LONDON (ShareCast) - (Sharecast News) - Hostel operator Safestay announced the strategic acquisition of a leasehold property in Budapest on Tuesday, as part of its continued expansion into key European cities.
The AIM-traded firm said the acquisition, made through its wholly-owned subsidiary Safestay

Hungary, would add around 150 beds to its existing portfolio of over 3,580 beds across 18 sites, excluding recent acquisitions in Brighton and Calpe Costa Blanca.

It said the newly-acquired site is a five-storey building with a large courtyard, centrally located a 15-minute walk from the Danube River and near Budapest's shopping district, bars, and restaurants.

Safestay said it had signed a five-year lease with Curzon Capital, with an option to extend the lease for up to two additional five-year terms.

Under the agreement, Safestay said it would benefit from the first eight months of the property's €150,000 annual rent being waived, allowing time to secure the necessary licence to operate the property as a hostel and to complete planned refurbishments, expected to cost around €0.6m.

If the licence was not obtained, the agreement would be terminated.

Once operational, the Budapest hostel was projected to generate around €0.35m in revenue and €50,000 in EBITDA after rent in its first year, with further growth expected as the site becomes established.

"We are very pleased to announce the acquisition of a leasehold property in the heart of Budapest, a vibrant European tourist destination," said chairman Larry Lipman.

"This site has excellent potential and, following refurbishment, will be a fantastic addition to Safestay's portfolio of premium, well-located hostels.

"This agreement builds on the group's exciting expansion over the past few months and reflects continued progress against our growth strategy."

At 1100 BST, shares in Safestay were up 0.73% at 20.75p.

Reporting by Josh White for Sharecast.com.

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