$220m SkyCity carpark sale beats expectations, new hotel/apartment tower planned

SkyCity's carpark deal settles on July 31. Photo/Natalie Slade

Finance experts welcomed SkyCity Entertainment Group's $220 million carpark sale, which was $20m more than expected, as news of a huge new tower on the NZX listed giant's site emerged.

Chelsea Leadbetter, a senior equities analyst at Forsyth Barr said this morning: "The outcome looks slightly better than we anticipated."

Chris Gaskin of Devon Funds Management said: "Looks like a good transaction, releasing capital from a non-core asset whilst maintaining operational and usage flexibility for the core business. This sale fits with the stated strategy of the company, so no surprises there. We had expected around $200m as a sale price, so this is slightly better than our expectations."

Shane Solly of Harbour Asset Management said: "Positive outcome – good value realisation while retaining flexibility for future use."

Wade Gardiner, Craigs Investment Partners' analyst said expectations were that the carparks would go for $200m.

Leadbetter said the deal would be earnings per share dilutive but value accretive by initial estimates. With that sale underway, SkyCity's planned share buyback was also an option available to the company, she said.

SkyCity told the NZX this morning it had sold a long-term concession to operate its Auckland carparks til 2048 to Macquarie Principal Finance. The properties have not been sold but the arrangement is a leasing-type arrangement. Concessions to operate have only been sold, and just for those 29 years.

Meanwhile, a SkyCity spokesman said funds the $220m for the carparks and $201.6m from the sale of the company's Darwin property which settles today would be used to repay debt.

But at some point, the business could look to develop its current headquarters on Federal St, he said.

"We are soon moving out of Federal St and into the AA Building. We have not decided on what to do about the Federal St offices yet, whether we knock it down and build anything," the spokesman said.

However, SkyCity chief executive Graeme Stephens told last year's annual general meeting that the business planned to use money from its Auckland carpark sales to develop a new hotel.

The spokesman said whether a new hotel or serviced apartments rose was undecided. Business and leisure travellers often wanted full kitchens and laundry facilities and this was an "in-demand product", he said.

No timing has been given on any hotel/apartment project, which could rise opposite the SkyTower and the casino's main entrance, near the Victoria St intersection. A tall tower could rise there, under the Unitary Plan and would give SkyCity a fourth hotel to add to its SkyCity Hotel, SkyCity Grand and yet-to-open Horizon Hotel at its NZ International Convention Centre site.