Three Leaf Partners started as a way for Milwaukee Bucks player Pat Connaughton to diversify his career outside of basketball. Now, the growing real estate firm he co-founded is diversifying in another sense – by purchasing industrial buildings throughout the Midwest.
To date, the Milwaukee-based company known for its apartment developments has acquired industrial properties totaling around 700,000 square feet, Three Leaf Partners Chief Development Officer John Ford said in an email Monday. The firm implemented its industrial acquisition strategy in 2023, he said.
Three Leaf earlier this month paid $9.55 million for a four-building, single-tenant industrial portfolio totaling 228,494 square feet in Walworth, according to state records and Ford. The facilities at 100 and 820 Wisconsin St. and 837 and 850 Walworth St. are occupied by Novares, a global manufacturer in the automotive industry. The seller was an entity tied to Royal Oak Realty Trust in Rochester, New York.
That deal was the latest industrial property Three Leaf has acquired as it looks to complement its ground-up development of apartments and other commercial projects. The company looks for “high-quality, well-located, off-market or limited-market” industrial properties in the Great Lakes region and the Upper Midwest, Ford said.
“The industrial acquisition model provides diversification of product type, a different investment profile compared to other ground-up development opportunities and immediate cash flow in many scenarios for our investors,” Ford said.
As of March 2023, Three Leaf had around 125 investors, around half of which were professional athletes.
In addition to providing cash and diversification for those investors, Three Leaf’s sale-leaseback approach to industrial properties can also help other companies “unlock the value within their real estate,” particularly as financing is tight, Three Leaf Partners Vice President of Construction Alex Rexrode told the Business Journal earlier this year.
“They’re obtaining cash upfront that they can then reinvest into their business,” Rexrode said.
Other industrial acquisitions
Three Leaf has made multiple industrial acquisitions in the last year.
In October 2023, it paid $3.73 million for a 54,500-square-foot facility leased by Federal Tool & Engineering LLC at 2150 Stonebridge Road in West Bend, according to state records and Ford.
In November and January, Three Leaf paid a combined $12 million for two buildings totaling around 224,000 square feet at 201 and 400 Interpane Lane in Deerfield in Dane County, according to state records and the company’s website.
Ground-up development
At the same time, Three Leaf has continued developing projects from the ground up.
This year, the firm began construction on a $92 million Hartland development with 267 apartments and broke ground on a $70 million West Allis project with 247 planned apartments.
It also opened a $17 million building with 55 apartments in Milwaukee near Downer Avenue and secured city approvals for a $45 million project slated to add 153 apartments in downtown Wauwatosa.
The firm also made progress on a 130-acre mixed-use development in Slinger that’s set to include a Fireside Market convenience store as well as a hotel, a senior living facility and other commercial and light-industrial spaces.
Connaughton originally founded his real estate company as Beach House LLC and got his start flipping houses. He rebranded to Three Leaf Development in 2020 and speaks publicly about how his real estate career helps demonstrate that he’s “more than an athlete.”
Much of the firm’s growth has come since January 2022, when Three Leaf Development joined forces with the development arm of Milwaukee’s Catalyst Construction to form Three Leaf Partners.