• Social infrastructure specialist has acquired 15 assets for a combined sum of approximately £50m
• Transactions include a 12-asset portfolio acquired from a major UK REIT for £25m
• Newcore Capital aims to deploy £100m of equity into primary healthcare over the next 18 months

UK-focussed social infrastructure real estate investment manager Newcore Capital (‘Newcore’) has acquired 15 assets in the primary healthcare sector for a combined sum of approximately £50m. Of the 15 assets acquired, 12 were purchased from a major UK REIT in a £25m portfolio transaction.

Representing a total Net Internal Area (NIA) of 145,184 sq ft, the acquisitions are geographically weighted towards Greater London and the Southeast. Of the total NIA, 88% is purpose-built, 57% is rated EPC A-B, and 90% is freehold tenure.

The 15 assets are let out on long-term leases to 31 different occupiers. Tenants include Northeast London NHS Foundation Trust, Kings College Hospital NHS Foundation Trust, Derbyshire Community Health Services NHS Foundation Trust, and Herefordshire & Worcestershire Health & Care NHS Trust.

The acquisitions adhere to Newcore’s wider strategy of investing in social infrastructure real estate assets that are resilient to the deflationary effects of technological change, with their use cases often necessitating the use of physical space. Other target social infrastructure sub-sectors for the firm include education, end-of-life services, childcare, EV charging, and waste management.

The investment manager recently announced that it had secured an £80m financing package from HSBC UK to support acquisitions in the social infrastructure sector.

Newcore is planning to deploy approximately £100m of equity into primary healthcare facilities over the next 18 months across both its value-add and core-plus strategies.

Harry Savory, Chief Investment Officer at Newcore Capital, said: “Primary healthcare represents the backbone of the UK’s healthcare system. Demand for facilities will only increase moving forward, with policymakers committed to making the NHS more accessible by improving the provision and quality of primary care as a community service.

In a sector where growing demand is underpinned by demographic shifts and supply constrained by valuation practice, these acquisitions give us the opportunity to work with tenant partners to fund capital improvements and deliver positive societal and environmental outcomes. It is exciting to be working with the NHS on this journey.”

• Social infrastructure specialist has secured a £40 million debt facility from HSBC UK, with an additional £40 million accordion facility also available

• Financing will support acquisitions for Newcore’s fifth value-add fund, which closed in May last year with £190 million in equity commitments

• Newcore Strategic Situations V is targeting assets such as education, healthcare, waste management, EV charging and storage

• Notable investors include Local Government pension schemes, a FTSE 100 corporate scheme and European institutions

UK-focused social infrastructure real estate investment manager, Newcore Capital (‘Newcore’), has secured a £40 million debt facility from HSBC UK, comprising a £20m senior loan facility and a £20 million revolving credit facility.

The facility also carries a £40 million uncommitted accordion option, subject to the lender’s discretion, that will lift the total facility size up to £80 million.

Newcore has maintained low leverage since inception, with a maximum loan-to-value ratio of 30% at the fund level for its value-add fund series.

The debt financing from HSBC UK will be used to acquire assets on behalf of Newcore’s fifth close-ended value-add fund, Newcore Strategic Situations V (‘NSS V’), which achieved a £190 million final close in May 2023 and marks the manager’s largest capital raise to date. Investors in the fund included Local Government Pension Schemes, a FTSE 100 corporate pension scheme and European institutions.

Recent acquisitions by NSS V include South Mimms motorway service area, Hertfordshire, home to the UK’s largest EV Hub, a short-leased 5.6-acre Tesco supermarket in the Bromley-by-Bow regeneration area, East London, a school in Milton Keynes let to one of Newcore’s SEN operating partners and an NHS-backed GP surgery in Kent.

Neil Sarkhel, COO, Newcore Capital, said: “The HSBC UK facility highlights that mainstream lenders are increasingly comfortable with social infrastructure as an asset class. The funding from HSBC, combined with the equity raised last year, provides us with significant firepower to deploy into creating functional assets that enable the provision of services critical to the dignified and orderly running of UK society.”

Newcore is the first dedicated UK real estate fund manager to achieve B Corporation certification and is, as at Q2 2024, the highest-ranked certified real asset investment manager in the movement. The firm exclusively invests in social infrastructure assets that deliver essential services to communities, including education, healthcare, waste management, EV charging and storage.

Hugo Llewelyn, CEO, Newcore Capital, said: “Our three-dimensional and long-term approach to sustainability – integrating social, environmental and financial considerations into our overall framework – has seen us adopt a low levered approach across our flagship value-add fund series. This has served our investors, tenants and underlying service users well through recent volatile times; and we believe that the strategy is likely to deliver stronger, long-term, risk-adjusted returns than tactical high-leverage strategies.

Richard Holland, Senior Relationship Director, Real Estate Finance at HSBC UK, said: “We are delighted for the opportunity to progress a banking relationship and loan facility with Newcore Capital for their fifth fund, and look forward to seeing both the business and our working relationship grow in the future.”

We are delighted to share the exciting news that Newcore has been awarded the ‘Best Strategy’ Content Award at the 2024 Pensions for Purpose Annual Symposium & Awards for The future of UK social infrastructure. This recognition highlights our commitment to creating impactful strategies within the investment community.

All submissions for the award were rigorously assessed based on originality, educational insight, presentation, and relevance to pension funds, with particular attention to evidence of positive and intentional outcomes. Pensions for Purpose is dedicated to accelerating capital flow towards impact investments, fostering positive outcomes for both people and the planet. Their mission includes sharing best practices, showcasing case studies, and delivering innovative solutions through an extensive online platform, which features a knowledge centre, training events, Impact Lens research, and a collaborative community of over 1,200 individuals and 400 members.

Our award-winning report, co-authored with Professor Peter Madden, OBE, explores the future opportunities for private sector investment in UK social infrastructure. It offers insights on how investors and the real estate industry can address growing challenges such as climate change, resource scarcity, and an ageing population, identifies future areas of social need, and explores the new UK assets that might be required in food production, energy storage, waste management,  the space economy, and in responding to changing demographics.

Hugo Llewelyn, CEO & Founder of Newcore said: “We are very pleased to have won this award and for the report to have been recognised by the Pensions for Purpose team and external judging panel. In order to invest sustainably for the long term, it is key to have a good understanding of the trends shaping UK society and the real estate that will be needed to enable these new core sectors.  In doing so one can harness the macro tailwinds during turbulent economic times”.

Professor Peter Madden, OBE, Founder Director of Vivid Futures (vividfutures.co.uk) added: “Understanding and engaging with future challenges is vital for the industry. The report outlines how this might be done and identifies some new potential opportunities for investment. It draws on the knowledge and experience of the Newcore team and has helped strengthen the capacity to respond to what the future needs.

Follow the link below to read our winning entry:

Congratulations to our fellow winners including Wiltshire Pension Fund, Border to Coast Pensions Partnership and Greater Manchester Pension Fund. The full list of the awards categories and winners can be viewed here.

Our CEO, Hugo Llewelyn recently contributed to Institutional Investing in Infrastructure (i3)’s October issue – Windows of opportunity: Why U.K pension funds should look at social – as well as economic – infrastructure.

A survey by GLIL Infrastructure Partners revealed that 65% of U.K. pension fund leaders plan to increase infrastructure investments over the next year, primarily focusing on economic infrastructure like energy and water. However, there is a surprising lack of attention to social infrastructure, which encompasses critical services such as healthcare, education, and waste management.

Social infrastructure not only has the potential for strong financial returns but also delivers significant social and environmental benefits. Survey respondents indicated that positive impacts on local communities and the U.K. economy are major reasons for their interest in infrastructure investments.

Given demographic trends like an aging population and rising wealth inequality, the demand for social infrastructure services is likely to grow. Additionally, the financial strain on government and private equity increases the need for reliable funding for these essential services.

Investing in social infrastructure presents a compelling opportunity, especially for funds seeking sustainable and resilient portfolios. The article argues that pension funds should naturally gravitate towards social infrastructure without needing coercion from the government, as it aligns with both fiduciary responsibilities and broader social goals.

Read the full article here – https://lnkd.in/eTUUckxq

By Beth Mattson-Teig

Hugo Llewelyn, CEO of Newcore Capital, recently contributed to Beth Mattson’s article, emphasising the need for a genuine approach to sustainability to attract capital and achieve results, noting that sustainable investing is increasingly essential for effective risk management, especially concerning long-term environmental issues.

The article discusses the increasing importance of environmental, social, and governance factors in infrastructure investment, highlighting a significant 75% rise in participation in the GRESB Infrastructure Assessment over the past five years. In 2023, 172 funds reported on 687 global assets valued at over $1.2 trillion. While some fund managers are leading in ESG practices, others are being pressured by investors and regulatory changes. Despite facing economic and political challenges, including anti-ESG sentiment, demand for sustainable strategies remains strong, particularly from institutional investors like pension funds.

In the article Hugo also notes a more scientific approach to sustainability measurement, with property companies now capable of accessing precise data on their environmental impact, particularly regarding carbon emissions and waste. Fund managers are increasingly able to quantify efficiency gains, tracking energy and water usage to demonstrate payback periods on investments and access to lower-cost sustainable financing.

Read the full article here – https://irei.com/publications/institutional-investing-in-infrastructure/

• UK social infrastructure specialist has acquired South Mimms motorway service area, home to the UK’s largest EV Hub
• The asset was acquired for Newcore’s latest value-add fund, Newcore Strategic Situations V (NSS V), which closed in May 2023 with £190m in equity commitments
• Notable investors into the fund include the Merseyside and Clwyd local government pension schemes

UK-focused social infrastructure real estate investment manager Newcore Capital (‘Newcore’) has acquired the investment long leasehold interest in the Welcome Break motorway service area (‘MSA’) at South Mimms, recognised as the UK’s largest EV Hub, for an undisclosed sum.

The 11-acre MSA occupies a key strategic location at the junction between M25 (J23) and A1 (M) that sees over 200,000 daily movements. The site features 70,000 sq ft across the amenity building, restaurants and hotel.

The property is let to Welcome Break until 2036 with passing rent of £1.6m per annum. The rent is structured as a ground rent and is subject to open market review in February 2026.

The asset was purchased on behalf of Newcore’s latest value-add fund, Newcore Strategic Situations V (‘NSS V’), which reached a final close at £190m of equity commitments in May last year and is still in the investment phase. Support for the fund included the Merseyside and Clwyd local government pension schemes. NSS V remains active in the market for MSA as well as other social infrastructure assets, including waste, open storage, healthcare and funeralcare.

Recent acquisitions include a short-leased 5.6-acre Tesco supermarket in the Bromley-by-Bow regeneration area, East London, and an NHS-backed GP surgery in Kent.

Harry Savory, CIO, Newcore Capital, said: “We are delighted to have purchased the service area at South Mimms for NSS V. It is a key strategic holding in UK transport infrastructure; it has a well-established trading position and is virtually unopposed from competition along the northern part of the M25. The site is uniquely positioned to capitalise on the transition towards EV and this will be key to delivering strong future performance”.

On behalf of NSS V, Newcore has also received planning consent for the redevelopment of the former-Royal Mail delivery office in Blackheath as a 120-place children’s nursery and 9 residential apartments in June 2024. The following month, Newcore completed the letting of a 25,000 sq ft school in Milton Keynes to Compass Schools, a national operator in children services, specialising in SEN schools, fostering and residential care.

Hugo Llewelyn, CEO, Newcore Capital, said: “The acquisition of South Mimms MSA follows an active summer for our latest value-add vehicle, with planning consent secured for new childcare provision and residential accommodation, as well as a leasing agreement for a specialist education provider. One of the additional benefits of investing in social infrastructure-related real estate is the positive impact our assets can have, whether that is supporting the decarbonisation of our transport system or providing much needed childcare or educational services.”