BKM Capital Partners Spends $24 Mil on AZ Industrial Portfolio

May 25, 2016

In a recent industrial buy out of Arizona, BKM Capital Partners has acquired the RREEF Tempe portfolio, a 305.5k sf, three-property portfolio in the growing submarket of Tempe. The assets were sold by Deutsche/RREEF and the CIM group on behalf of its client, an institutional investor. 

Bob Buckley and his team at Cushman & Wakefield represented the seller in the transaction. 

The portfolio, which consists of 16 multi-tenant light industrial buildings, was purchased for $24.1 mil in an off-market transaction. The deal came in at 34 percent below replacement cost. 

This portfolio was acquired as part of BKM Industrial Value Fund I L.P., which closed earlier this year and now has 14 assets totaling more than $155.1 mil in assets under management. 

“The Phoenix metro is one of the most highly sought after industrial regions in all of Arizona,” says Brian Malliet, CEO and Co-Founder of BKM Capital Partners. “The prime location of these assets coupled with the Tempe submarket’s historically high industrial occupancy will allow us to maximize returns for our investors over time.” 

The Tempe submarket currently boasts 93.4 percent occupancy, and has averaged a 91 percent occupancy rate since 1990. The RREEF Tempe portfolio is 87 percent occupied with in-place rents that are significantly below market, providing an opportunity for BKM to drive value and yields, according to Malliet. 

These acquisitions bring BKM’s holdings in the Phoenix region to 1.3 msf. The three-property portfolio acquisition includes: 

Twin Business Park 

Comprised of two buildings, Twin Business Park encompasses 120.5k sf of industrial space. Built in 1979 and renovated in 2011, the property is equipped with dock-high loading at every unit, which is extremely rare for a property in its size range, according to Brett Turner, Director of Acquisitions at BKM Capital Partners. 

In addition to its amenities, Twin Business Center is centrally located near Sky Harbor Airport, downtown Tempe, and downtown Phoenix, and provides convenient access to the I-10, I-143, I-202, I-101 and I-60 freeways. The property is located 1430-1454 and 1602-1638 West 12th Place in Tempe. 

Ash Business Center 

Ash Business Center encompasses 89.7k sf and is comprised of nine light industrial buildings. Situated along a major thoroughfare at the corner of the I-60 Fwy and Baseline Rd, at 4666-5010 South Ash Ave, the property is approximately one mile from downtown Tempe. 

Constructed in 1986, the property is equipped with 16’-18’ clear heights, 16 grade-level doors, 2.7 per 1,000 square feet parking, and 59 percent built-out office. BKM plans to enhance the interior and exterior of the building through a series of capital improvements that will further increase property value and drive rent growth for the asset.” 

Elliot Park 10 

Located at 1819-1849 West Drake Dr, at the intersection of the I-10 Fwy and Elliot Rd, Elliot Park 10 consists of five industrial buildings containing 95.3k sf of space. The property is currently 80.1 percent occupied with a major tenant, Elite Delivery, occupying 30k sf through September 2019. 

“This asset provides a strong opportunity to drive yields by aggressively leasing up vacant space,” says Turner. “Current in-place rents are $0.64 industrial gross, with competitive properties in the area garnering more than $0.82 industrial gross.” 

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BKM CAPITAL PARTNERS

 

Headquartered in Newport Beach, California, BKM Capital Partners is a fund manager specializing in the acquisition and improvement of value-add multi-tenant industrial properties in metro areas across the Western U.S. Combining a deep knowledge of this niche industrial product type with in-house capabilities including on-site property management, asset management, and structured financing, the firm continues to build on its proven track record, generating strong results with high levels of transparency and engagement for investors. 

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BKM MANAGEMENT COMPANY

 

BKM Management Company manages a portfolio of 8.2 million square feet of multi-tenant industrial properties for BKM Capital Partner’s private and institutional investors. With a focus on “boots on the ground” execution at the property level, BKM has in-house capabilities for both property management and leasing. The teams at the property level are focused on ensuring the tenants thrive and that the properties managed in the most efficient way.

 

 

 

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