A hotel-anchored mixed-use building in central Edinburgh has been sold for £23.4m, reflecting continued investor demand for income-producing assets in prime city locations.
Lothian Pension Fund has completed the acquisition of Hanover Buildings at 66-84 Rose Street, Edinburgh, from Oval Real Estate, with Lismore Real Estate Advisors acting for the buyer. The price reflects a net initial yield of 5.66%.
Hanover Buildings occupies a prominent position in Edinburgh’s New Town, between Hanover Street and St Andrew Square, and comprises a 145-bedroom hotel alongside five retail and leisure units.
The hotel, operated as Hub by Premier Inn, is secured on a long index-linked lease and accounts for around 70% of the scheme’s total income. The retail and leisure space is let to Lucy & Yak, William Hill, Cotswold Outdoor, Assaggini and Veeno.
STRONG DERMAND
Advisers said the deal highlights continued appetite for well-located assets offering secure income, particularly in Edinburgh where tourism and business travel remain strong.
Colin Finlayson, Director at Lismore Real Estate Advisors, says: “Investor demand for hotels across the UK remains particularly strong and this is increasingly evident in Edinburgh, where global tourism and business travel continue to underpin robust occupancy levels.
“With supply relatively constrained, well-located, income-secure assets such as Hanover Buildings are attracting significant interest and offering compelling long-term returns for our client.”
STABLE INCOME
Nicola Barrett, portfolio manager at Lothian Pension Fund, says the purchase fits the fund’s strategy of targeting resilient assets with stable income.
She adds: “Hanover Buildings is a high-quality, income-producing asset in a prime city-centre location. The strength of the hotel covenant, combined with diversified retail and leisure income, aligns well with our strategy of securing resilient, long-term real estate investments that deliver stable returns for Lothian Pension Fund.”
Elliot Cassels, director at Westwood Real Estate, says that the property attracted interest from both UK and overseas buyers, supported by the long hotel lease and improving demand for retail and leisure space in central locations.
Lismore and CMS advised Lothian Pension Fund, while Westwood Real Estate and DLA acted for Oval Real Estate.
