Feasibility tool
Early learning centre feasibility
Step 1 turns places, occupancy and fees into a capitalised value. Step 2 lets you shape the funding.
Inputs
Indicative only — a guide, not a formal feasibility, valuation or finance offer. Send us your numbers for a considered view.
Understanding childcare / early learning feasibility
A childcare centre feasibility calculator turns approved places, occupancy and daily fees into gross fee income, derives the operator rent, and capitalises that rent into a completed value — then sizes the debt.
Like other specialty assets, an early learning centre is funded on its completed, leased value. The operator covenant and lease term are what a lender underwrites, so submission quality is about the tenant and the lease, not presales.
The metrics, explained
Total development cost (TDC) is everything it costs to deliver the project — land, construction, professional fees, contingency, finance interest and brokerage. Loan to value (LVR) is total debt divided by the end value; loan to cost (LTC) is total debt divided by TDC. Lenders size senior debt to the lower of an LVR and an LTC limit, so both matter. Return on equity (RoE) is development profit divided by the equity you contribute; margin on cost (RoC) is profit divided by TDC — lenders usually want to see a margin comfortably into double digits. The blended cost of funds is the weighted-average interest rate across your debt layers — the true cost of the capital stack once mezzanine or preferred equity is added. The equity multiple is how many times your cash equity comes back.
More leverage lifts return on equity but raises LVR, LTC and the blended cost of funds — the art is fitting the layers so the numbers still clear the lender’s limits and leave your margin intact. Move to Step 2 and slide the senior and mezzanine layers to see it happen live, then send us the deal for a considered view.
Frequently asked questions
How is an early learning centre valued?
On the operator rent capitalised at a market yield. Operator rent is usually set as a percentage of gross fee income, which itself is driven by approved places, occupancy, the daily fee and operating days — all inputs in Step 1.
What occupancy should I assume?
Established centres often run at high occupancy, but new centres ramp up over time. Test a conservative occupancy as well as a stabilised one to see how sensitive the completed value is.
How much can I borrow against a childcare development?
Senior debt is sized against the completed value and total cost — typically a single senior facility. Slide the stack in Step 2 to see the equity requirement and returns.
Where do I read more?
See childcare centre development finance and our early learning case study.