According to Frédéric Puzin, real estate investment companies (SCPI) should still suffer for two years. But the drop in rates, expected for the second half of the year, could breathe new life into this market.
L’Express: How did your SCPIs weather the bad winds of 2023?
Frédéric Puzin: From March, we started to hear that some managers were experiencing withdrawals from institutional investors, such as insurers. This phenomenon marked the start of the nuclear winter for our market, with a scenario similar to that of 2008: first mass capital outflows from these players, then the fall in share prices. The craze for SCPIs has been such in recent years that the backlash has been very violent.
The challenge for Corum was to not get caught up in the movement and to maintain the trust of our customers. We were able to count on our strengths, namely the fact of not having large investors among our investors and of offering products that beat inflation and monetary investments (1). We passed the test successfully! Our withdrawal rate over the year increased from 0.7% to 0.9% of the capitalization of our SCPIs – which remains very modest – and we collected massively, with more than a billion euros on our three vehicles. In the third quarter of 2023, we captured more than 22% of net market flows.
Should we fear share price drops at Corum?
We are quite calm. Despite the decline in real estate prices, the value of the assets of our three SCPIs, estimated by independent experts, remained generally stable in 2023. By what miracle? First of all, the occupancy rates of our real estate assets are very high: between 97.5% and 100%. We sign long-term leases, we attach great importance to the solidity of tenants and we have very little debt. Then, we have a very rigorous approach to purchasing: before each investment, we carry out an independent appraisal to be sure not to overpay for the building. And then, we practice active management and we are not afraid to sell. Thus, we currently have very little exposure to German real estate, even though this country represented more than 20% of the portfolio of some of our SCPIs in the past. Finally, we manage everything internally, even abroad. It’s expensive for a management company like ours, but it’s a huge strength.
How do you see the SCPI market evolving in 2024?
The current crisis may still last twenty-four months but the situation should start to improve at the end of 2024. Interest rates should fall, which could allow the real estate investment market to slowly pick up again. As for the liquidity problems encountered by certain SCPIs on the market, this is not the first time that this has happened and, unfortunately, savers tend to forget quickly… Some players should, however, take advantage of the context to gain market share, and Corum will be in it. This crisis allows us to seize opportunities that help us prepare for tomorrow’s potential performance. It gives us oxygen for ten years.
Four years ago, you launched your life insurance. What assessment do you make of it?
At the start, in March 2020, we wanted, as usual, to break the codes. We believe that it is not the life insurance package as such that has value but the financial supports that make it up and the tax incentive ultimately obtained by the saver by blocking his savings! We therefore chose to be paid only on these supports and not on the envelope. This is why we do not charge management fees on the units of account. The contract is established in this very mature market that is life insurance: since its launch, we have doubled the collection each year.
We reached 160 million euros in 2023 and we want to continue on this trajectory. Last year, we considered the period opportune to create a euro fund. A good window of opportunity which allows us to offer an annualized return of 4.45%. This makes us credible. Let’s recognize, however, that if rates fall, this yield will also fall. Our goal remains to do better than Booklet A.
(1) The 2023 distribution rate of Corum Origin amounts to 6.06%, that of Corum XL to 5.40% and that of Corum Eurion to 5.67%.
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