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Crown Resorts Sells Melbourne Property Once Targeted for Skyscraper

Crown Resorts has found a buyer for its One Queensbridge development site as the Australian casino company continues to unload underutilized assets to strengthen its bottom line and recoup losses stemming from recent government inquiries.

Crown Resorts Melbourne Queensbridge
Crown Resorts has sold a strip of vacant buildings along Queens Bridge Street in Melbourne near its Crown Melbourne casino resort. Crown had planned to build a hotel and residential tower at the property dubbed One Queensbridge. (Image: Google Maps)

Crown, owned by US-based private equity titan Blackstone, recently sold 1-29 Queens Bridge Street to commercial real estate group PDG. The Australian Financial Review reports the selling price was AU$85 million (US$57 million).

The nearly 1.3-acre property consists of the long-shuttered, two-story Queens Bridge Hotel and four adjacent boarded-up office and retail buildings.

In 2017, when Crown was still under the control of its billionaire founder James Packer, the company acquired 1-29 Queens Bridge with plans to build a 90-story skyscraper housing 388 hotel suites and more than 700 private residences. The building, which would have been Melbourne’s tallest, was to connect across Queens Bridge St. to the Crown Melbourne resort and casino. 

Project Downturn

Crown Resorts was partnered with Schiavello Group, an Aussie property developer, on the One Queensbridge development. The partnership stalled the hotel and residency tower in 2019 because of slowing apartment demand downtown.

During the 2020 pandemic, Crown bought out Schiavello’s 50% stake in the project for AU$80 million. Months later, an inquiry in New South Wales into Crown’s suitability to possess a gaming license for its new resort in Sydney found that the company failed to protect its casinos in Melbourne and Perth from being used to launder money, and did little to keep criminals off of the resorts’ premises.

The NSW findings sparked inquiries in Victoria and Western Australia. Those probes reached similar conclusions and led to Packer’s ousting and forcible sell-off of his stake in the company he founded.

In 2022, Blackstone took Crown private in a takeover valued at AU$8.9 billion. Blackstone paid AU$450 million in fines after Crown was deemed unsuitable to hold gaming licenses by state officials in exchange for Crown being allowed to continue running its casinos under government-appointed monitors. Blackstone invested another AU$130 million to improve the company’s operations and become compliant.

Crown has since been deemed suitable in NSW and Victoria. The firm hopes to field a suitability determination in Western Australia in the coming months.

Crown Selloff Continues

Crown Resorts narrowed its annual fiscal loss in 2024 to AU$165 million from AU$199 million in FY2023. The company’s revenue, however, declined 0.2%.

Crown’s bottom line was strengthened as Blackstone divested assets. In July, Blackstone sold Crown’s 20% position in restaurant and hotelier Nobu for AU$1.3 billion.

The company is reportedly open to offers for its high-end Crown Aspinalls Club in London, a swanky members-only casino in Mayfair. The posh property has seen a downturn in VIP play in recent years after the British government scrapped the duty-free system afforded to foreign visitors. That’s led to fewer high rollers visiting London from the Arab Gulf states, many of whom patronized Aspinalls to get their gambling fix.

Crown and Blackstone are additionally said to be exploring a deal to sell the Capital Golf Club, an ultra-exclusive private golf club designed by famed golfer and course architect Peter Thomson.

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Blackstone’s Crown Resorts Sells Nobu Stake, Turns Tidy Profit

Crown Resorts, the Australian casino operator controlled by US private equity Blackstone (NYSE: BX), sold its 20% interest in the posh Nobu hotel-restaurant chain.

Nobu
The Nobu restaurant at Caesars Palace Las Vegas. Crown Resorts sold its 20% stake in Nobu for $180 million. (Image: Caesars Entertainment)

As is often par for the course with Blackstone, an impressive profit was wrong from the divestment. Crown reportedly grossed $180 million by selling its Nobu interest after buying into the hospitality entity in 2015 for $100 million. Crown’s sale implies Nobu, which counts actor Robert DeNiro among its investors, at $900 million.

At the end of last year, there were 56 Nobu restaurants in 23 countries around the world, the first of which opened in Los Angeles in 1987 under the name Matsuhisa — the surname of founder Nobu Matsuhisa. Crown acquired the Nobu stake under founder James Packer. The gaming company controls Crown Melbourne, Crown Perth, and Crown Sydney in its home country.

Nobu Still Has Gaming Ties

Even with Crown shedding its Nobu investment, the hotel-restaurant company maintains an array of ties to the casino industry.

The first Nobu hotel opened in Caesars Palace on the Las Vegas Strip in 2013. Two years later, another such venue debuted at Melco Resorts & Entertainment’s City of Dreams Manila. A new Nobu hotel is also a centerpiece of enhancements at Caesars Palace on the Atlantic City Boardwalk as well as that operator’s New Orleans plans.

Nobu Hotel and Restaurant New Orleans are set to open within the newly created Caesars New Orleans, following a multimillion-dollar transformation of Harrah’s New Orleans,” according to the Nobu Hotels website.

The site indicates the New Orleans property should be open in late 2024. In Las Vegas, Nobu also has restaurant locations at Caesars-operated Paris and the Virgin Hotel in addition to Caesars Palace.

Blackstone Wants Crown Focusing on Gaming

Crown’s divestment of its Nobu stake was reportedly the result of Blackstone wanting the gaming to focus on its core competencies of casino hotel operations. The private equity giant shelled out $6.6 billion for the Aussie gaming firm in 2022, pledging an array of improvements to bolster Crown’s position in its home country and its appeal to bettors throughout the Asia-Pacific region.

Blackstone is intimately familiar with the casino business. It previously owned and operated the Cosmopolitan on the Las Vegas Strip prior to selling those operating rights to MGM Resorts International (NYSE: MGM) for $1.6 billion. The private equity firm also has an array of successes in the world of casino real estate.

In December 2022, it sold its 49.9% interests in Mandalay Bay and MGM Grand to VICI Properties (NYSE: VICI) for $4.27 billion. It sold Cosmopolitan’s property to VICI for more than $4 billion and is still the majority owner of Bellagio’s real estate. Blackstone also owns the property assets of Aria and Vdara, both of which are also operated by MGM.

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Crown Resorts Receives Approval to Operate Sydney Casino

crown-resorts-receives-approval-to-operate-sydney-casinoIn a decision that echoes through the Australian business landscape, Crown Resorts has finally secured approval to operate its Sydney casino. This long-awaited green light, granted on April 23rd, 2024, by the New South Wales Independent Casino Commission (NICC), signifies a turning point for the company.

However, the path to this point has been controversial, forcing Crown to undergo intense scrutiny and implement significant reforms. The approval will have significant implications, not only for the company but also for the broader Australian gambling industry and the local economy.

A Look Back at Crown’s Tumultuous Journey

Crown’s Sydney aspirations were initially met with enthusiasm. In 2013, the development of a $1.5 billion luxury resort with an integrated casino at Barangaroo, a prime location in Sydney Harbour, was approved.

However, the path to opening wasn’t smooth. In 2021, a devastating inquiry led by former judge Patricia Bergin, SC, exposed a series of concerning practices within Crown Resorts. The issue unearthed evidence of money laundering, irresponsible gambling practices, and connections to organized crime syndicates through the company’s dealings with high-roller junket operators.

These revelations sent shockwaves through the Australian public and regulatory bodies. Crown’s license for the Sydney casino was suspended, and its suitability to operate in New South Wales was called into question.

Regaining Trust

Faced with the potential loss of its Sydney venture, Crown embarked on a comprehensive reform program. The company underwent a leadership overhaul, with a complete restructuring of its board and senior management.

Furthermore, the organization focused on cultural change. It puts a high priority on responsible gambling, anti-money laundering, and strong governance. Crown also implemented stricter compliance protocols and risk management strategies.

This commitment to reform was further strengthened by a change in ownership. In June 2022, US private equity giant Blackstone acquired Crown Resorts for $8.9 billion. Blackstone, known for its focus on responsible investment, pledged to uphold the highest standards of governance and compliance. This commitment resonated well with regulators, demonstrating Crown’s dedication to reform.

What’s more, this shift brought in new leadership and significant investment. It includes $200 million specifically allocated to support responsible gambling initiatives and anti-financial crime initiatives.

Notably, Crown Sydney adopted cashless gaming for all electronic table games, a first for casinos in New South Wales. This demonstrated its commitment to addressing money laundering concerns.

A New Dawn for Crown

The NICC’s decision to grant Crown Sydney its license reflects confidence in the company’s reform efforts. However, the approval comes with a set of stringent conditions. The NICC will maintain close oversight, and Crown will be obligated to demonstrate ongoing adherence to new regulations and compliance protocols.

This period of conditional operation serves as a probationary phase. During this time, Crown must consistently prove its suitability as a responsible casino operator.

For the Australian gambling industry, Crown’s Sydney approval signifies a potential turning point. The industry has faced increased scrutiny in recent years, with calls for stricter regulations to curb problem gambling and enhance anti-money laundering measures.

Crown’s experience serves as a cautionary tale. It highlights the severe consequences of non-compliance and the importance of responsible practices. The industry will likely see a ripple effect with other gambling operators, including the online casino in Australia. They will re-evaluate their own internal controls and compliance measures to avoid a similar situation.

The economic impact of Crown Sydney’s opening is expected to be substantial. The casino complex is projected to create thousands of jobs and generate significant tax revenue for the New South Wales government. It should also contribute to the revival of Sydney’s tourism industry.

However, concerns remain regarding potential social costs associated with increased gambling activity. Measures to mitigate problem gambling addiction and ensure responsible practices will be crucial in the long run.

The Public’s Verdict: A Jury Still Out

While the green light for Crown Sydney signifies a step towards regulatory reconciliation, the court of public opinion remains in session. The controversies that engulfed Crown have left a deep scar on the company’s image. Regaining the public’s trust won’t be a quick fix; it will be a long and arduous process demanding sustained commitment from Crown.

Regaining trust requires more than just regulatory compliance. Crown needs to demonstrate a genuine commitment to responsible gambling practices. As part of this effort, it is important to implement effective player identification and monitoring systems as well as provide support services for problem gamblers. It should also encourage a culture that prioritizes player well-being over maximizing profits.

Transparency will be a key factor in this process. Open communication with the public about Crown’s reform efforts, including detailed information on implemented changes and their effectiveness, is crucial.

Crown should be proactive in engaging with stakeholders. This includes community groups, problem gambling organizations, and the media. Regularly publishing independent audits and reports on its compliance efforts would also demonstrate a commitment to transparency.

A Second Chance, a Continued Watch

The story of Crown Sydney goes beyond the fate of a single casino. It represents a critical moment for the Australian gambling industry. As Crown Sydney prepares to open its doors, the industry as a whole face a period of heightened scrutiny and potential reform.

Whether Crown can capitalize on this second chance and the industry can navigate a more responsible path remains to be seen. Only time will tell if the lessons learned from Crown’s tumultuous journey will lead to a more sustainable and responsible future for Australian gambling.

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