Specialist lender MERA has provided a £3.25 million stabilisation loan to refinance a 131-bed hostel on City Road, London. The 24-month bridging facility allows the borrower to establish a trading history before securing longer-term financing.
The loan was structured at 65% of open market value and 70% of vacant possession value. The hostel, which features private rooms and dormitories alongside communal facilities including a lounge, kitchen and outdoor patio, currently operates at approximately 80% occupancy. The borrower anticipates this figure will increase gradually during the loan term.
Asset repositioning complete
The borrower acquired the property in 2025 and subsequently completed a full refurbishment. The stabilisation loan replaces the previous facility that funded the acquisition and renovation works, transitioning the asset from a repositioning phase to active trading operations.
The transaction comes as demand for serviced accommodation continues to grow across the capital. Research published by the Greater London Authority in July 2026 projected that demand for serviced accommodation rooms will increase from around 166,000 in 2025 to 232,000 by 2050, representing an addition of 66,000 rooms. The report noted that new supply requires several years to navigate planning and construction processes.
Specialist lending approach
Leo del Rosso, associate director at MERA who led the transaction, said: “Hospitality is a specialist asset class that many lenders shy away from, but it’s an area where MERA has real depth of experience. We’ve deployed over £125 million into secured lending across specialist and alternative real estate.”
The financing structure reflects broader trends in the alternative accommodation sector, where investors seek to capitalise on growing demand for non-traditional lodging options in major cities.
Matthew Yassin at Aquilae brokered the transaction, with valuation services provided by Fisher German and legal advice from Glovers. The deal demonstrates continued lender appetite for hospitality assets that have completed repositioning and established operational track records.
