Brighton Childcare Centre Sale Breaks into Top 25

A childcare centre in one of Melbourne’s blue-ribbon suburbs has muscled its way into the top transactions of recent times.

Less than six months after a record was set for Victoria’s biggest childcare investment sale, the centre in the Melbourne suburb of Brighton sold for $17.5 million, reflecting a yield of 5.19 per cent, adding it to the list of biggest sales since 2017.

The asset at 46 Dendy Street, Brighton, is leased to ASX-listed G8 Education, trading under its The Learning Sanctuary brand.

The centre was developed in 2019 and has a net operating income of $910,047 a year. It is licensed for 171 places, making it one of the largest centres in Victoria.

The property was sold via an international expressions-of-interest campaign handled by CBRE’s Australian Healthcare and Social Infrastructure team of Sandro Peluso, Jimmy Tat and Marcello Caspani-Muto.

Tat said the asset had drawn interest from private and institutional investors.

“The reality is private capital is leading the way by notable margins in most of our transactions between $15 million and $50 million ...  across both domestic and international capital,” Tat said.

“There was notable international investment interest in the property with most capital coming from Singapore or Taiwan.

“Both underbidders were international groups however in this instance the eventual buyer was a local investor.”

Peluso said that when selling childcare and healthcare investments at these price points “the focus of our team and broader investment market is moving away from returns and is more focused on replacement cost”.

“This is no revelation; however, astute investors are aware the opportunity will end in short order and may not be seen again for a long time.”

Peluso said yields would again sharpen as supply reduced, which would be further catalysed by the eventual and inevitable shift in interest rates.

“The fact is 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 like the subject property,” Peluso said.

Australia’s top 25 childcare centre sales since 2017 by date

▲ Source: CBRE