Safestay to take over Equity Point hostels in €3.6m deal
Hostel owner and operator Safestay announced on Wednesday that it entered into a debt financing agreement with Equity Point Hostels, that would see the group make an immediate payment to Equity Point of €3.6m - structured by way of debt - in return for security over 90% of Equity Point's share capital, valued at approximately €10m.
The AIM-traded company described Equity Point as a pan European hotel and hostel group, which owns and operates seven hotels and hostels across the continent.
Following the satisfaction of certain completion mechanics, it was anticipated that Safestay would ultimately be assigned 100% of the operating leases pertaining to three hostels owned by Equity Point, as redemption of the €3.6m loan.
Through the two-stage acquisition structure, the portfolio of sites to be acquired by the group contained one hostel in Barcelona, one in Prague and one in Lisbon, consistent with Safestay's strategy to establish a presence in “leading European gateway cities”.
The hostels were being acquired on operating leases to 2028 in Prague, 2031 in Barcelona and 2029 with subsequent automatic five-year renewal periods in Lisbon.
Safestay said the effective consideration for the acquisition was €3.6m, which would be satisfied from the group's existing cash resources.
For the financial year ended 31 December, the three hostels generated sales of €1.6m and EBITDA of €0.4m.
“The acquisition of these three sites, together with the U Hostels acquisition we announced earlier this month, means we have increased our portfolio from 4 to 10 hostels,” said Safestay chairman Larry Lipman.
“Most importantly, however, we have acquired sites in excellent locations, namely: Madrid, Barcelona, Paris, Prague and Lisbon.”
Lipman said it was a “strong” line up and a natural fit with its existing sites in London, York and Edinburgh.
“These three hostels, being already operational, will immediately add to our operating platform and significantly enhance our overall offer.
“We look forward to completing the transaction and integrating the new sites into the enlarged Safestay business.”