Network Rail sold thousands of its railway arches to Telereal Trillium and The Blackstone Group as part of a deal valued at £1.5 billion (about $2 billion). Railway arches in the U.K. house such businesses as cafés, furniture shops, microbreweries and plant shops.
People walk past the Arches Shopping arcade, under Waterloo Station, in London
Proceeds from the transaction will help fund the railway upgrade plan, bringing major improvements for passengers and reducing the need for taxpayers to fund the railway.
The portfolio is made up of some 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. Telereal and Blackstone, which will hold equal stakes, intend to be long-term owners of these properties. Telereal will oversee property management across the portfolio.
A row of businesses situated in arches by Embankment Station, in London
“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,” said Sir Peter Hendy, Network Rail's chairman, in a press release.
The companies plan to invest in several hundred currently disused arches so that they can provide space for more local businesses. “The arches portfolio is a unique and vital part of the U.K. economy,” said Graham Edwards, co-founder and chairman of Telereal, in a press release. “We are tremendously excited by the prospect of working with its entrepreneurial tenant base — made up of car mechanics, bakeries, microbreweries, restaurants and just about every type of business you can think of. These tenants are a vibrant part of many local economies and communities.”
By Brannon Boswell
Executive Editor, Commerce + Communities Today
