Burgess Rawson

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Interest for childcare centres continues unabated, with more properties under the asset class sold so far in 2017 than previously.
A recent analysis by commercial real estate agency Burgess Rawson of its sales over the past seven years shows 65 properties have been sold in 2017 so far, higher than previously. 
The average yield has risen to more than 5.5%, their report says.
Burgess Rawson, which has nearly three-quarters of the market share for childcare centre sales in Australia, says in a new report that average yields have fallen to 5.84% in the year to date from 7.58% since 2013. 
Burgess Rawson’s director Billy Holderhead was quoted by the Australian Property Journal as saying that unlike other property sectors where a surge in supply would normally result in an oversupply and push yields higher, childcare investment yields have declined further.
Supply increased a massive 550% between 2013 and 2014, yet yields compressed further by 10% from 7.58% to 6.89%.
“The sales history shows that despite increased supply, compression yields and greater price volumes continued. Therefore equilibrium, where demand is met, in our opinion has not been reached,” he said in the article carried on Burgess Rawson’s website.
“We see this trajectory continuing into the foreseeable future.”
Even the collapse of ABC Learning Centres has not dented the popularity of childcare centres, with 96% of all ABC centres now assigned to Goodstart, a consortium of The Benevolent Society, Mission Australia, the Brotherhood of St Laurence and Social Ventures Australia.
Burgess Rawson’s associate director Adam Thomas said childcare centres truly are one of the few remaining “set and forget’’ property investments, with strong similarities to supermarkets in a previous era when leases were more favourable to landlords.
“This shows the core fundamentals are there,” he added.
In the last five years, rents have surged too. Rents range from $1,500 and $6,000 per childcare place, per year, with metropolitan centres sold this year averaging $3,000 per place, according to Burgess Rawson.
Five years back, the metro range was nearly $2,000 and has now climbed to the high $3,000’s.
Earlier this year, a record low yield was set at an auction in Sydney when a <a href="https://www.urban.com.au/expert-insights/investing/70369-childcare-centre-yields-close-in-on-residential-in-sydney" target="_blank">36-place G8 Childcare centre</a> property (picture above) in Vaucluse sold for $4.425 million on a yield of 3.57%.
Another research by Ray White, Between The Lines: WA Child Care, says the child care market as an income producing asset class has grown in appeal across the East Coast for the two years with a push into the Western Australian market has heated up during the second half of 2017.
“It says high supply over the last five years in the East Coast was realised due to the large increases in population and the undersupply of facilities, in more recent times its heavily subsidised income stream has not gone unnoticed by savvy investors,” it says.
The prospects for childcare centres looks secure with the federal government projected to spend $8.8 billion in 2018/19 and as much as $10 billion by 2020, according to Burgess Rawson childcare specialist Michael Vanstone.
The government predicts this investment will return 90,000 parents back to the workforce, which will add $3.1 billion to the economy, adds the Burgess Rawson report.
The Ray White report, which focuses on WA, says the market there is still in its supply phase with a high volume of stock recently entering the market and a pipeline in the works.
Researchers Vanessa Vader and Stephen Harrison say the demand for childcare centres is high as investors can see the value and attractive yields still on offer. Added to that is the ease of funding for child care assets.
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Childcare centres one of the few remaining 'set and forget' investments: Burgess Rawson

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The commercial real estate firm, Burgess Rawson, has been found by a Melbourne court to have unlawfully fired an employee because she was pregnant and took leave days for illness.
Despite the company arguing that her dismissal was due to work performance issues, the Federal Circuit Court ruled that the administrative assistant was fired in the last week of her probation period because of pregnancy, taking personal and annual leave and being absent due to illness or injury.
In doing so, Burgess Rawson breached the Fair Work Act, it said.
The employee, Tiffany Mahajan, nee Reddy, was represented by Matthew Minucci with Clayton Utz her solicitor, while Burgess Rawson was represented by barrister Toby Borgeest who was assisted by solicitors, Abrahams Meese Lawyers.
Compensation is yet to be determined.
The worker joined the Burgess Rawson Melbourne office in December 2015 on a six-month probation as an administrative assistant.
Her role was to proof read valuation reports, ensuring that there were no spelling or grammatical errors, and format the reports, the <a href="https://www.propertyobserver.com.au/https://www.austlii.edu.au/au/cases/cth/FCCA/2017/1560" target="_blank">court judgement</a> shows.
She learnt about her pregnancy in January 2016, and informed the office at her three-month probation meeting in March 2016.
Her boss, Mr Perrin -- the leader of the valuations team -- did not raise any issues about her performance at the time.
Her three-month probation meeting was with Mr Perrin and Mr Silvester, who was a senior valuer employed by the respondent.
Mr Perrin told the court that, during that meeting, he told the applicant that she appeared to be “going alright”.
He conceded in cross-examination that he did not raise any performance concerns with the applicant at her three-month probation review.
The applicant claimed that, in fact, Mr Perrin praised her for her work ethic.
The court heard that between March and her dismissal on June 3, 2016, the last working day before her probation period was set to expire on June 6, the staff member took seven days of sick leave and four days of annual leave because of morning sickness and hospital appointments. On these occasions she says she notified the employer in advance, the judgement noted.
She was late to work by about five minutes around six or seven times over three months, the court heard, owing to Melbourne's public transport delays, the Smart Company website revealed in its reporting of the court judgement.
The court also reviewed the minutes from a directors meeting in April 2016, which mentioned the staff members name, followed by the words “6 months 6 June. Situation needs to be dealt with”.
The judge found that while there were other references to staff members with performance concerns, she was the only one who apparently needed to be “dealt with”.
The worker’s team leader told the court that by May, he had made the decision to terminate her employment due to poor performance and poor punctuality. He said her pregnancy, leave days and intention to take maternity leave formed no part of the decision to dismiss, but acknowledged he did not formally raise any concerns about performance with her prior to the dismissal.
The team leader also said that while informing her of the termination on June 3, he did not give further details about what performance concerns had arisen, but did say she was “unreliable”.
The worker claimed she was told: “Due to your current circumstances, your employment has become unreliable and we have decided not to continue with your employment”.
Despite denials the worker’s “circumstances” had been discussed in the dismissal meeting, Judge Heather Riley found it likely that this had taken place and that it “beggars belief” the worker’s employment could be considered “unreliable” on the basis of her being slightly late to work on a handful of occasions over three months.
The company had also raised concerns about the worker’s ability when it came to formatting valuation reports and ensuring consistency in valuation figures in these reports. However, the judge found this suggestion “preposterous”, saying errors in figures for valuation reports were the responsibility of the valuer who had prepared the numbers, not the administration assistant.
Riley ultimately ruled that the worker was dismissed because “she was pregnant, she took personal leave, she took annual leave and she was temporarily absent from work due to illness or injury”.
The court was told another employee who announced during her probation period that she was pregnant was retained in her employment, with arrangements to cover a period of maternity leave.
Mr Perrin told news.com.au he was “disappointed” with the outcome of the case, and that he would decide whether to appeal once the court had assessed the amount of damages the firm would have to pay to Ms Mahajan.
 
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Burgess Rawson unlawfully fired pregnant employee: Federal Court 

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An childcare investment property at Tamworth has been listed for sale.
Located at <a href="https://www.realcommercial.com.au/property-medical+consulting-nsw-tamworth-502320806" target="_blank">8 Patrick Street</a>, the property has a five year lease to G8 Education until May 2029.
There is two further 5 year options to extend until May 2039.
It has a fixed annual rental increase of 4 percent plus ‘ratchet’ provisions.
The property is well maintained and licensed for 38 places with all outgoing fees paid for by the tenant.
It has a net income of $97,525 per annum plus GST.
Positioned in a highly regarded place TAFE New England is 200 metres away while Tamworth’s CBD is only a kilometre.
The auction is on April 4 through Burgess Rawson agents Dean Venturato, Natalie Couper and Adam Thomas.
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Tamworth childcare investment property listed for sale

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An investment property at Leeton leased to ANZ bank has been sold for $965,000.
The property at <a href="https://www.burgessrawson.com.au/buying/NSW/Riverina/Leeton/Retail/2P1285#.WBPbZNxJtyw" target="_blank">63-69 Pine Avenue</a> comes with a secure lease until 2018 with options to extend until 2028.
The ANZ branch has been a long term tenant since 1989.
It is a substantial 1,012 sqm site with a quality 271 sqm one storey building.
In 2008 the building underwent a $1,400,000 building upgrade and it’s prime CBD location means that it’s surrounded by other major banks and national retailers.
The tenant pays all usual outgoing fees and there is an annual rent increase as well.
The net income from the property is $50,722 + GST.
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ANZ Bank at Leeton sold

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A property leased to Metro Petroleum at Haberfield, Sydney has been sold for $4,800,000.
The 1151 square metre property is located at <a href="https://www.burgessrawson.com.au/buying/NSW/Inner-West/Haberfield/Retail/2P1278#.WBPd4NxJtyw" target="_blank">163-165 Parramatta Road</a> and has a new lease from 2016.
It is a recently refurbished site with new high speed bowsers that have been there for 30 years.
The property does have further redevelopment/rezoning potential (STCA) and the valuable redevelopment clause is in the owners favour with 50,000 cars passing daily.
The tenant pays all outgoings, including 100% land tax with a strong 4% annual increase with a net income of $288,000 per annum plus GST with a predicted net income of $336,919 in 2021.
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