INTERVIEW-Czech developer Finep expands, eyes financing

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PRAGUE, April 3 (Reuters) - Czech real estate developer Finep plans to speed up expansion both at home and around eastern Europe and is preparing a new way of financing operations, Chairman Michal Kocian said in an interview.

The closely-held Finep has tapped into the booming Prague residential property market, helped by fast economic growth, record low interest rates and foreigners hungry for real estate in the historic Czech capital.

It is now looking at bigger projects - Kocian said two 10-15 billion crown ($477-716 million) mixed-use Prague developments would be announced this year - and at expanding beyond Prague and the Slovak capital Bratislava where it is now active.

"We got the feeling we had slept in a little in terms of expansion abroad," Kocian said. "We are analysing opportunities in Sofia, Bucharest and Zagreb," he said.

Finep has so far been inviting private or institutional investors -- U.S. real estate firm Heitman and the CSPF fund co-owned by bank Ceska Sporitelna -- into individual projects.

A new Prague project with Heitman will cover 180,000 square metres of flats and 20,000-30,000 metres of commercial space.

The company now aims a shift to what Kocian called "systemic" financing of further expansion, which could come through a number of options ranging from institutional partners to taking the company public.

"We are used to (working with individual investors), we are getting offers from investors, therefore it is the first option. But it is appropriate to consider the advantages and disadvantages of each of the models and then decide," Kocian said, adding that a decision would be taken later this year.

Real estate firms have been in focus since successful bourse listings by Orco and ECM . Orco shares have gained 40 percent over the past year.

Kocian said Finep was also looking at the possibility of keeping some assets in a fund rather than selling them directly.

"We are also considering the option of creating a fund, which would acquire a larger volume of apartments in various projects and rent them out," Kocian said.

"The fund would be open to financial partners on one side, and on the other it could buy flats in other projects as well."

PRAGUE MARKET

In the home market of Prague, Kocian said there was still a shortfall of some 30,000-40,000 apartments, and supply would likely stabilise at some 6,000 to 7,000 units per year.

Prices this year are rising by as much as 15 percent, Kocian said, but this has been affected by fear of a potential tax hike which raised demand and allowed contractors to push costs up.

He forecast a slower price growth ahead, but added there was a still long way to go toward prices in Munich across the German border, which are some 2.5 times higher.

Czech consultancy IRI said prices in Prague jumped 22 percent last year, and forecast further growth this year. An average old 68-square metre flat cost 2.3 million crowns, and a new one cost 3.29 million last year, it said.

Kocian said some 40 percent of buyers move in instantly, while another 30 percent plan to move in later, and the rest are bought purely for speculation, many by Britons.