Fannie/Freddie mortgage securities firm launches in Bethesda -- Gazette.Net


First Potomac buys third Redland office building in Rockville

by Sonny Goldreich

Special to The Gazette

Much of the federal government is shut down, but a new enterprise designed to eventually take over the mortgage-backed securities business of Fannie Mae and Freddie Mac has launched in Bethesda.

The two government-sponsored enterprises have created a joint venture — Common Securitization Solutions, LLC — and signed a lease for 63,000 square feet of office space at 7501 Wisconsin Ave., according to the Federal Housing Finance Agency, the regulator and conservator of Fannie and Freddie.

The firm is expected to move in by January and eventually ramp up to between 200 and 250 employees, said Corinne Russell, an FHFA spokeswoman.

A certificate of formation has been filed with Delaware’s secretary of state establishing CCS, which is an equally owned subsidiary of Fannie Mae and Freddie Mac.

“The filing of the certificate of formation represents a significant milestone toward accomplishing the goal of building a new secondary mortgage market infrastructure,” FHFA’s acting director, Edward J. DeMarco, said in a news release. “We are pleased with the progress being made and look forward to further developments.”

He announced plans for the new mortgage-backed securities firm in March, but its exact structure and function remain unsettled while Congress and the Obama administration deliberate on what will succeed Fannie and Freddie. Despite the housing recovery, the two enterprises continue to dominate the secondary market for single-family and multi-family mortgages.

“The overarching goal is to create something of value that could either be sold or used by policy makers as a foundational element of the mortgage market of the future,” DeMarco said in March.

Bethesda was chosen for the CCS headquarters to give it a physical presence separate from its corporate parents. Although Fannie and Freddie will own CCS initially, in the long term, it will be designed to be a key block in building a new secondary mortgage market infrastructure. An executive recruitment company is identifying candidates to hire as the firm’s chief executive officer and chairman of its board of managers.

The 750,000-square-foot property sits next to the Bethesda Metro subway station and is the headquarters of its owner, the B.F. Saul Co. The building formerly served as the headquarters of Chevy Chase Bank until it relocated after it was acquired by Capital One.

Other major tenants include the federal Centers for Medicare & Medicaid Services Office of Consumer Information and Insurance Oversight. Cushman & Wakefield brokered the three-year lease, representing Fannie and Freddie.

“The firm initially identified over 60 properties in the greater D.C. area, then narrowed down the list,” Russell said.

First Potomac buys third Redland office building

Bethesda-based First Potomac Realty Trust announced that it bought the third office building in Rockville’s Redland Corporate Center for $30 million.

Redland I — a 133,895-square-foot, Class A property — is fully leased to the Department of Health and Human Services through early 2018.

Redland is made up of three multistory, Class-A office buildings totaling 483,000 square feet. First Potomac bought Redland II and III in a joint venture in late 2010 with Perseus Realty, which represented its first and largest value-added acquisition.

First Potomac announced in June that it brought Redland II from fully vacant at acquisition to 100 percent leased.

The firm said buying the final building in the fully leased complex provides the opportunity to expand current tenants in future years.

“Redland I marks the first acquisition we have completed since late 2011, and it was compelling for a number of reasons,” Nicholas R. Smith, First Potomac’s chief investment officer, said in a news release. “The building is fully leased to the [General Services Administration]. It is located in a strong submarket where we already have a significant presence, and it is consistent with our plan to acquire additional high-quality, multi-story office assets in the Washington D.C. region.”

Redland II and III are both gold certified by the U.S. Green Building Council. First Potomac is targeting either an Energy Star or council certification for the third building.

Redland Corporate Center is in the I-270 corridor and provides shuttle service to the Shady Grove Metro station.

First Potomac said it used the proceeds from the sale of its industrial portfolio in June 2013, cash on hand and the company’s line of credit to acquire Redland I. The firm completed a sale of 23 industrial buildings — including three in Frederick County — for $241.5 million.

JBG lists two FDA-leased buildings for sale in Rockville

In other federal tenant news, Chevy Chase-based JBG Cos. is looking for buyers for a pair of Rockville office buildings fully leased to the FDA.

HFF is the broker for the two properties, which are both within walking distance of the Twinbrook Metro Station.

The FDA’s Office of Regulatory Affairs occupies 12420 Parklawn Drive under a lease that runs through December 2020. The 93,014-square-foot, four-story property dates to 1972. It underwent a comprehensive $17.5 million renovation in 2009 for FDA’s occupancy and has achieved gold certification by the U.S. Green Building Council.

FDA has a lease that recently was renewed through February 2023 at 5630 Fishers Lane. The 55,728-square-foot, two-story building originally was completed in 1967, but it underwent a “gut” renovation in 1997, according to a broker flyer.

The two properties sit within a GSA-leased cluster of more than 2.3 million square feet across nine buildings. That includes the Parklawn Building, where JBG recently renewed 935,000 square feet under a lease with the federal Department of Health and Human Services than runs through September 2030.

Federal Realty adds to Pike & Rose tenant list

Federal Realty Investment Trust announced that it added a gym and health club and a sports retailer to its tenants at its Pike & Rose complex under construction in Rockville.

The project will add 3.2 million square feet of retail, residential, office and hotel space on the site of the former Mid-Pike Plaza.

“Our goal from the start with Pike & Rose was to transform this area of Rockville Pike from a hard-scaped, commercial-centric corridor, into a walkable community that offers great entertainment, shopping and dining, along with active parks and lush landscaping where people can truly live, work and play,” Wendy Seher, vice president of leasing for Federal Realty, said in a news release.

The firm signed Sport&Health Clubs to a 32,000-square-foot, two-story space. City Sports will take another 10,000 square feet.

The new tenants bring phase one of Pike & Rose to 75 percent leased. The project will include an iPic theater, 150,000 square feet of retail with eight restaurants, a Strathmore concert venue, two residential buildings and an 80,000-square-foot office building.

Delivery of the first phase is expected next fall.