Author: Kate Sandle

ESG & Impact Report 2022-2023 published

ESG & Impact Report 2022-2023 published

Newcore Capital’s latest Impact Report shows ESG-grounded investment strategy delivers ‘consistently strong returns and social value’

  • B Corp certified real estate fund manager finds that three-quarters of the firm’s assets in Funds NSS V and NSS IV generate positive outcomes for people and the planet.
  • Newcore has simultaneously delivered strong returns to investors – 15.3%+ p.a. aggregate IRR on AUM since inception.
  • “Overall, the Fund turns vacant, derelict, or economically unproductive assets into economically and socially productive real estate”, said The Good Economy, social impact advisory firm.

Read the ESG & Impact Report for 2022 / 2023

Newcore Capital (‘Newcore’), the UK-focused social infrastructure real estate investment manager, has published its latest 2022-2023 ESG and Impact Report, which measures the environmental and social impact of its investments over the last year.

Newcore has worked with social impact advisory firm The Good Economy to establish an impact measurement and management framework and written two reports for Newcore Strategic Situations IV (‘NSS IV’) and Newcore Strategic Situations V (‘NSS V’) funds.

The funds’ reports review and highlight the considerable social impact produced by Newcore’s funds. For its NSS V fund, the report finds that three-quarters of the portfolio significantly improved social utility, generating positive outcomes for people and places. It also revealed the substantial impact derived through the firm’s strategy to redevelop derelict or disused sites into socially productive assets; it actively increased the social utility of two-thirds of its assets. Newcore’s contribution to creating impact was deemed medium or high for 72% of the fund.  “Overall, the Fund turns vacant, derelict, or economically unproductive assets into economically and socially productive real estate”, The Good Economy said in its NSS IV report.

There is a similar story for NSS IV, where the Fund actively increased the social utility of two-thirds of its assets, with 68% of the fund having a medium or high contribution to impact. Overall, 72% of the fund generates positive outcomes for people and planet.

Across both funds, Newcore has overseen the creation of 3,570 school places, 2,604 of which are children’s nursery places and 326 of which are special educational needs school places.

It also simultaneously achieved its largest ever capital raise of £190 million in Q1 2023 despite a highly challenging macro-economic environment, showing that its sustainable investment strategy pays dividends. Over its history, Newcore has delivered strong returns to investors – 15.3%+ p.a. aggregate IRR on AUM since inception with modest financial leverage to ensure that balance sheets remain sustainable and stable through market cycles.

Other significant environmental and governance achievements include:

  • Asset level energy data for 95% of assets across NSS IV and NSS V.
  • Introduction of a tenant engagement programme to align sustainability goals and accelerate environmental improvements
  • “Many partners interviewed describe the Fund (NSS V) as an investor of choice and they are keen to work more closely with it.”  The Good Economy, NSS V Impact Report
  • Progress on our commitment to bring nature closer to people and identified key areas for us to focus this year.
  • Newcore’s management platform being operationally carbon neutral for emission scopes 1, 2, and 3
  • Donating at least 10% of Newcore profits per annum to charities supporting social and environmental causes such as The Aldridge Foundation and The Rivers Trust.
  • Being under the UK HMRC tax regime both for management platform and funds (‘on-shoring’)
  • Signing up to the UN Principles of Responsible Investment, following their six key principles and filing regular reports and disclosures on progress.
  • Being the first B Corporation certified dedicated UK real estate investment manager, with the aim to improve the business’s score (currently 38% above the national average).

Newcore Capital Director of Sustainability, Kate Sandle, said: “Our focus on creating and managing sustainable – in all senses of the word – investments has paid dividends, putting us in a strong position for the future.

“Embedding ESG and measuring our impact contributed to us raising capital amidst challenging macro-economic circumstances, delivering consistently strong returns for investors while also generating positive social impact. That said, we recognise more can always be done and we are committed to increasing the supply of social infrastructure and accelerating action to address the climate and biodiversity crisis.”

Newcore Capital announces £190 million final close for fifth UK social infrastructure real estate fund

Newcore Capital announces £190 million final close for fifth UK social infrastructure real estate fund

Newcore Capital achieves the investment manager’s largest-ever capital raise amid challenging macro-economic circumstances

Limited Partners in Newcore Strategic Situations V include Merseyside and Clwyd Local Government Pension Schemes alongside fund of fund, insurance and corporate pension schemes, family offices and high-net-worth individuals 

NSS V will invest in UK social infrastructure assets, including education, healthcare, storage, life sciences, waste management and transport

LONDON, 24 MAY – Newcore Capital (‘Newcore’) has secured £190 million in equity commitments for Newcore Strategic Situations V (NSS V), which will invest in physical social infrastructure across the UK with a principal focus on Greater London and the South-East of England.

Combined with appropriate leverage, the capital raise gives Newcore close to £350 million of firepower to deploy into the current dislocated market. 

Notable investors include the Merseyside and Clwyd Local Government Pension Schemes, two European fund-of-fund managers and a FTSE-100 corporate pension fund. A number of high-net-worth individuals and family offices also participated in the final close. The fund had a 60 percent re-up rate, with those re-upping increasing their average commitment by 74 percent. Accord Europe Limited and its affiliates were the appointed placement agent. 

NSS V, a close-ended vehicle with a life spanning over seven years, is the latest in Newcore’s flagship value-add fund series. The UK-focused investment manager also manages core/core-plus separate accounts on behalf of two private family offices. 

The fund’s target net levered internal rate of return (IRR) is 13-15 percent per annum (p.a.) with sustainable leverage up to 30 percent loan-to-value at a fund level. Newcore has achieved a 14 percent-plus p.a. aggregate IRR since its inception in 2011 with modest financial leverage.  

Newcore currently manages £500 million in assets across both its core-plus and value-add strategies. The investment manager focuses exclusively on real estate that enables the provision of essential services to communities. Target asset classes include education and childcare, healthcare, storage, life sciences, waste management, roadside and transport. 

As the UK’s first dedicated real estate investment manager to achieve B Corporation status, Newcore has a strong focus on ESG (Environmental, Social, and Governance). Newcore donates at least 10% of its profits to its Newcore Foundation and has contributed close to £500,000 to charitable causes since its establishment in 2011. 

Newcore Capital CEO Hugo Llewelyn commented: “To have achieved our largest final close to date against a deeply uncertain economic backdrop is a testament to the track record of our team and the quality of our proposition, which is why so many of our investors have invested with us throughout our value-add fund series.

“Across traditional real estate sectors, rising interest rates are colliding with structural changes that put many assets at risk of obsolescence, forcing investors to rethink their allocations and we expect social infrastructure to form a greater portion of institutional portfolios going forward.”

Neil Sarkhel, chief operating officer at Newcore Capital, added: “Our strategy allows institutional investors to gain exposure to hard-to-access, granular assets that are both resilient and genuinely impactful. The capital raised will enable the creation and refurbishment of space for essential social uses.”

“Our investment approach with Newcore Strategic Situations V will look to build on the success of previous funds while intensifying our occupier engagement to drive positive ESG outcomes.”

Peter Wallach, director of pensions at Merseyside Pension Fund said: “Our continued investments with Newcore Capital allow us to contribute to the provision of essential infrastructure and services the UK needs to support a growing and ageing population, while also contributing to the ‘greening’ of the built environment through sustainability-focused, value-add asset management initiatives.”

Early investors in the fund include a number of high-net-worth individuals introduced by Coutts, via its investment club. The Coutts Investment Club connects some of the bank’s most financially sophisticated, high net worth clients with private investment opportunities, both direct private companies but also thematic private equity and real estate funds.

Hans Prottey, Head of Private Markets at Coutts said: “We are pleased to support Newcore’s fundraise, particularly given both Coutts and Newcore are certified B Corps. 

Our clients saw this as an attractive opportunity to invest alongside a highly specialised, award-winning fund manager with a proven track record. We look forward to following Newcore’s achievements over the next few years.”