A portfolio of six newly developed Victorian childcare centres offered to the market for the first time are expected to fetch $50 million.
The centres scattered across Melbourne’s middle suburbs from Point Cook in the west to Ashwood in the east have been developed by Bamfa Properties and LR & EC Enterprises, property records show.
Key attributes of childcare centres – stable long-term leases arrangements underpinned by guaranteed government-supported fees – have made them an investment market darling and keenly sought after.
Most of the centres in Ashwood, Hughesdale, Blackburn North, Point Cook, Carnegie and Mentone have 20-year leases to ASX listed G8 Education, Guardian Early Learning and Nino Early Learning Adventures.
The rapid expansion of institutional players like Goodstart (formerly ABC Learning Centres), Folkestone Education Trust, G8, Arena REIT and Affinity Education Group has also fuelled investor interest in the sector.
Marketing agents Savills ‘s Julian Heatherich said there was a shortage of good investment stock and “nothing like this has been put to market” for some time.
Mr Heatherich said he expected the centres to be sold individually or as one line to institutional investors.
Finding sites in middle-ring suburbs to construct childcare centres was a “difficult” task, he said.
Yields for stand-alone centres have sharpened significantly with all Victorian centres sold since February 2016 achieving sub 6.5 per cent yields, and in several cases near 5 per cent.
A childcare centre in Sayers Road Tarneit sold for $3.7 million on a yield of 4.96 per cent in September last year. Another in Berwick sold three months later for $3.425 million on a yield of 5.44 per cent.
The most recent sale in Pakenham achieved $5.12 million with a yield of 6.24 per cent.
Department of Education and Training data shows an estimated 1.67 million children attended approved care in 2015???16 with about $7.3 billion spent by governments on childcare fee assistance.
The federal government recently pushed through legislative reforms for the Child Care Benefit and Child Care Rebate to replace them with one means-tested payment called the Child Care Subsidy.
Under the changes families earning less than $65,000 a year will get a subsidy up to 85 per cent of their costs. The rate for families earning more than that, but less than $340,000, will gradually taper to 20 per cent.