Category: Report

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.

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 acquires £20 million of educational assets for UK social infrastructure fund

Newcore Capital acquires £20 million of educational assets for UK social infrastructure fund

Newcore Capital Management, the UK social infrastructure real estate investment manager, has acquired a further £20 million of educational assets for Newcore Strategic Situations V LP, its new £300 million value-add, social infrastructure fund.

The acquisition of the seven assets increases the fund’s investments to £43 million. It remains active in the market for educational properties as well as other social infrastructure assets, including healthcare, veterinary, waste, energy and open storage.

The seven assets, all located in Greater London and the southeast, include five early-years education settings now leased to operating partners: Family First in Guildford, Marlow and Finchampstead, Banana Moon in Tunbridge Wells and Fennies in Gerrards Cross. In addition, two special educational needs schools have been acquired: a primary school now leased to Outcomes First Group in Guildford and a school leased to an undisclosed tenant in Walton-on-Thames.

Harry Savory, chief investment officer of Newcore, said: “These seven investments provide good opportunities for our value-add strategy and for extending relationships with excellent operators of educational businesses. We are actively in the market to invest in further assets in the social infrastructure sector”.

Newcore announced the soft first close of Newcore Strategic Situations V LP (NSS V LP) in March, with an initial £60 million of investment firepower and expects a further single closing of the Fund at year end 2020. NSS V LP will shadow Article 9 of the EU Sustainable Finance Disclosure Regulation (SFDR), the highest green rating of positive impact that an alternative investment fund manager can achieve. This accords with Newcore’s strategy of delivering additional and much-needed essential services real estate to the UK market, while mitigating carbon dioxide emissions and utilities waste, within its B Corporation governance framework.

Newcore publishes 2022 Impact Report

Newcore publishes 2022 Impact Report

Since Newcore launched over a decade ago, we have tried to run our capital management business in a different way to the mainstream. We believed, even back then, that the “pre-2008” model of capital management – that led to the financial crisis and which was a prelude to current day economic market conditions – was not a sustainable one. 

Our 2021/22 Impact Report explains how we try to do this. 

Newcore’s mission is simply to deliver strong returns from sustainable investment in social infrastructure. 

We are driven by a belief that strong and sustainable risk-adjusted returns are best achieved on a long-term basis when you adhere to a rigorous governance framework and incorporate community and environmental considerations into business plans – both at fund and management platform level. That ethos has helped us to deliver 17%+ p.a. aggregate IRR on AUM since inception (with modest financial leverage) and we were the first dedicated UK real estate investment manager to certify as a B Corporation.  For Newcore, the past 12 months have resulted in the formal integration of our social and environmental objectives and the launch of our latest UK social infrastructure fund, NSS V LP.  In 2022, we’ve updated our brand, clarified our mission and launched a new website. We’ve also published our latest Impact Report where we reflect on what we’ve done, not managed to do; and what we want to do in the future. 

The continuing case for social infrastructure

The continuing case for social infrastructure

Click here to read the continuing case for UK social infrastructure, in light of current market conditions

Newcore’s 2020 Impact Report

Newcore’s 2020 Impact Report

Click here to read Newcore’s 2020 Impact Report