The purchase price reflects a cap rate of about 11% on estimated 2003 net operating income, according to a statement issued by Chelsea. The transaction is expected to close by the end of the year.

"Collectively, the outlet centers represent one of the strongest sizable portfolios in the outlet mall industry," according to David Bloom, chairman and CEO of Chelsea. "We're delighted to have the opportunity to add them to our share of the better outlet properties, and we intend to convert three of them to our Premium Outlet brand within the next 12 to 24 months."

Altogether, the four properties total 1.3 million sf and generated average tenant sales of $300 per sf for the year ended September 30, with an average tenant occupancy cost-to-sales ratio of about 7.3%. The three that will get the new branding include the one property in New Jersey, the 293,000-sf, 70-story Jackson Outlet Village. Located within a mile of the Six Flags Great Adventure theme park, the property is 100% leased to such tenants as Nike, Tommy Hilfiger, The Gap, Banana Republic and WestPoint Stevens.

The other two that will get the Premium Outlet branding are the 400,000-sf Factory Outlet Village Osage Beach in Osage Beach, MO, and the 329,000-sf St. Augustine Outlet Center in St. Augustine, FL. The former, which opened in 1987, is 96% leased with a tenant roster that includes Polo Ralph Lauren, Coach, Nautica, Bose, Tommy Hilfiger and Brooks Brothers. The latter, which opened in 1990, is 93% leased, with Liz Claiborne, Coach, WestPoint Stephens, Bose and Brooks Brothers among the tenants.

The fourth property is the 317,000-sf, 90-store Factory Merchants Branson in Branson, MO, a 90-store property that is currently 85% leased. "We will have the opportunity to rationalize and stabilize the Branson property by combining the leasing and management of Factory Merchants Branson with our existing center there," Bloom explains.

"This transaction is another significant step in the consolidation of the outlet mall industry, and we will continue to play a role in that trend," says Bloom.

Instant Insights /

Chelsea Will Buy Four Outlet Malls for $193M

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