Crown Group Enters Hospitality Industry Via Extended-Stay Hotel Venture.

DALLAS--(BUSINESS WIRE)--May 27, 1998--Crown Group Inc. (NASDAQ:CNGR) today announced that it has acquired an 80% equity interest in Home Stay Lodges I Ltd., a recently-formed venture to develop and operate extended-stay lodging facilities in the Southeastern U.S.

The Crown Group is a 79% limited partner of the venture and wholly owns the corporation which will be the general partner of Home Stay Lodges I Ltd. (and which has a 1% interest in the limited partnership). The Crown Group will initially invest $640,000 of equity capital into Home Stay Lodges I Ltd.

The first two Home Stay Lodges, which are currently under construction, will be located in Pensacola, Fla. Total costs for these first two lodges will approximate $6.2 million, which will be financed by partner contributions on a pro-rata basis and a $5.4 million loan from the Bank of Pensacola. Management plans to aggressively expand the Home Stay Lodges concept in such states as Alabama, Arkansas, Florida, Louisiana, Mississippi, Tennessee and Texas during the next several years, if the initial two lodges perform as anticipated.

Home Stay Lodges will target a market niche in the lodging industry which is not currently served by other extended-stay chains. Its facilities will be designed to offer quality accommodations for guests, at substantially lower rates than are charged by most other extended-stay lodging providers. Weekly lodging rates are expected to average less than $150 for single occupancy and less than $175 for double occupancy. Management expects Home Stay Lodge customers to primarily include business travelers (particularly those with limited expense accounts), blue-collar workers on temporary assignments, persons between domestic situations, and persons relocating or purchasing a home, with most guests staying for multiple weeks.

Each Home Stay Lodges studio unit will average 288 square feet in size and will provide a variety of features which are attractive to the extended-stay guest, including a fully-equipped kitchenette, weekly housekeeping, color television with cable or satellite hook-up, coin-operated laundromat, and telephone service with voice mail messaging. In order to control operating costs and offer attractive rental rates, no restaurants, swimming pools, or recreational facilities will be provided. Home Stay Lodges will be located near commercial, industrial and/or military centers, where the employment base consists largely of service, retail, blue-collar, military and support, construction, entry-level and/or seasonal jobs, or where large numbers of people are living on modest pensions. "Home Stay Lodges will target a potentially large market for extended-stay lodging which is currently not served by its competitors," commented Edward R. McMurphy, president and chief executive officer of The Crown Group. "Economic and demographic forces within the U.S. have created a large new market for low-to-moderately priced extended-stay properties. Studies indicate that the vast majority of new employment opportunities in the U.S. are being created in entry-level, service-oriented occupations. Many of these workers should find the low rates and guest services available at a Home Stay Lodge to be an attractive housing alternative to apartment rentals. Along with the growing population of low-to-moderate income workers, additional demand should come from corporate and personal relocation, corporate training programs, and military and government requirements. Construction crews, contract workers and hospital workers are among other groups with extended-stay housing needs.

"We expect the first two Home Stay Lodges to be open within six months. One of the initial facilities will be located in close proximity to the various U.S. Navy facilities in the Pensacola area, while the other will be near the main campus of the University of West Florida, the Ellison Industrial Complex and a planned $30 million Baptist Hospital center.

"The unit economics of the Home Stay Lodges concept are very impressive, and we view this as a long-term value builder for our company," concluded McMurphy. "We do not currently expect any significant impact upon The Crown Group's earnings per share during the fiscal year which ends April 30, 1999."

Daily operation of the properties will be provided by Windham Company, an experienced property manager for hotels, motels, country clubs, resorts, condominiums and apartments. Robert T. Windham, chairman and chief executive officer of the Windham Company, has been involved with franchise affiliations with the following companies: Hilton Hotels, Sheraton, Howard Johnson, Best Western, Econo Lodge and Travel Lodge. He has actively participated in more than twenty property investment, development and management partnerships in the Southeastern U.S.

Crown Group Inc. ("Crown"), which operates as The Crown Group, is a diversified company which seeks to enhance shareholder value through the acquisition, development, and operation of small-cap companies with significant growth potential. Such companies can benefit from Crown's financial and management expertise. The achievement of Crown's investment objectives may involve initial public offerings, mergers, spinoff transactions or sales to strategic partners. The company's common stock is traded on Nasdaq under the symbol "CNGR". -0-

This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe", "estimate", "project", "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, changing economic conditions, interest rate trends, continued acceptance of the company's products and services in the marketplace, competitive factors, dependence upon third-party vendors, and other risks detailed in the company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the company undertakes no obligation to update these statements for revisions or changes after the date of this release.

CONTACT: Edward R. McMurphy, 972/717-3423

or

Investor Relations Counsel

R. Jerry Falkner, CFA, 800/377-9893