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Long-term capital growth with SCPI
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The financial markets have been thoroughly shaken by the Covid-19 epidemic.
To spread the risk, investors will need to diversify their investments across different plans, now more than ever. SCPI, property investment plans, are an effective solution for those who would like to receive regular potential revenues and increase capital value in the long term provided they accept the risk of capital loss.
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SCPI: Property is a safe value for households in times of crisis
The global public health crisis and the confinement policies adopted by most nations to limit the spread of the virus have led to a drastic fall in the value of all of the financial markets. The crash has affected almost all of the business sectors; some financial assets have lost as much as 60% of their values in just a few days. The situation is complicated for small investors, since they will have to wait for many years before they absorb their losses, and any hoped-for dividends are unlikely to occur this year. In this context, SCPI shares could become a safe value. Since they are deeply linked with physical properties, their prices and returns are not correlated with the financial markets. Such placements are more resilient in times of crisis.
SCPI: a concrete solution that has been generating positive returns for many years
One of the main advantages of SCPI is the diversification of assets. They invest funds, collected with the sole purpose of purchasing physical property, in various market segments (offices, residential, healthcare establishments, etc.) and across different geographical zones (France, Europe, etc.). Most of them take particular care in the quality of the tenants, placing a high priority on long-term leases to ensure rental income over the long-term; this is then redistributed to the investors as dividends. Result: the current difficulties associated with the confinement are expected to have a very limited impact on returns paid out to the shareholders (investors). In 2019, SCPI had an average Market Value Distribution Rate (TDVM) of 4.40% according to figures published by Aspim (French association of property investment companies) and the IEIF (Property investment institute). SCPI shares can be bought for as little as a few hundred euros.
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Primonial REIM performance and commitments
Whilst not all SCPI have the same value, those managed by Primonial REIM were rated amongst the best on the market in 2019. Such as the office property oriented SCPI Primopierre which generates returns of 5.95%. This performance was achieved thanks to its targeted allocations of office property assets, mostly located in ‘Ile-de-France’, combined with a selective approach to its investments and choice of tenants. For the first quarter of 2020, Primonial REIM paid dividend advances to its SCPI shareholders of the same value as those paid out in the first quarter of 2019.
Previous investments or performances do not give any indication of future investments and performances
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SCPI: competitive returns
According to professionals, SCPI returns are not expected to fall more than a few tenths of a percentage point in 2020, this is largely due to tenant support measures put in place by the asset management companies. Property investment plan performances are likely to be better than those of any other investment plans on the market. Remember that, in February 2020, the annual interest rates of “Livret A” savings schemes fell as low as 0.50% and the average returns of ‘Euro’ life insurance policies fell below the 1.50% mark in 2019 according to Goodvalueformoney.eu.
However, investing in SCPI shares does involve risks such as losing all or part of one’s capital. Share values and revenue pay-outs may rise and fall and are not in any way guaranteed. Just as with any other unsecured capital investment, investing in SCPI shares should be seen as a long term commitment (at least ten years).