Safestay boosted by hostel openings in Glasgow and Edinburgh
Safestay gave no further details but noted: 'The Company does not currently anticipate operational or headcount changes arising from any such freehold disposal.'
The announcement indicates that Safestay may be considering a sale and lease-back type deal, which would allow it to raise cash that could be used to fund acquisitions. House broker Shore Capital said Safestay was well-positioned for growth in what it described as a highly attractive segment of the global hotel industry.
Hostels are popular with young travellers.
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Safestay has highlighted the potential of the Scottish market by opening hostels in Glasgow and Edinburgh in recent years.
It converted the Best Western Glasgow City hotel on Elmbank Street near Charing Cross Station into a hostel after buying it for £3.15m in 2019.
The company opened the Edinburgh Cowgate hostel in 2024 on the site of a property that it bought for £4.3m in 2023.
The company has five hostels in the UK including outlets in London and York.
It has hostels in a range of other countries including Spain and Italy.
Analyst Greg Johnson at Shore Capital said Safestay was well-funded and had a track record of successful asset recycling.
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Mr Johnson noted that at the end of June 2024, Safestay's portfolio of seven freehold and long leasehold properties had a valuation of £50.1m.
The properties in Glasgow and Edinburgh were valued at £4.9m and £4.3m respectively.
Safestay has a stock market capitalisation of around £16m.
The company said there could be no certainty that the disposal it is considering would proceed and advised shareholders to take no action.
Shares in the firm closed at 25p yesterday, unchanged on the day.
They sold for 21p in May.
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The company is led by sector veteran Larry Lipman who is managing director of the London-based Safeland residential property investment business.
On Monday Safestay said it had been awarded a £1.4m insurance payment in respect of the interruption to its business during the Covid-19 pandemic.
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