ATLANTA, Feb. 4, 1999 -  Homestead Village Incorporated (NYSE: HSD) today announced diluted earnings before depreciation, amortization and deferred taxes (EBDADT) per share of $0.79 for the year ended December 31, 1998, compared with $0.45 in 1997, a 75.6% increase. Homestead also reported a 117.8% increase in earnings before interest, taxes, depreciation and amortization (EBITDA) per diluted share for the year, to $0.98 per share, compared with $0.45 per share for the prior year.

For the fourth quarter 1998, Homestead reported a 66.7% increase in diluted EBDADT per share, to $0.20 compared with $0.12 in the prior year period. Homestead also reported a 138.5% increase in EBITDA per diluted share for the fourth quarter to $0.31 per share, compared with $0.13 per share in 1997.

The 1998 full year and fourth quarter per share numbers exclude $7.2 million of special charges in connection with reductions in Homestead's development program. The charges are equivalent to $0.12 pretax per diluted share for the full year 1998 and $0.13 pretax per diluted share for the fourth quarter. Homestead announced in October 1998 that it anticipated taking the special charges in the fourth quarter primarily due to severance, reorganization and pursuit costs related to projects that the company will not develop.

The company's year-end results were on target as Homestead continues to serve the growing ranks of corporate business travelers staying 4 nights or more. Weekly revenue per available room (RevPAR) for the company's stabilized properties increased 9.0% for the year, to $218 from $200 one year ago. In the fourth quarter, RevPAR increased 8.7%, to $213 from $196 one year ago.

"We are extremely pleased with Homestead's solid operating results in 1998, which demonstrate the value of the Homestead brand in successfully identifying and satisfying the needs of our target customer," said Michael D. Cryan, co-chairman and chief operating officer. "Our sustained growth throughout 1998 reflects the strong performance of our properties across the country," he said. "We believe the current weakness in our share price is the result of issues surrounding Homestead's balance sheet, as well as market concern over perceived demand and supply issues which have impacted share prices of the entire extended-stay sector in 1998, and are not a reflection of the company's operating performance."

Agreement to Sell and Leaseback 18 Properties for $145 Million

David C. Dressler, Jr., co-chairman and chief investment officer, noted that Homestead's management remains focused on operating effectively for its shareholders in the current difficult capital markets environment. "The agreement that we have reached with Hospitality Properties Trust (NYSE: HPT) for a sale and leaseback on 18 of our properties is a significant step in creating financial stability for Homestead in 1999," said Mr. Dressler.

Hospitality Properties will purchase 18 Homestead Village hotels for $145 million. Homestead will continue to operate the hotels under a long-term lease through 2015 and pay a minimum rent equal to 11% of the purchase price, or approximately $16 million per year. Homestead will post a security deposit equal to one year's rent. The properties being sold were among 26 hotels pledged as collateral for $122 million of mortgages maturing in June 1999. "This transaction represents an efficient re-financing of these mortgages," added Mr. Dressler.

Critical Mass Positions Homestead for Brand Expansion, Growth in 1999

Homestead has achieved critical mass with 125 properties operating today, including operating properties in 24 of the top 25 destination markets in the United States. The company expects to have 136 properties in operation by third quarter 1999. "With a strong presence in the major destination markets, key for extended-stay lodging, Homestead is now turning its focus in 1999 to strengthening its brand nationwide, building awareness and generating new relationships with targeted, multi-location corporate customers," noted Mr. Cryan. "Homestead is well-positioned to become the top extended-stay lodging provider for the corporate business traveler."

In 1998, Homestead added 223 major corporate customers, including Microsoft, Siemens, and Lucent Technologies to its growing list of corporate users. With field-based professionals in 24 markets, Homestead's sales force generated more than $14 million in revenue during 1998, $5.7 million in the fourth quarter. Homestead's connections to the Global Distribution Systems (GDS) used by travel professionals, and a toll free reservations number, 888-STAY-HSD, have generated reservations for over 179,000 room nights totaling more than $10 million in additional revenue to date.

Homestead Village Incorporated is committed to creating significant shareholder value as a leading owner and operator of moderately priced, corporate extended-stay lodging properties throughout the United States. Homestead is focused on the corporate business traveler, and has developed a proprietary operating system to ensure its customers a consistent, high-quality, uniform lodging experience. The company's site selection program targets infill locations proximate to major business centers and convenient to services desired by its customers. Homestead seeks to build a national brand recognized and valued by its major corporate customers by concentrating on delivering high-quality service and product in strategic locations.