A Tristan Capital Partners fund and hospitality group Queensway have bought a central Edinburgh office building on St Andrew Square from Patrizia for an undisclosed fee, with plans to redevelop it into a "budget boutique" hotel.
Queensway, subject to planning, will develop a Point A hotel at the 63,195 square foot property at 9-10 St Andrew Square on behalf of the joint venture, which is backed by Tristan's European Property Investors Special Opportunities 6 fund.
The building housed a Regus workspace and a Sainsbury's Local shop, but will become the Point A platform's 12th location across the UK and Ireland. EPISO 6 acquired a majority stake in Point A in 2022, which at the time comprised a portfolio of 10 operating hotels and one development.
Tristan added that its shareholders had committed "significant additional equity" to fund this phase of growth for the platform and have a "particular" focus on strategic locations in London.
The Point A platform already has a presence in the Scottish capital in Haymarket, with a 150-bedroom hotel on 152 Morrison Street. EPISO 6 acquired the majority shareholding in Raag Hotels, which owns Point A Hotels from The Wellcome Trust for £420 million in April 2022.
Kristian Smyth, investments managing director at Tristan Capital Partners, said: "St Andrew Square is a marquee location in one of the strongest hotel markets in Europe. We believe the addition of another Point A in the Scottish capital to complement our existing offer in Haymarket will be a positive for both our platform and the city of Edinburgh.
"Our stated ambition when we acquired the platform was to materially expand our hotel footprint in strategic locations and we are actively focused on delivering on this objective with substantial capital available to deploy. We have identified several London boroughs which are of particular interest and are engaged in dialogue with agents and owners of existing hotels or appropriate office assets suited to hotel conversion."
Queensway chief executive Naushad Jivraj added: "St Andrew’s Square in Edinburgh is a prime city centre location with excellent economic and social activity. The acquired site will be redeveloped to provide consumers with a new budget boutique offering located in the heart of the city close to key attractions.
"Our existing Point A Hotel in Edinburgh has been very well received by consumers and is one of the strongest performing hotels in our portfolio. We hope that this new project will provide much needed additional capacity for which we see significant customer demand."
Patrizia fund manager Simon West added that the sale had generated liquidity for the fund, Patrizia Hanover PUT, to focus on value adding decarbonisation projects in its remaining portfolio.
EPISO 6 was advised by Brodies, Ogier, BCLP, Workman, Savills, Amicus and PwC. Patrizia was advised by JLL and Burness Paull.