Archive | SkyCity

Propbd on Q F19Feb16 – Future transport, Higgins & adhesives clearances, port study, convention centre start

Feedback sought on future transport needs
Fletcher seeks Higgins acquisition clearance
HB Fuller seeks Advanced Adhesives acquisition clearance
Take a surfing cruise to the port of Muriwai…. 
Ministers turn first sod for convention centre

Feedback sought on future transport needs

Auckland Council, Auckland Transport & the NZ Transport Agency are seeking public input on planning transport for about 110,000 new houses on greenfields land.

Deputy mayor Penny Hulse said yesterday significant new transport infrastructure would be needed to support about 110,000 new houses & 50,000 new jobs in future urban areas matching the size of urban Hamilton.

The council & transport organisations will use feedback to help identify the transport networks needed during the next 30 years to support future urban areas in the north-west, southern Auckland, Warkworth & Silverdale.

6 weeks of public consultation began yesterday, with 2 weeks of initial feedback on proposals in each future urban area, starting in southern Auckland, followed by 4 more weeks starting in April.

“It is important we identify early what is needed so projects can be developed and in place before new housing and businesses go in.

“Getting transport well integrated with the future communities to ensure they are well connected and great places to live will be a priority. Making sure jobs are easy for people to get to is also very important.”

Auckland Transport key strategic initiatives project director Theunis van Schalkwyk said the agency was working closely with developers to deliver new transport for special housing areas as they are built, but needed feedback on what people believe future residents’ transport priorities will be.

“It is a good opportunity for people to help guide what mix of transport projects need to happen.”

Consultation will be conducted in southern Auckland from 18 February-3 March, Warkworth & Silverdale/Dairy Flat 25 February-10 March, and north-west Auckland 3-17 March.

Link:
Auckland Transport feedback 

Fletcher seeks Higgins acquisition clearance

Fletcher Building Ltd, through subsidiary Fletcher Building Holdings NZ Ltd, has applied to the Commerce Commission for clearance to acquire Higgins Group Holdings Ltd, including 50% of shares in the Horokiwi Quarries Ltd.

The application excludes Higgins’ readymix concrete business, including joint ventures in readymix concrete, which will be transferred to existing Higgins shareholders before the proposed acquisition.

Higgins is a privately owned company that provides civil construction services and is a manufacturer of construction products such as aggregates.

The Commerce Commission said its decision was due by Thursday 3 March.

Link: Commission clearances register, Fletcher application

HB Fuller seeks Advanced Adhesives acquisition clearance

HB Fuller Co Australia Pty Ltd has applied to the Commerce Commission for clearance to acquire the business & assets of Advanced Adhesives (NZ) Ltd.

HB Fuller is a member of a global group involved in the manufacture & marketing of adhesives, sealants & other speciality chemical products. In New Zealand, it mainly supplies hot melt adhesives for the industrial packaging, paper converting, woodworking, bookbinding & hygiene sectors. It also supplies a small volume of water-based adhesives to customers in the bookbinding & woodworking sectors.

Advanced Adhesives is a manufacturer & supplier of a range of hot melt & water-based adhesives used in industrial applications, including packaging, paper converting & woodworking.

Link: Commission clearances register, HB Fuller application

Take a surfing cruise to the port of Muriwai…. 

The Auckland port future study’s consensus working group released initial work identifying a long list on Wednesday of areas being considered as options to meet Auckland’s future demand for port activities.

The primary consideration seemed to be salt water – including most unlikely port contenders such as Muriwai.

Missing from the list were existing inland port sites and how those & new inland sites might form a component of new port development.

The consensus working group & wider reference group are meeting today to discuss a long list of areas & criteria. A consultant’s report to the consensus working group is due in April and that group has to make recommendations to Auckland Council at the end of June.

Link: Port future study

Ministers turn first sod for convention centre

Prime Minister John Key and Economic Development Minister Steven Joyce turned the first sod yesterday on construction of the SkyCity Entertainment Group Ltd’s NZ international convention centre between Hobson & Nelson Sts.

The total project cost of the convention centre plus associated hotel, laneway & extra carparks is $700 million. The centre is due to open in 2019.

Attribution: Commerce Commission, company & ministerial releases.

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Propbd on Q W20Jan16 – QE Square rezoning approved, Tamaki campus rezoning approved, Furniture City sold, SkyCity guidance up

Precinct’s QE Square rezoning approved
Tamaki campus rezoning approved
Smiths City to buy Furniture City
SkyCity lifts guidance

11.03am:
Precinct’s QE Square rezoning approved

Auckland Council has issued the decision of independent commissioners to approve rezoning of Queen Elizabeth Square (pictured) at the foot of Queen St under private plan change 79.

The panel of David Hill (chair), David Mead & Basil Morrison heard Precinct Properties Ltd’s application in November and issued their decision on 15 January.

The panel ruled out an alternative proposal by Graeme Scott for the Urban Design Forum. Mr Hill commented in the decision: “In short, we did not see the alternative option as providing any substantial benefits over the option set out in the notified plan change, except that it retained more land in public ownership. We would not describe it as a poorly performing option, rather that it was of no greater benefit in urban design terms to the notified option. In our view, it did not justify a fundamental reassessment of the plan change.”

Link: Private plan change 79 decision

Earlier stories:
14 December 2015: Precinct all set to transform Downtown
8 November 2015: Urban designer says fix the surrounds before selling square
6 November 2015: Is public-private co-operation the way to transform Downtown?

Tamaki campus rezoning approved

A panel of independent commissioners has approved Auckland University’s private plan change 375 to rezone its Tamaki campus. The decision, dated 23 December, was publicly notified today.

The panel of David Hill (chair), Gavin Lister, Sheena Tepania & Glenda Fryer heard the application in October-November.

The university has owned the land since 1944 but has decided to concentrate its activities in the network of city, Grafton & Newmarket campuses. It wants to vacate the Tamaki site by 2019.

The approved rezoning changes the campus from special purpose 2 (education) to mixed use.

11.9ha is at 261 Morrin Rd and another 6595m²at 231 Morrin Rd, which is subject to a long-term lease to Landcare Research NZ Ltd and a sublease to the Ministry of Primary Industries.

Link: Private plan change 375 decision

Smiths City to buy Furniture City

Christchurch-based Smiths City Group Ltd said yesterday it had entered into a conditional agreement to buy the business & assets of both Panmure Furniture City 1983 Ltd & its logistics operation Lucky Dragon Ltd for $5.85 million plus gst.

Auckland-based Furniture City has 2 stores in Auckland and one in Whangarei. The business also operates a comprehensive internet store & fulfilment facility.

The agreement is subject to Smiths City obtaining suitable finance and the satisfactory completion of due diligence, both by 29 February. Settlement is scheduled for 1 April.

SkyCity lifts guidance

SkyCity Entertainment Group Ltd said in interim guidance issued yesterday it expected ebitda (earnings before interest, tax, depreciation & amortisation) & net profit after tax for the half-year to 31 December to rise sharply above the returns a year earlier.

The company will issue its first-half results on Thursday 11 February. In guidance, it gave ranges for normalised returns of ebitda up 13-17%, from $154.5 million to $175-180 million, and net profit up 25-29%, from $66.5 million to $83-86 million. For reported returns, it expected ebitda to rise 21-23%, from $140.9 million to $170-173 million, and net profit to rise 26-30%, from $54.6 million to $69-71 million.

SkyCity said it expected the reported results to differ from the normalised results primarily due to adjustments for the actual win rate in the international business and the write-off of various non-current assets, including buildings being demolished as part of the construction of the NZ International Convention Centre in Auckland.

Attribution: Council decisions, company releases.

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SkyCity examines hotel partnership options as new gambling concessions click in

SkyCity Entertainment Group Ltd chair Chris Moller highlighted, when he addressed the company’s annual meeting on Friday, that the international convention centre it’s about to build won’t be a great earner in itself.

But there’s a second leg to its development, which has come into play immediately – earnings from extra gambling concessions.

SkyCity has awarded the $477 million construction contract to The Fletcher Construction Co Ltd to build both the convention centre & adjoining hotel, and is now looking at “partnership options” for the hotel. The company expects to turn the first sod on the development before Christmas and is aiming for an official opening in the second quarter of 2019.

Chief executive Nigel Morrison said the company’s total bill would hit $700 million including land, the convention centre development, Hobson St hotel development, connecting airbridges, retail/restaurant laneway development between Nelson & Hobson Sts and the additional parking spaces under the convention centre, increasing the total carpark to 1327 spaces, which, in addition to SkyCity’s existing ca park of 2000 spaces, will increase its total parking to 3327 spaces.

Mr Moller said it was timely to reflect on the benefits to SkyCity of the convention centre transaction: “Everyone knows that convention centres are not of themselves significant profit generators and the board is under no illusion about that. However, the extension of SkyCity’s Auckland licence to 30 June 2048, the tax certainty obtained and the attraction of more visitors to the SkyCity precinct will be of significant benefit to the company.

“The gaming concessions will also enhance our profitability and, whilst they are controversial in some quarters, our corporate social responsibility programme is how we retain our social licence to operate. Accordingly, and as you would expect, it stands at the heart of our strategy.”

Mr Morrison said the extra gaming concessions, including gaming tax rates being locked in, were activated when the construction contracts were signed on 11 November.

SkyCity’s main atrium, undergoing transformation.

SkyCity’s main atrium, undergoing transformation.

Mr Morrison also said the company had engaged international architects YWS to design & deliver “a world-class entry experience” in its main atrium on the corner of Victoria St West & Federal St, and would spend $24 million on the improvements.

Stage 1, well under way, is scheduled for completion next month and stage 2 by mid-2016. The changes include a new main escalator providing more direct access to the main gaming floor, a second new escalator linking levels 2 & 3, and the addition of ‘Andy’s’ gourmet burger bar to the food & beverage offerings. The main gaming floor will be extended through a partial infill of the atrium space.

Mr Morrison said SkyCity was well placed to fund the forecast $580 million convention centre & hotel development costs from future operating cashflows & existing debt facilities. Following the recent $125 million bond issue, SkyCity had over $300 million of committed undrawn bank facilities.

In addition, Mr Morrison said: “As part of its longer‐term funding plan, SkyCity continues to explore property-related funding options, including the potential sale of the Federal St carpark and securing external investors to fund & ultimately own the Hobson St hotel development.”

JLL has been appointed to secure external investors for the Hobson St hotel, with an information memorandum due out this month.

In a trading update for the first 4 months of the 2016 financial year, to 31 October, Mr Morrison said highlights included normalised group revenue up 11.1% to $373.2 million and normalised ebitda (earnings before interest, tax, depreciation & amortisation) up 20.5% to $121.8 million.

SkyCity Auckland, the company’s flagship property, continued to perform strongly, reporting growth across all business segments. Normalised revenues rose 6.2% to $209.3 million, and normalised ebitda rose 13.6% to $89.6 million.

International business turnover rose 50.7% to $4.5 billion, including significant growth in Adelaide. SkyCity’s Queenstown property was also buoyed by strong international growth.

SkyCity Hamilton lifted normalised revenue 11.3% to $18.1 million and normalised ebitda 27.9% to $7.8 million.

Mr Morrison said the company had made progress in addressing the cost structure of the Adelaide operations which, together with the growth in international business, had increased normalised ebitda by 77.2% to $A14.7 million.

SkyCity Darwin continued to experience challenging trading conditions, underpinned by soft hotel occupancy and restaurant & bar revenue. However, international business growth contributed to a satisfactory overall performance. Normalised revenue rose 3.3% to $A52 million and normalised ebitda rose 7.8% to $A16.6 million.

Attribution: Company release, meeting notes.

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Propbd on Q F13Nov15 – Convention centre contracts, Kiwi refinances

SkyCity confirms Fletcher convention centre contracts
Kiwi Property refinances

9.50am:
SkyCity confirms Fletcher convention centre contracts

SkyCity Entertainment Group Ltd confirmed yesterday that it had signed the building works contracts for the NZ International Convention Centre & Hobson St hotel with The Fletcher Construction Co Ltd.

As a result, SkyCity said, the regulatory concessions conferred by the NZ International Convention Centre Act 2013 became operative and would be activated.

Kiwi Property refinances

Kiwi Property Group Ltd it had refinanced all $775 million of bank debt facilities with its 4 lenders, ANZ Bank, Bank of NZ, Commonwealth Bank of Australia & Westpac, on favourable terms.

At 30 September, the company’s debt facilities had a weighted average term of 3.1 years and a weighted average cost of 5.43% (including its bonds). Chief operating officer Gavin Parker said yesterday the refinancing had extended the weighted average term to maturity by 1.3 years, and reduced fees & margins by about 20 basis points.

Attribution: Company releases.

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Propbd on Q T27Oct15 – Fletcher wins whole convention centre job, Metlife says no to Manukau golfcourse, 2 Goodman sales, tourist spendup

Fletcher wins convention centre & hotel contract
Metlifecare turns down Manukau golfcourse opportunity
Goodman sells 2 Addington buildings
Foreign tourists spend $1.7 billion more

4.45pm:
Fletcher wins convention centre & hotel contract

SkyCity Entertainment Group Ltd has appointed The Fletcher Construction Co Ltd to build the NZ International Convention Centre & a 5-star hotel beside it, on the Hobson-Nelson Sts block in Auckland (pictured).

SkyCity chief executive Nigel Morrison said today the company had agreed the terms of a binding $477 million contract with Fletcher Construction Company Ltd to build & complete the design of the centre & 1327 parking spaces under it, the 5-star 300-room Hobson St hotel and the retail laneway linking the 2 streets.

He said the parties were confident work could begin by Christmas.

Metlifecare turns down Manukau golfcourse opportunity

Metlifecare Ltd has decided against buying a 5.5ha site on the Manukau golfcourse from Fletcher Residential Ltd for a retirement village.

Chief executive Alan Edwards told Metlifecare’s annual meeting today: “After an extensive review, the company has determined that the proposed project did not meet Metlifecare’s key risk/return thresholds & capital allocation criteria.”

He said the company was still progressing its due diligence investigations into the 3ha site in McClymonts Rd, Albany, and its resource consent for 5ha at the Peninsula golfcourse, Red Beach.

“Investigations continue on possible acquisitions of other sites in the targeted areas, primarily Auckland, Bay of Plenty & Hamilton,” he said.

Goodman sells 2 Addington buildings

The Goodman Property Trust has sold 2 Christchurch buildings as part of its asset recycling programme. Local investors have bought the amenity & IAG buildings at 12 & 14 Show Place in Addington for $33.2 million. Settlement is scheduled for 25 November.

Trust manager Goodman (NZ) Ltd’s chief financial officer, Andy Eakin, said today: “Ongoing asset sales are currently the preferred source of funding for new development activity. It’s a successful & sustainable approach that is improving the cash earnings of the trust while enhancing an already high quality property portfolio.”

Earlier story:
28 August 2015: Goodman puts 5 Christchurch buildings on market

Foreign tourists spend $1.7 billion more

Statistics NZ said today continued growth in visitor numbers from Asia & North America contributed to a record $1.7 billion increase in international tourist spending in the year to March.

2.95 million overseas visitors came to New Zealand in the March year. 6 months on, annual arrivals had topped 3 million.
The number of international visitors rose 7.1% and they spent 17.1% more – $11.8 billion – in the March year after a 4.5% increase the previous year.

Statistics NZ’s Tourism satellite account 2015 showed domestic tourism spending up 6.3% to $18.1 billion and the total up 10.3% to $29.8 billion, following a 4% increase the previous year.

Link: Tourism satellite account

Attribution: Company releases, Statistics NZ.

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Convention centre consent granted

Independent commissioners have granted SkyCity Entertainment Group Ltd a 5-year consent to develop the NZ International Convention Centre on the Victoria Quarter block west of its casino & first hotel.

SkyCity chief executive Nigel Morrison said today the company was working towards concluding a building works contract this year, with the objective of turning the first sod before Christmas.

The application was non-notified and was heard in an open hearing – but without opposition – at the end of August.

The convention centre & 300-room hotel will sit on 1.4ha bounded by city centre arterial routes Hobson & Nelson Sts, and cross-streets Victoria & Wellesley Sts West.

The hearing panel, chaired by David Hill, said the commissioners were aware SkyCity & the Government had agreed a revised proposal after the application before them was lodged. SkyCity will apply for a change of conditions for the revised proposal. Mr Hill said the panel took no account of it in reaching its decision.

Auckland Council’s urban design reviewer, principal specialist urban designer Chad McMan, concluded that a number of urban design elements fell short of being acceptable, particularly relating to the quantity of parking, the Hobson St overbridge and what he considered to be a lack of an identifiable sense of place in the design.

The panel said it wasn’t persuaded that the overall number of parking spaces proposed (1415) would have adverse urban design effects of the magnitude suggested: “While we accept the short point that an airbridge is not generally an ideal urban design feature, we find that concern overridden by the plain fact of pedestrian & function convenience between the SkyCity main site & future central rail link Aotea station midplatform exit to Federal St.

“We were also persuaded by the traffic engineering evidence that its absence could result in safety issues for pedestrian patrons exiting onto Hobson St at peak periods, despite the proposed new controlled crossing. We understand that the applicant intends lighting the airbridge but that this will be controlled by Auckland Transport through a separate airspace application process. In terms of the potential for the airbridge to create an unwanted visual barrier to views of the harbour, the photomontages provided do not support that sightline concern.”

The panel also disagreed with council evidence on provision of 3 drop-off parking spaces on Hobson St in the vicinity of the hotel, finding no downside.

The consent provides for no more than 200 commuter parking spaces, and a minimum 420 for staff to be available at all times.

Links: Consent decision
SkyCity, convention centre details
Convention centre agreement
Convention centre Q&A

Earlier stories:
30 August 2015: SkyCity convention centre decision 3 weeks away
29 August 2015: Modelling agreement crucial to alignment on transport
28 August 2015: Council & government sign transport alignment terms
11 July 2015: Propbd on Q Sat11July15 – Non-notified hearing for convention centre, Pre-Christmas decision on Z’s Caltex buy
27 May 2015: Revised convention centre agreed

Attribution: Council & company releases.

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SkyCity convention centre decision 3 weeks away

A resource consent decision on SkyCity Entertainment Group Ltd’s application for its international convention centre & hotel in Auckland can be expected around 23 September.

SkyCity subsidiary NZ International Convention Centre Ltd’s application was heard by commissioners on Friday. The applicant will supply the panel with an updated version of the conditions by Tuesday, the hearing will then close and the panel has another 15 working days to deliver its decision.

The application is being determined on a non-notified basis, so the only submissions & evidence at the one-day hearing were from SkyCity.

Counsel Bronwyn Carruthers noted in her submissions the role the new precinct would play as a catalyst for regeneration on the Auckland cbd’s western fringe and architect John Coop, chairman & regional director of Warren & Mahoney, emphasised transparency of the exhibition hall – a sharp contrast with the SkyCity casino on the other side of Hobson St.

“It’s very unusual to have an exhibition hall where you can see in & out all day long. Most of them are enclosed boxes,” Mr Coop said.

Getting around many international centres can also be a mission, but Mr Coop said a unique & very positive aspect of this one was that it would be a stacked centre: “You’ll be moving vertically through the building, which will be very quick, and as you do that you’ll be able to look out on the city.

“It’s a compact site but still a big building, 100m x 100m, but we’ve been able to create a range of spaces where you look at the city differently.

“We feel that we’re city-making here, not just constructing a building. You can see into the building, not only at ground level but also the upper levels.”

Ms Carruthers said the international convention centre, 5-star hotel across a small airbridge and larger airbridge across Hobson St to SkyCity’s other facilities (casino, 2 hotels & smaller convention centre) would “bring the world to New Zealand” by delivering facilities that promoted the country’s identity & sense of place.

The see-through look from Hobson St.

The see-through look from Hobson St.

“This will enable New Zealand to compete globally for a share of largescale conferences, exhibitions & events, while simultaneously supporting the transformation of a part of Auckland’s cbd and rejuvenating the surrounding streetscapes.”

The new convention centre will be spread over 4 levels, the exhibition hall will be the size of the Eden Park field, the plenary theatre will have 3000 seats and there will be meeting rooms & breakout spaces.

The complex will be able to accommodate 6000 people and host conferences of up to 3000 delegates or 2 separate & concurrent conventions of 1250 delegates each. It would be flexible, multi-purpose & configurable to attract a wide variety of events.

An airbridge to the 12-level, 5-star, 300-room hotel will cross a public lane, with retail & hospitality venues for locals & visitors. The lane will open to a public plaza on Hobson St, but the hotel’s main entrance will be on Nelson St.

At the Albert St edge of SkyCity’s complex, visitors will have access to the new Aotea station, while 3 streets across, Nelson St may one day revert to 2-way traffic, although the non-scoping of the 2012 city centre masterplan by Thursday’s transport alignment project terms of reference may have put an end to that dream.

The environment & values along Hobson & Nelson Sts have suffered through their use as one-way arterials, and the city centre masterplan envisaged streetscape change, including a reduction in lanes, with 2-laning an eventual possibility. It would require elevation of streetscaping & property values as inputs to transport modelling for those changes to occur.

Meanwhile, under the convention centre consent application, parking will become an even bigger component of the SkyCity precinct. Basement parking at the Federal-Hobson Sts main site is already Auckland’s biggest parking lot with 1920 spaces. The proposal for the Hobson-Nelson Sts basement is for 1415 spaces on 4 levels, with access through to the existing carpark. SkyCity wants a flexible arrangement to maximise use of the new carpark – at least 420 spaces for staff but up to 778 at busy times, and a maximum 200 leased spaces. One council-proposed consent condition was for a minimum 801 spaces to be allocated for staff at all times.

Links: SkyCity, convention centre details
Convention centre agreement
Convention centre Q&A

Earlier stories:
29 August 2015: Modelling agreement crucial to alignment on transport
28 August 2015: Council & government sign transport alignment terms
11 July 2015: Propbd on Q Sat11July15 – Non-notified hearing for convention centre, Pre-Christmas decision on Z’s Caltex buy
27 May 2015: Revised convention centre agreed

Attribution: Hearing.

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SkyCity launches bond offer

SkyCity Entertainment Group Ltd lodged its product disclosure statement on Monday for a 7-year bond offer for up to $125 million, including $25 million of oversubscriptions.

The bonds will be unsubordinated, unsecured, redeemable & fixed rate, and SkyCity will use them to reduce drawings on its bank facilities.

The indicative interest rate range is 4.65-4.90%/year. The actual interest rate will be set through a bookbuild process on Wednesday 2 September. SkyCity expects the offer to open on 3 September and close on Tuesday 22 September.

Attribution: Company release.

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Propbd on Q Sat11July15 – Non-notified hearing for convention centre, Pre-Christmas decision on Z’s Caltex buy

Convention centre consent non-notified
Commission expects decision by Christmas on Z’s Chevron buy

6.35pm:
Convention centre consent non-notified

Independent commissioners have decided SkyCity Entertainment Group Ltd’s resource consent application for the NZ International Convention Centre should proceed on a non-notified basis.

SkyCity & the Government agreed on the preliminary design for the centre on 26 May. It’s to be built between Hobson & Nelson Sts, across the road from the company’s casino & first hotel.

The company’s chief executive, Nigel Morrison, said yesterday: “We are continuing to work towards signing a binding building works contract for the centre by October and then commencing construction by the end of 2015.”

The 33,000m² centre will be capable of hosting meetings of up to 3150 people, 2 concurrent events of 1200 delegates each, and one-off events of up to 4200 people. It will be the largest purpose-built convention centre in the country.

SkyCity also plans to construct a laneway featuring a new public space, shops, cafes, bars & signature restaurants like those on n Federal St, on the other side of the casino.

A part of the consent application is for a new 5-star, 300-room hotel. Mr Morrison said SkyCity was progressing the preliminary design of the hotel and exploring options with external investors for its development & ownership.

Earlier story, 27 May 2015: Revised convention centre agreed

Commission expects decision by Christmas on Z’s Chevron buy

The Commerce Commission has told Z Energy Ltd it expects to have made a decision on clearance for Z Energy’s application to acquire the shares of Chevron NZ Ltd by 18 December.

Z Energy said yesterday it remained committed to its original cutover target of 30 November and was planning its transition activities accordingly.

Z Energy signed an agreement with a subsidiary of US energy giant Chevron Corp on 1 June to acquire 100% of Caltex service station owner Chevron NZ for $785 million in cash.

Earlier story, 3 June 2015: Z Energy buys Caltex

Attribution: Company releases.

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Revised convention centre agreed

SkyCity Entertainment Group Ltd & the Government agreed yesterday on a revised preliminary design for the international convention centre proposed for SkyCity’s site between Hobson & Nelson Sts.

Key points:

  • The centre will be smaller
  • SkyCity’s minimum capital investment rises from the original $402 million to $430 million
  • Total cost including a hotel will be up to $560 million
  • The Government still won’t contribute
  • The gaming concessions agreed originally are unchanged
  • SkyCity will look at selling the hotel and its existing parking.

SkyCity chief executive Nigel Morrison & Economic Development Minister Steven Joyce executed an amended development agreement for a slightly smaller centre. SkyCity’s minimum capital investment will rose from the original $402 million to $430 million, the project’s future development area will be relocated from Wellesley St to Hobson St so the proposed hotel can be built next to the centre and the company will have greater responsibility for managing the design, procurement & construction processes.

SkyCity hopes to get non-notified resource consent, 2 building works contracts signed with a construction partner and a start to construction by the end of this year.

The convention centre, laneway & hotel from Hobson St.

The convention centre, laneway & hotel from Hobson St.

The details now agreed are:

  • 32,000m² gross floor area
  • Exhibition hall reduced from 8768m² to 8100m², able to host banquets of up to 3000 people
  • 2850-seat plenary (originally 3000), with flexibility in configuration enabling 2 1200-delegate conventions to be run contemporaneously
  • Ability to host 3150 conference delegates (originally 3500)
  • Flexible internal spaces with the use of movable walls
  • A new laneway between Hobson & Nelson Sts, akin to SkyCity’s Federal St development, offering cafes, restaurants, bars & retail.

The key amendments to the development agreement are:

  • An increase in SkyCity’s minimum capital investment from $402 million ($315 million construction & fitout costs, $87 million land costs) to $430 million
  • Relocation of the ‘future development unit’ land from Wellesley St to Hobson St, facilitating the development of the proposed Hobson St hotel next to the convention centre
  • Replacement of the original design brief with the agreed preliminary design, which will now provide the basis for SkyCity’s obligations regarding the construction of the centre, and
  • An agreement that, to expedite construction and to enable SkyCity to have greater control over costs & other risks, SkyCity will have greater responsibility for managing the design, procurement & construction processes through to completion.

SkyCity’s Nigel Morrison said: “Based on the revised preliminary design, SkyCity estimates that the total project cost will increase to be in the range of $450-470 million (including land). The reduction from the previous upper estimate of $530 million, announced in December, reflects a significant reduction in the allowance for future construction cost escalation & reduced cost associated with the revised preliminary design.

The convention centre auditorium.

The convention centre auditorium.

“In addition to the convention centre, SkyCity will, at its own cost, construct the new laneway space and increase the total parking spaces under the centre to 1415. Including the laneway, the additional parking spaces, plus other fees & costs & all the land, SkyCity’s investment in completing the development is estimated to be $540-560 million. Excluding the investment made to date of $113 million, the vast majority of which relates to the land assembled for the development, the future capital commitment of completing the development is estimated at $430-450 million.”

SkyCity said it remained committed to the development of a new 300-room 5-star hotel on Hobson St, next to the centre. The proposed hotel forms part of the resource consent application currently being considered by Auckland Council. SkyCity estimates the cost of developing this hotel will be in the order of $130-140 million (excluding land, which is included in the $113 million above).

“As part of funding the overall project, SkyCity is exploring various partnering options with external investors for the development & future ownership of the hotel, as well as considering other property-related funding options which are mutually beneficial for SkyCity & external investors. Additionally, SkyCity intends to sell its Federal St car park (currently worth about $40 million) once the additional convention centre parking is completed.”

Mr Morrison commented: “Subject to receiving a non-notified resource consent for the project from Auckland Council, we will now work towards signing a building works contract for the convention centre, expanded carpark & laneway. This will activate the gaming concessions, the additional gaming products and the extension of the Auckland casino licence out to 2048.”

Mr Morrison said SkyCity was well advanced in its plans to activate the various gaming concessions. The company has allowed an additional $50 million of capex for internal building works & the purchase of the additional gaming product.

“SkyCity remains confident that the convention centre project & other associated developments will be value-enhancing for the company & its shareholders. The various concessions & licence extension afforded to SkyCity as part of the convention centre agreement will support the continued growth in our flagship Auckland business for the foreseeable future, and enable us to continue to invest with certainty.”

Mr Joyce said the new design “will provide for a slightly smaller centre to be built without any construction costs being met by the Crown. SkyCity has also agreed to increase the minimum amount it will invest in the centre from $402 million to at least $430 million, and the company says it could spend in the range of $450-470 million.

“I am pleased to confirm today that the revised design approved by Cabinet & the SkyCity board means that a very impressive international convention centre for Auckland will be completed without any financial contribution from the Government or any other change to the regulatory concessions.

“This amended design will be very similar in appearance to the previous design and will, when built, be a major new amenity for the city. It will drive a significant increase in tourism expenditure in Auckland & around New Zealand through the estimated 33,000 additional convention delegates and $90 million annual increase in delegate expenditure it is expected to bring each year.”

SkyCity submitted a preliminary design last October for approval by the Government, and applied for a resource consent in December. However, the total construction cost of $470-530 million significantly exceeded the $402 million anticipated in the original agreement. With the Government unwilling to make any financial contribution to the cost of the project, SkyCity agreed in February to amend the design.

Mr Joyce said: “The Government is pleased to be moving ahead with this project which will create 800 permanent new jobs, an increase in gdp of $49 million, and be an important public facility for Auckland & New Zealand.”

Links:
Convention centre agreement
Convention centre Q&A

Earlier stories:
16 February 2015: SkyCity & Government return to a $402 million convention centre
22 December 2014: Convention centre cost hike follows unreal initial accounting for construction cost inflation
18 August 2014: SkyCity’s new convention centre, hotel & laneway – some of the detail
13 February 2014: SkyCity appoints convention centre design & development team
13 November 2013: Casino convention centre law passed

Attribution: Company & ministerial releases, agreement.

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