Assembly Funds Management, in partnership with Harrington Property Funds Management, has spent more than $40 million buying six childcare centres northwest of Sydney.
Assembly's head of transactions Tim Meurer said the “risk-reward balance” for this alternative asset class was appealing.
“Childcare has proven a highly resilient asset class in the face of economic turbulence and offers good value in a low-yield macro environment,” Meurer said.
“The direction of other asset classes such as traditional retail, commercial and leisure is less certain while industrial and logistics are heavily sought-after and comparatively expensive.”
The deal was made off the back of a $53-million equity-raising campaign in December last year.
It expands Assembly’s Australian Diversified Property Fund 1 (APDF1) portfolio equity close to its $325m target.
The six childcare centres will continue to be run by Young Academics under a 15-year lease. They are located in Marsden Park, Riverstone, Schofields, Box Hill, and two in Woodcroft. In total they offer 452 childcare places.
Harrington director Trevor Byles said the early learning sector was well placed for “long-term growth”.
“From a real estate investment perspective we [believe] that as the sector matures, the freehold ownership of early learning centres will become more consolidated by institutional capital,” Byles said.
APDF1’s recent acquisitions and divestments take the fund’s equity commitments to $141m across a range of real estate assets in Australia and New Zealand.
Assembly chief executive Michael Gutman, formerly of Westfield, said he “anticipated the fund will be seeking new equity investment in the next few months”.
Assembly is backed by Lowy Family Group and Alceon Group. The two-year-old fund was expected to start paying an annual distribution of 5-6 per cent next financial year.