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HBOS failure breaks GuestInvest but hotel room investment sector remains strong

3rd October 2008 | back to article listings BACK    print this article PRINT

It is very sad to hear the news that GuestInvest has gone into administration following an HBOS reduction in lending facility and we hope that a new owner comes forwards shortly. Johnny Sandelson, who started the company in 2003, effectively founded the hotel room investment sector in the UK and proved that the investment model for purchasing hotel rooms is a sound one with it running for a number of years

Their move into administration appears to be a direct result of HBOS running out of capital to lend to clients during the ongoing credit crunch. Indeed HBOS just pulled another £200m from another property firm, AAIM, this week showing this is far from an isolated incident.

Existing hotel rooms that investors have bought into continue to trade successfully, and the investment potential for this sector remains unchanged. However, it is the future pipeline of hotel rooms for investment from this great developer that may now be in jeopardy, as the credit crunch takes another victim.

Despite this recent news, it is the company and not the investment model that has fallen into trouble. Hotels continue to offer excellent potential for investors in the current climate.

Indeed, the hotel room investment model (where investors by individual rooms) provides the hotel operator with a far more flexible financing solution than going to banks whose funding is becoming less and less reliable as the weeks go by.

Assetz hotels division is currently marketing several investment opportunities, with a particular focus on the budget sector, which is performing particularly well due to the current economic slowdown. Sharing in room income can deliver 8 to 10% or more net yields plus capital growth potential which for many investors is far more attractive than putting their money in the bank or in the stock market at present.

Assetz Hotels : www.hotels.assetz.co.uk

This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.

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