Highland Hospitality Acquires 3 Properties

Highland Hospitality Corporation announced today that it has acquired a
100% interest in three hotels for a total consideration of approximately
$70.7 million. Highland`s investment will equate to approximately $97,300
per room based on an aggregate of 726 rooms. In connection with the
purchase, Highland repaid approximately $61.6 million of debt associated
with the three properties.

The three properties include the 250-room Portsmouth Renaissance Hotel &
Conference Center located in Portsmouth, Virginia, the 300-room Sugar Land
Marriott Hotel & Conference Center located in Sugar Land, Texas, and the
176- room Virginia Beach Town Center Hilton Garden Inn in Virginia Beach,
Virginia.
Highland purchased the three assets from joint ventures, all of which
included Barcelo Crestline Corporation as an equal or majority investor.
Barcelo Crestline, together with their joint investors will receive
operating partnership units in exchange for their equity interests in the
properties.

James L. Francis, President and CEO stated, “We are very excited about
executing our first property acquisitions as a new company. As a result of
our recent initial public offering, Highland Hospitality has approximately
$320 million of net proceeds to fund hotel acquisitions and, with the
addition of conservative leverage on our balance sheet, we will have over
$600 million of total investment capacity.”

Patrick Campbell, Executive Vice President and Chief Investment Officer
added, “These properties exemplify our strategy of investing in upscale
full- service and premium limited-service hotels that are well-positioned
or difficult to replace in their respective markets. We will continue to
target these segments as we invest the remaining proceeds from our recent
public offering.”

The 250-room Portsmouth Renaissance Hotel and Conference Center is located
along the historic waterfront of Olde Towne Portsmouth, Virginia. The
conference center offers over 24,000 square feet of meeting space and
houses a 70-seat amphitheater with video conferencing and interactive
computer training capabilities. The hotel was developed in 2001 as part of
a public/private joint venture and was built as a first-class hotel with
an impressive exterior design, elegant wood finishes and beautiful water
views.
The 300-room Sugar Land Marriott Hotel & Conference Center recently opened
in October, 2003, and includes 25,500 square feet of meeting space. The
hotel is located in the Town of Sugar Land, an affluent suburb located
approximately 15 minutes outside of Houston, Texas. The hotel is the
centerpiece hotel in Sugar Land Town Square, a 32-acre mixed-use
development that will include over 600,000 square feet of Class `A` office
space, Sugar Land`s City Hall, restaurants, upscale retail shops and
residential space.
The Hilton Garden Inn Virginia Beach Town Center recently opened in
November, 2003, and contains 176 rooms and 6,000 square feet of meeting
space. The hotel is located in Virginia Beach, Virginia, and is part of
Virginia Beach`s public/private town center development project which will
span over 17 blocks and will be located at the core of the city`s emerging
central business district. Within the town center, the hotel will be
situated near a mix of Class `A` office space, upscale retail, deluxe
residential unit, a performing arts center and an array of upscale
restaurants.
Highland Hospitality Corporation is a newly formed, self-advised lodging
real estate investment trust, or REIT, focused on hotel investments
primarily in the United States. The Company currently owns three hotel
properties with an aggregate of 726 rooms. Additional information can be
found on the company`s website at http://www.highlandhospitality.com/. Highland Hospitality Corporation editorial, based on news release distributed by PR Newswire.

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