Episode summary
What Makes UK Social Infrastructure a Distinct Asset Class? Hugo Llewelyn, CEO, Newcore Capital
Money Maze Podcast
· · Guests: Hugo Llewelyn
Summary
Hugo Llewelyn argues that UK social infrastructure is best understood as a real estate-led way of investing in essential services, not a separate speculative theme. Newcore Capital still focuses on healthcare, education, transport-related property and civic assets such as courts and police stations, and he says these assets remain “core to society” while still underserved by mainstream capital. The firm is wholly management-owned, now around $750 million under management, and has delivered returns roughly 4% to 5% above inflation since 2011.
He says the investment case has strengthened because inflation is sticky, private markets are overlevered, and refinancing pressure is exposing weak capital structures. In his view, many investors were relying on a low-rate playbook before 2022, but today they need real returns from assets with genuine social utility. Newcore targets around 12% to 14% returns on value-add funds, but keeps leverage modest, typically up to 30% LTV, to avoid turning risk management into speculation.
Llewelyn also says capital is scarce in parts of the market, especially where pensions and insurers have changed their allocation behavior. Local government pension schemes remain important backers, while the firm’s emphasis on affordability, dignity, decarbonization and practical demand helps it stand out. He sees a growing investor preference for total portfolio thinking and for assets that can withstand AI disruption because they support face-to-face, essential services.
Key takeaways
- Hugo Llewelyn says Newcore Capital targets healthcare, education, transport-related real estate and civic assets because they are essential but still underprovided.
- He says the firm has about $750 million under management and has generated roughly 4% to 5% above inflation since inception in 2011.
- Llewelyn argues sticky inflation and deglobalization make real returns harder to find, so investors need assets that are genuinely needed and inflation-linked.
- He says Newcore targets 12% to 14% returns on value-add funds while keeping leverage around 30% LTV to avoid the failures seen in overlevered private markets.
- He says local government pension schemes remain key allocators, while insurers’ shift toward credit has reduced demand for real assets.
Notable quotes
“the four three or four main pillars of our business are real estate assets that we lease enabling health care, education and transport related services”
“I maintain that real estate is a way of investing in infrastructure, and I it really helps us price risk”
“if you bring in too much leverage, you're moving from being a risk manager to being a sort of gambling manager”
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 3 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.
Thank you, 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
- market uncertainty & risk pricing
- defining core social infrastructure
- capital scarcity in private markets
- real estate vs infrastructure debate
- capital allocation & investor risk appetite
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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