December 04, 2024

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Midtown Center complex in Washington (Carr Properties)

After looking to relocate its headquarters from Washington, partially owned by South Korea's Igis Asset Management, US mortgage giant Fannie Mae has reversed course, opting instead to extend its lease under revised terms that will see it occupy a smaller space.

Igis Asset Management announced Tuesday that the Federal National Mortgage Association, commonly known as Fannie Mae, has recently signed a new long-term lease at Midtown Center, a downtown DC property the Korean company jointly owns with US real estate developer Carr Properties.

Under the new agreement, Fannie Mae will occupy approximately 32,000 square meters of the 81,000-square-meter building until 2045.

This deal follows the government-backed US mortgage provider’s decision earlier this year to vacate its initial 66,000-square-meter space at Midtown Center in 2029, five years before the original lease expiration in 2033. The move had marked a significant setback for the city's commercial real estate market, already grappling with record-high vacancies.

An official from Igis stated that the company does not "anticipate significant challenges in stabilizing the asset despite the reduction in Fannie Mae’s footprint," thanks to favorable conditions secured in the new lease negotiations.

"We negotiated terms that allow us to collect rent from both Fannie Mae and new tenants until the original lease expires in 2029, as new tenants begin occupying the space vacated by Fannie Mae," the official explained, adding that the company is currently in discussions with several prospective tenants.

Meanwhile, Igis acquired a 49 percent stake in Midtown Center in 2021 by investing approximately 250 billion won ($182.4 million) through a consortium.

By Choi Ji-won (jwc@heraldcorp.com)