New York City, October 02, 2002 -- Moody's Investors Servicecommented that recent announcements by several lodging REITs thatthird quarter 2002 results will be lower than had been expectedunderscore the weak operating environment faced by lodging REITs --particularly in the full-service, mid- and upscale segments.

Moody's near-term rating outlook for the lodging REIT sectorremains negative overall. Although year-over-year revenue peravailable room (RevPAR) performance for all lodging segments isexpected to be positive in the fourth quarter 2002 compared to thepost-9/11period of 2001, Moody's anticipates that recovery inlodging REITs' operating performance to more normalized levels willbe delayed well into 2003. No immediate rating actions arecontemplated. Moody's says that lodging REITs, for the most part,have some cushion available at their current rating levels towithstand current weak hotel market conditions. However, someREITs' ratings could be lowered if there is not a pick-up inoperating results over the next few quarters.

The dual challenges of an economic downturn combined withcutbacks in corporate travel are pressuring room rates (ADR, oraverage daily rates) and are resulting in shortfalls in operatingperformance for several lodging REITs. Firms such as RFS Hotels,FelCor Lodging Trust and MeriStar Hospitality have madeannouncements again revising downward their quarterly earningsexpectations in light of continued difficult operating conditions.These property owners' portfolios consist primarily of full-servicemid- and upscale lodging portfolios, with some concentrations invulnerable hotel markets, such as Northern California.

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