Starwood Lodging signs agreement to purchase the Grand Hotel in Washington, D.C.

LOS ANGELES--(BUSINESS WIRE)--Nov. 13, 1995--Starwood Lodging Trust, a real estate investment trust, and Starwood Lodging Corp., a hotel management and operating company, whose shares are paired and trade on the New York Stock Exchange (NYSE:HOT), Monday announced that they have signed an agreement to purchase the Grand Hotel, a 263-room (including 25 suites) luxury property located in Washington, D.C., on the corner of M and 24th streets.

The transaction is expected to close in early January 1996, and the corporation will assume management of the Grand Hotel immediately upon closing.

The trust's and the corporation's total purchase price of $33 million represents a price of $125,000 per room, or approximately 50 percent of replacement cost. In addition to the $33 million purchase price, the trust structured an earn-out payment to the seller based upon the asset meeting certain cash-flow targets.

The Grand Hotel was built in 1984 and is located directly across the street from the Park Hyatt Hotel, for which Hyatt recently paid $194,000 per room, and is cater-corner to the ANA Hotel, which was acquired in 1990 at a cost of $244,000 per room.

The Grand Hotel lobby, guest rooms and public space have all been recently renovated, and the hotel restaurant has undergone a major refurbishment and has reopened as the M-Street Cafe.

The trust will complete the public-area and soft-goods renovation already under way and continue to upgrade the property over the next 18 months at an anticipated cost of approximately $2 million. In addition, the corporation is currently evaluating different franchise alternatives.

Barry S. Sternlicht, chairman and chief executive officer of the trust, stated: ``Starwood's method of acquiring this hotel is illustrative of the creative acquisition methods the REIT employs to create long-term shareholder value.

``In late September, the trust bid on and acquired a note from the RTC that was secured by the first mortgage against the Grand Hotel for a purchase price of $19.5 million, a $3.5 million discount to face value. The trust then used the discount to privately negotiate the acquisition of the equity position at a price of $13.5 million.

``The trust drew on its credit facility to acquire the RTC note and will also use its credit facility to close the equity portion of the transaction in January.''

Jeffrey C. Lapin, president and chief operating officer of the trust, added: ``The Grand Hotel was built as a five-star Regent Hotel. The asset never could command the requisite room rate to justify its cost of construction and quickly fell victim to its debt service.

``Over the years, the debt balance ballooned and needed cosmetic repairs to the property were not made. The asset then became the subject of a bitter bankruptcy battle to the detriment of the hotel. This acquisition will allow the Grand Hotel to assume its rightful position among the most prominent hotels in Washington, D.C., and is an important addition to the Starwood Lodging Trust portfolio.''

Including the Grand Hotel, the trust and the corporation will have closed on six hotel transactions aggregating approximately 2,150 rooms at a total acquisition cost of approximately $167 million since the completion of their $273 million public offering in July 1995.

The trust, which conducts all of its business as the general partner of SLT Realty Limited Partnership, is the only hotel REIT whose shares are paired with those of a hotel operating company, Starwood Lodging Corp.

Including the Grand Hotel, the trust will own equity and mortgage interests in 48 hotels with approximately 10,400 rooms located in 19 states and the District of Columbia, including two hotel/casinos located in Las Vegas.

The equity portfolio includes 23 franchise locations, such as Embassy Suites, Marriott, Sheraton, Doubletree, Radisson, Holiday Inn, Ramada Inn and Best Western, as well as 12 independent properties.

The corporation, which conducts substantially all of its business as managing general partner of SLC Operating Limited Partnership, leases properties from the trust and operates them directly or through third-party management companies.

CONTACT: Starwood Lodging Trust, Los Angeles

Jeffrey C. Lapin, 310/575-3900

or

Silverman Heller Associates, Los Angeles

Eugene G. Heller, 310/208-2550