Investa Office Fund : 19 Mar 2012 – Half Year Review

Half Year Results

31 December 2011

Letter from the Fund Manager

Half year in review

19 March 2012

Dear Unitholder,
I am pleased to be given the opportunity to be the new Fund Manager for Investa Office Fund (IOF) and look forward to working with the Board, and my colleagues at Investa Property Group to deliver the best possible returns for unitholders.
IOF delivered a number of key outcomes since last reporting to you, including:
> Significant leasing activity with 19.5% of the Australian portfolio re-leased, at an average rental increase of 7.5% and high tenant retention of 90% achieved;
> Australian portfolio value increased 3.4% following the completion of independent valuations of 52% of the Australian portfolio;
> Strong progress on offshore sales following the sale of the entire US Portfolio and the Paris asset, at an overall 9.7% premium to book value; and
> The completion of a 10% on-market buyback in four months at an average price of $0.608, which was a significant discount to the NTA per unit.
IOF is committed to executing the Fund's stated strategy of being the pre-eminent Australian CBD office fund by repositioning the portfolio to focus on high quality core assets in prime CBD locations. As a result, IOF announced a proposal for the acquisition of:
> Up to a 50% interest in the iconic "Deutsche Bank Place" at 126 Phillip Street, Sydney, one of the premier CBD office properties in Australia; and
> A 50% interest in 242 Exhibition Street, Melbourne, an A-grade CBD office property that serves as the Telstra Global Headquarters
from members of Investa Property Group, subject to unitholder approval. This opportunity will enhance the risk adjusted returns for the Fund by:
> Significantly improving the overall quality of the Australian portfolio, being earnings accretive; and
> Providing an efficient redeployment of capital following the offshore asset sales.
The Unitholder meeting for the consideration and vote on the proposal will be held at 10.00am (Sydney time) on Tuesday 27 March 2012 in the Blaxland Room at the Swissotel, 68 Market Street, Sydney NSW.
In terms of outlook, FY2012 earnings are forecast to be favourably impacted by the effect of the buyback, offset by loss of earnings from offshore asset sales. Future earnings are dependent on the outcome of the proposed acquisitions. Forecast distributions per unit for FY2012 are expected to remain in line with the prior year at 3.9 cents per unit.
On behalf of the IOF team, thank you for your continued support of IOF.

Toby Phelps

Fund Manager, Investa Office Fund
Toby Phelps
Fund Manager,
Investa Office Fund (IOF)

Toby Phelps is the Fund Manager of IOF and is responsible for actively driving the long-term strategy and performance of the Fund.

Toby was most recently Head of Real Estate at Barclays Capital in Australia, and before this was Managing Director of both GreenOak Real Estate and Tishman Speyer Properties in the UK. Prior to this Toby was a Managing Director and Head of UK Investing with Europe-wide responsibilities at Morgan Stanley Real Estate.

Toby has extensive experience in global real estate investing, asset management, capital raising and corporate finance, and is an accomplished leader of successful investment

management teams.

INVESTA OFFICE FUND HALF YEAR RESULTS | 2012

Results at a glance

Investa's strategic objective is to reposition IOF as Australia's

pre-eminent CBD office Fund with a diverse portfolio of high performing investment grade office properties in prime

CBD locations.

Financial > Distributions of $1.95c in line with guidance

> Earnings impacted by declining income from offshore assets and the inclusion
of leasing fee amortisation within operating income
> Material increase in NTA per unit of 8.2%
> Gearing of 24.5% at low end of targeted range

Australian portfolio > Significant leasing activity completed with over

70,000sqm re-leased
> Face rents on renewals increased by 7.5% on average
> Occupancy increased to 97%
> Weighted average lease expiry increased to 5.3 years
> Significant progress on major lease expiries including
MLC (26,709sqm) and QBE (10,012sqm)

Strategy > Ongoing execution of strategic initiatives

> Significant progress with offshore asset sales
> Further repositioning with proposed acquisitions

The Fund reported a net profit of $172.3 million up from $117.6 million in the prior corresponding period. Operating income of $63.3 million was largely impacted by a decline in US net property income, although these assets have subsequently been sold.

31 Dec 2011 31 Dec 2010

Net profit (statutory) $172.3m $117.6m Operating income $63.3m $71.7m Operating income per unit 2.4¢ 2.6¢ Distributions per unit 1.95¢ 1.95¢

31 Dec 2011 30 June 2011

Gearing (look through)1 24.5% 20.5% Net tangible assets per unit (NTA) $0.79 $0.73

Movement in nTa per unit

$

0.80

0.75

0.04

0.01

0.01

0.79

+8.2%

0.70

0.73

0.65

0.60

30 JUN 11

REVALUATIONS

BUYBACK

FX IMPACT & OTHER

31 DEC 11

1. Based on debt to total assets, including share of associates' and DOF's assets and debt.

INVESTA OFFICE FUND HALF YEAR RESULTS | 2012

Fund performance highlights

We are pleased with the progress made towards

our stated objectives, namely completion of the 10% unit buyback at a 17% discount

to the prior period NTA per unit and execution of the offshore sales at an overall premium to book value.

Australian portfolio update

IOF's Australian portfolio saw a significant level of leasing activity with 19.5% re-leased during the six months. The management team have been able to leverage their strong relationships and knowledge of the office market to attract and retain quality tenants, and maintain high occupancy.

Key metrics for the Australian portfolio during the period were:

Occupancy 97% Tenant retention 90% Like-for-like net property income growth +1.5% Average face rental increase on renewals 7.5% Weighted average lease expiry 5.3 years1

Portfolio book value +3.4%

Offshore portfolio update

Significant progress has been made to date with the offshore sales, with four of the six investments sold since August last year. The Fund has divested all property assets in the US and one in Europe, at an overall premium of 9.7% to the 30 June 2011 book values, demonstrating the measured and timely approach adopted for offshore divestments.

During the period, the Fund completed an on-market buyback of 10% of the units on issue at an average purchase price of $0.608, which was a 17% discount to the prior period NTA per unit.
The Fund's look through gearing at 31 December 2011 was 24.5%, with settlement
of the offshore asset sales significantly reducing the gearing level to below the targeted range of 25% to 30%. Weighted average cost of debt is 4.8%, weighted average debt maturity is 2.8 years and interest cover ratio is 5.2 times.

8.2%

increase in

NTA per unit

$0.79

NTA per unit

95% Overall portfolio occupancy2

19.5% of Australian portfolio released during period

1. Includes leasing completed post balance sheet date.

2. Includes existing offshore assets of DOF and Bastion Tower.

Delivering on strategy

Since assuming management of IOF in

April 2011, Investa has been committed to progressively implementing a range of initiatives designed to

create value for unitholders. We expect to be judged

on our performance and believe that consistently

The Fund's overarching strategy is to be the pre-eminent Australian CBD office fund. The Fund's FY12 earnings are forecast to be favourably impacted by the effect of the buyback, offset by the loss of earnings from offshore asset sales. Future earnings are dependent on the re-investment of sale proceeds from the sale of offshore assets. Baseline FY12 EPU is expected to be 4.9 cents and DPU is to remain at 3.9 cents subject to prevailing market conditions.

Initiative Progress Status

delivering on our objectives should be a key measure

of our progress.

Align management fees

Enhance corporate governance

Early refinance of syndicated debt facility

Completed 10%

unit buyback

Executed offshore asset sales

Refocus portfolio on high quality assets in Australia

RE fee fixed at $8.6 million per annum until
30 June 2012, thereafter 0.55% per annum of IOF's total equity market capitalisation subject to cap and floor of 2.5% per quarter.
New RE Board with independent Chairman and majority of independent Directors appointed July
2011 and ability granted to unitholders to ratify the appointment or renewal of independent Directors.
This refinancing was announced on 15 August
2011. The new facility of $552 million expires
August 2014 and enabled IOF to undertake a buyback.
Completed unit buyback in four months at an average purchase price of $0.608 which was a
17% discount to the 30 June 2011 NTA per unit.
Offshore asset sales well progressed, completed sale of US portfolio and Paris asset at overall premium to book value.
Proposed acquisition of interests in 126 Phillip Street, Sydney and 242 Exhibition Street, Melbourne.