How do SCPIs work?
Investing in real estate with a relatively low initial investment is one of the advantages of the SCPI (Société Civile de Placement Immobilier).
In fact, this investment product allows you to buy shares in a pool of properties that are intended to be rented out, without having to worry about management, which is delegated to a management company for a fee. The income from any rents received is paid out to investors in proportion to their holding in the SCPI's capital. This saving in "paper stone" allows you to build up a real estate portfolio from a few hundred euros.
The SCPI, a way to invest in real estate
Non-trading property investment companies (SCPI) have the objective of buying real estate assets that they rent out. They carry out these acquisitions of goods thanks to the capital received from the savers who subscribe to shares of the SCPI. In return, and when the performance of the SCPI allows it, the latter receive, in proportion to their investment, a distribution from any income linked to the rental of the properties in the portfolio. However, the income is not guaranteed and can vary both upwards and downwards. The SCPI is thus a collective financial product accessible to several investors allowing them to buy shares in a portfolio of real estate assets.
Please note: SCPIs can invest in all types of assets. However, according to Aspim, offices will account for the majority of investments in 2021 (58%), followed by health and education (17%), retail (11%), logistics and business premises (5%), residential (3% including managed residences) and finally hotels and leisure (3%).
The management company is in charge of the management of the SCPI and the assets held
The SCPI unit holder does not bear the constraints related to the management of the assets. The management company is responsible for managing the real estate assets in which the SCPI invests, including leasing (or marketing) and maintenance, all in return for fees and commissions.
Please note: The subscription fee can be as high as 8 or 10% incl. tax and the management fee is about 12% incl. tax per year*.
Different types of SCPI
There are several types of SCPIs. The so-called "yield" SCPIs pay investors a non-guaranteed income, notably from any rents received by the real estate portfolio, on a quarterly basis, such as the SCPIs Primopierre and Primovie managed by Primonial REIM France. In addition, there are the so-called "tax exemption" SCPIs that invest in residential real estate assets that meet the eligibility criteria for tax schemes such as Pinel or Malraux. Finally, it is possible to invest in "valuation" SCPIs that aim to realize capital gains when the property is resold. Any income is paid to the investor at the end of the term, as is the case with the SCPI Patrimmo Croissance managed by Primonial REIM France.
Plese note: The term "paper stone" is used when referring to all forms of financial investments that have real estate as their main support. This term covers SCPIs, OPCIs (Organismes de Placement Collectif Immobilier), SIICs (Sociétés d'Investissement Immobilier Coté), real estate OPCVMs (Organisme de Placement Collectif en Valeurs Mobilières), real estate FPCIs (Fonds Professionnel de Capital Investissement) and real estate FCPRs (Fonds Commun de Placement à Risques)
SCPI: an investment accessible to all pockets
The SCPI is interesting investment from a financial point of view.. Indeed, its entry cost amounts to a few hundred euros, thus making it possible to put a foot in the real estate at low cost, the price of the shares starting from a few hundred euros. Moreover, it is a financial product that allows you to increase the capital invested over time, through scheduled payments or new subscriptions, or even to invest on credit. However, a loan commits the subscriber and must be repaid. It is advisable to check one's ability to repay before committing oneself. It is therefore an access product with a relatively low financial cost and flexibility. In 2021, it averaged 4.45%, however past performance is not indicative of future performance.
SCPI: an investment with risks
Investing in SCPI units involves risks, including the risk of capital loss. The investment is considered to be illiquid and should be considered from a long-term perspective and for asset diversification. The management company does not guarantee the resale of units. They may go up or down depending on the performance of the fund, the evolution of the real estate markets and the economic situation.
Sources chiffres: ASPIM
*Source : Capital