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Problems Won't Affect Move, Developer Says

Monday, December 20, 2004; Page E09

When Fannie Mae outgrew its offices on Wisconsin Avenue in Northwest, it decided to move many of its employees to southwest Washington.

Fannie Mae signed a letter of intent this year to move to Waterside Mall at M and Fourth streets SW. The decision was seen as a boost to efforts to revitalize the area.

Mitchell N. Schear's firm is lead developer.

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The company's board of directors, concerned about the costs of fixing accounting problems, may put the project on hold, according to sources familiar with the situation.

Mitchell N. Schear, president of Charles E. Smith Commercial Realty, which is the lead developer on the Waterside project, said last week that he does not expect Fannie Mae's troubles to affect the Waterside deal.

"The people that we work with at Fannie Mae have continued to work closely with us and press ahead," Schear said. He said he is "busy working through the negotiations" with Fannie Mae and hopes to have "something definitive" next year.

Alfred King, a spokesman for Fannie Mae, said the company would not comment on the real estate deal.

Fannie Mae chief executive Franklin D. Raines was a strong advocate of moving to Southwest. The new Fannie Mae site would also be close to Arena Stage, with which Raines and his wife are involved in a campaign to raise money to renovate the theater.

The $500 million Waterside project is planned to include 2 million square feet of offices -- most of which Fannie Mae is expected to take -- and 400 residential units. It would reopen Fourth Street SW and include 100,000 square feet of shops and restaurants, and underground parking. Charles E. Smith's development partners are Forest City Enterprises Inc. of Cleveland and Bresler & Reiner Inc. of Rockville.

-- Dana Hedgpeth

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