Star Entertainment Group has confirmed it intends to sell its leasehold interest in the Treasury Building in Brisbane to Griffith University, according to a report by trade publication Casino.org. The announcement came on a Friday, roughly two weeks after Star closed the casino it had run from the historic former government administration building for nearly 30 years.
Terms of the sale
According to the report, Star will sell the lease for AU$67.5 million and expects to net roughly AU$60.7 million after settlement adjustments. The transaction is expected to close before the end of September. Griffith University plans to refit the complex as a hub for its business, information technology and law disciplines.
The report explains that a Crown leasehold in Australia gives a tenant "ownership" of a property over a long period, generally in 99-year terms, while the property remains under the control of the Queensland Government.
Star Brisbane chief executive Daniel Finch said it had been a privilege to be caretaker of the heritage building for almost thirty years. He said the company was "delighted to hand the baton to Griffith University". Mr Finch also noted that The Star Brisbane at Queen's Wharf is a neighbour "just up the street".
"The worst case scenario would be that they have to close their doors not long after opening them." – Queensland Premier Steven Miles, as quoted by Casino.org
Financial and regulatory pressure
Casino.org characterises the sale as a response to Star's need for quick cash. It reports that the group's finances remain strained after investing AU$3.6 billion to relocate its Brisbane casino a block east into a new integrated resort. Star has not been quoted in the source as confirming that the sale is intended to address its funding position.
The report says Star is also the subject of suitability inquiries. A second inquiry in New South Wales recently concluded that the company remains unfit to hold a gaming licence, according to Casino.org. Star Sydney, which holds the state's only slots licence, remains operational until the NSW Independent Casino Commission determines a remedial course. Following the NSW findings, Star suspended trading on the Australian Securities Exchange and postponed its annual report, which had been due on 30 August.
Casino.org reports that Star needs AU$300 million in short-term funding to keep its Queen's Wharf operation going. It says the company owes lenders AU$450 million, and that creditors are demanding any new loans come with government concessions. The publication says Star is seeking tax breaks and other government relief. It also says such relief is likely because the government is unwilling to jeopardise thousands of jobs. That is the publication's assessment, and the source does not include a government commitment. Premier Miles said last week that the worst case would be Star closing not long after opening, calling the resort "a fantastic asset for our city" and "a big job generator".
Leadership change on the Gold Coast
Separately, Star announced it has hired Mark Mackay from rival Crown Resorts to lead The Star Gold Coast, in Broadbeach. He becomes chief executive of that resort on 10 September. Casino.org says Mr Mackay has more than 18 years of experience running integrated resorts and casinos, most recently as chief operating officer of Crown Melbourne. Before joining Crown in 2017, he was chief operating officer of the Gold Coast property, then known as Jupiters Hotel and Casino.
The source does not disclose what the NSW Independent Casino Commission's remedial course will involve or when it will be decided. It also does not say whether any government relief has been agreed. Pokiestralia will report further as those details emerge.