Hotel Properties in joint venture to buy former Royal Mail Delivery Offices in London for £111m

HOTEL Properties on Wednesday said it has formed a 70:30 joint venture (JV) with Anchorage View Pte Ltd to buy a freehold property in Paddington, central London, for £111 million (S$225 million).

The JV will pay the consideration in two tranches. It has paid £11.1 million (or 10 per cent of the purchase price) on signing the sale-and-purchase agreement. It will follow up with the remaining £99.9 million when the purchase of the property is completed - expected to be in December 2014.

The purchase price took into consideration the property's current market valuation and redevelopment potential.

The JV is assessing the property's potential for residential and retail re-development, it said.

A further planning overage payment of £20 million will be paid to the vendor, Royal Mail Group (RMG), a postal service company, when the planning permission to develop the property has been granted.

The property, formerly Royal Mail Delivery Offices, is located immediately to the east of Paddington Station, a principal hub of the London underground network.

"Public transport services in this area will be further enhanced following the completion of the Crossrail project which is scheduled to start in 2018," the JV said.

Currently, the site is occupied by three interconnected buildings which were associated with the RMG mail centre, sorting office and post office counter. The buildings on the site are now vacant as the vendor has relocated its operations.

The freehold site has a total land area of 0.45 hectares.

Hotel Properties will fund its share of the acquisition using third party loan financing and internal resources.

Anchorage View Pte Ltd is owned by Ong Beng Seng, the managing director and deemed controlling shareholder of Hotel Properties, and David Fu Kuo Chen, a non-executive director and deemed substantial shareholder of Hotel Properties.