442322934

Crown Resorts Divests Melbourne Development Site

Crown Resorts Sells One Queensbridge Development Site: A Strategic Move Amidst Regulatory Challenges

Posted on: October 21, 2024

Last updated on: October 21, 2024

Crown Resorts, the prominent Australian casino operator, has made significant strides in restructuring its assets, most recently by finding a buyer for its One Queensbridge development site in Melbourne. This strategic divestment comes in the wake of sustained government scrutiny that has put pressure on the company to streamline operations and bolster its financial position.

Sale of One Queensbridge Development

The recent sale of the One Queensbridge site reflects Crown’s broader strategy to offload underutilized assets. The property, which includes the long-shuttered Queens Bridge Hotel and several boarded-up office and retail buildings, was acquired by the commercial real estate group PDG. The deal, reported by The Australian Financial Review, concluded at A$85 million (approximately US$57 million).

Originally acquired in 2017 under former CEO James Packer, the site was intended for a grand development project that included plans for a 90-story skyscraper to house 388 hotel suites and over 700 private residences, aiming to become the tallest building in Melbourne. This ambitious project was designed to connect directly to Crown’s Melbourne casino resort across Queens Bridge Street.

Crown Resorts Melbourne Queensbridge

Image: Google Maps – Crown Resorts has sold a strip of vacant buildings along Queens Bridge Street in Melbourne near its Crown Melbourne casino resort.

The Downward Spiral of the One Queensbridge Project

The partnership between Crown Resorts and Schiavello Group, a prominent Australian property developer, to develop One Queensbridge hit a snag in 2019 due to decreased demand for new apartments in the area. The project stalled, and during the pandemic, Crown decided to buy out Schiavello’s stake in the project for A$80 million.

In the same timeframe, Crown faced severe scrutiny following an inquiry in New South Wales, which found the company’s operations were vulnerable to money laundering and other criminal activities. The findings sparked further investigations in Victoria and Western Australia, where similar concerns were raised, contributing to the departure of Packer and his forced sale of his stake in the company.

Financial Recovery and Future Prospects

In 2022, Crown was taken private by U.S.-based private equity firm Blackstone in a dramatic A$8.9 billion acquisition. Following the takeover, Blackstone faced substantial fines amounting to A$450 million due to Crown being deemed unsuitable to hold gaming licenses. However, after significant investments to overhaul operations and improve compliance, Crown has recently regained suitability determinations in New South Wales and Victoria, with pending assessments in Western Australia.

Crown’s recent fiscal report indicates that while operational losses in 2024 narrowed to A$165 million from A$199 million the previous year, total revenue decreased slightly by 0.2%. Nevertheless, the sale of non-core assets has provided some much-needed liquidity as Blackstone continues to optimize Crown’s financial health.

Ongoing Asset Divestment Strategy

Following the sale of One Queensbridge, Crown Resorts is actively exploring additional opportunities to divest more assets. This includes their 20% position in the high-end restaurant and hotel brand Nobu, which was successfully sold for A$1.3 billion earlier this year. Crown is also considering offers for its exclusive Crown Aspinalls Club in London, a luxurious members-only casino that has seen a decline in VIP patronage due to regulatory changes affecting high-rollers from the Arab Gulf states.

Furthermore, there are discussions surrounding the potential sale of the Capital Golf Club, an ultra-exclusive private golf venue designed by renowned golfer Peter Thomson. This concerted effort to sell off various assets indicates Crown’s commitment to refocusing its portfolio and improving operational efficiency.

Conclusion

Crown Resorts’ decision to sell its One Queensbridge development site underscores the company’s urgent need to recover from a series of setbacks exacerbated by government inquiries and financial strains. As the resort operator navigates these challenges and optimizes its asset portfolio under Blackstone’s stewardship, its future direction remains closely scrutinized. Crown aims not only to stabilize its financial standing but also to restore its reputation within the gaming industry, undergoing a transformative recovery process in the ever-evolving landscape of Australian gaming and hospitality.

New Casinos

Playpal PH: Get 500 bonus cash for your First Deposit

Ocean Casino: 200% match bonus up to $500 + 20 bonus spins

1 Free Spin credited for every $1 deposit. Up to $100 + 100 Spins

Monte Casino: Get 10 no deposit spins + $100 Bonus