Safestay, one of Europe’s largest hostel groups, has acquired a leasehold city centre site in Budapest, Hungary, via its wholly owned subsidiary Safestay Hungary.
Following refurbishment, the acquisition will add approximately 150 beds to Safestay’s existing portfolio, which numbers more than 3,580 beds across 18 sites excluding the group’s recently announced Brighton and Calpe Costa Blanca locations.
The site comprises five storeys and a large courtyard and is located in the heart of Budapest, a 15-minute walk from the Danube River and close to Budapest’s shopping district as well as the city’s bars and restaurants.
Safestay Hungary has signed a five-year lease for the property from Curzon Capital and under the terms of the agreement has the option to extend this over two additional five-year terms.
The first eight months of the property’s €150,000 annual rent will be waived while Safestay obtains the required licence to operate the property as a hostel and, subsequently, refurbishes the property at an anticipated cost of €600,000. Should Safestay be unable to secure the correct licence, the agreement will be terminated.
Once operational, the Budapest hostel is expected to contribute estimated revenue of approximately €350,000 and EBITDA after rent of €50,000 to the group during its first year of operation. This is expected to increase as the site matures.
Safestay’s entry into the Budapest hostel market is a natural extension of its strategy to expand its presence across key European cities, according to the firm, and builds on the company’s Eastern European presence in the Czech Republic, Slovakia and Poland.
Larry Lipman, chairman of Safestay, said: 'We are very pleased to announce the acquisition of a leasehold property in the heart of Budapest, a vibrant European tourist destination. 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.'
