Vector Hospitality puts share price at about £10

Vector Hospitality, the UK's first hotel real estate investment trust (REIT), has announced its share price of between 995p and 1,115p, valuing the company at £2.02b-£2.26b.

The announcement comes ahead of the group's initial public offering next month, which will see up to 200 million new shares issued.

Vector was formed by Alternative Hotel Group chief executive and property tycoon Richard Balfour-Lynn and ex-Hilton boss Sir David Michels, with the backing of the Bank of Scotland (BS) and Royal Bank of Scotland (RBS).

RBS has pledged to purchase shares worth £75m, BS £50m and the AHG management team £15m. In addition, several directors, including Vector chairman Simon Duffy and Michels, have agreed to buy £500,000-worth each.

Duffy said: "The combination of our focus on income, the company's tax-efficient REIT status, the quality of our portfolio and management team and the growth opportunities available has already attracted significant interest from investors around the world, including the UK, USA, Japan, Europe and Australia."

Vector's REIT plans were announced last month and include 71 hotel assets throughout the UK operated by Hilton, Marriott, Rezidor, Thistle Guoman, Malmaison, Hotel du Vin, De Vere and Village Hotels and Leisure.

The group is also contracted to acquire seven further Malmaison and Hotel du Vin properties, worth £113m, upon completion of their construction.

The hotel industry will be watching the progress of Vector closely as the first group in the sector to take advantage of REIT status, which allows individuals to invest in property listed on the Stock Exchange. To qualify, the properties in the portfolio must generate their own income, generally through a fixed commercial rent.

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By Emily Manson

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