CHARTER HALL GROUP

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Period ending 31 December 2012 Charter Hall Group

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Period ending 31 December 2012
ASX CODE:CHC
ARSN 113 339 147
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Dear Investor

Following an active start to the current financial year, we are pleased to have delivered a solid half year result for our investors, increasing operating earnings by 4.6% on the prior corresponding period.

Our strategic focus on accessing, deploying and managing equity invested in core Australian real estate has strengthened our business, delivering improved quality of earnings. In line with this strategy, over the first half year we secured $570 million of new equity from our wholesale, listed and retail investors and secured $1.3 billion of Australian office, retail and industrial property assets which has increased total portfolio funds under management (FUM) to $10.0 billion, representing growth of 12% since 30 June 2012.

The Group generated statutory profit after tax of $29.9 million, up 52.7% on the prior period and operating earnings of 11.76 cents per security (cps), up 4.6% on the prior period. Half year distribution increased 7.7% to 9.80 cps.

As a fully integrated property group, our business is focused on two key earnings streams, being property investments that deliver rental income returns, plus the earnings generated from the integrated property funds management platform. Property investment comprises Charter Hall’s co-investment in property funds and its directly owned property investments.

Please note, that the reporting segments have changed for the current financial year to reflect that the majority of Charter Hall’s earnings are generated from managing funds and property investments, principally in Australian property assets.

Total property investments

Charter Hall’s property co-investments total $532 million at 31 December 2012. Following the active management of the Group’s investment portfolio and lower borrowing costs in the managed funds, the annualised co-investment earnings yield has increased to 7.4% from 6.7% in the prior period.

Charter Hall’s investment in property funds represents 95% of the total property investment portfolio.

Charter Hall owns direct property through its consolidated Direct Retail Fund (DRF). Direct property income, as a component of total income, is reducing as the strategy to sell down the DRF portfolio is progressed.

Property funds management

We remain focused on growing our Australian platform, with Australian property FUM increasing by $1.1 billion since 30 June 2012. Today, total portfolio FUM is $10.0 billion. This growth follows the establishment of new funds and partnerships across the Group’s three core property sectors and the acquisition of a number of strategic properties.

In the office sector, our Core Plus Office Fund recently acquired the iconic 9 Castlereagh Street in Sydney for $172.5 million and last year, Charter Hall was appointed the Responsibility Entity and manager of PFA Diversified Property Trust, which comprises $422 million of predominately Australian office assets.

Within the non-discretionary retail sector, Charter Hall Retail REIT successfully raised $119 million of capital from its institutional and retail investors, making it the first S&P ASX A-REIT 200 stock to raise growth equity above the value of its NTA in several years. The Group also established a new wholesale partnership with Telstra Super in October 2012 to acquire the $207 million Bunnings portfolio and established a separate unlisted wholesale partnership with a global institutional investor for the acquisition of the $164 million Bateau Bay Square shopping centre.

We have actively increased our exposure to the industrial sector given its attractive property fundamentals, launching the Direct Industrial Fund No. 2 and establishing the new $400 million Core Logistics Partnership with two Australian institutional investors in February 2013.

Opportunistic funds

As previously announced to the market, Charter Hall will not reinvest in new opportunistic development funds once the remaining $23 million of equity invested in Charter Hall Opportunity Fund (CHOF) 4 and 5 has been realised. CHOF 5 has continued to progress its existing developments with capital being realised on progressive completion of projects at Aquilo and Lacrosse in Melbourne during the half year. In respect of the Little Bay Cove

development in Sydney, estate works continue with completion scheduled for August 2013. A commercial dispute persists between the development alliance partners and ongoing negotiations are being undertaken in an attempt to resolve this dispute and agree on the future direction of the project.

Active capital management approach

Charter Hall has continued to focus on recycling its property portfolio to seed additional high value opportunities for the Group and its investors. During the period, Charter Hall realised $41 million of capital from its co-investments and reinvested $53 million into new higher yielding investments. The Group aims to recycle a further target $113 million of equity over the next two years.

The Group refinanced $0.6 billion of debt across its managed funds during the period which resulted in an improved weighted average maturity of 3.2 years and a weighted average cost of debt of 6.2%. Charter Hall has maintained its low balance sheet gearing of 1.4% and look through gearing of 31.6%.

Driving further growth in property investment portfolio earnings and capital values
Diversifying sources of debt funding for the managed funds platform
Continuing to capitalise on a scalable operating platform to service FUM growth

Looking ahead, given our well-established relationships across wholesale, listed and retail equity sources and the continued interest from institutional and retail investors in Australian property, we believe Charter Hall is well positioned in the current climate.

Barring unexpected events, we forecast FY13 operating earnings to be in the range of 22.5 to 23.5 cents per security, representing 5% to 9% growth over FY12.

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David Southon Joint Managing Director

David Harrison Joint Managing Director

Strategy and outlook

We remain focused on accessing, deploying and managing equity that is invested into core real estate sectors to create value and provide sustainable income and capital returns for securityholders and external investors. Charter Hall is focused on:

Executing strategies to achieve the objectives of its investors
Enhancing return on equity and continuing to improve the quality of earnings for securityholders through:
Sourcing equity to invest into core real estate sectors
Targeting growth in the Australian FUM platform of 6-10% per annum
Realising and redeploying over $100 million of capital in property and development investments over the next two years

Results

Key financial results

Statutory profit after tax of $29.9 million, up 52.7% on the prior corresponding period (pcp)

Operating earnings of 11.76 cents per security (cps), up 4.6%[1] on pcp

Half year distribution of 9.80 cps, up 7.7% on pcp

Net Tangible Assets (NTA) per security of $2.12, down by $0.01 from 30 June 2012

Operational performance:

Secured $570 million of new equity commitments during 1HY13

Secured $1.3 billion of Australian office, retail and industrial property assets, delivering 12% growth in FUM to $10.0 billion today

Charter Hall realised $41 million of equity co-investments and reinvested $53 million during 1HY13

Increased co-investment property earnings yield from 6.7% to 7.4%

1HY12 is stated prior to specific items relating to the net CQO transaction fee and restructuring costs which total a net loss of $2.3m. There are no specific items in 1HY13.

Front Cover: No.1 Martin Place, Sydney NSW

With $10.0 billion[1] in assets under management across listed and unlisted funds, Charter Hall owns and manages 195 office, industrial and retail properties, comprising 2.5 million square metres of net lettable area, generating gross rental income of $861 million from almost 3,000 tenants.

Coles Distribution Centre, Perth WA

As at February 2013

Half Year Results

Group Key Metrics	1HY13	1HY12	Change
Statutory proft after tax	$29.9m	$19.6m	52.7%
Operating earnings (before specifc items1)	$35.1m	$33.2m	5.7%
Operating EPS (before specifc items1)	11.76cps	11.24cps	4.6%
Distribution per security	9.80cps	9.10cps	7.7%
Balance Sheet	At 31 Dec 2012	At 30 Jun 2012	Change
Funds under management2	$9.8bn	$8.9bn	10.1%
Total Group assets	$854m	$878m	(2.7%)
Net asset value (per security)	$2.46	$2.46	0.0%
Net tangible assets (per security)	$2.12	$2.13	(0.2%)
Balance sheet gearing	1.4%	1.4%	0.0%
Look through gearing	31.6%	32.2%	(0.6%)

1HY12 is stated prior to specific items relating to the net CQO transaction fee and restructuring costs which total a net loss of $2.3m. There are no specific items in 1HY13.
As at February 2013, FUM was $10.0bn, representing growth of 12% since 30 June 2012.

To access information on your holding or to update/change your details contact: Unit registry Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Telephone 1300 303 063 (within Australia) +61 2 8280 7134 (outside Australia) Email [email protected] Website www.linkmarketservices.com.au

For other enquiries relating to your investment contact: Manager’s office Level 11, 333 George Street Sydney NSW 2000 GPO Box 2704 Sydney NSW 2001 Telephone 1300 365 585 (within Australia) +61 2 8280 4000 (outside Australia)

Facsimile

(02) 8908 4040 (within Australia) +61 2 8280 4040 (outside Australia)

[email protected]

Website

www.charterhall.com.au

This is the half year update for Charter Hall Group ARSN 113 339 147 (‘CHC’).

Disclaimer of Liability

While every effort has been made to provide accurate and complete information, CHFML does not warrant or represent that the information in this update is free from errors or omissions or is suitable for your intended use. This half year update is not an offer or invitation for subscription or purchase of, or recommendation of, securities. It does not take into account any potential investors’ personal objectives, financial situation or needs. Before investing, you should consider your own objectives, financial situation and needs or you should obtain financial, legal and/or taxation advice. Past performance is not a reliable indicator of future performance. Forecasts, by their very nature, are subject to uncertainty and contingencies, many of which are outside the control of CHFML. Actual results may vary from any forecasts and any variation may be materially positive or negative.

Subject to any terms implied by law and which cannot be excluded, CHFML does not accept any responsibility for loss, damage, cost or expense (whether direct or indirect) incurred by an investor as a result of any error, omission or misrepresentation in information in this half year update.

CHFML does not receive fees in respect of the general financial product advice it may provide, however it will receive fees for operating CHC which, in accordance with CHC’s constitution, are calculated by reference to the value of the assets and the performance of CHC. Entities within the Charter Hall Group may also receive fees for managing the assets of, and providing resources to CHC. For more detail on fees, see CHC’s latest annual report.

To contact us, call 1300 365 585 (local call cost).

Complaints handling

A formal complaints handling procedure is in place for CHC. CHFML is a member of the Financial Ombudsman Service (‘FOS’). Complaints should in the first instance be directed to CHFML. If you have any enquiries or complaints, please contact the Complaints Officer on 1300 365 585 (local call cost), or email [email protected]