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A 120-place LDC, on a 20-year operator lease.

Sample assumptions, the operator lease that turns a property into a yield product, and the cap rate that decides the developer profit.

Scale120 places
Program20 months
Development margin16.8%

02 / Sample assumptions

The market context behind the numbers.

Pricing benchmarks, build rates and finance terms used in this childcare example. Every one is editable in Popurise.

Assumption sheet07 lines

Operator lease (face): $3,800 / place pa
Annual escalation: 3.5%
Lease term: 20 years plus 5 plus 5
Incentive: None (operator funded fit-out)
Outgoings recovery: Fully net
Exit cap rate: 5.50%
Senior debt: 55% LVR, 7.25% all-in

03 / Key inputs

The inputs that drive the deal.

Grouped the way Popurise groups them. Change a category, watch the childcare output set respond.

0104 items

Site and scheme

Site area: 1,400 m²
GFA: 780 m²
Outdoor play: 420 m²
Places: 120

0205 items

Cost stack

Land: $2.40M
Civils and external: $0.45M
Build (shell ready): $3.20M
Authority and pro fees: $0.45M
Finance and leasing: $0.40M

0304 items

Revenue and exit

Face rent: $456,000 pa
Stabilised NOI: $456,000 pa
Capitalised value: $8.29M
Lease start: Month 18

04 / Base case outputs

The output set, in full.

Every number a developer wants on the screen for a childcare deal, in one place.

Hero outputDevelopment margin

16.8%

Secondary metrics08 lines

Total development cost
$6.90M
Stabilised NOI
$456,000 pa
Yield on cost
6.61%
Exit value
$8.29M
Development profit
$1.39M
Equity IRR (sell on commencement)
21.6%
Peak debt
$3.80M
Cost per place
$57,500

05 / Scenarios

Base, downside, stretch. Side by side.

Three scenarios on the same childcare project. No copied files. The decision is which one to take to investment committee.

Base case

base

Single operator pre-let, 20 year lease, current cap rate.

Yield on cost6.61%
Spread to exit cap+111 bps
Equity IRR21.6%
Cost per place$57.5k

Verdict

Workable on cap rate spread. Operator covenant carries the deal.

Downside

downside

Cap rate softens to 6.25%, build cost lifts 6%.

Exit value$7.30M
Yield on cost6.23%
Equity IRR10.4%
Development margin5.3%

Verdict

Margin compresses sharply. Cap rate movement is the dominant risk.

Stretch

stretch

Long lease and CPI escalators above 3.5% tighten cap rate to 5.25%.

Exit value$8.69M
Yield on cost6.61%
Development margin26.0%
Equity IRR27.2%

Verdict

Best outcome lives in lease quality, not rent. Strong covenant is the multiplier.

06 / Decision takeaway

Childcare is a single tenant net lease product. The deal is decided by lease term, covenant and escalator. Build cost is a low-variance line. Cap rate is the swing factor and it moves on operator credit, not building quality.

Childcare feasibility solution

Open

Childcare feasibility model

Open

Shape childcare feasibility in Popurise.

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