Safestay PLC Acquisition (7337F)
May 22 2017 - 2:00AM
UK Regulatory
TIDMSSTY
RNS Number : 7337F
Safestay PLC
22 May 2017
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 ("MAR").
22 May 2017
Safestay plc
("Safestay", the "Company" or the "Group")
Acquisition of U Hostels
Safestay (AIM: SSTY), the owner and operator of a new brand of
contemporary hostel, is pleased to announce the acquisition of U
Hostels Albergues Juveniles, S. L. ("U Hostels") for a total cash
consideration of EUR3.0 million ("the Acquisition").
The U Hostels portfolio includes three leasehold properties:
-- A 226 bed luxury hostel located in the heart of Madrid,
operating since 2013 under the U Hostels brand with a 15 year
lease.
-- An apartment block situated next to the Madrid hostel. This
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.
-- A 2,300 sqm building in Montmartre, Paris with 2017 planning
for conversion into a circa 260 bed hostel. The building is ideally
located to become a Safestay hostel, it has a 12+12 year lease
effective from the opening of the 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 EUR2.3 million,
which will be funded from existing cash resources.
Commenting on the acquisition Larry Lipman, Group Chairman,
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.
Going forward, we will be able to offer guests the ability to
transfer seamlessly between Edinburgh, York, London, Paris and
Madrid. All great cities and we expect this network to be expanded
as we have further transactions under advanced negotiation and the
capital in place to complete them.
Madrid
The hostel is positioned at the luxury end of the market whilst
still offering excellent value for money and combines with the
apartment building to provide guests with a hybrid option whereby
they can either as a group opt to stay in an apartment whilst still
taking advantage of the hostels food & beverage offer or choose
to stay in the hostel. As with previous acquisitions of going
concerns, the sites will be re-branded under the Safestay name and
incorporated into the Group structure and critically into its
marketing capabilities and capacity to refer guests across the
hostel network. This is a natural extension of Safestay's brand
into key European gateway cities.
Paris
Montmartre is a famous bohemian Parisian area, home to the
Moulin Rouge and an ideal location for a hostel. U Hostels had
intended to develop the site and therefore 2017 planning permission
is in place and re-development is expected to commence this year.
The cost of re-developing and refurbishing the building as a
Safestay hostel will be shared under an agreement with the
landlord. Safestay's expected share of the costs will be capped at
EUR2.3 million, excluding fit-out costs.
Acquisition
For the financial year ended 31 December 2016, the Madrid hostel
generated sales of EUR1.3 million and a net loss of EUR0.1 million.
The business will increase substantially with the opening of the
apartment block in Madrid which will offer 34 individual apartments
to rent and the proposed hostel in Paris which will have circa 260
beds.
The Acquisition together with Safestay's share of the planned
investment in the fit out of the Madrid apartments and capped
re-development of the Paris site and fit out into a Safestay hostel
is EUR6.5 million in total. This will be funded by the net proceeds
from the Company's recent sale and leaseback transaction and the
asset backed financial headroom.
- ENDS -
Enquiries
+44 (0) 20 8815
Safestay plc 1600
Larry Lipman, Chairman
Canaccord Genuity Limited +44 (0) 20 7523
(Nominated Adviser and Broker) 8000
Bruce Garrow
Chris Connors
Ben Griffiths
Novella
+44 (0) 20 3151
Tim Robertson 7008
Toby Andrews
For more information visit: www.safestay.com
This information is provided by RNS
The company news service from the London Stock Exchange
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