Star to raise $450m from Hong Kong partners

Star to raise $450m from Hong Kong partners

Thu, 29/03/2018 - 14:15
The Start GC

The Star Gold Coast is one of the first development priorities under the new strategic alliance. Photo: The Star Entertainment Group

Hong Kong property giants Far East Consortium and Chow Tai Fook Enterprises will pour $490 million into ASX-listed The Star Entertainment Group, with the companies to jointly pursue large scale resort and residential developments on the Gold Coast and in Sydney.

The three companies have been collaborating in Australia’s tourism development sector since 2014, initially on the $3 billion Queens Wharf redevelopment in Brisbane, an integrated resort project expected to open in 2022.

Other activities by the alliance include the $140 million acquisition of the Sheraton Grand Mirage Gold Coast, as well as plans to develop a $400 million, 53-storey luxury hotel and residential project at Gold Coast’s Broadbeach Island, part of The Star Gold Coast master plan.

The first priorities of the new partnership include the Broadbeach Island project as well as two other hotel and residential developments in Sydney and on the Gold Coast.

Underpinning the agreement is a share subscription deal, with Far East Consortium and Chow Tai Fook to each pay $245 million to acquire 45.8 million shares in Star, which was formerly known as Echo Entertainment Group.

Both Far East and Chow Tai Fook will be prohibited from increasing their stake to more than 19.9 per cent under the deal.

Construction of the first project, The Star Gold Coast, is expected to begin midway through the year, subject to funding and board approvals.

Under plans approved by the Gold Coast City Council earlier this month, the precinct will comprise up to five joint venture towers containing hotels or residential apartments, alongside expanded entertainment, tourism and retail developments.

Approvals from the Queensland government are expected later this year, to allow for the development of up to 2,200 apartments on the site.

Also on the Gold Coast, the companies have committed to further developments at The Star’s Sheraton Grand Mirage luxury hotel, which was acquired by the alliance last year.

In Sydney, the three companies will jointly coordinate further developments at The Star Sydney, including a new Ritz-Carlton hotel which is currently in the approvals process, and the potential development of a train station in Pyrmont, in collaboration with the NSW state government,

Star chairman John O’Neill said the expansion of the partnership with Far East and Chow Tai Fook recognised the strength of relationships built over the past four years.

“The deal ensures a greater strategic and economic alignment of our collective interests, and continues The Star’s commitment to deliver growth investments through a capital efficient structure," Mr O'Neill said.

Far East Consortium chairman David Chiu said strengthening the partnership would leverage the companies’ complementary capabilities, while Chow Tai Fook chief executive Patrick Tsang said the company’s investment reflected its confidence in Australian tourism development investment.

At close of trade today Star’s shares had gained 1 cent, to finish at $5.29.