A NSW-based private investor has snapped up a newly built Canberra childcare centre for $7.8 million at auction on Wednesday.
The result was the highest at Burgess Rawson Melbourne’s latest portfolio auction day at which all seven properties sold.
The property, at 54 Kunapalari Street,Throsby, is leased to Wonderschool Early Education for 20 years, with two 10-year options.
Completed in December 2019, the 110-place centre is projected to generate net annual income of about $454,300 upon settlement. It sold on a yield of 5.82 per cent.
Burgess Rawson healthcare and childcare specialist Adam Thomas said that recent government interventions in the early education sector during the COVID-19 pandemic, along with collective realisations about the reality of working from home with kids, had given childcare assets a boost.
“Irrespective of whether people are working from home or not I think childcare will remain highly sought after,” Mr Thomas said.
Along with this continued confidence in the sector, the Canberra asset possessed several attributes which made it particularly appealing to investors, he said.
“The key and ultimate requirement for any early education provider is to be near a school and this was within a couple of hundred metres of a new school,” he said.
“You had a premium offering, high occupancy and strong lease terms with fixed increases and a proven boutique operator.”
Three other childcare assets sold before auction including a Baby Bells Childcare Centre in Altona, Victoria, which fetched $3,020,000 on a yield of 5.67 per cent.
All four remaining properties presented for auction sold, according to Burgess Rawson director Billy Holderhead.
Another standout result was the sale of a Subway restaurant in Leongatha, Victoria, which is leased to Subway head office.
Some 16 bidders – 14 phone bidders and two online bidder – fought it out for the property, which had a reserve of $750,000.
The property, at 7B Anderson Street, sits parallel to the South Gippsland Highway and is a well-known stop for commuters.
It sold to a Melbourne-based private investor, buying sight unseen, for $908,000 on a yield of 4.48 per cent.
Five of the seven properties sold before and during the auction were bought sight unseen, according to Mr Holderhead, either due to lockdown restrictions or buyers being located interstate.
As a result of being unable to access the properties before auction they had been seeking an increased amount of detail during the campaign.
“We were always pretty particular on our photos and our photo briefing but now we’ve got to be even more particular about things like videos,” he said.
The portfolio auction was the Melbourne office’s second to be held from Sydney due to pandemic-related restrictions in Melbourne.
With the current appetite for “essential service” assets leased to national brands, Mr Holderhead said that the firm’s final portfolio auction for 2020 would feature listings including a drive-through Starbucks in Queensland and two 7-Eleven service stations.
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