WXH Winston Hotels

Winston Hotels, Inc. (NYSE: WXH), today announced the income tax treatment for its 2006 Common Stock and Preferred Stock distributions. All of the preferred distribution and a portion of the common distribution declared in December 2006 but paid in January 2007 was paid out of Winston Hotels, Inc.�s 2006 earnings and profits. Pursuant to Internal Revenue Code Section 857(b)(9), these distributions are required to be included in the taxpayer�s 2006 taxable income. The remaining amount of the common distribution paid in January 2007 will be subject to taxation in 2007. The income tax treatment for the 2006 Common Stock distributions for Winston Hotels, Inc., (CUSIP #97563A 10 2) traded under the ticker symbol WXH is as follows: Declaration Date Record Date Payment Date Dividends Paid Per Share Ordinary Income Return of Capital Unrecap Sec. 1250 Gain 12/30/05� 12/28/05� 1/16/06� $0.150� $0.116� $0.000� $0.034� 3/13/06� 3/31/06� 4/13/06� $0.150� $0.116� $0.000� $0.034� 6/15/06� 6/30/06� 7/14/06� $0.150� $0.116� $0.000� $0.034� 9/7/06� 9/29/06� 10/16/06� $0.150� $0.116� $0.000� $0.034� 12/12/06� 12/29/06� 1/16/07� $0.018� $0.014� $0.000� $0.004� Total: �$0.618� $0.478� ��$0.000� ��$0.140� The Company also announced that the income tax treatment for the 2006 Series B Preferred Stock distributions for Winston Hotels, Inc., (CUSIP #97563A 30 0) traded under the ticker symbol WXH PrB is as follows: Declaration Date Record Date Payment Date Dividends Paid Per Share Ordinary Income Return of Capital Unrecap Sec. 1250 Gain 12/30/05� 12/28/05� 1/16/06� $0.136� $0.105� $0.000� $0.031� 3/13/06� 3/31/06� 4/13/06� $0.500� $0.388� $0.000� $0.112� 6/15/06� 6/30/06� 7/14/06� $0.500� $0.388� $0.000� $0.112� 9/7/06� 9/30/06� 10/16/06� $0.500� $0.388� $0.000� $0.112� 12/12/06� 12/29/06� 1/16/07� $0.500� $0.388� $0.000� $0.112� �Total: $2.136� $1.657� �$0.000� $0.479� The company did not incur any foreign taxes; the company also does not have any income to report as excess inclusion income. Winston�s tax return for the year ended December 31, 2006 has not yet been filed. As a result, the income tax allocation for the dividends discussed above has been calculated using the best available information as of the date of this release. Please note that federal tax laws affect taxpayers differently, and the information in this release is not intended as advice to shareholders on how dividends should be reported on their tax returns. Also note that state and local taxation of real estate investment trust (REIT) dividends varies and may not be the same as the taxation under the federal rules. Winston encourages shareholders to consult with their own tax advisors with respect to the federal, state and local income tax effects of these dividends. About the Company Winston currently owns or is invested in 53 hotel properties in 18 states having an aggregate of 7,205 rooms. This includes 44 wholly owned properties with an aggregate of 6,013 rooms and nine hotels in joint ventures totaling 1,192 rooms. The company�s joint venture hotels include a 41.7% ownership interest in a joint venture that owns one hotel with 121 rooms, a 60% ownership interest in a joint venture that owns one hotel with 138 rooms, a 49% ownership interest in a joint venture that owns one hotel with 118 rooms, a 48.78% ownership interest in a joint venture that owns one hotel with 147 rooms, a 13.05% ownership interest in a joint venture that owns four hotels with an aggregate of 545 rooms and a 0.21% ownership interest in a joint venture that owns one hotel with 123 rooms, for which substantially all of the profit or loss generated by the joint venture is allocated to the company. As of September 30, 2006, the company also had approximately $61.7 million of outstanding loans in its loan portfolio that it originated or purchased. The company does not hold an ownership interest in any of the hotels for which it has provided debt financing.