Folkestone’s $63m Childcare Acquisition

Nine Queensland childcare centres have been swept up in a $63 million move by Melbourne-based investment manager Folkestone.

Folkestone secured its new portfolio with a 20-year leaseback agreement, through its Education Trust, to Avenues Early Learning, with four five-year options available.

The Queensland properties form part of a portfolio of 13 assets offered for sale in late 2017. Avenues Early Learning has decided to concentrate on its business expansion in Sydney and Melbourne, prompting the sizable childcare centre listing.

Proving to be the hot real estate commodity, the Folkestone sale follows the recent combined sales of four south-east Queensland based childcare centres to the tune of $24.075 to private investors.

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CBRE’s Tom O’Driscoll brokered the sale. O’Driscoll said the formal EOI campaign received more than 130 enquiries both domestic and offshore.

“Over the past six months, there has been a strong uptick in demand for childcare assets underpinned by recognised and credible operators,” he said.

“Whilst a lot of noise remains in this sector, there will be a clear difference of value in centres. Avenues Early Learning as a covenant, drives this value due to its level of performance, quality of centres and key locations.”

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The nine properties include 339 Maundrell Terrace, Aspley; 93 Zahel Street, Carina; 110 Burrenbah Road, Jindalee; 51 Landis Street, McDowall; 65 Roseneath Drive, Parkinson; 88 Lister Street, Sunnybank; 385 Chatswood Road, Shailer Park, 123 Kennedy Terrace, Paddington; and 117 Agnew Street, Norman Park.

The sales campaign for the final four assets will soon begin with price expectations in excess of $50 million – reflecting a potential sub six per cent yield across the entire portfolio of 13 centres and total approximate value of $102 million.

Folkestone is the largest ASX-listed REIT that invests in early learning properties. Founded in 2002, it has a current market capitalisation of $701.82m.