Tag Archives | International convention centre

Pod hotel the opportunity for Augusta to close value-add fund with strong return and open tourism fund

NZX-listed property fund manager Augusta Capital Ltd will achieve 2 aims simultaneously when it leases the building at 54 Cook St, on the fringe of the Auckland cbd, to Jucy Snooze Ltd for a pod hotel.

That transaction, which has several conditional components, will:

  • finalise the sale by Augusta Value Add Fund No 1 Ltd of its 5th & last asset, resulting in closure of the fund & distribution of remaining funds, and
  • enable Augusta Capital subsidiary Augusta Funds Management Ltd to launch a new open-ended tourism fund.

Managing director Mark Francis talked about a tourism fund as one of several openings for new investment when he addressed Augusta’s annual meeting in July, and in the company’s annual report.

But first, the purchase of 54 Cook St will enable the value-add fund to close with an 11.5% pretax internal rate of return to investors after 2½ years, and a return of $900,000-1 million to Augusta Funds Management as a performance fee.

Northington to advise on transaction

The $16.5 million + gst Cook St sale is conditional on the value-add fund’s shareholders approving the transaction by 20 October, as it’s considered a related-party transaction. The fund company has engaged Northington Partners Ltd to provide independent advice on the proposed sale.

The transaction is also conditional on Augusta Funds Management obtaining a satisfactory cost estimate from its quantity surveyor by 26 October. If the sale proceeds, settlement is expected to occur on 31 October.

Augusta established the value-add fund in April 2016 to acquire a portfolio of 5 properties, which were identified as having value-add opportunities through either redevelopment or repositioning. The objective of the fund was to sell the properties after the value-adding improvements had been implemented, and to return the net proceeds from the property sales to investors in the fund.

Augusta has signed a conditional agreement to lease 54 Cook St to Jucy Snooze Ltd for 20 years, with fixed annual increases of 2.0% & market rent review every 10 years, and 2 7-year rights of renewal.

The lease agreement is conditional on resource consent, building consents and the cost estimate for the landlord’s works being no more than $14.5 million.

Jucy chief executive Tim Alpe (right) & his brother, Jucy Group chief operating officer Dan Alpe, sitting in a hotel pod.

Jucy chief executive Tim Alpe said on Thursday the 4-storey 388-bed hotel would be capable of accommodating over 466 visitors/night in a mixture of pod-style accommodation & ensuite rooms, as well as Jucy Group’s head office. The building, which used to house 1ZB’s radio studios, is one block up Nelson St from the southern edge of SkyCity Entertainment Group Ltd’s international convention centre.

Mr Francis said Augusta Funds Management intended to initially acquire & hold the asset on its balance sheet and then use it as a seed asset for a new open-ended tourism fund: “The new fund is consistent with Augusta’s core strategy to broaden & diversify our funds management offerings to appeal to a wider range of investors. At this stage, Augusta expects the Tourism Fund’s initial offering to be opened in the first quarter of 2019.”

Earlier stories:
21 September 2018: Jucy to open big pod hotel up street from new convention centre
30 July 2018: Augusta expands its portfolio platform, a different way of managing & seeing property investment

Attribution: Augusta release.

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Convention centre cost hike follows unreal initial accounting for construction cost inflation

The blame for a possible 32% rise in cost of Sky City Entertainment Group Ltd’s new international convention centre has largely been placed on the country’s 1% inflation rate, without itemised explanation of cost changes.

The rocketing difference can’t really be attributed to general inflation, because that levels out the construction-boosted economies of Auckland & Christchurch with the slower economies of provincial New Zealand.

Acknowledgment on Friday that the construction cost inflation had been expected meant the original price tag was always short of reality.

When Parliament passed the legislation in November last year to give effect to the agreement to build the convention centre, the price tag was $402 million.

But as SkyCity went to lodge its resource consent application with Auckland Council on Friday, construction cost inflation had pushed the estimate up to a range of $470-530 million – and that excludes the hotel which has been added to the original scheme.

It also excludes the pedestrian laneway of bars, restaurants & boutique shops between the convention centre & hotel, running from Hobson St to Nelson St, but does include the “sensitive treatment” of the historic Nelson House & the Albion Hotel.

SkyCity chief executive Nigel Morrison said there were also design improvements, which would enhance the quality of the centre, on top of the “recent & expected” construction cost inflation. The wide range of the new estimate allows for variation in future construction cost inflation.

“It is expected that further refinement of the detailed design and careful management by SkyCity of the tendering process will ensure a competitive total fixed construction cost is obtained from the market. However, the Crown & SkyCity will work constructively to identify additional options to address the funding of any costs over & above SkyCity’s $402 million contractual obligation.”

Mr Morrison said SkyCity & the Government had therefore agreed to extend the date for formally approving the preliminary design of the centre, which includes agreeing both the design & the total construction cost, until the end of February.

“The final timeline is still to be determined but, once the designs for the centre are finalised with the Crown and resource consent is granted by Auckland Council, SkyCity would hope to sign a binding construction contract in the final quarter of 2015.”

Mr Morrison said SkyCity expected the construction process to take about 3 years from contract signing to complete.

Economic Development Minister Steven Joyce said “predicted inflation” had played a significant part in the identification of the rise in cost: “The Crown expects that the cost differential, in the range of $70-130 million, will be addressed through a combination of value management savings and a rigorous & competitive procurement process. Other funding options for addressing any outstanding difference in value would be considered if required.

“Any such options would not involve granting SkyCity more or different gambling concessions, or making further changes to any legislation that affects casinos or gambling.”

Attribution: Company & ministerial releases.

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SkyCity’s new convention centre, hotel & laneway – some of the detail

SkyCity Entertainment Group Ltd reported its annual result and revealed approved concept designs last Wednesday for the NZ International Convention Centre, but in a flood of news from a number of companies during the week I was very sparing on detail.

The story below, as much for my own record as for your purposes, outlines convention centre details, the proposed 5-star 300-room hotel for the site between Hobson & Nelson Sts, the pedestrian laneway connecting the whole of the SkyCity precinct over 3 blocks, from the hotel & original convention centre entry on Albert St across Federal & Hobson Sts to Nelson St, and who will be in charge of various components of the new project.

Group chief executive Nigel Morrison said SkyCity was on track to apply for resource consent in the fourth quarter of this year for the new convention centre and would expect to start construction toward the end of the June 2015 financial year. At that time the convention centre concessions (gambling facilities for the casino, gained as part of the company’s agreement with the Government) will become operative.

The pedestrian walkway.

The pedestrian walkway.

Mr Morrison said: “The NZICC will enhance the rejuvenation of the western edge of the cbd and will provide a catalyst for further visitor & entertainment development in the Victoria Quarter and SkyCity’s Federal St. Auckland businesses of all sizes will benefit from increased high-value visitation. It will reinforce Auckland’s reputation as a leading, vibrant, international city.”

The general manager of the new centre, Simon Jamieson, outlined design details and who would be in charge of various facets of the project: “The design includes flexible, innovative convention & exhibition space. Spread over 4 levels, the facility will contain a public atrium entrance, multiple day meeting rooms and a dedicated multi-use plenary theatre able to accommodate 3000 people for convention & entertainment events.”

Inside the convention centre.

Inside the convention centre.

It will have a total gross floor area of 85,000m², which SkyCity understands will make it the biggest building project undertaken in Auckland since 1997, when the Sky Tower was constructed.

“The exhibition floor will be the size of Eden Park’s rugby pitch, with a 9m-high stud and the ability to accommodate 2 Dreamliner 787 aeroplanes side by side.

“The design of a large plaza entry off Hobson St, leading to a through-site laneway, will provide social, retail & hospitality experiences for Aucklanders & visitors alike. With the laneway, hotel & plaza, the centre will have a significant differentiated offering for the international business events market.

“Once up & running, it is expected to attract more than 33,000 new international visitors to New Zealand, generating $90 million of economic benefits to New Zealand annually & 800 jobs. The hotel development will create a further 150 jobs. This is a significant opportunity to train young New Zealanders for a wide range of skills & jobs in the hospitality, tourism & construction sectors.”

The company has certainly justified taking its hotel rooms to almost 1000 – occupancy at the 2 existing hotels hit records in the 2014 financial year, 93% at the SkyCity and 85% at the SkyCity Grand. The new hotel will be linked by an airbridge to the rest of SkyCity.

Design of the hotel & laneway is a collaboration between Warren & Mahoney and Moller Architects. Warren & Mahoney principal & executive director John Coop said: “The new SkyCity hotel is a landmark opportunity to create a truly international modern hotel within the central city. In Auckland, most of our current 4- & 5-star hotels are from a previous era – they are constructed of very solid brick masonry or concrete and, while they may have been successfully upgraded, still reflect the past.

“With a completely new-build hotel, we have an opportunity to use modern technologies and contemporary design & planning methods in the room & fixture design. In a beautifully integrated project, we will create lightness in the way the space feels and capitalise on beautiful views towards the harbour & urban landscape.”

Mr Morrison added: “We are also creating a pedestrian laneway adjacent to the new SkyCity hotel. This laneway will be a contemporary version of the historic Vulcan Lane with bars, restaurants & boutique shopping at street level.”

Initial key architectural team appointments were announced in February, and Mr Jamieson confirmed the full team charged with developing the design of the centre last week:

Design lead is Warren & Mahoney.

Beca Project Management will project manage the development, with Tony McKee leading as director of project management. Mr McKee has extensive knowledge in delivering large projects, including the Marina Bay Sands complex in Singapore, which has many parallels with the NZICC. Mr McKee is supported by Beca’s design & consents manager, Geoff Wicks, who will be responsible for developing the design within the project brief & cost parameters, and drive all consenting activities.

Boffa Miskell design director Rachel de Lambert has been appointed director of urban design for the project. She has 27 years’ experience in landscape & urban design, environmental & heritage planning and community facilitation.

Beca has been confirmed as providing structural, civil, geotechnical & building services engineering design, with Brendon Dwyer the engineering director for the development.  Mr Dwyer has experience in largescale environmentally sustainable design projects in the UK, Asia & the Pacific.  Beca’s structural engineering’s technical director, Richard Built, will be the structural design lead for the project, and Charles Roos will be the lead for building services design.

Karl Cook, a director at specialist town planning consultancy Barker & Associates, has been appointed director of town planning for the project. He has experience in planning approvals, plan & policy assessment & infrastructure, transport & public facility planning.

Image at top: An artist’s impression of the convention centre hotel, connected by an airbridge across Hobson St to the original casino building.

Attribution: Company release.

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Convention centre bill in Parliament tomorrow

Legislation was introduced to Parliament yesterday to give effect to the final agreement between the Government & SkyCity Entertainment Group Ltd for the $402 million convention centre to be built in the block next to the Auckland casino.

The final agreement was signed last Friday night and the NZ International Convention Centre Bill will have its first reading tomorrow.

The short bill provides for the Government to provide specific agreed regulatory concessions to SkyCity, while ensuring that SkyCity must comply with gambling laws & regulations in all other respects in regard to those concessions.

It also establishes protection of the names NZ International Convention Centre & NZICC, and requires that the convention centre land between Hobson & Nelson Sts can’t be used for any other purpose.

The Government also released documents relating to the negotiations yesterday, including the regulatory impact statement, which lays out the opportunities & risks Cabinet had to consider, as well as Cabinet papers & information on harm minimisation.

Link: Cabinet documents

Attribution: Ministerial release.

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