Royal Mail steps closer to selling lucrative Central London sites

Royal Mail is making progress in the sell-off of key London sites, which caused some controversy during the company’s privatisation last year. The prime London locations formed part of the evidence critics suggested for the company being undervalued by ministers when the UK government made around £2bn from the flotation on the London Stock Exchange.

Now Royal Mail has received an important planning approval from London Mayor Boris Johnson for parts of the Mount Pleasant mail centre site to be turned into luxury apartments.

And, the company has just exchange contracts on the sale of its former Paddington mail centre at London Street, in a deal that will bring it £111m cash.

Mount Pleasant

The London Mayor approved Royal Mail’s Mount Pleasant planning proposal at the start of this month. Royal Mail has said parts of the site are “surplus to our operational requirements” as mail volumes decline.

The project will see parts of the Central London site turned into 681 new homes, 163 of which will be classed as “affordable” to placate planners concerned that ordinary workers cannot afford to live in London any more. The original proposed number of affordable homes in the project was doubled to secure the favour of the Mayor.

Martin Gafsen, the Royal Mail Group property director said the project was a “great opportunity” to contribute to regeneration of the area.

“The next step for Royal Mail is to complete the design of the pre-development works at Mount Pleasant, which are vital to separate our mail operations from the planned residential areas,” he said. “Royal Mail will continue to work with the Greater London Authority, local authorities, businesses and the community as we progress with our development.”

Royal Mail said once its Mount Pleasant site shrinks, its mail operations there will continue, processing mail posted in London for delivery in the City and West End areas.

Paddington

Meanwhile, Royal Mail looks like selling its former London Street mail centre next to Paddington Station to Great Western Developments Limited for £111m.

Royal Mail vacated the site in 2008, relocating operations to Mount Pleasant.

The buyer is a joint venture between Hotel Properties Limited, a listed Singapore-based hotels and real estate company, and Anchorage View Pte Limited, a Singapore-based construction company. The joint venture is 70% owned by Hotel Properties Ltd, 30% by Anchorage View.

Royal Mail, which received planning permission in November 2012 for the site to be developed, said the purchaser intends to seek further planning approval that would add £20m to the price tag if the process is successful.

If the purchaser sells the site within a year, Royal Mail would receive 50% of any additional sale value beyond the £111m, and 25% if it is sold during the second year.

Gafsen said: “Royal Mail continues to seek to optimise value from sites no longer required for operational use and will consider all options as to the manner in which this is achieved.”