The Chicago office of billionaire and former U.S. Secretary of Commerce Penny Pritzker helped a suburban manufacturer cash in on the real estate it has long occupied.
An affiliate of Pritzker’s PSP Partners dropped $19.5 million on the 173,000-square-foot Thermoflex plant at 1535 South Lakeside Drive in Waukegan, Lake County records show. The seller was Thermoflex, a company that has operated locally for more than 60 years and designs and produces automotive accessories such as all-weather floor and cargo mats and exterior trims.
The deal appears to be structured as a sale-leaseback, in which Thermoflex will pay rent to Pritzker’s firm in a long-term lease in exchange for gaining access to liquid capital through selling the real estate. Public records tied to a mortgage recorded on the property in late December show Prtizker’s company inked a lease with Thermoflex the same time the sale closed. Neither PSP Partners nor Thermoflex returned requests for comment.
For industrial real estate owner-occupiers in need of cash flow, now may be as good a time as ever to explore a similar transaction. Vacancy rates for industrial assets in the Chicago area dropped to an all-time low of less than 5 percent in the third quarter last year, pushing the sale prices of property upward, according to Colliers.
Developers have responded by starting a record number of projects in the third quarter, swelling the total pipeline to more than 35 million square feet.
In 2019, Thermoflex also signed a 220,000-square-foot lease for a new industrial facility developed by the firm Bridge Industrial, adjacent to its existing property Pritzker’s firm bought on Lakeside, according to published reports.
Other recent leaseback deals include Chicago-based Oak Street Real Estate Capital’s $53 million purchase of a Skokie auto parts manufacturing facility occupied by Tenneco, a company recently bought out by Apollo Global Management for $7.1 billion, CoStar News reported.
Oak Street also agreed to a leaseback to Bally’s, the newspaper printing site in Chicago’s River West neighborhood that’s set to be redeveloped by the gaming and entertainment company into the city’s first casino. Oak Street’s purchase for $500 million followed Bally’s $200 million purchase from Nexstar Media Group, and will give the casino developer cash to help fund the $1.7 billion project without forcing immediate debt.
Pritzker is worth $3 billion, according to Forbes, and is part of the Pritzker family that counts 11 billionaires among its members, including Illinois Governor J.B. Pritzker. Penny Pritzker served as commerce secretary for the Obama administration from 2013 to 2017.
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