Episode summary
What Makes UK Social Infrastructure a Distinct and Attractive Asset Class? Hugo Llewelyn, Founder...
Money Maze Podcast
· · Guests: Hugo Llewelyn
Summary
Hugo Llewelyn says Newcore Capital is still wholly management owned, has grown to about 750 million under management, and is aiming toward a billion by focusing on real estate that enables essential services rather than asset gathering. He argues that the firm’s edge is buying land and buildings tied to healthcare, education, transport-related uses and civic functions, with a disciplined emphasis on low leverage and real returns above inflation.
He says the opportunity has improved because higher rates, sticky inflation and geopolitical shocks are exposing over-levered private markets and forcing liquidity events. In his view, many investors misread the pre-2022 environment by assuming QE-era yields would persist, while Newcore positioned itself for a world where inflation, deglobalization and climate transition keep real assets relevant. He says the firm targets about a quarter each in education, healthcare, transport-related real estate and other civic or adjacent uses such as courts, police stations, waste-related storage and commuter parking.
Llewelyn also argues that allocators are increasingly seeing social infrastructure as a real estate problem with infrastructure characteristics, not a box-ticking exercise between asset classes. He says local government pension schemes, family offices and some European investors have been important backers, and that the right cultural approach is “courtesy with humor,” combined with careful risk management and modest leverage.
Key takeaways
- Llewelyn says Newcore is about 750 million under management and is targeting about a billion while staying wholly management owned.
- He argues real estate is a way of investing in infrastructure, especially where assets enable healthcare, education, transport and civic services.
- He says the firm targets around 12% to 14% returns in value-add strategies, but keeps leverage modest at up to about 30% LTV.
- He believes sticky inflation, deglobalization and higher rates are making low-leverage real assets more attractive than over-levered private markets.
- He says local government pension schemes, family offices and European investors have been key sources of capital because they can tolerate long-duration real asset exposure.
Notable quotes
“We are creating new social infrastructure, so we're buying land and building a hospital or something like that”
“I maintain that real estate is a way of investing in infrastructure, and I it really helps us price risk”
“We're now about 750 million under management. We're on our way to about a billion”
“you can have equity, real estate or you can lend money. That's your Those are options”
“the world of private markets, whether it's UK or in western economies generally, uh has got quite a lot of hidden issues”
How the episode opens
Um, where where valuations are too high, where leverage needs to be refinanced, and where investors after 2022 were happy to extend and pretend for two or three years, and now, again, with what's happened in the last three months in in the Middle East, um, that has gone away. I maintain that real estate is a way of investing in infrastructure, and I it really helps us price risk. We are creating new social infrastructure, so we're buying land and building a hospital or something like that.
And then and we're doing it very low leverage, and it's very useful in terms of social impact. And that and the risks you take there need to be paid for. Um, so investors are I think more and more looking at the underlying principles of what your fund is doing, and can you deliver that risk management process?
In February 2024, we released an episode titled Investing in Essential UK Social Infrastructure. It was with the founder and CEO of Newcore Capital, Hugo Llewelyn. Hugo and I had met years earlier when we were both on the investment committee of the Great Ormond Street Hospital.
He was the property expert. I'm not sure actually what I was doing there, but anyway, we uh we got to know each other, and um we're back today on this curated edition to both reacquaint investors with the investment thesis and discuss why the investment opportunity might be so compelling. To talk about where capital is scarce, where opportunities exist, the priorities in execution, the return profile that's being targeted, and why this area might just be AI proof.
So, Hugo, welcome back to the Money Maze podcast.
Thanks, Simon. Thanks for having me back. — Well, I think it would be um really helpful just to start with a recap on the business.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- uk social infrastructure
- private infrastructure investing
- healthcare education transport civic
- local authority pension investors
- private capital in scarce markets
Companies and tickers mentioned
- Newcore Capital
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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