Real Estate
Sandstone To Raise ÂŁ60 Million For Residential Property Focused Fund

Sandstone, a private property and investment management company, discusses the benefits of its Sandstone Residential REIT and how the firm plans to be carbon positive in 2022.
Sandstone, a private
property and investment management company, plans to raise
ÂŁ60 million ($74.3 million) over the next 12 months for its
Sandstone Residential REIT, the firm said this week.
The fund focuses on traditional residential property across
10 university cities in the UK, with a target rental group of
students, with parental backing.
It enables family offices, fund managers, charities and private
clients to invest in the UK residential market in a
tax-efficient way, being exempt from tax on property income and
gains, with a minimum investment level of ÂŁ85,000 ($105,230), the
firm said in a statement.
REIT dividends are paid directly to UK resident investors which
will attract a withholding tax at 20 per cent but that is fully
reclaimable, the firm added. The REIT also has to pay out at
least 90 per cent of the net rent it receives as dividends to its
shareholders.
The Sandstone Residential REIT was soft launched in September
2021 when Peter Grant, Sandstone CEO and founder, contributed ÂŁ1
million ($1.24 million) of seed investment, the firm said. It
plans to have monthly closings over the next 12 months, with an
aim to IPO the REIT in 2023. This is subject to raising investor
equity in the fundraising period, during which it is targeting a
ÂŁ60 million ($74.3 million) raise, topped up by ÂŁ40 million
($49.5 million) debt, Paolo Alonzi, Sandstone chief operating
officer said. “The NAV per share is around £1.04 ($1.28) as of 31
March 2022 and the annual dividend is expected to grow between
3.5 per cent to 4 per cent in the first three years, rising
by 5.5 per cent to 6 per cent,” he added.
Explaining the current housing market, Grant said house prices
have been rising by 7 per cent per annum for the past 35 years,
due to supply and demand. He highlighted that property accounts
for 52 per cent of emissions, so reducing them is high on his
agenda. “Since 2006, we’ve cut our emissions by 30 per cent, by
using green energy, green transport and creating a tree planting
charity. We also aim to be fully carbon positive in 2022,” he
explained at a lunchtime event on Wednesday.
Expedition medic Dr Nathan Hudson-Peacock also highlighted at the
event the importance of green housing markets, warning that
the climate crisis is the single greatest health threat facing
humanity.
Edinburgh-based Sandstone has invested in more than 3,000
traditional residential properties in prime university cities and
towns across the UK. These investments, on behalf of investors
from 40 countries around the world, represent a gross asset value
of around ÂŁ1 billion ($1.24 billion). The company has also
achieved returns of 28 per cent per annum over the past 28 years,
based on 75 per cent loan-to-value gearing, Grant said.