- BKM Capital Partners
BKM Capital Partners 2023 Year-End Update
Dominating the light industrial sector, BKM adds $520M of high-quality infill assets in 2023.
NEWPORT BEACH, CA – February 12, 2024 – BKM Capital Partners (BKM), the largest owner and operator of small-bay industrial real estate in the Western U.S., today provided an update on the Company’s 2023 activity. BKM owns or has interests in properties that represent a total of 10.3 million square feet valued at $2.2 billion. Since its inception, BKM has completed more than $3.3 billion, comprising 95 transactions and 16.7 million square feet.
BKM Capital Partners has continued to showcase its expertise and leadership in the sector, strengthening both its investment capabilities and its portfolio. In 2023, BKM was exceptionally active, completing several strategic acquisitions aggregating more than $520 million. This includes 11 transactions across 15 properties, conducted in collaboration with five major institutional partners. Additionally, the Company executed over two million square feet of leasing in 2023.
“We’ve always believed in the light industrial asset class and today is no different. There's no property distress in industrial, but there is seller distress amongst industrial owners. We’re confident that we will look back on 2023 and 2024 and realize it was a terrific vintage for light industrial real estate,” said Brian Malliet, CEO of BKM Capital Partners. “In today’s quiet deals market, while people wait on the sidelines, the lack of competition coupled with sellers needing liquidity or an exit, is also an advantage because bargaining power is much more on the buyer side.”
“That distressed seller landscape has further provided us with a robust pipeline of investment opportunities often at an additional discount to current market value. Given the strong mark-to-market leasing spreads, underpinned by consistent demand from quality growth industry tenants and a lack of new supply, we are leaning into our strategy and see it as an opportunity to take advantage of dislocation in the markets ahead of the pack,” added Malliet.
BKM’s investment strategy capitalizes on identifying underperforming properties located in high barrier-to-entry markets with 30-50% below market rents. These factors create a conducive environment for rapid property-level NOI growth without relying on future market rent growth, or exposure to potential oversupply scenarios.
“As we move into the next phase of our growth, our focus will remain on identifying and capitalizing on strategic investment opportunities that align with our core mission,” Malliet added. “We are confident that our approach, combined with our deep market knowledge and execution expertise from our operator platform, will continue to deliver the outsized returns our investors and partners need in this market.”
2023 Notable Activity
Added $520 million of new assets comprising 2.2 million square feet across 15 high-quality light industrial parks in key markets.
Assembled a geographically diverse seed portfolio for third flagship fund, totaling over $170 million and nearly one million square feet, with significant price discounts.
New partnerships with BGO Strategic, Investcorp, and Stepstone Real Estate, among other institutional partners.
Completed 585 new and renewal leases comprising over two (2) million square feet.
In 2023, BKM acquired 15 properties in 11 transactions, making it the most active light industrial operator in the Western U.S. The acquisitions involve 2.2 million square feet in Portland, OR, Las Vegas, NV, Phoenix, AZ, Denver, CO, and California. They include:
Airport Business Center in Portland, OR (11 buildings, 228,518 square feet)
Valley View Business Center I-IV in Las Vegas (15 buildings, 481,135 square feet)
Decatur Crossing II in Las Vegas (3 buildings, 140,596 square feet)
Sunset Business Center in Las Vegas (2 buildings, 71,298 square feet)
Gateway Business Center in Las Vegas (46,888 square feet)
Decatur Business Center in Las Vegas (88,205 square feet)
Valley East Industrial Park, renamed Backlot NoHo, in North Hollywood, CA (2 buildings, 84,388 square feet)
Commerce Carlsbad, renamed Pacific Coast Industrial Center, in Carlsbad, CA (8 buildings, 129,928 square feet)
217 Distribution Center in Portland, OR (5 buildings, 451,602 square feet)
Gateway University Business Park I & II in Phoenix, AZ (16 buildings, 268,409 square feet)
Junction Business Park in San Jose, CA (2 buildings, 119,101 square feet)
West 6th Center, renamed Baker Exchange, in Denver, CO (122,783 square feet)
These activities highlight BKM's proficiency in navigating the industrial real estate market, alongside its ability to forge significant partnerships with major institutional players.
With its strategic vision and the successful implementation of its investment strategies, BKM Capital Partners is well-positioned to continue its trajectory of growth and success in the light industrial real estate sector. The firm remains committed to identifying and capitalizing on unique investment opportunities that align with its value-driven approach.
Learn more about BKM’s activity in 2023 in their Annual Letter here.
