Lothian Pension Fund has acquired the Edinburgh Hub by Premier Inn hotel and five retail and leisure units from Oval Real Estate for £23.4m, reflecting a net initial yield of 5.66%.
Hub By Premier Inn, Edinburgh
Hanover Buildings at 66-84 Rose Street occupies a prominent position by St Andrew Square in Edinburgh’s New Town.
It comprises the 145-bedroom hotel and retail and leisure units let to Lucy & Yak, William Hill, Cotswold Outdoor, Assaggini and Veeno.
The hotel is let on a long index-linked lease and accounts for around 70% of the scheme’s overall income.
“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,” said Colin Finlayson, director of Lismore Real Estate Advisors, which advised Lothian Pension Fund.
“With supply relatively constrained, well-located, income-secure assets such as Hanover Buildings are attracting significant interest and offer compelling long-term returns for our client.”
Nicola Barrett, portfolio manager at Lothian Pension Fund, added: “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.”
Lismore and CMS advised Lothian Pension Fund; Westwood Real Estate and DLA acted for Oval.
Oval recently recruited former Homes England chief executive Peter Denton as part of ambitious plans to become one of the UK’s biggest brownfield regeneration specialists.
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