Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions

NI 51-102 Continuous Disclosure Obligations, s.13.1 – real estate investment trust and finance trust want relief from Parts 4 and 5 of NI 51-102 in order to prepare, file and deliver combined financial statements – finance trust analogous to credit support issuer (because continuous disclosure required under stapled structure similar to continuous disclosure required in credit supporter structure) – similar statutory exemptions are available to credit support issuers under section 13.4 of NI 51-102 – exemption granted subject to conditions substantially similar to conditions in section 13.4(2) of NI 51-102 – real estate investment trust and finance trust want relief from Part 8 of NI 51-102 in order to assess significance based on, and file as part of business acquisition report, combined financial statements – exemption granted subject to conditions

NI 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, s. 8.6 – real estate investment trust and finance trust want relief from certification requirements – exemption granted subject to conditions

NI 44-101 Short Form Prospectus Distributions, s.8.1 – real estate investment trust and finance trust want relief from basic qualification criteria – exemption granted subject to conditions including that real estate investment trust and finance trust continue to comply with conditions of continuous disclosure relief

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s.13.1 National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, s. 8.6 National Instrument 44-101 Short Form Prospectus Distributions, s.8.1

October 24, 2013

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction),

AND

IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF H&R REAL ESTATE INVESTMENT TRUST (H&R REIT)

AND

H&R FINANCE TRUST (H&R Finance, and together with H&R REIT, the Filers)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filers for a decision under the securities legislation of the Jurisdiction (the Legislation) for the following relief (the Exemption Sought):

(a) pursuant to section 13.1 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), that H&R REIT be exempted from the obligations in Parts 4 and 5 of NI 51-102 relating to the filing of annual and interim financial statements, along with the accompanying annual or interim management’s discussion and analysis (MD&A), on a stand-alone basis, and relating to the delivery of the same to the holders (the H&R REIT Unitholders) of trust units (H&R REIT Units) of H&R REIT (the H&R REIT Financial Disclosure Requirements);

(b) pursuant to section 13.1 of NI 51-102, that H&R Finance be exempted from the obligations in Parts 4 and 5 of NI 51-102 relating to the filing of annual and interim financial statements and MD&A, respectively, on a stand-alone basis, and relating to the delivery of the same to the holders (H&R Finance Unitholders) of trust units (H&R Finance Units) of H&R Finance (the H&R Finance Financial Disclosure Requirements);

(c) pursuant to section 13.1 of NI 51-102, that the Filers be exempted from the requirements of Part 8 of NI 51-102 to (i) determine whether an acquisition or probable acquisition is a significant acquisition with reference to stand-alone financial statements, and (ii) present stand-alone historical and pro forma financial statements in a business acquisition report (the BAR Requirements);

(d) pursuant to section 8.1 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101), that the Filers be exempted from certain of the basic qualification criteria contained in subparagraph (d)(i) of section 2.2(d) of NI 44-101 for eligibility to file a short form prospectus, in particular the requirement that the Filers have current annual financial statements for any period for which the Filers file Combined Financial Statements (as defined below) (the Short Form Criteria); and

(e) pursuant to section 8.6 of National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), that the Filers be exempted from the requirements of sections 4.2 and 5.2 of NI 52-109 in respect of filing the chief executive officer and chief financial officer certificates that H&R REIT and H&R Finance would normally have to file if they prepared annual and interim financial statements and MD&A on a stand-alone basis (the Certificate Form Requirements).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for the Application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador (the Non-Principal Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

The Filers

1. H&R REIT is an open-ended unincorporated real estate investment trust established under the laws of the Province of Ontario which owns a North American portfolio of office, industrial and retail properties. The head office of H&R REIT is located in Toronto, Ontario.

2. H&R Finance is an open-ended limited purpose unit trust established under the laws of the Province of Ontario which primarily invests in notes issued by H&R U.S. Holdings Inc. (U.S. Holdco), a wholly-owned subsidiary of H&R REIT. The head office of H&R Finance is located in Toronto, Ontario.

3. Each of the Filers is a reporting issuer or the equivalent under the securities legislation of Ontario and each Non-Principal Jurisdiction. Each of the Filers is in compliance in all material respects with the applicable requirements of the securities legislation of Ontario and each Non-Principal Jurisdiction and is not in default under the securities legislation of any jurisdiction in Canada.

4. As provided in the respective declarations of trust of H&R REIT and H&R Finance, each H&R REIT Unit is stapled to an H&R Finance Unit (and each H&R Finance Unit is stapled to an H&R REIT Unit), and an H&R REIT Unit, together with an H&R Finance Unit, trades as a “Stapled Unit” (the Stapled Units) on the Toronto Stock Exchange, until there is an “Event of Uncoupling” (as defined below) (the Stapled Structure).

5. An Event of Uncoupling shall occur only: (a) in the event that H&R REIT Unitholders vote in favour of the uncoupling of H&R Finance Units and H&R REIT Units such that the two securities will trade separately; or (b) at the sole discretion of the trustees of H&R Finance, but only in the event of bankruptcy, insolvency, winding-up or reorganization (under an applicable law relating to insolvency) of H&R REIT or U.S. Holdco in furtherance of any such action or admitting in writing by H&R REIT or U.S. Holdco of its inability to pay its debts generally as they become due.

6. There are currently issued and outstanding: (a) 268,972,909 Stapled Units, (b) the following senior unsecured debentures of H&R REIT (collectively, the Debentures): $115,000,000 principal amount of Series A Senior Debentures due February 3, 2015; $115,000,000 principal amount of Series B Senior Debentures due February 3, 2017; $125,000,000 principal amount of Series C Senior Debentures due December 1, 2018; $180,000,000 principal amount of Series D Senior Debentures due July 27, 2016; $100,000,000 principal amount of Series E Senior Debentures due February 2, 2018; $175,000,000 principal amount of Series F Senior Debentures due March 2, 2020; $175,000,000 principal amount of Series G Senior Debentures due June 20, 2018; $235,000,000 principal amount of Series H Senior Debentures due October 9, 2015; and $60,000,000 principal amount of Series I Senior Debentures due January 23, 2017; and (c) the following convertible unsecured subordinated debentures of H&R REIT (collectively, the Convertible Debentures): $99,654,000 principal amount of Convertible Debentures due June 30, 2020; $75,000,000 principal amount of Convertible Debentures due December 31, 2016; and $74,414,000 principal amount of Convertible Debentures due November 30, 2018. The Convertible Debentures are convertible into Stapled Units at the holder’s option at (i) any time prior to the maturity date of such Convertible Debentures; and (ii) the business day immediately preceding the date specified by H&R REIT for redemption of such Convertible Debentures, at a conversion price indicated in the indenture governing such Convertible Debentures.

7. The economic interest of a holder of Stapled Units is in H&R REIT and H&R Finance together.

8. The assets of H&R Finance primarily consist of notes (U.S. Holdco Notes) issued by U.S. Holdco, a wholly-owned subsidiary of H&R REIT, representing indebtedness issued by U.S. Holdco.

Financial Reporting

9. As reporting issuers, the Filers currently prepare financial statements in accordance with International Financial Reporting Standards (IFRS), as permitted under National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards. Financial statements are presented in Canadian dollars.

10. Each of the Filers currently prepares and files stand-alone financial statements and corresponding MD&A, and the Filers also prepare and file combined financial statements of H&R REIT and H&R Finance and corresponding MD&A.

11. So long as the Stapled Units are not unstapled, H&R REIT and H&R Finance together, will file financial information on a combined basis. On a combined basis, the assets and liabilities relating to the U.S. Holdco Notes are netted out. The assets and liabilities reflecting the U.S. Holdco Notes on the H&R Finance and H&R REIT financial statements, respectively, are offsetting for holders of Stapled Units because they own interests in each of H&R REIT (on a consolidated basis) and H&R Finance. As such, financial statements prepared on a combined basis reflect the appropriate offset of the assets and liabilities relating to the U.S. Holdco Notes and contain the relevant information for holders of Stapled Units.

12. Accordingly, while the Stapled Structure persists, H&R REIT and H&R Finance will prepare and file one set of financial statements prepared on a combined basis (Combined Financial Statements) using the accounting principles applicable to H&R REIT and H&R Finance pursuant to the securities legislation of Ontario and each Non-Principal Jurisdiction, in accordance with IFRS to reflect the financial position and results of H&R REIT and H&R Finance on a combined basis, along with corresponding MD&A. While IFRS do not specifically address the presentation of combined financial statements, H&R REIT and H&R Finance are combined for these purposes because:

(a) the H&R REIT Units and H&R Finance Units are stapled (as noted above), resulting in H&R REIT and H&R Finance being under common ownership;

(b) a support agreement between H&R REIT and H&R Finance ensures that until such time as an Event of Uncoupling occurs, when H&R REIT Units are issued by H&R REIT, H&R Finance Units must also be issued by H&R Finance simultaneously, so as to maintain the Stapled Structure;

(c) the sole activity of H&R Finance is to provide capital funding to U.S. Holdco, a wholly-owned subsidiary of H&R REIT; and

(d) the investment activities of H&R Finance are restricted in its declaration of trust to providing such funding to U.S. Holdco and to making temporary investments of excess funds.

13. It is on this basis that H&R REIT and H&R Finance have filed combined financial statements in the past and it is on this basis that they would file Combined Financial Statements going forward. The Filers will cease filing stand-alone financial statements and corresponding MD&As.

14. The financial covenants contained in the trust indentures governing the Debentures are calculated on a combined basis. Therefore, the most relevant statements for holders of the Debentures are the Combined Financial Statements.

15. The Convertible Debentures are convertible into Stapled Units. Therefore, the most relevant statements for holders of Convertible Debentures are the Combined Financial Statements.

16. In a decision dated August 8, 2008, as revised by a decision dated September 12, 2008 (the Previous Decision), H&R Finance was exempted from, amongst other things, the requirements contained in Parts 6 and 7 of NI 51-102 and from the requirements contained in subparagraphs d(ii) and (e) of section 2.2 of NI 44-101 (the Finance Specified Basic Qualification Criteria), subject to certain conditions.

17. In the Previous Decision, H&R REIT was exempted from, amongst other things, the requirement contained in subparagraph (e) of section 2.2 of NI 44-101 (the REIT Specified Basic Qualification Criteria), subject to certain conditions.

Auditors and Audit Committee

18. The auditors of H&R REIT are currently the same as the auditors of H&R Finance. The auditors are appointed by H&R REIT Unitholders and H&R Finance Unitholders, respectively, but the Filers expect that the same firm of auditors will continue to be nominated and appointed for both while the Stapled Structure exists. H&R REIT and H&R Finance each have an audit committee consisting of at least three independent trustees, in compliance with National Instrument 52-110 Audit Committees (NI 52-110).

Short Form Criteria

19. If the Filers rely on the requested relief from the Short Form Criteria in accordance with this decision and the Finance Specified Basic Qualification Criteria and the REIT Specified Basic Qualification Criteria granted to H&R Finance and H&R REIT, respectively, in the Previous Decision, to distribute Stapled Units, they will file a single short form prospectus, or single prospectus supplement to a joint short form base shelf prospectus of H&R REIT and H&R Finance, qualifying the distribution of securities of each issuer (each, a Joint Prospectus), which will incorporate by reference at least the following documents into the short form prospectus or short form base shelf prospectus, as the case may be (collectively, the Joint Prospectus Documents):

(a) H&R REIT’s then current AIF (H&R REIT’s Current AIF);

(b) (i) the then most recent audited annual Combined Financial Statements, along with the corresponding MD&A, or (ii) prior to the filing of the Combined Financial Statements for the year ending December 31, 2013, the then most recent audited annual financial statements of each Filer, along with each corresponding MD&A;

(c) (i) if, at the date of the Joint Prospectus, the Filers have filed or have been required to file interim financial statements for a period subsequent to the then most recent financial year-end in respect of which annual financial statements have been filed, Combined Financial Statements relating to such interim period, along with the corresponding interim MD&A, or (ii) prior to the filing of the Combined Financial Statements for the interim period ended September 30, 2013, financial statements of each Filer relating to such interim period, along with each corresponding interim MD&A;

(d) the content of any news release or other public communication that is publicly disseminated by, or on behalf of, either of the Filers prior to the filing of the Joint Prospectus through news release or otherwise and that contains historical financial information about one or both of the Filers for a period more recent than the end of the most recent period for which financial statements are required under paragraphs (b) and (c) above;

(e) any material change report of either of the Filers, other than a confidential material change report, filed by H&R REIT under Part 7 of NI 51-102 or by H&R Finance in accordance with the Previous Decision, since the end of the financial year in respect of which H&R REIT’s Current AIF is filed;

(f) any business acquisition report filed by either of the Filers under Part 8 of NI 51-102 and in accordance with this decision for acquisitions completed since the beginning of the financial year in respect of which H&R REIT’s Current AIF is filed, unless:

(i) the business acquisition report is incorporated by reference in H&R REIT’s Current AIF; or

(ii) at least nine months of the relevant business operations are reflected in annual financial statements required under paragraph (b) above;

(g) any information circular filed by either of the Filers since the beginning of the financial year in respect of which H&R REIT’s Current AIF is filed, other than an information circular prepared in connection with an annual general meeting of either of the Filers if such Filer has filed and incorporated by reference in the Joint Prospectus an information circular for a subsequent annual general meeting; and

(h) any other disclosure document which either of the Filers has filed pursuant to an undertaking to a provincial and territorial securities regulatory authority, or pursuant to an exemption from any requirement of securities legislation of a Canadian jurisdiction, since the beginning of the financial year in respect of which H&R REIT’s Current AIF is filed.

20. If H&R REIT relies on the requested relief from the Short Form Criteria in accordance with this decision and the REIT Specified Basic Qualification Criteria granted to H&R REIT in the Previous Decision, to distribute only securities of H&R REIT, it will file a short form prospectus, prospectus supplement to a short form base shelf prospectus of H&R REIT or H&R REIT and H&R Finance jointly, qualifying the distribution of securities of H&R REIT (each, a REIT Prospectus), which will incorporate by reference at least the following documents into the short form prospectus or short from base shelf prospectus, as the case may be (collectively, the REIT Prospectus Documents):

(a) H&R REIT’s Current AIF;

(b) (i) the then most recent audited annual Combined Financial Statements, along with the corresponding MD&A, or (ii) prior to the filing of the Combined Financial Statements for the year ending December 31, 2013, the then most recent audited annual financial statements of H&R REIT, along with the corresponding MD&A;

(c) (i) if, at the date of the REIT Prospectus, H&R REIT has filed or has been required to file interim financial statements for a period subsequent to the then most recent financial year-end in respect of which annual financial statements have been filed, Combined Financial Statements relating to such interim period, along with the corresponding interim MD&A, or (ii) prior to the filing of the Combined Financial Statements for the interim period ended September 30, 2013, financial statements of H&R REIT relating to such interim period, along with the corresponding interim MD&A;

(d) the content of any news release or other public communication that is publicly disseminated by, or on behalf of, H&R REIT prior to the filing of the REIT Prospectus through news release or otherwise and that contains historical financial information about H&R REIT for a period more recent than the end of the most recent period for which financial statements are required under paragraphs (b) and (c) above;

(e) any material change report, other than a confidential material change report, filed by H&R REIT under Part 7 of NI 51-102 since the end of the financial year in respect of which H&R REIT’s Current AIF is filed;

(f) any business acquisition report filed by H&R REIT under Part 8 of NI 51-102 and in accordance with this decision for acquisitions completed since the beginning of the financial year in respect of which H&R REIT’s Current AIF is filed, unless:

(i) the business acquisition report is incorporated by reference in H&R REIT’s Current AIF; or

(ii) at least nine months of the relevant business operations are reflected in annual financial statements required under paragraph (b) above;

(g) any information circular filed by H&R REIT since the beginning of the financial year in respect of which H&R REIT’s Current AIF is filed, other than an information circular prepared in connection with an annual general meeting of H&R REIT if H&R REIT has filed and incorporated by reference in the REIT Prospectus an information circular for a subsequent annual general meeting; and

(h) any other disclosure document which H&R REIT has filed pursuant to an undertaking to a provincial and territorial securities regulatory authority, or pursuant to an exemption from any requirement of securities legislation of a Canadian jurisdiction, since the beginning of the financial year in respect of which H&R REIT’s Current AIF is filed.

Decision

1. The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

2. The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, provided that:

(a) in respect of the H&R REIT Financial Disclosure Requirements and the H&R Finance Financial Disclosure Requirements:

(i) H&R REIT files, under its profile on the System for Electronic Document Analysis and Retrieval (SEDAR), one set of financial statements prepared on a combined basis (Combined Financial Statements) using IFRS to reflect the financial position and results of H&R REIT and H&R Finance on a combined basis;

(ii) any Combined Financial Statements filed by H&R REIT include the components specified in sections 4.1(1) of NI 51-102 (for annual financial reporting periods) and 4.3(2) of NI 51-102 (for interim financial reporting periods);

(iii) the Combined Financial Statements filed by H&R REIT provide in the notes thereto segmented financial information for each of H&R Finance and H&R REIT if and to the extent required under IFRS;

(iv) the annual Combined Financial Statements filed by H&R REIT are audited;

(v) the Combined Financial Statements filed by H&R REIT are accompanied by the fee, if any, applicable to filings of annual financial statements;

(vi) the MD&A of H&R REIT is prepared with reference to the Combined Financial Statements;

(vii) H&R Finance files a notice under its SEDAR profile indicating that it is relying on the financial statements and related MD&A filed by H&R REIT and directing readers to refer to H&R REIT’s SEDAR profile;

(viii) H&R REIT and H&R Finance continue to satisfy the requirements set out in NI 52-110;

(ix) the audit committees of H&R REIT and H&R Finance are responsible for:

(A) overseeing the work of the external auditors engaged for the purposes of auditing the Combined Financial Statements under IFRS; and

(B) resolving disputes between the external auditors and management of both H&R REIT and H&R Finance regarding financial reporting;

(x) H&R REIT continues to satisfy the requirements of section 4.6 of NI 51-102, except that for each financial reporting period in respect of which Combined Financial Statements are prepared, H&R REIT shall only be required to send to H&R REIT Unitholders copies of the Combined Financial Statements and related MD&A;

(xi) the auditors of H&R REIT are the same as the auditors of H&R Finance, are appointed by H&R REIT Unitholders and H&R Finance Unitholders, respectively, and will continue to be nominated and appointed for both while the Stapled Structure exists;

(xii) prior to filing its unaudited Combined Financial Statements for each interim period during its financial year ending December 31, H&R REIT and H&R Finance and their auditors have concluded that the preparation of the Combined Financial Statements are acceptable under IFRS;

(xiii) each H&R Finance Unit is stapled to a unit of H&R REIT and trades as a Stapled Unit; and

(xiv) each Stapled Unit is listed and posted for trading on the Toronto Stock Exchange.

(b) in respect of the Certificate Form Requirement:

(i) H&R REIT and H&R Finance continue to satisfy the conditions set out in paragraph (a) of this section 2;

(ii) the certificates filed by H&R REIT and H&R Finance in accordance with section 4.1 of NI 52-109, in connection with the filing of Combined Financial Statements prepared under IFRS for each annual financial reporting period in respect of which the H&R REIT Units are stapled to the H&R Finance Units, are substantially in the form required by section 4.2 of NI 52-109, except that the certificates refer to and certify matters in respect of the filing of H&R REIT’s AIF and the Combined Financial Statements and related MD&A; and

(iii) the certificates filed by H&R REIT and H&R Finance in accordance with section 5.1 of NI 52-109, in connection with the filing of Combined Financial Statements prepared under IFRS for each interim financial reporting period in respect of which the H&R REIT Units are stapled to the H&R Finance Units, are substantially in the form required by section 5.2 of NI 52-109, except that the certificates refer to and certify matters in respect of the filing of Combined Financial Statements and related MD&A;

(c) in respect of the BAR Requirements:

(i) H&R REIT and H&R Finance continue to satisfy the conditions set out in paragraph (a) of this section 2;

(ii) H&R REIT and H&R Finance apply the significance tests under Part 8 of NI 51-102 with reference to the Combined Financial Statements; and

(iii) if a BAR is required to be filed, the BAR includes, with respect to H&R REIT and H&R Finance, pro forma combined financial statements, prepared using IFRS used in the Combined Financial Statements of H&R REIT and H&R Finance.

(d) in respect of the Short Form Criteria:

(i) H&R REIT and H&R Finance continue to satisfy the conditions set out in paragraph (a) of this section 2;

(ii) each joint prospectus filed by H&R REIT and H&R Finance incorporates by reference the Joint Prospectus Documents; and

(iii) each REIT prospectus filed by H&R REIT incorporates by reference the REIT Prospectus Documents.

“Shannon O’Hearn”

Shannon O’Hearn Manager, Corporate Finance