They went through the health crisis without difficulty. If even if the SCPI secondary market was livelier in 2020, all its liquidity indicators remained green. This is the finding of a study conducted by the IETF. Who assessed, more generally, the robustness of the SCPI liquidity model over a long period…
At the start of the health crisis, and in the few months following the start of the 1er containment, some feared that massive withdrawals would affect the liquidity of SCPI shares. Fortunately, nothing happened. Collection has certainly weakened. And the SCPI secondary market experienced, in 2020, the strongest activity in its history.
Reassuring indicators over the long term
But hardly much more (€1.25 billion) than in the previous two years. who also had experienced transaction volumes exceeding one billion euros “, recalled Stéphanie Galiègue, Deputy Director General in charge of research and studies at the IEIF, during a webinar organized by the IEIF on March 4th. The other SCPI liquidity indicators are just as reassuring. The share turnover rate, which has been evolving in a tunnel of between 1.4% and 2% for 10 years, has remained in the blueprint, at 1.8%. Above all, the percentage of pending shares relative to capitalization remains at its historic lows (0.15% vs. 0.12% in 2019). This shows, despite the crisis, that the secondary market “ worked without any voltage. And that no request for mass withdrawal has been observed “Summarizes Stéphanie Galiègue.
Assessment of the robustness of the liquidity model
This positive observation does not preclude questions about possible improvements to be made to the SCPI liquidity model. Or that of OPCIs. They have also shown no more signs of tension than their elders in recent months. This is why the ASPIM entrusted Pierre Schoeffler, senior adviser at the IEIF, to carry out a study. To assess, over the long term, the robustness of the retail unlisted real estate fund model in terms of liquidity. Implicit question: what would be the consequences of a liquidity crisis affecting the underlying real estate – which is not on the agenda, but you never know… – on the fluidity of the SCPI share market? Because, by nature, real estate funds open to the public are exposed to a transformation risk. That of the liquidity between their assets and their liabilities. Does this transformation create liquidity?
And yet… SCPIs destroy liquidity
Or, on the contrary, destructive? Pierre Schoeffler’s observation is without appeal. ” SCPIs are actually less liquid than their underlying “, he explains. Supporting figures. The volume of annual business real estate transactions represents, depending on the country, 10 to 15% of the stock invested. However, as we have said, the turnover rate of SCPIs is less than 2%. SCPIs, therefore, destroy liquidity… However, this does not seem to have had any dramatic consequences on the fluidity of their own market. ” Over a long period, the pending units/capitalization ratio has never exceeded 3% “says Pierre Schoeffler. Except at the height of the crisis of the 90s, when this ratio could reach 3.5%. Some vehicles, taken in isolation, have certainly experienced worse (up to 35%).
What tools to manage SCPI liquidity?
But these were very poorly capitalized SCPIs. These deviations from the norm also go back quite a long way. ” Before the regulatory reforms of 2002 and 2013 which adjusted the liquidity mechanism of SCPIs », points out Pierre Schoeffler. But what, precisely, are these liquidity management tools available to SCPI management companies? To be continued…
About the IEIF(i)
Established in 1986, the IEIF is an independent study, research and forecasting centre specializing in real estate. Its objective is to support real estate and investment players in their activity and their strategic thinking, by offering them studies, analysis notes, summaries and think tanks.
The IEIF approach integrates real estate into both the economy and asset allocation. It is transversal, the IEIF following both the markets (corporate real estate, housing), real estate funds (listed: SIIC, REIT; unlisted: SCPI, OPCI, FIA) and financing.
The French Association of Real Estate Investment Companies (SPAMI) represents and defends the interests of its members, managers of alternative investment funds (AIF) in real estate (SCPIs, OPCIs and other AIFs “by object”). Founded in 1975, ASPIM is a non-profit association that brings together all the players in the business of managing unlisted real estate funds. In France, as of December 31, 2019, real estate AIFs represented a total capitalization of 231 billion euros.
(i) Information taken from an official company document