HSBC has struck a £15 million deal to finance the expansion of serviced apartment provider Fountain Court, in one of the largest transactions arranged by the bank’s commercial division in Scotland.
Edinburgh-based Fountain Court yesterday appointed the group as its sole banking partner following the deal, which will see the business “significantly” expand its operations in the capital and beyond.
Founded in 1998, the firm has 180 apartments in Edinburgh and 60 staff. It reported a turnover of £4m in 2011, and says the sector has been experiencing rapid growth in the UK as an increasing number of corporate and leisure travellers choose serviced apartments over traditional hotel accommodation.
Director Peter Whitelaw said: “We believe the demand for serviced apartments will continue to grow and we are focusing on securing other locations in Edinburgh and other cities in the UK. It was crucial that we chose a banking partner that could support our long-term business plans.”
He said the company would continue to build or convert offices into apartments, but may also seek to expand by managing the portfolios of smaller providers.
Whitelaw said the firm was looking at taking on one or two more sites in Edinburgh and moving into Aberdeen. Glasgow, Manchester and Newcastle are other cities he believes are ripe for the business model.
The deal is a boost to HSBC’s commercial business north of the Border, which the bank has been investing in as it tries to take advantage of room in the market left by rivals weakened by the financial crisis.
Colin More, area commercial director for HSBC in Scotland, said: “The business model has been hugely successful in Edinburgh, with a great demand from both leisure and corporate clients all year round.”