Acquiring a SCPI before an increase in the price of its units is always a good operation that allows you to quickly make a capital gain or limit entry costs. To make the right choice, you need to compare the move-in prices to the new-build values calculated annually from each SCPI’s real estate asset appraisals.
The Management Companies are entitled to vary the price of the SCPI Shares by plus or minus 10% in relation to their Reconstitution Value. Therefore, it is generally required that the Recompilation Value exceeds the Subscription Price of the Share by more than 10% for a price increase to apply.
In the current very uncertain economic environment for growth and the prospect of a permanent rise in interest rates, choosing a SCPI whose subscription price is discounted in relation to its reconstitution value also offers a safety margin in the event of a fall in the property market, leading to a depreciation in the share price could.
75 SCPI screened
The SCPI observatory of the online savings platform Linxea had already examined the value of SCPIs’ real estate assets last summer and was pleasantly surprised to discover a new observation widespread increase in reconstitution values as of December 31, 2021. This increase is measured on average +1.57% for the main SCPIs on the market (75 SCPIs studied). The largest observed increase is for the retail SCPIs category (+2.45% compared to the end of 2020).
This study therefore confirms again this year a majority discount situation for the main SCPIs on the market with an average share price of 3.71% below their reconstitution value. ” That means subscribers are buying their shares today, on average, 3.71% cheaper than the actual value of the goods. sums up Pierre Garin, director of Linxea’s real estate department.
An average discount of 3.71%
It is the diversified SCPIs that experience the largest discount at -4.23% on average. Linxea notes that the residential sector, which had by far the highest discount last year, is “adjusted” with an average discount of -3.25%. Linxea states that this category is likely to be more affected than the other sectors by rising interest rates, which are having a more direct impact on house prices.
Among all these SCPIs analyzed by Linxea, fifteen stand out with a reconstitution value that exceeds the share price by more than 7%.
SCPIs with the highest discounts as ranked by Linxea:
– Novapierre Residential (Paref Management): 7.05%
– Cap Foncières & Territoires (property and territories): 7.4%
– Stone savings (Atland Voisin): 7.2%
– Fair investment (Norma Capital): 7.2%
– LF Opportunity Immo (La Française AM): 9.7%
– Selectipierre 2 (Fiducial Gérance): 9.9%
– Agricultural practitioners (Foncière Magellan): 7.6%
– Elialys (Advenis): 7.6%
– Real estate savings (La Française AM): 9%
– LF Europimmo (La Française AM): 9.1%
– LF Grand Paris Patrimoine (La Française AM): 8.9%
– Selectinvest (La Française AM): 9.4%
– Novapierre 1 (Paref management): 8.1%
– Novapierre Germany (Paref Management): 9.4%
– Novapierre Germany 2 (Paref Gestion): 9.7%
6 SCPIs with discounts of almost 10%
Therefore, if we kept only the largest discounts likely to result in the next stock price rise, there would be 6 SCPIs at a discount greater than 9%: LF Opportunit Immo (La Française AM), Sélectipierre 2 (Fiducial Gérance), Selectinvest (La Française AM), Novapierre Germany and Novapierre Germany 2 (Paref Gestion) and LF Europimmo (La Française AM).
To clearly illustrate this healthy assessment of SCPIs, we can add that 32 SCPIs, or more than 40% of the sample, had haircuts of at least 5%. ” With estimates generally increasing, the situation has improved further compared to the previous year. This also led to numerous price increases in the first half of 2022. While the environment holds real threats (inflation, rate hikes, etc.), the SCPIs are entering the second half of 2022 in even better shape than last year. Thus, the widening gap between reconstitution values and unit prices gives reason for optimism regarding the latter’s development, which could also serve as a buffer in the event of a general decline in property values following the current rise in interest rates » concludes Pierre Garin.
Conversely, the Linxea study shows that 15 SCPIs have a share price higher than their reconstitution value (a similar ratio to last year). These overvaluations are mostly small, averaging around 2%, with the exception of SCPI Patrimmo Commerce (Primonial REIM), where it’s around 10% difference, which could indicate a near-term price decline for the stock.