CHARTER HALL GROUP — Annual Report 2013

Sep 29, 2013

Charter Hall Group Securityholder Review 2013

Contents

Highlights	1
About Us	2
Offce	4
Retail	6
Industrial	8
Our Year in Review	10
Our Strategy	12
Chairman’s Review	14
Joint Managing Directors’ Review	16
Our Performance	18
Sustainability	20
The Board	22
Investor Information	24
Contact Details	25

Allianz Centre, 2 Market Street, Sydney NSW Cover: Bankwest Place, Perth WA

Annual General

Meeting

The 2013 Annual General Meeting will be held at The Westin Hotel, Ballroom 1, No.1 Martin Place, Sydney on Tuesday 12 November 2013 at 2.30pm.

==> picture [246 x 238] intentionally omitted <==

----- Start of picture text -----

Proud
----- End of picture text -----

==> picture [247 x 238] intentionally omitted <==

==> picture [107 x 440] intentionally omitted <==

==> picture [281 x 204] intentionally omitted <==

==> picture [212 x 204] intentionally omitted <==

Charter Hall / Securityholder Review 2013 / 1

Highlights

11.3%

increase in operating EPS[1]

$1.2 $3.1 billion billion in new equity secured of transactions

18%

Australian funds under management (FUM) growth

Operating Earnings ($ million)

Property Investment

Property Funds Management (PFM)

==> picture [491 x 270] intentionally omitted <==

----- Start of picture text -----

CHC Investment Property PFM EBITDA EBITDA Margin [2]
Portfolio ($ million) Investment Yield ($ million)
71.8 7.5% 35.5%
33.1%
6.7%
63.6 [1]
28.5
603
530
24.9
FY12 FY13 FY12 FY13 FY12 FY13
----- End of picture text -----

1 FY12 comparison excludes specific items.

2 EBITDA margin on revenue on a like-for-like basis.

2

About Us

Charter Hall Group has grown, since its launch in 1991, to become one of Australia’s leading property groups, with a total property portfolio of over $10 billion.

We own and manage 187 commercial properties around Australia, including office buildings, supermarket anchored retail centres, and a rapidly growing stable of industrial assets, on behalf of our institutional, wholesale and retail investors.

Our vision: To be the smart property choice.

==> picture [98 x 118] intentionally omitted <==

----- Start of picture text -----

25
Western Australia
Office 9
Retail 11
Industrial 5
----- End of picture text -----

Our integrated business model, coupled with our highly skilled and motivated team across investment management, asset management, property management, and project delivery produces sustainable returns for our investors, and positive experiences for our tenants and the community.

As a Group, we listed on the Australian Securities Exchange in 2005 under ASX Code: CHC. Charter Hall Group is a stapled security comprising a share in Charter Hall Limited (CHL), the operating business, and a unit in Charter Hall Property Trust (CHPT), which predominantly co-invests in the funds and partnerships the Group manages.

Charter Hall / Securityholder Review 2013 / 3

==> picture [99 x 118] intentionally omitted <==

----- Start of picture text -----

38
Queensland
Office 8
Retail 17
Industrial 13
----- End of picture text -----

==> picture [492 x 419] intentionally omitted <==

----- Start of picture text -----

6
South Australia
71
Office 3
New South Wales
Retail 2
Industrial 1 Office 22
Retail 44
Industrial 5
5
Australian Capital Territory
Office 1
Retail 4
Industrial 0
36
Victoria
Office 12
Retail 11
Industrial 13
6
Tasmania
Office 1 Charter Hall currently owns
Retail 3 and manages 13 offshore
Industrial 2 properties which are being
marketed for sale.
----- End of picture text -----

==> picture [596 x 495] intentionally omitted <==

----- Start of picture text -----

4
Office
----- End of picture text -----

We are one of the largest managers of CBD office properties in Australia, with a $6.2 billion office portfolio. We manage 1,052,231sqm of office space accommodating 648 tenants. We continue to provide smart, long-term accommodation solutions for our tenants while delivering income and capital returns for our investors. We adopt a proactive approach to enhance and maintain the quality, performance and value of our properties.

==> picture [596 x 495] intentionally omitted <==

----- Start of picture text -----

Charter Hall / Securityholder Review 2013 / 5
Brisbane Square,
Brisbane Qld
$6.2
billion
Office portfolio
----- End of picture text -----

56 Office properties

97% Total portfolio occupancy

5.1 years Weighted average lease expiry

Top 10 tenants

by gross income

1. Australian governments	15.9%
2. Telstra	8.4%
3. Macquarie Group	6.6%
4. Commonwealth Bank	4.6%
5. Westpac Group	2.9%
6. BHP Billiton	2.2%
7. Suncorp Group	2.2%
8. Citigroup	1.8%
9. Queensland Gas Company	1.6%
10. Wilson Parking	1.6%

==> picture [596 x 495] intentionally omitted <==

----- Start of picture text -----

6
Retail
----- End of picture text -----

With a focus on non-discretionary retail, we manage a $2.6 billion Australian retail portfolio.

We optimise returns for our investors by providing our centres with end-to-end property services and creating enjoyable environments for the 100 million shopper visitations to our retail assets each year.

==> picture [596 x 495] intentionally omitted <==

----- Start of picture text -----

Charter Hall / Securityholder Review 2013 / 7
Singleton Square,
Singleton NSW
$2.6
billion
Australian retail portfolio
----- End of picture text -----

105 Retail properties

98%

Total portfolio occupancy

6.6 years Weighted average lease expiry

Top 10 tenants

by gross income

1. Wesfarmers	26.4%
2. Woolworths	25.6%
3. Rewe Group	3.0%
4. The Reject Shop	1.4%
5. Retail Food Group	0.9%
6. Commonwealth Bank	0.9%
7. John Wiley & Sons	0.8%
8. Soul Pattinson Chemist	0.6%
9. Möbel Walther	0.6%
10. Aldi	0.6%

==> picture [596 x 495] intentionally omitted <==

----- Start of picture text -----

8
Industrial
----- End of picture text -----

We own and manage 39 predominantly long-leased industrial properties, covering approximately 800,000sqm, in key growth areas around Australia.

Through our 50% interest in CIP, a national industrial pre-lease developer, we are able to access high quality pre-leased industrial and logistics properties. Over the past seven years, we have been actively involved in the ownership and delivery of 20 newly developed assets covering approximately 410,000sqm of floor space and valued in excess of $600 million.

==> picture [596 x 495] intentionally omitted <==

----- Start of picture text -----

Charter Hall / Securityholder Review 2013 / 9
Australia Post Distribution
Centre, Rowville Vic.
$1.1
billion
Industrial portfolio
----- End of picture text -----

39 Industrial properties

100% Total portfolio occupancy

10.8 years Weighted average lease expiry

Top 10 tenants

by gross income

1. Wesfarmers	20.6%
2. Metcash	12.5%
3. Woolworths	11.3%
4. Volkswagen	6.0%
5. Australian governments	4.9%
6. Toll Holdings	4.1%
7. Grace	3.2%
8. Electrolux Home Products	3.1%
9. Fastline International	3.1%
10. Volvo Group	3.1%

10

Our Year in Review

Jul 2012 y

Charter Hall Retail REIT (CQR) finalises the documentation for the extension and refinancing of its K81 million German debt facility to December 2014, from its previous July 2012 maturity.

Au ust 2012 g

Charter Hall establishes a new partnership to acquire Bay Village Shopping Centre in NSW (renamed Bateau Bay Square) for $164 million, reflecting an 8% capitalisation rate.

Direct Industrial Fund (DIF1) closes more than 5% oversubscribed, raising $119.5 million since its launch in July 2010.

Charter Hall Office Trust’s (CHOT) $260 million 171 Collins Street building is awarded a 6 star Green Star – Office Design (v2) Certified Rating from the Green Building Council of Australia – a first for Melbourne.

Charter Hall Direct Property Management Limited was appointed manager and Responsible Entity of the $422 million PFA Diversified Property Trust.

CQR enters into an unconditional contract to sell Mile End Homemaker Centre, South Australia for $43.8 million.

144 Stirling Street syndicate raises $32 million of equity to acquire the $55 million Perth CBD property.

Charter Hall Group pays the final payment of its full year distribution of 18.2 cents per security, an increase of 10.3% on the previous year.

==> picture [191 x 204] intentionally omitted <==

----- Start of picture text -----

Toll Fleet & Auto Logistics Centre, Altona North Vic.
----- End of picture text -----

Se tember 2012 p

DIF1 acquires its sixth asset, the Coates Hire Distribution Centre in Kingston, Queensland, for a total consideration of $20.9 million.

October 2012

Charter Hall and a domestic institutional investor create a new partnership to acquire a national portfolio of recently completed Bunnings Warehouse retail stores for $207 million.

CQR raises $100 million through an institutional placement at a price of $3.45 per unit, a 2.1% premium to the REIT’s 30 June 2012 net tangible assets. This is a significant transaction for the listed REIT sector, which funds the acquisition of three supermarket anchored shopping centres.

November 2012

Core Plus Office Fund (CPOF) executes an agreement for lease with Bupa Australia Pty Limited for approximately 11,750sqm of net lettable area at CPOF’s Melbourne flagship asset, 11 Exhibition Street, for a 10 year term.

The $30 million redevelopment of CQR’s Lansell Square in Bendigo is approved by the City of Greater Bendigo. Works are scheduled to commence in late 2013.

CQR raises an additional $19 million from a Unit Purchase Plan giving retail unitholders the opportunity to participate in the October equity raising at the same price.

December 2012

Charter Hall delivers its first Corporate Responsibility and Sustainability Report (CR&S) addressing the Group’s CR&S journey and performance across key indicators for the 2012 financial year.

Charter Hall announces a distribution of 9.8 cents per security for the half year ended 31 December 2012.

Tracey Jordan joins Charter Hall as Group General Counsel and Company Secretary.

Core Plus Industrial Fund (CPIF) outperforms its sector specific benchmark in the IPD/Mercer Wholesale Unlisted Property Funds Index over the one, two and three year periods to 31 December 2012.

Charter Hall Direct Property Fund (CHDPF) acquires 181 St Georges Terrace, Perth for $26.8 million.

Launch of Direct Industrial Fund No.2 (DIF2) and acquisition of its first two assets totalling $55 million – industrial facilities in Victoria and Western Australia, following the success of DIF1.

==> picture [90 x 160] intentionally omitted <==

----- Start of picture text -----

Bunnings
Rouse Hill, NSW
----- End of picture text -----

==> picture [90 x 212] intentionally omitted <==

----- Start of picture text -----

11 Exhibition Street,
Melbourne Vic.
----- End of picture text -----

==> picture [90 x 270] intentionally omitted <==

----- Start of picture text -----

181 St Georges Terrace,
Perth WA
----- End of picture text -----

Charter Hall / Securityholder Review 2013 / 11

==> picture [90 x 229] intentionally omitted <==

----- Start of picture text -----

9 Castlereagh Street,
Sydney NSW
----- End of picture text -----

==> picture [90 x 97] intentionally omitted <==

----- Start of picture text -----

175 Eagle Street,
Brisbane Qld
----- End of picture text -----

==> picture [90 x 226] intentionally omitted <==

----- Start of picture text -----

100 Skyring Terrace,
Brisbane Qld
(Artist’s impression)
----- End of picture text -----

Februar 2013 y

Charter Hall establishes the Core Logistics Partnership (CLP) with two Australian institutional investors to acquire and manage a predominantly core Australian logistics portfolio. CLP acquires two seed assets totalling $103.1 million as part of the transaction – the 36,213sqm AMCOR logistics facility at Scoresby in Melbourne and a 50% interest in the Metcash Distribution Centre at Canning Vale, Perth for $63.5 million.

CPOF acquires the 21,000sqm Sydney CBD office tower, 9 Castlereagh Street, for $172.5 million.

Philip Garling joins the Board of Charter Hall as a Non-Executive Director.

Charter Hall Group pays a distribution of 9.8 cents per security, a 7.7% increase on the prior period.

March 2013

CQR sells its interest in the last United States (US) joint venture entity with Regency Centers for a gross sale price of US$49 million, in line with book value, and realises net proceeds of approximately A$11 million.

A ril 2013 p

Upgrade works commence on CHOT's 175 Eagle Street office building in Brisbane. Improvements will include an enhanced entry and lobby, upgraded lifts and services and the creation of an outdoor deck overlooking the Brisbane River.

Ma 2013 y

CPOF acquires 100 Skyring Terrace in Brisbane in a 50:50 partnership with a global institutional partner. This A-grade building, currently under development, is secured by an initial 12 year lease pre-commitment across 12,700sqm to the Bank of Queensland. Due for completion in early 2015, the asset will comprise a total of 23,800sqm of A-grade office and 1,060sqm of retail space.

CPIF secures $119 million of the $150 million equity target for its 2013 capital raising, providing capacity to grow to approximately $850 million once fully invested. The balance is anticipated to be committed by September 2013. The proceeds will be used to fund acquisitions and up to $190 million of pre-leased projects on existing land banks.

171 Collins Street Melbourne, accommodating BHP Billiton’s new headquarters, reaches practical completion.

June 2013

CPOF, in partnership with a domestic super fund and a global institutional investor, acquires the $458 million Bankwest Place in Perth. The recently completed property comprises a 45,000sqm office tower 100% leased to Bankwest for 12 years, a 9,831sqm retail complex anchored by a 15 year lease to Coles and adjoining hotels.

==> picture [190 x 164] intentionally omitted <==

----- Start of picture text -----

Bankwest Place and Raine Square, Perth WA
----- End of picture text -----

Global law firm, DLA Piper, commits to 6,000sqm of office space at No.1 Martin Place, one of Sydney’s largest leasing transactions this year.

Charter Hall announces a distribution of 10.4 cents per security (cps) for the half year ended 30 June 2013. The total distribution per security for the year ended 30 June 2013 was 20.2 cps, representing an 11.0% increase on the prior year.

CQR enters into a conditional contract for the sale of its five Polish assets for a gross sale price of K174.5 million, with settlement expected at the end September 2013.

CQR acquires the Secret Harbour Shopping Centre south of Rockingham, Western Australia and adjoining vacant land for $33.2 million.

==> picture [190 x 114] intentionally omitted <==

----- Start of picture text -----

Secret Harbour Shopping Centre, Rockingham WA
----- End of picture text -----

CPIF secures national logistics company Northline for a new 16,500sqm facility to anchor Stage 1 of its $80 million Smithfield development.

The 130 Stirling Street Trust is the third strongest performing property syndicate in Australia over the three years to 30 June 2013 (net return of 18.0% p.a.) according to IPD.

Utilising our specialist property expertise to access , deploy , manage and invest equity in the core real estate sectors of office, retail and industrial, creating value and generating superior income and capital returns for our clients and Charter Hall securityholders.

Morisset Shopping Centre, Morisset NSW

Charter Hall / Securityholder Review 2013 / 13

==> picture [326 x 200] intentionally omitted <==

----- Start of picture text -----

1. 2. 3. 4.
Access Deploy Manage Invest
----- End of picture text -----

FY13 objectives

• �� Continue to achieve our investors’ investment objectives

• �� Enhance return on equity

• �� Source equity to invest into office, retail and industrial properties, targeting growth of 6-10% p.a. in the Australian funds management platform

• �� Realise and redeploy an additional $100 million of capital in property and development investments over the next two years

• �� Drive further growth in property investment portfolio earnings and capital value

• �� Maintain high levels of tenant retention and low vacancy rates across our portfolios

• �� Diversify the sources of debt funding for our managed funds platform

• �� Continue to capitalise on a scalable operating platform to service FUM growth

• �� Reweight the investment portfolio, increasing the proportion of retail and industrial investments.

FY13 achievements

• Secured $1.2 billion of gross new equity

• Return on equity up from 9.9% to 11.2% (NTA basis)

• Core Plus Industrial Fund ranks first and Core Plus Office Fund ranks second best performing wholesale fund in their respective sectors for the year according to IPD

• 18% growth in Australian funds under management

• Established six new partnerships and funds

• Realised $58 million of balance sheet capital

• Reinvested $99 million of balance sheet capital

• Increased property co-investment earnings yield from 6.7% to 7.5%

• Maintained high tenant retention level with total portfolio occupancy of 97.4%

• Leased 301,924sqm of space

• Refinanced $0.9 billion of debt

• Operating EPS up 11.3% to 23.94 cps

• Property funds management margin up 2.4% on a like-for-like basis to 35.5%.

14

Chairman’s

Review

On behalf of the Board of Directors, I am pleased to present Charter Hall Group’s 2013 Securityholder Review.

The Group has had another active year delivering its strategy of accessing, deploying and managing equity into Australian office, retail and industrial property and co-investing alongside its capital partners.

By delivering on this strategy, Charter Hall saw solid growth in its security price over the year, evidence that our business model and strategy are well received by investors. This also highlights the increasing demand for higher yields available from property investments relative to most other investment asset classes. Total return for our securityholders over the course of the year was 80.6%, making Charter Hall Group the best performing A-REIT during the period.

The number of new investment initiatives launched during the year, with both current partners looking to extend their investment portfolios with us and new partners who have chosen to invest with us, has been particularly pleasing. Many of these are through partnership style structures, reflecting our partners’ recognition of our expertise, track record, governance and, ultimately, our ability to deliver growing income and capital returns, consistent with their risk appetite.

Charter Hall now manages a total portfolio of $10.3 billion, comprising 200 office, retail and industrial properties servicing almost 3,000 tenants.

Corporate responsibility

Over the last year, we have continued our sustainability and corporate responsibility focus, evolving our approach to ensure that we effectively listen, understand, and respond to our stakeholders. Last year, we focused on our operational platform, building the right systems and processes for long-term sustainable growth. This year, our focus has been on our people, ensuring that we understand and respond to their needs, develop their capabilities, and evolve a new way of working for the long term. Charter Hall’s focus on the environmental operations of our managed properties continues to produce results, with improvements in average National Australian Built Environment Ratings System (NABERS) Energy ratings across our managed funds.

Board changes

I was very pleased to welcome Philip Garling to the Board as a Non-Executive Director in February this year. Philip has extensive experience in property and funds management, and business strategy, and is a valuable addition to our Board.

Philip currently also serves as a director of Networks NSW, Downer EDI Limited and Water Polo Australia, and is Chairman of Australian Renewable Fuels.

Charter Hall / Securityholder Review 2013 / 15

==> picture [596 x 317] intentionally omitted <==

Kerry Roxburgh, Chairman

Total return for our securityholders was 80.6%.

Due to poor health, Roy Woodhouse retired as Deputy Chairman and a Non-Executive Director this year. Roy made a significant contribution to Charter Hall during his eight and a half years on the Board, initially when Charter Hall was a privately owned business and subsequently when it was a listed A-REIT, and on behalf of the Board I would again like to thank him for his industrious and enthusiastic approach.

Glenn Fraser also retired as a Non-Executive Director during the year, due to an illness in his family. Glenn, who was Chairman of the Audit, Risk and Compliance Committee, made a significant contribution to the Board and I would like to thank him for his constructive and balanced approach. On behalf of Charter Hall, I wish both Roy and Glenn every happiness and good health.

Outlook

While labour markets remain subdued, as we highlighted last year, investment drivers have been strong, with a historically high spread between the cost of debt and sustainable rental income yields from property, making securely-leased, core property a very attractive investment proposition. As a result, we continue to see strong demand from both wholesale and retail investors, leading to opportunities to expand Charter Hall’s funds management base.

I would like to thank our 300-plus people, the Board and management, and importantly all our securityholders and stakeholders for their continued support and commitment to Charter Hall over the past year. We look forward to working with you all in the years ahead.

==> picture [97 x 29] intentionally omitted <==

Kerry Roxburgh Chairman

16

Joint Managing ’ Directors Review

Financial year 2013 was another successful year for Charter Hall Group, where we executed on our strategy to access, deploy, manage and invest equity in core real estate markets throughout Australia. This has delivered an 11.3% increase in operating earnings per security on the prior corresponding period and a 16% increase in total funds under management (FUM) to $10.3 billion.

This year, we have refined and provided greater clarity on our long-term future direction and goals. We now have a refreshed brand, underpinned by a clearly articulated vision for our people and the business.

Charter Hall has a 22 year strong history of accessing and managing Australian property on behalf of our investors, partners and clients, including working co-operatively with our stakeholders to deliver smart outcomes. Through our vision to be ‘the smart property choice’ we are uniting our people, continuing to generate smart ideas and creating products and solutions that deliver wealth through a combination of sustainable rental income and capital growth. Charter Hall strives to be the smart property choice for its investors, partners, clients and stakeholders.

Results

We were pleased to deliver operating earnings of $71.8 million, up 12.9% on the prior year. This represented an 11.3% increase in operating earnings of 23.94 cents per security (cps) and a full year distribution for securityholders of 20.2 cps, an 11.0% increase on the prior financial year.

Property investment income represented 62% of the Group’s total operating earnings in FY13, with the annualised property investment portfolio earnings yield increasing from 6.7% to 7.5% during the year. This improvement has been the result of reweighting the Group’s investment portfolio, active asset management across the Group’s portfolio and lower borrowing costs through resetting debt facilities in many of the managed funds.

Delivering on our strategy

We completed $2.1 billion of property acquisitions and $1.0 billion of divestments during the year, consistent with our strategy of deploying equity into core Australian real estate.

We secured $1.2 billion of gross equity across our wholesale, listed and retail investor funds, and have secured $179 million since financial year end to August 2013. This equity, raised from listed wholesale and retail investors, was invested across the office, retail and industrial sectors, with all sectors making solid contributions to our Group performance. In particular, we were pleased with the new initiatives within our wholesale partnerships business, where we have formed new long-term relationships with investors in each of these sectors.

Charter Hall has a total of $603 million invested alongside our partners, and we continue to look to grow this through new partnerships and further investment in our managed funds.

Charter Hall / Securityholder Review 2013 / 17

==> picture [596 x 317] intentionally omitted <==

Left to right: Investing in our brand David Harrison and David Southon, Joint This year we introduced our refreshed brand, Managing Directors providing clarity on our vision and values for our business. As part of our refreshed brand, we have refined our logo and introduced a new colour palette to communicate and promote our focus on the office, retail and industrial property sectors.

Our upgraded website, reflecting our new brand, was recently launched to provide investors with more information on the Group and our properties, and greater functionality. We encourage you to take a look.

We are also investing into the branding of our properties. With over 338,000 people using a Charter Hall property each day – be it shopping in one of our centres or working in one of our buildings – we want to harness this exposure and promote both our property expertise and our commitment to delivering smart spaces for all our stakeholders.

Over the coming two years, we will be introducing Charter Hall signage on all our properties. Our retail business has already started this rollout, and on page 7 you can see the refreshed brand and new look signage on display at the recently completed Singleton Square.

Outlook

We maintain our focus on accessing, deploying and managing equity and investing alongside our clients to create value and provide superior returns for our clients and Charter Hall securityholders.

Given the current low interest rate environment and the comparatively high yields available from core real estate, we expect that investors will continue to increase their exposure to Australian property. Charter Hall remains well positioned to capture these inflows, and we will continue to partner with both new and existing investors to invest in quality Australian property.

We have already seen positive progress on continuing to implement our strategy in the new financial year, completing the $150 million Core Plus Industrial Fund equity raising and establishing a new retail partnership for the acquisition of Keperra Square in Brisbane.

We are committed to achieving sustainable income and growing value for all of our investors, and to delivering high quality outcomes for all of our stakeholders over FY14.

==> picture [78 x 36] intentionally omitted <==

==> picture [93 x 25] intentionally omitted <==

David Southon Joint Managing Director

David Harrison Joint Managing Director

18

Our Performance

Property Investment

A key element of our business model is co-investing alongside our capital partners, in our managed funds and partnerships, to align Charter Hall’s interests with those of our investors.

Our property investment totalled $603 million at 30 June 2013 and is well diversified across our equity sources and core property sectors of office, retail and industrial as detailed in the charts below. We continually review our investment portfolio allocation as our funds platform grows and are in the process of actively reweighting our investment portfolio through investing alongside partners in long weighted average lease expiry industrial and retail investments.

Our property investments delivered operating earnings of $44.5 million for the year, representing 62% of the Group’s operating earnings. Following the active management of Charter Hall’s investment portfolio and lower borrowing costs in our managed funds, the annualised property funds investment earnings yield increased by 12% on the prior period from 6.7% to 7.5%.

In line with our strategy, over the past two years, we have realised $126 million of capital from our co-investments and reinvested $117 million into new higher yielding investments. During the next 18 months, we are aiming to recycle a further $112 million of equity.

Property Funds Management

Property funds management delivered operating earnings of $27.3 million, representing 38% of the Group’s operating earnings.

Charter Hall is focused on Australian office, retail and industrial property, and during the year our Australian property funds under management (FUM) increased by 18% to $9.9 billion, with total FUM of $10.3 billion.

$1.2 billion of gross equity secured

During the year we secured $1.2 billion in gross equity across our wholesale pooled, wholesale partnership, listed and retail investor property funds (evidenced in the graph below). These solid inflows demonstrate the continuing attractiveness of Australian prime property.

This equity enabled Charter Hall and our managed funds to acquire $2.1 billion of core Australian office, retail and industrial property during the year.

Within the office sector, our Core Plus Office Fund (CPOF) acquired the 21,000sqm Sydney CBD office tower, 9 Castlereagh Street, for $172.5 million and, in partnership with our wholesale investors, the recently completed $458 million Bankwest Place in Perth. Bankwest Place is Perth’s newest CBD office development and comprises a 45,000sqm

Property Investments by equity source

Wholesale partnerships	37.2%
Wholesale pooled	28.4%
Listed	17.1%
Direct property	9.1%
Retail investor funds and syndicates	8.2%

Property Investments
by sector
Offce	$311m	52%
Retail	$213m	35%
Industrial	$79m	13%

Australian FUM by Equity Source

($ billion)

==> picture [191 x 270] intentionally omitted <==

----- Start of picture text -----

Wholesale Listed Retail
12
12% CAGR
10 1.7
1.5 1.5
8 1.8
1.5 3.5 1.6
6.5
6
3.2
5.4
4
3.6
2.5
2
Jun 10 Jun 11 Jun 12 Jun 13
----- End of picture text -----

Charter Hall / Securityholder Review 2013 / 19

office tower 100% leased to Bankwest for 12 years, a 9,831sqm retail complex anchored by a 15 year lease to Coles and adjoining hotels. Within retail, our listed Charter Hall Retail REIT successfully raised $119 million of capital from its institutional and retail investors to fund the acquisition of three supermarket anchored centres for $101 million during the year. Charter Hall also extended its exposure to the non-discretionary retail sector, establishing a new wholesale partnership with a domestic institutional investor to acquire a $235 million Bunnings portfolio, comprising 10 properties with long leases to Bunnings.

We have also actively increased our focus on the industrial sector over recent years. This year, we launched our new $400 million Core Logistics Partnership (CLP) in partnership with two Australian institutional investors, with the new vehicle acquiring two seed assets totalling $103 million.

Our Core Plus Industrial Fund (CPIF), which secured $119 million of its $150 million equity target for its 2013 capital raising (with the remaining $31 million committed post balance date), acquired a 45,000sqm strategically located site in Brisbane. CPIF has the capacity to grow to approximately $850 million once fully invested and is actively looking to continue to grow its portfolio of long leased logistics facilities.

Within our direct business, our $210 million Direct Industrial Fund (DIF1) was closed oversubscribed, and we are now well advanced on raising $120 million of equity for the Direct Industrial Fund No.2 (DIF2). DIF2 acquired two industrial facilities in Victoria and Western Australia as part of its launch and is in negotiations on several additional properties.

Solid portfolio performance

Charter Hall provides end-to-end property services for all our funds and properties, from property and leasing to financial management services.

Revenue from our property and asset management services delivered $44.4 million, up 20% from FY12, with solid growth across leasing and transaction services and steady contributions from property management and development services.

During the year, we completed 301,924sqm of lease renewals and new lease commitments across the 2.8 million sqm of space across the Australian portfolio. Our total Australian portfolio occupancy was 97.4%, with our weighted average lease expiry remaining steady at 6.1 years.

Our portfolio remains leased to a wide range of high calibre tenants including Wesfarmers, Woolworths, Citigroup, BHP Billiton, Telstra and the Australian and State governments.

As part of our integrated offering, we have continued to look for opportunities to enhance our managed funds’ portfolios through redevelopment and refurbishment works. We currently have a number of projects underway and are pleased to have completed two major projects in the past 18 months.

Charter Hall Retail REIT’s $63 million redevelopment of Singleton Square was completed in August this year, delivering a new 21,142sqm centre, including a full line Coles and new two storey carpark to the community.

Charter Hall Office Trust and Cbus Property’s 171 Collins Street in Melbourne was also officially completed during the year, with international fashion house, Dolce and Gabbana, opening its first Australian flagship store in the building’s retail space fronting Collins Street.

Charter Hall Group top 10 tenants

by gross income

		% Portfolio
	Tenant	leased
	Australian governments	8.6
	Woolworths	5.9
	Telstra	5.6
	Wesfarmers	5.6
	Macquarie Group	3.0
	Westpac Group	2.5
	Metcash	1.9
	BHP Billiton	1.8
	Citigroup	1.6
	Commonwealth Bank	1.5
	Total	37.8

20

Sustainability

Sustainability is a critical part of how we manage risks and enhance financial, social and environmental value across our business.

As an owner and manager of office, retail and industrial properties across Australia, we recognise that our success is dependent on building strong relationships with our tenants, fostering the trust of our investors and giving back to the communities that support our business. Our approach is centred on four key sustainability themes which are managed and monitored through Charter Hall Group’s sustainability strategy.

Sustainable Business

Our objective

To grow investor wealth by delivering smart property outcomes.

What we planned to do in FY13

• �� Source equity to invest into core real estate sectors targeting growth in the Australian FUM platform of 6-10%

• �� Continue to develop an efficient and scalable operating model

• �� Provide greater consistency and better information about our business to our stakeholders

• �� Further the accuracy and consistency of our CR&S reporting and seek third-party assurance in 2013

• �� Upgrade our website to provide an improved interface with Charter Hall for our stakeholders

• �� Launch our revised Code of Conduct to ensure that we instil our ethics and values across our people

• �� Review our corporate governance policies and framework against industry standards

What we did in FY13

• �� Raised $1 billion of net equity since June 2012

• �� Achieved 18% growth in Australian FUM

• �� Added six new partnerships and funds

• �� Released our first CR&S Report in December 2012 and seeking third-party assurance for our FY13 CR&S Report

• �� Upgraded our website, for launch in September 2013

• �� Revised our Code of Conduct to encompass a broader range of issues, reflecting third party advice and industry best practice

• �� Delivered training on our revised Code of Conduct to all employees

• �� Completed an initial review of our supply chain to determine key expense categories and vendors.

• �� Undertake a review of our supplier chain to determine opportunities to influence CR&S outcomes.

The Environment

Our objective

To actively work to reduce our consumption of natural resources.

What we planned to do in FY13

• �� Reduce energy usage by 4% and water usage by 2.5% in our retail funds

• �� Establish energy and water performance targets for all office assets

• �� Complete NABERS Energy ratings on all eligible retail centres

• �� Improve the coverage and robustness of our waste recycling data

• �� Measure the carbon emissions associated with our business travel.

What we did in FY13

• �� Reduced energy usage in our managed retail properties by around 2% and water by around 3.5%

• �� Established energy performance targets for the majority of office assets

• �� Completed NABERS Energy and Water ratings on all eligible retail centres

• �� Extended the coverage of our waste data to the majority of retail assets

• �� Tracked our carbon emissions associated with our business travel.

Charter Hall / Securityholder Review 2013 / 21

Our new Sydney office location from February 2014 – No.1 Martin Place, Sydney NSW

==> picture [403 x 174] intentionally omitted <==

Our Workplace

Our objective

To create a safe and engaging work environment that attracts, develops, retains and supports high performing people.

What we planned to do in FY13

• �� Increase the percentage of women in leadership and business related roles by 2015

• �� Promote a culture that values diversity, inclusion and flexibility

• �� Provide a clear strategic direction to our employees

• �� Continue to evolve our organisational structure to support our strategy

• �� Provide access to development opportunities

• �� Implement effective systems and processes for people to deliver results

• �� Evaluate performance against an improved balanced scorecard aligned with our strategic objectives

• �� Create a work/life balance working group to focus on providing a flexible workplace

• �� Invigorate our employees by providing a greener, healthier and more productive workplace for our head office during 2013

• �� Establish a Group wide occupational health and safety (OHS) strategy and training plan to enhance our OHS capability

What we did in FY13

• �� Increased the percentage of women in senior management roles

• �� Defined and aligned Charter Hall’s vision, values and strategy with a new way of working

• �� Initiated a personal development plan for all employees with a defined learning and development budget for every employee

• �� Implemented an online balanced scorecard with improved transparency and reporting

• �� Developed flexible work guidelines and designed a suite of benefits to support this, which will be rolled out in FY14

• �� Aligned our retail safety management system with AS4801 and applied for third-party certification

• �� Recorded zero serious incidents and no lost time incidents involving Charter Hall employees or contractors in FY13

• �� Signed the lease for our new premises and committed to a new way of working from February 2014.

• �� Reduce voluntary turnover to 14% by 2014.

The Community

Our objective

To make a positive contribution to the communities where we work and operate.

What we planned to do in FY13

• �� Improve the success of Charter Hall’s volunteer program by increasing the number of volunteer opportunities available to our employees

• �� Increase employee participation in our workplace giving program

• �� Improve our internal communications and employee awareness of community programs

• �� Further evolve our community involvement strategy for our retail centres.

What we did in FY13

• �� Evolved Charter Hall’s volunteer program to support both team and individual events in order to increase participation

• �� Developed our partnership approach with three key charities, establishing volunteering opportunities for our employees

• �� Supported our local communities by providing space and support to community groups local to our retail centres.

22

The Board

==> picture [90 x 134] intentionally omitted <==

----- Start of picture text -----

Kerry Roxburgh
----- End of picture text -----

==> picture [90 x 134] intentionally omitted <==

----- Start of picture text -----

Anne Brennan
----- End of picture text -----

Kerry Roxburgh Chairman

Kerry joined the Charter Hall Board in August 2005, becoming Chairman in October 2005. He is also Chair of the Nomination Committee, a member of the Audit, Risk and Compliance Committee, and a member of the Investment Committee. Kerry has 50 years of business experience, most notably as co-founder of E*TRADE Australia (where he was CEO and Chairman) and Executive Director of the Hong Kong Bank of Australia Group (where he was Head of Corporate Finance and Executive Chairman of James Capel Australia). Prior to this, he practised as a Chartered Accountant. Kerry is currently the Lead Independent Non-Executive Director of Ramsay Health Care Ltd, and a Non-Executive Director of both the Medical Indemnity Protection Society Group and MIPS Insurance. He is the Chairman of Tyro Payments and of Tasman Cargo Airlines and he is Deputy Chairman of Marshall Investments. Kerry is also a Member of the Advisory Boards of AON Insurance and Built Pty Ltd. Kerry is a Practitioner Member of the Stockbrokers Association of Australia, and holds a Bachelor of Commerce degree, as well as an MBA.

Anne Brennan

Non-Executive Director

Anne joined the Charter Hall Board in October 2010, is currently the Chair of the Remuneration and Human Resources Committee, and is a member of the Audit, Risk and Compliance Committee. With over 25 years’ professional experience, Anne has held a variety of senior management and executive roles in large corporates and professional services firms. Anne’s executive roles included chief financial officer of CSR and finance director of the Coates Group. Prior to this she was a partner in KPMG, Arthur Andersen and Ernst & Young. Anne is currently a Director of Argo Investments Ltd, Echo Entertainment Ltd, Myer Holdings Ltd and Nufarm Ltd. Anne holds a Bachelor of Commerce (Hons), is a Fellow of the Institute of Chartered Accountants Australia and a Fellow of the AICD.

==> picture [90 x 134] intentionally omitted <==

----- Start of picture text -----

David Deverall
----- End of picture text -----

==> picture [90 x 134] intentionally omitted <==

----- Start of picture text -----

Philip Garling
----- End of picture text -----

David Deverall

Non-Executive Director

David joined the Charter Hall Board in May 2012, is Chair of the Audit, Risk and Compliance Committee and a member of the Nominations Committee. He has extensive experience in financial services, funds management and strategy, having held previous positions as CEO of Perpetual Ltd, Chairman and Director of The Financial Services Council, Group Head of Funds Management and Head of Strategy at Macquarie Group. David is currently CEO of Hunter Hall International Ltd, Australia’s leading ethical funds management company. David holds an MBA (Stanford) and a Bachelor of Engineering (Sydney).

Philip Garling

Non-Executive Director

Philip joined the Board of the Charter Hall Group on 25 February 2013. Philip has over 35 years’ experience in property and infrastructure, development, operations and asset and investment management. Philip’s executive career included nine years as Global Head of Infrastructure at AMP Capital Investors and 22 years at Lend Lease Corporation, including five years as CEO of Lend Lease Capital Services. Philip holds a Bachelor of Building from the University of NSW, and has completed the Advanced Management Program at the Australian Institute of Management, and the Advanced Diploma at the Australian Institute of Company Directors. He is a Fellow of the Australian Institute of Company Directors, the Australian Institute of Building and the Institute of Engineers, Australia. Other current listed company directorships are Australian Renewable Fuels Limited (Chair); Downer EDI Limited; Networks NSW; Waterpolo Australia. Former listed company directorships in the last three years were at DUET Group.

Peter Kahan

Non-Executive Director

Peter joined the Charter Hall Board in October 2009, following an investment in Charter Hall by The Gandel Group. Peter is the Deputy Chairman of Gandel and has approximately 20 years of property and funds management experience. He joined Gandel in 1994, became the Group’s Finance Director in 2001 and was

Charter Hall / Securityholder Review 2013 / 23

==> picture [90 x 134] intentionally omitted <==

----- Start of picture text -----

Peter Kahan
----- End of picture text -----

==> picture [90 x 134] intentionally omitted <==

----- Start of picture text -----

Colin McGowan
----- End of picture text -----

CEO from 2007 to 2012. Prior to this, Peter worked as a Chartered Accountant and held senior financial roles in various industry sectors. Peter holds Bachelor of Commerce and Bachelor of Accountancy degrees and is a member of the Institute of Chartered Accountants Australia and the AICD. Peter is a member of the Remuneration and Human Resources Committee and the Nomination Committee.

Colin McGowan

Non-Executive Director

Colin joined the Charter Hall Board in April 2005, and is presently the Chair of the Charter Hall Property Trust. He is also a member of the Group’s Valuation Committee, the Remuneration and Human Resources Committee, the Nomination Committee, and the Group’s Investment Committee. Colin was formerly CEO of the listed AMP Diversified Property Trust, Executive Vice President of Bankers Trust (AUS), founding Fund Manager of the BT Property Trust and founding Fund Manager of Advance Property Fund. Colin is a qualified valuer, a Fellow of the Australian Property Institute, and a Senior Fellow of Finsia.

David Harrison

Joint Managing Director

As Charter Hall Group’s Joint Managing Director, with over 27 years of property industry experience, David is responsible for all aspects of the Charter Hall business, with specific focus on Investment Management, Corporate Transactions and Property Investment activities. David also substantially contributes to investment origination, capital raisings and structuring of transactions. David is directly responsible for overseeing the operation of the Investment Management Divisions, including the Listed REITs, Wholesale Unlisted and Retail Unlisted Divisions, together with Investor Relations. The Joint Managing Directors share responsibility for Corporate Finance, Legal/Company Secretariat and People, as well as Group Finance, Treasury and Capital Management via the Chief Financial Officer, Head of People and General Counsel.

In addition to his responsibilities on the various unlisted Fund Boards and Investment Committees, David is an Executive Director on the Responsible Entity Board of Charter Hall Retail REIT and various Wholesale Partnerships.

==> picture [90 x 134] intentionally omitted <==

----- Start of picture text -----

David Harrison
----- End of picture text -----

==> picture [90 x 134] intentionally omitted <==

----- Start of picture text -----

David Southon
----- End of picture text -----

David has a wealth of experience in the Australian commercial property market and has jointly overseen the growth of the Charter Hall Group from $500 million to $10 billion of assets under management in seven years. David has been principally responsible for transactions exceeding $15 billion of commercial, retail and industrial property assets across all property sectors over the past 20 years.

David holds a Bachelor of Business degree (Land Economy) from the University of Western Sydney, is a Fellow Member of the Australian Property Institute (FAPI) and holds a Graduate Diploma in Applied Finance from the Securities Institute of Australia.

David Southon

Joint Managing Director

David is a co-founder of the Charter Hall Group and one of its Joint Managing Directors, with over 27 years of property industry experience. Together, and in conjunction with the CHC Executive Committee and the Board, the Joint Managing Directors are responsible for the formulation and implementation of the Group’s strategy. David is directly responsible for overseeing the operation of the Property Services Divisions, including Development; Leasing; Asset Management; Property Management; Marketing and Communications, as well as strategic involvement in project origination and direction. Together with the relevant Divisional Heads, the Joint Managing Directors share responsibility for Investor Relations, Corporate Finance, General Counsel and People, as well as working closely with the Chief Financial Officer in relation to Group Finance, Treasury and Capital Management.

In addition, David is an Executive Director on the Board of the Responsible Entity for the Charter Hall Direct Funds, a Non-Executive Director on the Board of Commercial Industrial Property (CIP), member of the Charter Hall Diversity Committee, and a member of the Investment Committees of Charter Hall Opportunity Funds 4 and 5.

David is a member of the Board of Advisers NSW for the Property Industry Foundation (PIF). David holds a Bachelor of Business degree (Land Economy) and is a Fellow Member of the Australian Property Institute (FAPI).

24

Investor Information

How do I invest in Charter Hall?

Charter Hall Group securities are listed on the Australian Securities Exchange (ASX:CHC). Securityholders will need to use the services of a stockbroker or an online broking facility to invest in Charter Hall.

Where can I find more information about Charter Hall?

Charter Hall’s website, www.charterhall.com.au, contains extensive information on our Board and management team, corporate governance, sustainability, our property portfolio and all investor communications including distribution and tax information, and reports and presentations. The website also provides information on the broader Charter Hall Group including other managed funds available for investment. You can also register your details on our website to receive ASX announcements by an email alert as they are being released. To register your details, please visit our website at www.charterhall.com.au and subscribe to updates.

Can I receive my distribution via direct credit rather than cheque?

Direct credit enables you to receive automatic payment of your distributions quickly and securely. You can nominate any Australian or New Zealand bank, building society, credit union or cash management account for direct payment by downloading a direct credit form using the Investor Login facility and sending it to Link Market Services. On the day of payment, you will be sent a statement via post or email confirming that the payment has been made and setting out details of the payment. If you do not nominate a financial institution, your distribution will be paid by cheque.

Can I reinvest my distribution?

The Distribution Reinvestment Plan (DRP) allows you to have your distributions reinvested in additional securities in Charter Hall, rather than having your distributions paid to you. If you would like to participate in the DRP, you can do so online using the Investor Login facility available on our website, or you can complete a DRP Application Form available from our registry.

Can I receive my annual report electronically?

Charter Hall provides its annual report in both PDF and online formats (HTML). Using your Investor login, you can elect to receive notification that this report is available online.

==> picture [596 x 320] intentionally omitted <==

----- Start of picture text -----

Leasing agent and
tenant representative
‘sneak preview’ event
at 171 Collins Street,
Melbourne Vic.
----- End of picture text -----

Charter Hall / Securityholder Review 2013 / 25

Do I need to supply my Tax File Number?

You are not required by law to supply your Tax File Number (TFN) or exemption. However, if you do not provide these details, withholding tax may be deducted at the highest marginal rate from your distributions. If you wish to provide your TFN or exemption, please contact Link Market Services on 1300 303 063 or your sponsoring broker. You can also update your details directly online at www.charterhall.com.au using the Investor Login facility to download the TFN form.

How do I complete my annual tax return for the distributions I receive from Charter Hall?

At the end of each financial year, we issue securityholders with an Annual Taxation Statement. This statement includes information required to complete your tax return. The distributions paid in February and August are required to be included in your tax return for the financial year the income was earned, that is, the distribution income paid in August 2013 should be included in your 2013 financial year tax return.

How do I make a complaint?

Securityholders wishing to lodge a complaint should do so in writing and forward it to the Compliance Manager, Charter Hall Group at the address shown in the Directory. In the event that a complaint cannot be resolved within a reasonable time frame (usually 45 days) or you are not satisfied with our response, you can seek assistance from the Financial Ombudsman Service (FOS), an independent dispute resolution scheme available to those investors who have first raised their complaint with us and who remain dissatisfied. FOS’s contact details are below:

Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001

Tel: 1300 780 808 Fax: +61 3 9613 6399 Email: info@fos.org.au Website: www.fos.org.au

Contact Details

Registry

To access information on your holding or update/change your details including name, address, Tax File Number, payment instructions and document requests, contact:

Link Market Services Locked Bag A14 Sydney South NSW 1235

Tel: 1300 303 063 (within Australia) +61 2 8280 7134 (outside Australia)

Fax: +61 2 9287 0303 charterhall.reits@linkmarketservices.com.au www.linkmarketservices.com.au

Investor relations

All other enquiries related to Charter Hall Group can be directed to Investor Relations: Charter Hall Group GPO Box 2704 Sydney NSW 2001

Tel: 1300 365 585 (local call cost) + 612 8908 4000 (outside Australia) Fax: +612 8908 4040 reits@charterhall.com.au

www.charterhall.com.au