CRONULLA SHARKS DEVELOPMENT UPDATE
Dear Members,
You would be aware that, since 1999, The Sharks has actively pursued the redevelopment of its property holdings. This has variously involved the introduction of joint venture partners, the potential sale of the property and, ultimately, a decision by The Sharks to pursue a rezoning of the property at the Club's expense and direction.
Existing approval
After a lengthy approval process, 'deferred commencement' concept approval for a scheme for the existing Club car park was obtained from Sutherland Shire Council in August 2009. The deferred commencement concept approval involved the following:
. 5 storey 138 unit seniors living development including 169 parking spaces with a total area of 14,355m²;
. 5 storey 150 room hotel including 83 parking spaces with a total area of 6,140m²;
. 2,617m² supermarket and retail shops including 376 parking spaces; and
. 750m² extension of existing Club premises.
In early 2010, the Board of the Sharks appointed a property adviser, David Hynes from Winston Langley, to provide a report to the Board regarding the viability of the proposed development and to review the options available to the Club.
Outcomes of property review
The review of the approved development generated the clear conclusion that the development of the project as currently approved is not commercially viable.
Following the review, the Board determined that:
. The Club's current financial position is in large part due to the Club's historical commitment to obtaining development approval for a project over its land in its own right and without the involvement of a development partner.
. The existing development approval is unviable and unable to be financed.
. The Club does not possess the resources to undertake the development of the Sharks property on its own.
. It is not the core business of the Club to be undertaking projects of this scale and nature.
. Revisiting the existing approval will be time-consuming and unlikely to add value.
Expression of Interest campaign
The Board subsequently resolved to conduct an Expressions of Interest campaign to seek a development partner for the project. The Sharks sought through the EOI process to identify a development partner that would work with the Sharks to achieve the following Club objectives:
. Repay existing non-performing debt.
. Achieve a cash return.
. Ensure the project is developed as quickly as possible.
. Enable the Club to continue trading through the construction process.
. Ensure that the Club has an alignment of interests and healthy relationship with its development partner.
. Development of a modernised Club facility that will increase the relevance of the Club to its key stakeholders while creating an enhanced and more relevant positioning of the Club in the local area.
. Creation of alternative ongoing income streams and a reduction in the Club's reliance on revenue from gaming machines.
. Enhancement of the overall Toyota Stadium experience while maintaining Toyota Stadium as the home ground for the Sharks.
. Provision of sufficient parking to ensure that the Club and Toyota Stadium continues to operate effectively.
. Provision for sharing of Gross revenue upside with the Sharks from the successful development of the Club land holdings.
. Preserving relationships with key stakeholders.
Board recommendation
The Board is pleased to advise that it will be shortly putting forward a recommendation to members which we are confident will achieve all of the Club objectives listed above.
In this regard, the Board has unanimously resolved to appoint, subject to member approval, a consortium comprised of Capital Corporation, Bluestone Property Solutions and Parkview as the Club's development partners.
Capital Corporation, Bluestone and Parkview possess the relevant development experience and financial capacity, coupled with the resources and commitment, to drive a commercially viable development and financial solution for Sharks.
While the Board is fully aware that the development of the Sharks property holdings has a long and, so far, unsuccessful history, we believe that the proposal and prospective financial returns put forward by the consortium are reasonable, achievable and in the best interests of the Club.
Development proposal
Further details of the consortium and the proposal will be presented to members in the near future. The development proposal involves the creation of a retail and entertainment precinct which integrates closely with the existing Club, that will be substantially improved and modernised. Residential development is also proposed, together with long term improvements to the facilities and grandstands at Toyota Stadium.
From a financial perspective, the Club will receive a mix of lump sum payments from the residential development and an annuity income stream from the retail component of the project.
Process moving forward
It would be great if you could keep the following dates and times free in your diary for January/February 2011:
Week commencing 24th January 2011:
Issue of proposed member resolutions.
Monday 31st January 2011:
7.00pm Member Information Evening
Monday 21st February 2011:
7.00pm Extraordinary General Meeting (EGM)
All members of the development consortium, together with the Board and its property advisor, will be present at the Member Information Evening to answer any questions from members.
Following the Member Information Evening, the EGM will involve the formal consideration by members of a number of resolutions which relate to the engagement of the Club's development partners, predicated on the proposed development structure and expected Club financial returns.
On behalf of your board of directors I wish you a happy and prosperous 2011, Up Up Cronulla!
Damian Irvine
Chairman
