DEXUS — Interim / Quarterly Report 2012

Feb 14, 2012

15 February 2012

DEXUS Property Group (ASX: DXS) 2012 half year results

DEXUS Property Group provides the following documents to the ASX Limited:

• Appendix 4D Results for announcement to the market
• Financial statements for DEXUS Diversified Trust, DEXUS Industrial Trust, DEXUS Office Trust, and DEXUS Operations Trust for the period ending 31 December 2011, including Independent Auditor's Review Reports from PricewaterhouseCoopers.

For further information contact:

Media Relations		Investor Relations
Emma Parry	T: (02) 9017 1133 M: 0421 000 329 E: emma.parry@dexus.com	Daniel Rubinstein	T: (02) 9017 1336 M: 0466 016 725 E: daniel.rubinstein@dexus.com
Ben Leeson	T: (02) 9017 1343 M: 0403 260 754 E: ben.leeson@dexus.com	David Brewin	T: (02) 9017 1256 M: 0411 162 457 E: david.brewin@dexus.com

About DEXUS

DEXUS is one of Australia's leading property groups specialising in world-class office, industrial and retail properties with total assets under management of \$14bn. In Australia, DEXUS is the market leader in office and industrial and, on behalf of third party clients, a leading manager and developer of shopping centres. DEXUS is committed to being a market leader in Corporate Responsibility and Sustainability. www.dexus.com

DEXUS Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for DEXUS Property Group (ASX: DXS)

DEXUS Property Group ARSN 089 324 541

Financial reporting for the half year ended 31 December 2011

DEXUS Diversified Trust	Note 1
	31 Dec 2011	31 Dec 2010	%
	\$'000	\$'000	change
Revenue from ordinary activities	371,374	343,324	8.2%
Net profit attributable to security holders after tax	145,712	294,426	-50.5%
Funds from operations (FFO)1	184,328	179,043	3.0%
Distribution to security holders	129,202	125,331	3.1%
	CPS	CPS
Funds from operations per security	3.81	3.70	3.0%
Distributions per security for the period	2.67	2.59	3.1%
	\$'000	\$'000
Total assets	8,139,293	7,856,925	3.6%
Total borrowings	2,294,888	2,177,910	5.4%
Security holders equity	5,111,669	4,972,473	2.8%
Market capitalisation	4,016,390	3,847,024	4.4%
	\$ per unit	\$ per unit
Net tangible assets (excluding non-controlling interests)	1.01	0.98	3.1%
Securities price	0.83	0.795	4.4%
Securities on issue ('000)	4,839,024	4,839,024
Record date	30 Dec 2011	31 Dec 2010
Payment date	29 Feb 2012	25 Feb 2011

¹ FFO is often used as a measure of real estate operating performance after finance costs and taxes. DXS's FFO comprises profit/loss after tax attributable to stapled security holders measured under Australian Accounting Standards and adjusted for: property revaluations, impairments, derivative and FX mark to market impacts, amortisation of certain tenant incentives, gain/loss on sale of certain assets, straight line rent adjustments, deferred tax expense/benefit and DEXUS RENTS Trust capital distribution.

Results commentary

Refer to the attached media release for a commentary on the results of the Group.

Distribution Reinvestment Plan (DRP)

As announced on 13 December 2010, the DRP has been suspended until further notice. As a consequence, the DRP will not operate for this distribution payment.

Notes

Note 1: For the purposes of statutory reporting, the stapled entity, known as DXS, must be accounted for as a consolidated group. Accordingly, one of the stapled entities must be the "deemed acquirer" of all other entities in the group. DEXUS Diversified Trust has been chosen as the deemed acquirer of the balance of the DXS stapled entities, comprising DEXUS Industrial Trust, DEXUS Office Trust and DEXUS Operations Trust.

Note 2: The distribution for the period 1 July 2011 to 31 December 2011 is the aggregate of the distributions from DEXUS Diversified Trust and DEXUS Office Trust (DEXUS Operations Trust and DEXUS Industrial Trust did not pay a distribution during the period). The Annual Tax Statement, issued as at 30 June 2012, will provide details of the components of DXS' distributions.

DEXUS Diversified Trust (ARSN 089 324 541)

Interim Report 31 December 2011

Contents Page

Directors" Report 1
Auditor"s Independence Declaration 4
Consolidated Statement of Comprehensive Income 5
Consolidated Statement of Financial Position 6
Consolidated Statement of Changes in Equity 7
Consolidated Statement of Cash Flows 9
Notes to the Financial Statements	10
Directors" Declaration	32
Independent Auditor"s Review Report	33

DEXUS Property Group (DXS) (ASX Code: DXS) consists of DEXUS Diversified Trust (DDF), DEXUS Industrial Trust (DIT), DEXUS Office Trust (DOT) and DEXUS Operations Trust (DXO), collectively known as DXS or the Group.

Under Australian Accounting Standards, DDF has been deemed the parent entity for accounting purposes. Therefore the DDF consolidated Financial Statements include all entities forming part of DXS.

All press releases, Financial Statements and other information are available on our website: www.dexus.com

The Directors of DEXUS Funds Management Limited (DXFM) as Responsible Entity of DEXUS Diversified Trust (DDF or the Trust) present their Directors" Report together with the consolidated Financial Statements for the half year ended 31 December 2011. The consolidated Financial Statements represents DDF and its consolidated entities, DEXUS Property Group (DXS or the Group).

The Trust together with DEXUS Industrial Trust (DIT), DEXUS Office Trust (DOT) and DEXUS Operations Trust (DXO) form the DEXUS Property Group stapled security.

1 Directors

The following persons were Directors of DXFM at all times during the half year and to the date of this Directors" Report, unless otherwise stated:

Directors	Appointed	Resigned
Christopher T Beare	4 August 2004
Elizabeth A Alexander, AM	1 January 2005
Barry R Brownjohn	1 January 2005
John C Conde, AO	29 April 2009
Tonianne Dwyer	24 August 2011
Stewart F Ewen, OAM	4 August 2004
Victor P Hoog Antink	1 October 2004
Brian E Scullin	1 January 2005	31 October 2011
Richard Sheppard	1 January 2012
Peter B St George	29 April 2009

2 Review of results and operations

Financial Summary

DEXUS Property Group"s financial performance for the six months to 31 December 2011 is outlined below. To fully understand our results, please refer to the full Financial Statements in this Interim Report.

Total revenue from ordinary activities for the six months to 31 December 2011 increased by \$28.1 million to \$371.4 million (2010: \$343.3 million). The key drivers include:

• A 5.1% increase in like-for-like property income from the Australian office portfolio.
• Rental income commencing at recently completed developments including 123 Albert Street, Brisbane and completed developments at the Greystanes industrial estate.
• The proceeds from the sale of inventory totalling \$21.8 million (2010: nil).
• An appreciation in the average US dollar currency rate.

Net profit attributable to stapled security holders is \$145.7 million or 3.01 cents per security, a decrease of \$148.7 million from the prior corresponding period (2010: \$294.4 million). The key drivers are:

• Unrealised net fair value losses on derivatives totalling \$74.6 million (2010: gain of \$53.5 million) primarily as a result of lower market interest rates.
• Deferred tax expense of \$12.3 million (2010: \$1.2 million) associated primarily with the positive revaluation of our North American property assets.

Details of the operational result are set out on the following page.

2 Review of results and operations (continued)

Operational Result

DEXUS Property Group uses Funds from Operations (FFO¹ ) which is often used as a measure of real estate operating performance after finance costs and taxes.

DEXUS Property Group"s FFO for the six months to 31 December 2011 is \$184.3 million, an increase of 3.0% on the prior corresponding period. FFO per security is 3.81 cents (31 December 2010: 3.70 cents per security). The key drivers impacting FFO are:

• The Australian and New Zealand office portfolio"s net operating income of \$141.0 million increased by \$13.9 million (10.9%) driven by strong like-for-like growth of 5.1% and the commencement of rent following the completion of developments at 1 Bligh Street, Sydney and 123 Albert Street, Brisbane. Occupancy² for the Australian Office portfolio remains high at 97.2% (2010: 96.5%). The retention rate at the end of the period was 73%.
• The Australian industrial portfolio"s net operating income of \$58.4 million increased by \$1.6 million largely as a result of the completion of three developments at Greystanes during 2010 and 2011, valued at \$95.3 million. The industrial portfolio ended the period with occupancy² at 96.1% (2010: 97.4%) and a tenant retention rate of 77%.
• The US industrial portfolio"s net operating income of \$37.6 million decreased by \$4.0 million, predominantly as a result of translation of stable underlying portfolio income at higher exchange rates and property transactions. The internalisation of portfolio management for the central-east portfolio has contributed to strong leasing success helping to lift total US occupancy² to 90.2% (2010: 86.4%). The retention rate at the end of the period was 50%.
• Financing costs for distributable earnings increased by \$8.9 million primarily driven by the completion of office developments at 1 Bligh Street, Sydney, 123 Albert Street, Brisbane and our industrial portfolio developments.
• Management business EBIT increased by \$2.0 million including \$2.7 million of industrial trading profits and one off costs.

Based on our current distribution policy of 70% of Funds from Operations, the distribution payable for the 6 months to 31 December 2011 is 2.67 cents per security (2010: 2.59 cents per security).

Set out below is a reconciliation of profit attributable to stapled security holders to FFO and how the Group"s distribution has been calculated.

	31 Dec 2011	DPS	31 Dec 2010	DPS
	\$m	(cents)	\$m	(cents)
Profit for the period attributable to stapled security holders	145.7		294.4
Net fair value gain of investment properties3	(60.0)		(67.9)
Impairment of inventories	2.0		-
Net gain on sale of investment properties	(2.9)		(4.7)
Net fair value loss/(gain) of derivatives	74.6		(53.5)
Incentive amortisation and rent straight line3,4	16.7		14.5
Deferred tax expense	12.3		1.2
RENTS capital distribution	(5.3)		(5.3)
Impairment of goodwill and other	1.2		0.3
Funds from Operations1	184.3	3.81	179.0	3.70
Retained earnings5	(55.1)		(53.7)
Distributions	129.2	2.67	125.3	2.59

1 The DEXUS Property Group"s FFO comprises profit/loss after tax attributable to stapled security holders measured under Australian Accounting Standards and adjusted for: property revaluations, impairments, derivative and FX mark to market impacts, amortisation of certain tenant incentives, gain/loss on sale of certain assets, straight line rent adjustments, deferred tax expense/benefit and DEXUS RENTS Trust capital distribution. A full reconciliation of FFO is contained in our 2012 half year results appendices and is also available at www.dexus.com/dxs/propertyreports

2 Occupancy by area.

• 3 Including DXS"s share of equity accounted investments.
• 4 Includes cash and fit out incentives amortisation.
• 5 Based on the current distribution policy of 70% of FFO.

Auditor's Independence Declaration

As lead auditor for the review I declare that to the best of my knowledge and belief, there have been: of DEXUS Diversified Trust for the half year ended 31 December 2011,

• a) no contraventions of the auditor independence requirements of the relation to the review Corporations Act 2001 review; and in
• b) no contraventions of any applicable code of professional conduct in relation to the professional in review.

This declaration is in respect of period. DEXUS Diversified Trust and the entities it controlled and during the

EA Barron Partner PricewaterhouseCoopers

Sydney 14 February 2012

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Consolidated Statement of Comprehensive Income

For the half year ended 31 December 2011

		31 Dec 2011	31 Dec 2010
	Note	\$'000	\$'000
Revenue from ordinary activities
Property revenue		323,078	314,428
Proceeds from sale of inventory		21,830	-
Interest revenue		799	717
Management fee revenue		25,667	28,179
Total revenue from ordinary activities		371,374	343,324
Net fair value gain of investment properties		59,956	55,022
Net gain on sale of investment properties		2,905	4,697
Share of net profit of associates accounted for using the equity method	7	3,108	12,870
Net foreign exchange gain		778	491
Other income		17	641
Total income		438,138	417,045
Expenses
Property expenses		(77,999)	(75,268)
Cost of sale of inventory		(19,110)	-
Finance (costs)/income	2	(132,239)	2,424
Depreciation and amortisation		(1,237)	(1,217)
Impairment of inventories		(2,014)	-
Impairment of goodwill		(563)	(74)
Employee benefits expense		(35,664)	(36,093)
Net fair value (loss)/gain of derivatives		(517)	1,932
Other expenses		(9,310)	(11,367)
Total expenses		(278,653)	(119,663)
Profit before tax		159,485	297,382
Tax benefit/(expense)
Income tax benefit		149	3,032
Withholding tax expense		(12,914)	(5,064)
Total tax expense		(12,765)	(2,032)
Profit after tax		146,720	295,350
Other comprehensive income:
Exchange differences on translating foreign operations		(1,949)	(6,995)
Total comprehensive income for the period		144,771	288,355
Profit for the period attributable to:
Unitholders of the parent entity		110,659	91,480
Unitholders of other stapled entities (non-controlling interests)		35,053	202,946
Stapled security holders		145,712	294,426
Other non-controlling interest		1,008	924
Profit for the period		146,720	295,350
Total comprehensive income for the period attributable to:
Unitholders of the parent entity		116,560	68,147
Unitholders of other stapled entities (non-controlling interests)		27,203	219,284
Stapled security holders		143,763	287,431
Other non-controlling interest		1,008	924
Total comprehensive income for the period		144,771	288,355
		Cents	Cents
Earnings per unit Basic earnings per unit on profit attributable to unitholders of the parent entity		2.29	1.89
Diluted earnings per unit on profit attributable to unitholders of the parent entity		2.29	1.89

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Earnings per stapled security
Basic earnings per unit on profit attributable to stapled security holders	3.01	6.09
Diluted earnings per unit on profit attributable to stapled security holders	3.01	6.09

Consolidated Statement of Financial Position

As at 31 December 2011

	Note	31 Dec 2011 \$'000	30 Jun 2011 \$'000
Current assets
Cash and cash equivalents	3	77,032	73,746
Receivables		26,130	36,175
Non-current assets classified as held for sale	4	28,018	59,260
Inventories	5	44,431	7,991
Derivative financial instruments		14,930	23,112
Current tax assets		1,271	1,247
Other		11,361	11,396
Total current assets		203,173	212,927
Non-current assets
Investment properties	6	7,267,214	7,105,914
Property, plant and equipment		4,018	3,926
Inventories	5	74,480	104,247
Investments accounted for using the equity method	7	205,133	200,356
Derivative financial instruments		107,784	77,108
Deferred tax assets		51,064	55,577
Intangible assets	8	223,908	224,684
Other		2,519	2,905
Total non-current assets		7,936,120	7,774,717
Total assets		8,139,293	7,987,644
Current liabilities
Payables		101,421	108,916
Interest bearing liabilities	9	8,224	315,777
Current tax liabilities		7,132	7,014
Provisions		147,013	147,806
Derivative financial instruments		11,712	5,000
Total current liabilities		275,502	584,513
Non-current liabilities
Interest bearing liabilities	9	2,286,664	1,899,279
Derivative financial instruments		216,441	155,085
Deferred tax liabilities		24,237	18,151
Provisions		14,461	17,624
Other		6,183	6,151
Total non-current liabilities		2,547,986	2,096,290
Total liabilities		2,823,488	2,680,803
Net assets		5,315,805	5,306,841
Equity
Equity attributable to unitholders of parent entity
Contributed equity	10	1,623,028	1,798,077
Reserves		(97,769)	(103,670)
Retained profits		277,575	222,638
Parent entity unitholders' interest		1,802,834	1,917,045
Equity attributable to unitholders of other stapled entities (non controlling interests)
Contributed equity	10	3,189,433	3,014,665
Reserves		60,716	68,566
Retained profits		58,686	102,537
Other stapled unitholders' interest		3,308,835	3,185,768
Stapled security holders' interest		5,111,669	5,102,813
Other non-controlling interest		204,136	204,028
Total equity		5,315,805	5,306,841

	Stapled security holders equity
		Contributed equity	Retained profits	Foreign currency translation reserve	Asset revaluation reserve	Stapled security holders' equity	Other non controlling interest	Total equity
	Note	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Opening balance as at 1 July 2010		4,798,214	33,186	(72,967)	42,739	4,801,172	205,275	5,006,447
Profit for the period attributable to:
Unitholders of the parent entity		-	91,480	-	-	91,480	-	91,480
Other stapled entities (non-controlling interests)		-	202,946	-	-	202,946	-	202,946
Other non-controlling interest		-	-	-	-	-	924	924
Profit for the period		-	294,426	-	-	294,426	924	295,350
Other comprehensive (loss)/income for the period
attributable to: Unitholders of the parent entity		-	-	(23,333)	-	(23,333)	-	(23,333)
Other stapled entities (non-controlling interests)		-	-	16,338	-	16,338	-	16,338
Total other comprehensive loss for the period		-	-	(6,995)	-	(6,995)	-	(6,995)
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs		14,528	-	-	-	14,528	(1,088)	13,440
Distributions paid or provided for	11	-	(125,331)	-	-	(125,331)	(6,344)	(131,675)
Total transactions with owners in their capacity as owners		14,528	(125,331)	-	-	(110,803)	(7,432)	(118,235)
Transfer (from)/to retained profits		-	(5,327)	-	-	(5,327)	5,327	-
Closing balance as at 31 December 2010		4,812,742	196,954	(79,962)	42,739	4,972,473	204,094	5,176,567

Consolidated Statement of Changes in Equity (continued) For the half year ended 31 December 2011

Contributed equity Retained profits Foreign currency translation reserve Asset revaluation reserve Stapled securityholders' equity Other noncontrolling interest Total equity \$'000 \$'000 \$'000 \$'000 \$'000 \$'000 \$'000 Opening balance as at 1 July 2011 4,812,742 325,175 (77,843) 42,739 5,102,813 204,028 5,306,841 Unitholders of the parent entity - 110,659 - - 110,659 - 110,659 Other stapled entities (non-controlling interests) - 35,053 - - 35,053 - 35,053 Other non-controlling interest - - - - - 1,008 1,008 Profit for the period - 145,712 - - 145,712 1,008 146,720 Other comprehensive income/(loss) for the period attributable to: Unitholders of the parent entity - - 5,901 - 5,901 - 5,901 Other stapled entities (non-controlling interests) - - (7,850) - (7,850) - (7,850) Total other comprehensive loss for the period - - (1,949) - (1,949) - (1,949) Transactions with owners in their capacity as owners (281) - - - (281) - (281) Distributions paid or provided for 11 - (129,202) - - (129,202) (6,324) (135,526) Total transactions with owners in their capacity as owners (281) (129,202) - - (129,483) (6,324) (135,807) Transfer (from)/to retained profits - (5,424) - - (5,424) 5,424 - Closing balance as at 31 December 2011 4,812,461 336,261 (79,792) 42,739 5,111,669 204,136 5,315,805 Capital payments and capital contributions, net of transaction costs Profit for the period attributable to: Stapled security holders equity Note

Consolidated Statement of Cash Flows

For the half year ended 31 December 2011

	Note	31 Dec 2011 \$'000	31 Dec 2010 \$'000
Cash flows from operating activities
Receipts in the course of operations (inclusive of GST)		424,287	393,488
Payments in the course of operations (inclusive of GST)		(175,691)	(166,001)
Interest received		887	662
Finance costs paid to financial institutions		(83,995)	(79,771)
Distributions received from associates accounted for using the equity method		4,056	-
Income and withholding taxes paid		(482)	(2,254)
Proceeds from sale of property classified as inventory		21,830	-
Payments for property classified as inventory		(24,023)	(39,602)
Net cash inflow from operating activities		166,869	106,522
Cash flows from investing activities
Proceeds from sale of investment properties		103,296	44,949
Payments for capital expenditure on investment properties		(91,578)	(181,142)
Payments for acquisition of investment properties		(34,730)	(14,700)
Payments for acquisition of investments net of cash		-	(872)
Payments for investments accounted for using the equity method		(3,848)	(33,499)
Payments for property, plant and equipment		(1,115)	(1,301)
Net cash outflow from investing activities		(27,975)	(186,565)
Cash flows from financing activities
Proceeds from borrowings		1,425,136	719,765
Repayment of borrowings		(1,427,635)	(546,501)
Distributions paid to security holders		(125,331)	(103,583)
Distributions paid to other non-controlling interests		(6,365)	(6,079)
Capital contribution and capital payment transaction costs		(281)	-
Net cash (outflow)/inflow from financing activities		(134,476)	63,602
Net increase/(decrease) in cash and cash equivalents		4,418	(16,441)
Cash and cash equivalents at the beginning of the period		73,746	64,419
Effects of exchange rate changes on cash and cash equivalents		(1,132)	(3,904)
Cash and cash equivalents at the end of the period	3	77,032	44,074

Summary of significant accounting policies

(a) Basis of preparation

In accordance with AASB Interpretation 1002 Post-Date-of-Transition Stapling Arrangements, the entities within the Group must be consolidated. The parent entity and deemed acquirer of DIT, DOT and DXO is DDF. These Financial Statements represent the consolidated results of DDF, which comprises DDF and its controlled entities, DIT and its controlled entities, DOT and its controlled entities, and DXO and its controlled entities. Equity attributable to other trusts stapled to DDF is a form of non-controlling interest in accordance with AASB 1002 and represents the equity of DIT, DOT and DXO. Other non-controlling interests represent the equity attributable to parties external to the Group.

DEXUS Property Group stapled securities are quoted on the Australian Securities Exchange under the "DXS" code and comprise one unit in each of DDF, DIT, DOT and DXO. Each entity forming part of the Group continues as a separate legal entity in its own right under the Corporations Act 2001 and is therefore required to comply with the reporting and disclosure requirements under the Corporations Act 2001 and Australian Accounting Standards.

DEXUS Funds Management Limited as Responsible Entity for DDF, DIT, DOT and DXO may only unstaple the Group if approval is obtained by a special resolution of the stapled security holders.

These general purpose interim Financial Statements for the half year ended 31 December 2011 have been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

These Financial Statements do not include notes of the type normally included in an annual financial report. Accordingly these Financial Statements should be read in conjunction with the annual Financial Statements for the year ended 30 June 2011 and any public pronouncements made by the Group during the half year in accordance with the continuous disclosure requirements of the Corporations Act 2001. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

As at 31 December 2011, the Group had a net current asset deficiency of \$72.3 million (June 2011: \$371.6 million). These Financial Statements are prepared on a going concern basis as the Group has sufficient working capital and cash flow due to the existence of unutilised facilities of \$565.8 million and a \$200.0 million new facility as set out in note 9.

(b) Critical accounting estimates

The preparation of Financial Statements requires the use of certain critical accounting estimates and management to exercise its judgement in the process of applying the Group"s accounting policies. Other than the estimation of fair values relating to derivatives and other financial instruments, investment properties and intangible assets, no key assumptions concerning the future or other estimation of uncertainty at the end of each reporting period have a significant risk of causing material adjustments to the Financial Statements in the next reporting period.

Uncertainty around property valuations

The fair value of our investment properties in the United States and Europe have been adjusted to reflect market conditions at the end of the reporting period. While this represents the best estimates of fair value as at the end of the reporting period, the current uncertainty in these markets means that if investment property is sold in the future, the price achieved may be higher or lower than the most recent valuation, or higher or lower than the fair value recorded in the Financial Statements.

Finance costs

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
Interest paid/payable	(67,535)	(60,824)
Amount capitalised	15,037	29,123
Other finance costs	(2,372)	(2,128)
Net fair value (loss)/gain of interest rate swaps	(77,369)	36,253
Total finance (costs)/income	(132,239)	2,424

The average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 7.99% (2010: 7.74%).

Note 3

Current assets – cash and cash equivalents

	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Cash at bank	31,092	28,039
Short-term deposits1	45,940	45,707
Total current assets - cash and cash equivalents	77,032	73,746

1 As at 31 December 2011, the Group held C\$34.7 million (A\$33.5 million) in escrow in relation to the sale of its Toronto warehouse facility in June 2011. The funds in escrow relate to an amount withheld by the purchaser under Canadian law as part of the finalisation of the capital gains tax on disposal.

Note 4

Non-current assets classified as held for sale

(a) Non-current assets held for sale

	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Investment properties held for sale	28,018	59,260
Total non-current assets classified as held for sale	28,018	59,260

(b) Reconciliation

		For the	For the
		6 months to	12 months to
		31 Dec 2011	30 Jun 2011
	Note	\$'000	\$'000
Opening balance at the beginning of the period		59,260	18,068
Disposals		(30,106)	(15,674)
Transfer from investment properties	6	-	59,260
Foreign exchange differences on foreign currency translation		(1,114)	(2,445)
Net fair value loss of investment properties held for sale		(71)	-
Additions, amortisation and other		49	51
Closing balance at the end of the period		28,018	59,260

As part of the European asset sale program, certain assets were classified as non-current assets held for sale and carried at fair value.

Non-current assets classified as held for sale (continued)

Disposals

• On 16 September 2011, Schillerstraße 51, Ellhofen was disposed of for gross proceeds of €6.8 million (A\$9.4 million).
• On 16 September 2011, Schillerstraße 42, 42a & Bahnhofstraße 44, 50, Ellhofen was disposed of for gross proceeds of €4.0 million (A\$5.5 million).
• On 16 September 2011, Sulmstraße, Ellhofen-Weinsberg was disposed of for gross proceeds of €9.8 million (A\$13.6 million).
• On 30 December 2011, Niedesheimerstraße 24, Worms was disposed of for gross proceeds of €2.5 million (A\$3.1 million).

Note 5

Inventories

(a) Land and properties held for resale

	31 Dec 2011 \$'000	30 Jun 2011 \$'000
Current assets
Land and properties held for resale	44,431	7,991
Total current assets - inventories	44,431	7,991
Non-current assets
Land and properties held for resale	74,480	104,247
Total non-current assets - inventories	74,480	104,247
Total assets - inventories	118,911	112,238

(b) Reconciliation

		For the	For the
		6 months to	12 months to
		31 Dec 2011	30 Jun 2011
	Note	\$'000	\$'000
Opening balance at the beginning of the period		112,238	45,470
Transfer from investment properties	6	-	6,448
Disposals		(19,110)	(3,353)
Impairment		(2,014)	-
Acquisitions, additions and other		27,797	63,673
Closing balance at the end of the period		118,911	112,238

Acquisition

On 29 November 2011, undeveloped land was acquired at 3676 Ipswich Rd, Wacol QLD.

Disposals

• On 21 July 2011, two lots located at Templar Road, Erskine Park NSW were disposed of for gross proceeds of \$10.1 million.
• On 27 October 2011, a 6,534sqm development for Loscam at Foundation Drive, Laverton VIC was disposed of for gross proceeds of \$11.7 million.

Non-current assets – investment properties

(a) Properties	Ownership	Acquisition date	Independent valuation date	Independent valuation amount	Independent valuer	Book value 31 Dec 2011	Book value 30 Jun 2011
				\$'000		\$'000	\$'000
Kings Park Industrial Estate, Bowmans Road, Marayong, NSW	100%	May 1990	Dec 2009	88,000	(i)	88,724	88,660
Target Distribution Centre, Lot 1, Tara Avenue, Altona North, VIC	100%	Oct 1995	Jun 2011	32,500	(i)	32,521	32,500
Axxess Corporate Park, Mount Waverley, VIC	100%	Oct 1996	Jun 2010	179,400	(g)	181,801	181,249
Knoxfield Industrial Estate, 20 Henderson Road, Knoxfield, VIC	100%	Aug 1996	Jun 2011	37,600	(g)	37,607	37,600
12 Frederick Street, St Leonards, NSW	100%	Jul 2000	Jun 2011	33,500	(a)	33,737	33,500
2 Alspec Place, Eastern Creek, NSW	100%	Mar 2004	Dec 2011	24,900	(d)	24,900	24,328
108-120 Silverwater Road, Silverwater, NSW	100%	May 2010	n/a	n/a	n/a	26,062	25,931
40 Talavera Road, North Ryde, NSW	100%	Oct 2002	Dec 2011	31,500	(g)	31,500	27,981
44 Market Street, Sydney, NSW	100%	Sep 1987	Jun 2010	192,700	(d)	213,369	207,000
8 Nicholson Street, Melbourne, VIC	100%	Nov 1993	Jun 2009	85,000	(i)	80,279	80,162
130 George Street, Parramatta, NSW	100%	May 1997	Dec 2010	77,000	(f)	80,072	79,460
Flinders Gate Complex, 172 Flinders Street & 189 Flinders Lane, Melbourne, VIC	100%	Mar 1999	Jun 2011	28,500	(e)	29,312	28,500
383-395 Kent Street, Sydney, NSW	100%	Sep 1987	Dec 2011	133,000	(a)	133,000	127,225
14 Moore Street, Canberra, ACT**	100%	May 2002	Jun 2010	37,000	(i)	30,000	33,000
Sydney CBD Floor Space1	100%	Jul 2000	Dec 2011	129	(a)	129	129
34-60 Little Collins Street, Melbourne, VIC**	100%	Nov 1984	Jun 2011	39,200	(i)	39,213	39,200
32-44 Flinders Street, Melbourne, VIC	100%	Jun 1998	Jun 2011	29,500	(e)	29,899	29,500
Flinders Gate Carpark, 172-189 Flinders Street, Melbourne, VIC	100%	Mar 1999	Jun 2011	54,000	(e)	54,000	54,000
383-395 Kent Street Car Park, Sydney, NSW	100%	Sep 1987	Dec 2011	64,000	(a)	64,000	60,000
123 Albert St, Brisbane, QLD2	100%	Oct 1984	n/a	n/a	n/a	368,446	-
2 - 4 Military Rd, Matraville, NSW	100%	Dec 2009	n/a	n/a	n/a	51,400	48,902
79-99 St Hilliers Road, Auburn, NSW	100%	Sep 1997	Dec 2011	37,500	(g)	37,500	37,400
3 Brookhollow Avenue, Baulkham Hills, NSW	100%	Dec 2002	Jun 2010	40,000	(e)	40,365	40,112
1 Garigal Road, Belrose, NSW	100%	Dec 1998	Jun 2009	24,000	(f)	20,500	20,500

1 This relates to heritage floor space retained following the disposal of 1 Chifley Square, Sydney.

2 Classified as development property held as investment property at 30 June 2011.

The title to all properties is freehold, with the exception of the properties marked ** which are leasehold.

Non-current assets – investment properties (continued)

(a) Properties (continued)	Ownership	Acquisition date	Independent valuation date	Independent valuation amount	Independent valuer	Book value 31 Dec 2011	Book value 30 Jun 2011
				\$'000		\$'000	\$'000
2 Minna Close, Belrose, NSW	100%	Dec 1998	Jun 2009	27,600	(f)	27,346	27,312
114 - 120 Old Pittwater Road, Brookvale, NSW	100%	Sep 1997	Dec 2011	45,500	(a)	45,500	44,128
145 - 151 Arthur Street, Flemington, NSW	100%	Sep 1997	Jun 2011	28,000	(f)	28,001	28,000
436 - 484 Victoria Road, Gladesville, NSW	100%	Sep 1997	Dec 2011	41,500	(e)	41,500	43,500
1 Foundation Place, Greystanes, NSW	100%	Feb 2003	Jun 2010	41,500	(f)	43,201	43,000
5 - 15 Roseberry Avenue & 25 - 55 Rothschild Avenue, Rosebery, NSW	100%	Apr 1998	Dec 2010	89,000	(f)	90,115	89,756
10 - 16 South Street, Rydalmere, NSW	100%	Sep 1997	Jun 2011	39,250	(g)	40,273	39,250
Pound Road West, Dandenong, VIC	100%	Jan 2004	Dec 2011	74,700	(g)	75,464	75,300
DEXUS Industrial Estate, Boundary Road, Laverton North, VIC	100%	Jul 2002	Dec 2011	120,900	(f)	123,273	123,393
250 Forest Road, South Lara, VIC	100%	Dec 2002	Dec 2010	50,000	(i)	51,899	50,000
15 - 23 Whicker Road, Gillman, SA	100%	Dec 2002	Dec 2010	25,500	(a)	28,825	28,800
25 Donkin Street, Brisbane, QLD	100%	Dec 1998	Dec 2010	27,000	(f)	26,653	26,200
52 Holbeche Road, Arndell Park, NSW	100%	Jul 1998	Dec 2009	11,500	(a)	12,510	12,500
30 - 32 Bessemer Street, Blacktown, NSW	100%	May 1997	Jun 2011	16,250	(e)	15,500	16,250
27 - 29 Liberty Road, Huntingwood, NSW	100%	Jul 1998	Dec 2010	8,000	(i)	8,026	8,000
154 O'Riordan Street, Mascot, NSW	100%	Jun 1997	Jun 2011	13,750	(e)	13,893	13,750
11 Talavera Road, North Ryde, NSW	100%	Jun 2002	Jun 2010	127,000	(g)	145,251	141,000
DEXUS Industrial Estate, Egerton Street, Silverwater, NSW	100%	May 1997	Dec 2009	39,500	(e)	42,048	40,200
114 Fairbank Road, Clayton, VIC	100%	Jul 1997	Dec 2010	14,900	(f)	15,123	15,090
30 Bellrick Street, Acacia Ridge, QLD	100%	Jun 1997	Jun 2010	19,600	(d)	20,303	20,300
Quarry Greystanes, NSW – Solaris	100%	Dec 2007	Dec 2011	25,250	(e)	25,250	24,502
Quarry Greystanes, NSW – Symbion	100%	Dec 2007	n/a	n/a	n/a	30,472	30,411
Quarry Greystanes, NSW – Fujitsu1	100%	Dec 2007	n/a	n/a	n/a	39,600	-
European Portfolio	100%	Jul 2006	Dec 2011	61,699	(e)	61,444	114,660

1 Classified as development property held as investment property at 30 June 2011.

Non-current assets – investment properties (continued)

(a) Properties (continued)	Ownership	Acquisition date	Independent valuation date	Independent valuation amount	Independent valuer	Book value 31 Dec 2011	Book value 30 Jun 2011
			\$'000			\$'000	\$'000
45 Clarence Street, Sydney, NSW	100%	Dec 1998	Jun 2011	247,500	(f)	248,749	247,500
Governor Phillip Tower & Governor Macquarie Tower, 1 Farrer Place, Sydney, NSW1	50%	Dec 1998	Dec 2010	643,000	(d)	646,632	645,443
309-321 Kent Street, Sydney, NSW1	50%	Dec 1998	Dec 2010	182,500	(i)	185,063	184,308
1 Margaret Street, Sydney, NSW	100%	Dec 1998	Dec 2011	173,500	(d)	173,500	170,863
Victoria Cross 60 Miller Street, North Sydney, NSW	100%	Dec 1998	Jun 2011	135,000	(a)	137,538	135,000
The Zenith, 821-843 Pacific Highway, Chatswood, NSW1	50%	Dec 1998	Jun 2010	107,500	(e)	113,878	112,953
Woodside Plaza, 240 St Georges Terrace, Perth, WA	100%	Jan 2001	Jun 2010	425,000	(e)	441,200	441,000
30 The Bond, 30-34 Hickson Road, Sydney, NSW	100%	May 2002	Dec 2010	145,000	(a)	146,203	145,455
Southgate Complex, 3 Southgate Avenue, Southbank, VIC	100%	Aug 2000	Jun 2009	340,000	(i)	399,260	385,000
201-217 Elizabeth Street, Sydney, NSW1	50%	Aug 2000	Jun 2011	144,000	(d)	146,375	144,000
Garema Court, 140-180 City Walk, Civic, ACT **	100%	Aug 2000	Dec 2011	29,500	(a)	29,500	31,000
Australia Square Complex, 264-278 George Street, Sydney, NSW1	50%	Aug 2000	Dec 2011	278,750	(f)	278,750	271,463
Lumley Centre, 88 Shortland Street, Auckland, New Zealand	100%	Sep 2005	Jun 2010	97,756	(d)	93,738	94,974
13201 South Orange Avenue, Orlando	100%	Jun 2007	Dec 2011	32,395	(a)	32,395	29,435
Town Park Drive, Atlanta	100%	Sep 2004	Jun 2011	4,431	(a)	5,908	4,190
MD Food Park, Baltimore	100%	Sep 2004	Dec 2010	16,148	(a)	18,413	17,134
West Nursery, Baltimore	100%	Sep 2004	Jun 2011	5,120	(a)	5,380	4,842
Cabot Techs, Baltimore	100%	Sep 2004	Dec 2011	14,248	(a)	14,248	14,703
9112 Guildford Road, Baltimore	100%	Sep 2004	Dec 2011	7,099	(a)	7,099	7,147
8155 Stayton Drive, Baltimore	100%	Sep 2004	Jun 2010	6,105	(a)	6,715	5,773
Patuxent Range Road, Baltimore	100%	Sep 2004	Jun 2010	8,664	(a)	10,001	9,079
Bristol Court, Baltimore	100%	Sep 2004	Jun 2010	8,173	(a)	9,848	9,219
NE Baltimore, Baltimore	100%	Sep 2004	Jun 2010	6,145	(a)	5,898	6,220

1 The valuation reflects 50% of the independent valuation amount.

The title to all properties is freehold, with the exception of the properties marked ** which are leasehold.

(a) Properties (continued)	Ownership	Acquisition date	Independent valuation date	Independent valuation amount	Independent valuer	Book value 31 Dec 2011	Book value 30 Jun 2011
				\$'000		\$'000	\$'000
1181 Portal, 1831 Portal and 6615 Tributary, Baltimore	100%	Jun 2005	Jun 2011	9,880	(a)	10,634	9,344
9900 Brookford Street, Charlotte	100%	Sep 2004	Dec 2011	2,954	(a)	2,954	2,084
Westinghouse, Charlotte	100%	Sep 2004	Jun 2011	15,163	(a)	15,419	14,340
Airport Exchange, Cincinnati	100%	Sep 2004	Dec 2010	1,733	(a)	2,787	1,656
Empire Drive, Cincinnati	100%	Sep 2004	Dec 2011	3,643	(a)	3,643	3,896
International Way, Cincinnati	100%	Sep 2004	Dec 2011	9,157	(a)	9,157	8,732
Kentucky Drive, Cincinnati	100%	Sep 2004	Dec 2011	10,634	(a)	10,634	10,811
Kenwood Road, Cincinnati	100%	Sep 2004	Jun 2011	13,785	(a)	11,816	13,037
World Park, Cincinnati	100%	Sep 2004	Dec 2010	6,893	(a)	3,915	6,379
Equity/Westbelt/Dividend, Columbus	100%	Sep 2004	Dec 2011	19,063	(a)	19,063	16,840
2700 International Street, Columbus	100%	Sep 2004	Dec 2010	2,560	(a)	-	1,932
SE Columbus, Columbus	100%	Sep 2004	Dec 2010	2,508	(a)	2,140	1,886
Arlington, Dallas	100%	Sep 2004	Jun 2011	6,499	(a)	7,018	6,146
1900 Diplomat Drive, Dallas	100%	Sep 2004	Jun 2010	3,151	(a)	3,958	2,943
2055 Diplomat Drive, Dallas	100%	Sep 2004	Jun 2011	1,920	(a)	1,997	1,816
North Lake, Dallas	100%	Sep 2004	Jun 2010	9,738	(a)	12,259	10,532
555 Airline Drive, Dallas	100%	Sep 2004	Jun 2010	4,628	(a)	5,186	4,900
Hillguard, Dallas	100%	Sep 2004	Dec 2011	8,566	(a)	8,566	7,668
11011 Regency Crest Drive, Dallas	100%	Sep 2004	Dec 2011	7,286	(a)	7,286	6,024
East Collins, Dallas	100%	Sep 2004	Jun 2010	3,151	(a)	3,391	3,072
3601 East Plano/1000 Shiloh, Dallas	100%	Sep 2004	Dec 2011	12,702	(a)	12,702	12,240
East Plano Parkway, Dallas	100%	Sep 2004	Dec 2010	21,564	(a)	22,936	21,548
820-860 Avenue F, Dallas	100%	Sep 2004	Dec 2011	4,037	(a)	4,037	4,851
10th Street, Dallas	100%	Sep 2004	Jun 2010	10,625	(a)	9,200	8,800

(a) Properties (continued)		Acquisition date	Independent valuation date	Independent valuation amount	Independent valuer	Book value 31 Dec 2011	Book value 30 Jun 2011
	Ownership			\$'000		\$'000	\$'000
Capital Avenue, Dallas	100%	Sep 2004	Jun 2010	5,752	(a)	6,434	5,885
CTC @ Valwood, Dallas	100%	Sep 2004	Jun 2010	3,741	(a)	3,771	3,315
Glendale, Los Angeles	100%	Sep 2004	Dec 2011	57,404	(a)	57,404	54,192
14489 Industry Circle, Los Angeles	100%	Sep 2004	Dec 2010	7,336	(a)	8,212	6,957
14555 Alondra/6530 Altura, Los Angeles	100%	Sep 2004	Dec 2011	17,625	(a)	17,625	17,065
San Fernando Valley, Los Angeles	100%	Sep 2004	Dec 2010	20,225	(a)	22,027	20,832
2950 Lexington Avenue S, Minneapolis	100%	Sep 2004	Dec 2011	8,241	(a)	8,241	7,589
Mounds View, Minneapolis	100%	Sep 2004	Dec 2011	15,587	(a)	15,587	12,118
6105 Trenton Lane, Minneapolis	100%	Sep 2004	Jun 2010	6,558	(a)	6,653	6,272
CTC @ Dulles, Northern Virginia	100%	Sep 2004	Dec 2011	23,631	(a)	23,631	23,280
Alexandria, Northern Virginia	100%	Sep 2004	Jun 2011	40,567	(a)	40,932	38,365
Guildford, Northern Virginia	100%	Sep 2004	Jun 2010	14,474	(a)	-	16,272
Orlando Central Park, Orlando	100%	Sep 2004	Dec 2011	57,700	(a)	57,700	54,847
7500 Exchange Drive, Orlando	100%	Sep 2004	Jun 2010	3,741	(a)	4,697	3,962
105-107 South 41st Avenue, Phoenix	100%	Sep 2004	Dec 2010	10,047	(a)	14,021	9,889
1429-1439 South 40th Avenue, Phoenix	100%	Sep 2004	Dec 2010	8,467	(a)	8,143	8,449
10397 West Van Buren St., Phoenix	100%	Sep 2004	Dec 2011	11,638	(a)	11,638	7,984
844 44th Avenue, Phoenix	100%	Sep 2004	Dec 2010	6,006	(a)	6,000	5,671
220 South 9th Street, Phoenix	100%	Sep 2004	Dec 2011	6,400	(a)	6,400	5,595
431 North 47th Avenue, Phoenix	100%	Sep 2004	Jun 2010	5,317	(a)	6,203	5,350
601 South 55th Avenue, Phoenix	100%	Sep 2004	Dec 2011	5,199	(a)	5,199	3,850
1000 South Priest Drive, Phoenix	100%	Sep 2004	Dec 2011	2,895	(a)	2,895	1,867
1120-1150 W. Alameda Drive, Phoenix	100%	Sep 2004	Jun 2011	4,558	(a)	5,337	4,311
12th Street, Chino, Inland Empire	100%	Sep 2004	Dec 2010	6,165	(a)	7,223	6,790

(a) Properties (continued)	Ownership	Acquisition date	Independent valuation date	Independent valuation amount	Independent valuer	Book value 31 Dec 2011	Book value 30 Jun 2011
				\$'000		\$'000	\$'000
De Forest Circle, Mira Loma, Inland Empire	100%	Sep 2004	Dec 2010	11,914	(a)	14,287	12,308
Ontario, Riverside	100%	Sep 2004	Jun 2011	26,280	(a)	24,497	24,853
4190 East Santa Ana St, Ontario, Inland Empire	100%	Sep 2004	Dec 2010	4,282	(a)	5,179	4,616
Rancho Cucamonga, Riverside	100%	Sep 2004	Dec 2010	18,965	(a)	23,110	20,308
12000 Jersey Court, Rancho Cucamonga, Inland Empire	100%	Sep 2004	Dec 2011	4,401	(a)	4,401	3,975
Airway Road, San Diego	100%	Sep 2004	Dec 2011	7,188	(a)	7,188	7,540
Kent West, Seattle	100%	Sep 2004	Jun 2011	26,585	(a)	27,064	25,142
26507 79th Avenue - South, Seattle	100%	Sep 2004	Dec 2011	9,679	(a)	9,679	8,877
Calvert/Murry's, Northern Virginia	100%	Sep 2004	Jun 2011	4,825	(a)	4,833	4,563
7700 68th Avenue, Brooklyn Park	100%	Nov 2005	Jun 2010	2,697	(a)	2,954	2,441
7500 West 78th Street, Bloomington	100%	Nov 2005	Jun 2010	4,057	(a)	3,800	3,213
1285 & 1301 Corporate Center Drive, 1230 & 1270 Eagan Industrial Road, Eagan	100%	Nov 2005	Jun 2011	12,180	(a)	13,756	11,519
3691 Perris Boulevard, Perris, Inland Empire	100%	Jan 2008	Dec 2010	105,357	(a)	120,016	113,337
8151 & 8161 Interchange Parkway, San Antonio	100%	Jul 2007	Dec 2011	12,800	(a)	12,800	12,734
Cornerstone I & II, 5411 Interstate 10 East & 1228 Cornerway Boulevarde, San Antonio	100%	Aug 2007	Dec 2011	13,785	(a)	13,785	12,860
302 and 402 Tayman Road, Port of San Antonio	100%	Oct 2007	Jun 2011	15,853	(a)	15,876	14,992
1803 Grandstand Avenue, Alamo Downs, San Antonio	100%	Aug 2007	Jun 2010	5,795	(a)	9,172	8,637
195 King Mill Road, McDonough	100%	Nov 2009	Dec 2011	64,986	(a)	64,986	61,401
19700 38th Avenue East, Spanaway	100%	Oct 2009	Dec 2010	55,632	(a)	55,632	52,612
6241 Shook Road, Columbus, Franklin County	100%	Jul 2009	Dec 2010	60,064	(a)	58,228	55,067
28515 Westinghouse Place, Santa Clarita	100%	Dec 2006	Dec 2011	35,742	(a)	35,742	33,552
Tri-County 5, Tri-County Parkway, Schertz, Texas	100%	July 2007	Jun 2010	1,141	(a)	-	1,183
Tri-County 6, Tri-County Parkway, Schertz, Texas	100%	July 2007	Jun 2010	1,882	(a)	2,425	2,188
202 S Tayman Street, San Antonio, Texas	100%	Nov 2007	Jun 2011	8,566	(a)	8,811	8,101

(a) Properties (continued)	Ownership	Acquisition date	Independent valuation date	Independent valuation amount	Independent valuer	Book value 31 Dec 2011	Book value 30 Jun 2011
				\$'000		\$'000	\$'000
1100 Hatcher Ave and 17521 & 17531 Railroad Street	100%	Oct 2010	n/a	n/a	n/a	15,538	13,809
14501 Artesia Boulevard La Mirada	100%	Jan 2011	Dec 2011	31,312	(a)	31,312	26,077
6711 Valley View St La Palma	100%	Jul 2011	n/a	n/a	n/a	20,806	-
Total investment properties excluding development properties						7,078,645	6,566,931
Total development properties held as investment property						188,569	538,983
Total investment properties						7,267,214	7,105,914

• (a) Colliers International
• (b) Landmark White
• (c) Cushman & Wakefield
• (d) Jones Lang LaSalle
• (e) Knight Frank
• (f) FPD Savills
• (g) m3property
• (h) Weiser Realty Advisors (USA)
• (i) CB Richard Ellis

Non-current assets – investment properties (continued)

(a) Properties (continued)

Valuation basis

The basis of valuation of investment properties is fair value, being the amounts for which the assets could be exchanged between knowledgeable willing parties in an arm"s length transaction, based on current prices in an active market for similar properties in the same location and condition and subject to similar leases. In relation to development properties under construction for future use as investment property, fair value is determined based on the market value of the property on the assumption it had already been completed at the valuation date less costs still required to complete the project, including an appropriate adjustment for profit and risk. Properties independently valued in the last 12 months were based on independent assessments by a member of the Australian Property Institute, the New Zealand Institute of Valuers, the Appraisal Institute in the United States of America, the French Real Estate Valuation Institution or the Society of Property Researchers, Germany.

Acquisitions

• On 6 July 2011, 6711 Valley View Street, La Palma, California was acquired for US\$18.3 million (A\$17.1 million), excluding acquisition costs.
• On 27 October 2011, 2250 Riverside Avenue, Colton, California was acquired for US\$18.4 million (A\$17.5 million), excluding acquisition costs.

Disposals

• On 14 September 2011, Tri-County 5, Tri-County Parkway, Schertz, San Antonio, Texas was disposed of for gross proceeds of US\$1.8 million (A\$1.8 million).
• On 16 September 2011, 2700 International Street, Columbus, Ohio was disposed of for gross proceeds of US\$3.1 million (A\$3.0 million).
• On 26 September 2011, 44633-44645 Guilford Road & 21641 Beaumeade Circle, Ashburn, Virginia was disposed of for gross proceeds of US\$22.2 million (A\$22.9 million).
• On 30 November 2011, Kopenhagenerstraße, Duisburg was disposed of for gross proceeds of €18.9 million (A\$25.1 million).
• On 30 November 2011, Theodorstraße, Düsseldorf was disposed of for gross proceeds of €14.5 million (A\$19.3 million).
• On 23 December 2011, 9842 International Boulevard, Cincinnati, Ohio was disposed of for gross proceeds of US\$4.5 million (A\$4.4 million).

(b) Reconciliation

		For the	For the
		6 months to	12 months to
		31 Dec 2011	30 Jun 2011
	Note	\$'000	\$'000
Opening balance at the beginning of the period		7,105,914	7,146,397
Additions		74,385	267,455
Acquisitions		35,175	41,205
Lease incentives		27,940	85,439
Amortisation of lease incentives		(30,392)	(58,732)
Rent straightlining		1,138	(2,119)
Disposals		(69,616)	(141,674)
Transfer to non-current assets classified as held for sale	4	-	(59,260)
Transfer to inventories	5	-	(6,448)
Net fair value gain of investment properties		60,027	148,433
Foreign exchange differences on foreign currency translation		62,643	(314,782)
Closing balance at the end of the period		7,267,214	7,105,914

(c) Investment properties pledged as security

Refer to note 9 for information on investment properties pledged as security.

Non-current assets – investments accounted for using the equity method

The investment in Bent Street Trust is accounted for in the Financial Statements using the equity method of accounting. Information relating to this entity is set out below:

		Ownership interest
		31 Dec 2011	30 Jun 2011	31 Dec 2011	30 Jun 2011
Name of entity	Principal activity	%	%	\$'000	\$'000
Bent Street Trust	Office property investment	33.3	33.3	205,133	200,356
	Total non-current assets - investments accounted for using the equity method			205,133	200,356

The Bent Street Trust was formed in Australia.

Movements in carrying amounts of investments accounted for using the equity method

	For the	For the
	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Opening balance at the beginning of the period	200,356	93,344
Units issued during the period	5,112	73,558
Share of net profit after tax1	3,108	34,053
Distributions received/receivable	(3,443)	(599)
Closing balance at the end of the period	205,133	200,356
Results attributable to investments accounted for using the equity method
Operating profit before income tax	3,108	34,053
Operating profit after income tax	3,108	34,053
Less: Distributions received/receivable	(3,443)	(599)
	(335)	33,454
Retained profits/(accumulated losses) at the beginning of the period	844	(32,610)
Retained profits at the end of the period	509	844

1 Share of net profit after tax includes a fair value gain of nil (June 2011: gain of \$33.6 million) in relation to the Group"s share of the Bligh Street investment property.

Non-current assets – intangible assets

	For the	For the
	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Management rights
Opening balance at the beginning of the period	222,353	223,000
Amortisation charge	(213)	(647)
Closing balance at the end of the period	222,140	222,353
Cost	252,382	252,382
Accumulated amortisation	(2,439)	(2,226)
Accumulated impairment	(27,803)	(27,803)
Total management rights	222,140	222,353
Goodwill
Opening balance at the beginning of the period	2,331	2,525
Impairment	(563)	(194)
Closing balance at the end of the period	1,768	2,331
Cost	2,998	2,998
Accumulated impairment	(1,230)	(667)
Total goodwill	1,768	2,331
Total non-current assets - intangible assets	223,908	224,684

Management rights represent the asset management rights owned by DEXUS Holdings Pty Limited, a wholly owned subsidiary of DXO, which entitle it to management fee revenue from both finite life trusts and indefinite life trusts. Those rights that are deemed to have a finite useful life (held at a value of \$7,556,350) are measured at cost and amortised using the straight-line method over their estimated useful lives of 21 years. Management rights that are deemed to have an indefinite life are held at a value of \$214,584,150.

As at 31 December 2011, management had not identified any events or circumstances that would indicate an impairment of the carrying value of management rights associated with indefinite life trusts.

Interest bearing liabilities

		31 Dec 2011	30 Jun 2011
	Notes	\$'000	\$'000
Current
Secured
Bank loans	(b),(d)	1,519	250,983
Total secured		1,519	250,983
Unsecured
US senior notes		6,892	65,183
Total unsecured		6,892	65,183
Deferred borrowing costs		(187)	(389)
Total current liabilities – interest bearing liabilities		8,224	315,777
Non-current
Secured
Bank loans	(b),(c)	153,853	153,218
Total secured		153,853	153,218
Unsecured
US senior notes		762,505	720,967
Bank loans	(a)	1,048,695	701,573
Medium term notes		340,000	340,000
Preference shares	(e)	91	86
Total unsecured		2,151,291	1,762,626
Deferred borrowing costs		(18,480)	(16,565)
Total non-current liabilities – interest bearing liabilities		2,286,664	1,899,279
Total interest bearing liabilities		2,294,888	2,215,056

					31 Dec 2011	31 Dec 2011
					\$'000	\$'000
						Facility
Type of Facility	Note	Currency	Security	Maturity Date	Utilised	Limit
US senior notes (144A)		US\$	Unsecured	Oct-14 to Mar-21	539,976	539,976
US senior notes (USPP)		US\$	Unsecured	Mar-12 to Mar-17	229,420	229,420
Medium term notes		A\$	Unsecured	Jul-14 to Apr-17	340,000	340,000
Multi-option revolving credit
facilities	(a)	Multi Currency	Unsecured	May-12 to Jul-17	1,048,695	1,617,567
Bank debt – secured	(b)	US\$	Secured	Feb-14	79,654	79,654
Bank debt – secured	(c)	US\$	Secured	Jun-17 to Dec-17	75,719	75,719
Total					2,313,464	2,882,336
Bank guarantee utilised					3,030
Unused at balance date					565,842

Interest bearing liabilities (continued)

Financing arrangements

Each of the Group"s unsecured borrowing facilities are supported by guarantee arrangements, and have negative pledge provisions which limit the amount and type of encumbrances that the Group can have over their assets and ensures that all senior unsecured debt ranks pari passu.

The current debt facilities will be refinanced as at/or prior to their maturity.

(a) Multi-option revolving credit facilities

This includes 20 facilities maturing between May 2012 and July 2017 with a weighted average maturity of September 2014. The total facility limit comprises US\$223.5 million (A\$220.1 million) and A\$1,397.5 million. Of the total facility limit, A\$72.5 million is maturing in May 2012, none of which is drawn and A\$3.0 million is utilised as bank guarantees for developments.

(b) Bank loans – secured

This includes a US\$80.9 million (A\$79.7 million) secured bank debt facility that amortises over the life of the loan through monthly principal payments (US\$1.5 million payable within 12 months) with a final maturity date of February 2014. The facility is secured by mortgages over investment properties totalling US\$142.3 million (A\$140.1 million) as at 31 December 2011. During the current period, US\$7.3 million (A\$7.2 million) of the principal in addition to the amortisation has been repaid with associated mortgages discharged.

(c) Bank loans – secured

This includes a total of US\$76.9 million (A\$75.7 million) of secured bank facilities with a weighted average maturity of October 2017. The facilities are secured by mortgages over investment properties totaling US\$178.4 million (A\$175.6 million) as at 31 December 2011.

(d) Bank loans – secured

During the period, an A\$250.0 million secured bank loan was repaid and associated mortgages discharged.

(e) Preferred shares

DEXUS Industrial Properties Inc. (US REIT) has issued US\$92,550 (A\$91,128) of preferred shares as part of the requirement to be classified as a Real Estate Investment Trust (REIT) under US tax legislation. These preferred shares will remain on issue until such time that the Board decides that it is no longer in the Group"s interest to qualify as a REIT.

Additional information

An A\$200.0 million bilateral facility became available in January 2012 with a maturity of January 2015.

Contributed equity

(a) Contributed equity of unitholders of the parent entity

	For the	For the
	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Opening balance at the beginning of the period	1,798,077	1,789,973
Capital payments	(174,979)	-
Distributions reinvested	-	8,104
Transaction costs	(70)	-
Closing balance at the end of the period	1,623,028	1,798,077

(b) Contributed equity of unitholders of other stapled entities

	For the	For the
	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Opening balance at the beginning of the period	3,014,665	3,008,241
Capital contributions	174,979	-
Distributions reinvested	-	6,424
Transaction costs	(211)	-
Closing balance at the end of the period	3,189,433	3,014,665

Capital payments and capital contributions

In December 2011, DXS implemented the Capital Reallocation Proposal approved by security holders at the 2011 Annual General Meeting held on 31 October 2011. Under the Capital Reallocation Proposal, DOT and DDF made capital payments to security holders of 3.616 cents for each DOT and DDF unit which was then compulsorily applied as a capital contribution to DIT and DXO units. Security holders did not receive any cash as part of the Capital Reallocation Proposal.

(c) Number of securities on issue

	For the	For the
	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	No. of	No. of
	securities	securities
Opening balance at the beginning of the period	4,839,024,176	4,820,821,799
Distributions reinvested	-	18,202,377
Closing balance at the end of the period	4,839,024,176	4,839,024,176

Note 11

Distributions paid and payable

(a) Distribution to security holders

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
31 December (payable 29 February 2012)	129,202	125,331
	129,202	125,331

Distributions paid and payable (continued)

(b) Distribution to other non-controlling interests

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
DEXUS RENTS Trust (paid 18 October 2011)	3,223	3,162
DEXUS RENTS Trust (paid 17 January 2012)	3,101	3,182
	6,324	6,344
Total distributions	135,526	131,675

(c) Distribution rate

	31 Dec 2011	31 Dec 2010
	Cents per	Cents per
	security	security
31 December (payable 29 February 2012)	2.67	2.59
Total distributions	2.67	2.59

Note 12

Contingent liabilities

Details and estimates of maximum amounts of contingent liabilities are as follows:

	31 Dec 2011 \$'000	30 Jun 2011 \$'000
Bank guarantees by the Group in respect of variations and other financial risks
associated with the development of:
1 Bligh Street, Sydney, NSW1	2,500	5,650
123 Albert Street, Brisbane, QLD	500	5,682
34-60 Little Collins Street, Melbourne, VIC	30	30
Total contingent liabilities	3,030	11,362

1 Bank guarantee held in relation to an equity accounted investment (refer note 7).

DDF together with DIT, DOT and DXO is a guarantor of a total of A\$1,397.5 million and US\$223.5 million (A\$220.1 million) of bank bilateral facilities, a total of A\$340.0 million of medium term notes, a total of US\$233.0 million (A\$229.4 million) of privately placed notes, and a total of US\$550.0 million (A\$541.6 million) public 144A senior notes, which have all been negotiated to finance the Group and other entities within DXS. The guarantees have been given in support of debt outstanding and drawn against these facilities, and may be called upon in the event that a borrowing entity has not complied with certain requirements such as failure to pay interest or repay a borrowing, whichever is earlier. During the period no guarantees were called.

DDF together with DIT, DOT and DXO is also a guarantor, on a subordinated basis, of RENTS (Real-estate perpetual ExchaNgeable sTep-up Securities). The guarantee has been given in support of payments that become due and payable to the RENTS holders and ranks ahead of the Group"s distribution payments, but subordinated to the claims of the senior creditors.

The guarantees are issued in respect of the Group and do not constitute an additional liability to those already existing in interest bearing liabilities on the Statement of Financial Position.

The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Group, other than those disclosed in the Financial Statements, which should be brought to the attention of security holders as at the date of completion of this report.

Events occurring after reporting date

Since the end of the period, the Directors are not aware of any matter or circumstance not otherwise dealt with in their Directors' Report or the Financial Statements that has significantly or may significantly affect the operations of the Group, the results of those operations, or state of the Group"s affairs in future financial periods.

Note 14

Operating segments

(a) Description of segments

The Chief Operating Decision Maker (CODM) has been identified as the Board of Directors as they are responsible for the strategic decision making within the Group. DXS management has identified the Group"s operating segments based on the sectors analysed within the management reports reviewed by the CODM in order to monitor performance across the Group and to appropriately allocate resources. Refer to the table below for a brief description of the Group"s operating segments.

Office – Australia and New Zealand	This comprises office space with any associated retail space; as well as car parks and office developments in Australia and New Zealand.
Industrial - Australia	This comprises domestic industrial properties, industrial estates and industrial developments.
Industrial - North America	This comprises industrial properties, industrial estates and industrial developments in the United States as well as one industrial asset in Canada1
Management Business	The domestic and US based management businesses are responsible for asset, property and development management of Office, Industrial and Retail properties for the Group and the third party funds management business.
Financial Services	The treasury function of the Group is managed through a centralised treasury department. As a result, all treasury related financial information relating to borrowings, finance costs as well as fair value movements in derivatives, are prepared and monitored separately.
All other segments	This comprises the European industrial portfolio. This operating segment does not meet the quantitative thresholds set out in AASB 8 Operating Segments due to its relatively small scale. As a result this non-core operating segment has been included in "all other segments" in the operating segment information.

1 The Canadian asset was sold on 24 June 2011.

Operating segments (continued)

(b) Segment information provided to the CODM

The segment information provided to the CODM for the reportable segments for the half year ended 31 December 2011 and 31 December 2010 includes the following:

	Office Australia & New Zealand1	Industrial Australia	Industrial North America	Management Business	Financial Services	All other segments	Eliminations	Total
31 December 2011	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Segment performance measures
Property revenue	192,966	73,526	53,137	141	-	7,572	-	327,342
Proceeds from sale of inventory	-	-	-	21,830	-	-	-	21,830
Management fee revenue	-	-	-	25,667	-	-	-	25,667
Interest revenue	-	-	-	-	799	-	-	799
Inter-segment revenue	-	-	-	18,597	-	-	(18,597)	-
Total operating segment revenue	192,966	73,526	53,137	66,235	799	7,572	(18,597)	375,638
Net operating income (NOI)	141,042	58,350	37,593	-	-	5,447	-	242,432
Management business EBIT	-	-	-	3,509	-	-	-	3,509
Segment asset measures
Direct property portfolio	4,575,294	1,559,995	1,282,419	118,911	-	89,462	-	7,626,081

1 Includes the Group"s share of its investment accounted for using the equity method of accounting.

Operating segments (continued)

(b) Segment information provided to the CODM (continued)

	Office Australia & New Zealand1	Industrial Australia	Industrial North America	Management Business	Financial Services	All other segments	Eliminations	Total
31 December 2010	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Segment performance measures
Property revenue	172,885	70,853	59,432	552	-	10,706	-	314,428
Management fee revenue	-	-	-	28,179	-	-	-	28,179
Interest revenue	-	-	-	-	717	-	-	717
Inter-segment revenue	(9)	-	-	17,272	-	-	(17,263)	-
Total operating segment revenue	172,876	70,853	59,432	46,003	717	10,706	(17,263)	343,324
Net operating income (NOI)	127,166	56,790	41,601	-	-	8,098	-	233,655
Management business EBIT	-	-	-	1,516	-	-	-	1,516
Segment asset measures
Direct property portfolio	4,307,824	1,521,687	1,252,901	87,654	-	172,911	-	7,342,977

1 Includes the Group"s share of its investment accounted for using the equity method of accounting.

Operating segments (continued)

• (c) Other segment information
• (i) Net operating income (NOI) and operating earnings before interest and tax (Operating EBIT)

The Board assesses the performance of each operating sector based on a measure of NOI, which is determined as property revenue less attributable property expenses. The performance indicator predominantly used as a measure of the management business performance is the Management Business EBIT, which comprises management fee revenue less compensation related expenses and other management operating expenses. Both the property NOI and the management business" EBIT exclude the effects of finance costs, taxation and non-cash items, such as unrealised fair value adjustments, which are monitored by management separately. The reconciliation below reconciles these profit measures to the profit attributable to stapled security holders.

Reconciliation of net operating income and management business EBIT to Group net profit attributable to stapled security holders:

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
Property revenue per Statement of Comprehensive Income	323,078	314,428
Property expenses per Statement of Comprehensive Income	(77,999)	(75,268)
Intercompany property revenue and expenses1	(5,723)	(5,505)
Share of net operating income from associates	3,076	-
Net operating income (NOI)	242,432	233,655
Add: management business EBIT	3,509	1,516
Less: Internal management fees2	(12,618)	(11,832)
Less: Inter-segment eliminations	(533)	(405)
Other income and expense3	(1,632)	(3,140)
Operating EBIT	231,158	219,794
Interest revenue	799	717
Finance (costs)/income	(132,239)	2,424
Share of net fair value gain of investments accounted for using the equity method	-	12,870
Net fair value gain of investment properties	59,956	55,022
Net gain on sale of investment properties	2,905	4,697
Net fair value (loss)/gain of derivatives	(517)	1,932
Impairment and other	(2,577)	(74)
Tax expense	(12,765)	(2,032)
Other non-controlling interests	(1,008)	(924)
Net profit attributable to stapled security holders	145,712	294,426

1 Includes internal property expenses of \$5.5 million (2010: \$5.0 million) included in NOI for management reporting purposes but eliminated for statutory accounting purposes. The internal property management expenses comprise of property management fees included in the management business EBIT.

2 Elimination of internally generated Responsible Entity fees of \$10.1 million (2010: \$9.2 million) and \$2.5 million (2010: \$2.6 million) other internal management fees.

3 Other income and expenses comprise foreign exchange gains, depreciation, other income and expenses excluding amounts included in the management business" EBIT.

Operating segments (continued)

• (c) Other segment information (continued)
• (ii) Segment assets

The amounts provided to the CODM as a measure of segment assets is the direct property portfolio. The direct property portfolio values are allocated based on the physical location of the asset and are measured in a manner consistent with the Statement of Financial Position. The direct property portfolio comprises investment properties, all development properties and the Group"s share of properties held through equity accounted investments. The reconciliation below reconciles the total direct property portfolio balance to total assets in the Statement of Financial Position.

Reconciliation of direct property portfolio to Group total assets in the Statement of Financial Position:

	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Investment properties	7,267,214	7,105,914
Non-current assets held for sale	28,018	59,260
Inventories	118,911	112,238
Investment property (accounted for using the equity method)1	211,938	209,670
Direct property portfolio	7,626,081	7,487,082
Cash	77,032	73,746
Receivables	26,130	36,175
Intangible assets	223,908	224,684
Derivative financial instruments	122,714	100,220
Deferred tax assets	51,064	55,577
Current tax assets	1,271	1,247
Property, plant and equipment	4,018	3,926
Prepayments & other assets2	7,075	4,987
Total assets	8,139,293	7,987,644

1 This represents the Group"s portion of the investment property accounted for using the equity method of accounting.

2 Other assets include the Group"s share of total net assets of its investments accounted for using the equity method of accounting less the Group"s share of the investment property value which is included in the direct property portfolio.

Independent auditor's review report to the stapled security holders of DEXUS Diversified Trust

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of DEXUS Diversified Trust, which comprises the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors' declaration for the DEXUS Property Group (the consolidated entity). The consolidated entity comprises both DEXUS Diversified Trust (the Trust) and the entities it controlled during that half-year.

Directors' responsibility for the half-year financial report

The directors of DEXUS Funds Management Limited (the Responsible Entity) are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such control as the directors determine is 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 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 2011 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 DEXUS Diversified 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. 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.

Independence

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

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Liability limited by a scheme approved under Professional Standards Legislation.

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 Corporations Act 2001 including: year DEXUS Diversified Trust is not in accordance with is matter not the

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half half-year ended on that date; and view 2011
• (b) complying with Accounting Standard AASB 134 Corporations Regulations 2001. Interim Financial Reporting nterim and the

PricewaterhouseCoopers

EA Barron Partner

Sydney 14 February 2012

2011 DEXUS Industrial Trust (ARSN 090 879 137)

Interim Report 31 December 2011

Contents Page

Directors" Report	1
Auditor"s Independence Declaration	3
Consolidated Statement of Comprehensive Income	4
Consolidated Statement of Financial Position	5
Consolidated Statement of Changes in Equity	6
Consolidated Statement of Cash Flows	7
Notes to the Financial Statements	8
Directors" Declaration 15
Independent Auditor"s Review 16

DEXUS Property Group (DXS) (ASX Code: DXS) consists of DEXUS Diversified Trust (DDF), DEXUS Industrial Trust (DIT), DEXUS Office Trust (DOT) and DEXUS Operations Trust (DXO), collectively known as DXS or the Group.

Under Australian Accounting Standards, DDF has been deemed the parent entity for accounting purposes. Therefore the DDF consolidated Financial Statements include all entities forming part of DXS. The DDF consolidated Financial Statements are presented in separate Financial Statements.

All press releases, Financial Statements and other information are available on our website: www.dexus.com

The Directors of DEXUS Funds Management Limited (DXFM) as Responsible Entity of DEXUS Industrial Trust present their Directors" Report together with the consolidated Financial Statements for the half year ended 31 December 2011. The consolidated Financial Statements represents DEXUS Industrial Trust and its consolidated entities (DIT or the Trust).

The Trust together with DEXUS Diversified Trust (DDF), DEXUS Office Trust (DOT) and DEXUS Operations Trust (DXO) form the DEXUS Property Group (DXS or the Group) stapled security.

1 Directors

The following persons were Directors of DXFM at all times during the half year and to the date of this Directors" Report, unless otherwise stated:

Directors	Appointed	Resigned
Christopher T Beare	4 August 2004
Elizabeth A Alexander, AM	1 January 2005
Barry R Brownjohn	1 January 2005
John C Conde, AO	29 April 2009
Tonianne Dwyer	24 August 2011
Stewart F Ewen, OAM	4 August 2004
Victor P Hoog Antink	1 October 2004
Brian E Scullin	1 January 2005	31 October 2011
Richard Sheppard	1 January 2012
Peter B St George	29 April 2009

2 Review and results of operations

The results for the half year ended 31 December 2011 were:

• Loss attributable to unitholders was \$22.5 million (December 2010: \$79.1 million profit);
• Total assets were \$1,849.9 million (June 2011: \$1,881.9 million); and
• Net assets were \$722.6 million (June 2011: \$576.6 million).

A review of the results, financial position and operations of the Group, of which the Trust forms part thereof, is set out in the Directors" Report of the DEXUS Property Group Interim Report.

3 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 3 and forms part of this Directors" Report.

4 Rounding of amounts and currency

The Trust is a registered scheme of the kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission, relating to the rounding off of amounts in this Directors" Report and the Financial Statements. Amounts in this Directors" Report and the Financial Statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, unless otherwise indicated. All figures in this Directors" Report and the Financial Statements, except where otherwise stated, are expressed in Australian dollars.

Auditor's Independence Declaration

As lead auditor for the review declare that to the best of my knowledge and belief, there have been: of DEXUS Industrial Trust for the half year ended 31 December 2011, I

• a) no contraventions o relation to the review f the auditor independence requirements of the Corporations Act 2001 review; and in
• b) no contraventions of any applicable code of professional conduct in relation to the professional in review.

This declaration is in respect of period. DEXUS Industrial Trust and the entities it controlled during the

EA Barron Partner PricewaterhouseCoopers

Sydney 14 February 2012

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

DEXUS Industrial Trust

Consolidated Statement of Comprehensive Income

For the half year ended 31 December 2011

	Note	31 Dec 2011 \$'000	31 Dec 2010 \$'000
Revenue from ordinary activities
Property revenue		64,102	73,030
Interest revenue		807	957
Total revenue from ordinary activities		64,909	73,987
Share of net profit of associates accounted for using the equity method		12,734	11,474
Net fair value gain of investment properties		-	22,925
Net fair value gain of derivatives		-	1,335
Net foreign exchange gain		361	1,099
Other income		7	25
Total income		78,011	110,845
Expenses
Property expenses		(13,929)	(14,459)
Responsible Entity fees		(2,031)	(2,065)
Finance costs	2	(75,762)	(14,404)
Net loss on sale of investment properties		(3,199)	(117)
Net fair value loss of investment properties		(3,436)	-
Net fair value loss of derivatives		(501)	-
Other expenses		(812)	(885)
Total expenses		(99,670)	(31,930)
(Loss)/profit before tax		(21,659)	78,915
Tax (expense)/benefit
Income tax (expense)/benefit		(67)	13
Withholding tax (expense)/benefit		(793)	206
Total tax (expense)/benefit		(860)	219
(Loss)/profit after tax		(22,519)	79,134
Other comprehensive income:
Exchange differences on translating foreign operations		(6,394)	23,278
Total comprehensive (loss)/income for the period		(28,913)	102,412
Earnings per unit		Cents	Cents
Basic earnings per unit on (loss)/profit attributable to unitholders of the
parent entity		(0.96)	0.58
Diluted earnings per unit on (loss)/profit attributable to unitholders of the
parent entity		(0.96)	0.58

DEXUS Industrial Trust

Consolidated Statement of Financial Position

As at 31 December 2011

		31 Dec 2011	30 Jun 2011
	Note	\$'000	\$'000
Current assets
Cash and cash equivalents	3	43,517	39,837
Receivables		5,877	5,662
Non-current assets classified as held for sale	4	28,018	60,688
Loan with related parties	5	266,460	259,537
Derivative financial instruments		13,570	20,854
Current tax assets		256	233
Other		1,072	2,592
Total current assets		358,770	389,403
Non-current assets
Investment properties	6	1,276,981	1,307,484
Investments accounted for using the equity method	7	184,694	162,513
Deferred tax assets		5,941	6,061
Derivative financial instruments		23,345	16,283
Other		188	197
Total non-current assets		1,491,149	1,492,538
Total assets		1,849,919	1,881,941
Current liabilities
Payables		58,350	48,538
Current tax liabilities		5,968	5,956
Provisions		-	12,360
Derivative financial instruments		6,208	2,039
Total current liabilities		70,526	68,893
Non-current liabilities
Loans with related parties	5	908,389	1,111,503
Interest bearing liabilities	8	49,703	47,758
Derivative financial instruments		97,961	76,412
Other		779	810
Total non-current liabilities		1,056,832	1,236,483
Total liabilities		1,127,358	1,305,376
Net assets		722,561	576,565
Equity
Contributed equity	9	1,100,025	925,116
Reserves		35,248	41,642
Accumulated losses		(412,712)	(390,193)
Total equity nsolidated Statement of Finan cial Position		722,561	576,565 Co

				Foreign
				currency
		Contributed	Accumulated	translation	Total
		equity	losses	reserve	equity
	Note	\$'000	\$'000	\$'000	\$'000
Opening balance as at 1 July 2010		925,116	(492,578)	12,163	444,701
Profit after tax		-	79,134	-	79,134
Other comprehensive income		-	-	23,278	23,278
Transactions with owners in their capacity as owners
Contribution of equity, net of transaction costs	9	-	-	-	-
Closing balance as at 31 December 2010		925,116	(413,444)	35,441	547,113
Opening balance as at 1 July 2011		925,116	(390,193)	41,642	576,565
Loss after tax		-	(22,519)	-	(22,519)
Other comprehensive income		-	-	(6,394)	(6,394)
Transactions with owners in their capacity as owners
Capital contribution, net of transaction costs	9	174,909	-	-	174,909
Closing balance as at 30 December 2011		1,100,025	(412,712)	35,248	722,561

DEXUS Industrial Trust

Consolidated Statement of Cash Flows

For the half year ended 31 December 2011

	Note	31 Dec 2011 \$'000	31 Dec 2010 \$'000
Cash flows from operating activities
Receipts in the course of operations (inclusive of GST)		75,152	79,469
Payments in the course of operations (inclusive of GST)		(24,783)	(28,288)
Interest received		823	910
Finance costs paid		(18,907)	(18,960)
Income and withholding taxes paid		(386)	(242)
Net cash inflow from operating activities		31,899	32,889
Cash flows from investing activities
Proceeds from sale of investment properties		72,930	7,578
Payments for capital expenditure on investment properties		(11,722)	(13,200)
Net cash inflow/(outflow) from investing activities		61,208	(5,622)
Cash flows from financing activities
Proceeds from capital contribution		174,979	-
Capital contribution transaction costs		(70)	-
Borrowings provided by entities within DXS		124,655	29,237
Borrowings provided to entities within DXS		(379,909)	(61,843)
Proceeds from borrowings		14,089	-
Repayment of borrowings		(9,015)	-
Distributions paid to unitholders		(12,360)	-
Net cash outflow from financing activities		(87,631)	(32,606)
Net increase/(decrease) in cash and cash equivalents		5,476	(5,339)
Cash and cash equivalents at the beginning of the period		39,837	16,537
Effects of exchange rate changes on cash and cash equivalents		(1,796)	(1,431)
Cash and cash equivalents at the end of the period	3	43,517	9,767

Summary of significant accounting policies

(a) Basis of preparation

DEXUS Property Group stapled securities are quoted on the Australian Securities Exchange under the "DXS" code and comprise one unit in each of DDF, DIT, DOT and DXO. Each entity forming part of DXS continues as a separate legal entity in its own right under the Corporations Act 2001 and is therefore required to comply with the reporting and disclosure requirements under the Corporations Act 2001 and Australian Accounting Standards.

DEXUS Funds Management Limited (DXFM) as Responsible Entity for DDF, DIT, DOT and DXO may only unstaple the Group if approval is obtained by a special resolution of the stapled security holders.

These general purpose interim Financial Statements for the half year ended 31 December 2011 have been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

These Financial Statements do not include notes of the type normally included in an annual financial report. Accordingly these Financial Statements should be read in conjunction with the annual Financial Statements for the year ended 30 June 2011 and any public pronouncements made by DXS during the half year in accordance with the continuous disclosure requirements of the Corporations Act 2001. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

(b) Critical accounting estimates

The preparation of Financial Statements requires the use of certain critical accounting estimates and management to exercise its judgement in the process of applying the Trust"s accounting policies. Other than the estimation of fair values relating to derivatives and other financial instruments and investment properties, no key assumptions concerning the future or other estimation of uncertainty at the end of each reporting period have a significant risk of causing material adjustments to the Financial Statements in the next reporting period.

Uncertainty around property valuations

The fair value of our investment properties in the United States and Europe have been adjusted to reflect market conditions at the end of the reporting period. While this represents the best estimates of fair value as at the end of the reporting period, the current uncertainty in these markets means that if investment property is sold in the future, the price achieved may be higher or lower than the most recent valuation, or higher or lower than the fair value recorded in the Financial Statements.

Notes to the Financial Statements (continued) For the half year ended 31 December 2011

Note 2

Finance costs

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
Interest paid/payable	(500)	(811)
Interest paid to related parties	(33,635)	(37,677)
Amount capitalised	562	500
Other finance costs	(116)	(78)
Net fair value (loss)/gain of interest rate swaps	(42,073)	23,662
Total finance costs	(75,762)	(14,404)

The average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 7.99% (2010: 7.83%).

Note 3

Current assets – cash and cash equivalents

	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Cash at bank	10,035	6,436
Short-term deposits1	33,482	33,401
Total current assets - cash and cash equivalents	43,517	39,837

1 As at 31 December 2011, the Trust held C\$34.7 million (A\$33.5 million) in escrow in relation to the sale of its Toronto warehouse facility in June 2011. The funds in escrow relate to an amount withheld by the purchaser under Canadian law as part of the finalisation of the capital gains tax on disposal.

Note 4

Non–current assets classified as held for sale

(a) Non-current assets held for sale

	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Investment properties held for sale	28,018	60,688
Total non-current assets classified as held for sale	28,018	60,688

(b) Reconciliation		For the 6 months to	For the 12 months to
	Note	31 Dec 2011 \$'000	30 Jun 2011 \$'000
Opening balance at the beginning of the period		60,688	-
Disposals		(30,799)	-
Transfer from investment properties	6	-	60,688
Foreign exchange differences on foreign currency translation		(1,127)	-
Net fair value loss of investment properties held for sale		(793)	-
Additions, amortisation and other		49	-
Closing balance at the end of the period		28,018	60,688

Non–current assets classified as held for sale (continued)

Disposals

• On 16 September 2011, Schillerstraße 51, Ellhofen was disposed of for €6.8 million (A\$9.4 million).
• On 16 September 2011, Schillerstraße 42, 42a & Bahnhofstraße 44, 50, Ellhofen was disposed of for €4.0 million (A\$5.5 million).
• On 16 September 2011, Sulmstraße, Ellhofen-Weinsberg was disposed of for €9.8 million (A\$13.6 million).
• On 30 December 2011, Niedesheimerstraße 24, Worms was disposed of for €2.5 million (A\$3.1 million).

Note 5

Loans with related parties

	31 Dec 2011 \$'000	30 Jun 2011 \$'000
Current assets - loans with related parties
Non-interest bearing loans with entities within DXS1	138,948	138,948
Interest bearing loans with entities within DXS	127,512	120,589
Total current assets - loans with related parties	266,460	259,537
Non-current liabilities - loans with related parties
Interest bearing loans with related parties2	853,287	1,059,393
Interest bearing loans with entities within DXS	55,102	52,110
Total non-current liabilities - loans with related parties	908,389	1,111,503

1 Non-interest bearing loans with entities within DXS were created to effect the stapling of DIT, DDF, DOT and DXO. These loan balances eliminate on consolidation within DXS.

2 Interest bearing loans with DEXUS Finance Pty Limited (DXF). These loan balances eliminate on consolidation within DXS.

Note 6

Non-current assets – investment properties

		For the	For the
		6 months to	12 months to
		31 Dec 2011	30 Jun 2011
	Note	\$'000	\$'000
Opening balance at the beginning of the period		1,307,484	1,462,007
Additions		7,290	16,500
Lease incentives		6,910	18,398
Amortisation of lease incentives		(3,626)	(7,395)
Net fair value (loss)/gain of investment properties		(2,643)	39,696
Rent straightlining		157	805
Disposals		(45,595)	(97,563)
Transfer to non-current assets classified as held for sale	4	-	(60,688)
Foreign exchange differences on foreign currency translation		7,004	(64,276)
Closing balance at the end of the period		1,276,981	1,307,484

Disposals

• On 30th November 2011, Kopenhagenerstraße, Duisburg was disposed of for €18.9 million (A\$25.1 million).
• On 30th November 2011, Theodorstraße, Düsseldorf was disposed of for €14.5 million (A\$19.3 million).

Non-current assets – investments accounted for using the equity method

The investment in DEXUS Industrial Properties, Inc. is accounted for in the Financial Statements using the equity method of accounting. Information relating to this entity is set out below.

	Ownership Interest
		31 Dec 2011	30 Jun 2011	31 Dec 2011	30 Jun 2011
Name of entity	Principal activity	%	%	\$'000	\$'000
DEXUS Industrial	Asset, property and funds
Properties, Inc.1	management	50.0	50.0	184,694	162,513
184,694 162,513 Total non-current assets – investments accounted for using the equity method

1 The remaining 50% of this entity is owned by DDF. As a result, this entity is classed as controlled on a DDF consolidated basis.

DEXUS Industrial Properties, Inc. was formed in the United States.

Movements in carrying amounts of investments accounted for using the equity method	For the 6 months to	For the 12 months to
	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Opening balance at the beginning of the period	162,513	122,627
Interest acquired during the period	-	50,322
Share of net profit after tax	12,734	20,326
Foreign exchange difference on foreign currency translation	9,447	(30,762)
Closing balance at the end of the period	184,694	162,513
Results attributable to investments accounted for using the equity method
Operating profit before income tax	12,734	20,326
Operating profit after income tax	12,734	20,326
Less: Dividends received	-	-
	12,734	20,326

Accumulated losses at the beginning of the period (226,926) (247,252) Accumulated losses at the end of the period (214,192) (226,926)

Non-current liabilities - interest bearing liabilities

		31 Dec 2011	30 Jun 2011
	Note	\$'000	\$'000
Non-current
Bank loans	(a)	51,103	48,329
Total secured		51,103	48,329
Deferred borrowing costs		(1,400)	(571)
Total non-current liabilities - interest bearing liabilities		49,703	47,758

The Trust"s unsecured borrowing facilities are supported by the Trust"s guarantee arrangements, and have negative pledge provisions which limit the amount and type of encumbrances that the Trust can have over its assets and ensures that all senior unsecured debt ranks pari passu.

The current debt facilities will be refinanced as at/or prior to their maturity.

(a) Bank loans – secured

This includes a US\$51.9 million (A\$49.7 million) secured bank facility maturing in December 2017. The facility is secured by a mortgage over one investment property with a value of US\$121.9 million (A\$120.0 million) as at 31 December 2011.

Note 9

Contributed equity

	For the	For the
(a) Contributed equity	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Opening balance at the beginning of the period	925,116	925,116
Capital contribution	174,979	-
Capital contribution transaction costs	(70)	-
Closing balance at the end of the period	1,100,025	925,116
(b) Number of units on issue	For the	For the
	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	No. of units	No. of units
Opening balance at the beginning of the period	4,839,024,176	4,820,821,799
Distributions reinvested	-	18,202,377
Closing balance at the end of the period	4,839,024,176	4,839,024,176

Capital contribution

In December 2011, DXS implemented the Capital Reallocation Proposal approved by security holders at the 2011 Annual General Meeting held on 31 October 2011. Under the Capital Reallocation Proposal, DOT and DDF made capital payments to security holders of 3.616 cents for each DOT and DDF unit which was then compulsorily applied as a capital contribution to DIT and DXO units. Security holders did not receive any cash as part of the Capital Reallocation Proposal.

Contingent liabilities

The Trust together with DDF, DXO and DOT is a guarantor of a total of A\$1,397.5 million and US\$223.5 million (A\$220.1 million) of bank bilateral facilities, a total of A\$340.0 million of medium term notes, a total of US\$233.0 million (A\$229.4 million) of privately placed notes, and a total of US\$550.0 million (A\$541.6 million) public 144A senior notes, which have all been negotiated to finance the Trust and other entities within DXS.

The guarantees have been given in support of debt outstanding and drawn against these facilities, and may be called upon in the event that a borrowing entity has not complied with certain requirements such as failure to pay interest or repay a borrowing, whichever is earlier. During the period no guarantees were called.

The Trust together with DDF, DOT and DXO is also a guarantor, on a subordinated basis, of RENTS (Real-estate perpetual ExchaNgeable sTep-up Securities). The guarantee has been given in support of payments that become due and payable to the RENTS holders and ranks ahead of the DXS"s distribution payments, but subordinated to the claims of the senior creditors.

The guarantees are issued in respect of the Trust and do not constitute an additional liability to those already existing in interest bearing liabilities on the Statement of Financial Position.

The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Trust, other than those disclosed in the Financial Statements, which should be brought to the attention of unitholders as at the date of completion of this report.

Note 11

Events occurring after reporting date

Since the end of the period, the Directors are not aware of any matter or circumstance not otherwise dealt with in their Directors' Report or the Financial Statements that has significantly or may significantly affect the operations of the Trust, the results of those operations, or state of the Trust"s affairs in future financial periods.

Operating segments

The Chief Operating Decision Maker (CODM) has been identified as the Board of Directors as they are responsible for the strategic decision making within the Group. DXS management has identified DXS"s operating segments based on the sectors analysed within the management reports reviewed by the CODM in order to monitor performance across DXS and to appropriately allocate resources. Refer to the table below for a brief description of DXS"s operating segments.

Office – Australia and New Zealand	This comprises office space with any associated retail space; as well as car-parks and office developments in Australia and New Zealand.
Industrial – Australia	This comprises domestic industrial properties, industrial estates and industrial developments.
Industrial - North America	This comprises industrial properties, industrial estates and industrial developments in the United States as well as one industrial asset in Canada1
Management Business	The domestic and US based management businesses are responsible for asset, property and development management of Office, Industrial and Retail properties for DXS and the third party funds management business.
Financial Services	The treasury function of DXS is managed through a centralised treasury department. As a result, all treasury related financial information relating to borrowings, finance costs as well as fair value movements in derivatives, are prepared and monitored separately.
All other segments	This comprises the European industrial portfolio. This operating segment does not meet the quantitative thresholds set out in AASB 8 Operating Segments due to its relatively small scale. As a result this non-core operating segment has been included in "all other segments" in the operating segment information.

¹The Canadian asset was sold on 24 June 2011.

Consistent with how the CODM manages the business, the operating segments within DXS are reviewed on a consolidated basis and are not monitored at an individual trust level. The results of the individual trusts are not limited to any one of the segments described above.

Disclosures concerning DXS"s operating segments, as well as the operating segments" key financial information provided to the CODM, are presented in the DEXUS Property Group Financial Statements.

Independent auditor's review report to the unitholders of DEXUS Industrial Trust

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of DEXUS Industrial Trust, which comprises the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors' declaration for the DEXUS Industrial Trust Group (the consolidated entity). The consolidated entity comprises both DEXUS Industrial Trust (the Trust) and the entities it controlled during that half-year.

Directors' responsibility for the half-year financial report

The directors of DEXUS Funds Management Limited (the Responsible Entity) are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such control as the directors determine is 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 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 2011 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 DEXUS Industrial 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. 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.

Independence

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

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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 Corporations Act 2001 including: year DEXUS Industrial Trust is not in accordance with the is matter accordance view 2011

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half r half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Corporations Regulations 200 Interim Financial Reporting 2001. and the

PricewaterhouseCoopers

EA Barron Partner

Sydney 14 February 2012

2011 DEXUS Office Trust (ARSN 090 768 531)

Interim Report 31 December 2011

Contents Page

Directors' Report 1
Auditor's Independence Declaration 3
Consolidated Statement of Comprehensive Income 4
Consolidated Statement of Financial Position 5
Consolidated Statement of Changes in Equity 6
Consolidated Statement of Cash Flows 7
Notes to the Financial Statements 8
Directors' Declaration 15
Independent Auditor's Review Report 16

DEXUS Property Group (DXS) (ASX Code: DXS) consists of DEXUS Diversified Trust (DDF), DEXUS Industrial Trust (DIT), DEXUS Office Trust (DOT) and DEXUS Operations Trust (DXO), collectively known as DXS or the Group.

Under Australian Accounting Standards, DDF has been deemed the parent entity for accounting purposes. Therefore the DDF consolidated Financial Statements include all entities forming part of DXS. The DDF consolidated Financial Statements are presented in separate Financial Statements.

All press releases, Financial Statements and other information are available on our website: www.dexus.com

The Directors of DEXUS Funds Management Limited (DXFM) as Responsible Entity of DEXUS Office Trust present their Directors' Report together with the consolidated Financial Statements for the half year ended 31 December 2011. The consolidated Financial Statements represents DEXUS Office Trust and its consolidated entities (DOT or the Trust).

The Trust together with DEXUS Diversified Trust (DDF), DEXUS Industrial Trust (DIT) and DEXUS Operations Trust (DXO) form the DEXUS Property Group (DXS or the Group) stapled security.

1 Directors

The following persons were Directors of DXFM at all times during the half year and to the date of this Directors' Report, unless otherwise stated:

Directors	Appointed	Resigned
Christopher T Beare	4 August 2004
Elizabeth A Alexander, AM	1 January 2005
Barry R Brownjohn	1 January 2005
John C Conde, AO	29 April 2009
Tonianne Dwyer	24 August 2011
Stewart F Ewen, OAM	4 August 2004
Victor P Hoog Antink	1 October 2004
Brian E Scullin	1 January 2005	31 October 2011
Richard Sheppard	1 January 2012
Peter B St George	29 April 2009

2 Review and results of operations

The results for the half year ended 31 December 2011 were:

• Profit attributable to unitholders was \$76.0 million (December 2010: \$138.5 million);
• Total assets were \$3,283.3 million (June 2011: \$3,248.5 million); and
• Net assets were \$2,628.8 million (June 2011: \$2,808.2 million).

A review of the results, financial position and operations of the Group, of which the Trust forms part thereof, is set out in the Directors' Report of the DEXUS Property Group Interim Report.

3 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 3 and forms part of this Directors' Report.

4 Rounding of amounts and currency

The Trust is a registered scheme of the kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission, relating to the rounding off of amounts in this Directors' Report and the Financial Statements. Amounts in this Directors' Report and the Financial Statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, unless otherwise indicated. All figures in this Directors' Report and the Financial Statements, except where otherwise stated, are expressed in Australian dollars.

Auditor's Independence Declaration

As lead auditor for the review declare that to the best of my knowledge and belief, there have been: of DEXUS Office Trust for the half year ended ended 31 December 2011, I

• a) no contraventions of th relation to the review the auditor independence requirements of the Corporations Act 2001 review; and in
• b) no contraventions of any applicable code of professional conduct in relation to the professional in review.

This declaration is in respect of DEXUS Office Trust and the entities it controlled entities controlled during the period.

EA Barron Partner PricewaterhouseCoopers

Sydney 14 February 2012

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

DEXUS Office Trust

Consolidated Statement of Comprehensive Income

For the half year ended 31 December 2011

		31 Dec 2011	31 Dec 2010
Revenue from ordinary activities	Note	\$'000	\$'000
Property revenue		134,303	128,934
Interest revenue		206	189
Total revenue from ordinary activities		134,509	129,123
Net fair value gain of investment properties		19,736	28,331
Share of net profit of associates accounted for using the equity method	4	3,108	12,870
Finance income	2	-	8,472
Net foreign exchange gain		13	26
Net fair value gain of derivatives		-	29
Other income		-	89
Total income		157,366	178,940
Expenses
Property expenses		(35,354)	(34,185)
Responsible Entity fees		(4,912)	(4,609)
Finance costs	2	(39,287)	-
Other expenses		(799)	(743)
Total expenses		(80,352)	(39,537)
Profit before tax		77,014	139,403
Other comprehensive income:
Exchange differences on translating foreign operations		(1,509)	(6,940)
Total comprehensive income for the period		75,505	132,463
Profit for the period attributable to:
Unitholders of DEXUS Office Trust		76,006	138,493
Non-controlling interests		1,008	910
Profit for the period		77,014	139,403
Total comprehensive income for the period attributable to:
Unitholders of DEXUS Office Trust		74,497	131,553
Non-controlling interests		1,008	910
Total comprehensive income for the period		75,505	132,463
Earnings per unit		Cents	Cents
Basic earnings per unit on profit attributable to unitholders of the parent
entity		1.43	2.62
Diluted earnings per unit on profit attributable to unitholders of the parent
entity		1.43	2.62

DEXUS Office Trust

Consolidated Statement of Financial Position

As at 31 December 2011

		31 Dec 2011	30 June 2011
	Note	\$'000	\$'000
Current assets
Cash and cash equivalents		7,124	7,671
Receivables		5,483	6,005
Derivative financial instruments		33	266
Other		2,788	2,797
Total current assets		15,428	16,739
Non-current assets
Investment properties	3	3,056,884	3,026,959
Derivative financial instruments		5,090	3,544
Investments accounted for using the equity method	4	205,133	200,356
Other		773	860
Total non-current assets		3,267,880	3,231,719
Total assets		3,283,308	3,248,458
Current liabilities
Payables		32,729	38,452
Interest bearing liabilities	6	-	249,700
Loans with related parties	5	55,684	55,684
Provisions		73,481	64,739
Derivative financial instruments		1,199	1,207
Total current liabilities		163,093	409,782
Non-current liabilities
Loans with related parties	5	445,828	14,423
Derivative financial instruments		45,037	15,552
Other		549	551
Total non-current liabilities		491,414	30,526
Total liabilities		654,507	440,308
Net assets		2,628,801	2,808,150
Equity
Contributed equity	7	1,888,165	2,063,214
Reserves		(17,324)	(15,815)
Retained profits		553,824	556,723
		2,424,665	2,604,122
Non-controlling interests		204,136	204,028
Total equity		2,628,801	2,808,150

DEXUS Office Trust Consolidated Statement of Changes in Equity For the half year ended 31 December 2011

		Co i bu d tr te n i ty eq u	Re ine d ta f i ts p ro	ig Fo re n c ur re nc y la ion tra t ns re se rve	i ho l de Un t r i ty eq u	l l ing No tro n-c on in te ts re s	l e i To ta ty q u
	No te	\$ '0 0 0	\$ '0 0 0	\$ '0 0 0	\$ '0 0 0	\$ '0 0 0	\$ '0 0 0
Op ba lan ly 2 0 0 ing 1 Ju 1 t en ce as a		2, 0 6, 9 0 5 7	3 3, 9 4 4 5	0, ( 1 5 5 5 )	2, 8 0, 8 0 4 1	2 0 2 0 4, 1	2, 6 8 3 8 4, 1
Pro f i fo he io d t t r p er		-	1 3 8, 4 9 3	-	1 3 8, 4 9 3	9 1 0	1 3 9, 4 0 3
O he he ive los fo he io d t t r c om p re ns s r p er		-	-	( 6, 9 4 0 )	( 6, 9 4 0 )	-	( 6, 9 4 0 )
h o he Tr ion i in ir i t t t ty an sac s w wn er s ca p ac as ow ne rs
bu f e f Co i ion i ion tr t ty t o tra t ts n s o q ne nsa c co s u ,	7	6, 4 2 4	-	-	6, 4 2 4	-	6, 4 2 4
bu d o de d fo D is i ion i i tr t s p a r p rov r	8	-	( 6 5, 6 9 8 )	-	( 6 5, 6 9 8 )	( 6, 3 4 4 )	( 7 2, 0 4 2 )
Tr fe ine d p f i to ta ts an s r re ro		-	( 5, 3 2 7 )	-	( 5, 3 2 7 )	5, 3 2 7	-
C los ing ba lan 3 1 De be 2 0 1 0 t ce as a ce m r		2, 0 6 3, 2 1 4	5 0 1, 4 1 3	( 1 7, 4 9 5 )	2, 5 4 7, 1 3 2	2 0 4, 0 9 4	2, 7 5 1, 2 2 6
Op ing ba lan ly 2 0 t 1 Ju 1 1 en ce as a		2, 0 6 3, 2 1 4	6, 2 3 5 5 7	( 8 ) 1 5, 1 5	2, 6 0 2 2 4, 1	2 0 0 2 8 4,	2, 8 0 8, 0 1 5
Pro f i fo he io d t t r p er		-	7 6, 0 0 6	-	7 6, 0 0 6	1, 0 0 8	7 7, 0 1 4
he he los fo he d O ive io t t r c om p re ns s r p er		-	-	( 1, 5 0 9 )	( 1, 5 0 9 )	-	( 1, 5 0 9 )
ion i h o in he ir i Tr t t t ty an sac s w wn er s ca p ac as ow ne rs
Ca l p f i ion ta t, t o tra t ts p ay me n ne nsa c co s	7	( 1 7 5, 0 4 9 )	-	-	( 1 7 5, 0 4 9 )	-	( 1 7 5, 0 4 9 )
bu d o de d fo D is i ion i i tr t s p a r p rov r	8	-	( 7 3, 4 8 1 )	-	( 7 3, 4 8 1 )	( 6, 3 2 4 )	( 7 9, 8 0 5 )
Tr fe ine d p f i to ta ts an s r re ro		-	( 5, 4 2 4 )	-	( 5, 4 2 4 )	5, 4 2 4	-
los ba lan be C ing 3 1 De 2 0 1 1 t ce as a ce m r		1, 8 8 8, 1 6 5	5 5 3, 8 2 4	( 1 7, 3 2 4 )	2, 4 2 4, 6 6 5	2 0 4, 1 3 6	2, 6 2 8, 8 0 1

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
Cash flows from operating activities
Receipts in the course of operations (inclusive of GST)	157,855	148,465
Payments in the course of operations (inclusive of GST)	(52,054)	(48,274)
Interest received	206	189
Finance costs paid to financial institutions	(7,349)	(9,087)
Distributions received from associates accounted for using the equity method	4,056	-
Net cash inflow from operating activities	102,714	91,293
Cash flows from investing activities
Payments for capital expenditure on investment properties	(28,417)	(28,819)
Payments for investments accounted for using the equity method	(3,848)	(33,499)
Net cash outflow from investing activities	(32,265)	(62,318)
Cash flows from financing activities
Borrowings provided to entities within DXS	(94,328)	(78,662)
Borrowings provided by entities within DXS	519,540	96,906
Repayment of borrowings	(250,000)	-
Capital payment	(174,979)	-
Capital payment transaction costs	(70)	-
Distributions paid to unitholders	(64,738)	(45,802)
Distributions paid to non-controlling interests	(6,365)	(6,079)
Net cash outflow from financing activities	(70,940)	(33,637)
Net decrease in cash and cash equivalents	(491)	(4,662)
Cash and cash equivalents at the beginning of the period	7,671	8,766
Effects of exchange rate changes on cash and cash equivalents	(56)	(58)
Cash and cash equivalents at the end of the period	7,124	4,046

Summary of significant accounting policies

(a) Basis of preparation

DEXUS Property Group stapled securities are quoted on the Australian Securities Exchange under the "DXS" code and comprise one unit in each of DDF, DIT, DOT and DXO. Each entity forming part of DXS continues as a separate legal entity in its own right under the Corporations Act 2001 and is therefore required to comply with the reporting and disclosure requirements under the Corporations Act 2001 and the Australian Accounting Standards.

DEXUS Funds Management Limited (DXFM) as Responsible Entity for DDF, DIT, DOT and DXO may only unstaple the Group if approval is obtained by a special resolution of the stapled security holders.

These general purpose interim Financial Statements for the half year ended 31 December 2011 have been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

These Financial Statements do not include notes of the type normally included in an annual financial report. Accordingly these Financial Statements should be read in conjunction with the annual Financial Statements for the year ended 30 June 2011 and any public pronouncements made by DXS during the half year in accordance with the continuous disclosure requirements of the Corporations Act 2001. The accounting policies adopted are consistent with those of previous financial year and corresponding interim reporting period, unless otherwise stated.

As at 31 December 2011, the Trust had a net current asset deficiency of \$147.7 million (June 2011: \$393.0 million). The DXS group has in place both external and internal funding arrangements to support the cashflow requirements of the Trust. The Trust is a going concern and the Financial Statements have been prepared on that basis.

(b) Critical accounting estimates

The preparation of Financial Statements requires the use of certain critical accounting estimates and management to exercise its judgment in the process of applying the Trust's accounting policies. Other than the estimation of fair values relating to certain derivatives and other financial instruments and investment properties, no key assumptions concerning the future or other estimation of uncertainty at the end of each reporting period have a significant risk of causing material adjustments to the Financial Statements in the next reporting period.

Finance costs

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
Interest paid/payable	(3,835)	(8,237)
Interest paid to related parties	(8,097)	(620)
Amount capitalised	1,264	5,258
Other finance costs	(300)	(546)
Net fair value (loss)/gain of interest rate swaps	(28,319)	12,617
Total finance (costs)/income	(39,287)	8,472

The average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 7.99% (2010: 7.83%).

Note 3

Non-current assets – investment properties

	For the 6 months to	For the 12 months to
	31 Dec 2011	30 June 2011
	\$'000	\$'000
Opening balance at the beginning of the period	3,026,959	2,939,511
Additions	19,687	39,736
Lease incentives	6,498	22,178
Amortisation of lease incentives	(14,454)	(26,843)
Net fair value gain of investment properties	19,736	56,970
Rent straightlining	(152)	683
Foreign exchange differences on foreign currency translation	(1,390)	(5,276)
Closing balance at the end of the period	3,056,884	3,026,959

Non-current assets – investments accounted for using the equity method

The investment in Bent Street Trust is accounted for in the Financial Statements using the equity method of accounting. Information relating to this entity is set out below.

			Ownership Interest
		31 Dec 2011	30 June 2011	31 Dec 2011	30 June 2011
Name of entity	Principal activity	%	%	\$'000	\$'000
Bent Street Trust	Office property investment	33.3	33.3	205,133	200,356
	Total non-current assets - investments accounted for using the equity method			205,133	200,356
The Bent Street Trust was formed in Australia.
equity method	Movements in carrying amounts of investments accounted for using the			For the 6 months to	For the 12 months to
				31 Dec 2011	30 June 2011
				\$'000	\$'000
Opening balance at the beginning of the period				200,356	93,344
Units issued during the period				5,112	73,558
Share of net profit after tax1				3,108	34,053
Distributions received/receivable				(3,443)	(599)
Closing balance at the end of the period				205,133	200,356
	Results attributable to investments accounted for using the equity method
Operating profit before income tax				3,108	34,053
Operating profit after income tax				3,108	34,053
Less: Distributions received/receivable				(3,443)	(599)
				(335)	33,454
	Retained profits/(accumulated losses) at the beginning of the period			844	(32,610)
Retained profits at the end of the period				509	844

¹Share of net profit after tax includes a fair value gain of nil (June 2011: gain of \$33.6 million) in relation to the Trust's share of the Bligh Street investment property.

Loans with related parties

	31 Dec 2011	30 June 2011
	\$'000	\$'000
Current liabilities - loans with related parties
Non-interest bearing loans with entities within DXS1	55,684	55,684
Total current liabilities - loans with related parties	55,684	55,684
Non-current liabilities - loans with related parties
Interest bearing loans with related parties2	445,828	14,423
Total non-current liabilities - loans with related parties	445,828	14,423

¹ Non-interest bearing loans with entities within DXS were created to effect the stapling of DDF, DIT, DOT and DXO. These loan balances eliminate on consolidation within DXS.

2 Interest bearing loans with DEXUS Finance Pty Limited (DXF). These loan balances eliminate on consolidation within DXS.

Note 6

Current liabilities – interest bearing liabilities

		31 Dec 2011	30 June 2011
	Note	\$'000	\$'000
Secured
Bank loans	(a)	-	250,000
Total secured		-	250,000
Deferred borrowing costs		-	(300)
Total current liabilities – interest bearing liabilities		-	249,700

(a) Bank loans – secured

During the period, a \$250 million secured bank loan was repaid and the associated mortgage discharged.

Contributed equity
(a) Contributed equity	For the 6 months to	For the 12 months to
	31 Dec 2011	30 June 2011
	\$'000	\$'000
Opening balance at the beginning of the period	2,063,214	2,056,790
Distributions reinvested	-	6,424
Capital payment	(174,979)	-
Capital payment transaction costs	(70)	-
Closing balance at the end of the period	1,888,165	2,063,214
(b) Number of units on issue	For the 6 months to	For the 12 months to
	31 Dec 2011 No. of units	30 June 2011 No. of units
Opening balance at the beginning of the period	4,839,024,176	4,820,821,799
Distributions reinvested	-	18,202,377
Closing balance at the end of the period	4,839,024,176	4,839,024,176

Capital payment

In December 2011, DXS implemented the Capital Reallocation Proposal approved by security holders at the 2011 Annual General Meeting held on 31 October 2011. Under the Capital Reallocation Proposal, DOT and DDF made capital payments to security holders of 3.616 cents for each DOT and DDF unit which was then compulsorily applied as a capital contribution to DIT and DXO units. Security holders did not receive any cash as part of the Capital Reallocation Proposal.

Note 8

Distributions paid and payable

(a) Distribution to unitholders	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
31 December 2011 (payable 29 February 2012)	73,481	65,698
	73,481	65,698
(b) Distribution to non-controlling interests	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
DEXUS RENTS Trust (paid 18 October 2011)	3,223	3,162
DEXUS RENTS Trust (paid 17 January 2012)	3,101	3,182
	6,324	6,344
Total distributions	79,805	72,042
(c) Distribution rate	31 Dec 2011	31 Dec 2010
	Cents per unit	Cents per unit
31 December (payable 29 February 2012)	1.52	1.36
Total distributions	1.52	1.36

Contingent liabilities

Details and estimates of maximum amounts of contingent liabilities are as follows:

	31 Dec 2011	30 June 2011
	\$'000	\$'000
Bank guarantees by the Trust in respect of variations and other financial risks
associated with the development of:
Bligh Street, Sydney, NSW1	5,650	5,650
Total contingent liabilities	5,650	5,650

¹Bank guarantee held in relation to an equity accounted investment. (Refer note 4).

The Trust together with DDF, DIT and DXO is a guarantor of a total of A\$1,397.5 million and US\$223.5 million (A\$220.1 million) of bank bilateral facilities, a total of A\$340.0 million of medium term notes, a total of US\$233.0 million (A\$229.4 million) of privately placed notes, and a total of US\$550.0 million (A\$541.6million) public 144A senior notes, which have all been negotiated to finance the Trust and other entities within DXS. The guarantees have been given in support of debt outstanding and drawn against these facilities, and may be called upon in the event that a borrowing entity has not complied with certain requirements such as failure to pay interest or repay a borrowing, whichever is earlier. During the period no guarantees were called.

The Trust together with DDF, DIT and DXO is also a guarantor, on a subordinated basis, of RENTS (Real-estate perpetual ExchaNgeable sTep-up Securities). The guarantee has been given in support of payments that become due and payable to the RENTS holders and ranks ahead of DXS's distribution payments, but subordinated to the claims of senior creditors.

The guarantees are issued in respect of the Trust and do not constitute an additional liability to those already existing in interest bearing liabilities on the Statement of Financial Position.

The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Trust, other than those disclosed in the Financial Statements, which should be brought to the attention of unitholders as at the date of completion of this report.

Note 10

Events occurring after reporting date

Since the end of the period, the Directors are not aware of any matter or circumstance not otherwise dealt with in their Directors' Report or the Financial Statements that has significantly or may significantly affect the operations of the Trust, the results of those operations, or state of the Trust's affairs in future financial periods.

Operating segments

The Chief Operating Decision Maker (CODM) has been identified as the Board of Directors as they are responsible for the strategic decision making within the Group. DXS management has identified DXS's operating segments based on the sectors analysed within the management reports reviewed by the CODM in order to monitor performance across DXS and to appropriately allocate resources. Refer to the table below for a brief description of DXS's operating segments.

	Office – Australia and New Zealand This comprises office space with any associated retail space; as well as car parks and office developments in Australia and New Zealand.
Industrial – Australia	This comprises domestic industrial properties, industrial estates and industrial developments.
Industrial - North America	This comprises industrial properties, industrial estates and industrial developments in the United States as well as one industrial asset in Canada1
Management Business	The domestic and US based management businesses are responsible for asset, property and development management of Office, Industrial and Retail properties for DXS and the third party funds management business.
Financial Services	The treasury function of DXS is managed through a centralised treasury department. As a result, all treasury related financial information relating to borrowings, finance costs as well as fair value movements in derivatives, are prepared and monitored separately.
All other segments	This comprises the European industrial portfolio. This operating segment does not meet the quantitative thresholds set out in AASB 8 Operating Segments due to its relatively small scale. As a result this non-core operating segment has been included in 'all other segments' in the operating segment information.

1 The Canadian asset was sold on 24 June 2011.

Consistent with how the CODM manages the business, the operating segments within DXS are reviewed on a consolidated basis and are not monitored at an individual trust level. The results of the individual trusts are not limited to any one of the segments described above.

Disclosures concerning DXS's operating segments as well as the operating segments' key financial information provided to the CODM are presented in the DEXUS Property Group Financial Statements.

Independent auditor's review report to the unitholders of DEXUS Office Trust

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of DEXUS Office Trust, which comprises the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors' declaration for the DEXUS Office Trust Group (the consolidated entity). The consolidated entity comprises both DEXUS Office Trust (the Trust) and the entities it controlled during that half-year.

Directors' responsibility for the half-year financial report

The directors of DEXUS Funds Management Limited (the Responsible Entity) are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such control as the directors determine is 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 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 2011 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 DEXUS Office 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. 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.

Independence

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

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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 Corporations Act 2001 including: year DEXUS Office Trust is not in accordance with the is matter in view 2011and the

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Corporations Regulations 2001. Interim Financial Reporting

PricewaterhouseCoopers

EA Barron Partner

Sydney 14 February 2012

DEXUS Operations Trust (ARSN 110 521 223)

Interim Report 31 December 2011

Contents Page

Directors' Report………………………………………………………………………………………………………………………. 1
Auditor's Independence Declaration……………………….……………………………………………………………… 3
Consolidated Statement of Comprehensive Income………………………………….…………………………… 4
Consolidated Statement of Financial Position…………………………………………………………………………5
Consolidated Statement of Changes in Equity…………………………………………………………………………. 6
Consolidated Statement of Cash Flows…………………………………………………………………………………… 7
Notes to the Financial Statements…………………………………………………………………………………………… 8
Directors' Declaration…………………………………………………………………………………………………………… 14
Independent Auditor's Review Report……………………………………………………………………………………. 15

DEXUS Property Group (DXS) (ASX Code: DXS) consists of DEXUS Diversified Trust (DDF), DEXUS Industrial Trust (DIT), DEXUS Office Trust (DOT) and DEXUS Operations Trust (DXO), collectively known as DXS or the Group.

Under Australian Accounting Standards, DDF has been deemed the parent entity for accounting purposes. Therefore the DDF consolidated Financial Statements include all entities forming part of DXS. The DDF consolidated Financial Statements are presented in separate Financial Statements.

All press releases, Financial Statements and other information are available on our website: www.dexus.com

The Directors of DEXUS Funds Management Limited (DXFM) as Responsible Entity of DEXUS Operations Trust present their Directors' Report together with the consolidated Financial Statements for the half year ended 31 December 2011. The consolidated Financial Statements represents DEXUS Operations Trust and its consolidated entities (DXO or the Trust).

The Trust together with DEXUS Diversified Trust (DDF), DEXUS Industrial Trust (DIT) and DEXUS Office Trust (DOT) form the DEXUS Property Group (DXS or the Group) stapled security.

1 Directors

The following persons were Directors of DXFM at all times during the half year and to the date of this Directors' Report, unless otherwise stated:

Directors	Appointed	Resigned
Christopher T Beare	4 August 2004
Elizabeth A Alexander, AM	1 January 2005
Barry R Brownjohn	1 January 2005
John C Conde, AO	29 April 2009
Tonianne Dwyer	24 August 2011
Stewart F Ewen, OAM	4 August 2004
Victor P Hoog Antink	1 October 2004
Brian E Scullin	1 January 2005	31 October 2011
Richard Sheppard	1 January 2012
Peter B St George	29 April 2009

2 Review of results and operations

The results for the half year ended 31 December 2011 were:

• loss attributable to unitholders was \$2.5 million (December 2010: \$23.4 million);
• total assets were \$643.8 million (June 2011: \$602.1 million); and
• net assets were \$150.9 million (June 2011: \$21.5 million net asset deficiency).

A review of the results, financial position and operations of the Group, of which the Trust forms part thereof, is set out in the Directors' Report of the DEXUS Property Group Interim Report.

3 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 3 and forms part of this Directors' Report.

4 Rounding of amounts and currency

The Trust is a registered scheme of the kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission, relating to the rounding off of amounts in this Directors' Report and the Financial Statements. Amounts in this Directors' Report and the Financial Statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, unless otherwise indicated. All figures in this Directors' Report and the Financial Statements, except where otherwise stated, are expressed in Australian dollars.

Auditor's Independence Declaration

As lead auditor for the review I declare that to the best of my knowledge and belief, there have been: of DEXUS Operations Trust for the half year ended ended 31 December 2011,

• a) no contraventions o relation to the review f the auditor independence requirements of the Corporations Act 2001 review; and in
• b) no contraventions of any applicable code of professional conduct in relation to the professional in review.

This declaration is in respect of period. DEXUS Operations Trust and the entities it controlled entities it controlled during the

EA Barron Partner PricewaterhouseCoopers

Sydney 14 February 2012

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

DEXUS Operations Trust

Consolidated Statement of Comprehensive Income

For the half year ended 31 December 2011

		31 Dec 2011	31 Dec 2010
	Note	\$'000	\$'000
Revenue from ordinary activities
Management fee revenue	2	41,527	42,397
Property revenue		7,074	1,163
Proceeds from sale of inventory		21,830	-
Interest revenue		440	366
Total revenue from ordinary activities		70,871	43,926
Net fair value gain of investment properties		4,455	-
Net foreign exchange gain		30	-
Other income		-	216
Total income		75,356	44,142
Expenses
Property expenses		(2,525)	(201)
Cost of sale of inventory		(19,110)	-
Finance costs	3	(13,687)	(7,764)
Net fair value loss of investment properties		-	(18,909)
Depreciation and amortisation		(1,231)	(1,104)
Impairment of inventory		(2,014)	-
Impairment of goodwill		(563)	(74)
Employee benefits expense		(34,050)	(34,523)
Net foreign exchange loss		-	(13)
Other expenses		(6,589)	(6,887)
Total expenses		(79,769)	(69,475)
Loss before tax		(4,413)	(25,333)
Tax benefit
Income tax benefit		1,947	1,938
Total tax benefit		1,947	1,938
Loss after tax		(2,466)	(23,395)
Total comprehensive loss for the period		(2,466)	(23,395)
Earnings per unit		Cents	Cents
Basic earnings per unit on loss attributable to unitholders of the parent entity		0.03	(0.44)
Diluted earnings per unit on loss attributable to unitholders of the parent entity		0.03	(0.44)

DEXUS Operations Trust Consolidated Statement of Financial Position As at 31 December 2011

		31 Dec 2011	30 Jun 2011
	Note	\$'000	\$'000
Current assets
Cash and cash equivalents		13,572	13,229
Receivables		23,799	26,084
Current tax assets		1,015	1,015
Inventories	5	44,431	7,991
Other		977	461
Total current assets		83,794	48,780
Non-current assets
Investment properties	4	223,598	192,306
Property, plant and equipment		3,765	3,922
Inventories	5	74,480	104,247
Deferred tax assets		34,231	28,052
Intangible assets	6	223,908	224,684
Other		65	67
Total non-current assets		560,047	553,278
Total assets		643,841	602,058
Current liabilities
Payables		13,959	9,415
Loans with related parties	7	48,932	48,932
Provisions		17,060	21,105
Derivative financial instruments		-	773
Total current liabilities		79,951	80,225
Non-current liabilities
Loans with related parties	7	374,041	506,133
Deferred tax liabilities		21,246	17,013
Provisions		13,880	17,624
Derivative financial instruments		3,823	2,587
Other		-	19
Total non-current liabilities		412,990	543,376
Total liabilities		492,941	623,601
Net assets/(liabilities)		150,900	(21,543)
Equity
Contributed equity	8	201,244	26,335
Reserves		42,738	42,738
Accumulated losses		(93,082)	(90,616)
Total equity		150,900	(21,543)

		Contributed equity	Asset revaluation reserve	Accumulated losses	Total equity
	Note	\$'000	\$'000	\$'000	\$'000
Opening balance as at 1 July 2010		26,335	42,738	(61,325)	7,748
Loss after tax		-	-	(23,395)	(23,395)
Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Closing balance as at 31 December 2010	8	- 26,335	- 42,738	- (84,720)	- (15,647)
Opening balance as at 1 July 2011 Loss after tax Transactions with owners in their capacity as owners:		26,335 -	42,738 -	(90,616) (2,466)	(21,543) (2,466)
Capital contribution, net of transaction costs	8	174,909	-	-	174,909
Closing balance as at 31 December 2011		201,244	42,738	(93,082)	150,900

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
Cash flows from operating activities
Receipts in the course of operations (inclusive of GST)	54,967	40,050
Payments in the course of operations (inclusive of GST)	(52,178)	(46,474)
Payments for property classified as inventory	(24,023)	(39,602)
Proceeds from sale of property classified as inventory	21,830	-
Interest received	438	339
Finance costs paid	(1,240)	(1,565)
Income tax received	-	(993)
Net cash outflow from operating activities	(206)	(48,245)
Cash flows from investing activities
Payments for property, plant and equipment	(860)	(681)
Payments for capital expenditure on investment properties	(20,427)	(25,182)
Net cash outflow from investing activities	(21,287)	(25,863)
Cash flows from financing activities
Borrowings provided to entities within DXS	(260,051)	(31,706)
Borrowings provided by entities within DXS	106,979	106,199
Proceeds from capital contribution	174,979	-
Capital contribution transaction costs	(70)	-
Net cash inflow from financing activities	21,837	74,493
Net increase in cash and cash equivalents	344	385
Cash and cash equivalents at the beginning of the period	13,228	12,897
Cash and cash equivalents at the end of the period	13,572	13,282

Summary of significant accounting policies

(a) Basis of preparation

DEXUS Property Group stapled securities are quoted on the Australian Securities Exchange under the "DXS" code and comprise one unit in each of DDF, DIT, DOT and DXO. Each entity forming part of DXS continues as a separate legal entity in its own right under the Corporations Act 2001 and is therefore required to comply with reporting and disclosure requirements under the Corporations Act 2001 and Australian Accounting Standards.

DEXUS Funds Management Limited as Responsible Entity for DDF, DIT, DOT and DXO may only unstaple the Group if approval is obtained by a special resolution of the stapled security holders.

These general purpose interim Financial Statements for the half year ended 31 December 2011 have been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

These Financial Statements do not include notes of the type normally included in an annual financial report. Accordingly these Financial Statements should be read in conjunction with the annual Financial Statements for the year ended 30 June 2011 and any public pronouncements made by DXS during the half year in accordance with the continuous disclosure requirements of the Corporations Act 2001. The accounting policies adopted are consistent with those of previous financial year and corresponding interim reporting period, unless otherwise stated.

(b) Critical accounting estimates

The preparation of Financial Statements requires the use of certain critical accounting estimates and management to exercise its judgment in the process of applying the Trust's accounting policies. Other than the estimation of fair values relating to certain derivatives and other financial instruments, investment properties and intangible assets, no key assumptions concerning the future or other estimation of uncertainty at the end of each reporting period have a significant risk of causing material adjustments to the Financial Statements in the next reporting period.

Management Fee Revenue

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
Responsible Entity fees	18,471	17,207
Asset management fees	5,004	5,097
Property management fees	11,559	12,328
Capital works and development fees	2,407	3,485
Wages recovery and other fees	4,086	4,280
Total management fee revenue	41,527	42,397

Note 3

Finance costs

	31 Dec 2011	31 Dec 2010
	\$'000	\$'000
Interest paid to related parties	(21,181)	(18,013)
Amount capitalised	9,196	9,694
Other finance costs	(489)	(9)
Net fair value (loss)/gain of interest rate swaps	(1,213)	564
Total finance costs	(13,687)	(7,764)

The average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 7.99% (2010: 7.83%)

Note 4

Non-current assets – investment properties

		For the 6 months to	For the 12 months to
		31 Dec 2011	30 Jun 2011
	Note	\$'000	\$'000
Opening balance at the beginning of the period		192,306	170,011
Additions		26,072	45,463
Lease incentives		547	2,236
Lease incentives amortisation		(119)	(159)
Rent straightlining		337	282
Transfers to inventories	5	-	(6,448)
Net fair value gain/(loss) of investment properties		4,455	(19,079)
Closing balance at the end of the period		223,598	192,306

Inventories

(a) Land and properties held for resale

	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Current assets
Land and properties held for resale	44,431	7,991
Total current assets - inventories	44,431	7,991
Non-current assets
Land and properties held for resale	74,480	104,247
Total non-current assets - inventories	74,480	104,247
Total assets - inventories	118,911	112,238

(b) Reconciliation

		For the	For the
		6 months to	12 months to
		31 Dec 2011	30 Jun 2011
	Note	\$'000	\$'000
Opening balance at the beginning of the period		112,238	45,470
Transfer from investment properties	4	-	6,448
Disposals		(19,110)	(3,353)
Impairment		(2,014)	-
Acquisitions, additions and other		27,797	63,673
Closing balance at the end of the period		118,911	112,238

Acquisition

On 29 November 2011, DEXUS Projects Pty Ltd (DXP) acquired undeveloped land at 3676 Ipswich Road, Wacol QLD.

Disposals

• On 21 July 2011, DXP disposed of two lots located at Templar Road, Erskine Park NSW for \$10.1 million.
• On 27 October 2011, DXP disposed of a 6,534sqm development for Loscam at Foundation Drive, Laverton VIC for \$11.7 million.

Notes to the Financial Statements (continued) For the half year ended 31 December 2011

Note 6

Non-current assets - intangible assets

	For the	For the
	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Management rights
Opening balance at the beginning of the period	222,353	223,000
Amortisation charge	(213)	(647)
Closing balance at the end of the period	222,140	222,353
Cost	252,382	252,382
Accumulated amortisation	(2,439)	(2,226)
Accumulated impairment	(27,803)	(27,803)
Total management rights	222,140	222,353
Goodwill
Opening balance at the beginning of the period	2,331	2,525
Impairment	(563)	(194)
Closing balance at the end of the period	1,768	2,331
Cost	2,998	2,998
Accumulated impairment	(1,230)	(667)
Total goodwill	1,768	2,331
Total intangible assets	223,908	224,684

Management rights represent the asset management rights owned by DEXUS Holdings Pty Limited (DXH), a whollyowned subsidiary of the Trust, which entitle it to management fee revenue from both finite life trusts and indefinite life trusts. Those rights that are deemed to have a finite useful life (held at a value of \$7,556,350) are measured at cost and amortised using the straight-line method over their estimated useful lives of 21 years. Management rights that are deemed to have an indefinite life are held at a value of \$214,584,150.

As at 31 December 2011, management had not identified any events or circumstances that would indicate an impairment of the carrying value of management rights associated with indefinite life trusts.

Note 7

Loans with related parties

	31 Dec 2011 \$'000	30 Jun 2011 \$'000
Current liabilities - loans with related parties
Non-interest bearing loans with entities within DXS1	48,932	48,932
Total current liabilities - loans with related parties	48,932	48,932
Non-current liabilities - loans with related parties
Interest bearing loans with related parties2	374,041	506,133
Total non-current liabilities - loans with related parties	374,041	506,133

1 Non-interest bearing loans with entities within DXS were created to effect the stapling of the Trust, DIT, DOT and DDF. These loan balances eliminate on consolidation within DXS.

2 Interest bearing loans with DEXUS Finance Pty Limited (DXF). These loan balances eliminate on consolidation within DXS.

Contributed equity

(a) Contributed equity

	For the	For the
	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	\$'000	\$'000
Opening balance at the beginning of the period	26,335	26,335
Capital contribution	174,979	-
Capital contribution transaction costs	(70)	-
Closing balance at the end of the period	201,244	26,335

In December 2011, DXS implemented the Capital Reallocation Proposal approved by security holders at the 2011 Annual General Meeting held on 31 October 2011. Under the Capital Reallocation Proposal, DOT and DDF made capital repayments to security holders of 3.616 cents for each DOT and DDF unit which was then compulsorily applied as a capital contribution to DIT and DXO units. Security holders did not receive any cash as part of the Capital Reallocation Proposal.

(b) Number of units on issue

	For the	For the
	6 months to	12 months to
	31 Dec 2011	30 Jun 2011
	No. of units	No. of units
Opening balance at the beginning of the period	4,839,024,176	4,820,821,799
Distributions reinvested	-	18,202,377
Closing balance at the end of the period	4,839,024,176	4,839,024,176

Note 9

Distributions paid and payable

Dividends paid or payable by the Trust for the half year ended 31 December 2011 were nil (31 December 2010: nil).

Note 10

Contingent liabilities

The Trust together with DDF, DIT and DOT is a guarantor of a total of A\$1,397.5 million and US\$223.5 million (A\$220.1 million) of bank bilateral facilities, a total of A\$340.0 million of medium term notes, a total of US\$233.0 million (A\$229.4 million) of privately placed notes, and a total of US\$550.0 million (A\$541.6 million) public 144A senior notes, which have all been negotiated to finance the Trust and other entities within DXS. The guarantees have been given in support of debt outstanding and drawn against these facilities, and may be called upon in the event that a borrowing entity has not complied with certain requirements such as failure to pay interest or repay a borrowing, whichever is earlier. During the period no guarantees were called.

The Trust together with DIT, DOT and DDF is also a guarantor, on a subordinated basis, of RENTS (Real-estate perpetual ExchaNgable sTep-up Securities). The guarantee has been given in support of payments that become due and payable to the RENTS holders and ranks ahead of DXS's distribution payments, but subordinated to the claims of senior creditors.

The guarantees are issued in respect of the Trust and do not constitute an additional liability to those already existing in interest bearing liabilities on the Statement of Financial Position.

The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Trust, other than those disclosed in the Financial Statements, which should be brought to the attention of unitholders as at the day of completion of this report.

Events occurring after the reporting date

Since the end of the period, the Directors are not aware of any matter or circumstance not otherwise dealt with in their Directors' Report or the Financial Statements that has significantly or may significantly affect the operations of the Trust, the results of those operations, or state of the Trust's affairs in future financial periods.

Note 12

Operating segments

The Chief Operating Decision Maker (CODM) has been identified as the Board of Directors as they are responsible for the strategic decision making within the Group. DXS management has identified DXS's operating segments based on the sectors analysed within the management reports reviewed by the CODM in order to monitor performance across the Group and to appropriately allocate resources. Refer to the table below for a brief description of the Group's operating segments.

Office – Australia and New Zealand	This operating segment comprises office space with any associated retail space; as well as car-parks and office developments in Australia and New Zealand.
Industrial – Australia	This operating segment comprises domestic industrial properties, industrial estates and industrial developments.
Industrial - North America	This comprises industrial properties, industrial estates and industrial developments in the United States as well as one industrial asset in Canada1
Management Business	The domestic and US based management businesses are responsible for asset, property and development management of Office, Industrial and Retail properties for DXS and the third party funds management business.
Financial Services	The treasury function of DXS is managed through a centralised treasury department. As a result, all treasury related financial information relating to borrowings, finance costs as well as fair value movements in derivatives, are prepared and monitored separately.
All other segments	This comprises the European industrial portfolio. This operating segment does not meet the quantitative thresholds set out in AASB 8 Operating Segments due to its relatively small scale. As a result this non-core operating segment has been included in 'all other segments' in the operating segment information.

1 The Canadian asset was sold on 24 June 2011.

Consistent with how the CODM manages the business, the operating segments within DXS are reviewed on a consolidated basis and are not monitored at an individual trust level. The results of the individual trusts are not limited to any one of the segments described above.

Disclosures concerning DXS's operating segments as well as the operating segments' key financial information provided to the CODM are presented in the DEXUS Property Group Financial Statements.

Independent auditor's review report to the unitholders of DEXUS Operations Trust

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of DEXUS Operations Trust, which comprises the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors' declaration for the DEXUS Operations Trust Group (the consolidated entity). The consolidated entity comprises both DEXUS Operations Trust (the Trust) and the entities it controlled during that half-year.

Directors' responsibility for the half-year financial report

The directors of DEXUS Funds Management Limited (the Responsible Entity) are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such control as the directors determine is 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 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 2011 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 DEXUS Operations 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. 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.

Independence

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

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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 fin Corporations Act 2001 including: year financial report of DEXUS Operations Trust is not in accordance with the is matter in view 2011and the

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Corporations Regulations 2001. Interim Financial Reporting

PricewaterhouseCoopers

EA Barron Partner

Sydney 14 February 2012