H&R REIT AND H&R FINANCE TRUST - MD&A - December 31, 2010  Other than the Bow development which is described in greater detail under “Funding of Future Commitments”, the following is a  summary of material contractual obligations of the REIT (excluding mortgages related to discontinued operations and mortgages  payable on demand) including payments due as at December 31, 2010 for the next 5 years and thereafter as of December 31, 2010: DBRS Limited (“DBRS”) provides credit ratings of debt securities for commercial entities. A credit rating generally provides an  indication of the risk that the borrower will not fulfill its obligations in a timely manner with respect to both interest and principal  commitments. Rating categories range from highest credit quality (generally AAA) to default payment (generally D).  DBRS has confirmed that the REIT has a credit rating of BBB with a Stable trend as at December 31, 2010. A credit rating of BBB  by DBRS is generally an indication of adequate credit quality, where protection of interest and principal is considered acceptable. A  credit rating of BBB or higher is an investment grade rating. There can be no assurance that any rating will remain in effect for any  given period of time or that any rating will not be withdrawn or revised by DBRS at any time. The credit rating is reviewed  periodically by DBRS.  The REIT has no material capital or operating lease obligations.  (1) The total purchase price is approximately $376.8 million less the mortgage assumptions of $196.4 million.  The following table shows the budgeted costs for the Bow and actual costs to date:  Both the REIT and the lenders’ project consultant believe the remaining contingencies to be sufficient at this stage of the project. Based on the current anticipated tranche completion dates, it is expected that there will be an approximate one to three month delay  in delivery for each tranche. This potential cost based on the expected delay, would be approximately $4.7 million and is included in   (in thousands of dollars)  Costs incurred to date  Remaining Costs  Budget Land  $60,804  $ -  $60,804  Financing costs  21,893  19,315  41,208  Capitalized interest on the REIT’s costs as incurred  121,979  93,743  215,722  Soft costs  134,168  50,769  184,937  Hard costs  855,593  259,844  1,115,437  Recoveries and other income  (44,343)  (56,995)  (101,338)  Contingency - 29,952 29,952 Cost incurred to date/remaining costs/budget 1,150,094  396,628  1,546,722  Less capitalized interest on the REIT’s costs incurred (121,979)  (93,743)  (215,722)  Total costs incurred to date/ remaining costs/budget less  capitalized interest  $1,028,115  $302,885  $1,331,000  Funding of Future Commitments  Payments Due by Period  Contractual Obligations (in thousands of dollars)  2011 2012- 2013  2014- 2015  2016 and  thereafter  Total Mortgages payable $170,601 $567,172 $598,978 $1,296,418 $2,633,169 2013 Convertible debentures  -  115,000  -  115,000  2014 Convertible debentures  -  -  145,027  -  145,027  2017 Convertible debentures  -  -  -  175,000  175,000  2020 Convertible debentures  -  -  -  100,000  100,000  Series A Senior Debentures  -  -  115,000  -  115,000  Series B Senior Debentures  -  -  -  115,000  115,000  Series C Senior Debentures  -  -  -  125,000  125,000  Bank indebtedness - 89,045 - - 89,045 Property acquisitions (1) 180,400 - - - 180,400 Total Contractual Obligations  $351,001  $771,217  $859,005  $1,811,418  $3,792,641  Page 30 of 45 