HSBC Private Bank has beaten off several heavyweight British and international bidders to acquire Scottish Widows’ Edinburgh headquarters for a private client. The £105m-plus office deal is a record for the city.
The Port Hamilton building, in the heart of the Scottish capital’s financial district, was sold by fund manager Aberdeen Asset Management. It had taken over the 271,637sq ft office block last year as part of a £550m purchase of a property fund run by the insurer’s fund management arm, Scottish Widows Investment Partnership.
Scottish Widows — part of the state-backed Lloyds Banking Group — moved its head office from Edinburgh’s Dalkeith Road to the Port Hamilton building on Morrison Road in 1997. The site houses more than 2,000 staff, the majority employed by Scottish Widows. The Bank of Scotland and Lloyds also has departments working from the building.
Following the deal, the entire office block was immediately leased back to Lloyds Banking Group on a 25-year term, with a tenant break option on the 15th anniversary.
Aberdeen Asset Management, an international investment group, was represented by Jones Lang LaSalle (JLL). Its Scottish lead director, Alasdair Humphery, commented: “Edinburgh has long marketed itself as a destination for overseas investment, and this sale truly underlines the city’s credentials.
“The combination of Edinburgh as an investment prospect, a truly HQ office building and the long secure income resulted in significant interest from global investors and enabled the completion of a quick sale.”
The record-breaking office sale supports recent figures showing that last year Edinburgh enjoyed its strongest office take-up for a decade, despite a slowdown in transactions blamed on pre-referendum jitters.
Improving investor confidence has also sparked a number of major hotel deals. Earlier this week, Edinburgh’s four-star Radisson Blu was sold to a German investment firm in the biggest deal for Scotland’s hotel sector since the Radisson SAS in Glasgow was bought for £68m.
JLL also reported a sharp increase in deals for Scotland’s second city with the number of office sales in Glasgow city centre last year totalling 129, up more than 30 per cent on 2013. “There was a healthy end to the year, fuelled by strong occupier confidence after the referendum,” said the company’s Glasgow director, Alistair Reid.
And 2014 also saw what is believed to be the country’s largest office deal — at more than £127m — when Legal & General Property bought and forward funded the development of the 335,000 sq ft headquarters for Aberdeen-based oil services group Aker Solutions.
