Quebec's largest pension fund manager has lost more than $5.7 billion in real estate writedowns in the first half of 2009.

As of June 30, the Caisse de dépôt et placement du Québec saw declines of $4 billion in its real estate holdings and $1.7 billion in less liquid investments, the group said on Tuesday.

"The performance for the first half of the year was neutral ... notwithstanding the writedowns," chief executive officer Michael Sabia said. "Our performance in other areas was positive."

Management is confident it will recuperate the losses thanks to the high quality of its real estate holdings over the longer term, the company said.

In announcing the loss, the Caisse said it is reducing its exposure to certain types of higher-risk real-estate loans, known as mezzanine loans.

The Caisse was heavily criticized for its stunning losses in 2008, when the value of its assets plunged 25 per cent to about $120 billion, which included heavy losses in asset-backed commercial paper.

The Caisse also announced the integration of Cadim, an investor in multiple buildings and hotels, into subsidiary SITQ, which holds primarily office buildings and business parks.

"Cadim and SITQ operate in complementary sectors," Caisse vice-president René Tremblay said. "The restructuring [will simplify] the structure of the property and give it the agility required to seize the best investment opportunities and manage risk better."

"The kinds of changes we're putting into place are more appropriate and well aligned for the current environment," Sabia said.

With files from The Canadian Press