This article is from the Australian Property Journal archive
MELBOURNE developer Bridport Property Group has sold a recently completed childcare centre to a Chinese investor for the auspicious sum of $8,200,888.
The 117-place centre in the eastern suburb of Ringwood transacted on a yield of 5.4%.
Kids Club Child Care leases 30-32 Grey Street on a 15-year deal with two further options of 10 years each. The property is on a 1,677 sqm landholding with a two-storey building and has a rental income of $450,000 per annum, plus GST and outgoings, with annual rental increases of 3%.
“This is a solid outcome for an off-market transaction which reflects the current strength of the sector as well as the great location adjacent the Maroondah Private Hospital,” Bridport Property Group director, Tom Shelton said.
“We were well supported by our capital partner Barwon Investment Partners, backing us to ride the storm and sell into what has become a strong market for assets housing high quality essential service operators.”
Bridport sold an inner Melbourne centre just over one year ago for $8.25 million, also representing a 5.4% yield. After picking up the site for $4.51 million just over two years earlier, the developer repurposed the office building into a 92-place facility that is now also leased to Kids Club.
CBRE’s Sandro Peluso, Josh Twelftree, Jimmy Tat and Marcello Caspani-Muto negotiated the Ringwood sale, as well as the previous Kensington deal.
“Current investment activity in this asset class remains as strong as ever, spurred by reduced volume activity in 2020,” Peluso said, adding that financial institutions remain aggressive in their lending toward childcare assets, with loan to value ratios circa 60-65% with some banks.
Tat, who was instrumental in sealing the deal, said government support has seen the childcare emerge better off than most – despite domestic and international investors historically having doubts about continued growth year-on-year. This has now cemented international buyer confidence.
Private investors seeking childcare sector assets are finding greater competition coming from institutional players. HomeCo’s newly-floated Daily Needs REIT purchased a Melbourne centre tenanted by the country’s largest private early learning operator, Guardian Early Learning, for $8.6 million on a net yield of 5.3%, while HomeCo itself had just picked up a new childcare centre in the western suburb of Tarneit for $6,570,000, at 5.75%.
Childcare-sector focused Charter Hall Social Infrastructure REIT recently upgraded its full year guidance, citing government funding’s support to operators during the pandemic, and a strong recovery in attendances.
