CHARTER HALL GROUP — Capital/Financing Update 2008

Jan 23, 2008

ASX ANNOUNCEMENT

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CHARTER HALL GROUP ASSET AND DEBT PROFILE

Thursday, 24 January 2008

Increase in assets under management

Charter Hall Group (CHC) is pleased to advise that assets under management have risen 30% to $3.66 billion over the last 6 months to 31 December 2007. Assets under management have grown across all managed funds, as outlined in table 1.0 and 1.3.

Table 1.0 - Increase in funds under management

Funds under management ($m)	30-Jun-07	31-Dec-07	Increase
Core funds 336 642 306 Core plus funds 1,784 2,225 441 Opportunity funds 692 797 105 Total funds under management 2,812 3,664 852

Note: Funds under management calculated using completion value of assets

Joint Managing Director, David Harrison said, “We are very pleased with the continued support Charter Hall has received from investors and note that wholesale equity investors own approximately 80% of external assets under management with the balance owned by retail investors”.

Joint Managing Director, David Southon added, “Charter Hall raised $300 million in equity commitments for our latest opportunistic fund last May and have allocated 34% of this capital across three projects. The Group’s access to equity, strong in-house development and value-add credentials provide it with an ideal opportunity to explore new opportunities that may become available.”

Charter Hall Limited

Level 11 | 333 George Street | SYDNEY | NSW 2000 GPO Box 2704 | SYDNEY NSW 2001 Ph: +61 2 8908 4000 | Fax: +61 2 8908 4040 www.charterhall.com.au

ABN 57 113 531 150 Charter Hall Funds Management Limited ABN 31 082 991 786 Sydney Brisbane Perth Auckland

ASX ANNOUNCEMENT

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Debt Profile

Given recent events in the listed property sector, Charter Hall provides below a summary of the debt profile of the Group and those funds under management that have direct debt facilities.

Table 1.1 - Debt profile summary at 31 December 2007

Entity	Drawn balance	CHC co- investment	Tangible assets	Gearing	Remaining debt duration	Interest rate hedged %	Average hedged term	Average hedged rate
Charter Hall Group $252m 100% $723m 35% 2.5 yrs 79% 6.6 yrs 7.5% Core Plus Office Fund $481m 20% $1,020m 47% 2.4 yrs 82% 6.2 yrs 7.4% Core Plus Industrial Fund $107m 25% $276m 39% 2.4 yrs 96% 8.1 yrs 7.4% Diversified Property Fund $134m 14% $233m 57% 2.9 yrs 100% 6.1 yrs 7.7% CHOF 4 $29m 3% $90m 32% 1.3 yrs 40% 1.5 yrs 8.1% CHOF 5 $4m 15% $8m 53% 2.8 yrs 0% N/a N/a

Note: Charter Hall Group drawn debt balance is calculated as drawn debt minus Group cash balance plus Charter Hall distribution payable. Charter Hall Group tangible assets includes a $40 million investment in CIP and excludes cash balance (net of distribution payable). Asset and Debt balance is shown as at 31 December. Debt duration and interest rate hedges reflect current position.

Based on unaudited accounts, Charter Hall Group has current gearing of 35%[1] . The Group’s ‘look through[2] ’ gearing is 46% incorporating Charter Hall’s co-investments in the unlisted funds it manages and the underlying gearing of these funds. We note that all managed fund debt facilities have no recourse to investors. Once wholesale equity is received for the Core Plus Retail Fund which is currently seeded on balance sheet, the listed entity and look through gearing ratios will reduce further.

Table 1.2 - Look through gearing at 31 December 2007

Look through gearing
Cash	$11m
Other direct assets	$548m
Co-investment assets	$308m
Total gross assets	$868m
Direct debt (net of cash)	$252m
Co-investment debt	$142m
Total gross debt	$395m
Look through gearing	46.1%

• 1 Debt to tangible assets, both net of cash. Cash balance reduced by distribution payable in February. Gearing calculation includes investment assets and borrowings only. Other assets and liabilities (predominantly debtors and creditors) have been excluded.

• 2 Look through gearing calculated as follows: Charter Hall direct net debt plus the debt in funds in which the Group co-invests multiplied by the co-investment percentage gives Charter Hall’s total grossed up debt. This grossed up debt is divided by grossed up assets (net of cash). Grossed up assets is calculated as direct assets (excluding co-investment stakes) plus assets in funds in which the Group coinvests multiplied by the co-investment percentage. The tables on the following page provide more information.

Charter Hall Limited

Level 11 | 333 George Street | SYDNEY NSW 2000 GPO Box 2704 | SYDNEY NSW 2001 Ph: +61 2 8908 4000 | Fax: +61 2 8908 4040 www.charterhall.com.au

ABN 57 113 531 150

Charter Hall Funds Management Limited ABN 31 082 991 786 Sydney Brisbane Perth Auckland

ASX ANNOUNCEMENT

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Charter Hall Group debt is sourced from National Australia Bank through a 3 year evergreen facility. This facility currently has a remaining term of 2.5 years. Charter Hall Group has hedged 79% of its net debt[3] exposure of $252 million with interest rates fixed for on average 6.6 years. The average fixed interest rate is 7.5% p.a., including line fee and margin. In addition, the weighted average duration for Charter Hall Group and all managed funds’ debt facilities is 2.5 years with the interest rate locked in for an average of 6.3 years.

Charter Hall has an investment in 5 of the funds it manages that have direct borrowings with recourse only to the relevant fund assets as outlined in the diagram below. The co-investment Charter Hall has in each managed fund is shown below as a percentage.

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Charter Hall
$723m Assets
$252m Debt
(both net of cash)
3% 15% 20% 25% 14%
CPIF DPF
CHOF 4 CHOF 5 CPOF
$276m $233m
$90m assets $8m assets $1.0bn assets
assets assets
Debt $29m Debt $4m Debt $481m Debt $107m Debt $134m
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A more detailed overview of the individual funds is provided below. Charter Hall Property Trust is now invested across a diversified portfolio of direct assets and co-investments in managed funds which predominantly comprise Core Plus funds with a weighted average lease term to expiry of 9 years, substantially leased to high calibre tenants as outlined below.

3 Drawn debt balance reduced by cash. Cash balance used to calculate ratios in this announcement has been reduced by distribution payable in February

Charter Hall Limited ABN 57 113 531 150 Charter Hall Funds Management Limited ABN 31 082 991 786 Sydney Brisbane Perth Auckland

Level 11 | 333 George Street | SYDNEY NSW 2000 GPO Box 2704 | SYDNEY NSW 2001 Ph: +61 2 8908 4000 | Fax: +61 2 8908 4040 www.charterhall.com.au

ASX ANNOUNCEMENT

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Core Plus Office Fund (CPOF)

CPOF is an unlisted, open ended, wholesale fund that currently owns 14 properties across Australia with an asset value of $1.02 billion at 31 December 2007. The portfolio has a weighted average lease expiry (WALE) of 9 years. The portfolio is leased to 139 tenants with current vacancy of approximately 1.2%. More than 50% of CPOF rental income is generated by Telstra, AMEX, St George Bank, BHP Billiton and Monash University.

CPOF sources all of its debt from bank facilities provided by NAB, CBA and St George Bank. The majority of debt is provided under a NAB negative pledge facility relating to 10 of the 14 CPOF owned properties. This facility comprises a 3 year evergreen facility and a 364 day revolving facility to accommodate acquisitions. In addition, St George Bank and Commonwealth Bank provide property specific debt secured with mortgages relating to the remaining 4 CPOF owned assets. None of the debt finance provided to CPOF has recourse to the equity investors, including Charter Hall Group. The average remaining facility term is 2.4 years. 82% of interest has been fixed for on average 6.2 years. The fund is currently geared at 47%.

Core Plus Industrial Fund (CPIF)

CPIF is an unlisted open ended wholesale fund that owns 11 properties across Australia with a value of $276 million, rising to $300 million upon completion of the Perth Coles Group facility. The portfolio has a weighted average lease expiry (WALE) of 11 years. Vacancy is currently 0.5% with the portfolio leased to 25 tenants. More than 75% of CPIF rental income is generated from Coles Group, subsidiaries of Toll Holdings and Wesfarmers, Woolworths, Caterpillar and Myer Group.

CPIF has a negative pledge debt facility provided by NAB currently drawn to $57.5 million. This facility comprises a 3 year evergreen facility and a 364 day revolving facility to accommodate acquisitions. In addition, NAB also provides finance secured by one separate property, leased to Coles for 20 years. None of the debt finance provided to CPIF has recourse to the equity investors, including Charter Hall. The average remaining term across facilities is 2.4 years. 96% of interest exposure has been fixed for 8.1 years on average. CPIF is currently geared at 39%.

Charter Hall Limited

Level 11 | 333 George Street | SYDNEY NSW 2000 GPO Box 2704 | SYDNEY NSW 2001 Ph: +61 2 8908 4000 | Fax: +61 2 8908 4040 www.charterhall.com.au

ABN 57 113 531 150 Charter Hall Funds Management Limited ABN 31 082 991 786 Sydney Brisbane Perth Auckland

ASX ANNOUNCEMENT

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Diversified Property Fund (DPF)

DPF is an unlisted open ended diversified fund for retail and high net worth investors that owns 14 properties across Australia leased to 38 tenants with a portfolio value of $233 million. The portfolio has a weighted average lease expiry of 9 years. The portfolio is currently 100% leased with the top 10 tenants representing over 50% of DPF rental income generated from Fosters Group, Coles Group and Central Queensland University.

DPF’s debt finance has been sourced from NAB and AXA. All borrowings are secured individually against specific properties on a non recourse basis and hence none of the debt finance provided to DPF has recourse to equity investors, including Charter Hall Group. The NAB debt facility has a 3 year term and the AXA facilities have a term of 5 years. The average remaining term across facilities is 2.9 years. 100% of interest exposure has been fixed for on average 6.1 years. DPF is currently geared at 57%

Charter Hall Opportunistic Funds (CHOF 4 & 5)

The CHOFs are closed end opportunistic wholesale funds with a term of up to 7 years that invest in projects expected to deliver a minimum IRR of 20%. Charter Hall currently has 8 projects under management in CHOF 4 and CHOF 5. Development finance in CHOFs is obtained on a project by project basis with no cross collateralisation or recourse to investors. In addition, Bank of Scotland provides a facility that is secured against unallocated, undrawn equity commitments of the Fund. Each project is able to be geared up to a maximum of 65% of its projected completion value as determined by an independent valuation. Current gearing across CHOF 4 and CHOF 5 is 32% and 53% respectively. The interest exposure is typically substantially hedged on development finance for periods ranging from 1 to 2 years consistent with the development periods. Given the nature of the equity drawdowns, Charter Hall Group expects its maximum investment drawn to these funds to be no more than $35 million combined, even though total equity commitments are $5 million and $45 million to CHOF 4 and 5 respectively.

Charter Hall Limited

Level 11 | 333 George Street | SYDNEY NSW 2000

GPO Box 2704 | SYDNEY NSW 2001 Ph: +61 2 8908 4000 | Fax: +61 2 8908 4040 www.charterhall.com.au

ABN 57 113 531 150 Charter Hall Funds Management Limited ABN 31 082 991 786 Sydney Brisbane Perth Auckland

ASX ANNOUNCEMENT

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Reconciliation of Assets under Management

Table 1.1 in the debt profile analysis shows assets totalling $2.35 billion. As disclosed in this announcement, the Group currently has $3.66 billion in assets under management. Current assets under management also includes those funds Charter Hall has no co-investment in (Charter Hall Investment Funds or CHIFs and Property Development Portfolio 3 or PDP 3) and also the Charter Hall Umbrella Fund, which has no direct borrowings. In addition, current assets under management are calculated using the completion value of assets. A reconciliation of the assets disclosed in table 1.0 and 1.1 is provided in the table below.

Table 1.3 – Assets under management reconciliation

	Assets at 31 Dec 2007	Completion value of assets	Notes
Charter Hall Group direct assets (includes CPRF) $486m $598m 1 Charter Hall Group investments $237m N/a 2 Core Plus Office Fund $1,020m $1,414m 3 Core Plus Industrial Fund $276m $304m 4 Diversified Property Fund $233m $242m 5 CHOF 4 $90m $482m 6 CHOF 5 $8m $155m 7 Property Development Portfolio 3 N/a $160m 8 Charter Hall Umbrella Fund N/a $187m 9 CHIFs N/a $122m 10 Total $2,350m $3,664m

Notes: (1) Completion value higher as 4 retail properties held by Charter Hall have not yet completed (Redcliffe, Mentone, Ipswich and Rothwell). (2) The investments held by Charter Hall are not taken into account to calculate the value of assets under management to avoid double counting. (3) Completion value higher as CPOF has a number of properties under development (275 George Street, Northbank and Stirling Street) and it also includes 11 Exhibition St, Melbourne (unconditionally exchanged with settlement scheduled for late January). (4) and (5) Completion value is higher as Coles distribution centre is currently under development (75% owned by CPIF and 25% owned by DPF). (6) and (7) Completion value is used for developments where construction is underway. (8) Not included in left column as Charter Hall does not hold co-investment in PDP 3. (9) Not included in column at left as Charter Hall Umbrella Fund has no direct borrowings. (10) Not included in column at left as Charter Hall has no co-investment in CHIFs.

ENDS

Charter Hall Limited

ABN 57 113 531 150

Charter Hall Funds Management Limited

Level 11 | 333 George Street | SYDNEY NSW 2000 GPO Box 2704 | SYDNEY NSW 2001 Ph: +61 2 8908 4000 | Fax: +61 2 8908 4040 www.charterhall.com.au

ABN 31 082 991 786 Sydney Brisbane Perth Auckland

ASX ANNOUNCEMENT

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For more information contact Charter Hall Group:

David Southon

David Harrison

Joint Managing Director Joint Managing Director + 61 2 8908 4025 + 61 2 8908 4033 davids@charterhall.com.au davidh@charterhall.com.au

Jelte Bakker

Corporate Development Director + 61 2 8908 4035 jelteb@charterhall.com.au

About the Charter Hall Group:

Charter Hall Group is a property funds management and development company, based in Sydney with offices in Brisbane, Perth and Auckland. Established in 1991 and listed on the ASX in 2005 as a stapled security under the code CHC, Charter Hall Group combines Charter Hall Limited with Charter Hall Property Trust. The Group currently has funds under management of $3.66 billion. The Charter Hall Group has achieved a solid track record across its activities demonstrating a 10 year history of managing wholesale capital, making it one of Australia’s leading property fund managers. Charter Hall’s success has been underpinned by a highly skilled, incentivised and motivated management team with diverse expertise across property sectors and risk-return profiles.

Charter Hall Limited

ABN 57 113 531 150

Level 11 | 333 George Street | SYDNEY NSW 2000 GPO Box 2704 | SYDNEY NSW 2001 Ph: +61 2 8908 4000 | Fax: +61 2 8908 4040 www.charterhall.com.au

Charter Hall Funds Management Limited ABN 31 082 991 786 Sydney Brisbane Perth Auckland