The five-storey property on Buckle Street in Aldgate will form an extension to SACO's new 168-unit aparthotel on Leman Street which is scheduled to open at the end of this year.
SACO Leman Street is one of five new aparthotels the operator plans to open in the next three years, two of which will be in Edinburgh.
The Buckle Street property is also the first of a number of acquisitions planned for the next year with sites in Aberdeen, Glasgow, Dublin and Amsterdam also being targeted.
Eric Jafari, managing director of SACO Development Group said: “This acquisition will enable us to grow our lifestyle aparthotel presence in the city, and heralds the start of a £100m acquisition programme planned for 2016.
“Serviced apartments is the fastest growing element of the hospitality sector, and our investment in new property will enable us to remain at the forefront of the evolution in this rapidly changing sector.”
SACO Development Group was formed following the appointment of a team of specialist managers who joined SACO from Union Hanover, the founders of Urban Villa.
Bristol-based SACO, formed in 1997, currently operates 800 design-led apartments. The company, which is set to double its estate over the next two years, aims to give travellers 'memorable, immersive and cultural experiences'.