Safestay says Berlin site exit removes a loss-making operation

Safestay PLC on Thursday announced the early termination of the lease at Safestay Berlin Kurfurstendamm and the proposed liquidation of an operating subsidiary.

The London-based hostel operator said the landlord of the Berlin hostel has served notice to terminate the lease ahead of the contractual expiry at the end of December. On termination of the lease, Safestay will cease operations at the property, it said.

Safestay said the property has faced ‘sustained operational and commercial challenges, including ongoing trading losses’ and the prospect of ‘material’ capital expenditure in order to bring the site to the standard expected by the group.

On receipt of the termination notice and having considered the alternatives, Safestay concluded that an early exit from the property is the ‘most commercially appropriate outcome.’

The property is operated through Hotel Auberge GmbH, an indirect wholly owned subsidiary of Safestay. On termination of the lease, Safestay intends to place Hotel Auberge into liquidation. The firm does not expect the liquidation to create ‘material recourse’ to the wider group.

Safestay believes that the outcome will be beneficial to the group, pointing out the Berlin Kurfurstendamm site has been loss-making, with an earnings before interest, tax, depreciation and amortisation loss of around €220,000 in financial 2025. In addition, investment of €300,000 to €500,000 would have been required to improve the property.

‘Exiting the site now is therefore expected to improve the group’s future cash profile and remove a loss-making operation from the portfolio,’ Safestay added.

Safestay stressed the decision relates to a specific site and does not affect its broader interest in the German market.

‘Safestay will retain its German holding structure and continues to see attractive opportunities in Germany over the medium term,’ it added.

Shares in Safestay were 11% lower at 12.00 pence each in London on Thursday.

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