BKM Capital Partners Executes $550 Million Recapitalization with Kayne Anderson Real Estate for Multi-State Light Industrial Portfolio

NEWPORT BEACH, Calif. and BOCA RATON, Fla., Dec. 12, 2024 /PRNewswire/ -- BKM Capital Partners ("BKM"), a vertically integrated institutional fund manager specializing in value-add light industrial properties, today announced the firm has executed a $550 million recapitalization of a nine-property light industrial portfolio with Kayne Anderson Real Estate. This transaction marks the first entry into the light industrial sector for Kayne Anderson Real Estate, an alternative asset manager with an established track record in the alternative real estate sectors of seniors housing, student housing, medical office, multifamily housing, and self-storage.

"We are pleased to partner with Kayne Anderson Real Estate on its first move into the light industrial sector," says Brian Malliet, Founder, CEO, and CIO of BKM. "By combining our deep expertise in small-bay real estate investments with the support of a respected investment manager in Kayne Anderson, we are unlocking exceptional opportunities for growth. We hope this will be the first of many transactions with Kayne as we continue our long-term growth trajectory and execute on our unwavering commitment to creating sustainable value for our investors and partners. We are excited about the possibilities the future holds."

"At Kayne Anderson Real Estate, we have always sought to invest in asset classes, such as medical office, seniors housing, and student housing, which exhibit powerful fundamentals and allow us to leverage our platform's sophistication and scale. We see immense opportunity in the light industrial market, and we're thrilled to enter this asset class with an established partner in BKM," said Kayne Anderson Real Estate co-founder and CEO and Kayne Anderson CEO Al Rabil. "The BKM team brings laser-focused expertise in the light industrial space and an incredible operating track record to the table. As we look ahead to 2025 and beyond, we are excited to expand our focus and explore additional opportunities alongside BKM."

Strategic Growth and Market Momentum

The past 24 months have been particularly active for BKM, which invested more than $575 million in 11 strategic acquisitions across 15 properties in 2023. The momentum continued throughout 2024, with this latest transaction bringing BKM's acquisitions total for the year to $1.2 billion and more than 4.5 million square feet of space across 25 transactions.

"This transaction signifies an exciting phase in our journey and will enable us to drive significant value and rent growth across the portfolio," adds Malliet. "It underscores our dedication to excellence in the light industrial market, and we're eager to leverage this momentum to further our strategic goals and expand our impact in the industry."

Portfolio Overview: Quality Infill Assets with Strong Potential

The nine-property portfolio consists of 510 units and over 2.1 million square feet of small-bay industrial space located in high-density urban areas throughout the Western U.S. The portfolio encompasses: 

Hohokam Business Park, a 256,920 square-foot, 79-unit property in Tempe, AZ

Backlot Burbank, a 208,688 square-foot, 16-unit property in Burbank, CA 

Concord Business Park, a 141,792 square-foot, 28-unit property in Concord, CA

Gateway & Shoreline Business Centers, a 179,559 square-foot, 14-unit property in Fremont, CA

Lionshead Landing, a 228,816 square-foot, 54-unit property in Vista, CA

Inverness Exchange, a 215,212 square-foot, 103-unit property in Englewood, CO

Hughes Airport Center, a 672,424 square-foot, 58-unit property in Las Vegas, NV

West Valley Business Park, a 205,719 square-foot, 158-unit property in Kent, WA

The portfolio of quality, infill last-mile assets offers significant opportunity for rent growth, largely in part to the limited amount of new construction of smaller-bay industrial product in these high-density urban areas. The portfolio's varied tenant base and shorter lease terms create a favorable rent rollover profile, poised to capitalize on the high annual rent growth seen across the small-bay industrial sector.

"As growth in the industrial sector continues to outperform market expectations, these assets have delivered exceptional returns thanks to our team's strategic approach," says Brett Turner, Senior Managing Director of Acquisitions and Dispositions at BKM. "With ongoing demand for small-bay industrial properties and strong historical rent growth trends, we see significant future potential, which our institutional management expertise is well-positioned to fully unlock."

Since 2013, the Newport Beach-based real estate fund manager and operator has completed $4.3 billion worth of transactions involving more than 120 business parks and 22 million square feet of small-bay industrial space in the Western U.S. The firm continues to grow its investment management business through strategic joint ventures, institutional investor funds, and separately managed accounts.

Truist Securities facilitated the introduction between Kayne Anderson Real Estate and BKM Capital Partners and served as Left Lead, while First Citizens Bank acted as Joint Lead Arranger on the financing for the transaction.

About BKM Capital Partners

BKM Capital Partners is a proven real estate fund manager and operator focused exclusively on investing in small and mid-bay light industrial properties in the Western United States. Headquartered in Newport Beach, CA, with over 100 employees in 13 offices, BKM implements a value-add strategy targeting under-managed and under-capitalized assets. The team has invested over $4 billion in more than 120 small and mid-bay light industrial properties since 2013. Its approach includes the acquisition, refurbishment, repositioning, and active management of these industrial properties to drive NOI growth and generate a strong IRR and multiple on invested equity. BKM's foundation is built upon Focus, Operational Excellence, Technology, and Client Service. Additional information is available at bkmcp.com. 

About Kayne Anderson Real Estate

Kayne Anderson Real Estate is a leading real estate investment firm, managing approximately $16.6 billion in assets under management across opportunistic equity, core equity, and real estate debt, with sector expertise in medical office, seniors housing, off-campus student housing, multifamily housing, and self-storage. Kayne Anderson Real Estate is part of Kayne Anderson, a $36.4 billion alternative investment management firm with more than 40 years of successful experience across real estate, infrastructure, energy, and credit. For more information, visit www.kayneanderson.com/real-estate/. (As of September 2024)

Contacts

For BKM 
Emily Pollard
BKM Capital Partners
949.301.9231
[email protected]

For Kayne Anderson Real Estate
Jon Keehner / Madeline Jones
Joele Frank, Wilkinson Brimmer Katcher
212.355.4449

SOURCE Kayne Anderson Real Estate; BKM Capital Partners

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