Scottish Widows head office sold for £105m

SCOTTISH Widows’ Edinburgh-based headquarters has been sold to an overseas investor for more than £105 million in a record deal for the city.

The Scottish Widows headquarters in Edinburgh

After bids from a range of UK and international investors, the Port Hamilton building in the heart of the financial district was sold by fund manager Aberdeen Asset Management to an unnamed overseas private client of HSBC Private Bank.

Separately, Scottish Widows said it was taking on about 400 extra temporary workers at its Dalkeith Road customer service centre, which currently houses about 1,800 staff, ahead of an expected rush of enquiries as “pension freedom” changes come into force in April.

The staff are being drafted in to give customers information about the new rules, which will include the ability for those aged over-55 to take their entire pension pot as a cash lump sum.

A spokesman said the Port Hamilton site had been owned by a property fund run by the firm’s fund management arm, Scottish Widows Investment Partnership, which was taken over by Aberdeen in a £550m deal last year. Aberdeen declined to comment last night.

The record-breaking office sale comes in the wake of figures showing Edinburgh enjoyed its strongest office take-up for a decade last year, despite concerns from potential occupiers in the run-up to September’s ­independence vote.

Improving confidence among investors has also seen a number of major hotel deals completed since the referendum. Earlier this week, Edinburgh’s four-star Radisson Blu sold to a German investment firm in the biggest deal for Scotland’s hotel sector since the Radisson SAS in Glasgow was bought for £68m.

Scottish Widows, which is part of the state-backed Lloyds Banking Group, moved its head office from Dalkeith Road to Port Hamilton on Morrison Street in 1997. More than 2,000 staff are based at the 271,637 sq-ft office, most of whom work for Scottish Widows. The site, designed by architects BDP, also houses Bank of Scotland and Lloyds workers.

Property agents JLL and CBRE acted for Aberdeen, which received legal advice from CMS, the international law firm that merged with Dundas & Wilson last year. Knight Frank and Brodies acted on behalf of HSBC.

Alasdair Humphery, lead ­director of JLL Scotland, said: “Edinburgh has long marketed itself as a destination for overseas investment, and this sale truly underlines the city’s credentials.

“The combination of Edinburgh as an investment prospect, a truly HQ office building and the long secure income resulted in significant interest from global investors and enabled the completion of a quick sale.”

Following the deal, the building has been leased to Lloyds for a 25-year term, subject to a tenant break option on the 15th anniversary. The sale price reflects an initial yield of almost 5.1 per cent, with the rent rising by 3 per cent a year.

JLL also said the number of office deals in Glasgow city centre rose to 129 last year, up more than 30 per cent on 2013. Alistair Reid, city director, said: “There was a healthy end to the year, fuelled by strong occupier confidence after the referendum.”

Last year saw what is believed to be Scotland’s largest office deal, for more than £127m, when Legal & General Property bought and forward funded the development of the 335,000 sq-ft HQ for oil services group Aker Solutions in Aberdeen.