This article is from the Australian Property Journal archive
PREMIUM Melbourne childcare centres are beginning to change hands at a rapid click, with a two-year-old facility in the south eastern suburbs selling for $8 million.
The 2 Pinkhill Boulevard property in Beaconsfield is leased to Explorers Early Learning on a 15-year term with further options. The sale price reflects a yield of 5.05%, which CBRE selling agents Sandro Peluso, Marcello Caspani-Muto and Jimmy Tat noted is well below the current cost of debt.
They have also just sold 46 Dendy Street, in the blue-ribbon suburb of Brighton for $17.5 million, and 86 Springvale Road in Nunawading for $12.8 million.
The agents expect further transactions across the country to be announced imminently.
“The past three transactions can leave no question in investor minds – the buy side window of opportunity is rapidly closing if it hasn’t completely concluded already,” Peluso said.
“There is a finite supply of modern and quality childcare investments available in the marketplace and the number of opportunities is only shrinking with continual feasibility challenges for developers in metropolitan locations.”
A lack of supply will is tipped to put more downwards pressure on yields, and before the widely forecast reduction in rates at some point in the coming six to 18 months.
Also in Melbourne, a Bentleigh childcare centre has just changed hands for more than $6.7 million, on a 4.7% yield. It is occupied by Evolve Early Learning.
Marcello Caspani-Muto said the majority of transactions are occurring via private capital or syndicates.
“These buyers continue to take a medium to long-term view of their passive investments and are willing to overlook the short-term cost of borrowing (if they are borrowing funds at all) to secure their investment future for the next 15-plus years.”
“A more proactive approach to buyer education has also been critical in achieving these results. Cash flow analysis, cost of investing at benchmarked LVR’s versus leaving funds in the bank and so on. It’s more important than ever to spend time educating and assisting private capital, particularly as many are first-time investors in the space.”
