Star suitor once jointly bid for Darling Harbour site
Brisbane developer Patrick Farrugia engaged with Star Entertainment in a $250m bid for a Darling Harbour site more than a decade ago, it can be revealed.
Brisbane developer Patrick Farrugia engaged with Star Entertainment in a $250m bid for a landmark Darling Harbour site more than a decade ago, it can be revealed.
The Australian understands Mr Farrugia’s private company, HDI Group, and Deutsche Bank had put a proposal to Star – then known as Echo Entertainment – to redevelop the harbourside site adjacent to the International Convention Centre, opposite Cockle Bay, as a luxury retail, entertainment and hospitality precinct with a themed hotel and serviced apartments.
The site was ultimately awarded to Mirvac in a government-run market process. The revelation adds weight to Mr Farrugia’s credibility as a serious bidder for the troubled casino group.
Mr Farrugia made headlines last month when it emerged he had put in a bid to acquire parts of Star’s casino and hotels operation and then sell them to US hospitality giant Hard Rock, in which he has a long-term relationship.
Mark Daley, HDI’s US-based director, is a former executive at luxury goods firm DFS and led the installation of the DFS Galleria at Las Vegas Sands Casino in Macau. With the tightened regulatory framework likely to lead to continued falls in casino gaming revenue, it is expected Mr Daley would play a key role in any luxury retail hospitality led turnaround at Star.
The engagement with The Star in 2013 was reportedly around potential equity and the hotel management operation, with a view to creating a linkage between The Star’s property and a redeveloped harbourside site which included luxury retail, hotel and apartments.
The hotels would have used the Hard Rock brand if the deal were successful. That is similar to the deal Mr Farrugia reportedly put to Star earlier this year. Both Star and Mr Farrugua have declined to comment.
Mr Farrugia, who is the executive chair of HDI Group and its affiliate, Hard Rock Oceania, has had three decades of involvement with the Hard Rock brand – starting with a deal in the early 1990s with Hard Rock’s original founder, Peter Morton.
With Mr Morton’s sign-off, HDI Group initially partnered with the Oberoi Hotel Group to develop and operate established Hard Rock Cafes in Sydney, Melbourne and Surfers Paradise. Separately, Mr Farrugia and HDI affiliate HR Oceania (NZ) partnered with SkyCity in Hard Rock hotel and casino proposals. HDI Group held the Australian and New Zealand cafes for 10 years before selling them to Hard Rock US in 2005.
In 2006, HDI established a joint venture with Grocon to pursue mixed-use developments across Australia with branded hotels.
Knight Frank, which was involved in the 1 Martin Place project, was a founding HDI Group equity partner through its hotels arm, Knight Frank Expotel.
HDI /Grocon engaged at length with Star, which then formed part of Tabcorp, to acquire or enter into a joint venture for a hotel in Ultimo – the site that ultimately became The Darling Hotel. Hard Rock was one of several global brands being considered.
Given HDI’s business relationship with Hard Rock, it became a precondition that Hard Rock be given first right of refusal to brand, operate and manage the hotel, with or without gaming. If Hard Rock declined, then HDI/Grocon would go forward with another brand.
The proposal was to establish a new Hard Rock Hotel with potential sports betting and gaming elements, connected with The Star under its licence. The property was to be branded Hard Rock by way of licencing, but with no investment by Hard Rock. Star eventually decided to develop their own brand of hotel, The Darling.
Star shares soared last month after speculation Hard Rock International was backing a bid for Star, which is currently mired in regulatory challenges following the end of the Bell II inquiry.
However, those takeover hopes were dashed when Hard Rock International said it was not interested in Star.
Mr Bell’s five-week inquiry into Star Entertainment has ended and his final report is expected by the end of July.
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