Telereal Trillium and Blackstone Property Partners have agreed terms for the acquisition of the bulk of Network Rail's commercial estate portfolio for a total of £1.46 bn (€1.64 bn).
Telereal and Blackstone will hold equal ownership stakes and said that they intend to be long-term owners of the estate. Telereal will oversee the day-to-day property management of the portfolio.
Network Rail launched the sale of its commercial estate last November. 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.
'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,' said Peter Hendy, Network Rail's chairman. '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.'
Supportive environment
Proceeds from the transaction will help fund the railway upgrade plan, the railway network operator said.
Graham Edwards, co-founder and chairman of Telereal, said: 'The arches portfolio is a unique and vital part of the UK economy. We are tremendously excited by the prospect of working with its entrepreneurial tenant base – made up of car mechanics, bakeries, micro-breweries, restaurants, and just about every type of business you can think of.'
He added: 'As a long-standing real estate investor in the United Kingdom, we and our partner Blackstone believe that our ownership of the portfolio will provide the supportive environment in which these businesses can flourish on a long-term basis. For example, our business plan anticipates investing in several hundred currently disused arches so that they can provide space for more local businesses.'
Rothschild & Co acted as sole financial advisor to Network Rail on the sale. Clifford Chance and Eversheds Sutherland acted as legal advisors to Network Rail.
Cushman & Wakefield, Grant Mills Wood, Kirkland & Ellis and Gowling WLG acted as advisors to Telereal and Blackstone on the transaction.