RM may reap £662m from planned sale of London sorting office

[TrueBlueTerrier]

Royal Mail may reap £662m from planned sale of London sorting office

http://www.theguardian.com/business/201 ... ing-office" onclick="window.open(this.href);return false;?

Nine Elms centre joins Mount Pleasant and Paddington sites destined for redevelopment into luxury flats worth £1bn to newly privatised mail service

Royal Mail has put its former south London mail centre at Nine Elms up for sale, which analysts estimate could fetch up to £662m.

Nine Elms is one of three former mail centres expected to be turned into luxury flats, with the total value of the portfolio estimated at more than £1bn by analysts. The other two are Mount Pleasant, at Farringdon, central London, and a one-acre plot next to Paddington station, which was sold last month for £111m, with additional proceeds if the site is sold on soon or the developer gets further planning permission.

Nine Elms, a 14-acre site (5.6 hectares), is close to Battersea Power station in south-west London, an area considered a property hotspot – the power station is being converted by its Malaysian developers into luxury homes, designed by Frank Gehry and Sir Norman Foster, while the US embassy is relocating to the area from Grosvenor Square in Mayfair. Two-bed flats in the power station redevelopment have gone on sale for more than £1.5m, three-beds for more than £2.7m and four-beds for at least £4m.

Royal Mail said it would make a decision on the Nine Elms site, which was closed in 2012, once it has reviewed all options, which include a sale or developing it with a partner. It won planning consent from Wandsworth council in March 2012 to create up to 1,870 homes, more than six acres of public space, 1.2 acres of community and retail space, as well as a new primary school. The ratio of homes classified as affordable housing is 15%.

Analysts at Berenberg have valued Nine Elms at £662m. In one of the most controversial privatisations in UK history, the Royal Mail was floated at £3.3bnin autumn 2013. The National Audit Office judged that the sale had shortchanged taxpayers by at least £750m.

Royal Mail’s former central London sorting office at Paddington was sold to a Singaporean consortium, Great Western Developments, the first property sale since the privatisation. Royal Mail vacated the site in 2008 and received planning permission in 2012 to convert the building into 128 flats and an eight-storey office building with shops and restaurants on the ground floor.

Martin Gafsen, group property director at the Royal Mail Group, said: “Nine Elms is a key area of regeneration in London and we look forward to our former mail centre site being part of a thriving, revitalised area.”

The site is being marketed by Savills and Rothschild.

Last month, Royal Mail won the go-ahead to build 681 homes on part of its Mount Pleasant sorting office, with the London mayor overriding criticism that there was a lack of affordable housing – the scheme includes two-bed flats which will cost up to £1,690 a month to rent. The Mount Pleasant scheme alone could be worth up to £1bn.

Royal Mail has been criticised in the past for not collecting the full value of its property assets. A 2.3-acre Post Office site on Rathbone Place, just off Oxford Street, central London, which sold for £120m to Great Portland Estates in 2011, has been valued at £550m upon completion.

[gary1975]

So where does all these hundreds if millions go? Surely we the share holders should get a kickback and not just a proxy 50 quid dividend

[wandle]

So where does all these hundreds if millions go? Surely we the share holders should get a kickback and not just a proxy 50 quid dividend

Well, let's see...
Royal Mail is comprised of 1 billion shares, valuing the business at £3.3bn at the time of it's flotation in October 2013 (but which is now valued at £4.663bn, based on a closing share price on Wednesday of 466.3p).

If they sold Nine Elms for £662m, and that sum were distributed equally amongst shareholders via a special, one off, dividend, everyone would receive 66.2p for each and every share they hold. So, full-time posties holding 729 free shares would be entitled to a payout of a £482.60 from the sale of that site.

In practice, though, the proceeds of the sale should, arguably, be re-invested in the business, because if we want to retain Amazon as a customer, we need better scanners than the not-fit-for-purpose rubbish we are currently using. This would be a much wiser use of the money, as any business that does not keep pace with technology will lose out to rivals who can offer the likes of amazon the service they want.

In any case, even if a special dividend of 66.2p/share were to be paid out, the share price would fall the next day by around the same amount, because anyone buying the shares without entitlement to the special dividend would be disadvantaged and be buying into a business that has a balance sheet that is £662m lighter

[k979aaa]

So where does all these hundreds if millions go? Surely we the share holders should get a kickback and not just a proxy 50 quid dividend

Well, let's see...
Royal Mail is comprised of 1 billion shares, valuing the business at £3.3bn at the time of it's flotation in October 2013 (but which is now valued at £4.663bn, based on a closing share price on Wednesday of 466.3p).

If they sold Nine Elms for £662m, and that sum were distributed equally amongst shareholders via a special, one off, dividend, everyone would receive 66.2p for each and every share they hold. So, full-time posties holding 729 free shares would be entitled to a payout of a £482.60 from the sale of that site.

In practice, though, the proceeds of the sale should, arguably, be re-invested in the business, because if we want to retain Amazon as a customer, we need better scanners than the not-fit-for-purpose rubbish we are currently using. This would be a much wiser use of the money, as any business that does not keep pace with technology will lose out to rivals who can offer the likes of amazon the service they want.

In any case, even if a special dividend of 66.2p/share were to be paid out, the share price would fall the next day by around the same amount, because anyone buying the shares without entitlement to the special dividend would be disadvantaged and be buying into a business that has a balance sheet that is £662m lighter

And yet PDA batteries are not replaced elastic bands are as rare as rocking horse s**t and getting overtime for the hours you have worked is impossible! Wonder where all the money goes?