Brighton childcare centre changes hands for $17.5 million

A local private investor has purchased one of Victoria’s largest childcare centres for $17.5 million, amid an increase in demand for the asset class from both onshore and offshore investors.

Located at 46 Dendy Street, Brighton, the childcare centre is licenced for 171 places and is fully leased to ASX listed G8 Education, trading under their flagship banner, the Learning Sanctuary.

The 2,380sqm centre was developed in 2019 and has a net operating income of $910,047 per annum.

CBRE’s Australian Healthcare and Social Infrastructure team of Sandro Peluso, Jimmy Tat and Marcello Caspani-Muto managed the sale via an International Expression of Interest campaign.

Having transacted four of the five biggest centres across Australia since April 2022, the team now hold a 78% market share by dollar value for all childcare centre sales nationally exceeding $10,000,000 in the same period.

“Private capital is leading the way by notable margins in most of our transactions between $15 - $50 million. For this transaction, we saw an increase in investment interest from Singapore and Taiwan and while the purchaser was local, both underbidders were international groups,” Mr Tat said.

Mr Peluso added, “When selling childcare and healthcare investments at these price points, the focus is moving away from returns and onto replacement cost. This is no revelation; however, astute investors know that the buy-side opportunity being witnessed will end in short order and may not be seen again for a period.”

“Yields will sharpen again as supply is reduced which will be further catalysed by the eventual shift in the rate of environment when this occurs. The cost of buying and developing a new centre all-inclusive is often resulting in the same or an inferior yield to what can be achieved buying a passing and land-rich investment.”

CBRE Australian Healthcare and Social Infrastructure team's childcare centre sales since 2017, by dollar value: