EUROPE - TKP Pensioen Real Estate Fonds (TREF), the pooled property fund set up in 1998 for the Dutch KPN and TNT pension funds, last week passed the €1bn mark to become the largest European property fund-of-funds.

The announcement came after the fund, which invests in 39 unlisted real estate funds across categories and markets, opened to additional pension fund investors.

Robert-Jan Tel, head of real estate at TKP Investments - the fund manager set up by KPN and TNT and which is now part of Aegeon - said the structure would particularly appeal to mid-sized pension funds.

"They're able to invest pretty quickly, and it gives them instant exposure to the whole portfolio," he said.

"There has been a bigger appetite for others to share in this kind of fund. They were interested in getting extra investors into the fund. It obviously benefits us as the fund manager, and the investors. It'll improve the fund's liquidity."

Tel told IPE Real Estate last week bespoke property funds - those set up for specific pension funds - were "absolutely" likely to increase but added "not many are opening their funds to new investors".

Nordic pension funds have notably adopted the bespoke property fund model, often partnered with Aberdeen which last year launched two bespoke funds, each worth €250m, for AP3, the €21.2bn third Swedish buffer fund.

Swedish insurance group Folksam also set up the first bespoke property pooling structure in October, designed for separate pension funds within the same group.

Despite recent above-target returns - with a five-year target return of 8—10%, TREF returned 16% in 2006 and 12.8% last year - Tel said the fund manager would adopt a cautious approach.

"The markets were stronger than we expected, but we expect the 2008 return to be more moderate," he said.

Late last month TKP Pensioen announced it would offer cross-border pooling to European pension funds.