Bad times for stone-paper. Since the start of the year, several SCPIs have already been forced to reduce the price of their shares. And others could follow. Is this an opportunity, or a new danger?
Turbulence for SCPIs. Since January 1, 15 of them – representing more than 30% of the market in terms of capitalization – were forced to revise their share price downwards. And others could follow.
Because for several months, alarm signals have been multiplying on the commercial real estate market. First there is the rise in rates. In less than 14 months, the European Central Bank (ECB) raised its key rates 10 times. Never seen.
This impacts the refinancing cost of real estate companies, which consequently carry out fewer transactions. But also the economy in the broad sense, with forecast growth at its lowest since 2013.
However, according to credit analysts at Natixis Corporate & Investment Banking, the weakening economic outlook risks causing a slowdown in rental growth, as well as an increase in rental vacancies.
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Price at half mast
Result ? After 10 years of almost uninterrupted growth, commercial real estate is struggling. On average, prices fall by 17% in the office and logistics sector and 12% for shopping centers, according to Natixis experts.
Several SCPIs have already paid the price. Because, as a reminder, the price of shares in an SCPI must correspond to more or less 10% of the reconstitution value of the portfolio if all the assets it holds were to be sold.
In other words, if real estate falls too much, the value of your SCPI shares decreases. This is what happened to HSBC’s SCPI Elysées Pierre (-7%), as well as the Génépipierre funds (-17%) and Edissimmo (-13.9%) from Amundi, for example.
However, some funds are holding up. The management company CORUM, for example, does not plan to lower the share price of its SCPIs “neither in the short nor in the medium term”. Same story for Sofidy’s SCPIs, whose share price should remain unchanged this year.
Rental real estate: the price of these SCPI shares plummets by 10%
Difficult outlook
But how long can these SCPIs last? In a recent studyNatixis analysts have tried to estimate the potential extent of the decline in European commercial real estate between now and the end of 2024. And the outlook is rather poor.
According to the latter, office real estate should depreciate on average by 20 has 30% compared to the levels observed at the end of the first half of 2022, weighed down by high rates and the generalization of teleworking.
Commercial premises could resist (a little) better, with losses of 9 has 20%. The reason for this relative resilience? These assets had already undergone a significant correction, in particular because of the rise of e-commerce.
Finally, logistics assets are expected to lose 13 has 23% of their value, according to Natixis experts. The cause: the slowdown in economic activity, with European growth expected at only 0.6%.
Should we therefore avoid SCPIs? Not necessarily. Because behind these averages lie strong disparities depending on the quality and location of assets. Not to mention that investing in SCPIs is done for the long term.
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