Investors are chasing affordable Castlemaine childcare centre as it hits the market

Published on: 09/02/2021

A Castlemaine childcare centre leased to Australia’s largest early education operator is tipped to be a magnet for investors chasing attractive yields when it goes to auction this month.

The centre at 54-56 Ray Street features a net lease to ASX-listed provider G8 Education, which has more than 470 childcare facilities nationally, and comes purpose-built to accommodate 70 long day care places.

It will be auctioned at Burgess Rawson’s first Investment Portfolio Auction of the year on February 24, with agents expecting heavy interest in the property due to the strength of its tenancy and the potential for a higher yield than at metropolitan centres.

“Investors are chasing yield,” Burgess Rawson childcare specialist Adam Thomas said.

“There’s certainly been a shift to those regional destinations, given the higher yields, and even more so the flow-on effects of Melburnians seeking a tree change after the COVID lockdown.”

“This property is going to be very highly sought-after given the strength of the lease covenant and the very favourable landlord-friendly lease terms.”

Occupying a 2422sqm site, the Castlemaine property has a further six years to run on its lease to G8, with Mr Thomas pointing to the centre’s track record as a strong indication of its future security.

“The centre has consistently been at a very high occupancy. It’s purpose-built as a childcare centre and has been trading exceptionally well for years.”

“The expectation would be that the incoming purchaser would renegotiate with G8 when the time is right, and then continue their tenure, given how successful the business is.”

As part of the lease, G8 Education pays all outgoings including maintenance, land tax, rates, insurances and management fees.

The property currently returns annual net rent of $106,594 plus GST with annual CPI reviews, while potential buyers will also enjoy the 50% stamp duty concession available on commercial property purchases in regional Victoria.

It is expected to sell in the $1.4 million to $1.6 million range.

Burgess Rawson’s Investment Portfolio Auction will be held at Crown Casino from 11am AEDT on Wednesday, February 24.


Stay up to date with our latest portfolio auctions & insights