Medline Industries has paid $44.7 million for the former Kraft Heinz headquarters in Northfield, Ill., where it will begin moving employees from Mundelein, Ill., later this year.
Kraft Heinz, which completed its relocation of 1,500 headquarters employees downtown to the Aon Center in January, picked up much of the tab.
The packaged-foods giant paid $47.2 million to buy out the seven years that remained on its lease with New York-based W.P. Carey, according to a public filing by the seller.
As a result, W.P. Carey appears to have cashed out of the 679,000-square-foot building at 3 Lakes Drive for almost $92 million. It bought the north suburban building from Kraft Foods Group for $72 million in 2013, a deal in which Kraft agreed to lease back the office building for at least 10 years.
Crain's first reported in October that Mundelein-based health care supplies maker Medline planned to move into Kraft Heinz's headquarters, but at the time it was unclear whether Medline was buying the property or would sublease it.
Medline bought the more than 70-acre property from W.P. Carey for $44.7 million on Feb. 29, Cook County property records show.
“Medline's business continues to thrive and the company has outgrown its current headquarters in Mundelein,” spokeswoman Stacy Rubenstein said in an email. “New space in Northfield is more than double the size of the current buildings in Mundelein and will allow for better efficiencies, more collaboration and long-term growth.”
More than half of Medline's 1,800 headquarters employees will move to Northfield later this year, she said.
As part of the deal, Kraft Heinz made a one-time rent payment of $25 million and paid a $22.2 million termination fee to the landlord, according to a Feb. 26 securities filing by W.P. Carey.
The deal allowed Kraft Heinz, which kept a co-headquarters in Pittsburgh and slashed its overall employee count when Kraft was combined with Heinz in mid-2015, to reduce its remaining rent obligation in Northfield. Medline acquired a recently refurbished corporate headquarters facility at a discount.
“It was a terrific facility for Kraft,” Kraft Heinz spokesman Michael Mullen said. “We were pleased with the sale and the agreement between us, Medline and the landlord. It was a win-win for all parties.”
A spokesman for W.P. Carey declined to comment.
Ned Franke, an executive vice president at Cushman & Wakefield who represented Kraft Heinz, did not return a call requesting comment.
Medline plans to use its three-building, 252,826-square-foot campus along Illinois Route 60 for the next years, housing several departments, warehouse space and a production facility, Rubenstein said. Cushman & Wakefield Executive Vice President Frank Franzese has been marketing the current headquarters to potential buyers, on behalf of Medline, but Rubenstein said its long-term fate is under evaluation.
Medline definitely plans to sell a three-building former Aon Hewitt office campus in Lincolnshire that it bought for $17.2 million in January 2015, before the Kraft Heinz space became available, Rubenstein said.
“The existing (Lincolnshire) properties needed to be redeveloped and they were going to have to build additional buildings over time to accommodate growth,” said Joe Learner, an executive vice president at Savills Studley who represented Medline in the Northfield acquisition and is listing the 43-acre Lincolnshire campus for sale.
“When the Kraft opportunity came along, it was the perfect size and it was a recently renovated building,” Learner said. “It's a fortunate chain of events.”
"Medline buys former Kraft Heinz HQ—with assist from Kraft Heinz" originally appeared on the website of Crain's Chicago Business.
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