- Done Deals
BKM Capital Partners Confirms its Position as the Most Active Buyer of Light Multi-Tenant Industrial
NEWPORT BEACH, CA – BKM Capital Partners, an institutional fund manager with a niche focus on value-add, light industrial multi-tenant investments, has closed its strongest year yet with the acquisition of three multi-tenant industrial portfolios, bringing the firm’s total portfolio acquisitions in the past year to over $319 million spanning 2,000,000 square feet.
Just this week, the firm acquired a two-property portfolio consisting of four buildings totaling 99,187 square feet in San Diego, California.
“BKM is dominating the light multi-tenant industrial market, and we are widely recognized as the most active buyer of light multi-tenant industrial portfolios in the Western U.S.,” says Brian Malliet, Co-Founder and CEO of BKM Capital Partners.
“By acquiring assets that have already been assembled into portfolios, we are able to achieve geographic diversification and scale in markets where we continue to see opportunity for value creation on behalf of our investors.”
Most recently, the firm acquired three light industrial multi-tenant portfolios encompassing more than 769,411 square feet for a combined total of $138.7 million. Each of these acquisitions was acquired through BKM Industrial Value Fund II, L.P.
“We continue to focus on rapidly acquiring well-positioned properties in strong growth markets, while simultaneously ensuring that each acquisition is a precise fit with our niche investment strategy,” says Malliet.
“Through that strategy, we enhance value through extensive exterior capital improvements, strategic interior unit sizing and cosmetic improvements, and deliver an overall higher-end light industrial product for today’s new high-end manufacturing and warehousing users.”
The firm’s three newly acquired portfolios include:
$16.6 MILLION SAN DIEGO PORTFOLIO
BKM Capital Partners has acquired a two-property portfolio consisting of four buildings totaling 99,187 square feet in San Diego, California.
“We were able to acquire this portfolio below replacement cost and will be able to quickly drive down operating costs by leveraging the economies of scale created by our existing presence in the region,” says Turner who notes that BKM now owns 854,440 square feet throughout San Diego.
The portfolio is currently 96 percent occupied with rents that range from 20 percent to 39 percent below market rate.
“The near-full occupancy in this portfolio provides immediate cash flow while also giving our team an opportunity to bring rents up to market,” says Turner.
BKM plans to update both assets with creative exterior façades, new paint, modern landscaping, and upgraded tenant and monument signage, among other upgrades.
The properties are located at:
Del Abeto Commerce Center, 6352 and 6354 Corte del Abeto, Carlsbad, California
Waples Industrial Centre, 9540 and 9550 Waples Street, Sorrento Mesa, California
Mark Avilla at Cushman & Wakefield represented the seller, 3G Properties. BKM represented itself in the transaction.
$49 MILLION SOUTH BAY INDUSTRIAL PORTFOLIO
BKM has also acquired the South Bay Portfolio, which consists of five light industrial multi-tenant buildings totaling 221,651 square feet in Fremont, California.
Strategically located off Interstate 880, the assets provide excellent access to East Bay markets to the north, San Jose to the south, and Palo Alto over the Dumbarton Bridge to the west, according to Turner.
“Fremont has quickly emerged as the manufacturing hub of the Bay Area, which will drive long-term demand for these properties,” says Turner.
“Tenants are migrating to the region to take advantage of comparatively lower rates while maintaining a strong connection to the Silicon Valley and East Bay. This portfolio will benefit from the ongoing migration and evolution of traditional manufacturing facilities.
"As technological advances make the next wave of manufacturing more efficient, tenants are requiring less space, therefore, driving demand for smaller, light industrial multi-tenant assets.”
The property is currently 94 percent occupied by a diverse range of 13 different tenants with unit sizes ranging from 4,800 to 42,500 square feet.
“The diversification of tenants allows us to limit rollover exposure as no single tenant accounts for more than 20 percent of the property,” says Turner.
“Rents across this portfolio are also currently 20 percent below market value. We will be able to quickly bring rents up to market as 50 percent of the leasable space expires within the first three years.
"We will also be able to capitalize on the increased rent growth throughout the region as more than 9.0 million square feet of industrial has or is currently being purchased and demolished by the tech giants such as Facebook, Apple, Google, and Amazon, which are building campuses in the place of existing industrial product.
" As a result, vacancy throughout Fremont continues to tighten and there is very limited new light industrial multi-tenant development planned over the next decade because of the shortage of land.”
According to Turner, BKM plans to implement new paint, landscape, signage and spec tenant improvements to modernize the property, while also addressing deferred maintenance.
The properties are located at 48430- 48490 Lakeview Blvd., 48500-48560 Fremont Blvd., 48400 Fremont Blvd., 47745-47787 Fremont Blvd., and 47703-47737 Fremont Blvd. in Fremont, California.
Eastdil Secured represented the seller, Stockbridge. BKM represented itself in the transaction.
$73 MILLION WEST COAST INFILL PORTFOLIO
BKM has acquired a portfolio of four properties totaling 27 buildings and 448,573 square feet across California and Arizona.
“This was a rare opportunity to acquire a highly functional, geographically diverse portfolio of scale well below replacement cost and strategically positioned to perform over the next several years,” explains Brett Turner, Managing Director of Acquisitions at BKM Capital Partners.
“All assets in this portfolio are located in top-performing industrial infill submarkets and alongside key transportation corridors, making them attractive for last-mile delivery options and supporting long-term tenant demand.”
The portfolio is currently 87 percent occupied with in-place rents 15 percent below market value. BKM plans to implement a series of exterior and interior cosmetic improvements to the properties including the addition of multi-tone paint, the modernization of monument and tenant signage and landscaping, and addressing any structural deferred maintenance.
“We will be able to quickly stabilize the property by leasing remaining vacant space, as well as bringing rents up to market,” says Turner. “By implementing a comprehensive capital improvement plan, we will also be able to enhance the long-term value of the assets and further attract high-quality tenants.”
In addition to these benefits, BKM will also be able to increase cash flow by amassing economies of scale, according to Turner.
“Each property is located approximately five minutes from a BKM property management office, which allows us to scale resources, ultimately driving down operating costs, increasing NOI across the portfolio, and maximizing returns to our investors,” he explains.
The four properties are located at:
Fullerton Business Center, 4010-4080 North Palm Street in Fullerton, California.
Ramona Business Center, 12901-13177 Ramona Boulevard in Irwindale, California.
Mowry Business Center, 39975-38995 Cherry Street in Newark, California.
Baseline Business Center, 230-245 Baseline Road in Tempe, Arizona.
Mark Detmer, Bo Mills, and Ryan Sitov at JLL represented the seller, Global Logistics Properties (GLP). BKM represented itself in the transaction.
BKM Capital Partners, currently raising their second institutional fund, was founded in 2013 by Brian Malliet and Nima Taghavi. Headquartered in Newport Beach, California, BKM Capital Partners is a fund manager specializing in the acquisition and improvement of value-add light industrial multi-tenant properties in metro areas across the Western U.S.
Additional information is available at www.bkmcapitalpartners.com.