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REITs will bring more cash into hospitality

08 December 2005
REITs will bring more cash into hospitality

Hotels and restaurants could receive a cash boost after Gordon Brown gave the go-ahead for the establishment of real estate investment trusts (REITs) in his pre-budget report on Monday.

The trusts, which will start operating from January 2007, allow investors to buy into prperty without the penalty of corporation tax and look set to include the hospitality industry. Trust shareholders are required to pay only income tax on their dividends.

The British Hospitality Association's Martin Couchman welcomed the news, saying REITs should attract more investment and free up cash for refurbishments or new-build projects.

CB Richard Ellis director Chris Rouse said he believed REITs would accelerate the sale-and-leaseback trend of recent years as operators looked to sell their bricks and mortar to raise cash.

"It will increase the pace of change and open up a whole new range of opportunities for third-party investors in the sector," he said.

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