Network Rail sells railway arches to real estate firms for £1.5bn
Worried tenants told they will be protected by ‘charter’ but it lacks promises on rent rises
Network Rail has sold its railway arches to a pair of real estate investors as part of a £1.5bn deal and vowed that businesses working from the newly acquired spaces will be protected by a “tenants’ charter”.
Telereal Trillium and Blackstone Property Partners won the bidding for 5,200 properties, the majority of which are arches, the operator of Britain’s rail network said on Monday.
The sale has raised
fears among tenants, such as independent shops, restaurants and craft breweries, that the new owners may impose unaffordable rent hikes. Concerned tenants have united under the banner of the campaign group
Guardians of the Arches. The Guardian has approached the group for comment.
Network Rail said the £1.46bn proceeds from the sale would help it fund railway upgrades, bringing “major improvements for passengers and reducing the need for taxpayers to fund the railway”.
It said Telereal and Blackstone, which will hold equal ownership stakes, agreed to address tenants’ concerns by signing a charter guaranteeing them certain rights.
The charter includes promises to listen to tenants’ worries about rent reviews and engage with them in a timely fashion, but does not make any promises to avoid rent rises.
“We are aware that in recent years, increases in market rents have created financial pressures for some tenants,” the charter says.
It promises the owners will consider “new structures to provide financial or other support” to tenants struggling to pay their bills.
A further 1,800 properties were not included in the sale because Network Rail either needs to keep them to operate the railways or because they are part of the northern gateway redevelopment plan, under the auspices of Manchester city council.
Network Rail’s property estate, most of which is changing hands in the sale, brought in revenues of £304m last year, turning a profit of £81m.
But the company that oversees Britain’s rail infrastructure has been
looking to offload the majority of the estate to raise funds. The sites are being sold on a 150-year lease, with Network Rail retaining the freehold to ensure it still has right of access for the future operation of the railway.
The Network Rail chairman, Sir Peter Hendy, 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.”
David Biggs, the managing director of 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.”