Lowy-backed Assembly targets $440m Melbourne shopping centre

The famed family’s return to buying big shopping centres suggests there’s value to be unlocked, seven years after patriarch Sir Frank Lowy sold out of the international Westfield empire.

An investment firm backed by the billionaire Lowy family is getting back into big shopping centres, seven years after Sir Frank Lowy famously sold out of the international Westfield empire.

An investment firm backed by the billionaire Lowy family is getting back into big shopping centres, seven years after Sir Frank Lowy famously sold out of the international Westfield empire.

The Assembly Funds Management operation, run by a former Westfield chief operating officer, Michael Gutman, is in due diligence to buy the Woodgrove Shopping Centre in Melbourne for close to $440m.

The fund manager is backed by the Lowy Family Group, as well as Alceon Group and Mr Gutman. The principals of the LFG family office are Sir Frank and his sons, David, Peter and Steven.

Sir Frank struck a $32bn deal in 2018 to exit Westfield, and the family subsequently sold out of local operator Scentre Group, seemingly cutting all ties with mall ownership.

Assembly confirmed it was in exclusive negotiations to acquire the “highly attractive” shopping centre campus in Melbourne’s fast-growing western corridor.

The imminent purchase of Woodgrove is Assembly’s first investment into the tightly held asset class and seeks to leverage its deep experience managing and developing retail assets.

Woodgrove is a single level shopping centre occupying 27 hectares of land in the fast-growing western corridor of Melbourne, where the population growth is double the national average.

The site also carries significant opportunities for future development to meet anticipated demand for more retail floorspace at a time when development of large new centres has stalled.

Woodgrove Shopping Centre in Melton West.

Mr Gutman said market timing made retail property increasingly attractive. “AFM’s mandate is to invest through-the-cycle across diversified asset classes to take advantage of changing sectoral fundamentals. We have identified that it is an opportune time in the cycle to acquire a major retail asset such as Woodgrove,” he said.

“A scarcity of new retail space delivered in the last five years, coupled with ongoing population growth, has resulted in an actionable under-supply of retail floorspace,” he said. “It is expected that Woodgrove will deliver an attractive annual distribution to our investors from early ownership, while opportunities to improve the asset will deliver significant total return over the medium term.”

The centre is being sold by a QIC-managed fund. A spokeswoman for the manager noted the depth of demand: “The strong response to the sale campaign for Woodgrove speaks to the quality of the asset, and QIC’s ability to drive value creation through active management,” she said.

“As a responsible real estate manager, QIC strategically assesses the holdings of our funds to capture optimal growth and return outcomes for our clients, and the potential divestment of Woodgrove is in line with client-endorsed strategies.”

It is anticipated that Assembly will take over ownership and management by mid-2025.

The complex was almost bought last year by a fund run by listed group Dexus.

When that deal did not go ahead, it hit the market again, attracting strong bidding from the property syndicators and fund managers who have dominated buying. Bidders included shopping centre specialist Haben and real estate funds house AsheMorgan.

The Assembly purchase signals its confidence in the returns on offer at the large end of the retail market after huge price falls.

It also indicates Assembly’s belief that it can lift the performance of the mall.

Woodgrove Shopping Centre.

Back when the Lowy-led Westfield dominated the shopping centre industry and was a market leader in the management and development of new complexes, larger players were the favoured ownership models.

While they still own the largest assets, the advantage has shifted toward smaller owners.

Assembly is one of the country’s most innovative fund managers and has bought properties ranging from office blocks and warehouses to residential and large format retail projects.

Last November, it teamed with real estate private equity firm Wentworth Capital to snap up a bargain office building, with the pair paying $229.3m for a Sydney complex.

Two months earlier, it invested in a residential land lease joint venture to develop more than ten new estates and up to 2,000 homes across the east coast of Australia.

It remains to be seen whether a regional shopping centre will be a foothold in the industry or a broader play for the Melbourne asset.

The move to sell Woodgrove comes as the retail property market shows signs of stabilising, with Vicinity Centres buying again in Perth and Melbourne.

In Sydney, QIC last year sold the massive Westpoint Shopping Centre in the western suburb of Blacktown to fund house Haben and US investment group Hines for about $900m.

QIC also sold out of Perth’s Claremont Quarter, with private investment house Hawaiian taking full control of that mall in a deal valuing its half stake at about $207m.

Woodgrove comprises more than 60,000sq m of lettable area and generates over $500m in tenant sales per annum.

Woodgrove is a single level shopping centre occupying 27 hectares of land in the fast-growing western corridor of Melbourne.

JLL’s Sam Hatcher and Nick Willis, and Colliers’ Lachlan MacGillivray are handling the sale. The agents declined to comment.

Woodgrove comprises more than 60,000sq m of lettable area and generates over $500m in tenant sales per annum. It is anchored by retail heavyweights Coles, Woolworths, Aldi, Kmart, Big W, Harris Scarfe, Dan Murphy’s, Reading Cinemas and backed by 160 specialties and kiosks.