Nexity : Q1 2017 revenue and business activity

GOOD BUSINESS ACTIVITY IN RESIDENTIAL REAL ESTATE AND GROWTH IN REVENUE

• New home reservations in France: 3,506 reservations (up 19% by volume and 22% by value), of which 3,093 units on a like-for-like basis (up 5% by volume and 8% by value)
• Backlog (development): €4.1 billion (up 2%)
• Revenue: €656 million (up 5%)

2017 GROWTH OUTLOOK MAINTAINED

• Growth in Nexity's new home reservations in a French market expected to be stable in 2017 (125,100 reservations), with Nexity growing its market share by around 1 percentage point 
• Commercial real estate order intake in excess of €350 million in 2017
• 2017 revenue growth of around 10%
• Growth in current operating profit: €300 million in 2017 (up 13% from 2016) and €325 million in 2018
• Dividend per share payable in 2017 and 2018 increased ^[1] to €2.40

Alain Dinin, Chairman and CEO of Nexity, commented:

"In line with our expectations, the French real estate market appears to be stabilising in early 2017. Interest rates and financing conditions for clients remain favourable, demand stimulus measures are working, prices are stable, and French buyers' appetite for property is still strong. In the first quarter of 2017, Nexity posted slight organic growth in residential real estate reservations, and a good performance in real estate services to individuals. But the quarter's results do not change our outlook for a zero-growth French market for full-year 2017.

Housing policy has been notably absent from the debate in this year's French presidential election campaign. Housing is a household's number-one expense, the population is growing, there is a housing shortage, and our society is undergoing considerable changes - with a growing number of single-parent families and older people, the ability for local authorities to manage and fund urban transformation, and the immense challenges related to energy-efficient renovation and climate change - yet we have heard practically nothing on this issue from the candidates. That is a source of concern. Hoping that the next government will take a pragmatic approach, Nexity does not at this stage expect any major legislative or regulatory changes to take place, but is preparing itself - thanks to its flexible operating model - for various market scenarios, while steadfastly pursuing its commitment to development, innovation and gradually becoming a truly comprehensive real estate services provider.

The Group's revenue growth (5% from Q1 2016 to Q1 2017) should accelerate in the coming quarters, given the high backlog level at 31 March 2017, while the external growth transactions carried out in 2016 will also make a more substantial contribution to Group revenue starting in the second half of the year. Nexity therefore confirms all the targets and outlook disclosed to the market for 2017 and 2018."

***

Business activity in Q1 2017

Residential real estate

In 2016, the retail market for new homes in France posted its best performance since 2007, totalling 125,100 net reservations ^[2] (up 21% from 2015). In the first quarter of 2017, the market appeared to be stabilising at a good level thanks to the various stimulus measures currently in force up to the end of the financial year, as well as interest rates that remained very low.

After bottoming out in November 2016 (at an average of 1.31%), mortgage rates started increasing again in December 2016 and averaged 1.51% in March 2017 ^[3] , thus returning to their July 2016 levels.

* Including 413 reservations representing €75m incl. VAT from Edouard Denis and Primosud, which have been consolidated since 1 July 2016 and 31 December 2016, respectively

New homes

In the first quarter of 2017, net new home reservations in France totalled 3,506 units, up 19% by volume and 22% by value relative to Q1 2016 (on a like-for-like basis: up 5% by volume and 8% by value). By way of comparison, and highlighting the brisk business observed over the past two years, reservations recorded in the first quarter of 2017 were up 60% compared to the first quarter of 2015.

Expected revenue from reservations was up 22% to €655 million including VAT. It rose more sharply than reservation volumes as a result of mix effects, including in particular an increase in the average price of bulk sales (up 9%).

Reservations by first-time buyers were up by only 1% compared to the first quarter of 2016.

Reservations by individual investors increased in the first quarter of 2017 (up 9% with respect to Q1 2016), in line with the pattern observed last year.

Reservations made by professional landlords were up 6% compared to Q1 2016, accounting for 26% of all new business (compared with 25% in Q1 2016).

In terms of the geographic breakdown, reservations made in the first quarter of 2017 were very strong in the Paris region (up 24%), buoyed by the strong increase in bulk sales (three times higher than in Q1 2016), compared with the same period in 2016 reservations by individual clients decrease (down 7%).

The average price including VAT of new homes reserved by Nexity's individual clients in the first quarter of 2017 was up 3.3% compared to the first quarter of 2016, with a 3.0% increase in the average price per square metre and average floor areas remaining stable. Given the low volumes observed in the period, this change cannot be extrapolated to the entire financial year.

Remaining selective in its commitments, in the first quarter of 2017 Nexity launched a total of 2,899 units (11% fewer than in Q1 2016) ^[4] . Unsold completed stock (112 units) as a proportion of the total supply for sale (5,769 units) remained very low. The average level of pre-selling booked at the start of construction work came to 78% in the first quarter of 2017 (versus 68% in Q1 2016), an exceptionally high level.

At end-March 2017, the business potential ^[5] for new homes was up 18% from end-March 2016, at 42,474 units, the equivalent of 2.6 years of development operations (on a like-for-like basis, 35,494 units, equating to 2.3 years' business).

Subdivisions

Subdivision reservations totalled 479 units, up 15% relative to the first quarter of 2016, reflecting the upturn in the single-family home market. The average price of net reservations made by individuals decreased by 2.3% to €74.1k, with a slight dip in average subdivision size (down 0.9%) and the average price per square metre (down 1.4%).                            International

Nexity recorded 37 international new home reservations in the first quarter of 2017, mainly in Poland.

Commercial real estate ^[6]

The investment market continued its positive trend in the first quarter of 2017 with €3.1 billion invested, up 7% from the level observed in the first quarter of 2016. Office assets accounted for around 80% of these investments, with prime yields remaining stable.

Take-up of Paris-region offices kept up the positive momentum begun in 2016. In the first quarter of 2017, around 664,000 sq.m were marketed, a 27% increase year on year, making it the best first quarter performance since 2007. Prime headline rents were very slightly higher than the previous quarter.

Nexity did not record any significant new orders in the first quarter of 2017. Satisfactory progress was made on the various projects in the structuring phase, which should enter the sales phase starting in the second half of 2017.

In February 2017 ^[7] , Nexity signed an off-plan lease with the Île-de-France region for the Influence 2.0 building in the eco-district of Saint-Ouen (near Paris), which will house the future regional council premises, along with the Influence 1 building (previously sold by Nexity to an investor in 2014 and delivered in March 2017). The entire development represents a floor area of almost 57,000 sq.m.

In addition, Nexity acquired the real estate assets of the Bordeaux-region property developer Thalium Promotion.

Services

In Real estate services to companies , total floor area under management came to 11.8 million sq.m at end-March 2017, down 4% from end-December 2016, following the end of a management contract for more than 530,000 sq.m.

In Real estate services to individuals , the portfolio of units under management totalled 897,000 units at 31 March 2017, representing a very slight decrease over the period (down 0.1%) and an improvement over the first quarter of 2016, which saw attrition of 0.5%. The brokerage business was particularly buoyant, with the number of provisional sale agreements signed up 13% relative to end-March 2016. Nexity Studéa (which manages student residences) saw its occupancy rate rise in the first quarter to reach 94.3%, versus 92.3% in the first quarter of 2016.

In Franchise operations, the number of provisional sale agreements recorded in the first quarter of 2017 by Century 21 and Guy Hoquet l'Immobilier was up 13% year on year, with an exceptionally strong market for existing real estate in France in 2016 ^[8] . After declining for several years, the number of franchised agencies has picked up again since 2016, totalling 1,241 agencies at end-March 2017, compared with 1,217 at end-December 2016.

Urban regeneration (Villes & Projets)

At end-March 2017, Nexity's urban regeneration business (Villes & Projets) had land development potential of 540,400 sq.m ^[9] , with the notable addition to the portfolio of a residential development located in Villenave-d'Ornon (near Bordeaux), with a floor area of nearly 9,000 sq.m.

Digital and Innovation

Nexity continues to invest around €20 million a year in digital technology and innovation, split between in-house digitisation projects and investment in new services through direct investments (Blue Office, Bien'ici, E-gérance, etc.) or through partnerships with start-ups (SpiceSoft, Lucibel, etc.) and investment with venture capital funds.

In the first quarter of 2017, Nexity:

• opened an in-house demonstrator for corporate clients called "Le Lab" at the Group's head office in Paris, along with a new Blue Office shared workspace area (off-site and co-working offer for companies, self-employed professionals and start-ups);
• signed a contract with Atos to set up a Blue Office at its site in Bezons (near Paris);
• launched France's first entirely digital sales offering of a large-scale new homes programme: Vill'Arboréa, on the Rue des Girondins in Lyon;
• launched Connect', Nexity Conseil et Transaction's interactive, immersive new showroom on the Avenue de la Grande Armée in Paris, in partnership with a network of French start-ups and established companies, which provides investors and end-users with optimal conditions for mapping out their real estate strategy.

In addition, Bien'ici - a next-generation property listings website in which Nexity has a 40% stake alongside a consortium of real estate professionals ( Consortium des Professionnels de l'Immobilier ) - continued to receive a growing number of membership requests from professionals wishing to place paid listings (with 6,371 member agencies at 31 March 2017).

Q1 2017 revenue

In the first quarter of 2017, Nexity recorded revenue of €656 million, increasing in all the Group's business lines relative to the first quarter of 2016 (up 5%).

Residential real estate revenue totalled €448 million, up 3% year on year. This growth reflects the increase in the division's order book. Furthermore, given restatements in the opening balance sheet and remeasurements of assets and liabilities to fair value as part of the purchase price allocation (PPA), revenue generated in the year by Edouard Denis and Primosud made no contribution to Nexity's Q1 consolidated revenue, in spite of being consolidated since 1 July 2016 for Edouard Denis and 31 December 2016 for Primosud.

Revenue for the Commercial real estate division was much higher than in the first quarter of 2016 (up 27%), at €86 million, reflecting the ramp-up of projects signed in 2015 and 2016 in both the Paris region and the rest of France.    The Services division generated revenue of €121 million, up very slightly year on year. Growth in property management for individuals (up 2%) made up for lower revenue from real estate services to companies and Nexity Studéa (due to the voluntary non-renewal of less-profitable operating contracts).

As in the first quarter of 2016, revenue from Other activities was not significant.

In IFRS terms, revenue for Q1 2017 was €626 million, up 3% relative to consolidated revenue of €605 million for Q1 2016. This figure excludes revenue from joint ventures, in accordance with IFRS 11, which requires joint ventures to be accounted for via the equity method instead of proportionately consolidated as they were previously.

Backlog - Order book at 31 March 2017

The Group's order book at end-March 2017 stood at €4,092 million, up 2.1% from end-2016 and equivalent to 19 months' revenue from Nexity's development activities ^[10] .

Financial calendar and practical information

Shareholders' Meeting                                                    Thursday, 1 June 2017

2016 dividend*, subject to approval at the Shareholders' Meeting

• Ex-dividend date:                                               Tuesday, 6 June 2017
• Payment date:                                                    Thursday, 8 June 2017

2017 interim results                                                         Tuesday, 25 July 2017

9M 2017 business activity and revenue                            Wednesday, 25 October 2017

* For tax purposes, all amounts distributed to shareholders (€2.40 per share) constitute repayments of capital contributions (see resolutions submitted to the Shareholders' Meeting of 1 June 2017).

A conference call on Q1 2017 revenue and business activity will be held in English at 6:30 p.m. CET, which may be accessed using code 1838938 by calling one of the following numbers:

The presentation accompanying this conference will be available on the Group's website from 6:15 p.m. CET and may be viewed at the following address: http://edge.media-server.com/m/p/u2jxz99o

The conference call will be available on replay at http://www.nexity.fr/immobilier/groupe/finance from the following day.

Disclaimer

The information, assumptions and estimates that the Company could reasonably use to determine its targets are subject to change or modification, notably due to economic, financial and competitive uncertainties. Furthermore, it is possible that some of the risks described in Section 2 of the Document de Référence, filed with the AMF under number D.17-0335 on 6 April 2017, could have an impact on the Group's operations and the Company's ability to meet its targets. Accordingly, the Company cannot give any assurance as to whether it will meet its stated targets, and makes no commitment or undertaking to update or otherwise revise this information. This press release is considered to be a quarterly financial report as defined in eth Transparency Directive transposed by the AMF.

ANNEX

QUARTERLY FIGURES OPERATIONAL REPORTING (In accordance with IFRS but with joint ventures proportionately consolidated)

Reservations: Residential real estate division

Revenue by division

The financial data and indicators used in this press release - including forward-looking information - are based on Nexity's operational reporting, with joint ventures proportionately consolidated.

[1] Compared with a dividend of €2.00 per share paid in 2015 and €2.20 per share paid in 2016. 2017 dividend will be submitted to the approval of the Shareholders' Meeting to be held on 1 June 2017 n the basis of the resolutions approved by Nexity's Board of Directors. 2018 dividend pending the decision of Nexity's Board of Directors and approval at the Shareholders' Meeting

^[2] Source: Commissariat Général au Développement Durable (Sit@del2 database)

^[3] Source: Observatoire Crédit Logement

^[4] Sales data (launches, unsold completed stock, supply for for sale and pre-selling rate) are exclusive Edouard Denis and Primosud

^[5] Business potential includes the Group's current supply for sale, its future supply corresponding to project phases not yet marketed on purchased land, and projects not yet launched associated with land secured under options

^[6] Source of market data: CBRE - Market View Offices Paris region and Investments France - Q1 2017

^[7] See press release of 2 February 2017

^[8] Market totalling 848,000 transactions, equating to growth of 6% (CGEDD based on data from DGFiP [MEDOC] and notarial databases)

^[9] Floor areas are provided for information purposes only and may be subject to adjustment once administrative authorisations have been secured

^[10] Revenue basis - previous 12-month period

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