Another circa $10 million childcare centre transacts below the cost of debt

A local private investor has purchased one of Victoria’s largest childcare centres for $12.8 million.

Located at 86 Springvale Road, Nunawading, the childcare centre has capacity for 154 children and is fully leased to Explorers Early Learning on a 15-year term plus options. 

The sale price reflects a yield of 5.3% and follows the transaction of a Brighton childcare centre for close to $18 million. 

CBRE’s Australian Healthcare and Social Infrastructure team of Sandro Peluso, Jimmy Tat and Marcello Caspani-Muto managed the sale. The team is responsible for the largest four childcare centre sales across Australia over the past 12 months. 

“Buyers have accepted the current cash rate and have no immediate views they will be declining in the short term. It is not a matter of speculation anymore and this has been made clear over the past 30 days with the team trading near $30 million worth of childcare centres at a circa 5% yield,” Mr Peluso said. 

“Sophisticated investors are looking beyond short-term yields and the immediate cost of debt to recognise the incredible short term buyside opportunity which exists in the marketplace. It’s not just about surface level analysis anymore, investors are analysing multiple factors such as depreciation, replacement cost and run a comparison of the return on their money in the bank vs investing in childcare centres.”

Mr Tat added, “The volume of private international capital in the marketplace continues to surprise both buyers and agents. The money is there but it’s more challenging to engage buyers to act and overcome the negative commentary they see in the media.”