Lowy family-backed Assembly Funds Management and Cadence Property team up to buy industrial properties in Melbourne

Source: The Australian

Ben Wilmot

A fund manager backed by the famed Lowy shopping centre family is rapidly expanding its industrial holdings with a fresh play in Melbourne in league with the next generation of the Buxton family.

Article Image

Assembly Funds Management boss Michael Gutman said the firm is acquiring and operating a range of strategically located industrial infill sites


The Lowy family-backed Assembly Funds Management and Cadence Property have teamed to snap up two more industrial properties in Melbourne’s Preston and Dandenong for a total of $52.95m.

Assembly launched in mid-2019 between ex-Westfield boss Michael Gutman, the Lowy Family Group and Alceon.

The trio launched its first fund, ADPF1 a $350m diversified property fund in 2019 and has now raised over $280m from wealthy investors.

They are pursuing an industrial infill strategy that is targeting suburban sites, which are often suited e-commerce, whose growth is pressuring shopping centres.

The pair now own five properties and are focused on buying industrial investments in core inner and middle ring metropolitan areas.

The properties have a high underlying land value, good holding income and can often be overhauled.

Assembly chief executive Michael Gutman said the pair were acquiring and operating “a range of strategically located industrial infill sites with solid holding income and interesting prospects for value-add down the track”.

Cadence managing director Charlie Buxton said the purchase of the properties was a strong result given “the current shortage of premium logistics facilities and development land surrounding Melbourne”.

“We’re pleased to have secured another two properties together with Assembly. Land with potential is at a premium and the sites we’ve secured have a lot of underlying value we’re looking forward to bring to the surface,” Mr Buxton said.

The first of the two transactions is 55 Raglan Street, comprising four industrial buildings on a combined 2.5-hectare site located in a preferred infill industrial market of Preston, 9 kilometres from Melbourne’s CBD.

The site has three street frontages, comprises four separate titles and includes 23,508sqm of improvements. It was purchased for $42.25m off market in a deal negotiated by Rory Hilton and Bryce Pane of CBRE at an initial yield of 4.5 per cent.

“We expect Preston to benefit from the ongoing gentrification of Melbourne’s inner-city markets, which in turn will continue to apply pressure on the availability of industrial zoned land in the area and surrounding sub-markets,” Mr Buxton said.

“With that will come an increased tenancy demand so the site definitely has potential for an increase in value in the short to medium term,” he said.

The second of the two purchases are located at 345-353 South Gippsland Highway, Dandenong South. It is a 4,967sq m warehouse situated on a prominent 13,723 sq m site located adjacent to South Gippsland Highway and the Pound Road interchange.

AFM and Cadence have purchased the property with a two -year sale and leaseback providing holding income while approvals are sought prior to future expansion works.

“A short-term lease, strong location, development potential and favourable leasing conditions all point towards the kind of value we, along with AFM, are targeting in our investment strategy,” Mr Buxton said.

The $10.7m deal on the Dandenong South site was negotiated by Daniel Telling and Gordon Code of Colliers. The other three industrial properties acquired to date under the AFM/Cadence strategy are in Melbourne’s Sunshine and Dandenong.

In addition to the industrial strategy Assembly and Cadence have also acquired and repositioned the Sunshine Square retail centre in 2020 for $39m