Why Education Facilities Add Up for Investors
September 13 2023
With economic and building factors impacting the feasibility of new developments, investors have their sights set on assets promising a reliable return.
‘The Property’ plays host to a purpose-built education facility tenanted by Imagine Education Australia, a privately-owned centre operating from four Queensland locations and catering to both local and international students.
Long-established with a strong trading and financial history, Imagine Education Australia offers a strong tenant covenant and is producing a current net income of $390,000* per annum plus GST.
The holding attracted 37 enquiries and 3,913 online views during a 37-day campaign. It sold for an undisclosed price that demonstrated a net return of 7.35% on the passing rental and 5.6% as an analysed market yield.
“Due to the high capital expense and very specific council approvals associated with opening a school, there is also a very low chance of the tenant relocating.”
The Power of Education
Holdings that are set up for and tenanted by education facilities are sought after by investors for a number of reasons:
– Economic Resilience and Steady Demand: Regardless of economic conditions, the demand for educational facilities remains relatively stable, helping to maintain occupancy rates and a steady stream of income for the investor.
– Government Support: With the client base being supported and subsidised by the government, they are essentially the tenant.
– Long-term Lease: The leases signed by educational tenants are often long-term, sometimes spanning several years or even decades.
– Rare Opportunity: Buildings suitable for educational tenants are rare, and those that do exist are often owner-occupied and scarcely available for sale. According to Adam, this provides the investor with more negotiating power and the potential for a stronger deal than may be possible with other, more common commercial sites.
A combined nine lots spans 848m2* across the entire first and second floors of the Southport Central Commercial Tower, and benefits from nine basement car parks and exclusive access to lifts, foyers and amenities.
“This site is purpose-built, so all the hard work is done for you. This is an opportunity to buy a set-and-forget property with a tenant that won’t leave,” says Adam.
The tenant is producing $360,000* plus GST and is paying 100% of the outgoings. With a new five-year lease having commenced in 2023, this is a prime investment opportunity with a guaranteed long-term return.
To discuss the full potential of this opportunity, reach out to the Kollosche Commercial team.