Your Shout: Andrew Little, Berwin Leighton Paisner

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The long-awaited Government consultation paper "Promoting more flexible investment in property" paves the way for the introduction of UK real estate investment funds (REITs), to be known as property investment funds, or PIFs. Given the huge amount of investment committed to the hotel industry via REITs in the USA, Canada and Australia, the UK industry must not miss this opportunity to persuade Government that PIFs are suitable for hotel industry investment in the UK. The consultation paper indicates a cautious approach by the Government, which initially appears to view PIFs as not suitable for the hotel industry, and it contains a notable paucity of information when it comes to the hotel and leisure sector. There is a lack of awareness shown regarding typical investment structures now used in the industry (such as the split between property and operating companies, varying types of turnover and profit leases, and management contracts with or without guarantees of gross operating profit). The Government has indicated that returns should reflect underlying property assets rather than returns from trading profits, raising the threat that PIFs may be restricted to commercial, industrial, office or residential properties rather than buildings used for "trading", such as leisure and hotel properties. It also envisages PIFs as receiving rental income under leases (institutional or turnover leases with minimum levels of rent). The hotel industry has it all to play for in making strong representations to persuade Government of the virtues of using PIFs for hotel investment and to demonstrate that the hotel industry can be a suitable sector for long-term stable investment Financial Secretary Ruth Kelly and her Treasury team have requested representations - now is the time to contact them.