REAL ESTATE NEWS

BKM Capital Partners and Kayne Anderson Real Estate are continuing their collaboration on acquiring light industrial properties, a couple of months after announcing their joint venture.

The duo this time has purchased a multi-tenant 16-building portfolio in the San Francisco Bay Area. The light industrial space spans roughly 505,000 square feet on 34 acres of infill land. It includes three properties, Huntwood Business Center, Hesperian Business Park and Concord Industrial Park.

The portfolio, which was constructed between 1980 and 1988, is 89 percent leased to more than 70 tenants, with the unit sizes averaging over 5,300 square feet. The tenant share at the property appears to be diverse, as no single industry accounts for more than 20 percent of the rent roll, according to the JV. Also, about 28 percent of the rents are below the market, with the average lease term at two years.

Additionally, the location of these assets is key for both BKM and Kayne. Both noted that the area is surrounded by a skilled workforce, population centers and provides access to regional transportation. Additionally, the move expands the BKM and Kayen's presence in both East Bay and Contra Costa County, where fundamentals are favorable. For example, currently, there is no construction of space that's under 100,000 square feet and vacancy trails three percent in both areas, according to the two firms.

“Functional, well-located light industrial product of this scale rarely trades in the Bay Area, so this was a rare opportunity to secure critical mass in two of the most supply-constrained industrial submarkets on the West Coast,” Brett Turner, senior managing director of acquisitions & dispositions at BKM, said in a statement.

“The portfolio offers a compelling combination of functionality, tenant diversity, and mark-to-market upside in a region where scale is incredibly difficult to achieve. It’s exactly the kind of opportunity we’re purpose-built to execute on.”

BKM and Kanye first announced their JV in May, vowing to spend $1.5 billion on industrial light assets that particularly could be acquired at a discount or replacement cost. At the time, it revealed that it made a five-property 1.2 million square feet purchase in Phoenix and Las Vegas and recapitalized a 2.1 million square foot West Coast nine-property portfolio for $550 million. Then in June, the two bought nine assets in Orlando, spanning a total of 489,891 square feet.

So far, it's unclear how much the JV has spent in total— but the Bay Area portfolio continues on its strategy. The partners forecast that the Bay Area properties are "well-positioned to generate durable income and long-term value."

Source: GlobeSt/ALM