Network Rail has sold off its arches portfolio, including thousands of small businesses who trade from underneath railway arches across the UK.
5200 properties spanning 17 million sq ft, the majority of which are converted arches which trade as SMEs, have been offloaded by Network Rail in a deal worth £1.46 billion.
Telereal Trillium will now take on the overseeing of the day-to-day property management of the huge portfolio, in a joint venture with Blackstone Property Partners.
The deal has drawn major criticism from tenants as well as Big Issue-led campaign group Guardians of the Arches, who raised concerns that those trading under the arches would be hit by rent hikes under its new owners.
In response to the highly publicised campaign, Telereal and Blackstone have issued an open letter to all its tenants, promising to remain “particularly sensitive to small businesses” and reinvest in refurbishing several hundred disused arches.
“With our permanent capital structures, we will be investing in the portfolio for many years,” co-founder and chairman of Telereal Graham Edwards said.
“We believe that the long-term success of this portfolio rests on strong relationships with our tenants, as well as with local communities and local government.
“We intend to remain particularly sensitive to the small businesses that have been long-term tenants of the Network Rail estate.”
Telereal and Blackstone have also agreed to sign a charter which promises tenants it will agree to listen to concerns about rent reviews and engage with them, however it does not go as far as to promise no rent increases.
A Guardians of the Arches spokesperson said in response to the news: “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 out 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.”