Charter Hall buys two childcare centre portfolios for $134 million
Property investment group Charter Hall has paid $134.3 million for 21 childcare centres in Melbourne and Western Australia.
The Charter Hall Social Infrastructure REIT acquired two childcare property portfolios, the biggest comprising 18 WA centres that it purchased for $100 million.
The real estate investment trust also entered into sale and leaseback arrangements to buy three Nino Early Learning Adventures centres in Melbourne for $34.3 million.
The sale of the Melbourne centres represented a yield of 4.5%, which selling agents CBRE said was the strongest recorded for an Australian childcare portfolio.
Three Nino Early Learning Adventures childcare centres, including this recently-opened property in Mickleham, sold for $34.3 million. Picture: realcommercial.com.au/sold
The three Melbourne centres generated significant interest in excess of $30 million given Nino Early Learning’s track record of high occupancy rates, the CBRE agents said.
“With a substantial volume of conforming bids received, it is clear that investment groups who historically have not played within the childcare space are pivoting toward the sector at a rapid rate,” CBRE healthcare and social infrastructure director Sandro Peluso said.
“There is particularly strong interest in leaseback transactions, which have grown in popularity in recent years and are proving to be highly attractive, as a flood of investors seek long-term income streams.
“In turn, these transactions give owner occupiers an opportunity to reinvest the sale proceeds back into their core businesses.”
The Melbourne portfolio will be leased to Nino Early Learning on an initial term of 20 years.
The Mickleham centre opened in October while the Craigieburn and Ivanhoe centres are under construction and due to open in February. Together they will provide 345 long day care places.
Charter Hall Social Infrastructure REIT also acquired 13 childcare centres in Perth and another five located in regional WA, in an off-market deal announced on Wednesday. The portfolio had a combined 1752 long day care places.
The $100 million purchase price reflected a purchase yield of 4.63%, the ASX-listed REIT said. The total $134.3 million price for both portfolios reflected a passing yield of 4.6%.
Charter Hall Social Infrastructure REIT said 100% of the rental income for the WA centres was underpinned by Australia’s two largest childcare operators, Goodstart Early Learning and G8 Education.
“We are pleased to add these quality childcare properties with strong property fundamentals to the portfolio and further our tenant customer relationship with these three operators,” its fund manager Travis Butcher said.
He said the addition of the assets will result in the REIT’s gross assets exceeding $1.9 billion, meaning it continued to be the largest listed social infrastructure property fund in Australia.
When they open next year, the Craigieburn and Ivanhoe centres will take Nino Early Learning’s tally to 16 childcare centres across Melbourne.
Demand for childcare properties has increased during COVID. Picture: realcommercial.com.au/sold
Demand for childcare and other essential services assets has increased during COVID.
In October, 12 childcare centres in Victoria and Western Australia sold for $98 million to Home Consortium’s HealthCo Healthcare & Wellness REIT in what CBRE said was the largest publicly-marketed Australian early learning investment portfolio in recent history.
CBRE’s Australian healthcare and social infrastructure team has managed Nino Early Learning’s past 14 childcare centre sales since 2017, with a combined transaction value of more than $200 million. The centres sold to a mix of local and international buyers.
