Billionaire property developer Lang Walker has withdrawn his prize $2.5 billion Collins Square project in Melbourne from sale after finding equity funding for his equally large $2 billion property venture in Sydney's Parramatta.
Mr Walker has pulled the vast five-tower complex in Melbourne's Docklands off the market, despite three strong initial bids for the mixed-use retail and office project.
Walker Corp was looking to offload Collins Square to free up funding for two multibillion-dollar projects: Parramatta Square in Sydney and Festival Square in Adelaide.
Mr Walker said Collins Square attracted offers with tight yields around 5 per cent; a price which pitched the project at the peak of the current property cycle.
Two weeks ago, Investa Commercial Property Fund purchased a 75 per cent interest in a similar premium-grade property at 420 George Street in Sydney on a yield of 5.3 per cent.
Strong interest
Collins Square also attracted numerous expressions of interest for individual towers.
Over a multi-decade career, the Sydney-based property tycoon has built an enviable reputation for picking peak times to sell assets.
However, this time, he decided to sit tight.
"I now believe Collins Square is an asset which we should continue to hold for the long term," Mr Walker said.
No potential buyers were revealed during the sale process. However, market speculation centred on Chinese insurance companies and offshore wealth managers like Singapore-Malaysia CIMB Capital Trust.
Similar players may be helping to fund Walker Corp's equally ambitious plans for residential and commercial towers in Parramatta.
However, Mr Walker would not drawn on equity sources for the project.
Parramatta funded
"The company has now sourced equity funding for the Parramatta Square project, obviating the need for additional capital from the proposed sale of Collins Square," he confirmed.
"There have been a number of people who have expressed interest . . . coming from two sources, one [with] residential interest . . . and also a separate organisation in the commercial space," he said.
Walker Corp secured the rights to build Parramatta Square after beating off fund manager Charter Hall.
Design plans had firmed enough in the past fortnight to allow the funding to fall into place, Mr Walker said.
Walker Corp is more than halfway through the development of Collins Square. Two large towers have been completed and leased and another two high-rises are expected to be finished this year.
Completion due in 2017
The final tower is due for completion in 2017 but work is under way on the underground car parking, podium and central lift core.
"All the hard work is done. It's out of the ground," Mr Walker said.
When finished, the cluster of towers at the bottom end of Batman's Hill will have more than 250,000 square metres of lettable space and about 45,000 people visiting and working every day.
Current tenants include Marsh Mercer, Transurban, KPMG, CBA, Penguin Random House and Pearson, Maddocks, Link Group, Mott MacDonald and AECOM.
UBS AG was appointed to oversee the Collins Square sale process last November.
UBS managing director of real estate, Australia, Tim Church said the process was on track to close with a successful outcome.
"The three bidders were all outstanding parties but Lang has realised this is a pretty unique piece of real estate and wants to hold it. It wasn't a pricing issue or a process issue," he said.
