Sydney Level 15, 255 Pitt Street Sydney NSW 2000 Australia GPO Box 3698 Sydney NSW 2001 www.challenger.com.au

Telephone 02 9994 7000 Facsimile 02 9994 7777

11 April 2014

ASX Limited Level 4 20 Bridge Street Sydney NSW 2000

Dear Sir/Madam

Off Market Takeover Bid by Challenger Life in relation to Challenger Diversified Property Group

We refer to the announcement made to the Australian Securities Exchange by Challenger Life Company Limited on 11 April 2014 in relation to an off-market takeover offer by Challenger Life Nominees Pty Ltd (Challenger Life Bidder) as trustee for Challenger Australia Listed Property Holding Trust, for all outstanding units that it does not currently own in Challenger Diversified Property Group (ASX:CDI)

In accordance with section 633(1) item 5 of the Corporations Act 2001 (Cth), we enclose a copy of the Bidder's Statement of Challenger Life Bidder dated 11 April 2014 which includes a proposed offer for units in Ca

Pursuant to section 633(4) of the Corporations Act we give notice that 14 April 2014 is the date which has been set, in accordance with section 633(2) and 633(3), for the purposes of determining the people to whom the Bidder's Statement is to be sent.

Yours sincerely

Company Secretary

For and on behalf of Challenger Life Nominees Pty Ltd, as trustee of Challenger Australia Listed Property Holding Trust

Bidder's Statement

Accept the Offer

Challenger Life Nominees Pty Ltd (ABN 39 091 336 793) as trustee of Challenger Australia Listed Property Holding Trust

to acquire all of your stapled units in

Challenger Diversified Property Group (each stapled unit comprising one unit in Challenger Diversified Property Trust 1 (ARSN 121 484 606) and one unit in Challenger Diversified Property Trust 2 (ARSN 121 484 713))

For

A\$2.74 cash per stapled unit

(Reduced by the amount of any CDI distribution to which you become entitled following the date of this Bidder's Statement)

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT AS TO HOW TO ACT, YOU SHOULD CONSULT YOUR FINANCIAL OR LEGAL ADVISER AS SOON AS POSSIBLE

Please call the Challenger Life Offer Information Line on 1800 815 610 (toll-free within Australia) or +61 2 8256 3357 (from outside Australia) if you require assistance. For legal reasons calls to these numbers will be recorded.

Financial Advisor Legal Advisor

Chairman's Letter
	Summary of the Offer	2
	Why You Should Accept Bidder's Offer	4
1.	Profile of Challenger Life Bidder, Challenger Life and the Challenger Group	7
2.	Profile of Challenger Diversified Property Group	12
3.	Intentions	18
4.	Sources of Consideration	21
5.	Australian Tax Considerations	22
6.	Other Material Information	26
7.	Offer Terms	30
8.	Definitions and Interpretation	37
9.	Approval of Bidder's Statement	41

Additional Information

Annexure

Important Information

This Bidder's Statement is given under Part 6.5 of the Corporations Act and relates to the Offer. It is given by Challenger Life Nominees Pty Ltd (ABN 39 091 336 793) as trustee of Challenger Australia Listed Property Holding Trust to Challenger Listed Investments Limited (ABN 94 055 293 644) as responsible entity of Challenger Diversified Property Group (which is comprised of two stapled registered managed investment schemes: Challenger Diversified Property Trust 1 (ARSN 121 484 606) and Challenger Diversified Property Trust 2 (ARSN 121 484 713)).

You should read this Bidder's Statement in its entirety.

This Bidder's Statement is dated 11 April 2014 and includes an Offer dated [*] in section 7.

A copy of this Bidder's Statement was lodged with ASIC on 11 April 2014. Neither ASIC nor any of its officers takes any responsibility for the contents of this Bidder's Statement.

This Bidder's Statement does not take into account your individual investment objectives, financial situation or particular needs. You may wish to seek independent financial and taxation advice before deciding whether or not to accept the Offer.

References in this Bidder's Statement to Challenger Life's website (www.challenger.com.au), Challenger Limited's website (www.challenger.com.au), and to the Challenger Diversified Property Group's website

(http://www.challenger.com.au/listed/cdi/CDI.asp) are for your reference only. Information contained in or otherwise accessible from those websites are not part of this Bidder's Statement.

A number of defined terms are used in this Bidder's Statement. These terms are explained in section 8 along with certain rules of interpretation which apply to this Bidder's Statement.

Privacy statement

Challenger Life Bidder has collected your information from the Challenger Diversified Property Group registers of unitholders for the purpose of making the Offer. The type of information collected about you includes your name, address, contact details and information on your unit holding in CDI. Without this information, Challenger Life Bidder will be hindered in its ability to carry out the Offer.

The Corporations Act requires the name and address of unitholders to be held in a public register. Your information may be disclosed on a confidential basis to Challenger Life Bidder's Related Bodies Corporate and external service providers (such as the Registry and providers of print and mail services), and may be required to be disclosed to regulators such as ASIC. If you would like details of information about you held by Challenger Life Bidder or the Registry please contact them at the addresses set out in the corporate directory.

How Do I Accept the Offer?

You may only accept the Offer for all of your Units. Acceptances must be received before the end of the Offer Period.

For Issuer Sponsored Holdings of Units (Securityholder Reference Number beginning with 'I')

To accept the Offer, complete the enclosed Acceptance Form in accordance with the instructions on it and return it in the enclosed envelope or to the address on the Acceptance Form.

For CHESS Holdings of Units (Holder Identification Number beginning with 'X')

To accept the Offer, either contact your Controlling Participant (usually your broker) and instruct them to accept the Offer on your behalf, or complete the enclosed Acceptance Form in accordance with the instructions on it and return it in the enclosed envelope or to the address on the Acceptance Form.

Challenger Life Offer Information Line

If you have any questions in relation to the Offer, please call the Challenger Life Offer Information Line on the following numbers:

Within Australia: 1800 815 610 (toll-free) Outside Australia: +61 2 8256 3357

Please note that, as required by the Corporations Act, all calls to these numbers will be recorded.

Important Dates

Announcement date

Bidder's Statement lodged with ASIC

Date of the Offer [Insert date]

Offer scheduled to close (unless extended) [7] pm (Sydney time) on [Insert date]

11 April 2014

Note: The closing date for the Offer may change as permitted by the Corporations Act.

Chairman's Letter

11 April 2014

Dear Unitholder

On behalf of Challenger Life, I am pleased to make this offer (the Offer) to acquire all of your Units in the Challenger Diversified Property Group (CDI).

Challenger Life believes that the Offer delivers compelling value, liquidity and certainty to Unitholders.

The Offer is being made by Challenger Life Nominees Pty Ltd as trustee of Challenger Australia Listed Property Holding Trust (Challenger Life Bidder), a related entity of Challenger Life.

The Challenger Life Offer

The cash consideration payable under the Offer from Challenger Life Bidder is \$2.74 cash per Unit.

The Challenger Life Bidder will not increase the consideration under the Offer.

The cash consideration payable will be reduced by the amount of any distribution per Unit to which you become entitled following the date of this Bidder's Statement.

Challenger Life Bidder considers that the consideration under the Offer of \$2.74 cash per Unit represents an attractive premium to the closing Unit price on 10 April 2014, being the day prior to the announcement of the Offer. The consideration under the Offer:

represents a 4.6% premium to CDI's closing price on 10 April 2014, being the day before this Bidder's Statement was lodged with ASIC;
represents a 6.4% premium to the CDI 1 month VWAP (calculated from 11 March 2014); and
exceeds by \$0.03 the CDI stated 31 December 2013 net tangible assets (NTA) per Unit of \$2.71.

The Offer provides Unitholders with the opportunity to access meaningful liquidity at certain value. The key attractions of the Offer are summarised below:

the consideration under the Offer represents an attractive premium to CDI market value;
the Offer provides Unitholders with certain and immediate value at a price that exceeds NTA as at 31 December 2013;
the Offer is not subject to any defeating conditions;
it will relieve Unitholders of uncertainty as to future valuations of CDI's assets; and
Challenger Life Bidder considers that the likelihood of a competing proposal eventuating is low, given Challenger Life's current Unit holding in CDI and its existing ownership interests in the investment properties in CDI's portfolio.

Unitholders should also note that the liquidity in trading of Units may be reduced and their investment may be adversely impacted if Challenger Life Bidder acquires further Units under the Offer, but does not acquire enough Units to proceed with compulsory acquisition of all Units.

Challenger Life's Intentions

From the Announcement Date until the end of the Offer Period, Challenger Life Bidder also intends to conduct on-market purchases of Units in accordance with section 611 item (2) of the Corporations Act.

Challenger Life Bidder's objective is to increase its holding of Units by an amount that exceeds the acquisition limits imposed under the '3% creep in 6 months' provision set out in section 611 item (9) of the Corporations Act. In the event that the Offer results in Challenger Life Bidder holding 90% or more of the Units, it intends to proceed with compulsory acquisition of the remaining Units.

Challenger Life Bidder has also considered scenarios in which Challenger Life Bidder acquires less than 90% of the Units and is unable to undertake a compulsory acquisition. In those circumstances, Challenger Life Bidder will assess the matter at the relevant time, but its current intention would be to retain Challenger Listed Investments Limited (CLIL) (with a majority of independent directors) as the responsible entity of CDI.

A detailed description of the intentions of Challenger Life Bidder is set out in section 3 of this Bidder's Statement.

Next steps

I encourage you to read the Bidder's Statement in its entirety for more details about the Offer, its terms and the benefits you will receive from accepting the Offer.

**The Offer is now open for acceptance and is scheduled to close at 7.00 pm (Sydney time) on [*] (unless extended). See section 7.3 for details on how to accept the Offer.**

Please contact the Challenger Life Offer Information Line on 1800 815 610 (toll-free within Australia) or +61 2 8256 3357 (from outside Australia) if you have any questions in relation to the Offer.

Challenger Life believes that the Offer will deliver certain and immediate value for CDI unitholders who accept the Offer. We look forward to your acceptance of the Offer.

Yours sincerely

Peter Polson Chairman Challenger Life

Summary of the Offer

The following is a summary only of the Offer and is qualified by the detailed information contained in the rest of this Bidder's Statement. You should read this Bidder's Statement in full before deciding how to deal with your Units.

The terms of the Offer are contained in section 7.

Who is making the Offer?	Challenger Life Nominees Pty Ltd as trustee of Challenger Australia Listed Property Holding Trust (Challenger Life Bidder) is offering to acquire all of your Units.
What is the Offer price?	Challenger Life Bidder is offering to acquire all of your Units for \$2.74 cash per Unit, on the terms and conditions set out in section 7. The cash consideration payable under the Offer will be reduced by the amount of any CDI distribution to which you become entitled following the date of this Bidder's Statement.
	The Challenger Life Bidder will not increase the consideration payable under the Offer.
When does the Offer close?	The Offer is scheduled to close at 7.00 pm (Sydney time) on [insert date]. You should note that the Offer Period can be extended as permitted by the Corporations Act.
What are the conditions of the Offer?	The Offer is not subject to any defeating conditions.
How do I accept the Offer?	See the section on the inside front cover of this Bidder's Statement, as well as the instructions on the enclosed Acceptance Form.
	You should also note that from the Announcement Date until the end of the Offer Period, Challenger Life Bidder intends to conduct on-market purchases of Units in accordance with section 611 item (2) of the Corporations Act.
If I accept the Offer, when will I be paid?	If you accept the Offer in accordance with the instructions contained in the Offer and the Acceptance Form, you will be sent payment within five Business Days after the date that you accept.
What are the tax implications of acceptance?	You should consult your financial, tax or other professional adviser on the tax implications of acceptance. However, section 5 contains a general summary of the major likely Australian tax consequences for Unitholders who accept the Offer.

Do I pay brokerage or stamp duty if I	You will not pay stamp duty on the disposal of your Units if you accept the Offer.
accept?	If your Units are registered in an Issuer Sponsored Holding in your name and you deliver them directly to Bidder, you will not incur any brokerage in connection with your acceptance of the Offer.
	If your Units are registered in a CHESS Holding, or if you are a beneficial owner whose Units are registered in the name of a broker, bank, custodian or other nominee, you should ask your Controlling Participant (usually your broker) or that nominee whether it will charge any transaction fees or service charges in connection with acceptance of the Offer.
What happens if I do not accept?	You will remain a Unitholder and will not receive the consideration offered by Challenger Life Bidder. If Challenger Life Bidder becomes entitled to compulsorily acquire your Units, it intends to do so. If your Units are compulsorily acquired by Challenger Life Bidder, it will be on the same terms (including the same consideration for each Unit acquired) as the Offer. However, you will receive the money later than the Unitholders who choose to accept the Offer.
	If Challenger Life Bidder does not become entitled to compulsorily acquire your Units, you will remain a Unitholder.
What if I require further information?	If you have any questions in relation to the Offer or how to accept it, or if you have lost your Acceptance Form and require a replacement, please call the Challenger Life Offer Information Line on 1800 815 610 (toll-free within Australia) or +61 2 8256 3357 (from outside Australia).
	Please note that, as required by the Corporations Act, all calls to these numbers will be recorded.

Why You Should Accept Challenger Life Bidder's Offer

Challenger Life Bidder considers that the Offer provides compelling benefits to Unitholders. Reasons for accepting the Offer are set out below.

1. The consideration under the Offer represents an attractive premium to CDI market value

The consideration offered under Challenger Life Bidder's Offer is \$2.74 cash per Unit. This represents an attractive premium to historical trading values of CDI and:

a 4.6% premium to CDI's closing price on 10 April 2014, being the day before this Bidder's Statement was lodged with ASIC;
a 6.4% premium to the CDI 1 month VWAP (calculated from 11 March 2014);
a 7.5% premium to the CDI 3 month VWAP (calculated from 11 January 2014); and
a 8.1% premium to the CDI 12 month VWAP (calculated from 11 April 2013).

This is illustrated on the chart below.

2. Certain and immediate value in excess of NTA

The Offer represents an attractive price relative to the historical trading value of Units and exceeds by \$0.03 the NTA of CDI as at 31 December 2013. In addition, the Offer provides an opportunity for Unitholders to realise their investment at a price in excess of NTA as at 31 December 2013 and overcome limitations associated with CDI's small free-float, low trading liquidity and ongoing external fee arrangements, including base management fees and performance fees.

3. Uncertainty as to future valuations

The NTA of CDI as at 31 December 2013 was \$2.71. This was a reduction in NTA relative to that calculated as at 30 June 2013, being \$2.73.

Property prices are driven by various market factors and it is not possible to predict future valuation movements.

The Offer provides certainty for investors at a price in excess of the NTA per Unit as at 31 December 2013.

4. There is a risk that Unitholders' investment may be adversely impacted

Challenger Life currently beneficially holds approximately 58.65% of all Units.
The Offer is not subject to any defeating conditions.
If Challenger Life Bidder acquires further Units under the Offer but does not reach the thresholds necessary to proceed with compulsory acquisition the liquidity of CDI may decrease which may result in a reduction in the market value of Units following the Offer.

5. No conditions

The Offer is subject to no defeating conditions and will provide Unitholders with timely receipt of consideration once it has been accepted.

6. Likelihood of a competing proposal is low

Challenger Life Bidder considers that the likelihood of Unitholders receiving a competing proposal is low given Challenger Life's controlling interest in CDI and Challenger Life's existing ownership interests in a significant number of the investment properties within CDI's portfolio.

Under the co-ownership arrangements:

Challenger Life has a first right to be offered interests in the co-owned properties prior to any dealing by CDI; and
a change of the responsible entity of CDI may trigger certain rights requiring CDI to dispose of its interests in the co-owned properties to the Challenger Group.

7. No further increase to Offer consideration

The Challenger Life Bidder will not increase the consideration payable under the Offer.

1. Profile of Challenger Life Bidder, Challenger Life and the Challenger Group

1.1 Overview of Challenger Life Bidder

Challenger Life Bidder is Challenger Life Nominees Pty Ltd (ABN 39 091 336 793) as trustee for Challenger Australia Listed Property Holding Trust. Challenger Life Bidder is a wholly owned subsidiary of Challenger Life. The units in the Challenger Australia Listed Property Holding Trust are held by Challenger Life.

The directors of Challenger Life Bidder are Ms Victoria Kate Hartley, Ms Karen Robbins and Mr Gregory John Thomas. Ms Hartley, Ms Robbins and Mr Thomas are all Challenger Group executives.

Challenger Life Bidder currently owns approximately 73% of Challenger Life's existing 58.65% beneficial holding of Units.

1.2 Overview of Challenger Limited

Challenger Life is a wholly owned subsidiary of Challenger Limited, an ASX-listed investment management firm established in 1985. Challenger Limited manages more than \$48.8 billion of assets and has a market capitalisation of approximately \$3.3 billion. In addition to operating Challenger Life, Challenger Limited also operates a fiduciary funds management business, managing more than \$45 billion.

1.3 Overview of Challenger Life

Challenger Life is the leading provider of annuities and guaranteed retirement income solutions in Australia, and is a life company registered under the Life Insurance Act 1995. Challenger Life guarantees the capital and interest in annuitants' regular payments, providing reliable income to around 60,000 investors through its management of \$10.9 billion in assets. It is regulated by APRA and must hold a minimum amount of capital, set by APRA, to ensure it can meet all investors' payments into the future.

1.4 Challenger Life's Investment Objectives

Challenger Life's investment objectives include:

generating a sufficient return so that the rate offered to annuities customers (ie. policy holders) is earned;
generating cash flows that match liabilities;
managing risks; and
generating acceptable risk adjusted returns for its parent, Challenger Limited.

The acquisition of the remaining Units of CDI assists Challenger Life in meeting its investment objectives.

1.5 Challenger Life's Investments

Challenger Life's annuities are backed by a diversified portfolio of high quality assets, predominantly investments in debt, property and infrastructure. Challenger Life manages a cash flow matched portfolio, with liability cash flows (i.e. payments to customers) matched with cash flows from investment assets.

As at 31 December 2013, Challenger Life managed a portfolio of approximately \$10.9 billion of Australian and offshore assets, comprised of the following:

fixed income and cash: 73%;
property: 18%;
infrastructure: 5%; and
equities and other investments: 4%.

The table below sets out Challenger's assets as at 31 December 2013 in further detail.

Challenger Life Balance Sheet	Value in billions as at 31 December 2013 (rounded to nearest hundred million)
Cash and Equivalents	1.3
Asset Backed Securities	3.4
Corporate Credit	3.1
Other	0.2
Fixed Income and Cash	8.0
Australian: Office	0.7
Australian: Retail	0.4
Australian: Industrial	0.1
Japanese	0.2
REITS and Other	0.5
Property	2.0
Infrastructure	0.5
Equity and Other Investments	0.4
Challenger Life Investment Assets	10.9

1.6 Challenger Life's Property Assets

As at 31 December 2013, Challenger Life's investment assets include \$2.0 billion (net of debt) of property, representing 18% of Challenger Life's investment assets. Challenger Life's property portfolio principally comprises directly held properties and properties jointly held with

CDI as well as investments in Australian real estate investment trusts. Challenger Life's property assets include a \$234 million (12% of the property portfolio) net exposure to Japanese property, which consists of suburban shopping centres, focused on nondiscretionary retailing. The property portfolio is invested in a diversified portfolio of predominantly Australian office and retail properties.

Challenger Life continues to increase its exposure to property assets, reflecting the increase in longer tenor annuity sales.

1.7 Directors of Challenger Life and Challenger Limited

The boards of Challenger Life and Challenger Limited have the same Directors, comprising eight Non-Executive Directors and one Executive Director.

Members of the Challenger Life Board have significant experience in various fields, including banking, insurance, financial services, accounting and law. A biography of each Director of Challenger Life and Challenger Limited is set out below.

Peter L Polson

Non-executive Chairman, Independent

Peter Polson was appointed chairman of the Challenger Group in June 2004. Previously, he held the position of Group Executive, Investment and Insurance Services at the Commonwealth Bank, where he was responsible for all investment and insurance services for the group. Mr Polson retired from the Commonwealth Bank in October 2002. Since the early 1990s Mr Polson has held a number of executive roles in financial services including positions at the Colonial group and National Mutual Funds Management (International) Limited.

Brian R Benari

Chief Executive Officer, Non-independent

Brian Benari was appointed Managing Director & Chief Executive Officer in February 2012. Prior to this he was the Challenger Group's first joint CFO/COO, with oversight of the Challenger Group's treasury, finance, legal, tax, compliance, information technology, investor and government relations functions.

Prior to assuming the CFO/COO role in October 2008, Mr Benari was founding Chief Executive of the Challenger Group's Mortgage Management division, which, with lending assets in excess of \$23 billion and more than \$100 billion of mortgages under management, was the largest non-bank mortgage lender and one of the largest issuers of Residential Mortgage Backed Securities in Australia. In 2009 this business was sold to National Australia Bank.

Having originally trained as a Chartered Accountant with Andersen, Mr Benari joined the Challenger Group in March 2003 with many years of skills and experience from within the finance industry, both offshore and onshore. He has held a number of executive roles with institutions including JP Morgan, Bankers Trust and Macquarie Bank

Graham A Cubbin

Non-executive Director, Independent

Graham Cubbin joined the Challenger Life Board in March 2004. Mr Cubbin was a Senior Executive with CPH from 1990 until September 2005, including Chief Financial Officer for 13 years. Prior to joining CPH, Mr Cubbin held senior finance positions with a number of major companies including Capita Finance Group and Ford Motor Company.

Steven Gregg

Non-executive Director, Independent

Steven Gregg became a director of the Challenger Life Board in October 2012. Mr Gregg's more recent senior executive roles included Partner and Senior Adviser at McKinsey & Company and Global Head of Investment Banking at ABN Amro. His experience has spanned both domestic and international arenas having worked in the USA and UK. Steven holds a Bachelor of Commerce from the University of NSW.

Jonathan H Grunzweig

Non-executive Director, Independent

Jonathan Grunzweig joined the Challenger Life Board in December 2008. Based in California, USA, he is Principal and Chief Investment Officer (CIO) of Colony Capital, LLC, and oversees the sourcing, structuring, execution and management of all Colony Capital investments and divestments on a global basis. Prior to joining Colony in 1999, Mr. Grunzweig was a Partner with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, where he specialised in corporate finance and mergers and acquisitions.

Leon Zwier

Non-executive Director, Independent

Leon Zwier became an independent director on the Challenger Life Board in September 2006. He is a lawyer from Melbourne and a partner in the legal firm Arnold Bloch Leibler since 1991, whose practice focuses on commercial litigation and dispute resolution; and corporate recovery and insolvency.

Russell R Hooper

Non-executive Director, Independent

Russell Hooper became an independent director on the Challenger Life Board in July 2003. He was previously a director and chairman of the audit committee for Commonwealth Insurance Limited, a subsidiary of the Commonwealth Bank. Mr Hooper was also previously Chief General Manager, Funds Management at St. George Bank Limited and prior to that held various positions within the financial services group at Advance Bank Limited and St. George Bank Limited for more than thirteen years.

JoAnne M Stephenson

Non-executive Director, Independent

JoAnne Stephenson became a director of the Challenger Life Board in October 2012. Ms Stephenson was previously a partner with KPMG and holds a Bachelor of Commerce and a Bachelor of Laws (Honours) from the University of Queensland. She is a member of both the Institute of Chartered Accountants in Australia and the Australian Institute of Company Directors.

Brenda M Shanahan

Non-executive Director, Independent

Brenda Shanahan became a director of the Challenger Life Board in April 2011. Ms Shanahan is a Graduate of Melbourne University in Economics and Commerce and a Fellow of the Institute of Directors. Ms Shanahan has a research and institutional background in finance in Australia and overseas economies and share markets. She has held executive positions in stock broking, investment management and an actuarial firm. Ms Shanahan is also a non-executive director of Clinuvel Pharmaceuticals Limited.

1.8 Additional information regarding Challenger Limited and the Challenger Group

Challenger has been listed on ASX since 1987. A substantial amount of information concerning Challenger Limited and the Challenger Group has previously been notified to ASX.

Information about the Challenger Group may also be obtained from the Challenger Group's website at www.challenger.com.au.

2. Profile of Challenger Diversified Property Group

2.1 Disclaimer

The information in this section 2 (other than section 2.7) concerning CDI and the CDI Group has been prepared based on a review of publicly available information (which has not been independently verified). Neither Challenger Life nor Challenger Life Bidder makes any representation or warranty, express or implied, as to the accuracy or completeness of such information.

The information on CDI and the CDI Group in this Bidder's Statement should not be considered comprehensive.

Further information relating to CDI may be included in its Target Statement in relation to the Offer, which will be sent to you directly by CDI.

2.2 Overview of CDI

CDI is a stapled entity listed on ASX. Its head office is at 255 Pitt Street, Sydney.

CDI offers investors exposure to a diversified portfolio of properties, with stable income returns and potential for capital growth. With total property portfolio assets (excluding development property) of \$860 million at 31 December 2013, CDI holds investment interests in 27¹ office, industrial and retail properties located in Australia and France as well as a development portfolio comprising an industrial land bank. In addition, CDI holds a leasehold interest in Sydney's Domain Car Park, which expires in 2033.

CDI is comprised of two trusts, CDPT1 and CDPT2, the units in which have been stapled. CDPT1 holds CDI's 'passive' property assets. CDPT2 undertakes 'active' property transactions on behalf of CDI.

CLIL is the responsible entity of both CDPT1 and CDPT2. Each Unit in CDI comprises a unit in both trusts. The effect of the stapling is that units in the two trusts may not be traded separately.

2.3 Board of Responsible Entity

Biographical details of the directors of the board of CLIL, the responsible entity of the two trusts comprising CDI, are set out below.

Michael Cole

Non-executive Chairman, Independent

Mr Cole is a Graduate of the University of Sydney in Economics and holds a Master of Economics. He is also a Fellow of the Financial Services Institute of Australia. Mr Cole has over 30 years' experience in the investment banking and funds management industry. He was an Executive Director at Bankers Trust Australia for

¹ On 4 April 2014, CDI announced to the ASX the exchange of an unconditional contract of sale for 187 Todd Road, Port Melbourne for \$26.25 million to Podco investment syndicate. The property is co-owned by CDI (60%) and Challenger Life (40%). CDI announced that the transaction is expected to settle in early May.

over a decade. Mr Cole is currently Chair of Platinum Asset Management Ltd, Ironbark Capital Limited, and IMB Ltd (Illawarra Mutual Building Society). As well, Mr Cole is a director of NSW Treasury Corporation. In 2007, Mr Cole retired as Chair of SAS Trustee Corporation, a position he held from 2000. Mr Cole is a member of the CLIL Audit and Compliance Committee.

Ian Moore

Non-executive Director, Independent

Mr Moore has extensive experience in investment banking and structured finance. Mr Moore was Head of Corporate Finance at Bankers Trust Investment Bank where he was responsible for all forms of corporate debt, project debt and asset backed debt financings. Prior to that, Mr Moore was Head of Fixed Income at Bankers Trust where he was responsible for the trading and placement of all government, corporate and securitised debt. Mr Moore was a member of Bankers Trust's Investment Bank Management Committee and a partner of Bankers Trust globally. Mr Moore is currently a non-executive director and a member of the Audit Committee of the Clean Energy Finance Corporation. Mr Moore was a nonexecutive director of Artesian Capital Management from 2005 to 2008. Mr Moore is Chair of the CLIL Audit and Compliance Committee.

Geoff McWilliam

Non-executive Director, Independent

Mr McWilliam has had an extensive career in the Australian property investment industry. Mr McWilliam spent 10 years to 2005 building the Commonwealth Bank's property funds management and corporate real estate division, Colonial First State Property. As head of this business, he was responsible for the management and performance of over \$16 billion in listed and unlisted property funds. Prior to this, Mr McWilliam spent 23 years with Lend Lease Corporation in a variety of senior management roles including international postings. Over the last five years, Mr McWilliam has been appointed to various property groups as an independent director.

Mr McWilliam is a director of Lend Lease Funds Management Limited, Lend Lease Asian Retail Investments Limited, Lend Lease Real Estate Investments Limited, the Gandel Group Limited, ProTen Limited, LaSalle Funds Management Limited and the Dusseldorp Skills Forum Incorporated, and is a Fellow of the Australian Property Institute. Mr McWilliam is a member of the CLIL Audit and Compliance Committee.

Rob Woods

Executive Director, Non-independent

Mr Woods is Chief Executive, Funds Management at Challenger. Mr Woods has held this role since 2008. The Funds Management business manages investments in property, infrastructure, fixed income and mortgages via its Challenger Investment Partners business, as well as partnering boutique investment managers in the Fidante Partners multi-boutique platform.

Mr Woods joined Challenger in 2003 and was initially the Chief Executive of

Challenger Life which included Challenger's annuity business and the creation of Challenger's asset management business, before assuming his current role.

Prior to joining Challenger, Mr Woods held senior investment banking roles at Zurich Capital Markets and Bankers Trust.

Brendan O'Connor

Executive Director, Non-independent

Mr O'Connor is the Chief Financial Officer for Challenger's Funds Management division. Mr O'Connor is responsible for the services that support the Funds Management business as well as the financial management and reporting for the Funds Management division's funds, including the Challenger Diversified Property Group.

Mr O'Connor joined Challenger in 2006 as General Manager Group Finance. In 2007, Mr O'Connor was appointed as Chief Financial Officer of Challenger's Asset Management business, before assuming his current role in 2008. Prior to joining Challenger, Mr O'Connor held senior finance roles with Westpac Banking Corporation.

2.4 Overview of CDI's property portfolio

CDI provides investors with an exposure to a portfolio of assets in the office, retail and industrial property sectors. As at 31 December 2013, CDI's portfolio was weighted 93% to Australia, and 7% to France.

As at 31 December 2013, CDI's portfolio was 95.4% occupied and had a weighted average lease term to expiry of 4.6 years (by income). Charts below highlight the diversification in CDI's portfolio across sector, geography and tenants.

Tenant diversification by type (by gross income)

Tenant credit rating (by CGF internal credit system by using rating agency method)

Source: CDI 1H14 investor presentation

Portfolio overview—31 Dec 2013	Australian portfolio	French portfolio	Total portfolio
Total property portfolio—\$m	800	61	860
Number of investment properties in which CDI has an investment interest	22	5	272
Portfolio weighting—% (by value)	93	7	100
Net lettable area—sqm	328,542	42,759	371,301
Occupancy—%	95	100	95
WALE—years	5	4	5
Weighted average capitalisation rate—%	8	8	8

² On 4 April 2014, CDI announced to the ASX the exchange of an unconditional contract of sale for 187 Todd Road, Port Melbourne for \$26.25 million to Podco investment syndicate. The property is co-owned by CDI (60%) and Challenger Life (40%). CDI announced that the transaction is expected to settle in early May. Following settlement of this transaction, it is anticipated that CDI will have an investment interest in 26 rather than 27 properties located in Australia and France.

The property portfolio summary below provides further details of each property as at 31 December 2013.

				Occupancy	Weighted
				at 31 Dec.	average lease
		Ownership			2013 expiry (WALE)	Current
		Interest	Lettable	(by income)	(by income)	valuation
Property	Location	%	area	(%)	(years)	(S _m )
Office portfolio
ABS House	Belconnen, ACT	60.0	31.050	100.0	3.2	82.0
31 Queen Street	Melbourne, VIC	100.0	19,310	85.3	2.8	96.2
DIBP Building	Belconnen, ACT	60.0	29,530	100.0	5.8	71.5
The Forum, Cisco	St Leonards, NSW	60.0	16,577	100.0	3.3	65.4
Discovery House	Woden, ACT	60.0	22,239	100.0	8.7	60.0
Makerston House	Brisbane, QLD	60.0	14,650	85.1	2.5	42.5
The Forum, Verizon	St Leonards, NSW	60.0	11.713	69.9	2.2	41.5
Elder House	Adelaide, SA	60.0	14.086	100.0	2.3	25.2
Executive Building	Hobart, TAS	60.0	9.887	100.0	1.5	19.8
Office portfolio total/average			169,043	93.2	3.7	504.0
Retail portfolio
Jam Factory	South Yarra, VIC	60.0	20,115	100.0	10.4	75.3
Century City Walk	Glen Waverley, VIC	100.0	8.304	100.0	5.0	32.5
Innaloo Cinema Centre	Woodlands, WA	60.0	11,550	100.0	4.7	26.4
Kings Langley Shopping Centre	Kings Langley, NSW	60.0	4,157	100.0	6.1	10.8
Retail portfolio total/average			44,125	100.0	7.8	145.0
Industrial portfolio
The Junction, Stage 2	Enfield, NSW	100.0	20.360	100.0	8.5	35.5
The Junction, Stage 1	Enfield, NSW	100.0	13,437	100.0	2.0	20.0
6 Foray Street	Fairfield, NSW	100.0	17.152	1000	14	13.1
Spotlight	Laverton North, VIC	100.0	20,723	100.0	7.5	17.8
12-30 Toll Drive	Altona North, VIC	100.0	13,885	100.0	2.1	14.0
2-10 Toll Drive	Altona North, VIC	100.0	6.273	100.0	4.1	5.9
1-9 Toll Drive	Altona North, VIC	100.0	3,239	100.0	2.1	3.9
Distribution portfolio total/average			95,069	100.0	4.7	110.2
Hi-tech office
Taylors House	Waterloo, NSW	60.0	10.998	93.7	3.8	25.5
187 Todd Road	Port Melbourne, VIC	60.0	9.308	81.8	5.2	14.9
Hi-tech office portfolio			20,306	89.3	4.3	40.4
total/average
Australian portfolio total/average			328,542	95.1	4.7	799.6
French portfolio		100.0		100.0	4.0	12.6
Sully	Sully sur Loire		15,500
Aulnay	Aulnay sous Bois, Paris Villeneuve les Beziers	100.0 100.0	5,105	100.0 100.0	1.8 1.7	16.4 12.7
Beziers Gennevilliers	Gennevilliers, Paris		9.135	100.0	7.2	11.4
Tours	Parcay-Meslay, Tours	100.0 100.0	7,409 5,610	100.0	4.7	7.6
French portfolio total/average			42,759	100.0	3.7	60.7
Investment portfolio			371,301	95.4	4.6
total/average						860.2
Development portfolio
The Junction, Stage 3	Enfield, NSW	100.0	N/A			6.8

Source: CDI 1H14 Portfolio Summary

2.5 Publicly available information

CDI has been listed on ASX since 23 October 2006 and is obliged to comply with the periodic and continuous disclosure requirements of ASX. A substantial amount of information concerning CDI has previously been notified to ASX.

The ASX announcements made in relation to CDI between the financial year ending 30 June 2013 and the date of this Bidder's Statement are listed in the Annexure. In particular, this includes:

CDI's financial report for first half of 2014;
CDI's distribution for the six months ending 31 December 2013;
CDI's financial report for the financial year end 30 June 2013; and
CDI's estimated distribution for the twelve months ending 30 June 2014.

Information about the CDI Group (including copies of its financial statements) may also be obtained from CDI's website at http://www.challenger.com.au/listed/cdi/CDI.asp.

2.6 CDI securities on issue

According to documents lodged by CDI with ASX, as at the date of this Bidder's Statement the total number of securities on issue in each class in CDI is as follows:

Class	Number
Units	214,101,013

Units are quoted on ASX and may be freely traded.

2.7 Interests in CDI securities

(a) Challenger Life's relevant interest in CDI securities and voting power in CDI

As at the date of this Bidder's Statement and immediately before the first Offer was sent, Challenger Life had a relevant interest in 125,837,774 Units (which includes 274,984 Units held by other members of the Challenger Group in various capacities).

As at the date of this Bidder's Statement and immediately before the first Offer was sent, Challenger Life's voting power in CDI was approximately 58.77%.

(b) Acquisitions of Units by Challenger Life or associates

Except as referred to below, neither Challenger Life, Challenger Life Bidder, nor any of their associates have provided (or agreed to provide) consideration for a Unit under a purchase or agreement to purchase during the four months before the date of this Bidder's Statement or in the period between the date of this Bidder's Statement and the date of the Offer.

On 18 February 2014, Challenger Life acquired 100,000 Units in an on-market transaction through ASX for \$2.55 per Unit. On 19 February 2014, Challenger Life acquired 100,000 Units in an on-market transaction through ASX for \$2.55 per Unit.

3. Intentions

3.1 Introduction

This section 3 sets out the rationale for the Offer and Challenger Life's intentions in relation to:

the continuation of the operations of CDI;
any major changes to the operations of CDI, including any redeployment of the CDI property; and
any plans to remove the current Responsible Entity and appoint a new responsible entity.

These intentions are based on the information concerning CDI, its business and the general business environment which is known to Challenger Life at the time of preparation of this Bidder's Statement.

Final decisions regarding these matters will only be made by Challenger Life in light of material information and circumstances at the relevant time. Accordingly, the statements set out in this section 3 are statements of current intention only, which may change as new information becomes available to Challenger Life or as circumstances change.

Challenger Life Bidder's intentions concerning the business, property and responsible entity of, and securities in, CDI are the same as the intentions of Challenger Life set out in this section 3.

3.2 Rationale for the Offer

Challenger Life is an existing investor in both domestic and offshore property assets. Challenger Life considers that the stable long term cash flows offered by this asset class are complementary to its annuity liability obligations. The acquisition of CDI's property portfolio provides Challenger Life with access to earnings from a large portfolio of predominantly domestic real estate assets. It is anticipated that the earnings will assist in meeting Challenger Life's obligations to its annuity customers. Challenger Life is familiar with the assets of CDI. It is also familiar with the Responsible Entity, which is a Related Entity of Challenger Life. Challenger Life proposes to utilise its balance sheet strength and real estate expertise to continue to manage the assets, borrowings and other liabilities.

3.3 Intentions upon acquisition of 90% or more of the Units

This section 3.3 sets out Challenger Life's current intentions if Challenger Life Bidder acquires relevant interests in 90% or more of the Units and it is entitled to proceed to compulsory acquisition of the remaining Units under the Corporations Act.

(a) Corporate matters

It is intended that Challenger Life would:

proceed with compulsory acquisition of the outstanding Units in accordance with the provisions of Chapter 6A of the Corporations Act;
arrange for CDI to be removed from the Official List of ASX;
subject to the Corporations Act, Challenger Life's constituent documents and the outcome of the review referred to in this section 3.3(d), consider whether its objectives would be best served by replacing CDI's current responsible entity, CLIL, with an appropriately licensed entity; and
review the holding structure of CDI and CDI's assets with a view to determining the optimal structure for the CDI properties under 100% Challenger Life ownership.

(b) Intention for CDI's assets

If Challenger Life acquires a relevant interest in all of the Units, it intends to conduct a review of CDI's assets. Subject to the outcome of Challenger Life's review, Challenger Life intends that most or all of CDI's property portfolio will become part of Challenger Life's core property portfolio. As noted above, Challenger Life is an existing investor in property and believes in the long term fundamentals of this asset class.

(c) CDI borrowings

Challenger Life Bidder has made no final determination in relation to CDI's existing financing arrangements. However, Challenger Life Bidder's current intention is to keep existing arrangements in place.

(d) General operational review

If the compulsory acquisition threshold is achieved by Challenger Life, Challenger Life intends to conduct a thorough and broad-based general review of CDI's corporate structure, assets and operations. This review will apply quantitative and qualitative factors to measure performance and areas for improvement.

While Challenger Life does not have any specific intentions in relation to this review or its outcomes, its current expectation is that the review will focus on identifying opportunities in relation to:

profit improvement measures;
efficiency of operations;
current holding structures;
existing debt facility arrangements;
hedging transactions (including undertaking possible novations of existing derivative transactions); and
management arrangements within the Challenger Group.

3.4 Intentions upon acquisition of less than 90% of the Units

This section 3.4 sets out Challenger Life's intentions if Challenger Life Bidder does not become entitled to compulsorily acquire the outstanding Units but, by virtue of acceptances of the Offer increases its ownership of CDI.

In those circumstances, Challenger Life's current intentions are as follows.

(a) Corporate matters

It is intended that CDI's listing on ASX would be maintained, subject to the requirements for listing (including a sufficient spread of investors) continuing to be satisfied (although in this event the liquidity of trading in Units on ASX may be diminished).

(b) Further acquisition of Units

Challenger Life or Challenger Life Bidder may, at some later time, acquire further Units in a manner consistent with the Corporations Act.

(c) Compulsory acquisition at a later time

If Challenger Life becomes entitled at some later time to exercise general compulsory acquisition rights under the Corporations Act, it may exercise those rights.

3.5 On-market purchases

3.6 Other intentions

Other than as set out in this section 3, it is the present intention of Challenger Life to:

generally continue the operations of CDI; and
not make any major changes to the operations of CDI nor to redeploy any of the fixed assets of CDI.

3.7 Limitations on intentions

The intentions and statements of future conduct set out in this section 3 must be read as being subject to:

the law (including the Corporations Act) and the ASX Listing Rules, including in particular the requirements of the Corporations Act and the ASX Listing Rules in relation to conflicts of interest and 'related party' transactions, especially given that, as Challenger Life already controls CDI, it and Challenger Life Bidder will be treated as related parties of CDI for these purposes;
the legal obligation of the directors of the Responsible Entity at the time, including any nominees of Challenger Life Bidder or Challenger Life, to act in good faith in the best interests of CDI and for proper purposes and to have regard to the interests of all Unitholders; and
the outcome of the reviews referred to in this section 3.

4. Sources of Consideration

4.1 Consideration under the Offer

The consideration for the acquisition of the Units to which the Offer relates will be satisfied by the payment of cash (in Australian dollars).

Based on the number of Units on issue as at the date of this Bidder's Statement, and as Challenger Life already holds 125,562,790 Units as at the date of this Bidder's Statement, the maximum amount of cash that would be payable by Challenger Life Bidder under the Offer if acceptances were received for all Units which Challenger Life does not already hold is approximately \$243,000,000 (the Offer Amount).

4.2 Challenger Life Bidder's internal borrowing arrangements

Challenger Life has irrevocably and unconditionally undertaken to provide Challenger Life Bidder with the Offer Amount and other necessary amounts to meet Challenger Life Bidder's transaction costs. Such funds will be sourced from Challenger Life's existing cash resources (namely, cash or cash equivalents) and contributed to Challenger Life Bidder by equity subscription or a combination of debt and/or equity. Challenger Life has confirmed that funds of an amount greater than the Offer Amount are immediately available and not subject to security interests or rights of set off and are not required for other arrangements.

Although Challenger Life has not set aside particular cash reserves, Challenger Life is not aware of any reason why there will not be cash reserves at least equal to the Offer Amount which will be available for provision to Challenger Life Bidder when required under the Offer.

Under the terms of the internal funding arrangements, Challenger Life is obliged to advance funds on request by Challenger Life Bidder to enable Challenger Life Bidder to satisfy its payment obligations to Unitholders under the Offer, as well as to meet transaction costs.

4.3 Provision of consideration

On the basis of the arrangements described in this section 4, Challenger Life Bidder believes that it has reasonable grounds for holding the view, and does hold the view, that it will be able to provide the consideration offered under the Offer.

5. Australian Tax Considerations

5.1 Australian tax considerations

The taxation information below has been prepared to provide a general summary of the Australian income tax considerations for Unitholders who dispose of their Units as a result of accepting the Offer.

The taxation information provided below is intended only as a brief guide. The Australian taxation consequences for Unitholders will ultimately depend upon their individual circumstances. Accordingly, it is recommended Unitholders seek professional taxation advice in relation to their own position.

The information applies only to individuals who hold their Units on capital account (although brief comments have been provided in relation to the availability of the capital gains tax discount for other types of entities). The information does not cover the taxation implications for Unitholders (resident or non-resident) who hold their investments on revenue account, as trading stock or where the Units are subject to the Taxation of Financial Arrangements provisions (these provisions are generally not applicable to individuals unless they have made an election).

The comments below do not address any taxation implications which might arise in countries other than Australia. Non-Australian tax resident Unitholders should seek advice on the consequences of the disposal of their Units under relevant foreign tax laws.

The information below is based on existing Australian tax law and established interpretations as at the date of this Bidder's Statement and may be subject to change over time.

5.2 CGT consequences – implications of CDI's stapled structure

Each unit in CDPT1 and each unit in CDPT2 remain separate assets for Australian capital gains tax purposes. For capital gains tax purposes, the cost of each Unit and the consideration received on disposal of each Unit will need to be apportioned between the unit in CDPT1 and the unit in CDPT2.

The Australian Taxation Office has advised that this apportionment should be done on a reasonable basis. One possible method of apportionment is on the basis of the relative Net Assets of CDPT1 and CDPT2.

From publicly available information provided by CDI, at all times from December 2008 to 31 December 2013, the net asset allocation is 100% to CDPT1 and 0% to CDPT2.

5.3 CGT consequences for resident Unitholders

Disposal of Units

The disposal of Units will have CGT implications for the Unitholder. Broadly, the Unitholder must include any realised capital gain or loss on the disposal of their Units in the calculation of their net capital gain or loss for the year. The date of disposal of the Units will be taken to be the date on which Unitholders accept the Offer.

A Unitholder will derive a capital gain on the disposal of their Units to the extent that the capital proceeds on disposal exceed the CGT cost base of the Units. A Unitholder will incur a capital loss on the disposal of the Units to the extent that the capital proceeds on disposal are less than the CGT reduced cost base of the Units. The total cash that makes up the Offer will be the capital proceeds for the purposes of calculating the capital gain or loss.

Generally, the CGT cost base of each Unit will include the amount paid by each Unitholder to acquire their Units, together with any capital costs of acquisition or disposal, reduced by any tax deferred distributions or returns of capital made by CDI whilst each Unitholder held their Units. If the Unitholder holds Units that have been the subject of the 1 for 4 unit consolidation (as announced to the ASX on 7 August 2012), the cost base of the Units should be the same as the total of the cost bases of the original Units (prior to consolidation).

Where a Unitholder has participated in a distribution reinvestment plan, the initial cost base in the acquired Units will generally include the reinvested amount.

Historical tax deferred adjustments

The tax deferred distributions made on Units historically (the tax deferred component relating solely to the units in CDPT1) are as follows.

Period ended	Distribution – cents per unit*	Tax deferred component of distribution
31 December 2013	9.20	25.91%
30 June 2013	9.20	31.78%
31 December 2012	8.60	31.78%
30 June 2012	8.60	8.66%
31 December 2011	8.20	8.66%
30 June 2011	8.00	14.09%
31 December 2010	8.00	14.09%
30 June 2010	8.60	48.88%
31 December 2009	8.20	48.88%
30 June 2009	12.00	43.02%
31 December 2008	14.80	43.02%
30 June 2008	16.92	29.30%
31 December 2007	16.88	55.81%
30 June 2007	15.52	50.40%
31 December 2006	6.40	50.40%

* Distributions prior to August 2012 have been adjusted to reflect the one for four Units consolidation (i.e. the table displays the cents per four pre-consolidation Units).

Note: Based on distribution information made publicly available by CDI. The final tax deferred elements of distributions for the 30 June 2008 year are not publicly available.

If the Unitholder (being an individual, or a trustee of a trust) has held the Units for 12 months or more at the time of disposal and there is a net capital gain, a discount factor of 50% may be available to that individual or trustee of a trust.

The operation of the CGT discount can be complex for trustees, Unitholders in these circumstances should obtain specific advice.

If the Unitholder is a complying superannuation entity the discount factor that may be available is 33.33%. The CGT discount is not available to companies. Note that any available capital losses will be deducted from the gross capital gain before the CGT discount is applied. Unitholders should seek their own advice in this respect.

In addition, for complying superannuation entities, it will be necessary to consider whether the tax deferred components were assessable income in prior years, such that there is no need to make a further tax cost base adjustment.

Indicative calculation for an individual resident Unitholders

The following indicative calculation is intended to assist resident individual Unitholders in determining their capital gain or loss on sale, taking into account the effect of the "tax deferred" distributions.

By way of example, assume an individual resident Unitholder acquired 4000 Units in early June 2012 for \$0.55 per Unit, ie \$2,200, incurring brokerage of \$10, ie 0.25c per Unit. As a result of the 1 for 4 unit consolidation, the Unitholder's Units were converted into 1000 Units in August 2012, which are taken to have been acquired for \$2.20 per Unit. The following calculations are based on the post-consolidation unitholdings of 1000 Units.

The Unitholder participates in the Offer prior to 30 June 2014. Over their period of ownership, the Unitholder will have received four distributions, with tax deferred components determined as follows (rounded to two decimal places):

Distribution	CPU	Tax deferred	Tax deferred
		(%)	CPU
Jun-12	8.6	8.66%	0.74
Dec-12	8.6	31.78%	2.73
Jun-13	9.2	31.78%	2.92
Dec-13	9.2	25.91%*	2.38
	Total tax deferred (CPU)

*Note: it has been assumed that the December 2013 distribution will have the same tax deferred percentage as estimated at 31 December 2013. The final percentage for the 30 June 2014 year will only be confirmed after the 30 June 2014 distribution.

It is assumed that no costs are incurred by the Unitholder in participating in the Offer.

The cost base in the parcel of 1000 Units can be calculated as follows:

Cost of parcel: \$2.20 x 1,000 = \$2,200
Acquisition cost of parcel: \$0.01 x 1,000 = \$10
Less: tax deferred adjustments to cost base: \$0.0879 x 1,000 = \$87.90
Adjusted cost base: \$2,122.10

The capital gain on disposal can then be calculated as follows:

Proceeds on sale: \$2.74 x 1,000 = \$2,740.00
Less cost base (above): \$2,122.10
Net capital gain (prior to CGT discount): \$617.90

Net capital gain (assuming full 50% CGT discount available and no capital losses): \$308.95.

5.4 CGT consequences for non-resident Unitholders

Disposal of Units

Where the Unitholder is a non-resident and holds Units on capital account, the disposal of Units will have CGT implications for the Unitholder only where the Units are taxable Australian property.

Units should only be taxable Australian property where the Unitholder has held 10% or more of the issued capital of CDI at the date of disposal of the Units or throughout a 12 month period that began no earlier than 24 months before the date of disposal and ended no later than the date of disposal.

A capital gain may also arise for non-resident Unitholders if they have used their Units at any time in carrying on a business through an Australian permanent establishment. No discount on a capital gain is available for non-resident Unitholders.

5.5 Entitlement to distributions arising prior to acceptance

It is possible that some Unitholders may become entitled to a distribution from CDI prior to acceptance. Where this occurs, the distribution will be taxed as it ordinarily would have been. Based on CDI's history, any distribution may include a "tax deferred" component.

Where a distribution has been made, under the Offer, the consideration payable under the Offer will be reduced by a corresponding amount. From a tax perspective, this is likely to mean a reduction in the capital proceeds on disposal (thus reducing any capital gain, which will have concessional tax treatment for some Unitholders), and a corresponding increase in assessable income arising from the distribution.

As such, the tax implications of acceptance are likely to differ between acceptances before any distribution and those after a distribution.

5.6 Goods and Services Tax

The disposal of Units is not subject to GST. However, Unitholders may incur GST on costs that relate to their participation in the Offer and should seek their own independent advice in relation to the GST implications of participating in the Offer.

5.7 Stamp Duty

No Australian stamp duty will be payable by Unitholders in respect of the disposal of their Units.

6. Other Material Information

6.1 Governance arrangements

Governance protocols were adopted by Challenger Life and Challenger Life Bidder to address any actual or perceived conflict of interest that may potentially arise in relation to the Offer as a result of the relationship between Challenger Life and CLIL, including the fact that CLIL, the Responsible Entity, Challenger Life Bidder and Challenger Life are all part of the Challenger Group. The governance protocols were designed to ensure that:

(a) the consideration by the Responsible Entity of the Offer is undertaken free from any actual or appearance of influence from other Challenger Group entities;
(b) there is an orderly process for the various Challenger Group entities to negotiate matters in relation to the Offer and for the Responsible Entity to respond to the Offer; and
(c) the Responsible Entity may consider any actual or contemplated competing proposal made by a third party without actual or apparent influence from other Challenger Group entities.

The governance protocols include arrangements for each of the relevant Challenger Group entities to be represented by separate management teams in relation to the Offer and information barriers to maintain the integrity of such arrangements.

6.2 ASIC modifications and exemptions

ASIC has published various 'Class Order' instruments providing for modifications and exemptions that apply generally to all persons, including Challenger Life Bidder, in relation to the operation of Chapter 6 of the Corporations Act.

Amongst others, Challenger Life Bidder has relied on the modification to section 636(3) of the Corporations Act set out in paragraph 5(d) of ASIC Class Order 13/521 'Takeover Bids' to include references to certain statements by CDI in this Bidder's Statement without obtaining the consent of those persons. The relevant statements were respectively taken from announcements released to the ASX by CDI and CDI's website: http://www.challenger.com.au/listed/cdi/CDI.asp

As required by Class Order 13/521, Challenger Life Bidder will make available a copy of these documents (or relevant extracts of these documents), free of charge, to Unitholders who request them during the Bid Period. To obtain a copy of these documents (or the relevant extracts), Unitholders may telephone the Challenger Life Offer Information Line on 1800 815 610 (toll-free within Australia) or +61 2 8256 3357 (from outside Australia).

6.3 No Defeating conditions

The Offer is not subject to any defeating conditions.

6.4 Broker commission

Challenger Life Bidder may offer to pay a commission to brokers who solicit acceptances of the Offer from their clients, but has made no final decision in relation to the matter at this stage.

Any commission payments will be paid only in respect of parcels of Units held by retail shareholders who accept the Offer.

If such arrangements are put in place, commission payments will not exceed 0.75% of the value of the consideration payable for parcels of Units held by retail shareholders who accept the Offer, and will be subject to minimum payments (not exceeding \$50) and maximum payments (not exceeding \$750) for each acceptance.

If a commission is offered, it will be payable to brokers only and subject to the condition that no part of the fee will be able to be passed on, or paid, to Unitholders.

If and when Bidder decides to offer such a commission to any broker, it will make an announcement to ASX.

It is Challenger Life Bidder's intention that, if and when an offer of commission has been made to any broker by Challenger Life Bidder, the commission arrangement will remain in place for the balance of the Offer Period and the amount of the commission offered will not be increased during the Offer Period.

6.5 Social security and superannuation implications of the Offer

Acceptance of the Offer may have implications under your superannuation or pension arrangements or on your social security entitlements. If in any doubt, Unitholders should seek specialist advice before accepting the Offer.

6.6 Approvals for payment of consideration

Challenger Life Bidder is not aware of any Unitholders who require any approval referred to in section 7.6(e) in order to be entitled to receive any consideration under the Offer.

So far as Challenger Life Bidder is aware, unless the Minister for the Department of Foreign Affairs and Trade has given specific approval under the Autonomous Sanctions Regulations 2011 (Cth), payments or transfers to, by the order of or on behalf of prescribed governments (and their statutory authorities, agencies and entities) and, in certain cases, nationals of prescribed countries are subject to certain limited exceptions, restrictions or prohibitions. Based on Challenger Life Bidder's searches, the prescribed governments, countries and entities are as follows:

supporters of the former government of the Federal Republic of Yugoslavia;
individuals associated with the Burmese regime;
certain individuals associated with the Fiji Government;
certain Iranian entities and persons not already listed by the United Nations Security Council;
certain key persons and entities who were associated with the former Qadhafi regime;
persons and entities responsible for, or involved in, human rights abuses in Syria;
ministers and senior officials of the Government of Zimbabwe, as well as senior management of state-owned enterprises of Zimbabwe; and
certain entities and individuals associated with the Democratic People's Republic of Korea.

Part 4 of the Charter of the United Nations Act 1945 (Cth) prohibits funds and other financial assets from being provided to specified persons associated with terrorism. The places to which, and persons to whom the Charter of the United Nations Act 1945 (Cth) currently applies include places and persons specified in regulations made under the Charter of the United Nations Act 1945 (Cth), and any person or entity listed as being associated with terrorism by the Australian Minister for Foreign Affairs in the Commonwealth of Australia Gazette for the purposes of Part 4 of the Charter of the United Nations Act 1945 (Cth).

The places to which, and persons to whom, the Charter of the United Nations (Terrorism and Dealing with Assets) Regulations 2002 (Cth) currently apply include the Taliban, a member of the Al-Qaida organisation (also known as the Al-Qaeda organisation), and any person named on the list maintained pursuant to United Nations Resolution 1390 (2002) by the Committee of the United Nations Security Council established pursuant to United Nations Resolution 1267 (1999).

The places to which and persons to whom the Charter of the United Nations (Sanctions - Afghanistan) Regulations 2001 (Cth) currently apply include the Taliban Territory, a bin Laden Entity and a Taliban Entity (as those terms are defined in those regulations).

The Charter of the United Nations (Sanctions – Iraq) Regulations 2008 (Cth) apply in respect of certain assets of the previous government of Iraq, assets removed from Iraq, or acquired, by or on behalf of senior officials of the previous government of Iraq or their immediate families, and certain other assets specified in the regulations. Transactions involving such assets (including, if relevant, Units) require Ministerial approval.

6.7 Withholding of consideration

Challenger Life Bidder is not currently aware of any amounts that are or would be treated as withholding amounts under section 7.6(f). However, it is possible that Challenger Life Bidder may become aware of an obligation in this regard after the date of this Bidder's Statement.

For example, under section 255 of the Income Tax Assessment Act 1936 (Cth), the Australian Taxation Office may notify Challenger Life Bidder that all or part of the consideration otherwise payable under the Offer to Unitholders who are non-residents of Australia is to be retained by Challenger Life Bidder, or paid to the Australian Taxation Office, instead of being paid to the relevant Unitholders. Similarly, under section 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth), the Australian Taxation Office may require Challenger Life Bidder to pay to the Australian Taxation Office all or part of the consideration otherwise payable under the Offer to Unitholders who owe tax-related debts to the Australian Government.

6.8 No collateral benefits

Neither Challenger Life Bidder, Challenger Life nor any of their associates has in the four months before the date of this Bidder's Statement, or in the period between the date of this Bidder's Statement and the date of the Offer, given, offered to give or agreed to give a benefit which is not offered to all Unitholders under the Offer to another person which was likely to induce the other person (or an associate) to accept the Offer or dispose of Units.

6.9 No escalation agreements

Neither Challenger Life Bidder nor any of its associates has entered into any escalation agreement that is prohibited by section 622 of the Corporations Act.

6.10 Consents

This Bidder's Statement contains statements made by, or statements based on statements made by, Challenger Limited and Challenger Life. Each of Challenger Limited and Challenger Life have consented to being named in this Bidder's Statement and has consented to the inclusion of:

each statement it has made; and
each statement which is said in this Bidder's Statement to be based on a statement it has made,

in the form and context in which the statements have been included, and has not withdrawn that consent.

Name of person	Named as
Allens	Australian Legal adviser
Fort Street Advisers	Financial adviser
KPMG	Tax adviser

In addition, this Bidder's Statement includes statements which are made in, or based on statements made in, documents lodged with ASIC or given to ASX. Under the terms of ASIC Class Order 13/521, the persons making those statements are not required to consent to, and have not consented to, the inclusion of those statements, or of statements based on those statements, in this Bidder's Statement. See section 6.2.

6.11 Other material information

Except as disclosed in this Bidder's Statement, there is no other information that:

is material to the making of the decision by a Unitholder whether or not to accept the Offer; and
is known to Challenger Life Bidder,

which has not previously been disclosed to Unitholders.

7. Offer Terms

7.1 Offer

(a) Challenger Life Bidder offers to acquire all of your Units on the terms and subject to the conditions set out in this section 7.
(b) The consideration offered for each of your Units is \$2.74 in cash.
(c) If Challenger Life Bidder acquires your Units under this Offer, it will also be entitled to all Rights in respect of your Units.
(d) This Offer is dated [*].

7.2 Offer Period

(a) This Offer will remain open for acceptance during the period that commences on the date of this Offer and ends at [7]pm on [Insert date], unless this Offer is withdrawn or that period is extended in accordance with the Corporations Act.
(b) Challenger Life Bidder may, in accordance with the Corporations Act, extend the period during which this Offer remains open for acceptance.

7.3 How to accept this Offer

(a) Accept for all of your Units

Subject to section 7.7(c), you may only accept this Offer for all of your Units.

(b) Issuer Sponsored Holdings

If your Units are held in an Issuer Sponsored Holding (in which case your Securityholder Reference Number will commence with 'I'), to accept this Offer in respect of those Units you must:

(i) complete and sign the enclosed Acceptance Form in accordance with the instructions on it; and
(ii) return the Acceptance Form (using the enclosed reply paid envelope if you wish), together with all other documents required by the instructions on it, so that they are received before the end of the Offer Period at one of the addresses indicated on the Acceptance Form.

(c) CHESS Holdings

If your Units are held in a CHESS Holding (in which case your Holder Identification Number will commence with 'X'), to accept this Offer in respect of those Units you must either:

(i) instruct your Controlling Participant, in accordance with the sponsorship agreement between you and the Controlling Participant, to initiate acceptance of this Offer in accordance with Rule 14.14 of the ASTC Settlement Operating Rules, so as to be effective before the end of the Offer Period; or
(ii) complete, sign and return the enclosed Acceptance Form (using the enclosed reply paid envelope if you wish) in accordance with the instructions on the Acceptance Form, together with all other documents required by those

instructions, so that they are received before the end of the Offer Period at one of the addresses indicated on the Acceptance Form. This will authorise Bidder to initiate, or alternatively to instruct your Controlling Participant to initiate, acceptance of this Offer on your behalf in accordance with Rule 14.14 of the ASTC Settlement Operating Rules before the end of the Offer Period. You must ensure that the Acceptance Form (and the other required documents) are received in sufficient time for Bidder to give instructions to your Controlling Participant, and for your Controlling Participant to carry out those instructions, before the end of the Offer Period.

However, if you are the Controlling Participant in respect of your Units, to accept this Offer you must yourself initiate acceptance of this Offer in accordance with Rule 14.14 of the ASTC Settlement Operating Rules before the end of the Offer Period.

7.4 Status and effect of the Acceptance Form

(a) Status of Acceptance Form

The Acceptance Form that accompanies this Bidder's Statement forms part of this Offer, and the instructions on the Acceptance Form must be followed in using it to accept this Offer.

(b) Effect of Acceptance Form

By signing and returning the Acceptance Form in accordance with section 7.3, you irrevocably authorise Challenger Life Bidder and its nominees:

(i) to rectify any errors in, or omissions from, the Acceptance Form that are necessary to make it an effective acceptance of this Offer or to enable registration of the transfer of all of your Units to Challenger Life Bidder; and
(ii) (in respect of any of your Units in a CHESS Holding) to:
(A) initiate, or alternatively instruct your Controlling Participant to initiate, acceptance of this Offer in respect of all such Units in accordance with Rule 14.14 of the ASTC Settlement Operating Rules; and
(B) give any other instructions concerning those Units to your Controlling Participant on your behalf under the sponsorship agreement between you and the Controlling Participant.

(c) Validation of Acceptance Form

Notwithstanding sections 7.3(b) and 7.3(c)(ii), Challenger Life Bidder may (except in relation to Units in a CHESS Holding) treat the receipt by it of a signed Acceptance Form as valid even though it does not receive the other documents required by the instructions on the Acceptance Form or there is not compliance with any one or more of the other requirements for acceptance. If Challenger Life Bidder does treat such an Acceptance Form as valid, subject to section 7.6, Challenger Life Bidder will not be obliged to give the consideration to you until Challenger Life Bidder receives all those documents and all of the requirements for acceptance referred to in section 7.3 and in the Acceptance Form have been met.

Notwithstanding sections 7.3(b) and 7.3(c)(ii), Challenger Life Bidder may (except in relation to Units in a CHESS Holding) treat the receipt by it of a signed Acceptance Form either:

(i) before the end of the Offer Period; or
(ii) after the end of the Offer Period but where the Acceptance Form is sent by post and the envelope in which it is posted is post-marked before the end of the Offer Period,

as valid even though it does not receive the other documents required by the instructions on the Acceptance Form or there is not compliance with any one or more of the other requirements for acceptance. If Challenger Life Bidder does treat such an Acceptance Form as valid, subject to section 7.6, Challenger Life Bidder will not be obliged to give the consideration to you until Challenger Life Bidder receives all those documents and all of the requirements for acceptance referred to in section 7.3 and in the Acceptance Form have been met (other than the requirement of your Acceptance Form to be received before the end of the Offer Period).

(d) Risk in Acceptance Form

The transmission by you of the Acceptance Form and any other documents in accordance with section 7.3 is at your own risk. No acknowledgement of receipt of any such documents will be given to you by or on behalf of Challenger Life Bidder.

7.5 Agreement resulting from acceptance

By signing and returning the Acceptance Form or initiating or causing acceptance of this Offer under the ASTC Settlement Operating Rules in accordance with section 7.3:

(a) you accept this Offer in respect of all of your Units at the date your acceptance is processed (even if the number of Units specified on the Acceptance Form differs from the number of your Units) and agree to the terms and conditions of this Offer;
(b) you transfer, and consent to the transfer in accordance with the ASTC Settlement Operating Rules of, all of your Units to Challenger Life Bidder in accordance with this Offer and subject to the conditions of the constitution of CDI on which they were held immediately before your acceptance of this Offer (and Challenger Life Bidder agrees to take those Units subject to those conditions);
(c) you represent and warrant to Challenger Life Bidder that, at the time of your acceptance and at the time the transfer of your Units to Challenger Life Bidder is registered, all of your Units are and will be fully paid, and Challenger Life Bidder will acquire good title to them and full beneficial ownership of them free from all Encumbrances;
(d) you irrevocably appoint Challenger Life Bidder and each of its directors and nominees severally as your attorney to exercise all powers and rights that you have as the registered holder of your Units, including:
(i) attending any meeting of CDI, and voting in respect of your Units, proposing or seconding any motion, and demanding a poll for any vote at, any such meeting;
(ii) requisitioning the convening of any general meeting of CDI and convening a general meeting pursuant to any such requisition; and
(iii) signing any form, notice, instrument or other document (including any proxy appointment) relating to your Units.

Such appointment will terminate on the earlier of the withdrawal of your acceptance of this Offer (either in accordance with its terms or under section 650E of the Corporations Act) and the end of the Offer Period; you agree that, in exercising the powers and rights conferred by the power of attorney in section 7.5(d), each attorney may act in the interests of Challenger Life Bidder as the intended registered holder and beneficial owner of your Units;

(f) except as contemplated by section 7.5(d) and while the appointment in that section continues, you agree not to attend or vote in person or by proxy, attorney or corporate representative at any meeting of CDI, or to exercise or purport to exercise (in person or by proxy, attorney, or corporate representative or otherwise) any of the powers conferred by the power of attorney in section 7.5(d);
(g) you irrevocably authorise Challenger Life Bidder and its nominees to do all things necessary to transfer your Units to Challenger Life Bidder (including to cause a message to be transmitted in accordance with ASTC Settlement Operating Rule 14.17.1 so as to transfer your Units, if held in a CHESS Holding, to the Takeover Transferee Holding), even if Challenger Life Bidder has not at that time paid or provided the consideration due to you under this Offer; and
(h) you agree to indemnify Challenger Life Bidder and each of its agents in respect of any claim or action against it or any loss, damage or liability whatsoever incurred by it as a result of you not producing your Holder Identification Number or your Securityholder Reference Number or in consequence of the transfer of your Units to Challenger Life Bidder being registered by CDI without production of your Holder Identification Number or your Securityholder Reference Number.

7.6 Payment of consideration

(a) When you will generally be paid

Challenger Life Bidder will pay you the consideration for your Units under this Offer on or before the day that is five Business Days after the date of your acceptance.

(b) Payment where additional documents required

Where additional documents are required, either by the Acceptance Form or otherwise, to be given to Challenger Life Bidder with your acceptance to enable Challenger Life Bidder to become the holder of your Units (such as a power of attorney) then, subject to sections 7.6(c) to 7.6(f) and the Corporations Act:

(i) if those documents are given to Challenger Life Bidder with your acceptance, Challenger Life Bidder will pay you the consideration for your Units in accordance with section 7.6(a); and
(ii) if those documents are given to Challenger Life Bidder after the end of the Offer Period, Challenger Life Bidder will pay you the consideration for your Units within five Business Days after those documents are given.

(c) Delivery of consideration

Payment of any cash amount to which you are entitled will be made by cheque drawn in Australian currency in your favour. The cheque will be sent to you, at your risk, by ordinary mail (or, in the case of Unitholders with addresses outside Australia, by airmail) to your address shown on the Acceptance Form or the address for you last notified to Challenger Life Bidder by CDI.

(d) Rights

If Challenger Life Bidder becomes entitled to any Rights as a result of your acceptance of this Offer, it may require you to give to Challenger Life Bidder all documents necessary to vest title to those Rights in Challenger Life Bidder, or otherwise to give Challenger Life Bidder the benefit or value of those Rights. If you do not do so, or if you have received or are entitled to receive (or any previous holder of your Units has received or is entitled to receive) the benefit of those Rights, Challenger Life Bidder will be entitled to deduct the amount (or an amount equal to the value, as reasonably assessed by Challenger Life Bidder) of those Rights from any consideration otherwise payable to you under this Offer. If Challenger Life Bidder does not, or cannot, make such a deduction, you must pay that amount to Challenger Life Bidder, except to the extent that Challenger Life Bidder elects to waive its entitlement to those Rights.

(e) Non-Australian residents

If, at the time of acceptance of this Offer, any authority or clearance of a Public Authority is required for you to receive any consideration under this Offer or you are resident in or a resident of a place to which, or you are a person to whom:

(i) the Banking (Foreign Exchange) Regulations 1959 (Cth);
(ii) Part 4 of the Charter of the United Nations Act 1945 (Cth);
(iii) the Charter of the United Nations (Dealing with Assets) Regulations 2008 (Cth);
(iv) the Charter of the United Nations (Sanctions Afghanistan) Regulations 2001 (Cth);
(v) the Charter of the United Nations (Sanctions Iraq) Regulations 2008 (Cth); or
(vi) any other law of Australia or regulation under the Charter of the United Nations that would make it unlawful for Bidder to provide consideration for your Units,

applies then acceptance of this Offer will not create or transfer to you any right (contractual or contingent) to receive the consideration specified in this Offer unless and until all requisite authorities or clearances have been obtained by Challenger Life Bidder. See section 6.6 for information known to Bidder as to whether this restriction may apply to you.

(f) Withholding of consideration by Challenger Life Bidder

If any amount (the withholding amount) is required, under any Australian law or by any Public Authority, to be:

(i) withheld from any consideration otherwise payable to you under this Offer and paid to a Public Authority; or
(ii) retained by Challenger Life Bidder out of any consideration otherwise payable to you under this Offer,

the payment or retention by Challenger Life Bidder of the withholding amount (as applicable) will constitute full discharge of Challenger Life Bidder's obligation to pay the consideration to you to the extent of the withholding amount.

7.7 Offerees

(a) Registered holders

Challenger Life Bidder is making an offer in the form of this Offer to:

(i) each person registered as the holder of Units in the register of members of CDI as at the Register Date; and
(ii) each person who, during the period from the Register Date to the end of the Offer Period, becomes registered or entitled to be registered as the holder of Units (whether or not they are registered or entitled to be registered as the holder of other Units) due to the conversion of, or exercise of rights attached to, other securities convertible into Units that are on issue at the Register Date.

(b) Transferees

If at any time during the Offer Period another person is able to give good title to some or all of your Units, and that person has not already accepted an offer in the form of this Offer for those Units, then that person may accept as if an offer in the form of this Offer had been made to them in respect of those Units.

(c) Trustees and nominees

If at any time during the Offer Period and before you accept this Offer your Units consist of two or more separate parcels within the meaning of section 653B of the Corporations Act (for example, because you hold your Units as trustee or nominee for, or otherwise on account of, several distinct beneficial owners), then you may accept as if a separate offer in the form of this Offer had been made in relation to each of those parcels (including any parcel you hold in your own right). Acceptance for any parcel of Units (including any parcel consisting of two or more parcels) is ineffective unless:

(i) you give Challenger Life Bidder notice stating that the Units consist of a separate parcel, such notice being:
(A) in the case of Units not in a CHESS Holding, in writing; or
(B) in the case of Units in a CHESS Holding, in an electronic from approved by the ASTC Settlement Operating Rules for the purposes of Part 6.8 of the Corporations Act; and

(ii) your acceptance specifies the number of Units in the parcel.

(d) Units subject to CDI transfer restrictions

If at any time during the Offer Period some of your Units are subject to transfer restrictions imposed by CDI, then you may accept as if a separate offer in the form of this Offer has been made in relation to the balance of your Units. Acceptance for the balance of your Units is ineffective unless you give Challenger Life Bidder notice stating the number of your Units that are subject to a transfer restriction and explaining the nature of the restriction, and your acceptance specifies the balance of your Units.

7.8 Additional copies of Offer documents

If, for the purpose of accepting the Offer, you require additional copies of this Bidder's Statement and the Acceptance Form, please call the Challenger Life Offer Information Line on 1800 815 610 (toll-free within Australia) or +61 2 8256 3357 (from outside Australia) to request those additional copies.

7.9 Variation and withdrawal of Offer

(a) Variation

Challenger Life Bidder may vary this Offer in accordance with the Corporations Act.

(b) Withdrawal

This Offer may be withdrawn with the written consent of ASIC, which consent may be subject to conditions. If so, Challenger Life Bidder will give notice of the withdrawal to ASX and to CDI and will comply with any other conditions imposed by ASIC.

7.10 Costs and stamp duty

Challenger Life Bidder will pay all costs and expenses of the preparation and circulation of this Offer and any Australian stamp duty payable on the transfer of any Units to Challenger Life Bidder under this Offer.

7.11 Governing law and jurisdiction

This Offer and any contract resulting from your acceptance of this Offer are governed by the laws of New South Wales. In relation to them and related non-contractual matters each party irrevocably submits to the non-exclusive jurisdiction of courts with jurisdiction there, and waives any right to object to the venue on any ground.

8. Definitions and Interpretation

8.1 Definitions

In this Bidder's Statement and in the Acceptance Form, unless the context requires otherwise:

Acceptance Form means the acceptance form enclosed with this Bidder's Statement or, as the context requires, any replacement or substitute acceptance form provided by or on behalf of Challenger Life Bidder.

Announcement Date means 11 April 2014.

APRA means the Australian Prudential Regulation Authority.

ASIC means the Australian Securities and Investments Commission.

ASTC means ASX Settlement and Transfer Corporation Pty Ltd (ABN 49 008 504 532).

ASTC Settlement Operating Rules means the operating rules of the settlement facility provided by ASTC.

ASX means ASX Limited (ABN 98 008 624 691) or, as the context requires, the financial market operated by it.

ASX Listing Rules means the Listing Rules of ASX.

Bid Period means the period between the date on which this Bidder's Statement was provided to CDI and the end of the Offer Period (both inclusive).

Bidder's Statement means this document, being the statement of Bidder under Part 6.5 of the Corporations Act relating to the Offer.

Business Day means a day which is not a Saturday, Sunday or a public holiday in Sydney.

CDI means the Challenger Diversified Property Group, which is comprised of two stapled Australian registered managed investment schemes, CDPT1 and CDPT2.

CDI Group means CDI and its Related Entities as at the date of this Bidder's Statement.

CDPT1 means Challenger Diversified Property Trust 1 (ARSN 121 484 606).

CDPT2 means Challenger Diversified Property Trust 2 (ARSN 121 484 713).

CGT means Australian capital gains tax.

Challenger Group means Challenger Limited and its Related Entities as at the date of this Bidder's Statement.

Challenger Life means Challenger Life Company Limited (ABN 44 072 486 938).

Challenger Life Bidder means Challenger Life Nominees Pty Ltd (ABN 39 091 336 793) as trustee for Challenger Australia Listed Property Holding Trust.

Challenger Life Board means the board of directors of Challenger Life.

Challenger Limited means Challenger Limited (ABN 85 106 842 371).

CHESS means the Clearing House Electronic Subregister System, which provides for the electronic transfer, settlement and registration of securities in Australia.

CHESS Holding means a holding of Units on the CHESS Subregister of CDI.

CHESS Subregister has the meaning given in the ASTC Settlement Operating Rules.

CLIL means Challenger Listed Investments Limited (ABN 94 055 293 644).

Controlling Participant has the meaning given in the ASTC Settlement Operating Rules. Usually your Controlling Participant is a person, such as a broker, with whom you have a sponsorship agreement (within the meaning of the ASTC Settlement Operating Rules).

Corporations Act means the Corporations Act 2001 (Cth).

Encumbrance means an interest or power:

(a) reserved in or over any interest in any asset including any retention of title; or
(b) created or otherwise arising in or over any interest in any asset under a bill of sale, mortgage, charge, lien, pledge, trust or power,

by way of security for the payment of debt or any other monetary obligation or the performance of any other obligation and includes any agreement to grant or create any of the above.

GST means the goods and services tax imposed under the A New Tax System (Goods and Services Tax) Act 1999 (Cth) and the related imposition acts of the Commonwealth of Australia.

Holder Identification Number means the number used to identify a Unitholder on the CHESS Subregister of CDI.

Issuer Sponsored Holding means a holding of Units on the Issuer Sponsored Subregister of CDI.

Issuer Sponsored Subregister has the meaning given in the ASTC Settlement Operating Rules.

NTA means net tangible assets.

Offer means, as the context requires, the offer for Units contained in section 7, or the offmarket takeover bid constituted by that offer and each other offer by Challenger Life Bidder for Units in the form of that offer, including in each case as varied in accordance with the Corporations Act.

Offer Amount has the meaning given in section 4.1.

Offer Period means the period during which the Offer will remain open for acceptance in accordance with section 7.2.

Public Authority means any government or any governmental, semi-governmental, statutory or judicial entity or authority, or any minister, department, office or delegate of any government, whether in Australia or elsewhere. It also includes any self-regulatory organisation established under statute and any securities exchange.

Register Date means 8am on 14 April 2014 being the date set by Challenger Life Bidder under section 633(2) of the Corporations Act.

Registry means the securities registry to be appointed by the Challenger Life Bidder for the purposes of performing unitholder registration functions in connection with the Offer.

Related Entity means, in relation to a person, any entity that is related to that person within the meaning of section 50 of the Corporations Act or that is in an economic entity (as defined in any approved Australian accounting standard) that is controlled by that person.

Responsible Entity means Challenger Listed Investments Limited (ABN 94 055 293 644), which is the responsible entity of CDPT1 and CDPT2.

Rights means all accretions, rights and benefits of whatever kind attaching to or arising from the Units directly or indirectly at or after the date of this Bidder's Statement (including all dividends and all rights to receive them and rights to receive or subscribe for shares, notes, bonds, options or other securities or entitlements declared, paid or issued by CDI or any subsidiary of CDI).

Securityholder Reference Number means the number allocated by CDI to identify a Unitholder on the Issuer Sponsored Subregister of CDI.

Takeover Transferee Holding has the meaning given in the ASTC Settlement Operating Rules, being the CHESS Holding to which Units are to be transferred pursuant to acceptances of the Offer.

Unitholder means a person registered in the register of members of CDI as a holder of Units.

Units means the fully paid stapled units in the Challenger Diversified Property Group, each stapled unit being comprised of one unit in CDPT1 and one unit in CDPT2, which have been stapled together such that they may only be transferred together.

VWAP means volume weighted average price.

your Units means, subject to section 7.7:

(a) the Units in respect of which you are registered or entitled to be registered as a holder in the register of members of CDI at the Register Date, and in respect of which no other person becomes registered or entitled to be registered as a holder before you accept the Offer; and
(b) any other Units to which you are able to give good title at the time you accept the Offer.

8.2 Interpretation

In this Bidder's Statement and in the Acceptance Form, headings are for convenience only and do not affect interpretation.

(a) Mentioning anything after includes, including, for example, or similar expressions, does not limit what else might be included.

The following rules apply unless the context requires otherwise.

(b) The singular includes the plural and conversely.
(c) A reference to a section or Annexure is to a section of, or annexure to, this Bidder's Statement.
(d) Where a word or phrase is defined, its other grammatical forms have a corresponding meaning.
(e) A reference to a person, corporation, trust, partnership, unincorporated body or association or other entity includes any of them.
(f) A reference to a person includes a reference to the person's executors, administrators, successors, substitutes (including persons taking by novation) and assigns.
(g) A reference to any legislation or to any provision of any legislation includes any modification or re-enactment of it, any legislative provision substituted for it and all regulations and statutory instruments issued under it.
(h) A reference to any instrument or document includes any variation or replacement of it.
(i) A term not specifically defined in this Bidder's Statement has the meaning given to it in the Corporations Act (being, if any special meaning is given for the purposes of Chapter 6 or 6A of the Corporations Act or a provision of those chapters, that special meaning).
(j) A reference to time is a reference to Sydney time.
(k) A reference to \$ is a reference to the lawful currency of Australia.
(l) A reference to you is to a person to whom the Offer under section 7 is (or is deemed to be) made.

9. Approval of Bidder's Statement

This Bidder's Statement has been approved by a resolution of the directors Challenger Life Bidder.

Dated 11 April 2014

Signed on behalf Challenger Life Nominees Pty Ltd as trustee for Challenger Australia Listed Property Holding Trust:

Victoria Hartley Director

Annexure

ASX Announcements in Relation to CDI Since 30 June 2013

Date Lodged	Description

4 April 2014	CDI sells 187 Todd Road, Port Melbourne
28 February 2014	Half-year update 31 December 2013
04 February 2014	1H14 Non-resident withholding tax distribution summary
04 February 2014	1H14 Portfolio summary
04 February 2014	1H14 Results presentation
04 February 2014	1H14 Market release
04 February 2014	1H14 Financial report including appendix 4D
30 December 2013	Change of Director's Interest Notice
17 December 2013	Estimated distribution for six months ending 31 Dec 2013
23 October 2013	Presentation for BoA Merrill Lynch AREIT conference
22 October 2013	Change in substantial holding
24 September 2013	CDI 2013 Annual Report
13 August 2013	Change of Director's Interest Notice
06 August 2013	FY13 Non-resident withholding tax distribution summary
06 August 2013	FY13 Portfolio summary
06 August 2013	FY13 Results presentation
06 August 2013	FY13 Market Release
06 August 2013	FY13 Financial report including appendix 4E
02 July 2013	Change of Director's Interest Notice
02 July 2013	Change of Director's Interest Notice

Corporate Directory

Challenger Life Company Limited	Challenger Life Nominees Pty Ltd as trustee of Challenger Australia Listed Property Holding Trust
Registered Office Level 15 255 Pitt Street	Registered Office Level 15 255 Pitt Street
Sydney NSW 2000	Sydney NSW 2000

Challenger Life Offer Information Line

If you have any questions in relation to the Offer or how to accept it, or if you have lost your Acceptance Form and require a replacement, please call the Challenger Life Offer Information Line on the following numbers:

Within Australia: 1800 815 610 toll-free

Outside Australia: +61 2 8256 3357

Please note that, as required by the Corporations Act, calls to these numbers will be recorded.

AI assistant

CHALLENGER LIMITED — M&A Activity 2014

64641_rns_2014-04-10_12fbe6ac-9721-4cd4-8d36-25a15cfca23e.pdf

Off Market Takeover Bid by Challenger Life in relation to Challenger Diversified Property Group

Bidder's Statement

Accept the Offer

A\$2.74 cash per stapled unit

Table of Contents

Additional Information

Annexure

Important Information

Privacy statement

How Do I Accept the Offer?

For Issuer Sponsored Holdings of Units (Securityholder Reference Number beginning with 'I')

For CHESS Holdings of Units (Holder Identification Number beginning with 'X')

Challenger Life Offer Information Line

Important Dates

Chairman's Letter

Dear Unitholder

The Challenger Life Offer

Challenger Life's Intentions

Next steps

The Offer is now open for acceptance and is scheduled to close at 7.00 pm (Sydney time) on [*] (unless extended). See section 7.3 for details on how to accept the Offer.

Summary of the Offer

Why You Should Accept Challenger Life Bidder's Offer

1. The consideration under the Offer represents an attractive premium to CDI market value

2. Certain and immediate value in excess of NTA

3. Uncertainty as to future valuations

4. There is a risk that Unitholders' investment may be adversely impacted

5. No conditions

6. Likelihood of a competing proposal is low

7. No further increase to Offer consideration

1. Profile of Challenger Life Bidder, Challenger Life and the Challenger Group

1.1 Overview of Challenger Life Bidder

1.2 Overview of Challenger Limited

1.3 Overview of Challenger Life

1.4 Challenger Life's Investment Objectives

1.5 Challenger Life's Investments

1.6 Challenger Life's Property Assets

1.7 Directors of Challenger Life and Challenger Limited

Peter L Polson

Non-executive Chairman, Independent

Brian R Benari

Chief Executive Officer, Non-independent

Graham A Cubbin

Non-executive Director, Independent

Steven Gregg

Non-executive Director, Independent

Jonathan H Grunzweig

Non-executive Director, Independent

Leon Zwier

Non-executive Director, Independent

Russell R Hooper

Non-executive Director, Independent

JoAnne M Stephenson

Brenda M Shanahan

Non-executive Director, Independent

1.8 Additional information regarding Challenger Limited and the Challenger Group

2. Profile of Challenger Diversified Property Group

2.1 Disclaimer

2.2 Overview of CDI

2.3 Board of Responsible Entity

Michael Cole

Non-executive Chairman, Independent

Ian Moore

Non-executive Director, Independent

Geoff McWilliam

Non-executive Director, Independent

Rob Woods

Executive Director, Non-independent

Brendan O'Connor

Executive Director, Non-independent

2.4 Overview of CDI's property portfolio

Source: CDI 1H14 investor presentation

The property portfolio summary below provides further details of each property as at 31 December 2013.

2.5 Publicly available information

2.6 CDI securities on issue

2.7 Interests in CDI securities

(a) Challenger Life's relevant interest in CDI securities and voting power in CDI

(b) Acquisitions of Units by Challenger Life or associates

CHALLENGER LIMITED M&A Activity 2014

**The Offer is now open for acceptance and is scheduled to close at 7.00 pm (Sydney time) on [*] (unless extended). See section 7.3 for details on how to accept the Offer.**