Safestay (SSTY) has announced the early termination of the lease at its Berlin Kurfürstendamm hostel after the landlord served notice ahead of the contractual expiry date of 31 December 2026. As a result, the company will cease operations at the site and plans to liquidate the subsidiary that operates the property.
The Berlin Kurfürstendamm site has faced ongoing operational and commercial challenges, including trading losses, building-related issues and the prospect of significant capital expenditure to maintain the property at the standards expected by the group. Following a review of available options, the Board concluded that an early exit represented the most commercially appropriate outcome and was in shareholders' best interests.
The property is operated through Hotel Auberge GmbH, an indirect wholly owned subsidiary of Safestay. Following termination of the lease, the company intends to place the subsidiary into liquidation. Safestay said it has taken legal advice and does not expect the process to create material recourse to the wider group, with no parent company guarantees in place.
The move is expected to improve the group's future cash profile by removing a loss-making operation from the portfolio. The Berlin site generated an EBITDA loss of about €220,000 in FY25 and would otherwise have required an estimated €300,000 to €500,000 of additional investment to address property-related issues.
Safestay stressed that the decision relates only to the Berlin Kurfürstendamm property and does not alter its broader strategy in Germany. The group will retain its German holding structure and continues to see attractive medium-term opportunities in the market.
View from Vox
While the closure reduces Safestay's footprint in Berlin, the decision appears financially sensible. Exiting a loss-making asset removes a drag on earnings, avoids further capital commitments and should strengthen cash generation. Importantly, the company remains committed to Germany, suggesting management sees this as a portfolio optimisation exercise rather than a retreat from a key market.