BKM Capital Partners and Kayne Anderson Real Estate Announce $1.5 Billion Joint Venture Partnership to Acquire High-Growth Light Industrial Real Estate

May 2, 2025 – Newport Beach, CA – BKM Capital Partners (‘BKM’), a leading vertically integrated real estate fund manager and operator, and Kayne Anderson Real Estate, the real estate investment arm of Kayne Anderson, have entered into a $1.5 billion joint venture partnership (the “JV”) focused on light industrial real estate – one of the strongest-performing real estate asset classes in the U.S., yet one largely overlooked by traditional institutional capital.

The JV brings together BKM’s unmatched operating platform, sourcing capabilities, and sector-specific expertise with Kayne Anderson’s leading alternative real estate platform, creating a powerful vehicle with the ability to scale quickly in a highly fragmented and inefficient market. The $1.5 billion commitment from Kayne Anderson Real Estate will support the acquisition and value-add repositioning of a targeted portfolio of small bay and mid bay industrial properties, in a sector poised for continued demand.

The partnership allows for large-scale capital deployment into the light industrial sector and deepens BKM’s presence nationwide. The JV will focus on middle-market properties with below-market rents, high vacancy, and/or operational inefficiencies that can be acquired at a discount to replacement cost and well below peak pricing, and then repositioned to drive value.

“This joint venture marks a transformative step for BKM,” said Brian Malliet, Founder, CEO & CIO of BKM Capital Partners. “We’ve spent over a decade building an operating platform designed explicitly for small-bay industrial, which is both operationally complex and highly fragmented. We specialize in identifying value where others don’t, transforming underutilized properties into high-performing assets that meet the needs of a rapidly evolving industrial landscape. With Kayne Anderson’s support, we can now bring that model to scale across new markets with a partner who shares our long-term view.”

BKM has historically focused on the Western U.S., amassing a proven track record across its commingled fund series and joint ventures. With this new partnership, BKM will expand into infill markets across the U.S. that share common fundamentals — strong population and job growth, constrained new supply, and rising tenant demand driven by logistics, technology, and entrepreneurial business formation. BKM aims to double its overall platform to $5 billion AUM in the next 18-24 months.

The investment thesis is underscored by the sector’s strong fundamentals: small bay industrial continues to benefit from near-record occupancy, limited new development, and historically wide spreads between in-place and market rents. With assets often priced well below replacement cost, the JV is well-positioned to capitalize on market dislocation while delivering strong risk-adjusted outcomes in an underserved segment.

“The small-bay industrial market is not a segment where capital alone drives success—it requires a purpose-built platform, hands-on management, and deep local relationships. Our joint venture with BKM allows us to invest in a sector that’s long been on our radar, alongside an operator that brings deep expertise and consistent access to opportunities,” said Al Rabil, CEO of Kayne Anderson and Co-Founder & CEO of Kayne Anderson Real Estate. “The sector’s tailwinds – driven by e-commerce, onshoring, and supply chain transformation – create a compelling long-term opportunity, and this partnership is uniquely positioned to capture it.”

The JV has already hit the ground running with several acquisitions in recent weeks. These include the $550-million recapitalization of a nine-property, 2.1 million-square-foot West Coast portfolio, marking Kayne Anderson’s entry into the sector, and the acquisition of five properties totaling more than 1.2 million square feet in Las Vegas and Phoenix.

The partnership’s focus on multi-tenant and small bay properties comes at a time when demand for light industrial real estate is surging. According to industry reports, the U.S. light industrial market saw a record-low vacancy rate of 4.1% in Q4 2024, driven by sustained demand for small bay spaces catering to e-commerce, last-mile logistics, and small-to-mid-size manufacturers. Leasing activity in the multi-tenant sector rose 12% year-over-year, outpacing other industrial asset classes.

Rents for small bay spaces continue to grow, with national averages increasing 8% annually. In key markets where BKM operates – including California, Arizona, Nevada, Colorado, Oregon, Washington, and most recently, Texas – industrial rents have surged by double digits (10-12%) over the past year due to supply constraints, reinforcing the opportunity for value-add strategies.