Source : The Business Times, February 6, 2008
It's said to have appointed property consultant to explore its options
Singapore Post's landmark headquarters next to Paya Lebar MRT station may be on the verge of unlocking some riches.
SingPost said it is 'exploring opportunities' for Singapore Post Centre, which has about one million sq ft of net lettable area. Valued at $1,000 to $1,300 per square foot of existing net lettable area, this could translate to a total of $1 billion to $1.3 billion, assuming a full-commercial use, analysts estimate. The 14-storey building is on a 352,389 sq ft site with a remaining lease of about 73 years.
In its third quarter results statement last month SingPost said that it is 'continuing to review its non- core businesses, and is also exploring opportunities in respect of SingPost Centre, including unlocking the value of SingPost Centre'.
When contacted for details, SingPost's spokeswoman would only say that the group was at the 'preliminary stage of exploring opportunities in respect of SingPost Centre' and declined to elaborate.
But industry observers say SingPost held a 'beauty parade' late last year to select a property consultant to advise it on exploring its options for the property. The exercise is believed to have culminated in an appointment being made.
Market watchers say that among the factors that will determine the price that any potential buyer will be prepared to pay for SingPost Centre is whether SingPost will lease back the space it currently occupies in the building and the rental it is prepared to pay.
SingPost currently occupies about half of the property's one million sq ft total 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 office and retail tenants including HSBC Insurance, NorthWest Airlines, Symantec Corporation, Prudential (whose lease expires this year), This Fashion, Barang Barang, NTUC FairPrice and Kopitiam.
Although the site is zoned for commercial use with a 4.2 plot ratio (ratio of maximum potential gross floor area to land area) under Master Plan 2003, the current approved use for the site is understood to be 60 per cent industrial and 40 per cent commercial.
SingPost will probably be advised to make an application to convert the approved use to full commercial, to optimise the site's use under the current Master Plan. This would also be in keeping with the government's intention, announced last year, to transform the area around Paya Lebar MRT Station into a new business hub.
Some property consultants have since commented that the location will be ideal for cost-conscious office tenants, and could serve as backroom offices for banks, given its proximity to the city.
In exchange for allowing a conversion of the site's approved use a differential premium will have to be paid to the state.
SingPost Centre's existing gross floor area of 1.48 million sq ft has already tapped the 4.2 maximum plot ratio allowed under Master Plan 2003.
Property analysts reckon that office and retail space on the SingPost Centre site could be worth around $1,000 to $1,300 psf of net lettable area, with the higher end of this range ascribed to retail space.
SingPost Centre was completed in two phases - the industrial component in July 1998 and the commercial space in May 1999.
The 14-storey building, which also has three basement levels (mostly for retail), has a total of 587 car park lots.
SingPost has been selling some of its smaller properties. For the financial year ended March 31, 2007, it divested two HDB shop units - one at Marine Parade sold for $5.7 million, and the other at Hougang South divested for $2.2 million. The Marine Parade property was the group's former post office branch; SingPost has since relocated to a nearby leased property. The Hougang property was not used as a post office but was instead leased to a supermarket operator.
In the current financial year, the group has divested its former post office branch at Clementi Central and relocated its operations to another location nearby and sold a property at Boon Lay, which it had leased to a third party.
Several years ago, there had been market speculation that SingPost could spin off its post office properties into a real estate investment trust (and lease back the premises from the Reit). But that does not seem to be the way SingPost is headed currently in optimising its property portfolio. The group is still left with over a dozen properties, including two in the prime districts - Tanglin Post Office and Killiney Road Post Office.
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