Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications - Open-end real estate investment trustexempt from prospectus and registration requirements in connectionwith issuance of units to existing unitholders holding minimum500 units pursuant to a distribution reinvestment plan wherebydistributions of income are reinvested in additional units ofthe trust, subject to certain conditions B first trade reliefprovided for additional units of trust, subject to certain conditionsB issuer relieved of certain reporting requirements, subjectto certain conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25, 53, 74(1).

Rules Cited

Rule 45-502 - Dividend or Interest Reinvestmentand Stock Dividend Plans, (1998) 21 OSCB 3685.

Multilateral Instrument Cited

MI 45-102 - Resale of Securities, (2001) 24OSCB 5522.















WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Québec, New Brunswick, Nova Scotia, Newfoundland andLabrador, and Prince Edward Island (the "Jurisdictions")has received an application from InnVest Real Estate InvestmentTrust ("InnVest REIT") for a decision pursuant tothe securities legislation in each of the Jurisdictions (the"Legislation") that the requirements contained inthe Legislation to be registered to trade in a security andto file and obtain a receipt for a preliminary and final prospectus(the "Registration and Prospectus Requirements") shallnot apply to the distribution and resale of units of InnVestREIT pursuant to a distribution reinvestment plan (the "DRIP");

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications ("MRRS"),the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS InnVest REIT has representedto the Decision Makers that:

1. InnVest REIT is an unincorporated open-endedreal estate investment trust established under the laws ofthe Province of Ontario pursuant to a declaration of trustdated January 1, 2002, as amended and restated as of July18, 2002.

2. The beneficial interests in InnVest REITare divided into a single class of units (the "Units")and InnVest REIT is authorized to issue an unlimited numberof Units. As of the date hereof, 41,075,910 Units are issuedand outstanding.

3. InnVest's REIT's focus will be on managingits portfolio of hotel properties and acquiring other hotelproperties as opportunities arise. Its objectives are: (i)to provide holders of Units ("Unitholders") withstable and growing cash distributions, payable monthly, principallyfrom the ownership of limited service hotels; and (ii) tomaximize long-term Unit value by implementing InnVest REIT'sbusiness strategy.

4. InnVest REIT became a reporting issueror the equivalent thereof in each of the Jurisdictions onJuly 19, 2002 when it obtained a receipt for its final prospectusdated July 18, 2002. As of the date hereof, InnVest REIT isnot in default of any requirements under the Legislation.

5. The Units are currently listed and postedfor trading on the Toronto Stock Exchange ('the "TSX").

6. The REIT is not a "mutual fund"as described in the Legislation because the Unitholders arenot entitled to receive on demand an amount computed by referenceto the value of a proportionate interest in the whole or ina part of the net assets of InnVest REIT, as contemplatedin the definition of "mutual fund" in the Legislation.

7. InnVest REIT currently intends to makecash distributions to Unitholders monthly equal to, on anannual basis, not less than 80% of its distributable income.

8. InnVest REIT intends to establish the DRIPpursuant to which Unitholders who beneficially hold a minimumof 500 Units may, at their option, automatically reinvestcash distributions paid on their Units in additional Units("Additional Units"). The DRIP will not be availableto Unitholders who are not Canadian residents.

9. Distributions due to participants in theDRIP ("Participants") will be paid to ComputershareTrust Company of Canada in its capacity as agent under theDRIP (in such capacity, the "DRIP Agent") and appliedto purchase Additional Units. All Additional Units purchasedunder the DRIP will be purchased by the DRIP Agent directlyfrom InnVest REIT.

10. The price of Additional Units purchasedwith cash distributions will be the volume weighted averageof the closing price for a board lot of Units on the TSX forthe five trading days immediately preceding the relevant distributiondate. Unitholders who elect to participate in the DRIP willreceive a further distribution of Additional Units equal invalue to 3% of each distribution that is reinvested underthe DRIP.

11. No commissions, service charges or brokeragefees will be payable by Participants in connection with theDRIP and all administrative costs will be borne by InnVestREIT.

12. Additional Units purchased under the DRIPwill be registered in the name of The Canadian Depositoryfor Securities Limited ("CDS") as the Units areheld by Unitholders in book entry only form through CDS andits participants.

13. Participants may terminate their participationin the DRIP at any time by written notice to their broker,who will in turn notify CDS. CDS will notify the DRIP Agent,on a monthly basis, of the number of Units participating inthe DRIP. If a Participant elects to terminate his or herparticipation in the DRIP, he or she will receive all furtherdistributions by cheque.

14. The distribution of Additional Units byInnVest REIT pursuant to the DRIP cannot be made in relianceon certain existing registration and prospectus exemptionscontained in the Legislation as the DRIP involves the reinvestmentof distributions of distributable income of InnVest REIT andnot the reinvestment of dividends, interest or distributionsof capital gains or out of earnings or surplus.

15. The distribution of Additional Units byInnVest REIT pursuant to the DRIP cannot be made in relianceon registration and prospectus exemptions contained in theLegislation for distribution reinvestment plans of mutualfunds, as InnVest REIT is not a "mutual fund" asdefined in the Legislation.

AND WHEREAS under the MRRS, this MRRSDecision Document evidences the decision of each of the DecisionMakers (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Makers with the jurisdiction to make thedecision has been met;

THE DECISION of the Decision Makers pursuantto the Legislation is that the trades of Additional Units byInnVest REIT to the DRIP Agent for the account of Participantspursuant to the DRIP shall not be subject to the Registrationand Prospectus Requirements of the Legislation provided that:

(a) at the time of the trade InnVest REITis a reporting issuer or the equivalent under the Legislationand is not in default of any requirements of the Legislation;

(b) no sales charge is payable in respectof the trade;

(c) InnVest REIT has caused to be sent tothe person or company to whom the Additional Units are traded,not more than 12 months before the trade, a statement describing:

(i) their right to withdraw from the DRIPand to make an election to receive cash instead of Unitson the making of a distribution of income by InnVest REIT,and

(ii) instructions on how to exercise theright referred to paragraph (i) above;

(d) disclosure of the distribution of theAdditional Units is made to the relevant Jurisdictions byproviding the particulars of the date of the distributionof such Additional Units, the number of such AdditionalUnits and the purchase price paid or to be paid for suchAdditional Units in:

(i) an information circular or take-overbid circular filed in accordance with the Legislation;or

(ii) a letter filed with the DecisionMaker in the relevant Jurisdiction by a person or companycertifying that the person or company has knowledge ofthe facts contained in the letter,

when InnVest REIT distributes such AdditionalUnits for the first time and thereafter not less frequentlythan annually, unless the aggregate number of AdditionalUnits so traded in any month exceeds 1% of the Units outstandingat the beginning of a month in which the Additional Unitswere traded, in which case a separate report shall be filedin each relevant Jurisdiction in respect of that month withinten days of the end of the month;

(e) except in Québec, the first tradein Additional Units acquired pursuant to this Decision willbe a distribution or primary distribution to the publicunless the conditions in paragraphs 2 through 5 of subsection2.6(3) of Multilateral Instrument 45-102 Resale of Securitiesare satisfied;

(f) in Québec, the first trade inAdditional Units acquired pursuant to this Decision willbe a distribution unless:

(i) at the time of the first trade theissuer is a reporting issuer in Québec and is notin default of any of the requirements of securities legislationin Québec;

(ii) no unusual effort is made to preparethe market or to create a demand for the securities thatare the subject of the alienation;

(iii) no extraordinary commission or otherconsideration is paid in respect of the alienation; and

(iv) if the seller of the securities isan insider of the issuer, the seller has no reasonablegrounds to believe that the issuer is in default of anyrequirements of securities legislation.

January 24, 2003.

"Robert W. Korthals"                    "RobertL. Shirriff"