Childcare facilities for sale

5:00 AM Saturday November 19, 2016 True Commercial

And artist’s impression of the centre planned for 56 Woodcocks Road.

Childcare centres being built in Warkworth and North Waikato, both on new 15-year leases to local operators and due to open mid-to-late next year, are for sale by tender through Colliers International.

The properties — at 56 Woodcocks Road, Warkworth and 18 Te Kauwhata Road, Te Kauwhata — are being marketed for sale individually or together by Colliers’ Peter Kermode and Shoneet Chand. Tenders close on December 7.

In each case, freehold land and buildings make-up the purpose-built centres, being aimed at buyers looking to add long-term income-generating assets to their portfolios, says Kermode.

“Both centres are high quality commercial property assets designed to meet the requirements of a lot of individual investors. The facilities will have respected local operators in place on long-term leases, with income growth built-in.”

In addition to the initial 15-year leases, rights of renewal totalling a further 20 years are provided, Chand says.

“Having a single tenant on an extra-long lease will be viewed as a big plus for many investors, who want to hold commercial property because of the superior yield it offers but don’t want the hassle of managing multiple tenants and lease expiries,” he says.

“We believe these lease arrangements, combined with the locations serving growing residential catchments, mean these properties make very compelling investment propositions.”

A further attraction for buyers is the opportunity to purchase now and settle on completion of the buildings, Kermode says.

Both properties are being constructed by Signature Homes, which has been in operation since 1983 and is one of New Zealand’s longest serving home building companies.

Alongside its core home building business, Signature has much experience in childcare centre properties, having developed more than 100 early childhood education centres throughout New Zealand, Chand says.

“Signature’s extensive experience in the early childhood sector means it will deliver a top-notch product – a factor which is important to both buyers and tenants. Occupying quality land and buildings is critical to childcare operators, as there is huge value tied to the physical property. Once they are set up, childcare centres are generally long-term occupiers.”

The stability of the early childhood education industry, which is supported by central government, will be a further drawcard for investors, says Kermode.

18 Te Kauwhata Road Image.jpg

The location of the centre planned for 18 Te Kauwhata Road, Te Kauwhata.

“Demand for early childhood education is on the increase as more parents return to work to meet increasing living costs. The government has also invested in early childhood education through subsidising the cost of attendance, creating a stable industry and resulting in childcare centre properties being highly sought after among investors.”

The Warkworth property is located within 100 metres of Mahurangi College, which is the educational centre for the locality and provides schooling for students living within a 350 square kilometre area.

The 1836sq m site has been consented for up to 100 children. The net rental will be $260,000 a year, with operating expenses recoverable from the tenant.

Warkworth has recorded significant population growth in recent times, says Kermode.

“Warkworth’s population increased 19.5 per cent between the 2006 and 2013 Censuses. Growth is set to continue, with large areas of land surrounding Warkworth being rezoned for residential development.”

Te Kauwhata is a well-established town on the edge of Lake Waikare, midway between Auckland and Hamilton – approximately 40 minutes’ drive either way, says Chand.

“The centre is located just three kilometres from State Highway One and is surrounded by a broad rural and lifestyle residential catchment. Considerable development is also underway in the immediate area, including residential subdivision of some 300 lots.

“Just 15 minutes’ drive is the 80 hectare Gateway Business Park in Pokeno, which will bring considerable employment opportunities to the surrounding residential catchment.”

The 2700sq m site is positioned 400 metres from the town centre on the way to State Highway One and within 500 metres of the local primary school. Resource consent has been granted for up to 80 children. Annual net rental amounts to almost $200,000, again with operating expenses recoverable from the tenant.

Both locations are within 45 minutes of Auckland in areas where there is strong population growth, Chand says.

“The centres are both positioned in areas that are set to benefit from the growth in families moving outside Auckland in search of lower housing costs. This well-documented trend is resulting in areas such as Rodney, Waikato, Coromandel and Bay of Plenty becoming much more attractive to people who are finding themselves priced out of Auckland’s more desirable suburbs.”