Realty Income buys Lake Zurich health club for $46M

Sumit Roy has a new place to keep him in shape when he visits Chicagoland.

Realty Income, whose CEO is Roy, picked up a luxury fitness facility in the northern suburbs for $45.5 million. Health club chain Life Time Fitness sold its property at 400 North Rand Road in Lake Zurich to the real estate investment trust in a sale-leaseback deal that closed April 20, Lake County public records show.

“Sale-leasebacks continue to be a component of our capital-light strategy, supporting both our future growth opportunities and commitment to further strengthen the company’s balance sheet,” a Life Time spokesman said in an email.

Life Time is on track to complete about $300 million in sale-leaseback transitions by the end of 2023, the company said. Realty Income has a policy of not commenting on acquisitions.

The three-story, 148,000-square-foot facility opened as the chain’s 13th Chicago-area location in September, according to an announcement from Life Time. The Minnesota-based company has more than 160 clubs across the U.S. and Canada.

Realty Income is based in San Diego and specializes in free-standing, single-tenant commercial assets, including smaller properties like car washes, several of which the firm has bought in Chicagoland in recent months.

Like other net lease REITs, the firm benefitted from the “essential” status of many of their retail properties during the onset of the pandemic. The firm’s portfolio spans more than 12,200 commercial properties across the U.S., including more than 500 in Illinois.

Realty Income dropped more than $67 million on four Chicagoland retail and industrial properties in a deal with a CIM Group fund last month.

The REIT is also fond of Chicagoland grocery stores, spending $52.4 million on a Mariano’s store on the Near South Side in 2022 and paying $36.1 million for the chain’s Orland Park location in 2019. Realty Income also paid $116 million for three Mariano’s stores in Harwood Heights, Lake Zurich and Frankfort in early 2017 and acquired the Des Plaines Mariano’s in a separate 2017 deal for $34.6 million.

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