While the devaluation of SCPI share prices is increasing, a management company has just capped withdrawal requests for four of its real estate funds. One expert even envisages a 30% fall in SCPI share prices.
The situation is getting tense on the rental property market. Last example: Sofidy. This management company recently limited redemption requests for four of its real estate funds, according to recent information from L’Agefi. These are Sofidy Pierre Europe, Soliving, Sofimmo and its SCI Sofidy Convictions Immobilires.
For Sofidy, these withdrawal capping measures make it possible to better organize savers’ exits by scheduling redemption requests. This is in the primary interest of savers, in order to avoid a depletion of liquidity which would result in a blocking of the fund, report The echoes.
This decision is partly due to the rapid increase in interest rates and a reversal in the tertiary real estate market, particularly in the office sector in Ile-de-France.
Businesses may close, offices are unoccupied. These vacations can be complicated to manage for funds. To attract new buyers of their shares and deal with their liquidity problems, they have no other choice than to lower their price, explains Philippe Crevel, director of the Cercle de l’épargne, interviewed by West France.
SCPIs in turmoil
More generally, certain real estate funds, notably real estate investment companies (SCPI), are now under pressure.
Since last summer, significant announcements of devaluation of share prices have been made, against a backdrop of falling property prices. For example, Sofidy reduced the value of Effimo 1 and Sofipierre shares by 10.5% and 9.2% respectively. But the manager assures that there will be no drop in share prices this year on the other funds in the range, specify The echoes.
The Financial Markets Authority (AMF) warned last July of the risks associated with funds investing in commercial real estate.
The confidence of individual investors is eroding, leading to an increase in redemptions. In 2023, the annual net collection of SCPIs fell to 5.7 billion euros, a figure similar to that of 2020, a year marked by the Covid crisis.
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SCI and OCI also in the viewfinder
Real estate collective investment organizations (OPCIs) mainly distributed via life insurance show a net outflow of 3 billion euros over 12 months, according to The echoes. It amounts to 543 million euros for real estate life insurance companies (SCI).
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This difficult context raises concerns about a more systemic liquidity crisis in the sector. This concern was addressed during the last meeting of the High Financial Stability Council (HCSF), according to The echoes.
Nevertheless, sector experts, such as Jonathan Dhiver of Meilleurescpi.com, remain optimistic, believing that the risk is limited and that the worst is over for the real estate markets concerned. Even if difficulties for certain funds could continue for another 6 to 12 months.
For 30 years, the average yield of stone and paper has always been above 4%, even in times of crisis. The price of shares can fluctuate, but in the long term it remains generally on an upward trend, MoneyVox Paul Bourdois, co-founder of France SCPI, recently indicated.
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As a result, the savers most impacted by recent drops in valuation are those who invested recently. Those with a holding period of more than 8 years, as recommended by the AMF, very rarely lose out.
The declines are experienced as a shock by savers, since in the imagination of the French, stone is associated with a feeling of security. But the SCPI is an investment that carries risks. And the best ally in the face of these risks is time, adds Stphane van Huffel, co-founder of Netinvestment, recently interviewed by MoneyVox.
Investing in SCPIs is an option to consider but only if you have time on your hands. And not all SCPIs are equal. Furthermore, the price cuts are not yet over.
A 30% drop in the value of SCPIs?
According to Cyrille Chartier-Kastler, founder of Good Value for Money, redemption requests will continue with a domino effect. Managers will take temporary measures to block exits and the valuation of a large number of funds will be revised downwards, he indicates to the Echoes. He therefore anticipates a fall in the value of SCPI shares of 30% in the next 18 months.
We must not panic at a time like this, according to Philippe Crevel. In other words, rushing to sell your shares would not always be the best option. Especially since among the SCPIs which are reducing the price of their shares, some still have good returns, indicates the economist. And to continue: If you notice that your SCPI is really bad, then yes, it may be the time to resell. But if not, on the contrary, it might even be the time to reinvest!
Currently, 24 SCPIs out of around 220 have devalued their assets. However, since the start of the year, 11 SCPIs have increased the price of their shares and new funds have been created, indicating a certain resilience in the sector. We might have thought that the SCPI was like a Livret A. The situation experienced by these savings vehicles is therefore more of a return to reality than a crisis, analyzes Philippe Crevel.
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