UBS Asset Management’s (UBS-AM) Real Estate & Private Markets (REPM) has acquired a Scottish hotel on behalf of its long income UK property vehicle.
The UBS Long Income UK Property Fund (UBS-LIF Property) has paid £9.4m (€10.3m) for the Travelodge hotel in Edinburgh.
The five-storey hotel with 73 en-suite bedrooms, was acquired from a private investor and will continue to be operated by Travelodge Hotels on a long-term lease running to 2042.
Launched in January this year, the open-ended UK long-lease vehicle targets alternative real estate assets. UBS-LIF Property targets a net income return of 5% per annum.
The manager said the acquisition, which is in line with the fund’s investment strategy, further diversifies the tenant mix within the fund, supports the fund’s distribution yield and enhances the portfolio’s weighted average unexpired lease term.
Jonathan Hollick, head of transactions for REPM’s real estate UK team, said: “The stable long-term, indexed cashflow offers attractive income distribution for the fund’s investors while also providing diversification benefits to the rest of their fixed income and property portfolios.
“Moreover, the performance of Edinburgh’s hotel market is second only to London in terms of occupancy and RevPAR growth, and with the Haymarket regeneration scheme set to add further value to a city already receiving above-average levels of hotel occupancy, we expect this acquisition to provide strong returns for our investors.”