Member Article

Safestay plots Euro moves after securing £18m banking facility

Contemporary hostel operator, Safestay, has secured a banking facility with its creditors in a move that it says will ‘significantly reduce’ the cost of its debt and support its European expansion ambitions.

The London-headquartered hostelier has negotiated a new £18.4m five year bank facility with HSBC which consolidates its previous £13.8m bank facility and convertible loans of £3.8m into one facility, thus reducing the cost of its debt and facilitating the repayment of its loans when they become due.

Larry Lipman, who is Chairman at Safestay, said that the refinancing deal would significantly improve the financial footing of the publicly listed business and support its continental expansion plans.

He said: “Consolidating our borrowings into one new facility at a lower cost with an international lender capable of supporting our European ambitions is a logical and very positive step and has been made possible by the increasing trading strength of the business.”

In tandem with its refinancing, Safestay has also announced the sale and leaseback of two of the biggest properties in its portfolio in Edinburgh and Elephant & Castle, which has helped to raise a further £12.6m in cash for the chain.

The sales, which have been agreed with an unnamed ‘institutional buyer’, sees Safestay receive £6.1m for its Elephant & Castle site and £5.32m for its Edinburgh hostel, in exchange for 150 year geared ground rent leases.

Lipman added: “The underlying uplift in value for the Edinburgh and Elephant & Castle sites is excellent for the business and the transactions this has enabled reflect well on the strength of our business, our brand and the quality of our properties and means we can re-cycle capital into new growth opportunities where we can continue to achieve higher and therefore more attractive returns.”

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