners....................................           1,722          2,492            4,391         7,091
                                                                ------------    -----------     ------------   ------------    
Total...................................................          $ 9,380        $8,085          $22,802       $ 22,294 
                                                                =============   ===========     ============   ============ 
Net income per unit:
    General partner (including $0.05 net loss per unit
    from extraordinary item in the nine months ended
     September 30, 1996)..................................        $  0.50        $ 0.47          $  1.28       $   1.32
   Limited partners (including $0.05 net loss per unit
     from extraordinary item in the nine months ended                 
     September 30, 1996)..................................          $0.50         $0.47            $1.27          $1.29  

WEIGHTED AVERAGE UNITS OUTSTANDING:
   General partner........................................         15,262        11,834           14,355        11,539
   Limited partners.......................................          3,433         5,298            3,446         5,503
                                                                ------------  ------------     ------------- -------------
Total.....................................................         18,695        17,132           17,801        17,042
                                                                ============  ============     ============= =============

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                      CHELSEA GCA REALTY PARTNERSHIP, L.P.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (UNAUDITED)
                                 (IN THOUSANDS)

                                                                          1997                  1996
                                                                     ---------------       ---------------
Cash flows from operating activities
<S>                                                                    <C>                   <C>    
     Net income.....................................................   $22,802               $22,294
     Adjustments to reconcile net income to net cash
      provided by operating activities:                               
        Depreciation and amortization...............................    18,111                11,765
        Minority interest in net income.............................       127                   195
        Loss on early extinguishment of debt........................        -                    902
        Amortization of debt discount...............................        54                    56
        Other operating activities..................................        53                  (164)
        Additions to deferred lease costs...........................    (4,928)               (1,274)
        Changes in assets and liabilities:
         Straight line rent receivable..............................    (1,144)               (1,184)
         Other assets...............................................     5,391                   389
         Accounts payable and accrued expenses......................      (770)                3,494
                                                                       -----------            ----------
Net cash provided by operating activities...........................    39,696                36,473
                                                                       -----------           -----------
CASH FLOWS FROM INVESTING ACTIVITIES
     Additions to and acquisitions of rental properties............   (153,416)              (81,052)
     Additions to deferred development costs.......................     (1,060)               (1,894)
     Advances to related parties...................................        -                     (67)
     Payments from related parties.................................        -                     173
                                                                      ---------------      ---------------
     Net cash used in investing activities                            (154,476)              (82,840)
                                                                     ---------------       ---------------
     CASH FLOWS FROM FINANCING ACTIVITIES
     Net proceeds from sale of common stock.........................    51,976                 1,290
     Distributions..................................................   (26,459)              (29,472)
     Debt proceeds..................................................   137,035               188,592
     Repayments of debt.............................................   (50,000)             (107,000)
     Additions to deferred financing costs                                (536)               (3,349)
     Other financing activities.....................................      (113)                  (25)                        
                                                                     --------------       ---------------
     Net cash provided by financing activities......................   111,903                50,036
                                                                     --------------        --------------
     Net (decrease) increase in cash and equivalents...............     (2,877)                3,669
     Cash and equivalents, beginning of period.....................     13,886                 3,987
                                                                     ---------------        -------------
     Cash and equivalents, end of period...........................    $11,009                $7,656
                                                                     ===============        ============= 
</TABLE>


     SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

     During the nine months ended September 30, 1997 and 1996, 1.4 million and
0.5 million Operating Partnership units with a book value of approximately $20.0
million and $7.9 million, respectively, were converted to common shares. In June
1997, the Operating Partnership forgave a $3.3 million related party note
receivable as partial consideration to acquire the remaining 50% interest in
Solvang. On March 31, 1997, the Operating Partnership issued units having a
market value of $0.5 million as partial consideration to acquire Waikele Factory
Outlets. Additionally, during 1996, the Operating Partnership issued units to
acquire property valued at $1.6 million.

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.

<PAGE>

                      CHELSEA GCA REALTY PARTNERSHIP, L.P.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.    ORGANIZATION AND BASIS OF PRESENTATION

     Chelsea GCA Realty Partnership, L.P. (the "Operating Partnership"), which
commenced operations on November 2, 1993, is engaged in the development,
ownership, acquisition, leasing and operation of manufacturers' outlet centers.
As of September 30, 1997, the Operating Partnership operated 19 centers in 11
states (the "Properties") containing approximately 4.1 million square feet of
gross leasable area ("GLA"). The Properties are located near large metropolitan
areas including New York, Los Angeles, San Francisco, Sacramento, Atlanta,
Portland (Oregon), Kansas City and Cleveland, or at or near tourist destinations
including Honolulu, the Napa Valley, Palm Springs and the Monterey Peninsula.
The Operating Partnership also has a number of properties under development and
expansion. The sole general partner in the Operating Partnership, Chelsea GCA
Realty, Inc. (the "Company"), is a self-administered and self-managed Real
Estate Investment Trust.

Ownership of the Operating Partnership as of September 30, 1997 was as follows:

     General Partner            81.6%               15,264,000   units
     Limited Partners           18.4%                3,433,000   units
                           ----------------      -------------------
     TOTAL                     100.0%               18,697,000
                                                                              

     The condensed consolidated financial statements of the Operating
Partnership include the accounts of Solvang Designer Outlets ("Solvang"), a
limited partnership. The Operating Partnership previously had a 50% interest and
was the sole general partner. On June 30, 1997, the Operating Partnership
acquired the remaining 50% interest in Solvang. Solvang is not material to the
operations or financial position of the Operating Partnership.

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles 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 three and nine month periods ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. These financial statements
should be read in conjunction with the consolidated financial statements and
accompanying notes included in the Operating Partnership's Annual Report on Form
10-K for the year ended December 31, 1996.

     In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted for fiscal years
ending after December 15, 1997.  The Operating Partnership will be required to
change the method currently used to compute earnings per parnership unit and to
restate all prior periods. Management does not believe the adoption of Statement
No. 128 will have a material impact on earnings per partnership unit.

2.    JOINT VENTURE AGREEMENT

     In May 1997, the Operating Partnership announced the formation of a
strategic alliance with Simon DeBartolo Group, Inc. ("Simon") to develop and
acquire high-end outlet centers with GLA of 500,000 square feet or more in the
United States. The Operating Partnership and Simon will be co-managing general
partners, each with 50% ownership of the joint venture and any entities formed
with respect to specific projects; the Operating Partnership will have primary
responsibility for the day-to-day activities of each project. In conjunction
with the alliance, the Company completed the sale on June 16, 1997 to Simon of
1.4 million shares of new common stock, for an aggregate sales price of $50
million. Net proceeds from the sale were used to repay borrowings under the
Operating Partnership's Unsecured Facility.

3.    PROPERTY ACQUISITION

     On March 31, 1997, the Operating Partnership acquired Waikele Factory
Outlets, a manufacturers' outlet shopping center located near Honolulu, Hawaii.
The consideration paid by the Operating Partnership consisted of the assumption
of $70.7 million of indebtedness outstanding with respect to the property (which
indebtedness was repaid in full immediately after the closing) and the issuance
of special partnership units having a fair market value of $0.5 million.
Immediately after the closing, the Operating Partnership paid a special cash
distribution of $5.0 million to special unit holders. The cash used by the
Operating Partnership in the acquisition was obtained through borrowings under
the Unsecured Facility.

4.   DEBT

     In March 1996, the Operating Partnership replaced its secured revolving
credit facility (the "Secured Facility") with an unsecured $100 million
revolving credit facility (the "Unsecured Facility") which expires March 29,
1998. In connection with the termination of the Secured Facility, the Operating
Partnership expensed as an extraordinary item unamortized deferred financing
costs of $0.9 million. In March 1997, the Operating Partnership obtained a
supplemental $50 million unsecured revolving credit facility bearing the same
terms and conditions as the Unsecured Facility. Interest on the outstanding
balance of the unsecured facilities is payable monthly at a rate equal to the
London Interbank Offered Rate ("LIBOR") plus 1.45% (reduced to LIBOR plus 1.15%
on October 10, 1997), or the prime rate, at the Operating Partnership's option.
Fees on the unused portion of the unsecured facilities are payable quarterly at
a rate of 0.25% per annum. The outstanding balance at September 30, 1997 was
$87.0 million, which approximates fair value, leaving $63.0 million of borrowing
availability. The Operating Partnership repaid substantially all borrowings
under the Unsecured Facility with proceeds from two offerings in October 1997.
(See Note 6).

     The unsecured facilities require compliance with certain loan covenants
relating to debt service coverage, tangible net worth, cash flow, earnings,
occupancy rate, new development and dividends. The Operating Partnership has
remained in compliance with these covenants since inception of the facilities.

     In January 1996, the Operating Partnership completed a $100 million public
debt offering of 7.75% unsecured term notes due January 2001 (the "Term Notes"),
which are guaranteed by the Company. The five-year non-callable Term Notes were
priced at a discount of 99.952 to yield 7.85% to investors. Net proceeds from
the offering were used to pay down substantially all of the borrowings under the
Secured Facility.

     In October 1996, the Operating Partnership completed a $100 million
offering of Remarketed Floating Rate Reset Notes (the "Reset Notes"), which are
guaranteed by the Company. The interest rate will reset quarterly and will equal
LIBOR plus 75 basis points during the first year. The spread and the spread
period for subsequent periods will be adjusted in whole or part at the end of
the first year, pursuant to an agreement with the underwriters. Unless
previously redeemed, the Reset Notes will have a final maturity of October 23,
2001. Net proceeds from the offering were used to repay all of the borrowings
under the Unsecured Facility and for working capital. The carrying amount of the
Reset Notes approximates their fair value. In October 1997, the Operating
Partnership redeemed $40 million principal amount and reset the interest rate to
LIBOR plus 48 basis points for one year on the remaining $60 million of Reset
Notes.

     Interest and loan costs of approximately $3.5 million and $3.6 million were
capitalized as development costs during the nine months ended September 30, 1997
and 1996, respectively.

     In October 1997, the Operating Partnership completed a $125 million public
debt offering of 7.25% unsecured term notes due October 2007 (the "7.25%
Notes"). The 7.25% Notes were priced to yield 7.29% to investors, 120 basis
points over the then 10-year U.S. Treasury rate. The 7.25% Notes are redeemable
by the Operating Partnership at any time and from time to time at a premium. Net
proceeds from the offering were used to repay substantially all borrowings under
the Operating Partnership's Unsecured Facility, to redeem $40 million of Reset
Notes as mentioned above and for general corporate purposes.

5.    DISTRIBUTIONS

     On September 11, 1997, the Board of Directors of the Company declared a
$0.63 per unit cash distribution to unitholders of record on September 30, 1997.
The distribution, totaling $11.8 million, was paid on October 20, 1997.

6.   PREFERRED STOCK

     In October 1997, the Company issued 1,000,000 shares of 8.375% Series A
Cumulative Redeemable Preferred Stock (the "Preferred Stock"), par value $0.01
per share, having a liquidation preference of $50.00 per share. The Preferred
Stock has no stated maturity and is not convertible into any other securities of
the Company. The Preferred Stock is redeemable on or after October 15, 2027 at
the Company's option. Net proceeds from the offering were used to repay
borrowings under the Operating Partnership's Unsecured Facility.

7.    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.

8.    NET INCOME PER PARTNERSHIP UNIT

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

9.    COMMITMENTS AND CONTINGENCIES

     The Operating Partnership is not presently involved in any material
litigation nor, to its knowledge, is any material litigation threatened against
the Operating Partnership or its properties, other than routine litigation
arising in the ordinary course of business. Management believes the costs, if
any, incurred by the Operating Partnership related to this litigation will not
materially affect the financial position, operating results or liquidity of the
Operating Partnership.

10.        RELATED PARTY INFORMATION

     On June 30, 1997, the Operating Partnership forgave a $3.3 million related
party note and paid $2.4 million in cash to acquire the remaining 50% interest
in Solvang Designer Outlets. The Operating Partnership also collected $0.8
million in accrued interest on the note.

     The Operating Partnership recognized lease settlement income of
approximately $99,000 from a related party during the nine months ended
September 30, 1996. This amount is included in other income in the accompanying
condensed consolidated financial statements.

11.        EXTRAORDINARY ITEM

     Deferred financing costs of $0.9 million related to the Secured Facility
replaced in March 1996 were expensed and are reflected in the accompanying
financial statements as an extraordinary item.
<PAGE>
                      CHELSEA GCA REALTY PARTNERSHIP, L.P.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     The following discussion should be read in conjunction 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
the interim periods presented, and all such adjustments are of a normal
recurring nature.

GENERAL OVERVIEW

     The Operating Partnership has grown by increasing rent at its existing
centers, expanding its existing centers, developing new centers and acquiring
and redeveloping centers. The Operating Partnership operated 19 manufacturers'
outlet centers at September 30, 1997 compared to 18 at the end of the same
quarter in the prior year. The Operating Partnership's operating gross leasable
area (GLA) at September 30, 1997, increased 15.1% to 4.1 million square feet
from 3.5 million square feet at September 30, 1996. GLA added since October 1,
1996 is detailed as follows:

<TABLE>
<CAPTION>
                                                    12 mos. ended         9 mos. ended     3 mos. ended
                                                    September 30,        September 30,     December 31
                                                         1977                 1977             1977
                                                    ------------         -------------     -----------
GLA added (in 000's):
<S>                                                  <C>                    <C>            <C>

CENTERS EXPANDED:
    North Georgia................................        111                111                     -
    Desert Hills.................................         18                 18                     -
    Camarillo....................................        139                 85                    54
    Folsom.......................................         38                 16                    22
    Liberty Village..............................         18                 13                     5
    Other........................................         (4)                (4)                    -
                                                    ------------       -------------       -----------
TOTAL CENTERS EXPANDED...........................        320                239                    81

CENTER ACQUIRED:
    Waikele......................................        214                214                     -
                                                    ------------       -------------       ------------

Net GLA added during the                                 534                453                    81
period...........................................

GLA at end of period.............................      4,063              4,063                 3,610
</TABLE>
<PAGE>
RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1997 TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1996.

     Net income before minority interest and extraordinary item increased $1.3
million to $9.4 million for the three months ended September 30, 1997 from $8.1
million for the three months ended September 30, 1996. Increases in revenues
were offset by higher interest expense and depreciation and amortization.

     Base rental revenue increased $3.4 million, or 22.8%, to $18.1 million for
the three months ended September 30, 1997 from $14.7 million for the three
months ended September 30, 1996 due to expansions, new center openings, an
acquisition and higher average rents.

     Percentage rent revenue increased $0.7 million to $2.7 million for the
three months ended September 30, 1997, from $2.0 million for the three months
ended September 30, 1996. The increase was primarily due to increases in tenant
sales at the Operating Partnership's larger centers and an increase in tenants
contributing percentage rents.

     Expense reimbursements, representing contractual recoveries from tenants of
certain common area maintenance, operating, real estate tax, promotional and
management expenses, increased $1.2 million, or 21.1%, to $7.2 million for the
three months ended September 30, 1997 from $6.0 million for the three months
ended September 30, 1996, due to the recovery of operating and maintenance costs
from increased GLA. The average recovery of reimbursable expenses was 91.6% in
the third quarter of 1997, compared to 92.2% in the third quarter of 1996.

     Other income increased $0.2 million to $0.8 million for the three months
ended September 30, 1997 from $0.6 million for the three months ended September
30, 1996 as the result of an outparcel sale at one of the operating centers, net
of lease termination income in the 1996 period.

     Interest in excess of amounts capitalized increased $1.3 million to $3.8
million for the three months ended September 30, 1997 from $2.5 million for the
three months ended September 30, 1996 primarily due to higher debt balances from
new centers, expansion openings, and a center acquisition financed with
borrowings.

     Operating and maintenance expenses increased $1.2 million, or 17.2%, to
$7.9 million for the three months ended September 30, 1997 from $6.7 million for
the three months ended September 30, 1996. The increase was primarily due to
costs related to increased GLA.

     Depreciation and amortization expense increased $1.5 million, or 33.6%, to
$6.1 million for the three months ended September 30, 1997 from $4.6 million for
the three months ended September 30, 1996. The increase was primarily related to
increased GLA.

     General and administrative expenses increased $0.2 million, or 22.9%, to
$1.0 million, for the three months ended September 30, 1997 from $0.8 million
for the three months ended September 30, 1996 due to increased personnel and
overhead costs.

     Other expenses remained flat at $0.6 million for the three months ended
September 30, 1997 and 1996. 

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1997 TO THE NINE MONTHS
ENDED SEPTEMBER 30, 1996.

     Net income before minority interest and extraordinary item decreased $0.4
million to $23.0 million for the nine months ended September 30, 1997, from
$23.4 million for the nine months ended September 30, 1996. Increases in
revenues were more than offset by higher interest expense and increases in
depreciation and amortization.

     Base rental revenue increased $9.8 million, or 23.8%, to $51.0 million for
the nine months ended September 30, 1997, from $41.2 million for the nine months
ended September 30, 1996, due to expansions, new center openings, an acquisition
and higher average rents.

     Percentage rent revenue increased $2.1 million to $5.8 million for the nine
months ended September 30, 1997 from $3.7 million for the nine months ended
September 30, 1996. The increase was primarily due to increases in tenant sales,
expansions at the Operating Partnership's larger centers and increases in
tenants contributing percentage rents.

     Expense reimbursements, representing contractual recoveries from tenants of
certain common area maintenance, operating, real estate tax, promotional and
management expenses, increased $2.8 million, or 16.8%, to $19.6 million for the
nine months ended September 30, 1997 from $16.8 million for the nine months
ended September 30, 1996, due to the recovery of operating and maintenance costs
from increased GLA. The average recovery of reimbursable expenses was 91.8% in
1997 compared to 93.1% in 1996.

     Interest in excess of amounts capitalized increased $5.4 million to $11.3
million for the nine months ended September 30, 1997 from $5.9 million for the
nine months ended September 30, 1996 primarily due to higher debt balances from
new centers, expansion openings, and a center acquisition financed with
borrowings.

     Operating and maintenance expenses increased $3.1 million, or 16.9%, to
$21.4 million for the nine months ended September 30, 1997 from $18.3 million
for the nine months ended September 30, 1996. The increase was primarily due to
costs related to increased GLA.

     Depreciation and amortization expense increased $6.3 million, or 53.9%, to
$18.1 million for the nine months ended September 30, 1997 from $11.8 million
for the nine months ended September 30, 1996. The increase was primarily due to
costs related to increased GLA.

     General and administrative expenses increased $0.2 million to $2.5 million
for the nine months ended September 30, 1997 from $2.3 million for the nine
months ended September 30, 1996 due to increased personnel and overhead costs.

     Other expenses increased $0.2 million to $1.8 million for the nine months
ended September 30, 1997 from $1.6 million for the nine months ended September
30, 1996. The increase included additional reserves for bad debts.

     In March 1996, the Operating Partnership replaced its Secured Facility.
Deferred financing costs of $0.9 million were expensed in connection with the
early retirement of the Secured Facility.

LIQUIDITY AND CAPITAL RESOURCES

     The Operating Partnership believes it has adequate financial resources to
fund operating expenses, distributions, and planned development and construction
activities. Operating cash flow during 1997 is expected to increase with a full
year of operations of the 676,000 square feet of GLA added during 1996, the
acquisition of Waikele Factory Outlets and scheduled openings of one new center
and several expansions in 1997.

     Operating cash flow is expected to provide sufficient funds for
distributions. In addition, the Operating Partnership 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.

     Distributions declared and recorded during the nine months ended September
30, 1997 were $34.4 million, or $1.89 per unit. The Operating Partnership's
distribution payout ratio as a percentage of net income before depreciation and
amortization, exclusive of amortization of deferred financing costs, minority
interest and extraordinary item ("FFO") was 86.8% during the nine months ended
September 30, 1997. The Unsecured Facility limits aggregate distributions to the
lesser of (i) 90% of FFO on an annual basis or (ii) 100% of FFO for any two
consecutive quarters.

     In October 1997, the Company issued 1,000,000 shares of 8.375% Series A
Cumulative Redeemable Preferred Stock (the "Preferred Stock"), par value $0.01
per share, having a liquidation preference of $50.00 per share. The Preferred
Stock has no stated maturity and is not convertible into any other securities of
the Company. The Preferred Stock is redeemable on or after October 15, 2027 at
the Company's option. Net proceeds from the offering were used to repay
borrowings under the Operating Partnership's Unsecured Facility.

     In October 1997, the Operating Partnership completed a $125 million public
debt offering of 7.25% unsecured term notes due October 2007 (the "7.25%
Notes"). The 7.25% Notes were priced to yield 7.29% to investors, 120 basis
points over the 10-year U.S. Treasury rate. Net proceeds from the offering were
used to repay substantially all borrowings under the Operating Partnership's
Unsecured Facility, redeem $40 million of Reset Notes and for general corporate
purposes.

     Subsequent to the two offerings in October 1997, the Operating Partnership
had $145 million available under its unsecured facilities, access to the public
markets through its $175 million debt and the Company's $200 million equity
shelf registration and cash and cash equivalents of approximately $44 million.

     The 227,000 square foot first phase of Wrentham Village Premium Outlets
(Wrentham, MA), located near the junction of Interstates 95 and 495 between
Boston and Providence, opened in mid-October. The Operating Partnership expects
to be under construction by the end of November on approximately 730,000 square
feet of new GLA to be completed during the balance of 1997 and in 1998,
including the 270,000 square foot first phase of Leesburg Corner Premium Outlets
(Leesburg, VA), a new center serving the greater Washington, D.C. market; and
expansions, already underway, of 270,000 square feet at Woodbury Common Premium
Outlets (Central Valley, NY), 140,000 square feet (Phase II) at Wrentham Village
Premium Outlets, 30,000 square feet at Desert Hills Premium Outlets (Cabazon,
CA), and 20,000 square feet at Folsom Premium Outlets (Folsom, CA). These
projects are in various stages of development and there can be no assurance that
any of them will be completed or opened, or that there will not be delays in the
opening or completion of any of them. The Operating Partnership anticipates
development and construction costs of approximately $75 million to $115 million
annually.

     To achieve planned growth and favorable returns in both the short and long
term, the Operating Partnership'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; (iv) maintaining a significant level of
unencumbered assets; and (v) maintaining liquidity. Management believes these
strategies will enable the Operating Partnership 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.

     It is the Operating Partnership's policy to limit its borrowings to less
than 40% of total market capitalization (defined as the value of outstanding
common and preferred shares of the Company on a fully diluted basis including
conversion of partnership units to stock, plus total debt). After the two
October 1997 offerings were completed, using an October 21, 1997 closing price
of $41.125 per common share of the Company plus a liquidation preference of
$50.00 per preferred share of the Company, the Operating Partnership's ratio of
debt to total market capitalization was approximately 26%.

     Net cash provided by operating activities was $39.7 million and $36.5
million for the nine months ended September 30, 1997 and 1996, respectively. The
increase was primarily due to the growth of the Operating Partnership's GLA to
4.1 million square feet in 1997 from 3.5 million square feet in 1996 and
decreases in accounts receivable, offset by decreases in accrued expenses. Net
cash used in investing activities increased $71.6 million for the nine months
ended September 30, 1997 compared to the corresponding 1996 period primarily as
a result of the acquisition of Waikele Factory Outlets. Net cash provided by
financing activities increased $61.9 million primarily due to the purchase of
stock by Simon.
<PAGE>
FUNDS FROM OPERATIONS

     Management believes that funds from operations ("FFO") should be considered
in conjunction with net income, as presented in the statements of operations
included elsewhere herein, to facilitate a clear understanding of the operating
results of the Operating Partnership. Management considers FFO an appropriate
measure of performance for an equity real estate investment trust. FFO, as
defined by the National Association of Real Estate Investment Trusts ("NAREIT"),
is net income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and sales of
property, exclusive of outparcel sales, plus real estate related depreciation
and amortization and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect FFO on the same basis. FFO does not represent net income
or cash flow from operations as defined by generally accepted accounting
principles and should not be considered an alternative to net income as an
indicator of operating performance or to cash from operations, and is not
necessarily indicative of cash flow available to fund cash needs.

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED     NINE MONTHS ENDED
                                                                 SEPTEMBER 30,         SEPTEMBER 30,
                                                                1997      1996         1997       1996
                                                              --------   -------     -------   ---------
<S>                                                           <C>         <C>       <C>         <C>

Net income before extraordinary item......................    $9,380      $8,085    $22,802     $23,196
Add back:
Depreciation and amortization(1)..........................     6,143       4,539     17,999      11,604
Amortization of deferred financing costs and
    depreciation of non-real estate assets................      (430)       (264)    (1,166)       (920)
                                                              -------   --------   --------      -------
FFO......................................................
                                                             $15,093     $12,360    $39,635     $33,880
                                                             =========   =======   ========     =======
---------------------------------------
<FN>
(1   Excludes depreciation and minority interest attributed to a third-party limited partner's interest
     in a partnership.
</FN>
</TABLE>
<PAGE>
                      CHELSEA GCA REALTY PARTNERSHIP, L.P.

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.

                                 CHELSEA GCA REALTY PARTNERSHIP, L.P.

                                 By:  CHELSEA GCA REALTY, INC.
                                           Its General Partner

                                 By:    /S/  LESLIE T. CHAO
                                     -----------------------------------------
                                        Leslie T. Chao
                                        President and Chief Financial Officer

Date:  November 11, 1997