BKM Capital Partners acquires industrial asset for $58M
Posted June 21, 2016 by AZRE
BKM Capital Partners, an institutional fund manager with a niche focus on value-add, multi-tenant light industrial investments, acquired Tempe Commerce Park, a 535,976 square-foot, five-building property in Tempe in a limited marketing transaction for $58 million.
This acquisition, which is BKM Capital Partners’ tenth acquisition in the Phoenix metro area this year, was acquired through BKM Industrial Value Fund I L.P., according to Brian Malliet, CEO and co-founder of BKM Capital Partners.
“The Tempe submarket continues to demonstrate strong economic drivers and is currently one of the most dynamic submarkets in the Phoenix metro,” says Malliet. “Job and housing growth are on the rise, providing a significant opportunity to create value for our investors. This submarket is also experiencing a significant demand for back office users, which is further driving up lease rates in the business parks throughout the region.”
Malliet explains that Tempe Commerce Park was acquired at 30-percent below replacement costs and is currently 100-percent occupied.
“The asset was originally brought to market at 85-percent occupancy, and prior to the acquisition, occupancy was increased to 100-percent,” says Malliet. “This lease-up will drive distributable cash flow and reduce the cost of debt for the property, increasing overall yields to our investors.”
“Our ability to source and acquire these properties below replacement cost is a key to implementing our strategy of acquiring value-add opportunities, which we can enhance though capital improvements, ultimately driving up property value over time,” Malliet adds.
This acquisition brings BKM Capital Partners’ holdings in the region to just under two million square feet.
According to BKM Capital Partners’ Director of Acquisitions, Brett Turner, Tempe Commerce Park is located in the heart of Tempe within the “Silicon Desert submarket,” in close proximity to major transit corridors, including the I-10, with in-place rents well-below market value.
“The asset’s prime central location and below-market rents will provide a tremendous opportunity for long-term growth,” says Turner. “As the current tenant leases roll, we will be able to attract high quality tenants who are willing to pay a premium for the property’s desirable location and the updated amenities that BKM is planning.”
The property was purchased from Invesco, on behalf of its client, Ohio Police and Fire. Mark Detmer and Bo Miles at JLL represented the seller in the transaction.
“Invesco’s integrated approach and proactive management of this institutional quality asset was a major attraction to us,” adds BKM Capital Partners’ Director of Marketing and Operations Barbara Rea. “Further, Invesco was a pleasure to work with. The team’s attention to detail and ability to move quickly contributed to a seamless transaction, and we look forward to working with them on future transactions.”