Lowy family backed Assembly Funds Management and Cadence Property Group have snared two more Melbourne industrial investments for the Assembly Diversified Property Fund No 1.
In the biggest deal, the partners are paying a syndicate including ex-Carlton Football Club president Mark Lo Giudice, Baron Corporation founder Stewart Baron and David Cohen $42.25 million for four adjoining properties covering 2.5 hectares at 55 Raglan Street, Preston.
All up containing 23,508 square metres of improvements – including a car impound yard leased to Victoria Police – this portfolio is being acquired on a 4.5 per cent yield.
The suburb is about nine kilometres north of the CBD.
“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 markets,” Cadence chief executive officer Charlie 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 added.
Fifth industrial investment
Meanwhile at 345-353 South Gippsland Highway, on the corner of Pound Road, in Dandenong South, AFM and Cadence are paying $10.702m – reflecting a 4.44pc return – for a distribution centre offered with a two year leaseback to Aussie Disposals.
Containing a 4967 sqm warehouse covering just 36pc of the 1.37ha block – the buyers intend to seek a permit to construct more product upon obtaining vacant possession.
“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 [ADPF1’s] investment strategy,” Mr Buxton said of the property.
The acquisitions come six months since AFM and Cadence, for ADPF1, paid private investor David Feldman $25m for two Dandenong South warehouses.
The fund’s only other industrial asset, 1 Midway Lane, Sunshine North, set the group back $8.2m in 2020 (story continues below).
Spreading 2.16ha – the majority of which is hardstand – the former concrete batching plant is presently for lease.
Portfolio to reach $350m
AFM was formed in 2019 by ex-Westfield chief operating officer Michael Gutman with a $75m backing from Lowy Family Group, and $65m investment from Alceon.
ADPF1, its first fund, holds 12 properties worth a total of $283m.
Following the recent launch of its last capital raising, seeking $65m, the trust will top-out with a portfolio valued at c$350m.
Amongst its other assets is Sunshine Square, formerly known as City West Plaza, again in Sunshine North, and a swag of north west Sydney childcare investments acquired with Harrington Property Funds Management.
“It is pleasing to witness the consistent progress we are making together with Cadence in acquiring and operating a range of strategically located industrial infill sites with solid holding income and interesting prospects for value-add down the track,” Mr Gutman, AFM’s chief executive officer, said of the latest two acquisitions.
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