Blackstone Property Partners and Telereal Trillium have partnered to buy Network Rail’s portfolio of around 5,200 properties for £1.46bn (€1.64bn).

In October last year, Network Rail launched the sale of its commercial estate, the majority of which are converted railway arches.

The entire Network Rail commercial estate is made up of around 7,500 properties. Around 5,200 were included in the sale, with properties in Scotland and those that have an ongoing requirement to support the running of the railway not included. Proceeds from the sale will help fund Network Rail’s railway upgrade plan.

US private equity firm Blackstone and Telereal have formed an equal partnership to buy the assets and intend to be long-term owners of the estate.

The sites are being sold on a leasehold basis, with Network Rail retaining access rights for the future operation of the railway.

Peter Hendy, the chairman of Network Rail, said: “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.

“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.”

Graham Edwards, co-founder and chairman of Telereal, said: “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.

“With our permanent capital structures, we will be investing in the portfolio for many years. 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.”

James Seppala, the head of European Real Estate at Blackstone, said: “We are honoured to have been chosen as the new owners of Network Rail’s commercial estate.

“The portfolio is unique in its character and function, and we are excited by the tremendous opportunity for us to contribute to the continued revitalisation of the railway arches in the UK, always recognising the role that they play in stimulating economic activity, growth and prosperity, in particular amongst SMEs and local communities.”