Childcare centre ideal first step for investor

10:00 AM Wednesday August 19, 2015 Colin Taylor

BestStart’s modern First Steps childcare facility in Sunnyvale, West Auckland.

A modern childcare centre in West Auckland and leased by New Zealand’s largest service provider has been put on the market.

“The strong tenant covenant and attractive lease terms make this an appealing long term investment,” says Peter Kermode of Colliers International, who with colleagues Shoneet Chand and Sean Finnegan is marketing 74 Seymour Rd, Sunnyvale, for sale by auction at 11 am on August 26.

“The freehold property comes with a triple net lease meaning the tenant pays for all outgoings including management costs, operating expenses and internal and external maintenance,” Kermode says. “This also means the owners can be confident of a quality, passive commercial investment that could possibly extend for generations to come.

“The Sunnyvale First Steps childcare site was first opened in 1992 and is tenanted by Best Start – previously known as Kidicorp – which has been a trusted provider in the childcare industry for over 19 years.”

BestStart operates more than 250 centres nationwide with a roll of over 19,000 children and 4800 employees. 

Kermode says the 827 sq m property operates to an A-grade standard that must be maintained by the tenant. The rent is reviewed to market every two years based on this designation and the rent review also includes a hard ratchet clause.

“These features combined suggest good growth potential. Hard ratchet means the rent cannot fall below current rates. Paired with the A-grade standard expected of the property this will reflect positively for investors as the rent can never go down while the high level of quality is maintained by the tenant.”

The property comes with a 10 year lease from April 2013, with two, 10 year rights of renewal to follow. Current annual rental return for the property is $97,000 plus GST and operating costs.

Chand says the child centre also offers certainty of location, which is valued by families in the surrounding area and should give prospective investors even greater confidence.

“Through its longevity of service, this childcare facility has thoroughly integrated itself into the community.  Everything from its location and layout has been thoughtfully considered with early childhood education [ECE] in mind,” Chand says.

“The layout is designed around free flowing areas allowing children to focus on educational activities without distraction,” he says.

The building is constructed of durable, hard woods including matai flooring and rimu framing with long run iron roofing. It has timber and concrete foundations along with timber and composite weatherboard cladding.

The centre, located on an accessible corner site, was updated in 2007 to better align with ECE best practices. The renovations included adding a generous play area and extra on site car parking.

Amenities include a full kitchen, children’s toilets and wash area, separate staff toilets as well as a large, covered outdoor area with storage sheds for playground equipment.

Chand says BestStart’s stated objective is to improve children’s lives across New Zealand and government funding to ECE has increased significantly over the last eight years signalling a shift in prioritising early education services. 

“Early education has emerged as an essential service and accordingly, we should continue to see exponential growth in demand for quality service providers.

“BestStart strives to exceed expectations and in its most recent Education Review Office report, it was identified as a business well-placed to promote positive learning outcomes for children.”

Chand says BestStart’s Sunnyvale location provides a convenient child care facility for a fast growing suburban area of West Auckland.   

“It offers a very accessible childcare facility to surrounding suburbs like Glen Eden and Henderson.”

The Sunnyvale train station and primary schools are all within short walking distance.

The childcare facility is positioned at an entry point to Parrs Park that offers extensive sporting and recreational facilities for the local community including swimming pools, full sized Australian Football League field, table tennis stadium, waterways and playgrounds.

What’s on offer?

The property: Land and buildings occupied by childcare centre.

Location: 74 Seymour Rd, Sunnyvale, West Auckland.

Agency: Colliers International.

Sales method: Byauction at 11 am on August 26.

Features:

  • Long established childcare tenant.
  • Freehold 827 sq m property.
  • A-grade standard must be maintained by tenant.
  • Ten year lease from April 2013 with two 10 year rights of renewal.
  • Located in fast growing suburban area. 

Peter, Shoneet.jpg

Peter Kermode (left) & Shoneet Chand, Colliers International (right).