Newcore Capital announces £190 million final close for fifth UK social infrastructure real estate fund
May 31, 2023
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.”