Chelsea Property Group Forms Joint Venture With Sordo Madaleno Y Asociados; Partnership To Develop Premium Outlet Centers In Mexico.

Business Editors

ROSELAND, N.J.--(BUSINESS WIRE)--May 15, 2002

Chelsea Property Group, Inc. (NYSE: CPG) announced today that it signed an agreement with Sordo Madaleno y Asociados ("SMA") and Mr. Carlos Peralta of Mexico City to jointly develop -- on a 50/50 basis -- Premium Outlet(TM) centers in Mexico.

Founded in 1937, SMA is one of Mexico's pre-eminent firms in the areas of urban development, architecture and interior design, and through its history has been involved in the design and/or development of a wide range of projects including luxury hotels and resorts, shopping centers, churches, movie theaters, factories, laboratories, office complexes, apartment buildings and public spaces. The firm is headed by award-winning architect and developer Javier Sordo Madaleno, 45.

SMA's more recent design/development projects include the Westin Regina Resorts in Puerto Vallarta and Los Cabos; the 300-room J.W. Marriott Hotel in Mexico City; Palacio de Hierro's flagship store and world headquarters at Moliere 222 in Mexico City; and the world headquarters of Herdez and Cuervo in Mexico City. During the late 1960's, the firm developed Mexico's first two regional malls - Plaza Satelite and Plaza Universidad, both in Mexico City - which remain among the most successful retail properties in the country. SMA's current projects include Los Atrios, a 1.7 million square-foot luxury mixed-use project (retail-entertainment-hotel-office) being built in Mexico City's Polanco district, and an expansion of the highly successful Angelopolis regional mall in Puebla, two hours south of Mexico City.

The joint venture, known as Premium Outlets de Mexico SRLCV, will focus initially on developing a Premium Outlet center in the northwest of Mexico City. The proposed 27-acre site lies 28 kilometers from downtown Mexico City at the intersection of the Periferico, an eight-lane north-south highway running along the affluent west side of the city, and Chamapa-La Venta, an important ring road. The Periferico carries an average of more than 100,000 cars per day.

The outlet center - to be known as Punta Norte Premium Outlets - will be located on a scenic hilltop overlooking the Periferico, with a panoramic view southward toward Mexico City. The site is highly visible from the Periferico driving north, and roadway infrastructure improvements - part of SMA's overall master plan - will provide easy access from the highway. SMA's master plan covers a total of 190 acres of land and includes, in addition to the outlet center, several big box retailers, an auto mall, an entertainment park and residential development; Chelsea is involved only in the outlet center.

Subject to entilements, site work for the 200,000 square-foot first phase of the outlet project is scheduled to commence in the summer of 2002, with construction to begin later in the year. Phase I is expected to open in early 2004. The site can support a second phase containing approximately 175,000 square feet of gross leasable area.

Leslie Chao, President of Chelsea Property Group, said, "We are delighted to be in company with Mr. Sordo and Mr. Peralta, two of the Mexico's leading visionaries, as we embark on the development the country's first Premium Outlet project. We look forward to bringing Chelsea's usual high-quality mix of design, tenancy and convenience to the Mexico City market, and to expanding to other Mexican cities over time."

"We are very pleased today to have concluded this agreement, which we believe is the first U.S.-Mexico retail development joint venture in the country. We are confident that the combination of Chelsea's successful Premium Outlet concept and SMA's development expertise will create the leading outlet development organization in Mexico," Mr. Sordo added.

Chelsea Property Group, Inc. is a fully integrated, self-administered and self-managed real estate investment trust (REIT) that wholly or partially owns 58 Premium Outlet and other shopping centers - containing approximately 13.0 million square feet of GLA - in 28 states and Japan. The Company's leading properties include Woodbury Common Premium Outlets, near New York City; Orlando Premium Outlets, in Orlando, Florida; Wrentham Village Premium Outlets, near Boston; Desert Hills Premium Outlets, near Palm Springs, California; and Gotemba Premium Outlets, near Tokyo, Japan. Please see www.cpgi.com for more information.

This news release includes "forward-looking" statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Chelsea Property Group believes that the expectations reflected in such statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Forward-looking statements involve known and unknown risks that may cause actual results to differ materially from expected results. Risks include, without limitation, obtaining regulatory entitlements for and completion of development projects; the availability and cost of capital and foreign currency; credit risk; the Company's ability to lease its properties; retail, real estate and economic conditions; risks inherent to being a partner in joint ventures; competition; and other risks detailed from time to time in Chelsea Property Group's reports to the Securities and Exchange Commission. The Company accepts no responsibility for updating forward-looking statements.