SkyCity to sell Auckland car park concession for $220 million
By Rebecca Howard
April 4 (BusinessDesk) - SkyCity Entertainment Group has agreed to sell a long-term concession over its Auckland car parks to Macquarie Principal Finance Group for $220 million as part of a strategy to get out of non-core assets.
Of the proceeds, $100 million will be used to repay drawn bank debt. The balance will be retained as cash to be recycled into higher returning investments and strategic opportunities, the casino operator says. As a result, gearing is expected to reduce by around 0.5 times earnings before interest, tax, depreciation and amortisation.
It will also mean that annual ebitda from the firm's Auckland site will reduce by $17.5 million to $20 million over the 2020 and 2022 financial years due to on-going payments for car park usage and lost earnings from external car park revenue. However, SkyCity says the sale price implies an FY20 ebitda multiple of around 12.5 times and the transaction is "value-enhancing".
SkyCity had signaled plans to explore the potential sale of the concession last year and said it had received numerous expressions of interest. It also recently wrapped up the A$188 million sale of its Darwin casino to US hospitality company Delaware North.
The concession to operate the 3,200-space carpark will run to June 30, 2048 and the deal is expected to settle on July 31. Under the terms of the agreement, SkyCity will still own the car park land and buildings and remains responsible for plant and building services.
SkyCity says the deal is not expected to adversely impact its customers or staff as existing user groups will continue to have the same parking entitlements, including fixed pricing for car parks used by SkyCity VIP or loyalty customers and staff. There will be 450 car parks permanently reserved for use by VIP customers. SkyCity can pre-book up to 900 car parks four times a month for special promotions, as well as other similar conditions.
The stock last traded at $3.93 and is up 10.7 percent so far this year.