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  • Network Rail acquisition of freight sites

  • On the 31 st March 2014 Network Rail unconditionally exchanged contracts on a deal to transfer ownership of more than 100 key rail freight sites across Britain from three of the country's biggest freight operating companies to Network Rail. A universal completion date has been set for 31 st October 2014.

    With freight market growth predicted to more than double over the next 30 years, the acquisition of more than 100 leasehold sites from DB Schenker, Freightliner and GB Railfreight will help Network Rail make better use of the network, providing improved access to freight operators and adding capacity at critical points on the East Coast and West Coast main lines.

    Consolidating ownership and management of a large part of Britain's rail freight infrastructure with Network Rail will allow for far better long-term strategic management and development. It will make more sites available to more operators, increasing competition and driving growth in a sector which directly contributes almost £900m to Britain's economy each year and supports an economic output of £6bn.

    General Notes

    In 2012 Network Rail consulted on the proposal to acquire a number of property interests of DB Schenker Rail (UK) Limited. Following industry consultation it was decided not to proceed with the proposal. In response to comments made during the industry consultation process Network Rail has undertaken the following:

    • Together with the main UK freight operating companies, Network Rail developed a strategy to transfer ownership to us of a number of key freight sites. This will help drive continued rail freight growth, give customers greater transparency and equality in property arrangements, allow us to make more efficient use of the network, and release capital for freight operating companies to invest.
    • The identified leasehold interests are rail freight sites that either have active rail using tenants, prospects for future rail freight or other rail industry use. The transaction is self-funding based on current rent rolls, projected rental growth and operational benefits.
    • It should be noted that sites with known or immediate development value have been expressly excluded .
    • The acquisition covers 105 sites in total – 87 from DBS, 15 from Freightliner and 3 from GBRf.
    • All sites in scope are ultimately Network Rail freehold, though currently held by the freight operators on long head leases (typically 125 years at peppercorn rental).
    • Network Rail will pay each of the incumbent freight operators a premium for the surrender of their head leases. Where there are subleases this will result in a direct landlord/tenant relationship between Network Rail and the tenant. Being valued and acquired purely on the basis of their continued/expanded rail freight or other rail industry usage.
    • Network Rail exchanged unconditional purchase contracts with each of the three vendor operators on 31 March 2014. A universal completion date has been set for 31 October 2014.
    • The transaction will generate at least c£12.5 million per annum in additional property revenue for Network Rail.