Ryan Hotels has announced the sale of its 96 new bedrooms and car park at the Gresham Hotel to a consortium for £11 million in a sale and lease back arrangement. Chief executive, Mr Patrick Coyle, said the assets were among the few remaining which qualified for the preBudget write-off. The investors in the consortium qualify for the tax relief because the foundation was down before the last Budget, Mr Coyle said. The deal places the group in a "very strong cash position", Ryan Hotels said. Gearing comes down from 34 per cent to the "low teens" said Mr Coyle. The investors will pay just a nominal interest and Ryan Hotels will save interest costs of £450,000 a year over the period of the seven-year lease. This will boost earnings.

The lease arrangement has a put and call option. This will allow Ryan Hotels to buy back the assets for £11 million. That, said Mr Coyle, could be funded from bank borrowings.

The additional 96 bedrooms, the Lavery wing, opened in May 1998 and has traded above expectations. The Gresham has recently undergone a major refurbishment programme which included the additional rooms and a 150-space car park. The hotel is involved in the construction of a £1 million banqueting and conference centre with rooms capable of accommodating from 70 to 220 people.