Network Rail has agreed terms for the £1.46bn sale of its commercial portfolio on a leasehold basis with Telereal Trillium and Blackstone Property.
The deal will see Network Rail hive off its commercial estate portfolio and use the proceeds to fund the rail upgrade plan.
According to Network Rail, Telereal and Blackstone will hold equal ownership stakes with Telereal operating the day-to-day property management of the estate.
Network Rail launched the sale of its commercial estate last November with the deal seeing the two private firms taking the estate on a 150-year lease.
The portfolio is made up of around 5,200 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.
Network Rail chair Sir Peter Hendy CBE said: “This has been a very thorough, detailed and complex process and we are pleased we’re now in a position to announce Telereal Trillium and Blackstone Property Partners as the new owners of the commercial estate.
“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.”
The entire Network Rail commercial estate is made up of around 7,500 properties. Around 5,200 were included in the sale, with properties in Scotland and those that have an ongoing requirement to support the running of the railway not included.
Speaking at a rail event in London in March, former Network Rail chief executive Mark Carne said that the body had received interest from 250 bodies looking to buy parts or all of the commercial estate.
Mr Carne dismissed news reports at the time stating that the portfolio would be sold of £1bn as “too low”, stating that the portfolio was “the best commercial property to come on the market in years”.
Network Rail Property managing director David Biggs said: “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.”
Responding to the announcement of the deal a spokesperson for Guardians of the Arches, a group comprised of tenants affected by the sale of the portfolio said: “Throughout this process we have sought to ensure that small businesses are genuinely protected so that the arches can thrive. We continue to dispute whether selling off the whole estate in one job lot is the best way of supporting small businesses and the local economies which rely on them.
There is a long way to go in the sale process, but if Blackstone and Telereal successfully purchase the estate we trust they will follow up on their stated intention to put ‘tenants first’ in their management of the estate. A starting point would be to meet our demands for a full, transparent rent and lease audit, and to recognise Guardians of the Arches formally as a tenants’ association.
”We represent hundreds of businesses, and our number is growing every day. It is in the interests of all concerned that our proposals are taken on board.”