[Edaily Marketin KIM SUNG-SOO Reporter] Mirae Asset Management is seeking ways to recover funds from a real estate fund that invested in an office building in Atlanta, Georgia.

Although the company is receiving rent as scheduled from the tenant, State Farm, the tenant has not actually occupied the building for some time.

Mirae Asset Management has begun formulating an exit strategy by reviewing various options, ranging from finding an alternative tenant to early termination of the lease agreement, asset sale, and refinancing. The company aims to secure an exit strategy before the fund matures in 2030.

State Farm Leases 100% of Office Building… but There Is an Actual “Vacancy”

According to the financial investment industry on the 15th, Mirae Asset Management’s U.S. real estate fund, “Mirae Asset MAPS U.S. Real Estate Investment Trust No. 11” (MAPS U.S. No. 11), is working to improve the asset value of and recover investment capital from the office building “Park Center 1” located in Atlanta, Georgia.

Park Center 1 is located 14 miles (approximately 22 km) north of downtown Atlanta, at the intersection of Interstates 285 and 400. It offers excellent access to Hartsfield-Jackson Atlanta International Airport and is within a 10-minute drive of the Buckhead area, Atlanta’s financial, commercial, and residential hub.

The building is known as the Eastern Regional Headquarters of State Farm, North America’s largest property and casualty insurer. MAPS U.S. No. 11 is a fund established with the purpose of investing in and managing this office building to generate rental income and capital gains, which are then distributed to unitholders.

State Farm had planned to enter into a long-term lease covering the entire office space for approximately 20 years, through 2037. Office space accounts for 96% of the total leased area, and State Farm had been leasing the entire office space.

The issue is that there is a discrepancy between the lease agreement and the actual use of the building. While the fund is receiving rent as normal, the tenant continues to not actually occupy the building. Although rental income is being maintained, challenges remain in terms of asset utilization.

Previously, in September 2021, State Farm entered into a 10-year sublease agreement to sublease the entire leased space to Carvana, a U.S. online used car dealer. However, the sublease agreement was terminated in January 2023, and Carvana has since vacated the leased space.

Following the termination of the sublease agreement, a temporary “trigger event” occurred because State Farm’s plans for the use of the leased space had not yet been finalized. However, this situation has since been resolved.

According to the local senior loan agreement for this investment asset, a “trigger event” occurs if “at least 50% of the leased area” is not continuously occupied. In such a case, the borrower is obligated to set aside (cash trap) the rental income generated from the collateralized property in an account designated by the lender.

Simultaneously Reviewing Asset Sale and Refinancing… Securing an Exit Before the 2030 Maturity Date

Maps U.S. No. 11 is continuing discussions with the tenant to resolve this situation. The plan is to improve asset value by identifying replacement tenants through individual negotiations with the tenant, including leasing and subleasing efforts.

The option of early termination of lease agreements is also under consideration. The fund is exploring ways to recover investment capital, such as through lease buyouts—agreements with tenants to terminate lease agreements early. It is simultaneously examining strategies to increase building utilization by finding replacement tenants and creating recovery opportunities by adjusting existing lease agreements.

From a financial perspective, August of next year is expected to be a key inflection point. Although the senior loan held by MAPS U.S. Fund No. 11 matures in June 2037, the early repayment window opens in August of next year. Previously, MAPS U.S. Fund No. 11 completed a refinancing under a CTL (Credit Tenant Lease) structure in August 2024.

The CTL (Credit Tenant Lease) structure is a commercial real estate financing method that secures long-term funding based on the tenant’s high creditworthiness and future rental cash flows—rather than the property’s asset value—using long-term lease agreements with companies or government agencies possessing high credit ratings (investment-grade) as collateral.

Following that refinancing, local interest rates rose from 3.34% to 6.64%. Currently, MAPS U.S. No. 11 is in the process of repaying principal and interest. Due to this increase in interest expenses, MAPS U.S. No. 11’s distributable cash has decreased, and following the financial settlement at the end of September (18th period), the distribution amount was calculated at 1.532 billion won (distribution rate of 2.26%).

The maturity date for MAPS U.S. No. 11 is January 2030. The fund aims to secure an exit strategy (capital recovery) before the maturity date. Accordingly, the fund plans to simultaneously explore the sale of local assets and refinancing.

Asset sales involve disposing of held real estate to recover investment capital. Refinancing involves replacing existing loans with new ones to adjust financial terms or repayment structures. Specific implementation plans are expected to be reviewed in consideration of the status of local assets and market conditions.

The fund plans to continue monitoring the market while striving to maximize its recovery rate.

A financial investment industry official stated, “While rental income from Park Center 1 continues, the key issue is whether the fund can resolve the actual vacancy and how much it can increase the asset’s value,” adding, “It remains to be seen which approach—securing alternative tenants, adjusting lease agreements, or pursuing a sale and refinancing—will lead to tangible recovery results.”