Centennial is teaming up with longtime real estate executive Sandeep Mathrani to buy a regional shopping mall in greater Washington, D.C., marking the Dallas-based company's first purchase since it got a big investment from Lincoln Property to transform large retail centers into destinations across the country.
Centennial, Mathrani's Atlas Hill Real Estate and other partners acquired Annapolis Mall in Annapolis, Maryland, in August for an undisclosed price from Paris-based Unibail-Rodamco-Westfield. The mall that opened in 1980 is the only enclosed shopping center within a 25-minute drive of Maryland's Chesapeake Bay region.
"We've done a lot of business with Westfield over the years and had a relationship with them," Centennial founder and CEO Steven Levin told CoStar News. The 1.5 million-square-foot Annapolis Mall had been on Centennial's radar for a while, and the deal progressed quickly over the past three months, Levin said.
"This mall has been around for a long time and is the dominant retail property in an area with limited competition," Levin said. "It is in a growing affluent area, and there's the ability to add uses we feel will be very complementary, including entertaining, food and beverage, living and working, that will make it relevant and viable for the next 30 years."
The purchase is Centennial's first since Lincoln Property made an undisclosed investment into the company last month. The deal is also the first investment between Centennial and Atlas Hill, a new real estate firm founded by Mathrani, Levin said.
Mathrani served as CEO of WeWork from February 2020 to May 2023 before stepping down to join New York-based Sycamore Partners and oversee the private equity firm’s real estate activity. He also previously served as CEO of Brookfield Properties' retail group after he overhauled mall owner General Growth Properties before GGP’s sale to Brookfield. He spent nearly a decade in executive roles for Vornado Realty Trust's retail operations and has served on the board for Dick's Sporting Goods since September 2020.
The Annapolis Mall acquisition represents Centennial's plans to grow its U.S. footprint with some of the nation's most dominant retail destinations, Levin said. In the near term, the new owners plan to enhance the mall's tenant mix to elevate the shopping experience. Longer-term plans at the property are expected to require a "significant" amount of investment and include plans to densify the site and add other types of real estate uses, Levin said.
Like other retail real estate dealing with the rise of e-commerce, mall owners have had to continually reinvest or reposition their properties to appeal to more customers, offering experiences, restaurants and possibly even a place to stay.
Annapolis Mall checks all the boxes of being a "best-in-class retail asset" with the shopping center's high sales volume and robust tenancy in an affluent, growing trade area, Mathrani said in a statement. The acquisition also offers the new ownership group a place to add a residential component in the center of Annapolis, he added.
Levin, who has known Mathrani for about eight years, said Mathrani brings his deep expertise positioning super-regional centers to the table. Large projects, like Annapolis Mall, require a lot of energy, attention and resources, Levin said. Centennial, which operates 23 million square feet of mixed-use destinations in 17 states, will oversee the property's asset management.
"With our other partners, we made this a larger dinner party than normal," Levin told CoStar News. "With the Lincoln relationship, we want to ... make these kinds of investments. It was only natural after closing the Lincoln deal that this was our first transaction. These are the kind of deals we want to do together."
Lincoln Property Co-CEO David Binswanger said in the statement that the deal is a "tremendous example" of the opportunity in bringing the two firm's respective platforms together to transform a great retail location into a "dynamic, mixed-use destination of the future."
New leases
Centennial and its partners also announced they closed two leases totaling about 150,000 square feet at Annapolis Mall, bringing Dave & Buster's and Dick's House of Sport to the property. Both tenants are expected to open in winter 2025.
"This adds a tremendous amount of velocity with two best-in-class retailers," Levin said. "We want to bring additional tenants that we feel are consistent with the merchandising strategy in the long term. We also have the capital to be able to execute on our merchandising plan to bring key retailers to a long-term home."
The two retail leases were completed right before Centennial closed on the mall acquisition. Dick's House of Sport is a new experiential retail concept by Dick's Sporting Goods that offers visitors a climbing wall, multiple golf bays with simulators and multisport cages. This allows customers to try products ahead of buying them. Dave & Buster's is a restaurant and sports bar with multiple screens and an extensive video arcade.
The mall's new tenants join more than 200 retailers and restaurants, including Apple, Macy's, lululemon, H&M, Michael Kors, Zara, Maggiano's, The Cheesecake Factory, as well as a 12-screen AMC Theatres location.
The Annapolis Mall acquisition comes as economic uncertainty and elevated interest rates make finding capital to invest in properties difficult for some owners. If owners "can't do it all" in upgrading or investing capital into their assets, Levin said, they may only focus their attention on their best assets, offering an opportunity for investors.
"These are not easy projects to transform," he added. "You have to be very discerning and very clear on what the strategy is and there's no question that partnering with the right people and resources is the difference maker."
For the record
Waterfall Asset Management is an equity partner in the Annapolis Mall acquisition.