Sometimes crises are good; they often have the effect of pushing authorities to change the regulatory framework. This is what happened this summer with real estate investment trusts (SCPI), companies that buy buildings to rent them out and pay rent to investors who own shares.
The rise in interest rates, which began in mid-2022, has shaken many traditional SCPIs, both in their results and in their investment strategies. The result: cascading reductions in the price of their subscription shares. Savers’ fears also led to significant capital outflows, generating serious liquidity problems.
This is reflected in particular in the queues that last for several months for investors wishing to sell their shares on the secondary market. To date, this situation affects almost half of the SCPIs. Although the crisis does not seem to be over, some optimistic observers believe that the worst is over thanks to the gradual lowering of interest rates.
At the same time, the regulatory framework of SCPI has evolved, through an order published in Official Journal July 4. A series of measures that offer more flexibility and room for manoeuvre to management companies are likely to have a positive impact on the functioning of this investment. “This change comes after a market disruption. For the record, the law was amended after another major SCPI crisis in the 1990s. Now that rates are starting to fall again, the time is right to implement new rules.comments Vincent Martins, managing director of the heritage engineering firm Waker Stone.
No more minimum price
This text obliges SCPI managers to carry out an assessment of their real estate assets twice a year and to publish it. In addition to the usual “snapshot” of 31 December, there is now the one from the end of the first half of the year. This mid-year assessment is not entirely new. It had already been strongly recommended in 2023 by the Financial Markets Authority in the midst of a crisis in the sector, to take stock of the value of SCPI assets.
The completion of this second inventory of the value of assets is necessary for both fixed- and variable-capital SCPIs. The few who resist this measure, which was previously optional, will have to fall in line. “This measure is good news. The more information and details we have on the valuation of assets, the more transparency and elements of appreciation there will be for participants and potential investors. This affects liquidity.”comments Marine Fouré, manager of the Darwin investment fund.
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