SkyCity Entertainment Group has sold its Federal Street carpark in Auckland for $40 million, as it moves to free up cash from non-core assets to reduce debt and fund future growth.

New Zealand’s only listed casino company says it sold the 427-space carpark near its landmark Auckland casino to Melbourne-based ICD Property Investment following a tender process. The price is above the carpark’s $22 million book value, with settlement scheduled for late April 2019.

SkyCity is looking to free up cash from its existing assets during a period of heavy investment into its Auckland property where it is developing the country’s largest convention centre, a new hotel, and buying a neighbouring office tower. It’s also investing in redeveloping its Adelaide casino in Australia. SkyCity expects its total debt to peak at around $1 billion in 2020, and doesn’t want to lower its dividends which it says are important to a significant proportion of its shareholders.

“The sale of the Federal Street car park is consistent with SkyCity’s intention to move to an ‘asset-lighter’ strategy, which includes looking to divest non-core assets and businesses,” SkyCity says. “The proceeds of the sale will be used, initially, to pay down debt and then fund future growth opportunities as they arise.”

SkyCity says the carpark is currently used by its staff, who will shift their vehicles to the convention centre carpark when the first tranche of about 600 spaces is completed. It will then operate the Federal Street carpark for casual visitors and leaseholders through to settlement of the transaction with ICD.

Its shares were unchanged at $3.90, and have dropped 11 percent over the past year.

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