InvestIdeas

SingPost Plans Sale Of Headquarters For $850m

Singapore Post (SingPost) has reportedly put its 14-storey landmark headquarters building next to Paya Lebar MRT Station for sale at around $850m based on the existing use of Singapore Post Centre.

SingPost is expected to lease back the space it currently occupies - which is roughly half the building’s 1m sq ft net lettable area - for both its corporate office and operations, including the mail processing centre.

The rest of the property is leased to a mix of retail and office tenants, including NTUC FairPrice, Kopitiam, Barang Barang, This Fashion, HSBC Insurance, Northwest Airlines & Symantec Corporation.

I'll seriously think abt buying the stock that acquires the SingPost building. That location is a gem.
Now gonna add the tender of that site into my radar list

Not vested yet ..... previously a shareholder but hv since sold it off for a very tidy profit .......

10 Jul 2008 16:57 CST DJ MARKET TALK:Not Much Value From SingPost's HQ Sale - Analysts

0857 GMT [Dow Jones] Singapore Post's (S08.SG) plan to sell its HQ building unlikely to create much value for shareholders as benefits likely to be partly offset by loss of rental income and rental expenses incurred in leasing back property, analysts say. Postal group has engaged marketing agent to assess interest in building. UOB KayHian tips special dividend payout if sale proceeds, but notes financial impact after sale would be lower rental income, rise in rental expenses; "it seems the value created by the sale is not as high as the cash amount indicated."

Company hasn't set value on building, but Business Times reports sale price may be S$850 million, which translates to S$0.44/share. UBS tips any dividend payout to be less than S$0.15/share, noting uncertainty of liberalization in postal services sector, management's intention to acquire synergistic businesses. Stock +1.0% at S$1.04.

Likely hurdle at 20-day moving average around S$1.07.(FKH)

SingPost issued a clarification that the sale is only in an exploratory stage. A marketing agent has been appointed to source indicative market interest via an Expression of Interest. So gonna track for further development.

probably sell to a REIT and lease back?

I am not familiar with REIT. Is it true that assets in REIT are revalue every year?

Whereas a building own by the company would have been depreciated over the years.

CapitaLand's accounting policy:

Investment properties are initially recognized at cost, including transaction costs, and subsequently at fair value with any change therein recognized in the income statement. The fair value is performed once every 6 months based on internal valuation or independent professional valuation. Independent professional valuation is obtained at least once every 3 years.

Answer : It depends

It sounds like SingPost management are playing around with several variations on whether to sell the building outright, retain a stake in the redevelopment or some other variation on the theme. Regardless, it looks more like a 2009 happening rather than 2H08.

Possibly right. It could ask for an equity stake in exchange for the building. Leaseback is not a good option in the long term.

Q1 revenue grew 4.6%; net profit rose 2.9%

SingPost Group achieved a 4.6% growth in revenue from S$115.5 million to S$120.9 million in the first quarter of FY2008/09 on the back of improved performances by its three business segments.

Mail business recorded a 2.4% growth in revenue to S$93.6 million on higher mail traffic, while Logistics revenue increased 11.8% to S$18.0 million, as a result of growth in Speedpost traffic, vPOST shopping and shipping transactions and warehousing, fulfilment and distribution services. Growth in retail products, agency and financial services revenue contributed to the 17.6% increase in Retail revenue to S$16.5 million.

The Group’s rental and property related income was up 34.9% to S$7.2 million, mainly due to higher rental rates at Singapore Post Centre and an increase in lettable space. Miscellaneous income was lower by 34.1% at S$1.4 million compared to S$2.1 million in the same quarter last year, which included a one-off gain of S$1.9 million from the disposal of a property.

The Group continued to focus on cost management in the face of inflationary pressures on operating costs. Total expenses rose by a slower 3.4% compared to the past few quarters.

For the first quarter of FY2008/09, net profit grew 2.9% from S$38.4 million to S$39.5 million. Excluding one-off items, the Group posted underlying net profit growth of 11.6% to S$38.9 million.

Mr Wilson Tan, Group CEO of SingPost, said, “I am pleased to report on a healthy set of results for the first quarter, with growth registered by all business lines. The Group’s operating expenses showed a slower increase in the first quarter and we remain watchful and will continue to focus efforts on productivity and processes to ensure sustainable cost management.”

As with most companies, the uncertainties in the global economy following the developments in the US economy will have an impact on the business outlook in Singapore. In addition, there will be continuing inflationary pressures on operating costs.

The operating environment also remains challenging with the liberalisation of the basic mail services market. However, the Group has in place strategies to grow the business, and it will continue to press on with its pursuit for growth.

While the liberalisation of the basic services market and entry of new players is expected to result in margin pressure, the Group believes that it is positioned to address the challenges. It remains focused on growing its core business of Mail and Logistics, and leveraging its retail and distribution network to offer higher value products and services to customers. As part of its growth strategy, the Group will explore acquisition opportunities as and when they arise.

The Group will continue to explore opportunities in unlocking the value of Singapore Post Centre. In exploring its options, the Group has appointed a marketing agent to help assess the level of market interest through an Expression of Interest (EOI).

Interim dividend of 1.25 cents per share
The Group’s cash flow generation remained robust. Net cash inflow from operating activities amounted to S$51.8 million, compared to S$49.4 million in the same quarter last year.
SingPost’s Board of Directors has declared an interim quarterly dividend of 1.25 cents per ordinary share (tax exempt one-tier), payable on 29 August 2008.

ishak, can I suggest that when you're replying to posts, to avoid removing the counter name from the subject? I personally have no problems with changing the subject, as it helps offer some info at first glance, but when the counter info is removed, then folks need to look further to find out what counter you're talking about (for those looking at the "Last post" screen in the forum index)