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Boston Pizza Royalties Income Fund Announces December 2010 Distribution

December 17, 2010

For Immediate Release                                                                           Toronto Stock Exchange: BPF.UN


VANCOUVER, BC, December 17, 2010

December, 2010 Distribution

Boston Pizza Royalties Income Fund (the “Fund”) (TSX: BPF.UN) announced today a cash distribution of 11.5 cents per unit for the period from December 1, 2010 to December 31, 2010.  The distribution will be paid to unitholders of record at the close of business on December 31, 2010 and will be payable on January 31, 2011.

Post-SIFT Tax Distributions

On August 12, 2010, the Fund’s Trustees announced their intention for the Fund to maintain its current income trust structure beyond January 1, 2011 when legislative changes to the tax treatment of income trusts, commonly referred to as Specified Investment Flow Through tax (the “SIFT Tax”), become effective. Under the SIFT Tax, the Fund will be subject to a tax at the prevailing corporate rate of 26.5% for 2011 and 25% for 2012 and later taxation years.  The SIFT Tax will reduce the amount of cash available to the Fund to make distributions to unitholders.

Beginning with the distribution for the month of January 2011 (payable to unitholders of record at the close of business on February 21, 2011), the Fund’s Trustees expect to adopt a new distribution policy, with a reduced monthly distribution that reflects the Fund’s obligation to make SIFT Tax payments. The Fund’s Trustees anticipate that distributions to unitholders will be reduced by an amount roughly equivalent to the prevailing SIFT Tax rate and will be set at an initial level of approximately $0.084 per monthly distribution (or $1.01 per unit annually). In determining the actual level of distributions, the Trustees will consider the cash reserves of the Fund and its subsidiaries as well as the operational cash flows of the Boston Pizza Royalties Limited Partnership.  The Trustees note that the Fund's level of distributions are subject to change from time to time based on a number of factors – see the disclosure below re: Forward Looking Information.  Consistent with past practice, the Fund will periodically review distribution levels based on its policy of stable and sustainable distribution flow to unitholders.

Cash distributions to unitholders will be reclassified for tax purposes as eligible dividends and Canadian residents who hold their units in a non-tax deferred account may claim the dividend tax credit for eligible dividends, thereby reducing the after-tax impact of this legislative change. Unitholders are encouraged to consult their own tax advisors to determine the impact of this change in tax laws on their specific circumstances. 

The distribution announced today for December 2010 and payable on January 31, 2011 is not subject to SIFT Tax because it is based on earnings of the Fund in the 2010 tax year, prior to the commencement of SIFT Tax on January 1, 2011. As a result, the December distribution to unitholders remains at 11.5 cents per unit and will continue to be classified as normal trust income for tax purposes.

The Fund is a limited purpose, open-ended trust established under the laws of British Columbia to acquire indirectly certain trade marks and trade names used by Boston Pizza International Inc. ("BPI") in its Boston Pizza restaurants in Canada.  The trade marks are licensed to BPI for 99 years for which BPI pays the Fund 4% of franchise revenues of all Boston Pizza restaurants in the royalty pool. 

Forward Looking Information

Forward-looking information in this press release includes, but is not limited to, such things as:

  • The Fund's anticipated distribution amount for January, 2011;
  • The Fund retaining its current income trust structure beyond January 1, 2011;
  • The rate of SIFT applicable to the Fund in 2011, 2012 and beyond; and
  • The characterization of the Fund’s distributions as eligible dividends commencing January 1, 2011, and the ability of qualifying unitholders to claim dividend tax credits in respect of such distributions.

The forward-looking information disclosed herein is based on a number of assumptions including, among other things:

  • the absence of changes in law;
  • the protection of the Boston Pizza trade-marks and trade-names;
  • franchisees’ access to financing;
  • franchisees’ duly paying franchise fees and other amounts;
  • there will be no closures of Boston Pizza restaurants that materially affect the amount of royalty paid by Boston Pizza International Inc. (“BPI”) to the Fund;
  • future results being similar to historical results; and
  • expectations related to future general economic conditions.

This forward-looking information involves a number of risks, uncertainties and future expectations including, but not limited to:

  • competition;
  • changes in demographic trends;
  • changes in consumer preferences and discretionary spending patterns;
  • changes in national and local business and economic conditions;
  • legislation and government regulation;
  • cash distributions are not guaranteed;
  • accounting policies and practices;
  • the impact of new or increased or harmonization of sales taxes upon gross sales; and
  • the results of operations and financial conditions of BPI and the Fund.

The foregoing list of factors is not exhaustive and should be considered in conjunction with the risks and uncertainties set out in “Risks & Uncertainties” section of the Fund’s management’s discussion and analysis for the three month and nine month periods ended September 30, 2010. This press release discusses some of the factors that could cause actual results to differ materially from those expressed in or underlying such forward-looking information.

Forward-looking information is provided as of the date hereof and, except as required by law, we assume no obligation to update or revise forward-looking information to reflect new events or circumstances.

The trustees of the Fund have approved the contents of this news release.


Boston Pizza Royalties Income Fund
Jordan Holm - Vice President of Investor Relations
Tel: 604-303-6083

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