Crown Resorts Offloads One Queensbridge Development: A Strategic Move Amid Corporate Turmoil

Posted on: October 21, 2024, 10:40h
Last updated on: October 21, 2024, 10:40h

Crown Resorts, a significant player in Australia’s casino industry and currently owned by the U.S.-based private equity firm Blackstone, has made headlines once again by selling its One Queensbridge development site. This decision comes as part of a broader strategy to divest underutilized assets and stabilize the company’s finances, which have been adversely impacted by various government inquiries into its operations.

The Sale of One Queensbridge

The property located at 1-29 Queens Bridge Street, Melbourne, has been acquired by the commercial real estate group PDG for a reported price of A$85 million (approximately US$57 million). This sale marks a notable turn for a site that holds significant potential, as Crown previously envisioned it as the stage for a towering 90-story skyscraper featuring over 700 luxurious residences alongside a 388-suite hotel. The project was set to enhance Melbourne’s skyline and connect directly to the Crown Melbourne casino resort, but plans stalled amid changing market dynamics.

Figure: The sold property spans nearly 1.3 acres and includes the long-closed Queens Bridge Hotel along with adjacent office and retail spaces. (Image: Google Maps)

A Trip Down Memory Lane: The Rise and Fall of One Queensbridge

Crown Resorts’ aspirations for One Queensbridge began in 2017 under the leadership of its billionaire founder, James Packer. The acquisition of the site was part of a grand vision but quickly turned sour. With slowing apartment demand leading to a joint decision with the Schiavello Group to halt development in 2019, Crown was facing an uphill battle. By 2020, amid the pandemic, Crown opted to buy out Schiavello’s stake for A$80 million, hoping to revive the project—but this was not to be.

The turning point came when the New South Wales government launched inquiries into Crown’s operations, revealing serious compliance issues surrounding money laundering and suitability for holding gaming licenses. Consequentially, Crown’s reputation took a substantial hit, compounded by a series of regulatory inquiries in Victoria and Western Australia.

Regulatory Challenges and Corporate Restructuring

In light of the inquiries, Crown underwent a substantial corporate restructuring. In 2022, Blackstone acquired Crown for A$8.9 billion, inheriting a company already burdened by punitive fines and operational shortcomings. Faced with A$450 million in penalties, Blackstone made significant investments—both in financial resources and strategic management—to bring Crown’s operations into compliance.

Crown Resorts has since made headway, achieving a "suitable" designation in New South Wales and Victoria. Currently, the firm seeks a similar outcome in Western Australia, with hopes of restoring investor confidence and operational integrity.

Financial Recovery: The Sell-off Strategy

As part of Blackstone’s turnaround strategy, Crown Resorts is actively divesting non-core assets to improve its balance sheet and operational focus. Following the sale of One Queensbridge, the company announced its financial results for 2024, revealing a narrowed annual fiscal loss of A$165 million, down from A$199 million from the previous fiscal year. While revenues dipped slightly by 0.2%, the company’s proactive approach to asset divestment has contributed to an overall healthier corporate outlook.

Recent moves include divesting a 20% stake in Nobu, bringing in A$1.3 billion. Furthermore, Crown is reportedly considering offers for its high-profile Crown Aspinalls Club in London, which has seen a decline in VIP visits following policy changes affecting foreign gambling.

Looking Ahead: The Future of Crown Resorts

Crown Resorts’ decision to sell the One Queensbridge property underscores a critical pivot for the company as it navigates the challenging landscape of regulatory scrutiny and corporate restructuring. While the sale signals an end to grandiose plans for a marquee development, it also indicates a pragmatic approach to stabilize and refocus the company’s resources.

As Crown continues its financial recovery and asset management strategy, the industry will be watching closely to see how these changes impact its operations and standing in the competitive casino landscape in Australia and beyond. With a determined commitment to compliance and a sharpened business focus, Crown Resorts might still reshape its identity and recover fully from recent upheavals.

In conclusion, Crown Resorts is not just selling assets; it is strategically recalibrating itself amidst the tumultuous waters of corporate governance and market expectations. The journey ahead remains fraught with challenges, but the commitment to sustainability and improvement could pave the way for a sturdier future.