Australian Unity taps into childcare growth with new fund
Wealth manager Australian Unity is making its first foray into the childcare sector, launching this month a new fund, seeded with six facilities worth $30 million, with another 12 centres in due diligence.
The Australian Unity Childcare Property Fund aims to expand to $250 million within three years, according to an equity raising presentation. Australian Unity itself has invested $20 million into the vehicle, while next month’s raising is targeting $30 million.
Including the 12 properties under due diligence – they are in Adelaide, Melbourne and Perth, and worth close to $75 million – the combined portfolio will provide for more than 1650 childcare places nationally. Average lease expiry for the six seed assets is close to 15 years.
“Childcare centres are growing in investor popularity, with the sector enjoying strong bipartisan support,” said Ryan Banting, general manager for social infrastructure at Australian Unity.
“They will also play a key role in Australia’s economic prosperity in supporting parents’ return to the workforce, providing families with access to important early childhood education resources as well as creating employment opportunities across the community.”
Investors can expect a dividend yield of between 5.5 per cent and 6.5 per cent, along with an internal rate of return of as much as 10 per cent, according to fund documents.
With $5 billion of real estate funds under management already, Australian Unity controls assets across the healthcare, accommodation, retail, industrial and office sectors.
Underpinned by federal government support for childcare, the sector has proven resilient, even through the disruption of the past two years, and is generating close to $14 billion in revenue annually.
That solid revenue stream has in turn created an opportunity for real estate investors, with about $28 billion worth of investment-grade childcare centres established. There are about 8500 national long day care centres.
Further consolidation in property ownership is expected, with the two largest childcare landlords, both ASX-listed – Charter Hall Social Infrastructure Fun and Arena REIT – owning just 7.5 per cent of the market.
Mr Banting said Australian Unity’s move into childcare property was a logical extension of its exposure to social infrastructure, which includes specialist disability accommodation, seniors living, hospital and healthcare facilities, and more recently student accommodation.
“Our research estimates that an additional 3000 childcare centres will be needed over the next decade to cope with the growth of two-working-parent families, as more women look to enter or rejoin the workforce to reinvigorate their professional careers,” he said.
