BKM Capital Partners Accelerates Industrial Sector Growth Trajectory in 2021
· Expands Leadership Team with Key Senior Hires, Continues Building Light Industrial, Multi-Use Logistics Portfolio Across Western U.S.
· Totals More Than $950M in 2021 Activity, Encompasses 5.5 MSF of Industrial Assets Across 5 States
January 13, 2022 – Newport Beach, CA-based BKM Capital Partners, a vertically integrated institutional fund manager, completed more than $950 million in transactional activity in 2021 involving 5.5 million square feet of industrial property space spanning five Western U.S. states. The firm continued to build its light industrial and multi-use logistics portfolio to $1.5 billion in current AUM, encompassing 45 properties totaling 8.2 million square feet.
Brian Malliet, CEO of BKM Capital Partners, said, “BKM’s transaction activity in 2021 reflects our steadfast commitment to creating value for investors. Through our industry-leading operator platform and niche expertise in light industrial, we have been able to capitalize on the growing demand for properties servicing last mile delivery hubs and industrial users, maximizing returns to our investors.”
Malliet added, “Building upon on our proven track record, we have been integral in establishing this asset class within the larger industrial sector that offers compelling risk-adjusted returns and appeals to institutional-caliber investors.”
Activity in 2021 included 19 deals involving 28 assets and more than 200 buildings across seven Western U.S. markets including Phoenix, AZ, Las Vegas, NV, Seattle, WA, Portland, OR, San Diego, CA and Fremont, CA (Bay Area). Highlights included:
· the $261-million recapitalization of BKM’s Infill Industrial Portfolio involving seven multi-tenant industrial assets totaling roughly 1.3 million square feet of space in Metro Phoenix, AZ and Seattle, WA.
· the $85.35-million recapitalization of Tempe Commerce Park, a five-building, 536,051-square-foot, multi-tenant, light industrial park in Tempe, AZ.
· the $30.9-million sale of Cotton Center, a seven-building, 225,403-square-foot, multi-tenant, light industrial park in Phoenix, AZ.
· the $19.5-million purchase of Scottsdale Commerce Center, a four-building, multi-tenant industrial business park in Scottsdale, AZ.
· the $15.4-million purchase of Fry Distribution Center, a two-building, multi-tenant industrial business park in Beaverton, OR.
Creating Value Through Leadership
The anchor of BKM’s strategy was assembling a team and platform capable of navigating the demands of this niche asset class. Three senior-level executives joined the BKM Capital Partners team in 2021, ensuring the platform is well positioned for accelerated growth as it expands to serve a growing institutional investor client base. Bill Galipeau joined as Chief Financial Officer in October 2021 from PIMCO. Harry B. Hedison joined as Senior Managing Director of Capital Markets & Investor Relations in September 2021 from Mercury Capital Advisors. Susan Rounds joined as Managing Director of Operations in July 2021 from Red Mountain Group.
BKM’s senior management team averages over 30 years of experience and also includes Rob Sistek, Senior Managing Director of Investments, Brett Turner, Senior Managing Director of Acquisitions & Dispositions, Rene Velasquez, Managing Director of Asset & Property Management, and Caroline Kase, Director of Property Management at BKM Management Co.
In addition to bolstering the executive team, the company has also broadened its corporate governance. Recently, several key measures were taken to reinforce BKM’s foundation and foster its growth including the establishment of an Executive Committee to oversee corporate governance and business strategy execution and the formation of an independent Advisory Board comprised of highly regarded real estate and investment industry executives.
BKM utilizes a team-based approach to governance that ensures senior executives are accountable for oversight of the entire company, not just their functional areas. This approach shares decision making authority across a team of highly experienced professionals and promotes diversity of thought.
Proven Platform Builds Success
BKM is one of the only institutional fund managers that focuses exclusively on multi-use logistics and light industrial in the Western U.S. and continued to build value in this less heralded segment of the industrial market in 2021. The company continues to unearth value-add multi-tenant industrial opportunities and cultivate success in this underpenetrated segment through their proven platform, bringing structure to what has historically been a fractionalized component of the industrial sector.
“The asset class requires a vertically integrated operator platform, like BKM has strategically built since 2013. Our specialized on-site operating platform and product type expertise are key differentiators,” Malliet explains. “This niche property type demands that owners and operators apply decades of experience and a hands-on approach that is significantly more complex and involved than a facility that is occupied by one large tenant. We are unmatched in this sector with talented professionals, proven processes and proprietary software to efficiently manage, track and execute.”
The tenacity of BKM’s execution team and resiliency of its tenant base is reflected in its portfolios’ performance over 2020 and 2021. In additional to experiencing record transactional activity in 2021, both occupancy and rent collections remain at or above pre-pandemic levels across BKM’s portfolio.
Successfully operating a multi-tenant asset platform required BKM to also establish in-house capabilities to reposition and convert existing assets, enhance property management, incorporate leasing management, and institutionalize light industrial properties that have traditionally functioned under fragmented ownership positions.
Hedison added, “BKM’s operating platform works to create value in under-capitalized and under-managed light industrial assets. BKM’s leadership team stepped up and persevered during one of the most challenging times facing the industry marked by a global pandemic, economic uncertainty, and volatility across the CRE sector and solidified its strong market position in the multi-use logistics and small- and mid-bay light industrial asset class.”
Fostering Work Culture Built on Diversity, Equity & Inclusion
BKM is acutely focused on creating a diverse and inclusive place for people to work that is equitable for all, despite the challenges of pandemic-caused remote work schedules. BKM has adjusted its operational practices to accommodate both online and on-site work styles to enhance staff well-being and satisfaction. By creating and fostering a culture of collaboration and embracing different perspectives, BKM has achieved even greater levels of performance and portfolio success.
To build a strong workforce, BKM instituted a committee to ensure integration of diversity, equity, and inclusion (DEI) principles in its everyday business practices. Metrics tracked include employee demographics, women and minority owned businesses in its tenant base, and the impact of philanthropic efforts to improve social equity. The efforts to promote DEI are paying off, as 54% of BKM’s employees are female, 29% of female employees identify as BIPOC, and 32% of all BKM employees identify is BIPOC. Its leadership team is 24% female, and 24% identify as BIPOC.
A recent endeavor that reflects BKM’s strong commitment to women was the fact that CEO Brian Malliet signed on to the CREW Network CRE Pledge for Action. This industry-first, CEO-driven initiative is designed to advance women, and elevate actions that encourage greater diversity, equity, and inclusion (DEI) in the commercial real estate industry. Since signing the CREW Network Pledge for Action in October 2021, BKM has made significant progress in supporting the advancement of women and other individuals in underrepresented groups. BKM is actively evolving its DEI strategy to continue to improve policies and accountability. The firm has focused on implementing diverse recruitment efforts, new internal DEI policies and programs and external vendor diversity initiatives.
BKM has also partnered with SEO (Sponsor’s for Educational Opportunity). SEO recruits and trains high-achieving Black, Latino and Native American college students for challenging summer internships and delivers a comprehensive program that integrates year-round, holistic professional mentorship and a consistent network of support through high school and post-secondary years. This partnership allows BKM to reach top candidates from underrepresented communities as a source for talent.
BKM Capital Partners’ growth, maturity and appeal with institutional investors is reflected in its strong market position in the multi-use logistics and small and mid-bay light industrial asset class. BKM’s success was clearly evident when it fully realized its debut institutional fund in September 2021, which delivered returns to investors that well exceeded targets, achieved top quartile performance among its peers, and provided further confirmation of its investment thesis.
BKM celebrated this milestone by giving bonuses to every employee at the company across all six states at every level based on tenure. The bonus was in addition to year-end bonuses and was made possible through the strong returns generated from the fund.
“It’s important to recognize and reward all employees for their hard work and dedication to achieve this success,” Malliet said, “Not only was this an exciting milestone for BKM to round-trip our first fund, but it also became an opportunity to recognize the contributions of all employees in BKM’s success, the top performance of our Fund I, and the value our people add every day.”
By giving back to the people that made that success happen, it demonstrated the innovative ways BKM’s leadership team is working to build loyalty and create a positive and rewarding work atmosphere. The bonuses were a big inspirational surprise for the entire team, too. The reactions from employees were quite revealing and reflected the respect and admiration they have for the company and its leaders. One 30-year industry veteran noted that something like this has never happened during their CRE career and commented that it speaks volumes about BKM’s leadership, the corporate culture and working environment at the company.