Zolostays to sell its college hostel business to Good Host Spaces for Rs 107.8 Cr

Zolostays Property Solutions on Friday said its shareholders have approved the sale of its business that manages hostels for colleges and universities to Good Host Spaces Management Services for about Rs 107.8 crore. The decision was made during a special meeting of the shareholders. 

This part of Zolostays' business, including its related assets and responsibilities, will be transferred completely to Good Host Spaces, the company said in a statement. 

About 90% of the payment for the sale will be in cash, and the remaining 10% will be paid through a type of investment that could potentially turn into shares of the buyer's company later. 

Zolostays explained that selling this division will allow the company to concentrate on its main business activities, as well as improve cash flow, strengthen overall financial health, and make operations more efficient.

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Good Host Spaces is an owner-cum-operator of purpose-built captive student housing. In October 2023, the company underwent a major ownership change, with real estate investment firm Alta Capital acquiring 100% of the company from its previous major investors, Goldman Sachs and Warburg Pincus, for $320 million (nearly Rs 2,700 crore).

At the time, Good Host Spaces managed around 25,000 student beds across five cities by partnering with universities to operate on-campus housing.

Zolostays is trying to reposition itself as a premium accommodation provider to boost revenue. It has become more discerning while selecting assets, preferring only high-quality properties. Also, it is implementing design enhancements at its existing properties to reposition them as higher-tier units.

This shift has “led to better pricing power” for Zolo, which expects to achieve profitability in the next two quarters.

Between 2021 and 2022, the company's operational revenue grew by less than 1% to Rs 44.8 crore. The company managed to narrow its losses by almost 25% to Rs 67.5 crore for FY22 from Rs 89.9 crore in the year-ago period by cutting down its expenses.