UBS Asset Management’s (UBS-AM) Real Estate & Private Markets (REPM) business has set up an open-ended UK long-lease vehicle to target alternative real estate assets.

The newly launched UBS Long Income UK Property Fund (UBS-LIF Property) has received an initial commitment of £90m (€103.5m) from an unnamed UK local government pension plan.

REPM said the amount received has been used to acquire a seed portfolio of five UK hotel assets comprising more than 650 rooms, let to the Compass Group on 15-year lease terms.

The managers said it is currently in talks with further investors in the UK and overseas, with a strong pipeline of investment opportunities under review.

UBS-LIF Property targets a net income return of 5% per annum.

Howard Meaney, the UK head of real estate at REPM, said: “The stable long-term, indexed income generated by long-lease property offers an attractive alternative for investors, and at the same time, provides diversification benefits to the rest of their fixed income and property portfolios.

“We’re seeing a clear demand for this type of product from a broad range of clients seeking long-term, sustainable income streams, particularly those with liability matching commitments.”