Company Reorganizes (See Critical Note)

Effective October 1, 2008 H&R Real Estate Investment Trust completed the internal reorganization (the “Reorganization”) of the REIT, which was approved by the REIT’s unitholders at a special meeting on September 19, 2008. The Reorganization has resulted in the following: (i) the completion of a transaction where each H&R unitholder received, for each REIT unit held, a unit of a “sister” trust (“H&R Finance Trust”). Each issued and outstanding REIT unit now trades together with a unit of H&R Finance Trust as a “Stapled Unit” on the Toronto Stock Exchange under the symbol HR.UN; and (ii) the completion of certain transactions whereby H&R TT (LP) Inc., a wholly-owned subsidiary of the REIT, ultimately transferred all of its assets (which primarily consisted of an interest in a partnership that holds the Telus Tower in Calgary, Alberta) to the REIT. Commencing with the distribution payable October 31, 2008, the distribution and return of capital of H&R REIT and of H&R Finance Trust will be reported separately for tax purposes, even though it is assumed that a single distribution may be issued for the stapled unit. The initial ACB of H&R Finance Trust received from the spin-off is set at $0.90796481 per unit.