BKM Capital Partners Executes $261m Recapitalization with Investcorp for Multi-State Industrial Portfolio

Sep 2, 2021 | News

BKM Capital Partners executed a $261m recapitalization of its value-add industrial Fund I, expanding a partnership with Investcorp and marking the successful completion of an investment thesis involving the fund managers’ first fund.

The flagship investment vehicle launched in 2013 and is currently comprised of seven multi-tenant industrial assets totaling roughly 1.3 million square feet of space in top-tier industrial markets. A joint venture between Investcorp and BKM Capital Partners acquired the portfolio.

BKM Capital Partners’ Brian Malliet, CEO and founder, said, “This recapitalization of BKM’s Fund I is the true definition of win-win. We are incredibly proud of our ability to execute a full-circle investment on our first fund that generated remarkable results and resoundingly upheld our investment thesis. That process started with the formation of this portfolio, continued through stabilization, including completion of necessary capital improvements and lease-up, all the way to delivering impressive returns to our Fund I investors, as well as presenting an institutional-caliber investment opportunity that appealed to Investcorp.”

“Investcorp moved quickly and decisively to capture an opportunity to control a critical mass of institutional-quality, multi-tenant industrial product in two highly desired industrial growth markets of Seattle and Phoenix,” said Herb Myers, Co-Head of Real Estate North America at Investcorp. “We look forward to the expansion of our partnership with BKM through this investment.”

Multi-tenant parks attract a growing entrepreneurial tenant base, cater to numerous users and allow for growth within the park, typically leading to higher tenant retention and a lower risk profile for owners.

“Completing the monetization of our first fund is a significant milestone for BKM. The outstanding performance BKM achieved for Fund I investors is remarkable, especially given the turmoil caused by the pandemic last year,” said BKM’s Brett Turner.

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The assets held in Fund I encompassed five properties in Metro Phoenix and two in Seattle, two core light industrial markets. The Fund I portfolio houses a diverse tenant base of roughly 450 tenants and is 93% leased.

The Fund I portfolio of quality, infill last-mile assets offers the opportunity for rent growth, in part since there’s been virtually no new construction of smaller-bay industrial product in these high-density urban areas of Seattle and Phoenix. The portfolio’s large tenant base and short lease terms provide smooth rent rollover profiles.

The collaboration and synergies created between Investcorp and BKM Capital Partners emerged earlier this year and helped form the foundation for this Fund I recapitalization. In Q1 2021, Investcorp acquired Tempe Commerce Park, a five-building, 536,051-square-foot, multi-tenant, light industrial park in Tempe, Arizona, from BKM Capital Partners.

CBRE’s Darla Longo, Barbara Perrier, Brett Hartzell, Rebecca Perlmutter, Joe Cesta and Eric Cox handled the Fund I listing for BKM. Local market expertise was provided by CBRE’s Sean Durkin, Jackie Orcutt and Bill Bayless, while CBRE’s James Millon and Tom Traynor provided debt and structured finance advisory services.

Longo said, “BKM’s Fund I portfolio was well received in the marketplace, ultimately generating interest from a number of high-quality, institutional buyers seeking to expand their holdings into an asset class in which Brian and the BKM team has established a strong presence and successfully built an industry-leading operating platform around.”

Source: Business Wire

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