La Poste considering 1.75M property sell-off after legislation change

La Poste may sell up 1.75m m2 of property following a change in legislation which gives the state-owned postal operator greater powers to dispose of its buildings. The company owns around 5m m2 of property across France, with an estimated total value of Û3.5bn.

Up until the end of 2002, La Poste was not allowed to dispose of buildings that were still required for operational purposes. However, this changed with a new law, La Loi Murcef, which has paved the way to the outsourcing of property activities. In most cases, property disposals will still have to be approved in advance by the government, its main concern being that sales do not damage the provision of postal services.

La Poste’s structure was created in 1991 when the French postal services were converted from a government department into a state-owned company. Its property interests are managed by a property department headed by Jacques Matha and employing 1,500 staff.

In total, La Poste owns 5m m2 in 5,000 buildings and rents 3m m2 in 12,000 buildings. Characteristically, the rented properties are public post offices in smaller towns, often owned by the local authority. Properties owned by La Poste include larger post offices, sorting offices, homes, sports facilities and social centres. Around half of the properties it owns are more than 40 years old.

A principal objective of any sales would be to raise money for investment in La Poste’s core business areas, especially through sale and leaseback deals. La Poste needs cash to develop and diversify its activities in France, and to continue its strategy of acquiring postal operations in other European countries, as the sector liberalises and adapts to the development of electronic communications. However, the company has yet to adopt a definite strategy for property disposals.

At the same time, the government appears reluctant to make further large investments in La Poste. Against this background, selling off properties no longer required for its core businesses, and selling and leasing back properties still required for operational purposes, could be a fruitful avenue to raise cash.

Matha calculates that around 235 of the largest properties owned by La Poste might be suitable for sale and leaseback deals. Of these, 30% are in the Paris region. The buildings that may be sold range in size from 3,000m2 to 40,000m2, notable examples being the 40,000m2

post office building in Bordeaux and a 28,000m2 building near the Louvre in central Paris. La Poste has already sold a 15-building portfolio to Awon Group for Û100m, but this was carried out under the provisions of the old law governing disposals by the state-owned company.

The company is applying for government permission to carry out three sales under the Murcef law, as a way of testing the procedures and the appetite of investors. Two of the buildings earmarked for possible sale are postal buildings in rural areas, while the third is a large post office near the Gare St Lazare in the centre of Paris.

“We believe that many of our buildings could be attractive to both French and international investors – particularly those with a representative in France – because they include city-centre offices and logistics centres which have good access to transport routes,” says Matha. “Also, in the case of sale and leaseback transactions, investors obtain the assurance of having a top-class tenant already in place.”