Disposal of surplus Royal Mail property agreed
Royal Mail is pleased to announce a deal with Land Securities Trillium (LST), a Land Securities Group business, for the disposal of a portfolio of 285 surplus or partially-occupied premises. The deal, which followed a robust competitive process, is a key element in Royal Mail’s drive to increase efficiency and compete effectively in the UK postal market.
Some 108 of the properties are surplus to Royal Mail’s operations and LST will utilise its skills to refurbish these and seek new occupiers. Of the remaining 177 properties only part of the space is being used for operations and these will be leased back to Royal Mail for 15 years at a competitive rent. The properties comprise a total of 265K sq.m. in locations across the UK. This deal will have no impact on Royal Mail or Post Office® operations.
The net proceeds for the portfolio of assets and leasehold liabilities were in excess of £70 million. This represents an excellent deal for Royal Mail that takes advantage of the strength of the UK real estate market to realise value whilst streamlining its operations by removing surplus space from the portfolio with a significant annual saving in costs.
Against strong competition Land Securities Trillium have secured a large portfolio with Royal Mail’s strong covenant over a portion of this portfolio. With Land Securities Trillium management expertise this should provide them with significant future opportunities.
Martin Gafsen, Royal Mail’s Property Director, said: “After a robust competitive process, we are delighted to have reached agreement with Land Securities Trillium to take ownership of the premises and space that Royal Mail no longer needs for its operations. This is a good commercial deal for Royal Mail and it is a key element in our drive to increase efficiency to ensure we compete effectively in the UK postal market, which is now open to full competition. There will be no impact on the high level of target-beating service that Royal Mail is delivering to customers.”
He continued: “As part of the transfer, we will lease back only the space we need. This represents just 3% of our total operating space, so we will continue to own the vast bulk of the sites we use in our day-to-day operations.”
Ian Ellis, Chief Executive, Land Securities Trillium, added: “We are delighted to be entering into this partnership with Royal Mail, which we hope will be the start of a long and mutually beneficial relationship. We have released capital for Royal Mail while providing them with a flexible operational structure and relieving them of the burden of surplus space.”
Issued by Royal Mail
148 Old Street
Notes to Editors:
• Almost all of the properties in the deal comprise redundant or partially-used letters operational buildings. There are also administration buildings, which are no longer required. All the buildings are located in a large variety of sites in England, Scotland and Wales. All have become surplus as a result of the changes to Royal Mail operations.
• Royal Mail has around 2,700 properties in its estate.