UK-focused real estate investment manager Newcore Capital 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, Newcore Capital 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, Newcore Capital: “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.”
