In order to take account of the increasing proportion of variable-capital SCPIs (Société Civile de Placement Immobilier or real estate investment company) invested in commercial property, the EDHEC IEIF Commercial Property (France) Index will include them in its universe from January 1, 2015.
There is no change to the index composition rules: only SCPIs that have recorded trading volume of more than 2 million euros on the secondary market during the previous year will be included. The secondary market is the share trading market organised by SCPI investment companies in accordance with articles 422-21 to 39 of the AMF’s (French financial market authority) general regulations. For variable-capital SCPIs, the price considered in the calculation of the index is the subscription prices of compensated withdrawals, determined by the investment company.
Consequently, the index publication frequency is modified and switches from monthly to quarterly, and the publication period changes from 10 days to one month.
Pierre SCHOEFFLER, Senior Advisor with IEIF, commented, “The inclusion of variable-capital SCPIs improves the representativeness of the index. The capitalisation of the index sample increases from around 5 billion euros to over 23 billion, and the number of SCPIs in the sample doubles to around 30 SCPIs. Even though the price formation for variable-capital SCPIs does not obey the order book matching mechanism of fixed-capital SCPIs, the information that is specific to the transactional nature of the prices is preserved to the extent that the liquidity requirement remains unchanged.”
Noël AMENC, Professor of Finance and Director of EDHEC-Risk Institute sought to highlight that, “In a sector where valuations are more often than not based on estimations, the fact that the EDHEC IEIF index is based on genuine transaction prices provides this index with an interesting forward-looking dimension.”