BKM Capital Partners has completed the acquisition of Otay Mesa Industrial Portfolio, a six-property industrial portfolio that encompasses 14 buildings totaling 703.2k sf of space in San Diego’s Otay Mesa submarket. The multi-tenant industrial portfolio is currently 97% occupied by a diverse range of 44 different tenants with in-place rents approximately 24% below market value.
The Otay Mesa Industrial Portfolio is strategically located adjacent to the USA-Mexico international border, which is one of the busiest border crossings in the Western Hemisphere with an estimated $243 bil of goods exported across it each year. The six acquired properties include:
• Borderpoint Business Park, 6754, 6744 and 6794 Calle De Linea
• San Diego International Center, 8830 Siempre Viva Road
• Faraday Industrial Park, 2325, 2345, 2365, 2375 Michael Faraday Drive; 2350 Marconi Place
• Otay Business Center, 6987 and 6995 Calle De Linea
• Frontera Business Center, 2695 Customhouse Court
• Otay Crossing Business Park, 2340 Enrico Fermi Drive and 10025 Siempre Viva Road
“This strategic location provides tenants with unmatched access across the border, as well as direct access to the SR-905 and I-5 freeways,” explains BKM Capital Partners CEO and Co-Founder, Brian Malliet. “Major corporations such as Kraft, Sharp, Bose, General Dynamics and Camelback have already taken large positions in Otay Mesa in order to bolster access to key components of the supply chain. With the opening of the new Port of Entry to Mexico (Fwy-11) in late 2019, demand for high-quality industrial assets in the region will continue to grow, further placing upwards pressure on rental rates.”
“The nearly fully-occupied asset provides immediate stabilized cash flow while the diversification among tenants, staggered lease expirations, and varying unit sizes limit rollover exposure,” says Brett Turner, Director of Acquisitions at BKM Capital Partners. “Additionally, more than 60-percent of lease expirations are scheduled to expire in the first 3 years, which will allow BKM to quickly increase NOI by bringing rents up to market as leases roll.”
BKM plans to implement a series of cosmetic capital improvements to the property including new paint, landscaping and signage as well as structural improvements such as updated HVAC systems and new roofs.
Cushman and Wakefield represented the seller, Stockbridge Capital Group. The price was not disclosed.