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The $8 million purchase of a South Australian childcare centre by a Victoria-based investor marks the state’s largest childcare transaction since 2022.
The 900-square-metre childcare centre has since been fully leased to early childcare educator Nido Early Learning on a 20-year initial lease.
CBRE’s Australian healthcare and social infrastructure team made up of Sandro Peluso, Jimmy Tat, Marcello Caspani-Muto and Rhyce Scott were responsible for brokering the sale which attained a yield of 5.75 per cent.
Notably, this deal marks the team’s sixth in as many weeks across Victoria, South Australia and Western Australia.
“The team have now sold seven centres since January, and they are not location specific. These are across Victoria, Queensland, South Australia and Western Australia,” Peluso stated.
“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.”
Peulso identified the time his team spent engaging with investors as being integral to their recent transactions, emphasising that many private buyers will be “first or second-time investors” that will require guidance on factors such as “lease security, tenant performance and return fundamentals”.
“It’s these buyers that continue to perform with the team having now sold more than three times the volume of our nearest competitor nationally in 2024,” said Peluso.
Caspani-Muto also highlighted that buyers will often adopt a medium to long-term view of their passive investments and in the process “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”.
“A more proactive approach to buyer education has also been critical in achieving these outcomes,” Caspani-Muto declared.
“Cash flow analysis, cost of capital comparisons and factoring in the benefits of depreciation alongside fixed rental growth has 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,” he concluded.
This sale follows the release of CBRE’s Apartment Vacancy and Rent Outlook report, in which the company's four-year forecast projected a 28 per cent rise in apartment rents.
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