Owning childcare centre could be child’s play

5:00 AM Saturday February 28, 2015 Colin Taylor

Elevated view of childcare centre complex at 25-27 Onslow Rd identified by a red border.

A Papakura complex leased long term to a well established childcare centre is being presented as an ideal attractive, passive investment property.

The length of the lease and the pedigree of the tenant offer an appealing “hands off” investment, says Peter Kermode of Colliers International, who with colleague Shoneet Chand, is marketing 25-27 Onslow Rd for sale by auction at 11 am on March 18.

The freehold corner site is leased to Kidicorp Limited on a new 12 year lease earning $146,000 per annum net and offers investors rental reviews every two years fixed to Consumer Price Index rates. If all rights of renewal are exercised the lease has a final expiry of 2045.

“Kidicorp is a leading private childcare provider in New Zealand and the company has already occupied the 1575 square metre site for eight years,” Kermode says. “Kidicorp has established a very successful business with a strong trading history so it has a strong commitment to this location.”

The property consists of three standalone weatherboard classrooms and an administration block providing separate learning and play environments for three different age groups catered for on site. The net lettable area of the four buildings is about 389 sq m.

Chand says having off site car parks available in the public reserve directly opposite the childcare facility could allow for the future expansion of the centre – without needing to factor in unproductive onsite car park areas.

The property is currently zoned as Residential 2 under the Papakura District Plan and Mixed Housing Urban under the Proposed Auckland Unitary Plan.

The high profile, corner location is less than one kilometre from Papakura town centre.

Chand says Onslow Road is situated within a large residential catchment and the Papakura train station is just a short walk away.

Kidicorp has more than 250 centres nationwide including nurseries, pre-schools, kindergartens and child care services, operating under nine main brands from Kaitaia to Invercargill.

“Despite being the largest private childcare provider in the country, Kidicorp is a family owned business at heart,” says Kermode.

“From the perspective of landlords or investors Kidicorp is very approachable and makes decisions quickly which is not always the case with such large businesses.”

Kermode says childcare businesses – more so than many other types – also place a premium on the stability of their location.

“Unlike other businesses that move for a multitude of reasons, for childcare centres it is all about certainty of their location and the bond they create with their clients in the surrounding community.

“Further underpinning the long term viability of this investment is the location. It is a prominent corner site opposite a local reserve and two local schools, making it a natural site for a childcare centre,” Kermode says.

Kidicorp owner and managing director, Wayne Wright, says familiarity and stability are key considerations for their centres.

“All our centres have excellent staff to child ratios; trained, qualified and caring teachers; quality equipment and toys; and a safe and attractive learning environment.”

Chand says that government funding to Early Childhood Education (ECE) has increased by 47 per cent since 2007.

“It would be surprising to see this reversed given that ECE is viewed by the Social Policy Evaluation and Research Unit - formally the Families Commission - as an essential service.

An emphasis is always placed on the quality of care provided and an Education Review Office report identified this business as one that is well-placed to promote positive learning outcomes for children.”

Peter Kermode & Shoneet Chand of Colliers together.jpg

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