Network Rail sells railway arches for €1.5bn

Network Rail has agreed to sell its commercial property business to Telereal Trillium and Blackstone for almost ?1.5bn.
The move will see around 5,200 properties, the majority of which are converted railway arches, come under the ownership of the London-based and US buyout giants.
Money from the deal will be used to upgrade the rail network reducing the need for taxpayers to fund improvements.Telereal and Blackstone will hold equal ownership stakes and intend to be long-term owners of the estate. The commercial estate is sold on a leasehold basis.Amid concerns that existing occupants - such as bars, bakeries, breweries, garages and hairdressers - could see a hike in rents, Network Rail and the investment giants stressed they would adopt a "tenants first" approach and would "engage with all tenants and communities in an open and honest manner".Sir Peter Hendy, Network Rail chairman, said: "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."Rent from the portfolio made up the bulk of Network Rail's total rental income of €293m in 2017.The new owners said that they will invest in several hundred currently disused arches so that they can provide space for more local businesses.
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.
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"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."
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