BY Fraser Tennant
In a £1.5bn deal that will help fund railway upgrade plans, bring major improvements for passengers and reduce funding burden on taxpayers, Network Rail has agreed to sell its commercial estate portfolio to property company Telereal Trillium and investment firm Blackstone Property Partners.
Upon completion of the transaction, Telereal and Blackstone will hold equal ownership stakes and intend to be long-term owners of the estate. Both parties have adopted a ‘tenants first’ approach, cemented in a tenants’ charter, which offers a commitment to engage with all tenants and communities in an open and honest manner.
Network Rail launched the sale of its commercial estate in November 2017. The portfolio consists of approximately 5200 properties, the majority of which are converted railway arches. The sites are being sold on a leasehold basis, with Network Rail retaining access rights for the future operation of the railway.
Proceeds from the sale will help fund the railway upgrade plan, which is bringing 170,000 seats into major cities, 6400 extra train services and 5500 new train carriages – a 30 percent increase in capacity.
“This deal is great news,” said Sir Peter Hendy, chairman of Network Rail. “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.”
Both Telereal and Blackstone 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 arches portfolio is a unique and vital part of the UK economy,” said Graham Edwards, co-founder and chairman of Telereal. “We are tremendously excited by the prospect of working with its entrepreneurial tenant base.”
James Seppala, head of European Real Estate at Blackstone, added: “The portfolio is unique in the role that it plays in stimulating economic activity, growth and prosperity, in particular among SMEs and local communities.”
Mr Hendy concluded: “This has been a very thorough, detailed and complex process and we are pleased we are now in a position to announce Telereal Trillium and Blackstone Property Partners as the new owners of the commercial estate.”