• the 437-room Hilton Rye Town in Rye Brook, New York; 
• the 630-room Doubletree Crystal City and 
• 267-suite Embassy Suites Crystal City both in Arlington, Virginia; 
• the 257-suite Embassy Suites Santa Clara in Santa Clara, California and
• the 174-suite Embassy Suites Orlando Airport in Orlando, Florida. 

Hilton contributed the Hilton Rye Town and CNL contributed the Doubletree Crystal City to the partnership. The partnership purchased all three Embassy Suites properties from Strategic Hotel Capital.  Total consideration for all five hotels is approximately $249 million. The partnership financed a portion of the purchase price with a $145 million, 7-year first mortgage loan at a fixed rate of 5.95%.

On December 24, 2002, the Hilton-CNL partnership acquired the 500-room Doubletree at Lincoln Centre in Dallas, Texas and the 428-room Sheraton El Conquistador Resort and Country Club in Tucson, Arizona for a total consideration of approximately $121 million. The Tucson property has been converted to the Hilton brand, and the Dallas property is in the process of being converted to a Hilton.

Including anticipated refurbishment costs, the total capitalization of the partnership -- including all seven hotels -- is estimated at approximately $402 million. Hilton will generate net proceeds of approximately $30 million from the entire transaction, based on Hilton's investment in the partnership, contribution of the Hilton Rye Town to the partnership, and proceeds received from the acquisition financing. Hilton will use the $30 million net proceeds to reduce debt.

CNL, one of the lodging industry's top acquirers of hotels, owns a majority interest in the partnership.  Hilton, one of the world's leading hotel owners and operators, will operate all seven hotels under long-term management agreements and retain a minority interest in the partnership.

"We are delighted to have completed this transaction with CNL," said Matthew J. Hart, executive vice president and chief financial officer of Hilton Hotels Corporation. "This transaction allows us to secure seven attractive long-term management contracts, increase our income from management fees, reduce our debt and expand our relationship with CNL. That's a home run in this environment."

Hilton Hotels Corporation is recognized internationally as a preeminent hospitality company. The company develops, owns, manages or franchises more than 2,000 hotels, resorts and vacation ownership properties.