The owner of Charlottesville Fashion Square is less sure of the mall’s viability.
According to Washington Prime Group’s 2018 fourth-quarter report, Fashion Square is marked to be reclassified from a Tier II property to a non-core property in 2019.
Many former Washington Prime properties that previously were identified as non-core were ultimately transferred to a lender or sold.
The mall previously had been considered one of the company’s viable enclosed retail properties with lower productivity and modest growth profiles, according to the report. Tier I enclosed retail properties generally have higher occupancy, sales productivity and growth profiles.
“Washington Prime Group, the parent company of Charlottesville Fashion Square, has no plans to close or sell the mall at this time,” the mall’s general manager, Karen Weiner, said.
In the fourth-quarter earnings conference call, the company said that 90 percent of its total net operating income is attributable to its Tier I and “open air” properties, and Tier II and noncore assets will be excluded from core operating metrics as of first quarter 2019.
“The reason behind this action is straightforward — the inordinate amount of time spent discussing these assets is a distraction from our stated objectives,” Louis Conforti, CEO and director of Washington Prime Group, said in the call. “Remember, 40 percent of this [net operating income], or the NOI associated Tier II and non-core combined, is encumbered. Hence, we have a put option and, as you guys have known, we won’t hesitate to exercise that put option in a viable executed discounted payoff.”
Fashion Square was bought by Simon Property Group in 1997. In May 2014, Washington Prime Group was created as a spinoff for Simon and consisted of its strip center business and smaller enclosed malls.
According to annual reports, Fashion Square’s occupancy rate has increased slightly over the past three years, from 87 percent at the end of 2016 to 87.5 percent at the end of 2018.
Earlier this month, Payless ShoeSource announced it was closing all of its stores in the United States. In December, Sears Holdings announced it would be closing the Fashion Square location by the end of March.
Rumors have been swirling for years that the University of Virginia or its foundation are buying the mall.
“The university has no interest in purchasing Fashion Square mall,” university spokesman Anthony de Bruyn said earlier this week.
Last year, Albemarle County adopted a small area plan, a vision for the area around the intersection of Rio Road and U.S. 29, including the land where the mall sits.
A pre-marketing study showed that 40 percent of property owners asked said they were interested in redeveloping or collaborating with a developer if the county were to participate, particularly in the small area plan vicinity.
“They want to know what the county is willing to offer and be assured that there is an expeditious process for facilitating a public-private partnership, as the property owners may have other pressing decisions to make regarding their properties in the near term,” the report stated.