CHARTER HALL GROUP — Interim / Quarterly Report 2011

Feb 23, 2011

==> picture [147 x 76] intentionally omitted <==

Charter Hall Property Trust ARSN 113 339 147

Financial Report For the half year ended 31 December 2010

==> picture [118 x 162] intentionally omitted <==

Contents

	Page
Directors' report	3
Auditor’s independence declaration	5
Financial report	6
Directors’ declaration	16
Independent auditor’s review report	17

This financial report covers Charter Hall Property Trust as a consolidated entity consisting of Charter Hall Property Trust and its controlled entities. The financial report is presented in Australian dollars.

Charter Hall Funds Management Limited, the responsible entity of the Charter Hall Property Trust, is domiciled in Australia. The registered office and the principal place of business of the Responsible Entity is located at Level 11, 333 George Street, Sydney NSW 2000.

Charter Hall Property Trust Directors’ Report 31 December 2010

Directors’ Report

The directors of Charter Hall Funds Management Limited (CHFML) (ABN 31 082 991 786), as the responsible entity of Charter Hall Property Trust (Trust or CHPT) (ARSN: 113 339 147) present their report together with the consolidated financial report of the Consolidated entity for the half year ended 31 December 2010, and the Independent Auditor’s Review Report thereon. The Consolidated entity includes Charter Hall Property Trust and the entities it controlled at the end of, or during, the half year ended 31 December 2010.

The units in the Trust are ‘stapled’ to the shares in Charter Hall Limited (Company). These entities form the Charter Hall Group (the Group). A stapled security consists of one Trust unit and one Company share which cannot be traded separately. CHL and CHFML have identical Boards of Directors. The term Board hereafter should be read as references to both these Boards.

Directors

The Directors of the Responsible Entity in office at any time during the whole of the half year and up to the date of this report are:

K Roxburgh Chairman and Non-Executive Independent Director R Woodhouse Deputy Chairman and Non-Executive Independent Director A Brennan Non-Executive Independent Director (appointed 6 October 2010) P Derrington Non-Executive Independent Director (resigned 10 November 2010) G Fraser Non-Executive Independent Director C Fuchs Executive Director D Harrison Joint Managing Director P Kahan Non-Executive Director C McGowan Non-Executive Independent Director D Southon Joint Managing Director

Distributions

Distributions paid or declared by the Consolidated entity to unitholders were:

Distributions paid or declared by the Consolidated entity to unitholders were:
Interim distribution for the 31 December 2010 period of 8.00 cents (2009: 6.40 cents) per unit declared and payable 28 February 2011	2010 2009 $’000 $’000
	23,500 11,204

The actual distribution for 2009 was 1.60 cents per unit adjusted for the one for four unit consolidation the comparative is 6.40 cents per unit.

Review of operations

The consolidated net profit after tax for CHPT unitholders for the half year is $39.7 million (2009: $56.5 million loss). The total profit after tax including non-controlling interests is $42.3 million (2009: $67.9 million loss) and includes gains on sale of investments of $2.7 million (2009: loss of $5.8 million) and a fair value decrement of $0.4 million (2009: decrement of $49.0 million).

The Charter Hall Core Plus Retail Fund has changed its name and been launched as the Charter Hall Direct Retail Fund (DRF) and is now available for investment. With this fund currently consolidated by CHPT the equity raising gives an opportunity for the debt in the fund to be removed from the balance sheet.

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5.

3

Charter Hall Property Trust Directors’ Report

(continued)

Rounding of amounts

The Consolidated entity is of a kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission, relating to the “rounding off” of amounts in the directors’ report and financial report. Amounts in the directors’ report and financial report have been rounded to the nearest thousand dollars, in accordance with that class order, unless otherwise indicated.

This report is made in accordance with a resolution of directors.

==> picture [99 x 29] intentionally omitted <==

Kerry Roxburgh Chairman Sydney 24 February 2011

4

PricewaterhouseCoopers ABN 52 780 433 757

Auditor’s independence declaration

Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999

As lead auditor for the review of Charter Hall Property Trust for the half year ended 31 December 2010, I declare that, to the best of my knowledge and belief, there have been:

• (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (b) no contraventions of any applicable code of professional conduct in relation to the review.

• This declaration is in respect of Charter Hall Property Trust and the entities it controlled during the period.

==> picture [133 x 41] intentionally omitted <==

R Baker Partner PricewaterhouseCoopers

Sydney 24 February 2011

Liability limited by a scheme approved under Professional Standards Legislation

5

Charter Hall Property Trust Consolidated Income Statement For the half year ended 31 December 2010

Notes	31 December 2010 $’000 18,063 2,651 (2,577) (2,981) (3,322) 169 19,160 11,573 (764) (21) - 41,951 329 42,280 39,706 2,574 42,280 Cents per unit 8.00 13.56 12.50	31 December 2009 (restated) $’000
Revenue Gains / (losses) on sale of investments Investment property expenses Finance costs Other expenses Foreign exchange gains Share of net profit / (losses) of associates and joint ventures accounted for using the equity method Net gain on re-measurement of equity interests Fair value adjustments – property investments Fair value adjustments – derivatives Impairment of goodwill Profit / (loss) before income tax Income tax benefit Profit / (loss) for the half year Attributable to: Profit / (loss) attributable to unitholders of Charter Hall Property Trust Profit / (loss) attributable to non-controlling interests Profit / (loss) for the half year Earnings per unit for profit / (loss) attributable to the ordinary unitholders of the Trust: Distributions paid and payable Basic earnings per unit attributable to unitholders 2 Diluted earnings per unit attributable to unitholders 2		19,251 (5,801) (3,145) (3,657) (2,355) - (8,122) - (49,616) 583 (15,033)
		(67,895) -
		(67,895)
		(56,486) (11,409)
		(67,895)
		Cents per unit 6.40 (32.28) (29.92)

The 31 December 2009 earnings per stapled security have been recalculated for the restatement for change in accounting policy and the security consolidation.

The above consolidated income statement should be read in conjunction with the accompanying notes.

6

Charter Hall Property Trust Consolidated Statement of Comprehensive Income For the half year ended 31 December 2010

Notes	31 December 2010 $’000 42,280 (15,761) 26,519 23,957 2,562 26,519	31 December 2009 (restated) $’000
Profit / (loss) for the half year Other comprehensive income for the half year: Foreign currency reserve movement Total comprehensive loss for the half year Attributable to: Comprehensive income / (loss) attributable to unitholders of Charter Hall Property Trust Comprehensive income / (loss) attributable to non-controlling interests Total comprehensive income / (loss) for the half year		(67,895) -
		(67,895)
		(56,486) (11,409)
		(67,895)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

7

Charter Hall Property Trust Consolidated Balance Sheet As at 31 December 2010

Notes	31 December 2010 $’000 30 June 2010 (restated) $’000 1 July 2009 (restated) $’000
ASSETS Current assets Cash and cash equivalents Trade and other receivables Investment properties held for sale Total current assets Non-current assets Trade and other receivables Investments accounted for using the equity method 7 Financial assets at fair value through profit and loss 8 Investment property Deferred tax assets Derivative financial instruments Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Borrowings Total current liabilities Non-current liabilities Borrowings Deferred tax liabilities Derivative financial instruments Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Unitholders’ interest Non-controlling interest of Charter Hall Core Plus Retail Fund (DRF) Total equity	2,222 6,638 73 12,531 21,477 6,092 - 45,000 -
	14,753 73,115 6,165
	328,020 282,424 144,355 440,137 393,778 204,617 78,473 73,433 210,256 143,156 201,348 15,000 - 321 - 37 - -
	989,823 951,304 574,228
	1,004,576 1,024,419 580,393
	28,259 24,721 14,811 348 - -
	28,607 24,721 14,811
	68,506 91,228 14,220 - 661 - 58 4,754 -
	68,564 96,643 14,220
	97,171 121,364 29,031
	907,405 903,055 551,362
	934,458 927,018 627,925 (11,242) 4,627 - (63,013) (79,219) (76,563)
	860,203 852,426 551,362 47,202 50,629 -
	907,405 903,055 551,362

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

8

Charter Hall Property Trust Consolidated Statement of Changes in Equity For the half year ended 31 December 2010

Balance at 1 July 2009 (restated) Loss for the half year Total comprehensive income for the half year Transactions with equity holders in their capacity as equity holders: Non-controlling interest in DRF Contributions of equity, net of transaction costs Distribution provided for or paid Other Balance at 31 December 2009 (restated) Balance at 1 July 2010 Profit for the half year Foreign currency reserve movement Total comprehensive income for the half year Transactions with equity holders in their capacity as equity holders: Non-controlling interest in DRF Contributions of equity, net of transaction costs Distribution provided for or paid Transactions with non-controlling interests Balance at 31 December 2010		Attributable to owners of CHPT Contributed equity $’000 Reserves $’000 Retained earnings $’000 Total $’000 Non- controlling interest $’000 Total equity $’000
		627,925 - (76,563) 551,362 - 551,362 - - (56,486) (56,486) (11,409) (67,895)
		- - (56,486) (56,486) (11,409) (67,895)
		- - - - 64,825 64,825 (235) - - (235) - (235) - - (11,204) (11,204) (1,765) (12,969) - - (58) (58) - (58)
		(235) - (11,262) (11,497) 63,060 51,563
		627,690 - (144,311) 483,379 51,651 535,030
		927,018 4,627 (79,219) 852,426 50,629 903,055 - - 39,706 39,706 2,574 42,280 - (15,749) - (15,749) (12) (15,761)
		- (15,749) 39,706 23,957 2,562 26,519
		- - - - (4,548) (4,548) 7,440 - - 7,440 - 7,440 - - (23,500) (23,500) (1,441) (24,941) - (120) - (120) - (120)
		7,440 (120) (23,500) (16,180) (5,989) (22,169)
		934,458 (11,242) (63,013) 860,203 47,202 907,405

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes .

9

Consolidated Cash Flow Statement For the half year ended 31 December 2010

	31 December 2010 $’000 12,680 (6,486) (2,810) 12,860 768 17,012 (13,803) 75,995 (52,853) 7,984 - (256) 17,067 - (4,409) (36,692) 15,500 (12,880) (38,481) (4,402) 6,638 (14) 2,222	31 December 2009 $’000
Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees (inclusive of goods and services tax) Interest paid Distributions from investments Interest received Net cash inflow from operating activities Cash flows from investing activities Payments for investment property Proceeds on disposal of investment property Payments for investments Proceeds from sale of investments Cash acquired on consolidation of CPRF Loans to related parties Net cash inflow/(outflow) from investing activities Cash flows from financing activities Proceeds from issue of units less equity raising costs Payments to terminate derivative financial instruments Repayment of borrowings Proceeds from borrowings Distributions paid to unitholders Net cash outflow from financing activities Net increase/(decrease) in cash and cash equivalents held Cash and cash equivalents at the beginning of the half year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the half year		13,804 (9,033) (3,746) 6,655 6,783
		14,463
		(5,693) 107,400 (7,270) 29,700 5,983 (14,160)
		115,960
		(1,279) (9,875) (92,388) - (7,820)
		(111,362)
		19,061 73 (2)
		19,132

The above consolidated cash flow statement should be read in conjunction with the accompanying notes .

10

Charter Hall Property Trust NOTES TO THE FINANCIAL STATEMENTS HALF YEAR ENDED 31 DECEMBER 2010

1. BASIS OF PREPARATION OF HALF YEAR REPORT

This general purpose financial report for the interim half year reporting period ended 31 December 2010 has been prepared in accordance with Accounting Standard AASB 134, Interim Financial Reporting and the Corporations Act 2001 . The Charter Hall Property Trust financial report represents the consolidated financial report of Charter Hall Property Trust and its controlled entities.

The interim financial report does not include all notes normally included in an annual financial report. Accordingly, this report should be read in conjunction with any public announcements made by Charter Hall Property Trust during the half year to 31 December 2010 in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

The accounting policies adopted in the preparation of the financial report are consistent with those of the previous financial year and corresponding interim reporting period, other than as stated below.

Change in accounting policy

The Board resolved to equity account the investments in Charter Hall Core Plus Office Fund and Charter Hall Core Plus Industrial Fund from 1 July 2010. Previously an election had been made to fair value these investments in accordance with AASB 128 Investments in Associates and AASB 139 Financial Instruments: Recognition and Measurement .

The change in accounting policy was in response to the fact that recent sales of this investment were done based on the net tangible assets of the investments rather than unit price. Hence, management feels that equity accounting provides a more reliable and more relevant valuation of these investments.

The new policy has been applied retrospectively and comparative information in relation to the 2010 financial year has been restated accordingly. The following adjustments were made:

Consolidated Balance Sheet (Extract)

Non-current assets Investments accounted for using the equity method Financial assets at fair value through the profit and loss Net assets Equity Accumulated losses Total equity	30 June 2010 $’000 Restatements $’000 30 June 2010 (restated) $’000
	237,475 156,303 393,778 241,851 (168,418) 73,433 915,170 (12,115) 903,055 (67,104) (12,115) (79,219) 915,170 (12,115) 903,055

11

Charter Hall Property Trust NOTES TO THE FINANCIAL STATEMENTS HALF YEAR ENDED 31 DECEMBER 2010

1. BASIS OF PREPARATION OF HALF YEAR REPORT (continued)

Consolidated Balance Sheet (Extract)

Non-current assets Investments accounted for using the equity method Financial assets at fair value through the profit and loss Net assets Equity Accumulated losses Total equity Consolidated Income Statement (Extract) Revenue Gains / (losses) on sale of investments Share of net profit of associates and joint venture accounted for using the equity method Fair value adjustments – property investments Loss before income tax Loss for the half year Attributable to: Equity holders of Charter Hall Property Trust Basic earnings per unit on loss attributable to CHPT unitholders Diluted earnings per unit on loss attributable to CHPT unitholders	1 July 2009 $’000	Restatements $’000 1 July 2009 (restated) $’000
	- 433,621 570,110 (57,815) 570,110 6 months to 31 December 2009 $’000	204,617 204,617 (223,365) 210,256 (18,748) 551,362 (18,748) (76,563) (18,748) 551,362 Restatements $’000 6 months to 31 December 2009 (restated) $’000
	23,702 (10,854) - (65,172) (75,931) (75,931) (64,522) Cents per unit (36.88) (34.16)	(4,451) 19,251 5,053 (5,801) (8,122) (8,122) 15,556 (49,616) 8,036 (67,895) 8,036 (67,895) 8,036 (56,486) Restatements Restated Cents per unit 4.60 (32.28) 4.24 (29.92)

Consolidated Income Statement (Extract)

The earnings per unit have been restated for the one for four unit consolidation.

Going concern

At 31 December 2010 the Trust has booked a liability for the distribution payable on 28 February 2011. As a result, at 31 December 2010, current liabilities exceed current assets by $13,854,485. The financial statements have been drawn up on a going concern basis as the directors believe the Trust will be able to meets its debts as they fall due through continuing to generate net inflows from operations, and accessing undrawn finance facilities available to it, if needed.

12

Charter Hall Property Trust NOTES TO THE FINANCIAL STATEMENTS HALF YEAR ENDED 31 DECEMBER 2010

2. EARNINGS PER UNIT

Basic - earnings per unit (cents) Diluted - earnings per unit (cents) Earnings reconciliation Basic earnings per unit: Net profit / (loss) after tax for CHPT unitholders Diluted earnings per unit*: Net profit / (loss) after tax for CHPT unitholders	Consolidated 31 December 2010 Consolidated 31 December 2009 (restated) 13.56 (32.28) 12.50 (29.92) 2010 $'000 2009 $'000 39,706 (56,486) 39,706 (56,486)

• Diluted earnings calculation includes units (which are derecognised for accounting under AASB 2 Share-Based Payment) and performance rights and options issued under the ELSP . Diluted earnings are higher than basic earnings as interest income on loans to employees for stapled securities under the ELSP would be recognised.

The comparatives have been restated in accordance with AASB 133 Earnings Per Share for the change in accounting policy and security consolidation.

292,759,187 stapled securities (2009: 699,541,655 before the one for four consolidation or 174,885,413 after).

The weighted average number of stapled securities on issue used in the calculation of diluted ordinary earnings per stapled security was 317,594,347 stapled securities (2009: 755,676,912 before the one for four consolidation or 188,919,228 after).

3. DISTRIBUTIONS

Distributions recognised in the current period are:

December 2010 - Interim distribution December 2009 - Interim distribution	Payment per Unit Total Amount $’000 Date of Payment 8.00 cents 23,500 28 February 2011 6.40 cents 11,204 26 February 2010

The actual distribution for 2009 was 1.60 cents per security but with the one for four security consolidation the comparative is 6.40 cents per security.

13

Charter Hall Property Trust NOTES TO THE FINANCIAL STATEMENTS HALF YEAR ENDED 31 DECEMBER 2010

4. EQUITY UNITS ISSUED

Issues of Units during the period Opening balance Add back ELSP securities reversed Distribution reinvestment plan Consolidation at one for four Less: transaction costs Less: reversal of ELSP securities	1 July 2010 to 31 December 2010 Units ’000 1 July 2010 to 31 December 2010 $’000 1 July 2009 to 31 December 2009 Units ’000 1 July 2009 to 31 December 2009 $’000
	1,162,380 936,445 698,040 634,308 50,344 73,179 50,344 73,179 12,641 7,521 2,210 1,044
	1,225,365 1,017,145 750,594 708,531 (919,023) - - - - - - (1,260) (12,586) (73,179) (50,344) (73,179)
	293,756 943,966 700,250 634,092

• securities issued under the Executive Loan Security Plan (ELSP) are not recognised for accounting purposes under AASB 2 Share Based Payment .

The total number of securities issued at 31 December 2010 including ELSP securities is 306,341,814 (2009: 750,594,010 before the security consolidation or 187,648,503 after).

5. CONTINGENT LIABILITIES

Details and estimated maximum amounts of contingent liabilities (for which no amounts are recognised in the financial statements) are as follows:

The consolidated entity has a bank guarantee of $4.5 million on behalf of Charter Hall Funds Management Limited to satisfy the net tangible asset requirements of its Australian Financial Services licence. No liability is expected to arise.

6. SEGMENT REPORTING

The Consolidated entity’s only business is investing in direct property and listed and unlisted Property Funds. Consequently there are no separately reportable operating segments. This is consistent with the reporting reviewed by the Board.

7. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Charter Hall Office REIT Charter Hall Retail REIT Charter Hall Core Plus Office Fund Charter Hall Core Plus Industrial Fund Charter Hall Retail JV	31 December 2010 $'000 30 June 2010 $'000
	170,690 155,149 87,993 82,326 109,535 104,314 53,059 51,989 18,860 -
	440,137 393,778

14

Charter Hall Property Trust NOTES TO THE FINANCIAL STATEMENTS HALF YEAR ENDED 31 DECEMBER 2010

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS

Charter Hall Umbrella Fund Charter Hall Diversified Property Fund Charter Hall Direct Property Fund Charter Hall Direct Industrial Fund Total	31 December 2010 $'000 30 June 2010 $'000
	41,376 41,578 27,251 22,068 9,836 9,787 10 -
	78,473 73,433

9. EVENTS OCCURING AFTER THE BALANCE SHEET DATE

No matter or circumstance has arisen since 31 December 2010 that has significantly affected, or may significantly affect:

(a) the Consolidated entity's operations in future financial years; or

(b) the results of those operations in future financial years; or

(c) the Consolidated entity's state of affairs in future financial years.

15

Charter Hall Property Trust Directors’ Declaration

For the half year ended 31 December 2010

In the directors’ opinion:

• (a) the financial statements and notes set out on pages 6 to 15 are in accordance with the Corporations Act 2001 , including:

• (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

• (ii) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half year ended on that date; and

• (b) there are reasonable grounds to believe that Charter Hall Property Trust will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors.

==> picture [99 x 29] intentionally omitted <==

Kerry Roxburgh Chairman Sydney 24 February 2011

16

PricewaterhouseCoopers ABN 52 780 433 757

INDEPENDENT AUDITOR’S REVIEW REPORT to the unitholders of Charter Hall Property Trust

Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999

Report on the Half Year Financial Report

We have reviewed the accompanying half year financial report of Charter Hall Property Trust, which comprises the balance sheet as at 31 December 2010, and the income statement, statement of comprehensive income, statement of changes in equity and cash flow statement for the half year ended on that date, other selected explanatory notes and the directors’ declaration for the Charter Hall Property Trust Group (the consolidated entity). The consolidated entity comprises both Charter Hall Property Trust (the trust) and the entities it controlled during that half year.

Directors’ Responsibility for the Half Year Financial Report

The directors of Charter Hall Funds Management Limited (the responsible entity) are responsible for the preparation and fair presentation of the half year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such control as the directors determine necessary to enable the preparation of the half year financial report that is free from material misstatement whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Charter Hall Property Trust, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. It also includes reading the other information included with the financial report to determine whether it contains any material inconsistencies with the financial report. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of our procedures, our review was not designed to provide assurance on internal controls.

Our review did not involve an analysis of the prudence of business decisions made by directors or management.

Liability limited by a scheme approved under Professional Standards Legislation

17

INDEPENDENT AUDITOR’S REVIEW REPORT to the unitholders of Charter Hall Property Trust (continued)

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half year financial report of Charter Hall Property Trust is not in accordance with the Corporations Act 2001 including:

(a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half year ended on that date; and

(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

==> picture [199 x 46] intentionally omitted <==

PricewaterhouseCoopers

==> picture [133 x 41] intentionally omitted <==

R Baker Partner

Sydney 24 February 2011

18