GPT is the oldest listed property trust in Australia but its share price has fallen steeply in recent months as it struggles with more than $5 billion in debt.

When yesterday's Australian Financial Review ran a front-page report saying that GPT was being forced to raise $1 billion from shareholders in a heavily discounted "rights issue", the company contacted the Australian stock exchange, which agreed to suspend its shares from trading until tomorrow morning.

GPT declined to comment further, saying it would issue a statement tomorrow, but a public relations firm hired by GPT said the Financial Review story was "essentially correct".

"The steep discount to the raising, lead managed by investment bank UBS, would be unprecedented in recent times and indicates the parlous state of the [GPT] trust's finances and the lack of confidence in the listed real estate investment trust sector as property values fall," the Australian Financial Review reported.

Newcastle Lord Mayor John Tate said GPT was obviously hitting hard financial times but he had been assured by the company that it was determined to build its Newcastle project and he was not too concerned about the stock exchange development.

"I'm not too concerned about it a rights issue is just one of the methods that companies use to raise money and none of it changes the fact that GPT's proposal is an opportunity that we cannot afford to miss," Cr Tate said.

The Newcastle project is valued at about $650 million and GPT is believed to have spent at least $80 million buying property on the Hunter Street Mall.

In 2005, GPT rejected a $3.71 bid for its shares from rival shopping centre owner Stockland. Since then GPT's shares have fallen to $1.15 yesterday.

Two other property groups, Stockland and CFS Retail Property Trust, recently held rights issues, but the difference with these was that Stockland was discounted by just 7 per cent, and CFS by 17 per cent.

GPT, in contrast, is reportedly pricing the rights issue at a discount of up to 50 per cent.