H&R REAL ESTATE INVESTMENT TRUST  H&R FINANCE TRUST  Notes to Combined Financial Statements   (In thousands of dollars, except unit and per unit amounts)  Years ended December 31, 2010 and 2009  19.  Risk management (continued): (d) Fair values:  20. Joint venture and co-ownership activities :  The bank indebtedness is subject to variable interest rates. An increase in interest rates of 100 basis points for  the year ended December 31, 2010 would have decreased net earnings by approximately $300 (2009 - $500). This analysis assumes that all other variables, in particular foreign exchange rates, remain constant.  The fair values of the Trusts’ mortgages and amount receivable, accounts receivable, cash and cash equivalents, bank  indebtedness and accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short  periods to maturity of these financial instruments. The fair value of the mortgages payable has been determined by discounting the cash flows of these financial obligations  using year-end market rates for debt of similar terms and credit risks. Based on these assumptions, the fair value of  mortgages payable at December 31, 2010 has been estimated at $2,697,922 (2009 - $2,637,203) compared with the  carrying value of $2,706,707 (2009 - $2,818,476). The fair value of the debentures payable has been determined by discounting the cash flows of these financial  obligations using year-end market rates for debt of similar terms and credit risks. Based on these assumptions, the fair  value of debentures payable at December 31, 2010 has been estimated at $1,007,812 (2009 - $704,935) compared with  the carrying value of $822,340 (2009 - $565,758). These combined financial statements include the REIT’s proportionate share of assets, liabilities, revenue, expenses and  cash flows of the joint ventures and co-ownerships. The REIT’s proportionate share of these joint ventures and co- ownerships range between 20% and 98.5%, summarized as follows:  H&R Property Management Ltd. (the “Property Manager”), a company partially owned by family members of the Chief  Executive Officer, provides property management services for substantially all properties owned by the REIT, including  leasing services, for a fee of 2% of gross revenue. The Property Manager also provides support services in connection  with the acquisition, disposition and development activities of the REIT and is also entitled to an incentive fee. 33  21. Related party transactions: 2010  2009  Assets $150,568 $157,007 Liabilities 89,713 90,133 Revenue 26,765 26,275 Ex penses 16,481 18,695 Operating income from properties 10,284 7,580 Cash flows prov ided by operations 11,276 11,252 Cash flows used in financing (15,735) (6,784) Cash flows prov ided by (used in) inv estments 4,194 (5,453)