A BRAND new childcare centre in Sydney’s lower North Shore has sold in an off-market deal, becoming one of the largest child care investment sales in all of NSW in 2021.
The 1,047 sqm property at 32 Ryde Road in Hunters Hill, for which construction was completed in August 2021, was snapped up within just 48 hours after hitting the Knight Frank database in an off-market campaign. Industry sources state the property sold for $11m.
The 750 sqm building is home to a 76-place childcare centre, with two floors of internal and external learning and play areas, and a 17-car basement car park. The sale price equates to around $145,000 per place and is reported to reflect a 4.5% yield.
It has a long-term lease in place until 2031, with a further 10 plus 10-year options, with a substantial net rent and minimum annual increases of four per cent.
It is leased to Little Zak’s Academy, one of the largest privately owned childcare operators in Australia, with over 28 centres in New South Wales.
The property was purchased by Electrical City from Kadmour in an off-market deal negotiated by Demi Carigliano, Anthony Pirrottina and Alex McColl of Knight Frank.
Mr Carigliano said demand for the asset was so strong it was sold before it even officially hit the market.
“We sent it to our database on a Monday and it had the deal done by Tuesday afternoon,” he said.
“The strength of the covenant was one of the biggest drawcards, with a high-quality tenant for at least the next 10 years, providing a near guaranteed and steady income.
“It’s also in a prime North Shore location, in the affluent suburb of Hunters Hill, and is just one of two centres in the suburb providing a few competing places.
“The property is just a short walk to Hunter’s Hill village, St Joseph’s College, bus and ferry stops.”
Mr Pirrottina said childcare centres had proven to be a secure asset class over the course of the pandemic.
“The childcare industry has become secure with government rebates due to COVID lockdown and restrictions, and as such childcare-based investments continue to be sought after by buyers,” he said.
“This property had the added benefit of being a brand new building, enabling investors to claim depreciation benefits.
“This is one of the largest childcare investment sales in all of NSW in 2021.”