Industrial specialist BKM eyes new credit lines for multi-billion pipeline 

The firm believes secular changes in consumer behavior that are driving the US and industrial logistics markets are a strong opportunity.

BKM Capital Partners, a Newport Beach, California-based investment management company, is looking at putting into place new credit facilities as it prepares to execute on a multi-billion pipeline of  logistics and light industrial assets over the next year.

The pipeline represents a major increase in activity for BKM, which was founded in 2013 by Brian Malliet. BKM believes secular changes in consumer behavior that are driving the US and industrial logistics markets mean a strong opportunity for a specialist like BKM to expand its portfolio, Bill Galipeau, the firm’s newly minted chief financial officer, told Real Estate Capital USA.

Galipeau, who joins the firm from PIMCO, said BKM is planning to raise additional capital via new investment vehicles after fully realizing its first fund in September 2021. BKM Industrial Value Fund I provided a confirmation of BKM’s investment thesis and exceeded targets. The firm’s second fund. BKM Industrial Fund II, closed in 2019 and is also on track to exceed targeted returns.

“We believe this part of the market has long legs and we are excited about the opportunity to expand our portfolio,” Galipeau said. “We believe there are still very attractive valuations of these assets.”

Galipeau, who was most recently an executive vice-president and head of investment operations at PIMCO, will use his experience in managing and growing investment platforms to help BKM scale its business. A part of this will be reviewing the firm’s capital markets, accounting and reporting processes.

Having in-place credit lines will allow BKM to move more quickly on acquisitions, Galipeau said. “We now obtain financing on an asset-by-asset basis, regardless of whether the property is being held in a joint venture or a fund,” he added. “Having multiple types of credit facilities will allow us to be more nimble.”

Investment thesis

BKM believes that its focus on multi-use logistics and light industrial properties is rare, with Galipeau noting that these property types perform best as part of a vertically integrated operating platform that can oversee all functions, including leasing and interacting with tenants.

“We believe we will be able to scale our platform quickly because we have built the infrastructure and made the capex investments necessary,” Galipeau said. “We really just need a partner to help us expand our exposure.”

The firm, which has already been working with institutional investors, believes that its current plans will help to accelerate growth. “We need to be a fund manager to execute on our plan. I think this segment of the market has performed well as consumers work remotely and because of that shift in e-commerce, it is creating an even greater attention to the asset class,” Galipeau said. “I bring to the table a strong focus on asset management, building scalable financial operations and tapping into the capital markets.”

In addition to Galipeau, the firm also hired Harry Hedison as senior managing director of capital markets and Susan Rounds as managing director of operations. The firm is also looking to expand its staffing across the board and has openings on its investment management, back office and operational teams.