Route 6 Plaza II is a 3.5 acre development site located in Mohegan Lake, NY, across the street from CCGL’s initial Route 6 development.  The land was acquired in August 2006 for $ .3 million.  Construction of an 18,000 square foot mixed-use project began in Fall 2008.  The project will consist of a 4,000 square foot single tenant office building, a 10,000 square foot daycare facility and a 4,000 square foot bank branch with drive thrus.  Total project cost is budgeted at $6.0 million.

.Market Opportunity
Route 6 is a highly desirable retail artery in Northern Westchester County, with a daily traffic count of over 26,000 cars/day in Mohegan Lake.  The Route 6 II site had been under contract to another developer for $1.35 million for retail development.  However, concerns about increasing traffic led the town to downzone the property to office use.  As a result, the proposed sale was not consummated.

CCGL was quite familiar with the location as a result of its highly successful neighboring Route 6 Plaza project.  CCGL believed it could successfully develop a low density mixed-use project which would alleviate the town’s traffic concerns, provided zoning was modified to permit a bank branch.  Preliminary meetings with town officials indicated a zoning change could be obtained.

.Acquisition
CCGL contracted to buy the land in August 2005 for $750,000.  However, environmental investigation during due diligence disclosed the presence of hydrocarbons, which the unsophisticated seller was incapable of remediating.  After further environmental investigation, CCGL was able to buy the land “as is” in August 2006 at a price of $300,000.  CCGL is confident remediation can be completed for less than the price reduction.

.Results
CCGL obtained the necessary development approvals and began construction in Fall 2008.  The property is expected to open in 2009.  Two of the three buildings have been committed.  CCGL will complete the pad for the bank without a pre-construction commitment.  CCGL will sell the office building to a user. CCGL is confident the bank parcel will lease as the financial environment stabilizes.  It expects to hold the bank and the daycare center for the foreseeable future.

Mark Ellman and his family own a 78.86% interest in the property.  The remainder is owned by the family of one of the partners in the original Route 6 project and a key member of CCGL’s management.  CCGL projects an effective annual internal rate of return to the investors of over 21%.

CCGL rarely employs investor capital in development opportunities, since it believes the time horizons and risk profile are inconsistent with the goals of its investors.  However, Mark Ellman occasionally undertakes such projects for his own account.  Route 6 Plaza II is such a project.