The two firms entered into an agreement in which JER wouldassume Highland's approximately $260-million existing debt andacquire all of its outstanding common stock and operatingpartnership units for $19.50 per share. As part of the acquisitionagreement, no future dividends will be paid on the commonstock.

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The purchase price is a 15% premium over Highland's three-monthaverage closing share price, according to the companies. Should themerger close, JER will add 27 hotel properties with an aggregate of8,379 rooms in 14 states and DC to its portfolio. The firm nowholds an interest in more than 17,000 rooms in 170 properties.

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Bear, Stearns & Co. Inc. and Merrill Lynch & Co. actedas financial advisors to Highland. Hogan & Hartson LLP was itslegal advisor. Wachovia Securities and Citi were JER's financialadvisors. Acquisition financing is being provided by Wachovia Bank.O'Melveny & Myers LLP, Allen & Overy LLP and Venable LLPacted as JER's counsel.

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According to Cia Buckley, president of JER's US Fund Business,JER intends to undertake a focused capital investment program toposition the portfolio for further growth. "We view this as a keystrategic investment for our organization," she says in astatement.

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JER is also in the midst of another merger transaction. JER inconjunction with Formation Capital LLC has a $1.7 billion offer on the table to acquire GenesisHealthCare Corp. Currently, Genesis operates 221 skilled nursingand assisted living properties.

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Additionally, JER routinely acquires one-off hotels in keymarkets that can range from limited service to luxury class. Thefirm purchased the 394-key FairviewPark Marriott in March for $108.5 million, as well as the393-key RenaissanceStanford Court Hotel in San Francisco for $157 million.

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The last hotel portfolio the company acquired, a spokesman tellsGlobeSt.com, was its purchase of JamesonInns Inc., for $371 million in May 2006.

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