SkyCity Entertainment Group Ltd has bought NPT Ltd’s interest in the AA Centre at 99 Albert St in central Auckland for $47 million.
SkyCity said the acquisition was consistent with its intention to consolidate control over its Auckland precinct as part of the Auckland masterplanning it’s undertaken: “The masterplan, once completed, will incorporate opportunities for further hotels, apartments, food & beverage outlets, entertainment facilities & office spaces, with the aim of having a cohesive & integrated mixed-use entertainment precinct, and will ensure that SkyCity leverages the benefits of the increased pedestrian traffic flows anticipated following completion of the city rail link.”
Image above: The AA Centre is across the Victoria St West intersection from an entrance for the city rail link Aotea Station, one full block up from Queen St and one block from the SkyCity casino & tower (at right).
The rear entrance to the SkyCity Grand Hotel & original convention centre is from Albert St, a few doors along from the AA Centre.
The 2 NZX-listed companies entered a conditional agreement on 31 August and it went unconditional last Thursday, 12 October. Settlement is scheduled for 12 July 2018.
Under the agreement, NPT must complete $2 million of capital improvements, which it began before the agreement was signed.
NPT chair Bruce Cotterill said that, after allowing for those capital improvements, the transaction would increase NPT shareholder equity by $2 million over the $40.85 million valuation at 31 March.
The yield was about 7% on rent which wasn’t stated in NPT’s annual report or in this announcement. Occupancy of NPT’s share of the building at 31 March was 91.6%.
NPT owns 15 levels (12,000m²) of the 17 office floors, ground-floor retail, the through-site link to Federal St & 90 parking spaces.
The NZ Automobile Association owns the other 2 office levels, some ground-floor retail and a few parking spaces.
Mr Cotterill said: “The sale of this property represents a first step on the path to repositioning NPT. We have achieved a very good price, as compared with current book value, and the 9-month settlement period allows us to maintain current profit & distribution forecasts through to 31 March 2018 while we progress the board’s broader plans for NPT.
“The board is intending to update shareholders on its proposed strategy for the future of NPT in the coming weeks. The sale proceeds will be used to invest in the purchase of assets where we can see an opportunity to add value.”
SkyCity expected the acquisition to be “marginally earnings accretive” from its 2019 financial year. The company will fund the acquisition from existing bank facilities.
Attribution: NPT & SkyCity releases, NPT annual report.