Winston Hotels Acquires the Hampton Inn & Suites Baltimore Inner Harbor in Maryland

Business Wire, Sept 15, 2005

BALTIMORE -- Winston Hotels, Inc. (NYSE: WXH), a real estate investment trust and owner of premium limited-service, upscale extended-stay and full-service hotels, today announced it has acquired the 116-room Hampton Inn & Suites Baltimore Inner Harbor in Maryland for $16.25 million from a private investment group.

"We liked this project when we participated in a mezzanine loan to finance the hotel in 2002," said Joe Green, Winston's president and chief financial officer. "The property has been open about 18 months and has been well received in the market. We believe there is additional upside potential as the Baltimore economy, particularly in the Inner Harbor area, continues to grow."

Located at 131 East Redwood Street, in the heart of the Baltimore financial district and two blocks from the Inner Harbor, the property was created by converting a historic office building. The hotel features about 1,500 square feet of meeting space, an indoor pool, a fitness center, complimentary high-speed wireless Internet access in the lobby, a business center, limited room service and 24-hour valet parking.

In 2002, Winston co-funded equally with Hall Financial Group a $3.5 million mezzanine loan to help finance and renovate the historic building. The three-year loan required monthly principal and interest payments based on a 10-year amortization period and an interest rate of 30-day LIBOR plus 10.21%. In addition, the loan required quarterly interest payments equal to 4 % of gross monthly revenues. Interest on the loan also accrued at a rate of 6% of gross monthly revenue. Upon acquiring the hotel, the loan was paid off, which resulted in a lump sum payment of approximately $5.3 million, including $3.3 million of principal and $2.0 million in accrued interest and disposition fees. Winston's portion of the $5.3 million totaled $2.8 million. Upon pay off of the loan, the company realized $0.7 million in interest income that it had not previously received or accrued.

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 51 hotels with an aggregate of 7,143 rooms in 17 states, which includes: 43 wholly owned properties with an aggregate of 6,079 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.