BKM Capital Partners, an institutional fund manager with a niche focus on value-add, light industrial multi-tenant investments, has surpassed $1 billion in assets under management with the acquisition of Pacific Business Center, a 898,389 square-foot, 13-building light multi-tenant industrial property in Henderson, Nevada. The industrial complex was acquired for $111,250,000 and is BKM’s largest acquisition to date.
“Reaching $1 billion in assets under management is a major milestone for BKM that speaks to the strength of our ongoing investment strategy,” says Brian Malliet, Co-Founder and CEO of BKM Capital Partners. “We have been bullish on acquisitions over the past two years, consistently acquiring high-quality assets at pricing that remains well below replacement cost. In doing so, we have established ourselves as one of the most active buyers of multi-tenant industrial product in the U.S., while simultaneously creating tremendous value for our owned portfolio, which now spans more than eight million square feet throughout the Western U.S.”
Malliet attributes this success to the firm’s niche strategy – BKM is one of the only institutional fund managers that focuses exclusively on multi-tenant industrial in the Western U.S.
“This is a product type with tremendous potential for long-term return on investment,” says Malliet. “By assembling a substantial portfolio at this point in the cycle, we are able to leverage today’s favorable market fundamentals to create strong NOI portfolio-wide, while also executing on proven strategies to increase property values for the long term.”
Constructed between 1996-1998, Pacific Business Center is an institutional grade asset that has received over $12.4 million in capital improvements since 2010, which include high quality HVAC and EVAP systems, LED lighting, upgraded office finishes and new exterior paint. Additionally, the asset offers top of the line industrial features such as 24’-28’ clear heights, ESFR sprinkler systems and new TPO roofs, according to Brett Turner, Managing Director of Acquisitions at BKM Capital Partners.
“It is rare to find a property of this scale and caliber in the Las Vegas metro area,” says Turner. “Based on a lack of developable land and rising construction costs, there is a significant lack of industrial supply in the Henderson market, making this a strategic acquisition that will benefit from strong tenant demand for many years ahead.”
Turner adds that the Las Vegas metro’s continued economic growth and declining industrial vacancy will further drive tenant demand for the asset.
“At the close of 2018, overall vacancy in the Las Vegas metro was 2.6 percent,” says Turner. “This represents an approximate 15 percent annual increase in occupancy since 2014. We expect this trend to continue as more companies migrate to Nevada based on its low cost of labor compared to surrounding states such as California and Arizona.”
Pacific Business Center is currently 85 percent occupied with a diverse mix of high-quality tenants. In-place rents are projected to be 20 percent below market rate, giving BKM an opportunity for immediate value creation, according to Turner.
“By acquiring an asset that was institutionally owned, we benefit from a high-quality product that has been well-maintained and is positioned for growth,” explains Turner. “Our plan is to implement a series of improvements that will support strategic rent growth as we bring the property to full occupancy.”
The properties are located at:
1045-1175 American Pacific Drive
160-194 Gallagher Crest Road
1060-1110 Mary Crest Road