A landmark aged care facility in Melbourne’s bayside suburb of Cheltenham has sold for $5.8 million amid growing investor interest in the sector.
St James Terrace, a supported residential services facility dating back to 1985, has been purchased by an international investor in an early-2021 sale managed by CBRE’s Healthcare & Social and Development Sites teams.
The 3,266sqm site at 294-296 Warrigal Road, Cheltenham, is zoned general residential and offers long-term development opportunities in Melbourne’s south east.
CBRE’s David Minty, Jimmy Tat, Marcello Caspani-Muto and Nathan Mufale managed the campaign, with its specialist team also selling an aged care facility in Boronia last year for $11.3m.
“Investor interest and appetite in the aged care sector has been increasing year-on-year since 2018; it is well-placed to be a breakout investment class in 2021,” Mr Tat said.
“We are fielding growing interest in these investments from both international and local investors, very similar to the market we saw for medical centres in 2015 and 2016.
“Despite some of the sentiment around aged care in 2020, investors continue to gravitate towards the sector, largely drawn by the fact these properties are land-tax exempt while they are being used as an aged care or supported residential services facility.”
St James Terrace operates 45 beds, with the tenant having purchased the business in 2013 on a five-year lease with an additional five-year option.
“These investments are land-rich in nature and offer strong underlying land values, with median sizes of 4,000-5,000sqm for single and two-level facilities,” Mr Caspani-Muto added.
“Aged care is undeniably going through a time of expected reform, but investing in a reputable and well-managed tenant can result in a highly-desirable, long-term holding.
“With the Royal Commission into Aged Care Quality and Safety set to release its final report and recommendations shortly, the industry is awaiting positive news around the potential for increased government funding measures, which would bolster the longer-term outlook for aged care providers.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
