Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Sky City may JV with developers, investors in $807M projects

Sky City may JV with hotel developers, investors in $807M expansion, Morrison says

By Jonathan Underhill

Aug. 13 (BusinessDesk) - SkyCity Entertainment Group, New Zealand’s only listed casino company, would consider partnering with developers or hotel investors to part fund some $807 million of spending on its expansion in Auckland and Adelaide, chief executive Nigel Morrison says.

The Auckland-based company flagged the option of using co-investors while outlining development plans for the next six years that include a 300-bed, five-star hotel and adjacent retail precinct in Auckland at about $500 million, and the continued transformation of its Adelaide facilities to include a six-star hotel at a cost of $300 million.

Morrison said Sky City's balance sheet is "relatively modestly geared" and the company has some $330 million undrawn of a total $990 million of bank facilities to call on as well as cash flows from the business. Net debt was $659 million at balance date, while average borrowing costs fell to 6.92 percent in 2014 from 6.97 percent a year earlier.

It is also holding some 73.5 million of its capital notes as Treasury stock, amounting to about half the notes on issue, and could sell non-core assets such as its $35 million Federal Street car park. The notes were last quoted on the NZX debt market at $1.012 per $1 face value, meaning there's about $74 million of them in the market.

"There's lots of options. It's viable for us to invest ourselves and develop and operate but it is more important that the developments are completed" in a timely manner, Morrison told BusinessDesk. "There's some big developers who would come in and build it and take a stake in it, or a hotel investor."

Bringing in a partner to develop and own the new hotel on Hobson Street, which could then be leased to Sky City, could free up $130 million to $140 million, he said. Another option would be strata carparks, which could amount to between $30 million and $40 million. A joint venture of the new Adelaide hotel was also a possibility.

Such arrangements would be something of a novelty for Sky City, which typically owns its facilities. Exceptions are the land under its Queenstown casino and the freehold of its Adelaide casino site, which it rents from the state government.

The casino and hotel group is mid-way through what Morrison calls its "transformational projects" including a remake of Adelaide that has left "not a square inch" of the property untouched. Disruptions during renovations at Adelaide Casino contributed to an 18 percent drop in earnings before interest, tax, depreciation and amortisation at the complex, excluding international gaming rooms that were unaffected.

The company today posted a 23 percent drop in full-year profit, which it attributed to the impact of the strong kiwi dollar, Adelaide redevelopment costs and an adjustment to the theoretical win rate for its international business, which takes in the high rollers.

International business rebounded in the second half for a $6.5 billion in turnover in the full year.

The company lifted its maximum table differential, or the biggest hand that can be played to $250,000 from $200,000, narrowing the gap with rival casinos in Sydney and Melbourne with $500,000 hand limits. That initially lifted the volatility of returns from high-roller tables as the company built up volumes, Morrison said.

The shares rose 1.7 percent to $3.61 on the NZX and have shed about 12 percent in the past 12 months, while the NZX 50 Index gained by a similar amount.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Science Media Centre: Viral Science And Another 'Big Dry'?

"Potentially, if there is no significant rainfall for the next month or so, we could be heading into one of the worst nation-wide droughts we’ve seen for some time," warns NIWA principal climate scientist Dr Andrew Tait. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news