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Property leaseback offers stake in growth of landmark childcare centre

Commercial property investors are being offered a stake in the rapid growth of a landmark Hawke’s Bay childcare centre under a unique sale-and-leaseback arrangement.

The more than 5,000 square metres of freehold properties underpinning Scallywaggs Kindergarten & Care, an integral part of the Central Hawke’s Bay community of Waipukurau for 35 years, have been put up for sale by the operator. Buyers are being offered attractive terms in a leaseback that will allow Scallywaggs to re-invest the sale proceeds in ambitious expansion plans to meet growing demand.

Positioned prominently on the fringe of Waipukurau’s town centre, Scallywaggs was first licensed in 1988 with one qualified teacher catering for 35 children.

The privately owned and operated facility now has 25 qualified teachers plus other educators and support staff. It provides high-quality early childhood education and care services from several adjacent sites at 5-13 Russell Street.

The sites housing the purpose-built redeveloped centre are now for sale with the proposed leaseback enabling new owners to reap the benefits of a further major expansion. This will boost the centre’s capacity by more than 25 percent, from the current 131 childcare placements to 166 placements.

Upon settlement, Scallywaggs will enter into a new nine-year lease and complete fitout works and licensing requirements to provide the additional 35 placements.

The works will be completed, and the licence obtained, within a year of settlement. But the business will pay the new owner a market rental of $290,500 plus GST per annum based on the full 166 childcare placements from settlement.

The lease will operate for the first nine-year term on a “triple net” basis, insulating owners from repair, maintenance and capital expenditure costs. The lease agreement will incorporate three further six-year rights of renewal and three-yearly market rent reviews.

The freehold land and buildings at 5-13 Russell Street, Waipukurau, are being marketed for sale by negotiation through Mark Evans of Bayleys Napier.

Evans said the childcare centre comprised multiple buildings across five addresses on three separate freehold titles, with high-profile frontage to Russell Street.

The well-maintained buildings with a total floor area of approximately 1,130 square metres are underpinned by some 5,057 square metres of land.

“A huge demand for placements with this renowned operator of 35 years provides the opportunity to purchase their crown jewel – a substantial freehold property with purposefully developed buildings on the fringe of Waipukurau’s town centre.

“Scallywaggs has long thrived and grown at this location. Its strategic plan to further expand their business to meet community demand now provides a unique and highly attractive sale-and-leaseback investment opportunity.

“This exceptionally well-presented and located facility provides excellent childcare in a strong and supportive community and growing commuter town. It represents an outstanding passive investment opportunity which is sure to gain the attention of buyers well beyond Hawke’s Bay.

“Childcare is increasingly recognised as an attractive long-term investment option, with the added security that comes with a large proportion of operators’ revenue being government funded,” Evans said.

The premises for sale include two purpose-built blocks, one of which is a gymnasium constructed in 2002 which hosts unique preschool gym sessions for two to five-year-olds, along with several thoughtfully converted residential buildings.

These are a mix of 1930s timber-framed and 1940s stucco structures which are well presented with a high standard of internal decoration and natural timber joinery. Recent modernisation has seen upgrades to 7 and 9 Russell Street in 2017 and 13 Russell Street in 2023.

Other features include extensive soft fall and water play areas, a small orchard and paddock play areas, climbing structures and shade shelters between the various buildings. Further shading is provide by established, well-maintained trees which help to create an exceptional natural early childhood environment.

Parents and staff enjoy plenty of off-street parking and easy access to the town centre and surrounding residential areas. The wider region is accessible via nearby access to State Highway 2.

The Russell Street properties are zoned Township by Central Hawke’s Bay District Council, a designation that includes small towns with a mixture of living, business, community and productive uses.

Scallywaggs is one of two main childcare facilities in Waipukurau, the major township in Central Hawke’s Bay, a region which is experiencing strong economic and population growth.

Click here for more information on the listing.

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