The Big Interview: Sandstone Group founder Peter Grant
Peter Grant is the founder of Sandstone Group, a property investment and management business with 25 years’ experience helping clients to invest in 3,000 properties throughout the UK.
Originally known as Grant Property, the company was set up in the 1990s by the businessman and his then-wife Colette, after an initial buy-to-let purchase by the pair proved very successful, and they kept adding to the portfolio.
The now-rebranded company says it has helped clients to build portfolios of residential properties, which are then rented to students, enabling customers from 40 countries to invest in such sites, representing a net asset value of around £1 billion.
Edinburgh-based Sandstone also earlier this year launched a real estate investment trust (Reit), saying this was a “logical” next step for its clients.
The Sandstone Residential Reit was billed as focusing on traditional residential property across ten cities in the UK, letting family offices, fund managers, charities and private clients with self-invested personal pensions invest in the UK residential market “in a hands-off, tax-efficient way”.
Mr Grant said when the Reit launched: “We are already seeing interest from client groups in the UK and Europe, as well as Singapore, Hong Kong and across Asia.”
He started his career in the newspaper industry, focused on the circulation side of the business, and including a spell working for The Scotsman, later doing a finance-based MBA.
And entrepreneurship seemed to be his destiny. He has said: “There was just something inside me that always had this burning ambition to be either my own boss or to be the boss of someone else’s company. The route I finally went down was obviously starting my business from absolute scratch.”
Now based in Utah, he says he likes skiing in the local hills, biking and sailing. “I enjoy the adrenalin rush. I used to enjoy travel but that has gone by the wayside, though I am heading back to Scotland for a visit – and the first thing I will do is buy a pint and a bag of chips.”
What are the benefits of investing in a Reit and where do you see the demand coming from?
The Reit is new way for clients to invest in real estate in a very hands-off way. There are tax advantages, and it’s far more liquid than owning a property outright. It pools the capital of individual investors without them having to buy, manage, or finance any properties themselves.
It is aimed at those clients in our portfolio – as well as new clients – who are looking for somewhere to put a lump sum of money, or their pension and want to be hands-off investors in the property market.
It’s being run under our new company, Sandstone Investment Management, with its own board. The Reit is listed on The International Stock Exchange, a regulated market based in Guernsey, which is aimed at professional investors. We only launched in July and so far we’ve been overwhelmed by the level of interest from clients – it’s far higher than expected and has already exceeded targets.
You are passionate about the environment and, as a business working towards a carbon-neutral position, can you talk us through the steps you have taken over the years as well as the ongoing business plans?
There is a four-point plan. The first was to make the buildings that clients invest in more energy-efficient through things like insulation and energy-efficient appliances. Then we looked at transport and our vehicles. We now have a fleet of Teslas.
We use virtual meeting technology such as Zoom which has cut down on travel. None of our clients now needs to visit the properties as they can view them virtually. We have looked at green energy usage across the company in terms of heating and so on. We also focused a lot on tree-planting.
The target of making all our properties meet standards on green energy emissions came after I saw former US president Bill Clinton deliver a talk almost 20 years ago in Glasgow in which he highlighted the impact that property has on the environment.
On the back of that I launched a charity called Global Trees, which later caught Mr Clinton’s attention. His talk was the inspiration for setting up Global Trees and later his people got in touch, inviting me to meet him in New York.
How has the pandemic affected your business, and are there any fundamental changes in operations as a result?
The main difference is that everything has gone online. We do not do any in-person viewing of properties at all any more.
Doing meetings online has made us so much more efficient and we have been able to hit 100 per cent occupancy more quickly. My travel budget has fallen substantially. The absence of in-person visits also means that clients want more videos.
One downside is that there are a lot of people I have not met face to face and that includes some of my new directors.
Grant Property has been rebranded as Sandstone. Can you tell us why you have changed the name? And what is the vision for Sandstone?
The name Grant Property came from an accountant when we were setting up the business, but it is now too closely associated with me and is too generic. I wanted something that reflected the buildings we invest in and the scale of the business.
We are aiming to be in more cities, maybe 15 to 20 compared to ten at the moment, but we will choose carefully and not go into cities just for the sake of it. I see the Reit growing to about £500 million in assets under management. I also hope to list the operating company, which would be a partial exit (for me) in the next four or five years.
The lettings market is particularly competitive, what is your outlook for the sector?
It is highly competitive. There are a lot of lettings companies and a shortage of stock, but that has been a problem for 25 years.
Our advantage is that we are more than a property-management company. We buy and refurbish property for clients and then refurbish, furnish and manage them on their behalf.
What has been your biggest challenge in your career and the main highlight?
The biggest challenge was the financial crash (2007-09). It was turmoil. Chaos. It made Covid look easy to solve!
It was particularly bad for us as we had a strategic alliance with HBoS (the bank created by the merger of Halifax and Bank of Scotland) which had a 20 per cent shareholding. When it collapsed it changed our world overnight.
The saving grace is that we had a lot of money set aside and we immediately flipped our business model to grow our overseas client base. There were places in Asia where life just carried on as normal. But we had to downsize the business to cut our costs.
The highlight has to be what we are doing now – launching the Reit. It is definitely one of the more interesting things I have done and I am learning as I go along. It is an exciting opportunity and the clients seem to love the concept.
What advice would you give to someone looking to invest?
Consider location and be brave. There are many people who say to me that they wish they had done more earlier. Surround yourself with good advisers – and that does not necessarily mean family!
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