REVEALED: Coffs airport privatised in landmark $500m deal
INVESTMENT firm Palisade Investment Partners has secured a 50-year lease of Coffs Harbour Airport and the Enterprise Park development - in a deal worth almost $500 million.
Palisade Investment Partners, which operates Sunshine Coast Airport, has entered into the long-term lease of the council-owned asset for 50 years with an additional 49-year option.
Coffs Harbour City Council will receive $81.5m in fixed payments over an initial period and will receive a share of revenue forecast to be in excess of $400 million over the term of the lease and option.
Palisade will be able to enter into the 49-year lease extension subject to range of legal and commercial requirements being met, according to a statement from the council.
Coffs Harbour Regional Airport is now Palisade's fifth aviation asset, with Sunshine Coast Airport, Darwin Airport, Alice Springs and Tennant Creek making up the firm's portfolio.
Palisade signed a 99-year lease of Sunshine Coast Airport in 2017.
Despite previous concerns from councillors that the community wasn't getting a "good deal", Council's Director of Business Services Andrew Beswick said the outcome exceeds both the pre-COVID valuations provided by two independent experts when the lease process was first started around two years ago.
"This is an important point for the community to know," he said.
"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.
"In addition to a very positive financial result, the deal will also see council's continued involved in the airport with the contract conditions requiring that council will be consulted on the master planning and strategic directions of the airport."
In September, councillors Paul Amos, Tegan Swan and John Arkan had made a failed attempt to rescind the decision to progress the airport lease to the negotiations phase with Palisade.
They shared concerns that considering the length of the lease and the handing over of the "golden goose" Enterprise Park development, the council was not getting a good deal.
"We are potentially getting ourselves into a situation where we are doing our community out of a lot of future revenue and opportunity," Cr Tegan Swan said at the time.
The lease process, which began in 2018, had divided councillors with Cr Paul Amos sharing his frustrations that the details of the lease were being kept confidential from the community.
He had made several attempts for the council to release details regarding the length of the lease to the public.
In November, the council were split 4-4 when voting to officially execute the lease, and Mayor Denise Knight's casting vote brought it over the line.
Councillors Sally Townley, Paul Amos, Tegan Swan and John Arkan voted against while Michael Adendorff, George Cecato, Keith Rhoades and the mayor voted in favour.
A further report will be brought before councillors on the arrangements for funds received from the lease, which will uphold the resolution that was made that no revenue will be directed towards the Cultural and Civic Space project.
Palisade will take over airport management in early 2021, subject to regulatory approvals. The lease will be registered and publicly available to view once finalised.
"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," Palisade Investment Direct, Mike Reynolds said.
"We look forward to building on the expertise of the existing Coffs Harbour Airport team to grow this critical infrastructure asset."
Palisade will actively explore opportunities to "invest further" in the airport and Enterprise Park.
"By leveraging the expertise from our existing airport investments, particularly Sunshine Coast Airport, we will position Coffs Harbour Airport for future growth in aviation demand as well as diversifying its revenue streams following the development of the Airport Enterprise Park," Mr Reynolds said.
In a statement, Palisade confirmed a revenue share arrangement has been put in place with council, subject to the "achievement of certain performance metrics."
KPMG acted as the expert advisor to council throughout the lease process, assisting with market sounding, expression of interest, a binding bid phase and subsequent negotiation period to finalise the lease with Palisade.