United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549


                                    FORM 10-Q

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the Quarterly Period Ended March 31, 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 May 12, 2000, the issuer had outstanding  43,397,916 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 March 31, 2000 and
       December 31, 1999 ...............................................     1

     Consolidated Statements of Operations for the three months
       ended March 31, 2000 and 1999....................................     2

     Consolidated Statements of Cash Flows for the three
       months ended March 31, 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..........................     8

Item 3. Quantitative and Qualitative Disclosures About Market Risk......    22

PART II:  OTHER INFORMATION

Item 1.  Legal Proceedings..............................................    23

Item 2.  Changes in Securities..........................................    23

Item 3.  Defaults Upon Senior Securities................................    23

Item 4.  Submission of Matters to a Vote of Security Holders............    23

Item 5.  Other Information..............................................    23

Item 6.  Exhibits or Reports on Form 8-K................................    23

Signatures..............................................................    24

<PAGE>


                               Prime Retail, Inc.

                           Consolidated Balance Sheets

                (Amounts in thousands, except share information)


 -------------------------------------------------------------------------------
                                            March 31, 2000    December 31, 1999
 -------------------------------------------------------------------------------

 Assets

 Investment in rental property:
    Land.............................           $ 181,916          $ 181,854
    Buildings and improvements.......           1,564,780          1,560,710
    Property under development.......              81,682             66,581
    Furniture and equipment..........              14,696             17,406
                                               ----------         ----------
                                                1,843,074          1,826,551
    Accumulated depreciation.........            (199,823)          (183,954)
                                               ----------         ----------
                                                1,643,251          1,642,597
 Cash and cash equivalents...........                 776              7,343
 Restricted cash.....................              28,755             28,131
 Accounts receivable, net............              18,220             18,926
 Deferred charges, net...............              12,566             13,503
 Assets held for sale................              41,389             97,639
 Due from affiliates, net............               5,434              4,140
 Investment in partnerships..........              23,234             18,941
 Other assets........................              34,868             24,838
                                               ----------         ----------
          Total assets...............          $1,808,493         $1,856,058
                                               ==========         ==========

 Liabilities and Shareholders' Equity

 Bonds payable.......................           $  32,900           $ 32,900
 Notes payable (See Note 3)..........           1,192,051          1,227,770
 Accrued interest....................               8,633              8,033
 Real estate taxes payable...........              12,690             10,700
 Construction costs payable..........               4,738              5,123
 Accounts payable and other liabilities            71,011             73,340
                                               ----------         ----------
          Total liabilities..........           1,322,023          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 $59,764), 2,300,000 shares
      issued and outstanding.........                  23                 23
    8.5% Series B Cumulative Participating
      Convertible Preferred Stock, $.01 par
      value (liquidation preference of
      $201,941), 7,828,125 shares issued and
      outstanding.....................                 78                 78
    Shares of common stock, 150,000,000 shares
    authorized:
    Common stock, $.01 par value,
      43,397,916 and 43,368,620 shares issued
      and outstanding, respectively...                434                434
    Additional paid-in capital........            709,122            709,122
    Distributions in excess of
      net income......................           (224,689)          (212,970)
                                              -----------         ----------

       Total shareholders' equity.....            484,968            496,687
                                              -----------         ----------
       Total liabilities and
        shareholders' equity..........        $ 1,808,493         $1,856,058
                                              ===========         ==========

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

See accompanying notes to financial statements.




<PAGE>


                               Prime Retail, Inc.
                      Consolidated Statements of Operations
                    (in thousands, except share information)

--------------------------------------------------------------------------------
Three months ended March 31,                           2000                 1999
--------------------------------------------------------------------------------
 Revenues

 Base rents..................................      $ 44,248             $ 49,302
 Percentage rents............................         1,487                2,062
 Tenant reimbursements.......................        22,012               23,688
 Interest and other..........................         5,094                3,291
                                                   --------             --------
   Total revenues............................        72,841               78,343

 Expenses

 Property operating..........................        17,532               18,937
 Real estate taxes...........................         5,731                5,567
 Depreciation and amortization...............        16,237               18,259
 Corporate general and administrative........         5,433                2,787
 Interest....................................        24,023               21,262
 Loss on eOutlets.com........................        12,964                    -
 Loss on Designer Connection.................         1,079                  345
 Other charges...............................         1,529                1,888
                                                   --------             --------
    Total expenses...........................        84,528               69,045
                                                   --------             --------

 Income (loss) before minority interests.....       (11,687)               9,298
 Income allocated to minority interests......           (32)                   -
                                                   --------             --------
 Net income (loss)...........................       (11,719)               9,298
 (Income) loss allocated to preferred
  shareholders...............................        (5,668)               7,800
                                                   --------             --------
 Net income (loss) applicable to common shares    $ (17,387)            $ 17,098
                                                  =========             ========

 Earnings (loss) per common share (2):

     Basic ..................................       $ (0.40)             $  0.40
                                                  =========             ========
     Diluted.................................       $ (0.40)             $  0.06
                                                  =========             ========
 Weighted average common shares outstanding

     Basic...................................        43,379               42,951
                                                  =========             ========
     Diluted.................................        43,379               58,376
                                                  =========             ========
 Distributions declared per common share.....       $     -             $  0.295
                                                  =========             ========

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

See accompanying notes to financial statements.

<PAGE>


                               Prime Retail, Inc.

                      Consolidated Statements of Cash Flows

                             (Amounts in thousands)


--------------------------------------------------------------------------------
Three months  ended March 31,                             2000             1999
--------------------------------------------------------------------------------

Operating Activities
Net income (loss)................................     $(11,719)         $ 9,298
Adjustments to reconcile net income (loss)
 to net cash provided by operating activities:
  Income allocated to minority interests.........           32                -
   Depreciation..................................       16,070           18,074
      Amortization of deferred financing costs
       and interest rate protection contracts....          845              650
      Amortization of leasing commissions........          167              185
      Provision for uncollectible accounts
       receivable................................        1,028            1,054
      Loss on eOutlets.com.......................       12,964                -
      Gain on sale of land.......................       (2,471)               -
Changes in operating assets and liabilities:
    Increase in accounts receivable..............         (322)          (4,579)
   (Increase) decrease in other assets...........       (2,149)             204
   Increase (decrease) in other liabilities......       (5,283)             262
   Increase (decrease) in accrued interest.......          600           (2,567)
                                                      --------          -------
      Net cash provided by operating activities..        9,762           22,581

Investing Activities
Additions to investment in rental property.......      (11,083)         (10,462)
Increase in property under development...........      (17,637)          (9,197)
Proceeds from sale of land.......................        4,622                -
Proceeds from sale of outlet center..............       11,063                -
                                                      --------          -------
      Net cash used in investing activities......      (13,035)         (19,659)

Financing Activities
Proceeds from notes payable......................        9,066           34,587
Principal repayments on notes payable............      (12,285)         (19,600)
Deferred financing fees..........................          (75)            (444)
Distributions and dividends paid.................            -          (19,650)
Distributions to minority interests..............            -           (3,250)
                                                      --------          -------
      Net cash used in financing activities......       (3,294)          (8,357)
                                                      --------          -------
Decrease in cash and cash equivalents............       (6,567)          (5,435)
Cash and cash equivalents at beginning of period.        7,343            5,765
                                                      --------          -------
Cash and cash equivalents at end of period.......     $    776          $   330
                                                      ========          =======


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

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
                                                                      =========


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

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  months  ended March 31,
2000,  the  effect of all  exercises  and  conversions  was  anti-dilutive  and,
therefore,  dilutive EPS is  equivalent to basic EPS. For the three months ended
March 31, 1999, a redemption discount and dividends  aggregating $13,782 related
to the Company's  repurchase of its Series C Preferred  Stock were excluded from
the numerator and incremental shares of 15,413 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 three months ended March 31, 1999,
the  effect  of all other  exercises  and  conversions  was  anti-dilutive  and,
therefore, was excluded from the computation of diluted EPS.
<PAGE>

     At March 31, 2000 and 1999, loans to certain limited partners,  aggregating
$594  and  $1,188,  respectively,  were  reported  as a  reduction  in  minority
interests in the Consolidated Balance Sheets.

Note 3 - Notes Payable

     As of March 31, 2000,  the Company is a guarantor  or  otherwise  obligated
with  respect to an aggregate of $12,651 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 March 31, 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 $28,885 at March
31, 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.

     Certain of the Company's debt obligations  require  compliance with various
financial  loan covenants  including,  but not limited to, those relating to the
Company's (i) total outstanding variable interest rate indebtedness,  (ii) ratio
of total  outstanding  indebtedness  to total market  value,  as defined,  (iii)
consolidated  net worth,  as defined,  and (iv) debt  service  and fixed  charge
coverage ratios, as defined.

     As a result of its financial  results for the quarter ended March 31, 2000,
the Company is not in compliance with financial  covenants contained in three of
its credit facilities. The loans have not been accelerated nor has notice of the
respective  lender's  intention to accelerate been received by the Company.  The
Company has received a waiver and  amendment to one of its  facilities  enabling
the  Company to  maintain  continued  compliance  under such  indebtedness.  The
Company is currently in  discussions  with the other lenders to receive a waiver
and/or  amend the loans;  however,  there can be no  assurance as to whether and
when the Company will receive any such waiver or amendment.

     In addition,  noncompliance  with the covenants  described  above triggered
certain cross-default  provisions with respect to several of the Company's other
debt  instruments,  including a $20,000  subordinated  loan and $28,250 of fixed
rate tax-exempt  revenue bonds. None of these loans has been accelerated nor has
a notice of the respective  lender's  intent to accelerate  been received by the
Company. Management is currently in discussion with the affected

<PAGE>

lenders to obtain a resolution of the cross-default  provisions;  however, there
can be no assurance as to whether and when the Company will obtain a resolution.

     If the  Company  is unable  to  obtain  such  waiver  or  amendment  to the
Unsecured  Revolving Loan and reach  resolution with certain other lenders,  the
Company  will look to (i) obtain  alternative  financing  from  other  financial
institutions,  or (ii) 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 payments
under all of its indebtedness,  there can be no assurance that one or all of the
affected  lenders will not declare a default and accelerate the maturity of such
indebtedness.  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.

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 in four phases 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.

     On November  19,  1999,  the  Company  successfully  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 December  31,  1999 was  $10,745  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

<PAGE>

     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 the earlier of the closing
of the proposed sale of an expansion of the Williamsburg  center or December 15,
2000. The promissory note requires the monthly payment of interest in arrears at
an annual rate of 7.75%.  Although  the Company  expects to close on the sale of
Prime Outlets at  Hagerstown,  including  the expansion  which opened during the
second quarter of 2000, for aggregate  consideration  of  approximately  $80,500
during  the second  quarter  of 2000,  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 March 31, 2000, the Company
classified $41,389 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
March 31, 2000,  43,397,916  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 March 31, 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 March 31, 2000, unpaid dividends
for the period November 16, 1999 through March 31, 2000 on the Senior  Preferred
Stock and Series B Convertible  Preferred  Stock  aggregated  $2,264 and $6,238,
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,  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

<PAGE>

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. Therefore,  the Company is in arrears on its Preferred Stock distributions
due February 15, 2000 and May 15, 2000.  The Board of Directors will continue to
evaluate the payment of preferred stock  distributions on a quarterly basis. The
holders of the Senior Preferred Stock and Series B Convertible  Preferred Stock,
each series voting separately as a class, 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 March 31, 2000 are $6,038 and $16,636, respectively.

Note 6  - eOutlets.com

     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 $12,964 in the first quarter of 2000. The non-recurring
loss includes (i) the write-off of $3,497 of costs  capitalized  during 1999 and
(ii) $9,467 of costs  incurred  during the three  months  ended March 31,  2000,
including costs associated with discontinuing the operations of eOutlets.com.

Note 7 - 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 are 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 on August 20, 1999. The lawsuit  alleges that
the  Company  and its  related  entities  overcharged  tenants  for common  area
maintenance  charges  and  promotional  fund  charges.  The  outcome of, and the
ultimate  liability of the Company,  if any, from, this lawsuit cannot currently
be  predicted.  Management  believes  that the  Company has acted  properly  and
intends to defend this lawsuit vigorously.

     The New York Stock  Exchange  has notified the Company that it is 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  14,767,000 square  feet of
gross  leasable  area  ("GLA")  at March  31,  2000,  compared  to 50  operating
manufacturers'  outlet  centers  totaling   14,369,000 square  feet  of  GLA  at
March 31,  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 and (ii) acquired from Horizon Group
Properties, Inc. ("HGP") ownership interests in the Bellport Outlet Center 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 its second home furnishing  store operated by The Home Co., in which
a 47.6% interest is owned by the Company.

     Between  December 31, 1999 and March 31, 2000, the Company's  outlet center
portfolio  experienced  a decline in occupancy  from 93% to 90%. The decline was
primarily  attributable to tenant departures  subsequent to the holiday shopping
season.  For comparison,  the Company's outlet center portfolio was 95% occupied
on March 31, 1999.



<PAGE>

<TABLE>
                             Portfolio of Properties
                                 March 31, 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)
                                 March 31, 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
                                                                            V           August 1999         64,000             100
                                                                                                           -------             ---
                                                                                                           501,000              95

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

Prime Outlets at Bellport (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)
                                 March 31, 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)
                                 March 31, 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
                                                                                                           -------             ---
                                                                                                           389,000             100
                                                                                                           -------             ---
Total Outlet Centers (10)                                                                               14,767,000              90%
                                                                                                        ==========             ===

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


Notes:
     (1) Percentage  reflects  fully  executed  leases as of March 31, 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 98% leased as
of March 31, 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 second  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 81%
leased as of March 31, 2000.


<PAGE>

Results of Operations

     Comparison  of the three  months  ended March 31, 2000 to the three  months
ended March 31, 1999.

Summary

     The Company  reported  net income  (loss) of  $(11,719)  and $9,298 for the
three months ended March 31, 2000 and 1999,  respectively.  For the three months
ended March 31, 2000,  the net income (loss)  applicable to common  shareholders
was $(17,387), or $(0.40) per common share on a basic and diluted basis. For the
three  months  ended  March  31,  1999,  the net  income  applicable  to  common
shareholders  was  $17,098,  or $0.40 and $0.06 per common  share on a basic and
diluted basis, respectively.

Revenues

     Total  revenues  were  $72,841  for the three  months  ended March 31, 2000
compared to $78,343 for the three  months  ended March 31,  1999,  a decrease of
$5,502,  or 7.0%.  Base rents  decreased  $5,054,  or 10.3%, in 2000 compared to
1999.  Straight-line  rent (expense) income (included in base rents) were $(406)
and $209 for the three months ended March 31, 2000 and 1999, respectively. These
decreases  are  primarily due to the  Prime/Estein  Transactions,  a decrease in
portfolio occupancy and partially offset by the Portfolio Expansion.

     Percentage  rents,  which  represent  rents based on a percentage  of sales
volume above a specified  threshold,  decreased $575, or 27.9%, during the three
months  ended March 31, 2000  compared to the same period in 1999.  This decline
was primarily  attributable to Prime/Estein  Transactions.  For the three months
ended March 31, 2000, same-space sales in centers owned by the Company increased
5.2% compared to the same period 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 months  ended March 31, 2000,  same-store
sales increased by 0.8% compared to the same period in 1999.  "Same-store sales"
is defined as the weighted  average  sales per square foot reported by merchants
for stores opened since January 1, 1999.  The weighted  average sales per square
foot reported by all  merchants  was $257 for the year ended  December 31, 1999.
Tenant reimbursements,  which represent the contractual recovery from tenants of
certain operating expenses,  decreased by $1,676, or 7.1%,  primarily due to the
decrease in portfolio occupancy.

     Interest and other income  increased by $1,803,  or 54.8%, to $5,094 during
the three  months  ended March 31, 2000  compared to $3,291 for the three months
ended March 31,  1999.  The  increase  reflects (i) a $2,472 gain on the sale of
outparcel  land in  Camarillo,  CA, (ii)  amortization  of deferred fees of $283
related  to  payments  made to the  Company  for a  covenant-not-to-compete  and
licensing  agreement,  (iii) higher  property  management fee income of $221 and
(iv) an increase in lease buy-out  income of $221.  Partially  offsetting  these
items were  reductions in (i) equity earnings from investment in partnerships of
$701, (ii) temporary  tenant income of $588 and (iii) all other ancillary income
of $105.

Expenses

     Property  operating  expenses  decreased by $1,405, or 7.4%, to $17,532 for
the three months ended March 31, 2000 compared to $18,937 for the same period in
1999.  Real estate  taxes  increased by $164,  or 2.9%,  to $5,731 for the three
months ended March 31, 2000 from $5,567 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 increase in real estate taxes
is primarily attributable to increased assessments and the Portfolio Expansion,

<PAGE>

partially  offset  by  the  Prime/Estein  Transaction.  As  shown  in  TABLE  2,
depreciation and amortization  expense decreased by $2,022, or 11.1%, to $16,237
for the three  months  ended  March 31,  2000  compared  to $18,259 for the same
period in 1999. This decrease is primarily due to the Prime/Estein  Transaction,
partially offset by the Portfolio Expansion.

TABLE 2 - Components of Depreciation and Amortization Expense

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

--------------------------------------------------------------------------------
Three months ended March 31,                         1999                2000
--------------------------------------------------------------------------------

Building and improvements                         $ 8,798             $10,110
Land improvements                                   1,400               1,378
Tenant improvements                                 5,453               6,184
Furniture and fixtures                                419                 402
Leasing commissions                                   167                 185
                                                  -------             -------
      Total                                       $16,237             $18,259
                                                  =======             =======

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

TABLE 3 - Components of Interest Expense

The components of interest expense are summarized as follows:

--------------------------------------------------------------------------------
Three months ended March 31,                        1999                 2000
--------------------------------------------------------------------------------
Interest incurred                                 $24,278             $21,686
Interest capitalized                               (1,100)             (1,074)
Amortization of deferred financing costs              824                 593
Amortization of interest rate protection
 contracts                                             21                  57
                                                  -------             -------
         Total                                    $24,023             $21,262
                                                  =======             =======
================================================================================

     As shown in TABLE 3,  interest expense for the three months ended March 31,
2000 increased by $2,761,  or 13.0%, to $24,023 compared to $21,262 for the same
period in 1999.  This increase  reflects (i) higher interest  incurred of $2,592
and (ii) an  increase  in  amortization  of  deferred  financing  costs of $231.
Partially  offsetting these items was (i) a decrease in amortization of interest
rate protection  contracts of $36 and (ii) an increase in the amount of interest
capitalized in connection with development projects of $26.

     The  increase in  interest  incurred is  primarily  attributable  to (i) an
increase of $29,009 in the Company's  average debt outstanding  during the three
months  ended  March 31,  2000  compared  to the same period in 1999 and (ii) an
increase in the weighted  average interest rate for the three months ended March
31, 2000  compared to the same period in 1999.  The  weighted  average  interest
rates were 7.84% and 7.17% for the 2000 and 1999 periods, respectively.

     Other  charges  decreased  by $359,  or 19.0%,  to  $1,529.  This  decrease
reflects (i) reduced marketing  expenses of $99, (ii) lower ground lease expense
of $83, (iii) a lower provision for potentially  abandoned projects of $50, (iv)
a  lower  provision  for  uncollectible  accounts  receivable  of $26  and (v) a
decrease in all other miscellaneous charges of $101.


<PAGE>

     In connection with re-leasing space to new merchants,  the Company incurred
$224 and $786 in capital  expenditures  during the three  months ended March 31,
2000 and 1999, respectively.

Liquidity and Capital Resources

Sources and Uses of Cash

     For the three months ended March 31, 2000,  net cash  provided by operating
activities was $9,762,  net cash used in investing  activities was $13,035,  and
net cash used in financing activities was $3,294.

     The uses of cash for  investing  activities  during the three  months ended
March 31, 2000 of $28,720  included (i) costs  associated  with  development and
construction  of a new center (Prime Outlets of Puerto Rico) and four expansions
to existing centers aggregating  approximately  449,000 square feet of GLA which
are expected to open during 2000 (including two expansions  aggregating  165,000
square  feet of GLA at Prime  Outlets at  Hagerstown  which  opened in March and
April  2000),  (ii)  costs  for  pre-development  activities  related  to future
development  opportunities  and (iii) costs related to  eOutlets.com.  Partially
offsetting  these  uses  were  $11,083  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 three  months
ended March 31, 2000  included  (i)  principal  repayments  on notes  payable of
$12,285 and (ii) deferred  financing costs of $75.  Partially  offsetting  these
items were proceeds from new borrowings of $9,066.

     Although the Company believes that cash flow from (i) operations,  (ii) new
borrowings,  (iii) refinancing of certain existing debt, (iv) the potential sale
of a joint venture  interest in certain  outlet  centers,  and (v) the potential
sale of equity or debt  securities in the public or private capital markets 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 March  31,  2000,  unused
commitments  available for borrowings  under various loan facilities were $4,480
in the aggregate. See "Noncompliance with Certain Debt Covenants" 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,  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  10.5% Series A Senior
Cumulative  Preferred  Stock  ("Senior  Preferred  Stock")  and 8.5%  Cumulative
Convertible  Preferred Stock ("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. Therefore,  the Company is in arrears on
its Preferred  Stock  distributions  due February 15, 2000 and May 15, 2000. The
Board of Directors will continue to evaluate the payment of such preferred stock
distributions on a quarterly basis.

<PAGE>

The holders of the Senior  Preferred  Stock and Series B  Convertible  Preferred
Stock,  each series voting  separately  as a class,  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  will be elected to serve until the earlier
of (i) the election and  qualification  of such  directors'  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 cumulative dividends on
the Company's  Senior  Preferred Stock and Series B Convertible  Preferred Stock
outstanding as of March 31, 2000 are $6,038 and $16,636, respectively.

Debt Repayments

     The Company's aggregate indebtedness was $1,224,951 and $1,260,670 at March
31,  2000  and  December  31,  1999,  respectively.  At  March  31,  2000,  such
indebtedness had a weighted average maturity of 4.8 years and bore interest at a
weighted average interest rate of 7.84% per annum. At March 31, 2000,  $935,052,
or 76.3%,  of such  indebtedness  bore interest at fixed rates and $289,899,  or
23.7%,  of such  indebtedness  bore interest at variable  rates.  The Company is
obligated  to repay  $88,514 and  $227,609 of mortgage  indebtedness  during the
remainder of 2000 and 2001,  respectively.  See "Noncompliance with Certain Debt
Covenants."

     As of March 31, 2000,  the Company is a guarantor  or  otherwise  obligated
with  respect to an aggregate of $12,651 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 March 31, 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 $28,885 at March
31, 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.



<PAGE>

Noncompliance with Certain Debt Covenants

     Certain of the Company's debt obligations  require  compliance with various
financial  loan covenants  including,  but not limited to, those relating to the
Company's (i) total outstanding variable interest rate indebtedness,  (ii) ratio
of total  outstanding  indebtedness  to total market  value,  as defined,  (iii)
consolidated  net worth,  as defined,  and (iv) debt  service  and fixed  charge
coverage ratios, as defined.

     As a result of its financial  results for the quarter ended March 31, 2000,
the Company is not in compliance with financial  covenants contained in three of
its credit facilities. The loans have not been accelerated nor has notice of the
respective  lender's  intention to accelerate been received by the Company.  The
Company has received a waiver and  amendment to one of its  facilities  enabling
the  Company to  maintain  continued  compliance  under such  indebtedness.  The
Company is currently in  discussions  with the other lenders to receive a waiver
and/or  amend the loans;  however,  there can be no  assurance as to whether and
when the Company will receive any such waiver or amendment.

     In addition,  noncompliance  with the covenants  described  above triggered
certain cross-default  provisions with respect to several of the Company's other
debt  instruments,  including a $20,000  subordinated  loan and $28,250 of fixed
rate tax-exempt  revenue bonds. None of these loans has been accelerated nor has
a notice of the respective  lender's  intent to accelerate  been received by the
Company.  Management  is currently in  discussion  with the affected  lenders to
obtain a resolution of the cross-default  provisions;  however,  there can be no
assurance as to whether and when the Company will obtain a resolution.

     If the  Company  is unable  to  obtain  such  waiver  or  amendment  to the
Unsecured  Revolving Loan and reach  resolution with certain other lenders,  the
Company  will look to (i) obtain  alternative  financing  from  other  financial
institutions,  or (ii) 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 payments
under all of its indebtedness,  there can be no assurance that one or all of the
affected  lenders will not declare a default and accelerate the maturity of such
indebtedness.  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 obtain new financing
under terms as favorable as the Company has experienced in prior periods.

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 in four phases 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

<PAGE>

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.

     On November  19,  1999,  the  Company  successfully  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 December  31,  1999 was  $10,745  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 $11,083, 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 the earlier of the closing
of the proposed sale of an expansion of the Williamsburg  center or December 15,
2000. The promissory note requires the monthly payment of interest in arrears at
an annual rate of 7.75%.  Although  the Company  expects to close on the sale of
Prime Outlets at  Hagerstown,  including  the expansion  which opened during the
second quarter of 2000, for aggregate  consideration  of  approximately  $80,500
during  the second  quarter  of 2000,  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 March 31, 2000, the Company
classified $41,389 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.

Planned Development

     Construction  continues at Prime  Outlets of Puerto Rico,  the first outlet
center in Puerto  Rico,  which will contain  175,000  square feet of GLA, and is
expected to open in the second quarter of 2000. Additionally, the Company opened
two  expansions  aggregating  165,000  square  feet of GLA at Prime  Outlets  at

<PAGE>

Hagerstown  in  March  and  April  2000.  Furthermore,   the  Company  continues
construction  of a 58,000  square foot  expansion at Prime Outlets at San Marcos
which is scheduled to open during the second quarter of 2000. At March 31, 2000,
the remaining  budgeted capital  expenditures for projects  scheduled to open in
2000 aggregated  approximately  $8,540,  while anticipated capital  expenditures
related to the completion of expansions of existing outlet centers opened during
1999 (aggregating 102,000 square feet of GLA) approximated $3,777.

     Although the Company expects to fund the development cost of these projects
from (i) retained cash flow from operations,  (ii) construction loans, (iii) the
potential  sale of equity or debt  securities  in the public or private  capital
markets,  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 equity  capital  or debt  financing  for the
planned  development  projects  or  that  the  terms  of  such  capital  raising
activities will be as favorable as the Company has experienced in prior periods.
If adequate  financing for such development and expansion is not available,  the
Company  may not be able to develop new  centers or expand  existing  centers at
currently planned levels.

eOutlets.com

     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 $12,964 in the first quarter of 2000. The non-recurring
loss includes (i) the write-off of $3,497 of costs  capitalized  during 1999 and
(ii) $9,467 of costs  incurred  during 2000,  including  costs  associated  with
discontinuing of eOutlets.com.

Economic Conditions

     Substantially all 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.  Substantially  all 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.

Impact of Year 2000

     In prior periods, the Company discussed the nature and progress of its plan
to become Year 2000 ready. As a result of testing and remediation  efforts,  the
Company experienced no significant  disruptions in mission critical  information
technology  and  non-information  technology  systems and believes those systems
successfully responded to the Year 2000 date change. The Company is not aware of
any material problems resulting from Year 2000 issues, either with its products,
its internal  systems,  or the products and services of third parties with which
the Company  does  business.  The Company  will  continue to monitor its mission
critical computer  application and those of its suppliers and vendors throughout
the Year 2000 to ensure  that any latent  Year 2000  matters  that may arise are
addressed promptly.


<PAGE>

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
partnerships 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 4 provides a reconciliation of income before  allocations to minority
interests and preferred shareholders to FFO for the three months ended March 31,
2000 and 1999.  FFO decreased  $9,015,  or 32.2% to $18,995 for the three months
ended March 31, 2000 from $28,010 for the three months ended March 31, 1999.

TABLE 4 - Funds from Operations

--------------------------------------------------------------------------------

Three months ended March 31,                                2000           1999
--------------------------------------------------------------------------------

Income (loss) before minority interests                $ (11,687)       $ 9,298
FFO adjustments:
Depreciation and amortization                             16,237         18,259
Amortization of deferred financing costs
 and interest rate protection contracts                      844            650
Unconsolidated joint venture adjustments                     586            255
Non-real estate depreciation and amortization             (1,028)          (797)
                                                         -------        -------
 FFO before discontinued operations                        4,952         27,665
Discontinued operations - eOutlets.com                    12,964              -
Discontinued operations - Designer Connection              1,079            345
                                                        --------        -------
FFO before allocations to minority interests and
  preferred shareholders                                $ 18,995        $28,010
                                                        ========        =======

================================================================================
<PAGE>


Item 3.    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 March 31, 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....................    $34,196      $ 36,609    $46,529     $348,761     $17,049      $56,402    $395,506      $935,052
Average interest rate........      11.81%         7.44%      7.04%        7.76%       7.75%        6.98%      7.11%          7.54%
Variable rate:
--------------
Principal....................    $54,317      $191,000    $   637     $  1,152     $42,793            -           -       $289,899
Average interest rate........       9.17%         8.57%      7.42%        7.42%       7.42%           -           -           8.51%

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

</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 are 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 on August 20, 1999. The lawsuit  alleges that
the  Company  and its  related  entities  overcharged  tenants  for common  area
maintenance  charges  and  promotional  fund  charges.  The  outcome of, and the
ultimate  liability of the Company,  if any, from, this lawsuit cannot currently
be  predicted.  Management  believes  that the  Company has acted  properly  and
intends to defend this lawsuit vigorously.

     The New York Stock  Exchange  has notified the Company that it is 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 quarter  ended  December 31,
1999 and March  31,  2000,  the  Company  is not in  compliance  with  financial
covenants  contained  in its 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 May 15, 2000,  the aggregate  arrearage on the Senior  Preferred
Stock and the  Series B  Convertible  Preferred  Stock was  $3,019  and  $8,317,
respectively.

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

                  None

Item 5.           Other Information

                  None

Item 6.           Exhibits or Reports on Form 8-K

                  None

<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: May 15, 2000                                     /s/ Glenn D. Reschke
                                                       Glenn D. Reschke
                                                       President and
                                                       Chief Executive Officer