The true picture of the Auckland Trotting Club development
By Garrick Knight
It’s understood the Auckland Trotting Club is facing a minimum initial loss of $40 million on its urban/retail development. That number is likely to blow out further depending on various factors including legal proceedings, sources have told this writer.
The development, which had sales of $300 million, was trumpeted as going to deliver a $30 million cash profit to the club.
This $70 million swing in fortunes has come as the development approaches three years beyond its original expected completion date.
It has been mired with delays owing to numerous construction issues.
The club terminated the contract of one of two construction companies, Canam, in July last year, replacing them with CMP Construction.
Canam and the ATC subsequently commenced legal proceedings against each other.
Club officials are holding a Special General Meeting next week where they will plead the case to members to sell off a parcel of land on Manukau Rd, owned by the club, currently occupied by Caltex and Burger King.
The hoped outcome would be to reduce an outstanding loan to Westpac from $40 million to $20 million.
Interest on the loan is currently around $2 million per year.
The past three years the club has posted net operating results of a $283,000 loss (2016), $69,000 profit (2017) and $500,000 profit (2018).
Factoring these into account, an annual $2 million interest payment to the bank, or even $1 million should the debt be halved by the sale of the Manukau Rd land, seems hard to service.
In spite of this catastrophe, the club has proceeded with stakes rises, albeit capping race numbers at 8 or 9 to offset the extra costs involved.
The light at the end of the tunnel is that the retail development at the base of the development complex is projected to return $2.5 million per year in rent to the club.