DEVINE SELLS APARTMENT MANAGEMENT RIGHTS

DEVINE'S (ASX: DVN) Brisbane apartment management rights have been acquired by diversified financial services company Spring FG (ASX: SFL), with expansion to Sydney and Melbourne penned as likely over time.

SFL has established a real estate asset management division and acquired the exclusive management rights at DVN's still in-construction Mode Apartments, where 25 per cent of investor-owners are existing SFL clients.

The company will provide property asset management, letting agency and resale services to DVN's existing and new clients, and investor-owners, as well as building management services to bodies corporate.

A sum of $1.88 million is expected to be paid for the rights inclusive of $210,000 for a commercial lot within the development from where it will operate its services.

SFL managing director Keith Cullen says the acquisition is a natural extension of his company's services.

"With our clients already holding residential investment property assets estimated in excess of $500 million, the physical management of real estate assets is a natural extension of our investment advice and portfolio management services," says Cullen.

"Our clients already hold around 500 residential investment properties in inner-Brisbane, within a readily serviceable radius of Mode, so the acquisition of the management rights there provides an ideal hub from which to provide asset management and letting services across that entire asset pool.

"In addition to enabling end-to-end property advice and management service, the provision of physical asset management and letting services will provide stable recurring income that we expect to be a material contributor to revenue and profits into the future."

The acquisition will be funded by from SFL's balance sheet that currently holds more than $8 million in cash and receivables with zero debt.

The term is for 25 years. Mode is expected to be completed in mid-2016.

Pictured: DVN managing director David Keir