ABACUS GROUP — Capital/Financing Update 2009

Feb 26, 2009

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Abacus Property Group $187 million Rights Issue

Securityholder Offer Booklet

This Offer Booklet provides Securityholders in Abacus Property Group with the details of a one for one renounceable Rights Issue of stapled securities at an offer price of $0.25 per New Security. The Offer closes at 5pm Sydney time on Thursday, 26 March 2009.

This Offer Booklet is accompanied by a Rights Acceptance Form that you must complete if you want to participate in the Offer. Please read this Offer Booklet in full and consult your financial adviser if you have any queries.

This Offer Booklet has been prepared by Abacus Property Group, which comprises Abacus Group Holdings Limited (ACN 080 604 619), Abacus Group Projects Limited (ACN 104 066 104) , Abacus Trust (ARSN 096 572 128) and Abacus Income Trust (ARSN 104 934 287). The responsible entity for Abacus Trust and Abacus Income Trust is Abacus Funds Management Limited (ACN 007 415 590, AFSL 227819).

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Joint Lead Managers & Underwriters
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Adviser to the Issue
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February 2009

Contents

1. Chairman’s Letter

1. Key Dates

2. ASX Half-Year Results Announcement

3. Investment Risks

4. How To Apply

5. Important Information

1 6 7 10 13 14

Glossary

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Term Definition
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Term	Defnition
Abacus	Abacus Property Group
Abacus Property Group	The economic entity comprising Abacus Trust, Abacus Income Trust, Abacus Group Holdings Limited and Abacus Group Projects Limited (ASX code: ABP)
AIFRS	Australian equivalents to International Financial Reporting Standards
A-REIT	Australian Real Estate Investment Trust
ASX	Australian Securities Exchange
Covenant Gearing	Total liabilities / total tangible assets
DPS	Distribution per stapled security
EBITDA	Earnings before interest, tax, depreciation and amortisation
Eligible Securityholder	An Abacus Securityholder with a registered address in Australia or New Zealand as at the Record Date
EPS	Earnings per stapled security
FY	Financial year
Gearing	Net debt / total assets less cash
Group	Abacus Property Group
Offer	The offer of New Securities under the Rights Issue
Offer Price	$0.25 per New Security
New Securities	New stapled securities in Abacus to be issued pursuant to the Rights Issue
NTA	Net tangible assets
Record Date	6pm on Tuesday, 10 March 2009
Right	The entitlement to apply for one New Security for each stapled security held at the Record Date
Rights Issue	A one for one renounceable entitlement offer to Eligible Securityholders
Securityholder	The registered owner of a stapled security in Abacus Property Group
Underwriters	Macquarie Capital Advisers Limited and Tricom Equities Limited, as joint lead managers and underwriters
WAV	Weighted average

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Abacus Property Group Rights Issue

1. Chairman’s letter

27 February 2009

Dear Securityholder

1. Abacus Property Group – Rights Issue

On behalf of Abacus Property Group, it is my pleasure to invite you to participate in an underwritten 1 for 1 renounceable Rights Issue of Abacus stapled securities at an issue price of $0.25 per New Security.

Under the Offer, Abacus will raise approximately $187 million, which will be used to reduce gearing and strengthen the balance sheet. The Offer has been underwritten by Macquarie Capital Advisers Limited and Tricom Equities Limited.

On completion of the Offer, Abacus’ strengthened balance sheet should enable it to remain compliant with all of its banking covenants in the event of further deterioration in property values.

The Offer also provides Securityholders with attractive investment fundamentals, as follows:

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Targeted FY10 Distributions per Stapled Security 3.0 cpa
Distribution Yield at Offer Price 12% pa
Pro-forma Net Tangible Assets per Stapled Security $0.68
Offer Price Discount to Pro-forma NTA 63%
Pro-forma Gearing 22.6%
Pro-forma Covenant Gearing (Covenant limit of 45%) 30.0%
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Note: assumes that the proceeds of the Offer and the January placement are applied to the reduction of debt.

This Offer Booklet contains important information in relaton to the Rights Issue. You should read it in its entirety carefully before making any decision whether to increase your holding in Abacus and I strongly urge you to obtain financial advice when deciding whether to participate in the Offer. You should also read carefully the Investment Risks Section to familiarise yourself with the key risks of an investment in Abacus.

2. Half-Year Results Update

Abacus recently released its accounts for the half-year ended 31 December 2008. The key features of the accounts include:

• A normalised net profit after tax of $35.6 million for the half-year;

• An after tax accounting loss for the half-year of $51.7 million, due primarily to the value of Abacus’ fixed interest rate swap book falling by $72.1 million over the half-year (as official interest rates fell an unprecedented 3%) and a net $17.1 million write down of Abacus’ property values. Further details are provided in the ASX Announcement included in Section 3 of this Offer Booklet;

• Gearing of 36.6% and Covenant Gearing of 44.5%; and

• Net tangible asset backing per stapled security of $1.24 (before the impact of the $24.4 million placement announced on 20 January 2009 and the $187 million Rights Issue).

The Board was pleased with the normalised profit achieved during the half-year, which was underpinned primarily by recurring income from the property portfolio, property finance and funds management businesses.

A copy of the ASX Announcement accompanying the statutory accounts is included in Section 3 of this Offer Booklet. A copy of the half-year accounts and Investor Presentation can be obtained:

• from our website www.abacusproperty.com.au under Investor Information;

• from the ASX’s website www.asx.com.au; or

• by contacting Abacus on 1800 253 860.

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3. Why Are We Undertaking The Rights Issue?

Abacus is undertaking the $187 million Rights Issue to position the Group to withstand the challenging market conditions brought about by the global credit crisis.

Over the past year we have witnessed a significant fall in Abacus’ ASX security price (consistent with many other A-REITs), the extreme tightening of the availability of debt to Australian real estate investors, the effective freezing of Australian commercial property markets, a 4% fall in official interest rates and the start of a property devaluation cycle that is likely to continue through 2009.

We are also now seeing the impact of the global credit crisis spread through to the general economy. All of these factors are putting pressure on the balance sheets and profits of all listed property groups, and Abacus has not been immune.

In light of the uncertainties created by this highly volatile economic environment, your Board believes that it is prudent to undertake this capital raising to strengthen Abacus’ financial position so that it is sufficiently capitalised to weather the current market conditions, and then look to grow the business once liquidity returns to capital and property markets.

While the Board is acutely aware of the dilutionary impact of the capital raising, the Offer has been structured as a rights issue to enable all Securityholders to participate on equal terms, and enable Securityholders to lower the average cost of their securityholding. For those Securityholders unable or unwilling to participate, the Offer is renounceable, such that you may be able to sell your Rights on the ASX.

4. Details Of The Rights Issue

All Securityholders with a registered address in Australia or New Zealand as at the Record Date are entitled to subscribe for one New Security for every one stapled security held as at 6pm Tuesday, 10 March 2009. The issue price for each New Security is $0.25, representing a 12% distribution yield and a 63% discount to the pro-forma NTA per security.

The Offer opens on Thursday, 12 March 2009 and closes on Thursday, 26 March 2009 at 5pm Sydney time. A summary of the key Offer dates is provided in Section 2 of this Offer Booklet.

Details on how to apply are provided in Section 5 of this Offer Booklet.

The Rights Issue is renounceable. If you do not want to participate in the Offer you may be able to sell your Rights on the ASX over the period from Tuesday, 3 March 2009 until Thursday, 19 March 2009.

Securityholders with a registered address outside of Australia or New Zealand are ineligible to participate in the Rights Issue. Abacus will appoint a broker to sell the Rights entitlements of these Securityholders, and Abacus will remit the proceeds of any such sales to ineligible Securityholders.

5. Key Benefits Of The Rights Issue

The key benefits of the Rights Issue include:

• Attractive Investment Fundamentals: at the offer price of $0.25, Securityholders who subscribe for their Rights will be investing at a 63% discount to Abacus’ pro-forma net tangible assets per stapled security on completion of the Offer, and based on the targeted FY10 distribution of 3.0 cents per annum, will receive an annualised distribution yield of 12%.

• Considerable Strengthening Of The Balance Sheet: on completion of the $24.4 million placement announced on 20 January 2009 and the $187 million Rights Issue, Abacus will be well capitalised, with low gearing and the balance sheet strength to manage through the current property devaluation cycle.

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Abacus Property Group Rights Issue

NOT FOR DISTRIBUTION OR RELEASE IN ThE UNITED STATES OR TO, OR FOR ThE ACCOUNT OR BENEFIT OF, US PERSONS

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Pro-forma assuming
Summary Balance Sheet as at: 31 December 2008
$211.4m [1] equity raising
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Summary Balance Sheet as at:	31 December 2008	Pro-forma assuming $211.4m1equityraising
Gross Assets	$1,498.3m	$1,498.3m
Gross Liabilities	$644.4m	$434.8m2
Net Assets	$853.9m	$1,063.5m
Stapled Securities on Issue	650.7m	1,496.3m
Net Tangible Assetsper Stapled Security	$1.24	$0.68
Total Interest BearingDebt	$554.4m	$344.8m
Gearing3	36.6%	22.6%
Covenant Gearing4	44.5%	30.0%

1. Comprising the $24.4m placement announced on 20 January 2009 and the $187m Rights Issue

2. Assumes net proceeds from the $24.4m placement and $187m Rights Issue are used in full to reduce debt

3. Calculated as net debt divided by total assets less cash

4. Calculated as total liabilities divided by total tangible assets

5. Substantial Covenant Headroom: on completion of the Offer, Abacus’ Covenant Gearing will reduce to 30% (compared to its 45% covenant) and its loan to valuation ratio for the purposes of its banking covenants will reduce to 37% (compared to its 55% covenant).

Abacus has undertaken a sensitivity analysis to consider the impact of further declines in the value of its total assets (including its investment properties, property finance assets, investments in managed funds, joint ventures and the value of its working capital loans to its managed funds) on its headroom to applicable banking covenants. The results of this analysis revealed that if the total value of Abacus’ gross tangible assets declined by a further 20% from that reported at 31 December 2008, the impact on its banking covenants would be as follows:

• Covenant Gearing rises to 37.3% compared to the 45% covenant; and

• The loan to value ratio increases to 48.8% compared to the 55% covenant.

• Increased Market Capitalisation & Index Position: At the $0.25 Offer price, Abacus’ market capitalisation will increase to $374 million, which should enhance its weighting in the S&P/ASX 200 A-REIT Index.

6. Distributions

Existing Securityholders will receive a distribution of 1.75 cents per stapled security for the quarter ended 31 March 2009, payable in early May 2009.

New Securities issued pursuant to the Offer will only participate in distributions declared after 1 April 2009.

Abacus’ distribution policy is to seek to distribute its normalised cash operating profit, exclusive of transactional profits. Future transactional profits will be retained within Abacus to either reduce Gearing and/or to fund the future growth of the business.

Abacus has also decided to move from quarterly distribution payments to half-yearly distribution payments consistent with its overhead reduction strategy.

The targeted distribution per stapled security from 1 April 2009 is as follows:

• a distribution of 0.75 cents per stapled security is targeted be paid for the quarter ended 30 June 2009; and

• a distribution of 3.0 cents per stapled security is targeted to be paid for the year ended 30 June 2010, to be paid half-yearly.

This reflects an annualised 12% distribution yield on the Offer price of $0.25.

The distribution is to be reduced from the guidance provided by Abacus at its Annual General Meeting in November 2008 due primarily to the dilutionary impact of the $24.4 million placement and $187 million Rights Issue.

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Abacus has provided targeted distribution guidance in respect of future distributions on the basis that it considers that the business’ earnings are sufficiently predictable to target an annualised distribution of 3.0 cents per stapled security through to 30 June 2010. It is, however, possible that a further material deterioration in economic conditions could lead to a further reduction in distributions if the Abacus Board considers it prudent to do so.

7. Underwriting Arrangements And Kirsh Group’s Potential Securityholding In Abacus

The Rights Issue is underwritten by Macquarie Capital Advisers Limited and Tricom Equities Limited in equal proportions. The Underwriters have entered into sub-underwriting agreements with a number of sub-underwriters, including Calculator Australia Pty Limited, an entity associated with Kirsh Group.

Kirsh Group is a privately held investment group with substantial international business interests, including several property investments in Western Australia. In association with Ascot Capital Limited, Kirsh Group’s property interests in Western Australia include Jandakot Airport, Wesfarmers house and a joint venture with the West Australian Cricket Association.

Kirsh Group’s holding in Abacus as at the date of this Offer is 13.6%, following the $24.4 million placement to Kirsh Group that Abacus announced to the ASX on 20 January 2009. Kirsh Group has also committed to take up its Rights in the Offer.

Depending on the extent to which existing Securityholders subscribe for their Rights in the Offer, Kirsh Group’s resultant holding in Abacus will:

• remain at 13.6% if all Securityholders subscribe for all of their entitlements;

• increase to approximately 26.7% if half of Abacus’ Securityholders subscribe for their entitlements;

• increase to approximately 33.2% if a quarter of Abacus’ Securityholders subscribe for their entitlements; or

• increase to approximately 39.7% if no Securityholders subscribe for their entitlements.

Kirsh Group has advised Abacus its present intention is to be a long term strategic investor in Abacus. Kirsh Group currently has no representation on the Board of Abacus, nor on any Abacus governance or management committees. Depending on its resultant holding upon completion of the Offer, Kirsh Group may seek Board representation in the future. Kirsh Group currently has no ability or intention to change control of the Board of Abacus, its management or the nature of its business, but reserves the right to review its intentions in the future.

Abacus has reviewed all material contracts and agreements to ascertain what, if any impact Kirsh Group’s resultant holding in Abacus may have under any change in control provisions in those agreements. With the exception of various banking facilities, there were no material issues identified. In relation to the banking facilities, a number of them contain change in control provisions that, if triggered, could eventually require repayment, the effect of which could be materially adverse for Abacus and/or its managed funds.

To mitigate against this risk:

• the sub-underwriting arrangement with Kirsh Group has been structured to ensure that the maximum holding Kirsh Group may obtain if there is no take-up by existing Securityholders will not exceed 40%;

• Abacus has obtained legal and accounting advice confirming that this level of holding should not result in a change in control under the banking facilities; and

• Abacus has obtained confirmation from its bankers that this level of holding will not trigger a change in control under their respective facilities.

The accounting advice and bank confirmations note that control is assessable on an ongoing basis and that actions by Kirsh Group after the conclusion of the Rights Issue could give rise to a change in control. Kirsh Group is aware of this and has warranted that it will not act in a manner that is inconsistent with these requirements.

having considered the issues, the Board believes that the structure of the Rights Issue addresses appropriately any potential change in control risk under the terms of the banking facilities of both Abacus and the funds it manages. This issue is discussed in further detail in Section 4 of this Offer Booklet.

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Abacus Property Group Rights Issue

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8. Business Outlook

On completion of the Offer, Abacus will be well capitalised, with low Gearing, significant covenant headroom and, as at the date of the Offer, sufficient liquidity to cover debt expiries until February 2011.

Abacus’ strategy over the short term is to maintain a conservatively geared balance sheet through the asset devaluation cycle and look to grow the business once liquidity returns to capital and property markets.

Abacus' future strategy is to grow its principal property book and the recurring, cash backed income streams it generates.

Abacus remains focused on raising third party equity into its managed funds to repay the interim funding provided by Abacus. Fund flows are anticipated to increase as investor sentiment improves, market volatility settles and bank deposit rates fall.

The growth of Abacus’ principal property book in future will mean that property finance and joint ventures will form a smaller part of the business going forward.

Abacus is also evaluating all of the assets on its balance sheet and will seek to dispose those assets that are not core to its future direction.

9. Key Information

You will find in this Offer Booklet the following important information:

• the key dates of the Offer;

• a copy of the ASX half-year results announcement;

• an overview of the key risks of investing in Abacus, which I strongly recommend that you read before deciding whether to participate in the Offer;

• a “how to apply” section that tells you how to subscribe for all or part of your Rights; and

• additional information relevant to the Offer.

Along with the Offer Booklet, a Rights Acceptance Form is enclosed that must be completed if you want to participate in the Offer and pay by cheque, bank draft or money order.

In addition to the information contained in this Offer Booklet, Abacus recently released to the ASX its accounts for the half-year ended 31 December 2008 and an Investor Presentation that provides an overview of the half-year results, a business update, details of the Offer and its impact on Abacus. Copies of these documents are available from the Abacus and ASX websites, or by calling Abacus on 1800 253 860.

It is important to note that the Rights Issue closes at 5pm Sydney time on Thursday, 26 March 2009. To participate in the Offer, your application must be received by our registry on or before this date.

Abacus’ Board believes that the Offer and capital management initiatives will place Abacus in a strong position to deliver long-term value for our Securityholders. I invite you to consider this investment opportunity.

Yours faithfully

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John Thame Chairman

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2. Key Dates

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Announcement of the Offer Friday, 27 February 2009
Rights trading commences Tuesday, 3 March 2009
Record Date for determining Rights to New Securities 6:00pm Tuesday, 10 March 2009
Offer opens Thursday, 12 March 2009
Rights trading ends Thursday, 19 March 2009
Offer closes 5.00pm Thursday, 26 March 2009
Allotment of New Securities & despatch of holding
Friday, 3 April 2009
statements
Normal trading of New Securities on ASX Friday, 3 April 2009
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All times and dates refer to Sydney time and are subject to change

Abacus Property Group reserves the right, subject to the Corporations Act, ASX Listing Rules and other applicable laws to vary the dates of the Offer, including extending the Offer, delaying the allotment of securities or accepting late applications, either generally or in particular cases, without notice. Accordingly, applicants are encouraged to submit their Rights Application Form as soon as possible after the Rights Issue opens. No cooling-off period applies to the Offer.

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Abacus Property Group Rights Issue

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3. ASX half-Year Results Announcement

Normalised Net Profit Of $35.6 Million For The Half

Abacus Property Group today announced a $35.6 million normalised net profit for the half-year ended 31 December 2008, reflecting sound business performance in difficult market conditions.

The Board was pleased with the normalised profit achieved during the half, which was underpinned primarily by recurring income from Abacus’ property portfolio, property finance and funds management businesses. however, after taking into account non-cash fair value adjustments on the valuation of Abacus’ investment properties and its fixed interest rate contracts, Abacus recorded an after tax accounting loss for the half of $51.7 million.

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Summary Profit And Loss Statement 1HFY09
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Normalised Net Proft After Tax	$35.6m
Less fair value adjustments on investment properties	($17.1m)
Less fair value adjustments on fxed interest rate contracts	($72.1m)
Plus other fair value adjustments	$1.9m
Net Loss After Tax	($51.7m)
Normalised EPS	5.59cps
Normalised DPS1	3.50cps

1. Comprises a 3.5cps distribution paid for the quarter ended 30 September 2008, but does not include the distribution of 1.75cps declared on 7 January 2009, which is payable in March 2009.

As at 31 December 2008, Abacus had a net asset position of $854 million, with net tangible assets per security of $1.24.

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Summary Balance Sheet 31 December 2008
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Summary Balance Sheet	31 December 2008
Gross Assets	$1,498.3m
Interest Bearing Debt	$554.4m
Other Liabilities	$90.0m
Net Assets	$853.9m
NTA per security	$1.24
Gearing1	36.6%
Covenant Gearing2	44.5%

1. Gearing is calculated as Net Debt/Total Assets less Cash

2. Covenant Gearing is calculated as Total Liabilities/Total Tangible Assets

Abacus made significant progress during the half-year in reducing its total liabilities and gearing ratios by selling its self-storage assets to Abacus Storage Fund and completing the development of Aspley Shopping Centre. however these efforts were offset by unrealised revaluation losses on Abacus’ investment properties and its fixed interest rate contracts. Consequently, Gearing was reduced from 37.5% at 30 June 2008 to 36.6% at 31 December 2008 and Covenant Gearing was reduced from 44.9% to 44.5% over the same period. Approximately 4% of the Covenant Gearing was attributable to the $60.8 million liability recognised at 31 December 2008 in respect of Abacus’ fixed interest rate contracts.

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Fair Value Adjustments Of Investment Properties

Abacus independently valued 96% of its $895 million investment property portfolio in the calendar year ended 31 December 2008, in line with its valuation policy. Approximately two thirds of the portfolio was independently revalued at June 2008 and the remainder independently revalued at 31 December 2008.

The net effect of the property valuations undertaken in December was a revaluation loss of $17.1 million, comprising:

• a revaluation loss of $33.5 million on the majority of the assets that were revalued; and

• $16.4 million in revaluation gains, driven primarily by the revaluation of one asset that benefited from a lower capitalisation rate, higher income and a development approval obtained during the year.

The weighted average capitalisation rate of the property portfolio at 31 December 2008 was 7.75%. Abacus disposed of its storage and Fern Bay assets during the half, which had been valued at an average capitalisation rate of approximately 8.5%. Adjusting for these disposals, the weighted average capitalisation rate increased on a like for like basis from 7.65% to 7.75% over the half-year. Over the course of calendar year 2008, Abacus’ weighted average portfolio capitalisation rate increased on a like for like basis from 7.4% to 7.75%.

The following table summarises the changes to Abacus’ weighted average portfolio capitalisation rate over calendar year 2008:

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Asset Value WAV Cap Rate WAV Cap Rate WAV Cap Rate
Asset Summary by Sector
31 Dec 08 $000 31 Dec 08 30 June 08 31 Dec 07
Retail 279,969 7.44% 7.32% 7.00%
Commercial 416,337 7.75% 7.67% 7.52%
Industrial / Other 198,842 8.19% 8.26% 7.97%
Total 895,148 7.75% 7.75% 7.50%
Excluding Fern Bay and Storage 7.75% 7.65% 7.40%
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Fair Value Adjustments Of Fixed Interest Rate Contracts

Abacus’ policy in respect of interest rate management, which accords with the requirements of its lenders, is to fix the interest rates on the majority of its debt facilities so that the group is not vulnerable to upward movements in interest rates. The instruments used to give effect to this strategy are fixed interest rate contracts. As at 31 December 2008, 83% of Abacus’ drawn debt was subject to fixed rates, with the average fixed rate being 6.49% (exclusive of margin on the underlying facilities).

Due to the unprecedented 3% fall in official interest rates over the half-year, the mark to market value of Abacus’ fixed interest rate contracts fell by $72.1 million, from an asset of $11.3 million at 30 June 2008 to a liability of $60.8 million at 31 December 2008. This $72.1 million movement has been recorded in Abacus’ profit and loss statement as an unrealised loss, and is largely responsible for the accounting loss that Abacus reported for the half-year.

While this unrealised loss is not a cash item, and should progressively be recouped over the remaining term of the fixed interest rate contracts, it does appear in the balance sheet as a liability and is factored into the calculation of Covenant Gearing.

Subsequent to 31 December 2008, Abacus initiated a number of changes to the structure of our fixed interest rate contracts that will reduce their sensitivity to any further falls in official interest rates in the future.

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Operational Review

The Principal Investment portfolio performed well throughout the half-year with gross revenue increasing to $51.2 million and an EBITDA contribution of $41.4 million. Rental income increased at an annualised rate of 3.6%, occupancy levels remained at 93% and the average lease term remained at approximately 5 years.

The Funds Management business contributed $9 million to the Group’s results. The Abacus Storage Fund acquired $85 million in assets from Abacus and launched a $37 million entitlement offer. Initial feedback from existing securityholders and new investors wishing to participate in the offer has been positive. Gross assets under management grew to $2.4 billion at 31 December 2008.

The Joint Ventures and Projects business continued to make progress on a number of its properties during the half, most of which was confined to obtaining development consents or undertaking minor works on land-subdivision projects such as Colemans Rd and Muswellbrook. A number of projects have been deferred as we revisit project feasibilities in light of the current economic climate. The business generated $1.5 million in earnings for the halfyear.

As at 31 December 2008, Property Finance assets remained unchanged at $137 million. Interest and fee income for the half-year was $5.1 million, after taking a provision of $3.2 million.

Abacus also initiated a review of its cost structure during the half and is well advanced on a number of cost saving initiatives, including a recent 10% reduction in staffing levels.

Further Information

Further information on Abacus’ half-year results and an update on current operations are provided in the attached financial report. An Investor Presentation will shortly be released to the market in respect of the half-year results and the $187 million Rights Issue announced on 20 January 2009.

27 February 2009

Ellis Varejes Company Secretary (02) 9253 8600 Vivienne Bower Investor Relations (02) 9253 8600

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4. Investment Risks

This section summarises some of the key risks that may affect the future performance of an investment in Abacus. In addition to reading this section, it is recommended that you read the Offer Booklet in its entirety, together with all recent ASX Announcements and make your own assessment of the risks of investing in Abacus. You should also consider consulting your financial or legal adviser so as to ensure you understand fully the terms of this Offer and the inherent risks.

General Risks

Economic Environment: If the Australian economy experiences a prolonged economic downturn, this could have an adverse impact on Abacus’ earnings. Aspects of the business that could be affected include reduced rental income as a result of increased vacancy rates, lower rents and tenant defaults; higher lease incentives; lower development margins; potential defaults on mortgage loans, lower inflows into our managed funds or other adverse consequences. Other economic factors that could also affect Abacus’ business include unemployment, inflation, deflation, monetary policy, regulatory change, consumer spending, business investment, taxation and the state of capital markets in general.

Interest Rates: Adverse fluctuations in interest rates, to the extent that they are not hedged or forecast, may impact Abacus’ earnings. Abacus’ asset values may also be affected by any impact that rising interest rates may have on property markets in which Abacus operates. In addition, if official interest rates are further reduced, that may have the effect of increasing Abacus’ liabilities relating to its fixed interest rate contracts, which will also impact on Abacus’ AIFRS profit and, potentially, its banking covenants.

Illiquid Property Markets: Property assets are by their nature illiquid investments. This may make it difficult to sell assets of Abacus in the short term in response to changes in economic or other conditions.

Availability Of Capital: The real estate investment and development industry is highly capital-intensive. The ability of Abacus to raise funds on favourable terms for future acquisitions, development activity, new and existing funds managed by Abacus and refinancing depends on a number of factors including general economic, political and capital market conditions. The inability of Abacus or funds managed by Abacus to raise funds on favourable terms for future acquisitions, developments and refinancing could adversely affect Abacus and/or its managed funds. In addition Abacus has exposure to capital market risks for those assets that are stock market listed securities.

ASX Market Volatility: The ASX price of Abacus Property Group securities will fluctuate due to various factors including general movements in interest rates, the Australian and international investment markets, international economic conditions, global geo-political events and hostilities, investor perceptions and other factors that may affect Abacus’ financial performance and position. More particularly, the continuing adverse consequences of the current economic and financial crisis may further depress the market price of Abacus’ securities and assets.

Regulatory Issues And Changes In Law: Abacus is subject to the usual business risk that there may be changes in laws that reduce income or increase costs.

Taxation Implications: Future changes in taxation laws, including changes in interpretation or application of those laws by the courts or taxation authorities, may affect taxation treatment of an investment in Abacus securities, or the holding and disposal of those securities. Further, changes in tax law, or changes in the way tax law is, or is expected to be, interpreted in the various jurisdictions in which Abacus operates, may impact the future tax liabilities of Abacus. Those laws may also adversely affect the taxation treatment of entities in Abacus and that may in turn adversely affect the value of Abacus’ securities or distributions on those securities.

Specific Risks

Compliance With Banking Covenants: Abacus believes that on completion of the Offer it will have sufficient balance sheet liquidity to ensure that it remains in compliance with its banking covenants for the foreseeable future. however, if asset values continue to decline materially, if assets are sold at a significant discount to their book value or the earnings of the Group are adversely impacted by either declining property income (as a result of tenant defaults), declining income from co-investments or as a result of defaults in Abacus’ lending operations, there is a possibility that Abacus may breach its banking covenants, which could trigger a review of the facilities and/or penalty interest if the breach is not rectified, and could require the Group to repay the facilities on demand from its lenders.

Debt Renewals: On completion of this Offer, Abacus will have no debt facilities maturing until February 2011. If the current illiquidity in global credit markets continues into the medium term, it is possible that Abacus may encounter some difficulty refinancing some or all of these debt facilities. If this were to occur, this may necessitate asset sales or further equity raisings.

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Gearing: The use of leverage may enhance returns and increase the number of assets that can be acquired, but it may also substantially increase the risk of loss. Use of leverage may adversely affect Abacus when economic factors such as rising interest rates and/or margins, severe economic downturns, availability of credit or further deterioration in the condition of debt and equity markets occur. If an investment is unable to generate sufficient cash flow to meet the principal and interest payments on its indebtedness, the value of Abacus’ equity component could be significantly reduced or even eliminated

Change In Substantial Securityholding: If the level of Securityholder take-up under the Rights Issue is not high, it is likely that Kirsh Group’s holding in Abacus may increase from 13.6% to above 20%; potentially as high as 39.7% if no Securityholders take up their Rights. Further detail on the potential future holdings of Kirsh Group upon completion of the Offer is described in the Chairman’s Letter.

Potential Impact Of Kirsh Group's Resultant Securityholding In Abacus: Abacus has reviewed all material contracts to ascertain what impact the resultant holdings of Kirsh Group (as the largest Securityholder and largest sub-underwriter) on completion of the Offer may have on those contracts. With the exception of various banking facilities, no material issues were identified.

In relation to the banking facilities, a number of them contain change in control provisions that, if triggered, could eventually require repayment. Any such demand for repayment of existing debt facilities, given the current state of credit markets, could have a materially adverse impact for Abacus and/or its managed funds.

To mitigate against this risk:

(i) the sub-underwriting arrangements with Kirsh Group have been structured to ensure that the maximum holding Kirsh may obtain if there is no take-up by existing Securityholders will not exceed 40%;

(ii) Abacus has obtained legal and accounting advice confirming that there will be no change in control under the terms of the relevant banking facilities if Kirsh Group does not:

• (a) own more than 40% of Abacus;

• (b) control the Abacus Board or its membership; or

• (c) direct the financial and operating policies of Abacus or its funds; or

• (d) exercise control through majority voting at Abacus general meetings; and

The accounting advice and bank confirmations note that control is assessable on an ongoing basis and that actions by Kirsh Group after the conclusion of the Rights Issue could result in a change in control. For example, if Kirsh Group were to acquire power over more than half of the voting rights, appoint or remove a majority of the Abacus Board or direct the financial and operating policies of Abacus or its funds, that could potentially trigger the change in control provisions in the relevant banking facilities. Kirsh Group is aware of this and has warranted that it will not act in a manner that is inconsistent with these requirements.

having considered these issues, the Board of Abacus believes that the structure of the Rights Issue addresses appropriately any potential change in control risk under the terms of the banking facilities of both Abacus and the funds it manages.

Underwriting Termination Risk: The underwriting agreement, under which Macquarie Capital Advisers Limited and Tricom Equities Limited agree to fully underwrite the offer, allows Abacus to terminate the agreement on the occurrence of specified events, which are generally standard. however, some of the sub-underwriters such as Kirsh are off-shore entities, raising the prospect of delays or defaults in money flows through the international banking system or otherwise. Any default or delay in payment by a subunderwriter will allow Abacus to extend the Offer allotment date by 2 business days to address the default, subject to ASX approval. If the default is not rectified within the extra 2 business days (so that the Offer is fully subscribed) the Underwriters may terminate the underwriting agreement. In this event, Kirsh has agreed in its Subscription Agreement of 20 January 2009 to assume the underwriting, failing which the directors would assess the position under the Offer and advise Securityholders accordingly.

Change In Value Of Properties: Abacus’ policy is to undertake external revaluations of all of its investment properties on an annual basis, with approximately half revalued in June and the balance in December each year. Any change in the value of its properties will affect Abacus’ gross asset value, its level of Gearing (and hence, banking covenants) and its net tangible asset backing per stapled security. In addition, the change in value will be recorded in the profit and loss statement as an unrealised gain or loss, and while it does not impact on Abacus’ normalised earnings or distributions, it does impact on Abacus’ net profit after tax.

(iii) Abacus has obtained confirmation from its banks that provided the conditions specified in (ii) (a), (b) and (c) are adhered to, there should be no change in control event under the terms of their banking facilities.

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Loans To And Investments In Managed Funds: Abacus manages a number of funds on behalf of third party investors. These funds typically invest in propertyrelated assets and use debt to partially fund their investments. Many of the debt facilities within the funds have covenants related to the level of gearing and interest coverage in the fund. To the extent that property values or income levels in a particular fund fall, there is a risk that the fund may breach a relevant covenant. Abacus has exposure to its funds via coinvestments it has made in the funds and loans it has made to the funds and there is potentially reputation risk to Abacus. To the extent that a fund breaches a covenant, there is a risk that the value of Abacus’ exposure to that particular fund also falls. There are no relevant cross default provisions across Abacus managed funds, or as between Abacus and its managed funds.

Property Finance: Abacus provides loans to a number of real estate related projects. To the extent that these projects do not complete or asset values fall there is a risk they breach their debt facilities with banks. This would have an adverse effect to the carrying value of loans on Abacus’ balance sheet and reduce interest income.

Property Related Risks: An investment in Abacus is largely an investment in real estate and therefore may be adversely affected by changes to the underlying property, including:

• tenancy failure or delays in letting up premises and falls in rentals;

• capital expenditure requirements and increasing costs of plant equipment and labour and development and refurbishment risk;

• unforseen structural deterioration or failure;

• unforseen litigation with tenants;

• claims under legislation relating to indigenous occupants of land;

• native title claims;

• claims under environmental legislation; and

• changes in local, state and territory and federal legislation and regulations, particularly relating to planning.

Insurance Risk: Insurance may not be available or sufficient.

Litigation And Disputes: Legal and other disputes (including industrial disputes) may arise from time to time in the ordinary course of operations. Any such dispute may impact on earnings or affect the value of Abacus’ assets.

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5. how To Apply

Step 1:

Please read this Offer Booklet, recent ASX Announcements and, if necessary, consult your financial adviser so as to ensure you understand fully the terms of this Offer and the inherent risks.

The Rights Issue is not being made under a product disclosure statement or prospectus. Rather, it is being made pursuant to relatively new changes to the Corporations Act that allow rights issues to be offered by providing confirmations to the market. As a result, it is important for you to read and understand the publicly available information on Abacus Property Group and the Offer prior to accepting your Rights. In particular, please refer to the information enclosed in this Offer Booklet, Abacus’ half-year accounts, Abacus’ Annual Reports and other ASX announcements that are available at www.abacusproperty.com.au or www.asx.com.au.

Step 2:

Consider the Offer in light of your particular investment objectives and circumstances.

Consult with your stockbroker, solicitor, accountant or other independent financial adviser if you have any queries or are uncertain about any aspects of the Offer. In particular, please refer to the “Investment Risks” section in this Offer Booklet.

Step 3:

Complete the accompanying Rights Acceptance Form. If you decide to take up all or part of your Rights, you have two options for payment:

Option 1: Payment by cheque, bank draft or money order; or

Option 2: Payment by BPAY®.

Option 1: Payment by cheque, bank draft or money order

Complete the accompanying personalised Rights Acceptance Form pursuant to the instructions set out on the Rights Acceptance Form and indicate the number of New Securities you want to subscribe for.

Return the completed Rights Acceptance Form together with a cheque, bank draft or money order in Australian currency equal to the amount of the Acceptance Money, payable to “Abacus Property Group – RRI” and crossed “Not Negotiable” to the Registry in the enclosed self addressed envelope.

If you want to hand deliver your application, the address for the Registry is:

Computershare Investor Services Pty Limited Level 3, 60 Carrington Street, Sydney NSW 2000

You should ensure that sufficient funds are held in your relevant bank account(s) to cover the Application Money. If your cheque is dishonoured, your application will be rejected.

Cash payments will not be accepted. Receipts for payment will not be issued.

It is important to note that the Offer closes at 5pm Sydney time on Thursday, 26 March 2009. To participate in the Offer, your payment must be received no later than this date.

Option 2: Payment via BPAY®

If you want to pay for your Rights using electronic bill payment, you may pay for the value of your application (calculated at $0.25 per New Security applied for) by BPAY® in accordance with the instructions set out on the personalised Rights Acceptance Form (which includes the biller code and your unique customer reference number). You can only make a payment by BPAY® if you are the holder of an account with an Australian financial institution.

Please note that should you choose to pay by BPAY®:

• you do not need to submit the personalised Rights Acceptance Form but are taken to make the statements on that form; and

• if you subscribe for less than your Rights or do not pay for your full Rights, you are taken to have taken up your Rights in respect of the whole number of New Securities (rounded down) that is covered in full by your Application Money.

You need to ensure that your BPAY® payment is received by the Registry by 5.00pm Sydney time on Thursday, 26 March 2009. Applicants should be aware that their own financial institution may implement earlier cut off times with regards to electronic payment, and should therefore take that into consideration when making payment. It is the responsibility of the Applicant to ensure that funds are submitted through BPAY® by the dates mentioned above.

Step 4:

Are you eligible to participate in the Offer?

If your holding in Abacus has a registered address in Australia or New Zealand as at the Record Date, you are eligible to participate in the Offer.

Step 5:

If you have any enquiries.

This Offer Booklet is important and requires your immediate attention. You should read it in its entirety. If you are in doubt as to the course you should follow you should consult your stockbroker, accountant, solicitor or other professional adviser before deciding to invest. If you:

• have questions in relation to the number of stapled securities on which your Rights have been calculated; or

• have questions on how to complete the Rights Acceptance Form or take up your Rights; or

• have lost your Rights Acceptance Form and would like a replacement form

please call the Abacus Property Group Securityholder Information Line on 1300 751 767 (from within Australia) or 61 3 9415 4606 (from outside Australia) at any time between 8.30am to 5.00pm Sydney time Monday to Friday.

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6. Important Information

This Offer Booklet has been prepared by Abacus Property Group, which comprises Abacus Group holdings Limited (ACN 080 604 619), Abacus Group Projects Limited (ACN 104 066 104), Abacus Trust (ARSN 096 572 128) and Abacus Income Trust (ARSN 104 934 287). The responsible entity for Abacus Trust and Abacus Income Trust is Abacus Funds Management Limited (ACN 007 415 590, AFSL 227819).

Not Investment Advice

The information contained in this Offer Booklet is not a prospectus or product disclosure statement under the Corporations Act and has not been lodged with the Australian Securities and Investments Commission. It is also not financial product advice and has been prepared without taking into account your investment objectives, financial circumstances or particular needs. Further, Abacus Funds Management Limited advises that it is not licensed to provide financial product advice in relation to the stapled securities in the Abacus Property Group or at all.

No Cooling-Off Rights

Cooling-off rights do not apply to an investment in the New Securities. You cannot withdraw the application once it has been accepted.

Not An Offer

Despite anything stated in this Offer Booklet or elsewhere, nothing in this Offer Booklet (whether considered separately or together) constitutes an offer, invitation, solicitation, advice or recommendation with respect to the issue, purchase or sale of any New Securities. The Offer Booklet does not purport to contain all the information that you may require to evaluate a possible acquisition of stapled securities in Abacus Property Group and does not take into account the investment objectives, financial situation or needs of you or any particular investor. You should conduct your own independent review, investigation and analysis of Abacus Property Group stapled securities the subject of the Offer. You should obtain any professional advice you require to evaluate the merits and risks of an investment in Abacus Property Group before making any investment decision based on your investment objectives.

Foreign Jurisdictions

This Offer Booklet is being sent to all Securityholders on the register of the Abacus Property Group as at the Record Date whose registered address is located in Australia and New Zealand.

The New Securities being offered under the Rights Issue are being offered to Eligible Securityholders with registered addresses in New Zealand in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002 (New Zealand). This Offer Booklet is not an investment statement or prospectus under New Zealand law, and may not contain all the information that an investment statement or prospectus under New Zealand law is required to contain.

In accordance with relevant New Zealand securities law, a person who on the Record Date, being Tuesday, 10 March 2009, was a registered Securityholder with a New Zealand address but who sells their securityholding before the commencement of the Offer on Thursday, 12 March 2009, is not eligible to participate in the Offer.

This Offer Booklet does not constitute an offer in any jurisdiction in which, or to any person to whom it would not be lawful to make such as offer and no action has been taken to register stapled securities of Abacus or otherwise permit a public offering of the stapled securities in any jurisdiction. Return of the Rights Acceptance form will be taken by Abacus to constitute a representation by you that there has been no breach of any such laws. Eligible Securityholders who are nominees, trustees or custodians are therefore advised to seek independent advice as to how to proceed.

This Offer Booklet does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to any “U.S. person” (as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”) (“U.S. Person”)). Securities may not be offered or sold in the United States absent registration or an exemption from registration. The stapled securities to be offered and sold in the Offer have not been and will not be registered under the Securities Act, or under the securities laws of any state or other jurisdiction of the United States.

In addition, Abacus has not been, and will not be, registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”) in reliance on an exception provided by Section 3(c) (7) thereof and accordingly, the stapled securities may only be offered and sold (i) within the United States or to or for the account or benefit of any U.S. Person, to a person who is both a “qualified institutional buyer” (as defined in Rule 144A) and a “qualified purchaser” (“QPs”), as such term is defined in Section 2(a)(51) of the Investment Company Act (each such person a “QIB/QP”), in transactions exempt from, or not subject to, the registration requirements of the

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Securities Act and the Investment Company Act or (ii) outside the United States, to persons that are not U.S. Persons or acting for the account or benefit of U.S. Persons (other than dealers or professional fiduciaries organized, incorporated or (if an individual) resident outside of the United States acting for the account or benefit of U.S. Persons for which it has sole investment discretion) in offshore transactions in compliance with Regulation S under the Securities Act.

The distribution of this Offer Booklet outside Australia may be restricted by law. In particular, this Offer Booklet or any copy of it must not be taken into or distributed or released in the United States or distributed or released to any U.S. Person or to any person acting for the account or benefit of a U.S. Person (other than dealers or professional fiduciaries organized, incorporated or (if an individual) resident outside of the United States acting for the account or benefit of U.S. Persons for which it has sole investment discretion). Persons who come into possession of this Offer Booklet should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Broker Stamping Fees

A broker stamping fee of 1.0% (inclusive of GST) will be paid by Abacus on the value subscribed pursuant to a stamped Rights Acceptance Form, subject to the following conditions.

• the broker stamping fee will be limited to $300 in respect of any one Rights Acceptance Form;

• where a Securityholder lodges more than one Rights Acceptance Form, the fee is only payable on one Rights Acceptance Form;

• if an individual is applying on behalf of more than one beneficial holder, a list of beneficial holders must be provided in order to receive up to the maximum amount of $300 per beneficial holder;

• broker stamping fees will only be paid to participating organisations of the ASX and members of the Financial Planning Association of Australia Limited; and

Adviser To The Issue

LINWAR Securities Pty Ltd were engaged as adviser to the issue to assist in procuring sub-underwriting commitments.

Governing Law

This Offer Booklet, the Offer and the contracts formed on acceptance of the Applications are governed by the law applicable in New South Wales, Australia. Each Securityholder who applies for New Securities submits to the jurisdiction of the courts of New South Wales, Australia.

Future Performance And Forward Looking Statements Neither Abacus Property Group nor any other person warrants or guarantees the future performance of the New Securities, or any return on any investment made pursuant to this Offer. Forward looking statements, opinions and estimates provided in the Offer Booklet are based on assumptions and contingencies that are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions.

Forward looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. They are subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of Abacus Property Group and the board, which could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by the forward looking statements in this Offer Booklet.

Taxation

Securityholders should seek their own advice as to the tax consequences of exercising their Rights, disposing of their Rights and/or disposing of New Securities.

Other Australian Taxes

No Australian Goods and Services Tax (GST) or stamp duty is payable in respect of the grant or exercise of the Rights or the acquisition of New Securities.

• broker stamping fees will only be paid on BPAY® applications where a Broker Stamping Fee Claim Form and schedule is submitted to the Registry no later than 5pm on Thursday, 26 March 2009. The Broker Stamping Fee Claim Form and schedule (including details of how to submit this form) is available from the Registry on 1300 751 767.

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Declarations

By returning the Rights Acceptance Form and paying Application Monies by cheque, bank draft or money order, or by paying by BPAY® you:

• agree to be bound by the terms of the Offer;

• authorise Abacus Property Group to register you as the holder of the New Securities allotted to you;

• declare that all details and statements in the Rights Acceptance Form are complete and accurate;

• declare you are over 18 years of age and have full legal capacity and power to perform all your rights and obligations under the Rights Acceptance Form;

• acknowledge that once Abacus Property Group receives the Rights Acceptance Form, you may not withdraw it;

• agree to apply for the number of New Securities at the issue price;

• agree to be issued the number of New Securities that you apply for;

• authorise Abacus Property Group, the Underwriters and their respective officers or agents, to do anything on your behalf necessary for the New Securities to be issued to you, including to act on instructions of the Registry and using the contact details set out in the Rights Acceptance Form;

• declare that you are the current registered holders of Abacus Property Group stapled securities with an Australian or New Zealand registered address;

• acknowledge that the information contained in this Offer Booklet and the Rights Acceptance Form is not investment advice or a recommendation that New Securities are suitable for you given your investment objectives, financial situation or particular needs;

• represent and warrant that the law of any other place does not prohibit you from receiving the Offer Booklet or making an application on the Rights Acceptance Form;

• represent and warrant (for the benefit of Abacus Property Group, the Underwriters and their respective affiliates) that that you are not in the United States and that you are not, and you are not acting for the account or benefit of, a “U.S. Person”;

• acknowledge that the New Securities have not, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdictions in the United States, or in any other jurisdiction outside Australia or New Zealand and in addition, Abacus Property Group has not been and will not be registered under the Investment Company Act in reliance on an exception provided by Section 3(c)(7) thereof and accordingly, the New Securities may not be offered, sold or otherwise transferred except in accordance with an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the Investment Company Act and any other applicable securities laws;

• agree not to send the Rights Acceptance Form or any other material relating to the Offer to any person in the United States or that is, or is acting for the account or benefit of a U.S. Person; and

• agree that if in the future you decide to sell or otherwise transfer the New Securities, you will only do so where neither you nor any person acting on your behalf knows, or have reason to know, that the sale has been pre-arranged with, or that the purchaser is, in the United States or a U.S. Person.

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Corporate Directory

Abacus Funds Management Limited Level 34, Australia Square 264-278 George Street SYDNEY NSW 2000 Tel: (02) 9253 8600 Fax: (02) 9253 8616 Website: www.abacusproperty.com.au

Directors of Abacus Group Holdings Limited, Abacus Group Projects Limited and Abacus Funds Management Limited John Thame, Chairman Frank Wolf, Managing Director William Bartlett David Bastian Dennis Bluth Malcolm Irving Len Lloyd

Company Secretary Ellis Varejes Custodian Perpetual Trustee Company Limited Level 12, Angel Place 123 Pitt Street SYDNEY NSW 2000

Auditor

Ernst & Young Ernst & Young Centre 680 George Street SYDNEY NSW 2000

Registry Computershare Investor Services Pty Limited Level 3, 60 Carrington Street SYDNEY NSW 2000 Tel: 1300 751 767 from within Australia Tel: +61 3 9415 4606 from outside Australia Fax: (02) 8234 5050

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