Safestay PLC Acquisition (2388X)
December 18 2019 - 2:00AM
UK Regulatory
TIDMSSTY
RNS Number : 2388X
Safestay PLC
18 December 2019
18 December 2019
Safestay plc
("Safestay", the "Company" or the "Group")
Acquires three Hostels expanding network to 21
Safestay (AIM: SSTY), the owner and operator of an international
brand of contemporary hostels, is pleased to announce:
-- the acquisition of three hostels in Warsaw, Prague and
Bratislava from Dreamgroup Management E.C.P. Ltd for a total
consideration of EUR3.7 million; and
-- the increase of Safestay's network to more than 5,000 beds
across 21 hostels, all centrally located in Europe's leading
cities.
Larry Lipman, Chairman of Safestay, said, "It is satisfying to
meet our target of having at least 20 hostels one year ahead of
schedule. However, the true value of the operating network we are
establishing is in the customer response to the Safestay brand and
the sought-after central locations in key cities our hostels
occupy. No other hostel operator offers the same range of premium
sites in leading locations making the Safestay network uniquely
positioned in a sector that is growing rapidly.
It is pleasing to note that early stage investment in people and
systems has positioned the Group strongly to integrate the flow of
additional hostels, and that post integration, there is a positive
response to the impact of the specialist systems, revenue
management and sales initiatives implemented throughout the
company. The board believe this will combine to ensure long term
ongoing dominance by Safestay in the sector"
Acquisition of 3 Dream Hostels
The three sites are being acquired from Dreamgroup Management
E.C.P. Ltd which owns and operates hostels primarily in Ukraine.
Key details on each site:
-- Warsaw: An excellent hostel and the largest in Warsaw
offering 158 beds. Centrally positioned in the heart of the Old
Town and a short stroll from the Old Town Market Square. The site
has been operating as a hostel since 2016 and is therefore well
established in a City that attracts around 6.4 million visitors per
annum.
-- Prague: The hostel opened in February 2019 in a well-located
site in the heart of this famous city. Offering 204 beds, the site
complements the Group's existing hostel in Prague so that together
Safestay can accommodate 354 people across the two hostels. Given
the Group's detailed knowledge of the Prague market, the Company is
confident that this site will become a strong addition to the
Safestay network.
-- Bratislava: A 124 bed hostel, established in 2017 in the
capital of Slovakia. This hostel is conveniently located in this
vibrant city and is an excellent fit within our portfolio.
Warsaw and Bratislava generated EUR1.2 million revenues and
EUR0.1 million EBITDA in 2018, and it is estimated that following
the opening of Prague in 2019, the 3 hostels will generate revenues
in excess of EUR2 million and EBITDA of EUR0.3 million in the 12
months to 31 December 2019. The consideration before transaction
costs, which is also the value of the assets being acquired, is
EUR3.7 million and will be satisfied in cash from the Group's
existing resources. Completion of the acquisition is expected to
happen in Q1 2020. The acquisitions are expected to be accretive in
the first full year of ownership. All three properties are
leasehold.
The three sites will be integrated with Cloudbeds, the Group's
booking system, from completion and will require minimal investment
to operate under the Safestay brand. They achieved an average
occupancy of 74% in the first 9 months to September 2019 and are
expected to immediately benefit from joining the Safestay
network.
Safestay Network
Since October 2018 Safestay has doubled in size, adding 10
hostels to its portfolio and increasing the number of beds to over
5,000 when all development plans have been completed. Of the
operational sites acquired, Vienna (November 2018), Brussels
(November 2018) and Pisa (June 2019) have all traded well with
occupancy in excess of 75% in the 11 months to November 2019. We
expect our most recent acquisitions in Glasgow and Berlin to follow
the same successful path, even more so once their conversion to
hostels is completed in Q1 2020.
Region Location Beds Leasehold/
Freehold
============================= ====================
UK Edinburgh 618 Finance lease
=================== ============================= ==================== ==============
Glasgow *200 Freehold
=================== ============================= ==================== ==============
London "Kensington Holland 345 Finance lease
Park"
============================= ==================== ==============
London "Elephant and Castle" 491 Finance lease
============================= ==================== ==============
York 151 Freehold
=================== ============================= ==================== ==============
Europe Barcelona "Passeig de 380 Leasehold
Gràcia"
=================== ============================= ==================== ==============
Barcelona "Gothic Quarter" 132 Leasehold
=================== ============================= ==================== ==============
Barcelona "Sea" 96 Leasehold
============================= ==================== ==============
Berlin *168 Leasehold
============================= ==================== ==============
Brussels *196 Leasehold
============================= ==================== ==============
Lisbon 150 Leasehold
============================= ==================== ==============
Madrid 228 Leasehold
============================= ==================== ==============
Pisa 171 Freehold
============================= ==================== ==============
Prague Charles Bridge 150 Leasehold
============================= ==================== ==============
Vienna *141 Leasehold
=================== ============================= ==================== ==============
Operating 15 3,617
=================== ============================= ==================== ==============
Under Development Athens 132 (Q1 2020) Leasehold
=================== ============================= ==================== ==============
Prague Museum 204 (Q1 2020) Leasehold
=================== ============================= ==================== ==============
Bratislava 124 (Q1 2020) Leasehold
============================= ==================== ==============
Warsaw 158 (Q1 2020) Leasehold
============================= ==================== ==============
Paris 246 (2020) Leasehold
============================= ==================== ==============
Venice 660 (2022) Freehold (JV)
=================== ============================= ==================== ==============
Total 21 5,141
=================== ============================= ==================== ==============
*bed stock after completion of the conversion / renovation in
Vienna, Brussels, Glasgow and Berlin, all due to complete in Q1
2020
Enquiries
Safestay plc +44 (0) 20 8815 1600
Larry Lipman
Liberum Capital Limited
(Nominated Adviser and Broker) +44 (0) 20 3100 2000
Andrew Godber/Edward Thomas/Laura Hamilton
Novella +44 (0) 20 3151 7008
Tim Robertson
Fergus Young
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (MAR).
For more information visit our:
Website www.safestay.com
Vox Markets page
https://www.voxmarkets.co.uk/company/SSTY/news/
Instagram page www.instagram.com/safestayhostels/
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END
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