ASX'Release 31'December 2012'– Half'Year'Result

The" Company's financial" statements" for" the" halfOyear" to" 31" December 2012" are" attached" to" this" release."The"key"results"are"summarised"below:

*See\$the\$discussion\$of\$NTA\$later\$in\$this\$release.\$

Dividend

The"board"has"resolved"to"declare"a"fully"franked"interim"dividend"of"0.5"cents per"share"to"be"paid" on"28"March"2013.

Buy'Back

On"29"February"2012 BlackWall"announced"a"buy"back"of"its"shares."This"buy"back"expires"on"14 March 2013." Under" the" buy" back" the" Company" has" acquired" and" cancelled" 305,576 shares" at" a" weighted"average price"of"9.5"cents per"share."The"Board"has"resolved"to"extend the"buy"back"for a" further 12"months"from"15 March"2013."

Net'Tangible'Assets

The"company"holds just"over 17"million units"in"a"listed"trust,"known"as"POREIT"(ASX"Code:"PXT), of" which BlackWall"is"the"manager"and"responsible"entity."PXT"is"a"real"estate"investment"trust"with" gross" assets" of" \$122 million (gearing" of 43%)." Approximately" 67% of" its" assets" are" income" producing"real"estate"with"the"balance"in"property"securities."PXT"was"listed"in"October"2011"and" trades at"a"significant"discount"to"NTA."The"trust"is"involved"(as"a"defendant)"in"court"proceedings" initiated"by"the"MacarthurCook"Property"Securities"Fund (ASX"Code:"MPS)."The"proceedings"relate" to" transactions entered" into" by" PXT's" former" responsible entity," that" is," before" BlackWall's" businesses"assumed"management"of"the"Trust."In"August"2012"a"judgment"was"entered"against"the" Trust"for"over"\$19"million."The"Trust"has"appealed"this"judgment."The"appeal"is"before"the"court"in" early"April.

The" Company's" NTA" per" share" carries" its investment" in" PXT at" the" Trust's" trading" price" on" 31" December"2012 of"11.5"cents"per"unit," the"Pro"Forma"NTA"carries"PXT"at"its"NTA"of"23 cents"per" unit and" the" Adjusted"NTA" carries" PXT" at"its"NTA" assuming" the" appeal"is" won" and" the"litigation" provision"in"the"PXT"balance"sheet"is"reversed."More"information"on"PXT"can"be"found"on"the"ASX" Announcements"platform"or"on"the"BlackWall"website"at"www.blackwallfunds.com.au.

In"addition,"the"financial"statements"include"a"contingent"asset"of"2"cents"per"share,"which"is" derived"from"performance"fees"payable"at"maturity"of"the"BlackWall"Storage"Fund"in"October"2013." As"these"fees"are"contingent"on"the"sale"of"the"underlying"assets,"they"are"not"yet"recognised"on" BlackWall's"balance"sheet.

BLACKWALL'PROPERTY'FUNDS'LIMITED ABN"37"146"935"131 Level"1,"50"Yeo"Street,"Neutral"Bay,"Sydney"NSW"2089"Australia | PO"Box"612,"Neutral"Bay,"Sydney" NSW"2089"Australia | Tel"+61"2"9033"8611 | Fax"+61"2"9033"8600 | www.blackwallfunds.com.au

About'BlackWall

BlackWall's"businesses"generate"fee"and"investment"revenue"from"a"portfolio"of"income"producing" real"estate."We"manage"the"following"investment"structures"on"behalf"of"retail,"high"net"worth"and" institutional"investors:

Stuart'Brown Chief'Executive'Officer

APPENDIX 4D HALF-YEAR REPORT

Name of entity: BlackWall Property Funds Limited

1. Details of the reporting period

2. Results for announcement to the market

2.6 A brief explanation of any of the figures in 2.1 to 2.4 necessary to enable the figures to be understood:

Refer to the attached ASX release and Condensed Interim Consolidated Financial Statements for the halfyear ended 31 December 2012 for further information.

3. Net asset backing per security

* Under the listing rules NTA Backing must be determined by deducting from total tangible assets all claims on those assets ranking ahead of the ordinary securities (i.e., all liabilities, preference shares, outside equity interests etc). The NTA reflects the fair value of BlackWall Property Funds Limited's portfolio of assets.

4. Control gained or lost over entities during the period

5. Details of dividends/distributions

A fully franked dividend of 0.5 cents per fully paid share was paid on 31 October 2012 (2011: nil).

In addition, Directors have declared an interim fully franked ordinary dividend (0.5 cents per fully paid share) to be paid on 28 March 2013.

6. Details of dividend/distribution reinvestment plan

There was no dividend reinvestment plan in operation during the period.

7. Details of associates and joint venture entities

8. Details of controlled entities

9. Accounting standards used by foreign entities

Australian equivalent to International Financial Reporting Standards (AIFRS)

10. Audit / review of accounts upon which this report is based

This report is based on accounts to which one of the following applies (tick one):

11. Qualification of audit / review

Refer to the attached Condensed Interim Consolidated Financial Statements for the review report.

12. Attachments

The Condensed Interim Consolidated Financial Statements of BlackWall Property Funds Limited for the half-year ended 31 December 2012 is attached.

& Controlled Entities ACN 146 935 131 ABN 37 146 935 131

Condensed Interim Consolidated Financial Statements

Half-year Ended 31 December 2012

CONTENTS

Condensed Interim Consolidated Financial Statements

The Directors of BlackWall Property Funds Limited ("BlackWall" or "the Company") and its controlled entities ("the Group") present their report for the half-year ended 31 December 2012.

Principal Activities

The Group is a vertically integrated property funds management business earning fee and investment income from a portfolio of income producing real estate.

Review of Operations

The net result from continuing operations for the Group for the half-year ended 31 December 2012 was a profit after tax of \$401,000 (2011: \$328,000) with total Comprehensive Income (that is including movements in reserves) of \$258,000 (2011: Loss \$3,606,000). The significant change in Comprehensive Income is due to marking to market of the Group's investment in P-REIT (ASX Code: PXT) at 31 December 2011. P-REIT ("the Trust") is a real estate investment trust for which the Group acts as manager /Responsible Entity which listed on the ASX in October 2011.

Since listing the P-REIT unit price has traded well below its Net Tangible Assets (NTA) and was \$0.115 at 31 December 2012.

The Trust is involved in court proceedings initiated by the MacarthurCook Property Securities Fund (ASX Code: MPS). The proceedings relate to a series of transactions entered into before BlackWall's businesses assumed management of the Trust. On 10 August 2012 Justice Hammerschlag handed down a judgment ("Judgment") in favour of MPS. The Judgment is for \$17,764,204 including Judgment court interest (to the date of Judgment) but excluding costs. The Responsible Entity has estimated costs and interest to be in the order of \$1.7 million bringing the total provision for the Judgment to \$19,500,000. The Responsible Entity has subsequently lodged an appeal. The appeal is set down for hearing in early April 2013. Given the Judgment the Directors resolved to impair the value of the Trust's investment in P-REIT at 30 June 2012 to its trading price of 9 cents per unit. Movements since that impairment are shown as an unrealised gain in Other Comprehensive Income.

Further commentary on the operations and the results are set out in the ASX announcement accompanying the financial statements.

Significant Changes in Affairs

There were no significant changes to the state of affairs of the Group during the financial period.

Dividends

A fully franked dividend of 0.5 cents per fully paid share was paid on 31 October 2012 (2011: nil). In addition, Directors have declared an interim fully franked ordinary dividend of 0.5 cents per fully paid share, to be paid on 28 March 2013.

Events Subsequent to Reporting Date and Likely Developments

In January 2013, the Group entered into an agreement to sell its investments in Bakehouse Cellars Pty Ltd for consideration of \$400,000. This results in a profit of \$120,000. \$200,000 cash was received in January 2013 and the remaining \$200,000 is due on 31 March 2013. On 30 January 2013, \$50,000 of borrowings was repaid to the Group's lender (refer to Note 6).

Events Subsequent to Reporting Date and Likely Developments (continued)

To the best knowledge of the Directors, there have been no other matters or circumstances that have arisen since the end of the period that have materially affected or may materially affect the Group's operations in future financial years, the results of those operations or the Group's state of affairs in future financial years.

Contingencies

The Group in its capacity as investment manager of the BlackWall Storage Fund ("BSF") is entitled to a performance fee based on the uplift in BSF's underlying properties. The fee is payable on expiry of BSF in October 2013. Current property valuations will result in a performance fee of around \$1 million payable to BlackWall and its subsidiaries. Approximately \$250,000 of this fee will be attributable to outside equity interests.

Going Concern

The financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business

Office Holders

Richard Hill (Independent Chairman) Joseph (Seph) Glew (Non-Executive Director) Robin Tedder (Non-Executive Director) Stuart Brown (Managing Director) Don Bayly (Company Secretary)

Auditor's Independence Declaration

A copy of the auditor's independence declaration as required under Section 307C of the Corporations Act 2001 is set out in these financial statements. ESV Chartered Accountants continues in office under section 327 of the Corporations Act 2001.

Rounding Of Amounts

The Group is a group of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order, amounts in the Directors' Report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of the Board of Directors.

Stuart Brown Director Sydney, 22 February 2013

Level 18, City Centre, 55 Market Street, Sydney NSW 2000 T+61 2 9283 1666 F+61 2 9283 1866 E [email protected] www.esvgroup.com.au

Auditor's Independence Declaration Under Section 307C of the Corporations Act 2001

I declare that to the best of my knowledge and belief, during the half-year ended 31 December 2012, there have been:

• (i) no contraventions of the auditor's independence requirements as set out in the Corporations Act 2001 in relation to the review; and
• (ii) no contraventions of any applicable code of professional conduct in relation to the review.

Dated at Sydney the 22^nd day of February 2013

ESV Chartered Accountants

$\int_{-L}$

Chris Kirkwood Partner

ABN 37 146 935 131

Condensed Consolidated Statement of Comprehensive Income

For the Half-year Ended 31 December 2012

ABN 37 146 935 131

Condensed Consolidated Statement of Financial Position

As at 31 December 2012

8

BlackWall Property Funds Limited and Controlled Entities

ABN 37 146 935 131

Condensed Consolidated Statement of Changes in Equity

For the Half-year Ended 31 December 2012

ABN 37 146 935 131

Condensed Consolidated Statement of Cash Flows

For the Half-year Ended 31 December 2012

ABN 37 146 935 131

Notes to the Condensed Interim Consolidated Financial Statements

For the Half-vear Ended 31 December 2012

$\mathbf{1}$ . Statement of Significant Accounting Policies

The financial statements cover the economic entity of BlackWall Property Funds Ltd ("BlackWall" or "the Company") and its Controlled Entities ("the Group"). BlackWall Property Funds Ltd is a publicly listed company, incorporated and domiciled in Australia.

The financial statements for the Group for the half-year ended 31 December 2012 were authorised for issue in accordance with the resolution $\alpha$ f the Directors $\alpha$ 22 February 2013.

Statement of Compliance

The financial statements are general purpose financial reports which have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standard AASB 134 Interim Financial Reporting, Australian Accounting Interpretations and other authoritative pronouncements of the International Financial Reporting Standard IAS 34 Interim Financial Reporting.

The financial statements do not include notes of the type normally included in annual financial statements. It is recommended that the financial statements be read in conjunction with the annual financial statements for the year ended 30 June 2012 and any public announcements made by the Group during the half-year in accordance with the continuous disclosure obligations of the ASX listing rules.

Basis of Preparation

The financial statements have been prepared on an accrual basis and are based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period. Any change of presentation has been made in order to make the financial statements more relevant and useful to the user.

The Group is a group of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the Directors' Report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated.

The accounting policies adopted are consistent with those of the previous financial year.

Going concern

The financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

$2.$ Critical Accounting Estimates and Judgments

The Directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

ABN 37 146 935 131

Notes to the Condensed Interim Consolidated Financial Statements

For the Half-vear Ended 31 December 2012

$2.$ Critical Accounting Estimates and Judgments (continued)

Key estimates - Impairment

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets.

Key estimates - Available-for-sale financial assets

Financial asset provisions have been raised with reference to the prevailing prices at 31 December 2012 of available-for-sale assets measured at fair value with gains and losses recognised in other comprehensive income. The fair value of the unlisted securities is determined by reference to the net assets of the underlying entities. The fair value of the listed securities is based on the closing price from the Australian Securities Exchange as at the reporting date. The fair value of the Bakehouse Bonds is measured by its face value adjusted for CPI movements.

$\mathbf{R}$ Segment Information

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.

The Group's primary format for segment reporting is based on business segments. The business segments are determined based on the Group management and internal reporting structure. There is only one geographical segment being Australasia.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

The Group has adopted three reporting segments, Fund and Property Management, Investments and Unallocated. Following the acquisition of funds management operations, the Group's fee earning activities are primarily derived from property assets held within funds or held on balance sheet. As such the Group's operations and reporting lines are better represented by consolidating all of the fee earning, operating property businesses within the Fund and Property Management segment and returns derived by holding investments in property securities under the segment referred to as Investments.

The Fund and Property Management segment engages in funds and asset management as well as property services that include property management, leasing and general property consultancy. Management treats these operations as one "fee earning" operating segment.

The Investments segment includes interests in property related investments such as units in related party listed and unlisted unit trusts, loans and cash. It generates income from dividends, distributions, and interest.

The Unallocated segment represents general administrative functions at the head office (e.g. salaries).

Transfer prices between business segments are set at an arm's length basis.

ABN 37 146 935 131

Notes to the Condensed Interim Consolidated Financial Statements

For the Half-year Ended 31 December 2012

3. Segment Information (continued)

The segment information for the half-year ended 31 December is as follows:

ABN 37 146 935 131

Notes to the Condensed Interim Consolidated Financial Statements

For the Half-vear Ended 31 December 2012

$4.$ Income Tax Expense / (Benefit)

Non-current Assets - Financial Assets 5.

\$792,000 of loans and receivables continued to be impaired as at 31 December 2012 (June 2012: \$792,000).

The Group holds an investment in P-REIT which was listed on the Australian Securities Exchange (ASX) on 28 October 2011 (ASX code: PXT). TFML Limited (a subsidiary of the Group) acts as the responsible entity for P-REIT. Since listing the P-REIT unit price has traded well below its Net Tangible Assets (NTA) and was \$0.115 at 31 December 2012. TFML (as P-REIT's responsible entity) is a defendant in a Supreme Court action initiated by the MacarthurCook Property Securities Fund. The proceedings relate to a series of transactions entered into before BlackWall's businesses assumed management of the trust. On 10 August 2012 Justice Hammerschlag handed down a judgment ("Judgment") in favour of MPS. The Judgment is for \$17,764,204 including Judgment court interest (to the date of Judgment) but excluding costs. The Responsible Entity has estimated costs and interest to be in the order of \$1.7 million bringing the total provision for the Judgment to \$19,500,000. The Responsible Entity has subsequently lodged an appeal. The appeal is set down for hearing in early April 2013.

The Bakehouse Bonds are CPI linked debt instruments against a large scale mixed use property known as the Bakehouse Quarter in North Strathfield, Sydney. The Bonds' face value of \$5 million is indexed to CPI and the current value is \$5.06 million. The Bonds will mature on 30 June 2020. In addition, a coupon of 5.5% per annum is paid quarterly in arrears.

All other available-for-sale assets are investments in various managed investment schemes for which members of the Group act as responsible entity or investment manager.

ABN 37 146 935 131

Notes to the Condensed Interim Consolidated Financial Statements

For the Half-vear Ended 31 December 2012

6. Current Liabilities - Borrowings

Borrowings are under a debt facility with National Australia Bank. The facility has matured and is therefore classified as a current liability. The Group is in the process of documenting a renewal with NAB., During the period the Group repaid \$25,000 to reduce the borrowings to \$400,000. On 30 January 2013, the Group repaid a further \$50,000 to reduce the debt to \$350,000.

$\overline{7}$ . Share Capital

(a) Summary Table

During the period, the Company purchased 305,576 ordinary shares on-market as part of the Company's share buy back that commenced in February 2012. The shares were acquired at 9.5 cents per share. The total cost of \$29,000 (including transaction costs), was deducted from ordinary shareholder equity.

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.

At the shareholders' meetings, each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

All shares are fully paid and have no par value.

8. Dividends

Dividends paid to members during the financial period were as follows:

In addition, Directors have declared an interim fully franked ordinary dividend (0.5 cents per fully paid share) to be paid on 28 March 2013.

ABN 37 146 935 131

Notes to the Condensed Interim Consolidated Financial Statements

For the Half-vear Ended 31 December 2012

$\mathbf{q}$ Earnings Per Share

10. Commitments

No capital commitments were in existence as at 31 December 2012 (2011: Nil).

$11.$ Contingent Liabilities and Contingent Assets

The Group had no contingencies as at 31 December 2012 (2011: Nil), except for the following:

The Group in its capacity as investment manager of the BlackWall Storage Fund ("BSF") is entitled to a performance fee based on the uplift in BSF's underlying properties. The fee is payable on expiry of BSF in October 2013. Current property valuations will result in a performance fee of around \$1 million payable to BlackWall and its subsidiaries. Approximately \$250,000 of this fee will be attributable to outside equity interests.

12. Subsequent Events

In January 2013, the Group entered into an agreement to sell its investments in Bakehouse Cellars Pty Ltd for consideration of \$400,000. This results in a profit of \$120,000. \$200,000 cash was received in January 2013 and the remaining \$200,000 is due on 31 March 2013. On 30 January 2013, \$50,000 of borrowings was repaid to the Group's lender (refer to Note 6).

To the best knowledge of the Directors, there have been no other matters or circumstances that have arisen since the end of the period that have materially affected or may materially affect the Group's operations in future financial years, the results of those operations or the Group's state of affairs in future financial years.

13. Group Details

The principal place of business of the Group is: Level 1, 50 Yeo Street Neutral Bay NSW 2089

In the Directors' opinion:

• $(a)$ the financial statements and notes set out on pages 6 to 15 are in accordance with the Corporations Act 2001, including:
• (i) complying with Accounting Standards AASB 134 Interim Financial Reporting, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and
• (ii) giving a true and fair view of the consolidated entity's financial position as at 31 December 2012 and of its performance for the half-year ended on that date, and
• $(b)$ there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

This declaration is made in accordance with a resolution of the Board of Directors.

Stuart Brown Director Sydney, 22 February 2013

Level 18, City Centre, 55 Market Street, Sydney NSW 2000 T+61 2 9283 1666 F+61 2 9283 1866 E [email protected] www.esvgroup.com.au

Independent Review Report to the Investors of Blackwall Property Funds Limited and Controlled Entities

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Blackwall Property Funds Limited and Controlled Entities ("the Group"), which comprises the condensed statement of financial position as at 31 December 2012, the condensed statement of comprehensive income, condensed statement of changes in equity and condensed statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration.

Directors' Responsibility for the Half-Year Financial Report

The Directors of the Group are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the Directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group's financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Blackwall Property Funds Limited and Controlled Entities, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enguiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the Directors of Blackwall Property Funds Limited and Controlled Entities, would be in the same terms if given to the Directors as at the time of this auditor's report.

Independent Review Report to the Investors of Blackwall Property Funds Ltd and Consolidated Entities

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Blackwall Property Funds Limited and Controlled Entities is not in accordance with the Corporations Act 2001 including:

• $(a)$ giving a true and fair view of the Group's financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and
• complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations $(b)$ Regulations 2001.

Dated at Sydney the 22^nd day of February 2013

$551$

ESV Chartered Accountants

Chris Kirkwood

Partner

ACN 146 935 131 ABN 37 146 935 131

Level 1, 50 Yeo Street, Neutral Bay, Sydney NSW 2089 Australia PO Box 612, Neutral Bay, Sydney NSW 2089 Australia

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