The CBRE UK Property Fund (UKPF) is merging with the Electricity Supply Pension Scheme (ESPS) UK property portfolio to create a new £1.47bn fund.
The new fund, which has been authorised by the Financial Conduct Authority, will be operated as a Property Authorised Investment Fund (PAIF).
CBRE Global Investors has been the investment manager of ESPS' UK property portfolio since 2006.
The scheme trustee of ESPS, Electricity Pension Trustee Limited (EPTL) had been considering the options for its property portfolio, and decided to go for a merger with an existing fund.
A search for a partner was run by EPTL's investment advisers Aon Hewitt, and the UKPF was chosen.
CBRE said the merger was part of a trend among both global and domestic investors, who are increasingly looking for "scale and simplicity".
Hannah Marshall, fund manager of the new CBRE UK Property PAIF, said: "This is a very exciting time, the merger establishes the PAIF as one of the major players in the UK market.
"The ESPS portfolio was complementary to the existing fund and had a good performance track record. Our investors will now be able to benefit from the PAIF structure which is more flexible and efficient. We are also able of offer overall lower fee charges and a larger diversified investor base."