Author: Lucy Macewan

CityWealth x Newcore Capital – Is the sun setting on ESG investing?

CityWealth x Newcore Capital – Is the sun setting on ESG investing?

CityWealth x Newcore Capital – February 2024

“It has never been possible to separate the planks of E, S and G from a long term sustainable investment strategy”

Read how our CEO, Hugo Llewelyn recently explained how ESG has always been central to Newcore in CityWealth’s article challenging the future of ESG. 

 “to make a sensible economic return for investors, it has always been critical to have regard to their usefulness to society (S) and the capacity of the buildings to function efficiently from an environmental perspective (E) (or be able to be fixed economically to do so). In addition having on-shore UK operations, a strong ethos around tax and limited financial leverage (G) – all these have been the factors that have allowed us to do well and grow as a fund management business through some tricky market events (Brexit, Covid, QE unwinding).”

Download the article here.

PERE x Newcore Capital – Private real estate’s collision course with geopolitics

PERE x Newcore Capital – Private real estate’s collision course with geopolitics

Newcore Capital x PERE – February 2024

According to The Counsellors of Real Estate, political unrest and global economic health are one of the top ten issues affecting real estate capital flows.

Newcore’s CEO, Hugo Llewelyn, discussed this risk with Evelyn Lee for PERE’s February 2024 cover story alongside nine other managers, investors and advisers.

Read the full article below to hear their views on how a more volatile geopolitical environment has been shifting real estate capital flows in terms of geographic markets, sectors, asset types, leverage and strategies globally.

Download the full article here.

Newcore Capital’s CEO featured on The Money Maze podcast

Newcore Capital’s CEO featured on The Money Maze podcast

The Money Maze podcast is one of the leading financial podcast shows, covering interesting and relevant topics in the investment world. The show has in the past featured the likes of Ray Dalio, Sir Chris Hohn, Dame Kate Bingham and General Petraeus, plus in its curated section, investment businesses such as Ruffer and Lansdowne Partners.

The Money Maze is hosted by Simon Brewer, who was himself an investor and fund manager. Simon and Newcore’s CEO, Hugo Llewelyn, both sat on the Great Ormond Street Hospital Children’s Charity investment committee together and as a result of this relationship and Newcore’s differentiated social infrastructure investment strategy, which has not been featured on the show before, Hugo was recently interviewed about Newcore, our approach to sustainable investing and the Newcore Social Infrastructure Income Fund, which we are currently marketing, for the podcast’s curated section.

Listen to the episode below to further understand our business ethos and investment strategy in UK social infrastructure.

It can also be downloaded from:

IREI x Newcore Capital – For the social good: How the broadening definition of infrastructure is providing what cities and regions need to prosper

IREI x Newcore Capital – For the social good: How the broadening definition of infrastructure is providing what cities and regions need to prosper

Newcore Capital x IREI – 01 February 2024

‘Traditional’ infrastructure (public or private markets operating equity) investors have previously dominated the headlines investing in social infrastructure service businesses. However, specialist real estate capital managers – coming from the asset end of the risk spectrum – find opportunity too, perhaps increasingly interesting when the operational services are being squeezed by an increasing cost of living and capital.

“Social infrastructure”, such as children’s nurseries, waste management facilities and hospitals have come to the fore in the investment community in more recent years as well as other less prominent social infrastructure sectors such as cemeteries and fish farms.

“Trends in social infrastructure investment will adapt to wider socioeconomic shifts seen globally”. “Widening health inequality, societal ageing, the climate emergency and geopolitical instability are coalescing to necessitate investment into sectors that seek to offer remedies, if not solutions, to these shifts.”

Hugo Llewelyn, CEO, Newcore

The following article explores the widening definition of infrastructure in the investment world and highlights some interesting property segments which are becoming more prominent in the world of infrastructure investing. Newcore Capital has been investing in this space since inception in 2011 and our CEO, Hugo Llewelyn shares his thoughts in the latest i3 magazine.

Download the full article here.

“Assets that serve end-of-life uses, such as funeral homes and mortuaries, are capturing our attention because of the resilience of their use cases; they cannot be done online, so necessitate the use of physical space”. Hugo Llewelyn

People. Property. Place.

People. Property. Place.

Newcore’s CEO, Hugo Llewelyn, recently sat down with Matthew Watts to discuss a broad range of subjects which covered some of the following topics:

  • How he got into real estate
  • Creating investment thesis’
  • Fund raising
  • Changes in the capital management space
  • Balancing good business and social value
  • Social infrastructure investment
  • Distributing 10% of company profits to charity

Listen in to hear more about Hugo’s career, the driving principles behind Newcore, how we balance good returns and the creation of social impact, including our decision to certify as a B Corp.

IPE Real assets x Newcore Capital – Social infrastructure on the rise

IPE Real assets x Newcore Capital – Social infrastructure on the rise

Newcore Capital x IPE REAL ASSETS – January / February 2024

Investors are looking to increase their exposure to social infrastructure, but the sector is complex and requires a careful approach.

Our CEO, Hugo Llewelyn was pleased to participate in the recent IPE Real Assets article by Christopher Walker on the growing demand from institutional investors for social infrastructure investment exposure: both the essential services and the underlying assets that enable them, with their different risk profiles and need for specialist expertise.

“Having been advocates of investing in social infrastructure for the last 12 years, we are pleased now to find that institutional investors are finally becoming involved in looking for specialist partners to work with”.

Hugo Llewelyn, CEO, Newcore Capital

Read the full article here.

2023 PRI Report Results

2023 PRI Report Results

We are pleased to share our results from the 2023 Principles for Responsible Investment (PRI) Report, in which we were awarded 4 or 5 stars, out of a maximum of 5 stars, for all relevant modules.

We are proud to have scored above the median in our peer group in all relevant modules, but acknowledge there is always room for improvement.

As a signatory to the United Nations Principles of Responsible Investment (UN PRI), we report on our responsible investment activities using the PRI’s Reporting Framework.

Read our 2022-2023 ESG & Impact report for further information on our sustainable investment approach.

Newcore acquires two education buildings in Cambridge and Oxford and a food distribution centre in Colchester

Newcore acquires two education buildings in Cambridge and Oxford and a food distribution centre in Colchester
  • Specialist UK social infrastructure real estate fund manager has acquired three assets for a total of £11m+
  • The purchases represent two education-enabling assets in world-leading university cities Oxford and Cambridge, as well as a food distribution centre in Colchester
  • Acquisitions follow Newcore’s announcement that it has launched a core-plus investment vehicle, The Newcore Social Infrastructure Income Fund – its largest fund yet

Newcore Capital (‘Newcore’), the UK-focused real estate investment manager specialising in social infrastructure, has acquired two education assets in Cambridge and Oxford as well as a food distribution asset in Colchester. The assets were acquired for a combined sum of approximately £11m, reflecting a net initial yield of 6.1%.

The assets in Cambridge and Oxford were acquired on behalf of Newcore’s long standing core-plus separate accounts and represent 600 further education places in the world-renowned university cities. Both sites are let entirely to Aspect International Language Academy (trading as Kaplan International). There is significant scope to provide additional educational uses, such as special educational needs and childcare, if the tenant ever chose to vacate.

The food distribution centre in Gosbecks Road, Colchester has been acquired on behalf of Newcore’s latest value-add fund, the Newcore Strategic Situations V (NSS V), which closed in May this year having raised £190m in equity commitments. Support for the fund included the Merseyside and Clwyd local government pension schemes. NSS V remains active in the market for educational properties as well as other social infrastructure assets, including waste, open storage, healthcare and veterinary.

Newcore announced in October the launch of a new core-plus investment vehicle named The Newcore Sustainable Income Trust, which is targeting £375m in equity commitments. The firm says the vehicle – the firm’s largest fund yet – aims to capitalise the strong underlying demand fundamentals for social infrastructure real estate at a time of market dislocation, while its size is indicative of Newcore’s belief in the positive investment outlook for the sector.

Harry Savory, CIO of Newcore, said: “Owing to their low passing rents and the underlying societal need for the services that they enable, these three properties are expected to perform strongly on a long-term risk-adjusted basis. The properties in Cambridge and Oxford would sustain a wide range of educational uses, including childcare and special educational needs, if the current tenant ever chose to vacate. Colchester is an important hub for food distribution – an increasingly important societal trend and therefore sector of interest to Newcore.”

Hugo Llewelyn, CEO of Newcore, said: “Our purchases are always very conscious of the wider societal shifts taking place in social infrastructure provision across the UK, as increasingly stretched government resources creates significant opportunity for private investment in the sector. They are similarly conscious of minimising risk to the highest extent for us, our tenants, and investors. Market conditions, though bleak overall, have created a fantastic window of opportunity to satisfy this requirement through the availability of social infrastructure real estate entailing resilient demand fundamentals at highly attractive discounts.”

The future of UK social infrastructure

The future of UK social infrastructure

ESG

ESG

Newcore Capital and futurist professor, Peter Madden OBE, have published a report on the future of UK social infrastructure which outlines opportunities for private sector investment into UK social infrastructure.

Download the report

The paper sets out how investors and the real estate industry can understand and respond to challenges like climate change, resource scarcity, ageing populations, and the advent of new technologies like AI. New approaches to sustainability challenges, changing demographics, UK food production, and the further development of the space economy will drive growth of new sectors.

Investors expect that increased pressure on government spending will likely result in needing further private sector involvement in the provision of assets that serve essential needs. “There will be need to be more private-public funding to deal with a shortfall of government resourcing”, the report says.

Future need is influenced by structural shifts, such as ageing, widening wealth inequality, automation and the climate crisis – all of which will change how and where social infrastructure is delivered.

Investors should look to assets that are resilient to major economic, political, and environmental shocks and that can be adapted to changing circumstances.

“We are called to be the architects of the future, not its victims” R. Buckminster Fuller

New areas for potential investment include assets like onshore fish farming facilities, as warming oceans, overfishing, and the growing global demand for protein will make such sites increasingly important to the UK’s food security. Energy storage facilities are also becoming increasingly important with the mass-adoption of renewable energy sources and the electrification of the grid, while sustainable waste management facilities will adapt to new requirements in waste infrastructure stemming from resource shortages, circular economy approaches and supply chain risks.

Meanwhile, how we provide for our dead will change with shifts towards sustainable and eco-friendly burial options, the fact that many areas are running out of cemetery space and consideration of cultural change and different faith groups.

A widening wealth gap – the bottom 50% of population holds just 9% of the UK’s total wealth – is likely to exacerbate social polarisation and, as well as more investment to tackle the causes of inequality, may result in increased demand for real estate to accommodate police, migration control, and security services facilities.

Other types of new assets identified include vertical farming facilities, spaceports, VIP cycle stations, and elderly learning centres.

Hugo Llewelyn, CEO of Newcore Capital, said:

“Our report highlights the need for investors to be attentive to the shifting sands of UK society. Structural, global shifts will have diverse effects on the type of assets that will provide sustainable, long-term risk-adjusted investment returns. The need for investors in social infrastructure to co-opt these trends into their wider strategies is central. Newcore Capital continues to think carefully about these potential new, core sectors and include them in its value-add and core strategies as and when they become viable.”

Professor Peter Madden, OBE, Director of Vivid Futures, said:

“We can – and need to – do a better job at engaging with future challenges. Nobody wants stranded assets, figuratively or literally. In order to future-proof for the uncertain times ahead, I think the real estate sector needs an increased focus on resilience, more emphasis on the flexibility of assets, greater integration across sectors, and a much speedier shift towards sustainable solutions.”

Clarifying and pricing the different types of risks when investing in infrastructure

Clarifying and pricing the different types of risks when investing in infrastructure

In the capital raising round for our latest UK social infrastructure real estate fund, which closed in May 2023, several investors asked us the question: “Is Newcore infrastructure or real estate”? as they considered from which bucket of their own capital allocation to analyse our proposition.

The following piece explains how we answered it and might be helpful to others considering the same question and to shed light on the different risk / return attributes of areas of infrastructure investing, which are often overlooked or misunderstood.

Download the article here.