The Star Entertainment Group has announced it has reached a $248 million sale and partial leaseback accord for its Treasury Casino and Hotel in Brisbane.
Under the terms of the transaction, Charter Hall will acquire the Car Park, the Treasury Hotel building and the Treasury Casino building for $248 million. The Star will lease back the Car Park and the Treasury Hotel building for an initial term of 30 years with 2 x 15-year options.
Charter Hall will attain vacant possession of the Treasury Casino building in 2023, when Star relocates to the new Queens Wharf venue, which is under construction.
The lease terms imply an initial cap rate of 4.7% and include fixed annual rent increases over the term of the lease.
Under the arrangements, The Star retains its existing interest in the former State Library building, which is not part of this transaction. The Star will explore future uses and ownership models for this site, which is the smallest of the four Treasury assets.
Star has previously said it would pursue a strategy of releasing capital from non-core, or low yielding assets. As part of that, it has been looking at sale and leaseback accords, which have become relatively common in the U.S. gaming industry.
It has also said it sees potential to unlock value from a sale and leaseback of its Star Sydney property, which has been the worst-affected by the Covid crisis.
Earlier this year, it said a formal process has started for a transaction, under which it would retain a stake of more than 50 percent. The Gold Coast and Queens Wharf properties may be added at a future date.
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