Network Rail Property is eyeing up further development partnerships in order to bring forward land for residential use.
The newly formed company is carrying out research on whether it could “parcel up” a number of its sites to offer up to the market, with residential development in mind.
These sites would be developed in partnership with Network Rail Property, the company’s managing director David Biggs told Construction News.
He said NRP wanted to develop the sites in partnership because of their close proximity to railways.
A lot of the land that is most attractive to developers is often close to transport hubs and, therefore, constrained by the rail network, Mr Biggs explained.
“If Network Rail has an equity interest and stays involved [in the development], it gives our development partners a lot of confidence that we will find solutions to make it work.”
He added that a partnership would also allow NRP and the development industry to combine property, transport and development expertise.
NRP became a standalone business in April, having previously operated as a division under Network Rail. Mr Biggs said the rail body had some delegated authority, although he added that this was “restricted”.
The company will have a new governance structure – including a board chaired by Network Rail non-executive Chris Gibb – which it hopes will allow NRP to make better investment decisions to improve the network.
The changes followed a review by Network Rail chairman Sir Peter Hendy into the operator’s investment programme. It concluded that £1.8bn was needed to fund certain rail enhancement projects on the network.
NRP is now looking to sell off a number of its property assets, in addition to its development and land programme, to raise enough capital to fund the improvements.
Mr Biggs said NRP has three classes of assets that it was looking to sell: its commercial estate, its freight portfolio and its light maintenance depots.
“A year ago our strategy [was based on a revenue model]. So both in development and with our commercial assets we would hold those assets for income – as long as we got certain return rates – to fund the railway.
“But we believe that within the three businesses the railway can get better returns by investing the capital that can be raised into funding the expansion of the railway to meet passenger demand.”
He added: “Part of my objective [is to grow our income], but in certain points in any cycle you sometimes need a capital injection and we’ve looked at ways of how we can do that without damaging the long-term business of Network Rail.”
His comments came ahead of an ORR report, which raised concerns about Network Rail’s future ability to raise finance once it has sold some of its income-generating assets.