Inditex founder Amancio Ortega’s UK real estate company has bought its first UK rented residential asset in a £150M deal. 

Pontegadea UK bought 219 Baker Street in the West End from specialist investor and developer Ridgeback Group earlier this year, Green Street News reported. The building comprises 86 high-end rented apartments, and the deal reflects a 4% yield. 

While investors are wary of funding new BTR development because of the difficulty in making schemes pencil in an era of high costs, money is going into existing BTR assets because little new supply will push up rents. Greystar and Morgan Stanley have been among the big buyers in the sector.

The Grade II-listed art deco building was built in 1932 as the headquarters of UK lender Abbey National, before being converted to residential in 2004 and then upgraded by Ridgeback, whose backers have included Angelo Gordon and the Alberta Investment Management Corporation.

Because the building covers street numbers 219-229 Baker Street, it received thousands of letters a year addressed to fictional detective Sherlock Holmes, whose address in Sir Arthur Conan Doyle’s novels is 221B Baker Street.

Abbey National employed a full-time secretary to reply to the letters until it moved out of the building in 2002. 

Until the last few years, Ortega’s Pontegadea invested solely in offices and retail in the UK capital, with its assets including The Post building on New Oxford Street. Last year, it bought an 850K SF Amazon warehouse near Liverpool for £81M. Its UK real estate portfolio totals more than £2.7B.

In July, Pontegadea paid €800M (£684M) for the 484K SF Capital 8 office building in central Paris.