Charlesbank, Winston Hotels Form Venture to Acquire Hotel Assets.

Business Editors

BOSTON--(BUSINESS WIRE)--Dec. 30, 2002

Boston-based private investment firm Charlesbank Capital Partners, LLC announced that it has formed an investment venture to acquire over $100 million of hotel assets with Raleigh, NC-based Winston Hotels (NYSE: WXH). Winston is a real estate investment trust specializing in the development, acquisition, rehabilitation and asset management of hotel properties.

As is typical for Winston, the new venture will target limited-service, upscale extended-stay and small, full-service branded hotels in secondary and primary markets. The partnership will focus on acquisitions with turnaround or upside potential that can benefit from additional capital and aggressive asset management.

From a joint venture that acquired two hotels earlier this year, Winston intends to contribute the properties at their cost to the investment program. The two properties are a vacant building in suburban Cleveland that is being converted to a 113-room Courtyard by Marriott - slated to open during the first quarter of 2003, and the 102-room Fairfield Inn by Marriott in Des Moines, Iowa, which the joint venture converted from a previous franchise.

Of the total equity committed to each acquisition, Charlesbank will provide 85 percent, with Winston providing the remaining 15 percent. Charlesbank will have the option to expand the venture after the initial equity is committed. The partners anticipate that they will be able to secure debt financing for 65 percent of the all-in cost of projects that the venture purchases.

"We believe now is a good time to further diversify our real estate holdings through hotel properties, and we see numerous opportunities in this segment, which has performed well in the past few years," says Andy DiMatteo, Charlesbank senior vice president. "We are happy to be working with Winston Hotels, a partner that has deep experience and unusual strengths, including its in-house capability to develop hotels."

"The venture with Charlesbank will be an important avenue for growth, allowing us to acquire and add value to attractively priced hotels. Our goal is to reinvigorate an underperforming hotel in a good location through capital infusion, rebranding, renovating, repositioning and often a management change," says Winston's Chief Executive Officer Bob Winston. "Charlesbank is a strong partner with an impressive track record, and we look forward to expanding our relationship with them."

Charlesbank Capital Partners, LLC is a private investment firm with more than $2 billion of capital committed to acquisition and expansion financing for developing real estate assets and growing companies. The real estate team generally invests in equity or mezzanine debt structures, often with a strategic operator or developer who brings complementary expertise or market knowledge. Typical equity investments range from $15 million to $50 million per transaction and may include acquisitions, development or redevelopment, repositioning or recapitalization. The firm has offices in Boston and New York. For more information, visit www.charlesbank.com.

Raleigh, North Carolina-based Winston Hotels, Inc., is a real estate investment trust specializing in the development, acquisition, repositioning and active asset management of 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 53 hotels with 7,273 rooms in 16 states. For more information, visit www.winstonhotels.com.