SingPost puts 10 HDB shophouses up for sale and leaseback

Plans are for a sale and leaseback model to maintain current post office services, said SingPost. ST PHOTO: TARYN NG
SINGAPORE - Singapore Post has put up for sale 10 Housing Board (HDB) shophouses currently occupied by its post office outlets across Singapore, with the aim of leasing them back.
A spokesperson said in response to queries from The Straits Times: 'SingPost is initiating the divestment of 10 HDB shophouses across Singapore, in keeping with the group's plan to divest non-core assets.
'Plans are for a sale and leaseback model to maintain current post office services.'
In a sale and leaseback model, an asset is sold to someone else, but then leased back to the initial owner for a certain duration.
This occurs especially when the asset can be sold at a higher value than its initial purchase price. It can also allow the seller to raise capital from the proceeds of the sale, without interrupting its business operations.
SingPost said in May that its strategic review and restructuring are ongoing.
Its group chief financial officer Isaac Mah told the media at a briefing then that the company is engaging the Government to develop a more sustainable operating model, as the post office network is not profitable.
SingPost has 42 post offices, of which it owns 21.
As part of its efforts to restructure, it also sold its Australian logistics business, Freight Management Holdings (FMH). SingPost completed the sale of FMH for A$1.02 billion (S$853 million) in March.
The group has also taken steps to sharpen its focus on its core postal and logistics business, including streamlining its operations to right-size the cost base, it said.
In 2024, SingPost said that it is considering selling its flagship retail-commercial mixed development SingPost Centre at Paya Lebar Central, which it also identified as a non-core asset.
The SingPost Centre was valued at $1.1 billion as at September 2023.
Maybank analyst Jarick Seet said SingPost's sale and leaseback bid for the 10 HDB shophouses is 'not a new thing'.
'In their announcements in 2024, SingPost has said that it wants to monetise its assets and reduce postal centres because there has been a drop in usage,' he told ST.
In 2024, it was reported that SingPost closed 12 post offices, or one out of five branches, in the last two years. This was due to declining mail volumes, as people turn to electronic means instead.
It also said that letter mail and printed paper volumes in Singapore fell 8.1 per cent on the year to 87.8 million items, from 95.6 million items.
But Mr Seet noted that SingPost may also not be allowed to close so many post offices rapidly as people in the various districts still need to use them, which makes the sale and leaseback model a compromise as it can still free up capital without disrupting services.
The gains from the sales could also be used to revitalise SingPost's local business, and ultimately be returned to shareholders, he said.
SingPost is already investing $30 million in a new automation system to expand processing capacity for small parcels at the regional e-commerce logistics hub facility.
In May, it also announced a special dividend of nine cents per share after it booked a net exceptional gain of $222.2 million, largely from the divestment of its Australian business.
Mr Seet reiterated his call to 'buy' the stock.
'SingPost owns lots of assets that hold intrinsic value like the HDB shophouses, which are now worth much more than what they were bought for. The same goes for SingPost Centre,' he said.
'If we add the value of all these assets up, it is much more than the market cap of the company today. So SingPost is undervalued, but it depends on the company to unlock value this way.'
SingPost shares closed at 57 cents on June 19, up nearly 0.9 per cent from its previous close of 56.5 cents.
Sue-Ann Tan is a business correspondent at The Straits Times covering capital markets and sustainable finance.
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