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Highland Announces Acquisition of the Sheraton Annapolis

Highland Hospitality
Corporation , a lodging real estate investment trust, or REIT, announced
today that it has closed on the previously announced acquisition of the
196-room Sheraton Annapolis located in Annapolis, Maryland, for
approximately $18.0 million, plus customary closing adjustments, or
approximately $91,800 per room. The Company purchased the hotel from
Grubarges-Annapolis, LLC. Crestline Hotels & Resorts, Inc. will manage the
property as a Sheraton franchised hotel. James L. Francis, Highland’s President and CEO, stated, “We are pleased
with our acquisition of the Sheraton Annapolis, our first property closing
in 2005. Subsequent to this transaction, we currently have approximately
$70 million of remaining investment capacity, with which we are actively
seeking to acquire additional properties that meet our strategic

The 196-room Sheraton Annapolis is situated in the State of Maryland’s
capital and within close proximity to the US Naval Academy, the Annapolis
Historic District and the Anne Arundel County Medical Center. The property
provides approximately 9,400 square feet of meeting space and such
amenities as an outdoor pool and spa, a restaurant and fitness center. The
Company plans to invest an additional $3.0 to $3.5 million over the next
two to three years to upgrade the guestrooms, meeting rooms, fitness
center and other common areas.