Newcore Capital has launched a new social infrastructure fund called the Newcore Sustainable Income Trust and is targeting a £375m raise.
It is due to launch the fund, which is part of its new core-plus strategy, by the end of Q4 this year and 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).
Acquisitions will be UK-focussed, principally in London and the South East, as well as regional centres with strong local economies. The fund is targeting assets in the education, waste management, medical research and pathology, storage, clinical healthcare and transport sectors, and has already identified a circa £300m pipeline of potential assets. The semi-open fund will target returns of 9%-11% per annum IRR, with a 5% annual dividend.
Hugo Llewelyn (pictured), chief executive officer of 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 five-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, chief operating officer 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.”
