AMENDMENT NO. 1
                        TO THE THIRD AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                              OF PRIME RETAIL, L.P.

     This AMENDMENT NO. 1 (this  "Amendment")  to the Third Amended and Restated
Agreement of Limited  Partnership  of Prime Retail,  L.P. dated as of October 1,
1998 and effective as of June 15, 1998 (the "Limited Partnership  Agreement") is
made as of the 28th day of  September, 1999 by Prime  Retail,  Inc.,  a Maryland
corporation  ("Prime  Retail"),  as general  partner of Prime  Retail,  L.P.,  a
Delaware Limited  Partnership (the "Operating  Partnership").  Capitalized terms
not defined herein shall have the meanings ascribed to such terms in the Limited
Partnership Agreement.

                              W I T N E S S E T H:

     WHEREAS,  Prime Retail,  as general  partner of the Operating  Partnership,
desires to reduce the time period applicable to the exercise by limited partners
of the Operating  Partnership  ("Limited  Partners") holding common units in the
Operating Partnership ("Common Units") of their exchange rights;

     WHEREAS, on September 28, 1999, a majority of the independent  directors of
Prime Retail signed a written consent approving the reduction of the time period
applicable to the exercise of a Limited  Partner's  exchange rights with respect
to Common Units to five (5) business  days after the delivery of written  notice
from the Limited Partner to Prime Retail;

     WHEREAS,  pursuant to Section 14.7(d) of the Limited Partnership Agreement,
Prime Retail,  Inc., as general  partner of the  Operating  Partnership,  hereby
consents  to the  proposed  reduction  in the time  period for the  exercise  of
exchanges  of Common  Units and to the  related  amendment  of  Exhibit C to the
Limited Partnership Agreement as set forth below.

     NOW,  THEREFORE,  for and in  consideration  of the  terms  and  conditions
contained  herein,  and other good and valuable  consideration,  the receipt and
sufficiency  of which is hereby  acknowledged,  Prime  Retail,  Inc., as general
partner of the Operating Partnership, hereby consents and agrees as follows:

     1.  Amendment.  Exhibit C of the Limited  Partnership  Agreement  is hereby
deleted in its entirety and the Exhibit C attached  hereto is hereby inserted in
its place.

     2. Miscellaneous.

     a.  Counterparts.   This  Amendment  may  be  executed  in  any  number  of
counterparts,  each of which when so executed  shall be deemed an original,  but
all such counterparts shall constitute one and the same instrument.

     b.  GOVERNING  LAW.  THIS  AMENDMENT  SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF
THE STATE OF DELAWARE.

     c. Headings.  Section  headings in this  Amendment are included  herein for
convenience  of reference only and shall not constitute a part of this Amendment
for any other purpose.

     d.  Successors  and  Assigns.  This  Amendment  shall be  binding  upon the
Partnership,  each of the  Partners  of the  Partnership  and  their  respective
successors and assigns.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.

                                          PRIME RETAIL, INC., as General Partner

                                                By: /s/ C. Alan Schroeder
                                                    ----------------------
                                              Name: C. Alan Schroeder
                                             Title: Executive Vice President,
                                                    General Counsel and
                                                    Secretary