Lowy family-backed Assembly and PGIM team up for Woodgrove complex in $440m buy

Retail property is coming back in a big way and the most famed investors in the sector are leading the charge.

Michael Gutman, headed Westfield in UK/Europe before setting up Assembly Funds Management.

The Lowy family-backed Assembly Funds Management has paired up with US investment house PGIM Real Estate to pull off its biggest ever property deal.

The billionaires backed Assembly when it launched six years ago with former Westfield executive Michael Gutman at the helm. It is now becoming a force in institutional property as it seeks partners to buy larger assets building on a series of smaller deals ranging from buying warehouses to childcare property.

They will buy the Woodgrove Shopping Centre in the western Melbourne suburb of Melton for $440m.

The purchase, from funds manager QIC, marked Assembly’s entry into the top end of the retail market. Winning PGIM is a coup for the firm that had previously relied mainly on cultivating its own network of wealthy investors.

Steven Lowy of the Lowy Family Office. Picture: Jane Dempster/The Australian.

Assembly chief investment officer Tim Meurer said the property was a high performing centre in one of the fastest growing trade areas nationally.

“The opportunity to acquire centres such as this, which are already delivering strong sales over $520m, is very limited at a time when the cost of replicating them is unviable,” he said. He added there were multiple opportunities to add value to the property. Assembly will hold a majority stake in the centre with PGIM picking up a smaller share.

Assembly is buying via its diversified fund series, which will shortly open to new equity, and a new syndicate of high-net worth investors.

PGIM Real Estate head of Australia, Steve Bulloch, described good value in retail property, both in Australia and more broadly across Asia.

“We remain very selective in the retail space, but this opportunity ticks a number of boxes for us, offering a solid existing cashflow, trading performance, as well as several opportunities for asset enhancement,” he said.

Impossible to replicate, Woodgrove Shopping Centre in Melton. Picture: Supplied

Assembly and PGIM teamed up previously, having co-funded a retirement living platform in early 2024.

Woodgrove is a single level shopping centre on 27 hectares of land in the fast-growing western corridor of Melbourne, where the population is surging, opening the way for a mixed use development in the long term.

It has nine major, nine mini-major and 142 speciality stores with Coles, two Woolworths, Aldi, Kmart, Big W, Harris Scarfe, Dan Murphy’s, and Reading Cinemas.

QIC Real Estate director of funds management, Declan Walsh, said QIC had developed Woodgrove into the first-choice retail destination for locals.

The deal, handled by JLL’s Nick Willis and Sam Hatcher and Colliers’ Lachlan MacGillivray, is considered a landmark deal for the retail property sector’s recovery.

Mr Willis said the depth of bidding in the sales campaign showed the resurgence of Australian retail property was resonating globally.

“The offering of Woodgrove attracted diverse interest from all sources of capital domestically and offshore. Heightening the competition was the fact that it was the first 100 per cent controlling interest in a Victorian regional shopping centre above $400m to be offered in more than two decades,” he said.

Mr Hatcher said: “globally we are continuing to see a shift from major capital sources looking to reweight back towards the retail sector following a continued period of robust performance”.

QIC acquired the shopping centre in 1997 – at the time a Coles-anchored neighbourhood mall – before undertaking three expansions in 1998, 2003 and 2013. It could be further expanded by 30,000sq m.

Mr MacGillivray said the Woodgrove centre was unchallenged because no other major centres are planned in its corridor.