Childcare facility a long-term investment

5:00 AM Saturday November 26, 2016 True Commercial

Blossoms Educare, at 18 Princes St.

A childcare centre investment property in Otahuhu, Auckland, is being marketed as a long-term, quality commercial property holding.

The Blossoms Educare centre, at 18 Princes St, is offered for sale by auction through Peter Kermode and Shoneet Chand of Colliers International. It is due to go under the hammer at 11am on Wednesday, December 14, unless it sells before auction day.

“This is a modern property which was purpose-built as a childcare centre in 2011. It offers investors a long 15-year lease plus further rights of renewal,” says Kermode.

He says the highly visible freehold 1090sq m mixed-use zoned site, and 348sq m building, offer investors a strong investment proposition, which is currently rented below market levels for modern purpose-built centres in Auckland.

“With a new 15-year lease returning $163800 pa net, rights of renewal totalling a further 20 years, personal guarantees and built-in rental growth, this property has all the makings of a solid, long-term commercial investment,” he says. “Combined with its location on the fringe of Otahuhu Town Centre and serving a large residential catchment, we believe this property has highly desirable investment attributes.”

These attributes include the stability of a long-term lease which could potentially extend to 2061, the security of fixed income growth and a substantial and respected tenant with several other childcare centres in its portfolio, says Chand. 

The operator, Blossoms Educare, is a well-established and well-regarded early childhood education provider. "The first centre opened in 2010 and its portfolio [now includes] eight operational centres, with a further three expected to open in 2017.”

Most of Blossoms Educare’s portfolio of childcare centres are in Auckland and following the success of these facilities, the company is now expanding into Canterbury, Chand says.

The Otahuhu centre, which is licensed for 70 children, is efficiently laid out and includes modern features such as double glazing, air conditioning and insulation. It has proven to be very popular in the local community, with strong trading history for the years it has been operational, says Kermode.

The property includes a single-level building with outdoor play areas at the rear of the site and off-street car parking in front of the building.

The childcare sector has demonstrated strong growth in recent years, Chand says.

Further boosting the investment merits of childcare centre properties is the considerable goodwill tied to the property and the resource consent. These factors contribute to the stability and longevity of childcare property investment assets, he adds. The property occupies a high-profile location with easy access to a large residential catchment in a well-established suburb. It is positioned 200m from Otahuhu the town centre and Otahuhu Primary School, on the main road that links Otahuhu to SH1, says Kermode.