Investing in a real estate company is becoming increasingly popular, as this type of commercial company allows you to optimize the leverage effect of real estate credit. This option is attractive for those looking to build real estate assets while avoiding tax obstacles. 

A real estate company, or real estate company, aims to enhance and operate a real estate portfolio, including various types of properties such as residential housing, offices, warehouses, commercial premises, parking lots, nursing homes and university residences. 

In France, around forty real estate companies are listed on the stock exchange, called Sociétés d’Investissement Immobilier Cotées (SIICs), including companies such as Foncière des Pimonts, Société Foncière Lyonnaise, Silic, and Unibail-Rodamco-Westfield. 

These companies are preferred over riskier stock market investments and must pay dividends to their shareholders, also benefiting from a special tax regime. 

Advantages: The main advantage of creating a real estate company lies in its ability to reduce the taxation of real estate income. 

Income: Rental income, often heavily taxed, can benefit from the favorable tax structure of the real estate company, generally subject to corporate tax. This structure also makes it possible to borrow to acquire high-yield real estate assets, with rental income financing loans and generating profits, while providing better cash flow and risk management related to real estate investments. 

Operation: Operating a real estate company offers several important advantages. First of all, the diversification of real estate investments makes it possible to spread risks, predict economic fluctuations and react to new trends in the real estate market. 

Risk pooling: Secondly, the pooling of risks between shareholders is a solution to the disadvantages of direct ownership of assets, such as unpaid rent, vacancy periods or deterioration. 

Financial leverage: In addition, real estate leverage helps a real estate company generate profits that finance new projects, thus stimulating growth. On the tax side, real estate companies enjoy many advantages, including the deduction of loan interest and depreciation of assets, which reduces the taxable base. Although the property tax remains, real estate companies benefit from a lower corporate tax rate than the income tax rate. 

Taxation: Finally, to obtain tax transparency and be exempt from corporate income tax, a real estate company must choose the SIIC regime, have a minimum capital of 15 million euros, be listed on a regulated market in France and redistribute 85% of rental profits and 50% of disposal profits. These requirements allow real estate companies to make investments that would otherwise be inaccessible 

Distribution of profits: Investing in a Listed Real Estate Investment Company (SIIC) offers shareholders the advantage of receiving a generous distribution of profits, thus ensuring a regular income. Rental income must be redistributed each year, while profits from sales must be distributed before the end of the second financial year following their receipt. 

Capitalization & balance sheet: Nevertheless, it is important to recognize that this type of investment involves risks of capital loss. Before committing, it is essential to evaluate certain financial indicators. At the balance sheet level, tangible fixed assets must be significant and receivables low, because rents are collected monthly. The revalued net assets are an essential criterion for assessing the value of the company. 

In the income statement, several aspects must be monitored: 

• The amount of rents, the main source of income; 

• Depreciation provisions, which indicate the age and condition of the real estate portfolio; 

• Personnel costs, which must remain moderate; 

• And finally, the consistency of results, crucial to benefit from the leverage effect and finance new acquisitions. 

Rental management: Effective rental management and rent regulation also play a key role in the financial stability of the real estate company. 

Stability of value: The stability of the value of real estate companies is consolidated when they modernize their real estate portfolio, which improves their profitability. Their development is mainly internal, because the price of their shares remains relatively constant, with the exception of periods of strong financial speculation. Returns: The returns of real estate companies are attractive, reaching rates of 10%, which is higher than the stock market average.

Reinvestments: When they reinvest, they usually finance their new acquisitions through bank loans or capital increases, rather than retaining cash from their profits. However, it is crucial to monitor off-balance sheet commitments, such as guarantees or mortgages, as they can represent significant financial risks in the event of a problem. 

Management: Land management includes all the operations necessary for the operation of buildings, including anticipating and resolving problems to optimize the financial performance of the assets. This helps maintain or even increase the value of real estate assets over the long term.