Crown Resorts Ltd (ASX:CWN) is suing the NSW Government

Crown Resorts Ltd (ASX: CWN) reported its FY18 result today, as covered here by my colleague James Mickleboro.

One interesting piece of news to come out of the market releases was that Crown is suing the Barangaroo Delivery Authority (BDA), an NSW Government agency.

Why on earth would Crown do that?

“The proceedings seek injunctive relief and declarations against the BDA that, in substance, require the BDA to comply with a number of its contractual obligations under the Crown Development agreement (CDA).

“These obligations include consulting with Crown about any application for the proposed development of Central Barangaroo that differs from that provided for in the relevant Concept Plan for Central Barangaroo in existence at the time the CDA was entered into, and negotiating in good faith and agreeing with Crown and Lendlease Group (ASX: LLC) any required changes to that application to ensure that sight lines from the Harbour Bridge to the Sydney Opera House are retained for the Crown Sydney Hotel Resort.”

Essentially, Crown are saying that the BDA have approved a building that will block Crown Sydney’s views of the Sydney Harbour Bridge and the Sydney Opera House.

Just think how much more houses are worth when they have sea views, then add millions onto this situation with a huge development like Crown Sydney.

Crown are planning for Crown Sydney to be a six-star hotel with harbour views. It has been constructed to the sixth level so far and is projected to be completed by the end of FY21 at a cost of $2.2 billion.

This is obviously going to create an enormous amount of extra earnings for Crown if all goes to plan. I think this is one of the best reasons to invest in Crown shares for the long-term.

Foolish takeaway

Crown is currently trading at 23x FY19’s estimated earnings. I don’t think the view sue news damages the investment thesis, but it’s hard to say whether Crown is good value today. If you can be patient for the next three years, then FY22’s result could make today’s price look cheap.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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