This article is from the Australian Property Journal archive
THE sale of Adelaide's Skycity casino property, which has been sounded around $235 million, has been put on the backburner.
In a short statement, Skycity told the market the company is confident that it has a strong development and recovery plan for Adelaide.
The company also confirmed its profit guidance for the 2008 financial year, indicating an expected increase of 10%-12% in reported net profit.
This was a different message the company delivered in May this year, when it put the property along with the Christchurch Skycity casino and cinema assets on the market.
The company said the assets were ‘not delivering’.
Skycity’s managing director Evan Davies said indicated the group had lost patience with its troubled Adelaide casino asset located in heritage listed Adelaide Railway Station. The Railway Station is owned by the SA Government authority, TransAdelaide.
The group purchased the Casino business and the leasehold of properties from the South Australian Government’s Funds SA in 2000 for $185 million. In 1997, Funds SA put the properties on the market, after it bought out Japanese developer Kumagai’s interest in the joint venture. Funds SA withdrew the sale in February 1998 when bids fell short of asking prices.
SKYCITY’s leasehold currently has 87 years to run after the license was reissued in November 1999.
In 2004, SKYCITY began a $75 million upgrade on the Casino to improve facilities within the 1924 building. The Adelaide Railway Station lay vacant for almost 20 years prior to the Casino taking occupancy of the building in 1985.
The first stage of this redevelopment, including restaurants, bars and function dining rooms was completed at a cost of $20 million and opened in May 2005. Plans for stages two and three of the redevelopment include an 800-seat concert venue to be built at a cost of $7 million and a 450 space underground car park to be undertaken by Hansen Yuncken.
However, the Adelaide Casino venture for SKYCITY has not been a happy one with returns from the group’s investment significantly below expectations.
And in August, the company sold the Skycity Metro in Auckland, New Zealand to Orchard Funds Management for $NZ55.1 million on an initial yield of 7.25%.
Skycity Metro Auckland is a 15,750 sqm entertainment based retail complex, which includes a 12 screen SKYCITY cinema complex, IMAX Cinema’s, Borders Books, 31 specialties and a leasehold interest over 14 shops in the adjoining historic Civic Theatre Building.
Australian Property Journal
