Winston Hotels, Inc. (NYSE: WXH), a real estate investment trust and owner of premium limited-service, high-end extended-stay and full-service hotels, today announced results for the first quarter ended March 31, 2001. FFO totaled $7.0 million for the first quarter of 2001 as compared to $6.6 million for the first quarter 2000. On a per share basis, FFO for the first quarter of 2001 totaled $0.38 on 18.2 million weighted average shares outstanding compared to $0.36 on 18.2 million weighted average shares outstanding for the same quarter a year ago. Lease revenue totaled $9.7 million for both the first quarter of 2001 and 2000.

Bob Winston, Chief Executive Officer, commented: “We are very pleased to have recorded record FFO for the first quarter and to have met the Company`s and consensus analysts` expectations. This solid growth is reflective of the improved performance of our hotels combined with successful implementation of new growth strategies.”

“Leveraging our expertise in hotel development, finance, and operations, as well as participating in carefully structured joint ventures has allowed us to keep our dividend consistent and to create new avenues for growth,” Mr. Winston continued.

First Quarter Highlights
* Provided $2.2 million in mezzanine financing to Noble Investment Group, Inc. for the construction of a Hilton Garden Inn located in Tampa, FL

* Provided $1.1 million in mezzanine financing last July for the construction of a Hilton Garden Inn located in Atlanta, GA which opened in April, 2001

* Continued construction of the 178-room Hilton Garden Inn in Evanston, Illinois which is scheduled to open in July 2001

* Closed the quarter with consolidated debt to total assets at cost at 37%

* Fixed rate debt at 7.37% totaled approximately 70% of our outstanding debt

* Generated an unleveraged return on assets of 12.7%

* Exceeded first quarter 2000 RevPar for our focus brands, Hampton, Homewood and Hilton Garden Inn, by 5.07%, 6.15% and 2.49%, respectively

* Launched the Company`s enhanced website

Winston Hotels President & Chief Operating Officer, James D. Rosenberg comments on the first quarter highlights:

“We have been successfully implementing a mezzanine program, and are pleased with the volume of business that is available to us. The mezzanine program, in conjunction with our third party service business should continue to provide Winston with revenue opportunities.”

“We experienced positive news across our segments and geographic locations. We believe that we are well positioned for the current economic times. We also believe that supply additions are slowing and demand still is positive. For example, our RevPar in the South Atlantic region was positive for the first time in a year.”

“While it appears that the operating results for the upper upscale segment are suffering somewhat from the recent economic downturn, we believe that our properties are well positioned geographically and are within the segments which should fare most favorably in this economic environment. Indications are that certain corporate travelers are moving from the upper upscale brands into our upscale and mid-scale without food and beverage segments.”

“Our RevPar growth of 1.7% during the quarter was slightly ahead of the 1% growth we projected for the year. Although we are pleased with the performance, we continue to consider opportunities to improve the operations of our portfolio and sell under performing assets at the appropriate time.”

“Our enhanced website provides investors and consumers with an excellent vehicle to learn more about our Company and our brands. In addition, we have added a substantial number of options, specifically in the investor relations area, which will enable investors to obtain the information they need more quickly and efficiently.”

Dividend Performance:
During the first quarter, Winston Hotels declared a cash dividend of $0.28 per common share. The cash dividend was paid on April 16, 2001 to shareholders of record on March 30, 2001. The regular quarterly dividend is equivalent to $1.12 on an annualized basis. Also in the first quarter, the Company announced its regular quarterly cash dividend to preferred shareholders of record of $0.578125 per share. This dividend also was paid on April 16, 2001 to shareholders of record as of March 30, 2001.

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