TH Real Estate is close to securing an off-market deal to buy one of Edinburgh’s best-known office buildings, Waver
ley Gate, for close to £67m.
It has placed the building off Princes Street, at present owned by M&G Real Estate, under offer at a price reflecting a yield of around 5.25%.
The purchase would mark the first acquisition by TH Real Estate’s €3bn-€5bn (£2.3bn-£4bn) European Cities Fund, which launched last month. The fund is targeting 42 “future proof” cities across Europe. Each city has its own investment acquisitions focused primarily on retail and logistics with a third-tier investing across retail, logistics and offices.
The 217,000 sq ft office was previously Edinburgh’s General Post Office and the 130-year old building retains its Victorian façade.
Developed by Castlemore Securities in 2005, the building was placed in the hands of receivers at the bottom of the market, and has been frequently traded since (see box).
The building is let to a variety of tenants, including Amazon, marketing firm Hogarth Worldwide, H&M and Microsoft, which set a record rent for Edinburgh in 2008 when it paid £31 per sq ft for its 15,000 sq ft of space.
Cushman & Wakefield is advising TH Real Estate; JLL is acting for M&G.
TIMELINE – WAVERLEY GATE
The 217,000 sq ft former Edinburgh General Post Office, Waverley Gate, has changed hands several times since the financial crisis.
2005 – Castlemore completes speculative redevelopment at height of the market
2009 – Castlemore-controlled subsidiary that owns Waverley Gate goes into receivership with minimal lettings having been achieved
2010 – Highcross buys Waverley Gate from receivers for £30m
2013 – M&G buys building from Highcross for £46m
2016 – TH Real Estate in talks to buy Waverley Gate for £67m
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