WXH Winston Hotels

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 that it has closed on an $8.5 million loan to finance the development of a 101-room Hampton Inn & Suites in Murfreesboro, Tenn. The total estimated cost of the project, which is being developed by Host Murfreesboro, LLC, is $10.2 million. In addition, the company announced the sale of the Holiday Inn Select in Garland, Texas and declared its regular quarterly dividends. Hampton Inn & Suites Loan The $8.5 million loan is part of Winston's debt financing program, which provides loans to build, renovate or acquire hotels. The five-year loan requires payments at an interest rate of 30-day LIBOR plus 3.60 percent, with another 1.0 percent of the original principal balance accruing until the loan is paid in full. Payments are interest only during construction of the hotel and the first 12 months of hotel operations and thereafter include principle payments based on a 25-year amortization period. "The Murfreesboro project has a lot going for it, including a premium brand and a prime location in an urban market with solid growth potential," said Joe Green, president and chief financial officer. "Winston's unique combination of hotel experience and lending expertise made them an attractive and logical source of funding for this project," said Bryan Nearn, Chief Manager of Host Murfreesboro, LLC. The four-story hotel will be located on the west side of Thompson Lane, placing it between two Interstate 24 interchanges--Old Fort Parkway and Medical Center Parkway. The property is within a short distance of the downtown area, the main Murfreesboro exit and a new roadway and growth corridor. Hotel Sale The company recently sold the 242-room Holiday Inn Select in Garland, Texas, a Dallas suburb, for net cash proceeds totaling $4.4 million, resulting in a net gain on sale of approximately $0.5 million. Proceeds were used to pay down a portion of the company's outstanding indebtedness. "We continue to refine our hotel portfolio, replacing older properties and those that are no longer consistent with our long-term strategies with new, more strategic assets," Green said. "We currently have three hotels under construction and have an active acquisition pipeline." Dividend Winston's board of directors declared the company's regular quarterly cash dividend for the 2006 second quarter on its common and preferred shares. The cash dividend of $0.15 per common share is payable on July 14, 2006 to common shareholders of record on June 30, 2006. Based on yesterday's closing price of $10.67 per common share, the annualized dividend yield is 5.6 percent. The board also declared a cash dividend of $0.50 per Series B Cumulative Preferred share for the second quarter of 2006. The cash dividend is payable on July 14, 2006, to preferred shareholders of record on June 30, 2006. About the Company Currently, the company owns or is invested in 54 hotel properties in 18 states having an aggregate of 7,276 rooms. This includes 47 wholly owned properties with an aggregate of 6,328 rooms, a 60 percent ownership interest in a joint-venture that owns one hotel with 138 rooms; a 49 percent ownership interest in a joint venture that owns one hotel with 118 rooms, a 48.78 percent ownership interest in a joint venture that owns one hotel with 147 rooms, and a 13.05 percent ownership interest in a joint venture that owns four hotels with an aggregate of 545 rooms. Currently, the company also has hotel loan commitments totaling $71.4 million. The company does not hold an ownership interest in any of the hotels for which it has provided financing. For more information about Winston Hotels, visit the company's Web site at www.winstonhotels.com. Notes About Forward-Looking Statements 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, including without limitation its acquisition, disposition and development plans for hotel properties, its hotel lending plans, and its dividend policy. 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 risks including risk of construction delay, cost overruns, occupancy and governmental permits, zoning, the increase of development costs in connection with projects that are not pursued to completion, the risk of non-payment of subordinated loans, or the failure to make additional hotel 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, 2005.