The Star Entertainment Group expects shareholders to embrace the casino operator's preference for "capital lite" investment after chief executive Matt Bekier said it will make no upfront payment for the construction of a 200-metre tower at its Jupiters casino on the Gold Coast.
The Star and Hong Kong investors Chow Tai Fook and Far East Consortium plan to each hold a 33 per cent stake in the potential $400 million tower development, which will include 350 apartments and 700 hotel rooms of 4.5 star quality.
Mr Bekier said it expects to sell down its share of the apartment complex within the tower once they have been built, which will mean its portion of the hotel will be funded with no capital outlay from The Star.
"The only injection we will put onto that part of the development is the land," said Mr Bekier. "It doesn't get much more capital lite than that. If we had to fork out all of this ourselves and take on all the risk, we would not have done it. This extra investment doesn't put any stress on the balance sheet. If we had to put another $500 million into the Gold Coast, I don't think that would have flown and I don't think we could have justified the returns."
Mr Bekier said the casino company's only new investment on the casino complex will total $100 million on a live sports theatre, new restaurants and tweaks to the casino floor spread over the next four years.
The new proposal is in addition to the $345 million redevelopment of Jupiters that is focusing on the refurbishment of 600 existing hotel rooms and the addition of a six-star, 17-storey hotel tower, with more than 50 luxury suites, which is already under construction.
Total investment in Jupiters including the current redevelopment could reach $850 million, according to a release issued by The Star.
If it proceeds, it will mark the third project between the three partners after they combined to win a $3 billion deal to build the Queen's Wharf casino complex in Brisbane, which will open in 2022, and the potential development of a new tower and Ritz Carlton hotel at its flagship Sydney casino.
Mr Bekier said he is confident of quickly selling its allocation of apartments despite the mixed housing market in Queensland.
"Because our apartments have already gone through probity, then once planning is out of the way, we should be able to develop those and sell them pretty quickly – a long time before Queen's Wharf. I feel we are not taking on any undue risk here."
Mr Bekier also threw down a challenge to James Packer's Crown Resorts, saying it aims to be Australia's top resorts operator.
"We want to be Australia's leading integrated resorts operator and our plans for the Gold Coast are a significant part of that vision," Mr Bekier said.
The Star said it had not asked for more land as part of its proposal while noting it was in talks with stakeholders and the Queensland government over the concept.
Shares in The Star Entertainment Group fell 3¢ or 0.57 per cent on Friday to $5.23.