Analysis by Good Value for Money of the SCPI Primovie (Primonial REIM) specialized in retirement homes and care establishments

As its name suggests, Primovie is a SCPI specialized in “life”that is to say concretely, on the walls :

  • of serviced residences and D’EHPAD,
  • of clinics and D’care facilitiesof nursing homes,
  • of student residences and of premises of educational establishments,
  • of nurseries.

These four investment areas from Primovia represent 80.3% of the property portfolio of the SCPI as of June 30, 2022 (% in market value).

the specific positioning of Primovie induced:

  • long-term investments (sometimes off-plan) in order to support the development of clients over time, for example: the creation of a service residence for seniors in the Bordeaux region requiring:
    • the rresearch and acquisition of suitable land,
    • the solicitation of architectural firms,
    • the follow-up of the works and their reception,
  • relative security for the saver due :
    • the signature of long-term leases with the operators concerned,
    • of one great stability of the people accommodated in these residences,
    • of one pre-verified financial capacity of these people to pay their own rent,
  • a limited number of properties held by the SCPI (only 269 active at the end of 2021), each of them being logically of significant size (on average 4,800 m² as of December 31, 2021) in order to meet the related accommodation needs.

Primovie is referenced as a unit of account in many life insurance policies market, including:

  • Opportunities Tree 2 of UAF Life Patrimoine,
  • Life Direct-Investment,
  • Intensive Liberalys Life (ILV) of Intencial Patrimoine,
  • The Medical Premium 2 distributed by the La Médicale network,
  • Target+ by Primal.

The Primovie key figures show a good ability of Primonial REIMmanager of the SCPI, to absorb very significant flows of net inflows while maintaining the support’s financial ratios:

  • 2021:
    • Net inflow of €840m during the exercise
    • Net capitalization of €4,237m as of December 31
    • Payout rate on market value (TDVM) of 4.50%
    • Internal rate of return (SORTING) over 5 years of 4.20%
  • 2020(year strongly marked by covid-19):
    • Net inflow of €428m during the exercise
    • Net capitalization of €3,396m as of December 31
    • Payout rate on market value (TDVM) of 4.50%
    • Internal rate of return (SORTING) over 5 years of 4.28%
  • 2019:
    • Net inflow of €630m during the exercise
    • Net capitalization of €2,970m as of December 31
    • Payout rate on market value (TDVM) of 4.51%
    • Internal rate of return (SORTING) over 5 years of 4.29%

In order to absorb its growth while diversifying its risks, the SCPI Primovie has endeavored to gradually expand its scope of investmentboth in the provinces and in the euro zone excluding France.

At the end of 2021, the real estate assets of the SCPI is broken down as follows (vision in market value):

  • Betting: 7.5%,
  • Paris region: 40.9%,
  • Province: 21.1%,
  • Germany: 20.5%,
  • Italy: 7.9%,
  • Spain: 2.1%.

Main advantages of Primovie

  • Environmental and ethical commitments made by Primoviea guarantee of the sustainability of its investments and its positioning:
    • Obtaining a Governmental SRI labeling in January 2022,
    • Prior ESG rating systematic of all the investments made,
    • Concrete objectives for improving the well-being of people housed in EHPADs by reducing the proportion of double rooms.
  • Investment of 80% of real estate assets of the SCPI in resilient activities: retirement homes, establishments for the elderly, clinics, care establishments, educational establishments, crèches.
  • Physical occupancy rate (TOP) of the SCPI over 96% over the 2015-2021 period. Primovie’s excellent ability to maintain its financial occupancy rate despite the strong growth in its outstandings.
  • Gradual opening of the real estate portfolio internationallywith the weight of the Euro zone excluding France now over 30% at the end of 2020.
  • Weighted firm residual lease term (WALB) signed by Primovie 9.71 years as of June 30, 2022.

Main disadvantages of Primovie

  • Korian weight (retirement homes) of 13.2% of rents collected by Primovie in 2021, emphasizing however that this shrinks over the years thanks to the development of the SCPI.
  • Primovie’s financial debt of €450 million at the end of 2021remembering however:
    • that the high capitalization of Primovie (€4,600m at June 30, 2022) logically leads the SCPI to position itself on real estate transactions requiring significant financial investments (including off-plan operations),
    • that Primovie’s annual net inflow over the past three years (period 2019-2021) was greater than €450 million.
  • Limited amount of the provision for major maintenance as of December 31, 2021.

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