Winston Hotels Forms Joint Venture with Grand Heritage Hotel Company to Acquire the Stanley Hotel in Estes Park, Colo

Business Wire, August 17, 2005

RALEIGH, N.C. -- Winston Hotels, Inc. (NYSE: WXH), a real estate investment trust and owner of premium limited-service, upscale extended-stay and full-service hotels and Grand Heritage Hotel Company, a national hotel owner and manager that specializes in independent, historic hotels, today announced they have formed a joint venture and acquired the 141-room Stanley Hotel in Estes Park, Colo.

Winston contributed $3.0 million of the total $5.0 million equity investment in the joint venture. The joint venture simultaneously closed on a $13.0 million first mortgage loan provided by Credit Suisse First Boston to finance the acquisition. Grand Heritage will continue to operate the hotel.

Separately, Winston announced that it closed on a $2.0 million participation in a $20 million senior bridge loan that bears interest at 11% fixed for two years to finance a 95-unit condo/hotel conversion project in Miami, Fla., with Canyon Capital Realty Advisors LLC funding the remaining $18 million.

"Grand Heritage is a highly regarded hotel owner and operator and, we look forward to expanding our relationship with them." said Joe Green, president and chief financial officer of Winston Hotels. "This is a very unique historic property in an irreplaceable location at the entrance to Rocky Mountain National Park, approximately one hour from Denver."

"This joint-venture brings together two strong hotel companies and a unique property," said John Cullen, president of Grand Heritage. "We believe the hotel's setting, excellent physical condition and history present significant upside potential. Grand Heritage welcomes Winston as a partner to help us take the hotel to the next level of quality while maximizing the opportunities there."

The hotel was built in 1909 and has undergone significant upgrades in the past two years. The hotel has 141 renovated guest rooms, eight meeting and banquet rooms totaling 17,800 square feet, a restaurant, heated outdoor pool, spa, and a museum. Open year-round, the property's business base includes meetings, banquet, social events and leisure travelers.

One of the nation's premier owner-operators of independent historic hotels, Grand Heritage Hotels (www.grandheritageinternational.com) specializes in historic properties that epitomize luxury and comfort. The Grand Heritage Hotels brand includes 13 hotels throughout North America, including the Governor Hotel in Portland, Oregon, the Bitter End Yacht Club in Virgin Gorda, British Virgin Islands, the Royal Park Hotel in Rochester, Michigan and the Chanler on Cliff Walk in Newport, Rhode Island. Grand Heritage plans to expand its portfolio through acquiring and recapitalizing upscale hotels.

Raleigh, North Carolina-based Winston Hotels, Inc. is a real estate investment trust specializing in the development, acquisition, and repositioning of, and provision of subordinated financing to, premium limited-service, upscale extended-stay and full-service hotels, with a portfolio increasingly weighted toward the leading brands in the lodging industry's upscale segment. The company currently owns or is invested in 50 hotels with an aggregate of 7,024 rooms in 16 states, which includes: 42 wholly owned properties with an aggregate of 5,963 rooms; a 60 percent ownership interest in one joint-venture hotel with 141 rooms; a 49 percent ownership interest in one joint-venture hotel with 118 rooms; a 48.78 percent ownership interest in one joint venture hotel with 147 rooms; and a 13.05 percent ownership interest in five joint-venture hotels with 658 rooms. For more information about Winston Hotels, visit the Winston Hotels Web site at www.winstonhotels.com.

In addition to historical information, this press release contains forward-looking statements. The reader can identify these statements by use of words like "may," "will," "expect," "project," "anticipate," "estimate," "target," "believe," "continue" or similar expressions. These statements represent the company's judgment and are subject to risks and uncertainties that could cause actual operating results to differ materially from those expressed or implied in the forward looking statements including, but not limited to, changes in general economic conditions, lower occupancy rates, lower average daily rates, acquisition risks, development and redevelopment risks including risk of construction delay, cost overruns, occupancy, governmental permits, zoning, the increase of development costs in connection with projects that are not pursued to completion, lender consent rights in making loans, the risk of non-payment of loans, or the failure to make additional debt investments and investments in hotels. Other risks are discussed in the company's filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2004, Quarterly Reports on Form 10-Q and its other periodic reports.