Stone-paper is going through a difficult time. Several SCPIs have corrected their prices downward in 2023. And others could follow very soon. So what place should this asset class reserve in your portfolio in 2024?
In February 2023, the shares of the SCPI Laffite Pierre were exchanged 450 euros. A year later, these same shares are only worth 372 eurosi.e. a dizzying drop in 17.33%. And the SCPI of AEW Patrimoine is not the only one experiencing difficulties.
In total, 23 SCPIs have seen their valuations plummet over the last 12 months. Which ultimately seems quite a few out of the more than 200 investment vehicles identified in France. However, these few SCPIs alone represent more than 35% of total capitalization.
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Rate crisis
the origin of these declines, the sudden rise in ECB rates, which seriously shook the small, hushed world of stone and paper. More than a SCPI crisis, we can talk about an interest rate crisis, believes Stphane van Huffel, co-founder of Netinvestment.
That said, the difficulties of stone and paper are very real today. Because the first falls in share prices aroused the concern of certain savers, who rushed to withdraw their capital, fearing further losses.
Result? In the third quarter of 2023, SCPIs recorded for 1.7 billion euros redemption orders. An amount three times larger than in the first quarter of the same year, according to the French Association of Real Estate Investment Companies (Aspim).
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Low liquidity
These massive withdrawals could in turn fuel the decline. To honor redemption orders, SCPIs which have few liquidity reserves must put part of their real estate assets up for sale, which accentuates their losses, notes Stphane van Huffel.
Another downside: faced with the increase in withdrawals, the liquidity of SCPIs is deteriorating, since redemptions are not always compensated by new subscriptions. So that as of September 30, 2023, no less than 98 SCPI had shares awaiting redemption, according to Aspim.
So does stone-paper have lead in its wings? And should you stay away from this financial investment in 2024? Not necessarily. Because the SCPI picture is not as gloomy as it may seem at first glance.
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Record returns
To begin with, yields held up well. On average, SCPIs distributed about 4.6% net of fees for the year 2023 and some even show distributions exceeding 7.5%. Few investments can say the same, observes Paul Bourdois, co-founder of France SCPI.
Some SCPIs are doing even better, with record returns of 8.16% at Transitions Europe and 7.79% at Remake Live. Iroko Zen, an SCPI with no entry fees, displays a higher distribution rate 7% for the third consecutive year.
However, performance is the crux of the matter. When you buy SCPI shares, it is above all to generate a regular return over time. If the price of the shares improves over time, it is only a bonus, recalls Stphane van Huffel.
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Time factor
And on this point, the SCPIs were wrong. For 30 years, the average yield of stone-paper has always been greater than 4%, even in times of crisis. The price of the shares can fluctuate, but in the long term it generally remains on an upward trend, notes Paul Bourdois.
In other words: the savers most impacted by recent drops in valuation are those who have recently invested. Those who have a detention period over 8 yearsas recommended by the AMF, are very rarely losers.
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, says Stphane van Huffel.
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Back to reality
What we are actually seeing is a return to normal. Real estate is a long-term investment. However, in recent years, we have become real estate traders, believes Stphane van Huffel.
Investors could borrow at rates close to zero to buy goods and resell them barely two years later, realizing in the process a capital gain of 20%. Today, it’s over,” continues the leader.
Investing in SCPIs therefore remains an attractive option in 2024. But only if you have time on your hands. And even then, caution remains in order. Because not all SCPIs are equal. Not to mention that the price cuts are not over yet.
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Opportunities to seize
Other management companies should reveal the appraised value of their SCPIs by the end of February. And this time again, we expect that several of them will show a decreasing reconstitution value, confirms Paul Bourdois.
The vehicles most in difficulty are mainly banking SCPIs, invested in offices in the Ile-de-France region. Conversely, young SCPIs which garner significant inflows benefit from the liquidity necessary to position themselves in a bearish market.
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We are therefore witnessing the emergence of a multi-speed market. This implies being more selective in the choice of your SCPI, with a particular focus on the quality of the real estate stock and the investment strategy of the managers.
SCPIs which invest in nurseries, EHPADs, data centers or logistics warehouses seem well positioned to stand out from the crowd. As do European SCPIs, which are more diversified and which benefit from attractive taxation, concludes Stphane van Huffel. .
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