SCPI, OPCI, FIA: the best option to build the post-coronavirus?
Faced with the current health crisis, any investor, whether institutional or professional, must keep a cool head. This is a good time to take stock of their clients' asset situation. How can we prepare for the future, which may be marked by a serious economic recession? How can we make our clients' money work as well as possible to compensate for possible losses of income elsewhere? Among the various investment formulas likely to improve purchasing power is a relevant, simple and meaningful solution: investing in a real estate fund.
Even if the real estate fund, like any investment, involves a certain amount of risk (risk of capital loss and liquidity risk), it has many advantages over other forms of investment. Unlike the economic cycle, the real estate cycle is much longer and much less volatile. Unlike financial markets, which are more inclined to react immediately to the irrational rise or fall of stocks or to external events, as was the case with the coronavirus, the real estate market is connected to the real economy and is more resistant to recessive waves.
What to choose: OPCI, SCPI or FIA in Real Estate?
Designed to offer as much stability as possible over the long term, real estate funds are one of the best options to build the post-coronavirus, but you still need to know which one to choose. There are currently three main types of real estate investment: the Organisme de Placement Collectif en Immobilier (OPCI), the Société Civile de Placement Immobilier (SCPI) and the Fonds d'Investissement Alternatif (FIA) en Immobilier. Unlike the other two categories, OPCI are not exclusively real estate vehicles. They hold at least 60% of real estate assets, the remainder being divided between a pocket of liquidity (between 5 and 10%) and securities. SCPIs most often invest in a specific real estate sector, generally offices and shops. FIAs in real estate, on the other hand, aim for a diversified portfolio with secure income. But the differences between the three vehicles do not stop there! The comparative table below shows the main characteristics of each.Diversification, a major asset in performance
However, in view of the current context where the massive wave of confinement has accelerated the practice of teleworking and the use of e-commerce, the under-occupation of commercial premises and the reduction in investment in office space rental are likely to intensify in the years to come. Traditional real estate funds will be the first to suffer in the medium term from the consequences of the health crisis. It is therefore better to rely on real estate funds that have been able to implement both geographic and sector diversification ahead of this crisis.This is the approach adopted by FIAs in Real Estate, such as Cacik Fund [1] proposed by Unik Capital Solutions. In addition to respecting the fundamentals - location, quality of tenants and a firm long-term lease - Cacik Fund stands out for its very high level of diversification and flexibility. The fund only selects sectors whose studies have demonstrated their stability, namely local food stores, e-commerce logistics and medical residences, designed in particular to accommodate elderly people in a situation of loss of autonomy. When one of the sectors is affected by a crisis, the fund, thanks to the agile decisions of its investment committee, is able to quickly rebalance the portfolio.
Thus, following the coronavirus pandemic, projects in the tourism industry are still being studied but in a very opportunistic manner and the focus is on the three other sectors of activity that have proven their resilience throughout this crisis.
[1] Cacik Fund SCA SICAV-SIF est proposé par Unik Capital Solutions et géré par une AIFM à Luxembourg.
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