Should we fear a drop in the value of SCPI shares?


The health and economic context dampened the enthusiasm of savers for long-term investments. A wait-and-see attitude that also affects SCPIs. But to a lesser extent. At the center of the questions: the ability of these vehicles to weather the crisis. And in particular to avoid a drop in the value of their shares in the coming months…

SCPI collection figures from 3e quarter confirm that savers have become even more skittish about long-term investments. On the subject of SCPIs, even if the flow of subscriptions is far from having dried up – unlike other investment vehicles… – the questions are still there. And the second period of confinement will not help to lift them. At the center of the questions, the ability of these real estate vehicles to cross ” serenely ” crisis. That is to say, to maintain correct yields. While keeping share values ​​unchanged.

Interim dividends revised upwards

On the first point, the interim dividend from 3e quarter are likely to reassure investors. With the exception of a few specialized vehicles, very affected by the crisis, the vast majority of SCPIs have revised them upwards. ” Installments for the quarter increased by 12% compared to the second quarter “, note the ASPIM and the IEIF, in their last press release. Ditto, therefore, for returns. Certainly, compared to the 3e quarter of 2019, the trend remains bearish. The average evolution of installments, over the first nine months of the year, is down 8.4%. This means, all other things being equal, that the current average yield of SCPIs would settle, in 2020, in an area close to 4%. This is confirmed for the time being by the performance of the EDHEC IEIF Commercial Property France index.

A 2020 SCPI return in the 4% area?

Over a rolling year, at the end of September, the progression of the index, on its only part reinvested dividends, is displayed at 4.2%[1]. A return which, although lower than that of last year (4.40%), therefore remains more than reasonable. And is still very much above those issued by most other investments… The rent collection rate posted by most SCPIs at the end of September is also much higher than those estimated during the first confinement. This means that this return outlook has a good chance of being confirmed. The second period of confinement and health crisis certainly weakens this hypothesis somewhat, in terms of rents. In what proportions? Answer at the end of the year…

Pending valuations of SCPI shares

On the second point, that of the value of the shares, it will also be necessary to wait a few more months before being fixed. The first appraisals, intended to estimate the value of SCPI assets at the end of the year, have just begun. According to several real estate asset management companies, the first returns are rather encouraging. But very differentiated according to the classes of underlying assets… Certain sectors – the hotel industry, not to mention it – are expecting downward revisions, sometimes significant. Others, such as offices, are clearly more resilient. However, offices make up the bulk – around 60% – of SCPI assets. In 2019, in a sharply rising real estate market, appraisal values ​​were also set quite cautiously. It will be the same in 2020. In order, in both cases, to erase the excesses – upwards or downwards – of the underlying real estate markets.

A damping mechanism for SCPIs

SCPIs also benefit from a mechanism that allows them to amortize any fall in the value of their assets. A kind of insurance against volatility, in a way. Their price is not, in fact, necessarily equal to the value of their assets[2]. It may be within a range of plus or minus 10% in relation to their so-called ” reconstitution »[3]. This gives management companies some leeway in setting the price of shares. The subscription price of most SCPIs is now often lower than the 2019 appraisal value. Many of them, again out of caution, have favored the bottom of the range. SCPIs have, in a way, “ kept underfoot »…

A question that is likely to remain topical

Even if the appraisals for the year 2020 prove to be partly unfavourable, not all managers will therefore be forced to revise downwards the value of the units of their SCPIs. Several operators – such as, for example, Sofidy for the SCPI Immorente – have already announced that they do not plan to modify the subscription prices. For 2020… If economic uncertainties remain, if more and more tenant companies are affected by the crisis, it is however to be feared that the question of valuations will remain topical in 2021. Even beyond… The wait-and-see attitude of savers and of investors in general vis-à-vis this real estate investment is therefore likely to persist. And yet…

Do not focus on a possible fall in the value of SCPI shares

Focusing on a possible fall in the value of the shares – which, if it occurred, would not exceed, on average, a few percent – is a fundamental error. », Annoys the manager of a management company. ” First, because investing in SCPIs is measured over the long term. In 10 or 15 years, the impact of this possible decline will be completely erased. “, he explains. Then, because if the value of the shares were to fall, ” this is because the underlying real estate market would also be down. Which, for professionals, means investment opportunities that create long-term performance “, he adds.

Waiting does not rhyme with opportunity

This amounts to saying that SCPI partners, current or future, would also benefit from these ” market opportunities “. So, faced with the risks of a decline in SCPIs, a wait-and-see attitude, or an opportunity? It’s up to savers to make their choice…


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