Star Entertainment Planning to Sell Sheraton Grand Mirage, a High-End Resort on Gold Coast, Australia
Stressed-out casino chain Star Entertainment is in a financial crunch, following hefty fines from state governments and anticipated increased taxes on gaming revenues.
In an attempt to boost tax revenues to aid locals and businesses affected by floods and wildfires, the New South Wales (NSW) government plans to raise its tax rate on casinos starting in July. Star Entertainment runs its top destination, The Star Sydney, in eastern Australia's NSW state.
Star's 2022 expenses exceeded projections after state regulators in NSW and Queensland found that the casino conglomerate neglected to safeguard its casinos from being utilized for money laundering by dubious organizations.
In September, the NSW Independent Casino Commission penalized Star AUD 100 million (USD 66 million). In December, an independent commission in Queensland imposed the same fine.
The Queensland commission also announced it would temporarily suspend the gaming licenses for Star's Gold Coast and Treasury Brisbane casinos for 90 days. The suspensions have been postponed until December 2023, as the commission agreed to provide Star time to rectify its management and gaming operations.
Fundraising Effort
Star Entertainment came under scrutiny following state gaming regulators' findings that Crown Resorts, Star's main competitor in Australia, disregarded money laundering and alleged criminal networks in its casinos.
Star, the smaller of the two casino operators, is striving to reassure government regulators that its careless attitude towards gaming regulations is now a thing of the past. However, for the firm to withstand the around AUD 132 million in fines and higher impending taxes on Star Sydney's operations - its most significant property - the company needs to strengthen its financial standing.
To achieve this, Star announced this week that it will sell its stake in the Sheraton Grand Mirage Resort Gold Coast. This five-star luxury resort boasts 295 guestrooms, five restaurants, outdoor pools, meeting facilities, and beach access.
Star owns a 50% stake in the Sheraton Grand Mirage, with the other half divided among Hong Kong Stock Exchange-listed entities Far East Consortium and Chow Tai Fook. Marriott International leases the hotel's operations from the ownership group.
The three investors in Sheraton Grand Mirage purchased the hotel in 2017 for AUD 140 million. Star hopes to make a significant profit on its investment, as it is asking AUD 200 million for its 50% stake.
The Sheraton Grand Mirage is situated just south of SeaWorld Resort on the ocean side of SeaWorld Drive. The Star Gold Coast is approximately five miles south of the Sheraton.
high Interest
Star's high asking price for the Sheraton Grand Mirage doesn't seem to deter potential buyers. According to Steven King, head of Colliers International's Gold Coast commercial realty division,
"There's a lot of demand and nil supply," King told Business News Australia. “We’ve already got about 20 people interested in the first two days after its listing.”
Star aims to raise AUD 545 million. An AUD 200 million sale of its Sheraton stake would significantly contribute to achieving this fundraising goal.
