Category: News

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

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.”

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.”