UK-based social infrastructure investment specialist Newcore Capital is launching a new core-plus fund by the end of Q4 2023 with a target raise of £375 mln (€430 mln).
The Newcore Sustainable Income Trust will focus on acquiring fully functional and attractively-priced sustainable real estate assets to create a diversified, income-producing portfolio.
Newcore Capital believes that these social infrastructure assets are undervalued and can generate good returns for investors while also having a positive social impact.
A circa £300 mln pipeline of potential assets in sectors such as education, waste management, medical research and pathology, storage, clinical healthcare, and transport has been identified, principally in London and the Southeast, as well as in regional centres.
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, CEO 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.’
Neil Sarkhel, COO at Newcore Capital, added: ‘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.’
The launch follows a final close for its latest value-add vehicle, Newcore Strategic Situations V, which secured £190 mln (€218 mln) in equity commitments in May 2023.
Strongly focused on ESG, Newcore currently manages around £500 mln (€574 mln) in assets.
