YMCA Leased Early Learning Centre Set Transaction Continues Child Care Yield Compression

5 July 2021

A premium early learning investment opportunity has transacted via exclusive auction in CBRE’s Melbourne boardroom office which has now seen average child care yields fall below 5% across 2021.

10 Farm Road, Diggers Rest was transacted by CBRE’s healthcare and social infrastructure team of Sandro Peluso, Jimmy Tat and Marcello Caspani-Muto in a process with saw 6 bidders spread across physical attendance and online bidding.

In what already represented the fourth child care listing from the team this year CBRE most recently transacted 1 Whitford Way, Doreen, 30-32 Grey Street Ringwood and 138 Hoffman’s Road, Essendon at average yields of just over 5%.

The three year old child care centre in Diggers Rest was fully leased to YMCA on a 15 year term with further options while also set to benefit from some of the countries highest forecast population growth (45% increase scheduled by 2041).

Jimmy Tat said “While the substantial depreciation associated with a new build is evident and of great appeal to investors even more so was the substantial underlying land value associated with a single level centre such as this. Sitting on over 2,459sqm* of Urban Growth zoned land at the heart of one of the country’s fastest growing municipalities & leased to a national operator with a longstanding track record, lots of weight was placed behind this factor.

In recent years investors have become acutely focused on covenant strength and surrounding demographic assessments in order to ensure long-term viability of their investments and this centre was a perfect example of just that.” Tat added

Marcello Caspani-Muto said “Investor appetite for early learning investments remains as high as the team have seen in the past 7 years, matching its peak in popularity during the 2017/2018 periods. The rationale as to why, is evident though it’s exposure to investors has been catalysed over the past 6 months given media exposure.”

“As a result, average child care yields have fallen below 5% for 2021, with a small selection of regional assets even included within the statistics. Meaning the true metro Melbourne yield average is comfortable below this mark.” He added.

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