• No REIT for Whitbread

Moves by property investor Robert Tchenguiz to take a stake in Whitbread of 3% has attracted excited speculation that the company might be set to spin-off its property interests into a REIT.

Such rumours look wide of the mark, however, given that Whitbread has made so much of its ability to exploit its existing property base to grow its core Premier Inn business.

The Tchenguiz stake was revealed last week in a filing at Companies House. The rumours of a move by Whitbread were fuelled by an announcement by pub group Enterprise Inns that it is looking at turning itself into a REIT.

But Enterprise is a tenanted estate business with the individual pubs leased to licensees. Creating an operating company and property company to comply with the REIT regulations is thus much easier than with a managed estate such as Whitbread's.

A switch into a REIT might well make sense for Enterprise as its overall tax charge would reduce to just 6% or 7% after paying the 2% charge on asset values on conversion.

Enterprise makes its money from rents and a pseudo rent in the form of charges on beer supplies. It leaves the individual assets to be managed by the licensees.

Whitbread, however, is adding a significant proportion of its new rooms on existing sites (in its last financial year it added 1,651 rooms at existing hotels against 1,786 rooms at new hotels).

This means that at least in the near term, any separation of property from management is unlikely.

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