Safestay (AIM:SSTY), one of Europe's largest hostel groups, has exchanged contracts to sell its leasehold interest in Safestay London Kensington Holland Park to Acerhawk for £3 million in cash.
Completion is expected by the end of October 2026, after which the site will stop trading under the Safestay brand.
The hostel generated audited revenue of approximately £1.7 million and profit before tax of approximately £87,000 in the 12 months to 31 December 2025.
Safestay acquired the leasehold, which runs until 2065, in 2015 for no premium and has since spent approximately £1.4 million on improvements to the site.
Against a book value of approximately £0.4 million at 30 June, the sale represents a gain of approximately £2.6 million, and a gain of approximately £1.6 million on the Group's total investment.
The deal is the fourth UK disposal since Safestay flagged a review of certain UK assets in June 2025, following the £5.4 million sale and franchise of its Edinburgh freehold, the £3.1 million sale and leaseback of its Brighton freehold, and the £5.1 million sale of its Glasgow freehold and hostel.
Net proceeds will go toward repaying debt, working capital and strengthening the balance sheet.
"This transaction will further strengthen the group's balance sheet and provide additional flexibility as we continue to selectively grow the portfolio and create shareholder value," said chairman Larry Lipman.
News Intelligence what this means for the company
Safestay has exchanged contracts to sell its Kensington Holland Park hostel leasehold to Acerhawk for £3.0 million, completing a fourth UK asset disposal since June 2025. The sale crystallises a £2.6 million gain on book value and will funnel proceeds into debt repayment and balance-sheet strengthening—part of a deliberate portfolio review that has now yielded approximately £16.6 million in gross proceeds across four UK properties.
The disposal extends Safestay's shift from owning freehold UK assets to a lighter, cash-generative model. Against FY25 adjusted EBITDA of £3.7 million, the cumulative proceeds from four UK sales represent material deleveraging capacity, though the Kensington site itself contributed only £87k profit before tax in the 12 months to end-2025—a modest earnings contributor relative to the group's total.
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