Media centre

Friday 20 Jul 2018

Sale of Network Rail's commercial estate reaches final stages

Network Rail is nearing the end of the process to sell its extensive commercial estate in order to invest in railway improvements, with four bidders in the final stage.

The organisation, which owns, maintains and improves the rail network in Great Britain, has decided to sell its commercial estate in England and Wales – around 5,500 properties, the majority being railway arches – as it is a non-core property asset that’s not essential for running the railway. Proceeds from the sale will be reinvested into the railway, meaning major improvements can be delivered without placing an extra burden on the public purse.

Network Rail expects the new owner to invest significantly in maintaining and enhancing the estate, benefitting tenants and local communities.

Proceeds from the sale will help to fund the railway upgrade plan, which is improving and growing the rail network for the benefit of passengers and the wider UK economy. It will reduce the need for taxpayers and fare-payers to fund the railway.

Once the business is sold, all tenant leases will transfer to the new owner and all arrangements and protections will remain unchanged.

David Biggs, managing director of Network Rail Property, said:

‘We are selling a thriving estate of small and independent businesses and we believe the portfolio is a highly attractive business with growth potential.

‘We are proud that we have so many independent and diverse businesses thriving on our commercial estate, and for the tenants that run these it will be business as usual once the estate is sold. All lease arrangements will transfer to the new owner and all arrangements and protections will stay in place.

‘We believe a new owner will bring more investment to the commercial estate, benefiting tenants and local communities, and creating jobs and stimulating economic growth.

‘The sale is completely unconnected with periodic rent reviews which are part of our normal business activity. Our rents are based on local property market values with the vast majority of reviews, around 85%, agreed at an increase of 10% or less.’

-Ends-

Notes to editors

• The sale is NOT on a 999 year lease. The leases will last for 150 years.
• Rent reviews are a standard activity process for all lease arrangements and happen routinely. No rent reviews have been held as a consequence of the proposed sale.
• The leases will transfer in their current form and so tenants will retain the same rights and protections that they are afforded currently,
• In November last year Network Rail announced the sale of the commercial estate business, which is made up of a large portfolio of non-core property assets – meaning properties not essential for running the railway. The majority of these are converted railway arches.
• The commercial estate is made up of around 7,500 properties including 4,455 converted arch spaces, with fewer than 30 let directly to national chains.
• Around 5,500 of those are being sold. Properties in Scotland and those that have an ongoing requirement to support the running of the railway are not included in the sale. The sale of the 5,500 properties will allow the company to focus even more on its core business of running a safe and growing railway, as well as providing funds for major railway improvements.
• The sites are being sold on a leasehold basis and Network Rail will retain access rights for the future operation of the railway. The sale will not impact on the safe and efficient running of the rail network, train operating companies, freight operating companies or other operational partners.