Childcare Investment | $3,030,000 | Net Yield: 6.81% | WA

This Western Australian childcare investment presents an opportunity to secure an established early learning facility within a regional market experiencing sustained demand for essential education services. Operating successfully for almost three decades, the property combines long-term lease security, consistent rental growth and an established childcare operator, supported by strong occupancy levels and a substantial freehold landholding.

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At a purchase price of $3,030,000, the investment generates $206,250 in net annual income, delivering a 6.81% net yield. The property is secured by a long-term lease extending to July 2040, with three further 10-year options providing potential tenure through to 2070.

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The lease incorporates fixed annual rental increases of 3%, providing a structured pathway for contractual income growth. The tenant is responsible for 100% of property outgoings, including management expenses and land tax, supporting the property's net income profile and reducing ongoing ownership costs.

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The asset comprises an established 55-place childcare facility situated on approximately 1,012 square metres of freehold land. Constructed in 1996, the centre has operated as an early childhood education facility for almost 30 years, demonstrating its suitability for the surrounding residential catchment.

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The property benefits from an established operational configuration designed to support long-day childcare services. Its purpose-built accommodation and underlying landholding provide a functional environment for early education activities, while the existing licensed capacity supports ongoing childcare operations.

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A key feature of the investment is the tenant's longstanding operational history. The property is leased to an established regional childcare provider with approximately 25 years of experience delivering early childhood education services.

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The operator has maintained a sustained presence at the property and currently reports occupancy levels of approximately 98%, reflecting strong utilisation of the centre's licensed capacity. This established trading history and reported occupancy performance provide an indication of demand for the service within its surrounding catchment.

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The transaction is structured as a sale-and-leaseback arrangement, with the existing owner-operator seeking to release capital to support further expansion of its childcare operations. This provides investors with an established operating tenant while allowing the business to continue servicing its existing community.

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The lease extends to July 2040, with three further 10-year renewal options offering potential occupancy through to 2070. Fixed annual rental increases of 3% support consistent contractual income growth, while market rental reviews at the commencement of option periods provide opportunities to reassess rental levels against prevailing market conditions.

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The investment benefits from a net lease structure under which all property outgoings are recoverable from the tenant, including management fees and land tax. Additional security is provided through a rental bond equivalent to six months' net rent, supporting the property's income security arrangements.

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Positioned within an established regional Western Australian commercial and residential catchment, the property benefits from surrounding community infrastructure, education services and ongoing demand for childcare accommodation.

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The broader region supports a diversified economy underpinned by agriculture, mining, logistics, tourism and essential services. Continued investment in regional infrastructure, residential development and community facilities provides a foundation for population growth and demand for education services.

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Childcare remains an essential service supported by government funding and participation initiatives, with established centres providing an important role in supporting working families and local communities.

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The property's reported 98% occupancy level indicates strong current utilisation, while its established operating history and long-term lease structure provide investors with exposure to the childcare sector through an income-producing commercial asset.

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At a purchase price of $3,030,000, the investment delivers a 6.81% net yield on $206,250 in annual net income. Accounting for estimated purchasing costs, the net yield equates to approximately 6.35%.

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Based on an assumed 65% loan-to-value ratio and 6.5% annual interest rate, the property is projected to generate approximately $78,233 in annual cash flow after mortgage interest expenses, representing an estimated 6.12% cash-on-cash return on the total cash contribution of $1,277,981. These figures reflect acquisition modelling assumptions and are not guaranteed returns.

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The combination of a long-term lease, fixed annual rental increases, fully recoverable outgoings and an established childcare operator provides an income-focused investment proposition, while the property's underlying landholding and regional market positioning offer potential longer-term value.

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With an established 55-place childcare facility, reported 98% occupancy, long-term lease security, structured rental growth and an experienced operator, this investment reflects the calibre of commercial property opportunities Rethink Investing continues to identify for clients across Australia.

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