Fund Manager Nabs Four Business Parks

APRIL 14, 2016 | BY LISA BROWN

PHOENIX—With these acquisitions, the firm now has nearly 1 million square feet under management in the Phoenix market, encompassing 11 assets in the first fund with four more assets in escrow at roughly $25 million combined.

PHOENIX—Rose Garden Business Park, Metro Industrial Center and 4100 Broadway in Phoenix, as well as the Arizona Corporate Center in Chandler, AZ have been acquired. BKM Capital Partners acquired the four industrial business parks encompassing 442,173 square feet in the metro area for a total consideration of $34.45 million in a portfolio transaction from a Los Angeles-based private owner.

“Arizona ranked as the number one state for future job growth by Forbes last year and Phoenix is at the center of that. The growing population of residents and employers indicate an opportunity for active value creation over the next two to three years,” says Brian Malliet, CEO and co-founder of BKM Capital Partners. “We were able to acquire the assets well below replacement costs and below historical peak pricing.”

With these acquisitions, the firm now has nearly 1 million square feet under management in the Phoenix market, encompassing 11 assets in the BKM Industrial Value Fund I with four more assets in escrow at roughly $25 million combined. The firm, which recently announced the final close of its debut institutional fund, now has more than $150 million in assets under management.

“As opposed to a slowdown, we are nurturing a growing pipeline of off-market investment opportunities, and have already invested roughly 50% of our equity in assets just six weeks after the Fund closed. The off-market acquisition of these four high-quality properties in the dynamic Phoenix market will add deep value to our growing portfolio,” Malliet says.

The combined occupancy of the four assets BKM acquired is 69%, providing a strong opportunity for value creation, according to Brett Turner, director of acquisitions for BKM Capital Partners, who was responsible for sourcing and acquiring the deal.

“We plan to implement significant interior and exterior improvements to attract new tenants and retain existing tenants, ultimately pushing rents up to market rate. In addition, BKM will build out spec tenant improvements in vacant suites to demonstrate the potential of the space in each asset. By improving each property, we will be able to attract strong, quality tenants that will deliver deep value and strong NOI over time,” says Turner.

Planned upgrades include new landscaping, paint, signage, roof, HVAC and asphalt updates as needed.

Malliet tells GlobeSt.com: “The Phoenix market is poised for significant job and economic growth, and presents a strong opportunity to deliver long-term stabilized returns to our investors.”

BKM is an institutional fund manager with a niche focus on value-add, multi-tenant light industrial.