H&R REIT AND H&R FINANCE TRUST - MD&A - December 31, 2010  FINANCIAL HIGHLIGHTS (in thousands of dollars except per unit amounts)  December 31, 2010  December 31, 2009  Total assets  $5,531,534  $5,351,123  Debt to gross book value of assets (per the REIT’s Declaration of Trust) 50.3%  52.5%  Debt to gross book value of assets (per the combined financial statements)  57.9%  56.8%  Stapled Units outstanding  146,121  143,825  Class B units of H&R Limited Partnership outstanding  5,438  5,438  Three months ended  Three months ended  December 31, 2010  December 31, 2009  Property rental revenue  $160,262  $151,668  Net property operating income  29,632  21,606  Normalized funds from operations (“NFFO”)  58,089  56,385  Weighted average number of basic Stapled Units for NFFO  150,624  148,501  Normalized funds from operations per basic Stapled Unit  0.39  0.38  Distributions paid per Stapled Unit  0.22  0.18  Payout ratio per Stapled Unit as a % of basic NFFO  56%  47%  OPERATIONS  Office Industrial Retail Total* Occupancy as at December 31 ( 1 ) 2010 2009  99.2% 98.4%  98.3% 98.9%  100.0% 99.9%  98.9% 99.0%  Occupancy – same asset as at December 31 (2 ) 2010 2009 99.1% 98.7% 98.4% 98.8%  100.0% 99.9%  98.8% 99.0%  Average contractual rent per square foot for the  three months ended December 31 ( 3 ) 2010 2009  $19.65  $19.92 $5.76 $5.86 $12.75  $12.41 $10.19 $10.10 December 31, 2010  December 31, 2009  Average remaining term to maturity of leases (years)  10.2  10.5  Average remaining term to maturity of mortgages payable (years)  8.0  8.3  Net earnings is reconciled to FFO which is reconciled to NFFO and AFFO. AFFO is reconciled to cash provided by operations, being the most comparable GAAP  measures to these non-GAAP financial measures. See pages 24-29.  KEY PERFORMANCE DRIVERS  *  weighted average total  (1) Excluding those properties whose tenants who have filed for protection under Chapter 11 of the United States Bankruptcy Code.  (2) Same asset refers to those properties owned by the REIT for the entire two-year period ended December 31, 2010 and excludes any assets classified as  discontinued operations and those assets whose tenants terminated their leases due to U.S. bankruptcies.  (3) For continuing operations only and excluding those properties whose tenants who have filed for protection under Chapter 11 of the United States Bankruptcy  Code.  Page 4 of 45 