BKM Makes Geographic Diversification Push for Value-Add Fund

BKM Capital Partners, an institutional private equity real estate fund manager, is investing in value-added multi-tenant industrial assets across Western US metropolitan markets for its Industrial Value Fund II. “It’s a $400m fund that follows a similar strategy to the firm,” Brett Turner, BKM’s managing director of acquisitions, told REFI US. “Our markets are West of the Rockies including Denver and in the Pacific Northwest region.”

Seattle

The California-based manager recently completed a $30.45m off-market transaction to acquire West Valley Business Park, a 179-unit and 205,000-square-foot industrial property in greater Seattle. The asset is 92% leased to 164 tenants. The asset is located in Kent Valley, a highly sought-after industrial submarket, said Turner. “Even with nearly 600,000 square feet of new warehouse space recently delivered in this submarket, the vacancy rate remains low at only 4%, placing upwards pressure on rents,” Turner added.

BKM Management Company, a BKM Capital affiliate, will manage the property on behalf of global institutional partners and investors including pension funds, endowments and family offices.

Denver

BKM also recently paid $14.75 to purchase Crossroads Distribution Center, a 14-unit industrial business park in Denver’s Central East I-70/Montebello submarket, where the vacancy rate is 2.4% and there’s not enough supply being delivered to meet the demand in the submarket. “Denver is a high-net absorption market caused by population growth [and] nobody’s building these assets,” said Turner. Crossroads will be rebranded as Havana 37 Business Center and will cost BKM around $1.2m to improve the property. The property is 90% leased to 12 tenants. The rm will continue to make value-add deals in those markets and assets with below market rents to eventually bring the rental rates up to market. “We’re moving the fund at a decent clip, we move quickly – last year, we bought $550m and we plan to do the same this year,” Turner said. “We’ve done around seven or eight deals this year.” BKM has invested in Las Vegas, Phoenix, San Diego and California and has over $1bn in AUM.