Portillo-backed firm pays $139 million for retail buildings
Crains Chicago | Article by Ryan Ori - March 09, 2016
A new Chicago venture whose investors include hot dog baron Dick Portillo paid $139 million for 48 single-tenant retail buildings, including seven in the Chicago area.
BlueRoad Ventures said it bought the portfolio last month from Brauvin Net Lease, a privately held real estate investment trust managed by Chicago-based Brauvin Real Estate.
It was the first acquisition for BlueRoad, an asset management and investment firm launched in the fall, said Managing Partner Tim Farrell.
“The diversity of the tenant mix and locations offers long-term value for our investors,” Farrell said. “We’re aggressively growing our portfolio and looking for opportunities throughout the country.”
BlueRoad is seeking retail and office properties with long-term leases in place and large vacancies to fill, Farrell said. The company, whose investors are wealthy individuals and family offices, also has private-equity and financial and accounting services arms, Farrell said.
Farrell is a longtime real estate investor and developer whose former firm was called Farrell Office Properties. His projects included converting the Garland Building at 111 N. Wabash Ave. to office condominiums. Although that project and similar ones struggled during the recession, Farrell said 97 percent of the Garland space has now been sold, and “our investors did extremely well on the deal.”
BlueRoad’s chairman is Portillo, who will invest in some deals, as he did in the acquisition from Brauvin, Farrell said.
Portillo has been active in real estate investments since selling the Portillo’s Hot Dogs chain to Boston-based Berkshire Partners for nearly $1 billion in 2014.
In late 2014, a Portillo venture paid $74.4 million for 18 Chicago-area buildings leased to his former chain, and also acquired two other Portillo’s buildings in Arizona.
In other real estate investments, Portillo paid more than $24 million last year for an Oswego shopping center and sold a Hinsdale home for more than $3.8 million after he and his daughter-in-law bought it for almost $2 million and rehabbed it.
Tenants in the Chicago-area properties acquired by BlueRoad are Burger King franchises at 2000 W. 47th St. in Chicago and 11740 S. State Route 59 in Plainfield; private elementary and middle school operator Chesterbrook Academy, in buildings at 1571 and 1587 Oswego Road in Naperville; Steak ’n Shake at 2121 Willow Road in Glenview; a Fresenius Medical Care dialysis facility at 2601 S. Harlem Ave. in Berwyn, and National Tire & Battery at 1360 Ring Road in Calumet City.
Other tenants in the more than 1 million-square-foot portfolio include CVS, Advance Auto Parts and Tractor Supply, according to BlueRoad. The buildings are in 18 states.
The average remaining lease term is more than 10 years, Farrell said.
“We have the capital and the flexibility to pursue a range of deals in the office and retail asset classes,” Farrell said. “We will absolutely look at one-off deals. That’s going to be our bread and butter.”
Brauvin, meanwhile, plans to acquire about $200 million in net-leased retail properties for its 17th fund, President James Brault said.