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Press release from Marketwire

InnVest Real Estate Investment Trust Announces Estimated IOT Allocation of Value for Reorganization

Tuesday, December 14, 2010

InnVest Real Estate Investment Trust Announces Estimated IOT Allocation of Value for Reorganization16:30 EST Tuesday, December 14, 2010TORONTO, ONTARIO--(Marketwire - Dec. 14, 2010) -InnVest Real Estate Investment Trust ("InnVest") (TSX:INN.UN) announced today its estimation of the fair market value of the non-voting units ("IOT Units") of InnVest Operations Trust, a newly-formed taxable trust ("IOT"), which will be distributed to InnVest's unitholders as part of an internal reorganization (the "Reorganization"). The Reorganization is anticipated to be completed by December 31, 2010 (the "Effective Date") and was approved by InnVest's unitholders at a special meeting on June 16, 2010. The plan of arrangement under the Canada Business Corporations Act forming part of the Reorganization was also approved by the Ontario Superior Court of Justice. InnVest is pursuing the Reorganization in order to become a Qualifying REIT under Canadian income tax rules applicable to specified investment flow-through (SIFT) entities.Under the Reorganization, InnVest will transfer all of its directly and indirectly held operating assets to IOT. IOT (through its subsidiaries) will hold the operating assets, earn revenues from hotel customers and pay rent to subsidiaries of InnVest (the owners of the hotels). IOT will also indirectly hold (through a subsidiary) a 50% interest in Choice Hotels Canada Inc. and will earn revenues from franchising fees.Each InnVest unitholder will receive one IOT Unit for each InnVest unit held on the Effective Date. Thereafter, each issued and outstanding InnVest unit will trade together with an IOT Unit on a "stapled" basis unless the unitholders of InnVest vote in favour of an uncoupling of the stapled units or the trustees of the REIT or IOT approve an uncoupling in the event of a bankruptcy or insolvency.As described in more detail in InnVest's management information circular dated May 13, 2010 (the "Circular"), Part XIII.2 of the Income Tax Act (Canada) (the "Tax Act") imposes a tax on each holder of InnVest units that is a non-resident of Canada or a partnership other than a Canadian partnership as described in the Tax Act (a "Non- Resident Unitholder") equal to 15% of all or most of the fair market value of the IOT Units at the time of their distribution.It is estimated that each IOT Unit will have a fair market value of approximately $0.9585 on the Effective Date, and that Part XIII.2 non-resident withholding tax of 15% of this amount, or approximately $0.1438, is required to be paid in respect of each IOT Unit distributed to Non-Resident Unitholders.InnVest will issue a press release on the Effective Date confirming management's calculation of the amount of non-resident withholding tax payable by a Non-Resident Unitholder per IOT Unit distributed.Non-Resident Unitholders are encouraged to consult their broker or investment advisor with regard to arrangements for payment of any applicable Part XIII.2 non-resident withholding tax. Unitholders are also encouraged to review in detail the Circular for more information.FORWARD LOOKING STATEMENTSStatements contained in this press release that are not historical facts are forward-looking statements which involve risk and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. Among the key factors that could cause such differences are real estate investment risks, hotel industry risks and competition. These and other factors are discussed in InnVest's annual information form dated March 10, 2010 which is available at www.sedar.com or www.innvestreit.com. InnVest disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable securities law.TRUST PROFILEInnVest REIT holds Canada's largest hotel portfolio together with an interest in Choice Hotels Canada Inc. the largest franchisor of hotels in Canada. The hotel portfolio currently comprises 144 hotel properties, with approximately 19,000 guest rooms, operated under internationally recognized franchise brands such as Comfort Inn®, Holiday Inn®, Quality Suites/Inn®, Radisson®, Delta®, Travelodge®, Hilton® Staybridge Suites®, Fairmont Hotels®, Sheraton Suites® and Best Western®. InnVest's trust units and outstanding convertible debentures trade on the Toronto Stock Exchange under the symbols INN.UN, INN.DB.B, INN.DB.C, INN.DB.D, and INN.DB.E.FOR FURTHER INFORMATION PLEASE CONTACT: Kenneth GibsonInnVest Real Estate Investment TrustPresident and Chief Executive Officer(905) 206-7100(905) 206-7114 (FAX)ORTamara LawsonInnVest Real Estate Investment TrustChief Financial Officer and Corporate Secretary(905) 206-7100(905) 206-7114 (FAX)www.innvestreit.com