Saxon Woods Corporate Center is a 238,000 square foot, 2 building office park on a 15 acre site with 830 parking spaces located on Mamaroneck Avenue adjacent to the Hutchinson River Parkway in Harrison, NY.  The property was purchased in January 2006 for $32.75 million.  Total project cost is budgeted at $45.0 million.

.Market Opportunity
The property has an exceptional location in the very desirable Eastern submarket of Westchester County. It has abundant parking, great visibility and efficient floor plates. However, the buildings were extremely dated and required a complete aesthetic and mechanical renovation to realize the value of the location. The buildings were poorly managed and 75% of the leases were scheduled to roll within 18 months when the property was offered for sale. As a result, the sale drew limited bidders.

.Acquisition
CCGL was outbid for the property. However, concern about lease rollover led the original buyer to terminate the purchase during due diligence. CCGL was convinced the buildings could be successfully repositioned with an appropriate renovation, better management and aggressive leasing. CCGL also was convinced the ground floors of both buildings could be converted to medical tenancy at premium rents, creating additional value. CCGL also concluded the buildings were significantly over-valued for real estate tax purposes and cash flow could be materially increased through a tax assessment appeal. Finally, during due diligence, CCGL secured a 24,000 square foot tenant, which became a 30% equity partner in the property. As a result, the leaseup risk was significantly ameliorated.

.Results
CCGL leased the property to over 96% within two and a half years of acquisition. Two large tenants were renewed. A third was replaced by the incoming partner. Most smaller tenants renewed and a number significantly expanded. CCGL successfully converted the ground floor of both buildings and one upper floor to medical offices at premium rents. Significant aesthetic, mechanical, and energy conservation improvements were made in the first years of ownership and real estate taxes were reduced by 25%. Bloated operating expenses were reduced at the same time tenant satisfaction was dramatically improved. The facades, toilet rooms, corridors and signage were renovated. The cafeterias and lobbies of the buildings were renovated in 2008 and 2009. Site improvements were begun in 2010 and will continue through 2012. CCGL expects the repositioned property to achieve stabilization in 2012 and expects rents to increase significantly upon lease rollover.

CREF II owns a 30.7% interest in the property. The remainder of the equity is owned by three real estate professionals secured by CCGL. CCGL believes it is premature to project returns for this investment. It also views the property as a core holding and does not anticipate selling it in the foreseeable future.