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1 4 November 2011 Company Announcements Office Australian Stock Exchange Limited 10th Floor, 20 Bond Street Sydney NSW 2000 Dear Sir, Centro Retail Trust (ASX:CER) - Supplementary Explanatory Memorandum and Supplementary Disclosure Document The Supreme Court of New South Wales has this morning granted orders to dispatch the attached Supplementary Explanatory Memorandum and Supplementary Disclosure Document to Centro Retail Trust investors. The Supplementary Explanatory Memorandum supplements the Explanatory Memorandum issued by CER dated 5 October 2011 and provides information regarding refinancing, debt facility extensions and standstill arrangements for CER. The Supplementary Disclosure Document supplements the Disclosure Document relating to CER, Centro Australia Wholesale Fund and Centro DPF Holding trust, also dated 5 October 2011 and provides information regarding refinancing of Centro Retail Australia. Yours faithfully Elizabeth Hourigan Company Secretary

2 4 November 2011 Dear CER Securityholder Update on CER debt extensions and standstill agreements As you know, CER Securityholder Meetings have been convened for Tuesday, 22 November 2011, to consider approving the CRL Members' Scheme and the CER Aggregation Resolutions to give effect to the proposed Aggregation of CER, CAWF and DHT to form Centro Retail Australia. The details of the proposed Aggregation are set out in the CER Explanatory Memorandum and Disclosure Document (together, the Explanatory Statement), both dated 5 October 2011, which you should have received. These documents may also be downloaded from This document (Letter) supplements the CER Explanatory Memorandum and its purpose is to provide information to CER Securityholders, in accordance with Part 5.1 of the Corporations Act, about material new matters that have arisen since the Explanatory Statement was registered by ASIC on 10 October It is intended that this Letter be read together with the Explanatory Statement. Since the CER Explanatory Memorandum was dispatched, CER has successfully negotiated in-principle non-binding commercial agreement of extensions of all of its external debt facilities that were due to mature before 16 December CER has also reached in-principle non-binding commercial agreement with its lenders in relation to agreements on the part of its lenders not to exercise their rights in respect of those facilities in the event of the occurrence of certain events of default (standstill arrangements). Both the extensions and the standstill arrangements are subject to legal documentation and satisfaction of conditions precedent. This material development is explained in section 1 below. In addition to this Letter, CER Securityholders should also have received (together with this Letter) a supplementary disclosure document (Supplementary Disclosure Document) (issued by CRL, Centro MCS Manager Limited as RE of CRT, DHT and DPF, and CPT Manager Limited as RE of CAWF) which provides an update on progress made in relation to the refinancing of the borrowing facilities of the Aggregation Funds and the Centro MCS Syndicates. A copy of this Letter has been provided to ASIC and ASX. None of ASIC, ASX or any of their respective officers takes any responsibility for the contents of this Letter. Unless otherwise defined in this Letter, capitalised terms have the meaning given to those terms in either the CER Explanatory Memorandum (section 14) or the Disclosure Document (section 16).

3 1. Successful negotiation of in-principle commercial agreement to the extension of certain outstanding CER debt facilities and standstill arrangements Since the dispatch of the Explanatory Statement, CER has successfully negotiated inprinciple non-binding agreement on the commercial terms of extensions of its $463.3 million of external debt facilities which were due to mature by 16 December 2011 (see section 3.5 of the CER Explanatory Memorandum). Under these proposed extensions, $292.3 million of this debt will be due to mature on 31 August 2012, and the remaining $171.0 million will be due to mature on 17 September In addition, CER and CAWF have also negotiated in-principle non-binding approval to extend the maturity of a $300.0 million facility from December 2012 to December 2013 (subject to Aggregation occurring). In addition to the debt extensions outlined above, CER has also reached in-principle non-binding agreement on the commercial terms of standstill arrangements with all of its external lenders which will limit the event of default provisions to breaches of undertakings, payment defaults and covenant defaults, and exclude defaults arising from a default under another financing arrangement (cross defaults) and technical defaults not related to performance of obligations under the facilities. It is proposed that these standstill arrangements would expire between 31 August 2012 and 17 September The agreement of these standstill arrangements with its lenders is a condition to CER agreeing to the Extended Aggregation Period as described in section 8.4 of the CER Explanatory Memorandum. The Extended Aggregation Period means that Aggregation may still occur despite the fact that all necessary approvals from CNP Junior Stakeholders are not obtained. Under the proposed extensions and standstill arrangements as outlined above, CER will be required to make upfront cash payments, including the payment of waiver fees and facility extension fees, to its lenders. The aggregate amount of the fees is expected to total approximately $6 million. These fees will be funded out of CER's existing cash reserves and will not have a materially adverse impact on CER or its operations. CER will also be required to grant additional security to its lenders, in the form of five additional assets which were previously unencumbered. The value of these properties is $444 million. Four of CER's assets remain unencumbered and have a combined value of $100 million. As part of the extensions and standstill arrangements, CER will also commit to amortisation payments of $5 million each quarter, for the duration of the debt extensions. In all other respects, the terms of the facilities, including margins, are expected to be substantially the same as those which are currently in place. The extensions and standstills outlined above are subject to the execution of binding legal documentation and satisfaction of conditions precedent. [ : _1] 2

4 If Aggregation occurs, most of the debt facilities described above, will be refinanced by Centro Retail Australia s proposed Core Facility. The existing syndicated facility of $300 million (split equally between CER and CAWF) secured over four properties (refer above) will be retained by Centro Retail Australia (subject to Aggregation occurring). Section 3.9 of the CER Explanatory Memorandum explains the implications for CER if Aggregation does not proceed. The extensions and standstills described above will provide CER Securityholders with a greater level of certainty around CER's debt position (until August 2012) and will enable CER to consider alternatives to Aggregation (in the event that Aggregation does not proceed for whatever reason) without the risk of CER's financiers seeking to enforce on their security. However, it should be noted that the proposed extensions and standstills do not provide certainty in relation to CER's financing in the medium term and there can be no assurance that CER will be able to refinance these debts when they mature. As noted in section 3.9 of the CER Explanatory Memorandum, it is not possible to predict the exact consequences for CER in the event that Aggregation does not proceed (due to a number of factors). 2. Centro Retail Australia and Centro MCS Syndicates refinancing You should refer to the Supplementary Disclosure Document for further information on progress that has been made in relation to the negotiation of debt facilities for Centro Retail Australia and Centro MCS Syndicates. 3. No change to Directors' recommendation of Aggregation The CER Board has considered the supplementary information contained in this Letter and also in the Supplementary Disclosure Document. The CER Board (other than those Directors who are also Directors of CNP and who make no recommendation) confirm that none of these supplementary matters change the CER Board's recommendation, and reiterate their unanimous recommendation that you vote in favour of the CRL Members' Scheme Resolution and all CER Aggregation Resolutions, in the absence of a Superior Proposal. 4. No change to Independent Expert's opinion of Aggregation The Independent Expert, Grant Samuel & Associates Pty Ltd, has considered the supplementary information contained in this Letter and also in the Supplementary Disclosure Document, and has confirmed that it remains of the view that the Aggregation is fair and reasonable to and in the best interests of external CER Securityholders and that the acquisition of the CNP Assets is fair and reasonable to external CER Securityholders. External CER Securityholders are all CER Securityholders other than CNP and its associates. You should read the Independent Expert's letter to CER Securityholders (enclosed) which confirms its opinion, along with the Independent Expert's Report (contained in Section 10 of the CER Explanatory Memorandum) in full before making your own determination on the merits of Aggregation. [ : _1] 3

5 5. Voting and Proxy information You do not need to take any action if you have already lodged your proxy forms and do not wish to change your vote as a result of the supplementary information. If you have not yet voted, you simply need to take the supplementary information into account when making your decision. If you have already lodged your proxy form and now wish to change your vote, please call the CER Securityholder information line on toll-free ( for overseas callers) or investor@centro.com.au as soon as possible. New proxy forms will immediately be sent to you by or fax, or post if you prefer. Please lodge your new proxy form by 10:00 am on Sunday, 20 November If you lodge a new proxy form, it will revoke your previous proxy form (to the extent both appointments cannot be validly exercised at the meetings). In order to proceed, the Aggregation requires the approval of CER Securityholders. I urge you to read this Letter, the CER Explanatory Memorandum, the Disclosure Document and the Supplementary Disclosure Document carefully and vote either by proxy or in person at the CER Securityholder Meetings which are to be held at 10:00 am on Tuesday, 22 November 2011, at the Auditorium, Level 2, Melbourne Exhibition Centre (Jeff's Shed), 2 Clarendon Street, Southbank, Victoria. For your proxy vote to be considered, it must be lodged by 10:00 am on Sunday, 20 November Please note that the reference on page 249 of the CER Explanatory Memorandum to lodgement of proxy forms by 11:30 am (on Sunday, 20 November 2011), is incorrect. Except as set out in this Letter, the CER Explanatory Memorandum, the Disclosure Document or the Supplementary Disclosure Document, there is no other information material to the making of a decision in relation to the CRL Members' Scheme, being information that is within the knowledge of any Director of CRL or Centro MCS Manager Ltd which has not previously been disclosed to CER Securityholders. Grant Samuel & Associates Pty Ltd has given and has not, before lodgement of this Letter with ASIC, withdrawn its written consent to: (a) be named in this Letter in the form and context in which it is named; or (b) to the inclusion of their enclosed letter in the form and context in which it is included. Grant Samuel & Associates Pty Ltd does not make, or purport to make, any statement in this Letter other than those set out in section 4 above or in its enclosed letter and to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statements in or omissions from this Letter. Correction to Glossary of the CER Explanatory Memorandum (section 14) The definition of "CRT Sub Trust 1" on page 270 should be deleted and replaced with the following: "CRT Sub Trust means each of CRT Sub Trust 1, CRT Sub Trust 2 and CRT Sub Trust 3 as defined in the CNP Asset Sale Agreement - CPT Assets." [ : _1] 4

6 The Board looks forward to your attendance at the CER Securityholder meetings. In the meantime any queries should be directed to Investor Services on toll-free ( for overseas callers) or investor@centro.com.au. Yours sincerely. W. Peter Day Chairman [ : _1] 5

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9 This document is a supplementary prospectus and a supplementary product disclosure statement. This document must be read together with the Disclosure Document dated 5 October November 2011 Supplementary Prospectus and Supplementary Product Disclosure Statement This document is a supplementary prospectus for the purposes of Chapter 6D of the Corporations Act 2001 (Cth) (Corporations Act) and is also a supplementary product disclosure statement for the purposes of Chapter 7 of the Corporations Act (together, the Supplementary Disclosure Document). This Supplementary Disclosure Document supplements the disclosure document dated 5 October 2011 and lodged with ASIC on that date (Disclosure Document) which was issued by Centro Retail Limited ABN (CRL), Centro MCS Manager Limited ABN as RE of each of Centro Retail Trust ARSN , Centro DPF Holding Trust ARSN and Centro Direct Property Fund ARSN , and CPT Manager Limited ABN as RE of Centro Australia Wholesale Fund ARSN (CAWF) (the Issuers). You should already have received the Disclosure Document. The Disclosure Document, as well as this Supplementary Disclosure Document, may also be viewed at This Supplementary Disclosure Document must be read together with the Disclosure Document. Pursuant to section 719(4) of the Corporations Act, the Disclosure Document is taken to include this Supplementary Disclosure Document, and for the purposes of section 1014D of the Corporations Act, the Disclosure Document is taken to include the information and statements contained in this Supplementary Disclosure Document. This Supplementary Disclosure Document is dated 4 November 2011 and was lodged with ASIC on that date. Neither ASIC nor any of its officers takes any responsibility for the content of this Supplementary Disclosure Document. A copy of this Supplementary Disclosure Document was also given to ASX. Unless otherwise defined in this Supplementary Disclosure Document, capitalised terms used have the meaning given to those terms in section 16 of the Disclosure Document. Refinancing and Credit approvals Significant progress has been made in relation to refinancing as outlined below: Centro Retail Australia borrowing facilities There has been a small reduction to $1.275 billion for the Core Facility limit required by Centro Retail Australia from the $1.28 billion previously outlined in the Disclosure Document (see Table 7.5). Credit approved commitment letters or term sheets have been received for $1.86 billion of the $2.0 billion of proposed total borrowing facilities (excluding $303.7 million of consolidated non-recourse Centro MCS Syndicate facilities) set out in Table 7.5 of the Disclosure Document. Credit approvals for the remaining $136 million of

10 This document is a supplementary prospectus and a supplementary product disclosure statement. This document must be read together with the Disclosure Document dated 5 October 2011 borrowing facilities are expected to be received and all facilities fully documented prior to Aggregation. Centro MCS Syndicate borrowing facilities Of the $1.2 billion of Centro MCS Syndicate borrowing facilities requiring refinancing as set out in Section of the Disclosure Document, $230 million has been repaid from asset sale proceeds, or extended or refinanced prior to expiry. Of the remaining $1.0 billion, credit approved commitment letters or term sheets have been received for $556 million. Credit approvals for the remaining $463 million of Syndicate borrowing facilities requiring refinancing are expected to be received and all facilities fully documented prior to Aggregation. The facilities which are the subject of the commitment letters and credit approvals outlined above are generally subject to: Aggregation proceeding; finalisation of documentation; the satisfaction of conditions precedent; and material adverse change clauses usual for facilities of this nature. In certain instances, individual lenders may have additional requirements that are to be satisfied prior to Aggregation, such as finalisation of due diligence on properties or, in one case, satisfactory resolution of that lender's exposure in relation to units in DPF. In all instances, the Directors of the Issuers reasonably expect these conditions will be satisfied. Successful refinancing of the existing borrowing facilities of CER, CAWF, CSIF and 90% of the Centro MCS Syndicates (measured by funds under management) is an important condition precedent to Aggregation. Whilst this condition precedent is capable of being waived to allow Aggregation to proceed, the respective Boards of the Aggregation Funds have determined that it is not intended that the Aggregation Funds proceed with the Aggregation or that the condition precedent be waived, except in circumstances where existing CER, CAWF and CSIF facilities are fully refinanced and the Boards have reasonable grounds to believe other facilities could be refinanced on reasonable terms (including conditions that are believed to be capable of being satisfied) shortly after Aggregation. Pro Forma Borrowings The Disclosure Document outlined the expected pro forma debt position of Centro Retail Australia in Table 7.5 and Table 7.6. On the basis of credit approved commitment letters and term sheets received from financiers the terms and conditions for the Centro Retail Australia facilities (including those for the consolidated syndicates) can be regarded as generally typical for secured property lending facilities. Where terms and conditions are not typical and they are material to an investors understanding, they have been noted below (see Summary of additional Core Facility terms and conditions). The information set out in Tables 7.5 and 7.6 of the Disclosure Document remains accurate with the exception of the following minor changes: The $5 million reduction in the Core Facility mentioned above which reduces the 3- year working capital facility to $45 million and therefore the 3-year tranche to $660 million; 2

11 This document is a supplementary prospectus and a supplementary product disclosure statement. This document must be read together with the Disclosure Document dated 5 October 2011 The maturity date of the $14.5 million facility for Lutwyche is now 15 December 2012 not to 1 July 2013, and The limit and maturity date of the facility for the 50% interest in Karratha are $22.2 million and 21 March 2013 respectively not $24.8 million and 31 December Summary of Financial Covenants Set out below are details of the specific financial covenants included in the credit approvals agreed with the financiers: Secured Money 1 to property valuation ratio (LVR) Core Facility LVR not to exceed 50% in FY12 reducing to 45% thereafter, noting that the facility is secured by 34 properties with an aggregate value of $3 billion. The agreed Core Facility margin will reduce if the LVR is less than 35% and will increase if the LVR exceeds 45%. Other facilities have various LVR requirements but are all in the range of 40% to 75%; Property income to interest expense (Interest Cover Ratio ICR ) Core Facility ICR to exceed 2.0 times up to and including FY13 then increasing to 2.25 times for FY14 and beyond; Other facilities have various ICR requirements but all in the range 1.2 times to 2.0 times; Group Total Liabilities to Group Total Tangible Assets ratio (Gearing Ratio) (Core Facility only) - not to exceed 50% reducing to 45% in FY13 and beyond; Look Through Liabilities to Look Through Assets (Core Facility only) defined as Centro Retail Australia s proportionate share of borrowings of all investments, including investments in Centro MCS Syndicates, divided by its proportionate share of all property investments, not to exceed 55%; Group EBITDA to Group Interest Expense ratio (Core Facility only) - to exceed 2.0 times up to and including FY13 and then increasing to 2.25 times for FY14 and beyond; Senior Debt 2 to Group EBITDA ratio (Core Facility only) not to exceed 6.25 times in FY12; not to exceed 6.0 times thereafter; and Weighted Average Lease Life across Centro Retail Australia s whole portfolio not to fall below 3 years (Core Facility only). The Directors of each Issuer believe the covenant package described above: provides sufficient headroom to ensure that there is unlikely to be a breach during the forecast period to 30 June 2012 contemplated under the Disclosure Document (see Section 7); provides sufficient headroom to ensure that under normal operating conditions there is unlikely to be a breach for the balance of the terms of the respective facilities; and 1 Secured Money represents respective drawn debt balances 2 Senior Debt represents financial indebtedness under the Core Facility plus other transactional banking facilities ranking equally therewith. 3

12 This document is a supplementary prospectus and a supplementary product disclosure statement. This document must be read together with the Disclosure Document dated 5 October 2011 are broadly consistent with the operational and business plan requirements for Centro Retail Australia previously outlined in the Disclosure Document. Like all other important terms and conditions, failure to satisfy these financial covenants would constitute a material breach of the facility agreement. Summary of additional Core Facility terms and conditions Further to the terms and conditions outlined in Table 7.6 of the Disclosure Document, Centro Retail Australia s proposed $1.275 billion Core Facility will be subject to the following material terms and conditions some of which may be considered non-standard for a facility of this nature: Review Events (leading to possible events of default) Commencement of a new Chief Executive Officer If a permanent Chief Executive Officer (satisfactory to at least two-thirds of Core Facility lenders) has not assumed office by 30 June 2012 or, if commencement is imminent at that date, by 31 July In these circumstances, the lenders, subject to at least two-thirds majority agreeing, would be able to cancel all commitments at which time Centro Retail Australia has 120 days to refinance with an alternative lender to avoid being in default. Change of Control Any change of control (being the capacity to determine the outcome of decisions about the financial and operational policies) of Centro Retail Australia. This would enable any of the lenders to cancel commitments and require prepayment of that lender s participation in any loans within 120 days of notification of the prepayment requirement. Events of Default Non-repayment according to agreed amortisation schedule Failure to repay the Core Facility and reduce the facility limit in accordance with an agreed Amortisation schedule as set out below: o $50 million repayable by December 2012; o A further $100 million repayable by June 2013; and o A further $100 million repayable by June A failure to pay an instalment will not be considered an immediate event of default if Centro Retail Australia is able to demonstrate that appropriate steps have been taken to meet the payment within three months of the relevant payment date and the prepayment actually occurs within that three month period. Proceeds from the disposal of a property used to secure the Core Facility, including non-core assets, have to be utilised for reduction of the Core Facility. Although this may limit Centro Retail Australia s capacity to fund other initiatives such as developments and acquisitions, any prepayments prior to or in excess of amounts 4

13 This document is a supplementary prospectus and a supplementary product disclosure statement. This document must be read together with the Disclosure Document dated 5 October 2011 required to meet the above Amortisation schedule may be redrawn within a 12 month period if applied towards any development or redevelopment approved by at least two-thirds of the Core Facility lenders. Furthermore, as noted above, there may be pricing benefits where LVR reductions occur. Settlement of CATS in cash If Centro Retail Australia uses or proposes to use any cash (or cash equivalent) in lieu of issuing New Stapled Securities to settle the CATS without first obtaining the consent of at least two-thirds of the lenders. Change of Responsible Entity Any change of the Responsible Entity of Centro Retail Australia will require the consent of the Facility Agent (which will not be unreasonably withheld). The Directors of each Issuer believe the other terms and conditions described above, whilst potentially restrictive, are manageable and broadly consistent with Centro Retail Australia s operational and business plan objectives. Like all other important terms and conditions, failure to satisfy these additional terms and conditions would constitute a material breach of the facility agreement. Centro Retail Australia remains committed to its stated objective of achieving an investment grade credit rating as soon as practicable to assist in the diversification of its borrowing sources and, where possible, reduction in its cost of debt. Stamp duty exposures As noted in Section and of the Disclosure Document: $88.5 million had been recorded as a non-current provision on the pro forma balance sheet of Centro Retail Australia and taken into account for the purpose of calculating the Aggregation Ratios in relation to various stamp duty exposures of the Aggregation Funds and CNP. Centro Retail Australia has agreed to indemnify DPF and CNP against stamp duty assessments in respect of certain historical transactions one of which is the stamp duty matter outlined below. The New South Wales Court of Appeal recently decided against CNP in respect of a stamp duty matter for which an assessment of approximately $13.1 million had been raised. Although CNP, in consultation with Centro Retail Australia, is currently considering its options (including whether to appeal), the New South Wales Office of State Revenue has agreed in principle, subject to Aggregation occurring, to accept payment of amounts owing (estimated at $9.4 million after allowing for previous payments and costs) over a 12 month period from January The Directors of each Issuer believe that Centro Retail Australia has adequately provided for potential stamp duty exposures and that the recent Court of Appeal decision does not materially affect the financial position of Centro Retail Australia. 5

14 This document is a supplementary prospectus and a supplementary product disclosure statement. This document must be read together with the Disclosure Document dated 5 October 2011 Revised pro forma financial forecasts for Centro Retail Australia As a result of continued volatility and uncertainty in global credit markets, Centro Retail Australia s forecast financing costs for the year ending 30 June 2012 are now expected to be approximately 1.7% higher than the amounts outlined in the Disclosure Document due to an overall increase in market interest rates and margins negotiated with prospective financiers being at the upper end of the range that was previously anticipated. Using a revised forecast effective weighted average finance cost of 8.29% (calculated using an updated base interest rate of 4.53% as at 28 October 2011 and inclusive of relevant margins and line fees on drawn and undrawn facilities and guarantees, amortisation of establishment fees and relevant hedge costs), forecast financing costs are expected to reduce Centro Retail Australia s pro forma forecast earnings and distributions for the year ending 30 June 2012 as set out in Table 7.9 of Disclosure Document) as follows: Underlying earnings per unit reduced by 1.1% from 15.3 cents to 15.1 cents (rounded to one decimal place); and Cash distribution per unit reduced by 1.4% from 12.4 cents to 12.3 cents (rounded to one decimal place). Although, through the credit approval process, a high percentage of the margins and line fees on the debt facilities are now agreed with the financiers, investors should be aware that the underlying interest rates for the 71% of debt not already fixed or subject to existing hedge arrangements will remain unhedged until drawdown of the facilities on Aggregation (and will remain subject to change). Centro Retail Australia is proposing to enter into a series of interest rate swaps to fix its interest rate exposure with effect from Aggregation. Investors should note the sensitivity analysis set out at table 7.11 of the Disclosure Document. No change to Investigating Accountant s opinion The Investigating Accountant, Ernst & Young Transaction Advisory Services Limited, has considered the supplementary information contained in this Supplementary Disclosure Document and has confirmed that its opinion is unchanged from the Investigating Accountant's letter dated 5 October as contained in Section 12 of the Disclosure Document. Consents Ernst & Young Transaction Advisory Services Limited has given and has not, before lodgement of this Supplementary Disclosure Document with ASIC, withdrawn its written consent to be named in this Supplementary Disclosure Document in the form and context in which it is named Ernst & Young Transaction Advisory Services Limited does not make, or purport to make, any statement in this Supplementary Disclosure Document other than set out above and to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statements in or omissions from this Supplementary Disclosure Document. Each Director of each Issuer of this Supplementary Document has given, and not withdrawn, their consent to the lodgement of this Supplementary Document with ASIC. 6

15 This document is a supplementary prospectus and a supplementary product disclosure statement. This document must be read together with the Disclosure Document dated 5 October 2011 For Further Information Investor Services: toll free (or for overseas callers) investor@centro.com.au. 7