222 Bloomingdale Road is a 150,000 square foot office building on a 1.62 acre site with parking for 425 cars in structured, covered parking. The property was purchased in December 2010 for $7.0 million. Total project cost is budgeted at $15.6 million. Estimated value at stabilization is approximately $20.0 million.

.Market Opportunity
The property was acquired by the prior owner as part of a portfolio in 2005. The purchaser was a residential company with no experience in the local office market. Management was non-responsive to tenant needs and allowed taxes and operating expenses to become bloated. As a result, NOI was insufficient to justify the capital investment required to keep the property competitive and leasing stalled, creating a downward spiral. Notwithstanding its operational problems, the property had an excellent location with abundant free parking and more efficient floor plates than much of its competition. CCGL believed it could be acquired at a sufficiently low price to permit a major renovation and repositioning to make it more attractive than its competition, while still being extremely price competitive.

.Acquisition
CCGL first learned about the property over 2 years before the acquisition closed. The property was brought to CCGL by one of CCGL’s network of referral sources. After months of effort, CCGL put the property under contract for the amount outstanding on the first mortgage, with no value given to over $10 million of equity. After extensive due diligence, CCGL concluded the original purchase price was unjustifiable in light of the higher than budgeted capital expenditures required. As a result, CCGL terminated the original contract and began seeking the securitized lender’s consent to a short sale. After over another year of effort, CCGL concluded the acquisition for over 30% less than the amount of the debt. The purchase price amounted to under $50 per square foot for a 70% leased office building in downtown White Plains.

.Results
CCGL has begun an extensive renovation of the building. The goal will be to improve tenant satisfaction while increasing efficiency and dramatically lowering operating expenses. Taxes have already been meaningfully reduced. With CCGL’s expertise in the market, it expects a fast lease up.