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Read More » The early learning net lease market closed 2025 with tightening inventory and stable cap rates. Despite continued demand for essential-use real estate, fewer early learning properties came to market in the second half of the year, particularly assets with long remaining lease terms.
This year-end report provides a data-driven overview of inventory levels, cap rate trends, tenant activity, and geographic concentration across the early learning net lease market.
Market Snapshot
At year-end 2025, 122 early learning properties were actively listed nationwide. This reflects a 22.8% decline since August 2025 and an 11.6% decrease compared to year-end 2024. Over the same period, average cap rates compressed modestly to 6.88%.
Properties with 10 or more years of remaining lease term experienced an even sharper reduction in availability, reinforcing a tightening supply environment for long-duration assets.
Despite this, cap rates across many net lease sectors compressed or held firm, signaling that investor demand for credit-backed, essential-use assets remains resilient even amid elevated borrowing costs.
Early Learning Cap Rates
Cap rates across the early learning net lease market remained relatively stable through year-end 2025. The average cap rate declined 3 basis points since August and 5 basis points year-over-year, settling at 6.88%.
This modest compression suggests continued investor interest in essential-service assets, supported by long lease structures and predictable cash flow.
Long-Term Leased Assets (10+ Years Remaining)
Inventory with at least 10 years remaining on the lease declined 26% since August, falling to 89 properties. These assets now represent approximately 73% of total on-market inventory.
The average remaining lease term among these properties was 15.2 years, with an average cap rate of 6.86—only slightly below the broader market average.
Inventory Dynamics
The contraction in available inventory was driven largely by fewer listings from major operators rather than weakening sector fundamentals.
The Learning Experience remained the largest contributor to on-market inventory, though listings declined materially from mid-year levels. Even with this pullback, operator concentration remains a defining feature of the early learning net lease market.
In a limited-inventory environment, underwriting discipline plays an outsized role in pricing outcomes.
Tenant & Operator Highlights
The Learning Experience
The Learning Experience accounted for 29 on-market listings at year-end 2025, maintaining its position as the largest tenant presence in the sector. Typical leases feature long initial terms with periodic rent escalations, commonly structured as 10% increases every five years.
KinderCare
KinderCare properties posted an average cap rate of 6.83% at year-end. After a brief period of compression earlier in 2025, cap rates rebounded toward pre-IPO levels, reflecting investor expectations around revenue growth and operational stability.
Guidepost Montessori
In 2025, Guidepost Montessori Schools separated from Higher Ground Education following a Chapter 11 filing earlier in the year. A new parent entity, Guidepost Global Education, was formed to stabilize the platform. After a series of closures, 83 Guidepost Montessori schools remained in operation at year-end.
Geographic Concentration
Early learning inventory remained concentrated in a handful of states. Texas led the market with the highest number of on-market properties, followed by Florida, Georgia, and Illinois.
Cap rates varied modestly by region, reflecting differences in lease structure, remaining term, and operator profile rather than broad geographic dislocation.
What This Means for Investors
The year-end data points to a market characterized by limited inventory rather than weakening demand.
For investors evaluating early learning net lease assets:
- Fewer available properties may increase competition for institutional-quality assets.
- Long-term leased properties continue to trade with relative pricing stability.
- Tenant quality, lease structure, and remaining term remain primary drivers of value.
Early learning net lease real estate continues to serve as a defensive, income-oriented allocation within the broader net lease landscape.
Access the Full Year-End 2025 Report
Download the complete Year-End 2025 Early Learning Net Lease Market Report for detailed tenant data, lease metrics, and state-by-state analysis.
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