BKM Capital Partners, an institutional fund manager with a niche focus on value-add, multi-tenant light industrial investments, has sold the first three multi-tenant industrial business parks in its debut fund. The three dispositions include a 223,009 square-foot multi-tenant industrial building, and a 137,603 square-foot industrial complex in Las Vegas, Nevada, and a 98,516 square-foot business park in Portland, Oregon.
“Creating value in distressed assets is our specialty,” says Brian Malliet, CEO and Co-Founder of BKM Capital Partners. “We acquire light industrial properties that require hands-on management and then implement our proven operational platform to create value, which is exactly what we did here.”
BKM repositioned and leased up all three of the assets, ultimately achieving an IRR of 38.5 percent and 2.1 multiple at the Patrick Commerce Center property, an IRR of 38.5 percent and 2.4 multiple at the Portland property Hayden Island Business Park, and an IRR of 43.3 percent and a 2.3 multiple at Wind River, all within a two-year period.
“These results demonstrate the strength of our investment thesis,” says Malliet, who explains that BKM has maintained a niche focus on value-add multi-tenant industrial assets since its inception. “Because we understand this property type inside and out, we are consistently able to acquire these properties at a significant discount to replacement cost, providing our team with an opportunity to improve the performance of the asset and generate a return for our investors.”
BKM’s three dispositions include:
Patrick Commerce Center:
BKM sold Patrick Commerce Center, a 223,009 square-foot industrial business park in Las Vegas.
“The Las Vegas industrial market is rapidly growing, and big-box construction is dominating the region,” says BKM’s Director of Acquisitions Brett Turner, who explains that there is essentially no new development of multi-tenant light industrial product underway in the area.
“This lack of available supply is driving significant investor demand for high-quality renovated industrial buildings such as Patrick Commerce Center, allowing us to achieve a premium price for this asset,” explains Turner.
During its ownership, BKM Capital Partners completely renovated and repositioned the property, integrating a series of capital improvements including modernizing landscaping and paint, providing new roofs, and repairing HVAC units.
“When we initially acquired this asset in 2014, the property was only 55-percent occupied,” says Turner. “Our integrated operating platform, coupled with these strategic renovations allowed us to bring occupancy up to 95-percent at close, stabilizing cash flow and increasing net operating income.”
Turner adds, “We recognized the true value potential of this asset and market very early on, which enabled us to deliver an attractive product to the market, ultimately maximizing yields for our institutional investment partners.”
Patrick Commerce Center is located at 2875, 2925 E. Patrick, and 6151, 6171, 6231 McLeod in Las Vegas, Nevada. Colliers International represented BKM Capital Partners as the seller in this transaction.
Hayden Island Business Park:
BKM also sold Hayden Business Park, a 98,516 square-foot business park in Portland Oregon.
BKM initially acquired the asset in 2014. “We strategically repositioned this asset by integrating a series of capital improvements, and stabilized the property through a strategic lease-up,” explains Turner. “This resulted in significant interest among buyers, allowing us to maximize returns for our investors.”
During its ownership, BKM implemented a series of capital improvements including modernizing signage, updating the paint scheme and new landscaping.
“By integrating these cosmetic upgrades, we were able to bring the property up to 98-percent occupancy with rents more in line with market,” says Turner. “We more than doubled rental rates. This created strong stabilized in-place cash flow, further adding to the appeal of the property.”
The property is located at 2400-2422, 2511-2527, 2535-2541 and 2701-2703 N. Hayden Island Drive in Portland, Oregon. David Hill at Newmark Grubb Knight & Frank represented BKM Capital Partners as the seller in this transaction.
Wind River Industrial Complex
BKM also sold Wind River Industrial Complex, a 137,603 square-foot industrial building in Las Vegas, Nevada.
“We acquired the property in 2014 at a deep discount to replacement cost and through our strategic leasing and integrated management, we were able to create significant value for the asset,” explains Turner.
BKM implemented a series of structural and aesthetic improvements to the industrial complex including creative facades, fresh paint, new signage, new roof, HVAC and re-paving of the parking lot.
“These capital improvements allowed us to significantly increase occupancy at the property in an extremely short period of time,” says Turner. “The property was operating a nearly full occupancy with positive NOI quickly after acquisition. Our ability to quickly reposition the property and bring it full cycle demonstrates the success of our niche approach and our continued strategy of creating value in distressed and under managed multi-tenant industrial properties throughout the Western region.”
The property is located at 4301-4325 South Valley View Boulevard in Las Vegas, Nevada. CBRE represented BKM Capital Partners as the seller in this transaction.