BKM Capital Partners, an institutional fund manager with a niche focus on value-add, multi-tenant industrial investments, has acquired $175+ million in properties through its current “largest in market” acquisition strategy.
The firm most recently acquired Hughes Airport Center, a 670,902 square-foot, 13-building multi-tenant industrial complex in the Las Vegas Airport submarket in Nevada. This transaction closed on the heels of the firm’s recently announced acquisition, through its programmatic joint venture with the Canyon Catalyst Fund, of one of the largest multi-tenant industrial properties of its kind in Silicon Valley – a 14-building, 352,280 square-foot property in the Bayside Business Park in Freemont, California. Together, these acquisitions total more than a million square feet of multi-tenant industrial product.
“Our ‘largest in market’ acquisition strategy is serving our investors well,” says Brian Malliet, Co-Founder and CEO of BKM Capital Partners. “By acquiring the largest multi-tenant industrial assets in the markets we serve, we are able to devise units to match market demand, which translates directly into high occupancy, resulting in strong stabilized returns for our investors. We continue to seek out light multi-tenant industrial assets throughout the Western U.S.”
Malliet notes that BKM’s most recently acquired asset – Hughes Airport Center – was acquired at a significant discount to replacement cost.
“This is a best-in-class asset, the largest of its scale in the Las Vegas Airport submarket and our firm’s biggest transactions to date,” says Malliet. “The ability to acquire this once-in-a-decade opportunity speaks to our team’s tremendous market knowledge, local network, and expertise in the light multi-tenant industrial sector.”
Hughes Airport Center is the premier multi-tenant industrial property in the region, and is strategically positioned to benefit from ongoing growth in Las Vegas, according to Malliet.
“The property is poised to continue to attract strong tenant demand and serve as a last mile delivery option based on its unique position directly across from the airport and one block from the Las Vegas strip,” Malliet notes.
Situated between McCarran International Airport and the I-215 freeway, the multi-tenant industrial complex consists of 13 buildings. The complex is currently 86.6 percent leased to a diverse range of tenants across multiple industries.
“The diversification among tenants at this property limits tenant rollover exposure, which adds to the long-term value of the asset,” says Malliet. “Further, when we were initially awarded the acquisition, the property was 79-percent occupied. We signed five new leases totaling 54,738 square feet prior to close of escrow. Our ability to increase occupancy in such a short period of time demonstrates the success of our hands-on management platform, which is a key differentiator for our firm.”
BKM manages all of its assets completely in-house – a rare find in an institutional fund manager, and one that offers BKM a strategic competitive advantage, according to Brett Turner, Director of Acquisitions at BKM.
“We find distressed assets in strong growth markets where we can drive value through property improvements and integrated, in-house property management,” says Turner. “Because we are so active in Las Vegas, we will be able to immediately fix operational inefficiencies as well as invest a significant amount of new capital at the property, lease remaining vacant space, and increase NOI rapidly.”
BKM owns two multi-tenant parks in Las Vegas, providing an opportunity to amass economies of scale and drive down operating costs. The firm plans to implement a series of cosmetic interior and exterior upgrades to modernize Hughes Airport Center, such as reconfiguring dysfunctional office units into marketable industrial units totaling 27,771 square feet.
“Our strategy to reconfigure this space into highly-functional multi-tenant industrial units will allow us to capture the growing demand for logistically integrated industrial assets as the demand for same day delivery continues to grow in major markets across the West,” says Turner. “In doing so, we will be able to quickly lease remaining vacant space, while steadily increasing rents as the Las Vegas market matures.”
Hughes Airport Center II is a highly functional Class A industrial complex with clear heights ranging from 16-24’, 44 dock-high loading doors, and 59 grade-level loading doors. The property is located at 420-770 Pilot Road and 711-839 Pilot Road in Las Vegas, Nevada.