Crown Resorts Continues to Divest Assets with Sale of One Queensbridge Development Site
Posted on: October 21, 2024, 10:40h
Last updated on: October 21, 2024, 10:40h
Crown Resorts, the prominent Australian casino company, has recently made headlines with the sale of its One Queensbridge development site, a significant move in its ongoing strategy to streamline operations and recover from financial setbacks exacerbated by stringent government scrutiny. This decision reflects Crown’s commitment to fortify its financial standing by offloading underutilized assets, a trend that has become increasingly apparent since the company’s governance challenges arose in recent years.
The Sale Details
Crown Resorts has officially found a buyer for the 1-29 Queens Bridge Street property, selling it to the commercial real estate group PDG for AUD 85 million (approximately USD 57 million). This nearly 1.3-acre parcel includes the long-closed Queens Bridge Hotel alongside four adjacent office and retail buildings that have been boarded up.
Originally, Crown acquired this prime piece of real estate back in 2017, under the stewardship of its billionaire founder James Packer, with aspirations to construct an ambitious 90-story skyscraper that would house 388 hotel suites and over 700 private residences, transforming the Melbourne skyline. The project aimed to create a direct connection to Crown Melbourne, the company’s flagship casino resort.
Image: Crown Resorts has sold a strip of vacant buildings along Queens Bridge Street in Melbourne near its Crown Melbourne casino resort. Crown had planned to build a hotel and residential tower at the property dubbed One Queensbridge.
Challenges and Project Stagnation
Crown’s ambitious plans for the One Queensbridge development, however, faced significant roadblocks almost from the start. Partnering with the Schiavello Group, the venture struggled to gain traction, eventually stalling due to sluggish demand for apartments in Melbourne’s city center. In a decisive move during the pandemic in 2020, Crown acquired Schiavello’s 50% stake in the project for AUD 80 million, hoping to revive the initiative, but the company found itself mired in deeper troubles.
An intensive inquiry in New South Wales into Crown’s suitability to maintain gaming licenses revealed serious lapses in its operational integrity, including failures in safeguarding its casinos from money laundering activities and lax measures against allowing criminal elements on its properties. These findings led to wider probes in Victoria and Western Australia, compelling internal changes, including the ousting of Packer from the company he founded.
Blackstone’s Involvement and Financial Recovery Efforts
In 2022, U.S.-based private equity firm Blackstone acquired Crown Resorts in a move valued at AUD 8.9 billion, vowing to rectify the governance issues that had imperiled the company’s license to operate. Blackstone faced significant financial penalties totaling AUD 450 million but managed to negotiate continued operations under vigilant government oversight. Their commitment included a further AUD 130 million investment aimed at enhancing operational compliance.
As a result of these concerted efforts, Crown has recently regained its status as a suitable operator in New South Wales and Victoria, with hopes of solidifying its position in Western Australia shortly. Moreover, Crown Resorts has reported a decrease in its annual fiscal loss for 2024, down to AUD 165 million from AUD 199 million in the previous fiscal year, although its overall revenue witnessed a slight decline.
Continuing the Asset Sell-off
Crown Resorts’ decision to divest continues beyond the Queensbridge site. Blackstone has capitalized on Crown’s asset portfolio, selling its 20% stake in the renowned Nobu restaurant and hotel chain for AUD 1.3 billion earlier this year. Current reports suggest that Crown is open to offers on several additional high-value assets, including its exclusive Crown Aspinalls Club in London, which has suffered from reduced VIP patronage in recent years.
Additionally, reports indicate that Crown and Blackstone are considering a sale of the ultra-exclusive Capital Golf Club, designed by legendary golfer Peter Thomson, further underscoring the company’s ongoing strategy to divest non-core assets.
Conclusion
Crown Resorts’ recent moves signal a critical turning point as the company seeks to stabilize after tumultuous years marked by inquiries and operational challenges. With the strategic sale of assets like the One Queensbridge site and the tightening of its financial belts under Blackstone’s leadership, Crown is on a path aimed at regaining its stature and rebuilding its business for a more secure future. As these developments unfold, observers will be keen to see how effectively Crown can navigate the challenging landscape ahead and whether it can emerge as a resilient player in the Australian gaming and hospitality market.
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