Lothian Pension Fund in £23.4m Rose Street deal – Daily Business

Hub by Premier Inn in Rose Street

Lothian Pension Fund has acquired a building in central Edinburgh, currently leased to a Hub by Premier Inn and five retail and leisure units.

The fund is paying Oval Real Estate £23.4 million for Hanover Buildings at 66-84 Rose Street. The acquisition price reflects a net initial yield of 5.66%.

The 145-bed hotel is secured on a long index-linked lease and accounts for approximately 70% of the scheme’s overall income. Units are occupied by Lucy & Yak, William Hill, Cotswold Outdoor, Assaggini and Veeno.

Colin Finlayson, director of Lismore Real Estate Advisors which advised on the deal, said: “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.”

Nicola Barrett, portfolio manager of 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.”

Elliot Cassels, director at Westwood Real Estate, said: “The property generated interest from UK funds and overseas buyers who were attracted to the long index-linked hotel lease, and the vibrancy of the ground floor retail and leisure mix, where tenant and investor demand has rebounded in recent years.”

Lismore and CMS advised Lothian Pension Fund on the acquisition, whilst Westwood Real Estate and DLA acted for the vendor, Oval Real Estate.

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