Nexity S.A.

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Nexity S.A.

8 rue du General Foy
Paris F-75008
Telephone: +33 1 44 70 23 00
Fax: +33 1 44 70 28 06
Web site:

Subsidiary of Veolia Environment and EdF
Incorporated: 1996 as CGIS
Employees: 1,300
Sales: EUR 1.3 billion ($1.45 billion) (2003)

NAIC: 237210 Land Subdivision; 236115 New Single-Family Housing Construction (Except Operative Builders); 236116 New Multi-Family Housing Construction (Except Operative Builders)

Nexity S.A. is France's leading real estate developer, operating in both residential and commercial markets. Spun off from Vivendi in a management buyout in 2000, Nexity operates through four primary divisions. Residential Real Estate is handled by the group's Nexity Georges V and Nexity Foncier Conseil subsidiaries. Real Estate Development, which serves especially investors and third-party promoters, includes Nexity Sari and Nexity Geprim. Nexity Services provides a full range of real estate services including design, acquisition, day-to-day management, and others, for an institutional investor client base. Last, Nexity's fastest growing division is Nexity International, including Nexity Spain, Nexity Portugal, and, since 2003, Nexity Belgium. That division accounted for 36 percent of Nexity's revenues of EUR 1.3 billion (US $1.45 billion) in 2003. More than 68 percent of Nexity's revenues are generated by its residential real estate activities; institutional developments accounted for just 25 percent of the group's total revenues. Although Services represented just 6 percent of the company's revenues, it remains a fast-growing segment, and is helping to spearhead typically Paris-focused Nexity's drive to achieve greater penetration into the French regional market. Led by Stéphane Bernard and Alain Dinin, Nexity is said to be eyeing a public offering in the mid-2000s.

Grouping Real Estate Holdings in the 1990s

Nexity's origins were linked to the origins of former parent company Vivendi, which itself was known as Compagnie Générale des Eaux (CGE) for most of its existence. CGE was established in the mid-19th century in order to provide water supply services to France's rapidly industrializing cities. By the turn of the 20th century, CGE was already one of France's largest private companies.

Through the first half of the century, CGE remained focused on its core water utilities operations. In the 1960s, however, CGE launched a new diversification strategy that led it into a variety of new markets over the next two decades, including the construction and real estate sales and development sectors. By the late 1970s, CGE not only supplied water to French homes, it had begun to build them as well. In 1979, the company stepped up this activity with the acquisition of Maison Phenix.

Founded in 1946, Maison Phenix had played a prominent role in the rebuilding and modernization of France's housing stock. Maison Phenix was one of the first companies in France to offer American-style development homes, using standardized floor plans and prefabricated parts. In 1949, however, the company expanded its housing offerings with the launch of Maison Familiales, which provided more individual and artisan home-building services.

By the time of its acquisition by CGE, Maison Phenix was already a leader in the French home building market. CGE continued to extend its range of home brands over the next decade, adding such companies and their home brands as Maison Catherine Mamet, Maison FIL, Castor, Promidi, Florilège, Cévenol, and Sprint. A major boost to CGE's real estate operations came with its acquisition of SociétéGénérale d'Entreprise in 1988. The purchase of the future Vinci placed CGE at the top of France's construction and real estate development industries. Other CGE acquisitions included Seeri, and Sari, which enabled the company to participate in such high-profile developments as the La Défense business district in Paris.

CGE began restructuring its real estate holdings during the housing crunch of the early 1990s. That process led the company to place its various residential and single family home businesses (also known as "Maisons Individuelles" division) under a single subsidiary, MI S.A., in 1993. MI S.A. then became the clear leader in the French residential real estate and development market.

Just two years later, CGE's real estate division took on an entirely new scale. In 1995, CGE bought up the George V real estate division from Groupe Arnault, of LVMH fame. Bernard Arnault, who became one of France's most visible business leaders, started his career at his family's construction firm, Ferret-Savinel, in 1971. Originally specialized in public works projects and industrial construction, Ferret-Savinel began developing its real estate and development operations under the younger Arnault. In 1975, Arnault convinced his father, then head of the company, to sell off its public works and industrial construction operations to Quillery, later a founding member of leading French construction group Eiffage.

Following that sale, Ferret-Savinel changed its name, becoming Ferinel, and, focused on the real estate market, began developing its portfolio. By the early 1980s, Ferinel had emerged as an important player in that market, particularly in the Parisian housing sector. Ferinel also was to provide the launch pad to Arnault's later successparticularly after it gained control of Groupe Boussac in 1984.

Boussac had been founded by Marcel Boussac in 1911 as textile firm Comptoir de l'Industrie Contonnière (CIC). That company grew into France's dominant textile concern by the 1950s. Boussac began to diversify his holdings, acquiring, among many others, fashion house Dior in 1947, then branching out into perfumes, with Parfums Dior. By the 1960s, Boussac also controlled his own real estate empire, governing some 30 different companies, which in turn held and managed Boussac's various real estate interests.

Boussac sold his business to Agache-Willot's Saint Frères in 1978, then died two year later. The two companies were then merged, creating Boussac-Saint-Frères. Yet by 1981, the new business had collapsed, and both Boussac-Saint-Frères and Agache-Willot declared bankruptcy. The takeover by Arnault met with some controversy, a controversy that only grew as Arnault refocused Boussac around Dior, selling off most of the group's industrial operations, before engineering the takeover of LVMH that created Groupe Arnault as one of the world's leading luxury goods groups.

Restructured and Independent in the 2000s

CGE's acquisition of Ferinel, which included its Georges V real estate arm and its Savinel home building brand, among others, proved to be a turning point in CGE's history. By then, CGE had swollen to an internationally operating giant with more than 2,200 subsidiaries and operations spanning such disparate sectors as construction, telecommunications, pay television, facilities management, the operation of amusement parks, and others. Yet for the first time in its history, CGE slumped into losses in the mid-1990s, and these losses were attributed in large part to the company's unwieldy construction and real estate components.

While the construction wing was restructured and ultimately spun off as Vinci, the company also took steps to reorganize its real estate division. In 1996, CGE grouped all of its real estate-related activities under a single subsidiary, Compagnie Générale d'Immobilier et de Services, or CGIS. Placed in charge of restructuring the new subsidiary and in restoring it to profitability were the three-man team of Stéphane Bernard, Alain Dinin, and Jean-Louis Charon.

CGIS started out as a highly diversified business, involved in all aspects of the real estate market. As such, the company operated a string of vacation resorts, under the Maeva name, some 85 hotels, a chain of exercise clubs, Groupe Gymnase, as well as a vast portfolio of industrial holdings, including a number of Marseilles-based docks. The company also operated engineering services under its Coteba subsidiary.

CGIS's new management team set to work restoring the subsidiary's profits. The lack of synergy among its disparate operations led it to launch a sell-off of its assets. By 1998, CGIS had raised more than EUR 1.75 billion for CGEincluding the 1997 sales of two company flagships, including CGE's former headquarters near the Elysée Palace and its future headquarters, as Vivendi, on Avenue Friedland, near the Arc de Triomphe. The following year, CGE changed its name to Vivendi, and let it be known that it intended to refocus itself as a media and communications group.

CGIS's sell-off continued into 1999, as the company sold off its hotels to Accor for nearly EUR 1.4 billion, then spun off MI S.A. in a management buyout that same year. The company also sold a swath of Parisian commercial real estate properties, including a number of La Defense sites, to Unibail for EUR 900 million. CGIS went looking for a buyer for its Maeva resorts chain, reaching an agreement with Pierre et Vacances, which paid EUR 90 million in 2001. Also in that year, the company sold its Gymnase Club to Club Med for EUR 41 million, then shed its Marseilles docks and its suburban Paris office portfolio, among others, netting some EUR 692 million.

Company Perspectives:

As the leading French residential and commercial real estate developer, Nexity is present throughout France. Nexity combines all areas of expertise. To address the concerns of its many clientslocal communities, businesses, investors and individuals. Today, Nexity continues to grow in the area of real estate development, strengthening its presence in France and throughout Europe, while developing its commercial real estate services. Pursuing a targeted strategy of international development, Nexity aims to become a major player in European real estate.

By then, CGIS itself had been sold off, in a management buyout backed by CDC Ixis Capital, LBO France, and Lehman Brothers in 2000 in a deal worth some EUR 700 million. CGIS then changed its name to Nexity. Already France's leading real estate group, Nexity now turned its attention to building an international presence. The company had been operating in Spain since the early 1990s, primarily for French investors seeking properties in that country. In 2002, the company stepped up its Spanish presence, as well as began development plans in Portugal, where it created subsidiary Nexity Portugal.

In 2003, Nexity's international interests turned to Belgium, where it founded Nexity Belgium and began developing projects, including the Radisson Hotel in Brussels, as well as the City Gardens project in that city. In the meantime, Nexity continued its restructuring. In 2002, Nexity acquired a portfolio of 75 properties from former parent Vivendi for EUR 130 million. By the end of 2003, Nexity's refocusing effort drew to a close with the spin-off of its engineering services wing, Cotebo, in a management buyout.

Nexity was now a focused property development and property services group. In January 2004, the company boosted its small services division with the purchase of Saggel, founded in 1999. Nexity also acknowledged its interest in going public, perhaps by as early as the end of 2004.

Principal Subsidiaries

Nexity Belgium; Nexity Espagne; Nexity Foncier Conseil; Nexity Georges V; Nexity International; Nexity Portugal; Nexity Sari.

Principal Competitors

Fortis N.V.; Société Centrale Immobilière de la Caisse des Depots; Gensec Property Services; Casino Guichard-Perrachon S.A.; ABN AMRO Bouwfonds Nederlandse Gemeenten N.V.; Granaria Holdings B.V.; George Wimpey PLC; Unibail S.A.; Lixxbail S.A.

Key Dates:

CGE acquires Maison Phenix, creating a residential home-building division.
CGE enters the Spanish real estate market.
CGE regroups its home-building operations under MI S.A.
CGE acquires Georges V (formerly Ferinel) from Groupe Arnault.
Property, real estate development, and related operations are restructured under the new subsidiary CGIS, which begins selling off assets.
Vivendi (formerly CGE) spins off CGIS in a management buyout, and its name changes to Nexity.
Nexity sells Maeva resorts, Gymnase Club, and a portfolio of properties.
Nexity acquires 75 properties from Vivendi.
Nexity Belgium is formed; the engineering services arm Coteba is spun off in a management buyout.
Nexity acquires Saggel, property services group, and announces a possible public offering.

Further Reading

"Immobilier Nexity: 'Je croyair en l'equipe, j'ai plongé sans hésitation,'" Challenges, October 3, 2002.

Iskander, Samer, "Move to Extend the Company's Liquid Assets," Financial Times, February 22, 2000, p. 2.

"Nexity cherche des relais de croissance," Le Figaro, December 10, 2002.

"Nexity envisage une entrée en bourse," BatiActu, July 15, 2004.

"Nexity organise son pôle logement," BatiActu, July 2, 2004.

"Nexity se renforce dans les services," BatiActu, September 1, 2004.

Rivlin, Richard, "Vivendi in Talks on Properties," Financial Times, January 7, 2000, p. 22.

"Vivendi Universal se débarrasse d'une partie de son immobilier," BatiActu, May 30, 2002.

M.L. Cohen