Ex-Sunderland owner Short on track for £1.3bn Network Rail bid

By June 19, 2018 June 20th, 2019 No Comments

Ellis Short, the former owner of Sunderland AFC, has joined a £1.3bn race to take over thousands of commercial property sites owned by Network Rail.

Kildare Partners, the London-based real estate investment firm set up by Mr Short five years ago, is among a handful of shortlisted bidders for the premises, which sit underneath railway arches across Britain.

Kildare’s involvement in the auction, which has not been previously reported, pits it against rival bidders who are understood to include CK Asset Holdings, the Hong Kong-listed infrastructure investor founded by the recently retired Li Ka-shing, Asia’s richest man.

The other shortlisted bidders are: a joint offer from funds managed by Goldman Sachs and Wellcome Trust, Britain’s biggest medical research charity; Terra Firma Capital Partners, the buyout firm run by Guy Hands, the prominent financier; and a consortium comprising Blackstone, the world’s biggest real estate investor, and Telereal Trillium, the property group owned by the Pears family.

People close to the process said that bidders were looking at formal bids in the autumn likely to be worth between £1.3bn and £1.4bn.

The government’s decision to hoist a “for sale” sign over the portfolio of about 5,500 premises is designed to raise funds for rail infrastructure investment.

However, the proposed auction has begun to attract political opposition in recent weeks amid concerns expressed by some small business owners which lease sites from Network Rail.

Under their existing deals, rents have been kept artificially low, but any new owner is expected to push through substantial hikes for SMEs such as bakers, mechanics and restaurateurs.

An action group called Guardians of the Arches is reported to have been established to fight the planned sale, with support from Lord Bird, The Big Issue founder.

Kildare’s bid brings one of the world’s most experienced property investors into the fray.

Mr Short, an American, is a former president of the private equity firm Lone Star Funds, and recently ended a nine-year stint as the owner of Sunderland, who have just been relegated for the second consecutive season.

Kildare invests only in Europe and has an affiliate called Curzon Advisers which manages its portfolio of assets.

It is one of few British-based bidders for the Network Rail estate, with national provenance likely to become an increasingly prominent issue during the latter part of the auction, according to several people close to the situation.

Goldman and Wellcome have invested together on previous occasions, notably when they merged their respective student accommodation companies into a single enterprise, Vero Group, in 2016.

The auction, which is being run by Rothschild, has already seen a number of other high-profile bidders eliminated.

These include a joint bid from Lend Lease, the property giant, and Legal & General, according to insiders.

Network Rail’s Commercial Estates arm has generated huge interest among private investors because of the hundreds of millions of pounds in rent it generates each year.

The railway stations above the network of arches are not included in the sale.

Network Rail said recently that the prospective disposal would reduce the burden on taxpayers and rail passengers to fund rail infrastructure improvements.

“As a taxpayer-funded public company, we use funds from property rents and sales to invest in improving and growing the UK’s railway infrastructure.

“Upon completion of the sale, all current leases will transfer to the buyer and all arrangements and protections will remain unchanged.”

A Kildare spokeswoman declined to comment on Tuesday.