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5 criteria to look for to identify an efficient SCPI

You wish to invest in an SCPI (Sociétés Civiles de Placement Immobilier). But how do you choose among the 206 existing SCPIs? You will find a lot of information on the documents issued by the SCPI: the newsletters and the annual report. Here are, according to us, the 5 criteria to determine the performance of an SCPI.

 

 

 

1. The distribution rate on market value (TDVM - taux de distribution sur Valeur de marché in french ) of the SCPI

The TDVM corresponds to the gross dividend (before withholding tax) paid in a given year divided by the average share price in that same year.

The level of remuneration and its regularity are of primary importance. Indeed, investors in SCPI are, in general, looking for additional income (to improve their retirement pension, for example). It is also important to look at the IRR to know the performance of the fund over time (5 years, 10 years...)

2. The size of the SCPI

In addition to the overall value, it is important to look at the number of buildings and the number of tenants in the SCPI. The greater the number of tenants, the greater the risk pooling.

3. The SCPI's assets

The durability of an SCPI depends largely on the quality of its real estate. The buildings must be in line with the needs of the tenants (location, services, environmental quality, etc.) in order to secure the maximum rental income for the SCPI.

Please note: The properties held are listed in the SCPI's annual report.

4. The Financial Occupancy Rate (TOF) of the SCPI

The TOF corresponds to the ratio between the amount of rents, the occupancy indemnities invoiced, the indemnities compensating for rents and the total rents that would be invoiced if all the SCPI's assets were rented. This ratio illustrates to some extent the financial vacancy rate of the real estate portfolio managed by the SCPI. It is measured on the last business day of the past calendar quarter, and is valid for the three months making up that quarter.

5. The reputation of the management company (in charge of the SCPI)

The 206 SCPIs are managed by 38 management companies. To recognize a good management company, one must look at the quality of the management teams, its ability to source and manage quality assets and also to meet its commitments by offering an interesting risk/return ratio to its clients.

WARNING

  • Investing in SCPI units involves risks, including the risk of capital loss.
  • The liquidity of SCPI units is not guaranteed by the management company.
  • The SCPI is exposed to real estate market risk, which may have a negative impact on the value of the assets held by the SCPI.
  • The potential income of the SCPI, which is mainly derived from the rents received, as well as the value of the units, may vary upwards or downwards and is not guaranteed.
  • Investment in SCPI units should be considered for the long term. The recommended investment period is 10 years. Before subscribing to any SCPI units, the investor must be given the information memorandum, the articles of association, the DIC, the subscription form, the latest information bulletin and the latest annual report. These documents are available from the management company.

For more information on SCPI, contact us!

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