(This is the first story in an occasional series following the stages and progress of a property deal in Westchester”™s commercial real estate market. The Business Journal is tracking a team from the Stamford, Conn., office of CBRE Group Inc. in the marketing and sale of the Thornwood Conference Center property in the town of Mount Pleasant.)
“I do a tremendous amount of data raising,” said William V. Cuddy Jr., executive vice president at CBRE Inc. On a raw, sleety day in late January, Cuddy was in his office in downtown Stamford, Conn., where about 45 commercial brokers work the northern metropolitan markets from Connecticut”™s Fairfield County to New York”™s Hudson Valley.
Raising data ”“ Cuddy has been identifying prospective buyers to target across several industries for a former IBM Corp. property being sold by a debt-burdened religious congregation ”“ is critical to the marketing campaign launched in October by a nine-person team in CBRE”™s Stamford office. The effort is led by Cuddy, CBRE Vice President Budd Wiesenberg and Senior Vice President Gene Pride, who heads the office”™s private capital group.
The distinctive property is the approximately 262-acre Thornwood Conference Center at 582 and 590 Columbus Ave. in the town of Mount Pleasant. It includes two parcels, one developed as a corporate office campus and an undeveloped 165-acre tract. CBRE prefers to sell them as a package, though they could be sold separately to different investors or end users.
Secluded from public view, the featured property on the developed parcel is a 364,000-square-foot conference center built for IBM in 1985. It includes a 300-seat auditorium, 350-seat dining room and 249 hotel or dormitory rooms. The massive green-roofed complex is a short walk from an approximately 46,000-square-foot office building used by administrative staff of the property owner, Legion of Christ Inc.
The Legionaries of Christ, as the international congregation of Roman Catholic priests is commonly known, is headquartered on the wooded, rolling Thornwood campus and has used the conference center to train and house seminarians studying for the priesthood. But the main building is only lightly used now and the Legionaries will vacate the premises when a buyer is found.
A religious nonprofit, Legion of Christ paid $33.7 million to acquire the property from IBM in 1996. The Legionaries proposed to develop the 165-acre parcel as the site of Westchester University, a Roman Catholic liberal arts institution. The owner in 2008 completed about three-fourths of the environmental quality review required by the state for the project, but abandoned the university plan because “the demand hasn”™t developed for it,” Legionaries spokesman Jim Fair said last fall when the property went on the market.
Founded in Mexico 72 years ago, the conservative order of priests has been rocked by scandal following the death in 2008 of its founder, the Rev. Marcial Maciel Degollado, who was found to have sexually abused boys and to have fathered children. Pope Benedict XVI in 2010 ordered a Vatican-directed reform of the Legionaries, who have seen “a little bit of a drop” in seminarians in the wake of the scandal, Fair said.
The scandal also exacerbated the order”™s financial problems. The Legionaries spokesman said the decision to sell the Thornwood property and another Westchester property, Our Lady of Mount Kisco Retreat Center, on a former residential estate in the town of New Castle, was primarily financial. The order wants to pay down its debt, which includes a $37.3 million mortgage secured in 2009 with Allied Irish Banks PLC on the New Castle and Thornwood properties.
The Legionaries last August hired CBRE to market the Thornwood property for sale. CBRE competed with other real estate brokerage firms for the contract.
The vendor selection process “was done confidentially,” Cuddy said. “I know there were multiple other firms, but I don”™t know who they were and how quickly they were eliminated.”
From August into October, the CBRE team assembled the elements of the marketing package ”“ among them, land surveys, topographical maps and building floor plans. A plane and pilot were hired for aerial photos of the property. Cuddy said it took six weeks to put together the offering memorandum. Replete with color photos, the 26-page booklet with bound laminate covers advertises the Thornwood Conference center as a “prime development opportunity.”
Cuddy would not disclose his firm”™s marketing costs or project budget, though he said CBRE had a cost advantage over some competitors. “We have the benefit of being able to do a tremendous amount of this work in-house,” he said.
An email blast announcing the offering was sent to more than 16,000 investors and developers. For email marketing, “Sixteen (16,000) is toward the upper range,” Cuddy said. The brokerage also packaged and mailed more than 1,000 hard copies of the offer memorandum.
“Initiating a campaign in the fourth quarter is usually the most difficult,” Cuddy noted, with holidays slowing business activity. “And in this year, the Sandy event.” Hurricane Sandy “was disruptive,” he said, with damaged properties claiming the attention of affected developers and owners in the region.
“We identified five or six key buckets, key constituencies” to target as prospective buyers, he said. They include academia, residential developers, the hospitality sector, senior living and congregate care companies, research and development, especially in medical science, motion picture production and corporations in the tristate region with use for a conference center. Customized emails and letters were sent to prospects in each constituent area.
Cuddy called the site a great location for a medical science-related user. “We”™ve been pleasantly surprised by the activity from that sector.”
“Also the development community is back.” After four years of little activity by developers in Westchester, “We”™ve had pretty strong interest from the development community.” The undeveloped parcel is zoned for single-family homes, he said.
Where the Legionaries”™ university died in planning, Cuddy envisioned an engineering school. “I think for us and the county, that would be the home run of all home runs.”
“We don”™t know who the end user is ultimately going to be, but we want to be sure we”™ve got our tentacles out for any of them.”
At the start of spring, the CBRE team was preparing for the next stage in marketing. The firm on April 2 will issue a call for offers from “interested parties that have engaged with us and registered with us their interest” in the Thornwood property, Cuddy said. Bids must be submitted to CBRE by April 23.
Cuddy said the offer call will be sent to prospects that number “north of 75 and south of 100. It”™s a healthy enough response that we”™re going to be giving them instructions for how we”™d like to see their offer.”
CBRE brokers have been available to give tours of the property for prospective buyers on Tuesday afternoons and Thursday mornings. But with the call for offers, prospects will have daily access to the property.
“This is a complex property,” said Cuddy. The undeveloped site includes 30 acres of wetlands within the New York City watershed that drain toward the Kensico Reservoir. “It takes a while for people to do their due diligence.”
“It may be a single sale or we may need to mix and match” buyers with separately sold parcels, he said. “But the market is going to tell us.”
“This property is so different from other product. This isn”™t an apartment building or a triple net-leased industrial building. This is a very unique existing conference center and an undeveloped piece of property. ”¦It could end up as many different things and with a wide range of users.”
“I think it”™s played out as we had hoped,” Cuddy said of the marketing campaign. “We have interest from a wide range of parties.”
“This is as engineered,” he said.
