The joint venture plans to acquire approximately 15 to 20 primarily mid-priced full-service properties with significant turnaround potential, perform extensive renovations and reposition and re-brand the properties in the upscale hotel segment.  Bedrock Partners and Crestline Capital will be co-general partners for the joint venture, and Crestline Capital�s management division, Crestline Hotels & Resorts, Inc., is expected to manage most or all of the hotels.  Bedrock Partners is led by industry veterans, Paul Novak and Rick Besse.

Crestline Capital will provide approximately 10 percent of the equity for the joint venture.  Citadel Group Realty Group, LLC, through its principals Joel Ross and Dan Abrams, acted as an advisor to Bedrock Partners II in connection with the formation of the joint venture. The Citadel Group will also act as investment banker for raising an additional $75 million of third party equity for the fund.  When complete, the combined debt and equity is expected to total approximately $250 million.

�This joint venture further leverages our recently announced strategy to co-invest in hotels to obtain management contracts with favorable terms,� said Bruce D. Wardinski, Crestline Capital Chairman of the Board, President and Chief Executive Officer.  �The venture will add approximately $250 million to our previously announced $600 million of internal funds.  Crestline will benefit from the management fee income for the acquired hotels, while both Bedrock and Crestline will benefit from what we anticipate to be strong real estate returns.�

�There are a number of mid-market properties in great locations that will not be able to survive in their current physical condition,� said Paul Novak, Bedrock II Principal.  �Our access to capital gives us a significant competitive advantage enabling us to acquire these properties at attractive prices and reposition them in the upscale sector through major capital expenditures.  The upscale sector continues to experience strong revenue growth due to high barriers to entry controlling the levels of new supply.�
 �Our organizations� strengths complement one another,� Mr. Novak pointed out.  �Bedrock will source a majority of the acquisitions and oversee the due diligence as well as the renovations, Crestline will oversee the financing and feasibility, as well as manage the hotels.� 

Bedrock Partners II will have a multi-brand strategy, according to James L. Francis, Crestline Capital Executive Vice President and Chief Financial Officer.  �Since we will have no specific brand affiliation, we will have the greatest flexibility to acquire hotels and select the brand that will optimize property value,� he said.  �Both Bedrock Partners and Crestline Capital have strong relationships with all of the major franchisors and Crestline has a proven operating track record.�

The joint venture will seek hotels with 150-300 rooms, in urban, suburban and airport locations.   Typical properties will require significant capital improvements with half or more of the all-in-costs allocated for renovations to extensively upgrade the hotels to the upscale segment. 

�Renovation and repositioning requires special expertise,� noted Mr. Wardinski.  �Bedrock, which focused on these types of properties in its first fund, produced outstanding returns for its investors.  Combined with Crestline Hotels & Resorts� significant operating experience in hotel turnarounds, we have a great marriage of expertise.�

Mr. Novak and Rick Besse, both Bedrock II Principals, will focus on acquisitions.  Mr. Novak has had a long relationship with Crestline�s senior management team.  �We all have worked closely together at various stages of our careers and have a high regard for one another,� said Mr. Novak.  �Don Trice and Dave Durbin, who head up Crestline Hotels & Resorts, are great operators and are backed by a solid team of professionals.�

Bedrock Partners was originally founded in 1994 and acquired a total of 18 hotels over a three year period.  The organization became known for its unique strategy to totally renovate and reposition hotels which offered long term potential, but which had lost their competitive position due to their physical condition.  Typical renovation exceeded $35,000 per room.  The original Bedrock portfolio was recently sold for approximately $340 million.  Mr. Novak and Mr. Besse, will continue to work from their offices in Dallas (Bedford), Texas, but will maintain offices at Crestline Capital�s Bethesda, Maryland headquarters.

Crestline Capital is one of the nation�s 20 largest hotel management companies through its wholly-owned subsidiary, Crestline Hotels & Resorts.  Crestline Capital is also the nation�s largest independent hotel leasing company, majority owner of an upscale extended-stay hotel portfolio, and owner of one of the nation�s premier senior living community portfolios. 

Crestline Hotels & Resorts manages and leases 27 hotels, resorts and conference and convention centers with nearly 5,500 rooms in nine states and the District of Columbia.  Crestline Hotels & Resorts  manages properties independently and under such well regarded brands as Marriott, Hilton, Renaissance, Crowne Plaza, Holiday Inn, Courtyard by Marriott and Residence Inn.   

Certain matters discussed herein are forward-looking statements within the meaning of the Private Litigation Reform Act of 1995.