(News Bulletin 247) – The real estate developer announced at the end of December the sale of its property administration activities to the Bridgepoint fund for 440 million euros. For TP ICAP Midcap, this operation represents a catalyst pushing the financial intermediary to return to purchasing on Nexity, considering moreover that the commercial low point has now passed.

At the end of December, Nexity announced that it had entered into negotiations with the British management company Bridgepoint for the sale of its “individual services” activity. The sale of this division concerning the group’s property administration businesses (trustee, management, rental and transaction), would be carried out on the basis of an enterprise value of 440 million euros.

This news was welcomed on the stock market, Nexity shares then jumped 10.75% on December 22, the day of the announcement.

An opportunity to reduce debt

This operation, announced at the end of 2023, is also “welcome” for TP ICAP Midcap. The financial intermediary believes that this sale will be beneficial for Nexity, even if the promoter will “separate itself from a non-cyclical and rather well-margined activity”. It will make it possible to significantly reduce the real estate developer’s debt, “while maintaining synergies with its Promotion activity thanks to the conclusion of a strategic partnership with Bridgepoint”, specifies TP ICAP Midcap.

“In our opinion, these activities have never been valued at their fair value by the market, the group having on the contrary been more penalized by the debt generated by these developments”, adds Florian Cariou, the analyst in charge of coverage. of the title at TP ICAP Midcap.

“Obviously this operation is a good opportunity to reduce the group’s debt with a sale price which seems to us to correctly value the Personal Services activities,” Oddo BHF, for its part, appreciated in a note commenting on the announcement. of this sale.

In its press release, the promoter had in fact recalled that this sale would contribute to the debt reduction desired by the company. At the end of June 2022, Nexity had net debt of more than 1 billion euros. To reduce this debt, Nexity, for example, sold its activities in Portugal at the beginning of September, an operation which was added to the sale last summer of its Polish activities for 100 million euros.

Furthermore, Nexity had also indicated that the capital gains generated by the sale of its property administration activity would accelerate the adaptation of Nexity “to new market conditions” and thus partly compensate for the downturn expected in 2024. .

A revaluation of the title

Like Oddo BHF, TP ICAP Midcap is therefore relatively optimistic about Nexity, while being aware that 2024 “will be difficult in terms of results”. In addition to the promoter’s efforts to reduce its debt, the financial intermediary notes a “probable beginning of improvement in commercial activity after the low point of last year, under the effect of the stabilization or even the beginning of a decline in interest rate”.

The leading real estate developer had a difficult year in 2023, penalized by an intense real estate crisis. Reservations for new housing have collapsed with the increase in credit conditions for individuals. An unprecedented context which then led Nexity to lower its 2023 objectives last July. This lack of visibility also pushed the real estate developer to suspend its medium-term objectives, recorded in its Imagine 2026 strategic plan.

These are all bad signals which then weighed down Nexity’s stock market performance in 2023. With a drop of 35.34% in its shares, “Nexity posted the worst stock market performance in the sector last year”, recalls TP ICAP Midcap.

For the financial intermediary, the worst is in the rearview mirror. “The prospect of the start of a commercial rebound, hoped for from the second half of this year, should logically also result in a more significant stock market rerating,” says Florian Cariou.

TP ICAP Midcap therefore raises its recommendation to place the cursor at “buy” versus “hold”. The price target is also raised to 22 euros, against 19 euros taking into account “taking into account the adjustment of market parameters”, the financial intermediary’s estimates “being for the moment unchanged pending the finalization of this transfer”.

This boost from the financial intermediary supports Nexity shares, which are currently up 2.1% at 16.25 euros, around 10:45 a.m. this Thursday morning.