UBS Asset Management’s (UBS-AM) Real Estate & Private Markets (REPM) business has completed the acquisition of Quartermile 2, a prime office building located in the new Quartermile development in Edinburgh, Scotland for circa £28.5 million, representing a yield of 5.4%. The asset was acquired on behalf of a separate account from the Swiss-based fund, AFIAA.
Constructed in 2009, the Grade A building provides 58,840 sq ft of flexible, open plan office accommodation spread over six floors. The Very Good BREEAM rated building includes a spacious reception area with high quality finishes, whilst benefiting from underground car parking. Quartermile 2 is multi-let to five tenants representing a range of sectors and providing an attractive weighted average lease term of approximately seven years.
Quartermile 2 is centrally located within Edinburgh’s Quartermile development, a fast-growing and exciting new commercial and residential district in the city centre. The asset benefits from its close proximity to the district’s main retail and leisure facilities, whilst affording easy pedestrian and vehicular access to Lauriston Place. Situated on the site of the former Royal Infirmary, the mixed use-scheme comprises more than 1,000 new build apartments, over 350,000 sq ft of office space, together with an extensive retail and leisure offering.
Designed by internationally acclaimed architects Foster & Partners and extending to 19 acres, the development is home to more than 20 businesses currently employing 2,200 workers. Edinburgh is one of the UK’s big six office centres and 2016 saw a record year for investment into the city’s office sector. From an occupational perspective the availability of new Grade A stock is in short supply which is a dynamic that looks set to continue given the limited development pipeline.
Howard Meaney, Head of Real Estate UK at UBS-AM, commented: “Having long been impressed by Edinburgh’s transformational Quartermile area, we’re very pleased to now gain access to it through our acquisition of this prime office asset. Edinburgh continues to see robust occupier demand for high quality and well-located office assets that offer tenants a bespoke working environment alongside access to a range of amenities, open spaces and excellent transport links. The Quartermile development goes from strength to strength as one of the city’s most desirable mixed-use schemes, having achieved a number of major pre-lets with ambitious plans in the pipeline to capture further growth. We look forward to enjoying some of the upside as this district continues to thrive, while our asset management team will also be working hard to let out remaining space to maximise the value of our latest investment.”
Maximillian Opitz, Transaction Manager for Europe at AFIAA, said: “We want to thank UBS for their professional collaboration. The great result for both parties has underlined the strength of the Scottish market.”
Stuart Agnew, Senior Director at GVA, the sole selling agent, added: “We are delighted to have secured this result for our client following some competitive bidding for the asset. It is an example of improving market sentiment in Scotland where both domestic and international investors are seeking good quality stock providing a comfortable yield discount to London, but with strong occupational dynamics.”
For this transaction, UBS-AM was advised by CMS Cameron McKenna Nabarro Olswang LLP while AFIAA was advised by Brodies WS and GVA.
