AEGON Scottish Equitable is adding GuestInvest, the UK’s leading hotel buy-to-let hotel company, to its Self Invested Personal Pension investments from 22 January 2007. This is the first step in a phased expansion of its Sipp property portfolio, rolling out during Q1 2007, aimed at widening the investment options to cater for differing investor needs.

AEGON Scottish Equitable is the first major provider to offer direct hotel room purchase through a pension fund. The company believes this move will give investors exposure to the commercial property market with greater liquidity and less hassle than traditionally associated with such purchases.

Under the GuestInvest concept investors buy a room in a hotel on a 999-year lease receiving a return on their investment by letting it out, plus any capital appreciation on re-sale. GuestInvest manages the hotel and maximises room occupancy sharing room revenue 50/50 with the investor. A minimum 6% return is guaranteed in the first year of the hotel’s operation.

Making the purchase through a Sipp gives the investor tax relief at their marginal rate. And under normal Sipp borrowing rules, they can borrow up to 50% of the value of their Sipp fund to buy the hotel room. AEGON Scottish Equitable will also allow rooms to be bought on a pooled basis, potentially opening this asset class up to more people. The company believes this facility may be useful to husbands and wives, business partners or investment clubs. To qualify as a Sipp investment the investor must pay full commercial rates to use the room.

Douglas Jones, head of individual marketing said:

“Property is still a very popular asset class with advisers and their clients and can play an important part in building a balanced Sipp portfolio. But it is very diverse, each sub sector having a distinct performance potential. People are looking for greater levels of sophistication and we aim to expand our property portfolio over the next few months to give investors a broad spectrum of options to choose from.

“Growth projections for the London hotel sector are strong over the next three to five years and the GuestInvest concept is unique in offering investors exposure to this market. As well as the tax advantages, the borrowing and pooling facilities of purchasing through a Sipp could put this asset class within the reach of many more people.”

Jonny Sandelson, CEO and founder of GuestInvest added:

“We are very excited to enter into this new strategic partnership with AEGON Scottish Equitable, and to be able to provide the GuestInvest model as an attractive and tax-friendly proposition for pension investments.

“By offering investors a new way to invest in this attractive asset class we are confident the concept of buy-to-let hotels will continue to grow. With strong current and forecast occupancy rates in the robust London hotel market, sound returns can be anticipated. Adding to this, GuestInvest is also continuing to expand its portfolio by identifying additional properties across the UK and abroad.”

-ENDS-

Notes to editors

• GuestInvest is available on both Group and Individual Sipp products.
• GuestInvest’s first hotel, Guesthouse West in Notting Hill, launched in April 2004 and two more are currently under development – Nest near Paddington Station and The Chiswell Street Hotel in the City. There are a total of 380 rooms in a £120 million property portfolio with approximately 250 rooms currently available for purchase.  GuestInvest recently announced a £140 million partnership with Bank of Scotland to help the company expand its portfolio to other major UK and international gateway cities.
• Returns from initial investors have averaged 6.92% net with a further 15% average capital growth on initial investment for people who have subsequently sold.
• GuestInvest guarantees investors will receive a minimum of 6% of the capital value of the room in the first 12 months of the hotel’s operation.
• Projections for London hotel sector –
  • "Since 2004 London's luxury hotels have seen higher room rates growth than other segments including first class, mid-market and budget hotels. This has driven high revenue per available room levels for the sector and we expect over 18 per cent growth this year." Price Waterhouse Coopers Hospitality Directions Europe Edition Issue 14 September 2006.
  • "This study concludes that 2,000 extra ("net") rooms will be required per annum over the period to 2026. To meet this target, a total of around 2,500 new ("gross") hotel rooms will be required each year, as we also expect a loss of 500 rooms each year". Hotel Demand Study June 2006, Greater London Authority.
  • In the year to July 2006, London hotels have experienced a rise in revenue and occupancy rates.  Revenue per available room rose 30%, the average cost of a London hotel room increases almost 20% and occupancy rages climbed to 88.6% from 77.8% a year earlier.  HLL Humberts Leisure.
  • Example projections (provided by GuestInvest)

• Commission of 2% of the purchase price is payable, 1% on exchange and 1% on completion. No renewal commission is payable.
• AEGON Scottish Equitable Sipp costs are £300 set up fee plus £500 annual fee and any transactional costs (for example deeds, mortgages) as applicable.
• AEGON Scottish Equitable Sipp clients currently have access to a range of property investment options from top managers such as Morley and schroders covering:
  • direct investment in commercial property
  • investment in a property based insured fund
  • investment in a property based fund supermarket fund
• AEGON Scottish Equitable aims to add a range of funds to its Sipp during Q1 2007 to give investors greater choice for exposure to both the residential and commercial property markets.

For further information

Margaret Robertson
PR Manager
T. 0131 549 6798 | M. 07740 897527
margaret.robertson @aegon.co.uk