European hospitality business Kabannas has acquired former Edinburgh office Hayweight House from the Scottish Action for Mental Health (SAMH) charity, with plans to convert it into a hotel.
Kabannas’ London St Pancras location. Credit: Kabannas
Heavyweight House will be converted into Kabannas’ trademark ‘hybrid’ hotel format, providing a mix of hostel-style dorms, rooms, social communal spaces and food and beverage offerings.
The hotels are designed for 18 to 40-year-old guests and offer “ultra-affordable” accommodation that is “big on social” activities. The firm said this market is underserved, accounting for over 35% of all global travel, but on average representing less than 10% of available accommodation supply.
The deal is Kabannas’ fourth acquisition in nine months, having recently bought buildings in London St Pancras, Liverpool and Newcastle – all of which are open and operational – from The Youth Hostels Association England & Wales last August.
Supported by funding from investor Roundshield Partners, Kabannas plans to spend more than €100m (£85m) to open hotels in 15 European “gateway or cultural capital” cities.
“Kabannas’ acquisition strategy is focused on high value-add asset repositionings and developments in key European gateway and cultural cities,” a spokesperson for the firm said.
“The typical asset investment profile would be the conversion of non-ESG [environmental, social and governance] compliant office stock into hybrid hotels or heavy capex refurbishments of existing hotels to achieve high hurdle levels of return.”
Kabannas is targeting properties from 21,000 to 108,000 sq ft. Acquisition values typically range between €10m (£8.5m) to €50m (£42m), fully funded by Kabannas and RoundShield.
Graham + Sibbald advised SAMH on the deal, while Kabannas and RoundShield Partners were advised by Morton Fraser MacRoberts, Bellwether Green and Baker & McKenzie.
