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21.07.22

Lowy family-backed Assembly closes out property fund with $67m raising

Source: Australian Financial Review

Larry Schlesinger

Michael Gutman, chief executive of the Lowy-family backed Assembly Funds Management, said both the residential and industrial sectors remained attractive to the real estate investor, after it closed out its $500 million diversified property fund with an oversubscribed equity raising.

The fund, which launched in 2019 with a $75 million cornerstone investment from the founders of Westfield and Scentre Group, raised $67 million in its final round from high net worth investors and family offices taking total equity raised to $350 million.

Investors like our multi-sector approach: Michael Gutman

 

Highlighting the strong appetite for commercial investments despite rising interest rates and bond yields, 60 new investors joined the register in the oversubscribed offering, taking total investor numbers to around 360.

Mr Gutman said the latest raising, which gives the fund the firepower to hold about $500 million of assets, reinforced the attractiveness of both its multi-sector approach and the flexibility of its mandate to invest in debt or equity over the short, medium or long-term.

Having invested half of its funds raised so far in the residential sector, where it has focused on the downsizer apartment market, Mr Gutman said AFM “still liked this sector”.

“With immigration returning and the supply chain problems clogging up the market, you could end up with a reduction in supply [relative to demand],” the former Westfield chief operating officer told The Australian Financial Review.

“So the market could soon be up and running again,”

In the industrial space, where AFM has made a number of acquisitions, there existed similar strong underlying demand, Mr Gutman said.

“We still like that space, though the market has adjusted and is adjusting,” he said.

“So we will look at opportunities in [both] the residential and industrial markets,”

Since launch in September 2019, AFM has committed about $290 million of equity into 13 investments. These include buying a Harvey Norman-anchored homemaker centre in inner Melbourne in 2020 and two warehouses in Melbourne’s south-east last year.

In April, AFM beefed up its industrial exposure further, purchasing two last-mile delivery properties in Melbourne for a combined $53 million. It also has investment in Sydney childcare centres.

The fund is targeting annual net total return to investors of 10-12 per cent, of which half is paid out as an annual distribution.

“With the additional equity secured and other shorter term recycled assets the fund has around $300 million of firepower to secure attractive counter-cyclical opportunities emerging in the current dynamic environment,” Mr Gutman said.

“We’re negotiating on a bunch of opportunities, [but] things are a little quiet at the moment,” he said.

In the industrial sector, Mr Gutman said AFM was looking to acquire value-add opportunities on short-term leases, where it can improve the property and the cash flow.

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