Network Rail's arch plan to raise £600m
Network Rail, the not-for-profit successor to Railtrack, is examining ways of generating up to £600m from its portfolio of arches under the railway lines.
Around 4,500 arches have been converted into small business units, which deliver £70m a year in rent. But Network Rail is now focusing on maintaining and renewing the rail network and considers this business, known as Spacia, to be "non-core".
Network Rail believes it can release £400m to £600m by selling and leasing back the units or securitising them through bond issues backed by the rental income.
Network Rail must first overcome a problem. It is required by law to inspect each arch every six years. This involves ripping out the business units so that engineers can examine the arch's brickwork.
But Network Rail hopes in the future to inspect the arches using ultrasound techniques. It has asked various universities, including Edinburgh and Salford, to tender for a research project.
Network Rail is analysing ways to generate cash from its other property interests. At its major stations it is considering plans to sell a 10- to 20-year concession to manage and collect the rent from the retailers. This could generate £300m to £500m.
Deborah Richards, director of railway estates, said: "The joy of a concession is that it allows someone to build it up, and at the end of the period we take it back and sell it again."
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