Perfect long-term childcare investments for both new and seasoned investors

A pair of childcare centres offering true “set and forget” investing in prime schools territory will be auctioned this month amid rampant demand in the sector.  

The childcare centres at Kelso in Queensland and Quinns Rocks, Western Australia, feature long, triple net leases to major childcare operators and are expected to attract attention from a wide pool of investors, courtesy of their sub-$3 million price expectations. 

Both are to be sold at commercial agency Burgess Rawson’s latest Investment Portfolio Auction at Crown Casino in Melbourne on Wednesday, March 31. 

Leased to Affinity Education, which has 150 centres nationally, the Kelso property at 57 Yvette Street offers a 15-year triple net lease with options to 2038, with the centre licensed for 75 long day care places and positioned just 100 metres from Kelso State School. 

The property has also recently received capital upgrades and is just seconds from the major arterial to the heart of Townsville. 

Meanwhile, the centre at Quinns Rocks has a 20-year triple net lease to 2036, plus two additional 10-year options and minimum 3% annual rent increases with ratchet provisions at market review, ensuring rental growth. 

Licensed for 72 places and leased to Hong Kong-backed Sparrow Early Learning, the centre has an incredible 18 schools within a 3km radius. 

Burgess Rawson childcare specialist Natalie Couper said the triple net leasing conditions on offer were second to none in today’s market. 

“With the triple net leases on both properties, the tenants are paying 100% of the outgoings, which includes everything from structural insurance, maintenance, management fees and land tax,” Ms Couper said.  

“We refer to them as ‘true set and forget’ assets because there are no expenses for the incoming purchaser moving forward.” 

Ms Couper said that interest in childcare is high as investors look to de-risk and seek clean, passive investments.  

“Childcare as an asset class continues to offer attributes that investors are favouring such as long net leases, quality tenants and solid land value. 

“At our most recent auction we sold a number of assets above reserve in the sub-$2 million range, so the appetite is clearly very strong and will continue to be moving forward.” 

Burgess Rawson’s 143rd Investment Portfolio Auction will be held in the River Room at Crown Casino from 10.30am AEDT on Wednesday, March 31.