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Safestay has agreed conditional contracts to sell and lease back a Brighton freehold property for £3.125m, with completion expected before 15 January 2026 subject to bank approval.
The hostel operator said it plans to use the proceeds to reduce debt, support working capital and strengthen its balance sheet.
The move follows its June update that it was considering selling certain UK freeholds, and comes shortly after confirming the sale and franchising of its Safestay Edinburgh Cowgate site for £5.35m, due to complete on 1 December 2025.
The group bought the Brighton building in June 2024 for £2.275m. It secured planning consent in April 2025 to develop a 170-bed hostel. The property carried an unaudited book value of about £2.4m as at 30 June 2025.
Safestay will now lease back the site under a 15-year agreement that includes a six-month rent-free period. The company has committed £1m to converting the building ahead of a planned summer 2026 opening. Annual rent will be about £300,000 after the rent-free period.
The five-storey Grade II listed building on Pavilion Parade spans 15,300 sq. ft. and sits opposite the Royal Pavilion, around 600 metres from Brighton’s seafront.
Larry Lipman, chairman of Safestay, said: “The sale and leaseback of our Brighton freehold property for £3.125 million is fully aligned with our strategy to crystallise value for shareholders while supporting sustainable long-term growth.
“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.”
He added: “Work is well underway to convert the Property into a fantastic, 170-bed hostel ahead of opening next summer.
“Once operational, the site will create approximately 20 new jobs in the area as well as making a significant contribution to the local economy by enabling potentially thousands more visitors a week to stay in one of Brighton’s most vibrant and commercial areas.”
