NETHERLANDS - PFZW, the €88bn Dutch pension scheme formerly known as PGGM, said it would maintain its current property allocation despite the portfolio's significant underperformance in the last quarter.

An explanatory note attached to the Q4 figures posted last week blamed accounting changes for quarterly negative return worth -€676m (-4.9%). The overall portfolio returned -0.4% for the quarter, and 7.2% for the year.

New accounting rules introduced in the last quarter switched measurement of fair value changed in Q4 from net asset value to market value on the balance sheet date.

" The effect of this change was a change in the value of - €878m," said the note. "Without this accounting change, there would have been a positive return on real estate in the fourth quarter," said the PFZW report.

The same quarter saw the scheme invest €12.7m in property and infrastructure, compared with €1.070m over the year, and the combined real estate portfolio now accounts for 14.5% of the fund's assets.

A spokeswoman for the scheme said it was unconcerned by recent poor property returns. "Will it change the percentage allocated to real estate? No. We're a long-term investor and we hold on to diversification. When it goes OK with real estate, it goes worse in other assets, and vice versa."

Measurement against real estate returns achieved in recent years shows an annualised decline from 29.4% in 2006 to 14.5% in 2007.  However, 2006 was an exceptional year, representing a 12% increase over the previous year.

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