Childcare Investment | $8,888,000 | Net Yield: 5.57% | VIC

Imagination Garden Geelong is a modern, purpose-built childcare facility located at 21-27 Rollins Road, Bell Post Hill, approximately six kilometres north of the Geelong CBD. This off-market acquisition reflects the calibre of covenant-backed, reversionary childcare assets Rethink Investing continues to identify on behalf of clients seeking exposure to Victoria's early learning sector.

‍

The centre is trading exceptionally well, operating at full occupancy with a waiting list, and has recently expanded by a further 30 places to meet strong enrolment demand. The asset offers substantial and clearly identifiable upside within a relatively short timeframe, underpinned by a materially under-rented lease profile and a scheduled mid-term market review in August 2027. The sale is a reluctant one, driven by a major shareholder's forced sale, while the remaining shareholder retains a clear preference to hold the asset and realise the forthcoming rental and capital reversion.

‍

The property generates a net annual cash flow return of $495,174 under a long-term net lease featuring fixed annual rental increases of 4.0%, delivering compounding income growth well in excess of inflation. The property is leased to Evolve Early Education Pty Ltd, trading as Imagination Garden, which is owned by Embark Early Education Limited, ASX: EVO. The lease was transferred to the ASX-listed entity in September 2024, materially strengthening covenant quality. The current lease has a remaining term of approximately 11.5 years, expiring 12 August 2035, with two further ten-year options extending potential occupancy through to 2055. The lease is net in nature, with all usual outgoings recoverable excluding land tax, and is supported by a six-month bank guarantee.

‍

Various forms of upside exist within this acquisition. The centre is currently under-rented at approximately $3,300 to $3,315 per place, compared to comparable market rents averaging approximately $4,300 per place. Based on conservative assumptions, this represents an estimated rental uplift of approximately $136,000 per annum at the August 2027 mid-term market review. Following the lease transfer to an ASX-listed tenant, potential also exists to on-charge additional outgoings, and given the asset is approximately two years old, significant depreciation benefits are also available to investors in the current financial year.

‍

Bell Post Hill is a well-established and rapidly growing residential suburb within Greater Geelong, benefiting from sustained population growth and expanding family demographics. The property is strategically positioned near multiple established schools, including Rollins Primary School, Kardinia Upper Primary School and Kardinia International College, reinforcing long-term demand drivers for early learning services. Geelong continues to benefit from infrastructure investment and decentralisation trends from Melbourne, supporting durable demand for high-quality childcare facilities in well-located residential catchments.

‍

With a purchase price of $8,888,000 and total cash required of $3,851,392 (including a 35% deposit and purchasing costs), the investment delivers a net annual cash flow return of $495,174, a net yield of 5.57%, and a net yield of 5.14% accounting for purchasing costs. Against a cost of loan of $375,518, the cash flow after mortgage costs sits at $119,656, translating to a return on equity of 3.11% in pure cash flow terms. Accounting for conservative capital growth of 5%, 7% and 10%, the return on equity increases to 14.65%, 19.26% and 26.18% respectively.

‍

With an ASX-listed tenant covenant, fixed 4% annual rental growth, significant reversionary upside, and positioning within one of regional Victoria's fastest-growing family catchments, this acquisition reflects the calibre of childcare assets that Rethink Investing continues to secure for clients.

‍

About Rethink Investing Australia & New Zealand's largest and most experienced commercial buyer's agency $7 billion+ in commercial property secured for clients. Exclusive access to 70% off-market opportunities. Specialists in high-yielding commercial property investments