Safestay buys U Hostels for €3m

AIM-listed Safestay announced the acquisition of U Hostels for a total cash consideration of €3m.

The U Hostels portfolio includes a 226-bed luxury hostel located in the heart of Madrid, operating since 2013 under the U Hostels brand with a 15-year lease. It also includes an apartment block next to the Madrid hostel. The block is made up of 14 one-bedroom and 20 two-bedroom apartments which are currently being renovated and will open during 2018. The apartments will be managed by the hostel management team.

In addition, there is a 2,300 sqm building in Montmartre, Paris, with 2017 planning for conversion into a hostel with around 260 beds hostel. The landlord will be investing alongside Safestay in the redevelopment of this site, expected to commence this year and open early 2019. Safestay's contribution to this redevelopment is capped at €2.3m, which will be funded from existing cash resources.

Group chairman Larry Lipman said: “The U Hostels concept of what makes a modern luxury hostel is similar to ours, in terms of providing guests with the opportunity to stay in unique, stylish buildings, located centrally in gateway European cities. The U Hostels portfolio is therefore an excellent fit with us and will increase the Safestay portfolio to 6 hostels and the number of beds we offer to 2,012, excluding the apartments in Madrid.

“This transaction also represents our first step in establishing a pan-European network of Safestay hostels. I am particularly delighted that we are starting with sites in Madrid and Paris, two of the most visited cities in Europe. Interestingly, Paris in relation to the number of visitors it attracts each year, has the fewest number of hostel beds available.”

At 0900 BST, the shares were up 0.5% to 50p.