SkyCity unveils property ambitions

SkyCity is planning to spend $40 million on the Darwin casino, and aims to be finished by 2012. Photo / Supplied

SkyCity Entertainment Group yesterday unveiled plans for Australian and Auckland property expansion worth $627 million.

The board was congratulated by shareholders for its vision, new direction and ambitious real estate plans which aim to increase patronage, attract more high rollers and expand the business.

Nigel Morrison, the chief executive, outlined the scheme to snare New Zealand's $250 million-$300 million national convention centre at Auckland's 101 Hobson St, spend $250 million in Adelaide, $40 million in Darwin, $27 million atop its SkyCity Hotel, bringing a new two-level high-roller precinct, and $10 million streetscape revamp in Federal St below.

After the meeting, Morrison said SkyCity's bid for the convention centre was yet to be accepted and its fate was in the hands of the Ministry of Economic Development.

But even without that, SkyCity has earmarked $327 million for real estate expansion in the next three years, forecasting 15 per cent annual return on real estate capital expenditure.

Shareholders praised the board and chairman Rod McGeoch referred to the June 2010 year's record $141.7 million profit result and next year's rugby bonanza.

"The business is in very good shape and with international business exhibiting strong growth, and major events such as the Rugby World Cup rapidly approaching, we're confident that an improving economy will further position SkyCity for growth," McGeoch said.

Morrison said analysts' forecasts of a $127.4 million net after-tax profit for the year to June 2011 could be met.

"We would be disappointed if we didn't achieve this," he said.

Shareholders asked about a share price fall from $3.21 to $2.90 since April, Northern Territory Aboriginal land rights issues, abandoning sponsorship of Auckland's summer Starlight Symphony, staff cuts and lack of Asian directors.

McGeoch said the board wanted SkyCity's shares to change from being seen as a defensive stock to a growth stock to "put zing back into the share price".

All directors held shares, he said.

Coralie van Camp asked about Aboriginal land issues at the Darwin casino and Morrison explained how issues had been resolved at the Little Mindil site beside the casino.

"It's not a site we're building on," he said, clarifying outside the meeting the sensitivities of the issue.

"There are Aboriginal ancestral remains on the site.

"It's now a beautifully landscaped park. We took into account the fact that it had ancestral remains in the park beside the casino."

McGeoch said the symphony had been abandoned under Morrison's direction and this was appropriate because SkyCity had to target the most appropriate sponsorship.

SkyCity closed yesterday at $3.02, showing a market capitalisation of $1.7 billion.