5 keys to choosing your OPCI
OPCI (Organismes de Placement Collectif Immobilier) can be one of the cornerstones of your real estate portfolio.
Like SCPIs, this diversified collective real estate savings solution facilitates access to real estate while incorporating a minority share of financial assets, in exchange for taking on risk. Here are five keys to help you choose your OPCI: property and tenant quality, volatility, long-term performance potential and fees.
Asset quality, the first key criterion
OPCIs are mainly invested in physical real estate and in unlisted real estate assets1. These include buildings that are almost exclusively for rental purposes. The real estate portfolio of OPCIs may also include shares in unlisted real estate companies. Like SCPIs, these funds facilitate access to office, retail, healthcare and residential real estate. The geographical distribution of the assets and the number of properties included in the fund is another source of diversification, which makes it possible to mitigate risks in the event of non-payment of rent by a tenant, for example.
The financial assets of OPCIs may include shares of listed real estate companies and listed financial securities. It is important to be well informed about these different assets and their risk level. The DICI (Documentation d'Information Clé pour l'Investisseur - Key Investor Information Document) makes this possible. The OPCI must also hold a minimum of 5% cash at all times to guarantee the liquidity of its unit holders.
The quality of the tenants, the second criterion of choice for OPCIs
OPCIs, like SPCIs (Sociétés Civiles de Placement Immobilières), allow the rental management of the properties held by the fund to be entrusted to professionals, management companies. Monitoring the quality of tenants and their solvency reduces the risk of vacancies and unpaid rent. The duration of the leases is another essential point. This information is available in the annual report of the OPCIs posted on the management companies' websites.
The volatility of the portfolio is also a determining factor
The volatility of the different assets is another key point to check before investing. This is the amplitude of the evolution of the value of the units. In principle, this is between that of SPCIs and UCITS (SICAVs and FCPs)2.
OPCI, what is the long-term performance potential?
The recommended holding period for OPCIs is a minimum of 10 years. It is therefore advisable to refer to the fund's performance over this period. However, this performance is not a guide to future performance. The potential income and capital gains that OPCIs can provide are not guaranteed.
Costs amortized over a long period
Fifth and last key point, the fees are finally to be taken into account. These are the fund's subscription and management fees. The investment period and the potential performance of the fund should allow for their amortization.
OPCIs present a risk of capital loss due to changes in the real estate market. Income is not guaranteed and may vary both upwards and downwards depending on the performance of the fund. Investment in OPCI units is considered on a long-term basis with a recommended investment horizon of 10 years. Liquidity is limited, as the management company does not guarantee the resale of units. Past performance is no guarantee of future performance.
1 51% to 60% in unlisted real estate or OPCIs depending on their legal form: 51% in the case of a SPPICAV (Société de placement à prépondérance immobilière à capital variable - real estate investment company with variable capital) and 60% in the case of a FPI (Fonds de placement immobilier - Real estate investment trust)
2 according to the asset classes in which they are invested.