(News Bulletin 247) – On the sidelines of the publication of its half-yearly accounts, the largest developer on the Parisian stock exchange announced that it had entered into negotiations with Crédit Agricole Immobilier to sell it its subsidiary specializing in the management of corporate real estate. The market welcomed this new operation intended to reduce Nexity’s debt.

Unsurprisingly, Nexity announced degraded half-year results. The real estate developer remains on the front line of an unprecedented real estate crisis, particularly in new construction

In the first half of the year, the group revealed a decline in turnover, and the rest of the income statement turned out to be more degraded than anticipated by TP ICAP Midcap. The current operating loss came to 63.7 million euros, mainly due to Nexity’s difficulties in the residential sector.

A “low point” in 2024

But the group was able to count on an exceptional element to turn its accounts into the green. In April, Nexity sold its property management business to the Bridgepoint fund for an enterprise value of €440 million. This division concerned the group’s property management businesses (syndic, management, rental and transaction).

This transaction generated a capital gain that was higher than the expectations (183 million euros) of Florian Cariou, the analyst in charge of covering the case at TP ICAP Midcap. The capital gain from this transaction had the virtue of greening certain elements of the income statement.

The loss was transformed into an operating profit, amounting to 54.9 million euros as expected by the design office, while the net profit group share is also in positive territory at 45 million euros.

However, the analyst warns that the “trend should however reverse in the second half of the year with losses that should widen and in addition the impact of the job protection plan (estimated at around 50 million euros)”. Nexity had announced this plan at the end of February and detailed its outlines two months later, with a view to adapting to the “new market data” and partially offsetting the low point of the cycle expected in 2024.

The group confirms on this subject that the “financial low point” will be reached in 2024 before a recovery begins in 2025. TP ICAP Midcap is less enthusiastic than Nexity and adopts “an even more degraded scenario for 2024 with net losses expected at nearly 100 million euros”, before “a more gradual rebound in margins thereafter”.

Nexity Property Management sale project

But what the market is buying this Friday is not so much the group’s prospects as the efforts undertaken by the developer to deleverage. Nexity shares jumped 13.2% and are still at the top of the SBF 120 at around 4:30 p.m.

It must be said that the sale of the property management business in the spring allowed it to reduce its net debt to 579 million euros at the end of June 2024, compared to 843 million euros at the end of December 2023. “As expected, the financial structure is improving significantly as a result of the sale and a slight improvement in the working capital requirement,” TP ICAP Midcap also appreciates. And the group wants to continue its efforts in this direction in order to reduce its debt below the 500 million euro mark by the end of 2025.

With this in mind, the group has announced that it has entered into exclusive negotiations with Crédit Agricole Immobilier for the sale of its “property management” activity, its subsidiary dedicated to the management of corporate real estate. This new reorganization of the portfolio of activities will, according to TP ICAP Midcap, contribute even more to the group’s debt reduction. The consultancy estimates the impact at around 50 million euros.

The developer hopes to gain financial flexibility to accelerate the transformation of its model, which will be more focused on urban regeneration, a process which consists of renovating real estate without destroying or razing it.

The Carrefour operation is the highlight of this transformation. As part of a long-term partnership signed in 2023, the distributor called on Nexity to develop its 76 stores into mixed-use locations combining housing, retail and offices. The transformation projects will concern all of the French distributor’s store formats (hypermarkets, supermarkets, convenience stores).