SLI acquires London hotel building for sub-4% yield

Standard Life Investments (SLI) has acquired a hotel building in Shoreditch, an increasingly popular district of London, for £20.65 mln (€29 mln), reflecting a net initial yield below 4%.

SLI's Long Lease Fund purchased Empire House - fully let to Z Hotels and restaurant, Ceviche - from Helical Bar and Crosstree Real Estate Partners.

Empire House forms part of a 1.2-hectare site adjacent to Old Street Roundabout which was acquired by Helicar Bar and Crosstree for redevelopment in 2012. Empire House was vacant at the time. Phase one of The Bower redevelopment - encompassing 14,000 m2 of space - is almost fully let and is nearing completion.

Richard Marshall, fund manager of SLI's Long Lease Fund, commented: 'The purchase reflects the fund’s ambition to secure long-term RPI-linked income streams, which help our investors match their pension fund liabilities. Empire House provides the fund with exposure to a vibrant area of London with particularly strong growth prospects, and is ultimately underpinned by an attractive vacant possession value.'

JLL acted for Crosstree/Helical Bar on the sale of Empire House. Allsop advised Standard Life Investments.