Pentagon City Mall Now Equally Owned by California and Indiana Groups

ARLINGTON, VA-The Washington, DC area’s Fashion Centre at Pentagon City’s ownership is now equally distributed between its developer and manager Simon Property Group Inc, and the California Public Employees Retirement System. The combination office building and retail structure is worth $365 million.

CalPers pays $85 million for half of the structure’s retail property, which totals 989,000-sf across four floors. Formerly a minority holder in the entire property, CalPers makes this purchase from a consortium of pension funds advised by L&B Realty Advisors. With partial ownership of the overall property, the pension firm’s total stake in the complex is worth $182.5 million. Miller Capital Advisory Inc serves as CalPers’ advisor in the transaction and notes in a press release that, “CalPERS and Simon now hold equal 50% interests in the Fashion Centre. The new partners are fully aligned with each equally sharing the risks and rewards of ownership.”

Indianapolis-based Simon Property Group also previously held a minority stake, 21%, in the property. The REIT developed the complex in 1989 and still serves as the property’s manager. CalPers and Simon’s ownership also includes the land lease of the Ritz Carlton Pentagon City, a 366-unit luxury hotel.

Since it first opened within walking distance of the Pentagon itself, the mall has held an occupancy level of 99%. Anchored by popular department stores Macy’s and Nordstrom, the center’s annual sales last year totaled $380 million or $715 per sf. The national average for annual sales in 2000 was less than half that amount at $341 per-sf.