(AOF) – Nexity has unveiled a 9-month turnover of 2.954 billion euros, down 4%. It fell by 7% to 2.31 billion euros in development, weakened by business real estate: -31% to 249 million euros. The latter included last year the contribution of the order intake for the Reiwa building in Saint-Ouen for 124 million euros. Residential real estate fell by 3% to 2.06 billion euros. Services posted growth of 9% to 637 million euros.
Commercially, Nexity claims 11,446 new housing reservations at the end of September 2022, down 8% in volume (vs. a market down 21% and 5% in value at 2.56 billion euros.
Nexity recorded, at the end of September 2022, order intake in Business real estate for 108 million euros, “a low point in a wait-and-see market”.
The real estate developer has confirmed its “guidance” for the year 2022. It is aiming for a market share of more than 14% in residential real estate in an expected market of 130,000 units. It forecasts a turnover of more than 4.6 billion euros and a current operating margin of around 8%.
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Key points
– First integrated French property developer;
– Turnover of €4.6 billion refocused on residential development for 70% and businesses, for 12%, and diversified in administration services (18%);
– Integrated real estate operator business model, unique in France: low capital intensity, balance of activities between short, medium and long cycles, pooling of fixed costs at less than 10% of turnover / diversified in regeneration urban, services to individuals and businesses and managed residences, hence integrated promotion/services offers;
– Split capital, the main shareholders being Alain Dinin and the managers of Nexity (11.4% of the shares) acting in concert with Crédit Mutuel Arkéa (5.3%) and AG2RLa Mondiale (5%), ahead of Prédica (6.4 %) and employees (3.6%), Alain Dinin chairing the 14-member board of directors and Véronique Bédague as general manager;
– Solid financial position with net debt reduced to €598 million with leverage of 1.4, compared to €1.9 billion in equity and €1.8 billion in cash.
Challenges
– Customer-oriented 2020-23 strategic plan articulated between market meshing, consolidation of competitive advantages and operational excellence with, as objectives, an operating margin of 7% from 2021 and at least 10% operating income internationally;
– 3-point innovation strategy: transformation of the “information systems” function to better exploit disruptive opportunities – transition to the public cloud, strategic agreements in outsourcing, information… / internally, innovation 360° support with provision of data on 1,600 real estate start-ups, Intrapreneurship within the Startup Studio and Nex’Idea ideation competition / participation in Smart building alliance, Paris&Co, Impulse Partners, Real Estech …, equity investments in start-ups, by FPCI or directly;
– Environmental strategy “Making a sustainable and responsible city”: 2030 objective of reducing the carbon footprint by 22%, vs. 2019, per m2 delivered / revegetation of all real estate development in 2023 / issuance of “green” loans;
– Visibility of the activity with a pipeline of €20.7 billion, ie 5 years of activity, and an order book of €6.6 billion.
Challenges
– Benefits of the partnership with AG2R La Mondiale in senior residences under the Domitys brand (French No. 1, present in Italy, Belgium and Mauritius) and in property development;
– Risks for the future operating margin of soaring land prices and longer delays in obtaining building permits, a brake on sales growth;
– Russia-Ukraine war: no direct impact but postponement of the Investor Day to the start of the 2022 academic year, due to macro-economic uncertainties;
– 2022 objectives: development centered on France, market share above 14% in housing, maintenance of the operating margin rate around 8%;
– 2021 dividend of €2.5.
Property companies facing a less buoyant office market
In 2021, take-up (areas rented or purchased by users) in Ile-de-France remained 22% below its pre-health crisis level (2.38 million in 2019), despite the rebound (+ 32% , to 1.85 million) committed in the second half. It fell back to its 2013 level, far from the 2017 record (2.63 million). On the other hand, in the last quarter of 2021, the immediate supply (stock of empty offices) was at its highest for seven years, at 4 million square meters. The impact of teleworking is difficult to assess and it will be spread over several years, as leases expire (firm terms of three, six or nine years) and companies decide to move. This asset class nevertheless has the advantage of offering rents protected from inflation by indexation. In France, the ILAT index (Index of Rents for Tertiary Activities) takes into account inflation (50%), construction costs (25%) and GDP.