UK-focused real estate investment manager Newcore has launched a new social infrastructure fund, targeting a £375m raise for a new core plus strategy.
The fund will exclusively invest in social infrastructure assets that serve essential societal needs.
These include sectors such as education, clinical healthcare, transport, mortuaries, waste management, EV charging, and open storage.
The Newcore Sustainable Income Trust is due to launch by end of Q4 this year. The fund will focus on acquiring fully functional real estate assets at sustainable prices, to create a diversified, income-producing portfolio, using only moderate leverage (up to 30% LTV ratio).
In line with Newcore’s previous strategies, acquisitions will be UK focussed, principally London and the Southeast, as well as regional centres with strong local economies. Newcore has already identified a circa £300m pipeline of potential assets.
Sectors of focus include education, waste management, medical research and pathology, storage, clinical healthcare, and transport. Newcore, which currently manages approximately £500m in assets across its value-add series and existing core-plus strategies, has an established presence since 2011 and strong existing tenant relationships in the target sectors.
The fund will target returns of 9%-11% per annum IRR, with a 5% annual dividend. The fund will be semi-open ended with structured liquidity flows for primary redemption and new capital raising.
Hugo Llewelyn, Chief Executive Officer at Newcore Capital, said:
“The dislocation in the capital markets creates an attractive opportunity in social infrastructure real estate for experienced investors looking to create core strategies of scale.
“The Newcore Sustainable Income Trust will be structured to allow 5 yearly primary redemption windows to investors, which we think will better serve investors than open-ended real estate funds with daily or monthly liquidity where there can be a liquidity mismatch in weaker markets.”
Today’s announcement follows the final close for Newcore’s latest value-add fund, Newcore Strategic Situations V (NSS V) in May 2023, which secured £190 million in equity commitments. Investors included the Merseyside and Clwyd local government pension schemes, two European fund-of-funds managers, insurance and corporate pension schemes, family offices and high-net-worth individuals.
Neil Sarkhel, Chief Operating Officer at Newcore Capital, said:
“Institutional interest in social infrastructure assets, a segment of the UK real estate market not always targeted by traditional managers, has been demonstrated by the successful fundraise for our latest value-add vehicle – our largest to date.
“Our new core-plus fund will replicate our previous strategies at scale, aggregating hard-to-access, granular assets to create a diversified, resilient portfolio that commands an agglomeration premium and delivers reliable, steady returns for our investors.”
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