Kayne Anderson's real estate unit and BKM Capital Partners are partnering to spend $1.5 billion on industrial light-related acquisitions.
Through a joint venture, they are targeting both mid and small bay multi-tenant properties, particularly on assets that can be acquired at a discount or replacement costs. This includes middle market opportunities that feature low rents, c and high vacancy. The two partners will look to reposition the assets and add value to them.
Already, the JV has started unleashing investments in the industrial light sector. One was a $550-million recapitalization of a 2.1 million square foot West Coast nine-property portfolio. Another was for the purchase of five assets, taking up 1.2 million square feet in Phoenix and Las Vegas.
Currently, BKM operates industrial assets in several markets, including Colorado, Oregon, Washington State, Texas, Arizona, California, and Nevada. The fund manager said that the collaboration with Kanye will allow it to "expand into infill markets across the U.S." that have strong fundamentals from limited new supply to job growth and elevated tenant demand.
“We’ve spent over a decade building an operating platform designed explicitly for small-bay industrial, which is both operationally complex and highly fragmented," Brian Malliet, founder, CEO & chief investment officer of BKM, said in a statement.
"We specialize in identifying value where others don’t, transforming underutilized properties into high-performing assets that meet the needs of a rapidly evolving industrial landscape. With Jayne Anderson’s support, we can now bring that model to scale across new markets with a partner who shares our long-term view.”
BKM believes now is the time to strike, thanks to the strong fundamentals in the light industrial sector. For example, citing industry reports, the JV said that the asset class in the fourth quarter recorded a 4.1 percent vacancy rate, which marks a record low. Also, leasing activity in the multi-tenant segment climbed by 12 percent year-over-year in the fourth quarter.
While there are economic concerns currently with tariffs and elevated interest rates, the JV said that it "is well-positioned to capitalize on market dislocation while delivering strong risk-adjusted outcomes in an underserved segment.
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