Representatives for a joint venture of two national real estate firms on Wednesday signed a purchase agreement with The Brewery Works Inc. to buy the 32-acre Schlitz Park office complex near downtown Milwaukee.
The joint venture is comprised of TPG Real Estate (the real estate platform of San Francisco and Fort Worth, Texas-based TPG) and Detroit-based Crestlight Capital.
[caption id="attachment_138511" align="alignright" width="377"] Schlitz Park gateway from West Cherry Street.[/caption]
The Brewery Works is the development and ownership group led by the Grunau and Sampson families who transformed the former Schlitz brewery into the Schlitz Park office complex, located just north of downtown Milwaukee, which includes five office buildings, three parking structures and a chilled water plant. They bought the complex in 1983 after the brewery was shut down in 1981.
The sale of Schlitz Park to the TPG-Crestlight joint venture is expected to close in mid-January. Terms of the deal were not disclosed.
The Schlitz Park buildings comprise nearly 800,000 square feet of office space that is almost fully leased to a roster of 39 tenants, including the Milwaukee Bucks, UMB Fund Services, Infosys, AECOM, Badger Liquor, HSA Bank, National General Insurance, and Trusted Media Brands. There are about 4,200 people working at the Schlitz Park tenants, in total.
The two-story, 508,168-square-foot River Center building, the largest at Schlitz Park, has an assessed value of $35.6 million, according to city records. The two-story, 45,500-square-foot Key House building in the complex has an assessed value of $3.5 million. The two-story, 92,039-square-foot Bottlehouse A building has an assessed value of $7.7 million. The two-story, 36,986-square-foot Bottlehouse B building has an assessed value of $5.5 million. The combined assessed value of those buildings in the Schlitz Park complex is about $52.3 million.
In August, Schlitz Park was listed for sale. More than 90 potential buyers expressed initial interest in learning more about the property, said Gary Grunau, Schlitz Park co-developer.
"This whole (sale) process really has shown us how far Milwaukee has come since we started (Schlitz Park)," Grunau said. "People want to be here."
Crestlight and TPG Real Estate's acquisition of the property is the first for the joint venture, which was formed "to acquire unique, high-quality office properties in select cities across the Midwest," according to a news release on the deal. The firms say the joint venture will leverage their combined experience managing and investing in office properties across the country.
“Based in the Midwest, we gravitate towards the energy that exists across many of the region’s cities,” said John Coury, principal at Crestlight. “Schlitz Park is a perfect example of the type of dynamic asset in which the joint venture will seek to invest. Along with our partners at TPGRE, we are honored to continue the strong legacy that existing ownership preserved while managing a property that embodies the heartbeat and history of Milwaukee as a brewery town. We are excited to further enhance the property through continued investment in tenant spaces, common areas, and new amenities that will serve as gathering places for the campus’ active community.”
Upon closing of the transaction, Crestlight and TPG Real Estate say they expect to hire a national property management firm for Schlitz Park, while "leveraging the continued services of existing property staff."
[caption id="attachment_327757" align="alignright" width="317"] Gary Grunau[/caption]
After a significant decline in occupancy at Schlitz Park during the Great Recession, The Brewery Works invested $30 million in upgrades to revitalize the campus, make it more appealing to young workers and help attract new tenants. Occupancy rose and peaked at 100 percent this summer.
Now, after 35 years, The Brewery Works is prepared to pass the Schlitz Park property on to a new ownership group.
“It was just time," said Grunau, who turns 80 in April. "We’re excited about the future of Schlitz Park and what the new ownership team will do for downtown Milwaukee. They are going to take (Schlitz Park) from where we are at and keep it going. We're very happy with the people we have met from Crestlight and TPG."
The Brewery Works has been talking to three or four potential new tenants for Schlitz Park that could take space vacated by some tenants that want to downsize, Grunau said. The complex also has plenty of land for additional development, he said.
The Brewery Works will be before the city’s Redevelopment Authority today requesting a change in the lease for the ManpowerGroup headquarters parking structure to the new ownership group for Schlitz Park. The four-story, 280,000-square-foot ManpowerGroup headquarters was developed by Grunau’s group, but was sold separately last year for $66.5 million to Chicago-based real estate investment firm Bentall Kennedy and Warba Bank, a Kuwaiti public shareholding company. The parking structure attached to the ManpowerGroup headquarters building via skywalk was not part of that deal. It is owned by the city and leased by The Brewery Works.
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