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Charter Hall Social Infrastructure REIT (ASX: CQE) has disclosed that five of its early learning centres will be affected by G8 Education's decision to suspend operations at 40 underperforming childcare sites, although the property investment group says the impact amounts to roughly 1 per cent of its total income.
The disclosure follows an announcement from G8 Education (ASX: GEM) earlier this week that it would suspend the 40 centres amid a 7-percentage-point occupancy slump to 56.4 per cent across its network.
CQE says it has received assurances from G8 that it will continue to meet all financial obligations under its leases for the five affected properties.
The news lands as CQE has been actively reducing its exposure to early learning assets for some time, recycling capital into higher-yielding social infrastructure investments with longer weighted average lease expiry profiles.
QCE is the largest owner of early learning centres in Australia and while it is selling down some assets it is not exiting the sector, but reducing its exposure in favour of assets in health, government, and education facilities.
In FY25, the REIT divested $151.1 million worth of early learning centres at an 8.3 per cent premium to book value.
It offloaded a further $88.9 million in the first half of FY26 at a 4.6 per cent premium, and has contracted another $17.3 million in sales since 31 December 2025 at a 6.5 per cent premium.
Capital freed up from those disposals has been redeployed into assets including a 50 per cent interest in a Western Sydney University campus acquired for $152 million, a stake in a Geosciences Australia facility for $28.7 million and a Perth pathology laboratory for $47 million.
The portfolio has grown to $2.3 billion in gross assets across 308 properties.
G8 Education this week painted a grim picture for the childcare sector leading the company to cut its support office workforce and seek new procurement savings as it battles the sharp decline in occupancy across its 395-centre portfolio.
The company blames the deterioration in occupancy on a combination of sector-wide headwinds including cost-of-living pressures eroding family demand, falling birth rates, increased centre supply and weakened family confidence following serious child safety incidents across the early childhood education and care sector.
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