CHARTER HALL GROUP — Interim / Quarterly Report 2010

Dec 7, 2009

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ASX ANNOUNCEMENT

HALF YEAR FINANCIAL REPORT

8 December, 2009

Charter Hall Group (CHC) announces that it will be consolidating the 66% owned Core Plus Retail Fund (CPRF) in CHC’s 31 December 2009 half year financial accounts. In CHC’s FY09 financial accounts CPRF was not consolidated; it was accounted for as an investment held at fair value.

CHC’s non-consolidation of CPRF in FY09 was advised in the 2009 Annual Report (see extract attached) having regard to the advice of CHC’s auditors and legal advisors.

As disclosed in CHC’s 2009 Annual Report, CHC received a letter from ASIC, dated 6 October 2009, in which ASIC stated that it had identified some preliminary concerns with the non-consolidation of CPRF in the accounts of Charter Hall Property Trust (CHPT). CHPT has a 66% direct interest in CPRF.

Subsequent to ASIC’s 6 October 2009 preliminary letter, ASIC has finalised its view and discussions with ASIC have led to CHC’s decision to consolidate CPRF in CHC’s 31 December 2009 and future financial accounts whilstever CHC owns more than 50% of CPRF, and all other circumstances remain unchanged.

CHC’s consolidation of its investment in CPRF does not impact the operational control of CPRF by that fund’s Investment Committee. The CPRF Investment Committee will continue to make all investment and divestment, financing and capital expenditure decisions of CPRF.

No other managed funds where CHC has a co-investment are affected by the decision to consolidate CPRF.

CPRF currently has net debt[1] of $86m which is secured by the property assets in CPRF, totaling $245m. This debt has no recourse to the investors in CPRF, including CHPT. CPRF gearing is currently 35%.

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1 – Borrowings less cash on hand

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Absent any unforeseen circumstances, CHC estimates in the current financial year the following key financial impacts upon consolidation of CPRF:

• Statutory (AIFRS) Profit[2] and Underlying Profit[2] are not anticipated to be materially affected by the decision to consolidate.

• NTA per security decreases from $0.63[3] , as advised to securityholders on 11 November 2009 as part of the AGM update presentation, to $0.62 (see extract attached).

• Gearing[4] increases from 0% to 12.5%. Look through gearing remains unchanged at 37%.

CHC expects that its consolidated gearing will fall to 10% following the sale of the CHPT owned property located at 56 Anzac Street, Chullora NSW and to 3% following the contracted sale of the CPRF owned property Bluewater Plaza, Redcliffe QLD. These sales are expected to complete within the current financial year.

CHC reconfirms its previous FY10 Underlying EPS[1] and DPS guidance.

ENDS

For further media enquiries or to arrange a media interview, please contact:

David Harrison David Southon Joint Managing Director Joint Managing Director 0412 259 751 0418 479 155 davidh@charterhall.com.au davids@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 Melbourne, Brisbane, Perth, Adelaide 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 $3.24 billion. The Charter Hall Group has achieved a solid track record across its activities demonstrating a 17 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 and motivated management team with diverse expertise across property sectors and risk-return profiles. The Group has also recently been included in the S&P/ASX 200 A-REIT index.

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2 – After adjustment for minority interests. Underlying Profit excludes fair value adjustments, gains/losses on sale, non cash tax benefits and other non cash items.

3 – NTA per security reflects 30 September 2009 revaluations and excludes any estimated impact of 31 December 2009 revaluations of CHPT and CPRF. CHC is expected to report on 31 December 2009 NTA at its half year results announcement to be made in February 2010.

• 4 – Borrowings net of cash over total assets net of cash.

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EXTRACT FROM CHARTER HALL GROUP’S 2009 ANNUAL REPORT

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Core Plus Retail Fund Consolidation Note[1]

Charter Hall Property Trust (CHPT) currently holds a 65% interest in the Core Plus Retail Fund (CPRF).

In preparing Charter Hall’s Financial Report, Charter Hall formed the view that it was appropriate for CPRF to not be consolidated in the CHPT accounts, given CHPT does not control CPRF (see note 34 (f) in the Financial Report). Charter Hall received advice from PricewaterhouseCoopers (PwC) confirming the treatment of CPRF by CHPT was appropriate. Charter Hall’s Financial Report was prepared and signed off by PwC as auditors on this basis.

Charter Hall received a letter from ASIC, dated 6 October 2009, in which ASIC states that it has some preliminary concerns with the non-consolidation of CPRF in the accounts of CHPT.

ASIC is still making enquiries of CHPT and has not expressed a definitive view at this stage as to whether Charter Hall’s Financial Report, as lodged with the ASX on 25 August 2009 and included in this annual report, complies with the accounting standards regarding consolidation.

Although Charter Hall is of the view it is not appropriate to consolidate CPRF in the CHPT accounts, given ASIC’s concerns expressed to Charter Hall, we have prepared the below table with the key financials for the Group with CPRF consolidated in the CHPT accounts.

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Key Financials – 30 June 2009

Key Financials – 30 June 2009
	As reported in theAudited FinancialReport	With CPRFconsolidated inCHPT accounts2	Note
AIFRS Loss after tax	($82.2m)	($94.7m)	3
Underlying Earnings	$34.8m	$30.7m	4
Underlying EPS (cents per security)	7.61c	6.72c	5
DPS (cents per security)	4.96c	4.96c
Total Assets	$524m	$760m
Total Debt	$14m	$182m	6
Total Liabilities	$30m	$215m
Net Assets	$494m	$478m	7
NTA per security	$0.71	$0.69
Gearing	2%	23%	8
Look through gearing	42.8%	42.8%	9

Notes:

1. This Consolidation Note does not form part of the audited 30 June 2009 statutory financial report as lodged with ASX on 25 August 2009 and contained within this annual report.

2. The net assets and profit/loss on a consolidated basis exclude the minority interest (35%) in net assets and profit/loss.

3. The consolidated AIFRS loss has increased partly due to the fact that CPRF incurred an AIFRS loss of $14.1 million in relation to mark to market of derivatives.

4. Excludes AASB 140 fair value adjustments on investment property and financial assets, impairment of assets, gains on sale of investments and non cash AIFRS charges such as share based payments expense, amortisation and tax benefit. Underlying Earnings is $4.1 million lower if CPRF is consolidated in CHPT’s accounts mainly because of de-recognition of interest income recognised by CHPT at de-consolidation of CPRF. In addition certain management fees charged by CHPT to CPRF are eliminated.

5. Calculation excludes stapled securities issued under the Executive Loan Security Plan in accordance with AASB2 Share Based Payments.

6. The increase in total debt of $168 million if CPRF is consolidated in CHPT’s accounts relates to the debt balance of CPRF as at 30 June 2009. Note that this debt is secured by the assets in CPRF and there is no recourse to the investors in CPRF, including CHPT. Consolidation of CPRF by CHPT would have no impact on the compliance of either entity with debt facility covenants.

7. Charter Hall’s net asset balance is $16 million lower if CPRF is consolidated. This difference is mainly due to the fact that under consolidation, CHPT accounts for 65% of the net assets of CPRF rather than recognising a 65% investment at the 30 June 2009 CPRF unit price.

8. Gearing is calculated as total debt net of cash to total assets net of cash.

9. Look through gearing is calculated taking into account Charter Hall’s investment in each of the funds and the level of gearing in those funds. As such consolidating CPRF in CHPT’s accounts has no impact on the look through gearing for the Group. Note that look through gearing on a proforma basis (adjusted for the sale of 56 Anzac Street, Chullora and the sale of $30 million of CPOF units) reduces to 32.8%.