Tysons Corner Regional Shopping Center, the largest retail mall in the Washington area, has been bought by an American pension fund investment company for $167 million in what is believed to be the largest single real estate transaction in the Washington area.
The deal, completed late Thursday night, represents a new era for the 20-year-old shopping center, which has been owned since its opening by its original developers. The new owners already are talking with county officials about plans to expand the mall substantially and add major new retail outlets in space that would be cleared by converting the center's sprawling parking lots into double-decker parking facilities.
The new owner, a subsidiary of Lehndorff Management (USA) Ltd. Inc. of Dallas called Lehndorff Tysons Joint Venture, was funded by various pension groups, including some foreign firms.
Fairfax County officials, who have been aware of the impending sale for several months, said they were told Lehndorff was buying the mall on behalf of West German investors. Coldwell Banker's Vernon E. Knarr, who handled the transaction for Lehndorff, refused to say if any West German companies were involved. He said, however, that a majority of the pension investors were domestic companies.
Knarr said Lehndorff bought the mall and land, which included the real estate for the three "anchor" stores, Bloomingdale's, Woodward & Lothrop and Hecht's, because of current cash return and because it expected to increase that cash return in the future. He said Lehndorff, which will manage the mall, has carefully guarded information about the mall's earnings.
While final plans on expanding the mall will depend on what the county will allow, Lehndorff is considering building decked parking and adding two anchor stores and 40 smaller stores to the site as well as additional office space. More intense development of the property would be allowed under the current zoning.
The mall, which contains 1.6 million square feet of retail space and 200,000 square feet of office space, sold for $119 million in cash, with Lehndorff assuming a $22 million mortgage that has a 6 percent interest rate. The land, which was owned by a group of 12 individual landowners known as the Tysons Triangle Ltd. Partnership, sold for $26 million in cash.
Tysons Corner is considered one of the most successful malls on the East Coast and has been a financial boon for its developers and former owners Theodore N. Lerner, H. Max Ammerman of Washington and Baltimore developer Homer Gudelsky since it opened in the mid-'60s.
D. Jay Hyman, an independent real estate broker who represented the owners, said that many companies have been interested in buying the mall over the past several years, including Prudential Insurance Co. of America, but that Ammerman, Gudelsky and Lerner were unwilling to sell until they quarreled over the sale of the Tysons II property across Rte. 123 from the Tysons mall.
Lerner and Ammerman bought the Tysons II property several years ago, hoping to forestall development of a competitive mall, then feuded over the value of the land when Lerner tried to buy out Ammerman in 1981.
Lerner, with Homart Development Co., a Sears, Roebuck subsidiary, bought the Tysons II land. They have broken ground on an office and retail complex that will include a smaller mall. Hyman said that when the partnership broke up, Lerner, who had the right to buy Ammerman and Gudelsky's majority share, decided he would rather sell.
Knarr, whose company made at least $1 million in brokerage fees on the deal, said the land alone -- nearly 4 million square feet -- could have sold for $167 million because of its prime location in the Tysons area. CAPTION: Picture, Tysons Corner Regional Shopping Center, the area's largest has been sold for $167 million. By Larry Morris -- The Washington Post