The race for the biggest commercial real estate opportunity in the market, worth as much as $1.8 billion when fully developed at the top of Melbourne’s Collins Street, is now a three-cornered contest between Dexus, Charter Hall and Mirvac.
While all three listed players have hefty balance sheets, it is expected the trio of local bidders have tapped into their network of deep-pocketed capital partners to back their offers for the Collins Street property being offered by funds giant QIC.
Led by David Harrison, Charter Hall has a growing network of capital sources that it harnesses for its funds platform, including Singaporean sovereign fund GIC.
Mirvac, which is led by Susan Lloyd-Hurwitz, has also proved adept at roping in major foreign institutions. Four years ago ago it struck a deal with one of the world’s largest sovereign wealth funds, China Investment Corporation, to manage a $2.5 billion portfolio of office towers that CIC had acquired from Investa.
Dexus, headed by Darren Steinberg, also has a wide range of potential partners. In the past year it has bolted in major global investors such as Singapore’s GIC and M&G Real Estate for its industrial portfolio.
The country’s largest office landlord is already familiar with the top end of Collins Street, last year putting its foot on two adjacent sites in the next block that, when amalgamated, could be home to a $650 new office tower.
The 80 Collins Street property includes a 52-storey tower leased to private and state government tenants. Around that tower and part of the offering, QIC is developing a mixed-use project, comprising a 39-storey office tower, now more than halfway leased, along with a 300-room hotel and a retail complex.
Pricing the opportunity, which is being brokered by JLL and Savills, is complex. The project is under construction, there is no rental guarantee over the unleased office space and components carry varying degrees of risk. QIC will hope the final blended yield on the deal comes in under 5 per cent.
The first round of bids closed last week. QIC has been busy improving the real estate even after putting it on the market.
Celebrated restaurateur Chris Lucas, in combination with Sydney’s Martin Benn and Vicki Wild, have been brought on board to open an upmarket eatery at the mixed-use development, which QIC hopes will become a landmark at the “Paris end” of Collins Street.