Extendicare REIT
TSX : EXE.UN
TSX : EXE.DB
TSX : EXE.DB.A

Extendicare REIT

December 18, 2008 17:03 ET

Extendicare REIT Declares January 2009 Distribution of C$0.07 per Unit; Approval of Normal Course Issuer Bid; and Rhinelander Named Chairman of Extendicare REIT

MARKHAM, ONTARIO--(Marketwire - Dec. 18, 2008) - Extendicare Real Estate Investment Trust ("Extendicare REIT" or the "REIT") (TSX:EXE.UN)(TSX:EXE.DB)(TSX:EXE.DB.A) announced today, that after considering the outlook of Extendicare REIT's operating environment for the coming year and general economic conditions, the Board of Trustees of Extendicare REIT (the "Board of Trustees") has decided to reduce the monthly distribution per unit of the REIT (the "REIT Unit") from C$0.0925 to C$0.07 per REIT Unit commencing for the month of January 2009. The Board of Trustees has indicated its intention to maintain this level of distributions for the foreseeable future.

The declaration and payment of future distributions is subject to the discretion of the Board of Trustees and will be dependent upon a number of factors including results of operations, requirements for capital expenditures and working capital, future financial prospects of the REIT, debt covenants and obligations, and any other factors deemed relevant by the Board of Trustees.

Consistent with the Board of Trustees' decision, the REIT also announced today that it has declared a cash distribution of C$0.07 per REIT Unit for the month of January 2009, which is payable to unitholders of record at the close of business on January 30, 2009, and will be paid on February 16, 2009.

Extendicare Limited Partnership also announced today that it has declared a cash distribution of C$0.07 per Class B limited partnership unit (the "Exchangeable LP Units") for the month of January 2009, which is payable to unitholders of record at the close of business on January 30, 2009, and will be paid on February 16, 2009.

The REIT has a Distribution Reinvestment Plan, which provides Canadian resident holders of REIT Units and Exchangeable LP Units with the opportunity to increase their respective investments at a 3% discount to the volume weighted average trading price of the REIT Units on the TSX for the five trading days immediately preceding the distribution payment date. A copy of the Plan package is available under the investors section of the REIT's website.

Normal Course Issuer Bid for the REIT Units and Convertible Unsecured Subordinated Debentures Approved by TSX

Extendicare REIT also announced today that it has received the approval of the Toronto Stock Exchange (the "TSX") to commence a normal course issuer bid (the "Bid") to purchase for cancellation, from time to time, as Extendicare REIT considers advisable, up to a maximum of:

- 6,900,000 of REIT Units;

- $11,500,000 aggregate principal amount of its 5.70% convertible unsecured subordinated debentures due June 30, 2014 (the "5.70% Debentures"); and

- $9,200,000 aggregate principal amount of its 7.25% convertible unsecured subordinated debentures due June 30, 2013 (the "7.25% Debentures");

(collectively the "REIT Securities"), representing, in each case, approximately 10% of the public float of the outstanding securities on December 15, 2008, calculated in accordance with the rules of the TSX.

As of December 15, 2008, there were 70,239,246 REIT Units, $115,000,000 principal amount of 5.70% Debentures and $92,000,000 principal amount of 7.25% Debentures issued and outstanding.

Purchases under the Bid will commence on December 29, 2008 and will terminate on December 28, 2009, or on such earlier date as the Bid is complete. The actual number of REIT Securities purchased under the Bid and the timing of any such purchases will be at the discretion of the REIT.

Purchases of REIT Securities will be made through the facilities of the TSX in accordance with its rules. Subject to the TSX's block purchase exception, on any trading day to and including March 31, 2009 purchases under the Bid will not exceed 115,006 REIT Units, $64,000 aggregate principal amount of 5.70% Debentures and $62,000 aggregate principal amount of 7.25% Debentures, and thereafter will not exceed 57,503 REIT Units, $32,000 aggregate principal amount of 5.70% Debentures and $31,000 aggregate principal amount of 7.25% Debentures. The price that the REIT will pay for any REIT Securities purchased under the Bid will be the prevailing market price at the time of purchase and any REIT Securities purchased by the REIT will be cancelled. Extendicare REIT has made purchases of 717,714 REIT Units at a weighted average price of $4.09 under a previous normal course issuer bid for the REIT Units only, which expires on December 24, 2008.

The Board of Trustees has authorized the Bid because it believes that it is an attractive and appropriate use of the REIT's available funds to purchase REIT Securities when the market prices of such securities are such that they do not fully reflect their underlying value. Any REIT Securities purchased under the Bid will increase the proportionate interest of, and may be advantageous to all remaining securityholders.

Mel Rhinelander Named Chairman of the REIT

In addition, the Board of Trustees is pleased to announce the appointment of Mel Rhinelander as Chairman of the Board of Trustees of Extendicare REIT effective December 17, 2008. Mr. Rhinelander's appointment comes following Mr. Ladly's decision to step down as Chairman, while remaining on the Board of Trustees.

Mr. Rhinelander has served as Vice Chairman of the Board of Trustees since November 2006 and has served as a director of Extendicare Inc. (Extendicare) since May 2000. Since joining Extendicare in 1977, Mr. Rhinelander has held a wide range of senior leadership positions, most recently being the President and Chief Executive Officer of Extendicare from August 2000 until his retirement from management in 2006.

Frederick B. Ladly has served as Chairman of the Board of Trustees since November 2006 and as a director of Extendicare since 1986. Mr. Ladly joined Extendicare in 1984 as President and Chief Executive Officer of Extendicare (Canada) Inc., and served as the Chief Executive Officer of Extendicare from April 1992 until his retirement from management in 1997.

About Us

Extendicare REIT, through its wholly owned subsidiaries, is a major provider of short and long-term care services for seniors in North America. We operate 266 nursing and assisted living facilities in North America, with capacity for approximately 30,000 residents. As well, we offer medical specialty services such as subacute care and rehabilitative therapy services in the United States, and home health care services in Canada, and employ approximately 38,100 people in North America.

Forward-looking Statements

Information provided by Extendicare REIT from time to time, including this release, contains or may contain forward-looking statements concerning anticipated financial events, results, circumstances, economic performance or expectations with respect to Extendicare REIT and its subsidiaries, including its business operations, business strategy, and financial condition. Forward-looking statements can be identified because they generally contain the words "expect", "intend", "anticipate", "believe", "estimate", "plan" or "objective" or other similar expressions. Forward-looking statements reflect management's beliefs and assumptions and are based on information currently available, and Extendicare REIT assumes no obligation to update any forward-looking statement, except as required by applicable securities laws. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Extendicare REIT to differ materially from those expressed or implied in the statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on Extendicare REIT's forward-looking statements. Further information can be found in the disclosure documents filed by Extendicare REIT with the securities regulatory authorities, available at www.sedar.com and on Extendicare REIT's website at www.extendicare.com.

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