Edinburgh Georgian townhouse conversion yields double-digit return
Develop North PLC has completed a £1.25 million hotel financing transaction in Edinburgh, converting a Georgian townhouse into a 16-bedroom hotel that has since been refinanced through a long-term commercial mortgage.
The real estate investment company provided the funding to AM Number Three Ltd in March 2025, secured against 3 John’s Place in Leith. The borrower repaid the loan in full following the hotel’s opening and subsequent refinancing, delivering a double-digit return for Develop North.
Hotel operations and performance
The property, operated by the family-run Archibald Hotel Collection, opened to guests in July 2025. The hotel currently holds a rating of 9.6 out of 10 on Expedia. Located overlooking Leith Links, the conversion retained the townhouse’s historic character whilst incorporating contemporary interiors and technology including keyless entry and guest-controlled room settings.
“This investment helped the operator bring a historic building back into use as a hotel and establish a business that has been well received by its guests,” said Michelle Percy, chief executive officer of Develop North. “The move to a long-term commercial mortgage marks an important milestone for the owners.”
Investment strategy and portfolio focus
The transaction forms part of Develop North’s real estate lending portfolio, which sits alongside commercial and residential property investments. The company’s shareholder-approved strategy maintains a primary focus on the North East of England, though this Edinburgh transaction demonstrates activity beyond its core geographic area.
Percy noted that successful completions provide capital for further investment, with each opportunity assessed for its commercial case, associated risks and portfolio fit. The approach contrasts with recent volatility in mortgage markets, where development finance terms have faced pressure.
Caroline Claydon, director at Archibald Hotel Collection, said: “Develop North’s funding and flexible approach helped us turn our plans for 3 John’s Place into a trading hotel. We have been pleased with the response from guests since opening, and moving to a long-term commercial mortgage is an important next step for the business.”
Market context
The transaction reflects continued activity in hospitality property financing, where operators seek short-term development funding before transitioning to longer-term debt structures. The model is common in hotel conversions, where operational track records are established before accessing traditional commercial mortgages. The approach differs from other property financing structures in the UK market.
The successful refinancing indicates lender appetite for established hotel assets with proven trading performance, particularly in Edinburgh’s accommodation market.
