Moorfield has joined forces with Larry Lipman’s Safeland to create a £50m hostels joint venture.
The Safestay jv’s first project will be transforming the former London HQ of the Labour party, John Smith House, at 144-152 Walworth Road, SE1, into a 400-bed hostel.
Moorfield’s MREF II fund has contributed £20m to the jv, with Safeland committing £5m, overseeing development and hostel management, and identifying opportunities.
Moorfield chief executive Marc Gilbard said: “The hostel market is fragmented and underdeveloped, and this jv presents an opportunity to create a major hostel brand providing a high-quality product.”
The jv, which will invest through a Jersey-domiciled vehicle, plans to establish a chain of “tourism-driven hostels” with an initial focus on London.
Rival fund Patron Capital has been investing in the sector since 2006 when it bought family-run Generator. The group is now the largest hostel chain in Europe and is on target to have 4,500 rooms by 2013.
