Winston


	Y E A R 2 0 0 0 A N N U A L R E P O R T

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PART I

ITEM 1 ITEM 2 ITEM 3 ITEM 4

ITEM 2. PROPERTIES

The following table sets forth certain unaudited information with respect to the Current Hotels:

	2000					1999
	Number of Rooms	Room Revenues ($000)	ADR	Occupancy %	Lease Revenues ($000)	Number of Rooms	Room Revenues ($000)	ADR	Occupancy %	Lease Revenues ($000)
Hampton Inns
Boone, NC	95	$ 2,074	$ 82.45	72.33%	891	95	$ 1,896	$ 72.31	75.64%	$ 787
Brunswick, GA	128	2,112	59.87	75.28%	829	128	2,022	58.32	74.22%	785
Cary, NC	130	1,920	64.65	62.43%	732	130	2,081	67.21	65.24%	859
Charlotte, NC	125	2,590	81.46	69.49%	1,190	125	2,780	79.08	77.06%	1,327
Chester, VA	66	1,286	69.78	76.32%	544	66	1,334	71.66	77.29%	582
Duncanville, TX *	119	1,030	44.25	71.90%	350	119	1,221	49.83	56.39%	403
Durham, NC	137	2,410	65.75	73.11%	992	137	2,582	68.19	75.72%	1,120
Gwinnett, GA (Hampton Inn & Suites)	136	2,821	79.61	71.18%	1,428	136	2,799	78.57	71.77%	1,428
Hilton Head, SC	124	2,349	80.60	63.69%	939	124	2,380	76.72	68.21%	975
Jacksonville, NC	120	1,949	60.16	73.78%	779	120	1,872	58.62	72.90%	741
Las Vegas, NV	128	2,232	59.94	79.50%	1,057	128	1,872	58.63	68.35%	926
Perimeter, GA	131	2,452	84.75	60.33%	1,202	131	2,391	80.13	62.40%	1,173
Raleigh, NC	141	2,960	74.08	77.42%	1,396	141	2,930	73.07	77.91%	1,391
Southern Pines, NC	126	1,740	65.98	57.18%	620	126	2,065	63.90	70.28%	850
Southlake, GA	124	2,319	66.34	76.42%	961	124	2,235	64.46	76.01%	921
W. Springfield, MA	126	3,011	85.41	77.07%	1,460	126	2,850	80.14	77.69%	1,365
White Plains, NY	156	5,257	111.72	82.42%	2,728	156	4,902	105.16	81.87%	2,510
Wilmington, NC	118	2,022	69.44	67.41%	791	118	2,242	68.55	75.95%	946
Comfort Inns
Augusta, GA	123	1,294	58.67	49.01%	378	123	1,413	57.39	54.85%	468
Charleston, SC	128	2,390	75.65	67.44%	1,086	128	2,534	75.24	72.10%	1,194
Chester, VA	122	2,008	64.02	70.25%	872	122	2,115	64.58	73.53%	958
Clearwater/St. Petersburg, FL	120	1,548	58.84	60.09%	489	120	1,659	53.40	71.40%	576
Durham, NC	138	2,607	68.45	75.40%	1,209	138	2,536	72.68	69.28%	1,176
Fayetteville, NC	176	2,132	53.92	61.38%	917	176	2,198	54.08	63.28%	962
Greenville, SC	190	1,428	53.33	38.50%	357	190	1,552	46.96	47.65%	423
London, KY (Comfort Suites) *	62	68	50.60	36.32%	26	62	941	54.50	76.29%	394
Orlando, FL (Comfort Suites)	214	3,732	61.44	77.56%	1,583	214	3,865	61.13	80.94%	1,705
Raleigh, NC	149	1,492	46.77	58.49%	507	149	1,812	48.52	68.68%	657
Wilmington, NC	146	1,993	57.53	64.83%	732	146	2,297	56.98	75.66%	949
Homewood Suites
Alpharetta, GA	112	2,613	89.93	70.88%	1,284	112	2,611	90.44	70.61%	1,242
Cary, NC	120	3,086	89.96	78.75%	1,861	120	3,252	89.63	82.85%	1,986
Clear Lake, TX	92	2,460	92.54	78.94%	1,087	92	2,294	94.80	72.06%	987
Durham, NC	96	2,178	78.92	78.53%	1,089	96	1,916	81.21	67.32%	890
Lake Mary, FL	112	3,175	105.86	73.17%	1,624	112	2,999	91.82	79.89%	1,153
Phoenix, AZ	126	2,364	81.72	62.73%	1,404	126	2,422	70.95	74.23%	1,285
Raleigh, NC	137	3,322	89.43	74.08%	1,666	137	3,318	86.38	76.82%	1,589
Holiday Inns
Abingdon, VA (Holiday Inn Express)	81	1,374	65.02	71.27%	645	81	1,394	63.16	74.63%	667
Clearwater, FL (Holiday Inn Express)	127	2,452	72.59	72.67%	1,090	127	2,496	68.49	78.61%	1,137
Dallas, TX (Holiday Inn Select)	244	4,079	72.00	63.44%	1,760	244	4,179	72.80	64.45%	1,891
Secaucus, NJ	160	5,907	126.31	79.86%	3,181	160	5,442	115.70	80.53%	2,765
Tinton Falls, NJ	171	4,803	98.81	77.66%	1,727	171	4,414	91.67	77.15%	1,548
Courtyard by Marriott
Ann Arbor, MI	160	4,468	95.78	79.66%	2,162	160	4,277	90.84	80.62%	2,055
Houston, TX	198	3,619	83.46	59.83%	1,642	198	3,475	77.02	62.43%	1,565
Wilmington, NC	128	2,415	77.23	67.12%	976	128	2,551	74.39	73.83%	1,082
Winston-Salem, NC	122	2,466	84.34	65.47%	1,253	122	2,289	76.39	67.29%	1,121
Hilton Garden Inns
Albany, NY	155	3,830	88.85	75.98%	1,949	155	3,286	92.12	63.05%	1,813
Alpharetta, GA	164	3,707	96.19	64.21%	2,333	164	3,827	98.74	64.75%	2,071
Raleigh/Durham, NC	155	4,320	110.18	69.12%	2,476	155	3,635	98.33	65.34%	2,030

Quality Suites - Charleston, SC	168	3,738	86.09	70.62%	1,616	168	3,955	86.96	74.17%	1,789
Residence Inn – Phoenix, AZ	168	3,310	81.35	66.17%	1,721	168	3,459	82.12	68.68%	1,799
Fairfield Inn – Ann Arbor, MI	110	2,068	72.02	71.31%	839	110	2,019	69.71	72.14%	821
TOTAL	6,904	$ 134,977	$ 78.24	69.11%	$ 62,430	6,904	$ 134,886	$ 75.24	71.15%	$ 62,237

* Hotel sold during 2000.

The Percentage Leases

The Partnership leases the Current Hotels for remaining terms of 8 to 13 years pursuant to Percentage Leases, which provide for rent equal to the greater of Base Rent or Percentage Rent. The Percentage Leases for the Current Hotels contain the provisions described below. The Company intends that future leases with respect to its hotel property investments will contain substantially similar provisions, although the Company may, in its discretion, alter any of these provisions with respect to any particular lease, depending on the purchase price paid, economic conditions and other factors deemed relevant at the time.

Percentage Lease Terms

Each Percentage Lease for the Current Hotels has a non-cancelable remaining term of 8 to 13 years, subject to earlier termination upon the occurrence of certain contingencies described in the Percentage Lease.

Amounts Payable under the Percentage Leases

During the term of each Percentage Lease, the lessees are or will be obligated to pay (i) the greater of Base Rent or Percentage Rent and (ii) certain other additional charges. Base Rent accrues and is required to be paid monthly. Percentage Rent consists of minimum percentage rent and excess percentage rent, if any. Minimum percentage rent is calculated based primarily on the amount of room revenue up to a predetermined threshold per the lease. The percentage, which differs by hotel, is multiplied by this amount to calculate minimum percentage rent. These percentages range from 23% to 81%. Excess percentage rent is calculated based primarily on the amount of any room revenue in excess of the predetermined threshold mentioned above. The percentage, which differs by hotel, is multiplied by this amount to calculate excess percentage rent. These percentages range from 5% to 80%. For most leases, the percentage used to calculate excess percentage rent exceeds the percentage used to calculate the minimum percentage rent. Percentage Rent is due either monthly or quarterly.

Beginning in the fiscal year following the year in which most Percentage Leases commence, and for each fiscal year thereafter, (i) the annual Base Rent and (ii) the Percentage Rent formulas will be adjusted on a quarterly or annual basis for inflation, based on changes in the CPI. The adjustment in any quarter may not exceed 2%, which may be less than the change in CPI for the quarter.

Other than real estate and personal property taxes, casualty insurance, capital improvements and maintenance of underground utilities and structural elements, which are obligations of the Company, the Percentage Leases require the lessees to pay rent, insurance, all costs and expenses and all utility and other charges incurred in the operation of the Current Hotels. The Percentage Leases also provide for rent reductions and abatements in the event of damage to, destruction of or a partial taking of any Current Hotel.

Maintenance and Modifications

Under the Percentage Leases, the Company is required to maintain the underground utilities and the structural elements of the improvements, including exterior walls (excluding plate glass) and the roof of such Current Hotel. In addition, the Percentage Leases obligate the Company to fund periodic capital improvements (in addition to maintenance of underground utilities and structural elements) to the buildings and grounds comprising their respective Current Hotels, and the periodic repair, replacement and refurbishment of furniture, fixtures and equipment in their respective Current Hotels, up to an amount equal to 5% of room revenues (7% of room revenues and food and beverage revenue for one of its full-service hotels). These obligations will be carried forward to the extent that the lessees have not expended such amounts, and any unexpended amounts will remain the property of the Company upon termination of the Percentage Leases. Except for capital improvements and maintenance of structural elements and underground utilities, the lessees are required, at their expense, to maintain the Current Hotels in good order and repair, except for ordinary wear and tear, and to make non-structural, foreseen and unforeseen, and ordinary and extraordinary repairs which may be necessary and appropriate to keep the Current Hotels in good order and repair.

The lessees are not obligated to bear the cost of capital improvements to the Current Hotels. With the consent of the Company, however, the lessees, at their expense, may make non-capital and capital additions, modifications or improvements to the Current Hotels, provided that such action does not significantly alter the character or purposes of the Current Hotels or significantly detract from the value or operating efficiencies of the Current Hotels. All such alterations, replacements and improvements shall be subject to all the terms and provisions of the Percentage Leases and will become the property of the Company upon termination of the Percentage Leases. The Company owns or will own substantially all personal property not affixed to, or deemed a part of, the real estate or improvements thereon comprising the Current Hotels, except to the extent that ownership of such personal property would cause the rents under the Percentage Leases not to qualify as "rents from real property" for REIT income test purposes.

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