Safestay adds another Barcelona hostel to portfolio

The AIM-traded company had agreed to acquire three hostels from Equity Point at the end of May, located in Lisbon, Prague and Barcelona.

It said the acquisition of the second hostel in Barcelona, known as Barcelona Gothic, from Equity Point would mean the group now has 11 hostels within the portfolio.

Situated in the Gothic Quarter, Barcelona Gothic is 150 yards from the Picasso Museum and a five minute walk to Barcelona's La Rambla central street.

A leasehold site with 24 years remaining, the hostel offered 144 beds and had “significant” communal spaces with the potential to be further enhanced, according to the board.

Together with the group's first Barcelona hostel, Safestay now has 254 beds in the Catalonian city.

For the financial year to 31 December 2016, the Barcelona Gothic hostel generated sales of €0.7m and EBITDA of €0.2m.

The consideration was to be paid in cash from the company's current cash resources.

Safestay said it had now invested €8.6m in recent European acquisitions, following the gross £12.6 million sale and leaseback transaction completed in April.

The company also announced that the first transaction agreed with Equity Point at the end of May had completed.

As a result, the €3.6m loan was redeemed, and ownership of the three hostels in Lisbon, Prague and Barcelona have been transferred to Safestay.

“Barcelona Gothic is an attractive contemporary hostel located in the heart of one of Europe's most popular cities to visit,” said company chairman Larry Lipman.

“There is no requirement for significant additional investment instead the focus will be to integrate the site into the business under the Safestay brand and together with our other Barcelona hostel which is located next to the beach we will look to build upon an already established revenue stream.”

Lipman said the last three months had been “transformative” for the business, beginning with the debt refinancing and sale and leaseback transaction in April which released capital to support the expansion of its portfolio from four to 11 hostels, and increase the number of beds from 1,526 to 2,472 plus 34 apartments.

“We look forward to providing a more detailed update on the acquisitions we have made with the announcement of our half-year results in September.”