Australian Equivalents to International Financial Reporting Standards (“AIFRS”) Centro Transition Update 16 December 20

1. Australian Equivalents to International Financial Reporting Standards (“AIFRS”) Centro Transition Update 16 December 2005

2. Outline- Overview and Impact of AIFRS- Accounting Policy Changes- Impact on Financial Reports and Distributions

3. Overview • Centro AIFRS reporting from 31 Dec 2005 • Centro will provide relevant information to assist understanding and analysis of Centro’s underlying financial performance • Operating cashflow/profit will remain the basis for distribution payments • No change to business strategy or operations as a result of AIFRS

4. Impact of AIFRS • Significant Accounting Policy Changes • Material Increased Volatility in Accounting Results - i.e. 330% or $594m increase in FY05 • AIFRS will not Materially Impact • Business strategy or commercial decision making • Borrowing covenants • Operating cash flows or distributions to investors

5. Accounting Policy Changes

6. Accounting Policy Changes • Revaluation of Investment Properties • Business Combinations • Financial Instruments • Straightlining of Rental Income • Amortisation of Lease Incentives • Share Based Payments • Taxation • Consistency of Treatment for all Centro Managed Vehicles where Relevant

7. Property Revaluations now in P&L • AGAAP – No Profit Impact • No profit impact from property revaluation gains/losses • AIFRS – Potential Significant Profit Impact • Investment property revaluation gains/losses reported as operating profit/losses • Impact – Increased Profit Volatility • FY05 revaluation gain was $466.9m with resultant AIFRS impact on EPS of 203% or 62 cents • Unrealised revaluation gains/losses result in accounting results (including EPS) being less reflective of underlying financial performance

8. Business Combination Changes • AGAAP – Legal Form over Substance • Focus on legal form of transaction in acquisition accounting • Mandatory amortisation of goodwill (maximum of 20 years) • AIFRS – Substance over Legal Form • Focus on commercial substance of transaction for acquisitions • Infinite life intangibles (e.g. goodwill) subject to impairment testing rather than amortisation • Greater recognition of acquired contingent obligations & identified intangibles • Impact – One Off Adjustments/Minimal Recurring Impact • Reversal of Centro/Prime merger accounting as Centro regarded as acquirer resulting in goodwill and net asset reduction of $392.0m • Removes recurring goodwill amortisation which was previously ignored for DPS purposes ($23.8m in FY05) • No impact on Lender gearing ratio (already includes Centro Services Business value)

9. Valuation of Financial Instruments • AGAAP – No Market to Market of Derivatives • No recognition of unrealised derivative gains/losses • AIFRS – Mark To Market At Balance Date • Derivatives will be measured at fair value at each balance date • Fair value movements taken to P&L or equity depending on hedge designation and effectiveness testing • Impact – Increased Profit Volatility • Continued use of derivatives to manage interest rate and FX risks • Designation and effectiveness testing will be applied • Some derivatives (effective in a commercial sense) will not meet testing requirements resulting in fair value movements through P&L • No impact on restated FY05 result as not applied retrospectively • Internal systems in place to designate and undertake effectiveness testing

10. Straightlining of Rental Income • AGAAP – Income Recognised as Earned • Rental income recognised in the period earned • AIFRS– Income Recognised in Advance • Fixed base rent increases recognised on a straight line basis over the initial lease term • Other rental income will be recognised as earned including • Base rent where increases not fixed, e.g. to CPI or market • Percentage rent • Variable outgoings recoveries • E.g. - Specialty shop $100k p.a., 5 yr lease, 4% p.a. rent reviews • Impact – No Material Recurring Profit Impact • Increase in reported FY05 rental income of $2.2m

11. Changes to Treatment of Fit-outs • AGAAP – No Amortisation of Lessee Owned Fit-outs • Lessee owned fit out costs capitalised and not amortised • AIFRS – Amortisation of Lessee Owned Fit-outs • Lessee owned fit out costs will be amortised and offset against rental income on a straight-line basis over the initial lease term • Impact – No Material Recurring Profit Impact • Majority of leasing deals involve lessor owned fit outs which have value to Centro beyond the initial lease term & will not be amortised • Increase in FY05 reported amortisation expense of $4.0m

12. Minimal ESP Impact • AGAAP – No Recognition of Centro Employee Share Plan (“ESP”) Expense • No expense recognised in relation to securities issued to employees under the ESP • Securities issued to employees under the ESP were included in weighted average securities calculation • AIFRS – Recognition of ESP Expense • Securities issued under the ESP regarded as ‘options’ due to the non-recourse nature of loans provided to fund security purchase • Value of the ‘option’ recognised as an expense • Securities issued under the ESP excluded from weighted average securities calculation • Impact – Negligible DPS & EPS Impact • Recognition of employee benefit expense of $0.8m in FY05 • Negligible EPS/DPS impact due to recognition of fewer securities on issue

13. Deferred Tax Balances Recognised • AGAAP – Income Statement Method • Deferred tax balances determined using income statement method • AIFRS – Balance Sheet Method • Deferred tax balances determined using the balance sheet method • Liabilities recognised where investment property valuations held by entities subject to tax (e.g. companies) exceeds their tax cost bases • Impact – One Off Adjustments/Minimal Recurring Impact • Initial recognition of $53.1m deferred tax liability relating to investment properties held by Centro Group companies at 1 July 2004 • Deferred tax liability reduced by $36.2m during FY05 due to changes in tax cost bases of investment properties following the Centro/Prime merger

14. Impact on Financial Reportsand Distributions

15. Varied Impact on Financial Reports • P&L – Increased Reported Profit Volatility • Less indicative of underlying financial performance due to significant non-recurring and non-cash items including • Investment property revaluation gains/losses • Mark to market of financial instruments • Balance Sheet – No Material Recurring Impact • Reversal of Centro/Prime merger accounting will result in a reduction in goodwill and net assets of $392.0m • Increased focus on lender gearing (e.g. Services Business independently valued at circa $0.8bn in FY05 c/f $0.3bn of intangibles on balance sheet under AIFRS) • Cash Flow – Continued Basis For DPS Calculation • Cash flow from operations will become a more relevant financial performance measure on which to base distribution policy due to accounting profit volatility • Peer group consensus is expected to develop along similar lines to the US where the concept of Funds from Operations (“FFO”) is well established

16. AIFRS Increases FY05 Profit by 330%

17. AIFRS Will Not Impact Distributions • Increased Volatility in Reported Financial Results • Centro has Delivered Stable Cash Flowsfrom Operations -and will maintain a strong alignment between cash flow from operations and distributions • No Material AIFRS Impact on • Business strategy or commercial decision making • Borrowing covenants • Cash flows or distributions to investors

18. Questions?

19. Contact Details • Andrew Scott, Chief Executive Officer - andrew.scott@centro.com.au • Philippa Kelly, Centro Fund Manager - philippa.kelly@centro.com.au • Romano Nenna, Chief Financial Officer - romano.nenna@centro.com.au • Phone +61 3 8847 0000 • Website www.centro.com.au Important Note This presentation was not prepared for and should not be relied upon to provide all necessary information for investment decisions. Although great care has been taken to ensure the accuracy of this presentation, Centro Properties Group gives no warranties in relation to the statements and information contained herein and disclaims all liability arising from persons acting on the information and statements in this presentation. Due to the dynamics and changing risk profiles of investment markets, Centro Properties Group reserves the right to change its opinion at any time. All investors are strongly advised to consult professional financial advisors whose role it is to provide professional financial advice, taking into account an individual investor’s investment objectives, financial situations and particular needs.