We predicted Palisade would be the airport operator 17 days ago. We were right.

Coffs Harbour City Council has secured Palisade Investment Partners as its commercial operating partner for the long-term lease of Coffs Harbour Airport.

By TripleM Coffs Coast

CCO published that we understood this would be the case and said so on 1 December here; https://coffscoastoutlook.com.au/?p=37521

Triple M can this morning reveal that the value to the community is forecast at almost $500 million over the term of the lease and option.

Photo; TripleM – Coffs Coast

According to Coffs Harbour City Council, Palisade Investment Partners is one of Australia’s leading regional airport investors, and has entered into a 50-year lease, with an additional 49 year option of the Coffs Harbour City Council owned airport.

The agreement includes $81.5 million in fixed payments over an initial period including for the development of the Airport Enterprise Park, a 23-hectare greenfield employment precinct adjacent to the airport.

Council will also receive a share of revenue earned from both the Airport and Enterprise Park, forecast to be in excess of $400 million over the term of the lease and option. Palisade will be able to take up the 49-year lease extension option subject to a range of legal and commercial requirements being met.

Coffs Harbour City Council General Manager Steve McGrath said he was pleased to have reached such a positive outcome for the community with such an experienced commercial airport operator.

“This deal is great news for the community as this revenue stream will allow the Council to fund strategic community projects into the future. This will also allow us to invest in improved services for current and future generations,” he said.

Coffs Harbour City Council Director of Business Services Andrew Beswick said the Palisade team would draw on the expertise and resources from its existing airport investments, which includes Sunshine Coast Airport, Darwin Airport, Alice Springs and Tennant Creek as part of their portfolio. Coffs Harbour Airport will be their fifth aviation asset.

“With the total value of the partnership to the Coffs Harbour community sitting at almost half a billion dollars, this deal demonstrates that our airport is considered a high-quality asset with substantial growth potential,” Mr Beswick said.

Palisade Investment Director, Mike Reynolds, said they were very excited at the potential of Coffs Harbour Airport.

“The Coffs Harbour region has a great deal of potential and we’re really looking forward to becoming an active part of the community, supporting tourism growth and other local industries,” Mr Reynolds said.

“We look forward to building on the expertise of the existing Coffs Harbour Airport team to grow this critical infrastructure asset.”

The land next to Hogbin Drive is designated for the Enterprise Park

KPMG Real Estate Advisory acted as the commercial and financial advisor to Coffs Harbour City Council throughout the lease process. Market engagement included market sounding, global expression of interest, a binding bid phase and subsequent exclusive negotiation period to finalise the lease with Palisade.

A further report will be brought before Council on a holding structure and governance arrangements for funds received from the lease. These arrangements will uphold the current Council resolution that no revenue will be directed towards the Cultural and Civic Space project.

Palisade Investment Partners is set to take over airport management in early 2021, subject to customary regulatory approvals. Once finalised, the lease will be registered and publicly available to view.

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First published at Triple M Coffs Coast – Thursday 17 December 2020. See; https://www.triplem.com.au/story/breaking-news-palisade-investment-partners-confirmed-for-coffs-harbour-airport-lease-170345/?station=coffs

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CCO – CommentA rough, ‘back of the envelope’ first-up calculation suggests this is $5m p.a. over the life of any 99 year lease on today’s figures.

Remember the airport was paying $4.5m in net profit from air side operations only on average over the four years before 2020 when Covid19 hit. Land side revenue and profit from assets such as car parks and leases are estimated by some to be between $3.5m and $4.5m p.a. on top.

As always the ‘devil will be in the detail,’ and the lump sum figures presented by CHCC management strikes one as being very opaque. As usual.

We will present a full analysis, with help from Rob Steurmenn, when we return after Australia Day next January.

2 thoughts on “We predicted Palisade would be the airport operator 17 days ago. We were right.

  1. … and the million dollar spend, dressing it up, in a twelve month barrage of “it’s good for you” begins. Non-stop, ever-present, everywhere you look.

  2. On face value this looks like “money for jam” pouring into CHCC coffers however how does this compare to the status quo? Is it a better deal for loss of control of the asset? I look forward to your expert scrutiny of the numbers but can’t help feeling that such scrutiny has been deliberately side-stepped by Council’s “commercial in confidence” veil until after the deal has been done.

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