LPTs have lost more than one-third of their value this year.

They're suffering for having gone offshore, borrowed too much, ventured into areas such as funds management, culminating in the collapse of Centro Properties and most recently the earnings downgrade of the venerable GPT.

The valuations behind unlisted property trusts are also in doubt, though it will take some time before they become official revaluations.

The signs aren't good for property valued in the past couple of years.

The value of the Centrelink building in Canberra (pictured below), last valued a year ago, has been sliced by 15 per cent.

Revaluations of some properties in the listed Commonwealth Property Office Fund were down by up to 31 per cent, although others were raised by as much as 6 per cent.

Developer Simon Symond was reported in The Australian Financial Review as saying: "Overnight, shopping centres dropped tens of millions (in value)."

Not that the carnage is over for LPTs. So far they've been under fire for reasons not directly related to the properties they own, such as the slump in the overall sharemarket, the impact of higher interest rates on their excessive borrowing, the higher dollar and rising building costs.

Even the market savaging of GPT after its earnings warning had more to do with its management and disastrous joint venture foray into British and European funds management.

Dugald Higgins, associate director of Property Investment Research, said: "At any one time two-thirds of assets haven't had an independent valuation that year."

So most properties are still valued at the peak of the price boom when, in a hot market, they were probably inflated as well.

Peter Hilton, of Bridges Financial Services, says considering there was reputedly more than $12 billion of commercial property assets for sale, "you can probably say at December 31 they won't be worth the same as then".

Heavily-geared single-property syndicates were most likely to be affected, he adds: "We aren't a buyer of LPTs at this point.

"Even if this is the bottom, where will the market go? There are gearing issues that need to be resolved. Some could be close to their loan covenants."

Peter Ward, LPT sector head at rating agency Standard & Poor's, says: "The market is re-pricing with a vengeance but it's too early to tell if this is the bottom."

For all the talk of how much commercial property is on the market, Martin Hession, of Australian Unity, says there was little evidence to back it up.

"Only $800 million has been sold to date this year," he says.

"Valuers can only value on actual sales and the ones we've had have been good. There's no evidence of prices falling away dramatically.

"There are low vacancy rates, strong rentals and no looming over-supply, in fact an under-supply in Brisbane and Perth."

Indeed, this is "a beautiful spot" for a cashed- up unlisted trust.

There don't appear to be many of those around. Instead, those in danger of breaching their loan conditions will either have to sell properties in what is at best a flat market, cut their distributions, or both.

Higgins says that if anything, unlisted trusts are even more vulnerable though it may not be as obvious yet. "They tend to have assets of lesser quality compared with listed trusts," he says. "Having paid top dollar for secondary assets they'll be much more in the firing line to a reverse in real estate values."

A big problem for property trusts has been a disposition to pay distributions from borrowed money. Never prudent, this isn't even possible now with higher interest rates and a credit crunch. Those with 50 per cent gearing or more "will have to cut distributions because of the higher interest costs," Higgins warns.

Because nobody wants to move first, there's no indication of how far prices could fall in forced asset sales, especially when it appears some assets have been over-valued in the first place.

"The problems of the unlisted trusts haven't become obvious yet. They used to out-yield LPTs but none could beat GPT's 10 per cent."

Higgins tips LPTs will cut their distributions from 20 to 40 per cent next month.

"We say the cuts will represent buying opportunities," he said.

But he doesn't expect a sustained recovery until next year or even later.