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SCPI, invest in property without having to manage them

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Subscribing for SCPI shares is a way to invest indirectly in leased property without having to deal with the notary or having to personally manage the leased property.

Your assets are managed by a real estate professional. In return for a commission, they select the property investments, rent the properties out, manage them and monitor their value over time on your behalf.

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You can rely on the expertise of real estate professionals

Buying SCPI shares avoids having to ask yourself which property to invest in. In this case you leave this complex task to an asset management company with certification from the Autorités des Marchés Financiers (Financial Markets Regulator). They pay for this service with the commissions they take on the rent received. It is this company which decides which investment strategy should be adopted. They select the properties to be purchased and assess their potential and the risks associated with leasing them out. Some “themed” SCPI allow you to choose which type of property you invest in: offices, healthcare, residential, retail, etc.

With this you will benefit from the expertise of professionals specialised in the relevant French and international property sector. These professionals are able to anticipate market developments, allow you to benefit from their dynamics and take up opportunities as they arise.

The Asset Management Company deals with leasing the properties out

SCPI investments are turnkey solutions, accessible with a relatively small outlay and especially suited to investors who wish to diversify their investments into property but do not have the time, the desire or necessary skills to manage their assets directly. Buying SCPI shares means you do not have to deal with managing the leased properties.
 
In return for a commission, the asset management company takes care of everything. They select the tenants, sign the leaseholds and ensure that everything is legal, collect the rental payments, review rent amounts, recover unpaid amounts, deal with damages and neighbourhood issues.

They also manage the maintenance of the leased holdings and make sure that any necessary works are done to keep them in good condition and maintain their value. They can decide to sell the properties when they consider it necessary in terms of market developments and regulatory conditions.

SCPI: an effective compromise between risk and return

Investing in one or more SCPI allow you to become the indirect owner of select property assets. This will be made up of a large number of professional and/or residential properties rented out to a multitude of tenants selected by the asset management company. This diversification means that SCPI propose a very attractive return/risk ratio*.

According to a survey completed in 2019 by the Property Investment Institute (IEIF), SCPI* that generate returns have had an average annual performance more than twice higher than bonds over the last 15 years, for a comparatively similar degree of risk. They have also performed almost as well as shares but present six times less risk.

Good performance in spite of the crisis

Over the last 30 years, SCPI have never generated average returns below 4%*. In 2019, the average market value distribution rate (TDVM) was 4.40%.
In spite of the public health crisis and the difficulties faced by tenants unable to make their payments, the perspectives remain positive for 2020. For example, the effects of the crisis on dividend pay-outs should be quite limited for Primonial REIM Group SCPIs. For 2020 as a whole, the company plans to distribute additional regular revenues to each associate, without any negative impact on the values of the SCPI shares.
Since they are not listed on the financial market, they are less volatile than other types of investment whilst still generating interesting returns.

Just as with any other property investment, investment in SCPI shares are not secured. The potential income, the values of the shares and their liquidity may rise or fall depending on the property market. However in the long-term, they are a very interesting compromise between risk and returns for private investors.

*Previous investments or performances do not give any indication of the potential performance of future investments

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Worth knowing

 

With more than €22 billion in assets under management, Primonial REIM is one of France and Europe’s leading property asset managers. Primonial REIM manages and maintains the value of long-term property holdings located across 7 European countries including office, healthcare-education, retail, residential and hotel properties. Our specialised investment and asset management teams for each property asset class, all have a complete knowledge of their specialist markets in France and the Euro Zone. When necessary they can call on the support of local representatives for asset sourcing or the technical property management services.

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