Property developer Accord launches new Early Learning Fund with $25m capital raise
South Australian based property developer Accord has completed an initial raise of $25 million for a new fund that will focus on building a portfolio of as many as eighty early childhood education and care (ECEC) centres over the next five years.
The Early Learning Fund is the first such ECEC dedicated fund launched by the Group which signaled that it is targeting an average annual cash yield of 6.9 per cent as well as capital gains through its strategy of acquiring centres from its own pipeline and those of third parties.
“Given our tangible pipeline and ability to purchase on fund-through structures, we feel we can offer investors strong capital growth over the term of the fund,” Accord Managing Director Lachy Hogarth said in the Australian Financial Review (AFR).
The initial $25 million proceeds will be used to help the fund secure its first five assets, all of which are either newly opened or under-construction and leased to major operators such as Guardian Early Learning.
Nick Allen, Director of Funds Management told AFR that Accord’s preference was to acquire new ECEC centres through fund-through agreements rather than compete with private investors (via auction and other second hand markets) for operational centres, which have sold on yields between three and four per cent.
This strategy, he said, meant the fund was buying centres at a discount to the broader market, which in turn enabled investors greater potential capital gains over the initial five-year term of their Early Learning fund.
A second capital raising is anticipated in March 2022 to help fund the next tranche of acquisitions with Accord signalling it intends to expand the overall portfolio valuation to $150 million by the end of 2022.
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