Network Rail sells all its railway arches for £1.5bn

[whole diary]

[grahame]

Quoting from The Independent but widely covered elsewhere

Network Rail sells all its railway arches for £1.5bn

Funds from sale will be used for planned upgrades, but tenants fear rents will rise under new ownership

Network Rail has sold its commercial property portfolio, mainly comprised of converted railway arches, for £1.46bn.

The rail operator said the proceeds will be used to fund its railway upgrade plan, “bringing major improvements for passengers and reducing the need for taxpayers to fund the railway”.

The property has been sold to investment groups Telereal Trillium and Blackstone Property Partners, on a leasehold basis, and Network Rail will retain access rights.

I think of railway arches on the lines out of Blackfriars and London Bridge ... and Victoria on the South Eastern side. Probably because of my childhood in those parts.  Are there many arches and other similar properiues in the GWR^▸ (Great Western Railway) territory?

[Red Squirrel]

Can someone with a better grasp than I of financial matters explain to me how this makes sense? To my mind these were a valuable wholly-owned asset which, presumably, NR^» (Network Rail - home page) could have borrowed against at favourable rates. Why sell (well, lease) them?

[ChrisB]

Government requirement?

[Bmblbzzz]

I've no idea how many there are in GWR^▸ (Great Western Railway) territory but back in the 90s I briefly worked in one in Bath, just across the river from the station. There were about half a dozen in the row.

[Sixty3Closure]

Can someone with a better grasp than I of financial matters explain to me how this makes sense? To my mind these were a valuable wholly-owned asset which, presumably, NR^» (Network Rail - home page) could have borrowed against at favourable rates. Why sell (well, lease) them?

Focussing on core business supposedly but  I agree the finance doesn't really stack up.

[Lee]

In my opinion, this needs to be seen not through the prism of whether it makes financial sense, but more as a step in the transitional journey towards the politically-driven vision of what Network Rail is likely to become.

Basically, this move echoes what the Shaw Report called for. The Shaw Report also floated the possibility of reclassifying the entire body as private by way of accessing the equity capital markets or selling an equity stake to investors, and I wouldn't be at all surprised if that's where we were heading next.

[grahame]

From the BBC^» (British Broadcasting Corporation - home page)

Railway arches sale overlooked tenants, says spending watchdog

Network Rail only considered tenants of its arches "late in the process" when it sold its commercial property portfolio, the spending watchdog says.

The National Audit Office (NAO) said the £1.46bn generated by the deal in September was "more than expected".

But it said that tenants got no legal guarantees on the amount of rent they pay from the new owners.

The government says all tenants' rights have been protected - but campaigners warned firms could be priced out.