SkyCity Entertainment hires Jarden for property play

Adelaide’s SkyCity casino. Picture: Russell Millard

Adelaide casino owner SkyCity Entertainment is understood to have hired investment bank Jarden to weigh up options for its property portfolio, say sources.

Central to the deal for the $660m Australian and New Zealand-listed casino operator could be its Auckland casino and convention centre carpark – the largest in the city with 1960 spaces.

SkyCity had earlier agreed to sell the New Zealand International Convention Centre carpark to Macquarie Group in 2019 for $NZ220m.

But it failed to hand over the car park by the October 2022 deadline.

The agreement was terminated by the interests of the Australian bank after a fire broke out in the carpark and damaged the building.

The pair settled after a court case, whereby SkyCity paid $NZ204m ($190m) to take back the carpark.

Sources believe that Jarden’s role will be to consider options for SkyCity’s real estate portfolio and more broadly across its Australian and New Zealand business, after the group was reported to have $NZ722.4m of drawn debt at December.

A plan may also include other properties, including hotels and offices.

SkyCity has four hotels with more than 1000 rooms, a theatre and four gaming licences.

In Auckland, real estate assets include three hotels and one casino, the convention centre and an office building, as well as the carpark.

It also owns the Hamilton casino and an Adelaide hotel, while it leases its Queenstown casino property.

Property, plant and equipment is valued in its accounts at $NZ1.85bn.

Last week, SkyCity told the market it had launched legal action against the builder of its New Zealand International Convention Centre, Fletcher Building, claiming $NZ330m for liquidated damages over ongoing delays.

SkyCity said in a statement that the delivery of the project was now almost six-and-a-half years behind the January 2019 contractually agreed delivery date.

The centre was damaged by a fire in 2019, and SkyCity’s claim alleges that Fletcher’s breaches of its contract, including those which caused the fire, constituted gross negligence and/or persistent, flagrant or wilful neglect to carry out obligations under the building works contract.

Fletcher said that after already having paid damages related to the delays, it would defend itself against the claim for damages beyond the capped amount provided for in the building works contract.

It plans to hand over the project in the second half of this year for the announced opening in February.

SkyCity told the market in May that, due to deteriorating conditions, it expected its earnings before interest, tax, depreciation and amortisation to be 4 per cent below the bottom of its earlier guided range of $NZ225m to $NZ245m for the 2025 financial year.

The company said that while visitation was steady, Auckland spending was lower despite its Hamilton and Queenstown assets holding up to expectations, and spending and visits were down in Adelaide.

SkyCity has paid $NZ67m to Austrac over its noncompliance with anti-money-laundering and counter-terrorism financing laws at its Adelaide Casino and made a $NZ4.16m settlement with New Zealand’s Department of Internal Affairs over money laundering law compliance breaches at its assets which occurred between 2018 to 2023.

There had earlier been talk that SkyCity could consider selling its Adelaide casino, but tougher rules to curb problem gambling – such as mandatory cashless gaming – has meant there have been less lucrative returns for the industry, as experienced by Star Entertainment.

Star’s future is hanging in the balance as the country’s casino regulator, Austrac, seeks $400m in penalties.

Weeks before Star entered a rescue plan with shareholder Bruce Mathieson and Bally’s Corp, it almost entered receivership and directors flagged doubts over its future solvency.

For SkyCity, market experts believe its smaller Hamilton Casino is currently its most profitable asset.