MANTRA Group (ASX:MTR) has teamed up with David Devine's Metro Property Development in a deal that could boost the accommodation provider's rooms under management by more than 7 per cent.
Under the terms of a condition deal, Mantra has signed up to buy the management rights for more than 1500 apartments being developed by Metro across seven projects in Brisbane. The acquisition price has not been disclosed.
The agreement kicks off with Newstead Towers, comprising 314 apartments, Broadway on Ann with 247 apartments and Aqua at Newstead Central with 149 apartments.
These projects, which have been targeted largely by investors, are due for completion and settlement this year.
Metro managing director Luke Hartman says Metro generally does not retain management rights for its projects. Mantra has secured the deal following a national expressions of interest campaign.
"Metro's main focus is on the development, sales and marketing and construction of projects," says Hartman.
"The sale of management rights is part of our overall strategy, which enables us to focus on what we do best and move on quickly to the next project.
"Brisbane's inner-city, particularly Fortitude Valley and Newstead, is experiencing significant rental demand.
"We have seen a high level of interest from local, interstate and overseas investors who can see significant opportunity in this area of the market."
Tim Crooks, of Resort Brokers Australia, says the marketing campaign for the management rights drew five submissions from some of Australia's big names in accommodation management.
"It was an extremely competitive process and after a lengthy interviewing process with the top three bidders, Mantra Group emerged as the successful party," he says.
"Mantra Group's position as industry leaders in the management rights space, and their deep understanding of the Brisbane market make them the perfect management partner for Metro."
Mantra, Australia's second-largest accommodation provider, currently has about 19,500 rooms under management across its portfolio of more than 125 properties. The 1500 apartments under the Metro deal will boost its portfolio by 7.6 per cent.
Bob East, Mantra's CEO, says the deal remains subject to a number of conditions but is a significant transaction for the company.
"The idea of adding Metro's seven high-quality developments to our existing portfolio is a compelling opportunity and is well aligned to our operating expertise and growth aspirations," he says.
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