BKM Capital Partners’ Debut Fund Acquires 18th Industrial Business Park Asset For $19.8 Million
Tukwila, Wash. (October 26, 2016) – BKM Capital Partners, an institutional fund manager with a niche focus on value-add, multi-tenant light industrial investments, has acquired Andover Executive Park, an eleven-building multi-tenant industrial business park encompassing 181,163 square feet in the Kent submarket of Tukwila, Washington. The asset was acquired in an off-market transaction for $19.8 million.
This acquisition comes on the heels of BKM’s acquisition of Tukwila Commerce Center, which is located adjacent to the property and marks the firm’s 18th acquisition in its debut fund, according to Brian Malliet, CEO and Co-Founder of BKM Capital Partners.
“The Kent industrial submarket is one of the most dynamic in the entire U.S.,” says Malliet. “Currently ranked as the third largest industrial market in the country, Kent’s quality market fundamentals continue to dominate the region. Industrial vacancy remains extremely low, net absorption is positive and rents continue to steadily rise. We recognize the deep value potential in this market, and plan to capitalize on the momentum of this rapidly growing region through increasing our investment throughout the Seattle area.”
Malliet explains that BKM’s strategy is to acquire value-add multi-tenant light industrial assets in strong growth markets across the Western U.S., such as the Seattle metro area, that provide a tremendous opportunity for value creation.
“Our hyper focus on multi-tenant light industrial product allows us to identify, source, and acquire properties that will ultimately deliver the best yields to our institutional investment partners,” says Malliet. “Based on this niche focus and our deep knowledge of the market, we were able to acquire the Andover Executive Park well below peak prices and replacement cost, providing a significant opportunity for generating a strong ROI.”
According to Brett Turner, Director of Acquisitions at BKM Capital Partners, the property is currently 90-percent occupied with current rents below market value by 10 to 30 percent.
“The strong in-place occupancy provides immediate cash flow, and the below market rents create an opportunity to grow income as leases roll,” says Turner. Further, he notes that the in-place occupancy also speaks to the strength of the asset’s ability to remain highly occupied, despite its lack of key cosmetic upgrades.
BKM Capital Partners plans to implement a series of capital improvements to the 1974 business park, including upgrades to the buildings’ roofs, exterior paint, landscaping, facades and signage, as well as adding creative exterior accents and introducing interior common areas.
“Through these capital improvements, we will be able attract and retain high quality tenants, drive rent growth for the property over time, and add to the long-term value of the asset,” says Turner.
Turner notes that the property will also benefit from its proximity to BKM’s other asset in the area, Tukwila Commerce Center.
“We will use our existing presence and operating platform in the Seattle metro to lease the remaining vacant space, decrease operating costs and increase NOI,” he says. “This integrated approach will allow us to immediately reduce operating expenses by more than ten percent at the property.”
Andover Executive Park is strategically located off the intersection of the I-5 and 405 freeways at 400-774 Industry Drive in Tukwila, Washington. CBRE represented the seller, ScanlanKemperBard (SKB), a privately held real estate merchant bank based in Portland, Oregon.