01.09.21

Lowy family-backed fund buys Melbourne sheds on 4.4 per cent yield

Source: Financial Review

Larry Schlesinger

Real estate fund manager Assembly has joined the institutional investor push into industrial property after snapping up two warehouses in Melbourne’s south-east for $25 million.

Assembly, which is backed by the Lowy family, founders of Westfield, former Westfield chief operating officer Michael Gutman and Sydney-based private equity firm Alceon, acquired the fully leased warehouses in Dandenong South on a combined yield of 4.4 per cent.

As with last year’s $40 million purchase of a Harvey Norman-anchored homemaker centre in inner Melbourne, Assembly partnered with industrial property specialist Cadence Property Group, led by Charlie Buxton, on its dual purchase in Dandenong South.

The latest acquisition follows Assembly raising more than $70 million from new and existing wealthy investors in its latest funding round, taking the total raising for its ADPF1 fund to $280 million since being established in 2019.

To date, the fund has secured more than $200 million of acquisitions, including six early learning centres in north-west Sydney, as revealed by The Australian Financial Review’s Street Talk column.

The latest additions to the fund comprise a warehouse facility at 51-65 Nathan Road, bought for $11.75 million and leased to pallet hire company Loscam, and a warehouse down the street at 88-90 Nathan Road, leased to event and entertainment services company PRG, which sold for $13.25 million.

The vendor was Toorak-based investor David Feldman, who earlier this year sold the Coles-anchored Torquay Village mall near Geelong for $40 million.

Both Dandenong warehouses offloaded by Mr Feldman occupy sites of more than two hectares, providing scope for expansion and further development.

“This value-add industrial strategy with Cadence is an exciting addition to our multi-sector portfolio in our diversified ADPF1,” said Mr Gutman, who is the chief executive of Assembly.

“We see a good opportunity to add similar opportunities into our portfolio over time”.

Mr Buxton said Cadence has long been bullish on Melbourne’s south-east due to a “real shortage of premium logistics facilities and development land”.

“Both assets were purchased at close to land value, provide a decent yield and have low site coverage in the lowest vacancy market in Victoria,” he said.

“This portfolio sits well with our general investment thesis and skill set and fits nicely into the strategy we are pursuing with our partner Assembly.”

The sale of the portfolio was negotiated by Knight Frank’s Scott Braithwaite.

“[Dandenong South] is a very tightly held precinct, with a number of long-standing owner-occupiers in the area, including Australia Post which owns a 25-hectare parcel next door,” Mr Braithwaite said.

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