Hot dog mogul Dick Portillo paid more than $24 million for an Oswego shopping center as he continues gobbling up real estate after selling his restaurant chain last year.

A venture of Portillos new real estate investment firm, Oakbrook Terrace-based RS Growth Management, bought Prairie Market Shopping Center for $24.25 million May 6, according to Kendall County property records. The seller was Birmingham, Mich.-based private-equity firm ValStone Partners.

With the deal for the 131,883-square-foot shopping center at US 34 and Fifth Street in far southwest suburban Oswego, Portillo has spent more than $98 million on Chicago-area real estate since selling Portillos Hot Dogs to Boston-based private-equity firm Berkshire Partners last year. The deal for the Oak Brook-based chain reportedly was worth close to $1 billion.

In November, Portillo bought 18 Portillos restaurants and two commissaries that hell rent to his former company, including two buildings in Arizona. He paid $74.4 million for the 18 buildings in the Chicago area.

It is unclear whether Portillo has bought any other Chicago-area properties, or how much he plans to invest in real estate. He did not return calls.

INCLUDES DEVELOPMENT LAND

Prairie Market is fully leased and includes additional development land where Portillo could accommodate more tenants, according to Ben Wineman, a principal at Oakbrook Terrace-based Mid-America Real Estate who represented ValStone in the sale.

ValStone took control of the shopping center through a deed-in-lieu of foreclosure deal in 2011, according to county records. The property was developed in 2007 by an Aurora-based venture led by Kenneth Baumann, county records show. A group of lenders reduced the principal on a $33 million construction loan to $20.1 million in 2009, records show.
ValStone acquired the shopping center at a discount to the remaining loan principal, said ValStone Senior Managing Director Gerald Timmis III.

Timmis declined to specify how much ValStone or paid or what it spent adding Pier 1 Imports, which leases 9,567 square feet, and DSW, which leases 16,000 square feet, on outlots in the center.

We bought it in the teeth of the financial downturn, Timmis said. A lot of things happened between 2011 and now. The markets turned around substantially, and we as owners were able to make the investments that were needed in order to bring in additional tenants.

We filled vacancies and developed some of the land, so we had accomplished what we set out to accomplish, which was to stabilize the property. There was a high level of interest (from buyers). Theres a lot of dollars chasing deals today.

LEASES IN PLACE

Other tenants include Dicks Sporting Goods, with 50,000 square feet, Best Buy, with 30,038, and Ulta, with 10,000. No leases expire until late 2017, according to a Mid-America flier, and the average remaining lease term is more than six years.

Mid-America will continue to handle leasing at the center. There is a Portillos restaurant just south of Prairie Market, but it is not part of the shopping center.

Although he was known best as a restaurateur, Portillo is an experienced developer and landlord.

Rather than selling and leasing back his restaurants, Portillo owned many of his restaurants buildings until selling the chain last year. In some cases he developed strip retail centers for his restaurants and other tenants. In December, Portillo told Crains he will continue to own the real estate for every new Portillos that opens.

Related Stories

article source