Peel Hotels is to place 600,000 new ordinary shares at 90 pence per share to fund the acquisition of the three remaining leasehold hotels within the Grace Hotels estate and the freehold on the Golden Lion in Leeds.

The Grace Hotels leasehold properties are the Crown & Mitre in Carlisle, the Strathdon in Nottingham and the King Malcolm in Dunfermline. Peel announced the share issue alongside its preliminary results for the year ending 13 February 2005.

Owned hotels turnover was up 5.3 per cent to £12.3m, but pre-tax profits were down 16 per cent to £1.2m due to poor performance at hotels managed under contract.

Chair, Robert Peel, said acquiring the three leaseholds and Golden Lion freehold would provide future income to compensate for the loss of earnings seen under contract.