Three-way bidding war tipped for Collins Square

Billionaire Lang Walker is expecting up to three bids for his entire $2.5 billion Collins Square retail and office project in Melbourne’s Docklands when the first round of the process closes at the end of the week.

The heavy interest reported in the asset, which he placed on the market last year, could prompt Australia’s largest real estate sale.

However, Walker’s company, Walker Corporation, which picked investment bank UBS to handle the sale of the portfolio, is also understood to be considering a break-up of the five office towers at the western edge of the Melbourne CBD.

In demand: Melbourne CBD retail vacancies hit five-year low

Walker decided to sell Collins Square after receiving near-weekly approaches from interested parties, but some groups have shied away from taking an exposure to the final fifth tower, as it is under development and subject to a rental guarantee.

The top rank of bidders, which is believed to include an investment club, may have the edge if the billionaire vendor opts for a clean sale

In response, bids are also expected for the other four towers as a portfolio, with four or five groups running the ruler over this purely passive combination.

Sources point to Chinese insurers at the top end and local players seeking out smaller elements of the portfolio.

Collins Square under construction in Melbourne. Picture: Stuart McEvoy.

Formal inspections by onshore and international groups have been undertaken, with investors keen to eye the assets.

Further non-conforming bids for individual towers, or combinations of them, are also expected, which may boost the bidding pool.

However, the top rank of bidders, which is believed to include an investment club, may have the edge if the billionaire vendor opts for a clean sale.

Walker decided to sell Collins Square after receiving near-weekly approaches from interested parties

The Australian has learned that CIMB Capital Trust, which has bought a series of towers from Walker previously, including in this precinct, has tapped real estate agencies for advice on a major capital raising that would put it among the contenders.

Winning the portfolio, or part of it, would boost that group’s standing in Australia, and could assist with its longer-term float ambitions.

Two of the five office towers at Collins Square are built and fully tenanted, with two to be fnished within months and the last tower by the end 2017. Tenants that have agreed to move to the area include Marsh Mercer, KPMG and CBA.

This article originally appeared on www.theaustralian.com.au/property.