Michael Gutman

Assembly Funds Management (AFM) has begun talks with existing and prospective investors for the second close of ADPF2, the next fund in its Private Equity Real Estate series, to continue investment into high returning opportunities arising out of market dislocation and cyclical and structural changes across real estate subsectors.

AFM is seeking to raise up to $100m, with the balance of the second fund’s equity to be raised over the course of 2025.

ADPF2 completed its first close at the end of 2023, raising over $115m with around 50% of this initial equity expected to be committed, prior to the second close, into attractive investments largely in the Living sector. This ensures the fund is well seeded, with investments forecast to return high-teen gross IRR, in excess of fund targets.

Proceeds of the second close are also earmarked for various strategies in the Living Sector under the control of the Manager as a result of investments completed in 2024, and other countercyclical opportunities arising out of the elevated interest rate environment.

AFM has already deployed over 80% of the $350m ADPF1 (the first fund in the series) at the upper end of its mid-teens gross forecast return range despite its investment period overlapping with the headwinds of Covid and a severe interest rate hiking cycle. The team is expected to complete the balance of investing in ADPF1 by the end of FY 2024/25.

Approaching its 5-year anniversary in September, AFM announced a series of promotions and new hires to assist with the ongoing investment program for the two funds and management of the investments. The growing team at AFM now controls c.$600m of equity across the funds and Institutional co-investment and has completed 27 transactions of over $600m to date.

c.$200m of ADPF1 fund equity has also been successfully recycled from debt and equity investments at the target return since its launch.

AFM has largely avoided investment in retail and commercial assets since inception given the ongoing liquidity, leasing and valuation challenges in these sectors and will continue to focus on the living, logistics and alternatives sectors. The team is beginning to see more interesting countercyclical opportunities as the cycle progresses and asset owners are looking to either divest assets or raise new equity to resolve capital structure constraints.

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