Star Entertainment has entered a new sale-leaseback deal that mirrors one it recently launched for The Star Sydney. The latest involves the Treasury Casino and Treasury Hotel in Brisbane, which comes as the casino operator prepares to launch its new Queen’s Wharf property in a couple of years.
Star Entertainment Reshaping Operations
Star announced recently that it was negotiating a sale-leaseback deal for The Star Sydney with Blackstone, an investment management firm. While the terms of that arrangement are still being discussed, Star has joined another negotiating table with Charter Hall to make another deal for the Treasury properties. This one is reportedly further along, with Star ready to sell the real estate assets, as well as the attached parking garage, for AU$248 million ($186.4 million).
Star will continue to manage the operations of the properties in an agreement that will span 30 years. If it chooses, it can then renew the leases twice, each for 15 years. The agreement includes a fixed annual rent increase and an initial cap rate of 4.7%. A fourth property considered part of the Treasury group of buildings, the former State Library, was not included in the arrangement. It currently serves as the home of Star’s Brisbane offices.
Queen’s Wharf to Transform Brisbane
Queen’s Wharf, like mega commercial projects launched elsewhere, is a huge undertaking meant to transform Brisbane’s commercial business district. Star would be an anchor of the project, promising to build an AU$3.6-billion ($2.7 billion) resort there. Ultimately, the resort would be part of a community that includes four hotels, more than 50 restaurants and bars, public space the size of 12 football fields and as many as 2,000 apartments.
Star hopes to have at least part of the new property, if not all of it, ready sometime in 2023. When it’s time to move in, the company plans on relocating the Treasury Casino equipment to the new venue. After that, what happens to Treasury Casino is unclear.
All of this is contingent on Star avoiding any Crown Resorts-like blowback. Crown is under fire across Australia for serious financial and regulatory missteps that have already cost it its license in New South Wales (NSW) and put it on probation in Victoria. Last month, authorities in NSW uncovered what they believe is evidence that Star may have been involved in similar activity and announced that the casino operator was going to be investigated.
With Queen’s Wharf Brisbane not scheduled to come online for two years, a lot can happen between now and then. Crown was forced to open its Crown Sydney resort without gaming because it didn’t play by the rules and, should Star be found guilty of violating any laws or regulations, it could face the same outcome.