BKM Capital Partners, a local real estate fund manager and operator, entered a $1.5 billion joint venture partnership with Los Angeles-based Kayne Anderson Real Estate last month. The joint venture will specialize in light industrial real estate, specifically targeting small- and mid-bay properties.
Both companies, in a statement, said light industrial is one of the strongest performing real estate asset classes but is overlooked by traditional institutional investors.
The $1.5 billion joint venture, according to a BKM Capital Partners statement, would “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,” Newport Beach-based BKM Capital Partners said.
The joint venture will target mid-sized properties with below-market rents, high vacancies or operational inefficiencies, assets that can be acquired at a discount to replacement cost and well below peak pricing and then repositioned to drive value, BKM said.
The joint venture would help BKM, which invested in properties across the Western United States, to expand into infill markets across the country. BKM said it wants to double its platform to $5 billion of assets under management within the next 18-24 months.
Joint Venture’s Market Activity
BKM Capital Partners and Kayne Anderson have already completed transactions under their new joint venture, including a nine-property, $550 million recapitalization of a 2.1-million-square-foot West Coast portfolio and a five-property deal for 1.2 million square feet in Las Vegas and Phoenix.
The $550 million deal, completed in December, marked Kayne Anderson’s debut in the light industrial sector. Kayne Anderson specialized in the alternate real estate sectors of self-storage and housing for seniors, students and the military, prior to adding light industrial to its portfolio.
The joint venture also bought a five-property light industrial portfolio in Orlando, Florida, in June. BKM Capital Partners, in a statement, described the nine-building, 489,891-square-foot deal as one of the “largest light industrial portfolio trades in the Orlando metro in recent years and represents the continued expansion of BKM’s national footprint.”
Kayne Anderson, in a separate deal, announced $2.25 billion in capital commitments for an energy fund. The fund would invest in oil and natural gas companies.
BKM Capital Partners recently bought an industrial park in the Bay Area suburb of Fremont for $43 million.
Kayne Anderson & BKM Capital
Kayne Anderson was founded in 1984 as an investment management firm specializing in credit, energy, infrastructure and real estate. The firm said it managed $38 billion of assets through the first quarter of this year.
Real estate became one of Kayne Anderson’s specialties in 2007, with the firm targeting investments from $25 million to $1 billion. Kayne Anderson has, for example, invested $11.1 billion in 787 medical office properties across 43 states since 2013.
Since 2013, the firm has invested $5.4 billion in senior housing projects across 25 states. It focuses on buying and upgrading multi-tenant light industrial properties in metro areas across the country.
BKM Capital Partners was coincidentally founded in 2013 and started with $77.5 million of transactions and five assets. The company has since grown to complete $4.5 billion in transactions across more than 120 properties.
The only property within BKM Capital Partners’ Orange County portfolio is Fullerton Brea Business Park. The rest of BKM Capital Partners’ California portfolio is in Sacramento, San Diego, Irwindale, Carlsbad, North Hollywood, San Jose, Newark, Otay, Burbank, Concord, Fremont, Vista and Hayward.
