Investors spend $17.3m in a day on childcare centres

Burgess Rawson’s six-weekly auction portfolio event on Wednesday – its 137th – looked a lot less packed than the first 134 before social distancing measures were introduced.

Three out of four childcare centre investments offered as part of a portfolio auction event on Wednesday, found buyers.

In the biggest deal, an Epping complex marketed as one of Melbourne’s best performing because of its high average occupancy rate, traded for $6.97 million.

The Epping centre (outlined), on 2979 square metres, sold for $6.97 million.

The 150-place facility on a 2979 square metre corner site at 2 Shimmer Street, opposite St Mary of the Cross MacKillop Primary School, was developed by the operator, Wallaby Childcare.

Offered with a 15-year leaseback containing two (10 year) options, and based on the current annual rent ($417,575 net), this result reflects a 5.99 per cent yield.

Passed in on a vendor bid of $5.25 million, agents are seeking a sub 5.8 per cent yield for 61-63 Chandler Highway, Noble Park (marked).

West of Melbourne, in Werribee, a new centre rented to Imagine Childcare and Kindergarten, traded for $5.7m – a 5.86pc return.

On a similarly large (2699 sqm) block, with 817 sqm of internal area, 24 Azolla Avenue is licensed for 112 clients.

With options, this tenant could stay until 2060. The initial lease, however, expires in twenty years.

As well as its investment attributes, Burgess Rawson selling agents Natalie Couper and Adam Thomas spruiked this property’s “significant depreciation benefits”.

However another Melbourne childcare centre in south west Noble Park, which is also new, failed to find favour at the auction event.

Passed in on a vendor bid of $5.25m, the agents are seeking a sub 5.8pc yield for 61-63 Chandler Road.

Across the country, a Padbury facility 23 kilometres west of Perth, traded for $4.61m.

The double storey complex – also new – contains 1017 sqm of area and is licensed for 82 children.

It occupies a 1737 sqm site 1 Forrest Rd, at the north east corner of Marmion Ave, and is rented to ASX-listed Think Childcare for its premium Nido Early School brand.

Based on the annual net rent ($298,287), the return on this deal is 6.48 pc (story continues below).

Plumber, sky diver, sugar cane farmer, amongst investors at portfolio auction event

The four childcare centre investments were offered as part of a portfolio auction event – the 135th conducted by agency Burgess Rawson.

Since social distancing measures were introduced in March, recent occasions have looked significantly less full than in the past.

But the COVID-19 backdrop, nor the closed state borders, stopped investors from contesting, Billy Holderhead said.

“There was a genuine buzz in the room and the pace of bidding was fast,” the executive added.

The agency put 15 properties to the market – heavily weighted, this time, with social infrastructure investments.

The Werribee childcare centre (also pictured, top) transacted on a 5.86 per cent yield – the lowest of the three which traded on Wednesday.

Thirteen traded at or just before auction, the agent said.

The sales volume was just over $46.8 million.

Today’s buyers also revealed an interesting mix of investors, Mr Holderhead said.

“While we had the usual property people such as investors from mainland China, developers and fund managers, the winners of the day were a diverse mix of private investors.

Nido Early Learning occupies the Padbury centre which collected $4.61 million on Wednesday.

“This included a plumber, telecommunications consultant, sky diver, retired retailer and a sugar cane farmer which is really encouraging for the market, indicating commercial property is widely seen as a solid investment.”

The agent said it was motivating on Wednesday to see several buyers which had been unsuccessful at the company’s previous events.

Last week, CBRE’s Sandro Peluso, Jimmy Tat, Josh Twelftree and Marcello Caspani-Muto sold an Oakleigh East childcare centre investment for $8.1m – a 5.4pc yield.

Despite the spread seating, Burgess Rawson’s Billy Holderhead said there was a buzz in the room. Thirteen of 15 properties forming part of the event sold for a total of $46.8m. Buyers included a sky diver and sugar cane farmer.

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Marc Pallisco

A freelance property analyst and journalist, Marc is a co-founder of realestatesource.com.au.

Marc Pallisco