Childcare centres remain one of the most sought after commercial investments, particularly for private investors, with over $38 million of recent sales brokered by Stonebridge Property Group’s Tom Moreland, Michael Collins, Rorey James, Kevin Tong and Thomas Proberts.
Headlining the recent results is the sale of ‘Play & Learn Childcare The Gap’, situated 7 kilometres north-west of the Brisbane CBD at 10-14 Payne Road, The Gap. The asset was purchased for $7,900,000 by a regional Qld based private investor, with the price reflecting a 4.84% yield. The fully refurbished 112 place facility is set across a 1,962 sqm site and secured by a 20 year lease to 2039, with the tenant responsible for all outgoings and 3% annual rent increases.
Two facilities in Toowoomba, Queensland also sold as part of Stonebridge’s record breaking inaugural National Portfolio Auction, attracting a combined total of 104 enquiries during the campaign. ‘Story House Wilsonton’ at 23-25 Erin Street, Wilsonton sold for $5,420,000 to a Melbourne based private investor and set a record low yield of 4.75% for a regionally located childcare centre in Queensland.
The facility was newly built in 2020, provides ‘Hamptons style’ improvements and is positioned on a significant 2,029 sqm site in close proximity to numerous schools as well as a major shopping centre. Nearby, another Story House leased facility in North Toowoomba sold at Auction for $3,870,000 at a 5% yield. Both Story House Centres provide 20 year net leases, fixed 3% annual rent increases and boast high occupancy levels.
Additionally, three childcare centres have sold off-market prior to completion. An Eden Academy Childcare Development in Melbourne’s booming growth area of Tarneit has sold ‘off-the-plan’ to an active childcare fund for $7,648,000 at a yield of 4.92%. The property, situated at 32 Origin Drive, Tarneit will carry a new 15 year lease through to 2038 plus options and boast state-of-the-art improvements.
Further north, an Imagine Childcare Development in Townsville’s emerging suburb of Bushland Beach, at Lot 500 Goiceochea Drive, has sold to a Brisbane based private investor on a ‘fund-through’ basis for $6,575,000, at a 5.25% yield. The Centre is due for completion in early 2023 and will provide a 20 year net lease to 2053 plus options, with the tenant responsible for all outgoings and 3% annual rent increases.
Another childcare development at 1 Alma Road, Dakabin, 35 km north of Brisbane CBD has sold to a local private investor for $7,350,000 at a 5% yield. Directly adjoining a Woolworths Shopping Centre, the new facility will be operated by Journey Early Learning on a new 15 year term through to 2037 plus options, with fixed 2.75% annual rent increases.
Commenting on the flurry of recent activity, Stonebridge Partner Tom Moreland said “These sales indicate the childcare investment market remains buoyant, despite ongoing rhetoric surrounding the rising cost of debt and a softening of yields. We continue to witness high net worth private investors pursuing assets within defensive industries, particularly those providing annuity style income via long term leases to proven covenants”
Stonebridge Partner Michael Collins noted “Each of the properties sold share a number of similarities sought by investors, including long term leases, annual reviews of circa 3%, new buildings with high depreciation and strategic childcare locations near schools and associated amenity. This, together with the Federal Governments $10.3 billion anchor for the sector, growing by a further $1.7 billion over the next three years, is driving continued demand for quality freeholds”.