BlackRock Real Assets has formed a A$600m (€389m) joint venture with Sydney-based Federation Asset Management to invest in childcare real estate in Australia.

The joint venture will acquire Federation’s existing portfolio, valued at around A$200m, and will become the exclusive funder of new acquisitions and development of childcare centres.

The partners will use a new vehicle, Federation Education Trust, to hold the centres, and expect initial commitments exceeding A$600m.

Hamish MacDonald, BlackRock Real Assets’ head of investments for APAC Real Estate, said the joint venture was well-positioned to benefit from Federation’s industry relationships and to capitalise on Australia’s “large yet fragmented” market.

Federation Asset Management partner, Jason Walter, said the deal with BlackRock was a key milestone for Federation in capturing the significant opportunity to build out childcare infrastructure in Australia.

“The opportunity in Australian childcare real estate is profound. There are 8,500 centres nationally with an aggregate value of A$34bn and growing,” he said.

Over the past three years, Federation has been acquiring long-WALE childcare centres. It has supported that build-out through agreements with developers and builders and deals to purchase new centres with national childcare operators on long-term leases.

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