Morgan Stanley has told investors that its $8.8 billion real-estate fund may lose nearly two-thirds of its money due to bad investments, according to The Wall Street Journal, which reviewed fund documents.

But by mid-2009, the firm had already written down those losses, according to quarterly financial reports.

The $5.4 billion loss would be the biggest in the history of private equity real estate investing, according to the Journal.

Although Morgan Stanley declined to comment to Reuters, the Journal reported that the company told it that its real estate group has a long-standing history of investing through many different business cycles over the past two decades.

(Reporting by Helen Chernikoff and Steve Eder; Editing by Gary Hill, Phil Berlowitz)