Background

LEX Retail Property Trust is a direct property fund investing in the largest single-tenant retail store in Adelaide which is occupied by the IKEA franchisee.

Historical Performance

The fund successfully completed a capital raising of $18 million in October 2005 and has performed well since inception, paying cash distributions to investors to date as follows:

* 30 June 2006 - 2.65 cents per unit ("cpu")

* 30 June 2007 - 9.95 cpu

* 30 June 2008 - 10.40 cpu

* 30 June 2009 - 10.70 cpu

* 30 June 2010 - 11.25 cpu

All income distributions paid to 30 June 2009 were 100% tax deferred and the income distribution for the year eneded 30 June 2010 is currently forecast to be 75% tax deferred.

As at 30 June 2010, the fund's property was independently valued at $47.0 million. This represents a 4.1% reduction in value since 30 June 2009 but despite the generally softer property market conditions Adelaide experienced in the last 12 months, this value still represented a capital uplift since the at completion value of $45.1m was assessed in June 2006.

Based on this updated property value, the unaudited net asset backing per unit at 30 June 2010 is $1.09, representing a reduction from the 30 June 2009 net asset backing of $1.19 but still representing an increase from the original allotment price of $1.00 per unit paid by investors in October 2005.

Current Financial Year (FY10)

The directors of the responsible entity continue to monitor the capital and debt position of the fund and are pleased to report that the fund is not in breach of any of its banking covenants and the present stable financial position of the fund is consistent with the forecasts set out in the fund's PDS.

The annualised distribution of 11.25 cpu represents a 5.1% increase compared to the previous corresponding period.

Distributions for the current financial year to 30 June 2010 are forecast to be approximately 75% tax deferred and, subject to a review of fund's taxable position for the financial year, the fund expects to issue Annual Tax Statements to investors by 31 August 2010.