Newcore Capital launches GBP25 million self-storage venture
Alternative real estate investment manager Newcore Capital Management is entering the self-storage sector through a strategic relationship with established operator Engage Management Services.
Newcore is committing an initial GBP10 million of equity from its GBP100 million Newcore Strategic Situations IV value-add fund to build a portfolio of freehold self-storage assets in the UK. Using debt and recycling cash, Newcore expects to invest GBP25 million in the sector over the next 18 months, which would equate to around five assets.
Newcore Strategic Situations IV will own the assets and Engage Managements Services, which was set up in 2009 to provide independent advice and management services to the self-storage industry, will be the operator and development manager. The name of the self-storage brand has yet to be determined.
Geographically, Newcore will target the south east of England, which is its favoured investment area, as well as other strong regional locations, such as Bristol and Bath. Newcore will either acquire existing buildings or sites on which to develop new-build facilities.
Hugo Llewelyn, Managing Director of Newcore, says: “We believe this is an opportune time to invest in the self-storage sector for our five-year investment horizon. The UK is still undersupplied in self-storage in the major urban conurbations and there is little new supply coming onto the market. The sector has also proved resilient through the downturn.
“Self-storage is a challenging market to enter, as you need a strong operating platform, so we are delighted to have partnered with Engage, which has a very impressive track record of performance”.
Newcore announced the first close of Newcore Strategic Situations IV in October 2018 with equity commitments of GBP55 million from two local government pension funds and from its existing family office client base. It acquired the first tranche of assets for the fund a week later, investing GBP20 million in assets in the south of England in its target sectors of social infrastructure, storage and accommodation.
Newcore Strategic Situations IV continues the value-add strategy which Newcore has successfully executed since 2012 and follows the completion of the GBP40 million investment programme for its Newcore Strategic Situations III fund.