Understanding SCPIs

Yielding SCPIs are real estate savings products whose main objective is to pay savers a regular income in the form of dividends.

Definition of a yield SCPI


An SCPI (Société Civile de Placement Immobilier), also known by its generic name pierre-papier, is a collective financial investment in real estate. This can include office and retail property, as well as healthcare facilities and residential buildings. As their name suggests, SCPIs are designed to generate income. This income is not guaranteed, and may rise or fall according to market conditions and the performance of the SCPI. Distributed income comes from rental income, financial income from SCPI cash management, and any capital gains from property sales. The amount of this income depends in particular on rental activity and transactions carried out. This income, also known as dividends, is usually paid on a quarterly basis. The management company charges fees for rental management of the properties held by the SCPI and for transactions carried out on its behalf.


Why invest in an SCPI?


Investing in an SCPI can meet a number of different investment objectives. Most often, the primary objective is to generate additional income, whether you're working or retired. The multiplicity of tenants in the portfolio favors income stability. Long-term value enhancement, combined with investment diversification, is another objective consistent with the nature of the investment. Real estate investments, which are far less volatile than financial investments, can only evolve over the long term. However, SCPIs and the value of the underlying real estate assets remain subject to market fluctuations. Purchasing units in an SCPI can also be used to meet other investment objectives, such as passing on your property to your heirs.


How to choose an SCPI?


The objective of supplementing income generally focuses attention on the past performance of the yield SCPI, materialized by the internal rate of return (IRR) over different durations and the distribution rate (DR). Nevertheless, there are several points to consider before choosing one. Past performance is no guarantee of future performance. The Financial Occupancy Rate (TOF) is an important indicator of rental activity, as is the level of debt, which, if high, can have a negative impact on distributed income. Last but not least, the quality of the SCPI's real estate portfolio remains a decisive factor in meeting the long-term valuation objective, as the price of units fluctuates in line with the value of the portfolio they represent. The same applies to the quality of tenants, whether they be healthcare operators, businesses or retail outlets: their financial solidity remains a criterion of reliability.


How to buy SCPI units?


The initial investment can be modest compared with the amount needed to buy a property as such. Let's give an order of magnitude based on our own SCPIs: just over €2,000 (equivalent to 10 shares multiplied by a share price of around €200). You then have two options:

  • Buy SCPI units through a wealth management advisor (CGP) or financial investment advisor (CIF) who distributes the SCPI of your choice.
  • Buying SCPI units as a unit of account in a life insurance policy. Insurers offer a variable number of units of account in their contracts, generally from a variety of management companies. All you have to do is choose the SCPI(s) available from the list of units of account on offer, checking that they correspond to your investor profile.

The option of investing via programmed instalments, particularly in the context of a direct purchase via a CGP or CIF, enables you to build up real estate savings very gradually. This option should be considered over the long term.

In all cases, you should discuss the matter with your advisor, who will guide you towards the investment best suited to your personal and professional situation.


SCPI: a few risks to keep in mind


Investing in SCPI units involves a number of risks, including the risk of capital loss. The investment is considered to be illiquid, and should be considered with a long-term view to asset diversification. The management company does not guarantee the resale of units. Potential income from the fund and the value of units are not guaranteed. They may rise or fall according to the fund's performance, real estate market trends and economic conditions.


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