Think Childcare’s (ASX:TNK) property ‘incubator’ has gone into receivership.

Receivers have taken control of Edhod, the company that develops properties as childcare centres and on-sells them to Think which manages them.

Receivership is when a secured creditor, usually a bank, asks for a receiver to take control of a company’s assets in order for debts to them alone be paid. Liquidation is when the entity acts for all creditors.

The stock took an immediate hit, falling 7 per cent to $1.76.

Think CEO Mathew Edwards reassured investors by saying that Edhod subsidiaries are not subject to the receivership and these should be able to keep delivering on Think’s developments.

RBC Capital Markets’ analyst Garry Sherriff said in a note the impact on Think will be “difficult to gauge”.

“TNK [is] continuing to expand services primarily through incubator strategy,” he wrote.

“TNK’s growth pipeline is facilitated by its incubator model, where TNK manages centres on behalf of incubator partners such as Edhod. TNK collects management fees and has the option to acquire centres once occupancy levels of about 75 per cent are achieved over a continuous three-month period.

“We believe Edhod represents the bulk of TNK’s acquisition pipeline. Worst case would be that TNK is unable to purchase a pipeline of Edhod centres, which we assume is the bulk of its disclosed pipeline. Best case is receivers accepting a lower price from TNK to acquire the pipeline of Edhod centres.”

Sherriff has been very bullish on the sector this year, saying about 80 per cent of families are better off under changes made to childcare subsidies last year, although he was factoring in a Labor victory in the federal election and its improved promises for parents.

Today he said moderating supply and bipartisan support for childcare across the political spectrum means he’s still confident, but has moderated his views about the sector generally and Think specifically given the vacuum of information surrounding the receivership.