Investments in times of crisis: the SCPI stays the course

A look at the SCPI market

Today, the SCPI market (also called "rock paper") has more than 30 billion assets under management;

they are spread over more than 180 SCPIs and are managed by 33 management companies.

It must be said that this investment option represents an interesting alternative and can serve as a basis for financial and heritage investments.

Its units can be integrated into a life insurance contract and generate higher returns than current funds in euros.

For a fairly low level of risk, the SCPI remains one of the best investments there is, especially when it comes to rental property.

Findings from two studies on SCPI survival

The French Association of Real Estate Investment Companies (ASPIM) and the Institut de l'Épargne Immobilière et Foncière (IEIF), have published the results of studies on the situation of SCPIs in 2020. After a decline in the first half of the year , at the start of the pandemic, an improvement was noted at the start of the second half of the year. The authors of these studies also noted that fundraising, under the circumstances, remained positive and active, especially in real estate business and tax REITs. However, interim dividends were down 10% compared to the same period last year. Last summer, the overall performance for company SCPIs was 5.3% over the year with a revaluation of 1.2% at the share level. Since 2012, assets under management have tripled,which indicates that this investment vehicle corresponds well to the needs of investors. The pooling of rental risks is an asset. An article published on October 10 on the site

provides even more details on this subject.

Why do SCPIs attract investors?

An investment in SCPI does not require a substantial initial outlay since, in some cases, a few hundred euros - or sometimes even on credit - are enough to find (indirectly) the owner of part of the real estate portfolio. It also makes it possible to invest in certain "specialized" asset classes generally less accessible to individuals: office, education, early childhood, students, health, commerce, hotels ... Among this vast market, you must take the time to compare rates of return and payout, review investment strategies and also management. Despite the popularity of telecommuting, due to the pandemic, office SCPIs are showing resilience. Unlike tax SCPIs, performance SCPIs,which mainly concern business premises rather than residential buildings, pay their subscribers the share of the monthly rents received; without forgetting that the shares of these can increase over time. In general, SCPI shares in professional real estate are more profitable than those in housing. And all this for a reasonable starting sum (2,000 to 5,000 euros). Another significant advantage is that the managing company takes care of finding tenants and maintaining the premises. It is also possible to take out life insurance to reduce taxes.SCPI shares in professional real estate are more profitable than those in housing. And all this for a reasonable starting sum (2,000 to 5,000 euros). Another significant advantage is that the managing company takes care of finding tenants and maintaining the premises. It is also possible to take out life insurance to reduce taxes.SCPI shares in professional real estate are more profitable than those in housing. And all this for a reasonable starting sum (2,000 to 5,000 euros). Another significant advantage is that the managing company takes care of finding tenants and maintaining the premises. It is also possible to take out life insurance to reduce taxes.

The importance of diversifying your SCPIs

In the current context, if you are aiming for profitability, it is better to diversify your real estate stocks!

This is the best solution to spread the risk between different asset classes and also to keep the balance during more difficult times.

The Carry Forward (RAN) proves to be a resource in case of unforeseen events on which SCPIs can count.

This is a reserve that makes it possible to deal with problematic situations such as a drop in rents or even a rental vacancy.

While the hotel and retail sectors remain more at risk in this economic climate, essential sectors such as health, education and logistics, especially in B2B, as well as that of offices are less exposed to the consequences of this crisis. . Hospitals and medical establishments, as well as clinics and pharmaceutical laboratories, are among the assets to be favored. Leases are generally stable and long-term. As for the logistics sector, REITs can only benefit from the growth of online commerce, to ensure the maintenance of investments. Multi-sector SCPIs are also resisting quite well due to the pooling and diversification of their assets.

According to the estimates of REIT professionals, the rate of return in 2020 should remain around 3.5% to 4%, which allows them to remain optimistic for the rest of the events.

Sources:

Lefigaro.fr: SCPIs resist in times of crisis.

Ideal investor: SCPI: which sectors are affected?

What forecasts for the end of 2020?