Completion of the NZ International Convention Centre on the Nelson-Hobson Sts block in downtown Auckland is the biggest event on SkyCity Entertainment Group Ltd’s horizon, but it’s not the only focus.
In property terms, the company is moving its head office into the AA Centre on the corner of Albert & Victoria Sts, now referred to as SkyCity HQ, and is continuing to look at reshaping its assets between the casino operation & hotel in the Hobson-Federal Sts block & Albert St.
When work on the international convention centre site began in February 2016, the total project cost of the convention centre plus associated Horizon Hotel, laneway & extra carparks was $700 million, with an opening date in 2019.
SkyCity has collected $39.5 million of liquidated damages from The Fletcher Construction Co Ltd so far for late completion, but the company said in its annual result announcement on Wednesday total project costs (net of liquidated damages) aren’t expected to be materially above earlier guidance.
Pre-opening costs during the last year amounted to $4.3 million, on top of $3 million the previous year. Lumped in with expansion of its Adelaide premises, pe-opening costs in the next year are expected to be $8 million.
The current state of play at the International Convention Centre site on the Nelson-Hobson Sts block:
- The convention centre is now expected to be completed in late 2020
- The Horizon Hotel’s external façade has been completed and fitout is progressing
- The hotel’s expected to be completed shortly before the convention centre opens
- The first tranche of 600 parking spaces has been handed over
Chief executive Graeme Stephens said: “The NZICC is close to being weathertight and the shape & form of the meeting rooms, plenary, exhibition floor & public spaces are coming to life. The unique glass panels & terracotta spine wall created by New Zealand artists Sara Hughes & Peata Larkin are now visible at street level.
“The 300-room, 5-star Horizon Hotel is well advanced, with the external façade completed and internal fitout well progressed. At this stage, we continue to expect completion of the project towards the end of 2020 and expect no material changes to previous guidance on the total investment for the project.”
The next focal point is on the other side of the existing casino & first SkyCity hotel, in the Federal-Albert Sts block: “SkyCity’s masterplanning for the Federal St precinct in Auckland is beginning to take shape, with the property acquisitions largely completed and the move of head office to SkyCity HQ (formerly the AA Centre) on the corner of Albert & Victoria Sts underway.
“This move will allow for Federal House on Federal St to be demolished and become part of a broader precinct development, which will include accommodation, retail & further entertainment/hospitality. SkyCity is actively seeking a development partner to co-invest in developing the Federal St block and to unlock value on precinct.”
The company is looking at closure of the existing Auckland convention centre from November, and the company strategy includes an internal restructure, which is underway, to position the hotel portfolio as a standalone business.
The financial statement:
SkyCity reported net profit for the June year down 14.7% to $144.6 million ($169.5 million) on Wednesday.
However, normalised to represent underlying performance and eliminate structural differences between periods & known different treatments by NZ & Australian listed casino companies, SkyCity was 1.9% ahead with a $173 million profit.
Reported results (not normalised):
- Net profit after tax, down 14.7% to $144.6 million ($169.5 million)
- Total revenue, excluding gst, down 2.5% to $905.4 million ($928.3 million)
- Ebitda (earnings before interest, tax, depreciation & amortisation), $297.8 million ($310 million)
- Earnings/share, down 15.4% to 21.4c (25.3c)
- Net tangible assets/quoted security up 11.2% to 53.6c (48.2c)
- Committed debt facilities (at hedged exchange rates) $1.1 billion at 30 June, $495 million drawn – $467 million fixed term, $28 million bank debt
- Average debt maturity 3 years
- $150 million of $200 million bank debt maturing in the 2020 financial year to be cancelled following settlement (on 19 August) of the Auckland carpark concession
- Considering a second NZ senior bond issue this financial year
- $21 million US private placement notes expire in March 2020, to be repaid from existing bank facilities
- Average interest rate of 6.1% reflects higher cost US private placement debt issued in 2011.
14 August 2019: SkyCity parking sale unconditional
5 April 2019: SkyCity sells parking concession
9 November 2018: SkyCity sells Darwin casino
10 May 2018: Melbourne developer buys Federal St carpark
15 October 2017: SkyCity buys AA Centre to consolidate precinct control
24 July 2017: Convention centre project delayed but “on budget”
27 October 2015: Propbd on Q T27Oct15 – Fletcher wins whole convention centre job, Metlife says no to Manukau golfcourse, 2 Goodman sales, tourist spendup
18 September 2015: Convention centre consent granted