Racing: Alexandra Park faces $40m blow out

ATC says the developments are going ahead well now and they are definitely still going to be finished (one later this year, one next April). Photo / Dean Purcell

Alexandra Park bosses have called a special general meeting this Wednesday to ask members to allow them to sell land to pay down debt caused by their troubled property development.

But racing bosses say stakes at the Auckland track are not under threat and are sustainable at their level of the highest in Australasia.

The development of two commercial and residential towers on the Epsom track has been dogged with problems, resulting in a legal dispute between the Auckland Trotting Club and original construction company Canam started after budget blowouts and delays.

That means the original $30 million profit from the two developments, which are alongside each other, is now predicted to result in a $40m cash deficit, which will shock members.

ATC officials held workshops with some of those members last week to explain the reasons for the enormous turnaround but more importantly what can be done to pay down the expected $40m which will be owed.

The good news, if there can be any from such a situation, is the ATC are land rich and have targeted a parcel of land fronting Manukau Rd which can be sold for an estimated $20m.

"That would take the deficit down to $20m and we have other land assets we can sell in the future if needed," says interim chief executive Rod Croon.

Croon only stepped into the interim chief executive role at the start of this year after former CEO Dominique Dowding, who oversaw the early stages of the developments, left the ATC.

Croon is a straight shooter and admits mistakes were made, although the new bottom line would make that pretty obvious.

But he sees a way out of the mire.

"The developments are going ahead well now and they are definitely still going to be finished (one later this year, one next April) and the apartment buyers will have somewhere to live and the commercial space on the lower floors has been leased. But we realise this is less than ideal for those people and businesses and we appreciate their support."

Of the 246 apartments originally sold in Tower 1, 24 buyers have taken the option to cancel their contracts because of the delays. Eight of those apartments have been sold since and the ATC is confident the others will be sought after.

Selling land to pay down an unexpected loss is going to anger some members but the club is adamant the two blocks are only the first stage of enormous development at Alexandra Park and the lessons learned will be applied to future real estate work.

"We have learned not to put the club at risk so the future developments will be done as joint ventures," says Croon.

Stakes can be maintained though because the original estimates for how much the club was going to earn from the leasing of the commercial spaces has risen, from $1.7m annually to $2.5m. That will allow for the stakes increases as well as servicing any remaining debt.

"We will work through this and are confident the members will allow us to sell some land to halve the deficit. By the club rules we have to ask their permission to sell it.

"But we have other land which is increasing in value so the club can work its way out of this.

"And we are committed to the stakes increases because the club is a racing club and our first and most important aim is to foster harness racing here in the north."

The new chief executive of the ATC, who has been appointed but not officially named, is due to start in early August.

Trouble at the track

•The real estate developments at Alexandra Park are going to incur a huge cash deficit rather than make a profit.

•But the ATC says they will be finished inside a year and the $40 million burden can be halved with land sales.

•The club insists the record high stakes at Alexandra Park are sustainable.