Frasers Hospitality eyes property fund but in no hurry to start one, says CEO

Frasers Hospitality, a unit of food and property conglomerate Fraser and Neave (FRNM.SI), has been in talks with private equity firms to form a real-estate fund but is not in hurry to start the business, a senior executive told Thomson Reuters in an interview today.

“I think there will be many good deals, but we’re not in a hurry to jump in at the moment,” Choe Peng Sum, chief executive officer of Frasers Hospitality, the group’s property unit, said in an interview in Shanghai. “The market might be even worse.”

Asia’s property market has been struck by the global financial crisis, with transaction volumes drying up and prices falling as economic growth stalls.

Instead, Fraser Hospitality is stepping up its fee-based property management business, aiming to sustain annual revenue growth at 26% seen over the past five years by expanding into Asian countries such as China and India.

Fraser and Neave, which brews beer, manages malls and publishes magazines, posted a 5% increase in revenue during the last fiscal year that ended Sept 30, as strong growth in its food & beverage business was partially offset by a slowdown in its property and publishing segment.

Choe said there was a growing market for serviced apartments in Asia as companies cut expenses and encourage shorter-term travel. “The market is only starting to take off in Asia, there’s no oversupply.”

In China, Fraser Hospitality plans to expand into more cities, and aims for 13 properties under management by 2010. The company said in July last year it aimed to add 5,000 rooms in Asia by 2010, from 3,500 units at the time.

Fraser, founded by John Fraser and David Neave more than a century ago, has a presence in 20 countries spanning Asia, Europe and the United States.

Source : The Edge – 31 Mar 2009

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