Star trumps Packer for $160m Sheraton Mirage purchase
An international joint venture led by gambling company Star Entertainment has swooped on the Gold Coast’s Sheraton Mirage in the latest salvo in the casino war with James Packer’s Crown Resorts.
The listed gaming company is finalising a deal to pay up to $160 million for the landmark beachfront resort in conjunction with Hong Kong developer Far East Consortium and retailers Chow Tai Fook, in a repeat of its $3 billion Brisbane Queen’s Wharf joint venture.
Star and Crown were locked in a bitter competition over the Barangaroo and Queen’s Wharf developments, but Star has continued its dominance in southeast Queensland.
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Star, Far East and Chow Tai Fook would become a major force in the Queensland tourism industry, which Star sees as critical to its plans to drive a jump in international visitors who will gamble at its facilities.
A revamped Sheraton would be designed to complement Queen’s Wharf and the nearby Jupiters Hotel and Casino on the Broadbeach Island.
The hotel is owned by a near unknown Chinese-backed group called Australia Wattle Development and is operated by Starwood Hotels and Resorts, which was recently acquired by Marriott International.
The hotel operator is believed to be keen on overhauling the famous property.
Star and its HK partners have already embarked on a $670 million upgrade of the Jupiters development.
Any redevelopment plan would be kept low-rise to accord with the Spit’s unique environment and would not include a gambling element, as no application for one of Queensland’s fiercely contested regional casino licences has been made to the state government.
The plans are at a preliminary stage and the companies did not comment but their senior ranks are deeply invested in the project.
The Weekend Australian can reveal that a new company, Destination Gold Coast Investments, was created to undertake the venture, listing as directors Star chief executive Matt Bekier, chair John O’Neill, company secretary Paul Martin and Far East Australia’s executive director Craig Williams and the chief executive of Chow Tai Fook Enterprises, Patrick Tsang.
While not dependent on winning a casino licence, if the high-profile purchase proceeds, it could scuttle nascent plans by Packer’s Crown casino, which was negotiating with Chinese-backed ASF to run a prospective second casino on the Gold Coast.
ASF won the right to develop a $6.5 billion regional casino, hotel, apartment and cruise ship terminal under the Queensland government’s integrated resort development proposal in 2014.
But after political wrangling over the location, the development has been downgraded to a potential $3 billion project on a 5ha waterfront site on the northern Gold Coast, across the road from the Sheraton Mirage.
While that process has drawn heavy publicity, the Star-led consortium has been quietly finalising talks to acquire the right to buy the Sheraton Mirage from the Chinese-backed group Australia Wattle Development, which has only recently acquired the hotel.
The Weekend Australian understands that venture had secured the site from MiiResorts, which had been trying to sell the property for more than a year.
The Sheraton Mirage has a storeyed past. It was developed by tycoon Christopher Skase in 1987, and later sold to failed funds manager MFS and the Ray Group.
The pair sold the resort to Jim Raptis, whose companies went into receivership in 2008, when the hotel was sold for $62.5 million to Pearls Australasia, the local arm of major Indian conglomerate Pearls.
The now discredited Indian company has been found to have been a $9 billion fraud, dissipating the money of 58.5 million locals who believed they were investing in real estate developments.
Pearls, through its Australian arm Pearls Australasia, then also poured $20 million into renovating the resort.
MiiResorts, previously known as Pearls Australasia, has faced a Federal Court action by 46,000 investors, alleging money from a Ponzi scheme was sent to Australia to buy the resort and other properties.
In a Federal Court order last week Justice James Edelman ruled India’s Securities and Exchange Board could not join the existing court action, following opposition from the current class action.
The Indian statutory body, SEBI, wanted to join the Australian action “to complement” the existing case and recover the money but their application was opposed by representatives of the class action being run by Shine Lawyers.
– with Ben Wilmot
This article originally appeared on www.theaustralian.com.au/property.