Property investor Charter Hall (ASX: CHC) has scrapped plans for the $248 million acquisition of Brisbane’s Treasury Casino building in a leaseback deal with The Star Entertainment Group (ASX: SGR).
In a brief statement to the ASX this morning, The Star says that Charter Hall has advised the company it doesn’t plan to proceed with the transaction, although the reasons for pulling out have not been made clear.
The Star notes that the sale, which was due to be settled before the end of June, was subject to several conditions including consent from the Queensland Government.
It says the basis for the acquisition not proceeding is that the conditions ‘have not been satisfied by the relevant date under the terms of the contracts’.
“Charter Hall declined to extend the dates for satisfaction of the conditions,” The Star says. “The Star is considering its options in relation to this matter generally.”
Charter Hall is remaining silent on its reasons for pulling out of the deal. The company tells Business News Australia that it will not be making further comment on The Star's announcement.
Charter Hall had signed an agreement to buy the old Treasury building in October 2021 on a partial leaseback that would have included the Queen’s Gardens carpark.
The Star had agreed to a 30-year lease on the property plus two 15-year options providing Charter Hall with an initial cap rate of 4.7 per cent. The cap rate compares with Charter Hall’s latest average yield of 4.8 per cent for its property portfolio.
The Star, which is set to relocate its Brisbane casino from the heritage-listed building to its new home in the $3.6 billion Queen’s Wharf development when it opens early next year, had planned to convert the old casino building into a hotel and high-end retail precinct.
The latest setback follows The Star pushing back its opening date for Queen's Wharf into next year from previous plans to be up and running by Christmas.
In a separate announcement today, The Star’s CEO Robbie Cooke continues to rail against the proposed increase in casino duty to be paid by the company in NSW, arguing that it could cost jobs at its Sydney casino.
Cooke has previously said the modelling for the higher tax take was made on the company’s pre-pandemic operating performance, which at the time included earnings from the now discontinued high-roller junket business.
“This proposed duty increase was policy on the run by the former Treasurer, was ill-conceived with no consultation and had no regard to the capacity of our Sydney operation to afford the impost,” Cooke says.
“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.”
The Star says it plans to continue to lobby the NSW Government against the proposed increases which the company estimates will add $100 million a year in costs to The Star Sydney.
“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,” Cooke says.
The Star under Cooke’s leadership is working to right the company following the fallout of independent inquiries into its suitability to hold a casino licence in NSW and Queensland.
Cooke says the company’s plans to refinance its debt facilities and increase its debt covenants have been placed in jeopardy by the planned tax increases in NSW.
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