A private U.S. firm that recently raised $1.3B (£1B) for a new European real estate fund has bought a London office building for redevelopment to residential and plans other similar projects.

H.I.G. Capital teamed up with residential developer Hub to buy Finsgate House near the Old Street roundabout in east London for £31M. The three existing buildings on the site total 43K SF. They will be knocked down and a new mixed-use scheme comprising offices and residential will be built.

Hub said in a press release that the buildings are no longer fit for purpose, adding that the JV is trying to minimise carbon emissions by reusing materials when the building is demolished and making the operations of the new building sustainable.

H.I.G. said last week that it had raised £1B for its third European real estate fund, significantly more than the £585M it raised for its previous European real estate fund in 2019. It said the UK and Germany will be a major focus of the fund.

The firm said the Finsgate House deal was the debut project for a new “living platform” that will target other development deals to create London residential assets.

With the London residential market experiencing acute housing shortages and affordability issues, the emergence of the living sector offers residents an alternative to traditional housing options, it said in a statement on the Finsgate House deal.

“The properties offer greater flexibility, a more efficient use of space, and enhanced amenities throughout the buildings,” H.I.G. said.

These amenities include coworking spaces, gyms and cinema rooms aimed at creating a strong sense of community.

“We believe there is an opportunity to grow this platform across a number of locations in London,” Managing Director and Head of H.I.G. Realty Riccardo Dallolio said in a release.

For its part, Hub said redevelopment of the site will add to its growing pipeline of more than 7,000 homes completed or under development across the UK. More than 1,000 of those homes are due for completion by the end of the summer.