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Royal Mail to sell London property for 111 million pounds

LONDON (Reuters) - Britain's Royal Mail is selling one of its old central London mail centres to a hotel and real estate company for 111 million pounds in cash.

The postal operator, sold off in October last year to much controversy in Britain's biggest privatisation in decades, said on Tuesday it would use the net cash proceeds from the deal for general corporate purposes.

The location, a one-acre site near Paddington railway station in West London, is part of a portfolio Royal Mail says contains surplus property it intends to sell off. It was vacated in 2008.

It will be sold to Great Western Developments Limited, a listed Singaporean hotels and real estate company owned by Hotel Properties Limited which holds a 70 percent share with Anchorage View Pte Limited owning the remaining 30 percent.

The deal is expected to conclude on Dec. 8.

If Great Western Developments sells the property within a year of purchase Royal Mail will be paid 50 percent of net sale proceeds above 111 million pounds, and 25 percent if the sale is within two years of the deal.

Royal Mail will also be due another 20 million pounds if the purchaser is successful in securing further planning permission, the firm said.

Royal Mail was sold off last year for 2 billion pounds in a controversial deal.

Britain sold a 60 percent stake at 330 pence per share after a politically charged debate which pitted the coalition government against Royal Mail's heavily unionised workforce and the opposition Labour party.

The stock quickly rose by as much as 87 percent, prompting criticism that the price had been set too low and the government had short-changed the taxpayer.

Concerns over increased competition in parcels and the impact of a rival UK mail delivery service have seen the shares come off again since.

They rose 2 percent on the news to 401p by 1350 GMT (2.50 p.m. BST).

(Reporting By Ahmed Aboulenein; Editing by Neil Maidment)