Investment Strategy

The Fund's investment strategy is to:

• invest in quality Australian office properties for the medium to long term and actively manage them to increase their value and income growth prospects;

• grow the rental income of the Fund by attracting and retaining quality corporate tenants on long leases with structured rental increases, targeting properties that are well located within established markets;

• seek investment opportunities, including co-investment opportunities through Charter Hall Group's investment pipeline, its joint venture partners and others in accordance with clear investment criteria; and

• regularly review and rebalance the Property Portfolio, including where appropriate, selling Properties to maximise returns for Investors.

Charter Hall Direct Office Fund is an unlisted property fund with an existing diversified portfolio valued at more than $1 billion. Charter Hall's continued access to a pipeline of Australian office property will grow the portfolio with high quality, well located acquisitions.

By investing in the Fund, you have the potential to receive sustainable and stable tax-advantaged income paid quarterly. Distributions are derived from real properties in a portfolio with a long weighted average lease term, annual rent increases and the potential for capital growth.

The Property Portfolio currently comprises 11 high quality property investments diversified across Sydney, Melbourne, Brisbane and Perth:

• 1 Nicholson Street, Melbourne, Vic;

• 4-16 Montgomery Street, Kogarah, NSW;

• 68 Pitt Street, Sydney, NSW;

• 100 Skyring Terrace, Newstead, Qld;

• 105 Phillip Street, Parramatta, NSW;

• 169 Macquarie Street, Parramatta, NSW;

• 181 St Georges Terrace, Perth, WA;

• 200 Queen Street, Melbourne, Vic;

• 800 Toorak Road, Hawthorn East, Vic;

• 900 Ann Street, Fortitude Valley, Qld; and

• Charter Hall Prime Office Fund (CPOF) investment.

As at the date of this PDS, the Fund's total as if complete Property value is $1.2 billion, with 18% of this total value under development.

The current Property Portfolio continues to demonstrate strong tenant demand as evidenced by each Property in the portfolio outperforming the Property Council of Australia (PCA) occupancy benchmarks. The ability to attract and retain tenants is a key focus for the Responsible Entity and it is closely aligned with the Fund's investment objective to provide Investors with sustainable and stable tax-advantaged income and the potential for capital growth.

The Fund also has an investment in CPOF - a Charter Hall managed wholesale office fund with total assets valued at $3 billion. Investing in prime office assets across Australia, CPOF is geographically weighted to Sydney and Melbourne and was the top performing office fund in the MSCI/IPD Australia Wholesale Property Funds Index over one, three and five years to December 2016. CPOF has 19 properties with average occupancy of 97.9% and a 6.4 year weighted average lease term.

Investment Criteria

• Property type: Australian office property.

• Property grade: All Properties will be prime, A-grade or B-grade.

• Tenant: All Properties will have quality tenants.

• Value: At the time of acquisition, the Fund's interest in the relevant Property will be valued at no more than 25% of the total portfolio value.

• Average lease term: At the time of acquisition, the Property will not reduce the Property Portfolio's average lease term below five years.

• Development: To reduce risks associated with development, any Property acquired that is subject to development will have an approved development application and an agreement for lease over the majority of the Property.

• Co-investment: All co-investments will be in high quality office investment opportunities alongside Charter Hall's institutional office funds or major Australian or international investors.

The Responsible Entity may revise this investment criteria from time to time, having regard to the best interests of Investors. Changes to these investment criteria will be communicated to Investors via the Fund's website or in writing. The Board of the  Responsible Entity will consider each potential acquisition on a case-by-case basis.