Asset class / childcare centres
You own it. We run the lease.
Childcare leases are long documents. Ten to twenty years of term, options, fixed and market reviews and a triple-net split that quietly decides who carries the costs. We manage every clause as it falls due across centres throughout Sydney.
01 / Tenure The lease ladder
A childcare lease runs in rungs.
Most centres are not a single block of rent. They climb in steps: an initial term, a stack of option periods, and a review mechanism that resets the rent at each landing. Manage the dates and the asset compounds in your favour. Miss one and the rent stalls for a decade.
Every rung is a date. Each option and review carries a notice window the landlord has to action in writing.
The clock favours whoever reads the lease. We hold the calendar so nothing is exercised late.
The commitment that sets the asset
Childcare operators fit out a centre for a long horizon, so initial terms commonly run ten to fifteen years. The longer the secured term, the stronger the income and the cleaner the valuation. We log the commencement, the rent-free or incentive treatment, and the first review date the moment management starts.
Fixed, CPI or the higher of both
Between landings the rent steps up every year. Institutional-grade leases use fixed increases of 3.0% to 3.5%, CPI, or a higher-of mechanism. The trap is the index: use the wrong CPI series or the wrong base quarter and the increase is understated for the rest of the term.
The tenant's right, your notice to manage
Options sit with the operator, but they run on the landlord's clock. There is a window to exercise, usually six to twelve months before expiry, and a market review is often pegged to it. We track the window and prepare the position before the operator moves.
Where undermarket rent gets locked in
A second option can carry the lease past the twenty-year mark. At each market review the rent resets to current value, with a path to a valuer if the parties disagree. A poorly run market review locks in undermarket rent for another full term, so the evidence and the timing both matter.
Make good and the next tenure decision
At the end of the run the operator owes make good against an agreed condition, and you decide whether to re-let, renew or divest. Logged at handover, make good is enforceable. Discovered at the end, it becomes a discount you wear. We hold the dated condition record from day one.
02 / Outgoings The triple-net split
Who carries each cost.
On a triple-net lease the operator carries the building's running costs: council rates, water, land tax, insurance and most structural and capital items. The owner keeps a clean net return. The leakage happens when a charge is paid from the owner account and never recovered, or land tax is apportioned on the wrong basis.
Most childcare leases are non-retail under the Retail Leases Act 1994, so recovery is wide when the lease itemises it. A retail-classified lease restricts what can be passed through. We read which one you hold before we reconcile a cent.
The rent is only as strong as the operator behind it. Watch the covenant, protect the asset.Blox Commercial / commercial management only
03 / Covenant Why the operator matters
A childcare asset is a covenant, not just a building.
A long lease is worth what the operator can pay across its full term. The centre's licence, its rating and its subsidy approval all feed the rent, so a landlord who watches the covenant protects the income before it slips. This is asset management, not just rent collection.
NQF and ACECQA rating
A rating drop changes parent fees and confidence. We monitor outcomes because they read straight to the operator's ability to pay rent.
Child Care Subsidy approval
CCS is a precondition of a viable centre. A suspension threatens the tenant covenant the day it lands, so its status is part of active management.
Guarantee and security held
Bank or director guarantees back the lease. We monitor expiry and require replacement before they lapse, so the security is live when it counts.
04 / Leakage Where the money goes
Four things self-managed childcare landlords miss.
Each one is recoverable income or security quietly leaving a centre that looks like it runs itself.
Reviews run on the wrong index
A childcare lease specifies the review method per year. A fixed step missed on its date, or a CPI review calculated off the wrong series or base quarter, understates the rent for the rest of the term. It compounds at every landing and cannot be back-claimed.
Lost income, not recoverableTriple-net outgoings under-recovered
On a net lease the operator carries land tax, rates, water and insurance. Missed annual reconciliations, land tax apportioned on the wrong basis, or a charge paid from the owner account and never recovered all mean you quietly subsidise the occupancy cost.
Owner subsidises the tenantOption windows left to drift
An option carries a notice window and often a market review pegged to it. Left unmanaged, the market review either slips or settles on weak evidence, and the rent resets below value for the whole next term. The window favours whoever is watching the calendar.
Undermarket for a full termCovenant and security ignored
A rating slip or CCS suspension is an early signal that the rent is at risk, and an expired guarantee is worthless. If the covenant and the security are not monitored, you find out at default, which is the worst possible moment to learn the position.
Security gone when needed05 / Pricing What it costs
One fee. Your tenant pays.
Childcare management should cost what it costs. We charge a 5% management fee. On a net lease that fee is recoverable as an outgoing, so the operator carries it. A national-operator freehold and a strata centre on a shorter lease both sit under the same number.
- No contractor markups
- No disbursement margins
- No hidden charges in monthly statements
See the full breakdown on our commercial property management fees page, talk to us about commercial leasing for a vacant centre, set up a compliant lease with Lease Launch, or read what sits under commercial property management.
Get a proposal06 / Questions What landlords ask
Childcare management, answered.
It covers rent collection, annual CPI and market reviews, outgoings reconciliation, lease compliance monitoring, tenant liaison with the operator, maintenance coordination, renewal negotiation, NQF and ACECQA awareness, and landlord reporting. It differs from generalist commercial management because childcare leases have operator-specific structures, longer terms, and covenants that need ongoing assessment.
Blox charges a 5% management fee recovered through outgoings on a net lease, so your tenant pays it. A standalone freehold leased to a national operator on a long net lease and a strata centre on a shorter gross lease both sit under the same fee. Blox quotes after a free audit of your centre.
Yes. Even with a national operator as tenant, you still need to enforce reviews on time, reconcile outgoings, manage capital works obligations, handle option exercise notices, and protect your position at lease end. National operators run sophisticated property teams. Self-managed landlords under-recover outgoings and miss optimal review timing.
Most institutional-grade leases use fixed annual increases of 3.0% to 3.5%, CPI, or a higher-of mechanism. A market review is usually pegged to an option exercise date, every 5 years. Miss the notice, or use the wrong CPI series, and you lock in undermarket rent for another full term.
It depends on whether the lease is retail or non-retail. Most childcare leases are non-retail under the Retail Leases Act 1994, so land tax, management fees, and most outgoings are recoverable when the lease provides for it. The lease must itemise recoverable outgoings clearly. A triple-net lease typically pushes council rates, water, land tax, insurance, and most building costs to the operator. Retail-classified leases restrict recovery.
A drop in NQF or ACECQA rating affects parent fees and CCS eligibility, which pressures the operator's ability to pay rent. Your position is to monitor rating outcomes, understand covenant strength, and ensure lease covenants on operating standards are drafted properly. In severe cases you may need to consider operator transition.
07 / Adjacent Where to go next
Built around the long-lease childcare asset.
08 / Talk Let's discuss your centre
Send us the lease. We will read it.
One conversation is usually all it takes to understand the opportunity in your term, your options, your reviews and your outgoings on a childcare centre in Sydney.
(02) 8883 4559NSW Licence 1013554 · ABN 20 633 280 109