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Press release from Marketwire

InnVest Real Estate Investment Trust Announces Completion of Internal Reorganization

Friday, December 31, 2010

InnVest Real Estate Investment Trust Announces Completion of Internal Reorganization17:05 EST Friday, December 31, 2010TORONTO, ONTARIO--(Marketwire - Dec. 31, 2010) -InnVest Real Estate Investment Trust ("InnVest") (TSX:INN.UN) announced today that its internal reorganization (the "Reorganization"), which was approved by InnVest's unitholders at a special meeting on June 16, 2010, has been successfully completed. InnVest pursued the Reorganization in order to become a Qualifying REIT under Canadian income tax rules applicable to specified investment flow-through (SIFT) entities.The Reorganization has resulted in the following:the completion of certain transactions whereby InnVest transferred all of its directly and indirectly held operating assets to InnVest Operations Trust, a newly-formed taxable trust ("IOT"); and the completion of certain transactions that resulted in each InnVest unitholder receiving one non-voting unit of IOT (an "IOT Unit") for each unit of InnVest (an "InnVest Unit") held immediately prior to the distribution. As of December 31, 2010, there were 89,474,691 issued and outstanding InnVest Units and, accordingly, the same number of IOT Units were distributed to unitholders. The InnVest Units and IOT Units are listed on the Toronto Stock Exchange (the "TSX"). Each issued and outstanding InnVest Unit will commence trading together with an IOT Unit as a "Stapled Unit" under the symbol INN.UN at the opening of the TSX on January 4, 2011.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 had a fair market value of $0.9585 at the time of the distribution, and that Part XIII.2 non-resident withholding tax of 15% of this amount, or approximately $0.1438, is required to be paid by Non-Resident Unitholders in respect of each IOT Unit distributed to them. Non-Resident Unitholders are encouraged to consult their broker or investment advisor with regard to arrangements for payment of this withholding tax.Unitholders are 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 Secretary(905) 206-7100(905) 206-7114 (FAX)www.innvestreit.com