Newcore Capital Management, a UK social infrastructure real estate investment manager, has announced the launch of Newcore Strategic Situations V, a £300 mln (€360 mln) value-add fund for institutional and family office investors that will invest in UK real estate assets linked to social infrastructure.
At the soft first close of the fund, Newcore has secured institutional and family office commitments from its existing investor base, giving it an initial £60 mln of investment firepower. Newcore is now widening the marketing to the institutional investor market and expects further closes during 2022.
NSS V will be an Article 9 fund under 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 essential services real estate to the UK market, while mitigating carbon dioxide emissions and utilities waste, within its B Corporation governance framework.
The fund, which is closed ended with a seven-year life, will aim to deliver an annual 13-15% net internal rate of return to investors, using sustainable leverage of up to 30% on a loan-to-value basis. Newcore will focus on investing in assets that deliver essential services to society, which require repositioning, modernising or refurbishment to bring them up to institutional and future-proof quality.
These assets linked to social infrastructure, such as education, healthcare, transport, waste management, retirement living, life sciences and environmental infrastructure, are often considered “alternative” by mainstream institutional investors and, therefore, the province of specialist managers. Newcore has invested only in these sectors since its formation in 2011, delivering annualised returns of more than 17% to its investors over that period, while capturing and measuring significant positive social impact from its strategies.
NSS V LP continues the value-add strategy which Newcore has executed since 2012 and follows the completion of the £150 mln investment programme for its NSS IV fund. NSS IV delivered 28% year-on-year total returns in 2021, notwithstanding Covid and wider market disruption.