JD Wetherspoon not to become a REIT company

02 March 2007

Pub operator JD Wetherspoon has confirmed it will not be one of the first companies in the sector to turn itself into a Real Estate Investment Trust (REIT).

REITs are seen as a new source of funding for hospitality businesses, enabling more cash to be spent on updating or renewing property. This is because they are exempt from corporation tax.

But at the company's results presentation today JD Wetherspoon financial director Jim Clarke described REITs as a "glorified sale-and-lease-back with tax breaks".

"It's early days but I can confirm that Wetherspoon will not be one of the first in the pub sector to enter into a REIT," he added.

A number of major pub companies have been linked recently with REITs including O'Neills owner Mitchells & Butlers, Punch Taverns, Greene King and Marston's.

However, none have yet made the plunge, while on Wednesday, Whitbread's chief executive Alan Parker also confirmed the leisure giant would not be entering into a REIT.

Wetherspoon announced a 20% leap in profits for the six months to 28 January today.

What is a REIT?

A Real Estate Investment Trust is a tax-efficient investment vehicle which allows individuals to invest in property through the Stock Exchange.

Properties within the portfolio must comply with Schedule A - so must generate their own income, generally through a fixed commercial rent.

Individually owned hotels and pubs/restaurants are now allowed to be part of a REIT. An individual can own a maximum of 10% of each trust.

Wetherspoon's to open more pubs in 2007 >>

Strong hotel growth drive profit at Whitbread >>

Wetherspoon's non-smoking pubs prove successful >>

REITs will bring more cash into hospitality >>

How REITs could reshape UK hospitality >>

REITs and hotel investment >>

By Chris Druce

E-mail your comments to Chris Druce](mailto:chris.druce@rbi.co.uk?subject=JD Wetherspoons not to become a REIT company) here.

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