CPG PARTNERS LP
424B2, 2001-01-19
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>
 The information in this preliminary prospectus supplement is not complete and
may be changed.
<PAGE>
                                                Filed Pursuant to Rule 424(b)(2)
                                                      Registration No. 333-39324
                 SUBJECT TO COMPLETION. DATED JANUARY 18, 2001.

         Prospectus Supplement to Prospectus dated September 21, 2000.

                                  $150,000,000

[LOGO]
                               CPG PARTNERS, L.P.

                                  % Notes due

                                  -----------

    CPG Partners, L.P. (the operating partnership through which Chelsea Property
Group, Inc. conducts its operations) will pay interest on the notes on
         and      of each year. The first interest payment will be made on
          . The notes will be issued only in denominations of $1,000 and
integral multiples of $1,000.

    We have the option to redeem all or a portion of the notes at any time at a
price based on the present value on the redemption date, using a discount rate
based on a U.S. Treasury security having a remaining life to maturity comparable
to the notes, of the then remaining scheduled payments of principal and interest
on the notes to be redeemed, plus   basis points, plus accrued interest. The
redemption price will in no event be less than 100% of the principal amount of
the notes to be redeemed.

    SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THE ACCOMPANYING PROSPECTUS FOR A
DESCRIPTION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER PRIOR TO PURCHASING THE
NOTES.

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

    NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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

<TABLE>
<CAPTION>
                                                                   Per Note        Total
                                                                   --------       --------
<S>                                                                <C>            <C>
Initial public offering price...............................              %       $
Underwriting discount.......................................              %       $
Proceeds, before expenses, to Chelsea.......................              %       $
</TABLE>

    The initial public offering price set forth above does not include accrued
interest, if any. Interest on the notes will accrue from                and must
be paid by the purchaser if the notes are delivered after             .

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

    The underwriters expect to deliver the notes in book-entry form only through
the facilities of The Depository Trust Company against payment in New York, New
York on                 .

GOLDMAN, SACHS & CO.                                         MERRILL LYNCH & CO.
                         BANC OF AMERICA SECURITIES LLC

                                   ---------

                 Prospectus Supplement dated January   , 2001.
<PAGE>
                         PROSPECTUS SUPPLEMENT SUMMARY

    THE FOLLOWING SUMMARY CONTAINS BASIC INFORMATION ABOUT THIS OFFERING. IT
LIKELY DOES NOT CONTAIN ALL THE INFORMATION THAT IS IMPORTANT TO YOU. FOR A MORE
COMPLETE UNDERSTANDING OF THIS OFFERING, WE ENCOURAGE YOU TO READ THIS ENTIRE
PROSPECTUS SUPPLEMENT AS WELL AS THE ACCOMPANYING PROSPECTUS AND ANY OTHER
DOCUMENTS WE HAVE REFERRED YOU TO.

                                  THE OFFERING

<TABLE>
<S>                                            <C>
Securities Offered                             $150,000,000 aggregate principal amount of
                                                  % notes due              .

Maturity                                       .

Interest Payment Dates                         and               , beginning on
                                                            .

Optional Redemption                            We have the option to redeem the notes, in
                                               whole or in part, at any time, at the
                                               redemption prices described in the section
                                               "Description of the Notes" under the heading
                                               "Optional Redemption."

Ranking                                        The notes are unsecured and unsubordinated
                                               obligations and will rank on a parity with
                                               any existing and future unsecured and
                                               unsubordinated indebtedness we incur.

Use of Proceeds                                We will use the net proceeds from the
                                               offering (approximately $148.8 million) to
                                               repay $100 million of 7.75% unsecured notes
                                               due January 26, 2001, to repay borrowings
                                               (approximately $34 million) outstanding under
                                               our senior unsecured credit facility and the
                                               remainder (approximately $14.8 million) for
                                               general corporate purposes.

Limitations on Incurrence of Debt              The indenture with respect to the notes
                                               contains various covenants limiting our
                                               ability to incur additional debt.
</TABLE>

                                      S-2
<PAGE>
                                USE OF PROCEEDS

    The net proceeds to us from the offering are estimated to be approximately
$148.8 million. We intend to use the net proceeds of the offering to repay
$100 million of 7.75% unsecured term notes due January 26, 2001. Approximately
$34 million will be used to repay existing indebtedness presently outstanding
under our senior unsecured credit facility. The credit facility expires
March 30, 2003 and bears interest on the outstanding balance payable monthly at
a rate of London Interbank Offering Rate plus 1.05%, or the prime rate, at our
option. The average interest rate on such indebtedness was 7.65% as of
January 17, 2001. The remaining proceeds (approximately $14.8 million) will be
used for general corporate purposes, including the development or acquisition of
additional properties and the expansion of our existing properties.

                        THE COMPANY AND THE PARTNERSHIP

OVERVIEW

    CPG Partners, L.P. is 83% owned and managed by its sole general partner,
Chelsea Property Group, Inc., a real estate investment trust, or REIT, that
specializes in owning, developing, leasing, marketing and managing upscale and
fashion-oriented manufacturers' outlet centers. As of December 31, 2000, we
wholly or partially owned 27 centers in 15 states and Japan containing
approximately 8.2 million square feet of gross leasable area, or GLA. Our
centers generally are located near metropolitan areas which have a population of
at least one million people within a 30-mile radius, with an average annual
household income greater than $50,000 or at or within 20 miles of major tourist
destinations. Our existing portfolio includes properties in or near New York
City, Los Angeles, San Francisco, Sacramento, Boston, Atlanta, Washington, D.C.,
Orlando, Portland (Oregon), Cleveland, Honolulu, the Napa Valley, Palm Springs
and Tokyo and Osaka, Japan. During 1999, our portfolio generated weighted
average tenant sales of $377 per square foot. Weighted average tenant sales is
the total sales reported by tenants divided by their gross leasable area
weighted by months in operation. At December 31, 2000, more than 600 tenants
were represented in approximately 2,100 stores.

    On December 22, 2000, in partnership with Fortress Registered Investment
Trust, we acquired four manufacturers' outlet centers from Prime Retail, Inc. We
provide the operating management, leasing and marketing services for the
properties and receive a management fee. We have a 49% economic interest in the
four properties, which contain approximately 1.6 million square feet of GLA and
consist of Prime Outlets at Gilroy, a 577,000 square-foot center in Gilroy,
California (San Jose/ Silicon Valley region); Prime Outlets at Michigan City, a
491,000 square-foot center in Michigan City, Indiana (50 miles east of Chicago);
Prime Outlets at Waterloo, a 392,000 square-foot center in Waterloo, New York
(Finger Lakes region); and Prime Outlets at Kittery, a 131,000 square-foot
grouping of outlets in Kittery, Maine. The four centers are currently 99%
leased, with tenant sales averaging $335 per square foot during the 12 months
ended September 30, 2000. The total cost of the purchase was approximately
$240 million, including the assumption of approximately $174 million of
non-recourse mortgage debt maturing in 2008.

    On July 19, 2000, we announced that through a subsidiary we have been
developing a new technology-based e-commerce platform. This platform will
provide fashion and other retail brands their own customized direct to the
consumer internet online store, incorporating e-commerce design, development,
fulfillment and customer services. In consideration for such services, we will
receive a percentage of each brand's online sales. To date, this has not had any
material affect on our financial condition or results of operations. There is no
assurance that this concept will be successful or the future impact this will
have on our financial condition or results of operations.

    Unless the context otherwise requires, "Chelsea" refers to CPG Partners,
L.P. and "we" and "us" refer to both CPG Partners, L.P. and Chelsea Property
Group, Inc.

                                      S-3
<PAGE>
    Effective January 1, 2001, Chelsea GCA Realty Partnership, L.P. changed its
name to CPG Partners, L.P. and Chelsea GCA Realty, Inc. changed its name to
Chelsea Property Group, Inc. Chelsea is organized under the laws of the State of
Delaware. Our principal executive office is located at 103 Eisenhower Parkway,
Roseland, New Jersey 07068, telephone (973) 228-6111.

BUSINESS STRATEGY

    We believe our strong tenant relationships, high-quality property portfolio
and managerial expertise give us significant advantages in the manufacturers'
outlet business.

    STRONG TENANT RELATIONSHIPS.  We maintain strong tenant relationships with
high-fashion, upscale manufacturers that have a selective presence in the outlet
industry, such as Armani, Brooks Brothers, Coach Leather, Cole-Haan, Donna
Karan, GAP/Banana Republic, Gucci, Jones New York, Nautica, Polo Ralph Lauren,
Tommy Hilfiger and Versace, as well as with national brand-name manufacturers
such as Adidas, Carter's, Nike, Phillips-Van Heusen (Bass, Izod, Gant, Van
Heusen) and Timberland. We believe that our ability to draw from both groups is
an important factor in providing broad customer appeal and higher tenant sales.

    HIGH QUALITY PROPERTY PORTFOLIO.  Our properties generated weighted average
reported tenant sales during 1999 of $377 per square foot, the highest in the
manufacturers' outlet industry by a wide margin. As a result, we have been
successful in attracting some of the world's most sought-after brand-name
designers, manufacturers and retailers and each year we have added new names to
the outlet business and our centers. We believe that the quality of our centers
gives us significant advantages in attracting customers and negotiating
multi-lease transactions with tenants.

    MANAGEMENT EXPERTISE.  We believe we have a competitive advantage in the
manufacturers' outlet business as a result of our experience in the business,
long-standing relationships with tenants and expertise in the development and
operation of manufacturers' outlet centers. Our senior management has been
recognized as leaders in the outlet industry over the last two decades.
Management developed a number of the earliest and most successful outlet centers
in the industry, including Liberty Village Premium Outlets (one of the first
manufacturers' outlet centers in the U.S.) in 1981, Woodbury Common Premium
Outlets in 1985, and Desert Hills Premium Outlets in 1990.

GROWTH STRATEGY

    We seek growth through increasing rents in our existing centers; developing
new centers and expanding existing centers; and acquiring and re-developing
centers.

    INCREASING RENTS AT EXISTING CENTERS.  Our leasing strategy includes
aggressively marketing available space and maintaining a high level of
occupancy, providing for inflation-based contractual rent increases or periodic
fixed contractual increases in substantially all leases, renewing leases at
higher base rents per square foot, re-tenanting space occupied by
underperforming tenants, and continuing to sign leases that provide for
percentage rents.

    DEVELOPING NEW CENTERS AND EXPANDING EXISTING CENTERS.  We believe that
there continue to be significant opportunities to develop manufacturers' outlet
centers across the United States and internationally. We intend to undertake
such development selectively, and believe that we will have a competitive
advantage in doing so as a result of our development expertise, tenant
relationships and access to capital. We expect that the development of new
centers and the expansion of existing centers will continue to be a substantial
part of our growth strategy. We believe that our development experience and
strong tenant relationships enable us to determine site viability on a timely
and cost-effective basis. However, there can be no assurance that any
development or expansion projects will be commenced or completed as scheduled.

                                      S-4
<PAGE>
    ACQUIRING AND REDEVELOPING CENTERS.  We intend to selectively acquire
individual properties and portfolios of properties that meet our strategic
investment criteria as suitable opportunities arise. We believe that our
extensive experience in the outlet center business, access to capital markets,
familiarity with real estate markets and advanced management systems will allow
us to evaluate and execute our acquisition strategy successfully. Furthermore,
management believes that we will be able to enhance the operation of acquired
properties as a result of our strong tenant relationships with both national and
upscale fashion retailers, and our development, marketing and management
expertise as a full-service real estate organization. Additionally, we may be
able to acquire properties on a tax-advantaged basis through the issuance of
partnership units. There can be no assurance that any acquisitions will be
consummated or, if consummated, will result in an advantageous return on our
investment.

OPERATING STRATEGY

    Our primary business objectives are to enhance the value of our properties
and operations by increasing cash flow. We plan to achieve these objectives
through continuing efforts to improve tenant sales and profitability, and to
enhance the opportunity for higher base and percentage rents.

    LEASING.  We pursue an active leasing strategy through long-standing
relationships with a broad range of tenants including manufacturers of men's,
women's and children's ready-to-wear, lifestyle apparel, footwear, accessories,
tableware, housewares, linens and domestic goods. Key tenants are placed in
strategic locations to draw customers into each center and to encourage shopping
at more than one store. We continually monitor tenant mix, store size, store
location and sales performance, and work with tenants to improve each center
through re-sizing, re-location and joint promotion.

    MARKET AND SITE SELECTION.  To ensure a sound long-term customer base, we
generally seek to develop sites near densely-populated, high-income metropolitan
areas, and/or at or near major tourist destinations. While these areas typically
impose numerous restrictions on development and require compliance with complex
entitlement and regulatory processes, we believe that these areas provide the
most attractive long-term demographic characteristics.

    We generally seek to develop sites that can support at least 400,000 square
feet of GLA and that offer the long-term opportunity to dominate their
respective markets through a critical mass of tenants.

    MARKETING.  We pursue an active, property-specific marketing strategy using
a variety of media including newspapers, television, radio, billboards, regional
magazines, guide books and direct mailings. The centers are marketed to tour
groups, conventions and corporations; additionally, each property participates
in joint destination marketing efforts with other area attractions and
accommodations. Virtually all consumer marketing expenses incurred by us are
reimbursable by tenants.

    PROPERTY DESIGN AND MANAGEMENT.  We believe that effective property design
and management are significant factors in the success of our properties and work
continually to maintain or enhance each center's physical plant, original
architectural theme and high level of on-site services. Each property is
designed to be compatible with its environment and is maintained to high
standards of aesthetics, ambiance and cleanliness in order to promote longer
visits and repeat visits by shoppers.

FINANCING STRATEGY

    Our financing strategy is to maintain a strong, flexible financial position
by: (a) maintaining a moderate level of leverage, (b) extending and sequencing
debt maturity dates, (c) managing

                                      S-5
<PAGE>
floating interest rate exposure and (d) maintaining liquidity. Management
believes these strategies will enable us to access a broad array of capital
sources, including bank and institutional borrowings, secured and unsecured debt
and equity financings.

                              RECENT DEVELOPMENTS

NEW CENTERS, EXPANSIONS AND ACQUISITIONS

    Between January 1, 2000 and December 31, 2000, we added approximately
2.9 million square feet of GLA to our portfolio as a result of acquiring a 49%
interest in four properties comprising 1.6 million square feet of GLA; expanding
three existing wholly-owned centers by a total of 300,000 square feet of GLA;
and opening four new properties comprising 1.0 million square feet of GLA. The
first phases of two of the new properties, Gotemba Premium Outlets and Rinku
Premium Outlets, located outside of Tokyo and Osaka, Japan, respectively,
comprising 400,000 square feet of GLA, were developed by our 40%-owned joint
venture, Chelsea Japan Co., Ltd. The third new property, Orlando Premium
Outlets, a 428,000 square foot single-phase center, located in Orlando, Florida,
is 50%-owned through a joint venture partnership with Simon Property
Group, Inc. The first phase of the fourth new property, Allen Premium Outlets,
located north of Dallas, Texas contains 206,000 square feet of GLA and is
wholly-owned by us.

    We have made several recent investments through joint ventures with others.
Joint venture investments may involve risks not otherwise present for
investments made solely by us, including the possibility our co-venturers might
become bankrupt, our co-venturers might at any time have different interests or
goals than we do, and our co-venturers may take action contrary to our
instructions, requests, policies or objectives, including our policy with
respect to maintaining the qualification of Chelsea Property Group, Inc. as a
REIT. Other risks of joint venture investments include impasse on decisions,
such as a sale, because neither our co-venturer nor us would have full control
over the joint venture. There is no limitation under our organizational
documents as to the amount of funds that may be invested in partnerships or
joint ventures.

                                      S-6
<PAGE>
    The following table sets forth a summary of new centers, expansions and
acquisitions from January 1 through December 31, 2000:

<TABLE>
<CAPTION>
                                                            GLA       NUMBER
PROPERTY                         % OWNED     DATE(1)     (SQ. FT.)   OF STORES             TENANTS(2)
--------                        ---------   ----------   ---------   ---------   ------------------------------
<S>                             <C>         <C>          <C>         <C>         <C>
AS OF JANUARY 1, 2000.........                           5,216,000     1,364

NEW CENTERS:
  Orlando Premium Outlets,
    Orlando, FL...............      50            5/00     428,000       113     Brooks Brothers, Donna Karan,
                                                                                 Nike, Polo Ralph Lauren, Tommy
                                                                                 Hilfiger
  Gotemba Premium Outlets,
    Gotemba, Japan............      40            7/00     220,000        78     Brooks Brothers, GAP, Nike
  Allen Premium Outlets,
    Allen, TX.................     100           10/00     206,000        48     Barneys, Liz Claiborne, Polo
                                                                                 Ralph Lauren, Tommy Hilfiger
  Rinku Premium Outlets,
    Izumisano, Japan..........      40           11/00     180,000        71     Brooks Brothers, GAP, Nike
                                                         ---------     -----
TOTAL NEW CENTERS:............                           1,034,000       310

EXPANSIONS:
  Leesburg Corner Premium
    Outlets, Leesburg, VA.....     100      3/ & 12/00     138,000        30     Eddie Bauer, Old Navy
  Wrentham Village Premium
    Outlets, Wrentham, MA.....     100           12/00     127,000        33     Hugo Boss, Nike, Polo Ralph
                                                                                 Lauren
  Folsom Premium Outlets,
    Folsom, CA................     100            5/00      54,000        12     Eddie Bauer
  Other (net).................                              (1,000)        4
                                                         ---------     -----
TOTAL EXPANSIONS:.............                             318,000        79

ACQUISITIONS
  Gilroy Premium Outlets,
    Gilroy, CA................      49           12/00     577,000       141     Eddie Bauer, Esprit, GAP,
                                                                                 Nike, Polo Ralph Lauren,
                                                                                 Timberland
  Michigan City Premium
    Outlets, Michigan City,
    IN........................      49           12/00     491,000       122     Eddie Bauer, GAP, Polo Ralph
                                                                                 Lauren, Tommy Hilfiger
  Waterloo Premium Outlets,
    Waterloo, NY..............      49           12/00     392,000       100     Eddie Bauer, GAP, J. Crew,
                                                                                 Polo Ralph Lauren
  Kittery Premium Outlets,
    Kittery, ME...............      49           12/00     131,000        25     Crate & Barrel, GAP, J. Crew,
                                                                                 Lenox, Old Navy, Polo Ralph
                                                                                 Lauren
                                                         ---------     -----
TOTAL ACQUISITIONS:...........                           1,591,000       388
                                                         ---------     -----

TOTAL FOR 2000................                           2,943,000       777
                                                         ---------     -----

AS OF DECEMBER 31, 2000.......                           8,159,000     2,141
                                                         =========     =====
</TABLE>

------------------------------
(1) Opening, expansion or acquisition date.

(2) Consists of tenants who lease approximately 5,000 square feet of GLA and
    have estimated sales of more than $300 per square foot. Most tenants pay a
    fixed base rent based on the square feet leased by them and also pay a
    percentage rent based on sales.

                                      S-7
<PAGE>
                                 THE PROPERTIES

    Our properties are upscale, fashion-oriented manufacturers' outlet centers
located near large metropolitan areas, including New York City, Los Angeles, San
Francisco, Sacramento, Boston, Atlanta, Washington D.C., Portland (Oregon),
Cleveland and Tokyo and Osaka, Japan, or at or near tourist destinations,
including Honolulu, Napa Valley, Orlando and Palm Springs. Our properties were
98% leased as of December 31, 2000 and contained approximately 2,100 stores with
more than 600 different tenants. During 1999 and 1998, the properties generated
weighted average tenant sales of $377 and $360 per square foot, respectively. As
of December 31, 2000, we had 27 operating outlet centers in 15 states and Japan
containing approximately 8.2 million square feet of gross leasable area. Of the
27 operating centers, 20 are owned 100% (19 in fee and one under a long-term
lease); and seven are partially owned through joint ventures (four in fee and
three under long-term leases).

    Approximately 34%, 35% and 33% of our revenues for the years ended
December 31, 1999 and 1998 and for the nine-month period ended September 30,
2000, respectively, were derived from our two centers with the highest revenues,
Woodbury Common Premium Outlets and Desert Hills Premium Outlets. The loss of
either center or a material decrease in revenues from either center for any
reason may have a material adverse effect on us. In addition, approximately 30%,
34% and 28% of our revenues for the years ended December 31, 1999 and 1998 and
the nine-month period ended September 30, 2000, respectively, were derived from
our eight centers in California. Woodbury Common Premium Outlets and Desert
Hills Premium Outlets either contributed 10% or more of our aggregate gross
revenues during 1999 or had a book value equal to 10% or more of our total
assets at the end of 1999.

    We do not consider any single store lease to be material; no individual
tenant, combining all of its store concepts, accounts for more than 5% of our
gross revenues or total GLA; and only one tenant accounts for more than 4% of
our gross revenues or total GLA. In view of these statistics and our past
success in re-leasing available space, we believe the loss of any individual
tenant would not have a significant effect on future operations.

    Set forth in the table below is certain property information as of
December 31, 2000:

<TABLE>
<CAPTION>
                                            YEAR        GLA       NO. OF
NAME/LOCATION                              OPENED    (SQ. FT.)    STORES                    TENANTS
-------------                             --------   ---------   --------   ----------------------------------------
<S>                                       <C>        <C>         <C>        <C>
Woodbury Common Premium Outlets ........     1985      841,000      214     Brooks Brothers, Calvin Klein, Coach
  Central Valley, NY (New York City                                         Leather, GAP, Gucci, Last Call Neiman
  metro area)                                                               Marcus, Polo Ralph Lauren

Wrentham Village Premium Outlets .......     1997      601,000      158     Brooks Brothers, Calvin Klein, Donna
  Wrentham, MA (Boston/Providence metro                                     Karan, GAP, Polo Jeans Co., Sony,
  area)                                                                     Versace

Gilroy Premium Outlets(1) ..............     1990      577,000      141     Brooks Brothers, Eddie Bauer, Esprit,
  Gilroy, CA (40 miles south of San                                         GAP, J. Crew, Liz Claiborne, Nike, Polo
  Jose)                                                                     Ralph Lauren, Timberland, Vanity Fair

North Georgia Premium Outlets ..........     1996      537,000      135     Brooks Brothers, Donna Karan, GAP,
  Dawsonville, GA (Atlanta metro area)                                      Nautica, Off 5th-Saks Fifth Avenue,
                                                                            Williams-Sonoma

Michigan City Premium Outlets(1) .......     1987      491,000      122     Burberrys, Coach Leather, Donna Karan,
  Michigan City, IN (50 miles east of                                       Eddie Bauer, Esprit, GAP, Liz Claiborne,
  Chicago)                                                                  Polo Ralph Lauren, Spiegel, Tommy
                                                                            Hilfiger

Desert Hills Premium Outlets ...........     1990      475,000      121     Burberrys, Coach Leather, Armani, Gucci,
  Cabazon, CA (Palm Springs-Los Angeles                                     Nautica, Polo Ralph Lauren, Tommy
  area)                                                                     Hilfiger
</TABLE>

                                      S-8
<PAGE>

<TABLE>
<CAPTION>
                                            YEAR        GLA       NO. OF
NAME/LOCATION                              OPENED    (SQ. FT.)    STORES                    TENANTS
-------------                             --------   ---------   --------   ----------------------------------------
<S>                                       <C>        <C>         <C>        <C>
Leesburg Corner Premium Outlets ........     1998      463,000      103     Banana Republic, Brooks Brothers, GAP,
  Leesburg, VA (Washington, D.C. area)                                      Donna Karan, Off 5th-Saks Fifth Avenue

Camarillo Premium Outlets ..............     1995      454,000      124     Ann Taylor, Barneys New York, Bose,
  Camarillo, CA (Los Angeles metro area)                                    Cole- Haan, Donna Karan, Jones New York,
                                                                            Off 5th-Saks Fifth Avenue

Orlando Premium Outlets(2) .............     2000      428,000      113     Brooks Brothers, Burberrys, Cole-Haan,
  Orlando, FL (between Disney World &                                       Donna Karan, Nike, Polo Ralph Lauren,
  Epcot)                                                                    Reebok, Tommy Hilfiger, Versace

Waterloo Premium Outlets(1) ............     1995      392,000      100     Brooks Brothers, Coach Leather, Eddie
  Waterloo, NY (Finger Lakes Region)                                        Bauer, Esprit, GAP, J. Crew, Liz
                                                                            Claiborne, Nautica, Polo Ralph Lauren,
                                                                            Vanity Fair

Folsom Premium Outlets .................     1990      299,000       80     Bass, Donna Karan, GAP, Liz Claiborne,
  Folsom, CA (Sacramento metro area)                                        Nike, Off 5th-Saks Fifth Avenue

Aurora Premium Outlets .................     1987      297,000       69     Ann Taylor, Bose, Brooks Brothers, Liz
  Aurora, OH (Cleveland metro area)                                         Claiborne, Off 5th-Saks Fifth Avenue,
                                                                            Polo Ralph Lauren

Clinton Crossing Premium Outlets .......     1996      272,000       67     Coach Leather, Crate & Barrel, Donna
  Clinton, CT (I-95/NY-New England                                          Karan, GAP, Off 5th-Saks Fifth Avenue,
  corridor)                                                                 Polo Ralph Lauren

Gotemba Premium Outlets(3) .............     2000      220,000       78     Brooks Brothers, Coach Leather, Eddie
  Gotemba, Japan (60 miles west of                                          Bauer, GAP, J. Crew, L.L.Bean, Nautica,
  Tokyo)                                                                    Nike, Timberland

Waikele Premium Outlets ................     1997      213,000       52     Barneys New York, Bose, Donna Karan,
  Waipahu, HI (Honolulu area)                                               Guess, Polo Jeans Co., Off 5th-Saks
                                                                            Fifth Avenue

Allen Premium Outlets ..................     2000      206,000       48     Barneys New York, Crate & Barrel, Liz
  Allen, TX (20 miles north of Dallas)                                      Claiborne, Nautica, Polo Ralph Lauren,
                                                                            Reebok, Timberland, Tommy Hilfiger, Van
                                                                            Heusen

Petaluma Village Premium Outlets .......     1994      196,000       51     Ann Taylor, Brooks Brothers, Donna
  Petaluma, CA (San Francisco metro                                         Karan, Off 5th-Saks Fifth Avenue
  area)

Rinku Premium Outlets(3) ...............     2000      180,000       71     Brooks Brothers, Coach Leather, Dolce &
  Izumisano, Japan (30 miles south of                                       Gabbana, Eddie Bauer, GAP, Nautica,
  Osaka)                                                                    Nike, Timberland

Napa Premium Outlets ...................     1994      171,000       49     Cole-Haan, Dansk, Ellen Tracy, Esprit,
  Napa, CA (Napa Valley)                                                    J. Crew, Nautica, Timberland, TSE
                                                                            Cashmere

Columbia Gorge Premium Outlets .........     1991      164,000       45     Adidas, Carter's, GAP, Harry & David,
  Troutdale, OR (Portland metro area)                                       Mikasa

Liberty Village Premium Outlets ........     1981      157,000       56     Calvin Klein, Donna Karan, Ellen Tracy,
  Flemington, NJ (New York-Phila. metro                                     Polo Ralph Lauren, Tommy Hilfiger
  area)
</TABLE>

                                      S-9
<PAGE>

<TABLE>
<CAPTION>
                                            YEAR        GLA       NO. OF
NAME/LOCATION                              OPENED    (SQ. FT.)    STORES                    TENANTS
-------------                             --------   ---------   --------   ----------------------------------------
<S>                                       <C>        <C>         <C>        <C>
American Tin Cannery Premium Outlets ...     1987      135,000       48     Anne Klein, Nine West, Reebok, Totes
  Pacific Grove, CA (Monterey Peninsula)

Kittery Premium Outlets(1) .............     1984      131,000       25     Crate & Barrel, GAP, J. Crew, Lenox, Old
  Kittery, ME (60 miles north of Boston)                                    Navy, Polo Ralph Lauren, Reebok

Santa Fe Premium Outlets ...............     1993      125,000       40     Brooks Brothers, Coach Leather, Donna
  Santa Fe, NM                                                              Karan, Nine West

Patriot Plaza Premium Outlets ..........     1986       76,000       11     Lenox, Polo Ralph Lauren, WestPoint
  Williamsburg, VA (Norfolk-Richmond                                        Stevens
  area)

Mammoth Premium Outlets ................     1990       35,000       11     Bass, Polo Ralph Lauren
  Mammoth Lakes, CA (Yosemite National
  Park)

St. Helena Premium Outlets .............     1992       23,000        9     Brooks Brothers, Coach Leather, Donna
  St. Helena, CA (Napa Valley)                                              Karan
                                                     ---------    -----
  Total.................................             8,159,000    2,141
                                                     =========    =====
</TABLE>

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

(1) 49% owned through a joint venture with Fortress Registered Investment Trust

(2) 50% owned through a joint venture with Simon Property Group, Inc.

(3) 40% owned through a joint venture with Mitsubishi Estate Co., Ltd. and
    Nissho Iwai Corporation

                                      S-10
<PAGE>
                                 CAPITALIZATION

    The following table sets forth our capitalization as of September 30, 2000,
and as adjusted to give effect to the offering and the anticipated use of the
proceeds from the offering as described under "Use of Proceeds."

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30, 2000
                                                              ------------------------
                                                              HISTORICAL   AS ADJUSTED
                                                              ----------   -----------
                                                                   (IN THOUSANDS)
<S>                                                           <C>          <C>
DEBT:
  Senior Credit Facilities..................................   $  5,035     $  5,035(1)(2)
  7.75% Notes due 2001......................................     99,966           --
  8.375% Notes due 2005.....................................     49,871       49,871
  7.25% Notes due 2007......................................    124,768      124,768
  8.625% Notes due 2009.....................................     49,896       49,896
  Secured bank debt.........................................     84,758       84,758
     % Notes due     .......................................         --      150,000
                                                               --------     --------
    Total debt..............................................   $414,294     $464,328
                                                               ========     ========
PARTNERS' CAPITAL:
  Preferred partnership units outstanding, 1,300,000 at
    September 30, 2000 and as adjusted......................   $ 63,315     $ 63,315
  General partner units outstanding, 15,942,000 at
    September 30, 2000 and as adjusted......................    269,076      269,076
  Limited partner units outstanding, 3,357,000 at
    September 30, 2000 and as adjusted......................     37,464       37,464
                                                               --------     --------
  Total partners' capital...................................    369,855      369,855
                                                               --------     --------
    Total capitalization....................................   $784,149     $834,183
                                                               ========     ========
</TABLE>

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

(1) Represents a term loan due March 30, 2003.

(2) Subsequent to September 30, 2000 we borrowed $34 million under our senior
    credit facility that was principally used to acquire the 49% interest in the
    four manufacturers' retail centers acquired from Prime Retail, Inc. A
    portion of the net proceeds from the offering will be used to repay all of
    these borrowings.

                                      S-11
<PAGE>
                      SELECTED CONSOLIDATED FINANCIAL DATA

    The following selected consolidated financial data should be read in
conjunction with our financial statements included in our periodic reports filed
under the Securities Exchange Act of 1934, which are incorporated by reference
into this prospectus supplement and the accompanying prospectus.

    The financial data as of and for the nine months ended September 30, 2000
and 1999 has been derived from our unaudited condensed consolidated financial
statements. In our opinion, the financial data for the nine months ended
September 30, 2000 and 1999 includes all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position and
results of operations for the periods presented.

    Historical operating results, including net income, may not be comparable to
future operating results. In addition, we believe that the book value of our
properties, which reflects historical costs of such real estate assets less
accumulated depreciation, is not indicative of the fair value of the properties.

                                      S-12
<PAGE>
                               CPG PARTNERS, L.P.
              (IN THOUSANDS EXCEPT PER UNIT AND NUMBER OF CENTERS)

<TABLE>
<CAPTION>
                                            NINE MONTHS ENDED
                                              SEPTEMBER 30,                        YEAR ENDED DECEMBER 31,
                                          ---------------------   ---------------------------------------------------------
                                            2000        1999        1999        1998        1997        1996        1995
                                          ---------   ---------   ---------   ---------   ---------   ---------   ---------
                                               (UNAUDITED)
<S>                                       <C>         <C>         <C>         <C>         <C>         <C>         <C>
OPERATING DATA:
Rental revenue..........................  $ 89,538    $ 82,537    $114,485    $ 99,976    $ 81,531    $ 63,792    $ 51,361
Total revenues..........................   126,211     115,974     162,926     139,315     113,417      91,356      72,515
Loss on writedown of assets.............        --          --         694      15,713          --          --          --
Total expenses..........................    87,357      83,903     115,370     113,879      78,262      59,996      41,814
Income from unconsolidated entities.....     2,644         253          --          --          --          --          --
Income/(loss) from Chelsea
  Interactive...........................      (805)         --          --          --          --          --          --
Income before minority interest and
  extraordinary item....................    40,693      32,324      47,556      25,436      35,155      31,360      29,650
Minority interest.......................        --          --          --          --        (127)       (257)       (285)
Income before extraordinary item........    40,693      32,324      47,556      25,436      35,028      31,103      29,365
Extraordinary item -- loss on retirement
  of debt...............................        --          --          --        (345)       (252)       (902)         --
Net income..............................    40,693      32,324      47,556      25,091      34,776      30,201      29,365
Preferred distribution..................    (7,527)     (3,628)     (6,137)     (4,188)       (907)         --          --
Net income to common unitholders........  $ 33,166    $ 28,696    $ 41,419    $ 20,903    $ 33,869    $ 30,201    $ 29,365

OWNERSHIP INTEREST:
General partner.........................    15,937      15,697      15,742      15,440      14,605      11,802      11,188
Limited partners........................     3,357       3,399       3,389       3,431       3,435       5,316       5,601
                                          --------    --------    --------    --------    --------    --------    --------
Weighted average units outstanding......    19,294      19,096      19,131      18,871      18,040      17,118      16,789

BALANCE SHEET DATA:
Rental properties before accumulated
  depreciation..........................  $900,979    $827,202    $848,813    $792,726    $708,933    $512,354    $415,983
Total assets............................   862,263     787,483     806,055     773,352     688,029     502,212     408,053
Total liabilities.......................   492,408     409,752     426,198     450,410     342,106     240,878     141,577
Minority interest.......................        --          --          --          --          --       5,698       5,441
Partners' capital.......................  $369,855    $377,731    $379,857    $322,942    $345,923    $255,636    $261,035
Distributions declared per common
  unit..................................  $   2.25    $   2.16    $   2.88    $   2.76    $   2.58    $  2.355    $  2.135

OTHER DATA:
Funds from operations to common
  unitholders (1).......................  $ 64,494    $ 57,000    $ 79,980    $ 67,994    $ 57,417    $ 48,616    $ 41,870
Cash flows from:
Operating activities....................  $ 76,186    $ 61,929    $ 87,590    $ 78,731    $ 56,594    $ 53,510    $ 36,797
Investing activities....................   (69,772)    (51,980)    (77,578)   (119,807)   (199,250)    (99,568)    (82,393)
Financing activities....................    16,801      (8,262)    (10,781)     36,169     143,308      55,957      40,474
GLA at end of period....................     5,951       5,070       5,216       4,876       4,308       3,610       2,934
Weighted average GLA (2)................     5,497       4,951       4,995       4,614       3,935       3,255       2,680
Centers at end of the period............        21          19          19          19          20          18          16
Ratio of earnings to fixed charges
  (3)...................................      2.5x        2.3x        2.5x        2.3x        2.4x        2.8x        3.6x
Ratio of earnings to fixed charges and
  preferred stock dividends (3).........      2.2x        2.1x        2.2x        2.0x        2.3x          --          --
</TABLE>

                                      S-13
<PAGE>
------------------------------

NOTES TO SELECTED FINANCIAL DATA:

(1) We believe that funds from operations, or FFO, is helpful to investors as a
    measure of our performance because, along with cash flow from operating
    activities, financing activities and investing activities, it provides
    investors with an indication of our ability to incur and service debt, to
    make capital expenditures and to fund other cash needs. We compute FFO in
    accordance with the current standards established by NAREIT which may not be
    comparable to FFO reported by other REITs (or their operating partnerships)
    that do not define the term in accordance with the current NAREIT definition
    or that interpret the current NAREIT definition differently than we do. FFO
    does not represent cash generated from operating activities in accordance
    with GAAP and should not be considered as an alternative to net income
    (determined in accordance with GAAP) as an indication of our performance or
    to cash flow from operating activities (determined in accordance with GAAP)
    as a measure of our liquidity, nor is it indicative of funds available to
    fund our cash needs, including our ability to make cash distributions. See
    Management's Discussion and Analysis in our annual report on Form 10-K for
    the year ended December 31, 1999 for a definition of FFO.

(2) GLA weighted by months in operation.

(3) For purposes of computing the ratios, earnings consist of income from
    continuing operations after depreciation and before minority interest and
    fixed charges, exclusive of interest capitalized and amortization of loan
    costs capitalized. Fixed charges consist of interest expense, including
    interest costs capitalized, the portion of rent expense representative of
    interest and total amortization of expensed and capitalized debt issuance
    costs. Preferred stock includes dividends paid on the preferred stock.

                                      S-14
<PAGE>
                            DESCRIPTION OF THE NOTES

    We will issue the notes under an indenture, dated as of January 23, 1996,
among CPG Partners, L.P., Chelsea Property Group, Inc. and State Street Bank and
Trust Company, as trustee. When we refer to the indenture, we include all
supplements to the indenture. The terms of the notes include those stated in the
indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939. We have filed a copy of the indenture as an exhibit to
the registration statement.

    The following summary sets forth the material terms and provisions of the
notes and the indenture governing the notes. Capitalized terms not otherwise
defined in this section have the meanings given to them in the notes and in the
indenture. The following description of the specific terms of the offered notes
supplements, and, to the extent inconsistent, replaces the description of the
general terms and provisions of the Debt Securities set forth in the
accompanying prospectus.

GENERAL

    The notes will be:

    - unsecured general obligations of Chelsea;

    - unsubordinated debt of Chelsea and will rank on a parity with all existing
      and future unsecured and unsubordinated debt;

    - effectively subordinated to the prior claims of creditors under any
      secured debt we incur in the future; and

    - issued in book-entry form only.

    Except as described under "--Merger, Consolidation or Sale" and "--Certain
Covenants" below and under "Description of Debt Securities--Merger,
Consolidation or Sale" and "--Certain Covenants" in the accompanying prospectus,
the indenture does not contain any other provisions that would afford holders of
the notes protection in the event of:

    - a highly leveraged or similar transaction involving us or any affiliate of
      us;

    - a change of control; or

    - a reorganization, restructuring, merger or similar transaction involving
      us that may adversely affect the holders of the notes.

    Subject to the limitations set forth under "--Merger, Consolidation or Sale"
and "--Certain Covenants" below or under "Description of Debt
Securities--Merger, Consolidation or Sale" and "--Certain Covenants" in the
accompanying prospectus, we may enter into transactions such as the sale of all
or substantially all of our assets or a merger or consolidation that would
increase the amount of our debt or substantially reduce or eliminate our assets,
which may have an adverse effect on our ability to service our debt, including
the notes. Chelsea and its management have no present intention of engaging in a
highly leveraged or similar transaction.

    The notes are not subject to repayment at the option of the holders thereof.
In addition, the notes will not be entitled to the benefit of any sinking fund.
The notes will not be guaranteed by Chelsea Property Group, Inc.

PRINCIPAL, MATURITY AND INTEREST

    We will issue up to $150,000,000 aggregate principal amount of notes. We
will issue the notes in denominations of $1,000 and integral multiples of
$1,000. The notes will mature on          but are subject to redemption at our
option (as described below).

                                      S-15
<PAGE>
    Interest on the notes will accrue at the rate of       % per annum and will
be payable semi-annually in arrears on            and            , commencing on
             .
We will make each interest payment to the holders of record of these notes on
the immediately preceding            and            .

    Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.

OPTIONAL REDEMPTION

    We may at any time redeem the notes, in whole or in part, at a redemption
price equal to (1) the principal amount thereof, plus accrued and unpaid
interest to the redemption date and (2) the Make-Whole Amount (as defined
below), if any.

    If notice has been given as provided in the indenture and funds for the
redemption of any notes called for redemption have been irrevocably set aside on
the redemption date referred to in the notice, such notes will cease to bear
interest on the date fixed for redemption. Thereafter, the only right of the
holders of such notes will be to receive payment of the redemption price.

    We will give notice of any optional redemption to holders, at their
registered addresses, at least 30 and not more than 60 days before the date
fixed for redemption. The notice of redemption will specify, among other things,
the redemption price and the principal amount of the notes to be redeemed. If
less than all of the notes are to be redeemed, the trustee shall select which
notes are to be redeemed in a manner it deems fair and appropriate.

    As used above:

        "MAKE-WHOLE AMOUNT" means the excess, if any, of (1) the aggregate
    present value on the redemption date of the principal being redeemed and the
    amount of any interest (exclusive of interest accrued to the date of
    redemption) that would have been payable if such redemption had not been
    made, over (2) the aggregate principal amount of the notes being redeemed.
    The present value shall be determined by discounting, on a semi-annual
    basis, the principal and interest at the applicable Reinvestment Rate
    (determined on the third business day preceding the date such notice of
    redemption is given) from the respective dates on which the principal and
    interest would have been payable if such redemption had not been made.

        "REINVESTMENT RATE" means   % plus the yield on treasury securities at a
    constant maturity under the heading "Week Ending" published in the most
    recent Statistical Release under the caption "Treasury Constant Maturities"
    for the maturity (rounded to the nearest month) corresponding to the
    remaining life to maturity, as of the payment date of the principal being
    redeemed. If no maturity exactly corresponds to such maturity, yields for
    the two published maturities most closely corresponding to such maturity
    shall be calculated pursuant to the immediately preceding sentence and the
    Reinvestment Rate shall be interpolated or extrapolated from such yields on
    a straight-line basis, rounding in each of such relevant periods to the
    nearest month. For the purpose of calculating the Reinvestment Rate, the
    most recent Statistical Release published prior to the date of determination
    of the Make-Whole Amount shall be used.

        "STATISTICAL RELEASE" means the statistical release designated
    "H.15(519)" or any successor publication which is published weekly by the
    Federal Reserve System and which establishes yields on actively traded
    United States government securities adjusted to constant maturities, or, if
    such statistical release is not published at the time of any determination
    of the Make-Whole Amount, then such other reasonably comparable index which
    shall be designated by us.

                                      S-16
<PAGE>
MERGER, CONSOLIDATION OR SALE

    In addition to the restrictions on merger, consolidation or sale described
in the accompanying prospectus (see "Description of Debt Securities--Merger,
Consolidation or Sale"), we will not consolidate with or merge with or into any
person or sell, convey, transfer, lease or otherwise dispose of all or
substantially all of our assets to any other person unless after giving pro
forma effect to the consolidation, merger, sale, conveyance, transfer, lease or
other disposition, we or a successor entity could incur at least $1.00 of Debt
(other than intercompany Debt) in accordance with the indenture covenants
limiting the incurrence of Debt.

CERTAIN COVENANTS

    LIMITATION ON INCURRENCE OF DEBT.  In addition to the limitations on
incurrence of Debt contained in the accompanying prospectus (see "Description of
Debt Securities--Certain Covenants--Limitations on Incurrence of Debt"), we will
not allow any Restricted Subsidiary to incur any Debt other than intercompany
Debt.

    MAINTENANCE OF TOTAL UNENCUMBERED ASSETS.  We are required to maintain Total
Unencumbered Assets of not less than 150% of the aggregate outstanding principal
amount of outstanding Unsecured Debt.

    As used in this section:

        "RESTRICTED SUBSIDIARY" means any Subsidiary, unless it is designated as
    an Unrestricted Subsidiary.

        "TOTAL UNENCUMBERED ASSETS" means the sum of (1) those Undepreciated
    Real Estate Assets which have not been pledged, mortgaged or otherwise
    encumbered by the owner thereof to secure Debt and (2) all other assets of
    ours and our Subsidiaries determined in accordance with generally accepted
    accounting principles (but excluding intangibles and accounts receivable)
    which have not been pledged, mortgaged or otherwise encumbered by the owner
    thereof to secure Debt.

        "UNDEPRECIATED REAL ESTATE ASSETS" as of any date means the cost
    (original cost plus capital improvements) of ours and our Subsidiaries' real
    estate assets on such date, before depreciation and amortization, determined
    on a consolidated basis in accordance with generally accepted accounting
    principles.

        "UNRESTRICTED SUBSIDIARY" means any Subsidiary that is designated as
    such by our board of directors and any Subsidiary of an Unrestricted
    Subsidiary. Our board of directors may designate any Subsidiary to be an
    Unrestricted Subsidiary so long as (1) neither we nor any other Subsidiary
    is directly or indirectly liable for any Debt of the Subsidiary, (2) no
    default on any Debt of the Subsidiary would permit any holder of any of our
    Debt or the Debt of any other Subsidiary to declare a default on the Debt or
    cause payment of the Debt to be accelerated or payable prior to its
    maturity, (3) neither we nor any other Subsidiary has a contract, agreement,
    arrangement, understanding or obligation of any kind, whether written or
    oral, with the Subsidiary other than those that might be obtained at the
    time from persons who are not our affiliates and (4) neither we nor any
    other Subsidiary has any obligation to subscribe for additional equity in
    the Subsidiary or to maintain or preserve the Subsidiary's financial
    condition or to cause the Subsidiary to achieve certain levels of operating
    results. Our board of directors will file with the trustee under the
    indenture a copy of the board resolution approving the designation of a
    Subsidiary as an Unrestricted Subsidiary. Our board of directors may
    designate an Unrestricted Subsidiary as a Restricted Subsidiary if
    immediately after the designation there would be no event of default under
    the indenture and we could incur at least

                                      S-17
<PAGE>
    $1.00 of Debt (other than intercompany Debt) in accordance with the
    indenture covenants limiting the incurrence of Debt.

        "UNSECURED DEBT" means Debt which is not secured by any mortgage, lien,
    charge, pledge, encumbrance or security interest of any kind upon any of our
    properties or properties of any Subsidiary.

    Reference is made to the section entitled "Description of Debt
Securities--Certain Covenants" in the accompanying prospectus for a description
of additional covenants applicable to the notes. Compliance with the covenants
described herein and such additional covenants with respect to the notes
generally may not be waived by the Board of Directors of Chelsea Property
Group, Inc., as our general partner, or by the trustee unless the holders of at
least a majority in principal amount of all outstanding notes consent to such
waiver; PROVIDED, HOWEVER, that the defeasance and covenant defeasance
provisions of the indenture described under "Description of Debt
Securities--Discharge, Defeasance and Covenant Defeasance" in the accompanying
prospectus will apply to the notes, including with respect to the covenants
described in this prospectus supplement.

GLOBAL SECURITIES

    The notes will be evidenced by one or more global securities, which will be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York, or DTC, and registered in the name of Cede & Co., as DTC's nominee.

    Holders may hold their interests in any of the global securities directly
through DTC, or indirectly through organizations which are participants in DTC.
Transfers between participants will be effected in the ordinary way in
accordance with DTC rules and will be settled in immediately available funds.

    Holders who are not DTC participants may beneficially own interests in a
global security held by DTC only through participants, including some banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly, and have indirect access to the DTC system. So long as Cede & Co.,
as the nominee of DTC, is the registered owner of any global security, Cede for
all purposes will be considered the sole holder of such global security. Except
as provided below, owners of beneficial interests in a global security will not
be entitled to have certificates registered in their names, will not receive or
be entitled to receive physical delivery of certificates in definitive form, and
will not be considered the holders thereof.

    Neither we nor the trustee, nor any registrar or paying agent, will have any
responsibility for the performance by DTC or their participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations. DTC has advised us that it will take any action
permitted to be taken by a holder of notes only at the direction of one or more
participants whose accounts are credited with DTC interests in a global
security.

    DTC has advised us as follows:

    - DTC is a limited purpose trust company organized under the New York
      Banking Law, a "banking organization" within the meaning of the New York
      Banking Law, a member of the Federal Reserve System, a "clearing
      corporation" within the meaning of the New York Uniform Commercial Code
      and a "clearing agency" registered pursuant to the provisions of
      Section 17A of the Exchange Act;

    - DTC holds securities for its participants and to facilitate the clearance
      and settlement of securities transactions, such as transfers and pledges,
      among participants in deposited securities through electronic book-entry
      changes to accounts of its participants, thereby

                                      S-18
<PAGE>
      eliminating the need for physical movement of securities certificates.
      Participants include securities brokers and dealers, banks, trust
      companies, clearing corporations and other organizations;

    - some of such participants, or their representatives, together with other
      entities, own DTC; and

    - the rules applicable to DTC and its participants are on file with the SEC.

    Purchases of notes under the DTC system must be made by or through
participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each actual purchaser of each note is in turn to be
recorded on the participant's and indirect participants' records. Purchasers
will not receive written confirmation from DTC of their purchase, but purchasers
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
participant or indirect participant through which the purchasers entered into
the transaction. Transfers of ownership interests in the notes are to be
accomplished by entries made on the books of participants and indirect
participants acting on behalf of actual purchasers. Purchasers of notes will not
receive certificates representing their ownership interests, except if the use
of the book-entry system for the notes is discontinued.

    The deposit of notes with DTC and their registration in the name of Cede &
Co. effect no change in beneficial ownership. DTC has no knowledge of the actual
beneficial owners of the notes. DTC's records reflect only the identity of the
participants to whose accounts such notes are credited, which may or may not be
the beneficial owners. The participants will remain responsible for keeping
account of their holdings on behalf of their customers.

    The laws of some jurisdictions require that some purchasers of securities
take physical delivery of securities in definite form. Such laws may impair the
ability to transfer beneficial interests in the global security.

    Redemption notices shall be sent to Cede & Co. If less than all of the
principal amount of the global securities of the same series is being redeemed,
DTC's practice is to determine by lot the amount of the interest of each
participant therein to be redeemed.

    Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants and by participants and indirect
participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.

    Principal, Make-Whole Amount and interest payments on the notes will be made
to Cede & Co. by wire transfer of immediately available funds. DTC's practice is
to credit participants' accounts on the payable date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payment on the payment date. Payments by participants to
beneficial owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such participant and not of DTC or us, subject to any statutory or regulation
requirements as may be in effect from time to time. Payments of principal,
Make-Whole Amount and interest to Cede & Co. is our responsibility, disbursement
of such payments to participants is the responsibility of DTC, and disbursement
of such payments to the beneficial owners of the notes is the responsibility of
participants and indirect participants. Neither we nor the trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.

                                      S-19
<PAGE>
    DTC may discontinue providing its services as securities depository with
respect to the notes at any time by giving us reasonable notice. Under such
circumstances, in the event that a successor securities depository is not
obtained, certificates for the relevant notes will be printed and delivered in
exchange for interests in such global security. Any global security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
relevant notes in authorized denominations registered in such names as DTC shall
direct. It is expected that such instruction will be based upon directions
received by DTC from its participants with respect to ownership of beneficial
interests in such global security.

    We may decide to discontinue use of the system of book-entry transfers
through DTC, or a successor securities depository. In that event, certificates
representing the notes will be printed and delivered.

    The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but we do not
take responsibility for the accuracy thereof.

INFORMATION REGARDING THE TRUSTEE

    The trustee under the indenture is State Street Bank and Trust Company. The
trustee is the trustee with respect to our publicly issued debt securities.

            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

    The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. The following discussion deals only with notes held as capital
assets and does not purport to deal with persons in special tax situations, such
as financial institutions, banks, insurance companies, regulated investment
companies, dealers in securities or currencies, tax-exempt entities, persons
holding notes in a tax-deferred or tax-advantaged account, persons holding notes
as a hedge or as a position in a "straddle" or as part of a "conversion
transaction" for tax purposes, persons who are required to mark-to-market for
tax purposes, persons receiving payments from the offices of any broker not
located in the United States, or persons whose functional currency is not the
United States dollar. It also does not deal with holders other than original
purchasers (except where otherwise specifically noted). Persons considering the
purchase of the notes should consult their own tax advisors concerning the
application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the notes arising under the laws of any other taxing
jurisdiction.

    As used herein, the term "U.S. Holder" means a beneficial owner of a note
that is for United States Federal income tax purposes (a) a citizen or resident
of the United States, (b) a corporation or partnership (including an entity
treated as a corporation or a partnership for U.S. Federal income tax purposes)
created or organized in or under the laws of the United States or any state
thereof or the District of Columbia (except in the case of a partnership as
otherwise provided by Treasury Regulations), (c) an estate the income of which
is subject to United States Federal income taxation regardless of its source,
(d) a trust if a court within the United States is able to exercise primary
supervision of the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust or
(e) any other person whose income or gain in respect of a note is effectively
connected with the conduct of a United States trade or business. Notwithstanding
the preceding sentence, to the extent provided in regulations, certain trusts in
existence on August 20, 1996 and treated as United States persons prior to such
date that

                                      S-20
<PAGE>
elect to continue to be so treated also shall be considered United States
persons. As used herein, the term "non-U.S. Holder" means a beneficial owner of
a note that is not a U.S. Holder.

U.S. HOLDERS

    PAYMENTS OF INTEREST.  Under general principles of current United States
Federal income tax law, payments of interest in respect of a note generally will
be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular method of tax accounting).

    DISPOSITION OF A NOTE.  Under general principles of current United States
Federal income tax law, upon the sale, exchange or retirement of a note, a U.S.
Holder generally would recognize taxable gain or loss in an amount equal to the
difference, if any, between the amount realized upon the sale, exchange or
retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in its note. A U.S. Holder's adjusted tax
basis in a note generally would equal such U.S. Holder's initial investment in
such note. Any gain or loss realized by a U.S. Holder upon the sale, exchange or
retirement of a note generally would be long-term or short-term capital gain or
loss, depending upon whether the U.S. Holder had held the note for more than one
year. The maximum rate on gains recognized upon the taxable disposition of
capital assets held by individual taxpayers for more than one year as of the
date of disposition is 20% (and could be lower for gains realized by certain
individual taxpayers who meet specified conditions). A U.S. Holder's receipt of
any Make-Whole Amount should be treated as gain.

NON-U.S. HOLDERS

    A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium, if any, or interest on a note, if (a) such
non-U.S. Holder does not hold a direct or indirect 10% or greater capital or
profits interest in Chelsea, (b) such non-U.S. Holder is not a controlled
foreign corporation related to Chelsea and (c) the last United States payor (or
a non-U.S. payor who is a qualified intermediary, U.S. branch of a foreign
person or withholding foreign partnership) in the chain of payment (the
"Withholding Agent") has received either (1) if the non-U.S. Holder is the
beneficial owner of the note, a properly completed and signed Internal Revenue
Service Form W-8BEN, or substantially similar form, from such non-U.S. Holder
certifying under penalties of perjury that such holder is not a U.S. Holder and
disclosing the holder's name and address, or (2) if the non-U.S. Holder is not
the beneficial owner of the note, a properly completed and signed Internal
Revenue Service Form W-8IMY, or substantially similar form, from such non-U.S.
Holder. In certain cases, the Internal Revenue Service Form W-8IMY must be
accompanied by a copy of an Internal Revenue Service Form W-8BEN or the
substitute form that is provided by the beneficial owner to the non-U.S. Holder.
Generally, the Internal Revenue Service Form W-8IMY remains valid until a change
in circumstances makes any information on the form incorrect. However, the
Internal Revenue Service Form W-8BEN is generally effective for the remainder of
the year of signature plus three full calendar years unless a change in
circumstances makes any information on the form incorrect. Notwithstanding the
preceding sentence, an Internal Revenue Service Form W-8BEN with a U.S. taxpayer
identification number will remain effective until a change in circumstances
makes any information on the form incorrect, provided that the withholding agent
reports at least annually to the beneficial owner on Internal Revenue Service
Form 1042-S. The beneficial owner must inform the withholding agent within
30 days of such change and furnish a new Internal Revenue Service Form W-8BEN.
Interest received by a non-U.S. Holder which does not qualify for exemption from
taxation will be subject to United States Federal income tax and withholding tax
at a rate of 30% unless reduced or eliminated by an applicable tax treaty.

    Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
note, provided the gain is not effectively

                                      S-21
<PAGE>
connected with the conduct of a trade or business in the United States by the
non-U.S. Holder. Certain other exceptions may be applicable, and a non-U.S.
Holder should consult its tax advisor in this regard.

    A foreign corporation whose income or gain in respect of a note is
effectively connected with the conduct of a United States trade or business, in
addition to being subject to regular U.S. income tax, may be subject to a branch
profits tax equal to 30% of its "effectively connected earnings and profits"
within the meaning of the Code for the taxable year, as adjusted for certain
items, unless it qualifies for a lower rate under an applicable tax treaty (as
modified by the branch profits tax rules).

    The notes will not be includible in the estate of a non-U.S. Holder unless
the individual holds a direct or indirect 10% or greater capital or profits
interest in Chelsea or, at the time of such individual's death, payments in
respect of the notes would have been effectively connected with the conduct by
such individual of a trade or business in the United States.

BACKUP WITHHOLDING--U.S. HOLDERS AND NON-U.S. HOLDERS

    Backup withholding of United States Federal income tax at a rate of 31% may
apply to principal and interest payments made in respect of the notes to
registered owners who are not "exempt recipients" and who fail to provide
certain identifying information (such as the registered owner's taxpayer
identification number) in the required manner. Generally, individuals are not
exempt recipients, whereas corporations generally are exempt recipients.
Payments made in respect of the notes to a U.S. Holder must be reported to the
Internal Revenue Service ("IRS"), unless the U.S. Holder is an exempt recipient
or establishes an exemption. Compliance with the identification procedures
described in the preceding section would establish an exemption from backup
withholding and reporting for those non-U.S. Holders who are not exempt
recipients, provided that the payor does not have actual knowledge that the
holder is a U.S. Holder.

    In addition, upon the sale of a note to (or through) the United States
office of any broker, the broker must withhold 31% of the proceeds of sale,
unless either (a) the broker determines that the seller is a corporation or
other exempt recipient or (b) the seller provides, in the required manner,
certain identifying information and, in the case of a non-U.S. Holder, certifies
that such seller is a non-U.S. Holder and the payor does not have actual
knowledge that the holder is a U.S. Holder. Such a sale, as well as a sale by a
non-U.S. Holder to (or through) the foreign office of certain foreign brokers,
also must be reported by the broker to the IRS, unless either (1) the broker
determines that the seller is an exempt recipient or (2) in the case of a seller
that is a non-U.S. Holder, the seller certifies its non-U.S. status and the
payor does not have actual knowledge that the holder is a U.S. Holder.
Certification of the registered owner's non-U.S. status would be made normally
on an Internal Revenue Service Form W-8BEN under penalties of perjury, although
in certain cases it may be possible to submit other documentary evidence.

    Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.

                                      S-22
<PAGE>
                                  UNDERWRITING

    We and the underwriters for the offering named below have entered into an
underwriting agreement and a pricing agreement with respect to the notes.
Subject to certain conditions, each underwriter has severally agreed to purchase
the principal amount of notes indicated in the following table.

<TABLE>
<CAPTION>
                    Underwriters                       Principal Amount of Notes
                    ------------                       -------------------------
<S>                                                    <C>
Goldman, Sachs & Co..................................         $
Merrill Lynch, Pierce, Fenner & Smith
          Incorporated...............................
Banc of America Securities LLC.......................
                                                              ------------
    Total............................................         $150,000,000
                                                              ============
</TABLE>

    Notes sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover page of this prospectus
supplement. Any notes sold by the underwriters to securities dealers may be sold
at a discount from the initial public offering price of up to    % of the
principal amount of notes. Any such securities dealers may resell any notes
purchased from the underwriters to certain other brokers or dealers at a
discount from the initial public offering price of up to    % of the principal
amount of notes. If all the notes are not sold at the initial public offering
price, the underwriters may change the offering price and the other selling
terms.

    The notes are a new issue of securities with no established trading market.
We have been advised by the underwriters that the underwriters intend to make a
market in the notes, but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the notes.

    In connection with the offering, the underwriters may purchase and sell
notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
notes than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the notes while the
offering is in progress.

    The underwriters also may impose a penalty bid. This occurs when a
underwriter repays to the underwriters a portion of the underwriting discount
received by it because the underwriters have repurchased notes sold by or for
the account of such underwriter in stabilizing or short covering transactions.

    These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the notes. As a result, the price of the notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.

    We estimate that our share of the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $300,000.

    We have agreed to indemnify the underwriters against certain liabilities,
including civil liabilities under the Securities Act of 1933.

    In the ordinary course of business, some of the underwriters and their
affiliates have provided, and may in the future provide, investment banking,
financial advisory and other services to us for which they have received, and
may in the future receive, customary fees. Affiliates of Banc of America
Securities LLC are lead and/or administrative agents and lenders under our
revolving credit

                                      S-23
<PAGE>
facility and will receive a portion of the proceeds of this offering in
repayment of amounts outstanding under our revolving credit facility. Because
more than 10% of the net proceeds of this offering will be used to repay amounts
outstanding under our revolving credit facility, this offering will be made
pursuant to the requirements of Rule 2710(c)(8) of the Conduct Rules of the
National Association of Securities Dealers, Inc.

                                 LEGAL MATTERS

    The validity of the notes will be passed upon for us by Stroock & Stroock &
Lavan LLP, New York, New York and for the underwriters by Brown & Wood LLP, New
York, New York.

                                      S-24
<PAGE>
PROSPECTUS

                                  $900,000,000
                            CHELSEA GCA REALTY, INC.
              COMMON STOCK, PREFERRED STOCK AND DEPOSITARY SHARES
                               CHELSEA GCA REALTY
                               PARTNERSHIP, L.P.
                                DEBT SECURITIES
                            ------------------------

    Chelsea may offer and issue from time to time up to $300,000,000 of:

       - shares of common stock,

       - shares of preferred stock,

       - shares of preferred stock represented by depositary shares.

Chelsea's common stock is traded on the New York Stock Exchange under the symbol
CCG.

    Chelsea GCA Realty's operating partnership, Chelsea GCA Realty Partnership,
L.P., may offer and issue from time to time in one or more series unsecured
nonconvertible debt securities with an aggregate public offering price of up to
$600,000,000. If any debt securities are rated below investment grade at the
time of issuance, they will be fully and unconditionally guaranteed by Chelsea.

    The securities to be offered by us will be in amounts, at prices and on
terms to be determined at the time of offering.

    When we sell a particular series of securities, we will prepare a prospectus
supplement describing the offering and the terms of that series of securities.
Such terms may include limitations on direct or beneficial ownership and
restrictions on transfer of the securities, in each case as may be appropriate
to preserve our status as a real estate investment trust for federal income tax
purposes.

    Where necessary, the applicable prospectus supplement will contain
information about certain United States Federal income tax considerations
relating to, and any listing on a securities exchange of, the securities covered
by such prospectus supplement.

    SEE "RISK FACTORS" BEGINNING AT PAGE 4 OF THIS PROSPECTUS FOR A DESCRIPTION
OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER PRIOR TO PURCHASING THE SECURITIES.

    We may offer the securities directly or through agents or to or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of the securities their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth, or
will be calculable from the information set forth, in an accompanying prospectus
supplement. We can sell the securities through agents, underwriters or dealers
only with delivery of a prospectus supplement describing the method and terms of
the offering of such securities. See "Plan of Distribution."
                            ------------------------

    NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
                            ------------------------

    THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
                            ------------------------

               The date of this Prospectus is September 21, 2000.
<PAGE>
                             ABOUT THIS PROSPECTUS

    This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration or continuous
offering process. We may from time to time sell any combination of the
securities offered in this prospectus in one or more offerings up to a total
dollar amount of $900,000,000.

    This prospectus provides you with a general description of the securities we
may offer. Each time we sell securities we will provide you with a prospectus
supplement containing specific information about the terms of the securities
being offered. The prospectus supplement which contains specific information
about the terms of the securities being offered may also include a discussion of
certain U.S. Federal income tax consequences and any risk factors or other
special considerations applicable to those securities. The prospectus supplement
may also add, update or change information in this prospectus. If there is any
inconsistency between the information in the prospectus and the prospectus
supplement, you should rely on the information in the prospectus supplement. You
should read both this prospectus and any prospectus supplement together with
additional information described under the heading "Where You Can Find More
Information" beginning on page 33 of this prospectus.

    Unless otherwise indicated or unless the context otherwise requires, all
references in this prospectus to Chelsea refers to Chelsea GCA Realty, Inc., all
references to the Operating Partnership refers to Chelsea GCA Realty
Partnership, L.P. and all references to "we," "us," or similar references mean
both Chelsea GCA Realty, Inc. and the Operating Partnership.

                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

    The SEC allows us to "incorporate by reference" the information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and the information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the securities:

       1.  Chelsea's Annual Report on Form 10-K for the year ended December 31,
           1999, SEC File Number: 001-12328, as amended by Form 10-K/A filed
           September 20, 2000.

       2.  Chelsea's Quarterly Report on Form 10-Q for the quarter ended
           March 31, 2000, SEC File Number: 001-12328, as amended by
           Form 10-Q/A filed September 20, 2000.

       3.  Chelsea's Quarterly Report on Form 10-Q for the quarter ended
           June 30, 2000, SEC File Number: 001-12328.

       4.  The Operating Partnership's Annual Report on Form 10-K for the year
           ended December 31, 1999, SEC File Number: 033-98136-01, as amended by
           Form 10-K/A filed September 20, 2000.

       5.  The Operating Partnership's Quarterly Report on Form 10-Q for the
           quarter ended March 31, 2000, SEC File Number: 033-98136-01, as
           amended by Form 10-Q/A filed September 20, 2000.

       6.  The Operating Partnership's Quarterly Report on Form 10-Q for the
           quarter ended June 30, 2000, SEC File Number: 033-98136-01.

                                       2
<PAGE>
       7.  The description of Chelsea's common stock which is contained in Item
           1 of our registration statement on Form 8-A, as amended, filed
           September 8, 1993 pursuant to Section 12 of the Exchange Act, SEC
           File Number: 001-12328.

       8.  The information contained in the section "Policies With Respect to
           Certain Activities" contained in the Registration Statement on
           Form S-11 filed on August 25, 1993, as amended, SEC File Number:
           33-67870.

    You may request a copy of these filings, at no cost, by writing or
telephoning us at our principal executive offices at the following address:

                               Investor Relations
                            Chelsea GCA Realty, Inc.
                             103 Eisenhower Parkway
                           Roseland, New Jersey 07068
                           Telephone: (973) 228-6111
                           http://www.chelseagca.com

    You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. Do not
assume that the information in this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of these documents.

                                       3
<PAGE>
                   THE COMPANY AND THE OPERATING PARTNERSHIP

    The Operating Partnership is 83% owned and managed by its sole general
partner, Chelsea, a real estate investment trust that specializes in owning,
developing, leasing, marketing and managing upscale and fashion-oriented
manufacturers' outlet centers. As of July 15, 2000, we owned and operated 21
centers in twelve states and Japan containing approximately 6 million square
feet of gross leasable area. Our centers generally are located near metropolitan
areas which have a population of at least one million people within a 30-mile
radius, with average annual household income of greater than $50,000 or at or
within 20 miles of major tourist destinations. Our existing portfolio includes
properties in or near New York City, Los Angeles, San Francisco, Sacramento,
Boston, Atlanta, Washington, D.C., Orlando, Portland (Oregon), Cleveland,
Honolulu, the Napa Valley, Palm Springs and the Monterey Peninsula. During 1999,
our portfolio generated weighted average tenants sales of $377 per square foot.
Weighted average tenant sales is the total sales reported by tenants divided by
their gross leasable area weighted by month. At June 30, 2000, more than 500
tenants were represented in approximately 1,600 stores.

    On July 19, 2000, we announced that through a subsidiary we have been
developing a new technology platform. This platform will provide fashion and
other retail brands a customized direct to the consumer internet online store
incorporating e-commerce design, development, fulfillment and customer services.
In consideration for such services, we will receive a percentage of each brand's
online sales. To date, this has not had any material affect on our financial
condition or results of operations. There is no assurance that this concept will
be successful or the future impact this will have on our financial condition or
results of operations.

    Chelsea is organized under the laws of the State of Maryland. The Operating
Partnership is a Delaware limited partnership. Our principal executive office is
located at 103 Eisenhower Parkway, Roseland, New Jersey 07068, telephone:
(973) 228-6111.

                                  RISK FACTORS

    Your investment in the securities involves risks. In consultation with your
own financial and legal advisors, you should carefully consider, among other
factors, the matters described below before deciding whether an investment in
the securities is suitable for you.

WE COULD INCUR ADDITIONAL DEBT, WHICH COULD ADVERSELY AFFECT THE FUNDS WE
  RECEIVE FROM OPERATIONS

    Our organizational documents do not contain any limitation on the amount or
percentage of indebtedness that we can incur. The Indenture, however, will
contain limits on our ability to incur indebtedness. Our board of directors
could alter current debt-to-market capitalization and coverage ratios at its
discretion. At June 30, 2000, our debt-to-market capitalization was
approximately 32%, while our interest coverage ratio was approximately 5.1
times. Debt-to-market capitalization is the ratio of our total outstanding debt
to the market value of our outstanding common stock including conversion of
operating partnership units to common stock plus the liquidation preference
value of outstanding preferred stock and units and total debt outstanding as of
June 30, 2000. Interest coverage is the ratio of operating income before
interest expense and depreciation expense to interest expense for the twelve
months ended June 30, 2000. If our policy limiting borrowing were changed, we
could become more highly leveraged. This could result in an increase in debt
service that could adversely affect the funds we receive from operations. An
increase in debt service could also affect our ability to make expected
distributions to stockholders and result in an increased risk of default on our
obligations.

                                       4
<PAGE>
LOSS OF ONE OF OUR TWO PRIME REVENUE GENERATING CENTERS OR REGIONAL ECONOMIC
  DOWNTURNS COULD ADVERSELY IMPACT OUR REVENUES

    Approximately 34% of our revenues for the year ended December 31,1999 and
for the six-month period ended June 30, 2000 were derived from two of our
centers, Woodbury Common Premium Outlets located in New York and Desert Hills
Premium Outlets located in California. The loss of either of these centers or a
material decrease in the revenues received from either of these centers could
have a material adverse effect on us. Specifically, the loss of either of these
centers or the effects of an economic downturn in New York or California could
cause our revenues to decrease significantly. Approximately 30% of our revenues
for the year ended December 31, 1999 and 29% of our revenues for the six-month
period ended June 30, 2000 were derived from our centers in California.

CHELSEA'S GUARANTEES ARE EFFECTIVELY SUBORDINATED TO THE EXISTING AND FUTURE
  LIABILITIES OF THE OPERATING PARTNERSHIP

    The Operating Partnership conducts Chelsea's operations. Chelsea's only
asset is its interest in the Operating Partnership. As a result, Chelsea depends
upon the receipt of distributions or other payments from the Operating
Partnership to meet its financial obligations, including obligations under any
Guarantees. Any Guarantees will be effectively subordinated to existing and
future liabilities of the Operating Partnership. At June 30, 2000, the Operating
Partnership had approximately $407 million of indebtedness outstanding including
the Operating Partnership's share of the joint venture construction activities
and guarantees of other affiliates' debt, all but $78 million of which was
unsecured. The guarantees totaled approximately $42 million at June 30, 2000.
The Operating Partnership is a party to a $160 million unsecured credit facility
which contains financial and operational covenants and other restrictions with
which we must comply. These include the following:

    - the value of our unencumbered property must be at least 175% of the amount
      of our outstanding unsecured debt

    - the maintenance of a net worth of at least $348 million

    - our total liabilities may not exceed 55% of the value of our assets

    - our secured debt may not exceed 30% of the value of our assets

    - our occupancy rate must not be less than 90%

    In addition, there are limits on:

    - the amount of indebtedness we can incur

    - the placing of liens on Woodbury Common Premium Outlets

    - our guarantees of debt of others

    - distributions in excess of our funds from operations

    - our no longer being an owner, operator or developer of retail properties

    Although the Operating Partnership presently is in compliance with the
credit facility, we cannot assure you that it will continue to be in compliance
and that it will be able to continue to make distributions to Chelsea.

                                       5
<PAGE>
THE INDENTURE DOES NOT PROTECT INVESTORS WITH RESPECT TO TRANSACTIONS IN WHICH
  WE MAY PARTICIPATE

    The Indenture does not afford you protection in the event of the following:

    - a highly leveraged or similar transaction involving us, our management, or
      any of our affiliates,

    - a change of control, or

    - certain reorganizations, restructurings, mergers or similar transactions
      involving us.

OWNERSHIP LIMITATIONS AND MARYLAND LAW MAY PRECLUDE THE ATTEMPTS OF THIRD
  PARTIES TO ACQUIRE CONTROL OF CHELSEA, EVEN THOUGH SUCH ACQUISITIONS MAY BE
  BENEFICIAL TO CERTAIN STOCKHOLDERS

    In order to qualify as a REIT, not more than 50% in value of our stock may
be owned by five or fewer individuals. In order to maintain our status as a
REIT, Chelsea's Articles of Incorporation prohibit ownership of more than 7% of
our outstanding common stock by any person. Such restriction will likely
preclude a third party's attempt to acquire control of us without the consent of
our Board of Directors. This would be the case even if a change in control were
in the interest of stockholders.

    Maryland law contains restrictions on third party attempts to acquire
control of us, including the following:

    - prohibits us from engaging in a merger or business combination with a 10%
      or greater stockholder, unless our board approves the transaction in
      advance

    - eliminates the voting rights of persons who acquire 20% or more of our
      stock unless approved by holders of two-thirds of our voting rights

    - requires approval by holders of two-thirds of our voting rights for
      mergers or business combinations

THE REQUIRED CONSENT OF THE OPERATING PARTNERSHIP FOR MERGERS OR OTHER
  SIGNIFICANT CORPORATE ACTION MAY PRECLUDE A CHANGE IN CONTROL

    So long as the limited partners own 10% of the capital of the Operating
Partnership, the Operating Partnership may merge, consolidate or engage in any
combination with another person or sell all or substantially all of its assets
only if approved by the holders of a majority of the limited partnership units.
The limited partners currently own 17.4% of the capital of the Operating
Partnership.

OUR STAGGERED BOARD OF DIRECTORS COULD DISCOURAGE A THIRD PARTY FROM MAKING A
  TENDER OFFER OR OTHERWISE ATTEMPTING TO OBTAIN CONTROL OF US

    Chelsea's articles of incorporation and by-laws require that Chelsea's Board
of Directors be comprised of three classes of directors. The terms of the three
classes of directors will expire in 2001, 2002 and 2003. Directors for each
class will be chosen for a three-year term. As the directors only can be removed
for cause, the staggered terms for directors may affect the stockholders'
ability to effect a change in our control even if a change in control were in
the stockholders' interest.

                                       6
<PAGE>
THE ISSUANCE OF OUR PREFERRED STOCK COULD ADVERSELY AFFECT THE RIGHTS OF HOLDERS
  OF OUR COMMON STOCK AND DISCOURAGE TRANSACTIONS WHICH MIGHT OTHERWISE BE IN
  OUR BEST INTERESTS

    The issuance of preferred stock could adversely affect the voting power,
dividend rights and other rights of holders of common stock. When issuing
preferred stock, the Board could act in a manner that would discourage an
acquisition attempt or other transaction that some, or a majority, of the
stockholders might believe to be in our best interests or in which stockholders
might receive a premium for their shares over the then prevailing market price.

IF WE FAIL TO DISTRIBUTE TO STOCKHOLDERS 95% OF OUR NET TAXABLE INCOME, WE WILL
  NO LONGER QUALIFY AS A REIT

    To obtain the favorable tax treatment associated with REITs, each year
Chelsea is required to distribute to its stockholders at least 95% of its net
taxable income. As of January 1, 2001, Chelsea will be required to distribute to
its stockholders at least 90% of its net taxable income. Chelsea's ability to
make such distributions depends upon the receipt of distributions or other
payments from the Operating Partnership.

IF WE FAIL TO CONTINUE TO QUALIFY AS A REIT, WE WOULD SUFFER ADVERSE TAX
  CONSEQUENCES

    We intend to operate in such a manner so as to qualify as a REIT under the
Internal Revenue Code. If we were to fail to qualify as a REIT, we would not be
allowed a deduction for distributions to stockholders in computing taxable
income. We also would be subject to federal income tax, including any applicable
alternative minimum tax, on our taxable income at regular corporate rates. In
any year in which we would not qualify as a REIT, the additional taxes imposed
upon us would significantly reduce the cash flow available for distribution to
stockholders. Additionally, unless we are entitled to relief under certain
statutory provisions, we would be unable to qualify as a REIT for four taxable
years following the year during which qualification was lost.

COMPETITION FROM OTHER MANUFACTURERS' OUTLET CENTERS MAY MAKE ACQUISITION OF
  PROPERTY AND TENANTS DIFFICULT

    Numerous developers and real estate companies are engaged in the development
or ownership of manufacturers' outlet centers and other commercial properties
and compete with us in seeking tenants for outlet centers. There are two public
companies, Prime Retail, Inc. and Tanger Factory Outlet Centers, Inc., who
compete with us, in addition to many privately-owned companies. According to
published sources, as of March 31, 2000, the manufacturer's outlet industry
contained approximately 56 million square feet of gross leaseable area. The
three publicly traded outlet companies, including us, owned or operated
approximately 45% of the industry's gross leaseable area. This creates
competition for the acquisition of prime properties and for tenants who will
lease space in the manufacturers' outlet centers that are owned or operated by
our competitors or by us.

THE ECONOMIC PERFORMANCE AND VALUE OF CENTERS IS DEPENDENT ON MANY FACTORS, SOME
  OF WHICH ARE BEYOND OUR CONTROL

    Real property investments are subject to varying degrees of risk. Many
factors can affect the economic performance and values of real estate. The
factors which are not within our control include:

    - changes in the economic climate, which could cause customers to spend less
      money

    - local conditions such as an oversupply of space or a reduction in demand
      for real estate in the area, which could cause us to reduce the rents we
      charge our tenants

    - competition from other available space, which could reduce the rents we
      charge to tenants

                                       7
<PAGE>
    The factors which are within our control include:

    - attractiveness of properties to tenants which would induce tenants to
      lease our space and the rents they are willing to pay

    - increased operating costs, which could adversely affect our results of
      operations

IF WE ARE UNABLE TO PURSUE CERTAIN DEVELOPMENT ACTIVITIES, OUR FUTURE RESULTS OF
  OPERATIONS COULD BE ADVERSELY AFFECTED

    We intend to pursue manufacturers' outlet center development projects,
including the expansion of existing centers. These projects generally require
capital expenditures and various forms of government and other approvals. As of
June 30, 2000, we expect to complete approximately 0.9 million square feet of
gross leaseable area over the next twelve months consisting of three new outlet
projects and two expansions of existing projects. The balance of our financial
commitment is approximately $75 million and is fully financed through internally
generated funds, specific secured financing or through our credit facility. We
will seek to obtain permanent financing once the projects are completed and
income has been stabilized, but there can be no assurances that we will be
successful in obtaining permanent financing. If we are unable to pursue these
activities, our results of operations could be adversely affected.

THE INABILITY OF A SIGNIFICANT NUMBER OF OUR TENANTS TO MEET THEIR OBLIGATIONS
  TO US WOULD ADVERSELY IMPACT OUR INCOME AND AVAILABLE FUNDS

    Since substantially all of our income is derived from rental income from
real property, our income and funds for distribution would be adversely affected
if a significant number of our tenants could not meet their obligations to us or
if we could not lease a significant amount of space in our properties on
favorable lease terms. In addition, the terms of manufacturers' outlet store
tenant leases, our average as of June 30, 2000 is 6.1 years, traditionally have
been significantly shorter than in traditional segments of retailing which
generally are ten years or longer. We cannot assure you that any tenant whose
lease expires in the future will renew their lease or that we will be able to
re-lease space on advantageous terms.

CERTAIN ENVIRONMENTAL RISKS MAY CAUSE US TO BE LIABLE FOR COSTS ASSOCIATED WITH
  HAZARDOUS OR TOXIC SUBSTANCES

    Under various federal, state and local laws, ordinances and regulations, we
may be considered an owner or operator of real property or may have arranged for
the disposal or treatment of hazardous or toxic substances. As such, we may
become liable for the costs of removal or remediation of certain hazardous
substances released on or in our property or disposed of by us. We could become
liable for other potential costs, including governmental fines and injuries to
persons and property, that could relate to hazardous or toxic substances. Such
liability may be imposed whether or not we knew of, or were responsible for, the
presence of such hazardous or toxic substances.

                                USE OF PROCEEDS

    The net proceeds from the sale of the securities will be used for general
corporate purposes, which may include the repayment of existing indebtedness,
the development or acquisition of additional properties as suitable
opportunities arise and the renovation, expansion and improvement of our
existing properties. Any proceeds from the sale of common stock, preferred stock
or depositary shares must be invested in the Operating Partnership. The
Operating Partnership will use such proceeds for the above-described purposes.
The applicable prospectus supplement will contain further details on the use of
net proceeds.

                                       8
<PAGE>
                          RATIOS OF EARNINGS TO FIXED
                            CHARGES AND EARNINGS TO
                           COMBINED FIXED CHARGES AND
                           PREFERRED STOCK DIVIDENDS

    The following table sets forth our ratio of earnings to fixed charges for
the periods shown:

<TABLE>
<CAPTION>
                                      YEAR ENDED DECEMBER 31,
  SIX MONTHS ENDED      ----------------------------------------------------
    JUNE 30, 2000         1999       1998       1997       1996       1995
---------------------   --------   --------   --------   --------   --------
<S>                     <C>        <C>        <C>        <C>        <C>
        2.6x              2.5x       2.3x       2.4x       2.8x       3.6x
</TABLE>

    The following table sets forth our ratio of earnings to combined fixed
charges and preferred stock dividends for the periods since December 31, 1997:

<TABLE>
<CAPTION>
                           YEAR ENDED DECEMBER 31,
  SIX MONTHS ENDED      ------------------------------
    JUNE 30, 2000         1999       1998       1997
---------------------   --------   --------   --------
<S>                     <C>        <C>        <C>        <C>        <C>
        2.2x              2.2x       2.0x       2.3x
</TABLE>

    For purposes of computing the ratios, earnings consist of income from
continuing operations after depreciation and before minority interest and fixed
charges, exclusive of interest capitalized and amortization of loan costs
capitalized. Fixed charges consist of interest expense, including interest costs
capitalized, the portion of rent expense representative of interest and total
amortization of expensed and capitalized debt issuance costs. Preferred stock
includes dividends paid thereon.

                         DESCRIPTION OF DEBT SECURITIES

    The debt securities will be issued under an Indenture among us and State
Street Bank and Trust Company, as trustee. The Indenture is an exhibit to the
Registration Statement and is incorporated herein by reference. You can inspect
the Indenture at the corporate trust office of the Trustee at 2 Avenue de
Lafayette, Boston, Massachusetts or as described under "Where You Can Find More
Information."

    This section, along with the description in the applicable prospectus
supplement, is a summary of the material provisions of the Indenture and is not
complete. It does not restate the Indenture in its entirety. This section, along
with the description in the applicable prospectus supplement, are qualified in
their entirety by the provisions of the Indenture. We urge you to read the
Indenture because it, and not these descriptions, defines your rights as a
holder of the debt securities. Whenever defined terms are used, but not defined
in this prospectus, the terms have the meanings given them in the Indenture.

GENERAL

    The debt securities will be direct, unsecured obligations of the Operating
Partnership and will rank equally with all other unsecured and unsubordinated
indebtedness of the Operating Partnership. At June 30, 2000, the total
outstanding debt of the Operating Partnership was approximately $407 million
including the Operating Partnership's share of the joint venture construction
activities and guarantees of other affiliates' debt, all but $78 million of
which was unsecured debt. The guarantees totaled approximately $42 million at
June 30, 2000. Guarantees totaling approximately $36 million at June 30, 2000
contain provisions which reduce the Operating Partnership's obligation as
certain conditions including cash flow coverages are achieved. The Indenture
permits:

    (a) the debt securities to be issued without limit as to aggregate principal
amount;

    (b) the debt securities to be issued in one or more series and at various
times;

                                       9
<PAGE>
    (c) a series to be reopened, without the consent of the holders of the debt
securities of such series, for issuances of additional debt securities of the
series.

    If any debt securities issued by the Operating Partnership are rated below
investment grade at the time of issuance, such debt securities will be fully and
unconditionally guaranteed by Chelsea as to payment of principal, premium, if
any, and interest.

    There may be more than one trustee with respect to one or more series of
debt securities. Any trustee under the Indenture may resign or be removed with
respect to one or more series of debt securities. If a trustee is removed or
resigns from a series, a successor trustee may be appointed to act with respect
to the series. If two or more persons are acting as trustee with respect to
different series of debt securities, each trustee will be a trustee of a trust
separate and apart from the trust administered by any other trustee. Except as
otherwise indicated, any action described in this prospectus to be taken by a
trustee may be taken by each trustee with respect to the one or more series of
debt securities for which it is trustee under the Indenture.

    Each prospectus supplement and any applicable pricing supplement will
describe the terms of any debt securities we issue. The terms may include:

    (1) the title of the debt securities;

    (2) the aggregate principal amount of the debt securities and any limit on
the aggregate principal amount;

    (3) the percentage of the principal amount at which the debt securities will
be issued and, if other than the principal amount of the debt securities, the
portion of the principal amount of the debt securities payable upon acceleration
of their maturity;

    (4) the date or dates on which the principal of the debt securities will be
payable;

    (5) the rate or rates, which may be fixed or variable, at which the debt
securities will bear interest, if any;

    (6) the date or dates from which any interest will accrue, the interest
payment dates, the record dates for the interest payment dates, the person to
whom the interest will be payable, and how interest will be calculated if other
than that of a 360-day year of twelve 30-day months;

    (7) the place or places where payments may be made on the debt securities
and the place or places where the debt securities may be presented for
registration of transfer or exchange and where notices or demands to or upon the
Operating Partnership in respect of the debt securities and the Indenture may be
served;

    (8) if applicable, the period or periods within which, the price or prices
at which and the terms and conditions upon which the debt securities may be
redeemed at the option of the Operating Partnership;

    (9) the obligation, if any, of the Operating Partnership to redeem, repay or
purchase the debt securities pursuant to any sinking fund or analogous provision
or at the option of a holder of the debt securities, and the periods, prices,
terms and conditions of such redemption or purchase;

    (10) if other than U.S. dollars, the currency or currencies of principal and
any premium and interest payments on the debt securities;

    (11) any index, formula or other method used to determine the amount of
principal, premium and interest payments on the debt securities and the manner
in which such amounts shall be determined;

    (12) the events of default or covenants of the debt securities, to the
extent different from or in addition to those described herein;

    (13) whether the debt securities will be issued in certificated and/or
book-entry form;

                                       10
<PAGE>
    (14) whether the debt securities will be in registered or bearer form and,
if in registered form, the denominations thereof if other than $1,000 and any
integral multiple thereof and, if in bearer form, the denominations thereof if
other than $5,000 and terms and conditions relating thereto;

    (15) with respect to any series of debt securities rated below investment
grade at the time of issuance, the Guarantees;

    (16) if the Indenture's defeasance and covenant defeasance provisions are to
be inapplicable or any modification of such provisions;

    (17) if the debt securities are to be issued upon the exercise of debt
warrants, the time, manner and place for the debt securities to be authenticated
and delivered;

    (18) whether and under what circumstances the Operating Partnership will pay
additional amounts on the debt securities in respect of any tax, assessment or
governmental charge and, if so, whether the Operating Partnership will have the
option to redeem the debt securities instead of making such payment;

    (19) with respect to any debt securities that provide for optional
redemption or prepayment upon the occurrence of certain events, such as a change
of control of the Operating Partnership:

        (a) the possible effects of such provisions on the market price of our
    securities;

        (b) the possible effects of such provisions in deterring certain
    mergers, tender offers or other takeover attempts;

        (c) the intention of the Operating Partnership to comply with the
    requirements of Rule 14e-1 under the Exchange Act and any other applicable
    securities laws in connection with such provisions;

        (d) whether the occurrence of the specified events may give rise to
    cross-defaults on other indebtedness that would effectively subordinate the
    payment on such debt securities; and

        (e) if there is any limit on the Operating Partnership's financial or
    legal ability to repurchase the debt securities upon the occurrence of a
    specified event and the impact under the Indenture of such a failure,
    including whether and under what circumstances such a failure may constitute
    an Event of Default;

    (20) if other than the Trustee, the identity of each security registrar
and/or paying agent; and

    (21) any other terms of the debt securities.

    The Operating Partnership may issue debt securities that provide for less
than their entire principal amount to be payable upon the declaration of
acceleration of their maturities. If material or applicable, the applicable
prospectus supplement will describe any special U.S. Federal income tax,
accounting and other considerations applicable to these types of debt
securities.

    We may enter into certain transactions, such as the sale of all or
substantially all of our assets or the merger or consolidation of us, that would
increase the amount of indebtedness or substantially reduce or eliminate the
Operating Partnership's assets. These types of transactions might adversely
affect the Operating Partnership's ability to service the debt securities.

    Although the indenture does not presently contain any provisions that would
limit our ability to incur indebtedness, it is expected that upon the issuance
of debt securities limitations on indebtedness will be contained in a supplement
to the indenture which will be described in the applicable prospectus
supplement. The indenture does not afford holders protection in the event of

    - a highly leveraged or similar transaction involving us

                                       11
<PAGE>
    - a change of control

    - a reorganization, restructuring, merger or similar transaction involving
      us that may adversely affect holders of debt securities.

    In addition, restrictions on ownership and transfers of our common stock and
preferred stock, which are designed to preserve our status as a REIT, could
prevent or hinder a change of control. You should review the applicable
prospectus supplement for information about any deletions from, modifications of
or additions to the events of default or the covenants that are described below.

    Except as otherwise described in the applicable prospectus supplement,
Chelsea's Board of Directors or the Trustee can waive, with respect to a series
of debt securities, compliance with certain covenants, only if the holders of a
majority in principal amount of all outstanding debt securities of such series
consent to the waiver. These covenants may also be modified to the extent that
the defeasance and covenant defeasance provisions of the Indenture apply to such
series of debt securities.

GUARANTEES

    Chelsea will fully, unconditionally and irrevocably guarantee the due and
punctual payment of principal of, premium, if any, and interest on any debt
securities rated below investment grade at the time of issuance by the Operating
Partnership, and the due and punctual payment of any sinking fund payments
thereon, when such payments become due and payable.

DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER

    Unless the applicable prospectus supplement states otherwise, the Operating
Partnership can issue any registered debt securities, other than registered
securities issued in global form, in denominations of $1,000 and any integral
multiple of $1,000. The Operating Partnership can issue debt securities that are
bearer securities, other than bearer securities issued in global form, in
denominations of $5,000. Debt securities issued in global form may be of any
denomination.

    Unless the applicable prospectus supplement states otherwise, the principal
of and premium, if any, and interest on any series of debt securities will be
payable at the corporate trust office of the Trustee, initially located at 2
Avenue de Lafayette, Boston, Massachusetts. At the Operating Partnership's
option, payment of interest can be made by check mailed to the address of the
person entitled to the interest. Payment can also be made by wire transfer of
funds to such person at an account maintained within the United States.

    Any interest not punctually paid or duly provided for on any interest
payment date with respect to a debt security will cease to be payable to the
holder on the applicable record date. The interest may then either be paid to
the person in whose name such debt security is registered at the close of
business on a special record date for the payment of the defaulted interest
fixed by the Trustee, or may be paid at any time in any other lawful manner, as
more completely described in the Indenture.

    Debt securities of any series, subject to limits on debt securities issued
in book-entry form, will be exchangeable for other debt securities of the same
series and of equal aggregate principal and type in any authorized
denominations. The holder of the debt securities can exchange the debt
securities upon surrender of such debt securities at the corporate trust office
of the Trustee.

    In addition, subject to certain limitations imposed upon debt securities
issued in book-entry form, debt securities may be presented for registration of
transfer at the corporate trust office of the Trustee. Every debt security
presented for registration of transfer will be duly endorsed or accompanied by a
written instrument of transfer. No service charge will be made for any
registration of transfer or exchange of any debt securities. The Trustee or the
Operating Partnership may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection

                                       12
<PAGE>
with any registration of transfer or exchange. At any time we may change
transfer agents or approve a change in the location through which any transfer
agent acts, except that we will be required to maintain a transfer agent in each
place of payment for each series of debt securities. At any time, we may
designate additional transfer agents for any series of debt securities.

    The Operating Partnership or the Trustee will not be required:

    (a) to issue, exchange or register the transfer of any debt security of any
series to be redeemed for a period of 15 days after the selection of the debt
securities to be redeemed; or

    (b) to exchange or register the transfer of any debt security that was
selected, called or is being called for redemption, except for the unredeemed
portion of any debt security being redeemed in part; or

    (c) to exchange any bearer security so selected for redemption except that
such a bearer security may be exchanged for a registered debt security of that
series and like tenor, PROVIDED that such registered debt security shall be
simultaneously surrendered for redemption; or

    (d) to issue, exchange or register the transfer of any debt security which
has been surrendered for repayment at the option of the holder, except the
portion, if any, of such debt security not to be so repaid.

MERGER, CONSOLIDATION OR SALE

    We may consolidate with, or sell, lease or convey all or substantially all
of our assets to, or merge with or into, any other entity, provided that:

    (a) we shall be the continuing entity, or any other successor entity shall
expressly assume payment of the principal of, premium, if any, and interest on
all the debt securities and the due and punctual performance and observance of
all of the covenants and conditions contained in the Indenture;

    (b) immediately after giving effect to such transaction, no Event of Default
under the Indenture, and no event which, after notice or the lapse of time, or
both, would become such an Event of Default, shall have occurred and be
continuing; and

    (c) an officer's certificate and legal opinion covering such conditions
shall be delivered to the Trustee.

CERTAIN COVENANTS

    LIMITATIONS ON INCURRENCE OF DEBT.  The Operating Partnership will not, and
will not permit any subsidiary, to:

    (a) incur any debt, other than intercompany debt that is subordinate in
right of payment to the debt securities, if the incurrence of such additional
debt would cause the aggregate principal amount of all outstanding debt of the
Operating Partnership and its subsidiaries on a consolidated basis to be greater
than 60% of the sum of (i) the Operating Partnership's total assets as of the
end of the calendar quarter prior to the incurrence of such additional debt and
(ii) the increase in total assets from the end of such quarter including,
without limitation, any increase in total assets resulting from the incurrence
of such additional debt.

    (b) incur any debt secured by any mortgage, lien, charge, pledge,
encumbrance or security interest of any kind upon any of the property of the
Operating Partnership or any subsidiary, whether owned at, or acquired after the
date of the Indenture, if the incurrence of such secured debt would cause the
aggregate principal amount of all outstanding secured debt of the Operating
Partnership and its subsidiaries on a consolidated basis to exceed 40% of the
Operating Partnership's adjusted total assets.

                                       13
<PAGE>
    (c) incur any debt if the ratio of consolidated income available for debt
service to the annual service charge for the four consecutive fiscal quarters
most recently ended prior to the date on which such additional debt is to be
incurred shall have been less than 2.0 to 1, on a pro forma basis after giving
effect to the incurrence of such debt and to the application of the proceeds
from such debt, and calculated on the assumption that:

        (1) such debt and any other debt incurred by the Operating Partnership
    or its subsidiaries since the first day of the four-quarter period and the
    application of the proceeds from such debt, including to refinance other
    debt, had occurred at the beginning of the four-quarter period,

        (2) the repayment or retirement of any other debt by the Operating
    Partnership or its Subsidiaries since the first day of the four-quarter
    period had been incurred, repaid or retired at the beginning of the
    four-quarter period except that, in making such computation, the amount of
    debt under any revolving credit facility shall be computed based upon the
    average daily balance of such debt during such period,

        (3) the income earned on any increase in adjusted total assets since the
    end of the four-quarter period had been earned, on an annualized basis,
    during the four-quarter period, and

        (4) in the case of any acquisition or disposition by the Operating
    Partnership or any subsidiary of any asset or group of assets since the
    first day of the four-quarter period, including, without limitation, by
    merger, stock purchase or sale, or asset purchase or sale, such acquisition
    or disposition or any related repayment of debt had occurred as of the first
    day of such period with the appropriate adjustments with respect to the
    acquisition or disposition being included in such pro forma calculation.

    Debt is "incurred" by the Operating Partnership and its subsidiaries on a
consolidated basis whenever the Operating Partnership and its subsidiaries on a
consolidated basis shall create, assume, guarantee or otherwise become liable
for the debt.

    LIMITATIONS ON DISTRIBUTIONS.  Other than distributions payable in the
Operating Partnership's equity securities for the purpose of acquiring interests
in real property or otherwise, the Operating Partnership will make any
distribution only (a) if such distribution will not cause or continue a default
under the Indenture or event of default under any mortgage, indenture or
instrument under which there may be issued, or by which there may be secured or
evidenced, any of our debt and (b) the aggregate sum of all distributions made
after the date of the Indenture shall not exceed the sum of (x) 95% of the
aggregate cumulative funds from operations of the Operating Partnership accrued
on a cumulative basis from the date of the Indenture until the end of the last
fiscal quarter prior to the contemplated payment, and (y) the aggregate net cash
proceeds received by the Operating Partnership after the date of the Indenture
from the issuance and sale of our capital stock. If the aggregate principal
amount of all of our outstanding debt on a consolidated basis is less than 60%
of adjusted total assets, then the foregoing limitation will not apply to any
distribution or other action which is necessary to maintain our REIT status.

    Notwithstanding the foregoing, the Operating Partnership can pay any
distribution within 30 days of the declaration of the distribution if, at the
date of declaration, the distribution would have complied with the provisions
listed above.

    EXISTENCE.  Except as expressly permitted, we must preserve and keep in full
force and effect our existence, rights and franchises; PROVIDED, HOWEVER, that
we are not required to preserve any right or franchise if we determine that such
preservation is no longer desirable in the conduct of our businesses and that
its loss is not materially disadvantageous to the holders of the debt
securities.

                                       14
<PAGE>
    MAINTENANCE OF PROPERTIES.  The Operating Partnership must maintain and keep
in good condition, repair and working order its material properties used or
useful in the conduct of its or any subsidiary's business. The Operating
Partnership will keep its material properties supplied with all necessary
equipment. The Operating Partnership will make all necessary repairs, renewals,
replacements, betterments and improvements to its material properties that, in
the Operating Partnership's judgment, are necessary for the business carried on
in connection with the material properties to be properly and advantageously
conducted at all times. The Operating Partnership and its subsidiaries will not
be prevented from selling or otherwise disposing for value their respective
properties in the ordinary course of business.

    INSURANCE.  The Operating Partnership must, and must cause each of its
subsidiaries to, keep all of its insurable properties insured against loss or
damage equal to their then full insurable value with financially sound and
reputable insurance companies.

    PAYMENT OF TAXES AND OTHER CLAIMS.  Before they become delinquent, we must
pay or discharge:

    (a) all taxes, assessments and governmental charges levied or imposed on us
or any subsidiary or upon our income, profits or property or that of any
subsidiary, and

    (b) all lawful claims for labor, materials and supplies that, if unpaid,
might by law become a lien upon our property.

    We are not required to pay or discharge any tax, assessment, charge or claim
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings.

    PROVISION OF FINANCIAL INFORMATION.  The Operating Partnership will provide
the holders of debt securities with copies of its annual reports and quarterly
reports. Whether or not the Operating Partnership is subject to Section 13 or
15(d) of the Exchange Act and for so long as any debt securities are
outstanding, the Operating Partnership will, to the extent permitted under the
Exchange Act, be required to file with the SEC the annual reports, quarterly
reports and other documents which the Operating Partnership would have been
required to file with the SEC pursuant to such Section 13 or 15(d) if the
Operating Partnership were so subject. The Operating Partnership will
(a) transmit by mail to all holders of debt securities without cost to such
holders, copies of the annual reports and quarterly reports which the Operating
Partnership would have been required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act if the Operating Partnership were
subject to such Sections and (b) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Operating Partnership
would have been required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act if the Operating Partnership were subject to such Sections. If
the Operating Partnership cannot file such documents with the SEC under the
Exchange Act, the Operating Partnership will, upon written request and payment
of duplication and delivery costs, supply copies of such documents to any
prospective holder of debt securities.

    ADDITIONAL COVENANTS.  Any additional or different covenants with respect to
any series of debt securities will be set forth in the prospectus supplement
relating thereto.

EVENTS OF DEFAULT, NOTICE AND WAIVER

    The following events are "Events of Default" with respect to any series of
debt securities issued under the Indenture:

    (a) failure to pay interest on any debt securities of a series within
30 days after the interest becomes due;

    (b) failure to pay the principal or premium when due on any debt securities
of a series;

                                       15
<PAGE>
    (c) failure to make any sinking fund payment as required for any debt
security of a series;

    (d) default in the performance of any other of our covenants contained in
the Indenture applicable to the series of debt securities in question, if such
default has continued for 60 days after written notice as provided in the
Indenture;

    (e) failure to pay an aggregate principal amount exceeding $5,000,000 of any
evidence of recourse indebtedness or any mortgage, indenture or other instrument
under which such indebtedness is issued or by which such indebtedness is
secured, if:

        (x) the default occurred after the expiration of any applicable grace
    period; and

        (y) the default resulted in the acceleration of the maturity of such
    indebtedness; and

        (z) such indebtedness is not discharged or such acceleration is not
    rescinded or annulled.

    (f) certain events involving any bankruptcy, insolvency or reorganization of
us or any significant subsidiary as defined in Regulation S-X of the Securities
Act; and

    (g) any other Event of Default provided with respect to a particular series
of debt securities.

    If an Event of Default occurs and is continuing, then the Trustee or the
holders of 25% in principal amount of the outstanding debt securities of that
series may declare the principal amount or, if the debt securities of that
series are Original Issue Discount Securities or Indexed Securities, a specified
portion of the principal amount of all of the debt securities of that series to
be due and payable immediately. The holders of a majority in principal amount of
the debt securities then outstanding or of such series affected may revoke and
cancel such declaration and its consequences if:

    (a) we have deposited with the Trustee all required payments of the
principal of premium if any, and interest on the debt securities then
outstanding or of such series affected, plus certain fees, expenses,
disbursements and advances of the Trustee; and

    (b) all Events of Default, other than the non-payment of accelerated
principal of, or specified portion thereof, or premium or interest on the debt
securities of such series or of all outstanding debt securities have been cured
or waived as provided in the Indenture.

    Holders of a majority in principal amount of the outstanding debt securities
of any series or of all debt securities then outstanding under the Indenture may
waive any past default with respect to such series and its consequences, except
a default:

    (a) in the payment of the principal of, premium, or interest on any debt
security of such series; or

    (b) in respect of a covenant or provision contained in the Indenture that
cannot be modified or amended without the consent of the holder of each
outstanding debt security affected thereby.

    Unless the default has been cured or waived, the Trustee will notify the
holders of debt securities within 90 days of such default under the Indenture;
PROVIDED, HOWEVER, that the Trustee may withhold notice to the holders of any
series of debt securities of any default with respect to such series if
specified responsible officers of the Trustee consider such withholding to be in
the interest of such holders. The Trustee may not withhold notice of a default
in the payment of the principal, premium, or interest on any debt security or of
a default in the payment of any sinking fund installment relative to any debt
security.

                                       16
<PAGE>
    If the Trustee fails to act for 60 days after it has received both a written
request to institute proceedings in respect of an Event of Default from the
holders of 25% in principal amount of the outstanding debt securities of the
affected series and an offer of reasonable indemnity, the holders of debt
securities of any series then can institute any proceedings with respect to the
Indenture or for any remedy under the Indenture. This provision will not prevent
any holder of debt securities from instituting suit for the enforcement of
payment of the principal of, premium, if any, and interest on such debt
securities when due.

    If holders of any series of debt securities then outstanding have offered to
the Trustee reasonable security or indemnity, the Trustee must exercise any of
its rights or powers under the Indenture at the request or direction of such
holders. The holders of a majority in principal amount of the outstanding debt
securities of any series, or the holders of all debt securities then outstanding
under the Indenture, as the case may be, shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or of exercising any trust or power conferred upon the Trustee. The
Trustee may refuse to follow any direction which is in conflict with any law or
the Indenture, or which may be unduly prejudicial to the holders of debt
securities of such series not joining in the proceeding.

    Within 120 days after the close of each fiscal year, we must deliver to the
Trustee a certificate, signed by an officer, stating whether or not such officer
has knowledge of any default under the Indenture and, if so, specifying each
such default and the nature and status thereof.

MODIFICATION OF THE INDENTURE

    The Indenture may be modified and amended with the consent of the holders of
a majority in principal amount of all outstanding debt securities or series of
outstanding debt securities which are affected by such modification or
amendment. Only with the consent of each holder of any debt security affected,
may an amendment or modification to the Indenture:

    (a)  change the stated maturity of the principal of, premium, if any, or any
installment of interest on, the debt security;

    (b)  reduce the principal amount of, or the rate or amount of interest on,
or any premium payable upon redemption of, the debt security;

    (c)  reduce the amount of principal of an original issue discount security
that would be due and payable upon declaration of acceleration of the maturity
thereof or would be provable in bankruptcy, or adversely affect any right of
repayment of the holder of such debt security;

    (d)  change the place of payment, or currency for payment of principal of,
premium, if any, or interest on the debt security;

    (e)  impair the right to institute suit for the enforcement of any payment
on or with respect to the debt security;

    (f)  reduce the percentage of outstanding debt securities of any series
necessary to modify or amend the Indenture, to waive compliance with certain
provisions of the Indenture or certain defaults and consequences under the
Indenture or to reduce the quorum or voting requirements set forth in the
Indenture;

    (g)  modify or affect in any manner adverse to the holders the terms and
conditions of our obligations in respect of the payment of principal, premium,
if any, and interest on any Guaranteed Securities;

    (h)  modify any of the foregoing provisions or any of the provisions
relating to the waiver of certain past defaults or certain covenants, except to
increase the required percentage to effect such

                                       17
<PAGE>
action or to provide that certain other provisions may not be modified or waived
without the consent of the holder of the debt security.

    Holders of a majority in principal amount of a series of outstanding debt
securities may waive our compliance with certain covenants relating to any
series of debt securities in the Indenture.

    We and the Trustee may modify or amend the Indenture without the consent of
any holder of debt securities for any of the following purposes:

    (a)  to evidence the succession of another person to the Operating
Partnership as obligor;

    (b)  to evidence our successor as the guarantor under the Indenture;

    (c)  to add to the covenants for the benefit of the holders of all or any
series of debt securities;

    (d)  to surrender any right or power conferred upon us in the Indenture;

    (e)  to add Events of Default for the benefit of the holders of all or any
series of debt securities;

    (f)  to add or change any provisions of the Indenture to facilitate the
issuance of, or to liberalize certain terms of, debt securities in bearer form,
or to permit or facilitate the issuance of debt securities in uncertificated
form, PROVIDED that such action shall not materially and adversely affect the
interests of the holders of the debt securities of any series;

    (g)  to amend or supplement any provisions of the Indenture, PROVIDED that
no such amendment or supplement shall materially adversely affect the interests
of the holders of any debt securities then outstanding;

    (h) to secure the debt securities;

    (i)  to establish the form or terms of debt securities of any series;

    (j)  to provide for a successor Trustee's acceptance of appointment or
facilitate the administration of the trusts under the Indenture by more than one
trustee;

    (k)  to cure any ambiguity, defect or inconsistency in the Indenture,
PROVIDED that such action shall not materially and adversely affect the
interests of holders of debt securities of any series;

    (l)  to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of such
debt securities, PROVIDED that such action shall not materially adversely affect
the interests of the holders of the debt securities of any series.

    With respect to guaranteed securities, we or our subsidiaries may, without
the consent of any holder of debt securities, directly assume the payment of the
principal of and/or any premium and interest on all the guaranteed securities.
We or our subsidiaries may assume the performance of every covenant of the
Indenture required to be performed or observed by the Operating Partnership.
Upon assumption, we or our subsidiaries will succeed to, and be substituted for
and may exercise every right and power of, the Operating Partnership under the
Indenture. The Operating Partnership shall be released from all obligations and
covenants with respect to the Guaranteed Securities. We can enter into such
assumption only if we have delivered to the Trustee (a) an officers' certificate
and an opinion of counsel, stating, among other things, that the Guarantee and
all other of our covenants in the Indenture remain in full force and effect and
(b) an opinion of independent counsel that the holders of guaranteed securities
shall have no United States Federal tax consequences as a result of such
assumption, and that, if listed on the New York Stock Exchange, that such listed
debt securities shall not be delisted as a result of such assumption.

                                       18
<PAGE>
HOW A MAJORITY IS DETERMINED

    To determine whether the holders of the requisite principal amount of
outstanding debt securities of a series have given any request, demand,
authorization, direction, notice, consent or waiver under the Indenture or
whether a quorum is present at a meeting of holders of debt securities,

    (a)  the principal amount of an original issue discount security that shall
be deemed to be outstanding shall be the amount of the principal that would be
due and payable as of the date of such determination upon declaration of
acceleration of the maturity of the original issue discount security,

    (b)  the principal amount of a debt security denominated in a foreign
currency that shall be deemed outstanding shall be the U.S. dollar equivalent,
determined on the issue date for such debt security, of the principal amount or,
in the case of an original issue discount security, the U.S. dollar equivalent
on the issue date of such debt security of the amount determined as provided in
(a) above,

    (c)  the principal amount of an indexed security that shall be deemed
outstanding shall be the principal face amount of such Indexed Security at
original issuance, unless the Indenture otherwise provides, and

    (d)  debt securities owned by the Operating Partnership or any other obligor
upon the debt securities or any affiliate of the Operating Partnership or of
such other obligor shall be disregarded.

MEETINGS OF THE HOLDERS OF DEBT SECURITIES

    The Trustee can call a meeting of the holders of debt securities of any
series at any time. Upon request and notice, we, in respect of a series of
guaranteed securities, or the holders of 10% in principal amount of the
outstanding debt securities of such series can call a meeting. Except for any
consent that must be given by the holder of each debt security affected by
certain modifications and amendments of the Indenture, any resolution presented
at a meeting or adjourned meeting duly reconvened at which a quorum is present
will be permitted to be adopted by the affirmative vote of the holders of a
majority in principal amount of the outstanding debt securities of that series;
PROVIDED, HOWEVER, that, except as referred to above, any resolution that may be
made, given or taken by the holders of a specified percentage, which is less
than a majority, in principal amount of the outstanding debt securities of a
series may be adopted at a meeting or adjourned meeting duly reconvened at which
a quorum is present by the affirmative vote of the holders of such specified
percentage. Any resolution passed or decision taken at any meeting of holders of
debt securities of any series duly held in accordance with the Indenture will be
binding on all holders of debt securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
outstanding debt securities of a series; PROVIDED, HOWEVER, that if any action
is to be taken at such meeting with respect to a consent or waiver which may be
given by the holders of a specified percentage in principal amount of the
outstanding debt securities of a series, the persons holding or representing
such specified percentage will constitute a quorum.

    Notwithstanding the foregoing provisions, if the Indenture expressly
provides that any action to be taken at a meeting of holders of debt securities
of any series may be taken by the holders of a specified percentage which is
less than a majority in principal amount of the outstanding debt securities of a
series, then such action may be taken at a meeting at which a quorum is present
by the affirmative vote of holders of such specified percentage in principal
amount of the outstanding debt securities of such series.

                                       19
<PAGE>
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE

    The Operating Partnership may discharge certain obligations to holders of
any series of debt securities that have not already been delivered to the
Trustee for cancellation and that either have become due and payable or will
become due and payable within one year, or will be scheduled for redemption
within one year, by irrevocably depositing with the Trustee, in trust, funds in
such currency or currencies, currency unit or units or composite currency or
currencies in which such debt securities are payable in an amount sufficient to
pay the entire indebtedness on such debt securities in respect of principal,
premium, if any, and interest to the date of such deposit, if such debt
securities have become due and payable, or to the stated maturity or redemption
date, as the case may be.

    Unless the Indenture's defeasance provisions are made inapplicable to the
debt securities of or within any series, the Operating Partnership may elect
either (a) to defease and discharge itself and Chelsea, if such debt securities
are guaranteed securities, from any and all obligations with respect to such
debt securities or (b) to release itself and Chelsea, if such debt securities
are guaranteed securities, from obligations with respect to such debt securities
under the Indenture and, if provided under certain sections of the Indenture,
our obligations with respect to any other covenant. Any omission to comply with
such obligations shall not constitute a default or an Event of Default with
respect to such debt securities, a covenant defeasance, in either case upon the
irrevocable deposit by the Operating Partnership or Chelsea, if the debt
securities are guaranteed securities, with the Trustee, in trust, of funds,
which may include government obligations which through the scheduled payment of
principal and interest, will provide money in an amount sufficient to pay the
principal of, and premium, if any, and interest on such debt securities, and any
mandatory sinking fund or analogous payments, when due. Chelsea, if such debt
securities are guaranteed securities, and the Operating Partnership will be
required to pay additional amounts, if any, upon the occurrence of certain
events of tax, assessment or governmental charge with respect to payments on the
debt securities. We will retain the obligations to register the transfer or
exchange of such debt securities, to replace temporary or mutilated, destroyed,
lost or stolen debt securities, to maintain an office or agency in respect of
such debt securities and to hold moneys for payment in trust.

    The Operating Partnership can establish such a trust if, among other things,
we have delivered to the Trustee an opinion of counsel stating that:

    (a)  the holders of such debt securities will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such defeasance or
covenant defeasance, and

    (b)  the holders will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance or covenant defeasance had not occurred.

    The opinion of counsel, in the case of defeasance, must refer to and be
based upon a ruling of the Internal Revenue Service or a change in applicable
United States federal income tax law occurring after the date of the Indenture.

    Unless the prospectus supplement otherwise provides, if, after the Operating
Partnership has effected defeasance or covenant defeasance with respect to debt
securities of any series, (a) the holder of a debt security of such series is
entitled to and elects to receive payment in a currency, currency unit or
composite currency other than that in which such deposit has been made in
respect of such debt security, or (b) a Conversion Event (as defined below)
occurs in respect of the currency, currency unit or composite currency in which
such deposit has been made, the indebtedness represented by such debt security
will be fully discharged and satisfied through the payment of the principal of
and premium, if any, and interest on such debt security as they become due out
of the proceeds yielded by converting the amount deposited in respect of such
debt

                                       20
<PAGE>
security into the currency, currency unit or composite currency in which such
debt security becomes payable as a result of such election or such Conversion
Event. The conversion will be based on the applicable market exchange rate.

    "Conversion Event" means the cessation of use of (a) a currency, currency
unit or composite currency both by the government of the country which issued
such currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community, (b) the
ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Community or
(c) any currency unit or composite currency other than the ECU for the purposes
for which it was established. Unless otherwise provided in the applicable
prospectus supplement, all payments of principal of, premium, if any, and
interest on any debt security that is payable in a foreign currency that ceases
to be used by its government of issuance shall be made in U.S. dollars.

    In the event the Operating Partnership effects covenant defeasance with
respect to any debt securities and such debt securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (d) under "Event of Default, Notice and Waiver"
with respect to sections no longer applicable to such debt securities or
described in clause (g) under "Events of Default, Notice and Waiver" with
respect to any other covenant as to which there has been covenant defeasance,
and the funds we deposited with the Trustee are insufficient to pay the amount
declared due, Chelsea, if such debt securities are guaranteed securities, and
the Operating Partnership will remain liable to make payment of such amounts due
at the time of acceleration.

    The applicable prospectus supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the debt
securities of or within a particular series.

NO CONVERSION RIGHTS

    The debt securities will not be convertible into or exchangeable for any of
our capital stock or equity interest in the Operating Partnership.

GLOBAL SECURITIES

    The Operating Partnership may issue the debt securities of a series in whole
or in part in the form of one or more global securities. The global securities
will be deposited with, or on behalf of, a depositary identified in the
applicable prospectus supplement relating to such series. Global securities may
be issued in either registered or bearer form and in either temporary or
permanent form. The applicable prospectus supplement will describe the specific
terms of the depositary arrangement with respect to a series of debt securities.

                                       21
<PAGE>
                         DESCRIPTION OF PREFERRED STOCK

GENERAL

    Chelsea is authorized to issue 5,000,000 shares of preferred stock, $.01 par
value per share. At June 30, 2000, 1,000,000 shares of 8 3/8% Series A
Cumulative Redeemable Preferred Stock were issued and outstanding.

    The statements below describing the preferred stock are in all respects
subject to and qualified by reference to the applicable provisions of our
Articles of Incorporation and Bylaws and any applicable articles supplementary
to the Articles of Incorporation designating terms of a series of preferred
stock.

    The issuance of preferred stock could adversely affect the voting power,
dividend rights and other rights of holders of common stock. Issuance of
preferred stock could impede, delay, prevent or facilitate a merger, tender
offer or change in our control. Although the Board of Directors is required to
make a determination as to the best interests of our stockholders when issuing
preferred stock, the Board could act in a manner that would discourage an
acquisition attempt or other transaction that some, or a majority, of the
stockholders might believe to be in our best interests or in which stockholders
might receive a premium for their shares over the then prevailing market price.
Management believes that the availability of preferred stock will provide us
with increased flexibility in structuring possible future financing and
acquisitions and in meeting other needs that might arise.

TERMS

    Subject to the limitations prescribed by the Articles of Incorporation, the
Board of Directors can fix the number of shares constituting each series of
preferred stock and the designations and powers, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof, including such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other subjects or matters as may be fixed by
resolution of the Board of Directors. When issued, the preferred stock will be
fully paid and nonassessable by us. The preferred stock will have no preemptive
rights.

    Reference is made to the prospectus supplement relating to the preferred
stock offered thereby for specific terms, including:

    (1) the title and stated value of the preferred stock;

    (2) the number of shares of the preferred stock offered, the liquidation
preference per share and the offering price of the preferred stock;

    (3) the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to the preferred stock;

    (4) the date from which dividends on the preferred stock shall accumulate,
if applicable;

    (5) the procedures for any auction and remarketing, if any, for the
preferred stock;

    (6) the provision for a sinking fund, if any, for the preferred stock;

    (7) the provision for redemption, if applicable, of the preferred stock;

    (8) any listing of the preferred stock on any securities exchange;

    (9) the terms and conditions, if applicable, upon which the preferred stock
will be convertible into our common stock, including the conversion price, or
the manner of calculation thereof;

                                       22
<PAGE>
    (10) whether interests in the preferred stock will be represented by
depositary shares;

    (11) any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock;

    (12) a discussion of federal income tax considerations applicable to the
preferred stock;

    (13) the relative ranking and preferences of the preferred stock as to
dividend rights and rights upon liquidation, dissolution or winding up of our
affairs;

    (14) any limitations on issuance of any series of preferred stock ranking
senior to or on a parity with the series of preferred stock as to dividend
rights and rights upon liquidation, dissolution or winding up of our affairs;
and

    (15) any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve our status as a REIT.

RANK

    Unless otherwise specified in the prospectus supplement, the preferred stock
will, with respect to dividend rights and rights upon liquidation, dissolution
or our winding up, rank:

    (a) senior to all classes or series of our common stock;

    (b) senior to all equity securities ranking junior to the preferred stock;

    (c) equal with all equity securities issued by us, if the terms of such
securities specifically provide for equal treatment;

    (d) junior to all equity securities the terms of which specifically provide
that the equity securities rank senior to the preferred stock.

    The term "equity securities" excludes convertible debt securities.

DIVIDENDS

    Holders of the preferred stock of each series will be entitled to receive,
when and if declared by our Board of Directors, out of assets legally available
for payment, cash dividends at rates and on dates set forth in the applicable
prospectus supplement. Each such dividend will be payable to holders of record
as they appear on our share transfer books on the applicable record dates. Our
Board of Directors will fix the record dates for dividend payments.

    As provided in the applicable prospectus supplement, dividends on any series
of the preferred stock may be cumulative or non-cumulative. Cumulative dividends
will be cumulative from and after the date set forth in the applicable
prospectus supplement. If our Board of Directors fails to declare a dividend
payable on a dividend payment date on any series of the preferred stock for
which dividends are non-cumulative, then the holders of such series of the
preferred stock will have no right to receive a dividend for the dividend period
ending on such dividend payment date. We will have no obligation to pay the
dividend accrued for such dividend period, whether or not dividends on such
series are declared payable on any future dividend payment date.

    If preferred stock of any series is outstanding, our Board of Directors will
not declare, pay or set apart for payment dividends on any of our capital stock
of any other series ranking, as to dividends, equally with or junior to the
preferred stock outstanding for any period unless:

    (a) for preferred stock with cumulative dividends, we have declared and
paid, or declared and set apart a sum sufficient to pay, full cumulative
dividends on the preferred stock through the then current dividend period; and

                                       23
<PAGE>
    (b) for preferred stock lacking a cumulative dividend, we have declared and
paid or declared and set aside a sum sufficient to pay full dividends for the
then current dividend period;

    When dividends are not paid in full, or when a sum sufficient for such full
payment is not set apart, upon preferred stock of any series and the shares of
any other series of preferred stock ranking equally as to dividends with the
preferred stock of such series, all dividends declared upon preferred stock of
such series and any other series of preferred stock ranking equally as to
dividends with such preferred stock shall be declared pro rata so that the
amount of dividends declared per share of preferred stock of such series and
such other series of preferred stock shall in all cases bear to each other the
same ratio that accrued dividends per share on the preferred stock of such
series, which shall not include any accumulation of unpaid dividends for prior
dividend periods if such preferred stock lacks a cumulative dividend, and such
other series of preferred stock bear to each other. No interest, or sum of money
instead of interest, shall be payable for any dividend payment or payments on
preferred stock of such series which may be in arrears.

    Except as provided in the immediately preceding paragraph, unless we have
paid dividends through the then current dividend period, including dividend
payments in arrears if dividends are cumulative, for such series of preferred
stock or unless our Board of Directors has declared such dividends and has set
aside a sum sufficient for such payment, our Board of Directors shall not
declare dividends, other than in shares of common stock or other capital shares
ranking junior to the preferred stock of such series as to dividends and upon
liquidation, or pay or set aside for payment or declare or make any other
distribution upon the common stock, or any other of our capital shares ranking
junior to or equally with the preferred stock of such series as to dividends or
upon liquidation. Additionally, we shall not redeem, purchase or otherwise
acquire for any consideration, or any moneys to be paid or made available for a
sinking fund for the redemption of any such shares, any shares of common stock,
or any other of our capital shares ranking junior to or equally with the
preferred stock of such series as to dividends or upon liquidation.
Notwithstanding the foregoing, we may convert such shares into or exchange such
shares for other of our capital shares ranking junior to the preferred stock of
such series as to dividends and upon liquidation.

REDEMPTION

    If the applicable prospectus supplement so provides, the preferred stock
will be subject to mandatory redemption or redemption at our option, as a whole
or in part, in each case upon the terms, at the times and at the redemption
prices set forth in such prospectus supplement.

    The prospectus supplement applicable to a series of preferred stock that is
subject to mandatory redemption will specify:

    (a) the number of shares of such preferred stock that shall be redeemed by
us in each year,

    (b) the year such redemption will commence,

    (c) the redemption price per share, together with an amount equal to all
accrued and unpaid dividends thereon to the date of redemption,

    (d) whether the redemption price is payable in cash or property.

    If the redemption price for preferred stock of any series is payable only
from the net proceeds of the issuance of our capital shares, the terms of such
preferred stock may provide that, if we have not issued capital shares or to the
extent the net proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, such preferred stock shall automatically be

                                       24
<PAGE>
converted into our capital shares pursuant to conversion provisions specified in
the applicable prospectus supplement.

    We can not redeem, purchase or otherwise acquire shares of a series of
preferred stock unless:

    (a) for preferred stock with cumulative dividends, we have declared and
paid, or declared and set apart a sum sufficient to pay, full cumulative
dividends on the preferred stock through the then current dividend period; and

    (b) for preferred stock lacking a cumulative dividend, we have declared and
paid or declared and set aside a sum sufficient to pay full dividends for the
then current dividend period.

    The foregoing shall not prevent the purchase or acquisition of preferred
stock of such series to preserve our REIT status or pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding preferred
stock of such series.

    If fewer than all of the outstanding shares of preferred stock of any series
are to be redeemed, we will determine the number of shares to be redeemed. We
may redeem the shares on a pro rata basis from the holders of record of such
shares in proportion to the number of such shares held or for which redemption
is requested by such holder with adjustments to avoid redemption of fractional
shares, or by lot.

    We will mail notice of redemption 30 to 60 days prior to the redemption date
to each holder of record of preferred stock of any series to be redeemed at the
address shown on our share transfer books. Each notice shall state:

    (a) the redemption date;

    (b) the number of shares and series of the preferred stock to be redeemed;

    (c) the redemption price;

    (d) the place or places where certificates for such preferred stock are to
be surrendered for payment of the redemption price;

    (e) that dividends on the shares to be redeemed will cease to accrue on such
redemption date; and

    (f)  the date upon which the holder's conversion rights, if any, as to such
shares shall terminate.

    If we are to redeem fewer than all the shares of preferred stock of any
series, the notice we mail to each holder of preferred stock shall specify the
number of shares of preferred stock to be redeemed from each holder. If we have
given notice of redemption of any preferred stock and if we have set aside, in
trust for the benefit of the holders of any preferred stock called for
redemption, the funds necessary for such redemption, then from and after the
redemption date dividends will cease to accrue on the preferred stock to be
redeemed. Additionally all rights of the holders of the redeemable shares will
terminate, except the right to receive the redemption price.

LIQUIDATION PREFERENCE

    Upon any voluntary or involuntary liquidation, dissolution or winding up of
our affairs, then the holders of each series of preferred stock shall be
entitled to receive out of our assets legally available for distribution to
shareholders liquidating distributions in the amount of the liquidation
preference per share, plus an amount equal to all dividends accrued and unpaid
on such series of preferred stock. Such preferred shareholders will receive
these distributions before any distribution or payment shall be made to the
holders of any common stock or any other class or series of our

                                       25
<PAGE>
capital shares ranking junior to the preferred stock in the distribution of
assets upon our liquidation, dissolution or winding up. After payment of the
full amount of the liquidating distributions to which they are entitled, the
holders of preferred stock will have no right or claim to any of our remaining
assets. If our available assets are insufficient to pay the amount of the
liquidating distributions on all outstanding preferred stock and the
corresponding amounts payable on all shares of other classes or series of our
capital shares ranking equally with the preferred stock in the distribution of
assets, then the holders of the preferred stock and all other such classes or
series of capital shares shall share on a pro rata basis in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.

    If liquidating distributions have been made in full to all holders of
preferred stock, our remaining assets will be distributed among the holders of
any other classes or series of capital shares ranking junior to the preferred
stock upon liquidation, dissolution or winding up, according to their rights and
preferences and in each case according to their number of shares. For such
purposes, our consolidation or merger with or into any other corporation, trust
or entity, or the sale, lease or conveyance of all or substantially all of our
property or business, shall not be deemed to constitute our liquidation,
dissolution or winding up.

VOTING RIGHTS

    Holders of the preferred stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable prospectus supplement.

    Whenever dividends on any shares of preferred stock are in arrears for six
or more consecutive quarterly periods, the holders of such shares of preferred
stock, voting separately as a class with all other series of preferred stock
upon which like voting rights have been conferred and are exercisable, will be
entitled to vote for the election of two additional directors at a special
meeting called by the holders of record of ten percent (10%) of any series of
preferred stock so in arrears or at the next annual meeting of stockholders, and
at each subsequent annual meeting until (a) if such series of preferred stock
has a cumulative dividend, we have paid or our Board of Directors has declared
and set aside a sum sufficient for payment of all dividends accumulated on such
shares of preferred stock for the past dividend periods and the then current
dividend period or (b) if such series of preferred stock lacks a cumulative
dividend, we have fully paid or our Board of Directors has declared and set
aside a sum sufficient for payment of four consecutive quarterly dividends. In
such case, two directors will be added to our Board of Directors.

    Unless provided otherwise for any series of preferred stock, so long as any
shares of preferred stock remain outstanding, we will not, without the
affirmative vote or consent of the holders of at least two-thirds of the shares
of each series of preferred stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting with such series voting separately as a
class, (a) authorize or create, or increase the authorized or issued amount of,
any class or series of capital stock ranking prior to such preferred stock with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up or reclassify any of our authorized capital stock into
such shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares; or
(b) amend, alter or repeal the provisions of our Articles of Incorporation or
the designating amendment for such series of preferred stock, whether by merger,
consolidation or otherwise, so as to materially and adversely affect any right,
preference, privilege or voting power of such series of preferred stock or the
holders thereof. With respect to the occurrence of any of the events set forth
in (b) above so long as the preferred stock remains outstanding with the terms
thereof materially unchanged, the occurrence of any such Event shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting power of holders of preferred stock. Additionally, any increase in

                                       26
<PAGE>
the amount of the authorized preferred stock or the creation or issuance of any
other series of preferred stock, or any increase in the amount of authorized
shares of such series or any other series of preferred stock, in each case
ranking on a parity with or junior to the preferred stock of such series with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.

    The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of preferred stock shall have
been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.

CONVERSION RIGHTS

    The applicable prospectus supplement will set forth the terms and
conditions, if any, upon which any series of preferred stock is convertible into
shares of common stock. Such terms will include the number of shares of common
stock into which the shares of preferred stock are convertible, the conversion
price, or manner of calculation thereof, the conversion period, provisions as to
whether conversion will be at the option of the holders of the preferred stock
or us, the events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of such series of preferred
stock.

SHAREHOLDER LIABILITY

    Maryland law provides that no shareholder, including holders of preferred
stock, shall be personally liable for our acts and obligations and that our
funds and property shall be the only recourse for such acts or obligations.

RESTRICTIONS ON OWNERSHIP

    To qualify as a REIT under the Internal Revenue Code, not more than 50% in
value of our outstanding capital shares may be owned, directly or indirectly, by
five or fewer individuals as defined in the Code to include certain entities,
during the last half of a taxable year. Therefore, the designating amendment for
each series of preferred stock may contain provisions restricting the ownership
and transfer of the preferred stock. The applicable prospectus supplement will
specify any additional ownership limitation relating to a series of preferred
stock.

REGISTRAR AND TRANSFER AGENT

    The applicable prospectus supplement will set forth the Registrar and
Transfer Agent for the preferred stock.

                                       27
<PAGE>
                        DESCRIPTION OF DEPOSITARY SHARES

GENERAL

    We may issue receipts for depositary shares, each of which will represent a
fractional interest of a share of a particular series of preferred stock, as
specified in the applicable prospectus supplement. Shares of preferred stock of
each series represented by the depositary shares will be deposited under a
separate deposit agreement between us, the depositary named therein and the
holders of the depositary receipts. Subject to the terms of the deposit
agreement, each depositary receipt owner will be entitled, in proportion to the
fractional interest of a share of a particular series of preferred stock
represented by the depositary shares evidenced by such depositary receipt, to
all the rights and preferences of the preferred stock represented thereby.

    Depositary receipts issued pursuant to the applicable deposit agreement will
evidence the depositary shares. Immediately following our issuance and delivery
of the preferred stock to the depositary, we will cause the depositary to issue,
on our behalf, the depositary receipts. Upon request, we will provide you with
copies of the applicable form of deposit agreement and depositary receipt.

DIVIDENDS AND OTHER DISTRIBUTIONS

    The depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred stock to the record holders
of depositary receipts evidencing the related depositary shares in proportion to
the number of depositary receipts owned by the holders.

    If there is a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
entitled thereto. If the depositary determines that it is not feasible to make
such distribution, the depositary may, with our approval, sell the property and
distribute the net proceeds from such sale to the holders.

WITHDRAWAL OF STOCK

    Upon surrender of the depositary receipts at the corporate trust office of
the depositary, unless the related depositary shares have previously been called
for redemption, the holders thereof will be entitled to delivery, to or upon
such holders' order, of the number of whole or fractional shares of the
preferred stock and any money or other property represented by the depositary
shares evidenced by the depositary receipts. Holders of depositary receipts will
be entitled to receive whole or fractional shares of the related preferred stock
on the basis of the proportion of preferred stock represented by each depositary
share as specified in the applicable prospectus supplement. Thereafter, holders
of such shares of preferred stock will not be entitled to receive depositary
shares for the preferred stock. If the depositary receipts delivered by the
holder evidence a number of depositary shares in excess of the number of
depositary shares representing the number of shares of preferred stock to be
withdrawn, the depositary will deliver to the holder a new depositary receipt
evidencing the excess number of depositary shares.

REDEMPTION OF DEPOSITARY SHARES

    Provided we shall have paid in full to the depositary the redemption price
of the preferred stock to be redeemed plus an amount equal to any accrued and
unpaid dividends thereon to the redemption date, whenever we redeem shares of
preferred stock held by the depositary, the depositary will redeem as of the
same redemption date the number of depositary shares representing shares of the
preferred stock so redeemed. The redemption price per depositary share will be
equal to the redemption price and any other amounts per share payable with
respect to the preferred stock. If fewer than all the depositary shares are to
be redeemed, the depositary shares to

                                       28
<PAGE>
be redeemed will be selected as nearly as may be practicable without creating
fractional depositary shares, pro rata, or by any other equitable method we
determine.

    From and after the date fixed for redemption, all dividends in respect of
the shares of preferred stock so called for redemption will cease to accrue, the
depositary shares called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the depositary receipts evidencing
the depositary shares so called for redemption will cease, except the right to
receive any moneys payable upon such redemption and any money or other property
to which the holders of such depositary receipts were entitled to receive upon
such redemption upon surrender to the depositary of the depositary receipts
representing the depositary shares.

VOTING OF THE PREFERRED STOCK

    Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the depositary will mail the information contained
in such notice of meeting to the record holders of the depositary receipts
evidencing the depositary shares that represent such preferred stock. Each
record holder of depositary receipts evidencing depositary shares on the record
date, which will be the same date as the record date for the preferred stock,
will be entitled to instruct the depositary as to the exercise of the voting
rights pertaining to the amount of preferred stock represented by such holder's
depositary shares. The depositary will vote the amount of preferred stock
represented by such depositary shares in accordance with such instructions, and
we will agree to take all reasonable action that may be deemed necessary by the
depositary in order to enable the depositary to do so. If the depositary does
not receive specific instructions from the holders of depositary receipts
evidencing such depositary shares, it will abstain from voting the amount of
preferred stock represented by such depositary shares. The depositary shall not
be responsible for any failure to carry out any instruction to vote, or for the
manner or effect of any such vote made, as long as any such action or non-action
is in good faith and does not result from the depositary's negligence or willful
misconduct.

LIQUIDATION PREFERENCE

    Upon our liquidation, dissolution or winding up, whether voluntary or
involuntary, the holders of each depositary receipt will be entitled to the
fraction of the liquidation preference accorded each share of preferred stock
represented by the depositary share evidenced by such depositary receipt, as set
forth in the applicable prospectus supplement.

CONVERSION OF PREFERRED STOCK

    Except in connection with certain conversions in connection with the
preservation of our REIT status, the depositary shares are not convertible into
our common stock or any other of our securities or property. Nevertheless, if
the applicable prospectus supplement so specifies, the holders of the depositary
receipts may surrender their depositary receipts to the depositary with written
instructions to the depositary to instruct us to cause conversion of the
preferred stock represented by the depositary shares evidenced by such
depositary receipts into whole shares of common stock, other shares of our
preferred stock or other shares of our capital stock, and we have agreed that
upon receipt of such instructions and any amounts payable in respect thereof, we
will cause the conversion of the depositary shares utilizing the same procedures
as those provided for delivery of preferred stock to effect such conversion. If
the depositary shares evidenced by a depositary receipt are to be converted in
part only, the depositary will issue a new depositary receipt for any depositary
shares not to be converted. No fractional shares of common stock will be issued
upon conversion, and if such conversion will result in a fractional share being
issued, we will pay an amount in cash equal to the value of the fractional
interest based upon the closing price of the common stock on the last business
day prior to the conversion.

                                       29
<PAGE>
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT

    By agreement, we and the depositary at any time can amend the form of
depositary receipt and any provision of the deposit agreement. However, any
amendment that materially and adversely alters the rights of the holders of
depositary receipts or that would be materially and adversely inconsistent with
the rights granted to holders of the related preferred stock will be effective
only if the existing holders of at least two-thirds of the depositary shares
have approved the amendment. No amendment shall impair the right, subject to
certain exceptions in the deposit agreement, of any holder of depositary
receipts to surrender any depositary receipt with instructions to deliver to the
holder the related preferred stock and all money and other property, if any,
represented thereby, except in order to comply with law. Every holder of an
outstanding depositary receipt at the time an amendment becomes effective shall
be deemed, by continuing to hold the depositary receipt, to consent and agree to
the amendment and to be bound by the deposit agreement as amended thereby.

    Upon 30 days' prior written notice to the depositary, we may terminate the
deposit agreement if (a) such termination is necessary to preserve our status as
a REIT or (b) a majority of each series of preferred stock affected by such
termination consents to such termination. Upon the termination of the deposit
agreement, the depositary shall deliver or make available to each holder of
depositary receipts, upon surrender of the depositary receipts held by such
holder, such number of whole or fractional shares of preferred stock as are
represented by the depositary shares evidenced by the depositary receipts
together with any other property held by the depositary with respect to the
depositary receipt. If the deposit agreement is terminated to preserve our
status as a REIT, then we will use our best efforts to list the preferred stock
issued upon surrender of the related depositary shares on a national securities
exchange.

    The deposit agreement will automatically terminate if (a) all outstanding
depositary shares shall have been redeemed, (b) there shall have been a final
distribution in respect of the related preferred stock in connection with our
liquidation, dissolution or winding up and such distribution shall have been
distributed to the holders of depositary receipts evidencing the depositary
shares representing such preferred stock or (c) each share of the related
preferred stock shall have been converted into our capital stock not so
represented by depositary shares.

CHARGES OF DEPOSITARY

    We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the deposit agreement. In addition, we will pay the
fees and expenses of the depositary in connection with the performance of its
duties under the deposit agreement. However, holders of depositary receipts will
pay certain other transfer and other taxes and governmental charges. The holders
will also pay the fees and expenses of the depositary for any duties, outside of
those expressly provided for in the deposit agreement, the holders request to be
performed.

RESIGNATION AND REMOVAL OF DEPOSITARY

    The depositary may resign at any time by delivering to us notice of its
election to do so. We may at any time remove the depositary, any such
resignation or removal will take effect upon the appointment of a successor
depositary. A successor depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of $50,000,000 or more.

                                       30
<PAGE>
MISCELLANEOUS

    The depositary will forward to holders of depositary receipts any reports
and communications from us which are received by the depositary with respect to
the related Preferred Stock.

    We and the depositary will not be liable if either of us is prevented from
or delayed in, by law or any circumstances beyond its control, performing its
obligations under the deposit agreement. Our obligations and the depositary's
obligations under the deposit agreement will be limited to performing the duties
thereunder in good faith and without negligence, in the case of any action or
inaction in the voting of preferred stock represented by the depositary shares,
gross negligence or willful misconduct. If satisfactory indemnity is furnished,
we and the depositary will be obligated to prosecute or defend any legal
proceeding in respect of any depositary receipts, depositary shares or shares of
preferred stock represented thereby. We and the depositary may rely on written
advice of counsel or accountants, or information provided by persons presenting
shares of preferred stock represented by depository receipts for deposit,
holders of depositary receipts or other persons believed in good faith to be
competent to give such information, and on documents believed in good faith to
be genuine and signed by a proper party.

    In the event the depositary shall receive conflicting claims, requests or
instructions from any holders of depositary receipts, on the one hand, and us,
on the other hand, the depositary shall be entitled to act on our claims,
requests or instructions.

                          DESCRIPTION OF COMMON STOCK

GENERAL

    Chelsea's authorized capital stock includes 50 million shares of common
stock, $.01 par value per share. For each outstanding share of common stock
held, the holder is entitled to one vote on all matters presented to
stockholders for a vote. Cumulative voting is not permitted. Holders of the
common stock do not have preemptive rights. At August 9, 2000, there were
15,941,159 shares of common stock outstanding.

    All shares of common stock issued and sold will be duly authorized, fully
paid, and non-assessable. Distributions may be paid to the holders of common
stock if and when declared by our Board of Directors. Dividends will be paid out
of funds legally available for dividend payment. We have paid quarterly
dividends, beginning with a dividend for the portion of the quarter from the
closing of our initial public offering in November 1993.

    Under Maryland law, stockholders are generally not liable for our debts or
obligations. If we are liquidated, subject to the right of any holders of
preferred stock to receive preferential distributions, each outstanding share of
common stock will be entitled to participate pro rata in the assets remaining
after payment of, or adequate provision for, all of our known debts and
liabilities.

CERTAIN PROVISIONS OF OUR ARTICLES OF INCORPORATION

    Our Board of Directors is divided into three classes of directors, with each
class constituting approximately one-third of the total number of directors. The
classes serve staggered terms. At each annual meeting of stockholders, the class
of directors to be elected at such meeting will be elected for a three-year term
and the directors in the other two classes will continue in office. We believe
that classified directors will help to assure the continuity and stability of
the Board of Directors and our business strategies and policies. The use of a
staggered board may make a change in our control and/or the removal of incumbent
management more difficult.

                                       31
<PAGE>
RESTRICTIONS ON OWNERSHIP

    In order to qualify as a REIT under the Code, not more than 50% in value of
our outstanding common stock may be owned, directly or indirectly, by five or
fewer individuals, as defined in the Code, during the last half of a taxable
year and the common stock must be beneficially owned by 100 or more persons
during 335 days of a taxable year of 12 months, or during a proportionate part
of a shorter taxable year. To satisfy the above ownership requirements and
certain other requirements for qualification as a REIT, our Board of Directors
has adopted, and the stockholders approved, a provision in the Articles of
Incorporation restricting the ownership or acquisition of shares of common
stock.

REGISTRAR AND TRANSFER AGENT

    Boston EquiServe, L.P., Boston, Massachusetts is the Registrar and Transfer
Agent for the common stock.

                              PLAN OF DISTRIBUTION

    We may sell the securities to one or more underwriters for public offering
and sale by them or may sell the securities to investors directly or through
agents. We will name, in the applicable prospectus supplement, any such
underwriter or agent involved in the offer and sale of the securities.

    Underwriters may offer and sell the securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the
time of sale or at negotiated prices. We may, from time to time, authorize
underwriters acting as our agents to offer and sell the securities upon the
terms and conditions as are set forth in the applicable prospectus supplement.
In connection with the sale of securities, underwriters may be deemed to have
received compensation from us in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of securities for
whom they may act as agent. Underwriters may sell securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent.

    We will set forth in the applicable prospectus supplement any underwriting
compensation either of us pays to underwriters or agents in connection with the
offering of securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers. Underwriters, dealers and agents
participating in the distribution of the securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the securities may be deemed to be underwriting
discounts and commissions, under the Securities Act. Underwriters, dealers and
agents may be entitled, under agreements entered into with us, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act.

    If the applicable prospectus supplement so indicates, we will authorize
dealers acting as our agents to solicit offers by certain institutions to
purchase securities from them at the public offering price set forth in such
prospectus supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date or dates stated in such
prospectus supplement. Each Contract will be for an amount not less than, and
the aggregate principal amount of securities sold pursuant to Contracts shall be
equal to, the respective amounts stated in the applicable prospectus supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
will in all cases be subject to our approval. Contracts will not be subject to
any conditions except (a) the purchase by an institution of

                                       32
<PAGE>
the securities covered by its Contracts shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject, and (b) if the securities are being sold to
underwriters, we shall have sold to such underwriters the total principal amount
of the securities less the principal amount thereof covered by Contracts.

    In the ordinary course of business, certain of the underwriters and their
affiliates may be customers of, engage in transactions with and perform services
for us.

                                 LEGAL MATTERS

    Stroock & Stroock & Lavan LLP of New York, New York will pass upon the
validity of the issuance of the securities offered hereby for us.

                                    EXPERTS

    Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Reports on Form 10-K
for the year ended December 31, 1999, as set forth in their report which is
incorporated herein by reference. Our consolidated financial statements are
incorporated by reference in reliance on their report, given on their authority
as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

    We file reports, proxy statements and other information with the SEC. You
may inspect and copy any document that we file at the public reference rooms
maintained by the SEC in Washington, D.C., New York, New York and Chicago,
Illinois. Any documents we file may also be available at the SEC's site on the
World Wide Web located at http://www.sec.gov. For a fee you can obtain the
documents by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549.

    We have filed with the SEC a Registration Statement on Form S-3 under the
Securities Act of 1933. This prospectus does not contain all of the information
set forth in the registration statement.

                                       33
<PAGE>
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    No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the notes offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.

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

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                       Page
                                       ----
<S>                                    <C>
           Prospectus Supplement

Prospectus Supplement Summary........   S-2
Use of Proceeds......................   S-3
The Company and the Partnership......   S-3
Recent Developments..................   S-6
The Properties.......................   S-8
Capitalization.......................  S-11
Selected Consolidated Financial
  Data...............................  S-12
Description of the Notes.............  S-15
Certain United States Federal Income
  Tax Considerations.................  S-20
Underwriting.........................  S-23
Legal Matters........................  S-24

                Prospectus

About this Prospectus................     2
Incorporation of Certain Documents by
  Reference..........................     2
The Company and the Operating
  Partnership........................     4
Risk Factors.........................     4
Use of Proceeds......................     8
Ratios of Earnings to Fixed Charges
  and Earnings to Combined Fixed
  Charges and Preferred Stock
  Dividends..........................     9
Description of Debt Securities.......     9
Description of Preferred Stock.......    22
Description of Depositary Shares.....    28
Description of Common Stock..........    31
Plan of Distribution.................    32
Legal Matters........................    33
Experts..............................    33
Where You Can Find More Information..    33
</TABLE>

                                  $150,000,000

                               CPG PARTNERS, L.P.

                                  % Notes due

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                                     [LOGO]

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                              GOLDMAN, SACHS & CO.

                              MERRILL LYNCH & CO.

                                BANC OF AMERICA
                                 SECURITIES LLC

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