To the Unitholders of H&R Real Estate Investment Trust and H&R Finance Trust  We have audited the accompanying combined financial statements of H&R Real Estate Investment  Trust and H&R Finance Trust, which comprise the combined balance sheets as at December 31,  2010 and 2009, the combined statements of earnings, unitholders' equity and comprehensive income  and cash flows for the years then ended, and notes, comprising a summary of significant accounting  policies and other explanatory information.  Management's Responsibility for the Combined Financial Statements  Management is responsible for the preparation and fair presentation of these combined financial  statements in accordance with Canadian generally accepted accounting principles, and for such  internal control as management determines is necessary to enable the preparation of combined  financial statements that are free from material misstatement, whether due to fraud or error.  Auditors' Responsibility  Our responsibility is to express an opinion on these combined financial statements based on our  audits. We conducted our audits in accordance with Canadian generally accepted auditing  standards. Those standards require that we comply with ethical requirements and plan and perform  the audits to obtain reasonable assurance about whether the combined financial statements are free  from material misstatement.  An audit involves performing procedures to obtain audit evidence about the amounts and disclosures  in the combined financial statements. The procedures selected depend on our judgment, including  the assessment of the risks of material misstatement of the combined financial statements, whether  due to fraud or error. In making those risk assessments, we consider internal control relevant to the  entity's preparation and fair presentation of the combined financial statements in order to design audit  procedures that are appropriate in the circumstances, but not for the purpose of expressing an  opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the  appropriateness of accounting policies used and the reasonableness of accounting estimates made  by management, as well as evaluating the overall presentation of the combined financial statements.  We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to  provide a basis for our audit opinion.  Opinion  In our opinion, the combined financial statements present fairly, in all material respects, the financial  position of H&R Real Estate Investment Trust and H&R Finance Trust as at December 31, 2010 and  2009, and the results of its operations and its cash flows for the years then ended in accordance with  Canadian generally accepted accounting principles.  Chartered Accountants, Licensed Public Accountants  February 24, 2011  Toronto, Canada  INDEPENDENT AUDITORS' REPORT  Telephone (416) 777-8500 Fax (416) 777-8818 Internet  www.kpmg.ca  Bay Adelaide Centre 333 Bay Street Suite 4600  Toronto ON M5H 2S5  Canada KPMG LLP Chartered Accountants