Investing in shares of a Real Estate Investment Trust (REIT ) requires knowledge of its application and legal properties to guarantee the success of the operation. The choice between fixed and variable capital is therefore not an insignificant one, as these articles of association each have their own specific functioning.
The REIT market
This mature market is governed by the investment objective decided by the investor, and it is recommended to choose wisely among the various types available before investing in SCPI units. Yield REIT , i.e. fixed REIT or variable REIT , concern stocks that include only professional property (office, warehouse, etc.). These 2 statutes incorporate nuances that make it possible to anticipate the redemption or acquisition of units and understanding them is essential in order to optimise investments.
The REIT with fixed capital
The REIT with fixed capital includes a fixed value as soon as it appears concerning the value of the capital. As soon as this amount is reached, the company will be able to increase its capital on a regular basis. In order to carry out the operation, the previous capital increase must have been 75% invested in real estate and the old shares must not be resold at a lower amount than the new shares. However, the investor may not subscribe for new shares between two capital increases and must therefore acquire additional shares on the secondary market. The price applied to the shares may vary significantly, because, as in the supply and demand market, when supply is high and demand for shares remains low, prices are likely to fall regardless of actual values.
The open-ended REIT with variable capital
The open-ended REIT come with a unit value directly established by the body managing the units based on the real value of the real estate portfolio. The secondary market, on the other hand, will be taken care of by the investor and the management company, and in the event of liquidation of the units, it will not be necessary to seek another investor. However, the investor will not be able to speculate on the value of the property portfolio and the sale price of the REIT units. As the price applied to units does not change according to demand, in contrast to fixed-capital REIT , only the price of the real estate will define the value of the REIT units. However, there is no control over the flow of new capital and the manager will be forced to invest, even in situations of serious crisis, which may constitute a major obstacle in the long term for the quality of the REIT .