Luxury hostel brand Safestay is to expand overseas following its acquisition of the U Hostels portfolio of three leasehold properties for €3m (£2.6m).
U Hostels comprises two sites in Madrid and one in Paris. The Madrid properties include a 226-bed luxury hostel with a 15-year lease and the adjacent apartment block made up of 14 one-bedroom and 20 two-bedroom apartments, which will open in 2018 following renovation.
The 2,300sq m building in Paris is located in Montmartre and has planning permission for conversion into a hostel offering around 260 beds. It has a 12+12 year lease, which will be effective from the opening of the hostel in early 2019. Safestay will contribute €2.3m (£2m) towards its redevelopment.
The three hostels will increase Safestay's existing portfolio to seven which up until now has operated properties in London (Elephant & Castle and Kensington Holland Park), York and Edinburgh.
Larry Lipman, group chairman of Safestay, described U Hostels as "an excellent fit" for the company as both businesses offer "the opportunity to stay in unique, stylish buildings" in gateway European cities.
"This transaction represents our first step in establishing a pan-European network of Safestay hostels. Going forward, we will be able to offer guests the ability to transfer seamlessly between Edinburgh, York, London, Paris and Madrid.
"We expect this network to be expanded as we have further transactions under advanced negotiation and the capital in place to complete them."
In March Safestay announced an £18.4m debt restructuring and refinancing, and the sale and leaseback of its Edinburgh and Elephant & Castle hostels. The group's turnover for 2016 was £7.4m, with an EBITDA of £2.2m.
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