Assembly Funds Management has entered the industrial sector, picking up two Dandenong South warehouses from private investor David Feldman.
The blended yield for the $25 million outlay is 4.4 per cent.
The buyer will hold the assets with Cadence Property Group, with which it acquired a Sunshine North shopping centre last year.
They will be held in the Assembly Diversified Property Fund No 1, which also targets essential services, residential and hotel product.
The deals come three weeks since Mr Feldman sold a Port Melbourne service station to Wingate for $32.12m – a 46pc rise on the ($22m) price paid in 2016.
Early last month the businessman banked $54.5m from Bendigo’s All Seasons Hotel.
That property, 171-183 McIvor Road, cost $24m in 2017.
Also this quarter, Mr Feldman divested Torquay Village for $40m.
The executive picked up this shopping centre from Coles for $35m in 2018.
The new properties
Knight Frank’s Scott Braithwaite brokered the two Dandenong South deals.
The largest property – 88 Nathan Rd, on 2.25 hectares (pictured, top) – is trading for $13.25m.
Abutting an Australia Post 25ha sorting facility, it is leased to entertainment and event producer and designer, PRG.
The second asset is in the same street – #51-65.
On 2.02ha, and fully leased to pallet producer Loscam, it is setting Assembly back $11.75m.
Assembly flush with cash
Established in 2019, Assembly is backed by Sydney’s Lowy family, ex-Westfield chief operating officer, Michael Gutman and Alceon.
Cadence, which is Melbourne-based, is directed by Charlie Buxton.
In June we reported the latter sold a $128m Keysborough industrial estate to GPT Group in partnership with Quadreal (story continues below).
Not long earlier, Cadence sold Centuria the Southside business park – again in Dandenong South – for $88.8m.
Both these deals were struck on a funds-through basis.
The Nathan Rd investments will be funded with proceeds from a recent $70m capital raising.
ADPF1 was established two years ago; it has since sourced c$280m from its private investor client base.
In March its manager, with Harrington Property Group, acquired six Sydney childcare centres for the trust – a total outlay of $43m.
The fund has a final target of $350m.
Deals struck at close to land value: Cadence
Mr Buxton said the Nathan Rd assets were purchased at close to land value.
Both contain warehouses spreading over a low portion of the block – allowing for longer-term development upside.
“We’ve spent a lot of time assessing the south-eastern market and find the supply/demand dynamic very attractive for both development and investment opportunities,” he added.
“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,” according to the executive.
Mr Gutman said its value-add strategy with Cadence offers ADPF1 unit holders a competitive advantage.
Mr Braithwaite added “the current land market is supply constrained, putting upward pressure on prices and increasing demand for land rich industrial assets like the subject properties”.
Dandenong South is famed in industrial leasing circles for having a circa-one per cent vacancy.
According to Colliers research, four developers – Frasers, Goodman, Pellicano and Salta – control the 140ha of corporate controlled land available for new stock.
Outside of the inner-city, the region is Melbourne’s priciest in which to buy or lease.
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