Royal Mail share price: Company sells former mail centre site for £111 million

on Oct 14, 2014
Updated: Oct 21, 2019
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iNVEZZ.com, Tuesday, October 14: Royal Mail Plc (LON:RMG) is selling a former mail centre site in London in a £111-million all-cash transaction.

In a statement to the London Stock Exchange today, the postal service firm announced that contracts had been exchanged for the sale of its former Paddington mail centre site at London Street, W2 to Great Western Developments, a subsidiary of Singaporean hotels and real estate company Hotel Properties Limited. According to the statement, the deal is expected to be completed on December 8.

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In today’s trading, Royal Mail shares were up 1.1 percent at 398p. The company’s stock has fallen 30.2 percent since the start of the year.
**Disposal**
Royal Mail said that the site, adjacent to Paddington main line railway station in central West London, was part of its “London Development Portfolio”, which comprises surplus properties which the company has identified for potential sale or redevelopment in London. The company vacated the Paddington site in 2008 and moved operations to Mount Pleasant.

Under the terms of the deal, Royal Mail would receive an additional £20 million should planning permission be granted to the purchaser for a mixed-use scheme on the site. Also, the company would receive 50 percent of net sale proceeds above the £111 million purchase price if the site is sold within the first year, or 25 percent if sold in the second year.

Royal mail noted that it planned to use the net cash proceeds from the sale of around £108 million for general corporate purposes.
Royal Mail property director Martin Gafsen commented: “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.”

**Analysts on Royal Mail**
According to the Financial Times, the 16 analysts offering 12 month price targets for Royal Mail have a median target of 457.50p, with a high estimate of 700.00p and a low estimate of 360.00p. As of October 10, 2014, the consensus forecast amongst 25 polled investment analysts covering Royal Mail suggests that investors should hold their position in the company. The same consensus estimate has been maintained since the sentiment of investment analysts deteriorated on November 20, 2013, the FT notes.
**As of 14:47 BST buy Royal Mail shares at 401.40 pence**
**As of 14:47 BST sell Royal Mail shares at 401.10 pence**

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