PGIM sees potential in Argyle House, Edinburgh’s ‘ugliest building’

Argyle House on Lady Lawson Street is considered a landmark building in Edinburgh’s city center – but for the wrong reasons. Situated in the shadows of the historic Edinburgh Castle, which towers over the city from atop an extinct volcano, the 11-story office block has been named among the city’s “ugliest buildings” by local media, an “eyesore” in a city famed for its grand and elegant architecture.

PGIM Real Estate, however, has a different view of the asset. In late October, the real estate investment management business of US insurer Prudential Financial purchased the building from fellow US manager Kennedy Wilson for a reported £38 million ($47 million; €44 million). In a statement, PGIM Real Estate said the asset has “fantastic long-term potential for redevelopment and regeneration” and praised the building’s proximity to both key tourist attractions and the University of Edinburgh.

Beverly Hills-based Kennedy Wilson, which acquired Argyle House opportunistically as part of a non-performing loan portfolio from UK group Fordgate in 2014, said it had reached the end of its business plan with the asset. It is not known how much Kennedy Wilson paid for the property. Reports from the summer of 2016 – around the time the UK voted to leave the European Union – reveal the building was poised to be sold for £40 million, at a yield of around 5 percent, to UK infrastructure investor Equitix, but the deal fell through.

1968
Argyle House is built to house government offices

2014
Kennedy Wilson acquires property from Fordgate as part of non-performing loan portfolio

2016
£40m sale to Equitix falls through

2023
PGIM Real Estate buys property for £38m

With 220,000 square feet of space, the office block is currently fully let to the UK government, and offers its new owner 10 years of rental income. Previous tenants have included tech incubator CodeBase and the IT department of the University of Edinburgh, among other businesses and local and national government offices.

Still standing

Argyle House has withstood multiple demolition and redevelopment proposals since it was built in the post-modern, brutalist style in 1968 by architects Michael Laird and Partners. According to the property brochure, it has an Energy Performance Certificate rating of D.

The building was also used in the 2021 UK television drama Crime – based on the novel of the same name by Trainspotting author Irvine Welsh – as the fictional headquarters of Edinburgh police.

While Argyle House’s architectural style may not be to everybody’s taste, New Jersey-based PGIM praised the “strong underlying fundamentals” and “cultural heritage” of Edinburgh’s city center in its announcement of the acquisition. Its location in the city’s West Port area, representing a bridge between Edinburgh’s Old Town and the Financial Exchange District, is also an attraction, not to mention its proximity to the railway stations of Waverley and Haymarket.

If the walls of Argyle House could talk, they would repeat the age-old refrain in property lore: “location, location, location.”