In the Matter of H&R Real Estate Investment Trust, 2017 CanLII 86638

December 8, 2017

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”)

on its own behalf and on behalf of

H&R Finance (2017) Trust (“F17 Trust”, and together with H&R REIT, the “Filers”)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from H&R REIT and F17 Trust, the new trust that will result from the proposed reorganization of H&R REIT and H&R Finance Trust (“H&R Finance” and, together with H&R REIT, the “Trusts”) by way of a plan of arrangement under the Business Corporations Act (Alberta) (the “Reorganization”), for a decision (the “Requested Relief”) under the securities legislation of the jurisdiction of the principal regulator (the “Legislation”) that:

Financial Disclosure Requirements

(a) pursuant to section 13.1 of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”), 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, F17 Trust 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 (“F17 Trust Unitholders”) of trust units (“F17 Trust Units”) of F17 Trust (the “F17 Trust Financial Disclosure Requirements”);

(c) pursuant to section 13.1 of NI 51-102, 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 BAR (as defined below) (the “BAR Requirements”);

(d) pursuant to section 8.6 of National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), 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 F17 Trust 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”);

(e) pursuant to section 8.1 of National Instrument 52-110 – Audit Committees (“NI 52-110”), F17 Trust be exempted from the requirements set out in Part 5 of NI 52-110 (the “Audit Committee Disclosure Requirements”);

Continuous Disclosure Requirements

(f) pursuant to section 13.1 of NI 51-102, F17 Trust be exempted from the requirements contained in parts 6 and 7 of NI 51-102 relating to annual information forms (“AIFs”) and material change reports (“MCRs”) respectively (collectively, the “Specified Continuous Disclosure Requirements”);

Short Form / Shelf Qualification

(g) pursuant to section 8.1 of National Instrument 44-101 – Short Form Prospectus Distributions (“NI 44-101”), F17 Trust be exempted from the requirements contained in sections (d) and (e) of section 2.2 of NI 44-101 (“F17 Trust Basic Qualification Criteria”);

(h) pursuant to section 8.1 of NI 44-101, H&R REIT be exempted from the requirements contained in sections (d)(i) and (e) of section 2.2 of NI 44-101 (“H&R REIT Basic Qualification Criteria”);

(i) pursuant to section 11.1 of National Instrument 44-102 – Shelf Distributions (“NI 44-102”), subsections 2.2(3)(b)(i) of NI 44-102 (the “Shelf Financial Qualification Criteria”) and 2.2(3)(b)(ii) of NI 44-102 (the “Shelf AIF Qualification Criteria”, and together with the Shelf Financial Qualification Criteria, the “F17 Trust Shelf Qualification Criteria”) do not apply to F17 Trust;

(j) pursuant to section 11.1 of NI 44-102, the Shelf Financial Qualification Criteria do not apply to H&R REIT (the “H&R REIT Shelf Qualification Criteria”);

Prospectus Requirements

(k) F17 Trust be exempted from the prospectus requirements in respect of a trade of a F17 Trust Unit to an employee, executive officer, trustee or consultant (a “REIT Employee”) of H&R REIT (the “Employee Trade Relief”);

(l) F17 Trust be exempted from the prospectus requirements in respect of a trade of a F17 Trust Unit to F17 Trust Unitholders in connection with the exercise of rights issued pursuant to the Unitholder Rights Plan of H&R REIT (the “URP Relief”);

(m) F17 Trust be exempted from the prospectus requirements in respect of a trade by F17 Trust of F17 Trust Units to a securityholder of H&R REIT in accordance with the terms and conditions of a security previously issued by H&R REIT (the “REIT Securityholder Relief”); and

(n) the Filers be exempt from the prospectus requirements in the Legislation in respect of any trade of New Stapled Units (as defined below) by the Filers (or a by a trustee, custodian or administrator acting for or on behalf of the Filers) to holders of units of certain subsidiary limited partnerships controlled by H&R REIT (the “Subsidiary Partnerships”), which will be exchangeable for New Stapled Units in accordance with their terms (the “Exchangeable Units”), under a distribution reinvestment plan and unit purchase plan (the “DRIP”) under which distributions out of earnings, surplus, capital, or other sources payable to holders of Exchangeable Units in respect of the Exchangeable Units and optional cash payments by holders of Exchangeable Units are applied to the purchase of New Stapled Units (“DRIP Exemption”),

in each case provided that certain conditions are satisfied.

Reporting Issuer

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the Legislation that F17 Trust be designated a reporting issuer in the Jurisdiction upon completion of the Reorganization (the “Reporting Issuer Designation”).

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

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that Section 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, Quebec, Prince Edward Island, New Brunswick, Newfoundland and Labrador and Nova Scotia (collectively, the “Passport Jurisdictions”, and together with Ontario, the “Jurisdictions”).

Interpretation

Terms defined in National Instrument 14-101 – Definitions and 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:

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, residential and retail properties. The head office of H&R REIT is, and the head office of F17 Trust will be, 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 REIT (U.S.) Holdings Inc. (“U.S. Holdco”), an indirect wholly-owned subsidiary of H&R REIT. The head office of H&R Finance is located in Toronto, Ontario.

3. The Trusts are reporting issuers or the equivalent under the securities legislation of each Jurisdiction and are in compliance in all material respects with the applicable requirements of the securities legislation of each Jurisdiction.

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 a trust unit of H&R Finance (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 “Current Stapled Units”) until there is an “Event of Uncoupling” (the “Current Stapled Structure”).

5. An Event of Uncoupling shall occur only: (a) in the event that unitholders of H&R REIT 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. Provided that an Event of Uncoupling has not occurred, the declaration of trust of H&R REIT (the “REIT Declaration of Trust”) provides that: (a) each REIT Unit may be transferred only together with an H&R Finance Unit, (b) no H&R REIT Unit may be issued by H&R REIT to any person unless (i) an H&R Finance Unit is simultaneously issued to such person, or (ii) H&R REIT has arranged that H&R REIT Units will be consolidated (subject to any applicable regulatory approval) immediately after such issuance, such that each holder of an H&R REIT Unit will hold an equal number of H&R REIT Units and H&R Finance Units immediately following such consolidation, and (c) a holder of Current Stapled Units may require H&R REIT to redeem any particular number of H&R REIT Units only if it also requires, at the same time, and in accordance with the provisions of the declaration of trust of H&R Finance (the “H&R Finance Declaration of Trust”), H&R Finance to redeem that same number of H&R Finance Units. Equivalent provisions are included in the H&R Finance Declaration of Trust.

7. Provided that an Event of Uncoupling has not occurred, in certain circumstances H&R REIT or H&R Finance (subject to any applicable regulatory approval) will be required to cause a corresponding change to simultaneously be made to, or in, the rights of holders of H&R REIT Units or H&R Finance Units, as the case may be, if there is a subdivision, combination, consolidation, reclassification, or similar such change in the rights of holders of interests of H&R REIT or H&R Finance, that would otherwise be inconsistent with the stapling.

8. H&R REIT is authorized to issue an unlimited number of H&R REIT Units and H&R Finance is authorized to issue an unlimited number of H&R Finance Units, and H&R REIT is authorized to issue 9,500,000 special voting units (“Special Voting Units”). As at November 6, 2017, the Trusts had 291,148,983 Current Stapled Units outstanding and H&R REIT had 9,500,000 Special Voting Units and $99.7 million principal amount of 5.90% Series D convertible unsecured subordinated debentures due June 30, 2020 (the “2020 Convertible Debentures”) that are convertible into 4,240,510 Current Stapled Units, outstanding.

9. H&R Finance has four trustees, one of whom is appointed by H&R REIT, and three of whom are elected by unitholders and are independent of management of H&R Finance and H&R REIT. H&R Finance shares common management with H&R REIT. Under the H&R Finance Declaration of Trust, the undertaking of H&R Finance is restricted to:

(a) investing in notes issued by U.S. Holdco to H&R Finance (“U.S. Holdco Notes”);

(b) making temporary investments held in cash, term deposits with a Canadian chartered bank or trust company registered under the laws of a province of Canada, short-term government debt securities or money market instruments (including banker’s acceptances) of, or guaranteed by, a Schedule 1 Canadian bank (“Cash Equivalents”), but only if each of the following conditions is satisfied: (i) if the Cash Equivalents have a maturity date, the Cash Equivalents must be held until maturity; (ii) the Cash Equivalents are required to fund expenses of H&R Finance, a redemption of H&R Finance Units, or distributions to holders of H&R Finance Units, in each case before the next distribution date; and (iii) the purpose of holding the Cash Equivalents is to prevent funds from being non-productive, and not to take advantage of market fluctuations;

(c) repurchasing and redeeming H&R Finance Units;

(d) issuing additional H&R Finance Units for cash or U.S. Holdco Notes; and

(e) undertaking such other usual and customary actions necessary for the conduct of the activities of H&R Finance in the ordinary course, as shall be approved by its trustees from time to time.

10. The proposed Reorganization will result in a stapled unit structure (the “New Stapled Structure”) identical to the Current Stapled Structure, with a new trust, F17 Trust, effectively taking the place of H&R Finance. Following completion of the Reorganization and through a series of steps, holders of Current Stapled Units will, in lieu thereof, hold new “Stapled Units” (each consisting of one H&R REIT Unit and one F17 Trust Unit) (the “New Stapled Units”) and will receive distributions from both H&R REIT and F17 Trust (instead of H&R REIT and H&R Finance) on a going forward basis. The H&R Finance Units will be acquired by H&R REIT, and H&R Finance will be dissolved and terminated as part of the Reorganization.

11. Joint meetings of unitholders of the Trusts were held on December 7, 2017 to approve the Reorganization. The voting unitholders of the Trusts approved the proposed Reorganization by the requisite majority, with approximately 99% of the voting unitholders of each of the Trusts, respectively, voting in favour of the Reorganization. The Reorganization is subject to the satisfaction or waiver of various closing conditions, including receipt of a final order of the Court of Queen’s Bench of Alberta and an advance income tax ruling from the Canada Revenue Agency. Additional details regarding the Reorganization, including the reasons for the Reorganization, are set out in the joint management information circular of the Trusts dated October 31, 2017, which is available under each of the Trusts’ profiles on the System for Electronic Document Analysis and Retrieval (“SEDAR”).

12. F17 Trust will be established as an open-ended trust pursuant to a declaration of trust governed by the laws of Ontario (the “F17 Declaration of Trust”). Like H&R Finance, F17 Trust will have four trustees, one of whom will be appointed by H&R REIT, and three of whom will be elected by unitholders and be independent of management of F17 Trust and H&R REIT. F17 Trust will share common management with H&R REIT, as is currently the case with H&R Finance. Under the F17 Declaration of Trust, which will be substantially similar to the H&R Finance Declaration of Trust, the undertaking of F17 Trust will be restricted to:

(a) engaging in the transactions proposed under the Reorganization and investing in U.S. Holdco Notes;

(b) making temporary investments held in cash, term deposits with a Canadian chartered bank or trust company registered under the laws of a province of Canada, short-term government debt securities or money market instruments (including banker’s acceptances) of, or guaranteed by, a Schedule 1 Canadian bank (“F17 Trust Cash Equivalents”), but only if each of the following conditions is satisfied: (i) if the F17 Trust Cash Equivalents have a maturity date, the F17 Trust Cash Equivalents must be held until maturity; (ii) the F17 Trust Cash Equivalents are required to fund expenses of F17 Trust, a redemption of F17 Trust Units, or distributions to holders of F17 Trust Units, in each case before the next distribution date; and (iii) the purpose of holding the F17 Trust Cash Equivalents is to prevent funds from being non-productive, and not to take advantage of market fluctuations;

(c) repurchasing and redeeming F17 Trust Units;

(d) issuing additional F17 Trust Units for cash or U.S. Holdco Notes; and

(e) undertaking such other usual and customary actions necessary for the conduct of the activities of F17 Trust in the ordinary course, as shall be approved by its trustees from time to time.

13. Pursuant to the Reorganization, the REIT Declaration of Trust, as amended and restated, and the F17 Declaration of Trust will contain provisions to achieve the “stapling” of the H&R REIT Units and the F17 Trust Units, which provisions will be substantially similar to the provisions contained in the REIT Declaration of Trust and H&R Finance Declaration of Trust to achieve the Current Stapled Structure. Provided that a New Stapled Unit Event of Uncoupling (as defined below) has not occurred, the REIT Declaration of Trust will provide that: (a) each H&R REIT Unit may be transferred only together with a F17 Trust Unit, (b) no H&R REIT Unit may be issued by H&R REIT to any person unless (i) a F17 Trust Unit is simultaneously issued by F17 Trust to such person, or (ii) H&R REIT has arranged that H&R REIT Units will be consolidated (subject to any applicable regulatory approval) immediately after such issuance, such that each holder of an H&R REIT Unit will hold an equal number of H&R REIT Units and F17 Trust Units immediately following such consolidation, and (c) a holder of New Stapled Units may require H&R REIT to redeem any particular number of H&R REIT Units only if it also requires, at the same time, and in accordance with the provisions of the F17 Declaration of Trust, F17 Trust to redeem that same number of F17 Trust Units. Equivalent provisions will be included in the F17 Declaration of Trust.

14. Provided that a New Stapled Unit Event of Uncoupling has not occurred, in certain circumstances H&R REIT or F17 Trust (subject to any applicable regulatory approval) will be required to cause a corresponding change to simultaneously be made to, or in, the rights of holders of H&R REIT Units or F17 Trust Units, as the case may be, if there is a subdivision, combination, consolidation, reclassification, or similar such change in the rights of holders of interests of H&R REIT or F17 Trust, that would otherwise be inconsistent with the stapling.

15. The H&R REIT Units and the F17 Trust Units will only become “uncoupled” (a “New Stapled Unit Event of Uncoupling”): (i) in the event that holders of H&R REIT Units and special voting units of H&R REIT vote in favour of the uncoupling of H&R REIT Units and F17 Trust Units such that the two securities will trade separately; or (b) at the sole discretion of the trustees of F17 Trust, but only in the event of the bankruptcy, insolvency, winding-up or reorganization (under an applicable law relating to insolvency) of H&R REIT or U.S. Holdco or the taking of corporate action by H&R REIT or U.S. Holdco in furtherance of any such action or the admitting in writing by H&R REIT or U.S. Holdco of its inability to pay its debts generally as they become due.

16. So long as the New Stapled Units are not unstapled, H&R REIT and F17 Trust together will file financial information on a combined basis. On a combined basis, the assets and liabilities relating to the U.S. Holdco Notes will be netted out. The assets and liabilities reflecting the U.S. Holdco Notes on the F17 Trust and H&R REIT financial statements, respectively, will be offsetting for holders of New Stapled Units because they will own interests in each of H&R REIT (on a consolidated basis) and F17 Trust. As such, financial statements prepared on a combined basis will reflect the appropriate offset of the assets and liabilities relating to the U.S. Holdco Notes and contain the relevant information for holders of New Stapled Units.

17. Accordingly, while the New Stapled Structure persists, H&R REIT and F17 Trust 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 F17 Trust pursuant to the securities legislation of the Jurisdictions, in accordance with IFRS to reflect the financial position and results of H&R REIT and F17 Trust 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 F17 Trust will be combined for these purposes because:

(a) the H&R REIT Units and F17 Trust Units will be stapled, resulting in H&R REIT and F17 Trust being under common ownership;

(b) a support agreement between H&R REIT and F17 Trust will ensure that until such time as an New Stapled Unit Event of Uncoupling occurs, when H&R REIT Units are issued by H&R REIT, F17 Trust Units must also be issued by F17 Trust simultaneously, so as to maintain the New Stapled Structure;

(c) the sole activity of F17 Trust will be to provide capital funding to U.S. Holdco, a wholly-owned subsidiary of H&R REIT; and

(d) the investment activities of F17 Trust are restricted in its declaration of trust to providing such funding to U.S. Holdco and to making temporary investments of excess funds.

18. Initially, the auditors of F17 Trust will be the same as the auditors of H&R REIT. Thereafter, auditors will be appointed by H&R REIT Unitholders and F17 Trust Unitholders, respectively, but the Filers expect that the same firm of auditors will continue to be nominated and appointed for both while the New Stapled Structure exists. H&R REIT has and F17 Trust will have an audit committee consisting of at least three independent trustees, in compliance with NI 52-110.

19. If the Filers rely on the requested relief from the F17 Trust Basic Qualification Criteria and the H&R REIT Basic Qualification Criteria, each joint short form prospectus, prospectus supplement or pricing supplement to a short from base shelf prospectus, or other similar public offering document filed by H&R REIT and F17 Trust, qualifying the distribution of securities of each issuer (a “Joint Prospectus”), will incorporate by reference at least the following documents (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 first filing of the Combined Financial Statements of H&R REIT and F17 Trust for a financial year, the then most recent audited annual combined financial statements of H&R REIT and H&R Finance, along with the corresponding MD&A;

(c) (i) if, at the date of the Joint Prospectus, H&R REIT or F17 Trust has filed or has been required to file interim financial statements for a period subsequent to the then most recent financial year-end of H&R REIT 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) if such Joint Prospectus is filed prior to the filing of annual or interim financial statements and MD&A consisting of Combined Financial Statements and related MD&A, the combined financial statements of H&R REIT and H&R Finance for the most recent financial year and/or interim period, along with the corresponding 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 MCR of either of the Filers, other than a confidential MCR, filed by H&R REIT under Part 7 of NI 51-102 or by F17 Trust in accordance with the Specified Continuous Disclosure Requirements 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 (a “BAR”) 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 BAR 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 or by H&R REIT and H&R Finance 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 (or H&R REIT and H&R Finance) 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 or, as applicable, H&R REIT and H&R Finance 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 H&R REIT Basic Qualification Criteria, each short form prospectus, prospectus supplement or pricing supplement to a short from base shelf prospectus, or other similar public offering document of H&R REIT, or H&R REIT and F17 Trust jointly (each, a “REIT Prospectus”), will incorporate by reference at least the following documents (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 first filing of the Combined Financial Statements of H&R REIT and F17 Trust for a financial year, the then most recent audited annual combined financial statements of H&R REIT and H&R Finance, along with the corresponding MD&A;

(c) (i) if, at the date of the REIT Prospectus, H&R REIT or F17 Trust has filed or has been required to file interim financial statements for a period subsequent to the then most recent financial year-end of H&R REIT 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) if such REIT Prospectus is filed prior to the filing of annual or interim financial statements and MD&A for a year consisting of Combined Financial Statements and related MD&A, the combined financial statements of H&R REIT and H&R Finance for the most recent financial year and/or interim period, along with the corresponding 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 MCR, other than a confidential MCR, 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 BAR 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 BAR 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 or by H&R REIT and H&R Finance 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 (or H&R REIT and H&R Finance) if such Filer 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 either of the Filers or, as applicable, H&R REIT and H&R Finance 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.

21. Because of the New Stapled Structure, on exercise by a REIT Employee of an option to acquire New Stapled Units or settlement of a REIT Employee’s incentive units, both H&R REIT Units and F17 Trust Units must be issued. The Employee Trade Relief in respect of a trade of a F17 Trust Unit to a REIT Employee is necessary because F17 Trust is unable to rely upon the exemption in section 2.24 of NI 45-106 in respect of such a trade.

22. The relief requested in respect of a trade of a security of F17 Trust to F17 Trust Unitholders in connection with the exercise of rights issued pursuant to H&R REIT’s Unitholder Rights Plan is necessary as such trade would not satisfy the requirement for the exemption in section 2.42of NI 45-106 that the trade be in accordance with the terms and conditions of a security previously issued by F17 Trust. The Unitholder Rights Plan is a plan of H&R REIT, not F17 Trust. However, such plan will provide for the issuance of New Stapled Units (i.e. consisting of both securities of H&R REIT and of F17 Trust).

23. H&R REIT has issued the 2020 Convertible Debentures and from time to time, H&R REIT may wish to issue additional securities that are convertible, exercisable or exchangeable into New Stapled Units. The REIT Securityholder Relief is necessary as the trade of F17 Trust Units to a securityholder of H&R REIT in accordance with the terms of a security previously issued by H&R REIT does not qualify for the exemption from the prospectus requirements in section 2.42 of NI 45-106. The REIT Securityholder Relief will allow H&R REIT the flexibility to offer additional convertible debentures and other exchangeable or convertible securities on equivalent terms as other issuers.

24. H&R REIT controls, either directly or indirectly, certain limited partnerships which issue, among other securities, units exchangeable at any time for Current Stapled Units (and, following completion of the Reorganization, New Stapled Units). These exchangeable units include the Class B Limited Participation LP units (“HRLP Exchangeable Units”) of H&R Portfolio Limited Partnership, the Exchangeable GP units (“HRRMSLP Exchangeable Units”) of H&R REIT Management Services Limited Partnership and exchangeable limited partnership units (the “Primaris Exchangeable Units”) of Grant Park Limited Partnership and Place du Royaume Limited Partnership.

25. The HRLP Exchangeable Units, the HRRMSLP Exchangeable Units and the Primaris Exchangeable Units are each intended to be, to the greatest extent practicable, the economic equivalent of the Current Stapled Units and on completion of the Reorganization, the economic equivalent of the New Stapled Units.

26. H&R REIT first implemented the DRIP effective January 1, 2000. The DRIP has been amended and restated since on December 21, 2001, on October 1, 2008 following the internal reorganization of H&R REIT to establish H&R Finance and the Current Stapled Units, and further amended and restated on March 11, 2016 to allow Exchangeable Units to participate in the DRIP. The DRIP will be further amended and restated as a result of the Reorganization.

27. The Filers will be unable to rely on the exemption from the prospectus requirement in the Legislation with respect to reinvestment plans to distribute New Stapled Units under the amended and restated DRIP to holders of Exchangeable Units enrolled in the amended and restated DRIP since this exemption only permits distributions made in respect of an issuer’s securities and optional cash payments by a holder of an issuer’s securities to be applied to the purchase of the same issuer’s securities.

28. The Trusts previously received relief substantially similar to the Requested Relief pursuant to the following prior decisions of the principal regulator: (i) In the Matter of H&R Real Estate Investment Trust on its own behalf and on behalf of H&R Finance Trust dated August 8, 2008, as varied by In the Matter of H&R Real Estate Investment Trust on its own behalf and on behalf of H&R Finance Trust dated September 12, 2008, (ii) In the Matter of H&R Finance Trust dated May 7, 2009, (iii) In the Matter of H&R Finance Trust dated July 24, 2009, (iv) In the Matter of H&R Real Estate Investment Trust and H&R Finance Trust dated October 24, 2013, (v) In the Matter of the Securities Legislation of Ontario 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 and H&R Finance Trust dated April 28, 2015, and (vi) In the Matter of the Securities Legislation of Ontario 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 and H&R Finance Trust dated March 11, 2016.

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 Requested Relief is granted effective on completion of the Reorganization, provided that the Reorganization is implemented in substantially the manner contemplated by the representations above and provided that the conditions set out below are satisfied:

(a) In respect of the H&R REIT Financial Disclosure Requirements and the F17 Trust Financial Disclosure Requirements:

(i) H&R REIT files, under its SEDAR profile, Combined Financial Statements using IFRS to reflect the financial position and results of H&R REIT and F17 Trust 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 F17 Trust 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) F17 Trust 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 F17 Trust continue to satisfy or be exempt from the requirements set out in NI 52-110;

(ix) the audit committees of H&R REIT and F17 Trust 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 F17 Trust 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 F17 Trust, are appointed by H&R REIT Unitholders and F17 Trust Unitholders, respectively, and will continue to be nominated and appointed for both while the New 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 F17 Trust and their auditors have concluded that the preparation of the Combined Financial Statements are acceptable under IFRS;

(xiii) except for distributions of H&R REIT Units that are immediately followed by a consolidation of outstanding H&R REIT Units such that an equal number of H&R REIT Units and F17 Trust Units are outstanding immediately following such consolidation, (A) H&R REIT does not issue any units that are not stapled to F17 Trust Units, (B) each H&R REIT Unit is stapled to a F17 Trust Unit and trades as a New Stapled Unit, and (C) each F17 Trust Unit is stapled to a H&R REIT Unit and trades as a New Stapled Unit;

(xiv) except for distributions of F17 Trust Units that are immediately followed by a consolidation of outstanding F17 Trust Units such that an equal number of F17 Trust Units and H&R REIT Units are outstanding immediately following such consolidation, (A) F17 Trust does not issue any units that are not stapled to H&R REIT Units, (B) each F17 Trust Unit is stapled to an H&R REIT Unit and trades as a New Stapled Unit, and (C) each H&R REIT Unit is stapled to a F17 Trust Unit and trades as a New Stapled Unit; and

(xv) each New Stapled Unit is listed and posted for trading on the Toronto Stock Exchange (the “TSX”).

(b) In respect of the BAR Requirements:

(i) H&R REIT and F17 Trust continue to satisfy the conditions set out in paragraph 2(a) above;

(ii) H&R REIT and F17 Trust 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 F17 Trust, pro forma combined financial statements, prepared using IFRS used in the Combined Financial Statements of H&R REIT and F17 Trust.

(c) In respect of the Certificate Form Requirements:

(i) H&R REIT and F17 Trust continue to satisfy the conditions set out in paragraph 2(a) above;

(ii) the certificates filed by H&R REIT and F17 Trust 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 F17 Trust 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 F17 Trust 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 F17 Trust 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.

(d) In respect of the Audit Committee Disclosure Requirements;

(i) F17 Trust is exempt from or otherwise not subject to the Specified Continuous Disclosure Requirements;

(ii) each F17 Trust Unit is stapled to an H&R REIT Unit and trades as a New Stapled Unit;

(iii) F17 Trust discloses the audit committee information described in Form 52-110F1 in a stand-alone document filed in electronic format under its SEDAR profile;

(iv) F17 Trust includes a cross-reference to the stand-alone document described in (d)(iii) above in each management information circular in which, pursuant to section 5.2 of NI 52-110, F17 Trust would otherwise be required to provide a cross-reference to certain information as described in section 5.1 of NI 52-110; and

(v) H&R REIT satisfies and continues to satisfy the requirements set out in NI 52-110.

(e) In respect of the Specified Continuous Disclosure Requirements:

(i) except for distributions of H&R REIT Units that are immediately followed by a consolidation of outstanding H&R REIT Units such that an equal number of H&R REIT Units and F17 Trust Units are outstanding immediately following such consolidation, (A) H&R REIT does not issue any units that are not stapled to F17 Trust Units, (B) each H&R REIT Unit is stapled to a F17 Trust Unit and trades as a New Stapled Unit, and (C) each F17 Trust Unit is stapled to a H&R REIT Unit and trades as a New Stapled Unit;

(ii) except for distributions of F17 Trust Units that are immediately followed by a consolidation of outstanding F17 Trust Units such that an equal number of F17 Trust Units and H&R REIT Units are outstanding immediately following such consolidation, (A) F17 Trust does not issue any units that are not stapled to H&R REIT Units, and (B) each F17 Trust Unit is stapled to an H&R REIT Unit and trades as a New Stapled Unit, and (C) each H&R REIT Unit is stapled to a F17 Trust Unit and trades as a New Stapled Unit;

(iii) H&R REIT is a reporting issuer in a designated Canadian jurisdiction (as defined in section 13.4 of NI 51-102), complies with NI 51-102 or the conditions of any exemption therefrom and is an electronic filer under National Instrument 13-101 – System for Electronic Document Analysis and Retrieval (SEDAR) that has filed all documents it is required to file under NI 51-102 or under the conditions of any exemptions therefrom;

(iv) F17 Trust files a notice under its SEDAR profile indicating that it is relying on the AIFs and MCRs filed by H&R REIT and directing readers to refer to H&R REIT’s SEDAR profile;

(v) H&R REIT complies with the requirements of the Legislation and the TSX in respect of making disclosure of material information on a timely basis and immediately issues and files a news release that discloses any material changes in its affairs;

(vi) F17 Trust has minimal or no assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the New Stapled Units and investment in indebtedness issued by U.S. Holdco; and

(vii) F17 Trust complies with the requirements of the Legislation to issue a press release and file a MCR with the Jurisdictions upon the occurrence of a material change in respect of the affairs of F17 Trust that is not also a material change in the affairs of H&R REIT.

(f) in respect of the F17 Trust Basic Qualification Criteria:

(i) F17 Trust is exempt from or otherwise not subject to the Specified Continuous Disclosure Requirements;

(ii) F17 Trust continues to satisfy the conditions set out in paragraph 2(a) above;

(iii) F17 Trust satisfies the criteria in section 2.2 of NI 44-101 except for the requirements in subsections 2.2(d) and 2.2(e);

(iv) each New Stapled Unit is listed and posted for trading on a short form eligible exchange (as defined in NI 44-101); and

(v) each Joint Prospectus filed by H&R REIT and F17 Trust incorporates by reference the Joint Prospectus Documents.

(g) In respect of the H&R REIT Basic Qualification Criteria:

(i) H&R REIT is exempt from or otherwise not subject to the Specified Continuous Disclosure Requirements;

(ii) H&R REIT continues to satisfy the conditions set out in paragraph 2(a) above;

(iii) H&R REIT satisfies the criteria in section 2.2 of NI 44-101 except for the requirements in subsections 2.2(d)(i) and 2.2(e);

(iv) each New Stapled Unit is listed and posted for trading on a short form eligible exchange (as defined in NI 44-101);

(v) each Joint Prospectus filed by H&R REIT and F17 Trust incorporates by reference the Joint Prospectus Documents; and

(vi) each REIT Prospectus filed by H&R REIT, qualifying the distribution only of securities of H&R REIT, incorporates by reference the REIT Prospectus Documents.

(h) In respect of the F17 Shelf Qualification Criteria:

(i) F17 Trust qualifies for the relief contemplated by, and is in compliance with the requirements and conditions of the Specified Continuous Disclosure Requirements set out in paragraph 2(e) above;

(ii) F17 Trust continues to satisfy the conditions set out in paragraph 2(a) above; and

(iii) F17 Trust continues to satisfy the conditions set out in paragraph 2(f) above.

(i) In respect of the H&R REIT Shelf Qualification Criteria:

(i) H&R REIT continues to satisfy the conditions set out in paragraph 2(a) above; and

(ii) H&R REIT continues to satisfy the conditions set out in paragraph 2(g) above.

“Winnie Sanjoto”

Winnie Sanjoto

Manager, Corporate Finance

Ontario Securities Commission

(j) In respect of the Employee Trade Relief and the URP Relief:

(i) the first trade of any security acquired as a result of such Requested Relief shall be deemed to be a distribution under the securities legislation of the Jurisdiction where the trade takes place unless the conditions in section 2.6(3) of NI 45-102 as they would apply to H&R REIT are satisfied; and

(ii) except for distributions of H&R REIT Units that are immediately followed by a consolidation of outstanding H&R REIT Units such that an equal number of H&R REIT Units and F17 Trust Units are outstanding immediately following such consolidation, (A) H&R REIT does not issue any units that are not stapled to F17 Trust Units, (B) each H&R REIT Unit is stapled to a F17 Trust Unit and trades as a New Stapled Unit, and (C) each F17 Trust Unit is stapled to a H&R REIT Unit and trades as a New Stapled Unit;

(iii) except for distributions of F17 Trust Units that are immediately followed by a consolidation of outstanding F17 Trust Units such that an equal number of F17 Trust Units and H&R REIT Units are outstanding immediately following such consolidation, (A) F17 Trust does not issue any units that are not stapled to H&R REIT Units, and (B) each F17 Trust Unit is stapled to an H&R REIT Unit and trades as a New Stapled Unit, and (C) each H&R REIT Unit is stapled to a F17 Trust Unit and trades as a New Stapled Unit.

(k) In respect of the REIT Securityholder Relief:

(i) the conditions in section 2.5 of 45-102 are satisfied, if the F17 Trust Units were acquired in accordance with the terms and conditions of a security previously issued by H&R REIT under: (A) any of the circumstances listed in Appendix D of NI 45-102; or (B) an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of NI 45-102;

(ii) the conditions in section 2.6 of NI 45-102 are satisfied, if the F17 Trust Units were acquired in accordance with the terms and conditions of a security previously issued by H&R REIT under: (A) any of the circumstances listed in Appendix E of NI 45-102; or (B) an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of NI 45-102;

(iii) the following conditions are satisfied:

(A) a receipt was obtained for a prospectus qualifying the distribution of the convertible security, exchangeable security or multiple convertible security issued by H&R REIT;

(B) the trade is not a control distribution; and

(C) F17 Trust is a reporting issuer at the time of the trade; or

(iv) the following conditions are satisfied:

(A) a securities exchange take-over bid circular or a securities exchange issuer bid circular relating to a distribution of the convertible security, exchangeable security or multiple convertible security issued by H&R REIT was filed by the offeror on SEDAR;

(B) the trade is not a control distribution;

(C) the offeror was a reporting issuer on the date the securities of the offeree issuer were first taken up under the take-over bid or issuer bid; and

(D) F17 Trust is a reporting issuer at the time of the trade.

(l) In respect of the DRIP Exemption:

(i) at the time of the trade, the Subsidiary Partnerships continue to be controlled directly or indirectly by H&R REIT and H&R REIT is, directly or indirectly, the beneficial owner of all the issued and outstanding voting securities of the Subsidiary Partnerships;

(ii) the ability to purchase New Stapled Units under the Filers’ DRIP for distributions out of earnings, surplus, capital, or other sources payable by the Subsidiary Partnerships or through optional cash payments made by holders of Exchangeable Units is available to every holder of Exchangeable Units in Canada;

(iii) for so long as the DRIP includes a cash payment option, the DRIP Exemption will only apply if (i) the aggregate number of New Stapled Units issued through optional cash payments does not exceed, in the financial year of the Filers during which the distribution takes place, 2% of the issued and outstanding New Stapled Units as at the completion of the Reorganization (for the remainder of the financial year in which the Reorganization occurs) and, thereafter, as at the beginning of the financial year, and (ii) the New Stapled Units trade on a marketplace (as defined in National Instrument 21-101 – Marketplace Operation); and

(iv) the first trade of any New Stapled Units acquired under this decision in the Jurisdictions will be deemed to be a distribution unless the conditions in subsection 2.6(3) of NI 45-102 are satisfied at the time of such first trade.

3. The further decision of the principal regulator under the Legislation is that following completion of the Reorganization, F17 Trust is a reporting issuer for the purposes of Ontario securities law.

“Anne Marie Ryan” “Robert P. Hutchison”

Commissioner Commissioner

Ontario Securities Commission Ontario Securities Commission