Return to sender: Australia Post to sell 1 Martin Place

Writer: Edward Boyd
Published Date: May 11, 2016
Source: The Daily Telegraph

AUSTRALIA Post is considering selling its landmark GPO buildings in order to inject much-needed cash into the struggling business.

Under the spotlight in the hunt for new revenue streams is the organisation’s lucrative $1.7 billion property portfolio, with a deal to sell off a stake in the prized GPOs estimated to be worth $300 million.

The postal service reported an after tax loss of $222 million last year, driven by a 30.6 per cent decline in letter volumes since 2007.

Chief executive Ahmed Fahour has already hiked the price of stamps and now has his eyes on the seven GPO buildings located in the capital cities to boost revenue.

The freehold of six of the properties and the leasehold of the Canberra GPO would be transferred into an unlisted property trust managed by Sydney based Eureka Funds Management under one deal being considered. An investor would then be able to buy a 60 per cent stake in this trust for about $300 million, with Australia Post retaining 40 per cent ownership.

Two of the flagship properties forming part of the trust include the Sydney GPO at 1 Martin Place and the Melbourne GPO at 350 Bourke Street. The trust is predicted to deliver $16.5 million in net income in 2017, with an average lease expiry of 32 years.

In a typical unlisted property trust, the rental income is paid to the investors for the duration of the leases. Once these leases expire then the properties are sold to the highest bidder.

BIS Shrapnel chief economist Frank Gelber said the trust should appeal to investors and generate necessary cash flow for Australia Post. “I’m not sure Australia Post has a lot of choice, they need the cash flow and this is a way of generating that,” he said.

Mr Fahour has hiked the stamp price to $1 and introduced “two-speed” letter delivery, with regular post two days slower than a more expensive priority service.

Mr Fahour said yesterday no decision had been made on the sale of the GPO buildings, adding the process was only in the market evaluation stage. “There is no sale going on right now,” he said.

Mr Fahour said the property portfolio is regularly reviewed to ensure the assets provided maximum returns. “We always want to make sure the money in that real estate portfolio is being used to support the core business of who we are and what we are,” he said.


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