Network Rail has announced that they have agreed on the terms with Telereal Trillium and Blackstone Property Partners for the sale of its commercial estate portfolio.
Proceeds from the £1.46 billion sale will help to fund the Railway Upgrade Plan – this will bring major improvements to rail passengers around the UK.
Telereal and Blackstone will hold equal ownership and intend to be long-term owners of the estate.
Both companies have long and successful track records of operating large commercial estates across the UK. Telereal will oversee the day-to-day property management of the portfolio.
The portfolio is made up of around 5,200 properties, the majority of which are converted railway arches. Network Rail are retaining access rights for the future operation of the railway.
What did the officials say?
Sir Peter Hendy CBE, Network Rail chair, said:
“This has been a very thorough, detailed and complex process and we are pleased we're now in a position to announce Telereal Trillium and Blackstone Property Partners as the new owners of the commercial estate.
“This deal is great news – for tenants it will mean significant commitment and investment, and for passengers and taxpayers it will mean massive, essential improvements without an extra burden on the public purse.”
David Biggs, managing director, Network Rail Property, said:
“We are proud to have fostered so many small, independent, diverse businesses and communities across the country and we are confident that these will continue to thrive under the new owners.
“Ultimately our role is to run, improve and grow the railway, and managing these properties isn't essential to that. The new owners will invest in and grow the estate, and we can focus on our core business of running the railway.”
Graham Edwards, co-founder and chairman of Telereal, said:
“The arches portfolio is a unique and vital part of the UK economy. We are tremendously excited by the prospect of working with its entrepreneurial tenant base – made up of car mechanics, bakeries, micro-breweries, restaurants, and just about every type of business you can think of. These tenants are a vibrant part of many local economies and communities.
“As a long-standing real estate investor in the United Kingdom, we and our partner Blackstone believe that our ownership of the portfolio will provide the supportive environment in which these businesses can flourish on a long-term basis. For example, our business plan anticipates investing in several hundred currently disused arches so that they can provide space for more local businesses.
“With our permanent capital structures, we will be investing in the portfolio for many years. We believe that the long term success of this portfolio rests on strong relationships with our tenants, as well as with local communities and local government. We intend to remain particularly sensitive to the small businesses that have been long-term tenants of the Network Rail estate, and look forward to a long term partnership with Network Rail.”
James Seppala, head of European Real Estate at Blackstone, said:
“We are honoured to have been chosen as the new owners of Network Rail's commercial estate. The portfolio is unique in its character and function, and we are excited by the tremendous opportunity for us to contribute to the continued revitalisation of the railway arches in the UK, always recognising the role that they play in stimulating economic activity, growth and prosperity, in particular amongst SMEs and local communities.”
What did the officials say?
Alan Penlington, South Western Railway's Customer Experience Director said:
“More and more people are working from home these days, and this new Carnet gives them – and those who work part-time, a tremendous amount of flexibility while also offering great value for money with a 5% discount.”
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I think its a good idea to open restaurants, cafes, clothes shops and other retail purposes at railway arches at cities and towns in the UK where local businesses can thrive with the help of the community as well as from local authorities, councils and Network Rail looking after the arches where they will maintain the railway arches for years and decades to come.