Five Beach Rd properties with an estimated worth of at least $15m have been remortgaged by Mentone Girls’ Grammar

Mentone Girls’ Grammar School has recently remortgaged five prestigious beachfront homes and its strategic plan to acquire more properties has been put on hold.

Mentone Girls’ Grammar spent $10m creating an indoor wellness precinct.

A leading bayside girls’ school has refinanced five prestigious beachfront properties amid declining enrolments and multimillion-dollar debt levels.

Last month, Mentone Girls’ Grammar School, remortgaged five Beach Rd properties with an estimated worth of at least $15 million, with auditors warning about current liabilities of more than $10m.

The move comes as the school has lost one fifth of its enrolments since 2017 and now has just over 600 students.

This trend is not mirrored in nearby schools such as co-ed Mentone Grammar and boys-only St Bede’s, but reflects similar struggles in other small girls’ schools such as Shelford Grammar.

As a result of a drop in enrolments, the school has had a number of staff redundancies causing great friction among teachers.

The remortgaged properties include 92 Beach Rd bought in 2012 for $1.6m, 90A Beach Rd bought in 2015 for $1.2m, 91 Beach Rd bought in 2016 for $2.1m, 2/83 Beach Rd bought in 2019 for an undisclosed sum and 82 Beach Rd bought in 2021 for $2.6m.

One Beach St neighbour said she heard the school was “looking around the area for properties”.

“It’s a lot of money for anyone to spend, even a private school,” she said.

Mentone Girls’ Grammar School principal Natalie Charles said the “strategic acquisition of property remains a part of the school’s long term vision for facility improvement but our plans have necessarily been put on hold due to rising costs and uncertainty within the building industry”.

92 Beach Road was bought for $1.6m in 2012.

90A Beach Rd was acquired for $1.2m in 2015.

91 Beach Rd was bought for $2.1m in 2016.

The school is already battling in VCAT, with neighbours objecting to moves to open its $15m Aquatic Centre and playing fields to non-students after hours.

Another neighbour involved in the battle said the school “was seeking to operate like a commercial enterprise” and would subject residents to “noise and traffic seven days a week”.

Ms Charles confirmed the school’s enrolments peaked at 739 in 2017, then dipped to 598 in 2022 due to the loss of international students from Covid, but had since climbed to 612.

“Interest in the school remains high because we’re committed to providing an environment where every child is known, seen, and heard,” she said.

“We’ve never subscribed to the corporate maxim that bigger is necessarily better.”

2/83 Beach Rd was bought in 2019 for an undisclosed sum.

82 Beach Rd was purchased in 2021 for $2.6m.

In recent years, the school has had up to $9 million in accumulated capital loans.

In 2021 it posted a surplus of $3.5m, had a loan of $6m and total land and building assets of $105m.

The school’s auditors expressed concern about its “deficiency in working capital” which was based on current assets of $1.7m and current liabilities of more than $10m.

Ms Charles said the current liabilities “includes our existing loan facility, accrued employee entitlements and unearned revenue as per accounting standards”.

“We have no loans due to be paid in full until 2026 when our loan agreement comes up for renewal.”

Analysis from a school finance expert said the school’s low enrolments but high staff numbers meant its “profitability ratio of 8.7 is very low – Mentone Grammar’s is 11.33”.

The school’s high socio-economic status — 67 per cent of students in the top income band — will also see it receive less government funding in years to come, the expert said.