According to company officials, the reduction in revenues wasprimarily due to reductions to base rents as a result ofcompetition, and the absence of a Findlay, Ohio property sold inNovember of last year.

Earnings Before Interest, Depreciation, Taxes and Amortization(EBIDTA), which management feels more accurately reflects thefinancial performance of the hotel industry and the Company, wasapproximately $593,000 for the three months ended June 30, 2000. Inthe year-earlier period, EBIDTA was $145,000.

Host Funding is engaged in the business of acquiringlimited-service and full service hotels affiliated with national orregional hotel chains. The company was initially structured as areal estate investment trust, but has not yet elected REIT statusunder the Internal Revenue Code. The company currently forms whollyowned subsidiaries for the purpose of financing, acquiring andowning its hotels.