Edinburgh-based property investment firm Sandstone debuts Reit

Edinburgh-based private property investment and management company Sandstone has launched a real estate investment trust (Reit), adding that it has already attracted interest from client groups in Europe and Asia.

The Sandstone Residential Reit is focused on traditional residential property across ten cities in the UK, and is billed as enabling family offices, fund managers, charities and private clients with self-invested personal pensions to invest in the UK residential market “in a hands-off, tax-efficient way”.

With a maximum of 50 per cent gearing, projected returns are expected to be 17 per cent a year, on average, said the firm – adding that the UK’s property market grew at its fastest rate since 2007 this March.

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Sandstone, formerly known as Grant Property was founded in 1997, and says it has helped clients to build portfolios of residential properties, which are then rented to students.

The new Reit is focused on traditional residential property. Picture: Jon Savage.

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It also says it has helped clients from 40 countries to invest into 3,000 traditional UK residential properties, representing a net asset value of around £1 billion. “Notably, the company has achieved returns of 28 per cent per annum, over the past 25 years, based on 75 per cent loan-to-value gearing,” Sandstone also said.

"The resilience of the student accommodation market and Sandstone’s experience during the pandemic bears this out: occupancy in the portfolio has been above 95 per cent, and rental income rose by 12 per cent in 2020.”

The Sandstone Residential Reit aims to allow clients old and new to invest into a listed fund, benefiting from a booming rental market, capital gains, corporation tax efficiency, diversification of investment and liquidity – and existing clients will be able to move their properties into the Reit.

'We are already seeing interest from client groups in the UK and Europe, as well as... across Asia,' says Sandstone boss Peter Grant. Picture: contributed.

Sandstone founder and chief executive Peter Grant said the new Reit allows a whole new group of clients to capitalise on high-performing investments in the UK residential property market in a “hands-off” way. “It gives them the opportunity to move assets into a listed fund and benefit from the associated gains.

Connections

“We are already seeing interest from client groups in the UK and Europe, as well as Singapore, Hong Kong and across Asia. Private clients often have strong connections with the UK, whether it’s because of them, their children or grandchildren being educated here.

"There are very few residential Reits in the UK, and our new Sandstone Residential Reit has been created with large institutional investors in mind. It builds on our experience of creating, managing and selling two large-scale (£100 million) private funds.

“We operate within the student rental market, which has proved resilient, despite the pandemic… The combination of great locations, modern interiors, high-safety features and low-energy costs all results in student tenants typically staying for two to three years.”

The property boss also highlighted the group’s aim to be “fully” carbon-positive over the next 12 months. “Property accounts for 52 per cent of global warming, and it’s the number one issue for our student tenants, who are typically under 30 years of age, so it must be high on our agenda. Since 2006, we’ve cut our emissions by 30 per cent by changing how we renovate properties.”

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