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 June 30, 2000

                                       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 number 001-13301
                                               ---------

                               PRIME RETAIL, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Maryland                                        38-2559212
---------------------------------------          -------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


    100 East Pratt Street
    Nineteenth Floor
    Baltimore, Maryland                                      21202
---------------------------------------         --------------------------------
(Address of principal executive offices)                  (Zip Code)


                                 (410) 234-0782
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
--------------------------------------------------------------------------------
(Former name, former address,or former fiscal year,if changed since last report)

     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  periods  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90-days.

Yes ___  No  X

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practical date.

As of August 12, 2000, the issuer had  outstanding  43,577,916  shares of Common
Stock, $.01 par value per share.


<PAGE>

                               Prime Retail, Inc.
                                    Form 10-Q


                                      INDEX





PART I:  FINANCIAL INFORMATION                                              PAGE


Item 1.  Financial Statements (Unaudited)

Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999 ............................................................ 1

Consolidated Statements of Operations for the three and
six months ended June 30, 2000 and 1999 ...................................... 2

Consolidated Statements of Cash Flows for the six
months ended June 30, 2000 and 1999........................................... 3

Notes to the Consolidated Financial Statements................................ 5

Item 2. Management's  Discussion and Analysis of Financial
        Condition and Results of Operations.................................. 11

PART II:  OTHER INFORMATION

Item 1.  Legal Proceedings................................................... 30

Item 2.  Changes in Securities............................................... 30

Item 3.  Defaults Upon Senior Securities..................................... 30

Item 4.  Submission of Matters to a Vote of Security Holders................. 31

Item 5.  Other Information................................................... 31

Item 6.  Exhibits or Reports on Form 8-K..................................... 31

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.......... 32

Signatures................................................................... 33

<PAGE>


<TABLE>
                               Prime Retail, Inc.

                           Consolidated Balance Sheets

                (Amounts in thousands, except share information)


 -----------------------------------------------------------------------------------------------------------------------------------
                                                                                             June 30, 2000         December 31, 1999
 -----------------------------------------------------------------------------------------------------------------------------------
 <CAPTION>
 <S>                                                                                         <C>                  <C>
 Assets

 Investment in rental property:
    Land........................................................................              $  177,813           $  181,854
    Buildings and improvements..................................................               1,557,015            1,560,710
    Property under development..................................................                  70,789               66,581
    Furniture and equipment.....................................................                  16,714               17,406
                                                                                              ----------           ----------
                                                                                               1,822,331            1,826,551
    Accumulated depreciation....................................................                (213,066)            (183,954)
                                                                                              ----------            ---------
                                                                                               1,609,265            1,642,597
 Cash and cash equivalents......................................................                   6,605                7,343
 Restricted cash................................................................                  28,050               28,131
 Accounts receivable, net.......................................................                  17,396               18,926
 Deferred charges, net..........................................................                  12,213               13,503
 Assets held for sale...........................................................                  65,900               97,639
 Due from affiliates, net.......................................................                   3,878                4,140
 Investment in partnerships.....................................................                  22,151               18,941
 Other assets...................................................................                  34,033               24,838
                                                                                              ----------           ----------
          Total assets..........................................................              $1,799,491           $1,856,058
                                                                                              ==========           ==========


 Liabilities and Shareholders' Equity

 Bonds payable..................................................................               $  32,900             $ 32,900
 Notes payable (See Note 3).....................................................               1,188,046            1,227,770
 Accrued interest...............................................................                   8,174                8,033
 Real estate taxes payable......................................................                  16,833               10,700
 Construction costs payable.....................................................                   4,931                5,123
 Accounts payable and other liabilities.........................................                  77,643               73,340
                                                                                               ---------           ----------

          Total liabilities.....................................................               1,328,527            1,357,866

 Minority interests.............................................................                   1,502                1,505
 Shareholders' equity:
    Shares of preferred stock, 24,315,000 shares authorized:
     10.5%Series  A  Senior   Cumulative   Preferred   Stock,   $.01  par  value
          (liquidation  preference  of  $61,273),  2,300,000  shares  issued and
          outstanding...........................................................                      23                   23
     8.5% Series B Cumulative  Participating  Convertible  Preferred Stock, $.01
          par value  (liquidation  preference  of  $206,101),  7,828,125  shares
          issued and outstanding................................................                      78                   78

    Shares of common stock, 150,000,000 shares authorized:
     Common stock,  $.01 par value,  43,577,916 and 43,368,620 shares issued and
          outstanding, respectively.............................................                     436                  434
    Additional paid-in capital..................................................                 709,373              709,122

    Distributions in excess of net income.......................................                (240,448)            (212,970)
                                                                                               ---------           ----------
          Total shareholders' equity............................................                 469,462              496,687
                                                                                               ---------           ----------
          Total liabilities and shareholders' equity............................              $1,799,491           $1,856,058
                                                                                              ==========           ==========

 ===================================================================================================================================

</TABLE>
 See accompanying notes to financial statements.



<PAGE>
<TABLE>
<CAPTION>
                               Prime Retail, Inc.
                      Consolidated Statements of Operations
                  (in thousands, except per share information)

                                                                            Three months                          Six months
                                                                          ended June 30                         ended June 30
                                                                   -----------------------------        ----------------------------

                                                                         2000          1999                  2000          1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>          <C>                  <C>           <C>

Revenues
Base rents                                                              $44,461     $48,356               $88,709       $97,658
Percentage rents                                                          1,106       1,978                 2,593         4,040
Tenant reimbursements                                                    20,368      22,609                42,380        46,297
Interest and other                                                        2,649       2,631                 7,743         5,922
                                                                        -------     -------               -------       -------
   Total revenues                                                        68,584      75,574               141,425       153,917

Expenses
Property operating                                                       15,958      17,200                33,490        36,137
Real estate taxes                                                         5,507       5,726                11,238        11,293
Depreciation and amortization                                            15,783      18,565                32,020        36,824
Corporate general and administrative                                      8,019       2,800                13,452         5,587
Interest                                                                 23,714      22,463                47,737        43,725
Provision for asset impairment                                            8,538           -                 8,538             -
Loss on eOutlets.com                                                      1,315           -                14,279             -
Loss on Designer Connection                                               1,006         543                 2,085           888
Other charges                                                             4,503         600                 6,032         2,488
                                                                       --------     -------               -------       -------
   Total expenses                                                        84,343      67,897               168,871       136,942
                                                                       --------     -------               -------       -------
Income (loss) before minority interests and
   extraordinary loss                                                   (15,759)      7,677               (27,446)       16,975
Income allocated to minority interests                                        -        (534)                  (32)         (534)
                                                                       --------     -------               -------       -------
Income (loss) before extraordinary loss                                 (15,759)      7,143               (27,478)       16,441
Extraordinary loss on early extinguishment of debt,
   net of minority interests of $534                                          -      (2,106)                    -        (2,106)
                                                                       --------     -------               -------       -------
Net income (loss)                                                       (15,759)      5,037               (27,478)       14,335
(Income) loss allocated to preferred shareholders                        (5,668)     (6,046)              (11,336)        1,754
                                                                       --------     -------               -------       -------
Net income (loss) applicable to common shares                          $(21,427)    $(1,009)             $(38,814)      $16,089
                                                                       ========     =======              ========       =======

Basic earnings per common share:
   Income (loss) before extraordinary loss                             $  (0.49)    $  0.03              $  (0.89)      $  0.42
   Extraordinary loss                                                         -       (0.05)                    -         (0.05)
                                                                       --------     -------              --------       -------
   Net income (loss)                                                   $  (0.49)    $ (0.02)             $  (0.89)      $  0.37
                                                                       ========     =======              ========       =======
Diluted earnings per common share:
   Income (loss) before extraordinary loss                             $  (0.49)    $  0.03              $  (0.89)      $  0.08
   Extraordinary loss                                                         -       (0.05)                    -         (0.04)
                                                                       --------     -------               -------       -------
   Net income (loss)                                                   $  (0.49)    $ (0.02)             $  (0.89)      $  0.04
                                                                       ========     =======              ========       =======

Weighted-average common shares outstanding:
   Basic                                                                 43,532      43,186                43,456        43,069
                                                                       ========     =======              ========       =======

   Diluted                                                               43,532      43,186                43,456        55,720
                                                                       ========     =======              ========       =======

Distributions declared per common share                                $      -     $ 0.295              $      -       $ 1.385
                                                                       ========     =======              ========       ========


====================================================================================================================================
See accompanying notes to financial statements.

</TABLE>

<PAGE>




<TABLE>
<CAPTION>

                               Prime Retail, Inc.

                      Consolidated Statements of Cash Flows

                             (Amounts in thousands)


------------------------------------------------------------------------------------------------------------------------------------
Six months ended June 30,                                                                             2000              1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                 <C>                <C>

Operating Activities
Net income (loss)...............................................................                    $(27,478)          $ 14,335
Adjustments  to reconcile  net income  (loss) to net cash  provided by operating
activities:
      Income allocated to minority interests....................................                          32                  -
      Depreciation..............................................................                      31,689             36,419
      Amortization of deferred financing costs and interest rate
        protection contracts....................................................                       1,708                800
      Amortization of leasing commissions.......................................                         331                405
      Provision for uncollectible accounts receivable...........................                       3,529              1,249
      Provision for asset impairment............................................                       8,538                  -
      Loss on eOutlets.com......................................................                      14,279                  -
      Gain on sale of land......................................................                      (2,471)                 -
Changes in operating assets and liabilities:
   Increase in accounts receivable..............................................                      (1,999)            (4,475)
   Decrease in other assets.....................................................                       1,059              2,143
   Increase (decrease) in other liabilities.....................................                       4,178               (693)
   Increase (decrease) in accrued interest......................................                         141               (104)
                                                                                                    --------            -------

      Net cash provided by operating activities.................................                      33,536             50,079
                                                                                                    --------            -------


Investing Activities
Additions to investment in rental property......................................                     (17,560)           (39,774)
Increase in property under development..........................................                     (24,425)            (7,078)
Proceeds from sale of land......................................................                       4,622                  -
Proceeds from sale of outlet center.............................................                      11,063                  -
                                                                                                    --------            -------
      Net cash used in investing activities.....................................                     (26,300)           (46,852)
                                                                                                    --------            -------
Financing Activities
Proceeds from notes payable.....................................................                      12,734            124,136
Principal repayments on notes payable...........................................                     (19,958)           (85,617)
Deferred financing fees.........................................................                        (750)                 -
Series C preferred stock redemption.............................................                           -             (1,038)
Distributions and dividends paid................................................                           -            (38,381)
Distributions to minority interests.............................................                           -             (6,486)
                                                                                                    --------            -------
Financing Activities
      Net cash used in financing activities.....................................                      (7,974)            (7,386)
                                                                                                    --------            -------
Decrease in cash and cash equivalents...........................................                        (738)            (4,159)
Cash and cash equivalents at beginning of period................................                       7,343              5,765
                                                                                                    --------            -------
Cash and cash equivalents at end of period......................................                    $  6,605            $ 1,606
                                                                                                    ========            =======


====================================================================================================================================
</TABLE>

See accompanying notes to financial statements.
<PAGE>



                               Prime Retail, Inc.
                Consolidated Statements of Cash Flows (continued)
                             (Amounts in thousands)

Supplemental Disclosure of Noncash Investing and Financing Activities:


The following  assets and  liabilities  were sold in connection with the sale of
Prime Outlets at Williamsburg on February 23, 2000:

    Book value of assets disposed, net.......................          $ 53,563
    Cash received............................................           (11,063)
    Promissory note received.................................           (10,000)
                                                                        -------

    Debt disposed............................................          $ 32,500
                                                                       ========

Redemption of 3,300,000 shares of Series C Preferred Stock
 in exchange for issuance of note payable on March 31, 1999..          $ 33,000

                                                                       ========
================================================================================


See accompanying notes to financial statements



<PAGE>


                               Prime Retail, Inc.
                   Notes to Consolidated Financial Statements
            (Amounts in thousands, except share and unit information)


Note 1 -- Interim Financial Presentation

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") for interim
financial  information  and the  instructions  to Form  10-Q and  Article  10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes required by GAAP for complete financial statements.  In the opinion of
management,  all adjustments  consisting only of recurring  accruals  considered
necessary for a fair presentation have been included. Operating results for such
interim  periods are not  necessarily  indicative  of the  results  which may be
expected  for a  full  fiscal  year.  For  further  information,  refer  to  the
consolidated financial statements and footnotes included in Prime Retail, Inc.'s
(the "Company") annual report on Form 10-K for the year ended December 31, 1999.

Unless the context requires otherwise, all references to the Company herein mean
Prime Retail, Inc. and those entities owned or controlled by Prime Retail, Inc.,
including Prime Retail,  L.P. (the "Operating  Partnership").  The  consolidated
financial  statements  include  the  accounts  of  the  Company,  the  Operating
Partnership and the  partnerships in which the Company has operational  control.
Profits and losses are allocated in  accordance  with the terms of the agreement
of limited partnership of the Operating Partnership. Investments in partnerships
in which the Company does not have  operational  control are accounted for under
the equity method of accounting.  Income (loss) applicable to minority interests
and common shares as presented in the  consolidated  statements of operations is
allocated  based  on  income  (loss)  before  minority  interests  after  income
allocated to preferred shareholders.

The  preparation  of  financial  statements  in  conformity  with GAAP  requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities  and disclosure of contingent  liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting  period.  Actual results could differ from those estimates.
Significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.  Certain prior period financial information has been reclassified
to conform with the current period presentation.


Note 2 -- Earnings Per Share

Basic earnings per share ("EPS") is calculated by dividing net income  available
to common  shareholders  by the weighted  average  number of shares  outstanding
during the period. Diluted EPS includes the potentially dilutive effect, if any,
which would occur if  outstanding  (i)  options to  purchase  Common  Stock were
exercised,  (ii) Common Units were converted into shares of Common Stock,  (iii)
shares of Series C Preferred  Stock were  converted into shares of Common Stock,
and (iv) shares of Series B  Convertible  Preferred  Stock were  converted  into
shares of Common Stock. For the three and six months ended June 30, 2000 and the
three months ended June 30, 1999,  the effect of all exercises  and  conversions
was anti-dilutive and,  therefore,  dilutive EPS is equivalent to basic EPS. For
the six  months  ended  June 30,  1999,  a  redemption  discount  and  dividends
aggregating  $13,718  related  to  the  Company's  repurchase  of its  Series  C
Preferred  Stock were  excluded from the  numerator  and  incremental  shares of
12,651 were included in the  denominator,  related to the assumed  conversion of
Series C Preferred  Stock and Common Units,  of the  computation of diluted EPS.
For the six months ended June 30, 1999,  the effect of all other  exercises  and
conversions was anti-dilutive, and, therefore, was excluded from the computation
of diluted EPS.

Note 3 -- Notes Payable

The maturity of the Company's $25,000 unsecured line of credit was extended from
July 11,  2000 to August 30,  2000,  or earlier if the  Company  terminates  its
efforts to close on an  anticipated  debt financing  with Lehman  Brothers.  The
Company  is in  discussion  with the lender to obtain an  additional  short-term
extension of the loan.  See  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations - Lehman Brothers Loan  Negotiation and Debt
Facility Compliance" for additional information.

The maturity of the Company's  $20,000  subordinated loan was extended from June
30, 2000 to August 14,  2000.  The Company is in  discussion  with the lender to
obtain an additional short-term extension of the loan.

The maturity of the Company's $3,559 first mortgage,  collateralized by property
in  Knoxville,  TN, was  extended  from June 22,  2000 to August 21,  2000.  The
Company is in discussion  with the lender to obtain an  additional  extension of
the loan.

Debt Contingencies

As of June 30,  2000,  the Company is a guarantor or  otherwise  obligated  with
respect  to an  aggregate  of  $12,591  of the  indebtedness  of  Horizon  Group
Properties, Inc. and its affiliates ("HGP") including a $10,000 obligation under
HGP's  secured  credit  facility  which  bears a rate of  interest of LIBOR plus
1.90%,  matures in July 2001, and is collateralized by seven properties  located
throughout the United States.

On April 1, 1998, Horizon Group, Inc. ("Horizon")  consummated an agreement with
Castle  &  Cooke  Properties,  Inc.  which  released  Horizon  from  its  future
obligations  under its  long-term  lease of the Dole  Cannery  outlet  center in
Honolulu,  Hawaii,  in  connection  with the  formation of a joint  venture with
certain  affiliates of Castle & Cooke,  Inc.  ("Castle & Cooke") to operate such
property. Under the terms of the agreement, Castle & Cooke Properties, Inc., the
landlord of the project and an  affiliate  of Castle & Cooke,  released  Horizon
from any  continuing  obligations  under the lease,  which  expires in 2045,  in
exchange  for  Horizon's  conveyance  to the joint  venture  of its  rights  and
obligations  under such lease. The agreement also provided that Horizon transfer
to such joint venture  substantially  all of Horizon's  economic interest in its
outlet center in Lake Elsinore,  California  together with legal title to vacant
property located adjacent to the center. As of June 30, 2000, the Company held a
small minority interest in the joint venture but has no obligation or commitment
with  respect  to the  post-closing  operations  of the  Dole  Cannery  project.
Mortgage  indebtedness with an outstanding  balance of $28,837 at June 30, 2000,
for  which  one  of  the  Company's  subsidiary   partnerships  remains  legally
responsible,  is  collateralized by a first mortgage on the Lake Elsinore outlet
center. The joint venture, as a limited partner in such subsidiary  partnership,
is  obligated  to make  capital  contributions  to the  partnership  to pay debt
financing, operating and other expenses under certain conditions. The subsidiary
partnership  will remain  legally  responsible  for such expenses in case of any
shortfalls  by the joint  venture with  respect to such  capital  contributions.
Castle & Cooke has  provided  the Company with an  unconditional  guaranty  with
respect to any such shortfalls.

Debt Facility Compliance

Based on the financial  results for the second  quarter of 2000,  the Company is
not in  compliance  with  financial  covenants  contained in certain of its debt
facilities. Non-compliance with these covenants may have triggered cross-default
provisions with respect to several other Company debt facilities. Certain of the
affected lenders have alleged that  non-compliance  with the financial covenants
constitutes  a default  under  their loan  documents.  The Company has taken the
position  with these  lenders  that the nature and extent of the  non-compliance
with the  financial  covenants  would not permit any  lender to  accelerate  the
maturity of its loan or pursue other remedies under the loan documents.  None of
these loans has been  accelerated  nor has notice of any  lender's  intention to
accelerate been received by the Company.  The Company is in discussions with the
affected lenders regarding either paying off these loans in their entirety using
proceeds from the anticipated debt financing with Lehman Brothers,  or modifying
the terms and  financial  covenants so that the Company will be in compliance at
the time the anticipated debt financing closes.

If the Company is unable to close the  anticipated  debt  financing  with Lehman
Brothers,  it will look to obtain  alternative  financing  from other  financial
institutions  or the  potential  sale of assets or a joint  venture  interest in
certain outlet centers as sources of cash to repay the amounts outstanding under
such loans. This condition raises  substantial doubt about the Company's ability
to continue as a going  concern.  The  financial  statements  do not include any
adjustment  to reflect the possible  future  effects on the  recoverability  and
classification  of assets or the amounts and  classification of liabilities that
may result from the outcome of this uncertainty.

Although  the Company  continues to maintain its  regularly  scheduled  interest
payments under all of its other indebtedness, there can be no assurance that one
or all of the affected  lenders will not attempt to  accelerate  the maturity of
its indebtedness or pursue other remedies under their respective loan documents.
Additionally,  there can be no assurance  that the Company will be in compliance
with its financial debt  covenants in future periods since the Company's  future
financial  performance is subject to various risks and uncertainties,  including
but not limited  to, the  effects of  increases  in market  interest  rates from
current  levels,  the risk of  potential  increases  in  vacancy  rates  and the
resulting impact on the Company's revenue, and risks associated with refinancing
the Company's current debt obligations or obtaining new financing under terms as
favorable as the Company has experienced in prior periods.

The Company, through affiliates,  holds 50% interests in the owners of an outlet
center in Oxnard,  CA and phase one of an outlet  center in Bellport,  NY. First
mortgage  loans on these  properties  have matured and are currently in default.
The  Company is  exploring  all  options to resolve  these  defaults,  including
transferring  the outlet  centers to the lenders.  Such  transfers  would not be
expected to have a material  effect on the Company's  results from operations or
its financial condition.


Note 4 - Prime/Estein Joint Venture Transaction

On August 6, 1999,  the Company  entered  into an agreement  (the  "Prime/Estein
Joint Venture  Agreement") to sell three factory outlet  centers,  including two
future  expansions,  to a joint venture (the "Venture")  between an affiliate of
Estein & Associates USA, Ltd. ("Estein"),  a real estate investment company, and
the Company.  The  Prime/Estein  Joint  Venture  Agreement  provided for a total
purchase  price of  $274,000,  including  (i) the  assumption  of  approximately
$151,500 of first mortgage  indebtedness,  (ii) an $8,000 payment to the Company
for a ten-year covenant-not-to-compete and (iii) a $6,000 payment to the Company
for a ten-year  licensing  agreement with the Venture to continue the use of the
"Prime  Outlets" brand name.  Additionally,  the Company is in discussions  with
Estein  regarding  modification of the terms of the sale of the future expansion
to Prime Outlets at Willliamsburg.

On November 19,  1999,  the Company  completed  the initial  installment  of the
Prime/Estein Joint Venture Agreement  consisting of the sale of Prime Outlets at
Birch Run to the Venture for aggregate  consideration  of $117,000,  including a
$64,500 "wrap-around" first mortgage provided by the Company. In connection with
the sale of Prime  Outlets at Birch Run, the Company  received  cash proceeds of
$33,303,  net of  transaction  costs,  and  recorded  a loss on the sale of real
estate of $9,326.  Effective November 19, 1999, the Company commenced accounting
for its 30.0%  ownership  interest in Prime  Outlets at Birch Run in  accordance
with the equity method of accounting.  The "wrap-around" first mortgage provided
by the Company to the Venture has a ten-year  term at a fixed  interest  rate of
7.75% requiring monthly payments of principal and interest pursuant to a 25-year
amortization  schedule.  The Company's net investment in the "wrap-around" first
mortgage as of June 30,  2000 and  December  31,  1999 was $10,674 and  $10,745,
respectively,  which is included  in other  assets in the  Consolidated  Balance
Sheet.  Additionally,  the  Venture  assumed  $53,755  of  outstanding  mortgage
indebtedness.  Included  in the  aggregate  consideration  is a  $5,500  payment
related  to the  covenant-not-to-compete  and a $3,000  payment  related  to the
licensing agreement. The payments to the Company for the covenant-not-to-compete
and  the  licensing  agreement  are  included  in  accounts  payable  and  other
liabilities in the Consolidated  Balance Sheet and will be amortized into income
over their ten-year lives.

During the fourth  quarter of 1999,  the Company  recorded a loss on the sale of
real estate of $5,827  related to the  write-down of the carrying value of Prime
Outlets at  Williamsburg  based on the terms of the  Prime/Estein  Joint Venture
Agreement. On February 23, 2000, the Company completed the second installment of
the Prime/Estein Joint Venture Agreement consisting of the sale of Prime Outlets
at Williamsburg to the Venture for aggregate consideration of $59,000, including
(i) the assumption of mortgage  indebtedness  of $32,500,  (ii) a $1,250 payment
related to the covenant-not-to-compete and (iii) a $1,500 payment related to the
licensing   agreement.   In  connection  with  the  sale  of  Prime  Outlets  at
Williamsburg,  the  Company  received  (i)  cash  proceeds  of  $11,063,  net of
transaction  costs, and (ii) a promissory note in the amount of $10,000 from the
Venture,  such  amount  to be  payable  on or  before  December  15,  2000.  The
promissory note requires the monthly payment of interest in arrears at an annual
rate of 7.75%.

The Company now expects to close on the sale of Prime Outlets at Hagerstown  for
aggregate  consideration  of  approximately  $80,500 during the third quarter of
2000.  The Company  expects to receive net  proceeds of  approximately  $19,000,
which will be used to repay short-term  indebtedness  and for general  corporate
purposes.  Completion of this transaction  remains subject to various conditions
and there can be no  assurance  as to whether or when this  transaction  will be
consummated.  As of June 30, 2000, the Company classified  $59,261  representing
the aggregate  carrying  value of Prime Outlets at Hagerstown as assets held for
sale in its  Consolidated  Balance  Sheet.  As of December 31, 1999, the Company
classified $97,639 representing the aggregate carrying value of Prime Outlets at
Williamsburg  and Prime  Outlets at  Hagerstown  as assets  held for sale in its
Consolidated Balance Sheet.

Note 5 - Shareholders' Equity

The Company is authorized to issue up to (i) 150,000,000  shares of common stock
and (ii) 24,315,000 shares of preferred stock in one or more series. At June 30,
2000,  43,577,916  shares of common  stock,  2,300,000  shares of 10.5% Series A
Senior  Cumulative  Preferred  Stock  ("Senior  Preferred  Stock") and 7,828,125
shares of 8.5% Series B Cumulative  Participating  Convertible  Preferred  Stock
("Series B Convertible Preferred Stock") were issued and outstanding.

Dividends on the Senior  Preferred Stock are payable  quarterly in the amount of
$2.625 per share per annum.  Dividends  on the  Series B  Convertible  Preferred
Stock are payable  quarterly at the greater of (i) $2.125 per share per annum or
(ii) the dividends on the number of shares of Common Stock into which a share of
Series B Convertible Preferred Stock will be convertible at the conversion price
of $20.90 per share of Common  Stock.  At June 30,  2000,  there were  9,363,786
shares of Common  Stock  reserved for future  issuance  upon  conversion  of the
Series B Convertible Preferred Stock.

The Senior  Preferred  Stock and  Series B  Convertible  Preferred  Stock have a
liquidation  preference  equivalent to $25.00 per share plus the amount equal to
any accrued and unpaid dividends thereon.  As of June 30, 2000, unpaid dividends
for the period  November 16, 1999 through June 30, 2000 on the Senior  Preferred
Stock and Series B Convertible  Preferred Stock  aggregated  $3,773 and $10,398,
respectively.

In order to qualify as a Real  Estate  Investment  Trust  ("REIT")  for  federal
income tax purposes,  the Company is required to pay distributions to its common
and  preferred  shareholders  of at least  95.0% of its REIT  taxable  income in
addition to satisfying other requirements.  Although the Company intends to make
distributions  in accordance with the  requirements of the Internal Revenue Code
of 1986, as amended, necessary to remain qualified as a REIT, it also intends to
retain such amounts as it considers  necessary from time to time for capital and
liquidity needs of the Company.

The Company's  current policy with respect to common stock  distributions  is to
only make payments to the extent  necessary to maintain its status as a REIT for
federal income tax purposes.  Based on the Company's  current federal income tax
projections,  it does not expect to pay any distributions on its common stock or
common units of limited partnership interest in Prime Retail, L.P. during 2000.

With respect to distributions on the Company's Senior Preferred Stock and Series
B  Convertible  Preferred  Stock,  the  Board of  Directors  did not  declare  a
quarterly distribution on such preferred stock due February 15, 2000 and May 15,
2000,  respectively.  The Board of  Directors  announced  on July 24, 2000 that,
based on the Company's  current  financial  situation and the Company's  current
federal  income tax  projections,  the Company  does not  anticipate  paying any
quarterly  distributions  on  the  Senior  Preferred  Stock  and  the  Series  B
Convertible  Preferred  Stock during the  remainder  of 2000.  The Company is in
arrears on its Preferred Stock  distributions  due February 15, 2000 and May 15,
2000.  Non-payment of the quarterly preferred stock distributions due August 15,
2000 will  represent the third  consecutive  quarter that such  dividends are in
arrears.  The  holders of the Senior  Preferred  Stock and Series B  Convertible
Preferred Stock have the right to elect two additional  members to the Company's
Board of Directors if the equivalent of six consecutive  quarterly  dividends on
these series of preferred stock are in arrears. Each of such two directors would
be elected to serve until the earlier of (i) the election and  qualification  of
such director's successor, or (ii) payment of the dividend arrearage.

The  Company  is  currently  prohibited  under the terms of more than one of its
credit  agreements  from  paying  dividends  or  distributions  as a  result  of
non-compliance with a financial covenant.  In addition,  the Company may make no
distributions  to its common  shareholders  unless it is current with respect to
distributions  to  its  preferred  shareholders.  Annualized  dividends  on  the
Company's  Senior  Preferred  Stock and  Series B  Convertible  Preferred  Stock
outstanding as of June 30, 2000 are $6,038 and $16,636, respectively.

Note 6  - Special Charges

On April 12, 2000, the Company  announced that it had been unable to conclude an
agreement  to transfer  ownership  of its  wholly-owned  e-commerce  subsidiary,
primeoutlets.com inc., also known as eOutlets.com,  to a management-led investor
group  comprised of  eOutlets.com  management and outside  investors.  Effective
April 12, 2000,  eOutlets.com  ceased all  operations.  In  connection  with the
discontinuance  of eOutlets.com,  the Company  incurred a non-recurring  loss of
$14,279 which includes (i) the write-off of $3,497 of costs  capitalized  during
1999 and (ii)  $10,782 of costs  incurred  during the six months  ended June 30,
2000.

During the second quarter of 2000, management  established a formal plan to sell
two of its properties and,  accordingly,  reclassified their respective carrying
values to assets held for sale in the Consolidated  Balance Sheet as of June 30,
2000. In accordance with the  requirements of Statement of Financial  Accounting
Standards No. 121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and
Long-Lived Assets to be Disposed of", the Company incurred a provision for asset
impairment of $8,538 to reduce the carrying  value of these  properties to their
estimated  sales value,  less cost to dispose.  The aggregate  carrying value of
these properties as of June 30, 2000 was $6,639.

The operating  results for the Company's  Designer  Connection outlet stores are
reflected  in Loss on Designer  Connection  in the  Consolidated  Statements  of
Operations for all periods presented.  When accounting for the fourth quarter of
1999,  the  Company  decided  to  discontinue  the  operations  of its  Designer
Connection  outlet  stores.  The  operations of the Designer  Connection  outlet
stores ceased during June of 2000.

Note 7 - Commitments and Contingencies

The Company was required,  pursuant to a real estate purchase  agreement and two
ground  leases in which it is the  ground  lessee,  to  purchase  for $6,809 the
unowned 50% interests in parcels of land  underlying  Phases III and IV of Prime
Outlets  at Gilroy  in  Gilroy,  California.  The  Company  did not close on the
scheduled  closing date.  The seller has several  rights and remedies  under the
relevant  documents,  including  amending the base rent under the ground leases,
amending the purchase price, and seeking specific performance. On August 9, 2000
the seller  notified  the  Company  that it has  exercised  its right  under the
relevant documents require the Company to close within 180 days. The seller also
reserved its other  remedies under the relevant  documents.  The seller does not
have the right to terminate the ground leases a a remedy.

Note 8 - Legal Proceedings

In the  ordinary  course of  business  the  Company is subject to certain  legal
actions.  While any litigation  contains an element of  uncertainty,  management
believes the losses, if any,  resulting from such matters,  including the matter
described  below,  will not have a material  adverse effect on the  consolidated
financial statements of the Company.

The Company and its affiliates  were defendants in a lawsuit filed on August 10,
1999 in the Circuit Court for Baltimore City and removed to U. S. District Court
for the District of Maryland (the "U.S. District Court") on August 20, 1999. The
plaintiff alleged that the Company and its related entities  overcharged tenants
for common  area  maintenance  charges  and  promotion  fund  charges.  The U.S.
District Court dismissed the lawsuit on June 19, 2000. The plaintiff has filed a
notice of its appeal from the U.S. District Court's decision. The outcome of the
appeal, and the ultimate  liability of the Company,  if any, if the dismissal is
overturned on appeal,  cannot currently be predicted.  Management  believes that
the Company has acted properly and intends to defend this lawsuit vigorously.

Several  entities (the  "Plaintiffs")  have filed or stated an intention to file
lawsuits (the  "Lawsuits")  against the Company and its  affiliates in which the
Plaintiffs are seeking to hold them responsible under various legal theories for
liabilities  incurred by  primeoutlets.com,  inc.,  also known as  eOutlets.com.
Primeoutlets.com,  inc.  is  also a  defendant  in  some,  but not  all,  of the
Lawsuits.  The Company believes that it is not liable to the Plaintiffs as there
was no privity of contract between it and the respective Plaintiffs. The Company
intends to defend  all  Lawsuits  vigorously.  In the case  captioned  Convergys
Customer  Management  Group,  Inc. v. Prime Retail,  Inc. and  primeoutlets.com,
inc., currently pending in the Court of Common Pleas for Hamilton County (Ohio),
the Company prevailed in a motion to dismiss  Plaintiff's claim that the Company
was liable for primeoutlets.com, inc.'s breach of contract based on the doctrine
of piercing the corporate veil. The outcome of these Lawsuits,  and the ultimate
liability of the Company, if any, cannot be predicted.

The New York Stock  Exchange and the  Securities  and Exchange  Commission  have
notified the Company that they are  reviewing  transactions  in the stock of the
Company  prior to the  Company's  January  18,  2000  press  release  concerning
financial matters.


<PAGE>

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

(Amounts in thousands, except share, unit and square foot information)


Introduction

The following  discussion and analysis of the consolidated  financial  condition
and results of operations of Prime Retail,  Inc. (the "Company")  should be read
in conjunction with the Consolidated Financial Statements and Notes thereto. The
Company's  operations are conducted  through Prime Retail,  L.P. (the "Operating
Partnership").  The  Company  controls  the  Operating  Partnership  as its sole
general partner and is dependent upon the  distributions  or other payments from
the Operating Partnership to meet its financial obligations.  Historical results
and percentage  relationships set forth herein are not necessarily indicative of
future operations.

Cautionary Statements

The following  discussion in "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 which
reflect  management's  current views with respect to future events and financial
performance.  These statements are subject to potential risks and  uncertainties
and,  therefore,  actual  results may differ  materially.  Such  forward-looking
statements are subject to certain risks and  uncertainties,  including,  but not
limited  to,  the risk that the  Company  may be unable  to  obtain  waivers  or
amendments  to the  provisions  of its credit  agreements  that are presently in
default or to refinance the  indebtedness  outstanding  under such agreements in
the event they are  accelerated;  the effects of future  events on the Company's
financial  performance;  risks  related  to the  retail  industry  in which  the
Company's  outlet  centers  compete,  including the potential  adverse impact of
external factors, such as inflation, consumer confidence, unemployment rates and
consumer tastes and  preferences;  risks  associated with the Company's  planned
asset  sales;   risks  associated  with  the  Company's   property   development
activities,  such as the  potential  for cost  overruns,  delays and the lack of
predictability  with  respect to the  financial  returns  associated  with these
development activities;  the risk of potential increase in market interest rates
from current levels;  risks associated with real estate  ownership,  such as the
potential  adverse impact of changes in local  economic  climate on the revenues
and the value of the Company's properties; risks associated with litigation; and
risks associated with newly arising competition from web-based retailers.

Outlet Portfolio

The Company grew to its present size, a process largely  completed by the end of
1999, by  developing  and  acquiring  outlet  centers and expanding its existing
outlet  centers.  As  summarized  in  TABLE 1, the  Company's  outlet  portfolio
consisted of 51 outlet centers totaling 14,913,000 square feet of gross leasable
area ("GLA") at June 30, 2000,  compared to 50 operating  manufacturers'  outlet
centers totaling 14,343,000 square feet of GLA at June 30, 1999. The increase in
the number of outlet centers and the GLA in the Company's  outlet  portfolio are
collectively referred to as the "Portfolio Expansion."

On  November  19,  1999,  the  Company  sold Prime  Outlets at Birch Run,  which
contains  724,000  square feet of GLA, to a joint  venture  partnership  with an
unrelated party, (the  "Prime/Estein  Venture").  Additionally,  on February 23,
2000, the Company sold Prime Outlets at  Williamsburg,  which  contains  274,000
square feet of GLA, to the Prime/Estein Venture. The Company owns a 30% interest
in the Prime/Estein Venture. Commencing on the dates of disposition, the Company
accounts for the operating  results of these outlet  centers in accordance  with
the  equity  method  of  accounting.  The  sales of  these  outlet  centers  are
collectively referred to as the "Prime/Estein Transaction."

During 1999,  the Company (i) opened two  expansions to existing  outlet centers
totaling  85,000  square  feet of GLA (of which  21,000  square  feet and 64,000
square  feet  opened in the first and  third  quarters,  respectively)  and (ii)
acquired from Horizon Group Properties,  Inc. ("HGP") ownership interests in the
Bellport Outlet Center(in  September 1999) which consists of 292,000 square feet
of GLA. In the first  quarter of 2000,  the Company  opened a 68,000 square foot
expansion at Prime Outlets at Hagerstown  relating to the second home furnishing
store  operated  by The  Home  Co.,  in which a 47.6%  interest  is owned by the
Company.  In the second quarter of 2000, the Company opened a 98,000 square foot
expansion at Prime Outlets at Hagerstown and two expansions  aggregating  48,000
square feet at Prime Outlets at San Marcos.

Between  December  31,  1999 and June 30,  2000,  the  Company's  outlet  center
portfolio  experienced  a decline in occupancy  from 93% to 91%. The decline was
primarily  attributable to tenant departures  subsequent to the holiday shopping
season as well as certain tenant bankruptcies and adbandonments. For comparison,
the Company's outlet center portfolio was 94% occupied on June 30, 1999.



<PAGE>

<TABLE>
                             Portfolio of Properties
                                  June 30, 2000

<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

                                                                                              Grand            GLA      Percentage
Outlet Centers                                                          Phase          Opening Date      (Sq. Ft.)       Leased(1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>            <C>                <C>                 <C>
Prime Outlets at Kittery  - Kittery Maine..............................     I            April 1984         25,000             100%

                                                                           II              May 1984         78,000             100
                                                                          III           August 1989         18,000             100
                                                                           IV              May 1998         10,000             100
                                                                                                           -------             ---
                                                                                                           131,000             100

Prime Outlets at Fremont - Fremont, Indiana............................     I          October 1985        118,000              92
                                                                           II         November 1993         51,000             100
                                                                          III          October 1994         60,000              87
                                                                                                           -------             ---
                                                                                                           229,000              92

Prime Outlets at Birch Run (2) - Birch Run, Michigan................... I-XVI               Various        591,000              97
                                                                           XVII-
                                                                        XVIII                  1997        133,000              96
                                                                                                           -------             ---
                                                                                                           724,000              97

Prime Outlets at Latham - Latham, New York.............................     I           August 1987         43,000              88

Prime Outlets at Michigan City - Michigan City, Indiana................     I         November 1987        199,000             100
                                                                           II              May 1988        130,000              97
                                                                          III             July 1991         36,000              91
                                                                           IV             July 1994         42,000             100
                                                                            V         December 1994         26,000              98
                                                                           VI              May 1995         58,000              96
                                                                                                           -------             ---
                                                                                                           491,000              98

Prime Outlets at Williamsburg (3) - Williamsburg, Virginia.............     I            April 1988         67,000              96
                                                                           II         November 1988         60,000             100
                                                                          III          October 1990         49,000              95
                                                                           IV                  1995         98,000             100
                                                                                                           -------             ---
                                                                                                           274,000              98

Prime Outlets at Kenosha - Kenosha, Wisconsin..........................     I        September 1988         89,000              97
                                                                           II             July 1989         65,000             100
                                                                          III              May 1990        115,000              85
                                                                                                           -------             ---
                                                                                                           269,000              93

Prime Outlets at Silverthorne - Silverthorne, Colorado.................     I         November 1988         95,000              97
                                                                           II         November 1990         75,000              95
                                                                          III         November 1993         88,000              80
                                                                                                           -------             ---
                                                                                                           258,000              91

Prime Outlets at Edinburgh - Edinburgh, Indiana........................     I                  1988        156,000             100
                                                                           II         November 1994        142,000              97
                                                                                                           -------             ---
                                                                                                           298,000              99

Prime Outlets at Burlington - Burlington, Washington ..................     I              May 1989         89,000              84
                                                                           II          October 1989         36,000             100
                                                                          III            April 1993         49,000              97
                                                                                                           -------             ---
                                                                                                           174,000              91

Prime Outlets at Queenstown - Queenstown, Maryland.....................     I             June 1989         67,000              97
                                                                           II             June 1990         55,000             100
                                                                          III          January 1991         16,000              97
                                                                           IV             June 1992         14,000              97
                                                                            V           August 1993         69,000             100
                                                                                                            -------             ---
                                                                                                           221,000              99

</TABLE>
<PAGE>
<TABLE>

                       Portfolio of Properties (continued)
                                  June 30, 2000
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Grand            GLA      Percentage
Outlet Centers                                                          Phase          Opening Date      (Sq. Ft.)       Leased(1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>           <C>                 <C>                  <C>
Prime Outlets at Hillsboro - Hillsboro, Texas..........................     I          October 1989         95,000              96%
                                                                           II          January 1992        101,000              95
                                                                          III              May 1995        163,000              92
                                                                                                           -------             ---
                                                                                                           359,000              94

Prime Outlets at Oshkosh - Oshkosh, Wisconsin..........................     I         November 1989        215,000              85
                                                                           II             July 1991         45,000              93
                                                                                                           -------             ---
                                                                                                           260,000              86

Prime Outlets at Warehouse Row (4) - Chattanooga, Tennessee............     I         November 1989         95,000              84

Prime Outlets at Gilroy - Gilroy, California...........................     I          January 1990         94,000              98
                                                                           II           August 1991        109,000              97
                                                                          III          October 1992        137,000              96
                                                                           IV             July 1994        170,000              99
                                                                            V         November 1995         69,000             100
                                                                                                           -------             ---
                                                                                                           579,000              98

Prime Outlets at Perryville - Perryville, Maryland.....................     I             June 1990        148,000              88

Prime Outlets at Sedona - Sedona, Arizona .............................     I           August 1990         82,000             100

Prime Outlets at San Marcos - San Marcos, Texas........................     I           August 1990        177,000              96
                                                                           II           August 1991         70,000              91
                                                                          III           August 1993        117,000              97
                                                                         IIIB         November 1994         20,000              91
                                                                         IIIC         November 1995         35,000              75
                                                                         IIID              May 1998         18,000             100
                                                                           VA           August 1999         64,000             100
                                                                           VB              May 2000         17,000             100
                                                                           VC              May 2000         31,000              69
                                                                                                           -------             ---
                                                                                                           549,000              96

Prime Outlets at Anderson - Anderson, California.......................     I           August 1990        165,000              93

Prime Outlets at Post Falls - Post Falls, Idaho .......................     I             July 1991        111,000              71
                                                                           II             July 1992         68,000              86
                                                                                                           -------             ---
                                                                                                           179,000              77

Prime Outlets at Ellenton - Ellenton, Florida..........................     I         October 1991         187,000              98
                                                                           II          August 1993         123,000              98
                                                                          III         October 1996          30,000             100
                                                                           IV        November 1998         141,000              97
                                                                                                           -------             ---
                                                                                                           481,000              98

Prime Outlets at Morrisville - Raleigh - Durham, North Carolina........     I         October 1991         181,000              93
                                                                           II            July 1996           6,000             100
                                                                                                           -------             ---
                                                                                                           187,000              93

Prime Outlets at Naples - Naples/Marco Island, Florida.................     I        December 1991          94,000              83
                                                                           II        December 1992          32,000             100
                                                                          III           March 1998          20,000              98
                                                                                                           -------             ---
                                                                                                           146,000              89

Prime Outlets at Conroe - Conroe, Texas................................     I         January 1992          93,000              91
                                                                           II            June 1994         163,000              90
                                                                          III         October 1994          26,000              79
                                                                                                           -------             ---
                                                                                                           282,000              89

Bellport Outlet Center(5) - Bellport, New York.........................     I              May 1992         95,000              85
                                                                           II         November 1996        126,000              83
                                                                          III          October 1997         71,000              60
                                                                                                           -------             ---
                                                                                                           292,000              76

</TABLE>
<PAGE>
<TABLE>



                       Portfolio of Properties (continued)
                                  June 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                                              Grand            GLA      Percentage
Outlet Centers                                                          Phase          Opening Date      (Sq. Ft.)       Leased(1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>            <C>                <C>                  <C>

Prime Outlets at Niagara Falls USA - Niagara Falls, New York...........     I             July 1992        300,000              98%
                                                                           II           August 1995        234,000              89
                                                                                                           -------             ---
                                                                                                           534,000              94

Prime Outlets at Woodbury - Woodbury, Minnesota........................     I            July 1992         129,000              77
                                                                           II        November 1993         100,000              83
                                                                          III          August 1994          21,000              52
                                                                                                           -------             ---
                                                                                                           250,000              77

Prime Outlets at Calhoun - Calhoun, Georgia............................     I         October 1992         123,000              96
                                                                           II         October 1995         131,000              89
                                                                                                           -------             ---
                                                                                                           254,000              93

Prime Outlets at Castle Rock - Castle Rock, Colorado...................     I        November 1992         181,000              95
                                                                           II          August 1993          94,000              93
                                                                          III        November 1993          95,000             100
                                                                           IV          August 1997         110,000              91
                                                                                                           -------             ---
                                                                                                           480,000              95

Prime Outlets at Bend - Bend, Oregon...................................     I        December 1992          97,000             100
                                                                           II       September 1998          35,000              99
                                                                                                           -------             ---
                                                                                                           132,000             100

Prime Outlets at Jeffersonville II - Jeffersonville, Ohio..............     I           March 1993         126,000              68
                                                                           II          August 1993         123,000              43
                                                                          III         October 1994          65,000              64
                                                                                                           -------             ---
                                                                                                           314,000              57

Prime Outlets at Jeffersonville I - Jeffersonville, Ohio...............     I            July 1993         186,000              86
                                                                           II        November 1993         100,000              99
                                                                          IIB        November 1994          13,000              64
                                                                         IIIA          August 1996          35,000              97
                                                                         IIIB           March 1997          73,000             100
                                                                                                           -------             ---
                                                                                                           407,000              92

Prime Outlets at Gainesville - Gainesville, Texas......................     I           August 1993        210,000              80
                                                                           II         November 1994        106,000              88
                                                                                                           -------             ---
                                                                                                           316,000              82

Prime Outlets at Loveland - Loveland, Colorado.........................     I              May 1994        139,000              90
                                                                           II         November 1994         50,000              88
                                                                          III              May 1995        114,000              91
                                                                           IV              May 1996         25,000             100
                                                                                                           -------             ---
                                                                                                           328,000              91

Prime Outlets at Oxnard (6) - Oxnard, California.......................     I             June 1994        148,000              92

Prime Outlets at Grove City - Grove City, Pennsylvania.................     I           August 1994        235,000              97
                                                                           II         November 1994         95,000             100
                                                                          III         November 1995         85,000              96
                                                                           IV         November 1996        118,000              99
                                                                                                           -------             ---
                                                                                                           533,000              98

Prime Outlets at Huntley - Huntley, Illinois...........................     I           August 1994        192,000              92
                                                                           II         November 1995         90,000              71
                                                                                                           -------             ---
                                                                                                           282,000              85


Prime Outlets at Florida City - Florida City, Florida..................     I        September 1994        208,000              81

</TABLE>

<PAGE>


<TABLE>



                       Portfolio of Properties (continued)
                                  June 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                                              Grand            GLA      Percentage
Outlet Centers                                                          Phase          Opening Date      (Sq. Ft.)       Leased(1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>           <C>                 <C>                  <C>

Prime Outlets at Pismo Beach  - Pismo Beach, California................     I         November 1994        148,000              88%

Prime Outlets at Tracy  - Tracy, California............................     I         November 1994        153,000              88

Prime Outlets at Vero Beach  - Vero Beach, Florida.....................     I         November 1994        210,000              92
                                                                           II           August 1995        116,000              85
                                                                                                           -------             ---
                                                                                                           326,000              90

Prime Outlets at Waterloo - Waterloo, New York.........................     I            March 1995        208,000              97
                                                                           II        September 1996        115,000              95
                                                                          III            April 1997         68,000              94
                                                                                                           -------             ---
                                                                                                           391,000              96

Prime Outlets at Odessa - Odessa, Missouri.............................     I             July 1995        191,000              87
                                                                           II         November 1996        105,000              56
                                                                                                           -------             ---
                                                                                                           296,000              76

Prime Outlets at Darien (7) - Darien, Georgia..........................     I             July 1995        238,000              85
                                                                          IIA         November 1995         49,000              99
                                                                          IIB             July 1996         20,000             100
                                                                                                           -------             ---
                                                                                                           307,000              88

Prime Outlets at New River (6) - Phoenix, Arizona......................     I        September 1995        217,000              93
                                                                           II        September 1996        109,000              79
                                                                                                           -------             ---
                                                                                                           326,000              89

Prime Outlets at Gulfport (8) - Gulfport, Mississippi..................     I         November 1995        228,000              91
                                                                          IIA         November 1996         40,000              78
                                                                          IIB         November 1997         38,000              84
                                                                                                           -------             ---
                                                                                                           306,000              88

Prime Outlets at Lodi - Burbank, Ohio..................................     I         November 1996        205,000              90
                                                                          IIA              May 1998         33,000              92
                                                                          IIB         November 1998         75,000              82
                                                                                                           -------             ---
                                                                                                           313,000              88

Prime Outlets at Gaffney - Gaffney, South Carolina.....................     I         November 1996        235,000              91
                                                                           II             July 1998         70,000              92
                                                                                                           -------             ---
                                                                                                           305,000              91

Prime Outlets at Lee  - Lee, Massachusetts.............................     I             June 1997        224,000             100

Prime Outlets at Lebanon -  Lebanon, Tennessee.........................     I            April 1998        208,000              94
                                                                          IIA            March 1999         21,000              79
                                                                                                           -------             ---
                                                                                                           229,000              92

Prime Outlets at Hagerstown (9) - Hagerstown, Maryland.................     I           August 1998        218,000             100
                                                                           II         November 1998        103,000             100
                                                                          IIIA           March 2000         68,000             100
                                                                          IIIB           April 2000         98,000              80
                                                                                                           -------             ---
                                                                                                           487,000              95
                                                                                                           -------             ---
Total Outlet Centers (10)                                                                               14,914,000              90%
                                                                                                        ==========             ===

====================================================================================================================================

</TABLE>

<PAGE>

 Notes:
(1)  Percentage  reflects fully executed leases as of June 30, 2000 as a percent
     of square feet of GLA.
(2)  On  November  19,  1999,  the Company  sold this  outlet  center to a joint
     venture partnership with an unrelated party in which the Company owns a 30%
     interest.
(3)  On  February  23,  2000,  the Company  sold this  outlet  center to a joint
     venture partnership with an unrelated party in which the Company owns a 30%
     interest.
(4)  The Company owns a 2% partnership  interest as the sole general  partner in
     Phase I of this property but is entitled to 99% of the property's operating
     cash  flow and net  proceeds  from a sale or  refinancing.  This  mixed-use
     development  includes  154,000  square  feet of office  space which was 99%
     leased as of June 30, 2000.
(5)  On September 1, 1999, the Company  acquired from HGP 50% of Phase I and 51%
     of Phases II and III of this outlet  center which it owns in joint  venture
     partnerships with unrelated parties.
(6)  The Company owns 50% of this outlet center in a joint  venture  partnership
     with an unrelated third party.
(7)  The Company  operates  this outlet  center  pursuant to a long-term  ground
     lease under  which the  Company  receives  the  economic  benefit of a 100%
     ownership interest.
(8)  The real  property on which this  outlet  center is located is subject to a
     long-term ground lease.
(9)  The Company  expects to close on the sale of this outlet  center during the
     third  quarter of 2000 to a joint  venture  partnership  with an  unrelated
     party in which the Company owns a 30.0% interest.
(10) The Company  also owns three  community  centers not included in this table
     containing 424,000 square feet of GLA in the aggregate that were 83% leased
     as of June 30, 2000.



<PAGE>

Results of Operations

Comparison  of the three  months  ended June 30, 2000 to the three  months ended
June 30, 1999

Summary

The Company  reported net income  (loss) of  $(15,759)  and $5,037 for the three
months ended June 30, 2000 and 1999, respectively.  During the second quarter of
1999,  the  Company  recorded an  extraordinary  loss of $2,106 (net of minority
interests of $534)  relating to the early  extinguishment  of certain  long-term
debt. For the three months ended June 30, 2000, the net income (loss) applicable
to common shareholders was $(21,427), or $(0.49) per common share on a basic and
diluted  basis.  For the  three  months  ended  June 30,  1999,  the net  income
applicable to common shareholders was $(1,009), or $(0.02) per common share on a
basic and diluted basis.

Revenues

Total revenues were $68,584 for the three months ended June 30, 2000 compared to
$75,574 for the three months ended June 30, 1999, a decrease of $6,990, or 9.2%.
Base rents decreased  $3,895,  or 8.1%, in 2000 compared to 1999.  Straight-line
rent income  (included  in base  rents)  were $28 and $221 for the three  months
ended June 30, 2000 and 1999, respectively. These decreases are primarily due to
the Prime/Estein Transaction and the decrease in portfolio occupancy,  partially
offset by the Portfolio Expansion.

Percentage  rents,  which  represent rents based on a percentage of sales volume
above a specified  threshold,  decreased $872, or 44.1%, during the three months
ended June 30,  2000  compared  to the same  period in 1999.  This  decline  was
primarily attributable to the Prime/Estein  Transaction.  Tenant reimbursements,
which  represent  the  contractual  recovery  from tenants of certain  operating
expenses,  decreased  by  $2,241,  or 9.9%,  primarily  due to the  Prime/Estein
Transaction  and a decrease  in  portfolio  occupancy,  partially  offset by the
Portfolio Expansion.

Interest and other income  increased by $18, or 0.6%, to $2,649 during the three
months  ended June 30, 2000  compared to $2,631 for the three  months ended June
30, 1999. The increase reflects (i) an increase in late fee income of $487, (ii)
amortization  of  deferred  fees of $281  related  to the  payments  made to the
Company for  covenant-not-to-compete  and  licensing  agreements,  (iii)  higher
property  management fee income of $167, and (iv) higher interest income of $74.
These  increases were offset by reductions in equity earnings from investment in
partnerships of $985 and other miscellaneous items of $6.

Expenses

Property  operating  expenses  decreased by $1,242,  or 7.2%, to $15,958 for the
three  months  ended June 30,  2000  compared  to $17,200 for the same period in
1999.  Real estate  taxes  decreased by $219,  or 3.8%,  to $5,507 for the three
months ended June 30, 2000 from $5,726 in the same period in 1999.  The decrease
in property operating expenses is primarily due to the Prime/Estein Transaction.
The decrease in real estate taxes is primarily  attributable to the Prime/Estein
Transaction,  partially  offset  by  increased  assessments  and  the  Portfolio
Expansion.  As shown in TABLE 2, depreciation and amortization expense decreased
by  $2,782,  or 15.0%,  to $15,783  for the three  months  ended  June 30,  2000
compared to $18,565 for the same period in 1999.  This decrease is primarily due
to the Prime/Estein Transaction, partially offset by the Portfolio Expansion.

<PAGE>


TABLE 2 -- Components of Depreciation and Amortization Expense

The  components  of  depreciation  and  amortization  expense are  summarized as
follows:

--------------------------------------------------------------------------------
Three months ended June 30,                                 1999            2000
--------------------------------------------------------------------------------

Building and improvements                                 $8,658         $10,127
Land improvements                                          1,365           1,452
Tenant improvements                                        5,007           6,398
Furniture and fixtures                                       589             368
Leasing commissions                                          164             220
                                                        --------         -------
      Total                                             $ 15,783         $18,565
                                                        ========         =======

================================================================================


TABLE 3 -- Components of Interest Expense

The components of interest expense are summarized as follows:

--------------------------------------------------------------------------------
Three months ended June 30,                                2000             1999
--------------------------------------------------------------------------------

Interest incurred                                       $24,110         $22,807
Interest capitalized                                     (1,259)         (1,144)
Amortization of deferred financing costs                    846             797
Amortization of interest rate protection contracts           17               3
                                                        -------        --------
         Total                                          $23,714        $ 22,463
                                                        =======        ========

================================================================================

As shown in TABLE 3,  interest  expense for the three months ended June 30, 2000
increased by $1,251, or 5.6%, to $23,714 compared to $22,463 for the same period
in 1999. This increase reflects (i) higher interest incurred of $1,303,  (ii) an
increase  in  amortization  of  deferred  financing  costs  of $49 and  (iii) an
increase in amortization of interest rate protection contracts of $14. Partially
offsetting these items was an increase in the amount of interest  capitalized in
connection with development projects of $115.

The increase in interest  incurred is primarily  attributable  to an increase in
the  weighted  average  interest  rate for the three  months ended June 30, 2000
compared to the same period in 1999.  The weighted  average  interest rates were
7.90% and 7.19% for the 2000 and 1999  periods,  respectively.  The  increase is
partially  offset  by a  decrease  of  $48,341  in the  Company's  average  debt
outstanding  during the three  months  ended June 30, 2000  compared to the same
period in 1999.

Other charges for the three months ended June 30, 2000  increased by $3,903,  or
650.5%,  to $4,503  compared to $600 for the same period in 1999.  This increase
reflects (i) a higher provision for uncollectible  accounts receivable of $2,306
primarily due to certain tenant  bankruptcies and  abandonments,  (ii) increased
pre-development  costs of $706, (iii) higher marketing expenses of $415 and (iv)
an increase in all other miscellaneous charges of $476.

On April 12, 2000, the Company  announced that it had been unable to conclude an
agreement  to transfer  ownership  of its  wholly-owned  e-commerce  subsidiary,
primeoutlets.com inc., also known as eOutlets.com,  to a management-led investor
group  comprised of  eOutlets.com  management and outside  investors.  Effective
April 12,  2000,  eOutlets.com  ceased all  operations.  The Company  incurred a
non-recurring  loss of $1,315  during the three  months  ended June 30,  2000 in
respect of this discontinuance of operations.

During the second quarter of 2000, management  established a formal plan to sell
two of its properties and,  accordingly,  reclassified their respective carrying
values to assets held for sale in the Consolidated  Balance Sheet as of June 30,
2000. In accordance with the  requirements of Statement of Financial  Accounting
Standards No. 121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and
Long-Lived Assets to be Disposed of", the Company incurred a provision for asset
impairment of $8,538 to reduce the carrying  value of these  properties to their
estimated  sales value,  less cost to dispose.  The aggregate  carrying value of
these properties as of June 30, 2000 was $6,639.

The operating  results for the Company's  Designer  Connection outlet stores are
reflected  in Loss on Designer  Connection  in the  Consolidated  Statements  of
Operations for all periods presented.  When accounting for the fourth quarter of
1999,  the  Company  decided  to  discontinue  the  operations  of its  Designer
Connection  outlet  stores.  The  operations of the Designer  Connection  outlet
stores ceased during June of 2000.

In connection with re-leasing space to new merchants,  the Company incurred $285
and $53 in capital  expenditures during the three months ended June 30, 2000 and
1999, respectively.

Comparison  of the six months  ended June 30, 2000 to the six months  ended June
30, 1999

Summary

The Company  reported  net income  (loss) of  $(27,478)  and $14,335 for the six
months ended June 30, 2000 and 1999, respectively.  During the second quarter of
1999,  the  Company  recorded an  extraordinary  loss of $2,106 (net of minority
interests of $534),  relating to the early  extinguishment  of certain long-term
debt. For the six months ended June 30, 2000,  the net income (loss)  applicable
to common shareholders was $(38,814), or $(0.89) per common share on a basic and
diluted basis. For the six months ended June 30, 1999, the net income applicable
to common  shareholders  was  $16,089,  or $0.37 and $0.04 per common share on a
basic and diluted basis, respectively.

Revenues

Total  revenues were $141,425 for the six months ended June 30, 2000 compared to
$153,917 for the six months ended June 30, 1999, a decrease of $12,492, or 8.1%.
Base rents decreased  $8,949,  or 9.2%, in 2000 compared to 1999.  Straight-line
rent (expense)  income (included in base rents) were $(377) and $430 for the six
months ended June 30, 2000 and 1999, respectively. These decreases are primarily
due to the  Prime/Estein  Transaction  and a decrease  in  portfolio  occupancy,
partially offset by the Portfolio Expansion.

Percentage  rents,  which  represent rents based on a percentage of sales volume
above a specified  threshold,  decreased $1,447, or 35.8%, during the six months
ended June 30,  2000  compared  to the same  period in 1999.  This  decline  was
primarily attributable to the Prime/Estein  Transaction.  Tenant reimbursements,
which  represent  the  contractual  recovery  from tenants of certain  operating
expenses,  decreased  by  $3,917,  or 8.5%,  primarily  due to the  Prime/Estein
Transaction  and the decrease in portfolio  occupancy,  partially  offset by the
Portfolio Expansion.

Interest and other income  increased by $1,821,  or 30.7%,  to $7,743 during the
six months ended June 30, 2000  compared to $5,922 for the six months ended June
30, 1999. This increase reflects (i) a non-recurring  first quarter 2000 gain on
sale of  outparcel  land in  Camarillo,  CA. of $2,471 (ii) an increase in lease
buy-out income of $709, and (iii) higher property management fee income of $389.
Partially  offsetting  these  items  were  reductions  in equity  earnings  from
investment in partnerships of $1,686 and other miscellaneous items of $62.

Expenses

Property operating expenses decreased by $2,647, or 7.3%, to $33,490 for the six
months ended June 30, 2000 compared to $36,137 for the same period in 1999. Real
estate taxes decreased by $55, or 0.5%, to $11,238 for the six months ended June
30,  2000 from  $11,293 in the same  period in 1999.  The  decrease  in property
operating expenses is primarily due to the Prime/Estein  Transaction,  partially
offset  by the  Portfolio  Expansion.  The  decrease  in real  estate  taxes  is
primarily  attributable to the  Prime/Estein  Transaction,  partially  offset by
increased  assessments  and the  Portfolio  Expansion.  As  shown  in  TABLE  4,
depreciation and amortization  expense decreased by $4,804, or 13.0%, to $32,020
for the six months  ended June 30, 2000  compared to $36,824 for the same period
in 1999. This decrease is primarily due to the Prime/Estein  Transaction and the
reclassification  of certain properties to assets held for sale partially offset
by the Portfolio Expansion.

TABLE 4 -- Components of Depreciation and Amortization Expense

The  components  of  depreciation  and  amortization  expense are  summarized as
follows:

--------------------------------------------------------------------------------
Six months ended June 30,                                 2000             1999
--------------------------------------------------------------------------------
Building and improvements                               $17,456        $ 20,237
Land improvements                                         2,765           2,830
Tenant improvements                                      10,460          12,582
Furniture and fixtures                                    1,008             770
Leasing commissions                                         331             405
                                                        -------         -------
      Total                                             $32,020         $36,824
                                                        =======         =======

================================================================================

TABLE 5 -- Components of Interest Expense

The components of interest expense are summarized as follows:

--------------------------------------------------------------------------------
Six months ended June 30,                                  2000            1999
--------------------------------------------------------------------------------
Interest incurred                                       $48,388         $44,493
Interest capitalized                                     (2,359)         (2,218)
Amortization of deferred financing costs                  1,670           1,390
Amortization of interest rate protection contracts           38              60
                                                        -------         -------
         Total                                          $47,737         $43,725
                                                        =======         =======

================================================================================

As shown in TABLE 5,  interest  expense  for the six months  ended June 30, 2000
increased by $4,012, or 9.2%, to $47,737 compared to $43,725 for the same period
in 1999.  This  increase  reflects  higher  interest  incurred  of $3,895 and an
increase  in  amortization  of  deferred  financing  costs  of  $280.  Partially
offsetting these items was an increase in the amount of interest  capitalized in
connection with  development  projects of $141 and a decrease in amortization of
interest rate protection contracts of $22.

The increase in interest  incurred is primarily  attributable  to an increase in
the  weighted  average  interest  rate for the six months  ended  June 30,  2000
compared to the same period in 1999.  The weighted  average  interest rates were
7.87% and 7.18% for the 2000 and 1999  periods,  respectively.  The  increase is
partially  offset  by a  decrease  of  $9,792  in  the  Company's  average  debt
outstanding  during the six  months  ended June 30,  2000  compared  to the same
period in 1999.

Other  charges for the six months ended June 30, 2000  increased  by $3,544,  or
142.4%,  to $6,032 compared to $2,488 for the same period in 1999. This increase
reflects (i) a higher provision for uncollectible  accounts receivable of $2,280
primarily due to certain tenant  bankruptcies and  abandonments,  (ii) increased
pre-development  costs of $486,  (iii) higher  marketing  expenses of $316, (iv)
higher  ground  lease  expenses  of  $182,  and  (v) an  increase  in all  other
miscellaneous charges of $280.

On April 12, 2000, the Company  announced that it had been unable to conclude an
agreement  to transfer  ownership  of its  wholly-owned  e-commerce  subsidiary,
primeoutlets.com inc., also known as eOutlets.com,  to a management-led investor
group  comprised of  eOutlets.com  management and outside  investors.  Effective
April 12, 2000,  eOutlets.com  ceased all  operations.  In  connection  with the
discontinuance  of eOutlets.com,  the Company  incurred a non-recurring  loss of
$14,279 which includes (i) the write-off of $3,497 of costs  capitalized  during
1999 and (ii)  $10,782 of costs  incurred  during the six months  ended June 30,
2000.

During the second quarter of 2000, management  established a formal plan to sell
two of its properties and,  accordingly,  reclassified their respective carrying
values to assets held for sale in the Consolidated  Balance Sheet as of June 30,
2000. In accordance with the  requirements of Statement of Financial  Accounting
Standards No. 121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and
Long-Lived Assets to be Disposed of", the Company incurred a provision for asset
impairment of $8,538 to reduce the carrying  value of these  properties to their
estimated  sales value,  less cost to dispose.  The aggregate  carrying value of
these properties as of June 30, 2000 was $6,639.

The operating  results for the Company's  Designer  Connection outlet stores are
reflected  in Loss on Designer  Connection  in the  Consolidated  Statements  of
Operations for all periods presented.  When accounting for the fourth quarter of
1999,  the  Company  decided  to  discontinue  the  operations  of its  Designer
Connection  outlet  stores.  The  operations of the Designer  Connection  outlet
stores ceased during June of 2000.

In connection with re-leasing space to new merchants,  the Company incurred $509
and $839 in capital  expenditures  during the six months ended June 30, 2000 and
1999, respectively.

Sales

For the three and six month  periods  ended June 30, 2000,  same-space  sales in
centers owned by the Company increased 2% and 3%, respectively,  compared to the
same  periods in 1999.  "Same-space  sales" is defined as the  weighted  average
sales per square foot  reported  by  merchants  for space open since  January 1,
1999. For the three and six month periods ended June 30, 2000,  same-store sales
decreased  by 3% and 1%,  respectively,  compared  to the same  periods in 1999.
"Same-store  sales" is defined as the  weighted  average  sales per square  foot
reported by merchants for stores opened and operated by the same merchant  since
January 1, 1999.  The  weighted  average  sales per square foot  reported by all
merchants was $257 for the year ended December 31, 1999.



<PAGE>


Liquidity and Capital Resources

Sources and Uses of Cash

For the six  months  ended  June  30,  2000,  net  cash  provided  by  operating
activities was $33,536,  net cash used in investing  activities was $26,300, and
net cash used in financing activities was $7,974.

The uses of cash for investing  activities  during the six months ended June 30,
2000 of $26,300  included (i) costs associated with development and construction
of Prime  Outlets of Puerto Rico which opened July 27, 2000 and four  expansions
to existing centers aggregating  approximately  389,000 square feet of GLA which
opened  during the six  months  ended  June 30,  2000 and (ii) costs  related to
eOutlets.com.  Partially offsetting these uses were $11,063 of net proceeds from
the sale of Prime  Outlets at  Williamsburg  and $4,622 of net proceeds from the
sale of outparcel land in Camarillo, CA.

The gross uses of cash for financing activities during the six months ended June
30, 2000 included (i) principal  repayments on notes payable of $19,958 and (ii)
deferred financing costs of $750. Partially offsetting these items were proceeds
from new borrowings of $12,734.

Although  the  Company  believes  that cash flow from (i)  operations,  (ii) new
borrowings,  (iii)  refinancing of certain  existing debt and (iv) the potential
sale of a joint venture interest in certain outlet centers will be sufficient to
satisfy its scheduled debt service obligations and to sustain its operations for
the next year,  there can be no assurance that the Company will be successful in
obtaining  the  required  amount of funds  for these  items or that the terms of
capital  raising  activities,  if any,  will be as  favorable as the Company has
experienced in prior periods. At June 30, 2000, unused commitments available for
borrowings under various loan facilities were $812 in the aggregate. See "Lehman
Brothers Loan Negotiations and Debt Facility Compliance" below.

Dividends and Distributions

In order to qualify as a Real  Estate  Investment  Trust  ("REIT")  for  federal
income tax purposes,  the Company is required to pay distributions to its common
and  preferred  shareholders  of at least  95.0% of its REIT  taxable  income in
addition to satisfying other requirements.  Although the Company intends to make
distributions  in accordance with the  requirements of the Internal Revenue Code
of 1986, as amended, necessary to remain qualified as a REIT, it also intends to
retain such amounts as it considers  necessary from time to time for capital and
liquidity needs of the Company.

The Company's  current policy with respect to common stock  distributions  is to
only make payments to the extent  necessary to maintain its status as a REIT for
federal income tax purposes.  Based on the Company's  current federal income tax
projections,  it does not expect to pay any distributions on its common stock or
common units of limited partnership interest in Prime Retail, L.P. during 2000.

With respect to distributions on the Company's Senior Preferred Stock and Series
B  Convertible  Preferred  Stock,  the  Board of  Directors  did not  declare  a
quarterly distribution on such preferred stock due February 15, 2000 and May 15,
2000,  respectively.  The Board of  Directors  announced  on July 24, 2000 that,
based on the Company's  current  financial  situation and the Company's  current
federal  income tax  projections,  the Company  does not  anticipate  paying any
quarterly  distributions  on  the  Senior  Preferred  Stock  and  the  Series  B
Convertible  preferred  Stock during the  remainder  of 2000.  The Company is in
arrears on its Preferred Stock  distributions  due February 15, 2000 and May 15,
2000.  Non-payment of the quarterly preferred stock distributions due August 15,
2000 will  represent the third  consecutive  quarter that such  dividends are in
arrears.  The  holders of the Senior  Preferred  Stock and Series B  Convertible
Preferred Stock have the right to elect two additional  members to the Company's
Board of Directors if the equivalent of six consecutive  quarterly  dividends on
these series of preferred stock are in arrears. Each of such two directors would
be elected to serve until the earlier of (i) the election and  qualification  of
such director's successor, or (ii) payment of the dividend arrearage.

The  Company  is  currently  prohibited  under the terms of more than one of its
credit  agreements  from  paying  dividends  or  distributions  as a  result  of
non-compliance with a financial covenant.  In addition,  the Company may make no
distributions  to its common  shareholders  unless it is current with respect to
distributions  to  its  preferred  shareholders.  Annualized  dividends  on  the
Company's  Senior  Preferred  Stock and  Series B  Convertible  Preferred  Stock
outstanding as of June 30, 2000 are $6,038 and $16,636, respectively.

Debt Repayments

The Company's  aggregate  indebtedness was $1,220,946 and $1,260,670 at June 30,
2000 and December 31,1999, respectively. At June 30, 2000, such indebtedness had
a weighted average maturity of 4.5 years and bore interest at a weighted average
interest rate of 7.90% per annum. At June 30, 2000, $931,634,  or 76.3%, of such
indebtedness  bore  interest  at fixed  rates and  $289,312,  or 23.7%,  of such
indebtedness  bore interest at variable rates. The Company is obligated to repay
$80,761 and $227,688 of mortgage  indebtedness  during the remainder of 2000 and
2001,  respectively.  See "Lehman  Brothers Loan  Negotiations and Debt Facility
Compliance" below.

The maturity of the Company's $25,000 unsecured line of credit was extended from
July 11,  2000 to August 30,  2000,  or earlier if the  Company  terminates  its
efforts to close on an  anticipated  debt financing  with Lehman  Brothers.  The
Company  is in  discussion  with the lender to obtain an  additional  short-term
extension of the loan.

The maturity of the Company's  $20,000  subordinated loan was extended from June
30, 2000 to August 14,  2000.  The Company is in  discussion  with the lender to
obtain an additional short-term extension of the loan.

The maturity of the Company's $3,559 first mortgage,  collateralized by property
in  Knoxville,  TN, was  extended  from June 22,  2000 to August 21,  2000.  The
Company is in discussion  with the lender to obtain an  additional  extension of
the loan.

Debt Contingencies

As of June 30,  2000,  the Company is a guarantor or  otherwise  obligated  with
respect  to an  aggregate  of  $12,591  of the  indebtedness  of  Horizon  Group
Properties, Inc. and its affiliates ("HGP") including a $10,000 obligation under
HGP's  secured  credit  facility  which  bears a rate of  interest of LIBOR plus
1.90%,  matures in July 2001, and is collateralized by seven properties  located
throughout the United States.

On April 1, 1998, Horizon Group, Inc. ("Horizon")  consummated an agreement with
Castle  &  Cooke  Properties,  Inc.  which  released  Horizon  from  its  future
obligations  under its  long-term  lease of the Dole  Cannery  outlet  center in
Honolulu,  Hawaii,  in  connection  with the  formation of a joint  venture with
certain  affiliates of Castle & Cooke,  Inc.  ("Castle & Cooke") to operate such
property. Under the terms of the agreement, Castle & Cooke Properties, Inc., the
landlord of the project and an  affiliate  of Castle & Cooke,  released  Horizon
from any  continuing  obligations  under the lease,  which  expires in 2045,  in
exchange  for  Horizon's  conveyance  to the joint  venture  of its  rights  and
obligations  under such lease. The agreement also provided that Horizon transfer
to such joint venture  substantially  all of Horizon's  economic interest in its
outlet center in Lake Elsinore,  California  together with legal title to vacant
property located adjacent to the center. As of June 30, 2000, the Company held a
small minority interest in the joint venture but has no obligation or commitment
with  respect  to the  post-closing  operations  of the  Dole  Cannery  project.
Mortgage  indebtedness with an outstanding  balance of $28,837 at June 30, 2000,
for  which  one  of  the  Company's  subsidiary   partnerships  remains  legally
responsible,  is  collateralized by a first mortgage on the Lake Elsinore outlet
center. The joint venture, as a limited partner in such subsidiary  partnership,
is  obligated  to make  capital  contributions  to the  partnership  to pay debt
financing, operating and other expenses under certain conditions. The subsidiary
partnership  will remain  legally  responsible  for such expenses in case of any
shortfalls  by the joint  venture with  respect to such  capital  contributions.
Castle & Cooke has  provided  the Company with an  unconditional  guaranty  with
respect to any such shortfalls.

Lehman Brothers Loan Negotiations and Debt Facility Compliance

As previously announced, the Company expects to close $110,000 of new loans from
Lehman  Brothers  (the "Lehman  Brothers  Loans").  The Company now  anticipates
closing the Lehman  Brothers  Loans in two phases.  The first  phase,  a $20,000
first  mortgage  loan on the recently  opened Prime  Outlets of Puerto Rico,  is
expected to close on or about  September 1, 2000.  The second  phase,  a $90,000
mezzanine loan (the  "Mezzanine  Loan"),  is expected to close by the end of the
third  quarter.  The Mezzanine Loan will be secured by mortgages on, and pledges
of equity interests in, certain outlet centers. The net proceeds from the Lehman
Brothers  Loans will be used to repay up to $80,175 of  short-term  indebtedness
and for general corporate purposes, including the funding of programs to attract
and retain tenants through  increased  marketing and capital  improvements.  The
closing of the Lehman Brothers Loans is subject to customary  conditions as well
as the  agreement  by certain  existing  lenders to modify terms of their loans.
There  can be no  assurance  that the  Lehman  Brothers  Loans  will  close.  In
anticipation  of  closing  the  Lehman  Brothers  Loans,  the  Company  obtained
short-term  extensions of its $20,000  subordinated  loan to August 14, 2000 and
its  $25,000  unsecured  line of credit to August  30,  2000,  or earlier if the
Company  terminates  its  efforts to close on the  Lehman  Brothers  Loans.  The
Company  is in  discussions  with the  lenders to obtain  additional  short-term
extensions  of the two loans.  The two loans are expected to be retired with the
net proceeds from the Lehman Brothers Loans.

Based on the financial  results for the second  quarter of 2000,  the Company is
not in  compliance  with  financial  covenants  contained in certain of its debt
facilities. Non-compliance with these covenants may have triggered cross-default
provisions with respect to several other Company debt facilities. Certain of the
affected lenders have alleged that  non-compliance  with the financial covenants
constitutes  a default  under  their loan  documents.  The Company has taken the
position  with these  lenders  that the nature and extent of the  non-compliance
with the  financial  covenants  would not permit any  lender to  accelerate  the
maturity of its loan or pursue other remedies under the loan documents.  None of
these loans has been  accelerated  nor has notice of any  lender's  intention to
accelerate been received by the Company.  The Company is in discussions with the
affected lenders regarding either paying off these loans in their entirety using
proceeds  from the Lehman  Brothers  Loans or modifying  the terms and financial
covenants  so that the  Company  will be in  compliance  at the time the  Lehman
Brothers Loans close.

If the  Company is unable to close the Lehman  Brothers  Loans,  it will look to
obtain alternative financing from other financial  institutions or the potential
sale of assets or a joint venture  interest in certain outlet centers as sources
of cash to repay the amounts outstanding under such loans. This condition raises
substantial  doubt about the Company's  ability to continue as a going  concern.
The financial  statements do not include any  adjustment to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and  classification  of  liabilities  that may result  from the  outcome of this
uncertainty.

Although  the Company  continues to maintain its  regularly  scheduled  interest
payments under all of its other indebtedness, there can be no assurance that one
or all of the affected  lenders will not attempt to  accelerate  the maturity of
its indebtedness or pursue other remedies under their respective loan documents.
Additionally,  there can be no assurance  that the Company will be in compliance
with its financial debt  covenants in future periods since the Company's  future
financial  performance is subject to various risks and uncertainties,  including
but not limited  to, the  effects of  increases  in market  interest  rates from
current  levels;  the risk of  potential  increases  in  vacancy  rates  and the
resulting impact on the Company's revenue' and risks associated with refinancing
the Company's current debt obligations or obtaining new financing under terms as
favorable as the Company has experienced in prior periods.

The Company, through affiliates,  holds 50% interests in the owners of an outlet
center in Oxnard,  CA and phase one of an outlet  center in Bellport,  NY. First
mortgage  loans on these  properties  have matured and are currently in default.
The  Company is  exploring  all  options to resolve  these  defaults,  including
transferring  the outlet  centers to the lenders.  Such  transfers  would not be
expected to have a material  effect on the Company's  results from operations or
its financial condition.

Prime/Estein Joint Venture Transaction

On August 6, 1999,  the Company  entered  into an agreement  (the  "Prime/Estein
Joint Venture  Agreement") to sell three factory outlet  centers,  including two
future  expansions,  to a joint venture (the "Venture")  between an affiliate of
Estein & Associates USA, Ltd. ("Estein"),  a real estate investment company, and
the Company.  The  Prime/Estein  Joint  Venture  Agreement  provided for a total
purchase  price of  $274,000,  including  (i) the  assumption  of  approximately
$151,500 of first mortgage  indebtedness,  (ii) an $8,000 payment to the Company
for a ten-year covenant-not-to-compete and (iii) a $6,000 payment to the Company
for a ten-year  licensing  agreement with the Venture to continue the use of the
"Prime  Outlets" brand name.  Additionally,  the Company is in discussions  with
Estein  regarding  modification of the terms of the sale of the future expansion
to Prime Outlets at Williamsburg.

On November 19,  1999,  the Company  completed  the initial  installment  of the
Prime/Estein Joint Venture Agreement  consisting of the sale of Prime Outlets at
Birch Run to the Venture for aggregate  consideration  of $117,000,  including a
$64,500 "wrap-around" first mortgage provided by the Company. In connection with
the sale of Prime  Outlets at Birch Run, the Company  received  cash proceeds of
$33,303,  net of  transaction  costs,  and  recorded  a loss on the sale of real
estate of $9,326.  Effective November 19, 1999, the Company commenced accounting
for its 30.0%  ownership  interest in Prime  Outlets at Birch Run in  accordance
with the equity method of accounting.  The "wrap-around" first mortgage provided
by the Company to the Venture has a ten-year  term at a fixed  interest  rate of
7.75% requiring monthly payments of principal and interest pursuant to a 25-year
amortization  schedule.  The Company's net investment in the "wrap-around" first
mortgage as of June 30,  2000 and  December  31,  1999 was $10,674 and  $10,745,
respectively,  which is included  in other  assets in the  Consolidated  Balance
Sheet.  Additionally,  the  Venture  assumed  $53,755  of  outstanding  mortgage
indebtedness.  Included  in the  aggregate  consideration  is a  $5,500  payment
related  to the  covenant-not-to-compete  and a $3,000  payment  related  to the
licensing agreement. The payments to the Company for the covenant-not-to-compete
and  the  licensing  agreement  are  included  in  accounts  payable  and  other
liabilities in the Consolidated  Balance Sheet and will be amortized into income
over their ten-year lives.

During the fourth  quarter of 1999,  the Company  recorded a loss on the sale of
real estate of $5,827  related to the  write-down of the carrying value of Prime
Outlets at  Williamsburg  based on the terms of the  Prime/Estein  Joint Venture
Agreement. On February 23, 2000, the Company completed the second installment of
the Prime/Estein Joint Venture Agreement consisting of the sale of Prime Outlets
at Williamsburg to the Venture for aggregate consideration of $59,000, including
(i) the assumption of mortgage  indebtedness  of $32,500,  (ii) a $1,250 payment
related to the covenant-not-to-compete and (iii) a $1,500 payment related to the
licensing   agreement.   In  connection  with  the  sale  of  Prime  Outlets  at
Williamsburg,  the  Company  received  (i)  cash  proceeds  of  $11,063,  net of
transaction  costs, and (ii) a promissory note in the amount of $10,000 from the
Venture,  such  amount  to be  payable  on or  before  December  15,  2000.  The
promissory note requires the monthly payment of interest in arrears at an annual
rate of 7.75%.

The Company now expects to close on the sale of Prime Outlets at Hagerstown  for
aggregate  consideration  of  approximately  $80,500 during the third quarter of
2000.  The Company  expects to receive net  proceeds of  approximately  $19,000,
which will be used to repay short-term  indebtedness  and for general  corporate
purposes.  Completion of this transaction  remains subject to various conditions
and there can be no  assurance  as to whether or when this  transaction  will be
consummated.  As of June 30, 2000, the Company classified  $59,261  representing
the aggregate  carrying  value of Prime Outlets at Hagerstown as assets held for
sale in its  Consolidated  Balance  Sheet.  As of December 31, 1999, the Company
classified $97,639 representing the aggregate carrying value of Prime Outlets at
Williamsburg  and Prime  Outlets at  Hagerstown  as assets  held for sale in its
Consolidated Balance Sheet.

The Venture has agreed to retain the Company as its sole and exclusive  managing
and leasing  agent for a property  management  fee equal to 4.0% of gross rental
receipts.  The Venture also will pay a monthly asset  management and partnership
administration  fee to an  affiliate  of Estein equal to 3.0% of the monthly net
operating income from the centers.

Commitments and Contingencies

The Company was required,  pursuant to a real estate purchase  agreement and two
ground  leases in which it is the  ground  lessee,  to  purchase  for $6,809 the
unowned 50% interests in parcels of land  underlying  Phases III and IV of Prime
Outlets  at Gilroy  in  Gilroy,  California.  The  Company  did not close on the
scheduled  closing date.  The seller has several  rights and remedies  under the
relevant  documents,  including  amending the base rent under the ground leases,
amending the purchase price, and seeking specific performance. On August 9, 2000
the seller  notified  the  Company  that it has  exercised  its right  under the
relevant  documents to require the Company to close within 180 days.  The seller
also reserved its other remedies under the relevant  documents.  The seller does
not have the right to terminate the ground leases as a remedy.

Development

Prime  Outlets of Puerto  Rico,  the first outlet  center in Puerto Rico,  which
contains 175,000 square feet of GLA, opened on July 27, 2000. Additionally,  the
Company  opened two expansions  aggregating  166,000 square feet of GLA at Prime
Outlets at Hagerstown in March and April 2000.  Furthermore,  the Company opened
two expansions  aggregating 48,000 square feet at Prime Outlets at San Marcos in
May of 2000. At June 30, 2000, the remaining  budgeted capital  expenditures for
these projects aggregated approximately $9,017.

Although the Company  expects to fund the  remaining  development  cost of these
projects from (i) retained cash flow from operations,  (ii) construction  loans,
(iii) the Lehman Brothers Loans,  and (iv) the potential sale of a joint venture
interest in certain outlet  centers,  there can be no assurance that the Company
will be  successful  in  obtaining  the  required  amount  of  money to fund the
remaining development costs.

Economic Conditions

Most of the merchants'  leases  contain  provisions  that somewhat  mitigate the
impact of inflation.  Such provisions include clauses providing for increases in
base rent and clauses enabling the Company to receive  percentage  rentals based
on merchants'  gross sales.  Most of the leases  require  merchants to pay their
proportionate   share  of  all  operating   expenses,   including   common  area
maintenance,  real estate taxes and  promotion,  thereby  reducing the Company's
exposure to increased costs and operating expenses resulting from inflation.

Funds from Operations

Industry analysts  generally  consider Funds from Operations,  as defined by the
National Association of Real Estate Investment Trusts ("NAREIT"), an alternative
measure of performance  of an equity REIT. In October 1999,  NAREIT issued a new
white paper  statement and redefined  how funds from  operations is  calculated,
effective January 1, 2000. Funds from Operations is now defined by NAREIT as net
income (loss)  determined in accordance  with GAAP,  excluding gains (or losses)
from sales of depreciable operating property, plus depreciation and amortization
(other  than  amortization  of  deferred  financing  costs and  depreciation  of
non-real estate assets) and after adjustment for unconsolidated  partnership and
joint ventures.

Management  believes  that FFO is an important  and  widely-used  measure of the
operating performance of REITs which provides a relevant basis for comparison to
other REITs.  Therefore,  FFO is presented to assist  investors in analyzing the
performance of the Company.  The Company's FFO is not comparable to FFO reported
by other REITs that do not define the term using the current  NAREIT  definition
or that  interpret  the  current  NAREIT  definition  differently  than does the
Company.  Therefore,  the Company  cautions that the calculation of FFO may vary
from entity to entity and as such the presentation of FFO by the Company may not
be comparable to other similarly  titled measures of other reporting  companies.
The Company  believes that in order to facilitate a clear  understanding  of its
operating  results,  FFO  should be  examined  in  conjunction  with net  income
determined in accordance  with GAAP.  FFO does not represent cash generated from
operating  activities in accordance with GAAP and should not be considered as an
alternative  to net income as an indication of the Company's  performance  or to
cash flows as a measure of liquidity or ability to make distributions.

TABLE 6 provides a  reconciliation  of income  before  allocations  to  minority
interests and preferred  shareholders  to FFO for the three and six months ended
June 30, 2000 and 1999. FFO decreased $23,739, or 88.5%, to $3,090 for the three
months  ended June 30,  2000 from  $26,829 for the three  months  ended June 30,
1999. FFO decreased $32,754,  or 59.7%, to $22,085 for the six months ended June
30, 2000 from $54,839 for the six months ended June 30, 1999.

The 2000 FFO results  include the following  non-recurring  items:  (i) a second
quarter  provision  for  asset  impairment  of $8,538  for two of the  Company's
properties  in  accordance  with the  requirements  of  Statement  of  Financial
Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of Long-Lived
Assets and for  Long-Lived  Assets to be Disposed of", (ii)  severance and other
compensation costs aggregating $2,421 ($671 in the second quarter), (iii) second
quarter  professional fees of $1,455,  and (iv) a first quarter gain on the sale
of outparcel land in Camarillo,  CA. of $2,471.  Excluding  these  non-recurring
items, FFO was $13,754 for the three months ended June 30, 2000, and $32,028 for
the six months ended June 30, 2000.

The change in FFO for the three and six months  ended June 30, 2000  compared to
the same periods in 1999 is primarily attributable to the following factors:

o    the loss of net operating  income offset by decreased  interest expense due
     to the sale of a 70% joint  venture  interest in Prime Outlets at Birch Run
     in November 1999 and Prime Outlets at Williamsburg in February 2000;

o    reduced  occupancy in the outlet center  portfolio (91.0% and 90.7% at June
     30, 2000 and March 31, 2000,  respectively,  compared to 92.7% and 93.6% at
     June 30, 1999 and March 31, 1999, respectively);

o    higher interest expense  resulting from increased  short-term  indebtedness
     and higher financing costs;

o    increased  corporate  general and  administrative  expenses  primarily  the
     result of (i) non-recurring  severance and other  compensation  costs, (ii)
     non-recurring  professional  fees relating to  refinancing  activities  and
     (iii) lower  capitalization  of overhead  costs due to reduced  development
     activities;

o    the provision for asset impairment for two of the Company's properties; and

o    an  increase  in  the  provision  for  uncollectible   accounts  receivable
     primarily due to certain tenant bankruptcies and abandonments.



<PAGE>
<TABLE>
TABLE 6 -- Funds from Operations

------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                     Three months ended                         Six months ended
                                                                           June 30                                   June 30
                                                                  ----------------------                     -----------------------
                                                                    2000           1999                      2000           1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>                      <C>             <C>
Income (loss) before minority interests                           $(15,759)       $7,677                   $ (27,446)      $ 16,975
FFO adjustments:
Depreciation and amortization                                       15,783        18,565                      32,020         36,824
Amortization of deferred financing costs
  and interest rate protection contracts                               865           800                       1,709          1,450
Unconsolidated joint venture adjustments                             1,128           174                       1,714            429
Non-real estate depreciation and amortization                       (1,248)         (930)                     (2,276)        (1,727)
                                                                   -------        ------                      ------         ------

FFO before discontinued operations                                     769        26,286                       5,721         53,951
Discontinued operations - eOutlets.com                               1,315             -                      14,279              -
Discontinued operations - Designer Connection                        1,006           543                       2,085            888
                                                                  --------        ------                     -------        -------
FFO before allocations to minority interests and
  preferred shareholders                                           $ 3,090       $26,829                     $22,085        $54,839
                                                                  ========        ======                     =======        =======

====================================================================================================================================
</TABLE>

<PAGE>


PART II:  OTHER INFORMATION

Item 1.           Legal Proceedings

In the  ordinary  course of  business  the  Company is subject to certain  legal
actions.  While any litigation  contains an element of  uncertainty,  management
believes the losses, if any,  resulting from such matters,  including the matter
described  below,  will not have a material  adverse effect on the  consolidated
financial statements of the Company.

The Company and its affiliates  were defendants in a lawsuit filed on August 10,
1999 in the Circuit Court for Baltimore City and removed to U. S. District Court
for the District of Maryland (the "U.S. District Court") on August 20, 1999. The
plaintiff alleged that the Company and its related entities  overcharged tenants
for common  area  maintenance  charges  and  promotion  fund  charges.  The U.S.
District Court dismissed the lawsuit on June 19, 2000. The plaintiff has filed a
notice of its appeal from the U.S. District Court's decision. The outcome of the
appeal, and the ultimate  liability of the Company,  if any, if the dismissal is
overturned on appeal,  cannot currently be predicted.  Management  believes that
the Company has acted properly and intends to defend this lawsuit vigorously.

Several  entities (the  "Plaintiffs")  have filed or stated an intention to file
lawsuits (the  "Lawsuits")  against the Company and its  affiliates in which the
Plaintiffs are seeking to hold them responsible under various legal theories for
liabilities  incurred by  primeoutlets.com,  inc.,  also known as  eOutlets.com.
Primeoutlets.com,  inc.  is  also a  defendant  in  some,  but not  all,  of the
Lawsuits.  The Company believes that it is not liable to the Plaintiffs as there
was no privity of contract between it and the respective Plaintiffs. The Company
intends to defend  all  Lawsuits  vigorously.  In the case  captioned  Convergys
Customer  Management  Group,  Inc. v. Prime Retail,  Inc. and  primeoutlets.com,
inc., currently pending in the Court of Common Pleas for Hamilton County (Ohio),
the Company prevailed in a motion to dismiss  Plaintiff's claim that the Company
was liable for primeoutlets.com, inc.'s breach of contract based on the doctrine
of piercing the corporate veil. The outcome of these Lawsuits,  and the ultimate
liability of the Company, if any, cannot be predicted.

The New York Stock  Exchange and the  Securities  and Exchange  Commission  have
notified the Company that they are  reviewing  transactions  in the stock of the
Company  prior to the  Company's  January  18,  2000  press  release  concerning
financial matters.

Item 2.           Changes in Securities

None

Item 3.           Defaults Upon Senior Securities

As a result of its financial  results for the quarters  ended December 31, 1999,
March  31,  2000  and June 30,  2000,  the  Company  is not in  compliance  with
financial  covenants  contained  in certain  credit  facilities.  The Company is
currently  in arrears  in the  payment of  distributions  on its 10.5%  Series A
Senior Cumulative  Preferred Stock ("Senior  Preferred Stock") and 8.5% Series B
Cumulative  Participating  Convertible  Preferred  Stock  ("Series B Convertible
Preferred  Stock").  As of June 30, 2000, the aggregate  arrearage on the Senior
Preferred  Stock and the  Series B  Convertible  Preferred  Stock was $3,773 and
$10,398, respectively.

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

At the  Company's  Annual  Shareholders  Meeting held on June 21, 2000,  certain
matters  were  submitted  to the vote of the  Company's  security  holders.  The
following summarizes these matters and the results of the voting.

(a) The nominees for director  proposed by the Company were  elected.  The votes
cast for these nominees were as set forth below:

                                    Name                  For            Against
                              Michael W. Reschke      35,214,774       4,365,243
                              Glenn D. Reschke        35,963,060       3,616,957
                              William P. Dickey       35,963,179       3,616,838

(b) The proposal to ratify the  appointment  of Ernst & Young LLP as independent
auditors of the Company for the year ending December 31, 2000 was approved.  The
votes cast with respect to the proposal were as set forth below:

                                    For               Against            Abstain
                                38,982,420            452,795            144,802

Item 5.           Other Information

None

Item 6.           Exhibits or Reports on Form 8-K

(a)      The following exhibits are included in this Form 10-Q:

Exhibit  12.1  -  Ratio  of  Earnings  to  Fixed  Charges  and  Preferred  Stock
Distributions and Dividends

Exhibit 27.1 - Financial Data Schedule (EDGAR filing only)

(b)      Reports on Form 8-K:

On May 31, 2000,  the Company filed a Current  Report on Form 8-K, dated May 23,
2000 containing the annual letter to the shareholders from Glenn D. Reschke, the
President and Chief Executive Officer of the Company.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

Market Risk Sensitivity

Interest Rate Risk

In the  ordinary  course of  business,  the  Company is exposed to the impact of
interest rate changes.  The Company employs established  policies and procedures
to manage its exposure to interest rate changes. The Company uses a mix of fixed
and variable  rate debt to (i) limit the impact of interest  rate changes on its
results from  operations and cash flows and (ii) to lower its overall  borrowing
costs.  The  following  table  provides  a summary of  principal  cash flows and
related  interest  rates by  fiscal  year of  maturity,  excluding  acceleration
provisions.  Variable  interest rates are based on the weighted average rates of
the portfolio at June 30, 2000.

<TABLE>

------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                Year of Maturity
------------------------------------------------------------------------------------------------------------------------------------
                                    2000         2001        2002        2003         2004        2005   Thereafter        Total
------------------------------ ------------ ----------- ----------- ----------- ------------ ----------- ----------- ---------------
<S>                             <C>          <C>          <C>         <C>          <C>          <C>         <C>         <C>
Fixed rate:
Principal....................   $ 30,699     $  36,688    $46,529     $348,761     $17,049      $56,402     $395,506    $931,634
Average interest rate........      12.33%         7.44%      7.04%        7.76%      7.75%         6.98%       7.11%        7.54%
Variable rate:
Principal....................   $ 50,062     $191,0000    $   637     $  1,152     $46,461            -           -     $289,312

Average interest rate........       9.68%         9.11%      8.15%        8.15%      8.15%            -           -         9.05%


====================================================================================================================================
</TABLE>
<PAGE>



                                   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.



                                                  PRIME RETAIL, INC.
                                                  Registrant



Date: August 14, 2000                             /s/ Robert A. Brvenik
                                                  ---------------------------
                                                  Robert A. Brvenik
                                                  Executive Vice President,
                                                  Chief Financial Officer and
                                                  Treasurer