NETHERLANDS - Progress, the €4bn Dutch pension fund of Unilever Netherlands, is altering its real estate strategy by replacing direct real estate holdings with indirect real estate investments.

Officials at Progress, which had €587m worth of real estate investments at the end of 2007, said market conditions mean the fund is no longer big enough to invest in direct real estate.

"What we have seen is the scale of real estate investors has increased over the last 5-10 years, whereas Progress' position has declined in comparison to other real estate companies in the Netherlands and Europe," said Wouter van de Putte, a spokesman for Progress.

The pension fund also highlighted the difficulties in spreading risks in direct real estate over multiple categories and geographical regions as a key reason for altering its asset allocation strategy.

"With a direct real estate portfolio, it is more difficult to spread risk in different categories. To get a good spread of risks you need a big scale portfolio," said van der Putte.

Progress' board of directors is now working on developing an action plan to decide how best to dispose of its direct real estate and is looking at investing in listed real estate equities as well as through funds, plans of which are expected to be revealed by the end of 2008.

"A plan is currently being made. We are conducting further investigations that could take a month and we will decide how to proceed based on the results," said Van de Putte.

Progress' allocation to real estate was 15% of total assets by the end of July 2008.

Unilever's pension fund had 25,389 members at the end of 2007.