InnVest Real Estate Investment Trust
TSX : INN.UN
TSX : INN.DB.A
TSX : INN.DB.B

InnVest Real Estate Investment Trust

August 08, 2008 08:00 ET

InnVest REIT Reports Second Quarter Results

- Same-hotel RevPAR increases 5.7% -

TORONTO, ONTARIO--(Marketwire - Aug. 8, 2008) - InnVest Real Estate Investment Trust (TSX:INN.UN) today announced financial results for the three and six months ended June 30, 2008.

"Acquisitions completed in late 2007, coupled with a 5.7% growth in revenue per available room ("RevPAR") from our Base Portfolio contributed to meaningful improvement across all profitability measures this quarter. Importantly, our base portfolio showed solid margin improvement, up 1.5 points during the quarter, reflecting the positive contribution of top-line revenue growth," commented Mr. Kenneth Gibson, President and Chief Executive Officer of InnVest REIT. "Distributable income improved over 60%, increasing distributable income per unit by almost 20%, or $0.065 per unit diluted."



Second Quarter Highlights

- RevPAR grew 5.7% on a same hotel basis, driven by a 6.0% increase in
average daily rates ("ADR");

- Hotel operating income improved by 65.4% to $56.2 million.
Acquisitions completed in late 2007, including the addition of 11
upscale and first-class hotels (the "Legacy Portfolio"), contributed
the majority of the increase, with InnVest's Base Portfolio
generating a 10.5% increase;

- Hotel operating income margins for the Base Portfolio improved
1.5 points to 32.6% during the quarter. Overall margins declined
0.2 points to 30.9% resulting from the acquisition of the Legacy
Portfolio which generates a larger portion of its business in non-
room revenues, which typically yield lower margins; and

- Distributable income increased over 60% to $31.9 million.
Distributable income improved by $0.065 per unit to $0.400 per unit
diluted. The Legacy Portfolio was accretive to InnVest's
distributable income by approximately $0.02 per unit during the
second quarter of 2008.


FINANCIAL HIGHLIGHTS

-------------------------------------------------------------------------
Financial Highlights
-------------------------------------------------------------------------
(In thousands of dollars except average daily rate, revenue per
available room and per unit amounts)
-------------------------------------------------------------------------
Three months ended June 30
-------------------------------------------------------------------------
2008 2007 +/-
-------------------------------------------------------------------------
Occupancy 67.5% 65.7% 1.8%
-------------------------------------------------------------------------
Average daily rate ("ADR") $122.68 $102.80 $19.88
-------------------------------------------------------------------------
Revenue Per Available Room ("RevPAR") $82.84 $67.54 $15.30
-------------------------------------------------------------------------
(In thousands of dollars, except per
unit amounts)
-------------------------------------------------------------------------
Operating revenues $181,996 $109,299 $72,697
-------------------------------------------------------------------------
Hotel operating income $56,152 $33,959 $22,193
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Net income (loss) and comprehensive
income (loss) $15,494 ($113,291) $128,785
-------------------------------------------------------------------------
Add/(deduct)
Depreciation, amortization and
accretion 21,722 14,106 7,616
Future income tax (recovery) expense (1,237) 122,626 (123,863)
Non-cash executive and trustee
compensation 145 140 5
Write down (gain on sale) of assets
held for sale 1,864 (174) 2,038
Corporate reorganization expense - - -
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Funds from operations(1) $37,988 $23,407 $14,581
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Funds from operations per unit(1)
- basic $0.516 $0.418 $0.098
- diluted $0.477 $0.388 $0.089
-------------------------------------------------------------------------
Amortization of deferred financing costs 27 - 27
Non-cash portion of interest expense 1,055 751 304
Reserve for replacement of furniture,
fixtures and equipment and capital
improvements (7,492) (4,459) (3,033)
Convertible debentures accretion 288 190 98
Deferred land lease expense and
retail lease income, net 8 3 5
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Distributable income(1) $31,874 $19,892 $11,982
-------------------------------------------------------------------------
Distributable income per unit
- basic $0.433 $0.355 $0.078
- diluted $0.400 $0.335 $0.065
-------------------------------------------------------------------------
Distributions per unit $0.2813 $0.2813 -
-------------------------------------------------------------------------


-------------------------------------------------------------------------
Financial Highlights
-------------------------------------------------------------------------
(In thousands of dollars except average daily rate, revenue per
available room and per unit amounts)
-------------------------------------------------------------------------
Six months ended June 30
-------------------------------------------------------------------------
2008 2007 +/-
-------------------------------------------------------------------------
Occupancy 61.7% 61.1% 0.6%
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Average daily rate ("ADR") $118.25 $100.03 $18.22
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Revenue Per Available Room ("RevPAR") $72.94 $61.07 $11.87
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(In thousands of dollars, except per
unit amounts)
-------------------------------------------------------------------------
Operating revenues $322,525 $197,657 $124,868
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Hotel operating income $79,726 $51,578 $28,148
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Net income (loss) and comprehensive
income (loss) $421 ($5,959) $6,380
-------------------------------------------------------------------------
Add/(deduct)
Depreciation, amortization and
accretion 43,078 27,856 15,222
Future income tax (recovery) expense (4,757) 7,090 (11,847)
Non-cash executive and trustee
compensation 300 228 72
Write down (gain on sale) of assets
held for sale 2,364 (833) 3,197
Corporate reorganization expense - 1,471 (1,471)
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Funds from operations(1) $41,406 $29,853 $11,553
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Funds from operations per unit(1)
- basic $0.564 $0.537 $0.027
- diluted $0.558 $0.519 $0.039
-------------------------------------------------------------------------
Amortization of deferred financing costs 1,341 - 1,341
Non-cash portion of interest expense 1,604 1,477 127
Reserve for replacement of furniture,
fixtures and equipment and capital
improvements (13,340) (8,079) (5,261)
Convertible debentures accretion 575 402 173
Deferred land lease expense and
retail lease income, net 16 17 (1)
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Distributable income(1) $31,602 $23,670 $7,932
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Distributable income per unit
- basic $0.430 $0.425 $0.005
- diluted $0.429 $0.422 $0.007
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Distributions per unit $0.5625 $0.5625 -
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1. Funds from operations and distributable income are measures of
earnings and cash flow that are not required or do not have a prescribed
meaning under Canadian generally accepted accounting principles, and
accordingly, may not be comparable to similar measures used by
other organizations. Funds from operations and distributable income per
unit are calculated on a basis consistent with earnings per unit.


The key performance measures related to room revenue for the REIT's portfolio of hotels on a same hotel basis (the "Base Portfolio"), excluding the hotels that have been classified as discontinued operations and the hotels acquired after the second quarter in 2007 and in 2008 are as follows:



Three months ended Six months ended
June 30, 2008 June 30, 2008
Variance to 2007 Variance to 2007
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Occupancy
Ontario 64.9% 0.6 pts 59.7% (0.6 pts)
Quebec 67.7% 1.2 pts 61.8% 0.3 pts
Atlantic 66.1% (1.8 pts) 58.6% (2.2 pts)
Western 63.6% (4.4 pts) 59.4% (4.2 pts)
---------------------------------------------------------------
Total 65.5% (0.2 pts) 60.0% (1.1 pts)
---------------------------------------------------------------
---------------------------------------------------------------
ADR
Ontario $110.23 3.9% $108.59 3.7%
Quebec $115.35 7.4% $109.06 6.7%
Atlantic $104.88 6.6% $99.73 6.3%
Western $94.72 10.8% $92.20 10.6%
---------------------------------------------------------------
Total $108.94 6.0% $105.66 5.6%
---------------------------------------------------------------
---------------------------------------------------------------
RevPAR
Ontario $71.57 4.9% $64.84 2.8%
Quebec $78.07 9.3% $67.38 7.2%
Atlantic $69.27 3.6% $58.44 2.5%
Western $60.21 3.6% $54.80 3.4%
---------------------------------------------------------------
Total $71.39 5.7% $63.44 3.9%
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FINANCIAL REVIEW

Three months ended June 30, 2008

Second quarter hotel revenues increased by $72.7 million, or 66.5%, to $182.0 million. Acquisitions since the second quarter of 2007 contributed the majority of this increase, generating $66.9 million in hotel revenues. Revenues for InnVest's Base Portfolio increased 5.3% or $5.8 million. Overall, a 6.0% increase in ADR as compared to the prior year offset a modest occupancy decline, resulting in Base Portfolio RevPAR growth of 5.7% for the second quarter. Second quarter performance was aided by particular strength in the month of April which positively reflected the timing shift of the Easter holiday period in the first quarter of 2008.

Room revenues increased $49.4 million during the quarter to $141.5 million. This increase was primarily driven by the $44.2 million in revenues from acquisitions. Consistent with the RevPAR performance, InnVest's Base Portfolio saw room revenues improve 5.7%. Revenue improvement was experienced in all regions this quarter based on continued efforts to drive rates throughout the portfolio.

The Quebec region led growth this quarter driven by performance in Quebec City which is benefiting from festivities associated with the city's 400th anniversary celebrations in 2008. Room revenues at the Hilton Quebec City were up approximately 20% during the second quarter. The Western region continues to experience strong rate growth with ADR gains of 10.8% this quarter.

Non-room revenues for the second quarter totaled $40.5 million, up $23.3 million or 135.1% compared to the prior period, primarily reflecting the non-room revenues generated by the Legacy Portfolio. The hotels acquired were full-service hotels which typically generate a higher proportion of total revenues from non-room revenues such as food and beverage sales. Non-room revenues from the Base Portfolio were up 3.0% during the quarter, despite the modest decline in overall occupancies.

Hotel expenses for the three months ended June 30, 2008 increased by $50.5 million when compared to the same period in 2007. This increase reflects $48.3 million in expenses incurred for acquisitions. Hotel expenses for the Base Portfolio were up 2.9% over the prior year reflecting inflationary cost increases and higher management fees on the increased revenues.

Second quarter hotel operating income ("HOI") improved by 65.4% or $22.2 million to $56.2 million. Acquisitions contributed $18.6 million of the overall HOI increase. The Base Portfolio's HOI improved $3.6 million, or 10.5%, benefiting from the positive profitability contribution from higher RevPAR, particularly as it relates to ADR driven growth.

The REIT's hotel operating income margin declined 0.2 points to 30.9% for the second quarter of 2008 as compared to 2007. The decline is attributable to the impact of full-service hotel acquisitions in late 2007 which generate a larger portion of their business in non-room revenues, which typically yield lower margins. The Base Portfolio's operating margin increased by 1.5 points to 32.6%. This improvement reflects the positive margin impact from higher RevPAR, particularly as it relates to ADR driven growth.

Other income and expenses for the three months ended June 30, 2008 totaled $40.2 million, up $15.6 million as compared to the prior period in 2007. The second quarter increase is primarily attributable to higher depreciation and amortization of $8.0 million, as well as increased interest expenses of $7.3 million resulting from acquisitions in 2007.

For the three months ended June 30, 2008, the REIT generated a future income tax recovery of $1.2 million, as compared to a future income tax expense of $122.6 million in 2007. The prior period's expense related to a non-cash charge arising from temporary differences between the estimated accounting and tax basis of the REIT's assets and liabilities expected to reverse after the implementation date of new income tax legislation related to Real Estate Investment Trusts.

Funds from operations for the three months ended June 30, 2008 were $38.0 million or $0.516 per unit basic ($0.477 diluted) as compared to FFO of $23.4 million or $0.418 basic ($0.388 diluted) for the same period in 2007. The $14.6 million increase is driven by the $22.2 million improvement in hotel operating income for the period which was somewhat offset by higher interest expenses of $7.3 million.

Distributable income improved $12.0 million, or 60.2%, to $31.9 million or $0.433 per unit basic ($0.400 diluted) for the three months ended June 30 2008. This compares to distributable income of $19.9 million or $0.355 per unit basic ($0.335 diluted) in the prior year. The Legacy Portfolio was accretive to InnVest's distributable income by approximately $0.02 per unit during the second quarter of 2008.

Distributions declared during the quarter totaled $20.7 million or $0.28125 per unit.

Six months ended June 30, 2008

For the six months ended June 30, 2008, hotel revenues increased by $124.9 million, or 63.2%, to $322.5 million. Acquisitions contributed the majority of this increase, generating $116.9 million in hotel revenues. Revenues for InnVest's Base Portfolio increased 4.0% or $8.0 million as compared to the prior year. The Base Portfolio's strength in the second quarter offset lower occupancies in the first quarter resulting from the Easter holiday shift to the first quarter in 2008.

Overall, a 5.6% increase in ADR was offset by a 1.1 point decline in overall occupancy for the Base Portfolio. Year-to-date RevPAR, which eliminates the Easter holiday timing shift, increased 3.9%.

Hotel expenses for the six months ended June 30, 2008 increased by $96.7 million when compared to the same period in 2007. This increase reflects $91.5 million in expenses incurred from hotels acquired following the second quarter of 2007. Hotel expenses for the Base Portfolio were up 3.5% over the
prior year.

Year-to-date hotel operating income ("HOI") improved by 54.6% or $28.1 million to $79.7 million. Acquisitions contributed $25.4 million of the overall HOI increase. The Base Portfolio improved 5.4% or $2.8 million reflecting the positive contribution from its RevPAR growth.

For the six months ended June 30, 2008, the REIT's hotel operating income margin declined 1.4 points to 24.7% as compared to 2007. The decline is attributable to the impact of the 2007 Acquisitions which generate a larger portion of their business in non-room revenues, which typically yield lower margins. The Base Portfolio's operating margin was up 0.3 points year-to-date in 2008. Lower year-over-year margins experienced in the first quarter relating to the timing of the Easter holidays were offset by higher margins achieved in the second quarter.

Other income and expenses for the six months ended June 30, 2008 totaled $81.6 million, up $31.1 million as compared to the prior year. The increase is primarily attributable to higher depreciation and amortization of $17.4 million, as well as increased interest expenses of $14.8 million resulting from acquisitions. These higher costs were partially offset by a reduction in corporate and administrative costs of $1.2 million, primarily realized in the first quarter, in connection with land transfer tax and legal costs associated with the corporate reorganization completed in early 2007.

InnVest earned FFO for the six months ended June 30, 2008 of $41.4 million or $0.564 per unit basic ($0.558 diluted) as compared to FFO of $29.9 million or $0.537 basic ($0.519 diluted) for the same period in 2007. The $11.5 million increase is driven by the $28.1 million improvement in hotel operating income for the period which was somewhat offset by higher interest expenses of $14.8 million. Consistent with overall earnings, strength in the second quarter offset lower year-over-year results in the first quarter. Distributable income improved $7.9 million to $31.6 million or $0.430 per unit basic ($0.429 diluted) for the six months ended June 30 2008. This compares to distributable income of $23.7 million or $0.425 per unit basic ($0.422 diluted) in the prior year. Given the seasonality inherent in the assets, particularly as it relates to the fourth and first quarters, and the timing of the acquisition, the Legacy Portfolio was dilutive to InnVest's distributable income per unit by approximately $0.03 per unit during the first half of 2008.

BALANCE SHEET REVIEW

The REIT's cash position at June 30, 2008 was $19.3 million, of which $2.7 million is restricted under the REIT's Declaration of Trust for the replacement of furniture, fixtures, and equipment and for capital improvements. At June 30, 2008, the REIT's leverage was 47.4% debt to gross asset value (defined as total assets before accumulated depreciation less future income tax liabilities included in assets) excluding convertible debentures and 56.5% including convertible debentures at the end of the period.

Continuing with its strategy of investing in its hotels, InnVest deployed approximately $12.7 million for capital asset improvements during the second quarter and committed an additional $6.3 million.

The REIT had unused operating loan availability of $13.9 million at June 30, 2008. The REIT also has an unused loan facility of $33.2 million available to fund 50% to 100% of capital expenditures incurred at individual hotels. At June 30, 2008, the REIT has drawn $2.9 million on this facility.

INCOME TAX DEFERRAL PERCENTAGE

In 2007, 40% of the distributions made during that year were not taxable to unitholders. For calendar 2008, the REIT estimates that approximately 35% of unitholder distributions will not be taxable to unitholders.

OUTLOOK

The fundamentals in the hotel industry have been favourable as highlighted by the REIT's year-to-date performance. However, uncertainties in the North American economy have led to softening in InnVest's group bookings in its larger urban hotels.

In light of this, the Trust is taking several steps including reviewing its business mix and making adjustments as necessary, and where possible. In addition, plans to manage costs have been implemented across the portfolio. InnVest's geographic, customer and brand diversity, which contribute to the resiliency of its hotel portfolio, ideally positions the REIT to manage any near-term operating impact.

The third quarter is typically the Trust's seasonally strongest period of earnings. Weakness during this period could have a significant impact on earnings achieved for the Trust. The expiration of labour contracts in Montreal and Quebec City in the third quarter could have a negative impact on the Trust's operating results.

Having addressed all near term financing requirements and with no significant debt maturities until 2010, InnVest is focused on optimizing the performance of its hotel portfolio.

FORWARD-LOOKING STATEMENTS

Statements 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 REIT's 2007 annual information form which is available at http://www.sedar.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 PROFILE

InnVest 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 150 hotel properties, with 19,606 guest rooms, operated under internationally recognized franchise brands such as Comfort Inn®, Holiday Inn® Quality Suites/Inn®, Radisson®, Delta®, Travelodge®, Hilton Hotel®, 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.A, INN.DB.B and INN.DB.C, respectively.

QUARTERLY CONFERENCE CALL

Management will host a conference call on Friday August 8, 2008 at 11:00 a.m. Eastern time to discuss the performance of InnVest. Investors are invited to access the call by dialing (416) 644-3426 or 1-800-589-8577. You will be required to identify yourself and the organization on whose behalf you are participating. A recording of this call will be made available August 8th beginning at 12:00 pm through to 11:59 p.m. on August 15th. To access the recording please call (416) 640-1917 and use the reservation number 21277975.



InnVest Real Estate Investment Trust
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CONSOLIDATED BALANCE SHEETS

June 30, December 31,
(in thousands of dollars) (Unaudited) 2008 2007
-------------------------------------------------------------------------

ASSETS

Current Assets
Cash $ 16,566 $ 22,271
Accounts receivable 31,531 28,677
Prepaid expenses and other assets 17,077 9,487
Assets held for sale (Note 22) 417 301
-------------------------------------------------------------------------
65,591 60,736

Restricted cash 2,729 2,995

Hotel properties (Note 3 and Note 4) 1,888,936 1,884,765

Other real estate properties (Note 5) 16,254 16,428

Licence contracts (Note 6) 18,511 19,169

Intangible and deferred assets (Note 7) 48,066 55,101

Assets held for sale (Note 22) 20,720 23,085
-------------------------------------------------------------------------

$ 2,060,807 $ 2,062,279
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-------------------------------------------------------------------------

LIABILITIES

Current Liabilities
Bank indebtedness (Note 8) $ 35,082 $ 223,200
Accounts payable and accrued liabilities 78,592 73,682
Acquisition related liabilities 6,273 17,569
Distributions payable 6,924 6,844
Current portion of long-term debt (Note 9) 9,798 12,725
Liabilities related to assets held for sale
(Note 22) 829 610
-------------------------------------------------------------------------
137,498 334,630

Long-term debt (Note 9) 930,932 698,892

Other long-term obligations (Note 10) 6,994 6,692

Convertible debentures (Note 11) 178,796 177,387

Future income tax liability (Note 13) 220,746 225,503

Long-term liabilities related to assets
held for sale (Note 22) 14,169 14,509
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1,489,135 1,457,613

UNITHOLDERS' EQUITY 571,672 604,666
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$ 2,060,807 $ 2,062,279
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-------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated
financial statements.



InnVest Real Estate Investment Trust
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CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE INCOME
(LOSS)

Three Three Six Six
(in thousands of Months Months Months Months
dollars, except per Ended Ended Ended Ended
unit amounts) June 30, June 30, June 30, June 30,
(Unaudited) 2008 2007 2008 2007
-------------------------------------------------------------------------
(Restated, (Restated,
Note 22) Note 22)

Total revenues
(reference only)
(Note 20) $ 185,064 $ 112,348 $ 328,254 $ 203,319

Hotel revenues $ 181,996 $ 109,299 $ 322,525 $ 197,657
-------------------------------------------------------------------------

Hotel expenses
Operating expenses
(Note 18) 104,769 62,403 201,717 120,989
Property taxes, rent
and insurance 13,518 9,276 27,881 18,441
Management fees (Note 18) 7,557 3,661 13,201 6,649
-------------------------------------------------------------------------
125,844 75,340 242,799 146,079
-------------------------------------------------------------------------

Hotel operating income 56,152 33,959 79,726 51,578
-------------------------------------------------------------------------

Other (income) and
expenses
Interest on mortgages
and other debt 13,961 8,289 26,049 16,562
Interest on operating
and bridge loans 533 235 3,380 529
Convertible debentures
interest and accretion 3,561 2,186 7,121 4,613
Corporate and
administrative (Note 18) 1,643 1,548 2,869 4,115
Capital tax 62 24 101 48
Other business income,
net (Note 21) (1,257) (1,321) (2,250) (2,369)
Other income (49) (64) (121) (121)
Depreciation and
amortization 21,749 13,706 44,419 27,058
-------------------------------------------------------------------------
40,203 24,603 81,568 50,435
-------------------------------------------------------------------------

Income (loss) before income
tax (recovery) expense 15,949 9,356 (1,842) 1,143

Future income tax (recovery)
expense (Note 13) (1,237) 122,626 (4,757) 7,090
-------------------------------------------------------------------------

Net income (loss) from
continuing operations 17,186 (113,270) 2,915 (5,947)

Income (loss) from
discontinued operations
(Note 22) 172 (195) (130) (845)
(Writedown) gain on sale
of asset held for sale
(Note 22) (1,864) 174 (2,364) 833
-------------------------------------------------------------------------
(1,692) (21) (2,494) (12)
-------------------------------------------------------------------------

Net income (loss) and
comprehensive income
(loss) $ 15,494 $ (113,291) $ 421 $ (5,959)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Net income (loss) from
continuing operations,
per unit (Note 16)
Basic $ 0.233 $ (2.023) $ 0.040 $ (0.107)
Diluted $ 0.233 $ (2.023) $ 0.040 $ (0.107)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Net income (loss)
per unit (Note 16)
Basic $ 0.210 $ (2.023) $ 0.006 $ (0.107)
Diluted $ 0.210 $ (2.023) $ 0.006 $ (0.107)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Net loss from discontinued
operations, per unit
Basic $ (0.023) $ - $ (0.034) $ -
Diluted $ (0.023) $ - $ (0.034) $ -
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated
financial statements.



InnVest Real Estate Investment Trust
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CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY

Net Income
(in thousands (Loss) and
of dollars) Comprehensive Distri- Units
(Unaudited) Income (Loss) butions Deficit in $
-------------------------------------------------------------------------

Balance December 31,
2006 $ 96,701 $ (228,933) $ (132,232) $ 543,363

CHANGES DURING THE PERIOD
Net loss and
comprehensive loss (5,959) - (5,959) -
Unit distributions
(Note 17) - (31,373) (31,373) -
Distribution reinvestment
plan units issued - - - 4,934
Conversion of debentures
(Note 11) - - - 10,605
Vested executive
compensation - - - 275
Executive and trustee
compensation - - - 23

-------------------------------------------------------------------------

Balance June 30, 2007 $ 90,742 $ (260,306) $ (169,564) $ 559,200
-------------------------------------------------------------------------

Balance December 31,
2007 $ 137,923 $ (299,691) $ (161,768) $ 757,375

CHANGES DURING THE PERIOD
Net income and
comprehensive income 421 - 421 -
Unit distributions
(Note 17) - (41,351) (41,351) -
Distribution reinvestment
plan units issued - - - 7,626
Vested executive
compensation - - - 151
Executive and trustee
compensation - - - 76

-------------------------------------------------------------------------

Balance June 30, 2008 $ 138,344 $ (341,042) $ (202,698) $ 765,228
-------------------------------------------------------------------------


(in thousands Executive Holders'
of dollars) and Trustee Conversion
(Unaudited) Compensation Option Total
-------------------------------------------------------------

Balance December 31,
2006 $ 278 $ 6,208 $ 417,617

CHANGES DURING THE PERIOD
Net loss and
comprehensive loss - - (5,959)
Unit distributions
(Note 17) - - (31,373)
Distribution reinvestment
plan units issued - - 4,934
Conversion of debentures
(Note 11) - (519) 10,086
Vested executive
compensation (275) - -
Executive and trustee
compensation 177 - 200

-------------------------------------------------------------

Balance June 30, 2007 $ 180 $ 5,689 $ 395,505
-------------------------------------------------------------

Balance December 31,
2007 $ 417 $ 8,642 $ 604,666

CHANGES DURING THE PERIOD
Net income and
comprehensive income - - 421
Unit distributions
(Note 17) - - (41,351)
Distribution reinvestment
plan units issued - - 7,626
Vested executive
compensation (151) - -
Executive and trustee
compensation 234 - 310

-------------------------------------------------------------

Balance June 30, 2008 $ 500 $ 8,642 $ 571,672
-------------------------------------------------------------

The accompanying notes are an integral part of these consolidated
financial statements.



InnVest Real Estate Investment Trust
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CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Three Six Six
(in thousands of Months Months Months Months
dollars, except per Ended Ended Ended Ended
unit amounts) June 30, June 30, June 30, June 30,
(Unaudited) 2008 2007 2008 2007
-------------------------------------------------------------------------
(Restated, (Restated,
Note 22) Note 22)
OPERATING ACTIVITIES
Net income (loss) from
continuing operations $ 17,186 $ (113,270) $ 2,915 $ (5,947)
Add (deduct) items not
affecting operations
Depreciation and
amortization 21,749 13,706 44,419 27,058
Non-cash portion of
interest expense 1,055 751 1,604 1,477
Future income
tax (recovery) expense (1,237) 122,626 (4,757) 7,090
Non-cash executive and
trustee compensation 155 112 310 200
Convertible debentures
accretion 288 190 575 402
Discontinued operations (73) (126) (252) (130)
Changes in non-cash
working capital (12,191) (847) (17,868) (5,340)
-------------------------------------------------------------------------
26,932 23,142 26,946 24,810
-------------------------------------------------------------------------

FINANCING ACTIVITIES
Repayment of long-term debt (2,189) (3,522) (159,461) (5,846)
Proceeds from
long-term debt 2,462 24,448 389,948 24,448
Unit distributions (16,942) (12,990) (33,645) (26,326)
Increase (decrease) in
operating loan 2,282 (22,000) 17,882 (3,300)
Proceeds from bridge loan 3 - 8,910 -
Repayment of bridge loan - - (215,000) -
Discontinued operations
repayment of debt (57) (1,246) (114) (2,341)
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(14,441) (15,310) 8,520 (13,365)
-------------------------------------------------------------------------

INVESTING ACTIVITIES
Capital expenditures on
hotel properties (12,687) (7,525) (18,606) (13,405)
Discontinued operations
capital expenditures - (42) - (102)
Hotel under development
expenditures, net (959) (1,978) (5,252) (2,872)
Proceeds from sale of
discontinued assets, net
of costs (Note 22) - 4,300 - 6,400
Change in intangible and
deferred assets 154 (1,584) (277) (1,995)
Acquisition of hotel
properties (Note 3) (127) - (17,302) -
Decrease in restricted cash 195 1,806 266 4,126
-------------------------------------------------------------------------
(13,424) (5,023) (41,171) (7,848)
-------------------------------------------------------------------------

(Decrease) increase in cash
during the period (933) 2,809 (5,705) 3,597
Cash, beginning of period 17,499 5,319 22,271 4,531
-------------------------------------------------------------------------
Cash, end of period $ 16,566 $ 8,128 $ 16,566 $ 8,128
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Supplemental disclosure
of cash flow information:
Cash paid for interest $ 19,674 $ 12,491 $ 34,497 $ 21,287
Cash paid for income taxes
(including capital tax) $ 41 $ 70 $ 109 $ 139

The accompanying notes are an integral part of these consolidated
financial statements.



-------------------------------------------------------------------------
InnVest Real Estate Investment Trust

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008 (all dollar amounts are in thousands, except unit and per
unit amounts) (Unaudited)
-------------------------------------------------------------------------

1. Basis of Presentation

InnVest Real Estate Investment Trust ("InnVest" or the "REIT") is an
unincorporated open-ended real estate investment trust governed by the
laws of Ontario. The REIT began operations on July 26, 2002. The units of
the REIT are traded on the Toronto Stock Exchange under the symbol of
"INN.UN". As at June 30, 2008, the REIT owned 150 Canadian hotels
operated under international brands and has a 50% interest in Choice
Hotels Canada Inc. ("CHC").

The accompanying unaudited interim consolidated financial statements are
prepared in accordance with Canadian generally accepted accounting
principles ("GAAP"). The accounting principles used in these financial
statements are consistent with those used in the annual consolidated
financial statements for the year ended December 31, 2007, except as
disclosed in Note 2. These financial statements do not include all the
information and disclosure required by GAAP for annual financial
statements, and should be read in conjunction with the annual
consolidated financial statements for the year ended December 31, 2007.

Revenues earned from hotel operations fluctuate throughout the year, with
the third quarter being the highest due to the increased level of leisure
travel in the summer months, and the first quarter being the lowest as
leisure travel tends to be lower at that time of year.

2. Significant Accounting Policies

The accounting policies followed in preparation of these financial
statements are consistent with those as set out in the audited financial
statements for the year ended December 31, 2007, except as follows:

Capital Disclosures

Effective January 1, 2008, the REIT adopted the Canadian Institute of
Chartered Accountants ("CICA") Section 1535 - Capital Disclosures. This
standard specifies the disclosure of (i) an entity's objectives, policies
and processes for managing capital; (ii) quantitative data about what the
entity regards as capital; (iii) whether the entity has complied with any
capital requirements; and (iv) if it has not complied, the consequences
of such non-compliance (see Note 12).

Financial Instruments - Disclosures and Presentation

Effective January 1, 2008, the REIT adopted two new CICA accounting
standards: Section 3862 - Financial Instruments - Disclosures and
Section 3863 - Financial Instruments - Presentation. These new standards
replace Section 3861 - Financial Instruments - Disclosure and
Presentation. These standards revise and enhance disclosure requirements,
and carry forward, unchanged, existing presentation requirements. These
new standards place increased emphasis on disclosure about the nature and
extent of risks arising from financial instruments and how the entity
manages those risks (see Note 14).

Newly Built Hotels Acquired or Developed

The REIT has retroactively implemented a new accounting policy with
respect to costs capitalized to development properties. Capitalized costs
include interest on hotel specific debt, property taxes, general and
administrative expenses incurred directly in connection with the
acquisition and development of hotel properties, and net operating losses
until the earlier of hotel operating income break-even or one year (see
Note 4).

3. Acquisitions

On February 12, 2008, the REIT purchased the Staybridge Suites Guelph for
$17,423 including transaction costs. The acquisition was funded through
new debt proceeds of $8,300 and cash on hand.

During the year ended December 31, 2007, InnVest became the owner of
nine, and the lessee of two, of the following eleven first class hotels:
The Fairmont Palliser, Sheraton Suites Calgary Eau Claire, Delta Calgary
Airport, Fairmont Hotel Macdonald, Delta Winnipeg Hotel, Delta Ottawa
Hotel and Suites, Delta Centre-Ville, Delta Beauséjour, Delta Prince
Edward, Delta Barrington and the Delta Halifax (collectively, the "Legacy
Portfolio"). The REIT also completed the purchases of the Staybridge
Suites London and the Holiday Inn Express North Bay in 2007.

The purchase price allocations associated with these acquisitions are
summarized as follows:

June 30, December 31,
2008 2007
-------------------------------------------------------------------------
Current assets $ - $ 24,473
Hotel properties 17,423 794,152
Other assets - 47,466
-------------------------------------------------------------------------
17,423 866,091
Assumption of existing long-term debt - (196,674)
Future income tax liability - (127,133)
Current liabilities - (26,882)
Long-term liabilities - (2,493)
-------------------------------------------------------------------------
$ 17,423 $ 512,909
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The consideration paid, including transaction
costs, consists of the following:

Cash $ 9,013 $ 32,127
Bank indebtedness - 212,850
Units issued - 191,748
Debentures issued - 58,615
New mortgage debt 8,289 -
-------------------------------------------------------------------------
17,302 495,340
-------------------------------------------------------------------------
Acquisition related liabilities 121 17,569
-------------------------------------------------------------------------
$ 17,423 $ 512,909
-------------------------------------------------------------------------
-------------------------------------------------------------------------

As at June 30, 2008, the REIT is continuing to evaluate the fair value of
the net assets acquired in 2008, and based on this ongoing evaluation,
the purchase price allocation may be adjusted in future periods.

4. Hotel Properties

June 30, December 31,
Accumulated 2008 Net 2007 Net
Cost Depreciation Book Value Book Value
-------------------------------------------------------------------------

Land $ 185,980 $ - $ 185,980 $ 182,960
Buildings 1,768,579 159,516 1,609,063 1,612,650
Furniture, fixtures
and equipment 135,419 41,526 93,893 89,155
-------------------------------------------------------------------------
$ 2,089,978 $ 201,042 $ 1,888,936 $ 1,884,765
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Included in Hotel Properties are two newly built hotels acquired and one
hotel developed internally adjacent to a hotel owned by the REIT, with a
combined net book value of $52,738 (December 31, 2007 - $29,828).
Included in this balance is $1,047 (December 31, 2007 - $ nil) of net
operating losses. No depreciation has been recorded for these three
hotels.

5. Other Real Estate Properties

June 30, December 31,
Accumulated 2008 Net 2007 Net
Cost Depreciation Book Value Book Value
-------------------------------------------------------------------------

Land $ 1,624 $ - $ 1,624 $ 1,624
Buildings 15,403 809 14,594 14,766
Furniture, fixtures
and equipment 60 24 36 38
-------------------------------------------------------------------------
$ 17,087 $ 833 $ 16,254 $ 16,428
-------------------------------------------------------------------------
-------------------------------------------------------------------------

6. License Contracts

June 30, December 31,
Accumulated 2008 Net 2007 Net
Cost Amortization Book Value Book Value
-------------------------------------------------------------------------

Licence contracts $ 26,320 $ 7,809 $ 18,511 $ 19,169
-------------------------------------------------------------------------
-------------------------------------------------------------------------

During the six months ended June 30, 2008, the license contracts were
amortized by $658.


7. Intangible and Deferred Assets

June 30, December 31,
Accumulated 2008 Net 2007 Net
Cost Amortization Book Value Book Value
-------------------------------------------------------------------------

Deferred financing
related to credit
facility $ 2,240 $ 2,177 $ 63 $ 1,314
Intangible assets 61,029 13,026 48,003 53,787
-------------------------------------------------------------------------
$ 63,269 $ 15,203 $ 48,066 $ 55,101
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Intangible assets include customer and tenant relationships, lease
origination costs, above and below market leases, and franchise rights
recognized upon acquisition of new hotel properties and other real estate
properties.

During the six months ended June 30, 2008, the intangible assets were
amortized by $5,265 and the deferred financing related to the credit
facility was amortized by $1,341 for the bridge loans.

8. Bank Indebtedness

In the first quarter of 2008, the REIT provided five unencumbered
properties as additional security for its operating line which was
increased from $25,000 to $40,000. The operating line bears interest at
Canadian bank prime rate plus 0.5% or the Canadian Bankers' Acceptance
rate plus 1.5%. With the addition of the five properties, the operating
line is now secured by 14 properties and is payable on demand.

A bridge loan was funded on March 19, 2008 for $9,000, whereby the REIT
provided an additional unencumbered hotel as security. The bridge loan
bears interest at Canadian Bankers' Acceptance rate plus 2.0%, is for a
term of one year, and requires interest payments only.

The REIT's bridge loan facility of $215,000, entered into as part of the
closing for the acquisition of the Legacy Portfolio, was paid in full as
part of the refinancing of these assets (See Note 9). Deferred financing
costs related to this bridge loan were written off as part of
depreciation and amortization expense.

June 30, December 31,
2008 2007
-------------------------------------------------------------------------
Operating line $ 26,082 $ 8,200
Bridge loan 9,000 -
Legacy Portfolio acquisition bridge loan - 215,000
-------------------------------------------------------------------------
$ 35,082 $ 223,200
-------------------------------------------------------------------------
-------------------------------------------------------------------------

9. Long-term Debt

June 30, December 31,
2008 2007
-------------------------------------------------------------------------

Mortgages payable $ 948,305 $ 715,699
Less debt issuance costs (7,575) (4,082)
-------------------------------------------------------------------------
Total long-term debt 940,730 711,617
Less current portion (9,798) (12,725)
-------------------------------------------------------------------------
Net long-term debt $ 930,932 $ 698,892
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Substantially all of the REIT's assets have been pledged as security
under debt agreements. At June 30, 2008, long-term debt had a weighted
average interest rate of 5.8% (December 31, 2007 - 6.4%) and a weighted
average effective interest rate of 6.0% (December 31, 2007 - 6.5%). The
long-term debt is repayable in average monthly payments of principal and
interest totalling $5,394 (December 31, 2007 - $4,805) per month, and
matures at various dates from June 1, 2009 to March 21, 2018.

Scheduled repayment of long-term debt is as follows:

Scheduled Due on
Repayments Maturity Total
-------------------------------------------------------------------------

2008 (remainder of the year) $ 5,080 $ - $ 5,080
2009 9,764 - 9,764
2010 9,058 182,350 191,408
2011 9,372 268,000 277,372
2012 12,548 45,912 58,460
2013 and thereafter 22,875 383,346 406,221
-------------------------------------------------------------------------
$ 68,697 $ 879,608 $ 948,305
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The current portion of long-term debt on the balance sheet is based on
the twelve months ending June 30, 2009, whereas the repayment schedule
above reflects the fiscal year.

The estimated fair value of the REIT's long-term debt at June 30, 2008
was approximately $944,957 (December 31, 2007 - $717,463). This estimate
was determined by discounting expected cash flows at the interest rates
currently being offered to the REIT for debt of the same remaining
maturities.

Long-term debt includes $77,539 (December 31, 2007 - $79,777) of
mortgages payable, which are subject to floating interest rates. Annual
interest expense will increase by $775 for every 1% increase in the base
Bankers' Acceptance rate.

As part of the Staybridge Suites Guelph acquisition (see Note 3), the
REIT obtained $8,300 of new debt bearing an interest rate of 5.5% for a
ten-year term. The issuance costs associated with the debt amounted to
$11.

On February 29, 2008, the REIT secured an additional $350,000 of mortgage
financing on 10 of the 11 hotels in the Legacy Portfolio. Existing debt
of $154,765 was paid out and the REIT obtained new debt of $40,000 on two
assets which were previously unencumbered. Transaction costs of $3,803
were incurred for this transaction. InnVest fixed the interest rates on
$370,000, with the remaining $20,000 subject to floating rates. The
weighted average term to maturity is 4.9 years and the weighted average
blended interest rate is 5.6%.

A portion of the proceeds from the February 29, 2008 refinancing
transaction were used to repay the balance of the $215,000 bridge loan
facility entered into for the acquisition of the Legacy Portfolio in
2007, which had a maturity date of June 13, 2008.

Interest expense on mortgages and other debt, interest on operating and
bridge loans, as well as convertible debentures interest are considered
operating items in the statement of cash flows.

10. Other Long-term Obligations

June 30, December 31,
2008 2007
-------------------------------------------------------------------------

Capital leases $ 1,767 $ 1,767
Other lease obligations 390 360
-------------------------------------------------------------------------
2,157 2,127
Less current portion (165) (165)
-------------------------------------------------------------------------
Total lease obligations 1,992 1,962
Pension liability 3,545 3,294
Asset retirement obligation 1,457 1,436
-------------------------------------------------------------------------
Total other long-term obligations $ 6,994 $ 6,692
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Defined Benefit Pension Plans

The defined benefit pension plans were assumed pursuant to the
acquisition of certain hotels in 2006 and the Legacy Portfolio in the
third quarter of 2007. The most recent actuarial valuation with respect
to the funding of the REIT's pension plans was prepared on June 30, 2008.
The pension plan assets as at June 30, 2008 consist of the following:

Non-
Union Non-
Management Management June 30, December 31,
Pension Pension 2008 Total 2007 Total
Benefit Benefit Benefit Benefit
Plans Plans Plans Plans
-------------------------------------------------------------------------
Accrued benefit
obligation $ 5,841 $ 1,352 $ 7,193 $ 6,908
Fair value of plan
assets 2,540 1,325 3,865 3,614
-------------------------------------------------------------------------
Funded status - plan
deficit 3,301 27 3,328 3,294
Unamortized net
actuarial (loss) gain (123) 340 217 249
-------------------------------------------------------------------------

Accrued employee
future benefit
liability $ 3,178 $ 367 $ 3,545 $ 3,543
-------------------------------------------------------------------------
-------------------------------------------------------------------------


11. Convertible Debentures

The details of the three series of convertible debentures are outlined in
the tables below:

Effective Original Converted
Interest Interest Face to Trust
Debenture Maturity Date Rate Rate Amount Units
-------------------------------------------------------------------------
Series A April 15, 2011 6.25% 7.73% $ 57,500 $ (11,736)
Series B May 31, 2013 6.00% 7.53% 75,000 -
Series C August 1, 2014 5.85% 7.42% 70,000 -
-------------------------------------------------------------------------
$ 202,500 $ (11,736)
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Holders'
Face Amount Conversion Transaction June 30,
Debenture Outstanding Option Accretion Costs 2008
-------------------------------------------------------------------------
Series A $ 45,764 $ (2,289) $ 1,263 $ (838) $ 43,900
Series B 75,000 (3,400) 1,004 (2,323) 70,281
Series C 70,000 (2,953) 372 (2,804) 64,615
-------------------------------------------------------------------------
$ 190,764 $ (8,642) $ 2,639 $ (5,965) $ 178,796
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Effective Original Converted
Interest Interest Face to Trust
Debenture Maturity Date Rate Rate Amount Units
-------------------------------------------------------------------------
Series A April 15, 2011 6.25% 7.73% $ 57,500 $ (11,736)
Series B May 31, 2013 6.00% 7.53% 75,000 -
Series C August 1, 2014 5.85% 7.42% 70,000 -
-------------------------------------------------------------------------
$ 202,500 $ (11,736)
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Holders'
Face Amount Conversion Transaction December
Debenture Outstanding Option Accretion Costs 30, 2007
-------------------------------------------------------------------------
Series A $ 45,764 $ (2,289) $ 1,127 $ (1,356) $ 43,246
Series B 75,000 (3,400) 768 (2,497) 69,871
Series C 70,000 (2,953) 169 (2,946) 64,270
-------------------------------------------------------------------------
$ 190,764 $ (8,642) $ 2,064 $ (6,799) $ 177,387
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The fair value of the REIT's convertible debentures at June 30, 2008 is
$178,325 (December 31, 2007 - $180,917).

12. Capital Management

The REIT manages its capital, which is defined as the aggregate of
unitholders' equity and debt, under the terms of the Declaration of
Trust. The REIT's capital management objectives are to ensure compliance
with debt and investment restrictions outlined in its Declaration of
Trust as well as external existing debt covenants, allow for the
implementation of its acquisition strategy and hotel property
refurbishment program and finally build long-term unitholder value.
Issuances of equity and debt are approved by the Board of Trustees (the
"Board") through their review and approval of the REIT's strategic plan
and annual budget plan, along with changes to the approved plans
periodically throughout each year.

At June 30, 2008, InnVest's primary contractual obligations consisted of
long-term mortgage obligations and convertible debentures. InnVest is not
permitted to exceed certain financial leverage amounts under the terms of
the Declaration of Trust. The REIT is permitted to hold indebtedness
excluding convertible debentures up to a level of 50% of gross asset
value. Further, the REIT is permitted to have indebtedness and
convertible debentures up to a level of 60% of gross asset value. The
Declaration of Trust also governs that individual property mortgages, or
mortgages on a pool of properties, cannot exceed 75% of the value of the
underlying property. InnVest calculates indebtedness in accordance with
GAAP excluding non-interest bearing indebtedness, trade accounts payable,
and any future income tax liability. InnVest calculates gross asset value
as the total book value of assets on the REIT's balance sheet, plus the
accumulated depreciation and amortization, less future income tax
liabilities.

At June 30, 2008, the REIT's leverage excluding and including convertible
debentures was 47.4% and 56.5% respectively, calculated as follows:

June 30, 2008 December 31, 2007
-------------------------------------------------------------------------
Total assets per
Balance Sheet $ 2,060,807 $ 2,062,279

Accumulated depreciation
and amortization 239,739 192,973
Future income tax
liability (220,746) (225,503)
Future income tax
liability not included
in assets 23,536 23,909
-------------------------------------------------------------------------
Gross Asset Value $ 2,103,336 $ 2,053,658
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Book value of
mortgages and other
indebtedness(1) $ 997,441 47.4% $ 953,067 46.4%
Convertible
debentures(2) 190,764 9.1% 190,764 9.3%
-------------------------------------------------------------------------
$ 1,188,205 56.5% $ 1,143,831 55.7%
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(1) Adjusted to eliminate financing issuance costs and include long-term
debt related to assets held for sale.
(2) Adjusted to face value.


The REIT's Declaration of Trust also includes guidelines that limit
capital expended to, among other items, the following:

(a) Direct and indirect investments in real property on which hotels are
situated and the hotel business conducted thereon, primarily in
Canada, and in entities whose activities consist primarily of
franchising hotels;
(b) Temporary investments held in cash, deposits with a Canadian
Chartered bank or trust company, short term government debt
securities or in money market instruments of, or guaranteed by, a
Schedule 1 Canadian bank, short term commercial paper, notes, bonds
of other debt securities of a Canadian entity having a rating of at
least R-1 (Mid) by Dominion Bond Rating Service or A-1 (Mid) by
Standard & Poor's Corporation maturing prior to one year from the
date if issue; and
(c) Investments in mortgages or mortgage bonds, where the related
security is a first mortgage on income producing real property which
otherwise complies with (a) above and is subject to certain leverage
limits and debt service coverage. The aggregate value of such
investments shall not exceed 20% of the unitholders' equity;

The REIT is in compliance with these guidelines.

The REIT is also subject to certain restrictions on the issuance of
equity as discussed in Note 13. The REIT can issue on a non-cumulative
basis a total of approximately $143 million in equity annually in each of
2008 through 2010 and maintain its relief from taxation to the end of
2010.

As outlined in the Declaration of Trust, the REIT is required to
distribute monthly to unitholders not less than one-twelfth of
eighty percent (80%) of distributable income of the REIT for the calendar
year (see Note 17).

The REIT maintains an operating line of $40 million with a Canadian
Chartered bank with the following covenants in addition to the leverage
limits under the Declaration of Trust:

(a) Trailing twelve months consolidated earnings before interest, taxes,
depreciation and amortization ("EBITDA") to consolidated interest
expense of not less than 2.0 times (actual being 2.6 times at
June 30, 2008 and 2.8 times at December 31 ,2007);
(b) Trailing twelve months consolidated EBITDA to consolidated debt
service of not less than 1.5 times (actual being 2.3 times at
June 30, 2008 and 2.3 times at December 31 ,2007); and
(c) Unitholders' Equity of not less than $300,000 (actual being $571,672
at June 30, 2008 and $604,666 at December 31, 2007.

13. Income Taxes and Future Income Tax Liability

InnVest currently qualifies as a Mutual Fund Trust for income tax
purposes. As required by its Declaration of Trust, InnVest intends to
distribute all taxable income to its unitholders and to deduct these
distributions for income tax purposes (Note 17).

In June 2007, a Bill was enacted for the taxation of publicly traded
trusts, including income trusts (the "Bill"). The Bill applies to
publicly traded trusts which existed prior to November 1, 2006 starting
with taxation years ending in 2011, except for those trusts that qualify
for the real estate investment trust ("Qualifying REIT") exception
included in the legislation. An existing trust may lose its relief from
taxation in the interim periods to 2011 where it undergoes "undue
expansion". Pursuant to the legislation, a REIT which carries on Canadian
hotel operations (including through subsidiaries) will not be a
Qualifying REIT. As a result, InnVest will be subject to tax starting
January 1, 2011.

The Bill may adversely affect the level of cash distribution to
unitholders commencing in 2011 if InnVest does not become a Qualifying
REIT by then. Management is reviewing whether it is feasible to
reorganize InnVest so that non-qualifying operations and assets are
transferred under a plan of arrangement to a taxable entity that is held
by InnVest unitholders, and that the InnVest hotels, which continue to be
owned by the REIT, are leased by it to the taxable entity. It is not
possible at this preliminary juncture to provide any assurances that any
such reorganization or a similar reorganization can or will be
implemented before 2011, or that any such reorganization, if implemented,
would not result in material costs or other adverse consequences to
InnVest and its unitholders.

14. Financial Instruments

Risk Management

In the normal course of business, the REIT is exposed to a number of
risks that can affect its operating performance. These risks, and the
actions taken to manage them, are as follows:

Interest Rate Risk

The time period over which Management is spreading the debt maturities
implies an average term to maturity of approximately five years. This
strategy reduces the REIT's exposure to re-pricing risk resulting from
short-term interest rate fluctuations in any one year. Management is of
the view that such a strategy will provide the most effective interest
rate risk management for debt.

The REIT's floating rate debt balance is monitored by Management to
minimize the REIT's exposure to interest rate fluctuations. As at
June 30, 2008 the REIT's floating rate debt balance of $77,539
(December 31, 2007 - $79,777) is approximately 8% of total long-term
debt.

Credit Risk

Credit risks relate to the possibility that hotel guests, either
individual or corporate, do not pay the amounts owed to the REIT. The
REIT mitigates this risk by limiting its exposure to customers allowed to
pay by invoice after check out ("direct bill"). Accounts receivable as at
June 30, 2008 is $31,531 (December 31, 2007 - $28,677). InnVest reviews
accounts receivable and the allowance for doubtful accounts is adjusted
for any balances which are determined by management to be uncollectable.
This provision adjustment is expensed in the hotel operating income. The
allowance as at June 30, 2008 is $597 (December 31, 2007 - $670) or 1.9%
(December 31, 2007 - 2.3%) of total receivables. The amount included in
hotel expenses for the six months ended June 30, 2008 is $3 (six months
ended June 30, 2007 - $15).

Liquidity Risk

Liquidity risk arises from the possibility of not having sufficient debt
and equity capital available to the REIT to fund its growth and capital
maintenance programs and refinance its obligations as they arise.

There is a risk that lenders will not refinance maturing debt on terms
and conditions acceptable to the REIT or on any terms at all.
Management's strategy mitigates the REIT's exposure to excessive amount
of debt maturing in any one year. There is also a risk that bank lenders
will not refinance the operating credit facility on terms and conditions
acceptable to the REIT or on any terms at all.

Fair Values

The fair values of the REIT's financial assets and liabilities,
representing net working capital, approximate their recorded values at
June 30, 2008 and December 31, 2007 due to their short-term nature.

The fair value of the REIT's long-term debt is less than the carrying
value by approximately $5,813 at June 30, 2008 (December 31, 2007 - fair
value exceeded carrying value by approximately $1,764) due to changes in
interest rates since the dates on which the individual mortgages were
received. The fair value of long-term debt has been estimated based on
the current market rates for mortgages with similar terms and conditions.

The fair value of the REIT's convertible debentures is less than the
carrying value by approximately $471 at June 30, 2008 (December 31, 2007
- fair value exceeded carrying value by approximately $3,530). The fair
value of convertible debentures has been estimated based on the market
rates for convertible debentures as at June 30, 2008 and December 31,
2007.

Letters of Credit

As at June 30, 2008 the REIT has letters of credit totaling $3,718
(December 31, 2007 - $3,378) held on behalf of security deposits for
various utility companies and liquor licences, and additional security
for the pension liabilities.

15. Unitholders' Equity

The REIT is authorized to issue an unlimited number of units, each of
which represents an equal undivided beneficial interest in any
distributions from the REIT. All units are of the same class with equal
rights and privileges. Per the Declaration of Trust, units cannot be
issued from treasury unless the trustees consider it not to be dilutive
to ensuing annual distributions of distributable income to existing
unitholders.

Units Amount
-------------------------------------------------------------------------
Balance at December 31, 2006 55,045,351 $ 543,363
Units issued on conversion of debentures 830,800 10,605
Units issued under distribution reinvestment plan 367,118 4,934
Units issued for vested executive compensation 20,139 275
Units issued under trustee compensation plan 1,650 23
-------------------------------------------------------------------------
Balance at June 30, 2007 56,265,058 $ 559,200
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Units Amount
-------------------------------------------------------------------------
Balance at December 31, 2007 73,000,694 $ 757,375
Units issued under distribution reinvestment plan 824,893 7,626
Units issued for vested executive compensation 16,033 151
Units issued under trustee compensation plan 7,550 76
-------------------------------------------------------------------------
Balance at June 30, 2008 73,849,170 $ 765,228
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Trustee Compensation Plan

The members of the Board of Trustees receive 50% of their annual retainer
in units (based on the then current market price of the units). The REIT
has set aside 100,000 units in reserve for this purpose. The balance in
this reserve account at June 30, 2008 is 31,869 units. Under the Trustee
Compensation Plan, 7,550 units were issued during the six months ended
June 30, 2008 (six months ended June 30, 2007 - 1,650 units).

Executive Compensation Plan

The senior executives participate in the executive compensation plan
under which units are granted by the Board of Trustees from time to time.
The REIT has reserved a maximum of 1,000,000 units for issuance under the
plan. The balance in this reserve account at June 30, 2008 is 825,146
units. A unit granted through the plan entitles the holder to receive, on
the vesting date, the then current fair market value of the unit plus the
value of the cash distributions that would have been paid on the unit if
it had been issued on the date of grant assuming the reinvestment of the
distribution into REIT units. The payment will be satisfied through the
issuance of units.

The following table summarizes the status of the executive compensation
plan at June 30, 2008, excluding granted units which have fully vested:

Units
Unvested Accumulated
Executive from Dist- Total
units ributions Units
-------------------------------------------------------------------------
January 1, 2005 - granted 13,118 4,626 17,744
January 1, 2006 - granted 12,968 3,496 16,464
January 1, 2007 - granted 15,000 2,421 17,421
January 1, 2008 - granted 20,455 1,253 21,708
January 1, 2008 - units vested (6,559) (2,049) (8,608)
-------------------------------------------------------------------------
54,982 9,747 64,729
-------------------------------------------------------------------------
-------------------------------------------------------------------------

In March 2008, the Board of Trustees approved the granting of 20,455
units effective as of January 1, 2008. These units vest equally on the
third and fourth anniversaries of the effective date of grant.

Distribution Reinvestment Plan ("DRIP")

The REIT has a DRIP whereby eligible Canadian unitholders may elect to
have their distributions of income from the REIT automatically reinvested
in additional units. Unitholders who so elect will receive a further
bonus distribution of units equal in value to 3% of each distribution
that was reinvested.

16. Per Unit Information

Three Months Ended Three Months Ended
June 30, 2008 June 30, 2007
-------------------------------------------------------------------------
Weighted Weighted
Average Units Average Units
-------------------------------------------------------------------------
(Restated, Note 22)
Net income (loss)
from continuing
operations - basic $ 17,186 73,647,417 $ (113,270) 56,002,020
Dilutive effect
of executive
compensation plan - 63,826 - -
-------------------------------------------------------------------------
Net income (loss)
from continuing
operations - diluted $ 17,186 73,711,243 $ (113,270) 56,002,020
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007
-------------------------------------------------------------------------
Weighted Weighted
Average Units Average Units
-------------------------------------------------------------------------
(Restated, Note 22)
Net income (loss)
from continuing
operations - basic $ 2,915 73,440,150 $ (5,947) 55,631,950
Dilutive effect
of executive
compensation plan - 62,888 - 52,769
-------------------------------------------------------------------------
Net income (loss) -
diluted $ 2,915 73,503,038 $ (5,947) 55,684,719
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Three Months Ended Three Months Ended
June 30, 2008 June 30, 2007
-------------------------------------------------------------------------
Weighted Weighted
Average Units Average Units
-------------------------------------------------------------------------
Net income (loss) $ 15,494 73,647,417 $ (113,291) 56,002,020
Dilutive effect of
executive
compensation plan - 63,826 - -
-------------------------------------------------------------------------
Net income (loss) $ 15,494 73,711,243 $ (113,291) 56,002,020
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007
-------------------------------------------------------------------------
Weighted Weighted
Average Units Average Units
-------------------------------------------------------------------------
Net income (loss) $ 421 73,440,150 $ (5,959) 55,631,950
Dilutive effect of
executive
compensation plan - 62,888 - 52,769
-------------------------------------------------------------------------
Net income (loss) $ 421 73,503,038 $ (5,959) 55,684,719
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The impact of the convertible debentures has been excluded from the
June 30, 2008 per unit calculations as the impact of the conversions
would not be dilutive.

17. Distributions to Unitholders

Distributions to unitholders are computed based on distributable income
as defined by the Declaration of Trust (Note 12).

Distributable income is a measure of cash flow that is not defined under
Canadian GAAP and, accordingly, may not be comparable to similar measures
used by other entities. Distributable income per unit has been calculated
on a basis consistent with that prescribed by Canadian GAAP for
calculating earnings per unit.

Distributable income is defined as net income in accordance with Canadian
GAAP, subject to certain adjustments as set out in the Declaration of
Trust, including adding back depreciation and amortization, amortization
of fair value debt adjustment and future income tax (recovery) expense,
excluding any gains or losses on the disposition of real property and
future income taxes, deducting the amount calculated, at 4% of hotel
revenues, for the reserve for the replacement of furniture, fixtures and
equipment and capital improvements, the accretion on convertible
debentures that is included in the computation of net income, and making
any other adjustments determined by the trustees of the REIT in their
discretion. As outlined in the Declaration of Trust, the REIT is required
to distribute monthly to unitholders not less than one-twelfth of eighty
percent (80%) of distributable income of the REIT for the calendar year,
however during the second and third quarter, the REIT typically
distributes less than 80% of its distributable income.

Three Three
Months Months
Ended Ended
June 30, June 30,
2008 2007
-------------------------------------------------------------------------
Net income (loss) $ 15,494 $ (113,291)
-------------------------------------------------------------------------
Add (deduct)
Depreciation and amortization 21,749 14,106
Future income tax recovery (1,237) 122,626
Non-cash portion of interest expense 1,055 751
Reserve for replacement of furniture, fixtures
and equipment and capital improvements (7,492) (4,459)
Writedown (gain on) assets held for sale 1,864 (174)
Convertible debenture accretion 288 190
Non-cash executive and trustee compensation 145 140
Deferred land lease expense and retail
lease income, net 8 3
-------------------------------------------------------------------------
16,380 133,183
-------------------------------------------------------------------------
Distributable income 31,874 19,892
Distributions
Required under the Declaration of Trust 25,499 15,914
Discretionary (4,766) (121)
-------------------------------------------------------------------------
Distributions paid or payable 20,733 15,793
-------------------------------------------------------------------------
Distributions less than distributable income $ 11,141 $ 4,099
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Six Months Six Months
Ended Ended
June 30, June 30,
2008 2007
-------------------------------------------------------------------------
Net income (loss) $ 421 $ (5,959)
-------------------------------------------------------------------------
Add (deduct)
Depreciation and amortization 44,419 27,856
Future income tax (recovery) expense (4,757) 7,090
Non-cash portion of interest expense 1,604 1,477
Reserve for replacement of furniture, fixtures
and equipment and capital improvements (13,340) (8,079)
Writedown (gain on) assets held for sale 2,364 (833)
Convertible debenture accretion 575 402
Corporate reorganization costs - 1,471
Non-cash executive and trustee compensation 300 228
Deferred land lease expense and retail
lease income, net 16 17
-------------------------------------------------------------------------
31,181 29,629
-------------------------------------------------------------------------
Distributable income 31,602 23,670
Distributions
Required under the Declaration of Trust 25,282 18,936
Discretionary 16,069 12,437
-------------------------------------------------------------------------
Distributions paid or payable 41,351 31,373
-------------------------------------------------------------------------
Distributions in excess of distributable
income $ 9,749 $ 7,703
-------------------------------------------------------------------------
-------------------------------------------------------------------------

18. Management Agreements

Westmont Hospitality Canada Limited

On July 26, 2002, the REIT entered into a Management Agreement for hotel
management and accounting services and an Administrative Services
Agreement (the "Agreements") with Westmont Hospitality Management Canada
Limited ("Westmont"). Westmont is considered a related party to the REIT
as a result of its ability to exercise significant influence through the
Agreements. Westmont manages all but fifteen of the REIT's hotels.

The Agreements have an initial term of 10 years with two successive
five-year renewal terms, subject to the consent of Westmont and approval
of the REIT. The Agreements will expire July 25, 2012. The Agreements
provide for the payment of an annual management fee to Westmont in an
amount equal to 3.375% of gross revenues during the term of the
Agreements, including renewal periods. In addition, Westmont may receive
an annual incentive fee if the REIT achieves distributable income
(see Note 17) in excess of $1.25 per unit. No management incentive fees
were paid during the periods presented. Accounting fees are calculated
based on a fixed charge per room which increases by the Consumer Price
Index change annually.

In addition to the base management fee and incentive fee, Westmont is
entitled to reasonable fees based on a percentage of the cost of
purchasing certain goods and supplies and certain construction costs and
capital expenditures, fees for accounting services, reasonable
out-of-pocket costs and expenses (other than general and administrative
expenses or overhead costs except as otherwise provided in the
Administrative Services Agreement) and project management and general
contractor service fees related to hotel renovations managed by Westmont.

Also, for certain hotels owned by InnVest and not managed by Westmont,
Westmont is entitled to an asset management fee based on a fixed
percentage of the purchase price of the hotel or a fixed percentage of
Hotel operating income, subject to an annual minimum fee.

During the three and six months ended June 30, 2008 and 2007, the fees
charged to the REIT pursuant to the Agreements were as follows:

Three Three
Months Months
Ended Ended
June 30, June 30,
2008 2007
-------------------------------------------------------------------------
Fees from continuing operations:
Management fees $ 3,413 $ 3,174
Asset management fees (included in hotel
operating expenses) 583 79
Accounting services (included in hotel
operating expenses) 586 553
Administrative services (included in
corporate and administrative expenses) 111 107
Project management and general contractor services
(capitalized to hotel properties) 236 235
Fees from discontinued operations 93 178
-------------------------------------------------------------------------
$ 5,022 $ 4,326
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Six Months Six Months
Ended Ended
June 30, June 30,
2008 2007
-------------------------------------------------------------------------
Fees from continuing operations:
Management fees $ 6,137 $ 5,798
Asset management fees (included in hotel
operating expenses) 1,233 157
Accounting services (included in hotel
operating expenses) 1,168 1,105
Administrative services (included in
corporate and administrative expenses) 206 212
Project management and general contractor services
(capitalized to hotel properties) 347 393
Fees from discontinued operations 173 279
-------------------------------------------------------------------------
$ 9,264 $ 7,944
-------------------------------------------------------------------------
-------------------------------------------------------------------------

In addition, salaries of REIT employees paid by Westmont and reimbursed
by the REIT were $98 (June 30, 2007 - $126). Included in accounts payable
and accrued liabilities are amounts owed to Westmont at June 30, 2008
totalling $1,671 (December 31, 2007 - $1,480).

Other Management Agreements

The REIT entered into management agreements with Hilton Canada Co.
("Hilton") to manage the two Hilton hotels acquired in 2006. The
agreements provide for the payment of an annual management fee to Hilton
in an amount equal to 2.5% until September 30, 2008 and then 3.0% of
gross revenues during the balance of the term of the agreements. The
agreements mature on December 31, 2026. For the six months ended June 30,
2008, total management fees paid to Hilton were $484 (June 30, 2007 -
$337).

The REIT assumed the hotel management agreements with Delta Hotels
Limited ("Delta"), dated January 1, 2003 when two Delta hotels were
purchased in 2006. The agreements provide for the payment of an annual
management fee to Delta in an amount equal to 3% of total revenues from
the hotel, plus 0.5% of total revenues from the hotel if the hotel's
annual gross operating profit is greater than the budgeted gross
operating profit. The agreements mature on December 31, 2015, with two
ten-year extension options. For the six months ended June 30, 2008, total
management fees paid to Delta were $266 (June 30, 2007 - $357).

With the acquisition of the Legacy Portfolio in September 2007, InnVest
assumed the existing hotel management agreements with Fairmont Hotel and
Resorts ("Fairmont") or Delta for each of the Legacy Portfolio hotels.
The agreements provide for the payment of a base management fee and an
incentive management fee to either Fairmont or Delta. Legacy was also
subject to a portfolio incentive fee on 11 of its 25 hotels, of which six
are now owned or leased by InnVest. The base management fee is equal to
3% of total revenues from the hotel for nine of the hotels and 2% of
total revenues for the remaining two hotels. The agreements mature from
December 31, 2010 to December 31, 2047. The incentive fees are calculated
based on net operating income from hotel operations plus amortization
less the capital replacement reserve, in excess of a threshold. For the
six months ended June 30, 2008, total management fees paid for the Legacy
Portfolio were $5,135.

19. Segmented Financial Information

The REIT operates hotel properties throughout Canada. Information related
to these properties by geographic segment is presented below. The REIT
primarily evaluates operating performance based on hotel operating
income. All key financing, investing and capital allocation decisions are
centrally managed. The comparatives have been restated to exclude
discontinued operations and assets held for sale at June 30, 2008.

-------------------------------------------------------------------------
Western Ontario Quebec Atlantic Total
-------------------------------------------------------------------------

Three Months Ended
June 30, 2008
Hotel revenues $ 46,980 $ 67,070 $ 40,822 $ 27,124 $ 181,996
Hotel expenses 31,394 47,250 27,860 19,340 125,844
-------------------------------------------------------------------------
Hotel operating
income $ 15,586 $ 19,820 $ 12,962 $ 7,784 $ 56,152
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Three Months Ended
June 30, 2007
Hotel revenues $ 10,874 $ 58,329 $ 28,114 $ 11,982 $ 109,299
Hotel expenses 6,821 40,786 19,962 7,771 75,340
-------------------------------------------------------------------------
Hotel operating
income $ 4,053 $ 17,543 $ 8,152 $ 4,211 $ 33,959
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Six Months Ended
June 30, 2008
Hotel revenues $ 85,590 $ 122,066 $ 69,720 $ 45,149 $ 322,525
Hotel expenses 60,716 92,055 54,055 35,973 242,799
-------------------------------------------------------------------------
Hotel operating
income $ 24,874 $ 30,011 $ 15,665 $ 9,176 $ 79,726
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Six Months Ended
June 30, 2007
Hotel revenues $ 19,859 $ 108,091 $ 49,446 $ 20,261 $ 197,657
Hotel expenses 13,111 80,161 38,183 14,624 146,079
-------------------------------------------------------------------------
Hotel operating
income $ 6,748 $ 27,930 $ 11,263 $ 5,637 $ 51,578
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Capital expenditures
on hotel properties
Three Months Ended
June 30, 2008 $ 2,750 $ 3,130 $ 4,823 $ 1,984 $ 12,687
Three months ended
June 30, 2007 $ 1,374 $ 3,651 $ 2,062 $ 438 $ 7,525
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Capital expenditures
on hotel properties
Six Months Ended
June 30, 2008 $ 3,163 $ 5,037 $ 6,209 $ 4,197 $ 18,606
Six months ended
June 30, 2007 $ 1,747 $ 7,729 $ 2,939 $ 990 $ 13,405
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Hotel properties
As at June 30,
2008 $ 517,655 $ 703,475 $ 424,449 $ 243,357 $1,888,936
As at December 31,
2007 $ 525,322 $ 690,284 $ 430,570 $ 238,589 $1,884,765
-------------------------------------------------------------------------
-------------------------------------------------------------------------

20. Total Revenues

Three Three Six Six
Months Months Months Months
ended Ended ended Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
-------------------------------------------------------------------------

Hotel revenues $ 181,996 $ 109,299 $ 322,525 $ 197,657
Other business income
(Note 21) 3,068 3,049 5,729 5,662
-------------------------------------------------------------------------
$ 185,064 $ 112,348 $ 328,254 $ 203,319
-------------------------------------------------------------------------
-------------------------------------------------------------------------

21. Other Business Income

Three Three
Months Months
Retire- Ended Ended
Franchise Retail/ ment June 30, June 30,
Business Office Residence 2008 2007
-------------------------------------------------------------------------

Revenues $ 2,162 $ 636 $ 270 $ 3,068 $ 3,049
Expenses 1,334 304 173 1,811 1,728
-------------------------------------------------------------------------
Other business
income, net $ 828 $ 332 $ 97 $ 1,257 $ 1,321
-------------------------------------------------------------------------

Six Six
Months Months
Retire- Ended Ended
Franchise Retail/ ment June 30, June 30,
Business Office Residence 2008 2007
-------------------------------------------------------------------------

Revenues $ 3,891 $ 1,299 $ 539 $ 5,729 $ 5,662
Expenses 2,543 584 352 3,479 3,293
-------------------------------------------------------------------------
Other business
income, net $ 1,348 $ 715 $ 187 $ 2,250 $ 2,369
-------------------------------------------------------------------------

Other business income includes Franchise Business Income, which is
InnVest's 50% share of CHC's operations, and the income from the other
real estate properties acquired in 2006.

22. Assets Held for Sale and Discontinued Operations

On March 30, 2007, the REIT sold a hotel held for sale in Atlantic Canada
for $2,350 less closing costs of $250, and recorded a gain of $659. On
April 10, 2007, an Ontario asset held for sale was sold for $4,650 less
closing costs of $350, and the REIT recorded a gain of $174. The debt
owing of $1,010 and $1,181 respectively was paid out of the proceeds.
Both these hotels had been reclassified to assets held for sale in 2006.

In addition to the operations of these hotels, the results of
discontinued operations are comprised of three Ontario hotel properties
and one Quebec hotel property reclassified as assets held for sale on
December 18, 2007.

These discontinued operations are summarized below. The comparative
amounts in the statements of net income (loss) have been restated to
reflect that these assets were held for sale during the comparative
period.

Discontinued operations for the three and six months ended June 30, 2008
and 2007 are as follows:

Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
-------------------------------------------------------------------------
(Restated) (Restated)
Hotel revenues $ 2,154 $ 2,189 $ 3,872 $ 4,298
-------------------------------------------------------------------------
Hotel expenses
Operating expenses 1,388 1,371 2,827 3,032
Property taxes, rent
and insurance 313 312 620 667
Management fees 73 74 131 145
-------------------------------------------------------------------------
1,774 1,757 3,578 3,844
-------------------------------------------------------------------------
Hotel operating income 380 432 294 454
-------------------------------------------------------------------------
Interest on mortgages 208 227 424 501
Depreciation and
amortization - 400 - 798
-------------------------------------------------------------------------
208 627 424 1,299
-------------------------------------------------------------------------
Income (loss) from
discontinued operations 172 (195) (130) (845)

Gain on sale of assets
held for sale - 174 - 833
Write down of assets
held for sale (1,864) - (2,364) -
-------------------------------------------------------------------------
(1,864) 174 (2,364) 833
-------------------------------------------------------------------------
Net loss from
discontinued
operations $ (1,692) $ (21) $ (2,494) $ (12)
-------------------------------------------------------------------------

23. Comparative Information

Certain prior period amounts have been restated to conform to the current
period presentation.

%SEDAR: 00018005E

Contact Information

  • Kenneth D. Gibson
    President and Chief Executive Officer
    (905) 206-7100
    Fax: (905) 206-7114

    Tamara L. Lawson
    Chief Financial Officer and Corporate Secretary
    (905) 206-7100
    Fax: (905) 206-7114
    Website: www.innvestreit.com