Assembly Funds Management and Harrington Property Funds Management are paying $42.95 million for six north west Sydney childcare centres.
The assets will be held in the former’s Australian Diversified Property Fund No1, set to be worth $325m.
Since its launch 18 months ago, $207m has been raised for the diversified trust – including $53m in December.
Assembly – backed by the Lowy family, Alceon directors Phil Green and Trevor Lowensohn and ex-Westfield Group’s Michael Gutman, the latter also its chief executive – targets real estate for the fund worth c$30m, considered a sweet-spot too pricey for many private investors but under-the-radar of institutions.
Last May, in partnership with Cadence Property Group, the manager paid $39m for Melbourne’s City West Plaza – a large format retail investment on 6.1 hectares recently rebranded Sunshine Square.
ADPF1 will run five years.
The childcare centres
The early learning investments are all in suburbs forming a growth corridor: Box Hill, Marsden Park, Riverstone and Schofields.
There are two in Woodcroft.
Each property carries a 15 year lease to Young Academics.
All up they cater for 452 children.
“The early learning sector is well placed for long-term growth having the benefit of bi-partisan government support,” HPFM director Trevor Byles said.
“That support is driven by academic research which has highlighted the immediate and longer term social and economic benefits of childcare participation in formal early learning programs,” according to the executive (story continues below).
“From a real estate perspective, we are of the view that as the sector matures, the freehold ownership of early learning centres will become more consolidated by institutional capital” he added.
Tim Muerer, AFM head of transactions, added “childcare has proven to be a highly resilient asset class in the face of economic turbulence and offers good value in a low-yield macro environment.
“By comparison, the direction of other asset classes such as traditional retail, commercial and leisure is less certain while industrial and logistics are heavily sought after and comparatively expensive”.
Mum and dad investors outmuscled by offshore equity, institutions: agent
Peritus Childcare Sales’ Peter Fanous brokered the sales.
“We have experienced significant stronger demand from major global private equity firms and family offices based in Asia who are attracted to the fundamentals which support the asset class,” the agent said.
“At a macro level, childcare…has well and truly established itself as an institutional asset class alongside the traditional office, industrial and retail asset classes,” he added.
“The fundamentals which support the industry are robust with strong 0-5 population growth forecast at 1.4 per cent per annum (compound), over the next 10 years, bi-partisan federal government funding support currently at approximately $1.96 billion and increasing workplace participation rates with the spread between male and female narrowing by approximately 70 per cent since 1978″.
The deals come three months since HomeCo acquired childcare investments in Melbourne’s Essendon and Tarneit as part of a $163m spending spree for an essential services backed fund.
Last November, Primewest spent $17.5m on three of these assets – in Perth, Adelaide and the Gold Coast.
Charter Hall remains one of the earliest and biggest institutional investors in this sector; two years ago its Education Trust outlaid $73.5m on 13 early learning properties.