 Asset Class: | Childcare |
 Price: | $ 4000000 |
 Net Yield: | 5.82 % |
Net Yield - including solar strategy: | % |
 Property Market Status: | On Market |
<p class="mb-4"><strong>Exceptional Under-rented Childcare Opportunity With $100k pa Rental ? $1.6M Value Upside</strong></p><p class="mb-4">This opportunity features an 86-place childcare centre operated by Little Learners Place, a well-established and experienced Western Australian operator with nine centres across the state. This operator took over the lease from MercyCare in 2022, after the previous tenant ran into operations and staffing issues. </p><p class="mb-4">The current rental rate of $2,732 per place presents a clear value-add opportunity, with the fair market rate estimated at approximately $3,800 per place. While this rental uplift can only be realised at the next market review in 2034, the investment still delivers an attractive return at 5.8% net in one of the most secure asset classes.</p><p class="mb-4">The childcare sector benefits from strong government backing, driven by its recognised social and economic value—every dollar invested returns approximately $2 in economic benefits. Importantly, childcare was one of the first asset classes to receive direct support during the COVID-19 pandemic, highlighting its essential role and long-term stability.</p><p class="mb-4"></p><p class="mb-4"><strong>What We Like About This Asset</strong></p><p class="mb-4"></p><ul class="bullet-list"><li><p class="mb-4">Significantly under-rented at $2,732/ child > fair market rate between $3,700 - $4,000/child; this translates into a rental shortfall of approx $100k pa which further results in a $1.6m+ value upside at 6.25% cap rate</p></li><li><p class="mb-4">attractive built-in increases at higher of CPI or 3%</p></li><li><p class="mb-4">experienced medium size WA operator with 9 facilities in total</p></li><li><p class="mb-4">strongly subsidized asset class by government</p></li><li><p class="mb-4">high-exposure corner lot with 38,000 passing cars per day</p></li></ul>
How old is the asset?
Vendor's reason for selling?
Days property been on market?
Is this property strata titled?
Are the seller and tenant related parties?
How long has the current tenant been on site?
How long has the tenant been in business?
Is this property in a flood zone?
Is this lease a leaseback arrangement?
<p class="mb-4"><strong>Family Desirability & Socio-Demographic Profile</strong></p><p class="mb-4">Merriwa, located in Perth's northern suburbs, offers a family-friendly environment with an average household size of 2.5 people. Approximately 68.9% of its households are family-based. The suburb features parks, a primary school, and local shopping facilities, enhancing its appeal to families. While it may not be among Perth's most sought-after family suburbs, Merriwa provides an affordable and comfortable lifestyle, making it a viable option for families seeking suburban living.</p><p class="mb-4"></p><p class="mb-4"><strong>Population & Kids Ratio</strong></p><p class="mb-4">According to the Census 2021 there were 23,679 people living in Butler - Merriwa - Ridgewood. The catchment had a total of 1,588 children aged 0-4 years which reflects 6.7% of the total population - a rate above the median rate of WA at 6.1% and Australia at 5.8%</p><p class="mb-4">As of December 2023, approximately 49.2% of children aged 0 to 5 in Australia were enrolled in Child Care Subsidy-approved care. Applying this participation rate to the local 0–4 year-old population across the suburb’s 7 childcare centres suggests an average of around 111 children per centre.</p><p class="mb-4">While there is no publicly available data on the average number of places per childcare centre in WA, we estimate most centres offer between 80 to 100 licensed places.</p><p class="mb-4"></p><p class="mb-4">In summary, demand for childcare spaces in Merriwa still appears to outweigh supply.</p><p class="mb-4"><br></p>
Additional Location Information File<p class="mb-4"><strong>Branches Early Learning Centre</strong></p><p class="mb-4"></p><p class="mb-4">Branches Early Learning Centre, located in Merriwa, Western Australia, is a family-owned and operated childcare facility. They offer long day care for children aged 6 weeks to 6 years, as well as before school, after school, and vacation care for children from Kindy to Year 6. The centre also provides pick-up and drop-off services for students attending Merriwa Primary School and Alkimos Baptist College during the school term.</p><p class="mb-4">The owner of this center - Caroline Jane Parry - successfully runs 9 centers throughout WA which she holds under different entities.</p><p class="mb-4"><u>https://brancheselc.com.au/</u></p><p class="mb-4"><br></p>
Initial Term:
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Security Info:
<p class="mb-4">This freehold childcare facility offers a compelling <strong>5.82% net yield</strong> with strong growth potential. Currently generating <strong>$232,738 per annum</strong> plus outgoings and GST, the property features a secure long-term tenant on a lease extending to 2034 with 2×10 year options.</p><p class="mb-4">The current rent of <strong>$2,732 per place</strong> sits significantly below market rates of $3,700-$4,000 per place, creating substantial upside potential of approximately <strong>$100k per annum</strong> in today's market. This translates to a potential <strong>$1.6M+ value uplift</strong> at a 6.25% cap rate.</p><p class="mb-4">Under the lease, all outgoings are recoverable except land tax ($2,262). The tenant provides bank guarantee security equivalent to 6-months rent plus GST, and built-in rent increases are structured at the greater of CPI or 3%, ensuring consistent income growth.</p>
Additional Financial Information FileInitial Term:
Security:
Security Info:
<p class="mb-4"><strong>1 Seagrove Blvd, Merriwa - 86 Places - $2,732/place</strong></p><p class="mb-4">68 Readshaw Rd, Duncraig - 92 Places - $3,635/place</p><p class="mb-4">73 Kingsley Dr, Kingsley - 78 Places - $4,053/place</p><p class="mb-4">1 Encyclia Blvd, Treeby - 92 Places - $3,753/place</p><p class="mb-4">5 Ikara Lane, Yanchep - 68 Places - $3,875/place</p><p class="mb-4">9 Westfield Rd, Camilo - 93 Places - $3,578/place</p><p class="mb-4"><br></p>
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Initial Deposit:
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Due Diligence:
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<p class="mb-4"><strong>Purchase Price: </strong>$4,000,000 (negotiated)<br></p><p class="mb-4"><strong>Market Status:</strong> On-Market</p><p class="mb-4"><strong>Current Rent:</strong> $235,000pa + Outg + GST </p><p class="mb-4"><strong>Less non-recoverable: </strong>$2,262 (Land Tax)</p><p class="mb-4"><strong>= Current Net Rent: </strong>$232,738pa + Outg + GST (incl mng)</p><p class="mb-4"><strong>Current Net Yield:</strong> 5.82% (incl mng)</p><p class="mb-4"><strong>Number of Places:</strong> 86</p><p class="mb-4"><strong>Rate per Child</strong>: $2,733/child (below market)</p><p class="mb-4"><strong>Outgoings</strong>: Water: $6,058pa; Council TBC, Insurance TBC, Land Tax $2,262pa</p><p class="mb-4"><strong>100% Outgoings Recoverable:</strong> Yes, except for land tax</p><p class="mb-4"><strong>Age of Asset:</strong> 2004</p><p class="mb-4"><strong>Are Seller & Tenant Related:</strong> No</p><p class="mb-4"><strong>Occupancy Rate:</strong> approx 60%, note centers typically break even from as low as 30% occupancy</p><p class="mb-4"><strong>Flood Zone:</strong> No</p><p class="mb-4"><strong>Bushfire Zone:</strong> No</p><p class="mb-4"><strong>Contamination:</strong> No</p><p class="mb-4"></p><p class="mb-4"><strong>Asset Composition: </strong></p><ul class="bullet-list"><li><p class="mb-4">2,158sqm Freehold</p></li><li><p class="mb-4">4 amalgamated lots (1,3,5,7)</p></li><li><p class="mb-4">Brick and tile dwelling</p></li><li><p class="mb-4">86 places</p></li><li><p class="mb-4">Play rooms with wet areas</p></li><li><p class="mb-4">Outdoor area with play equipment</p></li><li><p class="mb-4">25 car bays (staff and drop-off)</p></li></ul><p class="mb-4"></p><p class="mb-4"><strong>Infrastructure Level:</strong> Tier 1</p><p class="mb-4"></p><p class="mb-4"><strong>Tenant Highlights:</strong></p><ul class="bullet-list"><li><p class="mb-4">Tenant - Branches Early Learning Centre (took over in 2022 after previous tenant)</p></li><li><p class="mb-4">Lease Term: 28-July 2022 (assigned) - 30-Nov-2034 + 2x 10 years (2054)</p></li><li><p class="mb-4">Annual increases greater of CPI or 3%, market reviews at options</p></li><li><p class="mb-4">All outgoings, incl mng paid by tenant, <u>excl</u> land tax</p></li><li><p class="mb-4">Security: Bank Guarantee, equivalent to 6-months rent + Outg + GST</p></li></ul><p class="mb-4"></p><p class="mb-4"><strong>Agent Questions:</strong></p><p class="mb-4"></p><p class="mb-4"><strong>When was this center built?</strong> 2004</p><p class="mb-4"><strong>Was there another operator previous of the current tenant?</strong> Current tenant is an experienced operator and took over in 2022 from Mercy Care (previous tenant). Previous operator ran into issues with staffing and operations.</p><p class="mb-4"><strong>Why is the owner selling?</strong> Freeing up cash for another development</p><p class="mb-4"><strong>Is the tenant related to the owner in any way?</strong> No</p><p class="mb-4"><strong>Current Occupancy:</strong> approx 60%</p><p class="mb-4"><strong>Do you foresee any issues with the tenant paying the full rent?</strong> No</p><p class="mb-4"><strong>What's the security?</strong> 6-months gross rent</p><p class="mb-4"><strong>Does the property need any maintenance work?</strong> Nothing, standard condition</p><p class="mb-4"><br></p>
