Strong Burgess Rawson portfolio results signal robust investor interest in child care

In the most recent Burgess Rawson, the early childhood education and care (ECEC) focused real estate broker, Portfolio Auction child care centres continued to see strong demand from investors attracted to its essential service nature and secure fundamentals.

The auction held on 31 March 2021 saw six freehold centres offered for sale which all saw buyers and one in particular, a centre leased to private operator Sparrow Early Learning Centre in Quinns Rocks, Western Australia, achieving a record low yield of 5.36%.

In addition, a centre leased to large operator Affinity Early Education, in Kelso was purchased before the auction actually took place as investors moved aggressively to secure the assets upfront.

Burgess Rawson Director Adam Thomas said, “Once again a strong performance in the child care segment demonstrates that investors are eager to spend with plenty of undeployed capital sitting frustratingly idle.”

“To add to the pent up demand is fresh interest from residential investors who have been outpriced of the housing market. The appeal of essential service tenants; long leases; reliable rent; and strong land values is proving irresistible.”

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The combined value of the centres sold was $33.515 million with yields achieved ranging from 5.09 per cent in Dandenong, Victoria to 6.62 per cent in Brisbane, Queensland.

The auction results were as follows:

  • 72 licence place centre in Quinns Rocks, WA currently leased to Sparrow Early Learning sold for $2,720,000 at a yield of 5.36 per cent
  • 111 place centre in Dandenong, VIC currently leased to Crest Children’s Sanctuary sold for $7,630,000 at a yield of 5.09 per cent
  • 87 license place centre in Maiden Gully, VIC currently leased to Jenny’s Early Learning sold for $3,950,000 at a yield of 5.52 per cent
  • 119 licence place centre in Toowoomba, QLD currently leased to Imagine Childcare and Kindergarten sold for $6,630,000 at a yield of 5.39 per cent
  • 75 licence place centre in Kelso, QLD currently leased to Affinity Education sold for $2,435,000 at a yield of 6.11 per cent
  • 147 licence place centre in Brisbane, QLD currently leased to Brisbane City Child Care sold for $10,150,000 at a yield of 6.62 per cent

“The overall results at this, our second auction for 2021, were terrific,” Mr Thomas said, “That is very exciting and another example of just how important the child care sector has come to investors.”

About Early Education Holdings

Early Education Holdings* (EEH) is a newly established partnership with an ambitious vision to acquire and develop local, community-focused childcare centres across the Eastern seaboard of Australia. Childcare centres are a stable, government-backed business funded by both Federal and State & Territory governments, and with the outbreak of COVID-19 contributing to the recent fall in attendances across the sector, EEH has identified the neglected and highly fragmented mid-sized market (40-75 places) as ripe with opportunity.

EEH’s Executed Team is powered by HEVEN, a business management company that makes SME ownership a reality for individuals looking for a low touch approach to income and portfolio growth. Founded in 2016 by one of the partners, HEVEN takes an industry-agnostic approach and specialises in sourcing, acquiring and managing government-funded and high consumer demand SMEs, with an established revenue, across Australia.

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