BKM Capital Partners has completed the first close of its second institutional fund, BKM Industrial Value Fund II, L.P., with $135 mil in equity commitments as well as $25 mil in co-investments. The firm also currently has an additional $100 mil of soft circled equity commitments from European and U.S. institutional investors.
The fund is comprised of a mix of institutional investors including a U.S. College Endowment, U.S. State Pension Fund, a large U.S. Insurance Company, a German Trust, U.S. Fund of Funds, and a Canadian Family Office, according to Nima Taghavi, Chairman of the Board and Co-Founder of BKM Capital Partners.
“Our first institutional fund, which closed in 2016 and is fully invested, has the same strategy as this second fund of acquiring value-add multi-tenant industrial assets throughout major metro markets in the Western U.S.,” says Taghavi. “Fund I had a target net IRR of 15-percent, but is performing at a 19-percent net fund IRR. Additionally, we recently sold the first three assets in our Fund I, achieving gross IRRs on all three above 37-percent and multiples that ranged from 2.0-2.5.”
“We have an extremely strong pipeline of value-add investment opportunities, and this $160 mil closing allows us to immediately begin deploying capital,” BKM’s Co-Founder and CEO, Brian Malliet, notes. “By being strategic in our specific focus and operator execution platform, we will capitalize on the growing demand for properties that serve as ‘last mile’ delivery hubs for retailers and industrial users. This will maximize returns to our investors while we continue to fundraise over the course of the year.”
Fund II will invest exclusively in the acquisition, improvement and repositioning of distressed and undervalued light multi-tenant industrial assets in strong growth markets across the Western U.S. BKM has already acquired four assets for the Fund. These properties include Hughes Airport Center II in Las Vegas, Activity Business Center in San Diego, Inverness Business Park in Denver, and Expo Centre in Sacramento with two additional assets in escrow.
BKM Capital Partners currently has more than 27 properties under management totaling more than 4.9 msf and $626 mil AUM. Fund II is on track to reach its target of $300 mil by final close, planned for summer 2018.