H&R FINANCE TRUST  H&R REAL ESTATE INVESTMENT TRUST  Combined Statements of Earnings (In thousands of dollars, except per unit amounts)  Years ended December 31, 2010 and 2009  2010  2009  Operating revenue: Rentals from income properties (note 13) 615,572 $  605,165 $  Interest income 2,589 6,222 618,161 611,387 Operating expenses: Property operating costs 204,084 195,615 Interest (note 14) 179,519 182,671 Depreciation and amortization (note 15) 125,134 128,643 508,737 506,929 Net property operating income (note 22) 109,424 104,458 Net loss on foreign exchange (6,775) (20,509) Impairment loss on income properties (note 3) (14,862) (14,764) Unrealized gain (loss) on derivative instruments (notes 7, 9(b) and 19(c)) (5,521) 3,463 Loss on repayment of debentures (note 8(f)) (38,834) - Gain on extinguishment of debt (note 3) 17,296 - Trust expenses  (8,897) (8,551) Net earnings before income taxes, non-controlling  interest and discontinued operations 51,831 64,097 Income tax recovery (note 23) 122,845 9,249 Net earnings before non-controlling interest and discontinued operations 174,676 73,346 Non-controlling interest (note 10) (6,272) (3,049) Net earnings from continuing operations 168,404 70,297 Net earnings from discontinued operations (note 24) 3,944 16,228 Net earnings  172,348 $  86,525 $ Basic net earnings per Stapled Unit (note 16): Continuing operations 1.16 $ 0.50 $ Discontinued operations 0.03 0.11 1.19 $ 0.61 $ Diluted net earnings per Stapled Unit (note 16): Continuing operations 1.16 $ 0.46 $ Discontinued operations 0.03 0.10 1.19 $ 0.56 $ See accompanying notes to combined financial statements.  3 