Star Entertainment sells Sheraton Mirage Gold Coast Resort
Australia's Star Entertainment Group has found a buyer for its 50 per cent stake in the Sheraton Mirage Resort on the Gold Coast.
Star Entertainment, one of Australia's leading commercial casino operators, along with Crown Resorts, continues to face government scrutiny and massive fines for regulatory lapses.
Last year, gambling regulators in New South Wales (NSW) and Queensland fined Star Entertainment A$100 million ($66.7 million) for breaching regulations. A government investigation found that Star failed to properly monitor its casino cages to ensure they were not used by illegal individuals to launder money.
In order to raise funds to offset unexpected regulatory costs, Star announced in March that it would sell its 50% stake in the Sheraton Gold Coast Hotel. A buyer was announced this week.
Five Star Luxury on the Beach
Star Entertainment co-acquired the non-gaming hotel Sheraton Grand Mirage in 2017 for $140 million. Hong Kong-listed Far East Consortium and Chow Tai Fook bought the other 50%. Marriott International leases the hotel business from the ownership group.
The Sheraton Grand Mirage Resort is a five-star beach resort with 295 guest rooms, five restaurants, multiple outdoor pools and meeting facilities. The Gold Coast Star Casino Resort is located approximately 5 miles south of the Sheraton Hotel.
When Star announced its intention to sell its Sheraton Gold Coast hotel location, it said the listing price was $200 million. The company announced on Monday that it had reached an agreement with the Karedis and Laundy families, two prominent business families with significant interests in the alcohol and hospitality industries, to sell Star's 50 per cent stake in the hotel for A$192 million.
The sale fetched more than $650,000 per room and was 21 times the hotel's most recent annual earnings before interest, taxes, depreciation, and amortization (EBITDA).
Last year, our due diligence valuation was A$200 million. It’s still a very good price,” real estate agent Sam McVay, who co-listed the property, told The Australian Financial Review.
McVeigh added that the two families rejected an offer from Hawaii hotelier Outrigger Hospitality Group.AFR valued the Laundry family and Karedis family at $1.5 billion and $972 million respectively in its 2023 Rich List.
Tax Responsibility
In addition to fines from state regulators, Star may soon have to pay higher taxes as New South Wales authorities work to impose higher taxes on pokies revenue.
Star owns and operates The Star Sydney in New South Wales, which has the highest annual gaming revenue in the company's portfolio. In addition to The Star Gold Coast and the Gold Coast Convention and Exhibition Centre, another of the company's assets is the Brisbane Treasury in Queensland.
New South Wales officials are proposing to increase the state's pokies winnings tax from 32 per cent to 60 per cent. The state's proposed gambling tax increase only applies to The Star Sydney because its NSW rival Crown Hotel Sydney does not offer pokies.
Star officials were, of course, opposed to the proposal.
Star chief executive Robbie Cooke said: "If the additional tax is implemented as originally proposed, it will severely damage the economic viability of Sydney businesses and jeopardize the jobs of up to 4,000 hard-working Sydney employees. " We will continue to work with the new NSW Government to safeguard the jobs of our team members while working to implement the significant reforms needed to return the Star to health and ensure it continues to be a valuable asset contributing to the NSW economy ."
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Source: www.casino.org
