Highland Announces Acquisition of Two Hotels

Highland Hospitality
Corporation , a lodging real estate investment trust, or REIT, announced
today the acquisition of two hotels, and the signing of two separate
definitive agreements to acquire two additional hotels. The combined
purchase price for the aforementioned four hotels consisting of 847 rooms
is $81.3 million, or approximately $96,000 per room. In addition, the
Company also announced the signing of a definitive agreement to acquire a
to-be-built hotel upon completion of its construction.The two acquired hotels, each of which is approximately three years old,
are the 156-room Courtyard Savannah Historic District in Savannah,
Georgia, and the 109-room Residence Inn Tampa Downtown in Tampa, Florida.
These hotels were purchased from McKibbon Hotel Group, and McKibbon Hotel
Management, Inc. of Tampa, Florida will continue to manage both of the
hotels.

James L. Francis, Highland’s President and CEO, stated, “We are excited
about our acquisition of these two assets. Both of these hotels are
situated in the heart of their respective cities and will benefit from the
high barriers to entry that exist in their downtown locations. The
acquisition of these hotels is well-aligned with our strategy to invest in
upscale limited- service and extended stay properties located within urban
markets.”

The 156-room Courtyard Savannah Historic District is adjacent to the
Savannah Civic Center, just blocks away from the city center. The
five-story, urban hotel was built in 2001, and offers approximately 1,500
square feet of meeting space, onsite parking and such amenities as
high-speed internet access, an exercise room and an outdoor pool.

The 109-room Residence Inn Tampa Downtown is located one-half mile from
the University of Tampa and one mile from the St. Pete Times Forum and
Tampa Bay Convention Center. The seven-story, urban hotel was also built
in 2001, and offers approximately 600 square feet of meeting space, onsite
parking and such amenities as high-speed internet access, a full kitchen
in each room, an exercise facility and an outdoor pool.

Highland Hospitality has also signed definitive agreements to purchase the
299-room Omaha Marriott in Omaha, Nebraska, and the 283-room Radisson
Hotel Mount Laurel in Mount Laurel, New Jersey. The Company expects to
close both transactions within the next 15 - 45 days.

ADVERTISEMENT

Mr. Francis stated, “We are pleased to have reached agreement on these
full-service assets, as we diligently work to close on a number of hotels
within the next several weeks. Each of these hotels represents a different
focus of our overall investment strategy. We believe that the Omaha
Marriott is a solid market leader that will immediately provide attractive
yields that will be enhanced through a conversion to a franchise
arrangement. The Radisson Hotel Mount Laurel represents a repositioning
opportunity where we will invest additional capital to significantly
upgrade the hotel.”

Finally, the Company has also agreed to acquire the to-be-built, 210-room
Courtyard Gaithersburg Washingtonian Center located in Gaithersburg,
Maryland. Upon its completion, the nine-story urban limited-service hotel
will be an addition to the existing Gaithersburg Washingtonian Center
mixed-use development project which contains upscale business, retail,
entertainment and residential complexes. The Gaithersburg Washingtonian
Center is located within the Washington, D.C. metropolitan area and
provides convenient access to both downtown Washington D.C., via the Metro
subway system, and the prominent technology corridor in Maryland. The
hotel fits within the Company’s strategy to acquire urban, upscale,
limited-service properties, and will be acquired upon completion, which is
currently scheduled for the fourth quarter 2005.
——-