REAL ESTATE NEWS

BKM Capital Partners and Kayne Anderson Real Estate have made another major industrial acquisition. The latest involves the purchase of a Metro Phoenix small bay portfolio.

The deal applies to eight small bay properties, which span 889,352 square feet. Six of the properties are located in the Tempe submarket: Buttes Business Center, Tempe Commerce Center, Priest-Excel Business Park, Expressway Corp. Center, Mineral Road and Harl Industrial Park. The others are located in the Airport submarket (Elwood Industrial Center and Roeser Commerce Center).

The properties are scattered across 41 buildings and 364 units. Overall, the portfolio is 89 percent leased to tenants. According to the two firms, they acquired the assets at a "significant discount to replacement cost" and are planning to implement a capital improvement plan in the future within the portfolio that would satisfy deferred maintenance.

“This was a rare opportunity to acquire a diverse collection of infill assets across Tempe and Phoenix, each with its own path to value,” Brian Malliet, founder, CEO and chief investment officer of BKM, said in a statement.

“As Phoenix transforms into a high-tech manufacturing and logistics hub, the need for functional, small-bay space has never been greater. "This portfolio gives us both critical mass and operational flexibility in one of the nation’s top industrial markets. Surpassing $3 billion in assets under management further highlights our sustained growth and reflects the deep confidence our investors continue to place in our strategy.”

Speaking of Phoenix, the duo gloated about the city's improving industrial fundamentals. In the first half, net absorption rose by 50 percent year-over-year to 6.8 million square feet and vacancy dropped by 30 basis points to 10.9 percent, according to BKM and Kayne. The vacancy fall represents the first decline in the market seen since 2022. Also, deliveries are at their lowest levels since 2021.

In Arizona alone, BKM's industrial footprint now stretches to 4.5 million square feet across 27 properties.

The move marks the latest from the joint venture, which was formed in the spring and aims to spend $1.5 billion on industrial light assets that could be acquired at a discount or replacement cost. In July, the two acquired a multi-tenant 16-building portfolio in the San Francisco Bay Area, which takes up 505,000 square feet of total space. A month earlier, the JV bought nine assets in Orlando, spanning a total of 489,891 square feet. And in May, 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.

Source: GlobeSt/ALM