SCI : how does it work ?
The Sociétés Civiles Immobilières (SCI), in the form of units of account, make it possible to invest in real estate through life insurance contracts.
Discreet and yet interesting to increase the potential return on one's assets, SCIs are worth watching, although the income is not guaranteed..
The SCI to invest in several real estate
The Société civile immobilière (SCI) is a form of civil company set up mainly for the purpose of acquiring, managing or renting out a property portfolio.
The SCI are mostly known for the family investment side they offer. Indeed, it is an interesting way for many people to become owners of a property and to manage it.
However, SCIs also exist in the form of units of account and therefore provide access to a wider range of real estate. Held within a life insurance contract, the main purpose of SCIs is to build up and manage a real estate portfolio with a view to offering recurring rental income to capitalize.
Please note: According to the French Association of Real Estate Investment Trusts (Aspim) in 2021, SCIs in the form of Units of Account recorded an inflow of 3.1 billion euros, an increase of 10% compared to 2020.
Including an SCI in a life insurance policy
They are still little known in France, yet it is possible to invest in SCI through life insurance contracts. Presenting more profitable prospects than the euro fund, this product allows not only to ensure a liquidity to its contract guaranteed by the insurer but also to potentially increase its overall return although there is a risk of capital loss.
Generally speaking, the SCIs offered on the market and which can be included in a life insurance contract function almost like funds of funds. By purchasing shares in real estate investment companies (SCIs) through a life insurance policy, this investment allows you to invest indirectly in real estate assets held directly by the SCIs, or in real estate investment companies (SCPIs), in other SCIs or in listed real estate securities of which the SCIs hold shares. It is therefore an excellent way to diversify your investments in real estate.
In addition, the SCI has no obligation to distribute income unlike SCPIs. This allows him to keep them and reinvest them. The SCI in units of account in a life insurance benefits from the tax regime of the life insurance. Finally, this support also allows you to transmit your SCI units of account at your death.
Good to know: Primonial REIM France's SCI Primonial Capimmo is the largest SCI on the market with more than €6 billion in net assets, according to Aspim as of 12/31/2021. Primonial Capimmo combines several characteristics at once: diversification of the allocation, autonomy and regularity of potential income with a long-term investment objective and a target performance above 4%. Income and performance are not guaranteed. Past performance is not a reliable indicator of future performance.
Increase your return prospects thanks to SCIs
On the yield side, it is recalled that neither the capital nor the income is guaranteed. However, SCIs open to life insurance contracts offer potential returns that are far from negligible and much higher than euro funds. Thus, according to the latest study conducted by bienprévoir.fr and Primaliance, they have generated a return of 3.71% in 2021, an increase of 82 basis points compared to 2020. Past performance is no guarantee of future performance.
What are the risks?
Investing in SCI shares via a life insurance contract presents an income risk and a risk of capital loss. The potential income from real estate assets as well as their value may vary up or down depending on the economic and real estate situation. The liquidity of the real estate fund units or real estate assets held by the SCI is not guaranteed. The underlying assets held by the SCI are considered to be illiquid. The SCI directly or indirectly owns buildings whose sale implies delays that will depend on the state of the real estate market. The real estate funds held by the SCI may have recourse to loans. Past performance is not indicative of future performance.