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Birmingham New Street station ‘to be sold in privatisation plan’

Birmingham New Street station ‘to be sold in privatisation plan’

🕔22.Feb 2016

Birmingham New Street is one of several prominent UK stations believed to have been earmarked for privatisation by Network Rail.

Bankers at Citigroup are reported to have been appointed to look at options for 18 stations, including New Street, London Waterloo, Reading, Leeds and Edinburgh Waverley as state-backed Network Rail seeks to pay down its debt.

The plan could include selling outright the stations or handing concessions to large firms that could last for decades. The concession model has been used at St Pancras station in London, which is run by HS1, which in turn is managed by Canadian pension funds on a 30-year deal, having paid £2.1 billion for the privilege in 2010.

New Street is likely to be of considerable interest to investors, having recently undergone a £750 million transformation, with the addition of the Grand Central shopping centre and John Lewis department store above the railway station.

However, Grand Central would not be included in any sale because it is not owned by Network Rail.

Birmingham city council sold the centre to property giants Hammerson for £335 million earlier this year. Hammerson subsequently sold on half of Grand Central to the Canadian Pension Plan Investment Board.

Details of Network Rail’s proposals were reported in the Independent, but the privatisation plan is yet to be confirmed officially by the Department for Transport.

Selling the country’s best known stations could raise billions of pounds for Network Rail, according to experts. The organisation has debt estimated to top £50 billion, which has been blamed for holding back investment in improving track.

Network Rail was forced by the Government to pause two major electrification projects on the Trans-Pennine and Midland Mainline routes last year following fears over spiralling construction costs. Meanwhile, engineering over-runs have led to chaotic scenes during rush hours at London Bridge, King’s Cross and Paddington, and the organisation’s chairman, Richard Parry-Jones, was axed and replaced by the Transport for London commissioner Sir Peter Hendy last summer.

Reviews into the future of Network Rail have been commissioned by the Treasury and the Department of Transport with the aim of selling off NR’s huge property portfolio.

A review by Nicola Shaw, the chief executive of the High Speed One link that runs from St Pancras in London to the Channel tunnel in Kent, is considering privatising the whole of Network Rail. The report could also recommend it remains in the public sector, but allows infrastructure projects to be part-financed through private money.

While stations earmarked for privatisation have not been identified, it seems certain that the largest and busiest venues will be at the top of the list. About 170,000 passengers use New Street every day, making it one of the UK’s busiest stations.

The new spacious passenger waiting area under New Street’s glass canopies already feature a number of eating concessions and small shops, but could be ripe for further money-making ventures under a privatisation scheme.

Not all of Network Rail’s stations would be sold, with several of them unavailable as they are undergoing substantial expansion work over the next five years. Options could also include asking firms to run just the shops in the stations, grouping several together for sale, or offering individual concessions.

A Network Rail source told The Independent on Sunday that Citi has been asked “to pull together options to realise best value from our stations”. The source added: “It could be just the retail; it could be a concession option like St Pancras. It could be some, could be all. It might be same answer for all or treating them individually.

“The point is there are lots of possibilities. Citi is testing the market so there will be lots of opinions out there and none of them right, as our board will make that decision some months down the line from now.”

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