H&R REIT AND H&R FINANCE TRUST - MD&A - December 31, 2010  For the three months ended December 31, 2010, a further amount of $0.6 million (2009 - $0.9 million) has been earned by the  Property Manager pursuant to the above agreement, in accordance with the annual incentive fee payable to the Property Manager. In 2009, the Property Manager waived payment of the annual incentive fee.  During the year ended December 31, 2010, the REIT recorded fees pursuant to this agreement of $14.7 million (2009 - $13.8  million), of which $1.1 million (2009 - $nil) was capitalized to the cost of the income properties acquired, $2.2 million (2009 – $2.1  million) was capitalized to properties under development and $1.8 million (2009 - $2.8 million) was capitalized to leasing expenses. The REIT has also reimbursed the Property Manager for certain direct property operating costs and tenant construction costs. For the year ended December 31, 2010, a further amount of $2.5 million (2009 - $3.6 million) has been earned by the Property  Manager, pursuant to the above agreement, in accordance with the annual incentive fee, payable to the Property Manager. In 2009,  the Property Manager waived payment of the annual incentive fee.  Pursuant to the above agreements, as at December 31, 2010, $1.7 million (2009 - $0.9 million) was payable to the Property  Manager. The REIT leases space to companies affiliated with the Property Manager. The rental income earned for the three months ended  December 31, 2010 is $0.3 million (2009 - $0.3 million) and for the year ended December 31, 2010 is $ 1.3 million (2009 - $1.3  million).  These transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the  related parties.  The beneficial interests in the Trusts are represented by a single class of Stapled Units which are unlimited in number. Each unit  carries a single vote at any meeting of unitholders. As at February 22, 2011, there were 146,292,321 Stapled Units issued and  outstanding.  As at December 31, 2010, the maximum number of Stapled Units authorized to be granted under the REIT’s Unit Option Plan was  8,800,000. Of this amount, 7,600,000 had been granted and 6,039,667 had been exercised. As at February 24, 2011, there were  2,093,666 options to purchase Stapled Units outstanding of which 585,333 are fully vested.  The following table lists the principal outstanding balance of the REIT’s convertible debentures as at February 22, 2011 and the  number of Stapled Units required to convert the convertible debentures to equity:  OUTSTANDING UNIT DATA  Convertible Debentures  Principal outstanding  as at February 22, 2011  Maximum number of  Stapled Units issuable 2013 6.65% Debentures  $115.0 million  4,976,201  2014 6.75% Debentures  144.2 million  10,303,143  2017 6.00% Debentures  175.0 million  9,210,526  2020 5.90% Debentures  100.0 million  4,255,319  Page 44 of 45 