For thousands of Chicagoans, the North Center studios of WGN TV were a rite of passage, where they flocked as kids to be in the audience at "Bozo's Circus" and have a chance at playing the Grand Prize Game. Those studios now have a new landlord in what is arguably Chicago's first splashy real estate deal of 2017.

A JV of R2 Cos and Polsky Holdings acquired the 113k SF studios and the 10 acres it sits on in a $22.25M sale-leaseback. WGN TV, now a cable superstation, has two five-year lease extension options in the leaseback.

The sale wasn't unexpected. Tribune Media announced last March that it would look at selling real estate holdings and other assets after it posted a $381M loss in Q4 2015. A JV of CIM Group and Golub purchased Tribune Tower for $240M last August, and with Tribune Media vacating the building this year for new offices at 303 East Wacker, Tribune Tower becomes a must-watch adaptive reuse play.

Redevelopment of the WGN studios site is a long-range goal of R2 Cos managing principal Matt Garrison. He said the deal is a covered land play. R2 and Polsky paid $50/SF for the land, but the basis drops significantly because of cash flow from the lease. Garrison called WGN a "mission critical" studio facility with solid cash flow, but he ultimately views the deal as a potential site for residential, retail or Class-A industrial development.

R2 is entering North Center at a good time. The WGN studios are across the street from Bradley Business Center, which Hansen Realty and Centrum Partners have successfully repositioned.

This is the second JV between R2 and Polsky. The two bought Milwaukee's 1.1M SF downtown post office in October 2015 and are drafting a plan to repurpose it.