SCPIs are investment companies authorized to issue shares to institutions and the public, and set up with the exclusive purpose of buying and managing property on behalf of the shareholders.
An SCPI needs to be distinguished from a Société Civile Immobilière (SCI), with which readers may be more familiar. The latter is merely a limited company that can be used for the purchase and ownership of French property.
The nearest equivalents outside of France to an SCPI are ‘Real Estate Investment Trusts (REITs)’.
There are now around 200 SCPIs in existence, with the largest having 100 or more properties in their portfolio. Notably amongst such SCPIs, each with a capitalisation in excess of €1 billion, are Accès Valeur Pierre, Crédit Mutuel Pierre 1, Edissimmo, Elysées Pierre, Immorente, Selectinvest 1, Novapierre and Rivoli Avenir Patrimoine.
The companies are managed by a professional management team (société de gestion) who collect the funds invested and undertake the acquisition, construction and management of the properties.
In recent years the funds have seen significant growth, rising from around €18 billion of capitalisation in 2009 to manage around €29 billion worth of funds today.
The returns have been well in excess of most other forms of investment averaging over 5% gross pa during the past twenty years.
Their income comes from the rents that are charged to tenants, which is then paid out to shareholders in dividends, normally on a quarterly basis, pro-rate to the number of shares held.
The strength of the returns comes from the fact that the vast majority of funds are invested in commercial and industrial property.
Investing in an SCPI gives an investor access to this market, and the mutualisation of risk, where they might otherwise be obliged to purchase an apartment or other residential property for letting purposes
The strength of the returns comes from the fact that the vast majority of funds are invested in commercial and industrial property, mainly around Paris and the Ile de France, but also in some of the other major cities of France.
The portfolio comprises prime offices occupied by governmental and other public sector bodies or large quoted companies, but will also include a large amount of more risky and low yielding properties let to medium sized companies.
Amongst the factors to consider, in addition to the historic level of the return and the charges, are the quality of the portfolio, the level of occupation, and the quality of the management team.
You clearly need to take professional advice regarding the choice of the SCPI to invest in. Moneo Consultants will provide you a tailored professional advice that will let you reach your goals.