The Malmaison hotel in central Edinburgh has been acquired in a £25 million deal by German investment manager Patrizia on behalf of an undisclosed UK institutional investor.

Developer S Harrison turned the former Buchan House, built in 1775 at the north west corner of St Andrew Square, into a 72-bed hotel which now has the third highest daily room rate in the Malmaison portfolio.

It benefits from an “attractive inflation-linked long income profile”, with a 30-year lease, said the fund manager.

Phil Irons, head of transactions for UK and Ireland at Patrizia, said: “We are pleased to have acquired this exceptional asset in an off-market deal to further our client’s strategy to diversify into alternative sectors like hospitality.

“Edinburgh’s world-renowned reputation for culture, sport and business make it one of Europe’s strongest hotel markets, which is being further driven by the post-pandemic recovery in international tourism.

“While the transactions market remains muted, the current conditions continue to present attractive opportunities for us to acquire re-priced core assets that benefit from strong fundamentals.”

Patrizia was advised by Burness Paull, JLL and Colliers.