GPT, Goodman lead listed trusts south LISTED property trusts took a turn for the worse last month after a strong run in the past year, with some of the largest hit the hardest. The main index for Australia's real estate investment trusts, the S&P/ASX 200 REITs, lagged the broader top 200 stocks, declining 0.8 per cent over the month against a 5.2 per cent rise in the ASX 200 index. Most affected by the downswing were diversified property group GPT (down 4.7 per cent), industrial behemoth Goodman Group (3.3 per cent), retail darlings Westfield Retail Trust (2.9 per cent) and Westfield Group (1.9 per cent). Also hit was Dexus, which wore a 1.9 per cent decline in its share price during the month despite receiving a lift in the last days of July after it emerged it was building a 14.9 per cent stake Commonwealth Property Office Trust, sparking speculation it would take over the office landlord. JPMorgan analyst Richard Jones said the sector-wide decline had wiped out the gains made over the three months prior, when property stocks had out-performed the main index by nearly 6 per cent on a cumulative basis. Mr Jones said there were a number of factors that could be pulling down the performance of property stocks when compared with the broader market, including swings in the 10-year bond rate. "REITs were the worst performing sector in the market in July, despite a three-basis-point decrease in the 10-year bond rate," Mr Jones said. Property stocks tend to rise when the 10-year bond rate falls as investors hunt around for the best returns. Also vacancies in both office and retail properties had risen over the month while tenant incentives were also on the increase, Mr Jones said. Maxim Asset Management managing director Winston Sammut said the weakening fundamentals of office properties were concerning. But he said the sell-down was probably the result of the falling Australian dollar leading to a spate of offshore investors selling out of their holdings during July. "The need to hold shares for now if you're an offshore investor isn't as strong as it might be, especially if you take the view that the dollar is going to go lower," Mr Sammut said. Offshore investors can sell their shares and then make up their mind about whether they want to come back into it when the currency is lower and its cheaper for them to buy the stock back and get ready for the September distribution.