The Caisse de dépôt et placement du Québec saw its real estate portfolio value fall 1.5% in the first half.

The property segment’s decline contrasted with an overall portfolio gain of 4.2%. The total value of assets rose to $424 billion from $402 billion at year-end 2022, the Montreal-based pension fund manager said in a news release.

The Caisse attributed the real estate portfolio’s decline to a large, rapid rise in interest rates.

“However, the portfolio’s shift toward the logistics segment offset the more mitigated performance of the office sector, which is undergoing a structural transformation in light of new work habits,” said the Caisse in the news release.

The portfolio outperformed its benchmark index (similar properties grouped for comparative purposes), which fell 4.1% in the first half.

On a five-year basis, the portfolio’s annualized 1.0% return was lower than the index’s 3.1% gain. The Caisse attributed that result to its real estate arm Ivanhoé Cambridge overweight in shopping centres that performed poorly.