Star Entertainment Sells Sheraton Grand Mirage Gold Coast Resort
Posted on: June 26, 2023, 09:30h.
Last updated on: June 26, 2023, 09:56h.
Star Entertainment Group in Australia has found a buyer for its 50% stake in the Sheraton Grand Mirage Resort, Gold Coast.
Star Entertainment, one of the leading commercial casino operators Down Under along with Crown Resorts, continues to face government scrutiny and numerous fines for regulatory wrongdoings.
Gaming regulators in New South Wales (NSW) and Queensland last year issued Star Entertainment AU$100 million (US$66.7 million) fines for regulatory violations. Government inquiries concluded that Star failed to properly monitor its casino cages from being used by illicit individuals to launder money.
To raise capital to offset the unexpected regulatory costs, Star announced in March that it would sell its 50% position in the Sheraton Gold Coast. This week, a buyer was revealed.
Five-Star Beachfront Luxury
Star Entertainment co-purchased the Sheraton Grand Mirage, a nongaming hotel, in 2017 for AU$140 million. Hong Kong Stock Exchange-listed entities, Far East Consortium and Chow Tai Fook, purchased the other 50%. Marriott International leases the hotel’s operations from the ownership group.
The Sheraton Grand Mirage Resort is a five-star beachfront resort featuring 295 guestrooms, five restaurants, several outdoor pools, and meeting capabilities. Star’s Gold Coast casino and resort is located about five miles south of the Sheraton.
When Star announced its intentions to sell its Sheraton Gold Coast position, the firm said the listing price was AU$200 million. The company announced Monday that it’s reached an agreement with the Karedis and Laundy families, two prominent business families with significant holdings in the liquor and hospitality industries, to sell Star’s 50% stake in the hotel for AU$192 million.
The sale represents a price of more than $650K per room. The transaction also represents a 21x multiple on the hotel’s most recent annual earnings before interest, taxes, depreciation, and amortization (EBITDA).
We had it in due diligence at AU$200 million last year. It’s still a really good price,” real etstae agent Sam McVay, who co-listed the property, told the Australian Financial Review.
McVay added that the two families beat out a bid from Hawaii-based hotelier Outrigger Hospitality Group. The AFR, in its 2023 “Rich List,” valued the Laundry and Karedis families respectively at AU$1.5 billion and AU$972 million.
Tax Responsibility
Along with the financial penalties levied by state regulators, Star could soon be on the hook for higher taxes, as officials in NSW are working to implement a higher levy on slot machine revenue.
Star owns and operates The Star Sydney in NSW, which generates the most annual gaming revenue in the company’s portfolio. The company’s other asset, along with The Star Gold Coast and the Gold Coast Convention & Exhibition Center, is Treasury Brisbane in Queensland.
NSW officials have proposed increasing the state’s tax on slot machine win from 32% to 60%. Since Star’s rival in NSW, the Crown Sydney, doesn’t offer slot machines, the state’s gaming tax hike suggestion would only apply to The Star Sydney.
Star officials are naturally fighting the proposal.
“If implemented as originally proposed, the additional duty would significantly challenge the economic viability of the Sydney business and put the jobs of up to 4,000 hard-working Sydney employees in jeopardy,” said Robbie Cooke, Star CEO. “We will continue to engage with the new NSW government to guarantee the jobs of our team members while working hard to implement the significant reforms required to restore The Star to suitability and to ensure it remains a valuable contributor to the NSW economy.”
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