SkyCity to pay Macquarie company $204m over Auckland car parks

SkyCity Entertainment Group will pay $204 million compensation to finance giant Macquarie over a failed deal to offload its car parks in Auckland.

In an NZX notice today, the Auckland company said it agreed a “mutually beneficial commercial resolution to the outstanding disputes with MPF Parking NZ in relation to the long-term concession agreement entered into in respect of the SkyCity Auckland car park”.

In April 2019, SkyCity struck a long-term concession agreement with the Macquarie business, getting $220m.

The deal announced today was the final settlement.

“SkyCity and MPF have agreed that, in exchange for the return of the car park on January 31, 2024, a compensation sum of $204 million will be paid by SkyCity to MPF under the concession agreement, and that the disputes between the parties in respect of this matter have been fully and finally resolved,” today’s statement said.

MPF Parking signed that deal but SkyCity failed to remedy damage from the 2019 fire in the time stipulated, so the Macquarie company terminated the contract, which was for roughly 3000 car parks to be operated by the Australians until June 2048.

Today’s $204m payout announcement follows SkyCity challenging Macquarie’s interpretation of the concession agreement that estimated SkyCity was liable for $240m.

SkyCity argued it should only pay $188m while MPF Parking’s arguments had been for $240m.

The contract was over car parks damaged by the disastrous convention centre fire.

Work is still underway to fix the convention centre, although the new hotel is due to open early next year.

On Friday, SkyCity downgraded its profit outlook.

Instead of making $310m Ebitda for the year to June 30, 2024, the company now expects to make $290m to $310m.

Reasons for the change in earnings guidance were:

• A reduction in electronic gaming machine revenue across New Zealand sites, reflecting continued cost of living pressures and economic uncertainty, impacting discretionary consumer spending;
• A weaker-than-expected performance in the Adelaide property based on a lower revenue outlook with continued legal and compliance cost pressure;
• A delay in settlement of the termination of the Auckland car park concession agreement with MPF Parking NZ (Macquarie), resulting in lower car park earnings;
• Accelerated investment in the group’s New Zealand online gaming operations ahead of potential regulation of that market.

On Friday, shares declined 8c or 4.28 per cent to $1.79 after that announcement.

Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.