The transaction includes the 10-story, 290-room hotel, an attached seven-story, 86,000-square-foot office building and a 42,000-square-foot meeting and conference center. The financing includes the cost of an approximate $5 million renovation, which is expected to be completed in the 2004 fourth quarter. The hotel will remain open during the renovation and convert to a full-service Marriott hotel upon completion.

Canyon Capital provided $10.85 million as the first, or A, piece of the financing, Winston provided $6 million as the second, or B piece. The loan is secured by the interest in the real estate complex. The financing is for two years, plus a one-year extension at the borrower's selection. Ronald Muzzi, Cohen Financial, Boca Raton, Fla., brokered the transaction.

"We have had a long-standing relationship with Winston, and look forward to conducting more transactions together," said Jonathan Roth, principal, Canyon Capital Realty Advisors. "Winston's in-depth experience in hotel ownership and operations provided us with additional expertise and insights into the potential for the hotel. We remain highly interested in underwriting quality hotel assets."

Roth noted that Winston and Canyon Capital worked together closely from the beginning of the transaction and were able to make the financing process virtually seamless to the borrower. "This substantially reduced the paperwork, legal costs and time required to process the loan," he said.

"We found this joint-venture approach with Canyon Capital to be a very efficient way to underwrite the financing, especially for the borrower," said Joe Green, president of Winston. "We are looking at several other transactions with Canyon Capital, and look forward to expanding our relationship."

Green noted that Winston continues to target subordinated hotel loan opportunities between 60 percent and 85 percent of a project's value for hotels with 100 to 425 rooms and single-asset loan amounts that range from $1 million to $15 million. Winston makes debt capital available for construction, acquisition, major refurbishments and refinance. The company also seeks to underwrite and acquire the junior mezzanine portion of loans that are originated in the marketplace under Collateralized Mortgage-Backed Securities (CMBS) programs. "Our debt finance pipeline remains very active," he said.

About Canyon Capital Realty Advisors
Canyon Capital Realty Advisors LLC and its affiliates are money management firms and registered investment advisors headquartered in Los Angeles, California, with over $6.5 billion in assets currently under management. Canyon's real estate funds include (i) the Canyon Value Mortgage Fund, which provides value-added bridge and mezzanine mortgage capital to real estate owners, operators, developers and corporations and (ii) the Canyon-Johnson Urban Fund, a joint venture with Earvin "Magic" Johnson, which provides equity capital for the development and redevelopment of real estate in densely populated, ethnically diverse communities. Since 1990, the principals of Canyon have invested over $2.5 billion in transactions involving more than 164 real estate and mortgage assets. These investments encompass a diverse mix of property types including retail, entertainment, multi-family, industrial, office, hospitality, mobile home, and mixed use. 

About Winston Hotels
Raleigh, North Carolina-based Winston Hotels, Inc. is a real estate investment trust specializing in the development, acquisition, and repositioning of, and provision of subordinated financing to, premium limited-service, upscale extended-stay and full-service hotels, with a portfolio increasingly weighted toward the leading brands in the lodging industry's upscale segment. The company currently owns or is invested in 50 hotels with an aggregate of 7,069 rooms in 16 states, which includes: 45 wholly owned properties with an aggregate of 6,388 rooms; a 49 percent ownership interest in one joint-venture hotel with 118 rooms; and a 13.05 percent ownership interest in four joint-venture hotels with 563 rooms. The company also has issued mezzanine loans to owners of five hotels with 881 rooms. In addition, the company owns a 48.78 percent ownership interest in one joint venture that is developing a hotel with 147 rooms, which is expected to open this summer. The company does not hold an ownership interest in any of the hotels for which it has provided mezzanine financing. 

In addition to historical information, this press release contains forward-looking statements about Winston Hotels. 

Canyon Capital Realty Advisors
www.canyonpartners.com

Winston Hotels, Inc. 
www.winstonhotels.com