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(Sharecast News) - Safestay announced on Tuesday that it has agreed a sale-and-leaseback of its Brighton freehold property for 3.125m, a move the hostel operator said would strengthen its balance sheet and support long-term growth plans.
The AIM-traded firm said the transaction, which was conditional on bank approval, was expected to complete before 15 January.
Net proceeds would be used to repay debt and provide additional working capital.
The deal followed Safestay's earlier announcement that it was considering the sale of UK freehold assets, and came shortly after the 5.35m sale and franchising of its Edinburgh Cowgate property, due to complete on 1 December.
The group bought the Brighton site in June 2024 for 2.275m and secured planning approval in April this year to convert it into a 170-bed hostel.
As of 30 June, the property carried an unaudited book value of about 2.4m.
Under the terms of the 15-year leaseback, Safestay said it would benefit from a six-month rent-free period while it continues its 1m conversion programme ahead of a planned summer 2026 opening.
After that, the group would pay annual rent of about 0.3m.
The Grade II listed, Regency-style property covers 15,300 square feet across five storeys on Pavilion Parade, close to the seafront and opposite the Royal Pavilion.
"The sale and leaseback of our Brighton freehold property for 3.125m is fully aligned with our strategy to crystallise value for shareholders while supporting sustainable long-term growth," said chairman Larry Lipman.
"Alongside the recent successful sale and franchising of our Edinburgh freehold, this transaction will further strengthen our balance sheet and provide additional flexibility as we continue to deliver our plans to create shareholder value."
Lipman said work on the Brighton conversion was progressing well, with the hostel to create around 20 jobs and bring thousands of visitors each week once open.
At 1440 GMT, shares in Safestay were down 2.7% at 18p.
Reporting by Josh White for Sharecast.com.