Tower Holdings overdue rent of $878k for Great Keppel Island Resort
To the public eye, it would seem nothing is happening at Great Keppel Island Resort, however it’s more complicated than that. See what Tower Holdings and the state government have to say.
Rockhampton
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Great Keppel Island Resort owner Tower Holdings has racked up an overdue bill of $878,000 in unpaid rent for its island and marine leases.
The Australian property development company bought the resort property for $16.5 million in 2006 which also included four land and one marine 99-year leases for property owned by the Queensland Government.
It is understood Tower Holdings has recently been issued an invoice for $878,000 of which $300,000 is interest for overdue rent on its leases.
It is unclear how much the lease currently costs the company per year, however in 2016 Tower Holdings reported it had already forked out $1.2 million in lease payments since 2006.
When contacted for comment by The Morning Bulletin regarding the outstanding bill, Tower Holdings responded promptly with the following statement.
“A spokesman for Tower Holdings advised that GKI Resort Pty Ltd has paid millions of dollars in rent to the state over the last 15 years and that they continue to work proactively with the state on the project.”
The Department of Resources is the state government body responsible for the lease arrangement.
When contacted about the rent arrears, the Department advised the “specifics of financial matters are not able to be disclosed” and would not provide a breakdown of costs.
“The Queensland Government understands the importance of our island tourism sector for the significant local, regional, and state employment and tourism benefits it provides,” a spokesman said.
“The Department continues to work with the lessee of GKI to encourage compliance with all lease conditions.
“If any lessee fails to meet the conditions of a lease, there are many compliance actions the Department may consider.”
In March 2016, The Morning Bulletin reported Tower Holdings was in rental arrears of more than $249,000 and had been issued a formal notice of intent to forfeit.
At the time, a Tower Holdings spokesman said it had honoured all of its state government lease payments since its ownership which had so far totalled $1.2 million.
It was reported a few days later the owing money had been paid.
In 2018, it was reported Tower Holdings was at risk of losing its leases unless the firm began demolition works by April and completed them by the end of August of that year.
Work did begin at the end of April and 12 buildings were demolished and flattened to slab level, moving 12 tonnes of asbestos back to the mainland, estimated to have cost less than $1 million.
RESORT CLOSURE
Locals are questioning why the state government hasn’t stripped Tower Holdings of its leases amid the lack of action at the resort.
The resort has been closed since 2008 when the island was damaged by cyclones and the effects of the Global Financial Crisis began to trickle in.
While to those who visit the island, the resort looks like an eyesore as it remains boarded up, it isn’t as straightforward as it seems.
The lease is “incredibly complex” and has 60 pages of conditions, along with pages of development approval conditions.
Over the years the stalled project has become a political football, and is always a hot topic resurrected during elections.
The state government most recently committed $30 million in funding for infrastructure at the island, of which as of May 2021, $4 million had been spent, with the only public expenditure detailed as staff travel, accommodation and hospitality.
There is also a lack of infrastructure on the island, with no underground power or water access and most supplies need to be barged over from the mainland.
GREAT KEPPEL ISLAND RESORT HISTORY
Captain James Cook sailed through the Keppel group of islands in 1770 and named the island and Keppel Bay after Admiral August Keppel, a British politician, sailor and first lord of Admiralty.
Silver Sands, the island’s first resort, was built in the 1950s and a new resort opened in 1967.
Trans Australia Airlines built the island’s air strip in 1975 and upgraded the accommodation to cater for 250 guests and day guests.
By mid 1975, the resort was attracting up to 1000 day guests and was famous for its slogan, ‘Get Wrecked on Keppel’.
By 1982, the resort was upgraded to accommodate 360 guests.
In 1992, Qantas acquired TAA and the resort.
In 2000, it was managed by Accor under Mercure and direct flights to the island ceased.
In 2002, Contiki partnered with Accor and Qantas and spent $3.5 million on refurbishments.
At the time it was marketed as “sun, sand, sea and sex” with the target demographic 18 to 35 year olds.
The “up-market backpackers lodge” had three levels of accommodation with 181 rooms of beachfront, garden and hilltop villas with capacity around 360 people, five swimming pools, three bars, a nightclub, lounge, internet cafe, gymnasium, food market and restaurants.
TOWER HOLDINGS BUYS GKI RESORT
In 2005, Tower Holdings entered an agreement to purchase GKI Resort and this was settled in 2007.
The resort closed in February 2008, following the global financial crisis.
In 2009, Tower Holdings released plans for a $600 million development boasting a 250-room hotel, 750 eco-tourism villas, 300 eco-tourism apartments, 250-berth marina, ferry terminal, yacht club, retail village, 18-hole championship golf course and 575 hectare environmental park.
A political debate ensued over the years around bids for a casino and a boutique casino licence for the resort was eventually denied by the state government in 2016.
The state parliament voted 43-41 on a motion to develop an offshore boutique casino gaming licence to encourage investment in developments like the proposed Great Keppel Island Resort project.
At the time, a Tower Holdings spokesman said he had already invested $50 million in the project and was disappointed with the parliamentary vote result.
BUYERS COME AND GO
In 2018, Tower Holdings listed the 162-hectare land holding, including the empty resort, marina and associated approvals, for sale, reportedly for between $20 and $25 million.
Singaporean-Taiwanese investors Isabella and CK Wei indicated plans to purchase the lease but that fell through in 2019.
Altum Property Group entered a conditional contract in 2019 for the sale of the island leases but two years later, the state government determined the company did not have the financial capability to deliver the proposed development.
In October 2021, mining magnate Gina Rinehart was looking at buying the lease but pulled out in May 2022 after an “extensive review process”.
The lease remains in the hands of Tower Holdings.
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