CHARTER HALL GROUP — Capital/Financing Update 2011

Aug 2, 2011

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Charter Hall Office Management Limited ABN 75 006 765 206 AFS Licence No. 247075 as responsible entity of Charter Hall Office REIT

ASX/MEDIA ANNOUNCEMENT

CONTRACTS EXCHANGED TO SELL 100% OF US PORTFOLIO

Wednesday, 3 August 2011

Charter Hall Office REIT (ASX:CQO) (‘CQO’) today announces it has executed binding contracts to sell 100% of its interests in its United States (‘US’) portfolio for a gross price of US$1.71 billion to entities affiliated with Beacon Capital Partners, LLC (‘Beacon Capital’). The closing of the sale of each US property (or CQO's interest in each property) is subject to customary closing conditions including receipt of lender consents and other third party consents.

The gross sale price represents a US$35 million or a 2% premium to the 31 December 2010 book value of the properties of US$1.675 billion and is in line with the 30 June 2011 independent valuations. The gross sale price is subject to the costs and price adjustments referred below.

The US portfolio sale is consistent with CQO’s strategy first announced in December 2008 of reweighting its portfolio to Australia in order to provide unitholders with exposure to the stronger Australian office market, removing risks and high capital expenditure associated with the challenging US leasing environment, and to reduce the discount between the unit price and net tangible assets (NTA) value per unit.

The sale follows the conclusion of Phase 2 of the US asset sale process, undertaken by Bank of America Merrill Lynch (‘BoAML’), where a group of 13 shortlisted parties were invited to undertake due diligence and submit formal bids for the purchase of all or some of the US portfolio. CQO’s United States portfolio comprises 14 office assets listed in Annexure 1.

Charter Hall Office Management Limited’s (‘CHOML’) Independent Chairman, Roger Davis, said: “The sale of CQO’s entire interest in the US portfolio to one party in an increasingly volatile global economic market is seen as a compelling risk adjusted outcome for unitholders.

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“Today’s announcement follows the completion of the five month comprehensive and competitive process undertaken by CHOML with assistance from BoAML which sought interest from 83 parties for all or part of CQO's US portfolio. Following entering into 47 non-disclosure agreements with interested parties, 28 indicative bids were received in Phase 1 and 13 bidders were invited into Phase 2. After careful consideration of all bids we believe Beacon Capital’s offer is the best offer for CQO unitholders following this robust process,” Mr Davis added.

CQO’s Chief Executive Officer, Adrian Taylor, said the sale is an important milestone in CQO’s strategy of reweighting to Australia and repositioning it as an Australian focused REIT.

“Following completion of the sales, CQO's portfolio will constitute high quality, well-leased, Australian investment-grade office assets located in capital cities and mature in-fill markets with a book value as at 30 June 2011 of $1.9 billion. Looking forward, we will remain focused on selective asset acquisition and portfolio composition strategies to maximise the income and capital growth of the Australian portfolio and will maintain conservative gearing of 25% - 35%,” Mr Taylor added.

The indicative net sale proceeds will be approximately US$575[1 ] million following the deduction of transaction costs and adjustments and the repayment or transfer of the debt principal. Estimated transaction costs and adjustments as a percentage of the gross sales price include sale costs of 1.6%, transfer taxes and debt transfer or break costs of approximately 1.9% and market adjustments relating to committed leasing costs and committed capital expenditure post settlement of 3.3%.

Since 31 December 2010 the Australian dollar has appreciated approximately 6% against the US dollar which would result in net Australian dollar proceeds of approximately $532 million[2] assuming an average exchange rate of AUD:USD1.08 at the closing of all sales. No foreign exchange hedging arrangements for the repatriation of the US dollar proceeds have been undertaken and accordingly the Australian dollar value of the proceeds will fluctuate with the prevailing AUD:USD exchange rate.

1 In determining the net sale proceeds, it is assumed that the conditions for closing are met for the entire US portfolio, thereby achieving closing of the sale of all properties. To the extent that conditions to closing are not satisfied for certain properties or all properties this may materially impact the proceeds received by CQO. In addition, various other factors may vary the quantum of the net sales proceeds, including movements in working capital, timing of properties sold, debt transfer or termination costs. The AUD:USD exchange rate assumed is 1.08. Because satisfaction of these assumptions is not within the control of CHOML, CHOML is not in a position to give, and does not give, any assurance as to the quantum or timing of receipt of net sale proceeds.

2 The expected pro rata distribution to CQO unitholders of AUD532 million (Distribution) is based on two key assumptions: (i) that the AUD:USD exchange rate does not exceed $1.08; and (ii) the closing conditions for the sale of all of the US properties are satisfied allowing completion for all assets to take place. Because satisfaction of these assumptions is not within the control of CHOML, CHOML is not in a position to give, and does not give, any assurance as to the quantum or timing of any Distribution.

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As previously announced, the Board expects to provide a return of capital via a pro-rata special distribution to unitholders of the net sale proceeds noted above. The final amount will be influenced by items including the prevailing foreign exchange rate at the time of repatriation of the proceeds of sale, and is subject to lender consent. CQO’s Australian only portfolio would have indicative gearing of 29%[3] in line with leading A-REIT market peers (refer Annexure 2).

Closing of the sales will occur on an individual property basis when the conditions precedent for closing of the sale for each property have been satisfied. Subject to the satisfaction of all conditions precedent, closing of the sale of each of the properties is expected to take place between October 2011 and May 2012, which the Board will have regard to in determining the timing and quantum of the pro-rata special distribution(s).

For further information please contact:

Adrian Taylor

Jill Rikard-Bell

Chief Executive Officer Chief Operating Officer Charter Hall Office REIT Charter Hall Office REIT Tel: +61 2 8295 1024 Tel: +61 2 8295 1013 - adrian.taylor@charterhall.com.au jill.rikard bell@charterhall.com.au

Investor enquiries

Media enquiries

Kylie Ramsden Rachel Mornington-West Head of Listed Investor Relations Senior Communications Manager Charter Hall Charter Hall Tel: +61 2 8295 1016 Tel: +61 2 8908 4093 kylie.ramsden@charterhall.com.au rachelm@charterhall.com.au

About Charter Hall Office REIT

Charter Hall Office REIT is a leading listed real estate investment trust focused on investing in high grade office buildings predominantly located in major business districts across Australia and the United States. A customer focused approach to asset management drives the leasing and refurbishment initiatives with a view to maximising returns of the underlying assets.

Charter Hall Office REIT is managed by Charter Hall Group (ASX:CHC) is one of Australia’s leading fully integrated property groups, with 20 years’ experience managing high quality property on behalf of institutional, wholesale and

3 Gearing is calculated as the ratio of debt net of cash to gross assets net of cash and excludes the Berlin asset and associated property level debt facility

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retail clients. Charter Hall has over $10 billion of funds under management across the office, retail, industrial and residential sectors. The Group has offices in Sydney, Melbourne, Brisbane, Adelaide, Perth, Warsaw and Chicago.

The Group’s success is underpinned by a highly skilled and motivated team with diverse expertise across property sectors and risk-return profiles. Sustainability is a key element of its business approach and by ensuring its actions are commercially sound and make a difference to its people, customers and the environment, Charter Hall can make a positive impact for its investors, the community and the Group.

For further information on Charter Hall Group and Charter Hall Office REIT go to www.charterhall.com.au

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Annexure 1 - United States portfolio

Asset	Location	Joint Venture Partner
Wells Fargo Center	Denver, CO	MPG Office Trust, Inc.
One California Plaza	Los Angeles, CA	MPG Office Trust, Inc.
San Diego Tech Center	San Diego, CA	MPG Office Trust, Inc.
Cerritos Corporate Center	Cerritos, CA	MPG Office Trust, Inc.
Stadium Gateway	Anaheim, CA	MPG Office Trust, Inc.
1&3 Christina Center	Wilmington, DE	Brandywine Operating Partnership, L.P.
SunTrust Financial Centre	Tampa, FL	Stiles Corporation
Chase Tower	Indianapolis, IN	n/a - Wholly Owned
Promenade II	Atlanta, GA	n/a - Wholly Owned
SunTrust Center	Orlando, FL	n/a - Wholly Owned
700 Thirteenth Street	Washington D.C.	n/a - Wholly Owned
30 Independence Boulevard	New Jersey, NJ	n/a - Wholly Owned
745 Atlantic Avenue	Boston, MA	n/a - Wholly Owned
Pasadena Towers	Pasadena, CA	n/a - Wholly Owned

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Annexure 2 – Pro-forma 30 June 2011 balance sheet

The table below presents the pro-forma balance sheet of the Australian operations presented on a “look-through” basis on CQO’s draft unaudited 30 June 2011 position.

	A$'m
Cash and other assets	124.6
Investment Properties	1,842.8
Total Assets	1,967.4
Interest Bearing Loans	624.0
Other Liabilities	48.7
Total Liabilities	672.7
Proforma Net Assets (NTA)	1,294.7
Units on issue ('m)	493.3
NTA per unit	$2.62
Gearing4	29.4%

The following adjustments have been made to the draft 30 June 2011 balance sheet position:

• removal of all asset and liability balances associated the European and United States operations;

• CMBS debt commitment reduced due to application of restricted cash deposits and net derivative receipts; and

• cash reduced to reflect the payment of the June 2011 distribution.

4 Gearing is calculated as the ratio of debt net of cash to gross assets net of cash and excludes the Berlin asset and associated property level debt facility

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Annexure 3 - Estimated Net Proceeds Summary

		% of gross
CQO share	US$'m	sale price
Gross Sale price	1,710.0
Existing debt repaid/transferred	(1,024.2)
Otherassets	25.2
Net USEquity	711.0
Costs
Estimated selling costs	(27.6)	(1.6%)
Estimated debt and transfer costs and taxes	(32.9)	(1.9%)
	(60.5)	(3.5%)
Adjustments for committed capital expenditure and leasing costs
Estimate post settlement	(57.3)	(3.3%)
Estimate pre-settlement	(18.2)	(1.1%)
Estimated Net Sale Proceeds (USD$ millions)		575.0
Assumed AUD:USD exchange rate		1.08
Estimated Net Sale Proceeds (AUD$ millions)		532.4
Estimated Net Sale Proceeds (per unit)		$1.08