Grocon alleges Infrastructure NSW engineered ‘fire sale’ of Barangaroo project
Grocon has accused Infrastructure NSW of deliberately withholding approval for its massive Barangaroo project, forcing it to sell the site at a bargain price.
Grocon has accused Infrastructure NSW of deliberately withholding approval for its massive Barangaroo project, forcing it to sell the site at a bargain price, as the developer escalated its dispute with the agency it is now battling in court.
Earlier this month, without apparent provocation, Infrastructure NSW released a statement that claimed Grocon had exited the Barangaroo development due to its own “financial difficulties” and said the company was trying to “mischaracterise” its actions.
The Melbourne-based developer slipped into administration in 2020 – although this was after it sold the site in 2019.
Infrastructure NSW, which oversees the development of government land, has denied any wrongdoing over the matter and says it complied with the agreement struck with Grocon.
Grocon is suing Infrastructure NSW in the Supreme Court, alleging it was dudded out of $270m due to the agency’s decision. However, that matter is not due back in the court until 2023.
Now Grocon says Infrastructure NSW’s actions forced it to sell the site at a “fire sale price”.
Grocon’s response to Infrastructure NSW noted it was seeking to correct the agency’s “complete mischaracterisation” of the case before the courts.
The developer alleged Infrastructure NSW was “contractually required” to issue it a sight lines notice after concluding negotiations between Crown Resorts and Lendlease on sight lines from the Barangaroo casino tower.
Grocon alleges Infrastructure NSW had sold the sight lines twice and was unwilling to reveal this to the developer. As part of its administration settlement, Grocon promised its creditors a cut of the $270m to cover debts.
On Wednesday, Grocon reiterated allegations that Infrastructure NSW repeatedly failed to deliver sight lines rulings on the site for over two and a half years.
“As a result, a $120m deal Grocon had inked with one of Canada’s largest pension funds fell over, after which Grocon struggled to finance the project because it could not give financiers any comfort as to size and shape of the development, and therefore the value of the asset,” the company said. “The true position is that Grocon was forced by INSW, in concert with Aqualand and Grocon’s then-financier, to sell the rights it paid $420m Infrastructure NSW for (and then spent another $30m in costs pursuing) at a fire sale price.”
Grocon sold its Central Barangaroo site to its consortium partner, developer Aqualand, for $73m. The day following the sale, Aqualand was granted a ruling on sight lines by Infrastructure NSW
The Supreme Court has previously heard extracts of messages from senior figures at Infrastructure NSW, suggesting not disclosing sight lines to Grocon boss Daniel Grollo.
“Yes, Grocon proposed an exit to Infrastructure NSW – but only because Infrastructure NSW’s conduct gave Grocon no choice,” Grocon said in its statement. “Still during this time, Grocon repeatedly requested – and was entitled to receive – the sight lines notice.”
Grocon claims Infrastructure NSW caused Grocon financial difficulties that forced it to sell.
“Infrastructure NSW withheld the notice that would restore value to Grocon and then attempted to extract a release from all claims against it. That is hardly the conduct of a government agency with nothing to hide.”
The $2.5bn Central Barangaroo project, now being completed by Aqualand, is expected to be finished in the years after the completion of the Barangaroo Sydney Metro station in 2024. It will have six office buildings and a luxury apartment tower but will be much lower than originally planned.
At the heart of the long-running disputes over the sight lines were attempts by the NSW government to recoup the costs of its plans to build the Barangaroo Metro station in the precinct.
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