LEISURE group Thistle is to sell more than half its portfolio of hotels, including sites in Middlesbrough and Newcastle, in a deal worth more than £600m.

The Leeds group has agreed to sell 31 regional and six London hotels to Gamma Four, a subsidiary of venture capital firm Euro & UK Property.

The £600.4m deal comes just days after Thistle blamed the most challenging conditions in the tourist industry since the Gulf War for a sharp fall in final full-year profits - foot-and-mouth, the global economic slowdown and September 11 all contributed.

The deal involves Thistle Hotels (Management) Limited, a subsidiary of Thistle, signing agreements to manage the hotels for 30 years from completion of the disposal.