This article is from the Australian Property Journal archive
A VICTORIAN investor has purchased a north-eastern Adelaide childcare centre for $8 million, marking the biggest childcare transaction in South Australia since 2022.
Located at 2-8 Botany Drive in Golden Grove, the 900 sqm childcare centre is fully leased to ASX-listed Nido Early Learning on a 20-year initial lease.
CBRE’s Australian Healthcare and Social Infrastructure team of Sandro Peluso, Jimmy Tat, Marcello Caspani-Muto and Rhyce Scott managed the sale which achieved a yield of 5.75%.
“Childcare investments are becoming more appealing in investors’ eyes, despite broader headwinds in the economy. However, just like much of the market it’s still no walk in the park,” Peluso said.
He noted that the CBRE team’s childcare centre transactions in 2024 are occurring on a national platform to start the year, with deals across Victoria, Queensland, South Australia and Western Australia.
“Detailed analysis and time need to be spent with private buyers to educate them on lease security, tenant performance and return fundamentals in the space as for many they could be first- or second-time investors.”
Caspani-Muto said the majority of our transactions occur 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.”
He said cash flow analysis, cost of capital comparisons and factoring in the benefits of depreciation alongside fixed rental growth have all been critical to demonstrate the positive cash flow nature of these assets, even if they are purchased below the cost of debt at a surface level.
CBRE recently sold a brand-new Ipswich childcare centre to a Brisbane-based investor for $7.6 million, and a two-year-old facility in Melbourne’s south-east suburb of Beaconsfield leased to Explorers Early Learning sold for $8 million, showing a yield of 5.05%.
At last week’s Burgess Rawson property portfolio auction, an investor paid $5.38 million for an inner Brisbane centre with a brand-new 15-year lease to Chatterbox Early Learning, on a yield of 4.84%, while another investor forked out $7.05 million for a Bluebird Early Education centre in Lake Macquarie on a 6.03% yield.
