The portfolio expansion also will mark the achievement of one of the Company's key strategic goals since announcing the sale of former lessee Winston Hospitality, Inc. to CapStar Hotel Company (NYSE:CHO) last November - the genesis of a second lessee relationship with Prime Hospitality Corp. (NYSE:PDQ) of Fairfield, New Jersey, giving Winston Hotels true multi-tenant lessee status.
 
 

"These announcements are the culmination of a lot of very hard work by all of the personnel at Winston Hotels and demonstrate that there is a strong pipeline of sensible deals available to the REIT," commented Jim Rosenberg, Winston Hotels' Chief Operating Officer and CFO. "The strength and quality of this acquisition pipeline is a tribute to our own dedicated acquisition team and the strong and meaningful relationship we have developed with CapStar Hotel Company," Rosenberg added.

The purchase of the Tinton Falls property is the latest successful collaboration between CapStar and Winston Hotels. Following the sale late last year of the Winston lessee, Winston Hospitality, to CapStar, the two companies entered into a strategic alliance that resulted in the creation of an acquisition pipeline through which potential deals flow to Winston. Mr. Rosenberg went on to say that the strategic alliance with CapStar was one that Winston Hotels hopes to nurture and build upon in the future for the mutual benefit of both companies.

The signing of a contract on the Holiday Inn in Secaucus, New Jersey marks another important event for the REIT since this hotel will be leased to Prime Hospitality. Prime, like CapStar, is a leading national hotel company with its own portfolio of hotels. Prime controls the AmeriSuites, Wellesley and Homegate Studios and Suites brands.

"We are particularly pleased to announce that Winston Hotels will begin a new relationship with a second quality lessee," said Rosenberg, adding, "the relationship with Prime will bring a number of key benefits, not the least of which is the creation of a second potential deal pipeline."

Mr. Rosenberg's comments were echoed by Bob Winston, Chief Executive Officer of Winston Hotels, who stated: "Initiating a relationship with a second high caliber lessee has been a key strategic goal of ours for a long time. We now have the foundation, the structure and the relationships to embark on the next important stage of growth for this Company."

In addition to the acquisition of the Tinton Falls Holiday Inn and the planned purchases of the Holiday Inn in Secaucus and the soon to-be completed Homewood Suites in Phoenix, Winston Hotels also announced that it expects four hotels currently under development to open within the next 30 days. These are the Hilton Garden Inn hotels in Albany, New York and Raleigh-Durham, North Carolina and the Homewood Suites hotels in Lake Mary, Florida and Alpharetta, Georgia. The previously announced Hilton Garden Inn acquisitions were part of a three-hotel package that was passed along to the Company by CapStar, who will lease these properties from the Company.

Winston Hotels developed the two Homewood Suites hotels through its experienced in-house development team. The opening of the two Homewood Suites hotels will bring to three the number of hotels brought online this year through the REIT's ongoing development program.

"The development program is a critical part of our growth strategy going forward," Rosenberg said. "Our depth of experience in real estate development and knowledge of the hotel and real estate industries give us important insight into the potential advantages and pitfalls of new development," he added. "We continue to identify niche opportunities to build selected new product in markets we know intimately," Rosenberg said. He went on to announce the REIT has signed contracts to buy two new sites to develop a Hilton Garden Inn in Chapel Hill, North Carolina and an Embassy Suites in Charlotte, North Carolina. Both projects are subject to satisfactory entitlements and necessary approvals.

The Phoenix Homewood Suites is within three miles of the Residence Inn hotel purchased just last month by Winston Hotels. Together the two hotels dominate the upper-end extended-stay market in the area. The Homewood Suites is expected to open within the next 30 days and will be leased to CapStar. The Holiday Inn in Secaucus, which is within driving distance of New York City, was built in 1983 and is the focal point of a corporate office park.

The Holiday Inn Tinton Falls, which was built in 1976 and expanded in 1986, is ideally situated within easy reach of popular destinations such as the Jersey Shore beaches, Monmouth Park Racetrack and nearby Six Flags Great Adventure. The Holiday Inn is also within 10 miles of several major corporate campuses including ATT and Lucent Technologies. The full-service Holiday Inn, which caters to business and leisure travelers as well as conference attendees, includes 12 suites among its 171 rooms. The hotel features a 111-seat licensed Morgan's restaurant with a 67-seat lounge and over 8,500 square feet of meeting space. Other amenities include an outdoor pool, exercise room with sauna and a gift shop. Approximately $2 million will be spent to upgrade this hotel.

The addition of the Tinton Falls property brings the REIT's current portfolio of operating properties to 42 hotels totaling 5,764 rooms. With the addition of the two internally-developed hotels about to come online and the four hotels currently under contract, the REIT's portfolio will reach 48 properties totaling 6,584 rooms. In addition, the REIT has five more development projects underway totaling 667 additional rooms.

This press release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. 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 the risk that hotels under contract will not be acquired and development risks, including risk of construction delay. From time to time, these 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, Quarterly Reports on Form
10-Q and its other periodic reports.

Raleigh, North Carolina-based Winston Hotels, Inc., is a real estate investment trust specializing in the development, acquisition, and rehabilitation of premium limited-service, high-end extended-stay and full-service hotel properties. The company currently owns equity interests in 42 operating hotels and has seven hotels in various stages of development and rights to acquire four hotels under contract.