---

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 March 31, 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. 1-12328

CHELSEA PROPERTY GROUP, INC.(Exact name of registrant as specified in its charter)

|Maryland(State or other jurisdiction
of incorporation or organization) | 22-3251332(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 Yes X No
.

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

The number of shares
outstanding of the registrants common stock, $0.01 par value was
41,867,755 at April 30, 2003.

---

Chelsea
Property Group, Inc.

Index

Part I.      Financial Information

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

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

| | Condensed Consolidated Statements of Income
          
for the three months ended March 31, 2003 and 2002 | 3
| | --------------------------------------------------------------------------------------------------------- | -

| | Condensed Consolidated Statements of Cash Flows
          
for the three months ended March 31, 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 | 19
|------------------------------------------------------------------------------------------------------------------------- | --

|Item 3.       Quantitative and Qualitative Disclosures about Market Risk | 27
|------------------------------------------------------------------------ | --

|Item 4.         Controls and Procedures | 27
|--------------------------------------- | --

Part II.      Other
Information

|Item 4.       Submission of Matters to a Vote of Security Holders | 28
|----------------------------------------------------------------- | --

|Item 6.       Exhibits and Reports on Form 8-K | 28
|---------------------------------------------- | --

|Signatures | 29
|---------- | --

|Officer Certifications | 30
|---------------------- | --

Chelsea Property Group, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)

`March 31,         December 31,
                                                                                   2003                2002
                                                                             ---------------     --------------

Assets:                                                                       (Unaudited)
Rental properties:
     Land................................................................     $   269,410        $    266,461
     Depreciable property................................................       1,574,650           1,570,713
                                                                             ---------------     --------------
Total rental property....................................................       1,844,060           1,837,174
Accumulated depreciation.................................................        (299,285)           (284,239)
                                                                             ---------------     --------------
Rental properties, net...................................................       1,544,775           1,552,935
Cash and cash equivalents................................................          21,024              22,551
Restricted cash-escrows..................................................           3,435               3,455
Tenant accounts receivable (net of allowance for doubtful
      accounts of $2,955 in 2003 and $2,593 in 2002).....................           3,100               7,762
Deferred rent receivable.................................................          20,317              18,778
Investments in unconsolidated affiliates.................................          61,926              47,997
Notes receivable-related parties.........................................           2,719               2,746
Deferred costs, net......................................................          14,890              16,706
Other assets.............................................................          34,319              30,100
                                                                              --------------    ---------------
Total assets.............................................................      $1,706,505         $ 1,703,030
                                                                             ===============     ==============

Liabilities and stockholders' equity:
Liabilities:
     Unsecured bank debt.................................................    $     87,035           $ 103,035
     Unsecured notes.....................................................         621,475             621,330
     Mortgage debt.......................................................         305,170             306,455
     Construction payables...............................................           7,708               8,046
     Accounts payable and accrued expenses...............................          39,430              43,570
     Obligation under capital lease......................................           1,349               1,507
     Accrued dividend and distribution payable...........................          27,628               4,927
     Other liabilities...................................................          22,391              18,886
                                                                             ---------------     --------------
Total liabilities........................................................       1,112,186           1,107,756

Commitments and contingencies

Minority interest........................................................         138,443             139,443

Stockholders' equity:
     8.375% series A cumulative redeemable preferred stock, $0.01
         par value, authorized 5,000 shares, issued and outstanding
         797 in 2003 and 2002 (aggregate liquidation preference of
         $39,847 in 2003 and 2002).......................................               8                   8
     Common stock, $0.01 par value, authorized 100,000 shares,
       41,764 in 2003 and 41,485 in 2002.................................             418                 415
     Paid-in-capital.....................................................         578,225             574,352
     Officer loan........................................................            (488)               (488)
     Distributions in excess of net income ..............................        (116,579)           (112,648)
     Accumulated other comprehensive loss................................          (5,708)             (5,808)
                                                                             ---------------     --------------
Total stockholders' equity...............................................         455,876             455,831
                                                                             ---------------     --------------
Total liabilities and stockholders' equity...............................      $1,706,505          $1,703,030
                                                                             ===============     ==============`

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

Chelsea Property Group, Inc.
Condensed Consolidated Statements of Income
for the Three Months Ended March 31, 2003 and 2002
(Unaudited)(In thousands, except per share data)

`2003                2002
                                                                                --------------   -----------------
Revenues:
   Base rent...............................................................        $59,889             $38,509
   Percentage rent.........................................................          4,187               3,073
   Expense reimbursements..................................................         18,794              12,595
   Other income............................................................          1,477               2,504
                                                                                --------------   -----------------
Total revenues.............................................................         84,347              56,681
                                                                                --------------   -----------------

Expenses:
   Operating and maintenance...............................................         22,976              16,204
   Depreciation and amortization...........................................         17,632              12,941
   General and administrative..............................................          2,201               1,517
   Other...................................................................          1,460               1,093
                                                                                --------------   -----------------
Total expenses.............................................................         44,269              31,755
                                                                                --------------   -----------------

Income before unconsolidated investments, interest expense and
   minority interest.......................................................         40,078              24,926

Income from unconsolidated investments.....................................          1,451               3,770
Loss from Chelsea Interactive..............................................           (837)             (2,700)
Interest expense...........................................................        (16,634)             (9,750)
                                                                                --------------   -----------------

Income before minority interest............................................         24,058              16,246

Minority interest..........................................................         (4,811)             (3,455)
                                                                                --------------   -----------------

Net income.................................................................         19,247              12,791

Preferred dividend requirement.............................................           (834)               (904)
                                                                                --------------   -----------------

Net income available to common shareholders................................        $18,413             $11,887
                                                                                ==============   =================

Earnings per share
Basic:
Net income per common share................................................         $ 0.44              $ 0.32
                                                                                ==============   =================
Weighted average common shares outstanding.................................         41,570              37,572
                                                                                ==============   =================

Diluted:
Net income per common share................................................         $ 0.43              $ 0.31
                                                                                ==============   =================
Weighted average common shares outstanding.................................         43,322              38,776
                                                                                ==============   =================`

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

Chelsea Property Group, Inc.
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 2003 and 2002
(Unaudited)(In thousands)

`2003                2002
                                                                            ---------------     -------------
   Cash flows from operating activities
   Net income.......................................................           $19,247             $12,791
   Adjustments to reconcile net income to net cash
      provided by operating activities:
     Depreciation and amortization..................................            17,632              12,941
     Equity-in-earnings of unconsolidated investments in
         excess of distributions received...........................              (261)               (348)
     Loss from Chelsea Interactive..................................                -                2,700
     Minority interest in net income................................             4,811               3,455
     Proceeds from non-compete receivable...........................               -                 4,300
     Amortization of non-compete revenue............................               -                (1,284)
     Other operating activities.....................................              (253)               (222)
     Changes in assets and liabilities:
        Straight-line rent receivable...............................            (1,760)               (522)
        Due from affiliates.........................................            (1,185)             (1,092)
        Other assets................................................             4,951               4,541
        Deferred incentive compensation.............................               -               (14,401)
        Accounts payable and accrued expenses.......................            (4,769)            (10,965)
                                                                             ---------------     -------------
   Net cash provided by operating activities........................            38,413              11,894
                                                                             ---------------     -------------

   Cash flows from investing activities
   Additions to rental properties...................................            (8,361)             (3,927)
   Additions to investments in unconsolidated affiliates............           (11,577)             (3,287)
   Distributions from investments in
         unconsolidated affiliates in excess of earnings............               -                   805
   Additions to deferred development costs..........................              (113)             (2,276)
   Payments from related parties....................................                27               1,113
   Loans to related parties.........................................               -                  (488)
                                                                             ---------------     -------------
   Net cash used in investing activities............................           (20,024)             (8,060)
                                                                             ---------------     -------------

   Cash flows from financing activities
   Debt proceeds....................................................               -                   159
   Repayment of debt................................................           (17,207)               (392)
   Net proceeds from sale of common stock...........................             3,536               2,835
   Distributions....................................................            (5,967)             (4,973)
   Redemption of preferred stock....................................               -                (6,431)
   Additions to deferred financing costs............................              (278)                (70)
                                                                             ---------------     -------------
   Net cash used in financing activities............................           (19,916)             (8,872)
                                                                             ---------------     -------------

   Net (decrease) in cash and cash equivalents......................            (1,527)             (5,038)
   Cash and cash equivalents, beginning of period...................            22,551              24,604
                                                                             ---------------     -------------
   Cash and cash equivalents, end of period.........................           $21,024             $19,566
                                                                             ===============     =============`

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

Chelsea Property Group, Inc.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Organization and Basis of Presentation

Chelsea Property Group, Inc. (the Company) is a
self-administered and self-managed real estate investment trust
(REIT). The Company is the managing general partner of CPG Partners,
L.P., (the Operating Partnership or OP), an operating
partnership that specializes in owning, developing, leasing, marketing and
managing upscale and fashion-oriented manufacturers outlet centers. As of
March 31, 2003, the Company wholly or partially owned 59 centers in 30 states
and Japan containing approximately 14.6 million square feet of gross leasable
area (GLA). The Companys portfolio is comprised of 28 premium
outlet centers containing 9.0 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 Companys Premium Properties generated
approximately 77% and 89% of the Companys retail real estate net operating
income for the three months ended March 31, 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.

Virtually all of the Companys assets are held by, and all
of its operations conducted through, the Operating Partnership. Due to the
Companys ability, as the sole general partner, to exercise financial and
operational control over the Operating Partnership, the Operating Partnership is
consolidated in the accompanying financial statements. All significant
intercompany transactions and accounts have been eliminated in consolidation.

On May 1, 2002, the Company declared a 2-for-1 stock split of
the Companys common shares. The stock dividend was paid May 28, 2002, to
shareholders of record on May 14, 2002. The Operating Partnership simultaneously
declared a 2-for-1 split of its limited units. All applicable share and per
share information in the accompanying financial statements have been adjusted to
reflect the stock split.

Disclosure about fair value of financial instruments is based on
pertinent information available to management as of March 31, 2003, and 2002,
using available market information and appropriate valuation methodologies.
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.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Organization and Basis of Presentation (continued)

Common ownership of the OP as of March 31, 2003, was
approximately as follows:

| | Company
UnitholdersTotal | 84.7%15.3%100.0% | 41,764,0007,529,00049,293,000 |  | 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 three month period ended March 31, 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 Companys Annual Report
on Form 10-K for the year ended December 31, 2002.

In August 2001, 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 2 to financial statements for
discussion related to the estimated future costs to be incurred in connection
with the future operations of Chelsea Interactive.

2. Stock Option Plan

The Company elected Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees ("APB No. 25") and related Interpretations in
accounting for its employee stock options. Under APB No. 25, no compensation
expense is recognized because the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of grant.

The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including expected stock price
volatility. Because the Companys employee stock options have
characteristics significantly different from those of traded options, and
changes in the subjective input assumptions can materially affect the fair value
estimate, management believes the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options.

Pro forma information regarding net income and earnings per
share is required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted average assumptions for 2003
and 2002 respectively: risk-free interest rate of 4% for 2003 and 5% for 2002;
volatility factor of the expected market price of the Companys common
stock based on historical results of 0.166 for 2003 and 0.236 for 2002, and
dividend yield of 6% in 2003 and 2002, and an expected option life of four
years. On March 13, 2003, the Company granted options to acquire 45,000 shares
at an exercise price of $36.20 that will expire in 2013.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

2. Stock Option Plan (continued)

For purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options vesting period.
The Companys pro forma information follows, assuming that the 2-for-1
stock split in May 2002 had occurred on January 1, 2002 (in thousands except for
earnings per share information):

`Three Months Ended March 31,
                                                             2003             2002
                                                       ---------------    ------------
       Net income to common shareholders;
       as reported................................         $18,413         $11,887

       Add: Stock based employee expense included
          in reported net income..................             -               -

       Deduct: Total stock-based employee
          compensation expense determined  under
          fair value based method for all awards,
          net of minority interest................            (366)           (520)
                                                         -------------    ------------

       Pro forma net income.......................         $18,047         $11,367
                                                         =============    ============

       Earnings per share: .......................
            Basic - as reported...................           $0.44           $0.32
            Basic -   proforma....................            0.43            0.30

            Diluted - as reported.................           $0.43           $0.31
            Diluted -  proforma...................            0.42            0.29`

3. Investments in Affiliates

The Company 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 and loss from Chelsea Interactive in the accompanying
financial statements.

As of March 31, 2003, the Companys interests in joint
ventures included a 50% interest in Las Vegas Premium Outlets and a 50% interest
in Chicago Premium Outlets with Simon Property Group, Inc. (Simon)
(collectively Simon-Ventures), a 40% interest in Chelsea Japan Co.,
Ltd. (Chelsea Japan), 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.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

3.  Investments in Affiliates (continued)

In June 2002, the Company and Simon entered into a new 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, scheduled to open in
mid-2003. The Company is responsible for financing its 50% share of development
costs that are expected to be approximately $48.0 million. As of March 31, 2003,
the Company had contributed $29.5 million.

In August 2002, the Company and Simon entered into a new 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
Company is responsible for financing its 50% share of the development costs that
are expected to be approximately $46.0 million. As of March 31, 2003, the
Company had contributed $10.5 million.

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, currently a
220,000 square-foot center, is being expanded by an additional 170,000 square
feet scheduled to open 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.

At March 31, 2003, the Company had incurred approximately $1.5 million related
to predevelopment costs and formation of the Chelsea Mexico joint
venture.

At March 31, 2003, the Company had minority interests ranging from 3% to 8% in
several outlet centers and outlet development projects in Europe.

At December 31, 2002, the Company recognized an impairment loss equal to the net
book value of its investment in Chelsea Interactive. The Company 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 Companys $60.0
million funding limit. Through March 31, 2003 the Company had funded $53.2
million and anticipates that the $6.8 million funding balance may be used to
further develop the platform and/or to finance operating cash shortfalls and
potential costs related to the disposal or discontinuance of the business. An
$0.8 million funding loss was reported for the three months ended March 31,
2003. Future funding by the Company will be reported as a loss in the period
funding is required. The Company is in active discussions with a potential
investor to restructure Chelsea Interactive or dispose of its assets. There can
be no assurance that any of these discussions will be successful or that Chelsea
Interactive will be able to continue as a going concern.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

3. Investments in Affiliates (continued)

The following is a summary of investments in and amounts due
from affiliates at March 31, 2003, (in thousands):

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

Balance December 31, 2002...........         $12,471        $31,919         $  -        $3,607        $47,997
Additional
   investment.......................             386         10,657         1,508           -          12,551
Income from
   unconsolidated
   investments......................           1,451            -              -            -           1,451
Distribution
    and fees........................          (1,190)           -              -            -          (1,190)
Advances (net)......................           1,147            (30)           -            -           1,117
                                          -----------    ------------    ------------  ----------    ------------
Balance March 31, 2003..............         $14,265        $42,546        $1,508       $3,607        $61,926
                                          ===========    ============    ============  ==========    ============`

The Companys share of income (loss) before depreciation,
depreciation expense and income (loss) from unconsolidated investments for the
three months ended March 31, 2003 and 2002 are as follows (in thousands):

`2003                                              2002
                        ------------------------------------------------ --------------------------------------------------
                                                           Income              Income                          Income
                         Income(loss)                   (loss) from            (loss)                       (loss) from
                         before                           Unconsol.           before                         Unconsol.
                        Depreciation         Depr.       Investments       Depreciation        Depr.       Investments
                      ----------------    ---------    ---------------    ---------------     --------     --------------
Chelsea Japan........    $2,050             $599          $1,451            $1,291             $  399         $  892
F/C (1)..............        -                -              -               2,264                721          1,543
Simon (2)............        -                -              -               1,833                523          1,310
Other................        -                -              -                  25                 -              25
                      -------------      ---------     ------------      -------------        --------     ------------
   Total.............   $2,050              $599          $1,451            $5,413             $1,643         $3,770
                      =============      =========     ============      =============        ========     ===========
Chelsea Interactive..   $ (837)             $ -           $ (837)          ($1,192)            $1,508        ($2,700)
                      =============      =========     ============      =============        ========     ===========`

|(1) | During the three months ended March 31, 2002, the Company had a 49% interest in
F/C Acquisition, a joint venture that owns four Premium Outlet centers. In
August 2002, the Company 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 March 31, 2002, the Company had a 50% interest in
Orlando Premium Outlets through a 50/50 joint venture with Simon. In April 2002,
the Company 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 March 31, 2003, and
December 31, 2002, and for the three months ended March 31, 2003, and 2002 for
investments in unconsolidated affiliates is as follows:

`Retail          Chelsea
                                                        Real Estate     Interactive
                                                       -------------   ------------
Property, plant and equipment (net)
     March  31, 2003...................................  $274,737       $     -
     December  31, 2002................................   140,057         31,409

Total assets
     March  31, 2003...................................   359,961              -
     December  31, 2002................................   190,157         33,295

Long term debt (Chelsea Japan)
     March  31, 2003...................................    78,221              -
     December  31, 2002................................    75,139              -

Total liabilities
     March  31, 2003...................................   189,841              -
     December  31, 2002................................   119,886          1,548

Net income (loss)
     March  31, 2003...................................       652              -
     March  31, 2002 (1) (2)...........................     4,992         (3,651)

Company's share of net income (loss)
     March  31, 2003...................................       261           (837)
     March  31, 2002 (1) (2)...........................     2,395         (2,700)

Fee income
     March 31, 2003....................................     1,190              -
     March  31, 2002 (1) (2)...........................     1,350              -`

|(1) | During the three months ended March 31, 2002, the Company had a 49% interest in
F/C Acquisition, a joint venture that owns four Premium Outlet centers. In
August 2002, the Company 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 March 31, 2002, the Company had a 50% interest in
Orlando Premium Outlets through a 50/50 joint venture with Simon. In April 2002,
the Company 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)

4. Non-Compete Agreement

The Company recognized income from its non-compete agreement
with The Mills Corporation of $1.3 million during the three months ended March
31, 2002 which is included in other income in the accompanying financial
statements.

5. Debt

Unsecured Bank Debt

The Company 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 Company 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% (2.38% at March 31, 2003) or the prime rate, at
the Companys option. The LIBOR rate spread ranges from 0.85% to 1.50%
depending on the Companys Senior Debt rating. A facility fee of 0.125% is
payable annually in advance. At March 31, 2003, $82.0 million was outstanding
under the Senior Credit Facility.

The Company 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
March 31, 2003, and December 31, 2002, is as follows (in thousands):

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

8.375% Unsecured Notes due August 2005.....     $  49,930       $  49,922       8.44%
7.25% Unsecured Notes due October 2007.....       124,849         124,841       7.39
8.625% Unsecured Notes due August 2009.....        49,935          49,933       8.76
8.25% Unsecured Notes due February 2011....       148,853         148,817       8.40
6.875% Unsecured Notes due June 2012.......        99,864          99,825       6.90
6.00% Unsecured Notes due January 2013.....       148,044         147,992       6.28
                                              --------------  --------------
   Total                                         $621,475       $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 March
31, 2003, and December 31, 2002 and the related interest rate and Net Book Value
(NBV) of the associated collateral as of March 31, 2003, are as
follows (in thousands):

`March 31,    December 31,    Interest
                                             2003         2002           Rate        NBV
                                         ------------ --------------  ---------    ---------
Mortgage Loan due July 2008 (1)           $166,955      $167,723        6.99%      $256,654
Mortgage Loan due April 2010 (2)            67,000        67,250        7.26%        71,546
Mortgage Loan due December 2012 (3)         71,215        71,482        7.67%        75,231
                                         ----------    -------------              ----------
                                          $305,170      $306,455                   $403,431
                                         ==========    =============              ==========`

|(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 interest plus
principal payment based on a 26-year amortization schedule. During the three
months ended March 31, 2003, the Company recognized $34,000 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
secured by its four properties. The Mortgage Loan bears interest equal to LIBOR
plus 1.50% (2.84% at March 31, 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
Company 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 three months ended March 31, 2003, and 2002, the
Company recognized interest expense of $0.7 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 fixed monthly debt service payments of $0.5
million for interest based on a 26-year amortization schedule. During the three
months ended March 31, 2003, and 2002, the Company recognized $0.1 million in
debt premium amortization that is included in interest expense in the
accompanying financial statements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest and loan costs of approximately $0.9 million and $0.7
million were capitalized as development costs during the three months ended
March 31, 2003, and 2002, respectively.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

6. Financial Instruments: Derivatives and Hedging

The Company 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 March 31, 2003 the Companys interest rate swap was
reported at its fair value and classified as another liability of $6.6 million.
At March 31, 2003, there were $6.6 million in deferred losses, recorded in
accumulated other comprehensive loss, a shareholders equity account, and
minority interest. During the next twelve months, the Company expects to
reclassify to earnings approximately $2.8 million of the current balance held in
accumulated other comprehensive loss and minority interest related to the
interest rate swap.

| | Hedge Type
Swap, Cash Flow | Notional Value
$67.0 million | Rate
5.7625% | Maturity
1/1/06 | Fair Value
($6.6 million) | 
| | -------------------------- | ---------------------------- | ------------ | --------------- | ------------------------- | 

The notional value and fair value of the above hedge provides an
indication of the extent of the Companys involvement in financial
derivative instruments of March 31, 2003, but does not represent exposure to
credit, interest rate, foreign exchange or market risk.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

Following is a statement of stockholders equity at March
31, 2003, (in thousands):

`Accum.
                                  Preferred    Common                          Distrib. in    Other
                                   Stock        Stock       Paid-                 Excess       Comp.            Total
                                  At Par       At Par         in       Officer    of Net       (Loss)     Stockholders'
                                   Value       Value        Capital     Loan      Income       Income         Equity
                                 ---------   ----------   ----------  ---------  -----------  ----------  -------------

Balance December 31, 2002........   $8        $415          $574,352    ($488)   ($112,648)   ($5,808)      $455,831

Net income.......................    -           -              -          -        19,247         -          19,247
Other comprehensive loss
     Foreign currency translation..  -                                                 -           (1)            (1)
     Interest rate swap............  -           -              -          -           -          101            101
                                                                                                            -----------
Total comprehensive income.........                                                                           19,347
                                                                                                            -----------

Preferred dividend................   -           -              -          -          (834)                     (834)
Cash distributions declared
     ($0.535 per common share).....  -           -              -          -       (22,344)                  (22,344)
Exercise of stock options..........  -           3             3,463       -           -                       3,466
Shares issued in exchange for units
     of the OP.....................  -           -               340       -           -           -             340
Shares issued through Employee
     Stock
     Purchase Plan
      (net of costs)...............  -           -                70       -           -           -              70

                                   ------   ---------      ----------  --------  -----------  ----------   ------------
Balance March 31, 2003              $8        $418          $578,225    ($488)   ($116,579)   ($5,708)      $455,876
                                   ======   =========      ==========  ========  ===========  ==========   ============`

8. Dividends

On March 13, 2003 the Board of Directors of the Company declared
a $0.535 per share dividend to shareholders of record on March 31, 2003. The
dividend, totaling $22.4 million, was paid on April 14, 2003. The OP
simultaneously paid a $0.535 per unit cash distribution, totaling $4.0 million,
to its minority unitholders.

9. Income Taxes

At March 31, 2003, the Company was in compliance with all REIT
requirements under Section 856(c) of the Internal Revenue code of 1986, as
amended, and as such, was not subject to federal income taxes.

10. Net Income Per Common Share

Basic earnings per common share is computed using the weighted
average number of shares outstanding. Diluted earnings per common share is
computed using the weighted average number of shares outstanding adjusted for
the incremental shares attributed to outstanding options to purchase common
stock of 1.8 million and 1.2 million shares for the three months ended March 31,
2003 and 2002, respectively.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

10. Net Income Per Common Share (continued)

The following table sets forth the computation of basic and
diluted earnings per share for the periods indicated and assumes the
Companys 2-for-1 split in May 2002 had occurred on January 1, 2002 (In
thousands, except per share amounts):

`March 31,        March 31,
                                                                     2003              2002
                                                                   ----------      -------------
Numerator
Numerator for basic and diluted earnings per share - net income
available to common shareholders.................................    $18,413          $11,887

Denominator
Denominator for basic earnings per share-
   Weighted average shares.......................................     41,570           18,786
   Increase in shares due to effect of 2-for-1 stock split.......          -           18,786
                                                                    ---------        ---------
   Denominator for basic earnings per share......................     41,570           37,572

Effect of diluted securities
  Stock options..................................................      1,752              602
  Increase in shares due to effect of 2-for-1 stock split........          -              602
                                                                    ---------        ---------
  Effect of dilutive securities..................................      1,752            1,204

Denominator for diluted earnings per share-
  Adjusted weighted average shares assumed conversions...........     43,322           19,388
  Increase in shares due to effect of 2-for-1 stock split........          -           19,388
                                                                    ---------        ---------
  Denominator for diluted earnings per share.....................     43,322           38,776

  Per share amounts:
  Net income - basic.............................................      $0.44            $0.32
  Net income - diluted...........................................      $0.43            $0.31
  Distributions declared.........................................     $0.535           $0.405`

11. Commitments and Contingencies

In May 2002, the Company 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 200,000 square-foot first phase of the outlet
project is scheduled to commence later in 2003 and open in 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 Company will be committed to fund
approximately $12.0 million which is 50% of the development costs.

In connection with the Simon joint ventures, the Company 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 March 31, 2003, the Company had contributed $29.5
million and $10.5 million to the Las Vegas and Chicago projects, respectively.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

11. Commitments and Contingencies (continued)

Borrowings related to Chelsea Japan for which the Company and
the OP have provided guarantees for repayment of debt as of March 31, 2003, are
as follows (in thousands):

`Total Facility                |                            Outstanding
                                      |                                        US $           Due    Interest
    Yen              US $ Equivalent  |     Yen      US $ Equivalent        Guarantee        Date    Rate
    ---              ---------------  |     ---      ---------------        ---------        ----    ----
 4.0 billion (1)     $33.9 million    | 1.0 billion    $8.4 million        $8.4 million       2004    1.43%
 3.8 billion (2)      32.2 million    | 3.5 billion    29.7 million        11.9 million       2015    2.20%
 0.6 billion (2)       5.1 million    | 0.6 billion     4.8 million         1.9 million       2012    1.50%`

|1) | Facility entered into by an equity investee of the Company that has a one-year
extension option.
|-- | ------------------------------------------------------------------------------------------------

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

As of March 31, 2003, the Company had provided limited debt
service guarantees of approximately $22.0 million to Value Retail and
affiliates, the maximum amount under a standby facility for loans provided to
Value Retail and affiliates to construct outlet centers in Europe. The term of
the standby facility expired in November 2001 and guarantees shall not be
outstanding for longer than five years after project completion.

At March 31, 2003, other assets includes $10.3 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 Company is not presently involved in any material litigation
nor, to its knowledge, is any material litigation threatened against the Company
or its properties, other than routine litigation arising in the ordinary course
of business. Management believes the cost incurred by the Company related to any
of its litigation will not be material and have been adequately provided for in
the consolidated financial statements.

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 issues 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 March 31, 2003, loans made to two unitholders, who
are also management 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
stockholders equity in the accompanying financial statements. The carrying
value of such loans approximated fair value at March 31, 2003. Effective June 1,
2002, the Company changed its policy to eliminate new loans to directors and
officers.

In August 1997, the Company and one of its directors entered
into a Consulting Agreement pursuant to which the director agreed to perform
services for the Company 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
Company 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. Fees paid under this agreement totaled $0.3 million for the three months
ended March 31, 2003. These fees are included in investment in affiliates in the
accompanying financial statements.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

13. Segment Information

The Company 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 Company
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.

`Unaudited                         Premium       Other
(in thousands)                        Domestic      Domestic     International    Other         Total
----------------------------------- -----------   ------------  -------------   ---------- ------------
                                                         (1)         (2)          (3)
Total revenues
  Three months ended:
        March 31, 2003.............    $62,370       $21,945         $  -         $32         $84,347
        March 31, 2002.............     44,075        11,229            -       1,377          56,681

Interest income
  Three months ended:
        March 31, 2003.............        255             4            -          32             291
        March 31, 2002.............        283            24            -          93             400

Income (loss) from unconsolidated
      investments
  Three months ended:
        March 31, 2003.............          -             -         1,451       (837)            614
        March 31, 2002.............      2,853             -           917     (2,700)          1,070

NOI
  Three months ended:
        March 31, 2003.............     45,267        14,463         2,414     (2,857)         59,287
        March 31, 2002.............     36,586         4,930         1,703       (744)         42,475

Fixed asset additions
  Three months ended:
        March 31, 2003.............      4,164         4,743            -        (546)          8,361
        March 31, 2002.............      3,192           275            -         460           3,927

Total assets
    March 31, 2003.................  1,257,106       397,283        19,380     32,736       1,706,505
    December 31, 2002..............  1,262,190       394,984        16,077     29,779       1,703,030`

|(1) | Approximately 15% of the GLA is occupied by and approximately 7% of annualized
revenue is derived from one tenant.
|--- | ------------------------------------------------------------------------------------------------------------------

|(2) | Principally comprised of the Company's interest in Chelsea Japan.
|--- | -----------------------------------------------------------------

|(3) | 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 months ended March 31, 2003, and 2002 (in thousands):

`2003          2002
                                                               -----------   ------------
Segment NOI.................................................     $59,287       $42,475
Interest expense - consolidated.............................    (16,634)       (9,750)
Interest expense - unconsolidated investments...............       (144)         (128)
Depreciation and amortization expense - consolidated........    (17,632)      (12,941)
Depreciation and amortization
             expense - unconsolidated investments...........       (599)       (1,643)
Depreciation and amortization
             expense - Chelsea Interactive..................           -       (1,508)
Income tax - unconsolidated investments.....................       (220)         (259)
Minority interest...........................................     (4,811)       (3,455)
                                                               -----------    ------------
Net income..................................................     $19,247       $12,791
                                                               ===========    ============`

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 April 1, 2002 to March 31, 2003, the Company has grown
rental revenue by $22.5 million to $64.1 million. This was achieved by
increasing rents, expanding two wholly-owned centers and acquiring seven centers
that were partially offset by rent decreases from selling five non-core centers.
Increasing rents at operating centers resulted in base rent growth of $1.2
million. The Company re-leased or renewed approximately 1.2 million square feet
of Premium Property GLA during the twelve months ended March 31, 2003, for which
initial contractual cash rents under new leases were 12% higher than expiring
leases. The expansion of two wholly-owned centers increased base rents by $0.4
million. The acquisition of seven centers increased base rents by $8.3 million.
In addition, the purchase of ownership interests in the five centers previously
held as unconsolidated investments resulted in rental revenue growth of $11.6
million and a decrease in income from unconsolidated investments of $2.9 million
during the three months ended March 31, 2003 from March 2002, as the operating
results for these five centers have been fully consolidated since their buyouts.
Income from unconsolidated investments for Chelsea Japan grew due to higher
earnings, increased fees and the expansion of Rinku Premium Outlets in March
2002 and the opening of Sano Premium Outlets in March 2003.

At March 31, 2003, the Company wholly or partially-owned 14.6
million square feet of GLA. Since April 1, 2002, the Company has added 2.0
million square feet (sf) of net GLA and details are as follows:

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

`12 months        3 months        9 months
                                                           ended            ended          ended
                                                        March 31,         March 31,      December 31,
                                                           2003             2003            2002
                                                        -------------    -------------  -------------
Changes in GLA (sf in 000's):

New centers developed:
     Sano Premium Outlets (40% owned) .............            180             180            -
                                                         ------------    -------------   ------------

Centers expanded:
    Rinku Premium Outlets (40% owned)..............             70              -            70
    Desert Hills Premium Outlets...................             23              -            23
    Liberty Village Premium Outlets................             23              -            23
    Other..........................................            (12)             -           (12)
                                                         ------------    -------------   ------------
Total centers expanded............................             104              -           104

Centers acquired:
    Factory Outlet Village Osage Beach.............            391              -           391
    St. Augustine Outlet Center....................            329              -           329
    Edinburgh Outlet Center........................            305              -           305
    Outlets at Albertville.........................            305              -           305
    Factory Merchants Branson......................            300              -           300
    Jackson Outlet Village.........................            292              -           292
    Johnson Creek Outlet Center....................            278              -           278
                                                         ------------       ----------   ----------
Total centers acquired.............................          2,200              -         2,200

Centers sold:
     Five Other Properties.........................           (496)              -         (496)
                                                         ------------       ----------   ----------

Net GLA added during the period....................          1,988             180         1,808

GLA at end of period...............................         14,566          14,566        14,386`

Results of Operations

Comparison of the three months ended March 31, 2003 to the
three months ended March 31, 2002.

Income before minority interest, increased $7.8 million, or
48.1%, to $24.0 million for the three months ended March 31, 2003, from $16.2
million for the three months ended March 31, 2002. This increase was primarily
the result of the buyouts of ownership interest in five centers, acquisition of
seven centers during 2002 and higher rents on releasing and renewals during
2003, partially offset by increased interest expense.

Base rentals increased $21.4 million, or 55.5%, to $59.9 million
for the three months ended March 31, 2003, from $38.5 million for the three
months ended March 31, 2002, due to the buyouts of ownership interest in five
centers and the acquisition of seven centers in 2002, higher average rents on
releasing and renewals, and the expansion of two wholly-owned centers in late
2002.

Percentage rents increased $1.1 million, or 36.3%, to $4.2
million for the three months ended March 31, 2003, from $3.1 million for the
three months ended March 31, 2002, primarily due to the buyouts of ownership
interest in five centers 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 $6.2 million, or 49.2%, to $18.8
million for the three months ended March 31, 2003, from $12.6 million for the
three months ended March 31, 2002, due to the recovery of operating and
maintenance costs from increased GLA. The average recovery of reimbursable
expenses for the Premium Portfolio was 87% for the three months ended March 31,
2003 and 2002. The average recovery of reimbursable expenses for the Other
Retail Centers was 69% for the three months ended March 31, 2003, compared to
52% for the three months ended March 31, 2002.

Other income decreased $1.0 million or 41.0% to $1.5 million for
the three months ended March 31, 2003, from $2.5 million for the three months
ended March 31, 2002, primarily due to the termination of the non-compete
agreement which included income recognition of $1.3 million in 2002 partially
offset by an increase in ancillary operating income in 2003.

Operating and maintenance expenses increased $6.8 million, or
41.8%, to $23.0 million for the three months ended March 31, 2003, from $16.2
million for the three months ended March 31, 2002. The increase was primarily
due to costs related to increase in GLA.

Depreciation and amortization expense increased $4.7 million, or
36.2% to $17.6 million for the three months ended March 31, 2003, from $12.9
million for the three months ended March 31, 2002. The increase was due to
depreciation of the increased GLA.

General and administrative expense increased $0.7 million or
45.1% to $2.2 million for the three months ended March 31, 2003, from $1.5
million for the three months ended March 31, 2002, primarily due to increases in
unit program accrual, increased salaries and professional fees.

Other expenses increased $0.4 million or 33.6% to $1.5 million
for the three months ended March 31, 2003, from $1.1 million for the three
months ended March 31, 2002, due to increased reserve for bad debt and center
rent expense.

Income from unconsolidated investments decreased $2.3 million or
61.5% to $1.5 million for the three months ended March 31, 2003, from $3.8
million for the three months ended March 31, 2002 due to the buyouts of
ownership interests in five centers which were previously held as unconsolidated
investments partially offset by higher income from Chelsea Japan.

The loss from Chelsea
Interactive decreased $1.9 million to $0.8 million for the three months ended
March 31, 2003, from $2.7 million for the three months ended March 31, 2002 due
to the write-off of the Companys investment at December 31, 2002. The
March 31, 2003 loss represents funding to Chelsea Interactive.

Interest expense increased $6.8 million or 70.6% to $16.6
million for the three months ended March 31, 2003, from $9.8 million for the
three months ended March 31, 2002, due to higher debt that financed acquisitions
and the buyouts of partners interests.

Liquidity and Capital Resources

The Company 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. The Company has adequate
funding sources to complete and open all current development projects from
available cash, credit facilities and secured construction financing. The
Company also has access to the public markets through its $1.6 billion debt and
equity shelf registration.

Operating cash flow is expected to provide sufficient funds for
dividends and distributions in accordance with REIT federal income tax
requirements. In addition, the Company 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 $26.4
million, or $0.535 per share or unit. The Companys dividend payout ratio
as a percentage of net income before minority interest, gain or loss on sale or
writedown of assets and depreciation and amortization (reduced by amortization
of deferred financing costs, depreciation of non-real estate assets and
preferred dividends (FFO)) was 66.9%. The Company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 Company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% (2.38% at March 31, 2003) or the prime rate, at
the Company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 Companys Senior
Debt rating. At March 31, 2003, $82.0 million was outstanding under the Senior
Credit Facility.

A summary of the maturity of the Companys contractual debt
obligations (at par) as of March 31, 2003, is as follows (in thousands):

`Less than            1 to 3         4 to 5         After 5
                          Total           One Year             Years         Years           Years
                       -------------    --------------    --------------   -----------    ------------
Unsecured bank debt         $87,035          $  -           $87,035          $  -             $ -
Unsecured notes             625,000             -            50,000         125,000         450,000
Mortgage debt               299,815         3,480            10,934         164,067         121,334
                       -------------    --------------    ------------    -----------    ------------
   Total                 $1,011,850        $3,480          $147,969        $289,067        $571,334
                       =============    ==============    ============    ===========    ============`

Construction projects underway and expected to open during 2003
include a 170,000 square-foot second phase at Gotemba Premium Outlets, scheduled
to open in July 2003; and the 435,000 square-foot Las Vegas Premium Outlets,
scheduled to open mid-2003. The 180,000 square foot first phase of Sano Premium
Outlets located north of Tokyo, Japan opened March 14, 2003. The Company is also
under construction on the 438,000 square-foot Chicago Premium Outlets in Aurora,
Illinois, that is scheduled to open in mid-2004 and the 124,000 square-foot
third phase of Outlets at Albertville scheduled to open in late March 2004. The
Gotemba and Sano projects are developments of Chelsea Japan Co., Ltd., the
Company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 Company will seek to obtain permanent financing once the projects
are completed and income has been stabilized.

In connection with the Simon joint ventures, the Company 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 March 31, 2003, the Company had contributed $29.5
million and $10.5 million to the Las Vegas and Chicago projects, respectively.

The Company 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
March 31, 2003, are as follows (in thousands):

`Total Facility            |                            Outstanding
                                       |
                             US $      |                      US $            US $        Due     Interest
         Yen              Equivalent   |    Yen            Equivalent       Guarantee      Date      Rate
         ---              ----------   |    ---            ----------       ---------      ----      ----
    4.0 billion (1)      $33.9 million |  1.0 billion     $8.4 million     $8.4 million     2004    1.43%
    3.8 billion (2)       32.2 million |  3.5 billion     29.7 million     11.9 million     2015    2.20%
    0.6 billion (2)        5.1 million |  0.6 billion      4.8 million      1.9 million     2012    1.50%`

1)   Facility entered into by an equity investee of the Company that has a one-year extension option.
2)   Facilities entered into by Chelsea Japan, secured by Gotemba and Rinku and 40% severally
      guaranteed by the Company.

In May 2002, the Company, 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 200,000 square-foot first
phase of an outlet project north of Mexico City is expected to commence later in
2003 and to open in 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 Company will be committed to fund approximately $12.0 million
which is 50% of the development costs. As of March 31, 2003, the Company had
incurred costs of approximately $1.5 million related to predevelopment costs and
formation of the joint venture.

At December 31, 2002, the Company recognized an impairment loss
equal to the net book value of its investment in Chelsea Interactive. The
Company 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
Companys $60.0 million funding limit. Through March 31, 2003, the Company
had funded $53.2 million and anticipates that the $6.8 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. An $0.8 million funding loss was reported for the three months ended
March 31, 2003. Future funding by the Company will be reported as a loss in the
period funding is required. The Company is in active discussions with a
potential investor to restructure Chelsea Interactive or dispose of its assets.
There can be no assurance that any of these discussions will be successful or
that Chelsea Interactive will be able to continue as a going concern.

The Company has minority interests ranging from 3% to 8% in
several outlet centers and outlet development projects in Europe operated by
Value Retail. The Companys total investment in Europe as of March 31,
2003, was $3.6 million. The Company has also provided $22.0 million in limited
debt service guarantees under a standby facility for loans arranged by Value
Retail to construct outlet centers in Europe. The term of the standby facility
for new guarantees expired in November 2001 and these guarantees shall not be
outstanding for longer than five years after project completion.

To achieve planned growth and favorable returns in both the
short and long-term, the Company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 Company 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 $38.4 million and
$11.9 million for the three months ended March 31, 2003, and 2002, respectively.
The increase was primarily due to increased operating cash flow generated on the
growth of the Companys GLA 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 was $20.0 million
and $8.1 for the three months ended March 31, 2003, and 2002, respectively. The
increase was a result of increased joint venture and wholly owned property
investing activity. Net cash used in financing activities was $19.9 million and
$8.9 million for the three months ended March 31, 2003, and 2002, respectively.
The increase was primarily a result of increased debt repayments offset by
preferred stock redemptions in 2002.

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 Company. 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 Company 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
Company to incur and service debt, to make capital expenditures and to fund
other cash needs. The Company 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
Company. 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
Companys financial performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the Companys
liquidity, nor is it indicative of funds available to fund the Companys
cash needs, including its ability to make cash distributions.

`Three Months
                                                                     Ended March 31,
                                                                      2003        2002
                                                                   ----------   ----------

      Income available to common shareholders ................      $18,413       $11,887
        Depreciation and amortization-wholly-owned............       17,632        12,941
        Depreciation and amortization-joint ventures..........          599         1,643
        Amortization of deferred financing costs and
         depreciation of non-rental real estate assets........         (600)         (552)
      Minority interest.......................................        4,811         3,455
      Preferred unit distribution.............................       (1,462)       (1,462)
                                                                   ----------    ----------
      FFO.....................................................      $39,393       $27,912
                                                                   ==========    ==========
      Average diluted shares/units outstanding (1)............       50,883        45,076
      Dividends declared per share............................       $0.535         $.405`

1)    Assumes 2-for-1 stock split in May 2002 had
occurred on January 1, 2002.

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 estimable, 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 Company 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
Company will need to apply its provisions to any existing variable interests in
variable interest entities by no later than December 31, 2004. The Company does
not believe that FIN 46 will have a significant impact on the Companys
financial statements.

Critical Accounting Policies and Estimates

The Companys discussion and analysis of its financial condition and
results of operations are based upon the Company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 Company to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses. The Company
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 Company 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 Company 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 Companys tenants were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required. The Companys allowance for doubtful accounts
included in tenant accounts receivable totaled $3.0 million and $2.6 million at
March 31, 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 Company will then record an impairment loss
equal to the difference between the carrying amount and the fair value of the
asset. The Company does not believe that the value of any of its rental
properties were impaired at March 31, 2003. The Company 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 costs related to securing additional brand
users for the platform, future funding by the Company will be reported as a loss
in the period funding occurs. As of March 31, 2003, $53.2 million had been
funded and $0.8 million has been reported as a loss for the three month period
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 Company continues
to attract and retain quality tenants. The Company 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 Company is exposed to changes in interest rates primarily
from its floating rate debt arrangements. In December 2000, the Company
implemented a policy to protect against interest rate and foreign exchange risk.
The Company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 Company 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 March 31, 2003, a hypothetical 100 basis point adverse move
(increase) in US Treasury and LIBOR rates applied to unhedged debt would
adversely affect the Companys annual interest cost by approximately $0.9
million annually.

Following is a summary of the Companys debt obligations at
March 31, 2003 (in thousands):

---

`2004      2005     2006      2007          2008      Thereafter     Total       Fair Value
                           ----      ----     ----      ----          ----      ----------     -----       ----------
  Fixed Rate Debt:           -      $49,930    -      $124,849     $166,955      $517,911    $859,645      $970,665
  Average Interest Rate:     -         8.38%   -         7.25%        6.99%          7.30%       7.29%
  Variable Rate Debt:        -      $87,035    -           -            -         $67,000    $154,035      $154,035
  Average Interest Rate:     -         2.38%   -           -            -            2.84%       2.58%`

Item 4. Controls and Procedures

Our 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)
within 90 days of the filing date of this report (the Evaluation
Date) and, based on that evaluation, concluded that, as of the Evaluation
Date, 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.

Since the Evaluation Date, 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.

Chelsea Property Group, Inc.

Part II. Other Information

Item 4.    Submission of Matters to a
Vote of Security Holders

The Company held a special meeting of stockholders on January
16, 2003, at which the following matters were voted upon:

| | 1. | To authorize and approve an amendment to the Articles of Incorporation of the
Company increasing the number of authorized shares of Common Stock of the
Company.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | To authorize and approve an amendment to the Articles of Incorporation of the
Company providing that the board of directors, with a majority of the entire
board, and without action by the stockholders, may amend the Articles of
Incorporation to increase or decrease the aggregate number of shares of stock of
the Company or the number of shares of stock of any class that the Company has
authority to issue.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The results of the meeting were as follows:

|Proposal 1:
Increase shares authorized | For
33,888,363 | Against
    776,151 | Abstain
 165,336 | Non-Votes
         -
|-------------------------------------- | -------------- | ------------------- | ---------------- | --------------------

|Proposal 2:
Board approve future increases | 8,444,997 | 20,279,491 | 172,622 | 5,932,740
|------------------------------------------ | --------- | ---------- | ------- | ---------

Item 6.    Exhibits and Reports on Form 8-K

(a)      99.1 Section 906 Certifications

(b)      Current Report on Form 8K
reporting under Items 2 and 7 on an event that occurred December 19,
2002.

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 PROPERTY GROUP, INC.
By: /s/ Michael J. Clarke
      Michael J. Clarke
      Chief Financial Officer
| | ------------------------------------------------------------------------------------------------------------

Date:  May  7, 2003

CERTIFICATION

I, David C. Bloom, Chief Executive Officer of Chelsea Property Group, Inc. (the
"Company"), certify that:

| | 1. | I have reviewed this quarterly report on Form 10-Q of the Company;
| | -- | ------------------------------------------------------------------

| | 2. | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Company as of,
and for, the periods presented in this quarterly report;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The Company's other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the Company and we have:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period
in which this quarterly report is being prepared;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated the effectiveness of the Company's disclosure controls and procedures
as of a date within 90 days prior to the filing date of this quarterly report
(the "Evaluation Date"); and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The Company's other certifying officers and I have disclosed, based on our most
recent evaluation, to the Company's auditors and the audit committee of the
Company's board of directors (or persons performing the equivalent function):
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all significant deficiencies in the design or operation of internal controls
which could adversely affect the Company's ability to record, process, summarize
and report financial data and have identified for the Company's auditors any
material weaknesses in internal controls; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company's internal controls; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | The Company's other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 5, 2003

| | /s/ David C. Bloom 
       David C. Bloom
       Chief Executive Officer
| | ------------------------------------------------------------------------

CERTIFICATION

I,
Michael J. Clarke, Chief Financial Officer of Chelsea Property Group, Inc. (the
"Company"), certify that:

| | 1. | I have reviewed this quarterly report on Form 10-Q of the Company;
| | -- | ------------------------------------------------------------------

| | 2. | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Company as of,
and for, the periods presented in this quarterly report;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The Company's other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the Company and we have:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period
in which this quarterly report is being prepared;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated the effectiveness of the Company's disclosure controls and procedures
as of a date within 90 days prior to the filing date of this quarterly report
(the "Evaluation Date"); and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The Company's other certifying officers and I have disclosed, based on our most
recent evaluation, to the Company's auditors and the audit committee of the
Company's board of directors (or persons performing the equivalent function):
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all significant deficiencies in the design or operation of internal controls
which could adversely affect the Company's ability to record, process, summarize
and report financial data and have identified for the Company's auditors any
material weaknesses in internal controls; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company's internal controls; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | The Company's other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 5, 2003

| | /s/ Michael J. Clarke 
       Michael J. Clarke
       Chief Financial Officer
| | ------------------------------------------------------------------------------

CERTIFICATION

I, David C. Bloom, Chief Executive Officer of Chelsea Property Group, Inc. (the
"Company"), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, do hereby
certify as follows:

| | 1. | The quarterly report on Form 10-Q of the Company for the period ended March 31,
2003 fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | The information contained in such Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of the Company.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------

IN WITNESS WHEREOF, I have executed this Certification this 7
day of May, 2003.

| | /s/ David C. Bloom 
       David C. Bloom
       Chief Executive Officer
| | ------------------------------------------------------------------------

A signed original of this written statement required by Section
906 has been provided to Chelsea Property Group, Inc. and will be retained by
Chelsea Property Group, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.

CERTIFICATION

I, Michael J. Clarke, Chief Financial Officer of Chelsea Property Group, Inc.
(the "Company"), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, do
hereby certify as follows:

| | 1. | The quarterly report on Form 10-Q of the Company for the period ended March 31,
2003 fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | The information contained in such Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of the Company.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------

IN WITNESS WHEREOF, I have executed this Certification this 7
day of May, 2003.

| | /s/ Michael J. Clarke 
       Michael J. Clarke
       Chief Financial Officer
| | ------------------------------------------------------------------------------

A signed original of this written statement required by Section
906 has been provided to Chelsea Property Group, Inc. and will be retained by
Chelsea Property Group, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.