Profit steady for LV mall operator

Jennifer Shubinski

Wednesday, Nov. 5, 2003 | 11:23 a.m.

Chelsea Property Group Inc., owner of the Las Vegas Premium Outlets and the Las Vegas Outlet Center, Tuesday reported a profit of $25 million or 55 cents per share for the third quarter, compared to $24.2 million, or 61 cents in the year-ago quarter when fewer shares were outstanding.

Revenue grew 31 percent to $92.6 million.

The Roseland, N.J.-based company attributed the improvement to internal rent growth; acquisitions since June 30, 2002, of partners' interests or properties totaling 3.1 million square feet of leaseable space, including the Belz Factory Outlet, Las Vegas, now known as the Las Vegas Outlet Center; and the opening of the Las Vegas Premium Outlets in August 2003.

Funds from operations -- a measure of cash flow for real-estate investment trusts -- rose 44 percent to $47.1 million or 89 cents per share.

On the same day during the third quarter, Chelsea opened its 435,000-square-foot Las Vegas Premium Outlets and bought its competition -- the 477,000-square-foot Belz Factory Outlet World, Las Vegas. Las Vegas Premium Outlets is a 50/50 joint venture with Simon Property Group, owner of the Forum Shops at Caesars in Las Vegas.

"Strong third quarter results were driven by internal growth as well as acquisitions, expansions and new projects completed during the quarter and preceding year," David Bloom, chairman and chief executive of Chelsea, said in a statement. " As we approach the end of 2003, the portfolio continues to perform well, and recent property additions plus a strong development pipeline should continue to drive growth."

Kit Graski, senior vice president at Voit Commercial Brokerage, Las Vegas, said Las Vegas Outlet Center (Belz) has always been successful, and it is too soon to tell how the new ownership will affect that.

He said he hasn't heard whether or not the Las Vegas Premium Outlets has been successful, but said the center has a good tenant mix and appears to be busy with shoppers.

Graski said it is possible that the two outlet malls could cannibalize profits from one or the other. Many of the stores can be found at both outlets.

"For anybody living in the north or northwest (Las Vegas) if the same store is at the Premium center, they will go to the Premium location," he said. "It's just like anything else though, like grocery stores. If one is doing so much business you can build a second one and hope to grab some additional business."

Despite the worry that the centers may take away profits from each other, clothing retailer Charlotte Russe plans to open at the Las Vegas Premium Outlets this month, company officials said. Las Vegas Outlet Center already has a Charlotte Russe.

Calvin Klein is expected to open this month at the Las Vegas Premium Outlets as well. An exact opening date was not available for either store.

VF Factory Outlet is scheduled to open Nov. 15 at the Las Vegas Outlet Center.

Chelsea Property Group wholly or partially owns 61 Premium Outlets or other retail shopping centers -- totaling 16.1 million square feet of leaseable space -- in 31 states and Japan.