H&R REIT AND H&R FINANCE TRUST - MD&A - December 31, 2010  The chart below lists some of the larger contractual rental step ups for the REIT occurring over the next 12 months:  Tenant inducements increased by $3.4 million in the year ended December 31, 2010 due primarily to one inducement for a tenant at  310-330 Front Street offset by normal periodic amortization.  Prepaid expenses and sundry assets have decreased from $12.8 million at December 31, 2009 to $6.9 million at December 31, 2010  primarily due to a deposit that was applied to the purchase of the Caledon lands.  Restricted cash decreased from $20.0 million at December 31, 2009 to $19.1 million at December 31, 2010 due primarily to a  decrease in funds being held in escrow relating to costs to complete Bell Phase III.  Mortgages and amount receivable decreased from $63.8 million to $3.0 million from December 31, 2009 to December 31, 2010. The  decrease of $60.8 million is primarily due to the collection of a $58 million mortgage receivable in April 2010 along with the collection  of $3.2 million of a mortgage receivable from the REIT’s partner in the Airport Road lands during 2010.  Future income tax asset has decreased from $14.3 million at December 31, 2009 to $nil as at December 31, 2010 as the REIT has  now completed the necessary restructuring to permit the REIT to qualify for the REIT Exemption beginning in 2011. Accordingly, this  balance has been recognized in earnings.  Derivative instruments represented the fair value of the interest rate swap on the Bow construction facility at December 31, 2009. At  December 31, 2010, the fair value of the interest rate swap on the Bow construction facility was a liability of $2,897. In May 2010,  the REIT entered into monthly future foreign exchange forward contracts which had a fair value of $1,225 at December 31, 2010. Page 21 of 45  Property  Sq.ft.  Rent increase ($ psf)  Effective date of  increase  Annualized rental  increases (in thousands of dollars)  88 McNabb St., Markham, ON  74,592  $1.32  Jan 2011  $98  649 N. Service Rd., Oakville, ON  123,000  $1.60  Mar 2011  $197  411-1 st  St., S.E., Calgary, AB  272,674  $2.00  May 2011  $545  100 Wynford Dr., Toronto, ON  459,171  $2.89  May 2011  $1,327  200 Bouchard Boul, Dorval, QC  451,899  $2.81  May 2011  $1,270  450-1 st  St., S.W., Calgary, AB  931,187  $2.88  May 2011  $2,682  2665- 32 nd  St., Calgary, AB  89,438  $1.06  Jul 2011  $95  775 Panet Rd., Winnipeg, MB  121,962  $1.08  Jul 2011  $132  1333 Sargent Ave., Winnipeg, MB  87,769  $1.26  Jul 2011  $111  160 Elgin St., Ottawa, ON  130,276  $2.00  Aug 2011  $261  2140 E. 116 th  St., Carmel, IN  80,640  $1.06  Dec 2011  $86  Other Assets (in thousands of dollars)  December 31, 2010  December 31, 2009  Tenant inducements  $33,209  $29,797  Leasing expenses  26,121  27,542  Restricted cash  19,106  20,001  Accounts receivable  7,420  6,543  Prepaid expenses and sundry assets  6,932  12,811  Mortgages and amount receivable  3,000  63,789  Derivative instruments  1,225  3,463  Future income tax asset  -  14,316  Other Assets  $97,013  $178,262 