rent monitoring indicators provide good protection against inflation, Actualité/Actu Epargne
It’s not just the IRL that has to rise due to inflation: the indices used to create business are also starting to experience an unprecedented increase due to the increase in inflation. This is how the latest index of rent for high-quality work (ILAT) has only increased by 5.1% (for the first quarter of 2022) after +4.3% in the previous quarter. This is the largest increase in this index since it was launched in 2011.
ILAT and ILC
Office SCPIs use this ILAT index, which is used to review the loans of professional lenders according to the indexation clauses. ILAT applies to tenants of offices, warehouses or other business premises. For commercial activities, SCPIs use the commercial lending index (ILC), which at the end of June showed an annual increase of 3.32% after +2.42% in the previous quarter.
ILAT and ILC are mainly calculated from the Consumer Price Index (excluding tobacco and rent) and the New Construction Price Index, which is also experiencing a significant increase from the evolution of the price of materials. It should be noted that the ILC calculation method was revised in March 2022 and does not include the part that is linked to the sale of goods, in order to avoid the increase of rent for traders.
So we feel that the owners of SCPI units should not worry about the increase in prices from the perspective of the change in rent, the distribution that creates a great return on their investment. However, management companies are responsible for choosing people who can support this…