Assembly and Cadence Expand Relationship to $80M with Purchase of Dandenong South Industrial Assets
01/09/2021
The portfolio of properties includes two industrial properties at 51-65 and 88-90 Nathan Road, Dandenong South, which were purchased from a private vendor in an off-market deal.
Michael Gutman, AFM CEO, said “This value add industrial strategy with Cadence is an exciting addition to our multi sector portfolio in the our diversified ADPF1. We see a good opportunity to add similar opportunities into our portfolio over time”.
Cadence Property Group Managing Director Charlie Buxton said the business has long been bullish on Melbourne’s south-east where there was 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.
“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. 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 price for the portfolio represented a 4.4% yield, with a combined income for the fully leased properties of $1,099,540.
The properties are both fully leased to national tenants, PRG and Loscam, and have low site coverage, which lends themselves to future value add opportunities.
The sale was negotiated by Knight Frank agent Scott Braithwaite who said the sale price for the portfolio reflected the current strength of leased industrial investments in the market.
“The current land market is supply constrained, putting upward pressure on prices and increasing demand for land rich industrial assets like the subject properties,” said Mr Braithwaite.
“It is a very tightly held precinct, with a number of long-standing owner occupiers in the area including Australia Post who own a 25-hectare parcel next door.”
The acquisition is being funded with fresh equity raised by Assembly over recent weeks which saw Assembly raise a further $70+ million committed by a swathe of new HNW investors as well as existing investors. Assembly was targeting $50 million in its third equity raise since it established its ADPF 1 Fund in September 2019. Assembly has now raised more than $280 million in its first two years against a final target of $350 million.
This transaction represents the third major industrial deal Cadence has undertaken in Melbourne’s south-east in the last 6 months, which includes the sale of the 60,400m2 Keylink development to The GPT Group for $128 million, and the $89 million sale of the 42,000sqm Southside estate to the Centuria Industrial REIT.
It also represents the third and fourth transaction that Cadence and Assembly have completed together including the purchase of a large format retail centre in Melbourne’s Sunshine last year for $39 million.