Winston Hotels Originates $6.0 Million Mezzanine Loan for La Posada de

    Business Editors/Real Estate Writers/Travel Editors

    RALEIGH, N.C.--(BUSINESS WIRE)--Jan. 10, 2005--Winston Hotels, Inc. (NYSE: WXH), a real estate investment trust (REIT) and owner of premium limited-service, upscale extended-stay and full-service hotels, today announced it has closed on a $6.0 million mezzanine loan to help finance the acquisition of, and capital improvements at, the 157-room La Posada de Santa Fe Resort in Santa Fe, New Mexico. The primary lender, Bear Stearns, provided a $29.2 million loan to the buyer. The hotel is being acquired by Trinity Hotel Investors L.L.C. and Glenmont Real Estate Partners II, L.P., from RockResorts, who are investing approximately $10 million in the project.
    "This is a well-located historic property, with an excellent reputation for service and luxury in a market with strong leisure demand," said Joe Green, president and chief financial officer. "The loan is our second with Trinity Hotel Investors and our first lending transaction with Bear Stearns, a relationship we expect to expand this year. We have an active loan pipeline that has accelerated during the past 12 months as the hotel industry has continued to recover."
    "We were pleased with Winston's understanding of the dynamics of the project in our first transaction with them and were very comfortable working with them on this second one," said George Ruff, principal of Trinity Hotel Investors. "They bring a perspective that most other lenders don't have because they have extensive experience in hotel ownership, development, repositioning and management. They can look at a transaction from all perspectives in determining the best loan structure."
    "Demand for hotel financing, both primary and mezzanine, remains strong," said Randy Reiff, a Senior Managing Director at Bear Stearns. "We continue to have a positive outlook for the hotel real estate sector. We are enthusiastic about growing our relationship with Winston Hotels and Trinity Hotels Investors.
    The 157-room resort is situated on a six-acre parcel in downtown Santa Fe, three blocks east of Santa Fe Plaza, the epicenter of the old town. Each room is uniquely designed in contemporary southwestern decor. The hotel's signature restaurant, Fuego, is winner of the 2004 Wine Spectator Award of Excellence and AAA's Four Diamonds, and offers innovative cuisine featuring flavors of Santa Fe tradition. The 4,500-s.f. Avanyu spa includes a treatment area featuring five spa rooms, two facial rooms, and one wet spa room. Avanyu offers a full spectrum of treatments, including many with native southwestern elements. The hotel also has 7,000 square feet of meeting space.
    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 52 hotels with an aggregate of 7,320 rooms in 15 states, which includes: 45 wholly owned properties with an aggregate of 6,397 rooms; a 49 percent ownership interest in one joint-venture hotel with 118 rooms; a 48.8 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," or "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 and other governmental permits, zoning, the increase of development costs in connection with projects that are not pursued to completion, lender consent rights in making mezzanine loans, the risk of non-payment of mezzanine loans, or the failure to make additional mezzanine 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, 2003, Quarterly Reports on Form 10-Q and its other periodic reports.

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CONTACT: Winston Hotels, Inc. Patti L. Bell, 919-510-8003 pbell@winstonhotels.com or DalyGray Jerry Daly or Carol McCune, 703-435-6293 jerry@dalygray.com carol@dalygray.com

KEYWORD: NORTH CAROLINA NEW MEXICO INDUSTRY KEYWORD: TRAVEL REAL ESTATE BUILDING/CONSTRUCTION PRODUCT SOURCE: Winston Hotels, Inc.

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