Charter Hall Office REIT : Update on proposal to acquire CQO units

ASX/MEDIA ANNOUNCEMENT UPDATE ON PROPOSAL TO ACQUIRE CQO UNITS

Tuesday, 6 March 2012

Charter Hall Office Management Limited

ABN 75 006 765 206

AFS Licence No. 247075 as responsible entity of Charter Hall Office REIT

Charter Hall Office Management Limited in its capacity as responsible entity of the Charter Hall Office REIT (ASX:CQO) (CQO), announced today an update on the likely timing of implementation of the proposal by Reco Ambrosia Pte Ltd (an affiliate of Government of Singapore Investment Corporation (Realty) Pte Ltd), the Public Sector Pension Investment Board of Canada and a member of the Charter Hall Group (ASX:CHC).
A copy of a unitholder letter detailing the announcement, which will be mailed to unitholders, is attached.

For further information, please contact:

Adrian Taylor Chief Executive Officer Charter Hall Office REIT Tel: [phone] [e-mail]	Jill Rikard-Bell Chief Operating Officer Charter Hall Office REIT Tel: [phone] [e-mail]
Kylie Ramsden Head of Listed Investor Relations Charter Hall Office REIT Tel: [phone] [e-mail]	Rachel Mornington-West Head of Marketing and Communications Charter Hall Office REIT Tel: [phone] or [phone] [e-mail]

About Charter Hall Office REIT

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

Charter Hall Office REIT is managed by Charter Hall Group (ASX:CHC) is one of Australia's leading fully integrated property groups, with 20 years' experience managing high quality property on behalf of institutional, wholesale and retail clients. Charter Hall has over $10 billion of funds under management across the office, retail, industrial and residential sectors. The Group has offices in Sydney, Melbourne, Brisbane, Adelaide, Perth, Warsaw and Chicago.

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

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

6 March 2012
[Insert address - line 1] [Insert address - line 2]
Dear Unitholder,
As Independent Chairman of Charter Hall Office Management Limited (CHOML), the responsible entity of Charter Hall Office REIT (CQO), I am writing to update you about the Proposal by Reco Ambrosia Pte Ltd (an affiliate of Government of Singapore Investment Corporation Pte Ltd), the Public Sector Pension Investment Board and a member of the Charter Hall Group (ASX:CHC) (together, the Bidders) to acquire all the units in CQO except certain of those held by the Bidders or their associates (the Proposal) as documented in a scheme implementation agreement entered into on 31 December 2011 (as amended) (SIA).
I refer to the Explanatory Memorandum dated 10 February 2012 relating to the Proposal, a copy of which is also available on CQO's website at www.charterhall.com.au/cqo.
Capitalised terms used in this letter, unless otherwise defined, have the same meaning as set out in the
Glossary in section 8 of the Explanatory Memorandum.

Update on the US Sales Process

The Proposal contains a number of conditions precedent which must be satisfied (or waived) before the Proposal may become effective. These include the completion of the sale of each of the US Assets previously announced by CHOML on 3 August 2012.
Beacon Capital Partners, LLC has contracted to acquire the US Assets although completion of the sale of each asset is dependent on satisfaction of a number of conditions precedent. CHOML is working with Beacon Capital Partners, LLC, as well as with the relevant lenders and other interested parties to facilitate completion of each sale as quickly as possible. There are seven US Assets whose sale has not yet
completed1.
Although no issues have arisen which cause CHOML to believe that the sale of any US Asset will not complete satisfactorily, the process for concluding each outstanding sale has taken longer than CHOML

1 See section 4.3(b) of the Explanatory Memorandum, which contains a list of these US Assets.

expected at the time of finalising the Explanatory Memorandum. As at the date of this letter, CHOML is unaware of any reason why any of the conditions precedent to completion of the sales of the remaining US Assets will not be satisfied.

When does CHOML expect the Implementation Date will occur?

CHOML still proposes to hold the unitholder Meeting as planned on 15 March 2012.
However, for the reason explained above, implementation of the Proposal cannot occur until after completion of the sales of all of the US Assets.
In order for the Proposal to be implemented in accordance with the timetable contained in the Explanatory Memorandum (which provides for an Implementation Date of 30 March 2012), the sales of all US Assets must complete by 8.00am on 16 March 2012 (being the date on which CHOML is currently scheduled to seek the Second Judicial Advice from the Court). Based on the information available today, CHOML cannot be certain that each sale will have completed by this time.
The Effective Date of the Proposal is expected to be the same day that the Second Judicial Advice is received, which will be as soon as reasonably practicable after the completion of the last US Asset sale. The Record Date for participation in the Proposal will be seven days after the Effective Date, and the Implementation Date will occur seven days after the Record Date.
At this stage, based on all information known to CHOML, CHOML expects all remaining US Asset sales to complete by the end of March 2012, which would mean that the Implementation Date would fall in mid- April.
However, because completion of the US Asset sales involves the satisfaction of conditions precedent, some of which are outside of CHOML's control, CHOML cannot be certain that the US Asset sales will complete in accordance with this timetable. CQO unitholders should note that the US Sale Contract with Beacon Capital Partners, LLC allows for satisfaction of the conditions precedent by an end date of 28 April
2012 2. As advised above, CHOML expects all remaining US Asset sales to complete by the end of March
2012.

2 See section 7.2 of the Explanatory Memorandum for information about what may happen if a condition to the Proposal is not satisfied or waived. At this stage, based on all information known to CHOML, CHOML expects all remaining US Asset sales to complete by the end of March 2012.

What is the effect of a delay?

The details of the Proposal remain as set out in the Explanatory Memorandum except for the timing of implementation of the Proposal, as outlined above, and the value of US Sales Distributions available for distribution, which may be affected by a delay in implementation, as outlined below.
As disclosed in section 3.2(b) of the Explanatory Memorandum, if the delay in the timetable causes implementation of the Proposal to occur after 31 March 2012, an amount equal to the increased debt funding costs of the Bidders as a result of implementation occurring after that date, adjusted for the agreed notional level of earnings of CQO over the extended period, will be deducted from the US Sales Proceeds
available for distribution to Unitholders as US Sales Distributions.3 The maximum net amount which may
be deducted is approximately $3 million, or 0.6 cents per CQO Unit.

Opinion of the Independent Expert

Grant Samuel & Associates Pty Limited, the Independent Expert, has considered the delay in implementation of the Proposal in so far as it impacts the conclusions drawn in its opinion and remains of the view that the Proposal is fair and reasonable to, and in the best interests of, scheme unitholders in the absence of a superior proposal.

Unanimous Recommendation of the Independent Directors

Each Independent Director:

• maintains his recommendation that Unitholders vote in favour of the Scheme Resolutions, in the absence of a Superior Proposal; and

• intends to vote his CQO Units in favour of the Proposal at the Meeting, in the absence of a

Superior Proposal.

3 If the delay in the timetable causes implementation of the Proposal to occur after 31 March 2012 but on or before 30 April 2012, the US Sales Proceeds available for distribution will be reduced by approximately $3 million to account for the increased debt funding costs of the Bidders, however this reduction will be offset by $194,285 for each day in April 2012 up to and including the implementation date (such amount representing the agreed notional level of earnings of CQO on a daily basis). If the delay in the timetable causes implementation of the Proposal to occur after 30 April 2012 but on or before 31 May 2012, the US Sales Proceeds available for distribution will be reduced by $8.9 million to account for increased debt funding costs of the Bidders, however this reduction will be offset by $194,285 for each day in April 2012 and May 2012 up to and including the implementation date (such amount representing the agreed notional level of earnings of CQO on a daily basis).

For the Proposal to be implemented, both of the Scheme Resolutions must be passed at the Meeting by the requisite majorities. Further details of the Scheme Resolutions and the Independent Directors' reasons for recommending Unitholders vote in favour are provided in the Explanatory Memorandum.

FIRB

CHOML has been advised that the Bidders have received the required Foreign Investment Review Board approval.

First US Sales Distribution

As announced on 21 February 2012, CQO unitholders will receive a first US Sales Distribution of $0.48 per CQO Unit held on the distribution record date of 5.00pm on 1 March 2012. The distribution will be paid on or about 8 March 2012.

Further Information

CHOML will continue to keep Unitholders informed of any material developments in relation to the Proposal and US Sale Process through releases to the ASX (which will also be published on CQO's website at www.charterhall.com.au/cqo).
Once CHOML has confirmed the Second Judicial Advice Date, in addition to advising ASX of that date, it will place an advertisement in The Australian newspaper as soon as practicable after confirmation from the Court of that date.
If you have any questions in relation to the Proposal, please call the CQO Unitholder information line on
1300 303 063 (within Australia) or [phone] (outside Australia) Monday to Friday between 8.30 am and 7.30 pm (Sydney time) or visit www.charterhall.com.au/cqo.
Yours sincerely,
Roger Davis
Independent Chairman of Charter Hall Office Management Limited