The new Coast Freehold Income Fund aims to provide investors with access to income generation and capital growth through owning residential ground rents. It will invest in freehold residential ground rents across England and Wales; all the underlying leases will be in excess of 95 years at the time of purchase.

Ground rents constitute regular payments required under the lease to the freeholder and rank above any claim on the leasehold, including mortgagees.

The fund will be co-managed by RCP Group and Coast Management and is expected to be initially capitalised at around £25 million ($40 million). Its establishment was supported by State Street's European real estate fund service team.

RCP will manage the ground rents and source purchases, and Coast will instruct RCP as to the maximum price to be paid on properties, based on yield to investors.

The fund is structured as a Jersey property unit trust with a targeted net annual total return of 5-8 per cent, with an inflation hedge through regular reviews of the ground rents, together with capital appreciation resulting from the leases shortening over time, the firms said in a statement.