H&R REIT AND H&R FINANCE TRUST - MD&A - December 31, 2010  ASSETS  Income Properties Opening balance - December 31, 2009  $4,124,856 Acquisitions  Purchase price of acquisitions  157,751  Transaction costs incurred  2,787 Purchase price allocated to intangible liabilities based on EIC-140 calculation  3,744  Mark-to-market adjustment of mortgages payable  2,378 166,660 Expenditures capitalized to building improvements  15,371  Foreign exchange difference  (71,146) Depreciation and amortization  (119,646) Income derecognized upon lender accepting legal title to the properties  (82,378)  Impairment loss  (14,862) Closing balance - December 31, 2010  $4,018,855 The REIT acquired 16 properties during the year ended December 31, 2010. These acquisitions less mortgages assumed were  funded from the REIT’s general operating facility, funds from debenture issuances and proceeds received from the sale of properties. There were no properties acquired during the year ended December 31, 2009. Property  Year Built  Property Type  Date Acquired  Square  Footage Purchase  Price ($ Millions)  Tenant Name Remaining  Lease Term  (years)  7919 Day Dr., Parma, OH  2008  Retail  Feb 26, 2010  92,634  $18.9  Giant Eagle  20  2951 SW Wanamaker Rd., Topeka, KS  2008  Retail  Mar 12, 2010  75,149  14.9  Hy-Vee  20  115-118 Wilmar Ave., Grand Island, NE  2008  Retail  Mar 12, 2010  83,331  13.2  Hy-Vee  20  9400 E. 350 Highway, Raytown, MO  2009  Retail  Mar 12, 2010  66,900  14.1  Hy-Vee  20  110 SSW Loop 323, Tyler, TX  2008  Retail  Aug 9, 2010  14,820  6.6  Walgreens  23  1510 South Main Ave., Taylor, PA  2000  Retail  Aug 11, 2010  68,622  7.9  Price Chopper  15  245 Wilkes Barre Township Blvd., Wilkes  Barre, PA  2008  Retail  Aug 11, 2010  64,252  10.5  Price Chopper  23  400 E FM 2410 Rd., Harker Heights, TX  2007  Retail  Sep 30, 2010  14,731  3.9  Walgreens  21  4746 Twin City Hwy., Groves, TX  2007  Retail  Sep 30, 2010  14,538  4.8  Walgreens  22  3822 Old Spanish Tr.,, Houston, TX  2007  Retail  Sep 30, 2010  14,490  6.7  Walgreens  22  101 S Washington Ave., Cleveland, TX  2008  Retail  Sep 30, 2010  13,805  5.4  Walgreens  23  1790 Texas Ave., Bridge City, TX  2008  Retail  Sep 30, 2010  14,513  5.8  Walgreens  23  1220 W University Ave., Georgetown, TX  2009  Retail  Sep 30, 2010  14,545  6.0  Walgreens  23  50 Cambridge St., Worcester, MA  2002  Retail  Dec 21, 2010  69,020  14.8  Price Chopper  18  9229 Lyndon B. Johnson Freeway,  Dallas, TX  1978  Office  Dec 30, 2010  79,049  11.4  Texas Health  Resources  15  9330 Amberton Pkwy, Dallas, TX  1978  Office Dec 30, 2010  92,694  12.9  Texas Health  Resources  15  Total 793,093 $157.8 2010 Acquisitions The dollar figures shown above for U.S. acquisitions are in Canadian dollars and are based on the exchange rates at the date of  such acquisitions.  Page 18 of 45 