SkyCity Entertainment Group Ltd has entered into a binding agreement to sell a long-term concession over its Auckland carparks to Australian bank Macquarie Group Ltd’s Macquarie Principal Finance Group for $220 million.
Macquarie has appointed Care Park NZ Ltd, a subsidiary of Care Park Group Pty Ltd of Melbourne, to operate the parking.
Settlement is expected by 31 July.
SkyCity said the sale was consistent with its group strategy to go “capital lighter”. In a release on the transaction yesterday, SkyCity said carparks were an important activator for core business but non-core in terms of ownership. The company said it aimed to recycle capital into investments & strategic opportunities that paid higher returns.
The $220 million will be payable in a lump sum at settlement. It will entitle Macquarie to operate SkyCity Auckland’s 3200-space main carpark until 30 June 2048, the renewal date for the casino licence. SkyCity will retain ownership of the land & buildings and responsibility for land & building services.
The transaction requires various regulatory & other consents and a binding ruling from Inland Revenue on tax treatment for both SkyCity & Macquarie.
A non-compete clause means SkyCity won’t be allowed to set up in competition on parking in the cbd, but certain conditions such as health & safety or force majeure would enable SkyCity to step in and take the parking over.
SkyCity said the transaction would reduce its gearing by about 0.5 times. It plans to reduce available bank facilities by about $100 million at settlement.
The company said the transaction would reduce its ebitda (earnings before interest, tax, depreciation & amortisation) by $17.5-20 million over the 2020-22 financial year, reflecting ongoing payments for carpark usage & lost earnings from external carpark revenue.
The sale price implies a 2020 financial year ebitda multiple of about 12.5 times, which SkyCity said made it value-enhancing.
Attribution: Company release.