ARLINGTON, VA—A 182,832-square foot office is trading to a joint venture between Lionstone Investments and Penzance. Federal Capital Partners is the seller of the 10-story property, located at 4040 N. Fairfax Dr. The sale is generating $56.2 million in gross proceeds.

The McMullin Revocable Family Trust, FCP's partner and the prior owner of the building, has retained control of the density rights. These will be sold separately to the Lionstone-Penzance venture, which has development plans that include incorporating the adjacent site.

McGuire Woods created the trust structure for separating the building from its additional density rights.

FCP entered into a partnership with the McMullin Family on 4040 N. Fairfax in July 2012 with a preferred equity investment. The loan on the property was set to expire; also the federal tenant was getting ready to depart due to the Base Realignment and Closure Initiative.

The partnership renovated the building and inked leases with Marymount University and Virginia Heritage (now Eagle) Bank. Marymount, which is the lead tenant at the building, signed its lease signed earlier this year for 87,000 square feet. It took a portion of the first floor and the entire second-through-fifth floors, according to broker Avison Young, leaving the top five floors available for lease.

Participants in this latest deal include Avison Young's Rob Walters, Mike Shuler, Nate Krill, Soph Chinoy, Amy Hewitt, Bill Dickinson and Jason Yanushonis and Bill Collins and Jud Ryan of Cassidy Turley, who represented the buyer.