 Asset Class: | Child Care |
 Price: | $ 5980000 |
 Net Yield: | 6.11 % |
Net Yield - including solar strategy: | % |
 Property Market Status: | Pre Auction |
10 McLennan Street represents an exceptional childcare investment opportunity in the thriving regional centre of Mooroopna, Victoria. This brand new purpose-built childcare facility stands on a substantial 3,105sqm corner site in an impressive location, immediately adjacent to a new Primary/Secondary school (final approvals pending),<br> and directly across the road from McDonalds.<br><br> Secured by a brand new 20-year net lease to January 2045 with Believe Early Learning, a boutique operator with over 15 years of industry experience, this investment provides exceptional income security and growth. The lease includes two further 10-year options extending potential tenure to 2065. Additionally, the lease includes a favorable market review after 10 years, providing opportunity for rental adjustment to market conditions.<br><br> The state-of-the-art facility is licensed for 110 long day care places and features 24 on-site car spaces. The<br> building showcases quality construction with brick veneer and timber finishes, fully ducted air conditioning, and modern amenities throughout.<br><br> Strategically positioned on McLennan Street (Midland Highway), the property benefits from excellent exposure with over 32,000 vehicles passing daily. Its A-grade corner location offers 112m² of combined street frontage and sits directly opposite McDonald's and just 350m from major national retailers including ALDI, KFC and Woolworths. A brand-new school has been recommended for approval immediately adjacent to the subject property, which will be highly complementary to the childcare operation.<br><br> The childcare sector continues to outperform other commercial property sectors due to ongoing Federal<br> Government support, with $4.7 billion committed over four years to enhance early education affordability. This investment provides a defensive asset class less affected by economic cycles than other property sectors.<br><br> The asset has a current net income of $365,544 (after accounting for land tax at the trust level) providing a net 6.11% yield. Depreciation has the effect of substantially reducing tax, effectively increasing the year one after-tax net yield to 6.86% (assuming tax at 30%). <br><br>Investors can also benefit from a 50% stamp duty saving on the purchase (due to the property being located in regional Victoria), equating to an approximate upfront saving of $185,000.
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Mooroopna is a thriving suburb located approximately 180km north of Melbourne and just 4km west of Shepparton in regional Victoria. As part of the City of Greater Shepparton, Mooroopna offers the perfect blend of rural lifestyle and city conveniences.<br><br> The suburb is home to over 8,647 residents across approximately 2,083 families, with a median age of 43. The property market offers accessible housing opportunities with a median house price of $400,000, having risen 5.3% in the last 12 months, and average weekly rent of $482.<br><br> The Greater Shepparton region is one of Victoria's most progressive provincial areas with a population of over 69,135 and a substantial trade catchment of 160,000+. The region boasts a diverse economy with a Gross Regional Product of $4.60 billion, supported by strong retail, manufacturing, healthcare and agricultural sectors. <br><br> Recent major infrastructure investments include a $180 million hospital upgrade, newly constructed $73 million Shepparton Law Courts, and a $60 million arts centre. The local council has committed $69.97 million to capital works programs in the 2024/2025 budget, including the Mooroopna Drainage Upgrade project.<br><br> The Victorian Planning Authority has developed the Shepparton and Mooroopna 2050 Regional Growth Plan, positioning the area for sustainable development and continued economic growth over the coming decades.
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This childcare investment offers exceptional financial fundamentals:<br><br> Current Net Income: $366,300 pa + GST<br><br> Lease Structure: Brand new 20-year net lease commencing January 2025 with two further 10-year options,<br> potentially extending to 2065. The lease includes fixed 3% annual rental increases, ensuring consistent income<br> growth throughout the term. A mid-term market review will occur at year 10 (2035) with a cap and collar of 5%.<br><br> Tenant Responsibilities: The tenant is responsible for all usual outgoings including single holding land tax and management fees (capped at 4%), creating a true net lease arrangement that maximizes landlord returns.<br><br> Income Security: The lease is secured by two unconditional bank guarantees each equal to three months' rent plus GST, with one guarantee to be returned upon the service reaching 70% enrollment utilization. The lease is personally guaranteed by Andrew David Kelly.<br><br> Income Growth Projection: With the fixed 3% annual increases, rent is projected to grow by over 70% during<br> the initial term, reaching $642,309 by 2044.<br><br> Depreciation Benefits: Total estimated depreciation over the life of the asset is approximately $3,182,100,<br> providing significant tax advantages for investors. The first year alone offers potential deductions of $149,500.
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10 McLennan Street, Mooroopna (Shepparton) - 110 places - $3,330 per place 349 Maroondah Highway, Healesville – 92 places - $3,261 per place 1-3 Ghazeepore Road, Waurn Ponds – 82 places - $3,252 per place 6 Huon Park Road, Cranbourne North - 108 places - $3,398 per place 2-8 Ballarto Road, Frankston North - 142 places - $3,200 per place
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• Brand new purpose-built childcare facility on a substantial 3,105sqm corner site with 112m² of dual street frontage<br><br> • Secured by a 20-year net lease to boutique operator Believe Early Learning with fixed 3% annual rent<br> increases. The lease comes with a market review at the 10th year.<br><br> • Exceptional location which adds significant strength to the childcare asset, being immediately adjacent to a<br> primary & secondary school - which has been recommended for approval.<br><br> • Positioned opposite McDonald's and just 350m from national retailers including ALDI, KFC and Woolworths<br><br> • Prime positioning on McLennan Street (Midland Highway) with exposure to over 32,000 vehicles daily<br><br> • Two further 10-year options extending potential tenure to 2065, providing exceptional income security<br><br> • State-of-the-art 110-place childcare centre with modern facilities and 24 on-site car spaces<br><br> • Located only 350m from Mooroopna Primary School and 900m from St Mary's Primary School<br><br> • Tenant pays all outgoings including single holding land tax and management fees (capped at 4%)<br><br> • Strong underlying land value in a rapidly expanding regional municipality<br><br> • Current net income of $365,544 pa, delivering a net yield of 6.14%. Substantial depreciation benefits increase the after-tax return to circa 6.86%.<br><br> • Substantial upfront saving of around $185,000 - due to a government stamp duty concession.<br><br> • Childcare investments continue to outperform due to government support and essential service status<br><br> NOTE RE FLOODING OVERLAY - Whilst a flooding overlay exists, any risk has been dealt with through the<br> council's planning process. The vendor has provided evidence of flood cover in the insurance. Further, a school is about to be built on the same land, with McDonald's recently built across the road.
