## 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 

## 11. Unitholders’ equity (continued): 

## (d) Short form base shelf prospectus: 

On May 11, 2009, the Trusts issued a short form base shelf prospectus allowing the Trusts to offer and issue the following securities: (i) unsecured debt securities; (ii) subscription receipts exchangeable for Stapled Units and/or other securities of the Trusts; (iii) warrants exercisable to acquire Stapled Units and/or other securities of the Trusts; and (iv) securities comprised of more than one of Stapled Units, debt securities, subscription receipts and/or warrants offered together as a unit, or any combination thereof having an offer price of up to $500,000 in aggregate (or the equivalent thereof, at the date of issue, in any other currency or currencies, as the case may be) at any time during the 25-month period that the short form base shelf prospectus (including any amendments) remains valid. On July 17, 2009, the Trusts filed Amendment No. 1 to the short form base shelf prospectus dated May 11, 2009, to provide that the securities that may be offered and issued thereunder include senior unsecured debt securities of the REIT. On January 18, 2010, the Trusts filed Amendment No. 2 to the short form base shelf prospectus dated May 11, 2009 and amended July 17, 2009, to increase the aggregate offer price of securities that may be offered under the short form base shelf prospectus from $500,000 to $1,000,000 (or the equivalent thereof, at the date of issue, in any other currency or currencies, as the case may be). 

## (e) Equity distribution agreement: 

On June 5, 2009, the Trusts entered into an equity distribution agreement with Canaccord Capital Corporation who will act as agent for the issuance and sale of Stapled Units over an approximate two year period, by way of “at-the-market distributions” over the TSX. The timing of any sale over such approximate two year period, and the number of Stapled Units actually sold during such period, are at the discretion of the Trusts. Pursuant to applicable securities laws, the market value of Stapled Units sold pursuant to the equity distribution agreement must not exceed 10% of the aggregate market value of outstanding Stapled Units, as determined as at the last trading day of the month before the month in which the first trade under the equity distribution agreement is made. The Stapled Units will be distributed at market prices prevailing at the time of sale of such Stapled Units (if any) and, as a result, prices may vary between purchasers and during the period of distribution. As at December 31, 2010, no trades were made pursuant to the equity distribution agreement. 

With the issue of the Series D Debentures (note 27), the REIT has issued $960,000 of securities under the short form base shelf prospectus and as such, only a maximum of $40,000 of Stapled Units can now be issued under the equity distribution agreement. 

