Childcare Investment | $7,500,000 | Net Yield: 7.40% | VIC

This off-market Victorian childcare investment presents an opportunity to secure a purpose-built early learning facility within one of Melbourne's established residential growth corridors. Leased to a nationally recognised childcare operator, the property combines long-term income security, an established operational history and exposure to growing demand for essential early education services.

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At a Rethink negotiated purchase price of $7,500,000, the investment delivers approximately $555,095 in modelled annual net income, representing a 7.40% net yield. The property is underpinned by a long-term lease extending to early 2034, with two further 10-year renewal options providing potential tenure through to 2054.

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The asset occupies a substantial freehold landholding of approximately 3,000 square metres, comprising a purpose-built, single-level childcare facility with approximately 1,190 square metres of accommodation. Licensed for 143 childcare places, the centre provides a functional early learning environment supported by dedicated outdoor play areas, modern amenities and 29 onsite car spaces.

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The facility has been designed to accommodate a range of early childhood education requirements, featuring spacious learning rooms, secure outdoor activity areas, landscaped play spaces and dedicated amenities. Its established construction and purpose-built configuration support ongoing childcare operations, while the substantial underlying landholding provides long-term utility for an essential service operator.

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A key feature of the investment is the strength of the existing tenant covenant. The property is leased to an established national early childhood education provider operating an extensive network of centres across Australia. The operator benefits from the backing of a larger international education and care organisation, providing additional corporate support and operational experience.

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Having occupied the property for more than a decade, the tenant has demonstrated a longstanding commitment to the facility and surrounding community. The existing lease extends to early 2034, with two further 10-year options providing a potential long-term occupancy horizon.

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The lease incorporates annual rental reviews, with the supplied financial overview specifying fixed 3% annual increases. This structure provides potential for consistent contractual income growth, while market rental reviews at the commencement of option periods offer opportunities to reassess income against prevailing market conditions.

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The investment also benefits from a net lease structure, with the tenant responsible for recoverable property outgoings. Certain ownership expenses, including land tax and property management fees, remain the landlord's responsibility under the supplied lease summary.

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Additional income security is provided through a bank guarantee equivalent to approximately six months' rent, offering financial protection in accordance with the lease terms.

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Positioned within a growing metropolitan residential corridor, the property benefits from a family-oriented catchment supported by ongoing housing development, expanding community infrastructure and demand for accessible early education services. The surrounding area offers established retail, education, healthcare and community amenities, contributing to the centre's suitability for long-term childcare operations.

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The broader Victorian childcare market is supported by population growth, increasing demand for early childhood education and continued public investment in the sector. Residential growth corridors with a high concentration of young families provide an important demand base for established childcare facilities, particularly those offering purpose-built accommodation and convenient accessibility.

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The property's established operational history, substantial licensed capacity and long-term lease arrangements provide exposure to the essential services sector, while its location within a growing residential market supports potential long-term tenant demand.

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At a Rethink negotiated purchase price of $7,500,000, the investment delivers a modelled 7.40% net yield on approximately $555,095 in annual net income. Accounting for estimated purchasing costs, the net yield equates to approximately 6.83%.

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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 $238,220 in annual cash flow after mortgage interest expenses, representing an estimated 7.33% cash-on-cash return on the total cash contribution of $3,249,750. These figures reflect acquisition modelling assumptions and are not guaranteed returns.

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The combination of long-term lease security, contractual rental reviews, an established national childcare operator and substantial underlying landholding provides an income-focused investment proposition, with potential longer-term growth supported by residential development and demand for early education services.

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With a nationally established tenant, purpose-built childcare accommodation, 143 licensed places, long-term lease options and a strong modelled net income profile, this off-market acquisition reflects the calibre of commercial property opportunities Rethink Investing continues to identify for clients across Australia.

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