An OPCI is a collective investment scheme specialising in real estate and intended for the general public. Its structure and legal framework are broadly inspired by those of collective investment schemes.

Object :
The object of real-property collective investment scheme is investment in buildings, including buildings in future state of completion, which they rent out or have built solely for the purpose of renting them out and which they hold directly or indirectly, all activities necessary for their use or resale, the carrying out of works of all kinds in those buildings, including works relating to their construction, renovation and restoration in order to rent them out and, subsidiary, the management of financial instruments and deposits.

What legal forms can they take?
Real-estate collective investment scheme refers to either a limited liability real estate company with variable capital (hereafter “SPPICAV”) or a real-estate investment trust (hereafter “FPI”).

SPPICAV

• It means a limited liability real-estate with variable capital which issues shares according to subscription offers.

• By purchasing SPPICAV shares, the investor (or the saver) becomes shareholder that enables him to give his opinion about the management of the company during the general meeting of shareholders.

FPI

• It means a collective ownership of securities that issues units. These real-estate investment trusts are unincorporated.

• Subscribers have no voting right.

• A portfolio management company authorised by AMF is in charge of their management.

The order sets out the possibility of creating subfunds
The limited liability real estate company with variable capital bylaws or the Real-estate investment trust regulation shall provide that the OPCI capital will be divided in two or several subfunds. Each subfund has its own accounting and issues several classes of units or shares.

Who can subscribe to OPCI units or shares?
Individuals and institutional investors (ex: insurance companies).

• Real-estate investment trust can hold buildings and shares of unquoted companies if their assets are mainly composed of real estate assets. Ex : Real-estate company

• Limited liability real-estate company with variable capital can hold shares of quoted real estates companies, buildings and shares of unquoted companies (minimum 51%).

Ratios to be respected :

• Between 60% and 90% of real-estate collective investment scheme’s capital has to be invested in real estate in France or in the OECD states, in real estate companies, in French or foreign real estate funds, in quoted real estate companies ==> Real estate goods can be held indirectly.

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• Real-estate collective investment scheme has to hold at least 10% of liquidity. Ex: Treasury bonds, negotiable debt instruments, government bonds, shares of unit trusts (OPCVM) that are concerned by those instruments.

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In case of available balance: the capital of the real-estate collective investment scheme can be invested in financial instruments.

Can the real-estate collective investment scheme subscribe to a loan? And if this is the case, what are the limits?

• The real-estate collective investment scheme can borrow funds within the limits of 50% of the value of its real estate assets and within the limits of 10% of its others assets.

• Possibility for the real-estate collective investment scheme to accept advance in current account.

French stock exchange authority (hereafter “ AMF”): authorisation of an OPCI and of all any decision relating to them (transformation, winding up, marketing…).

OPCI real estate evaluators:

• Two independent real estate evaluators have to be appointed by the OPCI for 4years period.

• Evaluators are not directly subjected to the AMF authorisation: in the case where the management company presents a file to the AMF in order to receive the relevant authorisation for real estate collective investment scheme creation, the authority also check the independence and skills of the evaluators.

• They have to evaluate the goods on the basis of the net assets.

• The evaluation of all buildings has to be done at least 4 times per year.

• Concerning buildings held directly: the appraisal indicates the value, the other one controls. Rotation of their functions each year.

• Concerning buildings held indirectly: evaluation and control by two evaluators.

Depositary: control of management decisions, conservation of the financial assets. The depositary is independent of the management company.

The portfolio management company in charge of the OPCI:

• The management company is authorised by the AMF

• It is in charge of the deposit of the file containing all essential information relating to the OPCI in order to obtain the AMF authorisation.

• It represents the shareholders.

Auditor :

• Appointed by the management company for a limited term.

• Mission: control of the accounting documents and certification of OPCI annual accounts.

Distributors and clients

OPCI supervisory board (method of governance)

• Members elected by the subscribers in accordance with the details set out in OPCI bylaws or regulation.

• Only composed of unitholders.

• Between 5 and 9 members: decision taken at the simple majority. Valid if at least 50% of the members are present.

• Control of the OPCI management modalities (but can not interfere in the management).

• Report relating to this control: at least one time per year. This report is attached to the OPCI annual report and communicated to the AMF. If several reports are drafted, they are available in accordance with modalities described in the OPCI bylaws or regulation.

AMF authorisation: the constitution of an OPCI (or subfunds) is subjected to the AMF authorisation. Its marketing is not possible before such authorisation.

Information to be provided:

Information required by the order:

• Liquidation value

• Full prospectus (regulation and circular)

• OPCI regulation/bylaws

• Management report

• Annual accounts

• Inventory of assets

• Periodical information

• Real estate evaluators’ reports

• Possibility for AMF to require the communication of any documents established and distributed by an OPCI. At anytime, the AMF could oblige the OPCI to modify the presentation and the content of these documents.

Additional information requested by the AMF in accordance with its supervisory mission:

• Information in case of modification or mutations of the OPCI.

• Statistic data concerning the OPCI practices.

• Evaluators/Supervisory board have to alert the AMF if they meet difficulties for the realisation of their missions and in case of act of god in order to stop the redemption.

Information published by the management company:

• Liquidation value

• Full prospectus

• Annual report

• Advertising brochure

• Transaction on the instrument

• Simplified prospectus

• Detailed memo

Risk of loss limited to investments made

Ratios of investments

Liquidity:

• The OPCI will issue new units to reply to the investors requests.

• Redemption in the case where investors want to sell them: The OPCI should keep at least 10% of it assets in liquid investments (money or bonds investments).

• In case of redemption, liquidation value = net asset of the OPCI / Number of outstanding shares or units.

Protection against a brutal withdrawal of an institutional investor holding a lot of shares: mechanism of redemption stoppage.

The attractiveness of the OPCI is reinforced compared with that of the real-estate investment trust (SCPI). However, the SCPI advantages are protected:

• Savings without management issues

• Regular incomes

• Share of the risks

• Enable to make an investment (even moderate) in real estate

Two tax systems:

• If the OPCI is constituted in the form of SPPICAV: taxation in accordance with the system of income from moveable capital. The taxation of the moveable capital gain is applicable.

• If the OPCI is constituted in the form of FPI: taxation of real-estate income like as the subscriber would receive rents of a building held directly. Real estate capital gain system.