Continuing its strategy to unlock the value of its real estate assets, Australia’s The Star Entertainment has inked a US$185.9m sale and leaseback deal with Charter Hall for its Treasury Hotel and Casino in Brisbane (pictured above). [Image: Shutterstock.com]
Shedding weight in Brisbane
Australian gambling operator The Star Entertainment Group has offloaded some of its buildings in Brisbane, including the Treasury Hotel and Casino. The firm agreed on the AU$248m (US$185.9m) sale and leaseback deal with integrated property group Charter Hall.
Independent Aussie news service InQueensland reported the transaction on Wednesday. A day prior, financial services provider CMC Markets took to Twitter to publicize news that The Star’s shares had risen 7%:
The rise in shares is positive news for Brisbane-based The Star, as its stock slumped by 30% earlier this month following a money laundering claim. The Star reportedly said the deal is in line with its strategy to free capital from non-core and low yielding assets.
According to InQueensland, the agreement with New South Wales-headquartered Charter Hall includes a leaseback of the Treasury Hotel and a car park building for “an initial 30 years with two 15-year options.”
The deal is still subject to approval from the Queensland Government.
Gaming floor on the move
The sale agreement means Charter Hall will take possession of the Treasury casino building. However, The Star isn’t totally vacating its gambling ffootprint in the Brisbane central business district. Instead, it’s currently developing the nearby AU$3.6bn ($2.7bn) Queen’s Wharf integrated resort project, which will house its new casino and entertainment assets.
The Treasury Building was the original headquarters for the Queensland premier and cabinet. According to reports, The Star had designs on repurposing the building into a combined hotel and high-end retail complex once it has relocated its casino operations to Queen’s Wharf. The Treasury site also includes the former State Library building, which was to house an Aboriginal and European heritage center.
The Star is due to shift its casino business into the new Queen’s Wharf development in 2023. This comes after having successfully converted its casino license for Treasury Brisbane, set to expire in 2070, into a 99-year license for the new integrated resort in Queen’s Wharf.
InQueensland quoted The Star as saying that under the new Charter Hall sale agreement “obligations to the State to deliver the repurposing of these assets as part of the Queen’s Wharf Brisbane precinct remain.”
While The Star has retained its grip on the old State Library building, it reportedly said it would look into future usage and ownership models for this property.
Sale amid turbulent times
The Star, like its increasingly humbled rival Crown Resorts, is under intense government scrutiny. In July, The Star announced it was under investigation by the Australian Transaction Reports and Analysis Center (AUSTRAC) for several potential non-compliance cases, including money laundering.
money laundering, organized crime, and large-scale fraud
To compound matters, and send its shares spiraling downwards, a joint report in October by three news outlets — the Sydney Morning Herald, The Age, and 60 Minutes — implicated The Star’s casinos in money laundering, organized crime, and large-scale fraud.
While The Star responded to the joint report by deeming the “number of assertions within the media reports […] misleading,” it only has to cast an eye over its shoulder to the events occurring around Crown to get the jitters… or maybe even feel a little reassured.
Government takes Crown’s Melbourne sceptre
Over in the Victorian state of Melbourne, Crown has hung onto its casino license albeit while relinquishing control of its operations to the government. On October 26, state officials allowed the James Packer-backed Crown Resorts to keep its Melbourne casino license in response to the findings of Victoria’s Royal Commission.
The Victoria government received a damning commission report on Crown Melbourne on October 15, stating that the casino had “facilitated millions of dollars to be laundered,” and that it had engaged in “illegal, dishonest, unethical and exploitative” conduct.
On Tuesday, the state government said it “accepts all” of the commission’s findings and, as a result, Crown Melbourne will fall under strict government supervision for two years in what lawmakers have described as “an unprecedented step in Australian corporate oversight.”
Stephen O’Bryan QC will take on the role of special manager overseeing Crown Melbourne — subject to legislation passing through parliament — and will have “unfettered access to all areas of the casino and its books and records.”
As it comes under its own investigation, The Star might breathe a little easier with its rival offered the chance for redemption. In his final report, royal commissioner Ray Finkelstein said he believes Crown has “the will and the capacity to reform itself […] and remove the stain on its reputation.”