BKM Capital Partners, an institutional fund manager with a niche focus on value-add, multi-tenant light industrial investments, has acquired Valley Business Center, a 203,231 square-foot, five-building.
February 21, 2019 — BKM Capital Partners, an institutional fund manager with a niche focus on value-add, multi-tenant light industrial investments, has acquired Valley Business Center, a 203,231 square-foot, five-building multi-tenant light industrial property in Denver, Colorado. The industrial complex was acquired for $24.3 million.
“The central Denver industrial submarket has consistently outperformed many of Denver’s other major submarkets with historically low vacancy rates and high demand,” says Brian Malliet, CEO and Co-Founder of BKM Capital Partners. “In fact, the industrial vacancy rate in central Denver is 3.6 percent, which is well below the metro average of 6.1 percent. The property is also strategically positioned between downtown Denver, Cherry Creek and the Denver Tech Center, the largest office submarkets in the city with projected employment rates in the metro region set to increase by 26-percent by 2023.”
Malliet explains this asset will benefit from this ongoing growth in the region and that this acquisition is consistent with the firm’s strategy to acquire large-scale multi-tenant industrial properties in high-growth markets where it can amass economies of scale and drive returns for investors through its comprehensive value creation strategy.
“We target best-in-class markets where we have a growing presence and assets that are aligned with our niche approach and core investment thesis to enhance value through strategic improvements, leasing, and integrated hands-on management,” says Malliet. “We acquired Inverness Business Park, a 215,268 square-foot, eight-building multi-tenant industrial asset in Denver last year. The addition of Valley Business Center will expand our portfolio as we continue to seek out opportunities in the region and allow us to immediately drive down operating costs.”
Constructed in 1983, Valley Business Center is an institutional-grade asset that features top of the line industrial features such as concrete tilt-up wall construction, 16-20’ clear heights and ESFR sprinkler systems, however, it lacks key cosmetic upgrades and modernization, according to Brett Turner, Managing Director of Acquisitions at BKM Capital Partners.
“Because of this, we were able to acquire the asset below replacement cost and plan to implement a series of upgrades to the property, which include modernizing the building facades with a multi-tone paint scheme and upgraded materials, uniform landscaping, and revamped project standard signage and addressing, among others,” says Turner. “These strategic upgrades will allow us to increase the long-term value of the asset.”
Valley Business Center is currently 100 percent occupied and features 20 different tenants including FedEx Kinkos, Colorado Lottery, Black & Decker and Municipal Energy Systems to name a few.
“The strong in-place occupancy at the property provides immediate stabilized cash flow and the diversification of tenants limits rollover exposure from any one single tenant,” explains Turner. “The staggered rent rolls also allow us to capitalize on ongoing rent appreciation over the next few years as the Denver market continues to mature and the lack of available land for new development continues to drive demand to the property.”
BKM Capital Partners acquired Valley Business Center from Mountain West Industrial Properties. Murray Platt, Doug Viseur, and Daniel Close at CBRE represented the seller in the transaction. BKM represented itself.
The property is located at 700 West Mississippi Avenue in Denver, Colorado near a strong network of surrounding highways including Highway 85 and Denver’s main artery, Interstate 25.