The IETF assessed the robustness of the SCPI liquidity model over a long period. Despite rather convincing results, the evolution of the market – in particular its size and that of the vehicles that compose it – would require some changes. Which? Focus on a few proposals…
The conclusion of the study that Pierre Schoeffler, Senior Advisor to the IEIF, carried out at the request of the ASPIM on the liquidity of retail unlisted real estate funds, is generally positive. ” The SCPI model with variable capital has proven to be resilient for more than 50 years “, he explained during a webinar organized by the IEIF on March 4 (see the article “SCPI: what about their liquidity”). SCPIs have indeed withstood the real estate crisis of the 1990s. The global financial crisis of 2008. And the observation applies both to the market as a whole and to each vehicle taken individually.
A resilient model over the long term, which has withstood the health crisis
On the OPCI model, which also fell within the scope of the study, the finding is less clear-cut. ” It is still a bit early to judge the resilience of the OPCI model, which is only ten years old. Although no liquidity problems have arisen so far », Considers Pierre Schoeffler. The health and economic crises that began in March 2020 have also not undermined the model of unlisted real estate funds. While bond funds suffered massive withdrawals, SCPIs and OPCIs remained straight in their boots. They even continued to collect, admittedly at a slower pace compared to 2019. But is this resilience sustainable? The economic crisis will have consequences on profitability and business failures. A decline in rental income should follow.
Is this resilience sustainable?
” This will have repercussions on the current yield of real estate “Warns Pierre Schoeffler. But also, no doubt, on capital returns. This could affect the SCPI share market. It would therefore not be completely immune to future correction… More generally, Pierre Schoeffler believes that despite a largely positive assessment, it would undoubtedly be necessary today to ” change certain practices “. To strengthen the liquidity management tools already available to management companies (see the article “SCPI: what tools to manage their liquidity?”). Because the SCPI market, its structure, its size, and the size of the vehicles that make it up, have changed significantly over the past 10 years. But what ” practice “should it therefore evolve?
Creation of a centralized platform to manage secondary market liquidity
Pierre Schoeffler recommends, for example, using more efficient techniques to manage liquidity. The management of this liquidity is now split between around thirty management companies and nearly 200 vehicles. It would be relevant to imagine a centralized platform to bring together all orders suggests Pierre Schoeffler. An old idea that has never seen the light of day… It would also be possible to take inspiration from what other countries have implemented. In Germany, for example, distribution platforms have been developed. They provide, de facto, part of the liquidity of the secondary real estate fund market. Marc Bertrand, the new president of Amundi Immobilier, who also took part in the IEIF webinar, agrees. Stating that in France, it is the insurers, increasingly buyers of real estate solutions, who partly play this role of ” clearing house “.
Improving incentives for holding SCPI shares
Marc Bertrand also believes that it would be desirable ” improve incentives for holding shares » SCPIs. How? By providing more incentive compensation for distribution networks and wealth management advisors. The effort to be deployed when marketing an SCPI is significant. Because it is a product with no guarantee of return or even liquidity. This effort is now well remunerated. By significant retrocession on the entrance fees. “On the other hand, there is no – or very little – retrocession of management fees, “says Marc Bertrand. As it is practiced, he recalls, on UCITS. However, to retain the subscribers of SCPI, the force of conviction of their advisers is not to be neglected either. Rewarding this strength of conviction could therefore make sense.
Redefining the SCPI taxonomy
It would probably also be necessary to improve the segmentation of SCPIs, suggests Pierre Schoeffler. There ” old Taxonomy between SCPI offices, businesses, diversified, specialized, has little meaning. It does not provide information on the level of risk associated with each vehicle. Whose strategies, in terms of diversification, leverage, management of reserves, and renewal of assets, are increasingly divergent. ” A risk classification tool – but which is not a value judgment – would be welcome “, also recognizes Jean-Marc Coly, another speaker of the webinar. The president of ASPIM also adds that the association “thinks about it “.
Blow up some regulatory corsets
Other legal reforms should also be considered. For Marc-Olivier Penin, general manager of La Française REIM, the removal of a few “ regulatory corsets would, for example, simplify the purchase-sale process. If the online subscription is now possible, certain rules still prevent a total digitalization of processes “ KYC “. The decimalization of shares, at a time when more and more management companies are setting up scheduled payment plans, is another subject that merits consideration. To be continued…