Before investing, it is important to learn about the real estate investment company, which is all the more true in these times of crisis. Indeed, some categories are more affected than others, although overall, this type of investment remains very successful. The level of collections for the last quarter of 2020 is in line with expectations and the indicators are reassuring.
Always attractive returns
In a context of rapidly becoming economic health crisis, real estate investment companies have proven their resistance and their ability to deliver regular returns. First of all, they have a serious asset: the pooling of rental risks. Thanks to the multiplicity of assets, tenants and real estate scattered in various geographical areas, they clearly stand out from bank passbooks, life insurance companies or the euro fund whose rates are historically low. Thus, they offer remuneration that is always attractive, with an average return of 4.81% over the last four quarters. It is true that specialists observe a slight drop in performance for the first quarter, but this is only a drop of 0.2 points in one year. These scores are all the more admirable as the net inflows amount to 1 billion euros. As indicated stone paper, the recovery is definitely here and even if these figures bear witness to the impact of the crisis on the morale of savers, they have never been so numerous to buy shares in SCPI.
Profitable sectors thanks to the crisis
This performance nevertheless hides strong disparities between the different types of real estate investment companies.
The prosperity of multi-sector SCPIs
Depending on their strategy, they can invest in different real estate sectors and it is clear that those which diversify into several asset classes show more resilience in the face of market downturns. However, a civil company specializing in a particular area of investment can offer better returns. Thus, if retail SCPIs are the most impacted by Covid-19, the success of specialized SCPIs is not called into question, like Primofamily whose investment policy focuses on residential buildings. Diversified real estate investment companies have the privilege of having a varied portfolio, which allows them to withstand shocks in a more controlled and limited manner. They can therefore claim a generous fundraising despite the crisis.
Areas of activity more impacted than others
With the confinement and postponement of rents for companies in difficulty, some real estate investment companies are more sensitive to the effects of the Coronavirus pandemic depending on the asset classes concerned. Commercial and hotel SCPIs are the hardest hit, and for good reason: companies were forced to cease their activity during confinement and rents could not therefore be collected. The impact is again on different scales, since food businesses naturally benefit from constant dynamism and excellent stability. Be that as it may, the real estate investment companies positioned in the medical field are the first to benefit from the crisis, like Pierval Santé. In addition to the aging of the population, it is now possible to invest in real estate stocks for strictly medical use, such as clinics or nursing homes. Civilian office real estate investment companies also highlight reassuring performances. Indeed, the premises are leased to large companies and tenants are often committed to long-term leases. As for SCPIs specializing in logistics, the growth of e-commerce has enabled them to maintain their investments.
The RAN, the indicator to follow
Retained earnings constitute a financial reserve on which real estate investment companies can count to deal with rental contingencies. When a management company collects rents, it pays most of it to savers. The remainder is used to remunerate rental management and to supply this cash flow. Even if there is no specific fund that must be held by a real estate investment company, a minimum provision of 10% is required for a long-term investment. This leaves him with a reserve of money of 75 days of rent on average, corresponding to a situation where the recovery is zero. It is therefore possible to minimize the negative effects associated with unpaid bills. For example, the RAN of the SCPI Edissimmo exceeds 9 months, or approximately 287 days. It could therefore provide the same level of dividends to its partners for 287 days without receiving rents. Of course, the situation is imaginable, but it remains unlikely that all tenants will stop paying their rent for such a long time. Despite everything, it is a risk and with the current economic and health crisis, the management of the cash flow of a real estate investment company remains an essential criterion to monitor before investing in stone-paper.