Edinburgh Council has sold its prestigious Atria office development in the heart of the capital’s financial district for £105 million to Deka Immobilien, a real estate investment company based in Frankfurt, Germany.
The council said proceeds from the sale of the Morrison Street office block “will be used to support the council’s improving debt position and repay the monies borrowed to facilitate the development.”
It said the sale “will bolster the council’s strategic development fund which was set up in 2013 to help create new development opportunities, support business innovation, deliver jobs and promote economic growth in Edinburgh …”
Atria opened in May 2013 and its corporate tenants include PwC, Brewin Dolphin, Aon, IBM, the UK Green Investment Bank, the Law Society of Scotland, Alliance Trust and Lothian Pension Fund.
Atria was the largest speculative office development over 100,000 square feet outside of central London when it was developed.
It was developed and funded by the council with part-funding from Scottish Enterprise.
Comprising Atria One and Atria Two, it provides nearly 200,000 square feet of Grade A office and retail accommodation for blue chip tenants.
Councillor Gavin Barrie, Edinburgh’s economy convener, said: “I’m delighted that we have concluded the sale of Atria.
“This is a further endorsement of the council’s decision to create an innovative funding package to develop much needed Grade A office space in the city to attract new, and retain existing, businesses in the capital while also cross-subsidising the cost of an expansion to the Edinburgh International Conference Centre (EICC).
“The fact that we have been able to attract investment into Edinburgh from a major overseas real estate company is testament to the quality of the building and its occupiers.
“Our plan was always to sell Atria once the development was completed and the economic conditions were right to achieve the best possible return for the council’s investment and I believe we have achieved this.”
Montagu Evans, JLL and Shepherd & Wedderburn acted for Edinburgh Council, and Savills, CBRE and HBJ Gateley represented Deka Immobilien.
In February, the Accounts Commission reported that Edinburgh Council had made “considerable progress” towards balancing its books.
The local authority watchdog had raised significant concerns in December 2014 over the council’s financial position, including a £67 million gap in savings required to meet future funding levels.
But an Accounts Commission report in February said that while it still faces major challenges, Edinburgh Council now “has a clear strategy for reducing its spending through changing the way it delivers services and reducing its workforce.”
The council met its £39 million savings target last year and is on track to deliver further savings of up to £49 million in the current financial year.