Property firm Sandstone laying foundations for growth with investment vehicle

Property firm Sandstone has confirmed that its Residential real estate investment trust (Reit) launched earlier this year is valued at just shy of £2 million, targeting £100m in assets by end of the current financial year.

The Edinburgh-headquartered firm, formerly known as Grant Property, debuted the investment vehicle in May, targeting prime city-centre properties in large university cities, looking to capitalise on a flourishing market.

It said it drew interest from existing clients looking to transfer property into the Reit, adding: “There are also active discussions with new clients including institutions, wealth-managers, private-equity companies and family offices. A number of private landlords have also approached the team about selling their portfolios into the Reit.”

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The business, which was founded by Peter Grant 25 years ago, added that the Reit has launched on the The International Stock Exchange and will move onto the London Stock Exchange as it scales up, also stating that it is currently sitting at 100 per cent occupancy.

Sandstone expects an annual dividend yield of between 3.5 per cent and 4 per cent within the first three years, rising to around 5.5 per cent to 6 per cent longer term, based on the net asset value as of March 31 this year. “Shareholders will receive dividends of at least 90 per cent of the net rent that the Reit receives,” Sandstone added.

It also pointed out that the financial vehicle is carbon positive, saying that the property sector is to blame for 52 per cent of global warming. The business works with the Energy Saving Trust to renovate properties to make them energy-efficient, supplying them with green energy, while emissions are offset by planting trees.

Mr Grant said: “Sandstone’s new Reit has had a successful launch, with strong interest from both the financial sector and private individuals.

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'There are very few residential Reits in the UK, and the new Sandstone Residential Reit fills a void,' says the firm's founder Peter Grant. Picture: contributed.

“There are very few residential Reits in the UK, and the new Sandstone Residential Reit fills a void as we see strong demand from investors to access a really attractive asset class which combines low risk and high returns, in a hands-off tax efficient way.”

Interest

Sandstone has previously highlighted its interest in the Residential Reit sector, including from client groups in Europe and Asia, for example.

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Additionally, Sandstone says that overall it has helped clients to invest in more than 3,000 “traditional” residential properties in prime university cities and towns across the UK – Edinburgh, Glasgow, Dundee, Stirling, Liverpool, Manchester, Birmingham, Nottingham and Bristol.

It favours such properties over new builds as they “tend to be in better locations, have larger room sizes, and in higher rental demand”. The firm also cited UCAS boss Clare Marchant earlier this month saying: “2022 now holds the record for the highest number of applicants and applications due to an increase in the number of 18-year-olds in the UK population, a trend set to rise 2-3 per cent almost every year.”

Sandstone said its investments in student accommodation, on behalf of investors from 40 countries, represent a gross asset value of around £1 billion in property.

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