Primewest is acquiring three childcare centres for a new fund.
In the priciest deal, it is paying $7.25 million for a 122-place complex in Gold Coast’s Robina.
Developed in 2004 and recently refurbished, 60 Investigator Drive (pictured, top, unrenovated) is tenanted to Oxanda Education for 15 years; an agreement with three 10 year options.
Based on the net annual rent ($425,000), this property is trading on the tightest yield – 5.86 per cent.
In Ellenbrook – 30 kilometres north east of Primewest’s Perth headquarters – the landlord will outlay $5.22m for an 87-place investment in Drumpellier Drive.
Due for completion next month and settlement in January, this asset, pre-committed to ASX-listed Think Childcare, will exchange on a 6.5pc net return.
At 36-40 John Rice Avenue, Elizabeth Vale, about 25 kms north east of Adelaide, another complex under construction, leased to the same occupier, is selling for the same yield.
It is costing the landlord less though – $5.022m. It is also licensed for more (102) clients.
Think has committed for an initial 20 years at both addresses; the rental agreements offer two 10 year options (story continues below).
Primewest Income Property Fund at a glance
Primewest has earmarked the childcare centres for the open-ended Property Income Fund (PPIF) which it started seeking investors for this week.
The trust isn’t limited to social infrastructure real estate: as long as it provides a monthly income, is in a capital city or major regional town and has about five years left to run on a lease, it will also consider offices, factories and shops.
No property will represent more than 35pc of its portfolio value, the manager added.
Gearing is intended to be between 35-50pc.
Interestingly for an income-driven fund, up to 15pc of its worth can be invested in development sites.
Following settlement of the three childcare centres, Primewest will raise more capital to expand the portfolio.
It will sell assets if required too.
PPIF shareholders should expect a 5.5pc distribution and first pay in February.