Entire Network Rail Commercial Property portfolio for sale

[WatcherZero]

https://www.networkrailmediacentre.co.uk/news/network-rail-launches-commercial-asset-sale#

Network Rail launches commercial asset sale
Route:
National


Network Rail has today announced the sale of its commercial property business in England and Wales.

The majority of properties will be sold on a leasehold basis, reflecting that access to these properties will be required for the future operation of the railway.

Private bidders are being sought to purchase Network Rail’s commercial estate portfolio, which will create a significant injection of cash to the taxpayer-owned railway infrastructure company as it focuses investment on passenger benefits.

Network Rail has decided to sell the commercial estate business because it is a non-core property asset and is not essential for the running of the railway. This will allow the company to place even more focus on its core business of improving the passenger experience and running a safe, reliable and growing railway and help fund its upgrade plan.

Network Rail’s commercial estate is a profitable and successful asset portfolio. Most of the 5,500 properties in the portfolio up for sale in England and Wales – the majority of which are spaces in railway arches – will be sold as leasehold with Network Rail retaining the freeholds to ensure access rights continue unaffected. These protections mean the safe and efficient operation of the railway remains now and into the future, with no impact on the daily operation of the railway, its safety or on future upgrades.

The business is unique as the largest provider of small and medium-sized business space in the UK, and current tenants will transfer to the new buyer with their existing leases and notice periods unchanged. Considerable potential exists to develop unused spaces to allow local businesses to grow and jobs to be created.

Network Rail is now delivering almost a quarter of all infrastructure investment in the UK, spending £130m every single week. The money will contribute toward its overall investment in delivering mega projects, like the Thameslink Programme, the Great North Rail Project – which includes the Ordsall Chord, Liverpool Lime Street station upgrade, the Calder Valley lines upgrade and the Manchester to Blackpool upgrade - Crossrail, and the Waterloo and South West Upgrade. Passengers will see a transformation in services over the next 18 months with much needed capacity with new, more frequent and longer trains.

The sale of Network Rail’s commercial estate business will see a new owner invest more money into the commercial estate, bringing more businesses, jobs, commerce and better social environments.

Mark Carne, Network Rail’s chief executive said:

“This deal will bring more investment into the commercial estate for the benefit of the local communities and it will help fund a better railway. I hope to see areas around the railway positively transformed with new and refurbished shops, amenities, and extra facilities for local people and passengers.

“The sale will bring a major cash boost to help fund key projects across England and Wales as part of the Railway Upgrade Plan. Passengers are about to see a bigger, better railway, with more reliable, more frequent services, and upgraded stations and facilities as these huge projects finally come to a conclusion in the months ahead.”

The sale has been agreed across Network Rail and Government, and Network Rail is talking with existing tenants, staff and other stakeholders, who are being provided with information on the decision, impacts, and next steps.

ENDS

NOTES TO EDITOR:

• For bidder enquiries please contact Rothschild & Co who are handling the sale.

Call +44 (0)20 7280 5000 / [email protected]

• No properties in Scotland are being sold

Looks like governments stepped up its pressure to raise money, nevermind raising a few billion to help the overspend they are likely targeting making a serious dent in Network Rails debt. All 5,500 commercial properties outside Scotland up for sale (with Network Rail retaining the Freehold to guarantee maintenance access).

 

[OxtedSignaller]

It’s clear Network Rail needs to focus on maintenance and upgrade work. They should also transfer station management to the TOCs in my opinion...

 

[Clip]

. They should also transfer station management to the TOCs in my opinion...

No, they really shouldn't - they make some half decent money from managing the major stations through retail activities.

Also how does that work at a station with multiple TOCs? who gets the lead to manage them and take that lovely retail money?

 

[DarloRich]

sigh.

 

[nidave]

It’s clear Network Rail needs to focus on maintenance and upgrade work. They should also transfer station management to the TOCs in my opinion...

You don't seriously think the same people who organise the maintenance and upgrade work are the ones responsible for the commercial property???

Its a great source of regular income which is going to come back and bite us at some point in the future.

 

[SPADTrap]

It has been a while since a great government sell out though, I was beginning to wonder what could be next. Should have seen this coming!

 

[infobleep]

Who owns the buildings in Scotland?

 

[InOban]

It’s clear Network Rail needs to focus on maintenance and upgrade work. They should also transfer station management to the TOCs in my opinion...

NR only manage a small number of major stations, usually used by several TOCs. It would be inappropriate for one of them to be in charge.

 

[Llanigraham]

It’s clear Network Rail needs to focus on maintenance and upgrade work. They should also transfer station management to the TOCs in my opinion...

Interesting idea, but you provide no justification for it. Perhaps you would give us an explanation?
And to add to that, how would you split the management where a station was used by more than one operator?

 

[Gareth Marston]

You don't seriously think the same people who organise the maintenance and upgrade work are the ones responsible for the commercial property???

Its a great source of regular income which is going to come back and bite us at some point in the future.

The letter we got from NR says they're looking to sell the commercial estate as a package and will not sell to individual tenants or separate the business into packages.

I'm fully expecting it will be sold to hedge fund or pension fund who will then sell it on and then in turn sell it on again and then the rents will increase and increase to pay for the money borrowed to buy it and the whole thing will end up like the PubCos like Admiral Taverns and Punch who have bleed dry what were profitable business to pay off loans from the city.

 

[Domh245]

And to add to that, how would you split the management where a station was used by more than one operator?

There would seem to be some reasoning behind splitting such things, although I can't always see it. Crewe, Stoke and Stockport are all Virgin managed, although there are plenty of other services that use them (and provide a more frequenct service in some cases). Milton Keynes on the other hand is London Midland managed, even though VT provide a similar service level at Milton Kenyes to that of Stockport

 

[OxtedSignaller]

Interesting idea, but you provide no justification for it. Perhaps you would give us an explanation?
And to add to that, how would you split the management where a station was used by more than one operator?

You could argue that it would no doubt improve customer experience and mean that it’s better integrated with the retailing and operational activities carried out by the TOCs in that station meaning you’ve got one entity responsible and accountable for what happens in that station. In regards to the money generated by retail activities this can easily be adjusted by taking it off the operator subsidy or putting extra on the premium. We all know theres no way DfT is just going to give that money away...

Many stations are used by more than one operator Clapham Junction is an example used by London Overground, Southern and SWR who staff their own platforms respectively whilst SWR also manages the station as facility operator. You can divide it up depending on who the principal operator is or whatever factor such as if it’s better for customer experience give management to the Intercity operator. As an example Victoria and London Bridge managed by GTR (Southern & Thameslink), Waterloo to SWR etc

 

[Mojo]

Will this include non-retail premises at stations; for instance non-railway businesses that are located in station buildings on platforms but where the business is not connected with the railway (e.g. there is an upholsterers in the Victorian station building at Redland).

And to add to that, how would you split the management where a station was used by more than one operator?

Maybe to the SFO (Station Facility Operator - the Toc that is shown in the "This station is managed by ____" publicity).

 

[Baxenden Bank]

The letter we got from NR sells there looking to sell the commercial estate as a package and will not sell to individual tenants or separate the business into packages. I'm fully expecting it will be sold to hedgefund/pension fund who will then sell it on and then in turn sell it on again and then the rents will increase and increase to pay for the money borrowed to buy it and the whole thing will end up like the PubCo's like Admiral Taverns and Punch who have bleed dry what were profitable business to pay off loans from the city.

You forgot the bit about it all going off-shore so reduced, if any, revenue to the UK government beyond the initial sale receipt (at a reduced price as per Royal Mail) - like all the dole and tax offices! The irony of the tax-man chasing plumbers over cash-in-hand payments whilst working out of an off-shore owned office!

 

[Baxenden Bank]

Who owns the buildings in Scotland?

At a guess, the Scottish Government, or at least they have a say in the matter and they do not agree to the perceived benefit of flogging of such important assets.

 

[Old Hill Bank]

How long will the leases be or is this just selling off the family silver for short term gain!

 

[RJ21]

It'll be selling off the silver in usual short-termism fashion.

 

[Clip]

How long will the leases be or is this just selling off the family silver for short term gain!

What family silver? It was just about all built using private money and not much from the public purse whatsoever

 

[Clip]

It'll be selling off the silver in usual short-termism fashion.

You know they will still be the freeholder of all such property's don't you? So no selling off of this mythical 'family silver' you speak of

 

[Llanigraham]

Perhaps there are some of the Maybot's friends in the offing?

 

[Moonshot]

Absolutely the right thing to do.......NR need to get the debt down.

 

[DarloRich]

Absolutely the right thing to do.......NR need to get the debt down.

No. It isnt the right thing to do. It is short sighted and silly. This is a long term, profitable, successful and expanding revenue stream being taken away from the railway for a short term cash boost. I suspect the sale will be at undervalue and will turn out to have been a bad deal for the taxpayer once the NAO/PAC have a look at it a few years. It is almost like Royal Mail never happened! It is worth nothing that there is no guarantee that a single penny of this money will be returned to the railway or that it will pay down any of the existing debt held by NR and backed by the government.

Lets not forget that the money raised by this property portfolio is already being returned to the railway and invested in the infrastructure. It wont be in future. Who will make up that shortfall?

 

[Moonshot]

No. It isnt the right thing to do. It is short sighted and silly. This is a long term, profitable, successful and expanding revenue stream being taken away from the railway for a short term cash boost. I suspect the sale will be at undervalue and will turn out to have been a bad deal for the taxpayer once the NAO/PAC have a look at it a few years. It is almost like Royal Mail never happened! It is worth nothing that there is no guarantee that a single penny of this money will be returned to the railway or that it will pay down any of the existing debt held by NR and backed by the government.

Lets not forget that the money raised by this property portfolio is already being returned to the railway and invested in the infrastructure. It wont be in future. Who will make up that shortfall?

I ll agree to disagree with you......but in any event the portfolio is up for sale. Best of luck to whoever inherits it.....lets hope they can fill all those empty workshops under arches.

 

[route:oxford]

Who owns the buildings in Scotland?

It may well be the case that it's being undertaken in two tranches - simply because property law is different in Scotland anyway.

For the stations, there are three key owners aren't they?

Network Rail
Scottish Government (Prestwick Airport Station)
Edinburgh Park (Edinburgh Park)

 

[pdeaves]

Scottish Government (Prestwick Airport Station)
Edinburgh Park (Edinburgh Park)

Do you have any reference for the non-NR ownership, please? (Not disbelieving you, just like to trace back to source). Certainly the Prestwick Airport SFO (station facility operator) is the airport company.

 

[cf111]

It may well be the case that it's being undertaken in two tranches - simply because property law is different in Scotland anyway.

For the stations, there are three key owners aren't they?

Network Rail
Scottish Government (Prestwick Airport Station)
Edinburgh Park (Edinburgh Park)

Edinburgh Park is owned by Network Rail and managed by ScotRail unless it's been sold off since it's been built.

 

[alistairlees]

NR only manage a small number of major stations, usually used by several TOCs. It would be inappropriate for one of them to be in charge.

This is not a sustainable argument. Stations like York and Newcastle manage just fine being managed by one TOC, despite being served by many.

Of the 18 stations that Network Rail manages 4 are 100% for one operator. Of the remaining 14, it's pretty obvious who should be managing 10 (Reading, Bristol TM, Paddington - all GWR; Victoria and London Bridge - both GTR; Kings Cross - VTEC; Euston and Man P - VT; and Edinburgh and Glasgow C - both ScotRail) given that one operator dominates. For three (Birmingham NS, Leeds, Liverpool LS) it's less obvious. And there's one (St Pancras) that NR doesn't own anyway.

It would make far more sense to have a TOC (or maybe "National Rail") sign at the entrance, rather than a sign up at the entrance saying "Managed by Network Rail". This makes no sense to customers, they don't buy anything from Network Rail.

Network Rail should be invisible, not trying to have a customer presence.

 

[EM2]

And there's one (St Pancras) that NR doesn't own anyway.

Along with Ebbsfleet International and Stratford International.

 

[deltic]

Absolutely the right thing to do.......NR need to get the debt down.

If the FT is right the property which is slated to be worth £1bn generates £76m revenue. It depends on the length of leases being sold but as its unlikely that Network Rail is paying anywhere near 7.6% interest on its debt then it seems to make little sense to sell the portfolio.

 

[daodao]

Of the 18 stations that Network Rail manages 4 are 100% for one operator. Of the remaining 14, it's pretty obvious who should be managing 10 (Reading, Bristol TM, Paddington - all GWR; Victoria and London Bridge - both GTR; Kings Cross - VTEC; Euston and Man P - VT; and Edinburgh and Glasgow C - both ScotRail) given that one operator dominates. For three (Birmingham NS, Leeds, Liverpool LS) it's less obvious. And there's one (St Pancras) that NR doesn't own anyway.

M/c Picc has no predominant operator, but it certainly isn't VTWC, with only 3 tph. Leeds, Liverpool LS and M/c Picc should be probably be NT, and New St should probably be LM, as the main local operators.