BKM Capital Partners Hits Milestone With $111M Las Vegas Buy

The purchase of the 13-building industrial property marks the California firm’s largest to date. Pacific Business Center was 85 percent leased at the time of sale.

BKM Capital Partners has acquired Pacific Business Center, an 898,389-square-foot, 13-building industrial property in Henderson, Nev., for $111.3 million—the firm’s largest to date. The Newport Beach, Calif.-based institutional fund manager now has more than $1 billion in assets under management in a portfolio that spans more than 8 million square feet in the Western U.S. BKM represented itself in the acquisition, while CBRE represented the seller, identified as an institutional owner.

The multi-tenant properties are located at 1045-1175 American Pacific Drive, 160-194 Gallagher Crest Road and 1060-111 Mary Crest Road. Constructed between 1996 and 1998, the institutional-grade assets have had more than $12.4 million in capital improvements since 2010. Projects included installing high-quality HVAC and EVAP systems and LED lighting, upgrading office finishes and painting building exteriors. Other features include 24- to 28-foot clear heights, ESFR sprinkler systems and new TPO roofs. BKM plans to further renovate the facilities.

Pacific Business Center was 85 percent occupied at the time of sale. In-place rents are projected to be 20 percent below market rate, giving BKM an opportunity for immediate value creation, according to Brett Turner, managing director of acquisitions at BKM. Turner noted that it was rare to find a property of the size and caliber of Pacific Business Center in the Las Vegas metro area because of the lack of developable land and rising construction costs.

NO SLOWDOWN FOR INDUSTRIAL

The Las Vegas industrial market has been growing in recent years. There were 89 industrial sales totaling 6.4 million square feet and $661.7 million in 2018, up from 66 properties sold in 2017 with a total of 3.2 million square feet for $316.2 million, according to a Colliers International first-quarter report for 2019. Colliers noted that there were 16 sales totaling $101 million encompassing 845,000 square feet.

The vacancy rate has been dropping over the past year from 5.4 percent in the first quarter of 2018 to 3.6 percent in the fourth quarter of 2018 and 3.2 percent in the first quarter of 2019. Net absorption in the first quarter of 2019 was 1.1 million square feet compared to 832,583 square feet in the same interval in 2018. The report stated that industrial developments in the West Henderson area should boost net absorption numbers in the Henderson submarket this year. Colliers expects strong demand for industrial space to continue in the Las Vegas market in 2019.

BKM BACKGROUND

BKM, which focuses exclusively on multi-tenant industrial in the Western U.S., closed on BKM Industrial Fund II in May. The fund, the firm’s second institutional fund, had $382 million in equity commitments from a mix of sources including U.S. endowments and pension funds, family offices and insurance companies.

The buyer’s recent deals include the acquisition of a Denver industrial property for $24 million from Mount West Industrial Properties. The 203,231-square-foot complex has five buildings that are 100 percent occupied by tenants such as FedEx and Black & Decker. Late last year, BKM purchased a San Diego industrial portfolio and a Los Angeles-area business park.