SC TO-C

________________________________________________________________________________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Schedule TO

(Rule 14d-100)

TENDER OFFER STATEMENT

UNDER SECTION 14(d)(1) OR 13(e)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

Westin Hotels Limited Partnership

(Name of Subject Company (Issuer))

Starwood Hotels & Resorts Worldwide, Inc.

WHLP Acquisition LLC

(Names of Filing Persons (Identifying Status as Offeror, Issuer or Other Person))

UNITS OF LIMITED PARTNERSHIP INTEREST

(Title of Class of Securities)

960 377 109

(CUSIP Number of Class of Securities)

Kenneth S. Siegel, Esq.

Executive Vice President, General Counsel and Secretary

Starwood Hotels & Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, NY 10604

(914) 640-8100

(Name, Address and Telephone Number of Person Authorized

to Receive Notices and Communications on Behalf of Filing Persons)

Copies to:

Thomas W. Christopher, Esq.

Kirkland & Ellis LLP

153 East 53rd Street

New York, New York 10022

(212) 446-4800

þ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

      þ     Third-party tender offer subject to Rule 14d-1

      o     Issuer tender offer subject to Rule 13e-4.

      þ     Going-private transaction subject to Rule 13e-3.

      o     Amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer:     o

SCHEDULE TO

      This Tender Offer Statement on Schedule TO is being filed with the Securities and Exchange Commission (the “SEC”) by WHLP Acquisition LLC (the “Purchaser”), a Delaware limited liability company which is wholly owned by Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (“Starwood” and together with the Purchaser, the “Filing Persons”) as a preliminary communication before the commencement of the tender offer. Because the Offer to Purchase document is also serving as a Solicitation Statement relating to a consent solicitation by the Filing Persons, it has also been filed as part of the Preliminary Proxy Statement filed on the date hereof on Schedule 14A by the Filing Persons. This Schedule TO relates to the contemplated offer by the Filing Persons for all of the outstanding limited partnership units (the “Units”) of Westin Hotels Limited Partnership, a Delaware limited partnership (the “Partnership”), at a cash price of $600 per Unit, without interest, reduced by the amount of distributions per Unit, if any, made by the Partnership from July 7, 2003 until the date on which Purchaser purchases the Units tendered pursuant to the Offer to Purchase and Solicitation Statement (the “Offer to Purchase”). Because the contemplated tender offer would be a Rule 13e-3 transaction, this Schedule TO is also being filed on the date hereof in compliance with that rule.

      The information set forth in the Offer to Purchase, including all schedules and annexes thereto, and the Assignment and Transfer Agreement is hereby incorporated by reference herein in answer to the items of this Schedule TO.

Item 1.     Summary Term Sheet.

      The information set forth in the section of the Offer to Purchase entitled “SUMMARY TERM SHEET” is incorporated herein by reference.

Item 2.     Subject Company Information.

      (a) Name and Address. The name of the Partnership is Westin Hotels Limited Partnership. The address of its principal executive office is 1111 Westchester Avenue, White Plains, New York 10604. The phone number of its principal executive office is 1-800-323-5888.

      (b) Securities. The securities which are the subject of the Offer are the “Units of Limited Partnership Interest” issued by the Partnership. According to the Schedule 14D-9 filed by the Partnership with the SEC on August 1, 2003, as of August 1, 2003, there were 135,600 Units outstanding.

      (c) Trading Market and Price. The information set forth in “SPECIAL FACTORS — Determination of the Offer Price” of the Offer to Purchase is incorporated herein by reference.

Item 3.     Identity And Background of Filing Person.

      (a) Name and Address. The names of the filing persons are Starwood Hotels & Resorts Worldwide, Inc. and WHLP Acquisition LLC, which is wholly owned by Starwood. The information set forth in “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Description of Purchaser, Starwood, the General Partner and the Partnership” and “SCHEDULE I — Directors and Executive Officers of Starwood,” and “SCHEDULE I — Directors and Executive Officers of the Purchaser” of the Offer to Purchase is incorporated herein by reference.

Item 4.     Terms of the Transaction.

      (a) Material Terms. The information set forth in the sections of the Offer to Purchase entitled “SUMMARY TERM SHEET,” “THE TENDER OFFER — Terms of the Offer; Expiration Date,” “THE TENDER OFFER — Acceptance for Payment and Payment for Units,” “SPECIAL FACTORS — Effects of the Offer,” and “SPECIAL FACTORS — Certain United States Federal Income Tax Considerations” is incorporated herein by reference.

      (b) Purchases. The filing persons are not aware that any Units offered to be purchased are held by affiliates of the subject company.

Item 5.     Past Contacts, Transactions, Negotiations and Agreements.

      (a) Transactions. The information set forth in “SPECIAL FACTORS — Transactions, Negotiations and Agreements” of the Offer to Purchase is incorporated herein by reference.

      (b) Significant Corporate Events. The information set forth in “SPECIAL FACTORS — Background to the Tender Offer,” and “SPECIAL FACTORS — Purpose of the Tender Offer; Future Plans” of the Offer to Purchase is incorporated herein by reference.

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Item 6.     Purposes of the Transaction and Plans or Proposals.

      (a) Purposes. The information set forth in “SPECIAL FACTORS — Background to the Tender Offer” and “SPECIAL FACTORS — Purpose of the Tender Offer; Future Plans” of the Offer to Purchase is incorporated herein by reference.

      (c)(1) through (7) Plans. The information set forth in “SPECIAL FACTORS — Effects of the Offer” and “SPECIAL FACTORS — Purpose of the Offer; Future Plans” of the Offer to Purchase is incorporated herein by reference.

Item 7.     Source and Amount of Funds or Other Consideration.

      (a) Source of Funds. The information set forth in “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Source and Amount of Funds for the Offer” of the Offer to Purchase is incorporated herein by reference.

      (b) Conditions. Not applicable.

      (d) Borrowed Funds. Not applicable.

Item 8.     Interest in Securities of the Subject Company.

      (a) Securities Ownership. The information set forth in “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Equity Interest in Partnership” of the Offer to Purchase is incorporated herein by reference.

      (b) Securities Transactions. The information set forth in “SPECIAL FACTORS — Transactions, Negotiations and Agreements” of the Offer to Purchase is incorporated herein by reference.

Item 9.     Persons/ Assets, Retained, Employed, Compensated or Used.

      (a) Solicitations or Recommendations. The information set forth in “THE TENDER OFFER — Certain Fees and Expenses” of the Offer to Purchase is incorporated herein by reference.

Item 10.     Financial Statements.

      (a) Financial Information. The information set forth in “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Selected Historical Financial Data for the Partnership” of the Offer to Purchase is incorporated herein by reference.

      (b) Pro Forma Information. Not applicable.

Item 11.     Additional Information.

      (a) Agreements, Regulatory Requirements and Legal Proceedings. The information set forth in “SPECIAL FACTORS — Purpose of the Tender Offer; Future Plans” and “THE TENDER OFFER — Certain Legal Matters; Required Regulatory Approvals” of the Offer to Purchase is incorporated herein by reference.

      (b) Other Material Information. None.

Item 12.     Exhibits.

(a)(1)(A)	Offer to Purchase and Solicitation Statement.
(a)(1)(B)	Agreement of Assignment and Transfer.
(a)(1)(C)	Consent Form.
(a)(1)(D)	Notice of Withdrawal from the Offer.
(a)(1)(E)	Notice of Withdrawal from Kalmia Offer.
(a)(1)(F)	Letter to Unitholders*.
(a)(3)	Offer to Purchase and Solicitation Statement (filed as Exhibit (a)(1)(A) above).
(a)(5)(A)	Text of Starwood press release, dated August 4, 2003.(1)

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(a)(5)(B)	Text of Starwood press release, dated August 19, 2003.(2)
(a)(5)(C)	Letter to Unitholders, dated August 22, 2003.(3)
(d)(1)	The Amended and Restated Agreement of Limited Partnership of Westin Hotels Limited Partnership as of December 31, 1986, as amended.
(d)(2)	The Merger Agreement (included as Annex F to the Offer to Purchase and Solicitation Statement filed as Exhibit (a)(1)(A) above).

(1)	Incorporated by reference from the Schedule TO filed with the SEC by the Filing Persons on August 4, 2003.
(2)	Incorporated by reference from the Schedule TO filed with the SEC by the Filing Persons on August 19, 2003.
(3)	Incorporated by reference from the Schedule TO filed with the SEC by the Filing Persons on August 25, 2003.

  * To be filed.

Item 13.     Information Required By Schedule 13e-3.

          Item 2.     Subject Company Information.

      (d) Dividends. The information set forth in “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Dividends and Distributions” of the Offer to Purchase is incorporated herein by reference.

      (e) Prior Public Offerings. Not applicable.

      (f) Prior Stock Purchases. The information set forth in “SPECIAL FACTORS — Transactions, Negotiations and Agreements” of the Offer to Purchase is incorporated herein by reference.

          Item 4.     Terms of the Transactions.

      (c) Different Terms. Not applicable.

      (d) Appraisal Rights. The information set forth in “OTHER MATTERS — No Appraisal Rights” of the Offer to Purchase is incorporated herein by reference.

      (e) Provisions for Unaffiliated Security Holders. Not applicable.

      (f) Eligibility for Listing or Trading. Not applicable.

          Item 5.     Past Contracts, Transactions, Negotiations and Agreements.

      (c) Negotiations or Contacts. The information set forth in “SPECIAL FACTORS — Background of the Tender Offer” and “SPECIAL FACTORS — Purpose of the Offer; Future Plans” of the Offer to Purchase is incorporated herein by reference.

      (e) Agreements Involving the Subject Company’s Securities. The information set forth in “SPECIAL FACTORS — Risk Factors” of the Offer to Purchase is incorporated herein by reference.

     Item 6.     Purposes of the Transaction and Plans or Proposals.

      (b) Use of Securities Acquired. The information set forth in “SPECIAL FACTORS — Effects of the Offer” of the Offer to Purchase is incorporated herein by reference.

      (c)(7) The termination of registration of the Units under Section 12(g)(4) of the Securities Exchange Act of 1934, as amended.

      (c)(8) The suspension of the subject company’s obligation to file reports under Section 15(d) of the Securities Exchange Act of 1934, as amended.

     Item 7. Purposes, Alternatives, Reasons and Effects.

      (a) Purposes. The information set forth in “SPECIAL FACTORS — Background of the Tender Offer” and “SPECIAL FACTORS — Purpose of the Tender Offer; Future Plans” of the Offer to Purchase is incorporated herein by reference.

      (b) Alternatives. The information set forth in “SPECIAL FACTORS — Alternatives Considered to the Offer” of the Offer to Purchase is incorporated herein by reference.

      (c) Reasons. The information set forth in “SPECIAL FACTORS — Purpose of the Tender Offer; Future Plans” of the Offer to Purchase is incorporated herein by reference.

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      (d) Effects. The information set forth in “SPECIAL FACTORS — Effects of the Offer,” “SPECIAL FACTORS — Certain United States, Federal Income Tax Considerations” and “SPECIAL FACTORS — Effects of the Offer” of the Offer to Purchase is incorporated herein by reference.

     Item 8. Fairness of the Going-Private Transaction.

      (a) Fairness. The information set forth in “SPECIAL FACTORS — Fairness of the Offer” of the Offer to Purchase is incorporated herein by reference.

      (b) Factors Considered in Determining Fairness. The information set forth in “SPECIAL FACTORS — Fairness of the Offer” of the Offer to Purchase is incorporated herein by reference.

      (c) Approval of Security Holders. The information set forth in “SPECIAL FACTORS — Fairness of the Offer” and “SPECIAL FACTORS — RISK FACTORS — We will control the voting decisions of Unitholders” of the Offer to Purchase is incorporated herein by reference.

      (d) Unaffiliated Representative. The information set forth in “SPECIAL FACTORS — Fairness of the Offer” and “SPECIAL FACTORS — Risk Factors — The General Partner may have a conflict of interest with respect to the Offer and the Consent Solicitation” of the Offer to Purchase is incorporated herein by reference.

      (e) Approval of Directors. The information set forth in “SPECIAL FACTORS — Fairness of the Offer” and “SPECIAL FACTORS — Risk Factors — The General Partner may have a conflict of interest with respect to the Offer and the Consent Solicitation” of the Offer to Purchase is incorporated herein by reference.

      (f) Other Offers. Not Applicable.

     Item 9. Reports, Opinions, Appraisals and Negotiations.

      (a) Report, Opinion or Appraisal. The information set forth in “SPECIAL FACTORS OF THE OFFER — Fairness of the Offer” and “SPECIAL FACTORS — Determination of the Offer Price” of the Offer to Purchase is incorporated herein by reference.

      (b) Preparer and Summary of the Report, Opinion or Appraisal. The information set forth in “SPECIAL FACTORS — Determination of the Offer Price” of the Offer to Purchase is incorporated herein by reference.

      (c) Availability of Documents. The information set forth in “OTHER MATTERS — Available Information; Incorporation by Reference” is incorporated herein by reference.

     Item 10. Source and Amounts of Funds or Other Consideration.

      (a) Source of Funds. The information set forth in “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Source and Amount of Funds for the Offer” of the Offer to Purchase is incorporated herein by reference.

      (b) Conditions. Not applicable.

      (c) Expenses. The information set forth in “OTHER MATTERS — Certain Fees and Expenses” of the Offer to Purchase is incorporated herein by reference.

      (d) Borrowed Funds. Not applicable.

     Item 12. The Solicitation or Recommendation.

      (d) Intent to Tender or Vote in a Going-Private Transaction. Not Applicable.

      (e) Recommendations of Others. Except as set forth in “SPECIAL FACTORS — Fairness of the Offer” of the Offer to Purchase which is incorporated herein by reference, none of the General Partner, any executive officer or director of the General Partner, any person controlling the General Partner or any executive officer or director of any person ultimately controlling the General Partner has made a recommendation either in support of or opposed to the Offer other than by Starwood and its employees pursuant to the Offer to Purchase and statements made in connection therewith.

     Item 13. Financial Statements.

      The information set forth in “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Selected Historical Financial Data for the Partnership” and “OTHER MATTERS — Available Information; Incorporation by Reference,” of the Offer to Purchase is incorporated herein by reference.

     Item 14. Persons/ Assets, Retained, Employed, Compensated or Used.

      (b) Employees and Corporate Assets. The information set forth in “OTHER MATTERS — Certain Fees and Expenses” of the Offer to Purchase is incorporated herein by reference.

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EXHIBIT INDEX

Exhibit No.	Description
(a)(1)(A)	Offer to Purchase and Solicitation Statement.
(a)(1)(B)	Assignment and Transfer Agreement.
(a)(1)(C)	Consent Form.
(a)(1)(D)	Notice of Withdrawal for the Offer.
(a)(1)(E)	Notice of Withdrawal for the Kalmia Offer.
(a)(1)(F)	Letter to Unitholders.*
(a)(3)	Offer to Purchase and Solicitation Statement (filed as Exhibit (a)(1)(A) above).
(a)(5)(A)	Text of Starwood press release, dated August 4, 2003.(1)
(a)(5)(B)	Text of Starwood press release, dated August 19, 2003.(2)
(a)(5)(C)	Letter to Unitholders, dated August 22, 2003.(3)
(c)(1)	Houlihan Lokey Fairness Opinion dated August 1, 2003 with respect to the offer to purchase Units by Kalmia Investors, LLC.(4)
(c)(2)	Fairness Presentation to the Board of Directors of the General Partner dated August 1, 2003 by Houlihan Lokey.
(c)(3)	Houlihan Lokey Fairness Opinion dated July 18, 2003 with respect to the offer to purchase Units by Windy City Investments LLC.(5)
(c)(4)	Draft Refinancing Valuation by Jones Lang LaSalle as of July 24, 2003.
(c)(5)	Draft Refinancing Valuation by Jones Lang LaSalle as of May 7, 2003.
(c)(6)	Appraisal Update Report, The Westin Michigan Avenue-Chicago, Chicago Illinois prepared by HVS International dated September 25, 2000.
(c)(7)	Self-Contained Appraisal Update Report, The Westin-Chicago, Chicago, Illinois, prepared by HVS International, dated March 8, 1998.
(d)(1)	The Amended and Restated Agreement of Limited Partnership of Westin Hotels Limited Partnership as of December 31, 1986, as amended.
(d)(2)	The Merger Agreement (included as Annex F to the Offer to Purchase and Solicitation Statement filed as Exhibit (a)(1)(A) above).

(1)	Incorporated by reference from the Schedule TO filed with the SEC by the Filing Persons on August 4, 2003.
(2)	Incorporated by reference from the Schedule TO filed with the SEC by the Filing Persons on August 19, 2003.
(3)	Incorporated by reference from the Schedule TO filed with the SEC by the Filing Persons on August 25, 2003.
(4)	Incorporated by reference from Exhibit (E)(1) to the Schedule 14D-9 filed with the SEC by the Partnership on August 6, 2003.
(5)	Incorporated by reference from Exhibit (E)(1) to the Schedule 14D-9 filed with the SEC by the Partnership on July 18, 2003.

* To be filed.

6 EX-99.(A)(1)(A) 3 p68165t3exv99wxayx1yxay.htm EX-(A)(1)(A)

THE INFORMATION IN THIS OFFER TO PURCHASE AND SOLICITATION STATEMENT IS NOT COMPLETE AND MAY BE CHANGED. THIS OFFER TO PURCHASE AND SOLICITATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO PURCHASE ANY UNITS OF LIMITED PARTNER INTEREST.

SUBJECT TO COMPLETION

Exhibit (a)(1)(A)

OFFER TO PURCHASE FOR CASH

ALL THE OUTSTANDING LIMITED PARTNERSHIP UNITS

OF

WESTIN HOTELS LIMITED PARTNERSHIP

AT

$600 PER UNIT

BY

WHLP ACQUISITION LLC,

A WHOLLY OWNED SUBSIDIARY OF

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

AND

SOLICITATION OF CONSENTS TO PROPOSALS TO AMEND THE

PARTNERSHIP AGREEMENT AND EFFECT A MERGER

      THE OFFER, THE WITHDRAWAL RIGHTS RELATED TO THE OFFER AND THE SOLICITATION PERIOD FOR THE CONSENTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON SEPTEMBER [     ], 2003, UNLESS WE EXTEND THE OFFER (AS SO EXTENDED, THE “EXPIRATION DATE.”)

      THE OFFER IS SUBJECT TO CERTAIN RISKS DESCRIBED UNDER “SPECIAL FACTORS — RISK FACTORS” BEGINNING ON PAGE 3 OF THIS OFFER TO PURCHASE AND SOLICITATION STATEMENT. YOU SHOULD READ THIS ENTIRE DOCUMENT CAREFULLY BEFORE DECIDING WHETHER TO TENDER YOUR UNITS OR DELIVER YOUR CONSENTS.

      THE ENTITY MAKING THE OFFER AND SOLICITING YOUR CONSENT IS WHLP ACQUISITION LLC (“PURCHASER”). WE ARE A DELAWARE LIMITED LIABILITY COMPANY AND A WHOLLY OWNED SUBSIDIARY OF STARWOOD HOTELS & RESORTS WORLDWIDE, INC., A MARYLAND CORPORATION (“STARWOOD”). STARWOOD ALSO OWNS ALL OF THE SHARES OF (I) WESTIN REALTY CORP., THE GENERAL PARTNER (THE “GENERAL PARTNER”) OF WESTIN HOTELS LIMITED PARTNERSHIP, THE SUBJECT OF THE OFFER (THE “PARTNERSHIP”), AND (II) 909 NORTH MICHIGAN AVENUE CORP. (“909 CORP.”), WHICH MANAGES THE PARTNERSHIP’S HOTEL, THE WESTIN MICHIGAN AVENUE, CHICAGO (THE “MICHIGAN AVENUE HOTEL”), AND IS THE GENERAL PARTNER OF THE PARTNERSHIP’S SUBSIDIARY LIMITED PARTNERSHIP THAT DIRECTLY OWNS THE MICHIGAN AVENUE HOTEL, THE WESTIN CHICAGO LIMITED PARTNERSHIP (THE “HOTEL PARTNERSHIP”). NO AFFILIATE OF STARWOOD OTHER THAN PURCHASER IS MAKING THE OFFER OR SOLICITING YOUR CONSENT. IN THIS DOCUMENT, THE TERMS “PURCHASER,” “WE,” “US” AND “OUR” REFER TO WHLP ACQUISITION LLC AND REFERENCES TO AFFILIATES OF EITHER STARWOOD OR PURCHASER EXCLUDE THE GENERAL PARTNER, THE PARTNERSHIP, 909 CORP. AND THE HOTEL PARTNERSHIP, AND ANY SUBSIDIARIES OF THE GENERAL PARTNER, THE PARTNERSHIP, 909 CORP. AND/ OR THE HOTEL PARTNERSHIP. FOR A DESCRIPTION OF THE RELATIONSHIP BETWEEN

STARWOOD AND PURCHASER, ON THE ONE HAND, AND THE GENERAL PARTNER AND THE PARTNERSHIP, ON THE OTHER HAND, SEE “SPECIAL FACTORS — TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.”

      THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE VALID AND NOT WITHDRAWN TENDER TO US OF AT LEAST A MAJORITY OF THE ISSUED AND OUTSTANDING UNITS OF LIMITED PARTNERSHIP INTEREST IN THE PARTNERSHIP (THE “UNITS”) (THE “MINIMUM CONDITION”), (II) THE CONSENT BY LIMITED PARTNERS OF THE PARTNERSHIP (“LIMITED PARTNERS”) WHO COLLECTIVELY HOLD MORE THAN 50% OF THE UNITS TO EACH OF THE PROPOSALS DESCRIBED UNDER “THE CONSENT SOLICITATION” AND (III) THE ADOPTION OF THE AMENDMENTS TO THE PARTNERSHIP AGREEMENT DESCRIBED IN THIS OFFER TO PURCHASE AND SOLICITATION STATEMENT SO THAT THEY HAVE BEEN IMPLEMENTED AND ARE IN FULL FORCE AND EFFECT, ALTHOUGH WE RESERVE THE RIGHT TO WAIVE THESE CONDITIONS (OTHER THAN THE MINIMUM CONDITION) OR TO EXTEND THE OFFER, SUBJECT TO THE TERMS AND CONDITIONS CONTAINED WITHIN THIS OFFER TO PURCHASE AND SOLICITATION STATEMENT. SEE “THE TENDER OFFER — CONDITIONS TO THE OFFER.”

      A HOLDER OF UNITS (A “UNITHOLDER”) MAY TENDER ANY OR ALL UNITS THAT IT OWNS.

      NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

IMPORTANT INFORMATION ON TENDERING YOUR UNITS

      Any (i) Unitholder, (ii) beneficial owner of Units, in the case of Units owned by Individual Retirement Accounts, Keogh plans or qualified plans (a “Beneficial Owner”), or (iii) person who has purchased Units but has not yet been reflected on the Partnership’s books as a limited partner of the Partnership (an “Assignee”) desiring to tender all or any portion of its Units should either (a) complete and sign the Agreement of Assignment and Transfer (a copy of which is enclosed with this Offer to Purchase and Solicitation Statement) in accordance with its instructions and mail or deliver an executed Agreement of Assignment and Transfer and any other required documents to the Depositary at the address or facsimile number set forth below or (b) request his or her broker, dealer, commercial bank, trust company or other nominee to effect the transaction for him or her. Unless the context requires otherwise, references to Unitholders in this Offer to Purchase and Solicitation Statement shall be deemed also to refer to Beneficial Owners and Assignees and references to “you” or “your” refers to an individual Unitholder. Assignees are not entitled to deliver consents in our consent solicitation being made by this Offer to Purchase and Solicitation Statement.

      If you have already tendered your Units to Kalmia Investors, LLC and its related investors (collectively, “Kalmia”) pursuant to Kalmia’s Offer to Purchase dated July 24, 2003 (the “Kalmia Offer”), and you wish to tender your Units pursuant to our Offer instead, then (i) you or your broker should notify Kalmia in writing before the expiration of the Kalmia Offer at Kalmia’s address listed in the Kalmia Offer, which notice must include your name, the number of Units to be withdrawn and the name in which the Units you tendered to Kalmia are registered, and (ii) once your Units have been withdrawn from the Kalmia Offer, you, or your broker, dealer, commercial bank, trust company or other nominee, should complete and submit the Agreement of Assignment and Transfer for the Offer. For the convenience of Unitholders who have tendered any Units in the Kalmia Offer, we have enclosed a PINK form of withdrawal notice for the Kalmia Offer with this Offer to Purchase and Solicitation Statement. Unitholders wishing to withdraw Units tendered in the Kalmia Offer should properly complete the PINK withdrawal notice and deliver it to Kalmia Investors, LLC, 601 Carlson Parkway, Suite 200, Minnetonka, MN 55305.

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      For important information on consenting to the proposals described in this Offer to Purchase and Solicitation Statement, see “THE CONSENT SOLICITATION — Voting and Revocation of Consents.”

      Questions or requests for assistance or additional copies of this Offer to Purchase and Solicitation Statement, the Agreement of Assignment and Transfer or the Consent Form or questions about withdrawing your Units tendered to Kalmia may be directed to the Information Agent at the number set forth below.

The Depositary for the Offer is:	The Information Agent for the Offer is:
American Stock Transfer & Trust Company 59 Maiden Lane New York, NY 10038 Telephone: 1-877-248-6417 (Toll-Free) Facsimile: 718-234-5001	D. F. King & Co., Inc. 48 Wall Street New York, NY 10005 1-212-269-5550 (Collect) 1-888-605-1957 (Toll-Free)

      The information contained in this Offer to Purchase and Solicitation Statement concerning the Partnership, including the reports, opinions and appraisals that we refer to in this Offer to Purchase and Solicitation Statement, was obtained by us as the parent company of the General Partner or obtained from publicly-available sources. Purchaser and Starwood do not take any responsibility for the accuracy of such information.

September [     ], 2003.

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SUMMARY TERM SHEET

      This summary highlights important and material information contained in this Offer to Purchase and Solicitation Statement but is intended as an overview only. To fully understand the Offer and the Consent Solicitation described in this document and for a more complete description of the terms of the Offer and the proposals to which we are seeking your consent, you should read carefully this entire Offer to Purchase and Solicitation Statement, the annexes and schedules to this Offer to Purchase and Solicitation Statement, the documents incorporated by reference or otherwise referred to in this Offer to Purchase and Solicitation Statement, the Agreement of Assignment and Transfer and the Consent Form (which are enclosed with this Offer to Purchase and Solicitation Statement). Section and heading references are included to direct you to a more complete description of the topics contained in this summary. Any terms not defined in this summary are defined in the complete Offer to Purchase and Solicitation Statement and any terms defined in this summary have the same meaning in the complete Offer to Purchase and Solicitation Statement.

Who is offering to purchase my Units and soliciting my consent?

•  The entity making the Offer and soliciting your consent is WHLP Acquisition LLC (“Purchaser”). We are a Delaware limited liability company and a wholly owned subsidiary of Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (“Starwood”). Starwood also owns all of the shares of (i) Westin Realty Corp., the general partner (the “General Partner”) of Westin Hotels Limited Partnership, the subject of the Offer (the “Partnership”), and (ii) 909 North Michigan Avenue Corp. (“909 Corp.”), which manages the Partnership’s hotel, The Westin Michigan Avenue, Chicago (the “Michigan Avenue Hotel”), and is the general partner of the Partnership’s subsidiary limited partnership that directly owns the Michigan Avenue Hotel, the Westin Chicago Limited Partnership (the “Hotel Partnership”). No affiliate of Starwood other than Purchaser is making the Offer or soliciting your consent. See “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP.”

Who is Starwood?

•  Starwood is one of the world’s largest hotel and leisure companies. Starwood conducts its hotel and leisure business both directly and through its subsidiaries. Starwood’s brand names include St. Regis®, The Luxury Collection®, Sheraton®, Westin®, W® and Four Points® by Sheraton. Through these brands, Starwood is well represented in most major markets around the world. Starwood’s operations are grouped into two business segments, hotels and vacation ownership operations.

Are you affiliated with the general partner of the Partnership?

•  Yes. The General Partner of the Partnership is a wholly owned subsidiary of our parent company, Starwood. 909 Corp. is also a wholly owned subsidiary of Starwood. All the activities of the General Partner and 909 Corp. are carried out by Starwood employees, since neither the General Partner nor 909 Corp. has any employees of its own. As a result of its relationship with Starwood, the General Partner may have a conflict of interest with respect to the Offer and our consent solicitation (the “Consent Solicitation”). See “SPECIAL FACTORS — Risk Factors — The General Partner may have a conflict of interest with respect to the Offer and the Consent Solicitation.”

•  We have implemented an information screen intended to prevent the exchange of information between Starwood, its affiliates and its legal counsel, on the one hand, and the Board of Directors of the General Partner (the “GP Board”), its financial advisors and its legal counsel, on the other hand, regarding offers for Units and similar types of transactions, including the Offer, and the Consent Solicitation. Although various Starwood employees perform services for the General Partner and the Partnership, we have excluded the members of the GP Board and all Starwood employees who perform managerial duties for the Michigan Avenue Hotel from our consideration of any aspect of the Offer or the Consent Solicitation. Some of the officers of the General Partner have participated in the consideration of our

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Offer on our behalf, and has not participated in any respect in the General Partner’s consideration of its response to our Offer or any other tender offer for the Units.

How much are you offering?

•  We are offering $600 in cash per Unit, less the amount of any cash distributions made or declared with respect to the Units on or after the date of the Windy City Offer (as defined below), July 7, 2003 (to the extent that we do not receive such distributions with respect to any Units accepted for payment). We will pay on your behalf the $50 transfer fee charged by the Partnership per transferring Unitholder. See “SPECIAL FACTORS — Determination of the Offer Price.”

What does the General Partner think of your Offer and Consent Solicitation?

•  We are not required to obtain the approval of the General Partner to commence the Offer or the Consent Solicitation. We have commenced the Offer and the Consent Solicitation without discussing the Offer with or obtaining the prior approval of the General Partner.

•  We are not aware of any position taken by the General Partner with respect to the Offer or the Consent Solicitation. The General Partner is required by United States federal securities laws to file with the Securities and Exchange Commission (the “SEC”) and distribute to the Unitholders, within ten business days from the date of the Offer, a statement as to its position, if any, on the Offer. Since Starwood is our parent company and the parent company of the General Partner, the board of directors and officers of the General Partner may have a conflict of interest with respect to the Offer. See “SPECIAL FACTORS — Transactions, Negotiations and Agreements.”

What are the most significant conditions to the Offer?

•  The Offer is conditioned upon, among other things:

•  The valid and not withdrawn tender of at least a majority of the issued and outstanding Units;

•  The valid written consent, by limited partners of the Partnership (“Limited Partners”) who collectively hold more than 50% of the Units, to each of the proposals as to which we are soliciting consents, including proposals to amend the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of December 31, 1986, as amended (the “Partnership Agreement”), and to approve the merger between us or one of our affiliates and the Partnership (the “Merger”) and the merger agreement related to the Merger (the “Merger Agreement”) if the Offer is successful;

•  The adoption and effectiveness of the amendments to the Partnership Agreement for which we are seeking your consent (the “Amendments”);

•  The non-occurrence of certain events before the Expiration Date (as defined in this Offer to Purchase and Solicitation Statement), such as legal or governmental actions that would prohibit the purchase of Units or the Merger or a material adverse change with respect to the Partnership or its business (including extraordinary distributions by, or a change in control of, the Partnership); and

•  Subsequent to the Expiration Date and before payment for the Units, our failure to receive any governmental regulatory approvals necessary to complete the Offer or the Merger.

      Consequently, if you decide to tender your Units to us but do not deliver your consent to us prior to the Expiration Date, this action will reduce the likelihood that we will close the Offer, in which event we would not purchase your Units and you would not receive the Offer Price.

•  There are no conditions to the Offer based on the availability of financing.

      For more information see “THE TENDER OFFER — Conditions to the Offer.”

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What securities and how many of them are sought in the Offer?

•  We are offering to purchase all of the outstanding Units upon the terms of and subject to the conditions to the Offer, from any Unitholder who validly tenders its Units. According to the Partnership’s public filings, as of August 1, 2003, there were 135,600 Units issued and outstanding. We believe that these Units are held primarily by persons unaffiliated with the Partnership and the General Partner. Subject to complying with applicable rules and regulations of the SEC and the satisfaction or waiver by us of all conditions to the Offer, we intend to purchase all Units validly tendered. See “THE TENDER OFFER — Terms of the Offer; Expiration Date.”

How was the Offer Price determined?

•  In establishing the $600 per Unit purchase price proposed to be paid in the Offer, we used our general expertise in the real estate market and the hospitality industry as well as our experience in managing the Michigan Avenue Hotel and took into account a variety of factors, including historical market prices for the Units and offer prices and terms of other tender offers for the Units (including mini-tender offers not subject to the SEC’s tender offer rules). We also considered the $550 per Unit price proposed to be paid in the Offer to Purchase by Kalmia dated July 24, 2003 (the “Kalmia Offer”), the $525 per Unit price proposed to be paid in the Offer to Purchase by Windy City Investments, LLC and other investors (collectively, “Windy City”) (the “Windy City Offer”), which expired on Monday, August 4, 2003. The purchase price we have proposed represents a 9.1% premium over the purchase price in the Kalmia Offer, a 14.3% premium over the purchase price in the Windy City Offer and a 47.1% premium over the weighted average price per Unit for Units traded over the 12 months ended March 31, 2003 (as reported by The Partnership Spectrum, an industry publication). We also considered reports, opinions and appraisals of the Partnership and the Michigan Avenue Hotel made available to us. These reports, opinions and appraisals include fairness opinions and a fairness presentation for the Windy City Offer by Houlihan Lokey Howard & Zukin Financial Advisors, Inc. and refinancing valuations by Jones Lang LaSalle Hotels. See “SPECIAL FACTORS — Determination of the Offer Price.”

Why are you making the Offer?

•  We are making the Offer to acquire control of, and the entire equity interest in, the Partnership, which would enable us to make the Partnership a private, wholly owned subsidiary of Starwood. Accomplishing these steps would allow us to reduce the Partnership’s expenses, including those associated with being a public entity . We are also making the Offer to provide you with a more attractive alternative to the Kalmia Offer. The Offer provides you with a higher purchase price than the Kalmia Offer and eliminates the risk of the Kalmia Offer that less than all of your Units will be accepted for payment. See “SPECIAL FACTORS — Purpose of the Offer; Future plans.”

Do I have to pay any brokerage fees to tender my Units?

•  If you are the record owner of your Units and you tender Units in the Offer, then you will not have to pay any brokerage or similar fees. However, if you own your Units through a broker or other nominee, and your broker or nominee tenders your Units on your behalf, then your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply.

How long do I have to decide if I want to tender my Units?

•  You have until 5:00 p.m., Eastern time, on September [     ], 2003 to tender your Units. We may extend the Offer in our discretion. If we extend the Offer, then we will make a public announcement not later than 9:00 a.m., Eastern time, on September [     ], 2003, the day after the Offer is scheduled to expire. See “THE TENDER OFFER — Terms of the Offer; Expiration Date.”

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How do I tender my Units?

•  You tender your Units by delivering a completed Agreement of Assignment and Transfer to the Depositary by mail, hand delivery or facsimile (facsimile no.: 718-234-5001) so that it is received by the Depositary no later than the time the Offer expires. A pre-addressed postage-paid envelope is enclosed for your convenience. If delivery is by facsimile, you must also return the original documents, which originals, only, may be received after the Expiration Date provided that the facsimile is received prior to or on the Expiration Date. See “THE TENDER OFFER — Procedure for Accepting the Offer and Tendering Units.”

Can I withdraw Units that I have tendered?

•  Yes, you may withdraw your tendered Units at any time until the Offer expires. If and to the extent that tendered Units have not been accepted for payment by November [     ], 2003 (60 days after the date of this Offer to Purchase and Solicitation Statement), you may also withdraw your tendered Units at any time thereafter. We will be deemed to have accepted your Units, subject to the terms of and conditions to the Offer, on the Expiration Date, unless we terminate or extend the Offer. To withdraw Units that you have tendered, you must deliver to the Depositary a written notice of withdrawal with the required information while you still have the right to withdraw. See “THE TENDER OFFER — Withdrawal Rights.”

How does your Offer differ from the Kalmia Offer?

•  We are offering $50 more per Unit than Kalmia, which represents a 9.1% premium over the Kalmia Offer.

•  We are offering to purchase all of the issued and outstanding Units. Kalmia has offered to purchase up to approximately 59% of the issued and outstanding Units. Consequently, if more than 59% of the Units are tendered in the Kalmia Offer, Kalmia will purchase only a pro rata portion of each Unitholder’s tendered Units.

•  Unlike us, Kalmia is not seeking consents to amend the Partnership Agreement to prevent the Partnership and the General Partner from applying the transfer restrictions in the Partnership Agreement in specific circumstances. The Partnership has announced that it has obtained preliminary advice from its counsel that the transfer of additional Units representing more than approximately 48% of the Units in the twelve months ending September 30, 2003 would result in a termination for United States federal income tax purposes of the Partnership under certain provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) and that such transfers would not be valid or effective. As a result, after giving effect to the transfers in connection with the Windy City Offer and assuming there have been no other transfers in the quarter ending September 30, 2003, Kalmia is unlikely to be able to acquire more than approximately 45.6% of the Units in the Kalmia Offer, reducing the number of Units each tendering holder would be permitted to transfer in the Kalmia Offer.

•  Our Offer, unlike the Kalmia Offer, is subject to a condition that a minimum number of Units be tendered.

•  We intend this to be a “going private” transaction and will seek to effect the Merger if the Offer is successful. In the Merger, the outstanding Units not owned by us or our affiliates will be converted into the right to receive cash in an amount equal to the price per Unit payable in the Offer. Kalmia states in its offer that it has no such plans.

What do I do if I have already tendered my Units to Kalmia?

•  If you have already tendered your Units to Kalmia pursuant to the Kalmia Offer, and you wish to tender your Units pursuant to our Offer instead, (i) you or your broker should notify Kalmia in writing before the expiration of the Kalmia Offer at Kalmia’s address listed in the Kalmia Offer, which notice must include your name, the number of Units to be withdrawn and the name in which the Units you

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tendered to Kalmia are registered, and (ii) once your Units have been withdrawn from the Kalmia Offer, you, or your broker, dealer, commercial bank, trust company or other nominee, should complete and submit the Agreement of Assignment and Transfer for our Offer. See “THE TENDER OFFER — Procedure for Accepting the Offer and Tendering Units — Withdrawing Units from the Kalmia Offer.”

•

For the convenience of Unitholders who have tendered any Units in the Kalmia Offer, we have enclosed a PINK form of withdrawal notice for the Kalmia Offer with this Offer to Purchase and Solicitation Statement. Unitholders wishing to withdraw Units tendered in the Kalmia Offer should properly complete the PINK withdrawal notice and deliver it to Kalmia Investors, LLC, 601 Carlson Parkway, Suite 200, Minnetonka, MN 55305.

If I accept the Offer, how will I get paid?

•  If the conditions to the Offer are satisfied (or waived, if waivable) and we complete the Offer and accept your Units for payment, you will receive payment for the Units that you tendered as promptly as practicable following the Expiration Date. We are seeking your consent to a proposal to amend the Partnership Agreement so that transfers of Units in the Offer would be recognized promptly upon completion of the Offer, rather than on the last business day of a calendar quarter as currently provided in the Partnership Agreement. If this proposal is not approved but we decide to complete the Offer anyway (by waiving conditions), we do not expect to pay you for Units you tender in the Offer until January 2004. See “THE TENDER OFFER — Acceptance for Payment and Payment for Units.”

Are there restrictions or possible delays with respect to my ability to transfer my Units?

•  Yes. Unless amended as contemplated by the Consent Solicitation, the following provisions of the Partnership Agreement will restrict or delay your ability to transfer your Units in the Offer:

•  Transfers of Units are not valid if counsel to the Partnership believes that the transfers would be likely to violate applicable laws or result in specific adverse tax consequences, such as a termination of the Partnership for United States federal income tax purposes;

•  The General Partner may suspend transfers of your Units if those transfers would result in 40% or more of the Units being transferred in a twelve-month period;

•  The General Partner may withhold its consent to our admission as a Substituted Limited Partner with respect to your Units, which would mean that we could not succeed to the voting and other non-economic rights associated with your Units; and

•  The Partnership recognizes transfers of Units only on the last business day of a calendar quarter and provides confirmation of transfers only after it has done so.

      We are seeking your consent to proposals that would have the effect of amending the Partnership Agreement so that these transfer restrictions would not apply to the transfer of your Units to us in connection with the Offer. See “THE CONSENT SOLICITATION.”

What are your future intentions?

•  We are seeking your consent to the Merger and the Merger Agreement and intend to cause the Partnership to effect the Merger following the completion of the Offer. In the Merger, the outstanding Units not owned by us or our affiliates will be converted into the right to receive cash in an amount equal to the price per Unit payable in the Offer.

•  If we are unable for any reason to effect the Merger, then we may seek to acquire additional Units through open market purchases, privately negotiated transactions, a tender or exchange offer or other transactions or a combination of these methods on such terms and at such prices as we shall determine, which may be different from the terms and price paid in the Offer. We also reserve the right to dispose of Units that we have acquired or may acquire.

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      See “SPECIAL FACTORS — Purpose of the Offer; Future plans.”

Will the Offer affect my Units if I do not tender?

•  Yes. This is a “going private” transaction. If the Offer is completed, we intend to cause the Partnership to effect the Merger. In the Merger, the outstanding Units not owned by us or our affiliates would be converted into the right to receive cash in an amount equal to the price per Unit payable in the Offer.

•  As a result of the Offer and the Merger:

•  We or one of our affiliates would own directly or indirectly all of the Units;

•  You and the Partnership’s other current public Unitholders would no longer have any interest in the Partnership’s future earnings or growth; and

•  The Partnership would no longer be a public entity, and its financial statements and other important information regarding the Partnership and its business would no longer be publicly available.

•  Even if the Merger is not effected:

•  The Partnership may stop filing financial statements and other information with the SEC if there are fewer than 300 Unitholders. In that event, information about the Partnership would not be made publicly available.

•  There may be increased illiquidity of the Units, which will likely have an adverse effect on the market price of your Units.

      See “SPECIAL FACTORS — Effects of the Offer.”

Is there any way that the Offer could be completed, but the Merger would not be effected?

•  Yes. While we intend to effect the Merger if the Offer is completed, we are not obligated to do so in any the following circumstances:

•  We do not receive the requisite consents to some or all of the Proposals (as defined below) as to which we are seeking consents, or we receive the requisite consents but the Amendments to the Partnership Agreement (as defined below) contemplated by the Proposals are not effective for any reason;

•  We fail to receive any material governmental or third party consent to the Merger;

•  There is a temporary restraining order, preliminary or permanent injunction or other order or decree that could reasonably be expected to have (i) a material adverse effect on us, Starwood or the Partnership or (ii) the effect of preventing the consummation of the Merger; or

•  There is pending or threatened litigation or a governmental action or proceeding challenging the Merger that could reasonably be expected to have a material adverse effect on us, Starwood or the Partnership.

      For more information about the conditions to the Merger, you should read Annex F to the Offer to Purchase and Solicitation Statement for the full text of the Merger Agreement.

      If the Offer is completed but the Merger is not effected, Unitholders who have not tendered may be harmed. See “RISK FACTORS — If the Offer is completed but the Merger is not effected, non-tendering Unitholders may be harmed.”

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Will the Partnership continue as a public entity?

•  If the Merger is effected, the Partnership will no longer be publicly owned, and its financial statements and other important information regarding the Partnership and its business will no longer be publicly available.

•  Even if the Merger is not effected, the Partnership may stop filing financial statements and other information with the SEC if there are fewer than 300 Unitholders. In that event, information about the Partnership would not be made publicly available. See “SPECIAL FACTORS — Effects of the Offer.”

What are the United States federal income tax considerations related to the Offer and what must I do to prevent the imposition of backup withholding tax and other United States federal withholding taxes?

•  The sale of Units in the Offer will be treated as a taxable transaction for United States federal income tax purposes. See “SPECIAL FACTORS — Certain United States Federal Income Tax Considerations.”

•  To prevent the possible application of backup withholding tax with respect to payment of the purchase price for Units purchased in the Offer, you must provide your taxpayer identification number and must certify in the Agreement of Assignment and Transfer, under penalties of perjury, that (i) the tax identification number provided in the Agreement of Assignment and Transfer is your correct taxpayer identification number; and (ii) you are not subject to backup withholding tax, either because you have not been notified by the Internal Revenue Service (the “IRS”) that you are subject to backup withholding tax as a result of your failure to report all interest or dividends, or because the IRS has notified you that you are no longer subject to backup withholding tax.

•  To avoid the imposition of a 10% withholding tax under Section 1445 of the Internal Revenue Code, you are also required to certify in the Agreement of Assignment and Transfer, under penalties of perjury, that you, if you are an individual, are not a nonresident alien for United States federal income tax purposes and, if not an individual, are not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and applicable Treasury Regulations).

Do you have the financial resources to pay the Offer Price for the Units?

•  Yes. If we buy all of the Units, then the aggregate amount of cash that we will need to purchase the Units and to pay related fees and expenses will be approximately $82.9 million. Starwood has committed to contribute to us, from its cash on hand, all of the cash necessary to complete the Offer and to pay related fees and expenses. Starwood has the financial resources to meet this commitment. See “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Source and Amount of Funds for the Offer.”

What is the market value of my Units?

•  There is no established public market for the Units, although there is a limited secondary market for the Units. According to the Partnership’s annual report on Form 10-K for the year ended December 31, 2002, the sale prices of Units from January 1, 2003 through March 17, 2003 ranged from $225 to $465 per Unit, with an average sale price of $333.36, before certain reductions. See “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Selected Historical Financial Data for the Partnership.” According to the Partnership’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003 (the “Partnership’s Second Quarter 10-Q”), sales processed by the Partnership through August 6, 2003 for tender offers were at a price range of $225 to $415 per Unit and other sales were at a price range of $330 to $507 per Unit. The weighted average price per Unit for Units traded over the 12 months ending March 31, 2003 was $407.82. We calculated this amount based on trades reported by The Partnership

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Spectrum, an industry publication. According to the American Partnership Board, there were 185 Units sold from April 1, 2003 through May 31, 2003, at prices ranging from $451 to $485 per Unit. Prices obtainable in the secondary market today or at any other time may be higher or lower than these historic prices. See “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Description of Purchaser, Starwood, the General Partner and the Partnership — Market for Partnership Units.”

•

In July 2003, two unsolicited tender offers were initiated for Units.

•  In the Windy City Offer, Windy City offered to pay $525 per Unit, reduced by the $50 transfer fee charged by the Partnership per transferring Unitholder and the amount of any cash distributions made or declared on or after July 7, 2003, with interest at the rate of 3% per annum from the expiration date of the tender offer to the date of payment, for up to 15% of the outstanding Units. The Windy City Offer expired on August 4, 2003. On August 5, 2003, Windy City announced that approximately 3,076 Units were validly tendered in its offer, representing approximately 2.27% of the outstanding Units.

•  In the Kalmia Offer, Kalmia is offering to pay $550 per Unit, less the amount of any cash distributions made or declared on or after July 7, 2003, for up to approximately 59% of the outstanding Units. The Kalmia Offer currently is scheduled to expire at 5:00 p.m., Eastern time, on August 29, 2003.

Why is the Purchaser soliciting my consent?

•  As described above, provisions of the Partnership Agreement restrict or delay your ability to transfer your Units in the Offer. In addition, provisions of the Partnership Agreement, Delaware law and the federal securities laws also have the effect of restricting or delaying the Merger. We are soliciting your consent to facilitate and expedite your transfer and our ownership of Units tendered in the Offer and our ability promptly to effect the Merger.

What are you asking me to consent to?

•  We are asking you to consent to the following proposals (each, a “Proposal”):

•  A Proposal to allow us to submit on your behalf amendments to the Partnership Agreement that would, if adopted:

•  Render the transfer restrictions (and the delaying of transfers until the end of a calendar quarter) contained in Article 11 of the Partnership Agreement inapplicable to the transfer of Units in connection with the Offer and the Merger or in connection with any other cash tender offer for all of the outstanding Units by a bidder who has disclosed an intention to effect a merger of the Partnership upon completion of the tender offer in which the merger consideration is equal to the tender offer price;

•  Require the Partnership to immediately recognize transfers following these types of transactions, rather than waiting until the end of a calendar quarter;

•  Prohibit the General Partner from giving effect to any other transfer restrictions in connection with the Offer or the Merger, or in connection with similar tender offers and mergers, whether or not those restrictions are in the Partnership Agreement; and

•  Permit the Merger or any other similar merger to be consummated upon the approval of Limited Partners who collectively hold more than 50% of the Units, without the approval by any general partner of the Partnership;

•  A Proposal to adopt the Amendments following their submission for approval by the Limited Partners; and

•  A Proposal to approve the Merger upon adoption of the Amendments.

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Who is entitled to consent to the Proposals?

•  You are entitled to vote on the Merger and the Amendments to the Partnership Agreement if you owned Units on August [     ], 2003 and have been admitted as a Limited Partner.

How do I consent to the Proposals?

•  If you wish to consent to the Proposals, you should complete, sign, date and return the GREEN consent form (the “Consent Form”) to the Depositary in the enclosed envelope with pre-paid postage or deliver it to the Depositary by facsimile. Your vote on these matters is very important. Your failure to return the enclosed consent form will have the same effect as not consenting to the Proposals; it will constitute a vote against the Proposals. See “THE CONSENT SOLICITATION — Voting and Revocation of Consents.”

May I tender my Units but not consent to any Proposal, or consent to a Proposal but not tender my Units?

•  Yes. The Offer and the Consent Solicitation are independent of one another. We intend to submit any Proposal that is approved to the Partnership.

•  You should be aware that completion of the Offer is conditioned upon the valid written consent, by Limited Partners who collectively hold more than 50% of the Units, to each of the Proposals. Consequently, if you decide to tender your Units to us but do not deliver your consent to each of the Proposals, this action will reduce the likelihood that we will close the Offer, in which event we would not purchase your Units and you would not receive the Offer Price.

May I consent to only some of the Proposals and withhold my consent from others?

•  Yes. The Consent Form enclosed with this Offer to Purchase and Solicitation Statement gives you the opportunity to give your consent separately to each of the Proposals. You should carefully follow the instructions on the Consent Form. See “THE CONSENT SOLICITATION — Voting and Revocation of Consents.” Completion of the Offer is conditioned upon the valid written consent, by Limited Partners of the Partnership who collectively hold more than 50% of the Units, to each of the Proposals. Consequently, if you decide to tender your Units to us but do not deliver your consent to each of the Proposals, this action will reduce the likelihood that we will close the Offer, in which event we would not purchase your Units and you would not receive the Offer Price.

How do I revoke my consent?

•  You may revoke your executed and returned consent form at any time prior to the Expiration Date by delivering to the Depositary a signed and dated written notice stating that your consent is revoked. Upon the expiration of the Offer, all consents previously executed and delivered and not revoked will become irrevocable. See “THE CONSENT SOLICITATION — Voting and Revocation of Consents.”

How long do I have to consent?

•  You may submit your signed consent form now. For your consent form to be accepted, it must be received by the Depositary no later than 5:00 p.m., Eastern time, on September [     ], 2003, unless we extend the Expiration Date of the Offer, in which case the new Expiration Date will be the last date on which your consent form will be accepted. See “THE CONSENT SOLICITATION — Solicitation Period.”

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What happens if I do not tender my Units in the offer and I vote against the Proposals, but the Proposals nevertheless receive the required Limited Partner approval?

•  Whether or not you tender your Units in the Offer or vote against the Proposals, if the Proposals receive the approval of Limited Partners holding a majority of the outstanding Units and the other conditions to the Offer are satisfied (or waived, if waivable), the Offer will likely be completed and the Merger will likely be effected. In that case, even if you did not consent to the Proposals or tender your Units in the Offer, you will be cashed out in the Merger at the Offer Price.

Will I get appraisal rights in the Offer or the Merger?

•  No. Appraisal rights are not available in the Offer or the Merger.

Whom can I call with questions about the Offer or the Consent Solicitation?

•  If you have questions or need assistance tendering your Units or consenting to the Proposals, please call D. F. King & Co., Inc., the Information Agent for WHLP Acquisition LLC’s Offer, toll-free at 1-888-605-1957.

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TABLE OF CONTENTS

SUMMARY TERM SHEET
INTRODUCTION
SPECIAL FACTORS
	1. Risk Factors
	2. Background to the Offer
	5. Determination of the Offer Price
	6. Transactions, Negotiations and Agreements
	7. Alternatives Considered to the Offer
	8. Effects of the Offer
	9. Certain United States Federal Income Tax Considerations
	10. Forward-Looking Statements
CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP
	1. Description of Purchaser, Starwood, the General Partner and the Partnership
	2. Equity Interest in Partnership
	3. Source and Amount of Funds for the Offer
	4. Selected Historical Financial Data for the Partnership
	5. Projections for Fiscal Year 2003
	6. Dividends and Distributions
THE TENDER OFFER
	1. Terms of the Offer; Expiration Date
	2. Acceptance for Payment and Payment for Units
	3. Transfer Restrictions
	4. Procedure for Accepting the Offer and Tendering Units
	5. Withdrawal Rights
	6. Extension of Tender Period, Termination, Amendment
	7. Conditions to the Offer
	8. Certain Legal Matters; Required Regulatory Approvals
THE CONSENT SOLICITATION
	1. Record Date; Outstanding Units; Voting Rights
	2. The Proposals; Effective Time of the Proposals; Vote Required
	3. Solicitation Period
	4. Voting and Revocation of Consents
	5. Effective Time of the Merger
	6. No Special Meeting
	7. Appraisal Rights
	8. Interests of Certain Persons in the Matters to be Acted Upon
	9. Costs of the Consent Solicitation
OTHER MATTERS
	1. Certain Fees and Expenses
	2. Available Information; Incorporation by Reference
	3. No Appraisal Rights
	4. Miscellaneous
SCHEDULE I
ANNEX B
ANNEX D
EX-(a)(1)(A)
EX-(a)(1)(B)
EX-(a)(1)(C)
EX-(a)(1)(D)
EX-(a)(1)(E)
EX-(c)(2)
EX-(c)(4)
EX-(c)(5)
EX-(c)(6)
EX-(c)(7)
EX-(d)(1)

TABLE OF CONTENTS

		Page
SUMMARY TERM SHEET			i
INTRODUCTION			1
SPECIAL FACTORS			3
1.	RISK FACTORS		3
2.	BACKGROUND TO THE OFFER		5
3.	PURPOSE OF THE TENDER OFFER; FUTURE PLANS		8
4.	FAIRNESS OF THE OFFER		9
5.	DETERMINATION OF THE OFFER PRICE		11
6.	TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS		14
7.	ALTERNATIVES CONSIDERED TO THE OFFER		17
8.	EFFECTS OF THE OFFER		17
9.	CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS		18
10.	FORWARD-LOOKING STATEMENTS		21
CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP			22
1.	DESCRIPTION OF PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP		22
2.	EQUITY INTEREST IN PARTNERSHIP		24
3.	SOURCE AND AMOUNT OF FUNDS FOR THE OFFER		25
4.	SELECTED HISTORICAL FINANCIAL DATA FOR THE PARTNERSHIP		25
5.	PROJECTIONS FOR FISCAL YEAR 2003		26
6.	DIVIDENDS AND DISTRIBUTIONS		27
THE TENDER OFFER			28
1.	TERMS OF THE OFFER; EXPIRATION DATE		28
2.	ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS		28
3.	TRANSFER RESTRICTIONS		29
4.	PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING UNITS		30
5.	WITHDRAWAL RIGHTS		33
6.	EXTENSION OF TENDER PERIOD, TERMINATION, AMENDMENT		34
7.	CONDITIONS TO THE OFFER		34
8.	CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS		36
THE CONSENT SOLICITATION			38
1.	RECORD DATE; OUTSTANDING UNITS; VOTING RIGHTS		38
2.	THE PROPOSALS; EFFECTIVE TIME OF THE PROPOSALS; VOTE REQUIRED		38
3.	SOLICITATION PERIOD		40
4.	VOTING AND REVOCATION OF CONSENTS		41
5.	EFFECTIVE TIME OF THE MERGER		42
6.	NO SPECIAL MEETING		42
7.	APPRAISAL RIGHTS		42
8.	INTERESTS OF CERTAIN PERSONS IN THE MATTERS TO BE ACTED UPON		42
9.	COSTS OF THE CONSENT SOLICITATION		42

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		Page
OTHER MATTERS			42
1.	CERTAIN FEES AND EXPENSES		42
2.	AVAILABLE INFORMATION; INCORPORATION BY REFERENCE		43
3.	NO APPRAISAL RIGHTS		43
4.	MISCELLANEOUS		44

SCHEDULE I	INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF STARWOOD HOTELS & RESORTS WORLDWIDE, INC. AND PURCHASER
ANNEX A	SUMMARY OF HOULIHAN LOKEY FAIRNESS OPINION AND PRESENTATION
ANNEX B	SUMMARY OF JLL REFINANCING ANALYSES
ANNEX C	SUMMARY OF HVS INTERNATIONAL APPRAISALS
ANNEX D	MICHIGAN AVENUE HOTEL PROJECTIONS FOR FISCAL 2003
ANNEX E	PROPOSED AMENDMENTS TO THE PARTNERSHIP AGREEMENT
ANNEX F	FORM OF MERGER AGREEMENT

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To: All Holders of Limited Partnership Units of Westin Hotels Limited Partnership

INTRODUCTION

      The entity making the Offer and soliciting your consent is WHLP Acquisition LLC (“Purchaser”). We are a Delaware limited liability company and a wholly owned subsidiary of Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (“Starwood”). Starwood also owns all of the shares of (i) Westin Realty Corp., the general partner (the “General Partner”) of Westin Hotels Limited Partnership, the subject of the Offer (the “Partnership”), and (ii) of 909 North Michigan Avenue Corp. (“909 Corp.”), which manages the Partnership’s hotel, The Westin Michigan Avenue, Chicago (the “Michigan Avenue Hotel”), and is the general partner of the Partnership’s subsidiary limited partnership that directly owns the Michigan Avenue Hotel, the Westin Chicago Limited Partnership (the “Hotel Partnership”). No affiliate of Starwood other than Purchaser is making the Offer or soliciting your consent. In this document, the terms “Purchaser,” “we,” “us” and “our” refer to WHLP Acquisition LLC and references to affiliates of either Starwood or Purchaser exclude the General Partner, the Partnership, 909 Corp. and the Hotel Partnership, and any subsidiaries of the General Partner, the Partnership, 909 Corp. and/or the Hotel Partnership. For a description of the relationship between Starwood and Purchaser, on the one hand, and the General Partner and the Partnership, on the other hand, see “SPECIAL FACTORS — Transactions, Negotiations and Agreements.”

      We are offering to purchase all of the issued and outstanding Units at a purchase price of $600 per Unit, in cash, reduced by the amount of any cash distributions made or declared on or after July 7, 2003, to the extent that we do not receive those distributions with respect to any Units accepted for payment (the “Offer Price”), upon the terms of and subject to the conditions set forth in this Offer to Purchase and Solicitation Statement (the “Offer to Purchase and Solicitation Statement”) and in the related Agreement of Assignment and Transfer and accompanying documents, as each may be supplemented or amended from time to time (which together constitute the “Offer”). Unitholders who tender their Units to us will not have to pay the $50.00 transfer fee per transferring Unitholder charged by the Partnership, as we will bear this cost.

      In connection with our Offer, we are soliciting Unitholders who have been admitted as limited partners of the Partnership (“Limited Partners”) to consent to proposals described in this Offer to Purchase and Solicitation Statement that would facilitate the transfer of your Units to us in the Offer and our ability to effect the merger described below (the “Proposals”). We refer to this solicitation as the “Consent Solicitation.” Limited Partners of record as of August [     ], 2003 (the “Record Date”) are entitled to consent to the Proposals in the Consent Solicitation.

      As of September [     ], 2003 (the “Offer Date”), we do not own, and to the best of our knowledge none of our affiliates owns, any Units. The General Partner, a subsidiary of Starwood, is the sole general partner of the Partnership.

      We are making the Offer to acquire control of, and the entire equity interest in, the Partnership. We intend, as soon as practicable after completion of the Offer, to cause the Partnership to effect a merger (the “Merger”) with us or one of our affiliates pursuant to Section 17-211 of the Delaware Revised Uniform Limited Partnership Act (“DRULPA”) as modified by the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of December 31, 1986, as amended (the “Partnership Agreement”). In the Merger, the outstanding Units not owned by us or our affiliates will be converted into the right to receive cash in an amount equal to the price per Unit payable in the Offer. While we reserve our right to do so, we have no plan to change the management or operations of the Partnership.

      FOR A DETAILED DESCRIPTION OF THE CONDITIONS TO THE OFFER, SEE “THE TENDER OFFER — CONDITIONS TO THE OFFER.” WE RESERVE THE RIGHT (SUBJECT TO THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”)) TO AMEND OR WAIVE ANY ONE OR MORE OF THE TERMS OR CONDITIONS TO THE OFFER OTHER THAN THE MINIMUM CONDITION (AS DEFINED BELOW). SEE “THE TENDER OFFER — TERMS OF THE OFFER; EXPIRATION DATE” AND “THE TENDER OFFER–CONDITIONS TO THE OFFER.”

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      THIS OFFER TO PURCHASE AND SOLICITATION STATEMENT AND THE RELATED AGREEMENT OF ASSIGNMENT AND TRANSFER CONTAIN IMPORTANT INFORMATION AND YOU SHOULD READ THESE MATERIALS CAREFULLY BEFORE MAKING ANY DECISION WITH RESPECT TO THE OFFER.

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SPECIAL FACTORS

1.     Risk Factors

      We urge you to consider the risks and other factors discussed below in deciding whether to tender your Units and consent to the Proposals.

      The General Partner may have a conflict of interest with respect to the Offer and the Consent Solicitation.

      We and the General Partner are wholly owned subsidiaries of Starwood and are therefore under Starwood’s control. All the activities of the General Partner and 909 Corp. are carried out by Starwood employees, since neither the General Partner nor 909 Corp. has any employees of its own. The directors and officers of the General Partner are full-time senior or executive-level employees of Starwood and in their capacities as directors or officers of the General Partner, they owe fiduciary duties to Starwood as the sole stockholder of the General Partner. The directors and officers of the General Partner and the General Partner, however, also owe fiduciary duties to the Partnership and the Unitholders that may conflict with their fiduciary duties to Starwood. Although the Board of Directors of the General Partner (the “GP Board”) has employed separate legal counsel, and is likely to employ an independent financial advisor to evaluate the Offer, these conflicting fiduciary duties may prevent the General Partner from evaluating the Offer objectively and may cause the General Partner to take actions (or refrain from taking actions) and make decisions in connection with the Offer and the Consent Solicitation that may not be in the best interests of the Unitholders. Some of the officers of the General Partner have participated in the consideration of our Offer on our behalf, and have not participated in any respect in the General Partner’s consideration of its response to our offer or any other tender offer for the Units. No independent committee or representative of the General Partner or the Partnership has been appointed or retained to negotiate the terms of the Offer or the Consent Solicitation on your behalf. We believe that the fairness factors enumerated in “— Fairness of the Offer,” and the fact that you are free to make your own decision whether to tender in the Offer, provide sufficient procedural safeguards to minimize the effects of the potential conflicts of interest inherent in this transaction.

The Offer Price might not accurately reflect the value of your Units.

      Our objectives and motivations in establishing the Offer Price might conflict with your interests as Unitholders in receiving the highest price for your Units. While our Offer Price exceeds those offered for your Units by Windy City, LLC and its related investors (collectively, “Windy City”) and Kalmia Investors, LLC and its related investors, (collectively, “Kalmia”) this fact alone does not ensure that you will receive the fair value of your Units if you tender them to us. Although we cannot predict the future value of the Partnership’s assets, based upon recent improvements in the Partnership’s operating results and the cyclical nature of the real estate market and the hospitality industry, the Offer Price could be significantly less than the net proceeds per Unit that you could realize from a liquidation of the Partnership following a future sale of the Michigan Avenue Hotel.

      If you tender your Units and we accept your Units for payment, or if you decline to tender your Units to us but we nevertheless complete the Offer and effect the Merger, you will lose the opportunity to participate in any future benefits from the ownership of Units, including potential future distributions by the Partnership.

Tendering your Units may result in a tax liability to you.

      The sale of Units in the Offer will be treated as a taxable transaction for United States federal income tax purposes. Depending on your adjusted tax basis for your Units, tendering your Units in the Offer will cause you to recognize a gain or loss for tax purposes. Assuming the Consent Solicitation is successful, we expect to purchase tendered Units by December 31, 2003, in which case, if you are a calendar-year taxpayer, you will recognize any gain or loss on the sale of your Units in the 2003 taxable year. See “— Certain United States Federal Income Tax Considerations.”

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If the Offer is completed but the Merger is not effected, non-tendering Unitholders may be harmed.

      Because the Offer and the Consent Solicitation are independent of one another, it is possible that we could receive a sufficient number Units to satisfy the Minimum Condition, but not receive the consents necessary for approval of any of the Proposals. If we decide to complete the Offer under these circumstances (which would involve our waiving conditions to the Offer) or if there are legal or regulatory delays to the Merger, we may not be able to effect the Merger promptly. If we complete the Offer but do not effect the Merger, we will have the right to vote each Unit purchased in the Offer in accordance with the Partnership Agreement. As a result, we will be in a position as the majority holder of the Units to influence or determine all voting decisions of the Partnership. In particular, we will have the right under the Partnership Agreement to:

•  Amend certain provisions of the Partnership Agreement;

•  Approve certain sales or borrowings by the Partnership;

•  Approve the transfer of the General Partner’s interest;

•  Prevent other Unitholders from expelling the General Partner and electing a new general partner;

•  Prevent other Unitholders from expelling 909 Corp. as the general partner of the Hotel Partnership (which owns the Michigan Avenue Hotel) and electing a new general partner; or

•  Dissolve the Partnership.

      If the Merger is not effected, but we receive sufficient tenders to reduce the number of Unitholders to below 300, we intend to seek deregistration of the Units under the Securities Exchange Act of 1934 (the “Exchange Act”). As a result, the Partnership will not be obligated to make annual and quarterly filings with the SEC and information about the Partnership may be less available to you. In addition, if the Merger is not effected and you continue to hold Units, there may be increased illiquidity of the Units, which will likely have an adverse effect on the market price of your Units.

If you tender Units in the Offer, but we do not receive sufficient consents or satisfy the Minimum Condition, we may not be able to complete the Offer and pay for your Units.

      Unless amended as contemplated by the Consent Solicitation, the following provisions of the Partnership Agreement will restrict or delay your ability to transfer your Units in the Offer:

•  Transfers of Units are not valid if counsel to the Partnership believes that the transfers would be likely to violate applicable laws or result in specific adverse tax consequences, such as resulting in a termination of the Partnership for United States federal income tax purposes;

•  The General Partner may suspend transfers of your Units if those transfers would result in 40% or more of the Units being transferred in a twelve-month period;

•  The General Partner may withhold its consent to our admission as a Substituted Limited Partner with respect to your Units, which would mean that we could not succeed to the voting and other non-economic rights associated with your Units; and

•  The Partnership recognizes transfers of Units only on the last business day of a calendar quarter and provides confirmation of transfers only after it has done so.

      We are seeking your consent to proposals that would have the effect of amending the Partnership Agreement so that these transfer restrictions would not apply to the transfer of your Units to us in connection with the Offer. If we do not receive sufficient consents to amend the Partnership Agreement in these ways, we may not be able to complete the Offer and pay for your Units. See “THE TENDER OFFER — TRANSFER RESTRICTIONS.”

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Payment for the Units could be otherwise delayed and is subject to certain conditions.

      We will not be obligated to complete the Offer unless all of the conditions to the Offer are satisfied or waived. In addition, upon the terms of and subject to the conditions to the Offer (including those specified in “THE TENDER OFFER — Conditions to the Offer”), we reserve the right, in our sole discretion, at any time and from time to time:

•  To extend the period of time during which the Offer or Consent Solicitation is open, which would delay acceptance of, and payment for, any Units;

•  To terminate the Offer and not accept any Units for which we have not already paid, if any of the conditions specified in the section, “THE TENDER OFFER — Conditions to the Offer,” cannot be satisfied; and

•  To amend the Offer in any respect.

2.     Background to the Offer

      Information included in this section concerning the Partnership and its business is derived from the Partnership’s reports filed by the Partnership with the SEC. For information on obtaining documents filed with the SEC, see “THE TENDER OFFER — Available Information; Incorporation by Reference.” We and Starwood disclaim any responsibility for the information included in those documents, including, without limitation, any information derived from them and included in this Offer to Purchase and Solicitation Statement.

      We and the General Partner are wholly owned subsidiaries of Starwood and therefore are under Starwood’s common control. The Partnership, through the Hotel Partnership, its subsidiary, owns the Michigan Avenue Hotel. See “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP” for a description of the Partnership and its business.

      The Partnership Agreement obligated the General Partner to review opportunities to sell the Westin St. Francis Hotel in San Francisco, California (the “Westin St. Francis Hotel”) and the Michigan Avenue Hotel or to refinance indebtedness secured by the Westin St. Francis Hotel and the Michigan Avenue Hotel, beginning in 1994, and to use its best efforts to complete a sale transaction by the end of 2001.

      The latter part of the 1990s marked a period of rapidly improving conditions in the United States hotel industry. The strong national economy led to significant improvements in occupancy rates and room rates resulting in substantial increases in hotel industry profitability. The substantial increases in hotel valuations observed during this period and the completion of significant renovations to the Westin St. Francis Hotel, which produced increased revenues and profits that would ultimately translate into higher property value, caused the General Partner to conclude, in late 1998, that efforts to market the hotels for sale should be initiated.

      In March 1999, the General Partner obtained appraisals of each of the hotels from HVS International (“HVS”), a leading hotel appraisal firm. The appraisals indicated a value for the Michigan Avenue Hotel of $100.9 million and for the Westin St. Francis Hotel of $229.9 million. On the basis of the appraised values of the Hotels and the General Partner’s continuing analysis of the Westin St. Francis Hotel’s financial performance, the General Partner concluded that it was in the best interest of the Partnership and its subsidiary limited partnerships to sell the Westin St. Francis Hotel and to continue to hold the Michigan Avenue Hotel to provide time to complete a planned rooms renovation. In September 2000, HVS delivered an updated appraisal valuing the Michigan Avenue Hotel at $124.6 million. For a more detailed description of the HVS appraisals of the Michigan Avenue Hotel, see “— Determination of the Offer Price.”

      In April 2000, the Partnership completed the sale of the Westin St. Francis Hotel to BRE/St. Francis L.L.C., an affiliate of the Blackstone Group, for $243,000,000. In accordance with the Partnership Agreement, $158,900,000 of the proceeds were used to repay the Westin St. Francis Hotel’s portion of the Partnership’s loan, which was secured in part by the Westin St. Francis Hotel, the Westin St. Francis Hotel’s portion of the

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subordinated note due to the General Partner, deferred incentive management fees related to the Westin St. Francis Hotel and costs and expenses related to the sale. The remaining proceeds of $84,100,000 and additional Partnership cash of approximately $1,300,000 were distributed to the Unitholders.

      In February 2001, after the completion of the majority of the renovations of the Michigan Avenue Hotel, the General Partner, on behalf of the Partnership, retained Jones Lang LaSalle Hotels (“JLL”), a nationally recognized broker, to market the Michigan Avenue Hotel for sale. In April 2001, formal marketing materials were distributed. Subsequently, indications of interest were received by, and discussions were commenced with, several potential purchasers. After the terrorist attacks in New York City, Washington, D.C. and Pennsylvania on September 11, 2001, however, certain of the most qualified potential purchasers indicated that they would expect significant discounts on their preliminary indications of value that they made before the attacks. According to the Partnership, based on the unstable and depressed hotel real estate market resulting from the weakened general worldwide economic environment, the General Partner did not believe that it was in the best interest of the Limited Partners to sell the Michigan Avenue Hotel in late 2001 or 2002. According to the Schedule 14D-9 filed by the Partnership on July 18, 2003, the General Partner does not believe that it will be able to sell the Michigan Avenue Hotel at an acceptable price in the near future.

      The General Partner also engaged JLL to assist in exploring a refinancing of the Partnership’s debt and in mid-2002 directed JLL to focus its efforts towards pursuing refinancing alternatives. JLL sent materials to a large number of potential lenders and received several preliminary loan proposals. In May 2003, the General Partner negotiated a loan application with Column Financial, Inc. (“Column”), an affiliate of Credit Suisse First Boston, and made a $75,000 deposit with Column. On May 15, 2003, the General Partner filed a preliminary consent solicitation statement (the “Preliminary Proxy Statement”) with the SEC which contemplated obtaining the consent of the Limited Partners to effect a refinancing of the Partnership’s debt. Subsequent to filing the Preliminary Proxy Statement, the General Partner learned that Column was not likely to be able to provide financing in accordance with the terms outlined in the Preliminary Proxy Statement.

      In its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003 (the “Partnership’s Second Quarter 10-Q”), the Partnership indicated that the General Partner is continuing to have discussions with Column regarding the terms of its loan proposal and has commenced preliminary discussions with other potential lenders. In the Partnership’s Second Quarter 10-Q, the General Partner cautioned that the General Partner is not optimistic it will be able to find a lender willing to provide financing to the Partnership upon terms set forth in the Preliminary Proxy Statement and further cautioned that there can be no assurance that a refinancing proposal will be presented to the Limited Partners.

      According to the Partnership, several mini-tender offers to purchase Units have been made during the last several years. The General Partner has announced its position with respect to many of these mini-tender offers in press releases and letters to the Limited Partners. See “— Determination of the Offer Price.”

      On July 7, 2003, Windy City made a tender offer to purchase up to 15% of the outstanding Units for a purchase price of $525 per Unit, reduced by the $50 transfer fee charged by the Partnership per transferring Unitholder and the amount of any cash distributions made or declared on or after July 7, 2003 (plus interest of 3% per year from the expiration date of the tender offer to the date of payment) (the “Windy City Offer”). In connection with the Windy City Offer, the Partnership retained Houlihan Lokey Howard & Zukin Financial Advisors, Inc. (“Houlihan Lokey”) to give an opinion on the fairness of the Windy City Offer to the Unitholders from a financial point of view.

      On July 18, 2003, the Partnership filed a Schedule 14D-9 with the SEC with respect to the Windy City Offer, which was amended on July 30, 2003 (the “Windy City 14D-9”) in which (i) the General Partner disclosed that it was expressing no opinion, making no recommendation and remaining neutral with respect to the Windy City Offer and (ii) the Partnership disclosed that Houlihan Lokey was of the opinion that the consideration to be paid to Unitholders in the Windy City Offer was fair to the Unitholders from a financial point of view.

      On July 24, 2003, Kalmia made a tender offer to purchase up to 58.94% of the outstanding Units for a purchase price of $550 per Unit, less the amount of any cash distributions made or declared on or after July 7,

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2003 (the “Kalmia Offer”). In connection with the Kalmia Offer, the Partnership also retained Houlihan Lokey to give an opinion on the fairness of the Kalmia Offer to the Unitholders from a financial point of view.

      On August 1, 2003, the Partnership filed a Schedule 14D-9 with the SEC with respect to the Kalmia Offer (which was amended on August 6, 2003) (the “Kalmia 14D-9”) in which (i) the General Partner disclosed that it was expressing no opinion, making no recommendation and remaining neutral with respect to the Kalmia Offer and (ii) the Partnership disclosed that Houlihan Lokey was of the opinion that the consideration to be paid to Unitholders in the Kalmia Offer was not fair to the Unitholders from a financial point of view.

      According to the Kalmia 14D-9, because the Windy City Offer was for a minority position within the Partnership, Houlihan Lokey applied a minority discount to the consideration to be paid to Unitholders, lowering the determined range of value for the Units in the Windy City Offer. On the other hand, if the Kalmia Offer were fully subscribed, Kalmia would hold approximately 67.04% of the outstanding Units and accordingly would hold sufficient interest to control certain material decisions to be made by the Unitholders in accordance with the terms of the Partnership Agreement. Because Houlihan Lokey deemed the Kalmia Offer to constitute a bid for a controlling interest in the Partnership, Houlihan Lokey could not apply any minority discounts to the value of the Units in the Offer, the effect of which increased the determined range of value for the Units above the amount of consideration offered to Unitholders in the Kalmia Offer. Thus, although the consideration to be received by a participating Unitholder in connection with the Kalmia Offer may have been greater than the consideration to be received by a participating Unitholder in connection with the Windy City Offer, Houlihan Lokey’s opinions had to take into account discounts for minority purchases where applicable, leading to different conclusions as to the appropriate determined range of value for the Units in each of the Windy City Offer and the Kalmia Offer.

      The Windy City Offer expired on August 4, 2003. According to Windy City, Units representing approximately 2.27% of the outstanding Units were tendered and accepted as reported by Windy City. The Kalmia Offer is currently scheduled to expire on Friday, August 29, 2003.

      In its capacity as the parent company of the General Partner, Starwood has participated in and been aware of the events described above, although no Starwood employees other than the two employees who are directors of the General Partner have been involved in the General Partner’s evaluations of, or responses to, the Kalmia Offer.

      Since the Kalmia Offer was made, Starwood has evaluated its strategic options with respect to the Partnership, including a possible purchase of Units. This evaluation has involved a number of factors, including consideration of the following factors that are positive for Starwood:

•  The benefits of acquiring control of the Partnership, including operating efficiencies in light of Starwood’s other assets;

•  The attractive long-term economics of the Partnership; and

•  The benefit of eliminating, after the Merger, the deferred management fees to 909 Corp., which bear no interest, and the subordinated loan from the General Partner to the Partnership, which bears interest at a lower rate of return than that which Starwood could earn in an alternate use of funds.

      Beginning on August 1, 2003, the Board of Directors of Starwood considered acquiring the Partnership in response to the Kalmia Offer. In light of the conflicts of interest between Starwood, as a potential offeror for the Units, and the General Partner, as the representative of the Partnership, on or about August 1, 2003, Starwood implemented an information screen intended to prevent the exchange of information between Starwood, its affiliates and its legal counsel, on the one hand, and the GP Board, its financial advisors and its legal counsel, on the other hand, regarding offers for Units, including the pending Kalmia Offer and our Offer. We have also excluded all employees involved in the management of the Michigan Avenue Hotel from consideration of any aspect of the Offer, including the terms and conditions described in this Offer to Purchase and Solicitation Statement. Some of the officers of the General Partner have participated in the consideration

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of our Offer on our behalf, and have not participated in any respect in the General Partner’s consideration of its response to our Offer or any other tender offer for the Units.

      In a press release issued on August 4, 2003, Starwood announced that:

[I]t is considering commencing a tender offer for the limited partnership units of Westin Hotels Limited Partnership, the owner of the Westin Michigan Avenue in Chicago, Illinois. Any such offer would be for all of the outstanding limited partnership units and would be conditioned on limited partners tendering units representing 50% of the outstanding Units plus one unit.

      Following the press release, Starwood decided to make an offer on the terms described in this Offer to Purchase and Solicitation Statement. On August 20, 2003, Starwood announced that it:

[I]ntends to commence a tender offer for all outstanding limited partnership units (the “Units”) of Westin Hotels Limited Partnership (“WHLP”), the owner of the Westin Michigan Avenue in Chicago, Illinois, for a purchase price of $600 in cash per Unit.

The tender offer would be conditioned on, among other things, (i) the valid and not withdrawn tender of at least a majority of the issued and outstanding Units and (ii) Starwood being reasonably satisfied that the general partner of WHLP will recognize the transfer of Units to Starwood and consent to its admission as a substituted limited partner in respect of the transferred Units. Starwood would use cash on hand to complete the tender offer, so the tender offer would not be subject to financing.

      The press releases making these announcements were filed on Schedule TO with the SEC on August 4, 2003, and August 20, 2003, respectively, and delivered to the General Partner, Windy City, Kalmia and their respective counsel on or shortly after such filing dates.

      On August 22, 2003, Starwood delivered to the Partnership, for distribution by mail to the Unitholders, a letter enclosing the August 20 press release and describing the expected terms of the Offer and the Consent Solicitation. This letter was filed on Schedule TO and Schedule 14A after the close of business on August 22, 2003, and delivered to the General Partner, Windy City, Kalmia and their respective counsel on or shortly after such filing date.

      The Offer has not been negotiated between us and the General Partner. No independent committee or representative has been appointed or retained to negotiate the terms of the Offer or the Consent Solicitation on your behalf.

3.     Purpose of the Tender Offer; Future Plans

      We are making the Offer to acquire control of, and the entire equity interest in, the Partnership. Accomplishing these steps would allow us to reduce some of the Partnership’s expenses, including those associated with preparing stand-alone annual audited financial statements, SEC reporting and responding to third party tender offers. We are also making the Offer to provide you with a more attractive alternative to the Kalmia Offer. The Offer provides you with a higher purchase price than the Kalmia Offer. In addition, whereas we are offering to purchase all of the issued and outstanding Units, Kalmia has offered to purchase up to approximately 59% of the issued and outstanding Units. Consequently, if more than 59% of the Units are tendered in the Kalmia Offer, Kalmia will purchase only a pro rata portion of each Unitholder’s tendered Units. The Partnership has announced that it has obtained preliminary advice from its counsel that the transfer of additional Units representing more than approximately 48% of the Units in the twelve months ending September 30, 2003 would result in a termination for United States federal income tax purposes of the Partnership under certain provisions of the Internal Revenue Code and that such transfers would not be valid or effective. As a result, after giving effect to the transfers in connection with the Windy City Offer and assuming there have been no other transfers in the quarter ending September 30, 2003, Kalmia is unlikely to be able to acquire more than approximately 45.6% of the Units in the Kalmia Offer, reducing the number of Units each tendering holder would be permitted to transfer in the Kalmia Offer. We intend, as soon as practicable after completing the Offer, to cause the Partnership to effect the Merger. In the Merger, the

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outstanding Units not owned by us or our affiliates will be converted into the right to receive cash in an amount equal to the price per Unit payable in the Offer.

      If we are unable for any reason to effect the Merger, then we may seek to acquire additional Units through open market purchases, privately negotiated transactions, a tender or exchange offer or other transactions or a combination of the foregoing on such terms and at such prices as we shall determine, which may be different from the price paid in the Offer. We also reserve the right to dispose of Units that we have acquired or may acquire.

      While we reserve the right to do so, we do not expect to change the board of directors of the General Partner or the management or operations of the Partnership prior to effecting the Merger.

4.     Fairness of the Offer

      Because we and the General Partner are wholly owned subsidiaries of Starwood and are under the control of Starwood, we are an “affiliate” of the Partnership for purposes of Rule 13e-3 under the Exchange Act. Accordingly, under Rule 13e-3, we and Starwood have considered the fairness of the Offer to you.

      We and Starwood believe that the Offer is fair to you. We and Starwood unilaterally established the terms of the Offer without any negotiation with the Partnership or the General Partner or any representative of the Unitholders. EXCEPT AS FOLLOWS, WE ARE NOT MAKING ANY RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD TENDER YOUR UNITS. YOU SHOULD MAKE THAT DECISION ONLY AFTER CONSULTING WITH YOUR FINANCIAL AND TAX ADVISORS AND CONSIDERING CAREFULLY THE INFORMATION SET FORTH IN THE OFFER.

      If you intend to tender Units in the Kalmia Offer, we recommend that you tender your Units to us instead, since we believe the terms of and conditions to our Offer are superior to those in the Kalmia Offer.

      In reaching the determination that the Offer is fair to the Unitholders, we and Starwood considered the following factors that we believe to be positive to the Unitholders:

•  We reasonably believe that the Offer is procedurally fair to you in light of the following factors:

•  You can determine in your sole discretion whether or not to tender any or all of your Units in the Offer;

•  The Offer includes a non-waivable condition that at least a majority of the issued and outstanding Units be tendered and not withdrawn in the Offer;

•  If the Offer is completed, Unitholders that do not tender Units in the Offer will receive the same amount per Unit in the Merger that they would have received had they tendered their Units in the Offer;

•  The GP Board will likely be advised by an independent financial advisor in connection with the Offer as it has been in the Windy City Offer and the Kalmia Offer;

•  The GP Board is being advised by separate legal counsel in connection with the Offer;

•  Since the Offer is for 100% of the outstanding Units and, if the Offer is completed, we intend to effect the Merger, Unitholders are under no coercion to tender Units into the Offer for fear that they may be left as a minority Unitholder, that the market for the Units will be more illiquid than it currently is or that the Partnership may no longer be required to file financial statements and other important information regarding the Partnership and its business with the SEC; and

•  The Offer provides the opportunity for you to sell your Units without incurring brokerage and other costs typically associated with secondary market sales.

•  Our purchase of your Units would provide a prompt means for you to receive cash for your Units that you tender, which is an attractive alternative to retaining an investment in the relatively illiquid Units.

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•  The Offer Price exceeds recent indications of the market price for the Units as evidenced by the Windy City Offer and the Kalmia Offer. The Offer will permit you to liquidate your investment in the Partnership at a cash price of $600 per Unit. In comparison, Kalmia is offering to purchase a portion of your Units for a net cash price of $550 per Unit, and Windy City offered to purchase a portion of your Units for a net cash price of $525 per Unit. Our Offer Price Represents a 9.1% premium over the purchase price in the Kalmia Offer and a 14.3% premium over the purchase price in the Windy City Offer. In transactions in which the price was reported to the Partnership, over the twelve months ended March 31, 2003, the weighted average price was $407.82 per Unit (according to The Partnership Spectrum, an industry publication). Our Offer represents a 47.1% premium over this weighted average price.

•  Our Offer Price is above the mid-point of the range of per Unit present values that JLL considered under each of the scenarios described in its July 24, 2003 report to the GP Board in connection with its refinancing analysis. See “— Determination of the Offer Price — Jones Lang LaSalle Hotels Refinancing Analysis.”

•  We determined that our Offer Price represents a 32.2% premium over the low point and a 19.2% premium over the midpoint on the range of per Unit values determined by Houlihan Lokey in connection with its analysis of the Windy City Offer as described in its August 1, 2003 presentation to the GP Board. See “— Determination of the Offer Price — Kalmia Offer and Houlihan Lokey Fairness Opinion.”

      We also considered the following factors, which we considered to be negative from the perspective of the Unitholders, in our consideration of the fairness of the terms of the Offer:

•  Due to their conflicted position, the General Partner’s directors may not be able to evaluate the Offer objectively and they may cause the General Partner to take actions (or refrain from taking actions) and to make decisions in connection with the Offer that may not be in the best interests of the Unitholders.

•  The separate legal counsel advising the GP Board on the Offer has a longstanding relationship with Starwood and is a regular outside counsel to Starwood and various Starwood affiliates.

•  The Partnership has recently experienced improved operating results, which may mean that the Offer undervalues the Partnership. For the six months ended June 30, 2003, the Partnership’s net loss was $390,000, down from a $1.8 million loss for the same period in the previous year. For the six months ended June 30, 2003, the Michigan Avenue Hotel’s room revenue increased 13.1% from the same period in the previous year, from $12.8 million to $14.5 million.

•  Improving economic conditions in general and in the value of hotel properties in particular may mean that the Offer undervalues the Partnership. The Offer Price may be less than the amount per Unit that might be obtained if the Partnership were to sell its assets and liquidate. The amount that might be available to distribute to Unitholders would vary depending upon the timing of any such sale and distribution, the proceeds realized from a sale of the Partnership’s assets, the liabilities existing at the time and various other factors that are not under the control of the Partnership.

•  Following the successful completion of the Offer, the Unitholders that accept the Offer will cease to participate in the future earnings or growth, if any, of the Partnership or to benefit from increases, if any, in the value of the Michigan Avenue Hotel.

•  If you do not tender your Units and the Merger is not effected, there may be increased illiquidity of the Units, which will likely have an adverse effect on the market price of your Units.

•  Our Offer, unlike the Kalmia Offer, is subject to a condition that a minimum number of Units be tendered.

•  The Partnership Agreement does not provide appraisal or similar rights to Unitholders with respect to the Offer or the Merger. Accordingly, Unitholders will not have the right to have their Units appraised

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or to have the fair value of their Units paid to them if it exceeds the Offer Price if they decide not to tender into the Offer and the Merger is effected.

•

If the Partnership is able to refinance its debt secured by the Michigan Avenue Hotel in an amount that is substantially in excess of the currently outstanding principal amount of the existing debt, the Partnership might be in a position to make a substantial cash distribution to Unitholders, representing a portion of the loan proceeds in excess of the amounts required to pay the Partnership’s outstanding indebtedness, accrued management fees and related fees and expenses. In that event, Unitholders would continue to own all of their Units and would likely receive an additional cash distribution upon any sale of the Michigan Avenue Hotel and subsequent liquidation of the Partnership after pay-down of the higher new loan balance. See “— Background to the Offer.”

      In determining that the Offer is fair to the Unitholders, we considered the above factors as a whole and did not assign specific or relative weights to them.

5.     Determination of the Offer Price

      The Offer Price is $600 per Unit, in cash, reduced by any cash distributions made or declared on or after July 7, 2003, to the extent that we do not receive such distributions with respect to any Units accepted for payment. If you tender any Units in the Offer, we will pay on your behalf the $50 transfer fee charged by the Partnership per transferring Unitholder.

Information and Factors We Considered.

      In arriving at the Offer Price, Starwood used its general expertise in the real estate market and hospitality industry and took into account:

•  Our experience in managing the Michigan Avenue Hotel;

•  Information provided in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2002 (the “Partnership’s 2002 10-K”), the Partnership’s Second Quarter 10-Q, the Partnership’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2003, and the Preliminary Proxy Statement;

•  Historical market prices for the Units;

•  Offer prices and terms of other tender offers for the Units;

•  The illiquidity of the market for the Units, including the limited frequency of trading of Units in the secondary market;

•  The difficulty of completing a sale or refinancing of the Michigan Avenue Hotel on terms acceptable to the Partnership

•  The current business and transient travel environment;

•  The indebtedness of the Partnership; and

•  Certain tax considerations.

      We also considered certain reports, opinions and appraisals of third parties made available to us by the General Partner. Unless otherwise indicated, each of the reports, opinions and appraisals described below is attached as an exhibit to the Schedule TO filed by us with the SEC on August 27, 2003 in connection with the Offer (“Schedule TO”), and is incorporated by reference in this Offer to Purchase and Solicitation Statement. You can obtain copies of the Partnership’s SEC filings, Kalmia’s and Windy City’s SEC filings and the reports, opinions and appraisals we describe in this section from the SEC. For information on obtaining documents filed with the SEC, see “THE TENDER OFFER — Available Information; Incorporation by Reference.” We and Starwood disclaim any responsibility for the information included in these documents, including, without limitation, any information derived from them and included in this Offer to Purchase and Solicitation Statement. Descriptions of any opinions, reports and appraisals are qualified in their entirety by

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reference to the full versions thereof as filed with the SEC as exhibits to the Schedule TO. We urge you to read each of these reports, opinions and appraisals in their entirety, as they are subject to important limitations and assumptions described in such documents. The reports, opinions and appraisals do not constitute recommendations as to whether any Unitholder should tender Units in the Offer.

      The Offer Price represents the price at which we are willing to purchase Units. Other measures of the value of the Units may be relevant to you. We urge you to consider carefully all of the information contained in this Offer to Purchase and Solicitation Statement and to consult with your own advisors (tax, financial or otherwise) in evaluating the terms of the Offer before deciding whether to tender your Units.

      In arriving at the Offer Price, we did not conduct an independent financial analysis of the value of the Michigan Avenue Hotel or the Units. We sought to establish an Offer Price that was significantly above the prices proposed to be paid in the Windy City Offer and Kalmia Offer, the prices offered in other mini-tender offers and market prices. We were mindful of the range of per Unit present value that JLL considered under each of the scenarios in its July 24 analysis, the range for a non-controlling interest determined by Houlihan Lokey in its August 1 presentation relating to the Windy City Offer and the fact that Houlihan Lokey concluded that the $550 offer price in the Kalmia Offer for a controlling interest was not fair to Unitholders from a financial point of view.

      In arriving at a purchase price which is above these recent offers and recent market prices, we and Starwood also considered the Partnership’s improving operating results as reflected in the Partnership’s Second Quarter 10-Q, its historical operating results and historical market prices of the Units. While we believe that the purchase price we arrived at is fair, we also believe that it affords us the opportunity to benefit from our investment in the Units. See “— Risk Factors — The Offer Price might not accurately reflect the value of your Units.”

Market for Partnership Units.

      The following information reflects the Partnership’s records of the average and range of Unit sale prices to date as quoted in the Limited Partnership Exchanges and as set forth in the Partnership’s 2002 10-K:

	Average Per Unit		Range of Per Unit
	Sales Price(1)		Sales Price(1)
2001
(through November 20, 2001, when sales were suspended)	$	542.63		$200.00 to $1,065.00
2002
2,563 units (through December 31, 2002)	$	434.35		$250.00 to $628.00
2003
(through March 17, 2003)	$	333.36		$225.00 to $465.00

(1)  The Per Unit Sales Price is the actual contracted price agreed upon by the respective Limited Partner and new purchaser. This balance does not reflect any reductions in the sales price due to subsequent distributions made to the Limited Partners, as specified by some of the mini-tender offers.

Previous Tender Offers.

      According to the Partnership’s 2002 10-K, several mini-tender offers to purchase Units have been made during the last several years. Offers that are for less than 5% of the outstanding Units are commonly referred to as “mini-tender offers” because they are not subject to the filing, disclosure and procedural requirements of the federal securities laws and regulations.

      In 2000, the offer prices in these mini-tender offers ranged between $200 and $400 per Unit. In 2001, such offer prices ranged from $300 to $575 per Unit. In 2002, a mini-tender offer was made at an offer price of $400 per Unit, and in 2003, before the Windy City Offer and the Kalmia Offer, mini-tender offers were made at offer prices ranging from $225 to $415 per Unit. The General Partner either took no position or recommended against tendering, on the basis, among other reasons, that the tender offer price was below the

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price in recent open market sales of Units. Please review the Schedules 14D-9 of the Partnership related to the Windy City Offer and the Kalmia Offer for the General Partner’s reasons for not expressing a position or making a recommendation in those transactions.

Kalmia Offer and Houlihan Lokey Fairness Opinion.

      When Starwood announced that it was considering a tender offer for all of the Units, the unsolicited Kalmia Offer was pending. Kalmia is offering $550 per Unit, less the amount of any cash distributions made or declared on or after July 7, 2003 with respect to such Unit, for up to approximately 59% of the outstanding Units. The Kalmia Offer is currently scheduled to expire at 5:00 p.m., Eastern time, on Friday August 29, 2003.

      The Partnership retained Houlihan Lokey to give an opinion on the fairness of the Kalmia Offer to the Unitholders from a financial point of view. According to the Kalmia 14D-9, Houlihan Lokey presented an opinion to the General Partner on August 1, 2003, which stated that, as of that date, in its opinion, the consideration to be received in connection with the Kalmia Offer was not fair to Unitholders from a financial point of view. The opinion addresses the fairness of the Kalmia Offer only from a financial point of view, does not constitute a recommendation to any Unitholder as to whether to tender Units in the Kalmia Offer or any other offer and is subject to important limitations and assumptions described in that opinion. The Houlihan Lokey opinion with respect to the Kalmia Offer is attached to the Kalmia 14D-9.

      Neither Starwood nor Purchaser had access to, and thus did not consider, any report, opinion or appraisal prepared by Houlihan Lokey or any other third party in connection with the Kalmia Offer other than the information contained in the Kalmia 14D-9.

Windy City Offer and Houlihan Lokey Fairness Opinion.

      When Starwood announced that it was considering a tender offer for all of the Units, the unsolicited Windy City Offer was also pending. In its offer, Windy City offered $525 per Unit, reduced by the $50 transfer fee charged by the Partnership per transferring Unitholder and the amount of any cash distributions made or declared on or after July 7, 2003 with respect to such Unit, for up to 15% of the outstanding Units. Windy City also agreed to pay interest at the rate of 3% per annum from the expiration date of the tender offer to the date of payment. The Windy City Offer expired on Monday August 4, 2003 and approximately 3,076 Units (or 2.27% of the total outstanding Units) were tendered as reported by Windy City. The Partnership retained Houlihan Lokey to give an opinion on the fairness of the Windy City Offer from a financial point of view. A summary of the Houlihan Lokey fairness analysis of the Windy City Offer is set forth in Annex A hereto.

      Starwood believes that the Partnership retained Houlihan Lokey based upon Houlihan Lokey’s experience in the valuation of businesses and their securities in connection with restructuring transactions, mergers, acquisitions, recapitalizations and similar transactions, particularly with respect to Real Estate Investment Trusts and other real estate companies. Houlihan Lokey is a nationally recognized investment banking firm that is continually engaged in providing financial advisory services and rendering fairness opinions in connection with mergers and acquisitions (“M&A”), leveraged buyouts, business valuations and securities valuations for a variety of regulatory and planning purposes, recapitalizations, financial restructurings and private placements of debt and equity securities. Houlihan Lokey has provided certain appraisal services to Starwood from time to time, and may provide such services to Starwood in the future.

      Starwood believes that the Partnership selected Houlihan Lokey to provide fairness opinions based upon its reputation and experience in similar transactions. The Partnership agreed to pay Houlihan Lokey a fee of $100,000 regarding the Windy City Offer. The Partnership also agreed to pay Houlihan Lokey a fee of $75,000 for its services in connection with the Kalmia Offer. In addition, the Partnership and Houlihan Lokey agreed that Houlihan Lokey would advise the Board of Directors of the General Partner regarding any future tender offers for a fee of $50,000, provided that the Partnership pays Houlihan Lokey a fee of $40,000 per month for each of August and September 2003, and $25,000 for each month after September 2003 for which it is engaged. The Partnership also agreed to reimburse Houlihan Lokey for its reasonable out-of-pocket expenses, and to indemnify Houlihan Lokey against certain liabilities.

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Jones Lang LaSalle Hotels Refinancing Analysis.

      As required by the Partnership Agreement, the General Partner has actively reviewed opportunities to sell the Michigan Avenue Hotel or refinance the senior debt secured by the Michigan Avenue Hotel. As part of these efforts, in February 2001, Starwood retained JLL, a nationally recognized broker, to market the Michigan Avenue Hotel for sale. In April 2001, formal marketing materials were distributed to potential purchasers. Subsequently, indications of interest were received and discussions were commenced with several potential purchasers. After the terrorist attacks in New York City, Washington, D.C. and Pennsylvania on September 11, 2001, certain of the most qualified potential purchasers indicated they would expect significant discounts on their preliminary indications of value made before the attacks. Based on the unstable and depressed hotel real estate market resulting from the weakened general worldwide economic environment, the General Partner did not believe that it was in the best interest of the Limited Partners to sell the Michigan Avenue Hotel in late 2001 or 2002.

      As a result, the General Partner also engaged JLL to assist in exploring a refinancing of the Partnership’s debt and, and in mid 2002, directed JLL to focus its efforts towards pursuing refinancing alternatives. In connection therewith, JLL prepared two draft reports dated July 24, 2003 and May 7, 2003. A summary of each of the reports is set forth in Annex B hereto.

      In the Partnership’s Second Quarter 10-Q, the Partnership indicated that due to current market conditions in the hotel real estate market, it did not believe that it would be able to sell the Michigan Avenue Hotel at an acceptable price in the near future. According to the Partnership’s Second Quarter 10-Q, the General Partner is continuing to have discussions with Column regarding the terms of its loan proposal and has commenced preliminary discussions with other potential lenders. However, at the time of the Partnership’s Second Quarter 10-Q, the General Partner was not optimistic it would be able to find a lender willing to provide financing to the Partnership upon terms set forth in the Preliminary Proxy Statement.

      Starwood believes that the Partnership selected JLL based upon its reputation and experience in real estate valuation. Payments from the Partnership to JLL totaled approximately $32,000 in 2003 (through June 30) and $37,000 in 2002.

HVS International Appraisals

      In January 1999, Starwood, on behalf of the Partnership, retained HVS to appraise each of the Westin St. Francis Hotel and the Michigan Avenue Hotel. On the basis of the appraised values of the hotels indicated by HVS, and the General Partner’s continuing analysis of the Westin St. Francis Hotel’s financial performance, the General Partner concluded that it was in the best interests of the Partnership to sell the Westin St. Francis Hotel and continue to hold the Michigan Avenue Hotel to provide time to complete a planned rooms renovation. A summary of the HVS appraisals with respect to the Michigan Avenue Hotel, including an updated appraisal delivered in September 2000, is set forth in Annex C hereto.

      HVS is a global provider of valuation and related services to the hospitality, travel and tourism industries, with a particular specialty in the valuation of hotels and resort properties. Starwood, on behalf of the Partnership, retained HVS based upon these credentials. HVS has provided certain appraisal services to Starwood from time to time, and may provide such services in the future to Starwood.

      Note: The HVS appraisals and opinions described above are of the Michigan Avenue Hotel and not of the Partnership and reflect conditions in the real estate market and travel industry prior to the terrorist attacks in New York City, Washington, D.C. and Pennsylvania on September 11, 2001. Due to the age of the appraisals and the events since their preparation, Starwood did not consider the HVS appraisals in its determination of the Offer Price.

6.     Transactions, Negotiations and Agreements

      As a wholly owned subsidiary of Starwood, we are an affiliate of the General Partner. 909 Corp., another subsidiary of Starwood, is both the general partner of the Hotel Partnership, which directly owns the Michigan

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Avenue Hotel, and the management company for the Michigan Avenue Hotel. Certain transactions, negotiations and agreements among these affiliated entities are set forth below.

The officers and directors of the General Partner and of 909 Corp. are employees of Starwood; certain Executive Officers of Starwood are officers of the General Partner or 909 Corp. or have been directors of the General Partner.

      The General Partner’s officers and directors and the officers and directors of the Hotel Partnership are full-time senior or executive-level employees of Starwood. In addition, the Michigan Avenue Hotel is managed by 909 Corp., a wholly owned subsidiary of Starwood. All the activities of the General Partner and 909 Corp. are carried out by Starwood employees, since neither the General Partner nor 909 Corp. has any employees of its own.

      The directors and officers of the General Partner are Starwood employees and in their capacities as directors and officers of a wholly owned subsidiary of Starwood owe fiduciary duties to Starwood in its capacity as the sole stockholder of the General Partner. The directors and officers of the General Partner and the General Partner, however, also have fiduciary duties to the Partnership and the Unitholders that may conflict with their fiduciary duties to Starwood. These conflicting fiduciary duties may prevent the General Partner from being able to objectively evaluate the Offer and may cause the General Partner to take actions (or refrain from taking actions) and to make decisions in connection with the Offer that may not be in the best interests of the Unitholders. Because of this conflict of interest, neither we nor Starwood have attempted to negotiate the Offer or its terms with the General Partner.

      Although they are not members of the GP Board, the Chief Financial Officer, the General Counsel and the President of the Real Estate Group of Starwood each hold positions with the General Partner and 909 Corp. The Chief Financial Officer of Starwood was a member of the GP Board until October 19, 2001.

      Each director and the President of the General Partner is a full-time, senior or executive-level employee of Starwood. Each has received salary and bonuses from Starwood in amounts commensurate with his level of skill and experience and comparable to similarly situated employees in the industry. Each has received grants of options and restricted stock of Starwood in each of the past two years and is also eligible to participate in Starwood’s benefit plans. Because each is a full-time employee of Starwood, and receives a significant amount of compensation from Starwood. We do not believe that you should consider any of them to be independent of Starwood for any purpose.

A Starwood subsidiary manages the Michigan Avenue Hotel.

      The Michigan Avenue Hotel is operated as part of the Westin international system of hotels pursuant to a management agreement initially entered into on August 21, 1986 among the General Partner, the Partnership, 909 Corp., the Hotel Partnership, as the owner of the Michigan Avenue Hotel, and the Westin Hotel Company, as hotel manager. When Starwood acquired the Westin Hotel Company in 1998, the Westin Hotel Company was merged into one of Starwood’s affiliates and the Westin Hotel Company assigned the management agreement to 909 Corp. The management agreement does not terminate until 2026 without the consent of all parties, absent a breach or a default by a party or the occurrence of certain extraordinary events specified in the agreement, which generally relate to the bankruptcy or insolvency of the Partnership or 909 Corp.

      The management agreement provides for a base management fee equal to 3.5% of annual gross revenues of the Michigan Avenue Hotel payable by the Hotel Partnership to the hotel manager out of cash flow from the operations of the Michigan Avenue Hotel. This fee is payable prior to the distribution of cash to the partners of the Hotel Partnership, including the Partnership as the sole Limited Partner of the Hotel Partnership.

      The management agreement also provides for an incentive management fee, which is currently equal to 20% of the net operating cash flow (as defined in the management agreement) of the Partnership. Payment of the incentive management fee in any year depends on the amount of distributable net cash flow of the

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Partnership and is subordinated to the payment to the Limited Partners of a preferred distribution of cash flow. Unpaid incentive management fees are deferred and do not accrue interest.

      Base management fees earned by 909 Corp. were approximately $726,000 in the six months ended June 30, 2003, and $1,426,000 and $1,467,000 in the years ended December 31, 2002 and December 31, 2001, respectively. Incentive management fees totaled approximately $1,248,000 in the six months ended June 30, 2003, and $2,700,000 and $2,507,000 in the years ended December 31, 2002 and December 31, 2001, respectively. Incentive management fee payments are subordinate to the Unitholders’ receipt of certain preferential returns. The 2002 incentive management fees and approximately $752,000 of previous years’ incentive management fees were paid in the first quarter of 2003. At June 30, 2003, all current and deferred incentive management fees with respect to the Partnership were $8.1 million. Deferred incentive management fees are payable from the proceeds of a sale or refinancing of the Michigan Avenue Hotel or from available net cash flow, as defined in the Partnership Agreement.

The Partnership reimburses the General Partner for certain expenses.

      In accordance with the Partnership Agreement, the Partnership reimburses the General Partner for expenses in connection with management and administration. These reimbursements totaled approximately $405,000 in the six months ended June 30, 2003, and $467,000 and $725,000 in the years ended December 31, 2002 and December 31, 2001, respectively.

The Hotel Partnership, as owner of the Michigan Avenue Hotel, has retained Starwood affiliates for marketing and other services.

      The Hotel Partnership paid marketing fees to Starwood and its affiliates totaling approximately $311,000 in the six months ended June 30, 2003, and $611,000 and $629,000 in the years ended December 31, 2002 and December 31, 2001, respectively. Additionally, the Partnership paid Starwood affiliates approximately $1,856,000 and $1,852,000 in the years ended December 31, 2002 and December 31, 2001, respectively, for services provided by Starwood affiliates primarily in connection with systems support, reservations, advertising, property and workers’ compensation insurance which payments include premiums paid to Westel Insurance Company, a wholly owned subsidiary of Starwood.

The Partnership has a loan outstanding from the General Partner.

      In conjunction with the restructuring of the Partnership’s mortgage loan secured by the Westin St. Francis Hotel and the Michigan Avenue Hotel in 1994, the General Partner loaned the Partnership $25 million to fund capital improvements to the Michigan Avenue Hotel and the Westin St. Francis Hotel, of which $5 million was contributed to the Hotel Partnership for capital improvements for the Michigan Avenue Hotel. This loan (the “Subordinated Loan”) is subordinate to the Partnership’s current mortgage loan. The annual interest rate on the Subordinated Loan is the prime rate quoted from time to time by Bank of America, plus 1%. The portion of the loan attributable to the Westin St. Francis Hotel was repaid upon the sale of the Westin St. Francis Hotel. At June 30, 2003, the outstanding balance on the Subordinated Loan totaled $10,677,000 (including $5,677,000 of accrued interest). The Subordinated Loan (both principal and interest) will be payable in full from the net proceeds of a refinancing or a sale of the Michigan Avenue Hotel in accordance with the Partnership Agreement. Interest expense on this loan was $273,000 in the six months ended June 30, 2003, and $572,000 and $734,000 in the years ended December 31, 2002 and December 31, 2001, respectively. Principal payments on the Subordinated Loan are due on the fifteenth anniversary of each advance with the first payment due in June 2009. See “DESCRIPTION OF PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP.”

Starwood has an equity interest in Grill Concepts which operates a restaurant in the Michigan Avenue Hotel pursuant to an operating lease.

      In June 2000, the Michigan Avenue Hotel transferred the operations of its restaurant, The Grill on the Alley, to Grill Concepts of California (“Grill Concepts”). Starwood made an equity investment in Grill Concepts in the

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third quarter of 2001 and currently owns 27.4% of the outstanding common stock of Grill Concepts and has rights to acquire additional shares of Grill Concepts pursuant to a subscription agreement. An employee of Starwood also serves on the Board of Directors of Grill Concepts. Grill Concepts operates the Grill on the Alley pursuant to a ten-year operating lease that expires in 2008. Rental revenues to the Partnership from Grill Concepts under the operating lease for the restaurant were $151,000 in the six months ended June 30, 2003, and $238,000 and $242,000 in the years ended December 31, 2002 and December 31, 2001, respectively.

      In late 2002, Grill Concepts approached the General Partner seeking a reduction or deferral in the rental payments due under the lease based on the general decline in operating conditions in the market, as well as increases in operating costs that would be attributable to a new collective bargaining agreement with the union representing employees at the restaurant. The General Partner and Grill Concepts discussed the need for an amendment to the lease. In April 2003, a notice of default under the lease was delivered to Grill Concepts in connection with its failure to enter into a new collective bargaining agreement with the restaurant union. In response, Grill Concepts advised the Partnership that it did not believe that a default existed. Grill Concepts has since agreed to the terms of a new collective bargaining agreement.

7.     Alternatives Considered to the Offer

      Starwood believes that a cash tender offer for the Units is the best method for accomplishing its objectives of obtaining control of the Partnership and providing the Unitholders with liquidity. As the parent company of the General Partner, Starwood has been involved in the General Partner’s efforts to sell the Michigan Avenue Hotel or refinance the indebtedness secured by the Michigan Avenue Hotel. These efforts are described in “— Background to the Offer.” From time to time since the General Partner began to explore a sale of the Michigan Avenue Hotel in 2001 and a refinancing of the indebtedness secured by the Michigan Avenue Hotel in 2002, Starwood has evaluated its strategic options with respect to the Partnership, including whether to purchase any or all of the Units.

      In light of (i) market conditions that have rendered the sale or refinancing of the Michigan Avenue Hotel impracticable on terms acceptable to the Partnership and (ii) the Kalmia Offer, on August 1, 2003, the Board of Directors of Starwood began considering whether Starwood wished to take control of, and acquire all the equity interests in, the Partnership. Starwood desires to pursue the most efficient course to acquire all of the Units and believes that offering to buy the Units directly from other Unitholders will result in an expedited and fair process. Starwood believes that a one-step transaction involving only a merger between the Partnership and a Starwood affiliate would require a long lead time to negotiate and effect and is impracticable given the inherent conflict of interest faced by members of the Board of Directors and the President of the General Partner, who are employees of Starwood and owe fiduciary duties both to Starwood and to the Unitholders. Our Offer enables you to tender your Units and be paid in a much shorter time frame than a negotiated one-step merger.

8.     Effects of the Offer

Voting Power of Purchaser.

      Because the Offer and the Consent Solicitation are independent of one another, it is possible that we could receive a sufficient number Units to satisfy the Minimum Condition, but not receive the consents necessary for approval of any of the Proposals. If we decide to complete the Offer under these circumstances (which would involve our waiving conditions to the Offer) or if there are legal or regulatory delays to the Merger, we may not be able to effect the Merger promptly. If we complete the Offer but do not effect the Merger, we will have the right to vote each Unit purchased in the Offer in accordance with the Partnership Agreement. As a result, we will be in a position as the majority holder of the Units to influence or determine all voting decisions of the Partnership. In particular, we will have the right under the Partnership Agreement to:

•  Approve a merger between us or one of our affiliates and the Partnership, even if we do not receive sufficient consent to the Merger in the Consent Solicitation;

•  Amend certain provisions of the Partnership Agreement;

•  Elect to dissolve the Partnership;

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•  Approve certain sales or borrowings by the Partnership, including the sale of the Hotel Partnership or the Michigan Avenue Hotel; and

•  Approve the transfer of the General Partner’s interest and prevent other Unitholders from expelling the General Partner and electing a new General Partner or General Partners.

      If we pay for Units tendered in the Offer and the Merger is approved in the Consent Solicitation, we intend to effect the Merger as contemplated by Section 17-211 of the DRULPA as modified by the Partnership Agreement. If we pay for Units tendered in the Offer and the Merger is not approved in the Consent Solicitation (which would involve our waiving conditions to the Offer), we may take additional steps to effect such a merger. We intend to comply with any applicable requirements of Regulations 14A or 14C under the Exchange Act in connection with any merger.

Effect on Trading Market.

      If you do not tender your Units, and we complete the Offer but the Merger is not effected, there may be increased illiquidity of the Units, which will likely have an adverse effect on the market price of your Units.

Registration Under Section 12(g) of the Exchange Act.

      The Units are registered under the Exchange Act, which requires, among other things, that the Partnership furnish certain information to its Unitholders and to the SEC and comply with the SEC’s proxy rules in connection with meetings of, and solicitation of consents from, Unitholders. If, as a result of the completion of the Offer, the Units are held by fewer than 300 persons, and if the Merger is not effected, we intend to cause the Partnership to de-register the Units under the Exchange Act. The termination of the registration of the Units under the Exchange Act would reduce the information required to be furnished by the Partnership to holders of Units and to the SEC and would make certain other provisions of the Exchange Act no longer applicable to the Units.

9.     Certain United States Federal Income Tax Considerations

In General.

      The following is a summary of the principal United States federal income tax consequences to a Unitholder that is a United States holder (as defined below) of the sale of Units pursuant to the Offer or the subsequent Merger. This discussion is based on the United States Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), United States Treasury regulations promulgated or proposed thereunder, judicial authorities, published administrative positions of the IRS and other applicable authority, all as in effect on the Offer Date. All of the foregoing are subject to change, possibly with retroactive effect; and any change could affect the continuing accuracy of this summary. We have not sought any ruling from the IRS with respect to any matter discussed in this summary; the IRS may take a different view as to any of the matters discussed in this summary, and, ultimately, a court may agree with the position taken by the IRS rather than with the position taken by us. This summary assumes that the Partnership is properly classified as a partnership, and not as a corporation, for United States federal income tax purposes, and that the Partnership is not treated as a “publicly traded partnership” as defined in Section 7704 of the Internal Revenue Code.

      This summary deals only with Unitholders that hold the Units as “capital assets” within the meaning of Section 1221 of the Internal Revenue Code, and does not address tax considerations that may apply (i) to Unitholders that are subject to special tax rules (such as banks, insurance companies, tax-exempt organizations, regulated investment companies, real estate investment trusts, grantor trusts, dealers or traders in securities or currencies, persons that received or hold the Units in connection with the performance of services, persons that hold the Units as part of a hedging, “straddle” or “conversion” transaction or otherwise as part of a holding with any other position, persons that are deemed to sell Units under the constructive sale provisions of the Internal Revenue Code or persons whose functional currency is not the United States dollar) or (ii) under the alternative minimum tax, any federal tax other than the federal income tax or any state, local or foreign tax laws. This summary applies only to a beneficial owner of a Unit that is (i) an individual citizen or resident of the United

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States, (ii) a corporation created or organized under the laws of the United States or any state or political subdivision thereof (including the District of Columbia) or (iii) an estate or trust, the income of which is subject to United States federal income taxation regardless of its source (collectively, “United States holders”).

      UNITHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE UNITED STATES FEDERAL, STATE AND LOCAL AND THE NON-UNITED STATES TAX CONSEQUENCES TO THEM OF TENDERING OR NOT TENDERING UNITS OR OF NOT TENDERING UNITS AND RETAINING UNITS AFTER COMPLETION OF THE OFFER.

Consequences to a Tendering Unitholder.

      The sale of Units pursuant to the Offer will be treated as a taxable disposition of the Units for United States federal income tax purposes. You will recognize gain or loss on the sale in an amount equal to the difference between the amount realized by you on the sale and your adjusted tax basis in the Units. The amount realized will be equal to the sum of (x) the amount of cash received by you pursuant to the Offer and (y) the amount of the liabilities of the Partnership properly allocable to the Units sold for federal income tax purposes (as determined under Section 752 of the Internal Revenue Code). Your adjusted tax basis in your Units generally will be equal to the amount paid by you for the Units, plus the amount of the liabilities of the Partnership properly allocable to your Units (as determined under Section 752 of the Internal Revenue Code) and the Partnership income or gain allocated to your Units, less any Partnership deductions or losses allocated to your Units and any distributions made by the Partnership to you with respect to your Units.

      For United States federal income tax purposes, as a Unitholder, you are considered to own a single interest in the Partnership, having a single adjusted tax basis, without regard to the number of Units that you hold. If you sell less than all of your Units, then you will recover a portion of your overall adjusted tax basis in your Units, rather than identifying the cost or other tax basis that is specifically attributable to the particular Units that you sell, and you will be deemed to have one or more holding periods for the transferred Units in proportion to your holding period(s) for your overall interest. If you are considering a tender of less than all of your Units, then you are urged to consult your own tax advisor as to these and other consequences to you of a partial sale.

      If you sell your Units pursuant to the Offer, you will be allocated a share of the Partnership’s taxable income or loss for the taxable year of the sale in accordance with the Internal Revenue Code and the Partnership Agreement. The allocation to you of the Partnership’s taxable income or loss, as well as any distributions made by the Partnership to you, will affect your basis in your Units and thus the amount of gain or loss that you will recognize on a sale of your Units.

      The gain or loss that you recognize generally will be treated as capital gain or loss. However, any portion of the amount realized by you that is attributable to the share of the Partnership’s “unrealized receivables” or “inventory items” (“Section 751 Property”) allocable to the Units sold will be taxable as ordinary income under Section 751 of the Internal Revenue Code, to the extent that the portion of the amount realized that is attributable to Section 751 Property exceeds your allocable share of the Partnership’s adjusted tax basis in the Section 751 Property. For this purpose, the “unrealized receivables” allocable to the Units sold include the share of the Partnership’s prior depreciation deductions allocable to the Units that would be subject to recapture if the depreciated assets were sold for fair market value. Under Section 751, it is possible that you may recognize ordinary income on the sale of your Units, even if you realize a net loss on the sale.

      Your capital gain or loss on the sale of Units will be treated as long-term capital gain or loss if your holding period in the Units for federal income tax purposes is more than one year. In general, your holding period for your Units began at the time that you acquired those Units. However, if you acquired Units at different times, then the Units, considered for tax purposes as a single partnership interest, will have a divided holding period in your hands, essentially based upon the relative number of Units that you acquired at the various times. Under current law, long-term capital gain of non-corporate Unitholders generally is taxable at a maximum rate of 15% (except that the rate will be 25% on the portion of the gain (“Section 1250 capital gain”) that is attributable to depreciation claimed with respect to real estate that is not recaptured as ordinary income under Section 1250 of the Internal Revenue Code), whereas the maximum marginal federal income tax rate for ordinary income is 35%. The ability of a Unitholder to offset capital losses against ordinary income is limited.

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      Under the passive activity loss rules contained in Section 469 of the Internal Revenue Code, which apply to noncorporate taxpayers and, with modifications, to certain classes of corporations, losses generated by passive activities generally may be used only to offset income from passive activities and may not be applied to reduce active income or portfolio income. Passive activity losses that are suspended because a taxpayer does not have sufficient passive income to absorb the passive activity losses may be carried over to future taxable years. Suspended passive activity losses no longer will be subject to the passive loss limitations in the year in which the taxpayer completely disposes of the passive activity that generated the losses. Under these rules, if a Unitholder is subject to the passive loss rules:

•  In general, income or gain derived by you from the sale of your Units in the Offer will be treated as passive income and may be offset against any passive activity losses derived by you in the current taxable year or against suspended passive losses from prior taxable years.

•  If you sell all of your Units, then any Partnership losses that have been suspended under the passive loss limitations will cease to be subject to those limitations.

•  If you do not sell all of your Units, then the deductibility of any suspended losses will continue to be subject to the passive activity loss limitations until you sell your remaining Units.

The limitations on the use of passive activity losses are complex and you are urged to consult your own tax advisor regarding the impact of the rules on your ability to use your distributive share of passive losses from the Partnership.

      Gain realized by a non-United States Unitholder on a sale of Units in the Offer will be subject to United States federal income tax. Under Section 1445 of the Internal Revenue Code, the transferee of an interest held by a non-United States person in a partnership that owns United States real property generally is required to deduct and withhold a tax equal to 10% of the amount realized with respect to the transaction. In order to comply with this requirement, we will withhold 10% of the amount realized by you in the Offer unless you properly complete and sign a certificate, under penalties of perjury, that includes your name, address and taxpayer identification number, and that certifies that you are not a non-United States person. Amounts withheld will be creditable against a non-United States Unitholder’s income tax liability and, if in excess thereof, a refund can be obtained from the IRS by filing a United States federal income tax return.

      If you (other than certain exempt Unitholders) sell Units in the Offer, then you may be subject to backup withholding tax, unless you (i) furnish a correct taxpayer identification number and certify on the substitute Internal Revenue Service Form W-9 included in the Agreement of Assignment and Assumption that you are not subject to backup withholding tax, (ii) provide a certification of foreign status on Internal Revenue Service Form W-8BEN or (iii) otherwise establish an exemption from backup withholding tax. Should a non-exempt Unitholder fail to provide the required certification, we will be required to withhold 28% of the amount otherwise payable to the Unitholder.

      If you do not provide a correct taxpayer identification number, then you may be subject to penalties imposed by the IRS. Any amount paid as backup withholding tax does not constitute an additional tax and will be creditable against your United States federal income tax liability, provided that the required information is given to the IRS. If backup withholding tax results in an overpayment of tax, then you can obtain a refund by filing a United States federal income tax return.

      If you sell your Units in the Offer, then you will be required to file an information statement with your federal income tax returns for the year of the sale that provides certain information as to the capital gain Section 1250 capital gain and ordinary income that you recognized on the sale.

Consequences to a Non-Tendering Unitholder.

      A Unitholder that does not tender its Units in the Offer (a “non-tendering Unitholder”) should not be subject to any material United States federal income tax consequences as a result of the failure to tender, other than the consequences, if any, resulting from the termination of the Partnership under Section 708 of the Internal Revenue Code. Under Section 708, the Partnership will be deemed to terminate if 50% or more of the interests in Partnership profit and capital are sold or exchanged within a 12-month period. It is likely that

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transfers made pursuant to the Offer will terminate the Partnership for United States federal income tax purposes. On such a termination, the Partnership will be treated for United States federal income tax purposes as if it had contributed its assets to a new partnership (the “New Partnership”) in exchange for interests in the New Partnership and immediately liquidated, distributing the interests in the New Partnership to the persons holding Units in the Partnership after the transfer of Units that triggered the termination.

      While a non-tendering Unitholder will not recognize taxable gain or loss as a result of the termination of the Partnership for tax purposes, such a termination may give rise to certain other tax consequences:

•  The Partnership’s taxable year will close as of the date of the transfer that triggers the termination. This could cause Unitholders with tax years that do not end on December 31 to be required to include in income taxable income or loss of the Partnership for a period that exceeds one year.

•  The New Partnership will be considered to acquire the assets of the Partnership on the date of the transfer triggering the termination. A new depreciation or amortization recovery period will begin as of the date of the termination for any depreciable or amortizable asset of the Partnership. As a result, for taxable years immediately following the termination, the amount of the Partnership’s depreciation and amortization deductions likely will be reduced, thus increasing the taxable income allocable to Unitholders. In such an event, however, the amount of the Partnership’s depreciation and amortization deductions in subsequent taxable years would be increased correspondingly, with the result that the aggregate amount of taxable income derived by the Partnership in the years following the deemed termination should be equal to the aggregate amount of taxable income that the Partnership would derive in such years if no such termination were to occur.

•  The New Partnership might no longer be eligible for beneficial transition rules with respect to its business or properties that may have been contained in statutory or regulatory changes enacted or issued before the termination.

      The United States federal income tax treatment of Unitholders that receive cash payments in the Merger generally will be the same as the United States federal income tax treatment of Unitholders that sell their Units in the Offer, as described above.

      THE PRECEDING DISCUSSION IS ONLY A SUMMARY OF CERTAIN UNITED STATES FEDERAL TAX IMPLICATIONS OF THE OFFER. WE URGE YOU TO CONSULT WITH YOUR OWN TAX ADVISOR TO DETERMINE THE TAX IMPLICATIONS OF THE OFFER IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES.

10.     Forward-Looking Statements

      This Offer to Purchase and Solicitation Statement, including the information incorporated by reference in this Offer to Purchase and Solicitation Statement, contains forward-looking statements. These forward-looking statements may include statements regarding the intent, belief or current expectations of us or Starwood or our or Starwood’s officers or directors with respect to the matters discussed in this Offer to Purchase and Solicitation Statement. All of these forward-looking statements involve risks, uncertainties and other factors, including, without limitation, the risks, uncertainties and other factors set forth in “— Risk Factors” that could cause actual results to differ materially from those projected in the forward-looking statements.

      You should assume that the information in this Offer to Purchase and Solicitation Statement is accurate as of the date on the front cover of this Offer to Purchase and Solicitation Statement only. Neither we nor Starwood undertakes any obligation to publicly update or revise any forward-looking statement to reflect current or future events.

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CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE

GENERAL PARTNER AND THE PARTNERSHIP

1.     Description of Purchaser, Starwood, the General Partner and the Partnership

      Information in this Offer to Purchase and Solicitation Statement concerning the Partnership is derived from the Partnership’s publicly-filed reports, including the Partnership’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the SEC. For information on obtaining documents filed with the SEC, see “THE TENDER OFFER — Available Information; Incorporation by Reference.” We and Starwood disclaim any responsibility for the information included in these documents, including, without limitation, any information derived from them and included in this Offer to Purchase and Solicitation Statement.

      We are a wholly owned subsidiary of Starwood. Starwood is the parent company of the General Partner of the Partnership, which owns the Michigan Avenue Hotel through the Hotel Partnership, and 909 Corp., which manages the Michigan Avenue Hotel and is the general partner of the Hotel Partnership. According to the Partnership’s public filings, as of August 1, 2003, there were 6,710 holders of record of the 135,600 Units issued and outstanding.

      The Partnership and the Hotel Partnership, each a Delaware limited partnership, were formed on April 25, 1986. Through the Hotel Partnership, the Partnership owns the Michigan Avenue Hotel. The Michigan Avenue Hotel has been managed as part of the Westin hotel chain since 1964. As a result of the acquisition of Westin Hotel Company by Starwood in 1998, the management agreement for the Michigan Avenue Hotel was assigned to 909 Corp. and the General Partner became a subsidiary of Starwood.

      To the best of our and Starwood’s knowledge, none of the executive officers or directors of the General Partner owns any Units.

      Starwood is one of the world’s largest hotel and leisure companies. Starwood’s status as one of the leading hotel and leisure companies resulted from the 1998 acquisition of Westin Hotels & Resorts Worldwide, Inc. and certain of its affiliates and the acquisition of ITT Corporation, renamed Sheraton Holding Corporation, and the acquisition of Vistana Inc., renamed Starwood Vacation Ownership, Inc., in October 1999. Starwood conducts its hotel and leisure business both directly and through its subsidiaries. Starwood’s brand names include St. Regis®, The Luxury Collection®, Sheraton®, Westin®, W® and Four Points® by Sheraton. Through these brands, Starwood is well represented in most major markets around the world. Starwood’s operations are grouped into two business segments, hotels and vacation ownership operations.

      The Michigan Avenue Hotel is operated by Starwood as part of the full-service, upscale Westin hotel chain. Starwood owns, manages and franchises hotels throughout the world and the inclusion of the Michigan Avenue Hotel within its global system provides the benefits of name recognition, centralized reservations and advertising, system-wide marketing programs, centralized purchasing and training and support services.

      The Michigan Avenue Hotel is managed by a wholly owned subsidiary of Starwood. Since Starwood also owns, operates, manages and franchises hotels under other brands, including other hotels in the Chicago area, potential conflicts of interest may exist. While Starwood and its affiliates have the right to own, operate and develop competing hotels, the General Partner has a fiduciary duty to conduct the affairs of the Partnership and the Hotel Partnership in the best interests of these entities and their partners.

      The Partnership and the Hotel Partnership do not have any employees. Administrative and hotel personnel are employees of either Starwood or 909 Corp. The Michigan Avenue Hotel and the Hotel Partnership are required to reimburse Starwood and 909 Corp. for the costs of such employees. However, the Partnership and the Hotel Partnership are not responsible for the payment of executive compensation to the officers of 909 Corp.

      The Michigan Avenue Hotel is located at 909 North Michigan Avenue in Chicago, Illinois and has 751 guest rooms and 23 suites.

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      The Hotel Partnership has a fee simple interest in the Michigan Avenue Hotel. The Michigan Avenue Hotel is encumbered by a mortgage held by The Teacher Retirement System of Texas to secure indebtedness. The effective interest rate on the indebtedness is 8.06% per annum through maturity. The mortgage requires combined payments of principal and interest each quarter in arrears, in such amount as is necessary to repay the principal balance (together with interest at the fixed interest rate) based on a 25 year amortization schedule with a balloon payment on December 1, 2006. Annual payments of principal and interest on the mortgage are $3.01 million, payable quarterly through December 1, 2006, at which time the remaining outstanding principal balance plus all accrued and unpaid interest is due and payable. Principal payments of $5.4 million and interest payments of $1.1 million were made on the mortgage during the six months ended June 30, 2003. Scheduled principal and interest payments for the remainder of 2003 total approximately $1.5 million. The Partnership is permitted to make two prepayments of $5 million each in any calendar year (up to a maximum of $20 million over the term of the mortgage) without a prepayment penalty. One such $5 million payment was made in 2003. Any other prepayment may only be made in full in the amount equal to the then outstanding principal balance plus the amount by which the present value of the remaining scheduled principal and interest payments exceeds the then outstanding principal balance. Present value is calculated using a discount rate (compounded quarterly) equal to 1.0% plus the percent per annum of the Treasury constant maturities having a maturity date closest in time to November 30, 2006 as reported in The Federal Reserve Statistical Release G13(415). The outstanding principal amount of the mortgage as of June 30, 2003 was $24.1 million. Assuming no further prepayments are made, $21.7 million, of which $21.3 million will be principal, will be due at maturity.

      The Michigan Avenue Hotel is covered by comprehensive general liability insurance, fire and extended property insurance (including earthquake coverage), business interruption, workers’ compensation, employer’s liability insurance, terrorism and such other insurance as is customarily obtained for similar properties. Much of this insurance coverage is provided under policies that apply to multiple Starwood-related entities and properties.

      As reported in the Partnership’s 2002 10-K, the Michigan Avenue Hotel rents various property and equipment under operating leases. Minimum future rents under the operating leases in effect at December 31, 2002 are $59,000 for 2003, $17,000 for 2004 and $7,000 for 2005.

      Rental expense for operating leases, including short-term leases, was $89,000 and $158,000 for the years ended December 31, 2002 and 2001, respectively.

      As reported in the Partnership’s 2002 10-K, the Michigan Avenue Hotel also rents space for a restaurant, gift shop and other retail space to third-party vendors under operating leases. Minimum annual rental income under the operating leases in effect at December 31, 2002 are as follows (in thousands):

2003	$	975,000
2004	$	996,000
2005	$	906,000
2006	$	869,000
2007	$	870,000
Thereafter	$	2,268,000

      Rental income from operating leases, including contingent rental income, was $1.9 million and $1.8 million for the years ended December 31, 2002 and 2001, respectively.

      The Michigan Avenue Hotel reported an average occupancy of 69.5%, 66.2%, 72.6%, 72.9% and 70.9% in the years ended December 31, 2002, 2001, 2000, 1999, and 1998 respectively.

      As reported in the Partnership’s 2002 10-K, capital improvements in 2003 are expected to total approximately $2.3 million. Approximately $1.2 million is expected to be spent on meeting space and corridor upgrades; $0.5 million for continued improvement of the lobby and $0.6 million for engineering and computer enhancements. All capital projects are subject to approval by The Teacher Retirement System of Texas, in its capacity as lender, and the General Partner.

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      For the Michigan Avenue Hotel to remain attractive and competitive, the Partnership has to keep it well maintained, modernized and refurbished. This creates an ongoing need for cash and, to the extent that expenditures cannot be funded from cash generated by operations, the Partnership may be required to borrow or otherwise obtain these funds. Accordingly, the Partnership’s financial results may be sensitive to the cost and availability of funds.

      The Michigan Avenue Hotel competes for customers with other hotel and resort properties in its geographic market. Some of its competitors may have substantially greater marketing and financial resources than the Michigan Avenue Hotel does, and they may improve their facilities, reduce their prices or expand or improve their marketing programs in ways that adversely affect the Partnership’s operating results.

      The address of the Partnership’s principal executive office is 1111 Westchester Avenue, White Plains, New York 10604. The phone number of its principal executive office is 914-640-8100.

      The address of the General Partner’s principal executive office is 1111 Westchester Avenue, White Plains, New York 10604. The phone number of its principal executive office is 914-640-8100.

      Our and Starwood’s principal executive office address is 1111 Westchester Avenue, White Plains, New York 10604. Our and Starwood’s phone number at the principal executive office is 914-640-8100.

Market for Partnership Units.

      According to the Partnership’s 2002 10-K, there is no public market for the Units, and it is not anticipated that a public market for the Units will develop. See “SPECIAL FACTORS OF THE OFFER — Determination of the Offer Price” for historical market prices for the Units.

2. Equity Interest in Partnership

      As of the Offer Date, neither we nor Starwood, nor, to the best of our knowledge, any of our affiliates, owns any Units. The General Partner, also owned by Starwood, is the sole general partner of the Partnership. Neither we, the Partnership, nor, to the best of our knowledge, the General Partner nor any of our or their executive officers, directors, affiliates or subsidiaries has effected any transaction in the Units during the past 60 days.

      Two entities not affiliated with us or Starwood each beneficially owns more than 5% of the issued and outstanding Units. According to the Schedule 13D/A dated July 24, 2003 and filed by Kalmia, Kalmia beneficially owns 12,030 Units, representing 8.87% of the issued and outstanding Units. The business address of Kalmia is 601 Carlson Parkway, Suite 200, Minnetonka, MN 55305. According to the Schedule 13G, dated August 14, 2003 and filed by The Harmony Group II, LLC (the “Harmony Group”), which is the controlling person of various entities, including Windy City, the Harmony Group beneficially owns 7,822 Units, representing 5.8% of the issued and outstanding Units. The business address of the Harmony Group and Windy City is 410 Park Avenue, Suite 540, New York, New York 10022.

      Because of the limited and inefficient nature of the market for the Units, we do not believe that the prices at which Units have traded in the past should be relied upon as a complete and accurate representation of the current fair value of the Units.

      Except as otherwise set forth in this Offer to Purchase and Solicitation Statement, (i) neither we nor, to our best knowledge, the persons listed on Schedule I nor any of our affiliates, beneficially owns or has a right to acquire any Units, (ii) neither we nor, to our best knowledge, the persons listed on Schedule I nor any of our affiliates, or any director, executive officer or subsidiary of any of the foregoing, has effected any transaction in the Units within the past 60 days, (iii) neither we nor, to our best knowledge, the persons listed on Schedule I nor any of our affiliates has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Partnership, including but not limited to, contracts, arrangements, understandings or relationships concerning the transfer or voting thereof, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations, (iv) there have been no transactions or business relationships which would be

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required to be disclosed under the rules and regulations of the SEC between us or, to our best knowledge, the persons listed on Schedule I or any of our affiliates, on the one hand, and the Partnership or its affiliates, on the other hand, and (v) there have been no contracts, negotiations or transactions between us or, to our best knowledge, the persons listed on Schedule I or any of our affiliates, on the one hand, and the Partnership or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets.

3. Source and Amount of Funds for the Offer

      We expect that approximately $81,360,000 would be required to purchase all of the issued and outstanding Units, if tendered, and an additional amount of approximately $1,500,000 may be required to pay related fees and expenses. Starwood has made a binding commitment to us to contribute the funds necessary to fund the acquisition of all Units subject to the Offer and all anticipated costs and expenses related thereto. As of June 30, 2003, as part of current assets, Starwood had $482 million of cash and cash equivalents, of which $161 million was restricted cash.

4. Selected Historical Financial Data for the Partnership

      Below is a summary of certain financial information for the Partnership, which has been excerpted or derived from the Partnership’s 2002 10-K and the Partnership’s Second Quarter 10-Q. More comprehensive financial and other information is included in such reports and other documents filed by the Partnership with the SEC, and the following summary is qualified in its entirety by reference to such reports and other documents and all the financial information and related notes contained in those reports and documents and should be read in conjunction with such related notes. The Partnership’s 2002 10-K and the Partnership’s Second Quarter 10-Q are incorporated in this Offer to Purchase and Solicitation Statement by reference. We and Starwood disclaim any responsibility for the information included in these documents, including, without limitation, any information derived from them and included in this Offer to Purchase and Solicitation Statement. In their capacity as employees of the parent company of 909 Corp., Starwood employees may receive periodic updates regarding the operating results and financial position of the Michigan Avenue Hotel that are not publicly available, as well as updated forecasts for the Michigan Avenue Hotel. Since the date of the forecast described in the next section of this Offer to Purchase and Solicitation Statement, no such Starwood employee who has been involved in the consideration of our Offer or any of its terms has examined any of these updates.

      Selected financial information for the Partnership:

												For the Six Months
												Ended
		Year Ended December 31,										June 30,
		2002		2001		2000(1)		1999		1998		2003		2002
		(In thousands, except per unit amounts)
Operating revenues:
	Rooms	$	28,943	$	30,188	$	58,232	$	97,973	$	94,724	$	14,522	$	12,843
	Food and beverage		8,160		7,610		20,771		45,277		37,354		4,436		3,942
	Other operating departments		3,615		4,117		7,873		13,047		12,158		1,780		1,718
Total operating revenues			40,718		41,915		86,876		156,297		144,236		20,738		18,503

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													For the Six Months
													Ended
		Year Ended December 31,											June 30,
		2002		2001		2000(1)			1999		1998		2003			2002
		(In thousands, except per unit amounts)
Operating expenses:
	Rooms		6,745		7,136		14,652			25,417		25,493		3,601			3,133
	Food and beverage		6,453		6,264		16,109			35,189		26,946		3,217			3,127
	Administrative, general and marketing		6,269		5,845		11,700			18,886		19,857		2,951			2,856
	Management fees		4,126		3,974		5,358			13,300		9,949		1,974			1,794
	Depreciation		8,555		8,124		7,222			11,679		10,190		4,307			4,214
	Other		4,544		7,635		13,063			22,629		21,427		3,822			3,898
Total operating expenses			36,692		38,978		68,104			127,100		113,862		19,872			19,022
Operating profit (loss)		$	4,026	$	2,937	$	18,772		$	29,197	$	30,374	$	866		$	(519	)
Net income (loss)		$	1,383	$	559	$	66,139(2	)	$	16,831	$	17,933	$	(390	)	$	(1,802	)
Net income (loss) per Unit			10.20		4.12		487.75			124.12		132.25		(2.87	)		(13.29	)
Total assets		$	104,233	$	106,585	$	109,272		$	295,834	$	285,661	$	96,249		$	102,717
Long-term obligations, net of current portion		$	40,390	$	40,461	$	40,322		$	166,049	$	165,050	$	34,797		$	40,425
Deferred incentive management fees, net of current portion		$	6,829	$	7,544	$	7,447		$	29,532	$	25,618	$	8,077		$	8,726
Distributions paid per Unit		$	26.88	$	26.88	$	690.94		$	95.00	$	95.00	$	13.44		$	13.44

(1)	Includes Westin St. Francis Hotel results through the sale date on April 26, 2000.
(2)	Includes $52,606 gain on the Westin St. Francis Hotel sale.

      The Partnership historically has not reported a ratio of earnings to fixed charges.

5.     Projections for Fiscal Year 2003

      The Partnership does not, as a matter of course, make public forecasts or projections as to future sales, earnings or other income statement data of the Partnership. However, employees of Starwood in performing services for 909 Corp. prepare projections in the ordinary course of business, based on information they receive in this capacity. These projections are updated to reflect actual results as they become available so that, for example, a projection for the fiscal year 2003 made in July 2003 would reflect the actual results of the Michigan Avenue Hotel from January through June 2003.

      In connection with their activities managing the Michigan Avenue Hotel for 909 Corp., employees of Starwood and the management staff at the Michigan Avenue Hotel prepared forecasts for the Michigan Avenue Hotel (and not the Partnership) for fiscal year 2003 as set forth in Annex D. These projections were prepared solely for the purpose of assisting in the management of the Michigan Avenue Hotel and not prepared with a view to public disclosure, and they are presented for the limited purpose of ensuring that you have information that may be relevant to your decision whether to tender your Units in the Offer. The forecasts were not prepared in accordance with generally accepted accounting principles, or with a view to compliance with the published guidelines of the SEC or the American Institute of Certified Public Accountants regarding projections, which would require a more complete presentation of the data. These forecasts have not yet been subjected to the periodic review and refinement typically undertaken by senior management of Starwood of property level forecasts. The projections have not been reviewed or compiled by any senior personnel of Starwood or its independent auditors, and accordingly neither Starwood nor such auditors have expressed an opinion or any other assurance regarding the projections.

      THE FORECASTED INFORMATION IS INCLUDED IN THIS OFFER TO PURCHASE AND SOLICITATION STATEMENT SOLELY BECAUSE SUCH INFORMATION WAS PREPARED BY

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EMPLOYEES OF STARWOOD BEFORE STARWOOD DECIDED TO MAKE THE OFFER. WE AND STARWOOD ARE NOT MAKING ANY REPRESENTATION AS TO THE PROJECTIONS AND NEITHER OF US ASSUMES ANY RESPONSIBILITY AS TO THEIR ACCURACY. SINCE THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND ARE BEYOND THE CONTROL OF STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP, THERE CAN BE NO ASSURANCE THAT RESULTS SET FORTH IN THE PROJECTIONS WILL BE REALIZED. IT IS LIKELY THAT THERE WILL BE DIFFERENCES BETWEEN ACTUAL AND PROJECTED RESULTS, AND ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE.

6.     Dividends and Distributions

      Set forth below is a list of the distributions per Unit made by the Partnership to Unitholders from the beginning of the fiscal year 2000 through the Offer Date. The information in this summary relating to the fiscal years 2000, 2001 and 2002 is derived from the Partnership’s 2002 10-K and the information relating to the 2003 fiscal year is derived from the Partnership’s Second Quarter 10-Q.

DISTRIBUTIONS PER UNIT

Date	Distribution Per Unit
June 10, 2003	$	6.72
March 16, 2003		6.72
December 13, 2002		6.72
September 13, 2002		6.72
June 14, 2002		6.72
March 16, 2002		6.72
December 14, 2001		6.72
September 13, 2001		6.72
June 14, 2001		6.72
March 15, 2001		6.72
December 14, 2000		6.72
September 14, 2000		6.72
June 14, 2000		23.75
May 24, 2000		630.00	(a)
March 14, 2000		23.75

(a)  Reflects the payout of net cash proceeds received from the Westin St. Francis Hotel sale in accordance with the terms of the Partnership Agreement.

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THE TENDER OFFER

1.     Terms of the Offer; Expiration Date

      Upon the terms of and subject to the conditions to the Offer (including the terms and conditions of any extension or amendment of the Offer), we will accept for payment and pay for all Units validly tendered on or before the Expiration Date and not withdrawn in accordance with the terms of the section below entitled, “— Withdrawal rights.” The term “Expiration Date” shall mean 5:00 p.m., Eastern time, on September [     ], 2003, unless and until we, in our sole discretion, extend the period of time for which the Offer is open, in which event the term “Expiration Date” shall mean the latest time and date on which the Offer, as extended by us, will expire.

      The Offer is conditioned on the satisfaction of certain conditions, including the valid and not withdrawn tender to us of at least a majority of the issued and outstanding Units (the “Minimum Condition”). See “— Conditions to the Offer,” which sets forth all the conditions to the Offer. We reserve the right (but shall not be obligated), in our sole discretion and for any reason, to waive any or all conditions (other than the Minimum Condition). If, by the Expiration Date, any or all such conditions have not been satisfied or waived, we reserve the right (but shall not be obligated) to (i) decline to purchase any of the Units tendered, terminate the Offer and return all tendered Units to tendering Unitholders, (ii) waive all the unsatisfied conditions (other than the Minimum Condition) and, subject to complying with the applicable rules and regulations of the SEC, purchase all Units validly tendered, (iii) extend the Offer and, subject to the right of Unitholders to withdraw Units until the Expiration Date, retain the Units that have been tendered during the period or periods for which the Offer is extended or (iv) amend the Offer. The rights that we reserve in this paragraph are in addition to our right to terminate the Offer at any time before the acceptance of tendered Units for payment.

2.     Acceptance for Payment and Payment for Units

      Upon the terms of and subject to the conditions to the Offer (including the terms and conditions of any extension or amendment of the Offer), we will accept for payment, and will pay for, all Units validly tendered and not withdrawn in accordance with the section “— Withdrawal rights,” as promptly as practicable following the Expiration Date. Subject to applicable rules of the SEC, we expressly reserve the right to delay acceptance for payment of, or payment for, Units pending receipt of any regulatory or governmental approvals specified in the section “— Certain Legal Matters; Required Regulatory Approvals” or pending receipt of any additional documentation required by the Agreement of Assignment and Transfer or as specified in this Offer to Purchase and Solicitation Statement. The tendering Unitholders will be paid promptly subject to and following: (i) receipt of a valid, properly and fully executed Agreement of Assignment and Transfer, (ii) confirmation that each of the Proposals has been approved by the requisite consent of Limited Partners and that the Amendments have been adopted and are in full force and effect and (iii) the actual transfer of Units to us. If we do not receive the confirmation specified in clause (ii) above or if the Units are not actually transferred to us, we will not be required to purchase such Units. The Partnership recognizes transfers only on the last business day of a calendar quarter and provides confirmation of transfers only after it has done so. As we describe in the section “THE CONSENT SOLICITATION,” we are seeking your consent to amendments to the Partnership Agreement that would require the Partnership to recognize transfers of Units to us in the Offer immediately upon our request on or after the Expiration Date. See “— Conditions to the Offer.” If we do not receive sufficient consents to these Amendments and we complete the Offer (which would involve our waiving conditions to the Offer), the earliest that we would expect to pay for Units is January 2004. We reserve the right, in our sole discretion, to pay tendering Unitholders before our receipt of such confirmation or the actual transfer of Units to us. We will issue payment only to Unitholders of record and payments will be forwarded only to the Unitholder’s address listed on the Agreement of Assignment and Transfer.

      If any tendered Units accepted for payment are not purchased for any reason, the Agreement of Assignment and Transfer with respect to the Units not purchased will be of no effect from the date the Offer is terminated and no payments (including, without limitation, interest payments) will be made in respect of such Units. If, for any reason, acceptance for payment of, or payment for, any Units tendered pursuant to the Offer

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is delayed or we are unable to accept for payment, purchase or pay for the Units tendered pursuant to the Offer, then without prejudice to our rights under “— Conditions to the Offer” (but subject to compliance with Rule 14e-1(c) under the Exchange Act), we may retain tendered Units, subject to any limitations of applicable law, and such Units may not be withdrawn except to the extent that the tendering Unitholders are entitled to withdrawal rights as described in “ Withdrawal Rights.”

      If we increase the consideration offered to Unitholders pursuant to the Offer, such increased consideration will be paid for all Units accepted for payment pursuant to the Offer, whether or not such Units were tendered before the increase.

      Unless otherwise prohibited, we reserve the right to transfer or assign, in whole or from time to time in part, the right to purchase Units tendered pursuant to the Offer, but any such transfer or assignment will not relieve us of our obligations under the Offer or prejudice the rights of tendering Unitholders to receive payment for Units validly tendered and accepted for payment pursuant to the Offer.

3.     Transfer Restrictions

      Note: As we describe in the section “THE CONSENT SOLICITATION,” we are seeking your consent to Proposals that would have the effect of (i) amending the Partnership Agreement so that the transfer restrictions described in this section would not apply to the transfer of your Units to us in connection with the Offer and the Merger and (ii) instructing the General Partner not to apply any Unit transfer policy not contained in the Partnership Agreement (including the 5% Limitation) that would otherwise limit the transfer of your Units to us in connection with the Offer and the Merger.

      The assignment or other transfer of Units is subject to the requirements of Article 11 of the Partnership Agreement. Section 11.01 of the Partnership Agreement provides that no transfer is valid or effective, and the Partnership is not obligated to recognize a purported transfer, where, in the opinion of counsel to the Partnership, the transfer would be likely to (i) violate the registration requirements of the Securities Act, (ii) violate any state laws or governmental regulations (including those relating to suitability standards), (iii) cause the Partnership to be treated as a corporation for United States federal income tax purposes, (iv) result in the termination of the Partnership for United States federal income tax purposes under Section 708 of the Internal Revenue Code or (v) result in the inability of the Partnership to obtain or continue in effect any license permitting the sale of alcoholic beverages in the Michigan Avenue Hotel. The Partnership Agreement (i) gives the General Partner the power to suspend transfers of Units if any transfer, when added to all other transfers made within the preceding twelve months, would result in the transfer of 40% or more of the interests in the Partnership (the “40% Limitation”), and (ii) provides that any transfers of Units are recognized as of the last business day of the calendar quarter in which the Partnership receives notice of the transfer.

      In addition to the limitations set out in Section 11.01 of the Partnership Agreement, according to the Partnership’s public filings, the General Partner has adopted a Unit transfer policy. The transfer policy is intended to permit the Partnership to qualify for a specified safe harbor promulgated by the IRS. Compliance by the Partnership with the safe harbor prevents the Partnership from being treated as a “publicly traded partnership,” potentially taxable as a corporation, under Section 7704 of the Internal Revenue Code. The safe harbor applies if the sum of the percentage interests in Partnership capital or profits represented by Units that are sold or otherwise disposed of during any calendar year does not exceed 5% of the aggregate Partnership interests outstanding. Consistent with the terms of the safe harbor, the Partnership’s public filings indicate that if the Partnership reaches the 5% limitation in any calendar year, then the General Partner may suspend its approval of any further requests for the transfer of Units for remainder of that calendar year (the “5% Limitation”).

      Section 11.02 of the Partnership Agreement provides that, with certain exceptions not relevant to the Offer, no assignee of a Limited Partner’s interest in the Partnership may be treated as a Substituted Limited Partner, unless and until, among other things, the General Partner has given its prior written consent, which consent may be withheld in the General Partner’s absolute discretion.

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      Our proposed purchase of Units pursuant to the Offer (i) will exceed the number of Units that may be transferred without triggering the ability of the General Partner to suspend any further transfer of Units (under either or both of the 40% Limitation and the 5% Limitation) and (ii) is likely to cause a termination of the Partnership under Section 708 of the Internal Revenue Code. However, we note that (i) the underlying purposes of the various transfer limitations are (x) to prevent the Partnership from being classified and taxed as a corporation for United States federal income tax purposes, (y) to prevent the Partnership from being treated as a publicly traded partnership for United States federal income tax purposes and (z) to avoid any termination of the Partnership under Section 708 of the Internal Revenue Code; and (ii) based upon the preliminary advice of our tax counsel, we believe that (x) the transfer of Units to us in the Offer should not cause the Partnership to be classified as a corporation or as a publicly traded partnership for United States federal income tax purposes and (y) while the transfer of Units to us in the Offer is likely to cause a termination of the Partnership under Section 708 of the Internal Revenue Code, the effects of the termination should be limited to the relatively circumscribed consequences described above under “SPECIAL FACTORS — Certain United States Federal Income Tax Considerations” and, in any event, should not affect a Unitholder that tenders all of its Units in the Offer.

      Under the terms of the Offer, the tendering Unitholders will be paid promptly following: (i) receipt of a valid, properly and fully executed Agreement of Assignment and Transfer, (ii) confirmation that each of the Proposals has been approved by the requisite consent of Limited Partners and that the Amendments have been adopted and are in full force and effect and (iii) the actual transfer of Units to us. Although we are affiliated with the General Partner and the Partnership, we have not entered into any prior agreement or arrangement with the General Partner to cause the Partnership to recognize the transfer of your Units to us, to admit us as a Substituted Limited Partner with respect to your Units or to provide the written confirmation we refer to above. We reserve the right, in our sole discretion, to pay tendering Unitholders before the receipt of this confirmation.

4.     Procedure for Accepting the Offer and Tendering Units

Valid Tender

      To participate in the Offer and validly tender your Units, you must complete, in their entirety, the following documents that accompany this Offer to Purchase and Solicitation Statement and return them to our Depositary at the address set forth below (and on the back of this Offer to Purchase and Solicitation Statement) on or before the Expiration Date:

•  The Agreement of Assignment and Transfer; and

•  Any other applicable documents included with the Agreement of Assignment and Transfer or specified in the instructions to that document.

      IF LEGAL TITLE TO THE UNITS IS HELD THROUGH AN IRA, KEOGH OR SIMILAR ACCOUNT, THE AGREEMENT OF ASSIGNMENT AND TRANSFER AND OTHER APPLICABLE DOCUMENTS INCLUDED WITH THE AGREEMENT OF ASSIGNMENT AND TRANSFER OR SPECIFIED IN THE INSTRUCTIONS TO THAT DOCUMENT MUST BE SIGNED BY THE CUSTODIAN OF SUCH IRA OR KEOGH ACCOUNT. FURTHERMORE, YOU MUST AUTHORIZE AND DIRECT THE CUSTODIAN OF SUCH IRA OR KEOGH ACCOUNT TO CONFIRM THE AGREEMENT OF ASSIGNMENT AND TRANSFER.

      These documents must be received by the Depositary by 5:00 P.M., EASTERN TIME, ON SEPTEMBER [     ], 2003 (or such time until which the Offer is extended) and may be sent by mail, hand delivery, overnight courier or facsimile to:

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Facsimile: 718-234-5001

Telephone: 877-248-6417 (Toll-Free)

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We enclose a pre-addressed postage-paid envelope for your convenience.

      The method of delivery of the Agreement of Assignment and Transfer and all other required documents is at your option and risk, and delivery will be deemed made only when actually received by our Depositary. If delivery is by mail, we recommend registered mail with return receipt requested. In all cases, you should allow sufficient time to ensure timely delivery prior to the expiration of the Offer. If delivery is by facsimile, you must also return the original documents, which originals, only, may be received after the Expiration Date provided that the facsimile is received prior to or on the Expiration Date.

      You may tender any or all Units that you own.

Signature Guarantees

      Your signature(s) on the Agreement of Assignment and Transfer must be medallion guaranteed by a commercial bank, savings bank, credit union, savings and loan association or trust company having any office, branch or agency in the United States, a brokerage firm that is a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. (the “NASD”).

Backup Withholding Tax

      To prevent the possible application of backup withholding tax with respect to payment of the Offer Price for your tendered Units, you should provide us with your correct taxpayer identification number and certify that you are not subject to backup withholding tax. These certifications are described in “SPECIAL FACTORS — Certain United States Federal Income Tax Considerations” and in the Agreement of Assignment and Transfer. You should insert your taxpayer identification number in the space provided on the signature page to the Agreement of Assignment and Transfer, and you should complete the Substitute Form W-9 included with the Agreement of Assignment and Transfer, which contains the certifications referred to above. See the instructions to the Agreement of Assignment and Transfer.

FIRPTA Withholding

      To prevent the withholding of federal income tax under Section 1445 of the Internal Revenue Code in an amount equal to 10% of the amount realized by you on your sale of Units (the sum of the Offer Price plus the amount of Partnership liabilities allocable to each Unit tendered), you must properly complete and sign the certification that is included with the Agreement of Assignment and Transfer, under penalties of perjury, that includes your name, address and taxpayer identification number, and that certifies that you are not a non-United States person. See the instructions to the Agreement of Assignment and Transfer and “SPECIAL FACTORS — Certain United States Federal Income Tax Considerations.”

Appointment as Attorney-in-Fact and Proxy

      By executing an Agreement of Assignment and Transfer as set forth above, and subject to “— Withdrawal rights” and our acceptance of and payment for your Units, you irrevocably constitute and appoint us and our designees as your true and lawful attorneys-in-fact and proxies, in the manner set forth in the Agreement of Assignment and Transfer, with respect to the Units you tender and we accept for payment (and with respect to any and all other Units or other securities issued or issuable in respect of such Unit on or after the Offer Date), each with full power of substitution, to the full extent of your rights (such power of attorney and proxy being deemed to be an irrevocable durable power coupled with an interest and being unaffected by your disability, incapacity, dissolution, termination or bankruptcy) to (i) seek to transfer ownership of such Units on the Partnership’s books to us (and to execute and to deliver any accompanying evidences of transfer and authenticity which we, the Partnership or the General Partner may deem necessary or appropriate in connection therewith, including, without limitation, any documents or instruments required to be executed under a “Transferor’s (Seller’s) Application for Transfer” created by the NASD, if required), (ii) become a Substituted Limited Partner, (iii) receive any and all distributions made or declared by the Partnership after the Offer Date, (iv) receive all benefits and otherwise exercise all rights of beneficial ownership of such Units in accordance with the terms of the Offer, (v) execute and deliver to the Partnership and/or the General

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Partner (as the case may be) a change of address form instructing the Partnership to send any and all future distributions to which we are entitled pursuant to the terms of the Offer in respect of tendered Units to the address specified in such form, (vi) endorse any check payable to or upon the order of you representing a distribution to which we are entitled pursuant to the terms of the Offer, in each case on your behalf, in favor of us or any other payee we otherwise designate, (vii) exercise all your voting and other rights as any such attorney-in-fact in its sole discretion may deem proper at any meeting of Unitholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise, (viii) act in such manner as any such attorney-in-fact shall, in its sole discretion, deem proper with respect to the Units, (ix) execute a loss and indemnity agreement relating to the Units on your behalf if you fail to include your original certificate(s) (if any) representing the Units with the Agreement of Assignment and Transfer or (x) commence any litigation that we or our designees, in our sole discretion, deem necessary to enforce any exercise of our or such designees’ powers as your attorneys-in-fact as set forth above.

      Such appointment will be effective upon receipt by us of the Agreement of Assignment and Transfer. Upon such receipt, all prior proxies given by you with respect to such Units (other than pursuant to the Consent Solicitation) will, without further action, be revoked, and no subsequent proxies may be given (and if given will not be effective).

      The proxy described in this section is separate and apart from the power of attorney and proxy we are seeking from you in the Consent Solicitation to effect the Proposals if they are approved.

Assignment of Entire Interest in the Partnership

      By executing and delivering the Agreement of Assignment and Transfer, you irrevocably sell, assign, transfer, convey and deliver to us all of your right, title and interest in and to the Units tendered and accepted for payment pursuant to the Offer and any distributions (whether cash, non-cash, in-kind or otherwise, including voting rights and other benefits of any nature whatsoever and whenever distributable or allocable to the Units under the Partnership’s Limited Partnership Agreement) issued or issuable in respect of the tendered Units on or after the Offer Date, unconditionally to the extent that the rights appurtenant to the Units may be transferred and conveyed without the consent of the General Partner. In addition, by executing an Agreement of Assignment and Transfer, and not otherwise timely withdrawing pursuant to the provisions of “ —Withdrawal Rights,” you also assign to us all of your rights to receive distributions from the Partnership with respect to the Units which are accepted for payment and purchased pursuant to the Offer, including those cash distributions made or declared on or after the Offer Date.

Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation to Give Notice of Defects

      All questions as to the validity, form, eligibility (including time of receipt), payment and acceptance for payment of any tender of Units pursuant to the procedures described above or in “— Acceptance for Payment and Payment for Units” will be determined by us, in our sole discretion, which determination shall be final and binding. We reserve the absolute right to reject any or all tenders if not in proper form or if the acceptance of, or payment for, the Units tendered may, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defect or irregularity in any tender with respect to any particular Units of any particular Unitholder, and our interpretation of the terms of and conditions to the Offer (including the Agreement of Assignment and Transfer and the instructions thereto) will be final and binding. Neither we nor any other person will be under any duty to give notification of any defects or irregularities in the tender of any Units or will incur any liability for failure to give any such notification.

      A tender of Units pursuant to any of the procedures described above will constitute a binding agreement between the tendering Unitholder and us upon the terms and subject to the conditions to the Offer, including the tendering Unitholder’s representation and warranty that (i) such Unitholder owns the Units being tendered within the meaning of Rule 14e-4 under the Exchange Act and (ii) the tender of such Units complies with Rule 14e-4. Rule 14e-4 requires, in general, that a tendering security holder be able to deliver the security subject to the tender offer, and is of concern particularly to any Unitholder who has granted

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options to sell or purchase the Units, holds option rights to acquire such securities, maintains “short” positions in the Units (i.e., who has borrowed the Units) or has lent the Units to a short seller. Because of the nature of limited partnership units, we believe that it is unlikely that any option trading or short selling activity exists with respect to the Units. In any event, a Unitholder will be deemed to tender Units in compliance with Rule 14e-4 and the Offer if the holder is the record owner of the Units and the holder (i) delivers the Units pursuant to the terms of the Offer, (ii) causes such delivery to be made, (iii) guarantees such delivery, (iv) causes a guaranty of such delivery or (v) uses any other method of delivery permitted in the Offer.

Withdrawing from the Kalmia Offer

      If you have already tendered your Units to Kalmia pursuant to the Kalmia Offer, and you wish to tender your Units pursuant to our Offer instead, (i) you or your broker should notify Kalmia in writing before the expiration of the Kalmia Offer at Kalmia’s address listed in Kalmia’s offer to purchase, which notice must include your name, the number of Units to be withdrawn and the name in which the Units you tendered to Kalmia are registered, and (ii) once your Units have been withdrawn, you, or your broker, dealer, commercial bank, trust company or other nominee, should complete and submit the Agreement of Assignment and Transfer for the Offer. See “— Valid Tender.” For the convenience of Unitholders who have tendered any Units in the Kalmia Offer, we have enclosed a PINK form of withdrawal notice for the Kalmia Offer with this Offer to Purchase and Solicitation Statement. Unitholders wishing to withdraw Units tendered in the Kalmia Offer should properly complete the PINK withdrawal notice and deliver it to Kalmia Investors, LLC, 601 Carlson Parkway, Suite 200, Minnetonka, MN 55305.

5.     Withdrawal Rights

      Except as otherwise provided in this section, all tenders of Units pursuant to the Offer are irrevocable, provided that Units tendered pursuant to the Offer may be withdrawn at any time before the Expiration Date, and, if and to the extent that tendered Units have not been accepted for payment by November [     ], 2003 (60 days after the date of this Offer to Purchase and Solicitation Statement), at any time thereafter.

      For withdrawal to be effective, a written notice of withdrawal must be timely received by us (i.e., a valid notice of withdrawal must be received after the date of this Offer to Purchase and Solicitation Statement but on or before September [     ], 2003, or such other date to which the Offer may be extended) at the address or facsimile number set forth in the attached Agreement of Assignment and Transfer. Any such notice of withdrawal must specify the name of the person who tendered the Units to be withdrawn, must be signed by the same person(s) who signed the Agreement of Assignment and Transfer and must also contain a medallion signature guarantee. If the Units are held in the name of two or more persons, all such persons must sign the notice of withdrawal.

      If purchase of, or payment for, Units is delayed for any reason (including because of the terms of the Offer), or if we are unable to purchase or pay for Units for any reason, then, without prejudice to our rights under the Offer, we may retain tendered Units and such Units may not be withdrawn except to the extent that tendering Unitholders are entitled to withdrawal rights as set forth in this section, subject to Rule 14e-1(c) under the Exchange Act, which provides, in part, that no person who makes a tender offer shall fail to pay the consideration offered or return the securities (i.e., Units) deposited by or on behalf of security holders promptly after the termination or withdrawal of the tender offer.

      All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by us, in our sole discretion, which determination shall be final and binding. Neither we nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or will incur any liability for failure to give any such notification.

      Any Units properly withdrawn will be deemed not to be validly tendered for purposes of the Offer. Withdrawn Units may be re-tendered by following the procedures described in “— Procedure for accepting the Offer and tendering Units” at any time before the Expiration Date.

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6.     Extension of Tender Period, Termination, Amendment

      We expressly reserve the right, in our sole discretion and regardless of whether any of the conditions set forth in “— Conditions to the Offer” shall have been satisfied, at any time and from time to time, to (i) extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and the payment for, validly tendered Units, (ii) upon the occurrence or failure to occur of any of the conditions specified in “— Conditions to the Offer,” to terminate the Offer and not accept for payment any Units not theretofore accepted for payment or paid for, and (iii) amend the Offer in any respect, including, without limitation, by increasing or decreasing the consideration offered or the number of Units being sought in the Offer or both or changing the type of consideration. Any extension, termination or amendment will be followed as promptly as practicable by public announcement, the announcement in the case of an extension to be issued no later than 9:00 a.m., Eastern time, on the next business day after the previously scheduled Expiration Date, in accordance with the public announcement requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner in which we may choose to make any public announcement, except as provided by applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act), we will have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by issuing a release to the Dow Jones News Service. We may also be required by applicable law to disseminate to Unitholders certain information concerning the extensions of the Offer or any other material changes in the terms of the Offer.

      If we extend the Offer or if we (whether before or after our acceptance for payment of Units) are delayed in our payment for Units or are unable to pay for Units pursuant to the Offer for any reason (including because of the terms of the Offer), then, without prejudice to our rights under the Offer, we may retain tendered Units on our behalf, and such Units may not be withdrawn except to the extent that tendering Unitholders are entitled to withdrawal rights as described in “— Withdrawal Rights.” However, our ability to delay payment for Units that we have accepted for payment is limited by Rule 14e-1 under the Exchange Act, which requires that we pay the consideration offered or return the securities deposited by or on behalf of holders of securities promptly after the termination or withdrawal of the Offer.

      If we make a material change in the terms of the Offer or the information concerning the Offer or waive a material condition to the Offer (other than the Minimum Condition), we will extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following a material change in the terms of the Offer or information concerning the Offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the change in the terms or information. With respect to a change in price (including any reduction in price resulting from a cash distribution by the Partnership made or declared on or after the Offer Date) or a change in percentage of securities sought (other than an increase of not more than 2% of the securities sought), however, a minimum ten business-day period is generally required to allow for adequate dissemination to security holders and for investor response. As used in this Offer to Purchase and Solicitation Statement, “business day” means any day other than a Saturday, Sunday or a federal holiday, and consists of the time period from 12:01 a.m. through 5:00 p.m., Eastern time.

7.     Conditions to the Offer

      Notwithstanding any other terms of the Offer and in addition to (and not in limitation of) our rights to extend, amend or terminate the Offer at any time in our sole discretion, we shall be required to accept for payment and, subject to any applicable rules or regulations of the SEC, to pay for any Units tendered, only if (and we may postpone the acceptance for payment or, subject to the restriction referred to above, the payment for any Units tendered, unless): (A) at least a majority of all issued and outstanding Units is validly tendered and not withdrawn on or before the Expiration Date (the “Minimum Condition”); (B) all authorizations, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, necessary for the completion of the transactions contemplated by the Offer shall have been filed, occurred or been obtained on or before the Expiration Date; (C) the Purchaser shall have received the valid written consent to each of the Proposals, which consent shall not have been revoked, by Limited Partners of

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the Partnership who collectively hold more than 50% of the Units; (D) the Amendments shall have been adopted and shall be in full force and effect; (E) no legal or governmental action would prohibit the purchase of Units tendered in the Offer; and (F) we determine, in our reasonable judgment, that none of the following conditions shall exist:

      (a)     a preliminary or permanent injunction or other order of any federal or state court, government or governmental authority or agency shall have been issued and shall remain in effect which, in our view, (i) makes illegal, delays or otherwise directly or indirectly restrains or prohibits the making of the Offer or the acceptance for payment of or payment for any Units by us or the consummation of the Merger, (ii) imposes, confirms or seeks to impose or confirm limitations on our ability effectively to exercise full rights of ownership of any Units, including, without limitation, the right to vote any Units acquired by us pursuant to the Offer or the Merger or otherwise on all matters properly presented to the Partnership’s Unitholders, (iii) requires divestiture by us of any Units, (iv) might cause any material diminution of the benefits expected to be derived by us or any of our affiliates as a result of the transactions contemplated by the Offer, (v) might materially adversely affect our or the Partnership’s business, properties, assets, liabilities, financial condition, capitalization, partners’ equity, licenses, franchises, tax status, operations, results of operations or prospects, (vi) challenges the acquisition by us of the Units or seeks to obtain any material damages as a result thereof or (vii) challenges or adversely affects the Offer or the Merger;

      (b)     there shall be any action taken, or any statute, rule, regulation or order proposed, enacted, enforced, promulgated, issued or deemed applicable to the Offer by any federal or state court, government or governmental authority or agency, other than the application of the waiting period provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), which might, directly or indirectly, result in any of the consequences referred to in clauses (i) through (vii) of paragraph (a) above;

      (c)     there shall have been threatened or instituted or be pending any action, proceeding, application, audit, claim or counterclaim by any government or governmental authority or agency, or any other person, domestic or foreign, or by or before any court or governmental, regulatory or administrative agency, authority or tribunal, domestic, foreign or supranational, which might, directly or indirectly, result in any of the consequences referred to in clauses (i) through (vii) of paragraph (a) above;

      (d)     any change, development, condition or event shall have occurred or been threatened since December 31, 2003, in the business, properties, assets, liabilities, financial condition, capitalization, partners’ equity, licenses, franchises, tax status, operations, results of operations or prospects of the Partnership, which, in our reasonable judgment, is or may be adverse to the Partnership, or we shall have become aware of any fact that, in our reasonable judgment, does or may have an adverse effect on the value of the Units;

      (e)     there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (iii) any limitation (whether or not mandatory) by any governmental authority, or other event which might have a material adverse effect, on the extension of credit by banks or lending institutions or which might result in any imposition of currency controls in the United States, (iv) a commencement or material escalation of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States that, in each case, materially adversely affects the domestic business or leisure travel industry or (v) a material change in United States or other currency exchange rates or a suspension or limitation on the currency markets;

      (f)     (i) any of the following shall occur, or the General Partner or the Partnership shall propose to effect any of the following: (a) a material change in the capital structure of the Partnership, (b) a material change in the obligations or rights of Unitholders with respect to the Partnership, (c) a material change in the indebtedness secured by, or to the management agreement relating to, the Michigan Avenue Hotel, (d) a material change in the ownership or management of the Partnership, (e) an issuance or sale of any Units or rights to receive Units, conditional or otherwise, (f) a distribution

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(whether cash, non-cash, in-kind or otherwise) with respect of the Units; or (ii) any event shall occur that materially damages or causes a material impairment of the Michigan Avenue Hotel or prevents the Michigan Avenue Hotel from operating as a hotel in a manner substantially similar to the manner in which it was operating as a hotel as of the date of this Offer to Purchase and Solicitation Statement;

      (g)     the Partnership or any of its subsidiaries shall have authorized, recommended, proposed or announced an agreement or intention to enter into an agreement, with respect to any merger, consolidation, liquidation or business combination, any acquisition or disposition of a material amount of assets or securities or any comparable event, not in the ordinary course of business consistent with past practices;

      (h)     the failure to occur of any approval or authorization by any federal or state authorities necessary for the completion of the purchase of all or any part of the Units to be acquired hereby, which in our reasonable judgment in any such case, and regardless of the circumstances (including any action of ours) giving rise thereto, makes it inadvisable to proceed with such purchase or payment;

      (i)     we shall become aware that any material right of the Partnership or any of its subsidiaries under any governmental license, permit or authorization relating to any environmental law or regulation is reasonably likely to be impaired or otherwise adversely affected as a result of, or in connection with, the Offer;

      (j)     the Partnership or its General Partner shall have amended, or proposed or authorized any amendment to, the Limited Partnership Agreement (other than the Amendments) or we shall have become aware that the Partnership or its General Partner has proposed any such amendment; or

      (k)     there is a material possibility that the acceptance by us of the Units tendered and not withdrawn pursuant to the Offer or the transfer of such Units to us would cause the Partnership to be classified as a corporation or as a publicly traded partnership, within the meaning of Section 7704 of the Internal Revenue Code.

      Notwithstanding anything to the contrary in this Offer to Purchase and Solicitation Statement, the foregoing conditions are for the sole benefit of us and our affiliates and may be asserted by us regardless of the circumstances giving rise to such conditions (including, without limitation, any action or inaction by us or any of our affiliates) or may be waived by us in whole or in part at any time and from time to time in our sole discretion on or after the Offer Date and on or before the Expiration Date (other than the Minimum Condition set forth in clause (A) of the first paragraph of this Section 7, which we shall not waive, and other than the conditions in clause (B) of the first paragraph of this Section 7, which may be asserted or waived at any time or from time to time on or after the Offer Date). Our failure, at any time, to exercise the foregoing rights will not be deemed a waiver of such rights, which will be deemed to be ongoing and may be asserted at any time and from time to time on or after the Offer Date and on or before the Expiration Date (other than the condition in clause (A) of the first paragraph of this Section 7, which may be asserted at any time or from time to time on or after the Offer Date and which shall not be waived). Any termination by us concerning the events described above will be final and binding upon all parties.

8.     Certain Legal Matters; Required Regulatory Approvals

General

      Except as set forth in this Section, based on our review of publicly available filings by the Partnership with the SEC and other publicly available information regarding the Partnership, we are not aware of (i) any filings, approvals or other actions by any domestic or foreign governmental or administrative or regulatory agency that would be required before the acquisition of Units by us pursuant to the Offer other than the filing of a Tender Offer Statement on Schedule TO (which has been filed) and any required amendments thereto or (ii) any licenses or regulatory permits that would be material to the business of the Partnership, taken as a whole, and that might be adversely affected by our acquisition of Units as contemplated in this Offer to Purchase and Solicitation Statement. Should any such approval or other action be required, it is our intention that such additional approval or action would be sought. While we have no intent to delay the purchase of

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Units tendered pursuant to the Offer pending receipt of any such additional approval or the taking of any such action, there can be no assurance that any such additional approval or action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the Partnership’s business, or that certain parts of the Partnership’s business might not have to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or action, any of which could cause us to elect to terminate the Offer without purchasing Units thereunder. Our obligation to purchase and pay for Units is subject to certain conditions, including conditions related to the legal matters discussed in this Section 8.

Antitrust

      Under the HSR Act, and the rules and regulations that have been promulgated thereunder by the Federal Trade Commission (the “FTC”), certain acquisition transactions may not be completed until certain information and documentary material has been furnished for review by the Antitrust Division of the Department of Justice and the FTC and certain waiting period requirements have been satisfied. We do not believe that the HSR Act is applicable to the acquisition of Units pursuant to the Offer.

ERISA

      By executing and returning the Agreement of Assignment and Transfer, a Unitholder will be representing that either (a) the Unitholder is not subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or Section 4975 of the Internal Revenue Code, or an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101 et seq., or (b) the tender and acceptance of Units pursuant to the Offer will not result in a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

Margin Requirements

      The Units are not “margin securities” under the regulations of the Board of Governors of the Federal Reserve System and, accordingly, such regulations are not applicable to the Offer.

State Takeover Laws

      A number of states have adopted anti-takeover laws which purport, to varying degrees, to be applicable to attempts to acquire securities of corporations or other entities which are incorporated or organized in such states or which have substantial assets, security holders, principal executive officers or principal places of business in such states. Although we have not attempted to comply with any state anti-takeover statutes in connection with the Offer, we reserve the right to challenge the validity or applicability of any state law allegedly applicable to the Offer, and nothing in this Offer to Purchase and Solicitation Statement nor any action taken in connection therewith is intended as a waiver of such right. If any state anti-takeover statute is applicable to the Offer, we might be unable to accept for payment or purchase Units tendered pursuant to the Offer or be delayed in continuing or consummating the Offer. In such case, we may not be obliged to accept for purchase or pay for any Units tendered.

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THE CONSENT SOLICITATION

1.     Record Date; Outstanding Units; Voting Rights

      Only a holder of Units of record at the close of business on August [     ], 2003 who has been admitted as a Limited Partner, shall be entitled to vote by written consent on the Proposals. According to the Partnership, as of August 1, 2003, there were 6,710 holders of record of the 135,600 Units issued and outstanding. As of the date of this Offer to Purchase and Solicitation Statement, we do not own, and to the best of our and Starwood’s knowledge, none of our affiliates owns, any Units. Each Unitholder who has been admitted to the Partnership as a Limited Partner is entitled to cast one vote for each Unit held of record.

      For a description of the ownership of the Units by certain persons, see “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Equity Interest in the Partnership.”

2.     The Proposals; Effective Time of the Proposals; Vote Required

      As described in “THE TENDER OFFER — Transfer Restrictions,” provisions in Article 11 of the Partnership Agreement currently restrict or delay your ability to transfer your Units in the Offer. In addition, provisions of the Partnership Agreement, Delaware law and the federal securities laws also have the effect of restricting or delaying the Merger. We are soliciting your consent to each of the Proposals to facilitate and expedite your transfer and our ownership of Units tendered in the Offer and our ability promptly to effect the Merger. By granting your consent to a Proposal described below, you will also be appointing us as your attorney-in-fact and proxy for the purpose of taking any action we consider necessary or desirable to effect that Proposal. The form of the power of attorney and proxy is set forth in its entirety on the Consent Form. As to each Proposal, your abstention or failure to return timely the enclosed Consent Form will have the same effect as not consenting to the Proposal.

      We intend to use our power-of-attorney and proxy to submit to the Partnership, on behalf of consenting Unitholders, any Proposal that is approved by the requisite consent described in this section.

                  Proposal No. 1

      We refer to the Proposal described in this subsection as “Proposal No. 1.”

      Pursuant to Section 14.01(a)(ii) of the Partnership Agreement, amendments to the Partnership Agreement may be proposed by Limited Partners owning 10% or more of the Units. Any amendments submitted pursuant to that section must be accompanied by a statement of purpose of such amendments. In order to facilitate the adoption of the amendments described under “— Proposal No. 2” below, the text of which is attached to this Offer to Purchase and Solicitation Statement as Annex E (the “Amendments”), we are seeking your consent to submit the Amendments and a statement of purpose of the Amendments to the General Partner on your behalf, as your agent and attorney-in-fact.

      Also pursuant to Section 14.01(a)(ii) of the Partnership Agreement, the General Partner is required, within 20 days after receipt of a proposed amendment submitted as described above, to give notice to all Limited Partners of the proposed amendment and statement of purpose, together with the views, if any, of the General Partner with respect to the proposed amendment.

      If this Proposal is approved, we intend promptly to submit the Amendments and the following statement of purpose to the General Partner on your behalf, as your agent and attorney-in-fact:

“The purposes of the proposed amendments to the Partnership Agreement are to facilitate (i) transfers by Limited Partners of their Units in connection with certain cash tender offers for all of the Units and mergers following such tender offers and (ii) the approval of mergers to be consummated following completion of certain tender offers for all of the Units.”

      The vote required for the approval of Proposal No. 1 is the vote of Limited Partners owning 10% or more of the Units.

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Proposal No. 2

      We refer to the Proposal described in this subsection as “Proposal No. 2.”

      We are seeking your consent to the Amendments. The descriptions of the Amendments in this section are qualified in their entirety by reference to the full text of the Amendments that appears in Annex E to this Offer to Purchase and Solicitation Statement.

      We are proposing to amend the Partnership Agreement to add the defined terms “Qualified Tender Offer” and “Qualified Merger.” A Qualified Tender Offer would be defined as an offer to purchase all Units for cash in which (i) the offeror publicly discloses an intention to consummate a Qualified Merger following completion of such offer and (ii) at least a majority of the outstanding Units are validly tendered and are accepted for payment by the offeror. A Qualified Merger would be defined as the merger of the Partnership, following a Qualified Tender Offer, with or into a limited partnership or other business entity in accordance with Section 17-211 of the DRULPA as modified by the amended Partnership Agreement, where (i) such other entity is the offeror in such Qualified Tender Offer or an affiliate thereof and (ii) the consideration provided for in such merger is the same as the consideration offered in such Qualified Tender Offer. These two defined terms would be used in the amendment to Article 11 described below, which would, among other things, prohibit the General Partner and the Partnership from applying transfer restrictions or suspending transfers in connection with these two types of transactions. The Merger and the Offer (if it is successful) would meet the definitions of Qualified Merger and Qualified Tender Offer, respectively.

      We are also proposing to amend the Partnership Agreement to add a new Section 11.04 to the end of Article 11. The new section would provide, among other things, that, notwithstanding anything to the contrary in Article 11 or elsewhere in the Partnership Agreement:

•  None of the transfer restrictions set forth in Article 11 would apply to transfers in connection with Qualified Tender Offers or Qualified Mergers.

These transfer restrictions include those described above under “THE TENDER OFFER — Transfer Restrictions,” which could otherwise restrict the transfer of your Units in connection with the Offer or the Merger.

•  The General Partner would not be permitted to suspend transfers in connection with Qualified Tender Offers or Qualified Mergers.

This amendment would, among other things, remove the General Partner’s ability to suspend transfers in connection with the Offer or the Merger due to the 40% Limitation described above under “THE TENDER OFFER — Transfer Restrictions” or for any other reason.

•  The transfers of Units in connection with Qualified Tender Offers or Qualified Mergers would be recognized immediately, rather than only on the last business day of a calendar quarter.

This amendment would allow us to promptly complete the Offer and pay you for your Units as promptly as practicable. In the absence of this amendment, we might not pay you for your Units until January 2004. See “THE TENDER OFFER — Acceptance for Payment and Payment for Units.”

•  Simultaneous with any transfer in connection with Qualified Tender Offers or Qualified Mergers, the transferee would be deemed automatically admitted to the Partnership as a Substituted Limited Partner.

This amendment would remove the General Partner’s discretion to refuse to admit us as a Substituted Limited Partner following successful completion of the Offer. In the absence of this amendment, even if we acquire Units in the Offer, we may not be entitled or able to exercise all the rights of a Limited Partner.

•  The General Partner would be prohibited from giving effect to any other transfer restriction in connection with Qualified Tender Offers or Qualified Mergers, whether or not in the Partnership Agreement.

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This amendment would prevent the General Partner from implementing transfer policies outside the terms of the Partnership Agreement to restrict our ability to buy your Units in the Offer or to complete the Merger. Accordingly, it would prevent the General Partner from giving effect to the 5% Limitation described above under “THE TENDER OFFER — Transfer Restrictions,” which, according to the Partnership, is designed to prevent the Partnership from being treated as a “publicly traded partnership” under the Internal Revenue Code.

      Finally, we are proposing to amend the Partnership Agreement to add a new Section 15.07. This section would permit a Qualified Merger to be effected upon the consent of Limited Partners who collectively hold more than 50% of the Units, without the consent of the General Partner. The purpose of this amendment is to facilitate the Merger and other mergers consummated following tender offers for all of the Units that are successfully completed for a majority of the Units.

      Pursuant to Section 14.01(b), amendments that have been proposed pursuant to Section 14.01(a) are adopted if approved by the consent of Limited Partners who collectively hold more than 50% of the Units. Therefore, the vote required for the approval of Proposal No. 2 is the vote of Limited Partners owning more than 50% of the Units. We intend for the Amendments to become effective as soon as practicable following the end of the Solicitation Period, but in any event before we pay for or assume ownership of the Units in the Offer.

Proposal No. 3

      We refer to the Proposal described in this subsection as “Proposal No. 3.”

      Upon the approval of Proposal No. 2 and the adoption of the amendments to the Partnership Agreement contemplated by Proposal No. 2, assuming successful completion of the Offer, the approval of Limited Partners who collectively hold more than 50% of the Units will be required under the Partnership Agreement to approve the Merger and the Merger Agreement (as defined below).

      We are therefore seeking your consent to the Merger and the Merger Agreement (as defined below), to be effective immediately upon the adoption of the Amendments and immediately before we pay for or assume ownership of the Units in the Offer. The Merger would be consummated after we assume ownership of the Units in the Offer pursuant to a merger agreement substantially in the form attached as Annex F to this Offer to Purchase and Consent Solicitation (the “Merger Agreement”). We reserve the right to make changes to the Merger Agreement at any time prior to effecting the Merger, so long as those changes do not adversely affect the interests of Unitholders that have consented to this Proposal No. 3. Without limiting the foregoing, while the Merger Agreement contemplates the merger of Purchaser with and into the Partnership (or another affiliate of Starwood), we reserve the right instead to cause the Partnership to merge with and into Purchaser (or another affiliate of Starwood).

      Following the effectiveness of Proposal No. 2, the vote required for the approval of Proposal No. 3 will be the vote of Limited Partners owning more than 50% of the Units.

3.     Solicitation Period

      The solicitation period is the time during which Unitholders may vote for or against the Proposals (the “Solicitation Period”). The Solicitation Period will commence upon delivery of this Offer to Purchase and Solicitation Statement and will continue until 5:00 p.m., Eastern time, on September [     ], 2003, unless the Offer is extended by Purchaser, in which case the Solicitation Period will be extended to such later date that coincides with the Expiration Date of the Offer.

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4.     Voting and Revocation of Consents

      A GREEN consent form (the “Consent Form”) is included with this Offer to Purchase and Solicitation Statement. The Consent Form should be properly executed and received by the Depositary by 5:00 P.M., EASTERN TIME, ON SEPTEMBER [     ], 2003 (or such time until Solicitation Period is extended) and may be sent by mail, hand delivery, overnight courier or facsimile to the Depositary:

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Facsimile: 718-234-5001

Telephone: 877-248-6417 (Toll-Free)

      We enclose a pre-addressed postage-paid envelope for your convenience. For the Consent Forms transmitted via facsimile to be valid, the entire Consent Form (front and back) must be received by the Depositary. Consent Forms transmitted via facsimile will be deemed to have been received and dated on the date they are actually received by the Depositary. If delivery is by facsimile, you must also return the original documents, which originals, only, may be received after the Expiration Date provided that the facsimile is received prior to or on the Expiration Date.

      Consent Forms may be revoked and votes may be changed at any time on or prior to the Expiration Date. For a revocation or change of vote to be effective, you must execute and deliver to the Depositary, on or prior to the Expiration Date, a subsequently dated Consent Form or a written notice to the Depositary stating that you revoke your consent or change your vote as to any or all Proposals. Unitholders may submit a subsequently dated Consent Form or written notice via mail, hand delivery, overnight courier or facsimile, provided that it is received by the Depositary on or prior to the Expiration Date. For subsequently dated Consent Forms transmitted via facsimile to be valid, the entire subsequently dated Consent Forms (front and back) must be received by the Depositary on or prior to the Expiration Date. Any subsequently dated Consent Form or written revocation notices transmitted via facsimile will be deemed to have been received and dated on the date they are actually received by the Depositary. If delivery is by facsimile, you must also return the original documents, which originals, only, may be received after the Expiration Date provided that the facsimile is received prior to or on the Expiration Date.

      All properly executed Consent Forms that are received and not withdrawn prior to the Expiration Date will become binding and irrevocable after the Expiration Date and will be deemed to be coupled with an interest. Consent Forms will be effective only when actually received by the Depositary on or prior to the Expiration Date. Valid Consent Forms submitted prior to the Expiration Date will remain valid and outstanding after the Expiration Date and will be voted in accordance with the instructions contained therein. Consent Forms or notices of a change of vote dated after the Expiration Date will not be valid.

      Questions concerning (1) how to complete the Consent Form, (2) where to remit the Consent Form or (3) how to obtain additional Consent Forms should be directed to the Information Agent, D.F. King & Co., Inc., at 1-888-605-1957 (Toll-Free).

      In accordance with Exchange Act Rule 14a-3(e)(1), only one Offer to Purchase and Solicitation Statement is being delivered to two or more Unitholders who share an address, unless the Partnership has received contrary instructions from one or more of the Unitholders. We undertake to deliver promptly upon written or oral request a separate copy of the Offer to Purchase and Solicitation Statement to a Unitholder at a shared address to which a single copy of the documents was delivered. If you are a Unitholder who shares an address and wish to receive a separate copy of the Offer to Purchase and Solicitation Statement, of if you and the other Unitholder(s) who share an address have received multiple copies of this Offer to Purchase and

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Solicitation Statement and you wish to request delivery of a single copy of all future transmittals with respect to this Offer to Purchase and Solicitation Statement, you should contact the Information Agent:

D. F. King & Co., Inc.

48 Wall Street

New York, NY 10005

1-888-605-1957 (Toll-Free)

5.     Effective Time of the Merger

      As soon as practicable after all conditions to the Merger have been satisfied (or waived, if waivable), the General Partner will file a certificate of merger with the Secretary of State of Delaware substantially in the form attached as Exhibit A to the Merger Agreement (the “Certificate of Merger”). The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of Delaware or upon such later date and time as is provided in the Certificate of Merger.

6.     No Special Meeting

      The Partnership Agreement does not require a special meeting of the Unitholders to consider the Merger, Amendments or Proposals. Accordingly, no special meeting of the Unitholders will be held.

7.     Appraisal Rights

      The Partnership was formed under the DRULPA. Under the DRULPA, a limited partnership agreement or a merger agreement may contractually provide for appraisal rights with respect to limited partnership interests. Neither the Partnership Agreement nor the Merger Agreement we intend to submit on your behalf provides or will provide for a judicial appraisal of Units in connection with the Merger.

8. Interests of Certain Persons in the Matters to be Acted Upon

      In considering whether to vote for or against the Proposals, you should carefully review the sections of this Offer to Purchase and Solicitation Statement that address the potential conflicts of interest inherent in this transaction that arise out of our and Starwood’s relationships to the General Partner and the Partnership. See “SPECIAL FACTORS — Risk Factors — The General Partner may have a conflict of interest with respect to the Offer,” “SPECIAL FACTORS — Transactions, Negotiations and Agreements,” and “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP.”

9.     Costs of the Consent Solicitation

      All of the costs of the Consent Solicitation will be borne by Starwood and Purchaser.

OTHER MATTERS

1.     Certain Fees and Expenses

      We have retained D. F. King & Co., Inc. as Information Agent in connection with the Offer and Consent Solicitation. The Information Agent may contact Unitholders by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee Unitholders to forward material relating to the Offer and Consent Solicitation to beneficial owners. The Information Agent has not been retained to make solicitations or recommendations in its role as Information Agent. Customary compensation will be paid for all such services in addition to reimbursement of reasonable out-of-pocket expenses. We have agreed to indemnify the Information Agent against certain liabilities and expenses, including liabilities under the United States Federal securities laws.

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      In addition, we have retained American Stock Transfer & Trust Company as the Depositary. The Depositary has not been retained to make solicitations or recommendations in its role as Depositary. The Depositary will receive reasonable and customary compensation for its services in connection with the Offer and Consent Solicitation, will be reimbursed for its reasonable out-of-pocket expenses, and will be indemnified against certain liabilities and expenses in connection therewith.

      We will not reimburse any costs that the Partnership may incur in connection with the Offer and Consent Solicitation.

      The following table presents the estimated fees and expenses to be incurred by us in connection with the Offer and Consent Solicitation:

Legal fees and expenses	$	750,000
Printing and mailing costs		100,000
Filing fees		6,582
Depositary fees		45,000
Information Agent		50,000
Transfer fees		335,500
Miscellaneous		212,918
Total	$	1,500,000

      Except as set forth above, we will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Units pursuant to the Offer and Consent Solicitation. Brokers, dealers, commercial banks and trust companies and other nominees will, upon request, be reimbursed by us for customary clerical and mailing expenses incurred by them in forwarding materials to their customers. We have not made any provisions in connection with the Offer and Consent Solicitation for Unitholders to access the Partnership’s files or provide counsel or legal advice at our expense.

2. Available Information; Incorporation by Reference

      Each of the Partnership and Starwood is subject to the reporting requirements of the Exchange Act and is required to file periodic reports, proxy statements and other documents with the SEC relating to its business, financial conditions and other matters. In addition, Windy City and Kalmia are required to file certain documents with the SEC relating to their respective offers pursuant to the reporting requirements of the Exchange Act. Such reports, proxy statements and other documents may be examined and copies may be obtained from the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC’s Web site at http://www.sec.gov. Copies should be available by mail upon payment of the SEC’s customary charges by writing to the SEC’s principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549. We incorporate by reference into this Offer to Purchase and Solicitation Statement (1) the Partnership’s 2002 10-K (a copy of which accompanies this Offer to Purchase and Solicitation Statement), (2) the Partnership’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003, (3) the Partnership’s Second Quarter 10-Q, and (4) the Partnership’s Current Report on Form 8-K dated July 25, 2003. Copies of the reports, opinions, and appraisals described herein are available for inspection and copying at the principal executive offices of Starwood during regular business hours by any Unitholder or its representative who has been so designated in writing, and will be provided to any such Unitholder or representative upon written request at the expense of the requesting party. Unitholders interested in obtaining a copy of any such reports, opinion, or appraisals should contact Starwood at 1111 Westchester Avenue, White Plains, New York 10604, Attention: General Counsel. We and Starwood disclaim any responsibility for the information included in such reports, statements, appraisals, opinions and other documents, including, without limitation, any information derived therefrom and included in this Offer to Purchase and Solicitation Statement.

3. No Appraisal Rights

      Appraisal rights are not available in the Offer or the Merger.

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4. Miscellaneous

      THE OFFER IS BEING MADE TO ALL UNITHOLDERS, BENEFICIAL OWNERS AND ASSIGNEES, ALL TO THE EXTENT KNOWN BY PURCHASER. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) UNITHOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. PURCHASER IS NOT AWARE OF ANY JURISDICTION WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD BE ILLEGAL.

      No person has been authorized to give any information or to make any representation on our behalf not contained in this Offer to Purchase and Solicitation Statement or in the Agreement of Assignment and Transfer and, if given or made, such information or representation must not be relied upon as having been authorized.

      Pursuant to Rules 14d-3 and 13e-3 of the General Rules and Regulations under the Exchange Act, we have filed with the SEC a Tender Offer Statement on Schedule TO, together with exhibits, furnishing certain additional information with respect to the Offer. Pursuant to Regulation 14A under the Exchange Act, we have filed with the SEC a Proxy Statement on Schedule 14A. Such statements and any amendments thereto, including exhibits, may be inspected and copies may be obtained at the same places and in the same manner as set forth with respect to information concerning the Partnership in “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP.”

WHLP ACQUISITION LLC

SEPTEMBER [     ], 2003

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SCHEDULE I

INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF STARWOOD HOTELS & RESORTS WORLDWIDE, INC. AND PURCHASER

DIRECTORS AND EXECUTIVE OFFICERS OF STARWOOD

      The name, current principal occupation or employment and material occupations, positions, offices or employment for the past five years of each director and executive officer of Starwood are set forth below. The business address of each officer is care of Starwood Hotels & Resorts Worldwide, Inc., 1111 Westchester Avenue, White Plains, NY 10604. None of the directors and officers of Starwood listed below has, during the past five years, (i) been convicted in a criminal proceeding or (ii) been a party to any judicial or administrative proceeding that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, United States federal or state securities laws, or a finding of any violation of United States federal or state securities laws. All directors and officers listed below are citizens of the United States. Directors are identified by an asterisk.

Directors and Executive Officers of Starwood

			Current Principal Occupation or Employment
Name	Age		and Five-Year Employment History
Charlene Barshefsky*		53	Ambassador Barshefsky is currently Senior International Partner at the law firm of Wilmer, Cutler & Pickering. From March 1997 to January 2001 Ambassador Barshefsky was the United States Trade Representative, the chief trade negotiator and principal trade policy maker for the United States and a member of the President’s Cabinet.
			The address of Wilmer, Cutler & Pickering is 2445 M. Street, NW Washington, D.C. 20037
Ronald C. Brown		48	Mr. Brown has been the Executive Vice President and Chief Financial Officer of Starwood since March 1998.
Jean-Marc Chapus*		43	Mr. Chapus has been Group Managing Director and Portfolio Manager of Trust Company of the West, an investment management firm, and President of TCW/ Crescent Mezzanine L.L.C., a private investment fund, since March 1995.
			The address of Trust Company of the West is 11100 Santa Monica Boulevard, Suite 2000, Los Angeles, CA 90025.
Robert F. Cotter		51	Mr. Cotter has been the Chief Operating Officer of Starwood since February 2000. From December 1999 to February 2000, he was President, International Operations, and from March 1998 to December 1999, he served as President, Europe. Before joining Starwood, Mr. Cotter was President, Sheraton Europe Division, from June 1994 to March 1998 and previously held various other positions with Sheraton, including President, Sheraton Asia-Pacific Divisions, and numerous sales and marketing positions in the United States and Asia.
Theodore W. Darnall		45	Mr. Darnall has been the President of the Real Estate Group since August 2002. From July 1999 to August 2002, he was the President of Starwood’s North America Group. From April 1998 to July 1999 Mr. Darnall was Executive Vice President, North America Operations. Mr. Darnall was also Executive Vice President and COO of Starwood Lodging between April 1996 and April 1998.

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			Current Principal Occupation or Employment
Name	Age		and Five-Year Employment History
Bruce W. Duncan*		51	Mr. Duncan is currently President, Chief Executive Officer and Trustee of Equity Residential (“EQR”), the largest publicly traded apartment company in the United States. He joined EQR in April 2002. From April 2000 until March 2002 he was a private investor. From December 1995 until March 2000 Mr. Duncan served as Chairman, President and Chief Executive Officer of The Cadillac Fairview Corporation Limited, a real estate operating company.
			The address of EQR is 2 N. Riverside Drive, Suite 400, Chicago, IL 60606
Steven M. Hankin		42	Mr. Hankin has been the President of Starwood Technology and Revenue Systems (“STARS”) since June 2000. He joined Starwood as Senior Vice President of Strategic Planning in October 1999 and held that position until May 2000, when he became the Executive Vice President of Starwood and President — STARS. From October 1986 to September 1999, he was a partner at McKinsey & Company, Inc., an international management consulting firm.
Eric Hippeau*		51	Mr. Hippeau has been Managing Partner of Softbank Capital Partners, an Internet venture capital firm, since March 2000. Mr. Hippeau served as Chairman and Chief Executive Officer of Ziff-Davis Inc., an integrated media and marketing company, from 1993 to March 2000 and held various other positions with Ziff-Davis from 1989 to 1993.
			The address of Softbank is 461 Fifth Avenue, New York, NY 10017.
George J. Mitchell*		69	Mr. Mitchell has been a partner in the law firm of Piper Rudnick since October 2002. From January 1995 to October 2002 he was Special Counsel to the law firm of Verner, Liipfert, Bernhard, McPherson and Hand, Chartered and served as chairman of that firm from November 2001 to October 2002. He served as a United States Senator from January 1980 to January 1995, and was the Senate Majority Leader from 1989 to 1995. From 1995 to 1997, Senator Mitchell served as the Special Advisor to the President of the United States on economic initiatives in Ireland. Subsequently, at the request of the British and Irish Governments, he served as Chairman of the peace negotiations in Northern Ireland.
			The address of Piper Rudnick is 901 15th Street, NW Suite 700 Washington, DC 20005-2301

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			Current Principal Occupation or Employment
Name	Age		and Five-Year Employment History
David K. Norton		47	Mr. Norton has been the Executive Vice President — Human Resources of Starwood Corporation and Vice President — Human Resources of the Trust since May 2000. Before joining Starwood, Mr. Norton held various positions with PepsiCo, Inc. from September 1990 to April 2000, including Senior Vice President, Human Resources of Frito-Lay, a division of PepsiCo, from November 1995 to April 2000 and Senior Vice President, Human Resources of PepsiCo Food Systems from December 1994 to October 1995.
Stephen R. Quazzo*		43	Mr. Quazzo has been the Managing Director, Chief Executive Officer and co-founder of Transwestern Investment Company, L.L.C., a real estate principal investment firm, since March 1996. From April 1991 to March 1996, Mr. Quazzo was President of Equity Institutional Investors, Inc., a subsidiary of Equity Group Investments, Inc., a Chicago-based holding company controlled by Samuel Zell.
			The address of Transwestern Investment Company, L.L.C. is 150 N. Wacker, Suite 800, Chicago, IL 60606.
Thomas O. Ryder*		58	Mr. Ryder has been Chairman of the Board, Chief Executive Officer and a Director of The Reader’s Digest Association, Inc., since April 1998. Mr. Ryder was President, American Express Travel Related Services International, a division of American Express Company, which provides travel, financial and network services, from October 1995 to April 1998.
			The address of Readers Digest Association, Inc. is Readers Digest Road, Pleasantville, New York 10570
Kenneth S. Siegel		47	Mr. Siegel has been the Executive Vice President and General Counsel of Starwood since November 2000. In February 2001, he was also appointed as the Secretary to the Corporation. Mr. Siegel was formerly the Senior Vice President and General Counsel of Gartner, Inc., a provider of research and analysis on information technology industries, from January 2000 to November 2000. Before that time, he served as Senior Vice President, General Counsel and Corporate Secretary of IMS Health Incorporated, an information services company, and its predecessors from February 1997 to December 1999. Before that time, Mr. Siegel was a Partner in the law firm of Baker & Botts, LLP.
Barry S. Sternlicht*		42	Mr. Sternlicht has been the Chairman and Chief Executive Officer of the Company since September 1997 and January 1999, respectively. Mr. Sternlicht has served as Chairman and Chief Executive Officer of the Trust since January 1995. Mr. Sternlicht also has been the President and Chief Executive Officer of Starwood Capital Group, L.L.C. (“Starwood Capital”) and its predecessor entities since its formation in 1991. Mr. Sternlicht was Chief Executive Officer of iStar Financial, Inc. (“iStar”), a publicly held real estate investment firm, from September 1996 to November 1997 and served as the Chairman of the Board of Directors of iStar from September 1996 to April 2000.

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			Current Principal Occupation or Employment
Name	Age		and Five-Year Employment History
Daniel W. Yih*		43	Mr. Yih has been a Principal with GTCR Golder Rauner, LLC, a private equity firm, since March 2001. From June 1995 until March 2000, Mr. Yih was a general partner of Chilmark Partners, L.P., a private equity firm.
			The address of GTCR Golder Rauner, LLC is 233 South Wacker Drive, Suite 6100, Chicago, IL 60606
Kneeland C. Youngblood*		47	Mr. Youngblood has been a managing partner of Pharos Capital Group, L.L.C., a private equity fund focused on technology companies, business service companies and health care companies, since January 1998. From July 1985 to December 1997 he was in private medical practice.
			The address of Pharos Capital Group, L.L.C., is 100 Crescent Court Suite 1740, Dallas, Texas 75201

DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER

      The name, current principal occupation or employment and material occupations, positions, offices or employment for the past five years of each director and executive officer of the Purchaser are set forth below. The business address of each director and officer is care of Starwood Hotels & Resorts Worldwide, Inc., 1111 Westchester Avenue, White Plains, NY 10604. None of our directors and officers listed below has, during the past five years, (i) been convicted in a criminal proceeding or (ii) been a party to any judicial or administrative proceeding that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, United States federal or state securities laws, or a finding of any violation of United States federal or state securities laws. All directors and officers listed below are citizens of the United States. Directors are identified by an asterisk.

Directors and Executive Officers of Purchaser

			Current Principal Occupation or Employment
Name	Age		and Five-Year Employment History
Ronald C. Brown		48	Mr. Brown has been the Executive Vice President and Chief Financial Officer of Starwood since March 1998.
Kenneth S. Siegel		47	Mr. Siegel has been the Executive Vice President and General Counsel of Starwood since November 2000. In February 2001, he was also appointed as the Secretary to the Corporation. Mr. Siegel was formerly the Senior Vice President and General Counsel of Gartner, Inc., a provider of research and analysis on information technology industries, from January 2000 to November 2000. Before that time, he served as Senior Vice President, General Counsel and Corporate Secretary of IMS Health Incorporated, an information services company, and its predecessors from February 1997 to December 1999. Before that time, Mr. Siegel was a Partner in the law firm of Baker & Botts, LLP.

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ANNEX A

SUMMARY OF HOULIHAN LOKEY FAIRNESS OPINION AND PRESENTATION

Windy City Offer and Houlihan Lokey Fairness Opinion

      When Starwood announced that it was considering a tender offer for all of the Units, the unsolicited Windy City Offer was also pending. In its offer, Windy City offered $525 per Unit, reduced by the $50 transfer fee charged by the Partnership per transferring Unitholder and the amount of any cash distributions made or declared on or after July 7, 2003 with respect to such Unit, for up to 15% of the outstanding Units. Windy City also agreed to pay interest at the rate of 3% per annum from the expiration date of the tender offer to the date of payment. The Windy City Offer expired on Monday August 4, 2003 and approximately 3,076 Units (or 2.27% of the total outstanding Units) were tendered as reported by Windy City.

      The Partnership retained Houlihan Lokey to give an opinion on the fairness of the Windy City Offer from a financial point of view. Houlihan Lokey delivered a fairness presentation to the Board of Directors of the General Partner on July 18, 2003, concluding that the consideration to be paid to Unitholders in the Windy City Offer was fair to Unitholders from a financial point of view. On August 1, 2003, Houlihan Lokey delivered an additional fairness presentation regarding the Windy City Offer that superseded the July 18 presentation as it came to Houlihan Lokey’s attention subsequent to the delivery of its July 18 opinion, that certain assumptions and financial information required modifications to more adequately reflect the financial position of the Partnership. The revised fairness presentation reached the same conclusion as the original presentation.

      In the August 1 presentation for the Windy City Offer, Houlihan Lokey employed:

•  A “net asset value approach” whereby market-based capitalization rates were applied to representative earnings and cash flow streams of the Michigan Avenue Hotel to determine enterprise value;

•  A “comparable transaction approach” whereby selected comparable transactions were analyzed and implied market multiples were applied to representative revenues and cash flow streams of the Michigan Avenue Hotel to determine enterprise value;

•  A “market capitalization approach” whereby market-based multiples of comparable public companies were applied to representative earnings and cash flow streams of the Michigan Avenue Hotel to determine enterprise value; and

•  A “yield approach” whereby required yields for comparable publicly traded partnerships were applied to representative dividend levels for the Partnership; this approach did not consider the Michigan Avenue Hotel but rather the characteristics and particularly the liquidity of the Units.

      Based on the conclusions derived from the valuation methods described above and the assumptions made within each approach, Houlihan Lokey estimated the value range per Unit in the Windy City Offer to be between $454 and $553 per Unit and concluded that the consideration to be received by Unitholders in the Windy City Offer was fair, from a financial point of view, to the Unitholders. Because the Windy City Offer was only for a maximum of 15% of the outstanding Units, the range included a discount for lack of control and lack of marketability of the Units. The opinion addressed the fairness of the Windy City Offer only from a financial point of view, does not constitute a recommendation to any Unitholder as to whether to tender units in the Windy City Offer or any other offer and is subject to important limitations and assumptions described in that opinion. This summary of Houlihan Lokey’s opinion is qualified in its entirety by reference to the full text of the opinion with respect to the Windy City Offer attached to the Windy City 14D-9.

      The Houlihan Lokey opinion described above was based on the then-prevailing market conditions and assumptions deemed appropriate by Houlihan Lokey. Houlihan Lokey undertook such reviews, analyses and

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inquiries they deemed necessary under the circumstances, including, but not limited to, discussions with management, visits to the Michigan Avenue Hotel, review of various agreements of the Partnership, review of the Partnership’s financial statements, projections and SEC filings and review of the documents filed with the SEC relating to the Windy City Offer. Houlihan Lokey’s role was limited solely to rendering a fairness opinion with respect to the Windy City Offer and Houlihan Lokey performed no other role with respect to the Windy City Offer.

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ANNEX B

SUMMARY OF JLL REFINANCING ANALYSES

July 24, 2003 JLL Refinancing Analysis

      The draft July 24, 2003 JLL Refinancing Analysis presented the following scenarios:

Scenario I — Year End 2005 Sale

•  Year End 2005 Sale Base Case- The “as is” value of the Michigan Avenue Hotel was calculated assuming no capital expenditures would be made above the Furniture, Fixture & Equipment Reserve (the “FF&E Reserve”) in future years. Under this scenario, the sales price for the Michigan Avenue Hotel ranged from $110.2 million to $117.1 million, with a midpoint of $113.6 million. To account for the risk inherent in projecting cash flows to derive a sales price for the Michigan Avenue Hotel for the 2005 sale year, a 13.0% discount rate was utilized. Under this scenario, given the uncertainty in the current market due to geopolitical and economic conditions as well as the Michigan Avenue Hotel’s declining operational projections, JLL concluded that the lower end of the given price range was a more realistic assumption. The ultimate proceeds to be distributed per Unit in October 31, 2003 present value terms would be between $561 and $598, with a midpoint of $580.

•  Year End 2005 Sale With Additional Prepayments — The “as is” value of the Michigan Avenue Hotel was calculated assuming no capital expenditures would be made above the FF&E Reserve in future years. This scenario assumed that one additional $5 million prepayment on the mortgage secured by the Michigan Avenue Hotel will be paid in 2003 and two additional payments will be made on March 1, 2004 and June 1, 2004. Under this scenario, the sales price for the Michigan Avenue Hotel ranged from $110.2 million to $117.1 million, with a midpoint of $113.6 million. In order to account for the risk inherent in projecting cash flows to derive a sales price for the for the Michigan Avenue Hotel for 2005, a 13.0% discount rate was utilized. The ultimate proceeds to be distributed per Unit in October 31, 2003 present value terms would be between $574 and $611, with a midpoint of $592.

•  October 31, 2003 $75 Million Refinancing and Year End 2005 Sale — This scenario assumed a $75 million refinancing occurs by October 31, 2003, and a sale occurs by December 31, 2005. The refinancing assumed an interest only loan, with a base interest rate of 3.1% plus a 0.25% annual increase in the rate. Under this scenario, the sales price for the Michigan Avenue Hotel ranged from $110.2 million to $117.1 million, with a midpoint of $113.6 million. In order to project the accrual of the incentive fees, assumptions were made as to the most likely terms a buyer would achieve for an acquisition financing. For acquisition financing, $70 million in proceeds, an all-in fixed interest rate of 6.5% and 25-year amortization were assumed. In order to account for the risk inherent in projecting cash flows to derive a sales price for the 2005 sale year, a 13.0% discount rate was utilized. The ultimate proceeds to be distributed per Unit in October 31, 2003 present value terms would be between $558 and $596, with a midpoint of $577.

Scenario II — YE 2006 Sale

•  Year End 2006 Sale Base Case — The “as is” value of the Michigan Avenue Hotel is calculated assuming no capital expenditures made above the FF&E Reserve in future years. Under this scenario, the sales price for the Michigan Avenue Hotel ranged from $111.9 million to $118.9 million, with a midpoint of $115.3 million. In order to account for the risk inherent in projecting cash flows to derive a sales price for the 2006 sale year, a 14.0% discount rate was utilized. Under this scenario, given the uncertainty in the current market due to geopolitical and economic conditions as well as the Hotel’s declining operational projections, the lower end of the given price range is a more realistic assumption. The ultimate proceeds to be distributed per Unit in October 31, 2003 present value terms would be between $563 and $597, with a midpoint of $580.

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•  YE 2006 Sale With Additional Prepayments — The “as is” value is calculated assuming no capital expenditures made above the FF&E Reserve in future years. This scenario assumed a $5 million prepayment made on the existing loan on December 1, 2003 and two additional payments on March 1, 2004 and June 1, 2004. Under this scenario, the sales price ranged from $111.9 million to $118.9 million, with a midpoint of $115.3 million. In order to account for the risk inherent in projecting cash flows to derive a sales price for the 2006 sale year, a 14.0% discount rate was utilized. The ultimate proceeds to be distributed per Unit in October 31, 2003 present value terms would be between $582 and $615, with a midpoint of $598.

•  October 31, 2003 $75 Million Refinancing and YE 2006 Sale — This scenario assumed a $75 million refinancing occurs by October 31, 2003, and a sale occurs by December 31, 2006. The refinancing assumes an interest only loan, with a rate of 3.1%, plus a 0.25% annual increase in the rate. Under this scenario, the sales price range is $111.9 million to $118.9 million, with a midpoint of $115.3 million. In order to project the accrual of the incentive fees, assumptions were made as to the most likely terms a buyer would achieve for an acquisition financing. For acquisition financing, $70 million in proceeds, an all-in fixed interest rate of 6.5% and 25-year amortization are assumed. In order to account for the risk inherent in projecting cash flows to derive a sales price for the 2006 sale year, a 14.0% discount rate has been utilized, based on current hotel real estate and capital market conditions. The ultimate proceeds to be distributed per Unit in October 31, 2003 present value terms would be between $552 and $586, with a midpoint of $569.

May 7, 2003 JLL Refinancing Analysis

      The draft May 7, 2003 JLL Refinancing Analysis presented the following scenarios:

Scenario I: Year-End 2003 Sale Base Case

      Under this scenario, JLL estimated a sales price range for the Michigan Avenue Hotel of between $93.8 million and $99.6 million, with a midpoint of $96.7 million. In order to derive a sales price for 2003, JLL used a 13.0% discount rate to take into account the risk inherent in projecting cash flows. JLL assumed that no capital expenditures would be made above the FF&E Reserve in future years. JLL concluded that given the uncertainty in the current market due to geopolitical and economic conditions as well as the Michigan Avenue Hotel’s declining operational projections, the lower end of the given price range was more realistic. The ultimate proceeds to be distributed per Unit in August 31, 2003 present value terms would be between $501 and $541, with a midpoint of $521.

Scenario II: Year- End 2005 Sale

      JLL valued a sale in 2005 to have a price range of $104.7 million to $111.3 million, with a midpoint of $108.0 million. For the same reasons as set forth in Scenario 1, a 13.0% discount rate was utilized. JLL assumed that no capital expenditures would be made above the FF&E Reserve in future years. The ultimate proceeds to be distributed per Unit in August 31, 2003 present value terms would be between $520 and $555 with a midpoint of $538.

Scenario III: $75 Million Refinancing and Year- End 2005 Sale

      JLL analyzed the ultimate proceeds to be distributed to Unitholders upon the sale of the Michigan Avenue Hotel by the end of 2005 after a refinancing, if it closed by August 31, 2003. For the same reasons as set forth in Scenario 1, a 13.0% discount rate was utilized. JLL concluded that the distribution per Unit discounted to August 31, 2003 present value terms would be between:

•  $524 and $559 with a midpoint of $542 (assuming a $75 million refinancing at LIBOR spread of 2.15%);

•  $520 and $555, with a midpoint of $538 (assuming a $75 million refinancing at LIBOR spread of 2.15% plus 0.42%); and

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•  $519 and $554, with a midpoint of $537 (assuming a $70 million refinancing at LIBOR spread of 2.15%).

      Each of the JLL valuation scenarios described above was based on assumptions, including the closing costs of the transactions contemplated, that the Michigan Avenue Hotel is free and clear of all encumbrances other than as stated in the JLL reports, and that there are no hidden or unapparent conditions of the property, subsoil or structures that render the Michigan Avenue Hotel more or less valuable. The cash flow assumptions were based on a 2003 reforecast (as of June 1, 2003 for the July 24 report and as of April 1, 2003 for the May 7 report), 2004 and 2005 projections as of April 1, 2003, the Partnership’s historical operating performance, and the hotel industry standards as of the date of the reports in which the scenarios were presented.

      In the Partnership’s Second Quarter 10-Q, the Partnership indicated that due to current market conditions in the hotel real estate market, it did not believe that it would be able to sell the Michigan Avenue Hotel at an acceptable price in the near future. According to the Partnership’s Second Quarter 10-Q, the General Partner is continuing to have discussions with Column regarding the terms of its loan proposal and has commenced preliminary discussions with other potential lenders. However, at this time, the General Partner is not optimistic it will be able to find a lender willing to provide financing to the Partnership upon terms set forth in the Preliminary Proxy Statement.

      The Partnership selected JLL based upon its reputation and experience in real estate valuation. Payments from the Partnership to JLL totaled approximately $32,000 in 2003 (through June 30) and $37,000 in 2002.

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ANNEX C

SUMMARY OF HVS INTERNATIONAL APPRAISALS

      Note: The HVS appraisals and opinions described below are of the Michigan Avenue Hotel and not of the Partnership and reflect conditions in the real estate market and travel industry prior to the terrorist attacks in New York City, Washington, D.C. and Pennsylvania on September 11, 2001. Due to the age of the appraisals and the events since their preparation, Starwood did not consider the HVS appraisals in its determination of the Offer Price.

      HVS delivered an appraisal of the Michigan Avenue Hotel to the General Partner that in March 1999 indicated a value of $100.9 million. In September 2000, HVS delivered an updated appraisal valuing the Michigan Avenue Hotel at $124.6 million. HVS attributed the increase in value to several improvements at the Michigan Avenue Hotel, including the addition of meeting space, the leasing of the restaurant and renovations to the main building.

      In preparing the appraisal, HVS, among other things:

•  Reviewed management’s actual 1998, 1999 and planned 2000 capital expenditure budgets;

•  Conducted a market area analysis focusing on air passenger trends at local airports, office space statistics, convention statistics and tourist attractions;

•  Examined regional hotel supply and demand;

•  Forecasted occupancy trends and anticipated hotel rates;

•  Projected future income and expense; and

•  Analyzed recent sales of comparable hotels.

      In determining the value of the Michigan Avenue Hotel, HVS considered the strengths and weaknesses of the following approaches: the cost approach, the sales comparison approach and the income capitalization approach.

      The cost approach estimates market value by computing the current cost of replacing the property and subtracting any depreciation resulting from physical deterioration, functional obsolescence and external (or economic) obsolescence. HVS concluded that this approach may be reliable in the case of new properties, but with older properties, the resultant loss becomes increasingly difficult to quantify accurately. Additionally, HVS found that (i) knowledgeable hotel buyers base their purchase decision on projected net income and return on investment that are not reflected in the cost approach. As a result of the Michigan Avenue Hotel’s age and the inapplicability of the cost approach, it was considered but not applied in the analysis.

      In the sales comparison approach, HVS used actual sales of similar properties to provide an indication of the Michigan Avenue Hotel’s value. HVS made several adjustments to the sale prices examined but found these adjustments diminished the reliability of the sales comparison approach and added that typical hotel investors employ a sales comparison procedure only to establish broad value parameters.

      Thus, HVS gave primary weight to the value indicated by the income capitalization approach. This approach analyzes the local market for transient accommodations, examines the competitive environment and projects the occupancy and average rate levels. HVS thereby developed a forecast of income and expense that reflects anticipated income trends and cost components through a stabilized year of operation. Through a discounted cash flow and income capitalization procedure, HVS calculated the value of the mortgage and equity components based on market rates of return and loan-to-value ratios. After giving primary weight to the value indicated by the income capitalization approach, HVS concluded that the “as is” market value as of September 2000 of the fee simple interest in the Michigan Avenue Hotel was $124.6 million which reflects the deduction of approximately $4.4 million to complete the renovation program then underway and necessary to achieve the projected operating results. HVS defines “as is” as an estimate of the market value of a property in the condition observed upon inspection and as it physically and legally exists without hypothetical conditions, assumptions, or qualifications as of the date of the inspection.

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ANNEX D

MICHIGAN AVENUE HOTEL PROJECTIONS FOR FISCAL 2003

Note: These projections were prepared by employees of Starwood solely for the purpose of assisting them in managing the Michigan Avenue Hotel and for no other purpose. They are projections of the Michigan Avenue Hotel only, and not of the Partnership. See “CERTAIN INFORMATION CONCERNING PURCHASER, STARWOOD, THE GENERAL PARTNER AND THE PARTNERSHIP — Projection for Fiscal 2003.”

SUMMARY INCOME STATEMENT

2003 Forecast

	2003
	Forecast/Actual		%
Available Rooms		274,115
Occupied Rooms		205,633
% of Occupancy		75
Average Rate		149.25
Revpar		111.96
Revenue
Rooms		30,691,213		70.2
Food & Beverage		9,362,423		21.4
Telecommunication		1,052,026		2.4
Minor Operating Dept		17,100
Rent & Other		2,605,189		6
Total Revenue		43,727,951		100
Dept Profit
Rooms		23,388,515		76.2
Food & Beverage		2,501,654		26.7
Telecommunication		650,560		61.8
Minor Operating Dept		-9,304		-54.4
Rent & Other		2,316,908		88.9
Total Dept Profit		28,848,333		66
Undistributed Depts
Administrative & Gen		1,950,063		4.5
Cr Card Commission		763,133		1.8
Marketing		2,396,630		5.5
Repairs & Maintenance		1,696,352		3.9
Energy		1,137,273		2.6
Total Undistributed Depts		7,943,450		18.2
Gross Oper Profit		20,904,882		47.8
Mgmt Fee Base		1,530,478		3.5
Mgmt Fee Incentive		2,551,311		5.8
Income Bef Fixed Chg		16,823,093		38.5
Rent Taxes & Insurance		4,842,963		11.1
Owners Expense		-414,450		-1
EBITDA		12,394,581		28.3

NOTE: 2003 Forecast reflects actuals through July

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ANNEX E

TEXT OF PROPOSED AMENDMENTS TO PARTNERSHIP AGREEMENT

      A new Section 1.39 shall be added to the Partnership Agreement, the text of which shall read as follows:

      1.39 “Qualified Merger” A merger of the Partnership, following a Qualified Tender Offer, with or into a limited partnership or other business entity in accordance with Section 17-211 of the Act, as modified by this Agreement, where (i) such other entity is the offeror in such Qualified Tender Offer or an affiliate thereof and (ii) the consideration provided for in such merger is the same as the consideration offered in such Qualified Tender Offer.

      A new Section 1.40 shall be added to the Partnership Agreement, the text of which shall read as follows:

      1.40 “Qualified Tender Offer” An offer to purchase all Units for cash in which (i) the offeror publicly discloses an intention to consummate a Qualified Merger following completion of such offer and (ii) at least a majority of the outstanding Units are validly tendered and are accepted for payment by the offeror.

      A new Section 11.04 shall be added to the Partnership Agreement, the text of which shall read as follows:

      11.04 Qualified Tender Offers; Qualified Mergers. Notwithstanding anything to the contrary in this Article 11 or elsewhere in this Agreement,

      (a)     None of the transfer restrictions set forth in Article 11 shall apply to transfers in connection with a Qualified Tender Offer or a Qualified Merger;

      (b)     The General Partner may not and shall not suspend any transfer of an Interest occurring in connection with a Qualified Tender Offer or a Qualified Merger;

      (c)     Any transfer of an Interest in the Partnership in connection with a Qualified Tender Offer or Qualified Merger shall be effective, and the Partnership shall recognize such transfer, immediately upon the request of the transferee, without the delivery of any instruments other than an assignment instrument or other evidence that appears satisfactory on its face to show that the transferee is the owner of the Interest sought to be transferred;

      (d)     Simultaneous with any transfer described in paragraph (c) of this Section 11.04, without the need for any further act or Consent of any Person, the transferee of an Interest in connection with a Qualified Tender Offer or a Qualified Merger shall be deemed admitted as a Substituted Limited Partner. The General Partner shall thereupon amend the books and records of the Partnership to reflect the admission of the transferee to the Partnership as a Substituted Limited Partner and to reflect the transferor’s ceasing to be a Limited Partner of the Partnership (if the transferor is a Limited Partner), and the transferor (whether or not a Limited Partner) shall have no Interest in the Partnership;

      (e) The transfer of an Interest in connection with a Qualified Tender Offer or Qualified Merger shall be deemed not to result in multiple ownership of the Interest so transferred, but shall instead be deemed for all purposes to result in the ownership of such Interest by the transferee;

      (f) The General Partner and the Partnership may not and shall not give effect to any transfer restrictions, whether or not contemplated by this Agreement, in connection with a Qualified Tender Offer, including, without limitation, restrictions intended to prevent the Partnership from being treated as a “publicly traded partnership” under Section 7704 of the Internal Revenue Code of 1986, as amended, or any successor provision.

      A new Section 15.07 shall be added to the Partnership Agreement, the text of which shall be as follows:

      15.07 Qualified Merger. Notwithstanding anything to the contrary in this Agreement or the Act, the only approval of the Partnership or any Partner that shall be required to consummate a Qualified

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Merger shall be the approval by the Majority Vote of the Limited Partners. Notwithstanding anything to the contrary in this Agreement, the approval of any General Partner shall not be required to consummate any Qualified Merger and the General Partner may not act to terminate, prevent or otherwise hinder the consummation of the Qualified Merger, notwithstanding any duty (contractual, fiduciary or otherwise) it might otherwise have had under this Agreement or applicable law. Notwithstanding anything to the contrary in this Agreement, upon approval by the Majority Vote of the Limited Partners, the Partnership, and the General Partner on behalf of the Partnership, shall promptly execute and deliver any merger or similar agreement and certificate of merger and take any other action necessary, convenient or appropriate to consummate such Qualified Merger or otherwise provided for in any merger agreement relating to such Qualified Merger. In connection with the obtaining of any such vote, Section 9.02(h) shall not be applicable. Notwithstanding anything to the contrary in this Agreement, simultaneous with the effective date and time of the Qualified Merger, the acquiror of Units in the Qualified Merger shall, without the need for any further act or Consent of any Person, be deemed admitted to the Partnership as a Limited Partner and the Partnership shall continue without dissolution.

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ANNEX F

AGREEMENT AND PLAN OF MERGER

between

WESTIN HOTELS LIMITED PARTNERSHIP

and

WHLP ACQUISITION LLC

October [     ], 2003

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      This Agreement and Plan of Merger (this “Agreement”), is entered into by and among Westin Hotels Limited Partnership, a Delaware limited partnership (“WHLP”), WHLP Acquisition LLC, a Delaware limited liability company (“Purchaser”) and Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (“Starwood”).

RECITALS

      WHEREAS, capitalized terms used herein and not otherwise defined are used as defined in the Partnership Agreement (as defined below).

      WHEREAS, pursuant to that Offer to Purchase for Cash All the Outstanding Limited Partnership Units of Westin Hotels Limited Partnership at $600 per Unit by WHLP Acquisition LLC, a Wholly Owned Subsidiary of Starwood Hotels & Resorts Worldwide, Inc. and Solicitation of Consents to Proposals to Amend the Partnership Agreement and Effect the Merger (the “Offer to Purchase and Solicitation Statement”), the limited partners of WHLP (“Limited Partners”) holding collectively more than 50% of the Units of WHLP (the “Requisite Limited Partners”), consented to, among other things, (i) amendments to the Amended and Restated Agreement of Limited Partnership of Westin Hotels Limited Partnership, dated as of December 31, 1986 (as amended, the “Partnership Agreement”), to, among other things, (x) permit Purchaser, upon the terms and subject to the conditions set forth in this Agreement, to merge with and into WHLP (the “Merger”) upon the Majority Vote of the Limited Partners, without the approval of any general partner of WHLP, and (y) to require WHLP, and the general partner of WHLP (the “General Partner”), on behalf of WHLP, upon the delivery to the General Partner of consents from the Requisite Limited Partners consenting to this Agreement and the Merger (the “Merger Consents”), to execute and deliver this Agreement and to take any and all other actions required to be taken by WHLP under this Agreement or that are otherwise necessary, convenient or appropriate to effectuate the Merger and (ii) this Agreement and the Merger;

      WHEREAS, Merger Consents from the Requisite Limited Partners have been delivered to the General Partner;

      WHEREAS, Starwood, as the sole member of Purchaser, has approved this Agreement and the Merger;

      WHEREAS, Section 17-211 of the Delaware Revised Uniform Limited Partnership Act (the “LP Act”) and Section 18-209 of the Delaware Limited Liability Company Act (the “LLC Act”) permit the merger of a Delaware limited liability company with and into a Delaware limited partnership; and

      WHEREAS, for federal income tax purposes, it is intended that the Merger qualify as a tax-free reorganization within the meaning of Section [368(a)(1)(F)] of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

      NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

THE MERGER; CLOSING; EFFECTIVE TIME; EFFECTS OF MERGER

      SECTION 1.1     The Merger. Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 1.3) and in accordance with Section 17-211 of the LP Act, Section 18-209 of the LLC Act and the respective organizational documents of WHLP and Purchaser, Purchaser shall be merged with and into WHLP and the separate corporate existence of Purchaser shall thereupon cease, WHLP shall be the surviving entity of the Merger (hereinafter sometimes referred to as the “Surviving Partnership”) and the separate existence of WHLP will continue unaffected by the Merger.

      SECTION 1.2     The Closing. Upon the terms and subject to the conditions set forth in this Agreement, the closing of the Merger (the “Closing”) shall take place at such time, date and place as the parties may agree but in no event prior to the satisfaction or waiver, where permitted, of the conditions set forth in Section 3.1 hereof. The date on which the Closing occurs is hereinafter referred to as the “Closing Date”.

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      SECTION 1.3     Effective Time. Upon the terms and subject to the conditions set forth in this Agreement, following the Closing, the parties hereto shall, at such time as they deem advisable, cause (i) a certificate of merger substantially in the form of Exhibit A hereto, or as altered to reflect any other type or structure of the Merger (and other than as contemplated by Section 2(a) below) (the “Certificate of Merger”) to be executed and filed with the Secretary of State of Delaware and make all other filings or recordings required by Delaware law in connection with the Merger. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of Delaware or at such other time as Purchaser and WHLP shall agree and specify in the Certificate of Merger (the “Effective Time”).

      SECTION 1.4     Effects of the Merger. The Merger shall have the effects specified in the LP Act, the LLC Act and this Agreement.

      SECTION 1.5     Restructuring. Notwithstanding anything to the contrary in this Agreement, the parties shall have the right, in their sole discretion, to (i) change the type or structure of, and/or the parties to, the Merger, including changing the structure of the Merger so that (x) WHLP merges with Purchaser with Purchaser being the surviving entity, (y) WHLP merges with an affiliate of Starwood other than Purchaser with WHLP being the surviving entity and (z) an affiliate of Starwood other than Purchaser merges with and into WHLP with such other affiliate being the surviving entity and/or (ii) assign any or all of their rights, interests, duties or obligations under this Agreement to any affiliate of Starwood, provided that any action taken by any party pursuant to this Section 1.5 shall not, individually or when taken together with any or all other actions under this Section 1.5, have an adverse effect on any Unitholder.

ARTICLE II

EFFECT ON UNITS AND INTERESTS

      SECTION 2.1     Effect on Units and Interests. At the Effective Time, by virtue of the Merger and without any further action on the part of Purchaser, WHLP, the members of Purchaser or the partners of WHLP:

      (a) Each issued and outstanding limited liability company interest in Purchaser owned by Starwood shall automatically be converted into and become one fully paid and non-assessable Unit representing a 100% Interest in WHLP, and Starwood shall be deemed admitted to WHLP as a limited partner of WHLP;

      (b) Each Unit that is owned by WHLP, any subsidiary of WHLP, Purchaser or Starwood immediately prior to the Effective Time shall automatically be canceled and shall cease to exist and no consideration shall be delivered in exchange therefor;

      (c) Each Unit issued and outstanding immediately prior to the Effective Time (other than Units canceled pursuant to Section 2.1(b)) (collectively, the “Non-affiliate Units”), including all accrued and unpaid distributions thereon, shall automatically be converted into and become the right to receive $600 less the sum of: (i) all distributions of cash or other property from the Partnership attributable to the Units that are declared or made on or after July 7, 2003 (the “Reference Date”), including, without limitation, all distributions of cash from operations and capital proceeds, without regard to whether the applicable sale, financing, refinancing or other disposition took place before or after the Reference Date and (ii) all proceeds that are paid on or after the Reference Date from or as a result of any claim, litigation, class or derivative action brought by or for the benefit of the Limited Partners with respect to the Units, regardless of when the claims brought pursuant to such action accrued (the “Merger Consideration”). At the Effective Time, all such Units shall automatically be canceled and shall cease to exist, and each Unitholder immediately prior to the Effective Time (i) who was a Limited Partner shall cease to be a limited partner of WHLP, and (ii) shall cease to have any rights with respect to such Units, except the right to receive the Merger Consideration; and

      (d) Notwithstanding anything to the contrary in this Agreement, if the Merger is of another type or structure contemplated by Section 1.5 (and other than as contemplated by Section 2(a) above), each Non-affiliate Unit shall be converted into the right to receive the Merger Consideration, and the other provisions of this Section 2.1 shall be modified by the parties hereto to give the effect to such type or structure.

      SECTION 2.2     Payment Procedures.

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      (a) Paying Agent. Prior to the Effective Time, Purchaser shall deposit, or cause to be deposited, with American Stock Transfer and Trust Company, as paying agent for the Merger Consideration (the “Paying Agent”), at least an amount in cash equal to the product obtained by multiplying (i) the Merger Consideration by (ii) the number of Non-affiliate Units (the “Payment Fund”) for the purpose of paying the Merger Consideration.

      (b) Payment procedure. As soon as reasonably practicable after the Effective Time, the Paying Agent shall mail to each Unitholder of record immediately prior to the Effective Time whose Units were converted into the right to receive the Merger Consideration pursuant to Section 2.1(c), a form of letter of transmittal (the “Letter of Transmittal”) which shall specify that delivery shall be effected, and risk of loss and title to the Units held by a person or entity shall pass, only upon delivery or presentation to the Paying Agent of evidence reasonably satisfactory to the Paying Agent that the such person or entity was, immediately prior to the Effective Time, the Unitholder of record of the Units it purported to own as of such time (“Unit Ownership Evidence”). Upon delivery or presentation to the Paying Agent of a properly completed and executed Letter of Transmittal, together with Unit Ownership Evidence and such other documents or evidence as the Paying Agent may reasonably request, the Unitholder shall be entitled to receive the Merger Consideration for each Unit owned immediately prior to the Effective Time. No interest shall be paid or shall accrue on any Merger Consideration payable pursuant to this Agreement or otherwise.

      (c) No further ownership rights in Units. All Merger Consideration paid in exchange for Units in accordance with this Article II shall be full satisfaction for the Units exchanged for such Merger Consideration and all rights related to such Units. At the close of business on the date on which the Effective Time occurs, the Unit transfer records of WHLP shall be closed and there shall be no further registration of transfers of Units on the transfer records of the Surviving Partnership of Units that were outstanding immediately prior to the Effective Time.

      (d) Termination of Payment Fund. Any portion of the Payment Fund that remains undistributed to Unitholders for twelve (12) months after the Effective Time shall be delivered to Starwood, upon demand, and any Unitholders who have not theretofore complied with this Article II shall thereafter look solely to Starwood for, and subject to Section 2.2(e), Starwood shall remain liable for, payment of their claim for Merger Consideration.

      (e) No liability. None of Purchaser, Parent, WHLP or the Paying Agent shall be liable to any person or entity in respect of cash from the Payment Fund in each case delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Units have not been exchanged for Merger Consideration prior to the second anniversary of the date on which the Effective Time shall occur (or immediately prior to such earlier date on which any Merger Consideration would otherwise escheat to or become the property of any governmental entity), any such Merger Consideration in respect thereof shall, to the extent permitted by applicable law, become the property of the Surviving Partnership, free and clear of all claims or interest of any person or entity previously entitled thereto.

      (f) Investment of Payment Fund. The Paying Agent shall invest the Payment Fund on a daily basis as directed by Starwood; provided, however, that such investments shall be solely in (i) obligations of or guaranteed by the United States of America and backed by the full faith and credit of the United States of America or (ii) commercial paper obligations rated A-1 or P-1 by Moodys’ Investors Service, Inc. or Standard & Poor’s Corporation, respectively. All interest and other income resulting from such investments shall be paid to Starwood.

      (g) Withholding Rights. Purchaser, Starwood and/or the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any Unitholder such amounts as Purchaser, Starwood or the Paying Agent is required to deduct and withhold with respect to making such payment under the Internal Revenue Code or any provision of domestic or foreign (whether national, federal, state, provincial, local, or otherwise) tax law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by Purchaser, Starwood or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Unitholder in respect of which such deduction and withholding was made by Purchaser, Starwood or the Paying Agent.

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ARTICLE III

CONDITIONS

      SECTION 3.1     Conditions to Each Party’s Obligations to Effect the Merger. The respective obligations of each party to consummate the transactions contemplated by this Agreement are subject to the satisfaction or waiver of the following conditions at or prior to the Closing Date:

      (a) Each of Purchaser, Starwood and WHLP shall have received all governmental approvals and third party consents required to be obtained in connection with the Merger except where the failure to so obtain any such approval or consent would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of Starwood, Purchaser or WHLP (a “Material Adverse Effect”);

      (b) No temporary restraining order, preliminary or permanent injunction or other order or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint or prohibition that could reasonably be expected to have (i) a Material Adverse Effect or (ii) the effect of preventing the consummation of the Merger, shall be in effect; and

      (c) There shall be no pending or threatened litigation or governmental action or proceeding challenging the Merger that could reasonably be expected to have a Material Adverse Effect.

      SECTION 3.2     Conditions to Purchaser’s Obligations to Effect the Merger. Purchaser’s obligation to consummate the transactions contemplated by this Agreement are subject to the satisfaction or waiver of the following conditions at or prior to the Closing Date:

      (a) All of the Proposals (as defined in the Offer to Purchase and Solicitation Statement) shall have been approved by the Requisite Limited Partners; and

      (b) The Amendments to the Partnership Agreement contemplated by the Proposals (as defined in the Offer to Purchase and Solicitation Statement) shall be effective.

ARTICLE IV

TERMINATION

      SECTION 4.1     Termination of Agreement. This Agreement may be terminated and the Merger abandoned at any time prior to the Effective Time, before or after the approval of this Agreement by the Requisite Limited Partners, if any condition set forth in Section 3.1 to any party’s obligation to consummate the transactions contemplated by this Agreement shall become incapable of being satisfied (unless such condition has been waived).

      SECTION 4.2     Effect of Abandonment. In the event of the termination of this Agreement and the abandonment of the Merger pursuant to this Article IV, this Agreement shall forthwith become null and void and have no effect and no party hereto (or any of its directors, officers or employees) shall have any liability or further obligation to any other party to this Agreement.

ARTICLE V

MISCELLANEOUS

      SECTION 5.1     Further Assurances. Each of Purchaser, Starwood and WHLP shall use its reasonable best efforts to take all actions necessary and appropriate to effectuate the Merger, including, if necessary, executing any additional documents or other instruments and filing such documents or other instruments with the appropriate governmental authorities.

      SECTION 5.2     No Appraisal Rights. The holders of Units are not entitled to any appraisal or dissenters’ rights under applicable law as a result of the Merger.

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      SECTION 5.3     Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

      SECTION 5.4     Entire Agreement. This Agreement, including the exhibits hereto, reflects the entire agreement of the parties regarding the subject matter hereof and supercedes all prior agreements and understandings among the parties with respect thereto.

      SECTION 5.5     Severability. If any provision of this Agreement is held or deemed to be void, unenforceable or otherwise of no force and effect, each other provision of this Agreement shall remain in full force and effect and shall be construed without giving effect to the provision that is void, unenforceable or of no force and effect.

      SECTION 5.6     Amendment. This Agreement shall be amended only by a writing signed by all parties hereto.

      SECTION 5.7     No Third Party Beneficiary. This Agreement shall be for the sole and exclusive benefit of the parties hereto and no other party shall have any direct or indirect right or interest in or arising out of this Agreement.

      SECTION 5.8     Counterparts. This Agreement may be signed in two or more counterparts which, when taken together, shall constitute a fully executed version of this Agreement.

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      IN WITNESS HEREOF, the parties have executed this Agreement and caused the same to be delivered on their behalf as of the date first above written.

WESTIN HOTELS LIMITED PARTNERSHIP

By: 

Name:

Title

WHLP ACQUISITION LLC

By: 

Name:

Title

STARWOOD RESORTS & HOTELS

WORLDWIDE, INC.

By: 

Name:

Title

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EXHIBIT A TO MERGER AGREEMENT

Certificate of Merger

of

WHLP ACQUISITION LLC

with and into

WESTIN HOTELS LIMITED PARTNERSHIP

      Pursuant to Section 17-211 of the Delaware Revised Uniform Limited Partnership Act (the “Act”), Westin Hotels Limited Partnership, a Delaware limited partnership (the “Partnership”), which is the surviving partnership in the merger described below, hereby certifies that:

      FIRST:     The name and jurisdiction of formation of each constituent entity that is a party to the merger is as follows:

Name	Jurisdiction of Formation
WHLP Acquisition LLC	Delaware
Westin Hotels Limited Partnership	Delaware

      SECOND:     An Agreement and Plan of Merger, dated as of October [     ], 2003 by and among WHLP Acquisition LLC, a Delaware limited liability company, Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation and the Partnership (the “Agreement and Plan of Merger”), has been approved and executed by the Partnership in accordance with the requirements of Section 17-211(b) of the Act, as modified by the agreement of limited partnership of the Partnership, and by Purchaser in accordance with Section 18-209(b) of the Delaware Limited Liability Company Act.

      THIRD:     Pursuant to the Agreement and Plan of Merger, WHLP Acquisition LLC is merged with and into the Partnership (the “Merger”), with the surviving limited partnership being the Partnership. The Partnership shall continue its existence under its present name under the laws of the State of Delaware.

      FOURTH:     The Merger shall be effective upon the filing of this Certificate of Merger with the Secretary of State of the State of Delaware (such time, the “Effective Time”).

      FIFTH:     The Agreement and Plan of Merger is on file at the offices of the Partnership at the following address:

1111 Westchester Avenue

White Plains, New York 10604

      SIXTH:     A copy of the Agreement and Plan of Merger will be furnished by the Partnership, on request and without cost, to any partner or any person or entity holding an interest in any constituent limited partnership.

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      IN WITNESS WHEREOF, the Partnership has caused this Certificate of Merger to be duly executed as of this                                day of October, 2003.

WESTIN HOTELS LIMITED PARTNERSHIP

By:

By: 

Name:

Title:

3

The Depositary

for WHLP Acquisition LLC’s offer for all of the Units of the Partnership is:

American Stock Transfer & Trust Company

By Mail, Hand Delivery, Overnight Delivery or Facsimile:

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Facsimile: 718-234-5001

Confirm by Telephone Toll-Free:

(877) 248-6417

      If delivery is by facsimile, you must also return the original documents, which originals, only, may be received after the Expiration Date provided that the facsimile is received prior to or on the Expiration Date.

      Any questions or requests for assistance or additional copies of the Offer to Purchase, the Agreement of Assignment and Transfer and related tender offer materials may be directed to the Information Agent at its telephone number and location listed below. Unitholders may also contact their local, commercial bank, trust company or nominee for assistance concerning the offer to exchange.

The Information Agent

for WHLP Acquisition LLC’s offer for all of the Units of the Partnership is:

D. F. King & Co., Inc.

Contact information:

D. F. King & Co., Inc.

48 Wall Street

New York, NY 10005

Banks and Brokers Call Collect: (212) 269-5550

All Others Call Toll-Free: (888) 605-1957 EX-99.(A)(1)(B) 4 p68165t3exv99wxayx1yxby.htm EX-(A)(1)(B)

Exhibit (a)(1)(B)

AGREEMENT OF ASSIGNMENT AND TRANSFER

FOR UNITS OF LIMITED PARTNERSHIP INTEREST IN

WESTIN HOTELS LIMITED PARTNERSHIP

      Note: If you wish to consent to the Proposals described in the Offer to Purchase and Solicitation Statement in addition to tendering your Units, you must also fill out, sign and deliver the Consent Form that is included in this package.

1.     Offer of Units; Agreement to Transfer

      Upon the terms and subject to the conditions set forth in this Agreement of Assignment and Transfer (this “Agreement”), I, the undersigned Limited Partner (as defined in the Partnership Agreement that is defined below), and/or assignee holder or beneficial owner, do hereby sell, assign, transfer, convey and deliver (“Transfer”) to WHLP Acquisition LLC or its assignee or assignees (such purchasing entity is hereafter referred to as “Purchaser”),                      units of limited partnership interest (including any certificates or depositary receipts evidencing such interests) (the “Units”) in Westin Hotels Limited Partnership, a Delaware limited partnership (the “Partnership”), pursuant to this Agreement and the associated Offer to Purchase and Solicitation Statement (the “Offer to Purchase and Solicitation Statement”), dated September [     ], 2003 (“Purchaser’s Offer Date”), as each may be supplemented or amended, for a purchase price of $600 per Unit, subject to adjustment as set forth in the Offer to Purchase and Solicitation Statement and below (the “Purchase Price”).

      Notwithstanding any provision to the contrary, it is my understanding, and I hereby acknowledge and agree, that, upon the terms and subject to the conditions of this Agreement, Purchaser shall be entitled to receive (i) all distributions of cash or other property from the Partnership attributable to the Units that are declared or made on or after July 7, 2003, including, without limitation, all distributions of cash from operations and capital proceeds, without regard to whether the applicable sale, financing, refinancing or other disposition took place before or after my Offer or the Transfer and (ii) all proceeds that are paid on or after July 7, 2003, from or as a result of any claim, litigation, class or derivative action brought by or for the benefit of the Limited Partners with respect to the Units, regardless of when the claims brought pursuant to such action accrued (the distributions or proceeds described in (i) and (ii), collectively, a “Distribution”). To the extent that any Distribution is made or declared by the Partnership with respect to the Units for any period commencing on or after the July 7, 2003,and I receive such Distribution, I understand that the amount of the Distribution per Unit will be deducted from the cash price of $600 per Unit to be paid to me by Purchaser, as described in the Offer to Purchase and Solicitation Statement. It is also my understanding, and I acknowledge and agree, that, subject to Purchaser’s payment to me for the Units Transferred hereby, the taxable income and taxable loss attributable to the Transferred Units with respect to the taxable period in which the Transfer occurs shall be allocated between me and Purchaser as provided in the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of December 31, 1986, as such agreement may be amended (the “Partnership Agreement”), or in accordance with such other lawful allocation methodology as may be agreed upon by the Partnership and Purchaser.

      It is my intention that Purchaser succeed to my interest as a Substituted Limited Partner, as defined in the Partnership Agreement, with respect to the Transferred Units and that Purchaser will be treated as a Limited Partner of the Partnership with respect to those Units for all purposes. Subject to, and effective upon, Purchaser’s payment to me for the Units Transferred hereby upon the terms of and subject to the conditions of this Agreement and the Offer to Purchase and Solicitation Statement, I hereby Transfer to Purchaser all of my right, title and interest in and to the Units and any and all Distributions declared or made on or after the July 7, 2003, including, without limitation, all rights in, and claims to, any Partnership profits and losses, cash distributions, voting rights and other benefits of any nature whatsoever distributable or allocable to the Units, or, if applicable, in respect of my status as a Limited Partner, under the Partnership Agreement or otherwise. This Transfer is made unconditionally (i) to the extent that the rights appurtenant to the Units may be

transferred and conveyed without the consent of the general partner of the Partnership (the “General Partner”), and (ii) to the extent that the General Partner recognizes the transfer of those Units to Purchaser for all purposes and will accept Purchaser as the Substituted Limited Partner in respect of the Transferred Units in accordance with Section 11 of the Partnership Agreement.

      I agree to pay any costs incurred by Purchaser in connection with the enforcement of any of my obligations hereunder and to indemnify and hold harmless Purchaser from and against all claims, damages, losses, obligations and any responsibilities arising, directly or indirectly, out of my breach of any agreements, representations and warranties made by me herein. Purchaser will be entitled to recover from me all costs and expenses Purchaser incurs in recovering any amounts due Purchaser from me under this Agreement, including fees and expenses incurred in the collection process as well as reasonable lawyers’ fees and costs at trial and on appeal. I shall keep the terms of this Agreement and all other dealings and communications between myself and Purchaser and our respective representatives confidential. Notwithstanding the foregoing, I (and each affiliate and person acting on my behalf) agree that I and any other party to this Agreement (and each employee, representative, and other agent of such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to me or such other party or such person relating to such tax treatment and tax structure, except to the extent necessary to comply with any applicable federal or state securities laws. This authorization is not intended to permit disclosure of any other information including, without limitation, (i) any portion of any materials to the extent not related to the tax treatment or tax structure of the transaction, (ii) the identities of participants or potential participants in the transaction, (iii) the existence or status of any negotiations, (iv) any pricing or financial information (except to the extent such pricing or financial information is related to the tax treatment or tax structure of the transaction) or (v) any other term or detail not relevant to the tax treatment or the tax structure of the transaction.

2.     Appointment as Attorney-In-Fact and Proxy

      Effective upon Purchaser’s payment for the Units Transferred hereby, and subject to “THE TENDER OFFER — Withdrawal Rights” section in the Offer to Purchase and Solicitation Statement, I hereby irrevocably constitute and appoint Purchaser and its designees as my true and lawful attorneys-in-fact and proxies with respect to the Units (and with respect to any and all other Units or other securities issued or issuable in respect of such Unit on or after Purchaser’s Offer Date), each with full power of substitution, to the full extent of my rights (such power of attorney and proxy being deemed to be an irrevocable durable power coupled with an interest and being unaffected by my disability, incapacity, dissolution, termination or bankruptcy), to (i) seek to transfer ownership of such Units on the Partnership’s books to Purchaser (and to execute and to deliver any accompanying evidences of transfer and authenticity which Purchaser, the Partnership or the General Partner may deem necessary or appropriate in connection therewith, including, without limitation, any documents or instruments required to be executed under a “Transferor’s (Seller’s) Application for Transfer” created by the NASD, if required); (ii) become a Substituted Limited Partner; (iii) receive any and all Distributions made or declared by the Partnership after the July 7, 2003; (iv) receive all benefits and otherwise exercise all rights of beneficial ownership of such Units in accordance with the terms of the Offer to Purchase and Solicitation Statement; (v) execute and deliver to the Partnership and/or the General Partner (as the case may be) a change of address form instructing the Partnership to send any and all future Distributions to which Purchaser is entitled pursuant to the terms of the Offer to Purchase and Solicitation Statement in respect of tendered Units to the address specified in such form; (vi) endorse any check payable to me or upon my order representing a distribution to which Purchaser is entitled pursuant to the terms of the Offer to Purchase and Solicitation Statement, in each case on my behalf, in favor of Purchaser or any other payee Purchaser otherwise designates; (vii) exercise all of my voting and other rights as any such attorney-in-fact in its sole discretion may deem proper at any meeting of Unitholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise; (viii) act in such manner as any such attorney-in-fact shall, in its sole discretion, deem proper with respect to the Units; (ix) execute a loss and indemnity agreement relating to the Units on my behalf if I fail to include my original certificate(s) (if any) representing the Units with this Agreement; or (x) commence any litigation that

2

Purchaser or its designees, in its sole discretion, deems necessary to enforce any exercise of Purchaser’s or such designees’ powers as my attorneys-in-fact as set forth above.

      Purchaser shall not be required to post bond of any nature in connection with this power of attorney. Such appointment will be effective upon receipt by Purchaser of this Agreement and Purchaser’s payment for the Units Transferred hereby. Upon such receipt, all prior proxies (other than the power of attorney and proxy given as provided in the Consent Form completed by me) given by me with respect to the Units that are the subject of my Offer will, without further action, be revoked, and no subsequent proxies may be given (and if given will not be effective).

3.     Custodian Signature and Authorization Required

      IF LEGAL TITLE TO THE UNITS IS HELD THROUGH AN IRA, KEOGH OR SIMILAR ACCOUNT, I UNDERSTAND THAT THIS AGREEMENT MUST BE SIGNED BY THE CUSTODIAN OF SUCH IRA OR KEOGH ACCOUNT. FURTHERMORE, I HEREBY AUTHORIZE AND DIRECT THE CUSTODIAN OF SUCH IRA OR KEOGH ACCOUNT TO CONFIRM THIS AGREEMENT.

4.     Representations and Warranties

      I hereby represent and warrant to Purchaser and the Partnership that (i) I have received the Offer to Purchase and Solicitation Statement; (ii) I own the Units that are being Transferred hereby, of record and beneficially, and have full right, power and authority to validly sell, assign, trade, transfer, convey and deliver to Purchaser the Units; (iii) effective at the time that the Units are accepted for payment by and transferred to Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all options, liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale and transfer thereof, and the Units will not be subject to any adverse claim; (iv) I am a “United States person,” as defined in Section 7701(a)(30) of the United States Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”); (v) I own the Units being tendered within the meaning of Rule 14e-4 under the Exchange Act; and (vi) the tender of such Units complies with Rule 14e-4.

      I hereby also represent and warrant that the Transfer contemplated by this Agreement would not (i) violate the registration requirements of the Securities Act of 1933, as amended or (ii) violate the laws of any state, or the rules or regulations of any government agency (including those related to suitability standards), applicable to such transfer.

      I hereby also represent, warrant and confirm to Purchaser and the Partnership that in entering into this Agreement and Transferring my Units, I have not relied on any information or representation of Purchaser except for information regarding the price at which Purchaser is prepared to purchase my Units, and that Purchaser has not given me any investment advice nor have I compensated Purchaser in any manner.

      I understand that the Purchase Price may be more or less than the fair market price of the Units or than prices recently quoted by secondary market matching services. By Transferring my Units, I wish to have Purchaser bear all future risks and uncertainties relating to the value of the Units.

      I understand that my Transfer hereby is subject to certain conditions for the benefit of Purchaser to Purchaser’s offer as set forth in the Offer to Purchase and Solicitation Statement, including (i) the condition that Purchaser shall have received the valid written consent to each of the proposals described in the Offer to Purchase and Consent Solicitation, which consent shall not have been revoked, by Limited Partners of the Partnership who collectively hold more than 50% of the Units, (ii) the condition that the proposed amendments to the Partnership Agreement described in the Offer to Purchase and Consent Solicitation shall have been adopted and shall be in full force and effect, and (iii) the unwaivable condition to Purchaser’s offer that at least a majority of the issued and outstanding Units be validly tendered and not withdrawn as of the date on which Purchaser’s offer expires (or such other date to which the Offer to Purchase and Solicitation Statement may be extended) (the “Expiration Date”) and that no contract will be deemed to have arisen prior to Purchaser’s written acceptance of my Offer.

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5.     Release of General Partner

      I hereby release and discharge the General Partner and its officers, shareholders, directors, employees and agents from all actions, causes of action, claims and demands I have, or may have, against the General Partner that result from the General Partner’s reliance on this Agreement or any of the terms and conditions contained herein. I hereby indemnify and hold harmless the Partnership from and against all claims, demands, damages, losses, obligations and responsibilities arising, directly or indirectly, out of a breach of any one or more of the representations and warranties set forth herein.

6.     Offer Irrevocable, Subject to My Withdrawal Rights

      I understand that my Transfer of Units hereby will be irrevocable by me, subject to my withdrawal rights set forth in the section of the Offer to Purchase and Solicitation Statement, “THE TENDER OFFER — Withdrawal Rights.” These rights include that I may withdraw any Units I have tendered pursuant to the Offer to Purchase and Solicitation Statement at any time prior to the Expiration Date. After the Expiration Date, my Offer is firm and irrevocable and may not be withdrawn until after November [     ], 2003 (60 days from the commencement of Purchaser’s offer) and then only to the extent that tendered Units have not been accepted for payment. For any withdrawal to be effective, I understand that I must deliver to you or your agent a written notice of withdrawal in the form attached to this Agreement on or before September [     ], 2003 (or such other expiration date to which the Offer to Purchase and Solicitation Statement may be extended), at the address or facsimile number set forth in the Notice of Withdrawal.

      All authority herein conferred or agreed to be conferred to Purchaser shall survive my death or incapacity and all of my obligations shall be binding upon my heirs, personal representatives, successors and assigns.

      Upon request, I will execute and deliver any additional documents deemed by Purchaser and its designees to be necessary or desirable to complete the assignment, transfer and purchase of the Units.

7.     Payment Procedures

      I hereby understand that on the terms of and subject to the conditions in this Agreement and the Offer to Purchase and Solicitation Statement, payment by Purchaser for the Units Transferred hereby and accepted by Purchaser will be made by check mailed to me or my custodian, once (i) Purchaser receives receipt of the Partnership’s confirmation that the transfer of Units to Purchaser has been effected and that Purchaser has been recognized as a Substituted Limited Partner with respect to the Units Transferred and (ii) the Units have been actually transferred to Purchaser. I further understand that the effective date of transfer is established by the Partnership and may occur several weeks after the date on which Purchaser receives confirmation from the Partnership of the transfer of the Units to Purchaser. I hereby agree that Purchaser shall have no liability for any damages that may be incurred by me as a result of any delay in such payment caused by the Partnership’s failure to promptly effect transfers. I acknowledge that, notwithstanding the foregoing, Purchaser reserves the right, in its sole discretion, to pay for the Units Transferred hereby prior to the effective date of transfer established by the Partnership.

8.     Termination

      I hereby understand and agree that I may withdraw the Units being Transferred hereby subject to my withdrawal rights as described in Section 6 herein and that Purchaser may, at its sole discretion, terminate this Agreement (in whole or in part) prior to making payment for the Units in accordance with the terms of and conditions to the Offer to Purchase and Solicitation Statement. If Purchaser does terminate this Agreement, I understand that (i) Purchaser shall notify me promptly after such termination and return the Units to me or my custodian and (ii) Purchaser shall have no liability for any damages incurred by me as a result of such termination.

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9.     Backup Withholding Tax

      I understand and agree that in order to avoid the imposition of backup withholding tax at the rate of 28% on payments of cash made to me pursuant to Purchaser’s Offer, I must provide my correct taxpayer identification number and I must certify, on the Substitute Form W-9 included as part of this Agreement of Assignment and Transfer, under penalties of perjury, that the taxpayer identification number that I have provided is correct and that I am not subject to backup withholding tax. I further understand that if I do not provide my correct taxpayer identification number, or fail to provide the certifications described above, then the Internal Revenue Service (the “IRS”) may impose a penalty on me, and I may be subject to backup withholding tax at the rate of 28%. If I am not a United States person, I will provide a Form W-8BEN or a Form W-8ECI (available from D. F. King & Co., Inc. (the “Information Agent”) at 1-888-605-1957 (Toll Free) (Banks and Brokers call collect at 212-269-5550)), as applicable, in order to avoid backup withholding tax.

10.     FIRPTA

      I hereby certify, under penalties of perjury, that (i) the number shown on the form below is my correct taxpayer identification number, (ii) if an individual, I am not a nonresident alien for purposes of United States income taxation and (iii) if other than an individual, I am not a foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and related Treasury Regulations promulgated thereunder). I understand that this certification may be disclosed to the IRS by Purchaser and that any false statements herein could be punishable by fine, imprisonment or both.

11.     Assignment and Disclaimer

      I understand and agree that Purchaser may, without my consent, assign all or some of its rights and delegate all or some of its duties arising out of this Agreement to an affiliate. I hereby disclaim any contractual or other legal relationship with the Information Agent or American Stock Transfer & Trust Company (the “Depositary”), which merely have acted as a provider of general information about this offering and other offerings and depositary of your returned documents, respectively. I understand that the only party acquiring my Units, and participating in this Agreement, is Purchaser.

12.     Governing Law; Waiver of Trial By Jury

      This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. I hereby waive any claim that any state or federal court in the State of Delaware is an inconvenient forum, and WAIVE ANY RIGHT TO TRIAL BY JURY. I HEREBY SUBMIT TO THE JURISDICTION OF ANY COURT IN THE STATE OF DELAWARE IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

13.     Withdrawal From Partnership

      By executing this Agreement, I hereby acknowledge to the General Partner and the Partnership that, to the extent I am a Limited Partner, I desire to cease to be as a Limited Partner as to the Units referenced herein and hereby direct the General Partner to take all such actions as are necessary to accomplish such cessation and to appoint Purchaser as my agent and attorney-in-fact, to execute, swear to, acknowledge and file any document or to amend the books and records of the Partnership as necessary or appropriate for my ceasing to be a Limited Partner.

      I HEREBY DIRECT AND INSTRUCT THE PARTNERSHIP AND THE GENERAL PARTNER IMMEDIATELY UPON THEIR RECEIPT OF THIS AGREEMENT AND EFFECTIVE AS OF THE EXPIRATION DATE (I) TO AMEND THE BOOKS AND RECORDS OF THE PARTNERSHIP TO CHANGE MY ADDRESS OF RECORD AND TO RECOGNIZE PURCHASER FOR THE PURPOSE OF RECEIVING ALL FUTURE DISTRIBUTIONS AND ACKNOWLEDGE THE TRANSFER OF UNITS FROM ME TO PURCHASER AT 1111 WESTCHESTER AVENUE, WHITE PLAINS, NEW YORK 10604, AND (II) TO FORWARD ALL DISTRIBUTIONS WITH RESPECT TO THE UNITS

5

DECLARED OR MADE ON OR AFTER JULY 7, 2003, AND OTHER INFORMATION TO BE RECEIVED BY ME TO PURCHASER TO THE ADDRESS SET FORTH IN (I). TO THE EXTENT THAT ANY DISTRIBUTIONS ARE MADE BY THE PARTNERSHIP WITH RESPECT TO THE UNITS ON OR AFTER JULY 7, 2003, AND ARE RECEIVED BY ME, I AGREE THAT PURCHASER WILL DEDUCT THE AMOUNT OF SUCH DISTRIBUTIONS FROM THE PRICE PURCHASER PAYS ME FOR MY TENDERED UNITS.

[remainder of page intentionally left blank]

6

      AS THE TRANSFEROR, YOU MUST COMPLETE ALL ITEMS IN THIS SECTION TO THE EXTENT APPLICABLE OR NOT ALREADY COMPLETED.

      I hereby make application to transfer and assign to Purchaser, as set forth herein, and for Purchaser to succeed to such rights and interests as a Substituted Limited Partner, successor in interest and assignee.

Partnership Information

FULL NAME OF PARTNERSHIP:	Westin Hotels Limited Partnership
QUANTITY of Units I desire to sell:	Units
PARTNERSHIP ID:	91-1328985
Certificate Information
Was a certificate issued to you?	Circle One:  Yes  No
If yes, did you include the certificate:	Circle One:  Yes  No
	If not included, why not?
CUSIP No.:	960 377 109

Registration Information

      Indicate exactly as shown on Partnership records and include any custodial information. If a Custodial Account, the address of the beneficial owner should be your address.

      The Units are currently registered as follows:

Name:
Social Security or Tax ID #:
Custodian/ Trustee Tax ID #:
Home Telephone Number:
Office Telephone Number:
Mailing Address:
City, State, Zip Code:
State of Residence:
Circle One:	U.S. Citizen     Resident Alien     Non-Resident Alien
	IRA             Keogh             Entity

Certification

      I hereby certify and represent that I have possession of valid title and all requisite power to assign such interests and that the assignment is in accordance with applicable laws and regulations and further certify, under penalty of law, the following:

Reason for Transfer: Sale (for consideration)

Tax Certification

      Under penalty of perjury, I certify that the statements in Sections 9 and 10 of this Agreement are true, complete and correct.

7

Signature Certification/ Power of Attorney

      As set forth in Section 2 of this Agreement, I hereby irrevocably constitute and appoint Purchaser as my true and lawful agent, attorney-in-fact and proxy with respect to the Units, with full power of substitution. This must be signed by the registered holder(s) exactly as the name(s) appear(s) on the Partnership records. Persons who sign as a representative or in any fiduciary capacity must indicate their capacity when signing and must present satisfactory evidence of their authority to so act.

Your Signature:	Medallion Signature Guarantee:
Date:	Date:
Co-Transferor’s Signature(if applicable)	Medallion Signature Guarantee:
Date:	Date:
Custodian’s Signature:	Medallion Signature Guarantee:
Date:	Date:

      If signature is by trustee(s), executor(s), administrator(s), guardian(s), attorney(s)-in-fact, agent(s), officer(s) or a corporation or another acting in a fiduciary or representing capacity, please provide the following information:

Name(s):  Capacity: (Full Title): 

AGREED TO AND ACCEPTED:

WHLP Acquisition LLC

By: [Managing Member]

By: 

Name:

Title:

Unit Price: $600     Trade Date:       Account Executive: 

8

INSTRUCTIONS TO COMPLETE THE AGREEMENT OF ASSIGNMENT AND TRANSFER

      You must mail, or send by hand delivery, overnight courier or facsimile, the executed original to Purchaser’s Depositary any time prior to or on the Expiration Date (or such other date to which the Offer to Purchase and Solicitation Statement may be extended):

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Telephone:

Facsimile: 718-234-5001

      Note:     If you wish to consent to the Proposals described in the Offer to Purchase and Solicitation Statement in addition to tendering your Units, you must also fill out, sign and deliver the Consent Form that is included in this package.

      All signatures must be medallion guaranteed.

      A pre-addressed postage-paid envelope is enclosed for your convenience. The method of delivery of this Agreement and all other required documents is at your option and risk, and delivery will be deemed made only when actually received by our Depositary. If delivery is by mail, Purchaser recommends registered mail with return receipt requested. If delivery is by facsimile, you must also return the original documents, which originals, only, may be received after the Expiration Date provided that the facsimile is received prior to or on the Expiration Date. In all cases, you should allow sufficient time to ensure timely delivery prior to September      , 2003 (or such date as our Offer and Consent Solicitation are extended).

      If you have questions regarding the sale of your Units or need assistance completing this form, please call Purchaser’s Information Agent:

D.F. King & Co., Inc.

48 Wall Street

New York, NY 10005

Banks and Brokers call Collect: (212) 269-5550

All other’s call Toll-Free: (888) 605-1957

If you are a Beneficial Owner of Record, you should:

      1.     COMPLETE and SIGN this Agreement;

      2.     Have your signature medallion guaranteed by your Bank or Broker;

      3.     Indicate number of Units owned and/or to be sold; and

      4.     Return this Agreement in the envelope provided.

If you own the Units through Joint Ownership, you should:

      1.     ALL owners of record must COMPLETE and SIGN this Agreement;

2. ALL owners of record must have your signatures SEPARATELY medallion guaranteed by your Bank or Broker;

      3.     Indicate number of Units owned and/or to be sold; and

      4.     Return this Agreement in the envelope provided.

If you are an IRA or KEOGH, you should:

      1.     Have BENEFICIAL OWNERS COMPLETE and SIGN this Agreement;

2. Provide Custodian information (i.e., Name, Company Name, Address, Phone No. and Account No.);

9

      3.     Indicate number of Units owned and/or to be sold;

      4.     Return this Agreement in the envelope provided; and

      5.     Purchaser will obtain the medallion guarantee of Custodian signature.

If any owner is Deceased, you should:

      1.     Enclose a certified copy of the death certificate;

2. If ownership is other than joint tenants with right of survivorship, please provide a letter of testamentary or administration, current within 6 months, showing your beneficial ownership or executor capacity (in addition to a copy of the death certificate);

      3.     COMPLETE and SIGN this Agreement;

      4.     Have your signature medallion guaranteed by your Bank or Broker;

      5.     Indicate number of Units owned and/or to be sold; and

      6.     Return this Agreement in the envelope provided.

If you are a Corporation, you should:

      1.     Enclose a CORPORATE RESOLUTION showing authorized signatory;

      2.     COMPLETE and SIGN this Agreement;

      3.     Have your signature medallion guaranteed by your Bank or Broker;

      4.     Indicate number of Units owned and/or to be sold; and

      5.     Return this Agreement in the envelope provided.

If you are a Trust, Profit Sharing or Pension Plan, you should:

1. Enclose the title, signature and other applicable pages of your trust, profit sharing or other agreement showing authorized signatory;

      2.     COMPLETE and SIGN this Agreement;

      3.     Have your signature medallion guaranteed by your Bank or Broker;

      4.     Indicate number of Units owned and/or to be sold; and

      5.     Return this Agreement in the envelope provided.

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PAYOR’S NAME: WHLP ACQUISITION LLC
	Name (if joint names, list first and circle the name of the person or entity
SUBSTITUTE	whose number you enter in Part I below). ---------------------------------------------------------- Address
	-------------------------------------------------------------------------------------- City, State and ZIP Code
Form W-9	---------------------------------------------------------- List account number(s) (optional)
Department of the Treasury	Part 1 — PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER (“TIN”) IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW	Taxpayer Identification Number
Internal Revenue Service	Part 2 — Check the box if you are NOT subject to backup withholding under the provisions of section 3406(a)(1)(C) of the Internal Revenue Code because (1) you are exempt from backup withholding, (2) you have not been notified by the Internal Revenue Service (the “IRS”) that you are subject to backup withholding as a result of a failure to report all interest or dividends or (3) the IRS has notified you that you are no longer subject to backup withholding.  o
	CERTIFICATION — UNDER PENALTIES OF PERJURY, I CERTIFY THAT I AM A UNITED STATES PERSON (INCLUDING A UNITED STATES RESIDENT ALIEN) AND THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.	Part 3 — Awaiting TIN  o Check the box if you have applied for a TIN and are awaiting its receipt.
	Signature:    D	ate:

NOTE:  FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 28% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.

11

      TO COMPLETE THE SUBSTITUTE FORM W-9, IF YOU ARE A UNITED STATES PERSON YOU SHOULD:

      1.     Fill in your name and address at the top of the form.

      2.     Part 1:     Provide the taxpayer identification number (“TIN”) of the record owner of the Units. An individual should provide his social security number. Joint owners should provide the social security number of the owner whose name appears first. A trust account should provide the TIN assigned to the trust. An IRA custodial account should provide the TIN of the custodian. A custodial account for the benefit of a minor should provide the social security number of the minor. A corporation, partnership or other business entity should provide the Employer Identification Number assigned to that entity.

If you do not have a TIN, please complete Part 3 and contact the Depositary.

      3.     Part 2:     Check the box if it is true with respect to you. If you ARE subject to backup withholding, please cross out Part 2.

      4.     Part 3:     Complete only if you do not have a TIN and are awaiting a TIN from the Internal Revenue Service. Notwithstanding that the certification in Part 3 is given, if you have not been issued a TIN, then the Depositary WILL withhold 28% on all payments made prior to the time a properly certified TIN is provided to the Depositary.

      5.     Sign and date the Substitute Form W-9.

      6.     Include the completed Substitute Form W-9 with the completed Agreement that you return to Purchase in the care of its Depositary at the following address:

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Facsimile: 718-234-5001

If delivery is by facsimile, you must also return the original documents, which originals, only, may be received after the Expiration Date provided that the facsimile is received prior to or on the Expiration Date.

12 EX-99.(A)(1)(C) 5 p68165t3exv99wxayx1yxcy.htm EX-(A)(1)(C)

Exhibit A(1)(C)

CONSENT FORM

      THIS WRITTEN CONSENT IS SOLICITED BY WHLP ACQUISITION LLP FOR ACTION BY WRITTEN CONSENT OF THE LIMITED PARTNERS OF WESTIN HOTELS LIMITED PARTNERSHIP (THE “PARTNERSHIP”) TO BE EFFECTIVE AS SET FORTH IN THE OFFER TO PURCHASE AND SOLICITATION STATEMENT, DATED SEPTEMBER [     ], 2003, ACCOMPANYING THIS CONSENT FORM. THIS WRITTEN CONSENT IS NOT SOLICITED BY OR ON BEHALF OF THE PARTNERSHIP, THE GENERAL PARTNER OR THE BOARD OF DIRECTORS OF THE GENERAL PARTNER.

      Note:     If you wish to tender your Units in addition to delivering your consent to the Proposals described in this Consent Form, you must also fill out, sign and deliver the Agreement of Assignment and Transfer that is included in this package.

      The undersigned, with respect to each unit of limited partnership interest in the Partnership held of record by the undersigned on August [     ], 2003, hereby sets forth his, her or its vote in connection with the written consents solicited by WHLP Acquisition LLP (including to its assignee or assignees, “Purchaser”) as described in the Offer to Purchase and Solicitation Statement, dated September [     ], 2003, accompanying this Consent Form. Capitalized terms used herein have the meanings given to them in the Offer to Purchase and Solicitation Statement.

      Please sign and date this Consent Form. You are encouraged to indicate your vote by marking the appropriate boxes below. Failure to check any of the boxes with respect to any Proposal will constitute a vote “FOR” such Proposal.

      Please mail, or send by hand delivery, overnight courier or facsimile, the executed original of this Consent Form to:

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Facsimile: 718-234-5001

      A pre-addressed, postage-paid envelope is enclosed for your convenience. The method of delivery of this Agreement and all other required documents is at your option and risk, and delivery will be deemed made only when actually received by our Depositary. If delivery is by mail, Purchaser recommends registered mail with return receipt requested. If delivery is by facsimile, you must also return the original documents, which originals, only, may be received after the Expiration Date provided that the facsimile is received prior to or on the Expiration Date. In all cases, you should allow sufficient time to ensure timely delivery prior to September [     ], 2003 (or such date as our Offer and Consent Solicitation are extended).

      Please call Purchaser’s Information Agent, D. F. King & Co., Inc. at 1-888-605-1957 (Toll-Free) (Banks and Brokers call Collect at (212) 269-5550) if you have any questions regarding our consent solicitation.

Exhibit A(1)(C)

IMPORTANT: PLEASE VOTE, DATE AND SIGN BELOW

      The undersigned hereby consents to the Proposals, as more fully described in and subject to the accompanying Offer to Purchase and Solicitation Statement dated September [     ], 2003, as indicated below.

(1) The Proposal to allow Purchaser to submit on my behalf, as my agent and attorney-in-fact, amendments to the Partnership Agreement (the “Amendments”) and an accompanying statement of purpose that would render the transfer restrictions and notice requirements (and the delaying of transfers until the end of a calendar quarter) contained in Article 11 of the Partnership Agreement inapplicable to the transfer of Units in connection with the Offer or in connection with any other cash tender offer for all of the outstanding Units by a bidder who has disclosed an intention to effect a merger of the Partnership upon completion of the tender offer in which the merger consideration is equal to the tender offer price. The Amendments would also prohibit the General Partner from giving effect to any other transfer restrictions in connection with the Offer or the Merger, or similar tender offers and mergers, and would require the Partnership to immediately recognize transfers following these types of transactions, rather than waiting until the end of a calendar quarter.

FOR o                    AGAINST o                    ABSTAIN o 

(2) The Proposal to adopt the Amendments to the Partnership Agreement following their submission for approval by the Limited Partners.

FOR o                    AGAINST o                    ABSTAIN o 

(3) The Proposal to approve the Merger between a subsidiary of Starwood Hotels & Resorts Worldwide, Inc. and the Partnership following the adoption of the Amendments to the Partnership Agreement and the Merger Agreement related thereto.

FOR o                    AGAINST o                    ABSTAIN o 

      I hereby irrevocably constitute and appoint Purchaser and its designees as my true and lawful attorneys-in-fact and proxies with respect to the Units (and with respect to any and all other Units or other securities issued or issuable in respect of such Units on or after Purchaser’s Offer Date), each with full power of substitution, to the full extent of my rights (such power of attorney and proxy being deemed to be an irrevocable durable power coupled with an interest and being unaffected by my disability, incapacity, dissolution, termination or bankruptcy) to vote for the three Proposals described above in the same manner as indicated or not indicated in this Consent Form and to make the submission to the General Partner as contemplated by the first Proposal described above.

      Note: If you wish to tender your Units in addition to delivering your consent to the Proposals described in this Consent Form, you must also fill out, sign and deliver the Agreement of Assignment and Transfer that is included in this package.

Signature(s) of Limited Partners(s)
Name:

Signature of Representative
Name:
Capacity:

Dated:                               , 2003

      (NOTE: Please sign exactly as your name or names appear on the label. If more than one name appears, all persons so designated should sign. When signing in a representative capacity, please give your full title.)

2 EX-99.(A)(1)(D) 6 p68165t3exv99wxayx1yxdy.htm EX-(A)(1)(D)

Exhibit (a)(1)(D)

NOTICE OF WITHDRAWAL

OF

PREVIOUSLY TENDERED

UNITS OF LIMITED PARTNERSHIP INTEREST OF

WESTIN HOTELS LIMITED PARTNERSHIP

TO

WHLP ACQUISITION LLC

To: WHLP Acquisition LLC

c/o American Stock Transfer

59 Maiden Lane

New York, NY 10038

Ladies and Gentlemen:

      The following units of limited partnership interest (the “Units”) of Westin Hotels Limited Partnership (the “Partnership”) previously tendered to WHLP Acquisition LLC (“Purchaser”) are hereby withdrawn.

      DESCRIPTION OF UNITS WITHDRAWN

AND

SIGNATURE OF LIMITED PARTNER(S)

      All registered holders of Units must sign exactly as their names appear on the Partnership records and in the same manner as the signature in the previously submitted Agreement of Assignment and Transfer. See Instruction 3.

NUMBER OF UNITS WITHDRAWN:

X	X
(Signature of Owner)	(Signature of Joint Owner)
Print Name	Print Name
X	X
(Signature of Individual if not Owner)	(Signature of Individual if not Owner)
Print Name, Capacity and Title	Print Name, Capacity and Title
Address:	Address:
Telephone No. (Day):	Telephone No. (Day):
Telephone No. (Evening):	Telephone No. (Evening):

SIGNATURE MEDALLION GUARANTEE

(IF GUARANTEED IN AGREEMENT OF SALE; SEE INSTRUCTION 4)

Name and Address of Eligible Institution:
Authorized Signature:	X
Name:
Title:
Date:

2

INSTRUCTIONS FOR WITHDRAWAL

OF

PREVIOUSLY TENDERED UNITS OF LIMITED PARTNERSHIP INTEREST IN

WESTIN HOTELS LIMITED PARTNERSHIP

TO

WHLP ACQUISITION LLC

      PLEASE NOTE THAT YOU MAY ONLY WITHDRAW UNITS TENDERED IN AN OUTSTANDING OFFER. ANY UNITS TENDERED IN PRIOR OFFERS AND PAID FOR MAY NOT BE WITHDRAWN.

      1.     DELIVERY OF NOTICE OF WITHDRAWAL FROM THE WHLP ACQUISITION LLC OFFER. If you are withdrawing Units previously tendered pursuant to the Offer to Purchase dated September [     ], 2003, please complete, execute, detach and send in the enclosed envelope the attached Notice of Withdrawal of Previously Tendered Units of Westin Hotels Limited Partnership to WHLP Acquisition LLC (“Notice of Withdrawal”), to:

WHLP Acquisition LLC

c/o American Stock Transfer

59 Maiden Lane

New York, NY 10038

      PURCHASER MUST RECEIVE THE NOTICE OF WITHDRAWAL PRIOR TO SEPTEMBER [          ], 2003, THE WITHDRAWAL EXPIRATION DATE SET FORTH IN THE OFFER TO PURCHASE, UNLESS PURCHASER EXTENDS THE DATE.

      2.     INADEQUATE SPACE. If any space provided in the Notice of Withdrawal is inadequate, please list such additional information on a separate schedule and attach the separate schedule to the Notice of Withdrawal.

      3.     SIGNATURE ON NOTICE OF WITHDRAWAL. The Notice of Withdrawal must be signed, as applicable, by the person(s) who signed the Agreement of Assignment and Transfer relating to the Offer to Purchase, in the same manner as such Agreement of Assignment and Transfer was signed. The signatures must correspond exactly with the name(s) as they appear on the Partnership records. If any Units tendered pursuant to the Offer to Purchase are registered in the names of two or more joint holders, all such holders must sign, as applicable, the Notice of Withdrawal. If the Notice of Withdrawal is signed by any trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or others acting in a fiduciary capacity, such persons should so indicate when signing and must submit proper evidence of their authority to act.

      4.     GUARANTEE OF SIGNATURES. If the signature was guaranteed on the Agreement of Assignment and Transfer, then it must be guaranteed on the Notice of Withdrawal.

      5.     REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to D. F. King & Co., Inc. at its address and phone number listed below. Additional copies of this Notice of Withdrawal may also be obtained from D. F. King & Co., Inc.

D. F. King & Co., Inc.

48 Wall Street

New York, NY 10005

Banks and Brokers Call Collect: 212-269-5550

All Others Please Call: 1-888-605-1957

3 EX-99.(A)(1)(E) 7 p68165t3exv99wxayx1yxey.htm EX-(A)(1)(E)

Exhibit (a)(1)(E)

NOTICE OF WITHDRAWAL

OF

PREVIOUSLY TENDERED

UNITS OF LIMITED PARTNERSHIP INTEREST OF

WESTIN HOTELS LIMITED PARTNERSHIP

TO

KALMIA INVESTORS, LLC

To: Kalmia Investors, LLC

601 Carlson Parkway, Suite 200

Minnetonka, MN 55305

Ladies and Gentlemen:

      The following units of limited partnership interest (the “Units”) of Westin Hotels Limited Partnership (the “Partnership”) previously tendered to Kalmia Investors, LLC (“Kalmia”) are hereby withdrawn.

DESCRIPTION OF UNITS WITHDRAWN

AND

SIGNATURE OF LIMITED PARTNER(S)

      All registered holders of Units must sign exactly as their names appear on the Partnership records and in the same manner as the signature in the previously submitted Agreement of Sale. See Instruction 3.

NUMBER OF UNITS WITHDRAWN:

X	X
(Signature of Owner)	(Signature of Joint Owner)
Print Name	Print Name
X	X
(Signature of Individual if not Owner)	(Signature of Individual if not Owner)
Print Name, Capacity and Title	Print Name, Capacity and Title
Address:	Address:
Telephone No. (Day):	Telephone No. (Day):
Telephone No. (Evening):	Telephone No. (Evening):

SIGNATURE MEDALLION GUARANTEE

(IF GUARANTEED IN AGREEMENT OF SALE; SEE INSTRUCTION 4)

Name and Address of Eligible Institution:
Authorized Signature:	X
Name:
Title:
Date:

2

INSTRUCTIONS FOR WITHDRAWAL

OF

PREVIOUSLY TENDERED UNITS OF LIMITED PARTNERSHIP INTEREST IN

WESTIN HOTELS LIMITED PARTNERSHIP

TO

KALMIA INVESTORS, LLC

      PLEASE NOTE THAT YOU MAY ONLY WITHDRAW UNITS TENDERED IN AN OUTSTANDING OFFER. ANY UNITS TENDERED IN PRIOR OFFERS AND PAID FOR MAY NOT BE WITHDRAWN.

      1.     DELIVERY OF NOTICE OF WITHDRAWAL FROM THE KALMIA OFFER. If you are withdrawing Units previously tendered pursuant to the offer by Kalmia Investors, LLC and related investors dated July 24, 2003 (the “Kalmia Offer”), please complete, execute, detach and send in the enclosed envelope the attached Notice of Withdrawal of Previously Tendered Units of Westin Hotels Limited Partnership to Kalmia Investors, LLC (“Notice of Withdrawal from the Kalmia Offer”), to:

Kalmia Investors, LLC

601 Carlson Parkway, Suite 200

Minnetonka, MN 55305

      KALMIA MUST RECEIVE THE NOTICE OF WITHDRAWAL FROM THE KALMIA OFFER PRIOR TO AUGUST 29, 2003, THE WITHDRAWAL EXPIRATION DATE SET FORTH IN THE KALMIA OFFER, UNLESS KALMIA EXTENDS THE DATE.

      2.     INADEQUATE SPACE. If any space provided in the Notice of Withdrawal from the Kalmia Offer is inadequate, please list such additional information on a separate schedule and attach the separate schedule to the Notice of Withdrawal from the Kalmia Offer.

      3.     SIGNATURE ON NOTICE OF WITHDRAWAL. The Notice of Withdrawal from the Kalmia Offer must be signed, as applicable, by the person(s) who signed the Agreement of Sale relating to the Kalmia Offer, in the same manner as such Agreement of Sale was signed. The signatures must correspond exactly with the name(s) as they appear on the Partnership records. If any Units tendered pursuant to the Offer to Purchase are registered in the names of two or more joint holders, all such holders must sign, as applicable, the Notice of Withdrawal from the Kalmia Offer. If the Notice of Withdrawal from the Kalmia Offer is signed by any trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or others acting in a fiduciary capacity, such persons should so indicate when signing and must submit proper evidence of their authority to act.

      4.     GUARANTEE OF SIGNATURES. If the signature was guaranteed on the Agreement of Sale, then it must be guaranteed on the Notice of Withdrawal from the Kalmia Offer.

      5.     REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to D. F. King & Co., Inc. at its address and phone number listed below. Additional copies of this Notice of Withdrawal from the Kalmia Offer may also be obtained from D. F. King & Co., Inc.

D. F. King & Co., Inc.

48 Wall Street

New York, NY 10005

Banks and Brokers Call Collect: 212-269-5550

All Others Please Call: 1-888-605-1957

3 EX-99.(C)(2) 8 p68165t3exv99wxcyx2y.htm EX-(C)(2)

Exhibit (c)(2)

	Westin Hotels
August 1, 2003	Limited Partnership
Confidential	Fairness Presentation to the Board of Directors

Houlihan Lokey Howard & Zukin
Investment Bankers
1930 Century Park West
Los Angeles, California 90067
310- 553- 8871
www.hlhz.com

Los Angeles New York Chicago San Francisco Washington D.C. Minneapolis Dallas Atlanta London

• This presentation supercedes the presentation on July 18, 2003.

• It has come to Houlihan Lokey’s (as defined herein) attention that subsequent to the delivery of the July 18, 2003 presentation and delivery of its opinion, that certain assumptions and financial information required modification to more accurately reflect the financial position of the Partnerships (as defined herein).

• The information presented herein speaks only as of July 18, 2003.

Table of Contents

	Tab
Executive Summary		1
Due Diligence Summary		2
Methodology		3
Summary of Fairness Analysis		4
Exhibits
Financial Statements		A
Capitalization Rate Information		B
Discount Summary & Support		C
Synopses of Comparable Public Companies		D

i

Executive Summary

     Executive Summary

ENGAGEMENT OVERVIEW

• Windy City Investments, LLC (the “Purchaser”) and each of Madison Windy City Investments, LLC, Madison Investment Partners 20, LLC, Madison Capital Group, LLC, The Harmony Group II, LLC and Bryan E. Gordon (collectively, the “Co-Bidders”) have offered to purchase up to 20,340 units of limited partnership interest (“Units”) of Westin Hotels Limited Partnership (“WHLP”).

• The cash purchase price is equal to $525.00 per Unit, reduced by (i) $50.00 transfer fee charged by WHLP for each transfer and (ii) any cash distributions made or declared on or after July 7, 2003 (the “Offer Date”) (to the extent the Purchaser does not receive such distributions with respect to any Units accepted for payment), with interest at the rate of 3 percent per annum from the expiration date of the offer (the “Expiration Date”) to the date of the payment (the “Offer Price”).

• The sole general partner of WHLP is Westin Realty Corp. (the “General Partner”). Further, WHLP owns the Westin Michigan Avenue, Chicago in Chicago, Illinois (the “Westin Michigan Avenue” or the “Hotel”) through The Westin Chicago Limited Partnership (the “Hotel Partnership” and, together with WHLP, the “Partnerships”), a subsidiary limited partnership.

• Prior to any distribution to the partners, the Hotel Partnership is obligated to repay its existing third party and affiliate debt obligations as well as any accrued and deferred incentive management fees to 909 North Michigan Avenue Corporation (“909 Corp.” and, together with the General Partner, the “General Partners”), the general partner of the Hotel Partnership.

• The Purchaser’s and Co-Bidders’ offer to purchase up to 20,340 Units of WHLP at the Offer Price and all related transactions disclosed to Houlihan Lokey Howard & Zukin Financial Advisors, Inc. (“Houlihan Lokey”) are collectively referred to herein as the “Transaction.”

1

     Executive Summary

ENGAGEMENT OVERVIEW (CONTINUED)

• The Opinion does not address: (i) the Purchaser’s and Co-Bidders’ underlying business decision to effect the Transaction; (ii) the Partnerships’ and/or the General Partners’ underlying business decision to endorse, reject, or remain neutral with respect to the Transaction; (iii) whether any of WHLP’s limited partners should participate in (or reject) the Transaction by tendering into the offer; (iv) the tax or legal consequences of the Transaction, including but not limited to tax or legal consequences to the limited partners, the General Partners or the Partnerships; (v) the fairness, advisability or desirability of alternatives to the Transaction; (vi) the fair market value of the Westin Michigan Avenue; or (vii) the fairness of any aspect of the Transaction not expressly addressed in this Opinion, including the fairness of the Transaction as a whole. Furthermore, at your request, we have not negotiated the Transaction or advised you with respect to alternatives to it. We have not been requested to, and did not, solicit third party indications of interest in acquiring all or any part of the Westin Michigan Avenue or WHLP, make any recommendations as to the form or amount of consideration to be received by the Partnerships, the limited partners, the General Partners or any other person in connection with the Transaction.

CONCLUSION

• Houlihan Lokey expresses no opinion as to whether any of WHLP’s limited partners should participate in the Transaction by tendering their Units; notwithstanding, and based upon the foregoing, and in reliance thereon, it is our opinion that the consideration to be received in connection with the Transaction is fair to a limited partner of WHLP, from a financial point of view.

2

     Executive Summary

LEGAL OWNERSHIP CHART

3

     Executive Summary

WESTIN MICHIGAN AVENUE

• The Westin Michigan Avenue is part of the full-service, upscale Westin hotel chain and is managed by a subsidiary of Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”). Starwood owns, manages and franchises hotels throughout the world and the inclusion of the Hotel within its global system provides the benefits of name recognition, centralized reservations and advertising, system-wide marketing programs, centralized purchasing and training and support services.

• The Westin Michigan Avenue offers 751 newly renovated guest rooms, including 28 suites, and renovated banquet and meeting rooms totaling 35,000 square feet. Rooms can accommodate meetings ranging from 10 to 1,000 people in one of its three ballrooms.

• The Hotel is a first-class hotel operating under the Westin name and located in a premier central, urban location, providing guests with convenient access to business districts, shopping areas and convention facilities. The Westin Michigan Avenue is located on an exciting corner of the “Magnificent Mile.” The Hotel is located next to The John Hancock Building and near The Water Tower Place.

• The Westin Michigan Avenue offers beautifully decorated, comfortable facilities with many breath-taking views of Chicago’s North Michigan Avenue.

• The Hotel has a full-service restaurant, The Grill on the Alley, an up-scale 300 seat restaurant and bar named to the Fine Dining Hall of Fame by Nation’s Restaurant News in 1995. The Hotel also offers other amenities including a health club.

4

     Executive Summary

OTHER ITEMS

• Pursuant to the WHLP partnership agreement, the General Partner will use its best efforts to sell or refinance the Hotel or WHLP’s interest in the Hotel Partnership by December 31, 2001.

• In February 2001, WHLP retained Jones Lang LaSalle Hotels (“JLL”) to market the Hotel for sale.

• In April 2001, formal marketing materials were distributed and discussions with several potential purchasers commenced.

• After the occurrence of the September 11th attacks, certain of the most qualified buyers indicated they would expect significant discounts on their preliminary offers.

• In late 2001 or 2002, the General Partner decided it was not in the best interest of the limited partners of WHLP to sell the Hotel based on the unstable and depressed hotel real estate market, resulting from the weakened general worldwide economic environment.

• The General Partner has also engaged JLL to assist in exploring a refinancing of WHLP’s debt and has recently directed JLL to focus its efforts towards pursuing a refinancing alternative.

• In early May 2003, WHLP filed a preliminary proxy statement with the Securities and Exchange Commission outlining the refinancing of the existing Hotel Partnership mortgage loan totaling approximately $25.0 million with a new mortgage loan expected to be in the range of $70.0 million to $75.0 million.

• Discussions with management indicate that the proposed refinancing may not be achieved due to a number of reasons, including but not limited to, identifying a lender willing to lend on the terms and conditions acceptable to the General Partner.

5

Due Diligence Summary

     Due Diligence Summary

DUE DILIGENCE SUMMARY

In connection with this opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. Among other things, we have:

• held discussions with the General Partnerships’ senior management to discuss the Transaction, the operations, financial condition, future prospects and performance of the Westin Michigan Avenue and WHLP;

• reviewed WHLP’s financial statements as filed on Form 10-K for the two fiscal years ended December 31, 2002 and December 31, 2001, respectively;

• reviewed WHLP’s financial statements as filed on Form 10-Q for the quarterly period ended March 31, 2003;

• reviewed company-prepared consolidating financial statements for WHLP and the Westin Michigan Avenue for the fiscal years ended, December 31, 1999 through 2002;

• reviewed company-prepared financial statements for the Westin Michigan Avenue for the fiscal years ended December 31, 1998 through 2002;

• reviewed company-prepared financial statements for the Westin Michigan Avenue for the six-month period ending June 30, 2002 and company-prepared preliminary financial statements for the Westin Michigan Avenue for the corresponding six-month period ending June 30, 2003, which WHLP’s management has identified as being the most current financial statements available;

• reviewed multi-year projections for the Westin Michigan Avenue for the years ended December 31, 2003 through 2005;

• reviewed a draft Refinancing Analysis prepared by JLL, dated May 7, 2003;

 7

     Due Diligence Summary

DUE DILIGENCE SUMMARY (CONTINUED)

• visited the Westin Michigan Avenue;

• reviewed copies of the following agreements:

• the Amended and Restated Agreement of Limited Partnership of WHLP, as of December 31, 1986;

• the Amended and Restated Agreement of Limited Partnership of the Hotel Partnership, as of December 31, 1986;

• the Chicago FF&E Escrow Agreement, as of June 2, 1994;

• the Amended and Restated Management Agreement among Westin Hotel Company and 909 Corp., the Hotel Partnership, and WHLP, as of August 21, 1986;

• the First Amendment to Amended and Restated Management Agreement of the Hotel Partnership, as of June 2, 1994;

• the Second Amendment to Amended and Restated Management Agreement, as of September 1, 1999;

• the Third Amendment to Amended and Restated Management Agreement, as of February 27, 2002;

• the Mortgage and Security Agreement between 909 Corp. and Teacher Retirement System of Texas, dated August 21, 1986;

• the First Amendment to Mortgage and Security Agreement, dated June 2, 1994;

 8

     Due Diligence Summary

DUE DILIGENCE SUMMARY (CONTINUED)

• the Promissory Note by and between 909 Corp. and Teacher Retirement System of Texas, dated August 21, 1986;

• the First Amendment to Promissory Note, as of June 2, 1994;

• the Loan Agreement by and between WHLP and the General Partner, as of June 2, 1994;

• the Assignment and Assumption of Agreements by and between Westin Hotel Company and 909 Corp., as of December 31, 1997; and

• the Restructuring Agreement by and among Teacher Retirement System of Texas, Westin Hotel Company, the General Partner, St. Francis Hotel Corporation, The Westin St. Francis Limited Partnership, 909 Corp., the Hotel Partnership and WHLP, as of June 2, 1994.

• reviewed the Tender Offer Statement filed on Schedule TO as of July 7, 2003;

• reviewed the preliminary Proxy Statement filed on Schedule 14A filed with the Securities and Exchange Commission in May 2003; and

• conducted other such analyses, studies and investigations as we deemed appropriate under the circumstance for rendering the opinion express herein.

 9

Methodology

     Methodology

Houlihan Lokey utilized several valuation methodologies in our analysis of the fairness of the Offer Price to the limited partners of WHLP. Such valuation methodologies resulted in estimates of value for the Hotel, and thus the Hotel Partnership.

VALUATION OF THE HOTEL PARTNERSHIP AND WHLP

In order to determine the valuation of the Hotel Partnership and WHLP, Houlihan Lokey determined the value of the Westin Michigan Avenue as the Hotel is the primary and only material operating asset of the Hotel Partnership. The value of the Hotel, and ultimately the Hotel Partnership and WHLP, was estimated by employing several valuation methodologies. The following are the three approaches employed to determine the enterprise value of the Hotel:

1.     A “Net Asset Value Approach” whereby market based capitalization rates were applied to representative earnings and cash flow streams of the Hotel.

2.     A “Comparable Transaction Approach” whereby selected comparable transactions were analyzed and implied market multiples were applied to representative revenues and cash flow streams of the Hotel

3.     A “Market Capitalization Approach” whereby market based multiples of comparable public companies were applied to representatives earnings and cash flow streams of the Hotel.

The following approach did not consider the Hotel, but rather the characteristics and particularly the liquidity of the units held by WHLP’s limited partners.

1.     A “Yield Approach” whereby required yields for comparable publicly traded partnerships were applied to representative dividend levels for WHLP.

11

Summary of Fairness Analysis

     Summary of Fairness Analysis

RECONCILIATION — LIQUIDATION ANALYSIS

($ in thousands)
Concluded Net Asset Value Range			July 18th
			HLHZ Concluded Range							Reconciliation			HLHZ Concluded Range
Net Asset Value Approach			$	94,080		—	$	98,000					$	94,080		—	$	98,000
Comparable Transaction Approach			$	88,200		—	$	101,920					$	88,200		—	$	101,920
Market Capitalization Approach			$	111,665		—	$	118,427					$	111,665		—	$	118,427
Concluded Hotel Partnership Net Asset Value Range			$	98,000		—	$	106,000					$	98,000		—	$	106,000
Add: Hotel Partnership Cash				21,200		—		21,200						21,200		—		21,200
Add: Hotel Partnership Non-Cash Current Assets (1)				(16,010	)	—		(16,010	)		12,114	(1)		(3,896	)	—		(3,896	)
Less: Total Mortgage Debt				(25,213	)	—		(25,213	)					(25,213	)	—		(25,213	)
Less: Accrued Incentive Management Fees				(8,077	)	—		(8,077	)		392			(7,685	)	—		(7,685	)
Less: Starwood Subordinated Debt				(10,678	)	—		(10,678	)					(10,678	)	—		(10,678	)
Hotel Partnership Equity Value Range			$	59,222		—	$	67,222		$	12,506		$	71,728		—	$	79,728
WHLP ownership percentage in Hotel Partnership				99	%	—		99	%		99	%		99	%	—		99	%
WHLP Equity Value Range			$	58,630		—	$	66,550		$	12,381		$	71,011		—	$	78,931
Add: WHLP Cash				9,500		—		9,500						9,500		—		9,500
Add: WHLP Accrued Management Fees				392		—		392			(784	)		(392	)			(392	)
Add: WHLP Non-Cash Current Assets				—		—		—			24	(2)		2 4		—		24
Less: WHLP Current Liabilities				(318	)	—		(318	)					(318	)	—		(318	)
Less: WHLP Liquidation Expenses				(265	)	—		(265	)					(265	)	—		(265	)
WHLP Concluded Equity Value			$	67,939		—	$	75,859		$	11,621		$	79,561		—	$	87,481
Less: WCR ownership percentage in Hotel Partnership	1	%		($679	)	—		($759	)		($116	)		($796	)	—		($875	)
WHLP Concluded Equity Value, net of WCR ownership			$	67,260		—	$	75,101		$	11,505		$	78,765		—	$	86,606
Number of Partnership Units				135,600		—		135,600			135,600			135,600		—		135,600
Per Unit Distribution to LPs (rounded)			$	496.00		—	$	554.00		$	85.00		$	581.00		—	$	639.00

(1)	Reflects adjustment made for accrued incentive management fee and non-cash current assets, per management.
(2)	Reflects adjustment to non-cash current assets, per management.

13

     Summary of Fairness Analysis

FAIRNESS CONCLUSION

($ Actual)
Fairness Summary Analysis	Publicly Announced Tender Price
Announced Tender Offer Per Unit		$525.00	—	$	525.00
	HLHZ Concluded Range
Liquidation Scenario (1)		$494.00	—	$	543.00
Yield Approach — (with cash adjustment and without cash adjustment)		$414.00	—	$	562.00
			—
HLHZ Concluded Value Range		$454.00	—	$	553.00

Conclusion: The Offer Price of $525 per Unit falls within Houlihan Lokey’s range of concluded values. Therefore, the Transaction is fair, from a financial point of view, to the limited partners of WHLP.

Other Considerations
Refinancing Analysis Per Unit (2)	$526.00	—	$	562.00

(1)	Assumes no cash holdback for contingent liabilities and/or litigation expenses.
(2)	Per draft JLL analysis as of May 07, 2003. Conclusions dependent upon $75mm of refinancing proceeds and other assumptions. Should refinancing proceeds fall below $75mm, the concluded value per unit would decrease.

14

     Summary of Fairness Analysis

PARTNERSHIP UNITS TRADING HISTORY VS. CURRENT TENDER OFFER

										Weighted Average
Reporting Period (1)	High Trade		Low Trade		Units Traded		Weighted			Units		Trade (low)		Trade (high)
04/01/2003-05/31/2003	$	485.00	$	451.00		185		4.77	%		8.82	$	21.51	$	23.13
02/01/2003-03/31/2003	$	476.00	$	385.00		414		10.67	%		44.19	$	41.09	$	50.80
12/01/2002-01/31/2003	$	460.00	$	385.00		245		6.32	%		15.47	$	24.32	$	29.05
10/01/2003-11/30/2002	$	500.00	$	275.00		1107		28.54	%		315.92	$	78.48	$	142.69
08/01/2002-09/30/2002	$	435.11	$	400.00		382		9.85	%		37.62	$	39.39	$	42.85
06/01/2002-07/31/2002	$	460.00	$	275.00		135		3.48	%		4.70	$	9.57	$	16.01
04/01/2002-05/31/2002	$	465.00	$	400.00		364		9.38	%		34.16	$	37.54	$	43.63
02/01/2002-05/31/2002	$	455.00	$	380.00		160		4.12	%		6.60	$	15.67	$	18.77
12/01/2001-01/31/2002	$	615.00	$	402.00		107		2.76	%		2.95	$	11.09	$	16.96
10/01/2001-11/30/2001	$	615.00	$	500.00		260		6.70	%		17.43	$	33.51	$	41.22
08/01/2001-09/30/2001	$	625.00	$	580.00		155		4.00	%		6.19	$	23.18	$	24.97
06/01/2001-07/31/2001	$	630.00	$	575.00		365		9.41	%		34.35	$	54.11	$	59.28
Weighted Average											528.39	$	389.45	$	509.38

Historical Offer Prices
Reporting Period (2)	Offer Price		Offerer	Units	Comments
02/18/2003-03/04/2003		$395.00	NA	NA	NA
02/01/2003-04/30/2003		$400.00	NA	NA	NA
10/01/2001-11/30/2001		$500.00	NA	NA	NA
07/01/2001-08/31/2001		$470.00	NA	NA	NA
2/1/99		$1,000.00	Arlen Capital, LLC	4,900	NA
3/2/99		$1,000.00	Kalmia Investors, LLC	4,900	The 4,900 Units sought to be purchased pursuant to the Offer represented approximately 3.6% of the Units outstanding as of the date of the offer.
12/30/98		$1,000.00	Arlen Capital, LLC	6500	Funding for the purchase of the Units was provided through the Purchaser’s existing working capital.

Current Tender Offer
7/7/03	$	525.00

(1)	Based on the Westin Hotels Limited Partnership Tender Offer Statement dated 07/07/03.
(2)	Based on the Westin Hotels Limited Partnership Tender Offer Statement dated 07/07/03. Represents the offers to purchase Units during the periods indicated.

15

     Summary of Fairness Analysis

VALUATION SUMMARY

($ in thousands)
Concluded Net Asset Value Range										Tender
			HLHZ Concluded Range							Price (1)
Net Asset Value Approach (2)			$	94,080		—	$	98,000
Comparable Transaction Approach (2)			$	88,200		—	$	101,920
Market Capitalization Approach (2)			$	111,665		—	$	118,427
Concluded Hotel Partnership Net Asset Value Range			$	98,000		—	$	106,000		$	89,875
Add: Hotel Partnership Cash (3)				21,200		—		21,200			21,200
Less: Net Working Capital (4)				(3,896	)	—		(3,896	)		(3,896	)
Less: Total Mortgage Debt(5)				(25,213	)	—		(25,213	)		(25,213	)
Less: Accrued Incentive Management Fees (6)				(7,685	)	—		(7,685	)		(7,685	)
Less: Starwood Subordinated Debt				(10,678	)	—		(10,678	)		(10,678	)
Hotel Partnership Equity Value Range			$	71,728		—	$	79,728		$	63,604
WHLP ownership percentage in Hotel Partnership				99	%	—		99	%		99	%
WHLP Equity Value Range			$	71,011		—	$	78,931		$	62,968
Add: WHLP Cash (3)				9,500		—		9,500			9,500
Less: WHLP Accrued Management Fees				(392	)			(392	)
Add: WHLP Non-Cash Current Assets				24		—		24			24
Less: WHLP Current Liabilities (7)				(318	)	—		(318	)		(318	)
Less: WHLP Liquidation Expenses (8)				(265	)	—		(265	)		(265	)
WHLP Concluded Equity Value			$	79,561		—	$	87,481		$	71,909
Less: WCR ownership percentage in Hotel Partnership	1	%		($796	)	—		($875	)		($719	)
WHLP Concluded Equity Value, net of WCR ownership			$	78,765		—	$	86,606		$	71,190
Less: Discount for lack of control and marketability				15.0	%	—		15.0	%
Discounted WHLP Concluded Equity Value, net of WCR ownership			$	66,950		—	$	73,615		NA
Number of Partnership Units (9)				135,600		—		135,600			135,600
Per Unit Distribution to LPs			$	494.00		—	$	543.00		$	525.00

(1)	Represents publicly announced tender price per unit @ $525. Concluded NAV range was derived based on the implied NAV from the $525 tender offer, assuming no discounts.
(2)	Based on Net Asset Value Ranges net of selling cost.
(3)	Free and available cash as of 6/30/03 per management.
(4)	Represents net working capital not including cash and current portion of long term debt.
(5)	Based on total interest bearing debt as of 6/30/03.
(6)	Based on management estimates as of 6/30/03. Accrued incentive and management fees would be repaid at the time of sale.
(7)	Based on consolidated 12/31/02 current liabilities for WHLP. Management has indicated a potential high balance of approximately $350k.
(8)	Per the WHLP partnership agreement, the partnership must be liquidated in 90 days or the year end of the liquidating event, whichever is longer. We have assumed full liquidation to be at 12/31/03. This amount represents 1/2 of normalized operating partnership expenses.
(9)	Based on the Amended and Restated Agreement of Limited Partnership of Westin Hotels Limited Partnership as of 12/31/86.

16

Summary of Fairness Analysis

NET ASSET VALUE APPROACH
($ in thousands)

	Adjusted			Concluded Range of						Concluded
	NOI			Selected Cap Rates						Net Asset Value Range
NOI (1)
Latest Twelve Months NOI (2)	$	9,851			10.0	%	—	10.5	%	$	93,816		—	$	98,507
Three Year Average NOI (3)	$	10,746			10.5	%	—	11.0	%	$	97,687		—	$	102,338
Concluded Net Asset Value Range										$	96,000		—	$	100,000
Less: Selling Expenses		2	%								(1,920	)	—		(2,000	)
Concluded Net Asset Value Range, net of Selling Expenses										$	94,080		—	$	98,000
Implied Cap Rate Based on
LTM NOI as of 6/30/03 (4)											10.3	%	—		9.9	%

(1)	NOI is defined as “Net Operating Income.”
(2)	As of 6/30/03.
(3)	Based on adjusted average NOI for FY 2000, FY 2001, and FY 2002.
(4)	Implied Cap Rate calculation is derived before taking any deduction for selling expenses.

17

Summary of Fairness Analysis

REPRESENTATIVE LEVELS
($ in thousands)

	Historical												Projected									Three-Year
	Fiscal Year Ended December 31,									LTM			Fiscal Year Ended December 31,									Average(3)			Estimated (4)
	2000			2001			2002			6/30/03			2003			2004			2005			(2000-2002)			2004
Occupancy		73	%		66	%		70	%		74	%		75	%		74	%		74	%		69	%	NA
RevPar	$	127		$	110		$	106		$	107		$	111		$	111		$	116		$	114		NA
Total Revenues	$	48,398		$	41,915		$	40,718		$	42,953		$	43,564		$	43,918		$	46,933		$	43,677		$	46,613
Less: Departmental Expenses		(16,384	)		(14,113	)		(13,831	)		(14,463	)		(14,748	)		(15,173	)		(16,653	)
Departmental Profit		32,014			27,802			26,887			28,490			28,815			28,745			30,279
Less: Operating Expenses		(9,491	)		(7,854	)		(7,718	)		(7,770	)		(7,905	)		(7,947	)		(9,262	)
Gross Operating Profit		22,524			19,948			19,169			20,719			20,910			20,798			21,017
Less: Management & Incentive Fees		(1,694	)		(4,091	)		(4,125	)		(4,305	)		(4,074	)		(3,957	)		(3,922	)
Less: Fixed Expenses (1)		(6,758	)		(6,417	)		(4,018	)		(3,829	)		(6,607	)		(7,066	)		(7,979	)
Reported NOI	$	14,072		$	9,440		$	11,026		$	12,585		$	10,229		$	9,775		$	9,117
Add: F, F & E Reserve		2,420			2,096			2,036			2,148			2,178			2,196			2,347
Reported EBITDA	$	16,491		$	11,535		$	13,062		$	14,733		$	12,407		$	11,971		$	11,463
Adjustments:
Less: Owners Expense Adjustment (2)		10			7			(2,318	)		(2,734	)		(414	)		—			—
Add: Other Adjustments		—			—			—			—			—			—			—
Adjusted EBITDA	$	16,501		$	11,543		$	10,744		$	11,998		$	11,992		$	11,971		$	11,463
Adjusted EBITDA Margin		34	%		28	%		26	%		28	%		28	%		27	%		24	%
Less: F, F & E Reserve		2,420			2,096			2,036			2,148			2,178			2,196			2,347
Adjusted NOI		14,081			9,447			8,708			9,851			9,814			9,775			9,117			10,746			10,501
Adjusted NOI		29	%		23	%		21	%		23	%		23	%		22	%		19	%		23	%		23	%

(1)	Includes FF&E Reserve @ 5% of total Revenue, per the Chicago FF&E Escrow Agreement.
(2)	Adjusted for owners expense.
(3)	Represents the average of FY 2000, FY 2001 and FY 2002.
(4)	Estimated 2004 figures based on revenue growth of 6% from projected FY 2003. NOI based on same margin as % of sales as FY 2003.

18

Summary of Fairness Analysis

CAPITALIZATION RATE SUMMARY

												Cap Rate
	Low		High			Median			Mean			Focus
CoStar	7.00%	—		12.25	%		10.50	%		10.47	%	Regional
Hospitality Investment	8.50%	—		13.00	%	NA				11.00	%	National
PwC Korpacz	7.00%	—		11.50	%	NA				9.70	%	National

							HLHZ
	Selected Cap Rate						Adjustment(1)			Concluded Cap Rate
LTM		9.50	%	—	10.00	%		0.50	%		10.00	%	—	10.50	%
Three Year Average		10.00	%	—	10.50	%		0.50	%		10.50	%	—	11.00	%

(1) Based on both quantitative and qualitative factors including but not limited to industry fundamentals, regional market risk/competition and the nature of the management agreement.

19

Summary of Fairness Analysis

DEBT AND ACCRUED MANAGEMENT & INCENTIVE FEES
 
($ in thousands)
 
Total Interest Bearing Debt Calculation

	As of
	6/30/03
TRST Mortgage Loan (1)	$	25,213
TRST Mortgage Loan Prepayment Penalty (2)		—
Total Mortgage Debt	$	25,213
Starwood Subordinated Debt (3)	$	10,678
Total Incentive Management Fees Payable Calculation
Incentive Management Fee balance as of 06/30/03 (3)	$	7,685
WHLP Stub Accrued Incentive Management Fees as of 06/30/03 (3)		392
Total Incentive Management Fee balance as of 06/30/03	$	8,077

(1)	Mortgage notes bear interest at 5.25 percent.
(2)	It is our understanding that should a refinancing of the debt occur in 2003 a $2.6 mm prepayment penalty is due and payable. In the event of a change of control prepayment penalty does not apply.
(3)	Based on management amortization schedule estimates as of June 30, 2003.

20

Summary of Fairness Analysis

COMPARABLE TRANSACTION APPROACH
($ in thousands)

	Representative			Range of Selected							Concluded
	Levels			Multiples							Enterprise Value Range
Adjusted Latest Twelve Months EBITDA (1)		11,998			9.5	x	—		10.0	x		113,984		—		119,983
Adjusted Latest Twelve Months NOI (1)		9,851			9.5	%	—		11.0	%		89,552		—		103,692
Number of Rooms (2)		751		$	104.0	0	—	$	132.0	0		78,104		—		99,132
Concluded Control Enterprise Value Range											$	90,000		—	$	104,000
Less: Selling Expenses		2	%									(1,800	)	—		(2,080	)
Concluded Net Asset Value Range											$	88,200		—	$	101,920
Implied Cap Rate Based on LTM NOI as of 6/30/03 (3)												10.9	%	—		9.5	%

(1)	As of 06/30/03.
(2)	Based on the number of rooms for Westin Michigan Avenue.
(3)	Implied Cap Rate calculation is derived before taking any deduction for selling expenses.

21

Summary of Fairness Analysis

HOTEL CAP RATE INFORMATION
($ thousands)

Hotel Transactions (1)
		Sale			Sale Price		Overall
Hotel Name	Location	Date	Rooms		Per Room		Cap Rate
Hilton Garden Inn (2)	Chicago, IL	Oct-02		357	$	70.03		7.0	%
Candlewood Suites (2)	Schiller Park	Apr-02		160	$	79.30		12.3	%
Comfort Suites BWI	Linthicum Heights	Mar-03		137	$	90.88		10.8	%
Del Mar Hilton	Del Mar	Dec-02		245	$	108.41		9.5	%
Doubletree Club JFK Airport	Jamaica	Sep-02		110	$	104.55		11.0	%
AmeriSuites	Fort Lauderdale	Sep-02		128	$	83.20		11.0	%
Summerfield Suites By Wyndham	West Hollywood	Jul-02		120	$	106.25		10.5	%
Barnabey’s Hotel + Office Building	Manhattan Beach	May-02		123	$	109.76		10.5	%
Homewood Suites	Herndon	Jun-01		109	$	116.97		10.5	%
Howard Johnson Plaza Hotel & Suites	Washington	Mar-01		184	$	70.92		10.5	%
Quality Hotel & Suites	Washington	Mar-01		137	$	77.55		10.5	%
Canterbury Hotel	Washington	Mar-01		99	$	106.31		10.5	%
Marriott Capital Hotel	Austin	Feb-01		365	$	132.19		11.6	%
High				365	$	132.19		12.3	%
Low				99	$	70.03		7.0	%
Median				137	$	104.55		10.5	%
Mean				175	$	96.64		10.5	%

	Note: Based on discussions with Tom Callahan of PKF Consulting, luxury hotels in the Chicago area are valued at cap rates ranging from 8.5% to 10.0%.
(1)	Source: Lodging Investment DataBank, July 2003 — Prepared by CoStar.
(2)	Source: The Chicago/Midwest Area Lodging Investment DataBank, July 2003 — Prepared by CoStar.
(3)	Based on both quantitative and qualitative factors including but not limited to market risk.

22

Summary of Fairness Analysis

COMPARABLE TRANSACTIONS
($ in millions)

Announce

$Price/

Deal

EV/

Date

Closed

Seller

Target Product Line

Buyer

# of Rooms

Room

Size

EBITDA

Comments

27-Jun-03

27-Jun-03

Ratos AB (1)

Capona Ab

Choice Hotels Scandinavia

NA

$

53.8

11.6x

19-Jun-03

NA

Macdonald Hotels PLC (2)

Management Buyout

Management of Macdonalds Hotel

NA

165.6

9.3x

MBO

17-Jun-03

17-Jun-03

Lansdowne Resort LP (3)

Single Hotel

LaSalle Hotel Properties

296

$

347.30

102.8

10.3x

11-Jun-03

11-Jun-03

Rajadamri Hotel PCL (4)

Regent Hotel Bangkok

SCB Securities Co Ltd

382

$

50.24

19.2

NA

Minority Stake

22-May-03

NA

NH Hoteles SA (5)

Hotel Chain

Hoteles Hesperia SA

291.6

7.7x

Minority Stake/Unsolicited

3-Apr-03

NA

Riviera Holdings Corp (6)

NA

Private Group led by Fabrizio

2,075

$

118.55

246.0

7.2x

Unsolicited Offer

10-Mar-03

NA

Six Continents PLC

NA

Private Group led by investors

9,000.0

10.4x

5-Mar-03

NA

Jupiters Ltd

NA

Tabcorp Holdings Ltd

632.9

7.1x

4-Mar-03

NA

Six Continents PLC

NA

Capital Management & Investment PLC

8,811.1

10.2x

7-Feb-03

7-Feb-03

Orbis SA

NA

Accor SA

4.5

5.0x

16-Aug-02

16-Aug-02

Zoffany Hotels Ltd (7)

NA

Forestdale Hotels Ltd

NA

39.7

8.9x

25-Jun-02

NA

CHE Group Plc

Quality Clock Hotel WelwynBAE Systems PLC

5.5

NA

31-May-02

2-Sep-02

Republic Hotels and Resorts Ltd

(8) NA

Millennium & Copthorne Hotels Plc

NA

54.3

11.8x

28-Mar-02

7-Jun-02

Crestline Capital Corp

NA

Barcelo Hotels & Resorts

602.0

NA

22-Mar-02

22-Apr-02

Hilton Group Plc (9)

NA

Deutsche Bank AG

NA

57.3

11.3x

Resale

14-Mar-02

2-Apr-02

Queens Moat Houses Plc (10)

NA

Trefick Ltd

4.5

7.9x

Minority Stake

High

$

347.30

$

246.0

11.8x

Low

$

50.24

$

19.2

7.2x

Median

$

118.55

$

55.8

10.3x

Mean

$

172.03

$

92.3

10.0x

Source: Mergerstat: SIC code 7011-Hotels & Motels

Shaded represents transaction that were not included within selected ranges

(1)	Based on Comtex News Network Ratos sold 7.6 million shares in Capona, corresponding to almost 40% of the capital and voting rights, to Choice Hotels Sweden AB, a Choice Hotels Scandinavia. In connection with the transaction Ratos also purchased 2 million shares in Choice Hotels Scandinavia ASA for NOK 50m with a lock-up period of 18 months.
(2)	Based on Financial Times Limited dated July 7, 2003 Macdonald Hotels was forced to raise bid for the company after the institutional shareholders indicated that the 240 pound per share offer was low.
(3)	Based on Business Wire, Inc. dated June 17, 2003 LasSalle Hotel Properties announced its acquisition of Lansdowne Resort for $115.8 million. The AAA Four-Diamond resort, located on 207 acres in Virginia featured 296 guest rooms and suites, an 18-hole championship golf course designed by award-winning architect Robert Trent Jones, Jr. and 45,000 square feet of conference center meeting and pre-function space.
(4)	Based on WorldSources Inc., Royal Garden Resorts acquired a 12.55% stake in Rajadamri Hotel from Goldman Sachs through SCB Securities Co ltd, raising its stake in the hotel company from 30.29% to 42.84%.
(5)	Based on The Deal L.L.C dated May 28, 2003 the board of Spain’s largest hotel chain, NH Hoteles SA, indicated on May 27, 2003 that an unsolicited $258.9 million offer by Hoteles Hesperia was made for 26.1% of the company’s
(6)	Based on the Wall Street Journal dated April 3, 2003 Investor Fabrizio Boccardio launched an unsolicited bid to buy debt-ridden Riverioa Holdings Corp, owner of the Riveria casino; the bid, backed by investors including Groupe amounts to $30 million in cash plus assumption of $216 million in debt.
(7)	Based on Business Magazine Deals South BDO Stoy Hayward played key roles in the 25.5 million pound acquisition by Forestdale Hotels of the Zoffany Hotels group.
(8)	Based on AFX News limited dates May 31, 2002 Millennium & Copthorne Hotels (“the Group”) announced its offer for the remaining 15% of it 85% already owned stake in Resorts Limited.
(9)	Based on AFX European Focus dated March 22, 2002, Deutsche Bank placed 17 million shares in Hilton Group PLC with institutions at a price of 241 pence a share. The stake placed was understood to have been held by Ratos AB. These shares were acquired by Ratos as a part of Hilton’s acquisition of Scandic Hotels AB last year. The lock over 17.6 million shares representing 1.1% of the UK hotels giant, was due to expire on April 22.
(10)	Based on AFX Trefick Limited acquired 5.82% of the total number of shares in issue.

23

Summary of Fairness Analysis

MARKET CAPITALIZATION APPROACH
($ in thousands)

	Adjusted	Range of Selected			Concluded
	EBITDA	EBITDA Multiples			Enterprise Value Range
Latest Twelve Months EBITDA (1)	11,998	8.5x	—	9.0x		101,986		—		107,985
Concluded Enterprise Value Range					$	102,000		—	$	108,000
Less: Total Mortgage Debt						(25,213	)	—		(25,213	)
Less: Total Accrued Incentive Management Fees						(8,077	)	—		(8,077	)
Less: Starwood Subordinated Debt						(10,678	)	—		(10,678	)
Add: Hotel Partnership Cash						21,200				21,200
Concluded Marketable Minority Equity Value Range					$	79,232		—	$	85,232
Add: Control Premium of 15.0 %						11,885		—		12,785
Concluded Control Equity Value Range					$	91,117		—	$	98,017
Add: Total Mortgage Debt						25,213		—		25,213
Add: Total Accrued Incentive Management Fees						8,077		—		8,077
Add: Starwood Subordinated Debt						10,678		—		10,678
less: Hotel Partnership Cash						(21,200	)			(21,200	)
Concluded Control Enterprise Value Range					$	113,885		—	$	120,785
Less: Selling Expenses	2%					(2,278	)	—		(2,416	)
Concluded Enterprise Value Range, net of Selling Expenses					$	111,607		—	$	118,369
Implied Cap Rate Based on LTM NOI as of 6/30/03 (2)						8.6	%	—		8.2	%

(1)	As of 6/30/03.
(2)	Implied Cap Rate calculation is derived before taking any deduction for selling expenses.

24

Summary of Fairness Analysis

MULTIPLE SELECTIONS

	Fiscal Year		Latest Twelve			2003E		2004E
	End		Months			Year		Year
Public Hotel Multiples	EV/EBITDA (1)		EV/EBITDA (1)			EV/EBITDA (2)		EV/EBITDA (3)
FOUR SEASON HOTELS -LTD VTG		24.1x		24.9x		NMF			27.4x
HILTON HOTELS CORP		10.2x		10.6x			10.8x		9.7x
HOST MARRIOTT CORP		10.1x		10.4x			11.6x		10.4x
LASALLE HOTEL PROPERTIES		12.2x		12.8x		NA			10.6x
RFS HOTEL INVESTORS INC		9.5x		9.8x			9.7x		8.8x
High		12.2x		12.8x			11.6x		10.6x
Low		9.5x		9.8x			9.7x		8.8x
Median		10.2x		10.5x			10.8x		10.1x
Mean		10.5x		10.9x			10.7x		9.9x
Selected Multiple Low End of Range	NA			8.5x		NA		NA
Selected Multiple High End of Range	NA			9.0x		NA		NA
Low End of Range % of Median	NA			80.9	%	NA		NA
High End of Range % of Median	NA			85.7	%	NA		NA

Shaded area indicates exclusion from ranges.

(1)	EV is defined as “Enterprise Value.”
(2)	Based on 12/31/03
(3)	Based on 12/31/04

25

Summary of Fairness Analysis

QUANTITATIVE RANKINGS

($ in millions)	Latest Twelve											1 Year
	Months		EBITDA			Return on			Return on			EBITDA
Public Hotel Companies (1)	Revenues		Margin			Equity			Assets			Growth
FOUR SEASON HOTELS -LTD VTG	$	287.9		21.0	%		0.8	%		0.7	%		-26.6	%
HILTON HOTELS CORP		3,843.0		24.7	%		8.9	%		0.7	%		-5.0	%
HOST MARRIOTT CORP		3,698.0		21.5	%		-7.8	%		-0.8	%		-10.2	%
LASALLE HOTEL PROPERTIES		180.8		26.1	%		-2.2	%		-1.1	%		-13.9	%
RFS HOTEL INVESTORS INC		196.5		33.1	%		0.3	%		0.3	%		-19.0	%
High	$	3,843.0		33.1	%		8.9	%		0.7	%		-5.0	%
Low	$	180.8		21.5	%		-7.8	%		-1.1	%		-19.0	%
Median	$	1,947.3		25.4	%		-0.9	%		-0.3	%		-12.1	%
Mean	$	1,979.6		26.3	%		-0.2	%		-0.2	%		-12.0	%
Westin Michigan Avenue	$	43.0		34.3	%		-0.1	%		1.6	%		13.2	%

($ Actual)

													Total Number
Public Hotel Companies	RevPar			Occupancy			ADR			NOI Margin			of Rooms
FOUR SEASON HOTELS -LTD VTG	$	179.0			63.5	%	$	283.00			21.9	%		30,866
HILTON HOTELS CORP		71.0			67.2	%		105.89			27.9	%		337,000
HOST MARRIOTT CORP		100.7			70.4	%		143.19			23.5	%		59,176
LASALLE HOTEL PROPERTIES		92.4			64.0	%		144.30			30.7	%		5,834
RFS HOTEL INVESTORS INC		59.7			68.9	%		86.43			33.1	%		8,271
High	$	100.7			70.4	%	$	144.30			33.1	%		337,000
Low	$	59.7			64.0	%	$	86.43			23.5	%		5,834
Median	$	81.7			68.1	%	$	124.54			29.3	%		33,724
Mean	$	81.0			67.6	%	$	119.95			28.8	%		102,570
Westin Michigan Avenue(2)	$	105.6			69.5	%	$	151.86			29.3	%		751
% of Median		129.2	%		102.1	%		121.9	%		100.1	%		2.2	%

Shaded area indicates exclusion from ranges.

(1)	Based on public company 12/31/02 10K information.
(2)	Represents figures as of 12/31/02 based on management.

26

     Summary of Fairness Analysis

YIELD VALUE APPROACH — WITHOUT CASH ADJUSTMENT

($ in thousands)	Yield Value Range
	Low				High
Annual Distributions to LP (1)	$	3,645		–	$	3,645
Selected Required Yields		6.5	%	–		5.5	%
Implied Total Equity		56,076		–		66,271
Number of Partnership Units (2)		135,600		–		135,600
Per Unit Price	$	414.00		–	$	489.00

(1)  Based on 10-K dated 12/31/02 distributions paid per unit totaled $26.88 or approximately $3.6 million in the aggregate based on 135,600 partnership units.

(2)  Based on the Amended and Restated Agreement of Limited Partnership of Westin Hotels Limited Partnership as of 12/31/86.

27

     Summary of Fairness Analysis

YIELD VALUE APPROACH — WITHOUT CASH ADJUSTMENT

($ in thousands)	Yield Value Range
	Low				High
Annual Distributions to LP (1)	$	3,645		–	$	3,645
Selected Required Yields		9.0	%	–		8.0	%
Implied Total Equity		40,499		–		45,562
Add: Hotel Partnership Cash		21,200		–		21,200
Add: WHLP Cash		9,500		–		9,500
Implied Total Equity Plus Cash		71,199		–		76,262
Number of Partnership Units (2)		135,600		–		135,600
Per Unit Price	$	525.00		–	$	562.00

(1)  Based on 10-K dated 12/31/02 distributions paid per unit totaled $26.88 or approximately $3.6 million in the aggregate based on 135,600 partnership units.

(2)  Based on the Amended and Restated Agreement of Limited Partnership of Westin Hotels Limited Partnership as of 12/31/86.

28

     Summary of Fairness Analysis

YIELD DETERMINATION SUMMARY

		Yield Range
		Median				Mean			Low				High
Partnership Spectrum (low debt)			9.1	%	–		8.4	%		3.4	%	–		11.6	%
Partnership Spectrum (moderate to high debt)			6.6	%	–		6.3	%		3.0	%	–		9.2	%
Realty Stock Review			7.3	%	–		5.5	%		0.0	%	–		9.4	%
	HLHZ Selected Yield – Without Cash Adjustment		6.5	%	–		5.5	%
	HLHZ Selected Yield – With Cash Adjustment		9.0	%	–		8.0	%

29

     Summary of Fairness Analysis

REFINANCING SCENARIO

• According to the preliminary proxy statement and the draft analysis provided by JLL, dated May 7, 2003, the estimated per Unit net proceeds to limited partners of WHLP ranges from $141.00 to $177.00

• Per the draft analysis provided by JLL, dated May 7, 2003, and subject to certain assumptions (listed below) the implied valuation per Unit ranges from $526.00 to $562.00

• Material Assumptions

• $75.0 million refinancing in Q4 2003,

• Sale of the Hotel at the end of fiscal year 2005,

• Repayment of TRST debt with a $2.6 million prepayment penalty,

• Repayment Starwood subordinated debt,

• Repayment of Deferred Incentive Fees,

• Continued receipt of distributions, and

• Normal and customary closing and transaction costs

• Issues

• According to management, the likelihood of the refinancing closing, according to the terms set forth in the preliminary proxy statement, are not highly likely at this time.

• The per Unit value range of $526.00 to $562.00 could be negatively impacted by any reduction in the amount of refinance proceeds from $75.0 million.

30

Exhibits

Financial Statements

     Financial Statements

INCOME STATEMENT

($ in thousands)
Stand Alone		Fiscal Year Ended December 31,												LTM			Projected Fiscal Year End December 31,
		1999			2000			2001			2002			6/30/03			2003			2004			2005
Revenues
	Rooms	$	31,168		$	34,872		$	30,188		$	28,943		$	30,622		$	30,394		$	30,496		$	31,810
	Food & Beverage		10,082			9,096			7,610			8,160			8,654			9,413			9,518			11,066
	Telecommunications		1,468			1,409			1,152			992			1,003			1,099			1,155			1,007
	Minor Operating Departments		1,103			439			28			32			30			17			66			81
	Rent & Other		1,717			2,582			2,937			2,591			2,645			2,642			2,683			2,968
Total Revenue			45,538			48,398			41,915			40,718			42,953			43,564			43,918			46,933
Departmental Expenses
	Rooms		7,208			8,121			7,136			6,745			7,213			7,252			7,244			7,635
	Food & Beverage		8,551			7,297			6,264			6,454			6,544			6,766			7,188			8,300
	Telecommunications		398			459			429			347			380			407			414			373
	Minor Operating Depts		468			237			31			17			35			28			41			47
	Rent & Other		296			270			253			269			292			294			286			300
Total Departmental Expenses			16,921			16,384			14,113			13,831			14,463			14,748			15,173			16,653
Departmental Profit			28,617			32,014			27,802			26,887			28,490			28,815			28,745			30,279
Operating Expenses
	Administrative & General (1)		2,990			3,312			2,761			2,687			2,564			2,711			2,819			3,270
	Marketing		3,315			3,286			2,484			2,396			2,421			2,385			2,416			2,941
	Repairs & Maintenance		1,678			1,881			1,492			1,593			1,659			1,668			1,605			1,830
	Energy		959			1,012			1,117			1,042			1,127			1,141			1,107			1,220
Total Operating Expenses			8,943			9,491			7,854			7,718			7,770			7,905			7,947			9,262
Gross Operating Profit			19,674			22,524			19,948			19,169			20,719			20,910			20,798			21,017
Management Fee			1,594			1,694			1,467			1,425			1,503			1,525			1,537			1,643
Incentive Management Fee			2,045			—			2,624			2,700			2,802			2,550			2,420			2,279
Total Income Before Fixed Expenses			16,035			20,830			15,857			15,044			16,414			16,836			16,842			17,096
Fixed Expenses
	Rent Taxes & Insurance		4,467			4,329			4,314			4,300			4,416			4,843			4,870			5,632
	Owners Expense		28			10			7			(2,318	)		(2,734	)		(414	)		—			—
	F, F & E Reserve (2)		2,277			2,420			2,096			2,036			2,148			2,178			2,196			2,347
Total Fixed Expenses			6,772			6,758			6,417			4,018			3,829			6,607			7,066			7,979
Net Operating Income		$	9,263		$	14,072		$	9,440		$	11,026		$	12,585		$	10,229		$	9,775		$	9,117
NOI Margin			20	%		29	%		23	%		27	%		29	%		23	%		22	%		19	%
Interest Expense			2,616			2,592			2,549			2,503			2,479			2,454			2,454			2,549
Depreciation & Amortization			4,618			7,222			8,124			8,555			8,648			8,613			8,580			—
Net Income			2,028			4,258			(1,233	)		(33	)		1,458			(838	)		(1,259	)		6,567

(1)  Includes credit card commission expense.

(2)  FF&E Reserve is assumed to be 5% of total revenues per the Chicago FF&E Escrow Agreement.

33

     Financial Statements

BALANCE SHEET

($ in thousands)
					As of December,
Stand Alone		June 30, 2003			2002			2001			2000
Assets
Current Assets
	House Bank	$	114		$	98		$	108		$	122
	Operating Cash		19,075			24,543			10,497			5,231
	Other Cash		6,268			4,683			11,414			6,368
	Accounts Receivable, Net		3,912			2,346			1,666			3,223
	Inventories		494			510			560			593
	Prepaid Expenses		4			3			2			30
	Deposit		8			8			8			8
	Deferred Current		297			126			197			172
Total Current Assets			30,171			32,318			24,452			15,747
Property & Equipment
	Land		8,836			8,835			8,835			8,835
	Building & Improvements		55,728			55,597			54,538			54,538
	Furniture & Equipment		61,913			61,710			60,506			58,519
	Less: Accumulated Depreciation		(70,610	)		(66,303	)		(57,747	)		(49,624	)
Net Property & Equipment			55,868			59,840			66,131			72,268
Deferred Charges			336			360			408			456
Non-Current Assets			31			36			45			54
Total Assets		$	86,406		$	92,553		$	91,036		$	88,525
Liabilities & Shareholders Equity
Current Liabilities
	Accounts Payable, net	$	1,425		$	1,250		$	828		$	720
	Accrued Expenses		14,585			15,687			15,996			13,985
	Current Portion of Long Term Debt		690			644			594			549
Total Current Liabilities			16,700			17,581			17,418			15,253
Long Term Debt
	Debt-Long Term		24,624			29,986			30,629			31,224
Total Long Term Debt			24,624			29,986			30,629			31,224
Deferred Income			40			72			78			—
Total Liabilities		$	41,364		$	47,639		$	48,125		$	46,477
Shareholders Equity
	Owners Equity	$	875		$	875		$	875		$	875
	Retained Earnings		11,399			9,396			8,534			1,856
	Paid in Capital		32,640			32,640			32,640			32,640
	Current Period Earnings		128			2,003			862			6,678
Total Equity		$	45,042		$	44,914		$	42,911		$	42,049
Total Liabilities & Shareholders Equity		$	86,406		$	92,553		$	91,036		$	88,525

34

     Financial Statements

PARTNERSHIP EXPENSES

($ in thousands)

	As of December 31,
	1999		2000		2001		2002
Partnership Expenses (1)	$	495.5	$	569.7	$	592.0	$	480.3
Median		532.6
Mean		534.4
Normalized Partnership Expenses	$	530.0

(1)  Per WHLP consolidating income statements.

35

Capitalization Rate Information

Capitalization Rate Information

HOTEL CAP RATE INFORMATION

Hospitality Investment Survey ⁽¹⁾

Investment Criteria	Average			Low			High			2002 Average
Capitalization Rates (after fees and reserves)
Full-Service		11.00	%		8.50	%		13.00	%		10.94	%
Limited-Service		11.65	%		10.00	%		15.00	%		11.25	%
All Properties		11.24	%								10.94	%
Terminal Capitalization (after fees and reserves)
Full-Service		10.72	%		8.50	%		13.50	%		10.67	%
Limited-Service		11.28	%		10.00	%		16.00	%		11.50	%
All Properties		10.92	%								10.94	%
Internal Rate of Return/Discount Rate
Full-Service		15.47	%		10.00	%		23.00	%		14.39	%
Limited-Service		16.83	%		14.00	%		23.00	%		17.50	%
All Properties		15.96	%								16.15	%
Equity Yield
Full-Service		20.04	%		13.00	%		25.00	%		19.95	%
Limited-Service		19.70	%		13.00	%		25.00	%		25.25	%
All Properties		19.95	%								20.62	%
Cash-on-Cash Return
Full-Service		9.00	%		4.00	%		15.00	%		9.19	%
Limited-Service		8.25	%		4.00	%		10.00	%		10.00	%
All Properties		8.75	%								9.15	%
Holding Period (Years)
Full-Service		7.29			3.00			15.00			10.33
Limited-Service		8.50			4.50			15.00			5.00
All Properties		7.74									9.27

(1) Based on The Hospitality Research Group, the research affiliate of PKF Consulting

Shaded area represents the most relevant types of Hospitality Investment Criteria

37

Capitalization Rate Information

HOTEL CAP RATE INFORMATION

National Luxury Lodging Segment Cap Rate Support ⁽¹⁾

Key Indicators

Discount Rate (IRR)2	Current Quarter	Q3 2003	Year Ago
Range	10.00% — 15.00%	11.00% — 17.00%	11.00% — 17.00%
Mean	12.85%	13.05%	13.68%
Change (Basis Points)	0 BP	(-) 20 BP	(-) 83 BP

LTM Overall Cap Rate (OAR)2	Current Quarter	Q3 2003	Year Ago
Range	7.00% — 11.50%	6.00% — 13.00%	8.00% — 14.00%
Mean	9.70%	9.80%	10.56%
Change (Basis Points)	0 BP	(-) 10 BP	(-) 86 BP

Exit Residual Cap Rate	Current Quarter	Q3 2003	Year Ago
Range	8.00% — 12.5%	8.00% — 12.0%	8.00% — 14.0%
Mean	10.20%	10.15%	10.55%
Change (Basis Points)	0 BP	(+) 5 BP	(-) 35 BP

Average Marketing Time (in months)	Current Quarter	Q3 2003	Year Ago
Range	4.0 — 12.0	4.0 — 12.0	4.0 — 12.0
Mean	7.50	7.50	8.25
% Change			-9.1%

(1)	Based on the PwC Korpacz Real Estate Investor Survey Q1 2003.
(2)	Industry rates are based on unleveraged, all cash transactions.
(3)	Based on both quantitative and qualitative factors including but not limited to market risk.

38

Capitalization Rate Information

HOTEL MARKET INFORMATION

39

Capitalization Rate Information

HOTEL MARKET INFORMATION

Chicago Area Full Service Brand Analysis ⁽¹⁾

Brand (Full Service)	Total Rooms			Total Properties		Chicago Rank		National Rank
Hyatt		6,328			12		1		6
Holiday Inn		5,937			26		2		1
Hilton		4,980			7		3		4
Marriott		3,468			8		4		3
Sheraton		2,563			5		5		5
Total Full Service Market		52,416			162
Westin Michigan Avenue		751
Market Share		1.43	%

Note: With the exception of Ramada Inn, the top national full service hotel brands as measured by the number of rooms are well represented in the Chicago MSA. Additionally, a limited service market leader in Chicago, Extended Stay America, is not a national market leader. Both of these observations confirm the regional nature of the lodging industry. Just under half of all lodging properties in the Chicago MSA were built more than 11 years ago. Almost 27 percent of the hotel properties are under five years old.

(1) Based on the AH&LA 2001 Directory of Hotel & Motel Companies from PKF Consulting.

40

Discount Summary & Support

Discount Summary & Support

OVERVIEW OF APPLICABLE DISCOUNTS

For purposes of determining the appropriate lack of marketability and control discounts for the limited partnership units of WHLP, consideration was given to the underlying holdings and operations of WHLP: the Hotel Partnership and the Westin Michigan Avenue.

LACK OF MARKETABILITY DISCOUNTS

There are several company-specific factors which impact the level of marketability discounts associated with a subject security. Some of the relevant issues are addressed below.

Size of Underlying Entity

Size of the entity being valued is an important element in the overall consideration of value. Generally, the larger the entity, the more diversified its assets, products, services, etc., and the more professionally managed the business. Bigger entities typically have less overall risk. Furthermore, larger entities are generally more easily sold or financed against, consequently justifying lower discounts.

Management

Investors gravitate towards known and quality management expertise. Businesses that have successful management are more likely to be maximizing investor returns and thus warrant smaller discounts. In fact, certain well-run, closed-end funds can actually trade at a premium to net asset value due to management. As management expertise is more unknown or unproven, the desire for liquidity is enhanced.

Historical Distributions

Historical distributions increase the credibility of the company as well as attract potential investors. Larger historical distributions of a company tend to warrant a smaller discount applied to the security. In accordance with its partnership agreement, WHLP does not distribute earnings based on the underlying performance of the Hotel Partnership and ultimately the Westin Michigan Avenue.

42

Discount Summary & Support

OVERVIEW OF APPLICABLE DISCOUNTS (CONTINUED)

Diversification

Diversification limits the risk associated with owning a group of assets or a business in general. The more diversified an entity the less potential for material adverse investment results which are not desirable, especially for illiquid investments. Consequently, less diversified entities have higher discounts.

Leverage

Leverage can increase an investor’s potential return as well as risk. Because holders of illiquid securities are concerned about substantial risk and their inability to exit an investment during poor performance, substantial leverage can increase marketability discounts.

Volatility

Investors desire liquidity to gain flexibility in unpredictable markets. Frequently, when investors desire liquidity the most, asset values may be at depressed levels. Consequently, the more volatile the assets or business, the higher the discounts.

Past Performance of Business

The better performing a business or asset, the fewer economically beneficial changes that can be made to the business or asset. Consequently, good historical performance reduces applicable discounts. Furthermore, investors are more comfortable with a buy and hold strategy when past performance has been good.

Access to Capital

A company that has easy access to capital is at a huge advantage relative to its competitors. It is able to raise capital when it is expanding its business or paying down current debt in a short period of time. Having access to capital warrants a lower discount rate.

43

Discount Summary & Support

OVERVIEW OF APPLICABLE DISCOUNTS (CONTINUED)

LACK OF CONTROL DISCOUNT

WHLP’s limited partnership interests do not provide their holders with any control over WHLP and its assets. Most importantly, an investor in the limited partnership units would not have the right to unilaterally sell, transfer, encumber or otherwise dispose of the assets or make any distributions to limited partnership members. Consequently, an investor would discount the 100 percent value of the limited partnership units to reflect the diminution in value attributable to the lack of full control.

Those elements of control that do not accrue to minority shareholders include such items as:

• Election of directors and appointment of management

• Determination of management compensation and perquisites

• Declaration and payment of dividends or distributions

• Acquisition or sale of “treasury shares"

• Acquisition or liquidation of assets or the entity itself

• Establishment of policies and alteration of the course of business

• Diversification through acquisitions or internal development

• Consolidation through divestiture or merger

• Selection of suppliers

• Alteration of articles or bylaws

• Right to liquidate, dissolve, sell out or recapitalize

Determining an appropriate lack of control and lack of marketability discount for the WHLP limited partnership interests was based primarily on the following analyses and investigations:

• The Partnership Spectrum

• Reality Stock Review

44

Discount Summary & Support

PARTNERSHIP SPECTRUM

The Partnership Spectrum, a publication of Partnership Profiles, Inc., conducts price-to-value discount analyses for real estate partnerships traded in the secondary market. The publication has conducted this study annually for almost a decade. The most current study published in the May/June 2003 issue of the publication, features 77 partnerships owning real estate assets ranging from debt-free shopping centers to debt-laden apartment complexes.

The partnerships included in the study are publicly registered with the Securities and Exchange Commission, but are not publicly traded on any recognized securities exchange. Instead, units of the partnerships are bought and sold in the so-called limited partnership secondary market. This market is comprised of 10 to 12 independent securities brokerage firms that act primarily as intermediaries in matching buyers and sellers of units in non-listed partnerships of all types.

In this price-to-value discount study, the value of the partnership unit is either based on an annual third party fair market value appraisal or estimate by the general partner. The most recent unit values reported for the sample 77 partnerships were then compared to the weighted average prices at which investors purchased units in these partnerships in the partnership secondary market during the 12 months period ending May 2003. The study incorporates 271 actual purchase transactions. The 77 partnerships in the study were grouped into six categories. A description of the groups and the average discount and distribution yield for each group of partnerships is provided in the table below. Because the unit values likely reflect a controlling interest value and the purchase prices reflect a minority semi-marketable price, the discounts summarized below reflect both a minority discount and partial lack of marketability discount.

Partnership	# of		Average			Average
Category	Partnerships		Discount			Yield
Equity — Distributing (low or no debt)		15		16	%		8.40	%
Equity — Distributing (moderate-to-high debt)		19		27	%		6.20	%
Equity — Non-Distributing		8		32	%		0	%
Undeveloped Land		3		29	%		0	%
Triple-Net-Lease		26		16	%		9.70	%
Insured Mortgages		6		15	%		9.70	%

45

Discount Summary & Support

PARTNERSHIP SPECTRUM (CONTINUED)

EQUITY – DISTRIBUTING

The partnerships in this category consistently pay cash distributions and have historically been the bulk of secondary market trading volume involving real estate partnerships. The 15 partnerships in this category that are either debt-free or utilize low levels of debt financing traded at an average discount of 16 percent and an average cash distribution of 8.4 percent. The 19 partnerships in this group that employ moderate-to-high levels of debt financing traded at an average discount of 27 percent and had a cash distribution yield of 6.2 percent. As a whole, the 34 partnerships in this group traded at an average discount of 22 percent

EQUITY – NON-DISTRIBUTING

The real estate partnerships that traded at the highest average discount were generally those that did not pay any operating cash distributions. This situation is typically due to high debt levels combined with significant property improvement needs. The average discount for the 8 partnerships that comprise this group is 32 percent. Discounts among partnerships in this group can vary significantly, depending upon a partnership’s prospects for resuming operating distributions in the near future.

UNDEVELOPED LAND

The 3 partnerships in this group were formed to invest in undeveloped land on an all-cash basis. The objective of these partnerships is to enhance the value of their land through pre-development activities. The partnerships pay cash dividends as parcels are sold; assuming proceeds are not needed to fund pre-development costs at other parcels. The discounts for these partnerships fall in a range of 26 percent to 34 percent with an overall average of 29 percent.

46

     Discount Summary & Support

PARTNERSHIP SPECTRUM (CONTINUED)

TRIPLE-NET-LEASE

All or substantially all of the real estate properties owned by the 26 partnerships in this group are net-leased to tenants pursuant to long-term lease agreements, whereby the lessees are required to pay all insurance, taxes and day-to-day maintenance expenses associated with the properties. Such partnerships trade at a relatively low discount because they typically pay high cash distributions on a very predictable basis. The average discount for triple-net-lease partnerships is 16 percent and the average distribution yield is 9.7 percent.

INSURED MORTGAGE PROGRAMS

Substantially all of the real estate assets owned by the 6 programs in this group consist of mortgage loans and/or mortgage backed securities secured by multi-family apartment complexes, whereby payment of principal and interest is substantially guaranteed by the federal government or an agency thereof. These debt-free partnerships consistently pay cash distributions, and because their mortgage loans are insured, they trade at the lowest discount among the various categories of real estate partnerships. The partnerships in this group traded at an average discount of 15 percent and offered an average cash distribution yield of 9.7 percent.

SUMMARY

Since the subject securities are low yielding securities and the subject partnership has a low level of debt, Houlihan Lokey focused its analysis on the partnership categories that pay either no or nominal cash distributions with low levels of debt. As such, Equity–Distributing (low or no debt) and Equity-Distributing (moderate to high debt) were considered most comparable. Houlihan Lokey determined the appropriate discount level of the WHLP limited partnership interests at 15 percent. Because the partnerships units represent a minority position within the partnerships and because the units trade on a secondary market, the overall average discount is comprised of both a semi-marketability discount and a minority discount.

47

     Discount Summary & Support

EQUITY PARTNERSHIPS — DISTRIBUTING (LOW OR NO DEBT)

	Average		Average			Distributing	Debt	Distribution
Partnership	Trade Price		Discount			Frequency	Low, High	Rate
ChrisKen Partners Cash Income Fund	$	340.0		19.0	%	Quarterly	Low	NSR		NSR
First Capital Income Properties Series XI	$	175.1		14.0	%	Quarterly	Low	$	16.00		9.1	%
Public Storage Properties Ltd. (III)	$	1,206.8	NA			Quarterly	Low	$	140.00		11.6	%
Public Storage Properties Ltd. IV	$	1,393.0	NA			Quarterly	Low	$	136.00		9.8	%
Public Storage Properties Ltd. V	$	1,214.4	NA			Quarterly	Low	$	116.00		9.5	%
Rancon Income Fund I	$	255.0		30.0	%	Semi-Annual	Low	$	20.00		7.8	%
Realty Parking Properties LP	$	7.1		19.0	%	Quarterly	Low	NSR		NSR
Wells Real Estate Fund III-A	$	0.7		8.0	%	Quarterly	Low	$	0.05		6.4	%
Wells Real Estate Fund IV-A	$	7.6		17.0	%	Quarterly	Low	$	0.60		7.9	%
Wells Real Estate Fund IX-A	$	8.3		7.0	%	Quarterly	Low	$	0.86		10.4	%
Wells Real Estate Fund V-A	$	7.0		18.0	%	Quarterly	Low	$	0.24		3.4	%
Wells Real Estate Fund VI-A	$	7.5		17.0	%	Quarterly	Low	$	0.46		6.1	%
Wells Real Estate Fund VII-A	$	8.7		8.0	%	Quarterly	Low	$	0.98		11.3	%
Wells Real Estate Fund XI-A	$	8.0		11.0	%	Quarterly	Low	$	0.84		10.6	%
WHLP	$	469.4		23.0	%	Quarterly	Low	$	26.88		5.7	%

Median Discount	17.0	%	Median Yield	9.1	%
Average Discount	15.9	%	Average Yield	8.4	%
Median Discount (without WHLP)	17.0	%	Median Yield (without WHLP)	9.3	%
Average Discount (without WHLP)	15.3	%	Average Yield (without WHLP)	8.7	%

48

     Discount Summary & Support

EQUITY PARTNERSHIPS — DISTRIBUTING (MODERATE TO HIGH DEBT)

	Average		Average			Distributing	Debt	Distribution
Partnership	Trade Price		Discount			Frequency	Low, High	Rate
American Retirement Villas Props. III	$	262.8		23.0	%	Sporadic	High	NSR		NSR
Angeles Income Properties 6	$	173.4		20.0	%	Sporadic	High	NSR		NSR
Angeles Income Properties II	$	95.5		41.0	%	Sporadic	High	NSR		NSR
Angeles Income Properties	$	230.0		38.0	%	Sporadic	High	NSR		NSR
Brown-Benchmark Properties	$	17.1		19.0	%	Quarterly	High		0.75		4.40	%
Century Properties Fund XV	$	106.0		38.0	%	Sporadic	High	NSR		NSR
Century Properties Fund XVI	$	44.0		24.0	%	Sporadic	High	NSR		NSR
Century Properties Fund XVII	$	303.0		35.0	%	Sporadic	High	NSR		NSR
Century Properties Fund XVII	$	500.0		9.0	%	Sporadic	High	NSR		NSR
ChrisKen Growth & Income L.P. II	$	244.7		12.0	%	Sporadic	High	NSR		NSR
Consolidated Capital Growth Fund	$	225.0		27.0	%	Sporadic	High	NSR		NSR
Consolidated Capital Institutional Props. 1	$	173.1		53.0	%	Sporadic	High	NSR		NSR
Consolidated Capital Institutional Props. 3	$	46.0		32.0	%	Sporadic	High	NSR		NSR
Consolidated Capital Properties IV	$	165.0		25.0	%	Sporadic	High	NSR		NSR
HCW Pension Real Estate Fund	$	142.0		24.0	%	Sporadic	High	NSR		NSR
Inland Real Estate Corporation	$	10.2		7.0	%	Quarterly	High	$	0.94		9.2	%
Oxford Residential Properties I	$	762.0		25.0	%	Sporadic	High	NSR		NSR
Uniprop MHC Income Fund	$	389.9		39.0	%	Quarterly	High	$	12.00		3.0	%
Uniprop MHC Income Fund II	$	11.3		25.0	%	Quarterly	High	$	0.92		8.7	%

Median Discount	25.0	%	Median Yield	6.6	%
Average Discount	27.2	%	Average Yield	6.3	%

49

     Discount Summary & Support

EQUITY PARTNERSHIPS — DISTRIBUTING PAYOUT RATIOS ⁽¹⁾

     ($ thousands)

				Plus: Deprecation		Less:		Free		Cash		Total		Cash to			LP Cash		GP Cash		LP Payout
Partnership	Net Income			& Amortization		Cap Ex		Cash Flow		Balance		Assets		Total Assets			Distributions		Distributions		Ratio (3)			Date
Public Storage Properties Ltd. IV	$	7,311.0		$	951.0	$	359.0	$	7,903.0	$	698.0	$	21,012.0		3.3	%	$	5,680.0	$	1,970.0		71.9	%		12/31/02
Public Storage Properties Ltd. V		6,166.0			931.0		364.0		6,733.0		1,439.0		26,864.0		5.4	%		3,300.0		1,144.0		49.0	%		12/31/02
Realty Parking Properties LP		5,588.2			115.8		0.0		5,704.0		687.4		14,631.5		4.7	%		8,664.3		0.0		151.9	%		12/31/02
Wells Real Estate Fund I		(410.9	)		652.1		21.0		220.2		10,404.8		21,285.2		48.9	%		987.1		0.0		448.3	%		12/31/02
Wells Real Estate Fund III-A (2)		(111.1	)		643.6		0.0		532.6		2,613.0		13,576.7		19.2	%		232.8		0.0		43.7	%		12/31/02
Wells Real Estate Fund IV-A		385.0			0.0		0.0		385.0		28.6		8,928.6		0.3	%		906.5		0.0		235.4	%		12/31/02
Wells Real Estate Fund IX-A		1,535.1			0.0		0.0		1,535.1		121.3		24,566.1		0.5	%		2,818.0		0.0		183.6	%		12/31/02
Wells Real Estate Fund V-A		403.8			0.0		0.0		403.8		29.7		10,803.5		0.3	%		890.9		0.0		220.7	%		12/31/02
Wells Real Estate Fund VI-A		905.3			0.0		0.0		905.3		926.8		16,015.5		5.8	%		1,572.0		0.0		173.6	%		12/31/02
Wells Real Estate Fund VII-A		803.7			0.0		0.0		803.7		993.8		15,340.4		6.5	%		1,678.6		0.0		208.9	%		12/31/02
Wells Real Estate Fund XI-A		746.8			0.0		0.0		746.8		91.0		13,081.6		0.7	%		1,275.0		0.0		170.7	%		12/31/02
WHLP	$	1,383.0		$	8,564.0	$	2,264.0	$	7,683.0	$	39,236.0	$	42,197.0		93.0	%	$	3,645.0	$	0.0		47.4	%		12/31/02
Mean															15.7	%						167.1	%
Median															5.0	%						172.2	%
WHLP % of median															1849.5	%						27.6	%
Mean (without WHLP)															8.7	%						178.0	%
Median (without WHLP)															4.7	%						173.6	%
WHLP % of median															1979.2	%						27.3	%

(1)	Based on 10-k public company financial statements.
(2)	Net income excludes impairment loss and loss on disposition.
(3)	Based on LP Cash distributions as a percentage of Free Cash Flow

50

     Discount Summary & Support

YIELD SUPPORT — REALTY STOCK REVIEW

Reality Stock Review ⁽¹⁾

Lodging REITs	Yield
Boykin Lodging		0.00	%
Equity Inns		7.50	%
Host Marriot Corp		0.00	%
Felcor Lodging		7.40	%
Hospitality PPTYS TR		9.40	%
Innkeepers USA TR		4.20	%
LA Salle Hotel PPTYS		5.90	%
RFS Hotel Invs		8.10	%
Winston Hotels		7.30	%
Mean		5.53	%
Median		7.30	%

(1) Based on the Realty Stock Review dated May 30, 2003.

51

Synopses of
Comparable Public Companies

     Synopses of Comparable Public Companies

FOUR SEASONS HOTELS INC

Four Seasons Hotels Inc. (FS) is one of the world’s leading managers of luxury hotels and resorts. As of March 1, 2002, the company managed 54 luxury hotel and resort properties and two Residence Clubs, containing 15,184 guestrooms and units. These properties are operated primarily under the Four Seasons and Regent brand names, in principal cities and resort destinations in 25 countries in North America, Europe, Asia, the Middle East, Australia, the Caribbean and South America. Twenty-four hotel and resort properties to be operated under the Four Seasons brand name are under construction or development in a further nine countries around the world. Thirteen of these new hotels and resorts include a Residence Club or other residential component. The company’s goal is to offer business and leisure travelers the finest accommodation in each destination it serves.

53

     Synopses of Comparable Public Companies

FOUR SEASONS HOTELS INC (CONTINUED)

As of December 31, 2001, hotels were located in major international financial centers, such as London, New York, Paris, Chicago, Washington, Los Angeles, Tokyo, Milan, Shanghai, Singapore, Toronto and Sydney, as well as in emerging international markets, such as Berlin, Dublin and Mexico City. FS also manages resorts in world-class destinations, such as California, Hawaii, Nevis, Mexico and Bali, and has Residence Clubs in active sales and operation in California and Arizona. FS anticipates that it will continue to expand in urban and resort destinations where consumer demand warrants a luxury property. In 2001, approximately 68 percent, 12 percent, 15 percent and 5 percent of the company’s management revenues were derived from hotels and resorts in North America, Asia/Pacific, Europe, and the Middle East/Caribbean/South America, respectively.

In 2001, FS opened properties in Dublin, Prague, Caracas and San Francisco. It also assumed the management of two existing properties in Buenos Aires, Argentina and Carmelo, Uruguay, now re-branded Four Seasons.

FS will open five Four Seasons hotels and resorts in 2002. These include the newly opened Four Seasons Hotel Shanghai, as well as hotels in Amman, Riyadh and Tokyo at Marunouchi, and a resort in Sharm el Sheikh.

Expected openings for 2003 include Four Seasons hotels, resorts or residence clubs in Budapest; The Bahamas; Hampshire, England; Istanbul at the Bosphorus; Jackson Hole; Miami; Provence at Terre Blanche; Punta Mita; Sao Paulo; and Sedona.

FS expects to open five to seven new luxury properties each year. This should enable the company to double its size within seven to ten years.

54

     Synopses of Comparable Public Companies

HILTON HOTELS CORP.

Hilton Hotels Corp. (HLT) is primarily engaged in the ownership, management and development of hotels, resorts and vacation ownership properties and the franchising of lodging properties. As of December 31, 2002, the company’s hotel system included 2,084 properties, totaling approximately 337,000 rooms worldwide. Of such properties, HLT owned an interest in and operated 128 hotels, leased seven hotels, managed 201 hotels owned by others and franchised 1,721 hotels owned and operated by third parties. Also included in the number of properties are 27 timeshare properties which HLT managed or franchised. All of these hotels are located in the United States, with the exception of 12 hotels in which HLT owns an interest and/or manages and 45 hotels franchised by the company.

As of December 31, 2002, the company managed (and in some cases, partially owned) hotel properties in Belgium, Egypt, England, Hong Kong, Ireland, Mexico, Puerto Rico, Singapore and Turkey. HLT also franchised hotel properties in Canada, Colombia, Costa Rica, Ecuador, Mexico, Peru, Puerto Rico and Venezuela. As of December 31, 2002, HLT stated that the amounts of revenues, operating profits and identifiable assets attributable to areas outside the United States had not to that date been material.

55

     Synopses of Comparable Public Companies

HILTON HOTELS CORP. (CONTINUED)

HLT’s hotel brands include Hilton, Hilton Garden Inn, Doubletree, Embassy Suites, Hampton, Homewood Suites by Hilton and Conrad. The company develops and operates vacation ownership resorts through Hilton Grand Vacations Company and its related entities, which are wholly owned.

The company’s Hotel Ownership segment derives revenue primarily from owned, majority owned and leased hotel properties and earnings from unconsolidated affiliates. This segment accounted for 59 percent of total revenues in 2002. The Managing and Franchising segment (33.3 percent) provides services including hotel management and licensing of HLT’s brands to franchisees.

HLT intends to grow its hotel brands primarily through franchising and the addition of management contracts, which require little or no capital investment. In addition, it will continue to invest in capital replacements and select major renovation projects at its owned hotels, and may seek to acquire hotel properties on a strategic and selective basis. During 2002, the company added 143 properties with approximately 18,000 rooms to its portfolio; 45 properties with approximately 8,400 rooms were sold or otherwise divested. In 2003, HLT expects to add 100 to 115 hotels with 12,000 to 15,000 rooms to its system, with Hampton and Hilton Garden Inn accounting for most of the new development.

56

Synopses of Comparable Public Companies

HOST MARRIOTT CORP.

Host Marriott Corp. (HMT) is a self-managed and self-administered real estate investment trust (REIT) that owns full-service hotel properties conducted through an operating partnership, which issues units of partnership interest (OP Units), Host Marriott, L.P. (the Operating Partnership), and its subsidiaries. The company is the sole general partner of the Operating Partnership and as of Mar. 22, 2002, owns approximately 92 percent of the Operating Partnership.

As of Mar. 1, 2002, HMT owned or had controlling interests in 122 upscale and luxury, full-service hotel lodging properties throughout the United States, Canada and Mexico. Most of the hotels are operated under the Marriott, Ritz-Carlton, Four Seasons, Hilton, Hyatt and Swissotel brand names. Of these properties, 109 are managed or franchised by Marriott International, Inc. and its subsidiaries.

HMT’s hotels average approximately 475 rooms; twelve of the hotels have more than 750 rooms. Hotel facilities typically include meeting and banquet facilities, a variety of restaurants and lounges, swimming pools, gift shops and parking facilities. Hotels primarily serve business and pleasure travelers and group meetings at locations that are generally well situated with significant barriers to entry by competitors. The average age of the properties is 18 years.

57

Synopses of Comparable Public Companies

HOST MARRIOTT CORP. (CONTINUED)

Through subsidiaries, HMT owned four Canadian and two Mexican properties, with 2,548 rooms as of December 31, 2001. HMT also maintains investments in general and/or limited partner interests in partnerships that in the aggregate own three full-service hotels and 158 limited service hotels, as well as other real estate investments.

HMT’s hotels are managed and operated by third parties pursuant to management agreements with its subsidiaries to which the company has leased its hotels. The initial term of management agreements is generally 15 to 20 years in length with multiple renewal terms.

Revenues increased $2.4 billion, or 171 percent, to approximately $3.8 billion for 2001; however, in 2001 HMT acquired certain lessee interests from Crestline Capital Corp. through its HMT Lessee LLC subsidiary that changed its operating structure, and its 2001 revenues were therefore not materially comparable to 2000 revenues. In the Sept. 11, 2001 terrorist attacks, HMT’s New York World Trade Center Marriott hotel was destroyed, its New York Marriott Financial Center hotel was substantially damaged, and the resulting disruptions of commercial air travel had an adverse effect on operations throughout the remainder of 2001.

58

Synopses of Comparable Public Companies

LASALLE HOTEL PROPERTIES

LaSalle Hotel Properties (LHO) is a self-managed and self-administered real estate investment trust that buys, owns and leases primarily upscale and luxury full-service hotels located in convention, resort and major urban business markets. As of December 31, 2002, LHO owned interests in 17 hotels with approximately 5,800 rooms/suites located in eleven states and the District of Columbia. Independent hotel operators manage the hotels.

Substantially all of the Trust’s assets are held by, and all of its operations are conducted through, LaSalle Hotel Operating Partnership, L.P. The Trust is the sole general partner of the partnership with an approximate 97.7 percent ownership at December 31, 2002. The remaining 2.3 percent was held by other investors in the form of 424,686 units of limited partnership interest. Partnership units are redeemable for cash or, at the option of the Trust, for a like number of common shares of beneficial interest of the Trust. The hotels are leased under participating leases that provide for rental payments equal to the greater of base rent or participating rent based on fixed percentages of gross hotel revenues.

59

Synopses of Comparable Public Companies

LASALLE HOTEL PROPERTIES (CONTINUED)

The Trust’s primary objectives are to provide a stable stream of income to its shareholders through increases in distributable cash flow and to increase long-term total returns to shareholders through appreciation in the value of its common shares of beneficial interest. To achieve these objectives, the Trust seeks to: enhance the return from, and the value of, the hotels in which it owns interest and any additional hotels the Trust may acquire or develop; and invest in or acquire additional hotel properties on favorable terms.

The Trust seeks to achieve revenue growth principally through: renovations and/or expansions at selected hotels; acquisitions of full-service hotels located in convention, resort and major urban business markets in the United States and abroad, especially upscale and luxury full-service hotels in such markets where the Trust perceives strong demand growth or significant barriers to entry; and selective development of hotel properties, particularly upscale and luxury full-service hotels in high demand markets where development economics are favorable.

LHO believes that its regular program of capital improvements at the hotels helps maintain and enhance its competitiveness and maximizes revenue growth under the participating leases. The Trust planned to invest approximately $28.0 million on renovations and additional capital improvements at its hotel properties during 2003.

60

Synopses of Comparable Public Companies

RFS HOTEL INVESTORS, INC.

RFS Hotel Investors, Inc. (RFS), a hotel real estate investment trust which, at December 31, 2002, owned interests in 57 hotels with 8,271 rooms located in 24 states (collectively the Hotels) through its approximately 92 percent equity interest in RFS Partnership, L.P. (the Operating Partnership). At December 31, 2002, third party limited partners owned the remaining 8 percent of the Operating Partnership. RFS is the general partner in the Operating Partnership. The Operating Partnership is the issuer of public debt.

Many of the company’s hotels are located in attractive metropolitan areas or growing secondary markets and are well located within these markets. All but two of the company’s hotels are operated under franchises from nationally recognized franchisors such as Marriott International, Inc., Hilton Hotels Corporation, Starwood Hotels & Resorts, Inc. and Six Continents PLC.

In 2002, the company sold the 153-room Comfort Inn in Fort Mill, SC for $3.25 million, resulting in a loss on sale of approximately $3.8 million. The net proceeds were used to reduce borrowings under the company’s line of credit.

61

Synopses of Comparable Public Companies

RFS HOTEL INVESTORS, INC. (CONTINUED)

At December 31, 2002, the company leased five hotels to two third-party lessees. Fifty hotels are managed by Flagstone Hospitality Management LLC and the remaining seven hotels are managed by four other third-party management companies. RFS seeks to increase operating cash flows through aggressive asset management. It applies its asset management and investing expertise to the renovation, redevelopment and rebranding of its existing hotels and the maintenance of strong strategic relationships with its brand owners and managers.

Over the past five fiscal years, the company has spent approximately $101 million upgrading, renovating and redeveloping existing hotels in order to enhance their competitive position and improve cash flow. Recent examples of this strategy include: an $11 million renovation and conversion of the 234-room San Francisco Fisherman’s Wharf hotel from a Ramada Plaza to a Hilton; a $4.5 million, 40-room addition to the Beverly Heritage hotel in Milpitas, CA; the conversion of the Sunnyvale, CA hotel from a Four Points by Sheraton to a Sheraton; the renovation and conversion of the Clayton, MO hotel from a Holiday Inn to a Sheraton; and the conversion of the Birmingham, AL hotel from a Sheraton to a Hilton.

62 EX-99.(C)(4) 9 p68165t3exv99wxcyx4y.htm EX-(C)(4)

Exhibit (c)(4)

DRAFT

REFINANCING ANALYSIS

July 24, 2003

DRAFT

TABLE OF CONTENTS

Table of Contents	i
Introduction	1
Executive Summary	2
Scenario I:
A. YE 2005 Sale	7
B. YE 2005 Sale with Additional Prepayments	9
C. 10/31/03 $75 Million Refinancing and YE 2005 Sale	11
Scenario II:
A. YE 2006 Sale	16
B. YE 2006 Sale with Additional Prepayments	18
C. 10/31/03 $75 Million Refinancing and YE 2006 Sale	20
Appendix	24

Refinancing Closing Costs

TRST Revised Note Schedule with One $5 Million Prepayment

TRST Revised Note Schedule with Four $5 Million Prepayments

Starwood Subordinate Loan Schedule

Scenario I Deferred Incentive Fee Balances

Scenario II Deferred Incentive Fee Balances

Scenario I Statement of Projected Cash Flows

Scenario I Sale Proceeds (Valuation Matrix)

Scenario I Cash Account Balances

Scenario II Statement of Projected Cash Flows

Scenario II Sale Proceeds (Valuation Matrix)

Scenario II Cash Account Balances

The Westin Michigan Avenue 2003 Reforecast as of 6/1/03

The Westin Michigan Avenue 2004-2005 Projections as of 4/1/03

The Westin Michigan Avenue Capital Plan as of 5/1/02

DRAFT

INTRODUCTION

Jones Lang LaSalle Hotels (“JLLH”) has been engaged by Starwood Hotels & Resorts, Worldwide, Inc. on behalf of Westin Realty Corp., the General Partner of the Westin Hotel Limited Partnership (“WHLP”), to provide a refinancing analysis of The Westin Michigan Avenue (the “Property”). We understand that the information contained within this report will be used by Westin Realty Corp. to determine the appropriate course of action regarding the sale or refinancing of the Property. The general terms of our appointment are set out in our letter dated October 31, 2001.

This report is based on the real estate and investment markets prevailing as of July 24, 2003.

The relevant Assumptions and Limiting Conditions upon which our report is prepared should be read in conjunction with this report.

In accordance with our standard practice, this report is confidential to the party to whom it is addressed. No responsibility is accepted to any third parties and neither the whole nor any part nor any reference thereto may be published in any document, statement or circular nor in communication with third parties without our prior written approval of the form and context in which it will appear.

1

DRAFT

EXECUTIVE SUMMARY

Jones Lang LaSalle Hotels has analyzed The Westin Michigan Avenue under the scenarios described below.

SCENARIO DESCRIPTION

Scenario I – YE 2005 Sale

A.     YE 2005 Sale Base Case

“As Is” value is calculated assuming no capital expenditures made above the FF&E Reserve in future years. This scenario assumes one $5 million prepayment has been made on the existing TRST loan on 3/1/03. Under this scenario, the sales price range is $110.2 million to $117.1 million, with a midpoint of $113.6 million. In order to account for the risk inherent in projecting cash flows¹ to derive a sales price for the 2005 sale year, a 13.0% discount rate² has been utilized. Under this scenario, given the uncertainty in the current market due to geopolitical and economic conditions as well as the Hotel’s declining operational projections, the lower end of the given price range is a more realistic assumption.

B.     YE 2005 Sale With Additional Prepayments

“As Is” value is calculated assuming no capital expenditures made above the FF&E Reserve in future years. This scenario assumes two $5 million prepayment made on the existing TRST loan on 3/1/03 and 12/1/03 and two additional payments on 3/1/04 and 6/1/04. Under this scenario, the sales price range is $110.2 million to $117.1 million, with a midpoint of $113.6 million. In order to account for the risk inherent in projecting cash flows¹ to derive a sales price for the 2005 sale year, a 13.0% discount rate² has been utilized.

C.     10/31/03 $75 Million Refinancing and YE 2005 Sale

This scenario assumes a $75 million refinancing occurs by 10/31/03, and a sale occurs by 12/31/05. This scenario assumes one $5 million prepayment has been made on the existing TRST loan on 3/1/03. The refinancing assumes an interest only LIBOR loan, with a LIBOR base rate of 125 bps, 185 bps spread, and 25 bps annual increases in LIBOR². Under this scenario, the sales price range is $110.2 million to $117.1 million, with a midpoint of $113.6 million.

In order to project the accrual of the incentive fees, assumptions were made as to the most likely terms a buyer would achieve for an acquisition financing. For acquisition financing, $70 million in proceeds, all-in fixed interest rate of 6.5% and 25-year amortization are assumed².

In order to account for the risk inherent in projecting cash flows¹ to derive a sales price for the 2005 sale year, a 13.0% discount rate² has been utilized.

¹ JLLH underwriting cash flow assumptions are based on The Westin Michigan Avenue’s historical operating performance, the 2003 Reforecast as of 6/1/03, the 2004-2005 Projections as of 4/1/03 and current hotel industry standards. (See Appendix)

² JLLH assumptions based on the current hotel real estate and capital market conditions.

2

DRAFT

SCENARIO DESCRIPTION (CONT.)

Scenario II – YE 2006 Sale

A.     YE 2006 Sale Base Case

“As Is” value is calculated assuming no capital expenditures made above the FF&E Reserve in future years. This scenario assumes one $5 million prepayment has been made on the existing TRST loan on 3/1/03. Under this scenario, the sales price range is $111.9 million to $118.9 million, with a midpoint of $115.3 million. In order to account for the risk inherent in projecting cash flows¹ to derive a sales price for the 2006 sale year, a 14.0% discount rate² has been utilized. Under this scenario, given the uncertainty in the current market due to geopolitical and economic conditions as well as the Hotel’s declining operational projections, the lower end of the given price range is a more realistic assumption.

B.     YE 2006 Sale With Additional Prepayments

“As Is” value is calculated assuming no capital expenditures made above the FF&E Reserve in future years. This scenario assumes two $5 million prepayment made on the existing TRST loan on 3/1/03 and 12/1/03 and two additional payments on 3/1/04 and 6/1/04. Under this scenario, the sales price range is $111.9 million to $118.9 million, with a midpoint of $115.3 million. In order to account for the risk inherent in projecting cash flows¹ to derive a sales price for the 2006 sale year, a 14.0% discount rate² has been utilized.

C.     10/31/03 $75 Million Refinancing and YE 2006 Sale

This scenario assumes a $75 million refinancing occurs by 10/31/03, and a sale occurs by 12/31/06. This scenario assumes one $5 million prepayment has been made on the existing TRST loan on 3/1/03. The refinancing assumes an interest only LIBOR loan, with a LIBOR base rate of 125 bps, 185 bps spread, and 25 bps annual increases in LIBOR². Under this scenario, the sales price range is $111.9 million to $118.9 million, with a midpoint of $115.3 million.

In order to project the accrual of the incentive fees, assumptions were made as to the most likely terms a buyer would achieve for an acquisition financing. For acquisition financing, $70 million in proceeds, all-in fixed interest rate of 6.5% and 25-year amortization are assumed².

In order to account for the risk inherent in projecting cash flows¹ to derive a sales price for the 2006 sale year, a 14.0% discount rate² has been utilized.

¹ JLLH underwriting cash flow assumptions are based on The Westin Michigan Avenue’s historical operating performance, the 2003 Reforecast as of 6/1/03, the 2004-2005 Projections as of 4/1/03 and current hotel industry standards. (See Appendix)

² JLLH assumptions based on the current hotel real estate and capital market conditions.

3

DRAFT

Utilizing the assumptions discussed above and later in this report, the following is a summary of proceeds achievable for each scenario. A detailed description of each scenario is provided in the following pages.

REFINANCING ANALYSIS SUMMARY

     Scenario I: YE 2005 Sale

		Total Proceeds (1) (2)							Per LP Unit (2)
Refinancing Summary		Low			High		Midpoint		Low		High			Midpoint
A. YE 2005 Sale with No Additional Prepayments		$	76,038,000	to	$	81,147,800	$	78,592,900	$	560.75	to	$	598.44	$	579.59
B. YE 2005 Sale with Three Additional Prepayments		$	77,779,300	to	$	82,889,100	$	80,334,200	$	573.59	to	$	611.28	$	592.44
C. $75 M Refinancing (10/31/03) and YE 2005 Sale		$	75,642,500	to	$	80,752,400	$	78,197,450	$	557.84	to	$	595.52	$	576.68
	(No Additional Prepayments)

Scenario II: YE 2006 Sale

		Total Proceeds (1) (2)							Per LP Unit (2)
Refinancing Summary		Low			High		Midpoint		Low			High		Midpoint
A. YE 2006 Sale with No Additional Prepayments		$	76,335,200	to	$	80,890,400	$	78,612,800	$	562.94	to	$	596.54	$	579.74
B. YE 2006 Sale with Three Additional Prepayments		$	78,853,700	to	$	83,408,800	$	81,131,250	$	581.52	to	$	615.11	$	598.31
C. $75 M Refinancing (10/31/03) and YE 2006 Sale		$	74,838,900	to	$	79,394,000	$	77,116,450	$	551.91	to	$	585.50	$	568.71
	(No Additional Prepayments)

1.	Discounted to 10/31/03 present value terms.
2.	Based on a 2005 midpoint sale price of $113.6 million and a 2006 midpoint sale price of $115.3 million.
3.	Assumes 135,600 Limited Partnership units, based on the WHLP 10K 12/31/02 SEC Filing.

Amounts received by the WHLP in future years, i.e. sales proceeds at 12/31/05 and 12/31/06, quarterly distributions and the distribution of the Cash Account Balance, have been discounted at 13.0%, which represents the JLLH estimated WHLP weighted average cost of capital.

ASSUMPTIONS

Each scenario assumes the following sources of distributions to the Limited Partners:

1.	Proceeds from a sale and/or a refinancing;
2.	Quarterly Distribution payments ($6.72 per quarter per share or $26.88 per year) based on the cash distributions made in 2002 as reported in the WHLP 10K 12/31/02 SEC Filing; and
3.	Cash Account ending balance. This account equals the beginning Cash Account balance (based on the WHLP 10K 12/31/02 SEC Filing and reconciliation by Westin Realty Corp.) plus net cash flow from operations less debt service, less Quarterly Distribution payments, less total capital expenditures, less $10 million (withheld in the year of a sale transaction for WHLP liquidation expenses, subsequently distributed to the Limited Partners 12 months following the sale less $2.4 million in liquidation, legal and general and administrative expenses estimated by Westin Realty Corp.). Note: The $10 million amount is withheld for legal and liquidation costs while the $400,000 annual A&G expense accounts for the regular operation of the partnership, unrelated to the sale or refinancing of the Property.

4

DRAFT

This report has been made with the following general assumptions and limiting conditions:

1.	This report presents conclusions, projections and forecasts such as are typically used in the underwriting and valuation of income-producing properties, and are based on information provided by third parties. Actual results may vary from those presented in this report. There is no guaranty or warranty that conclusions, projections and forecasts presented within this report can be attained.
2.	The consultant is not obligated to predict future political, economic or social trends. The consultant assumes no responsibility for economic factors that may affect or alter the opinions in this report if said economic factors were not present as of the date of this report.
3.	Responsible ownership and competent property management are assumed.
4.	The information furnished by third parties is believed to be reliable, but no warranty is given for its accuracy and the consultant is not responsible for the accuracy of such information.
5.	The property is assumed to be free and clear of any or all liens or encumbrances unless otherwise stated.
6.	It is assumed that there are no hidden or unapparent conditions of the property, subsoil or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them.
7.	It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless a non-conformity has been identified, described and considered in the report.
8.	Possession of this report, or a copy thereof, does not carry with it the right of publication.
9.	Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the consultant, or the firm with which the consultant is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the consultant.

5

DRAFT

SCENARIO I: YEAR-END 2005 SALE

6

DRAFT

     A.     2005 YEAR-END SALE

7

DRAFT

A.     DISTRIBUTION FOOTNOTES

(1)	The sales price range derived represents a minimum and maximum value estimated by JLLH (See Appendix).
(2)	JLLH estimate based on current hotel real estate and capital market conditions.
(3)	Revised 12/31/05 year-end balance based on the TRST Second Amendment Note Schedule taken from the WHLP 10Q 6/30/97 SEC Filing with one $5 million prepayment made on 3/1/03. (See Appendix)
(4)	12/31/05 Balance derived based on 12/31/02 actual balance of $10,404,000 as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%.
(5)	12/31/05 balance estimated by JLLH based on JLLH, Westin Realty Corp. and The Westin Michigan Avenue actual payments and projected accruals and payments.
(6)	Preliminary WHLP proxy process costs estimate provided by Westin Realty Corp.
(7)	Discounted to 10/31/03 present value terms, utilizing a 13.0% discount rate, the JLLH estimated WHLP cost of capital.
(8)	Assumes 135,600 Limited Partnership units as reported on the WHLP 10K 12/31/02 SEC Filing.
(9)	Assumes per unit distribution of $6.72 per quarter or $26.88 ($4.48 for 11/1/03-12/31/03), 135,600 WHLP units (based on the WHLP 10K 12/31/02 SEC Filing reported cash distributions), discounted quarterly to 8/31/03 present value terms (discounted for one quarter) by 13.0%, the JLLH estimated WHLP cost of capital.
(10)	Assumes a current Cash Account balance of $32.0 million as of 12/31/05. Of this amount, $12.0 million is distributed in 2005 and $10 million is withheld for Partnership A&G and Liquidation Expenses the sale, to be distributed one year following the sale. Assumes $2 million in legal administrative and other miscellaneous expenses related to liquidating the Partnership in addition to $400,000 incurred in A&G for one year following the sale (estimated by Westin Realty Corp.). The resulting $7.6 million is discounted to 10/31/03 present value terms assuming a 13.0% rate, the JLLH estimated WHLP cost of capital.

8

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B. 2005 YEAR-END SALE WITH ADDITIONAL PREPAYMENTS

9

DRAFT

B.  DISTRIBUTION FOOTNOTES

(1)	The sales price range derived represents a minimum and maximum value estimated by JLLH (See Appendix).
(2)	JLLH estimate based on current hotel real estate and capital market conditions.
(3)	Revised 12/31/05 year-end balance based on the TRST Second Amendment Note Schedule taken from the WHLP 10Q 6/30/97 SEC Filing with four $5 million prepayment made on 3/1/03, 12/1/03, 6/1/03 and 12/1/03. (See Appendix)
(4)	12/31/05 Balance derived based on 12/31/02 actual balance of $10,404,000 as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%.
(5)	12/31/05 balance estimated by JLLH based on JLLH, Westin Realty Corp. and The Westin Michigan Avenue actual payments and projected accruals and payments.
(6)	Preliminary WHLP proxy process costs estimate provided by Westin Realty Corp.
(7)	Discounted to 10/31/03 present value terms, utilizing a 13.0% discount rate, the JLLH estimated WHLP cost of capital.
(8)	Assumes 135,600 Limited Partnership units as reported on the WHLP 10K 12/31/02 SEC Filing.
(9)	Assumes per unit distribution of $6.72 per quarter or $26.88 ($4.48 for 11/1/03-12/31/03), 135,600 WHLP units (based on the WHLP 10K 12/31/02 SEC Filing reported cash distributions), discounted quarterly to 8/31/03 present value terms (discounted for one quarter) by 13.0%, the JLLH estimated WHLP cost of capital.
(10)	Assumes a current Cash Account balance of $19.4 million as of 12/31/05. Of this amount, $19.4 million is distributed in 2005 and $9.4 million is withheld for Partnership A&G and Liquidation Expenses related to the sale, to be distributed one year after the sale. Assumes $2 million in legal administrative and other miscellaneous expenses related to liquidating the Partnership in addition to $400,000 incurred in A&G for one year following the sale (estimated by Westin Realty Corp.). The resulting $7.6 million is discounted to 10/31/03 present value terms assuming a 13.0% rate, the JLLH estimated WHLP cost of capital.

10

DRAFT

C. 10/31/03 $75 MILLION REFINANCING AND YE 2005 SALE

11

DRAFT

C.  DISTRIBUTION FOOTNOTES

(1)	JLLH estimate of closing costs including due diligence, legal fees, title insurance, brokerage fees and interest rate cap. (See Appendix)
(2)	Revised 10/31/03 balance derived by LaSalle Investment Management based on a $5 million principal prepayment made on 3/1/03. (See Appendix)
(3)	Prepayment penalty provided by LaSalle Investment Management as of 3/25/03 after one $5 million principal prepayment made on 3/1/03.
(4)	10/31/03 balance derived based on 12/31/02 actual balance of $10,404,000, as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%. (See Appendix)
(5)	10/31/03 balance based on actuals and estimates provided by JLLH, Westin Realty Corp. and The Westin Michigan Avenue.
(6)	Preliminary WHLP proxy process costs estimate provided by Westin Realty Corp.
(7)	Based on current lender proposal which requires a $1.0 million Incentive Mgt. Fee Reserve and a $693,750 Liquidity Reserve (for three months of debt service at 4.04% of the $75M refinancing proceeds)
(8)	Assumes 135,600 Limited Partnership Units as indicated on the WHLP 10K 12/31/02 SEC Filing.
(9)	Sales proceeds represent minimum and maximum proceeds projected by JLLH (See Appendix).
(10)	12/31/05 balance based on the $75 million interest only refinancing proceeds.
(11)	12/31/05 balance estimated by JLLH based on its projections and actual payments and accruals provided by Westin Realty Corp. and The Westin Michigan Avenue.
(12)	Discounted to 10/31/03 present value terms, utilizing a 13.0% discount rate, the JLLH estimated WHLP cost of capital.
(13)	Net refinancing and sales proceeds represent minimum and maximum proceeds based on the refinancing proceeds and sales price ranges projected by JLLH.
(14)	Assumes per unit distribution of $6.72 per quarter or $26.88 ($4.88 for 11/1/03-12/31/03), 135,600 WHLP units (based on the WHLP 10K 12/31/02 SEC Filing reported cash distributions), discounted quarterly to 10/31/03 present value terms (discounted each quarter for nine quarters) by 13.0%, the JLLH estimated WHLP cost of capital.
(15)	Assumes a current Cash Account balance of $33.1 million as of year-end 2005. Of this amount, $23.1 million is distributed by 12/31/05 and $10 million is withheld for Partnership A&G and Liquidation Expenses related to the sale. Assumes a deduction of $2 million in legal administrative and other miscellaneous expenses related to liquidating the Partnership in addition to $400,000 per year incurred in Partnership A&G for one year following the sale (estimated by Westin Realty Corp.). The resulting $7.6 million is discounted to 10/31/03 present value terms by 13.0%, the JLLH estimated WHLP cost of capital.

12

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SCENARIO I: ASSUMPTIONS

SCENARIO I CASH FLOW ASSUMPTIONS

Occupancy1	Year 1: 2006 (Stabilized Year): 75.0%
ADR1	Year 1: 2006 (Stabilized Year): $167.93 Annual Growth Rate: 4.0%
DCF Analysis Discount Rate1	13.0%
DCF Analysis Terminal
Capitalization Rate1	12.0%
WHLP Discount Rate2	13.0%
Annual Revenue Growth Rate1	3.5%
Annual Expense Growth Rate1	3.0%
Annual Capital Expenditures3	FF&E Reserve Amounts:
	2003: $2.2 million
	2004: $2.2 million
	2005: $2.3 million
	2006: $2.0 million
	2007: $2.1 million
	2008: $2.2 million
	2009: $2.2 million
	2010: $2.3 million

¹ JLLH estimate based on the current hotel real estate and capital markets.

² Represents the WHLP weighted cost of capital, as estimated by JLLH.

³ Assumes no capital expenditures made above the JLLH projected FF&E Reserve, based on the Westin Michigan Avenue 2002 Capital Plan as of 5/1/02 provided by Westin Realty Corp. From 1/1/03 through 10/31/03, FF&E Reserves are 5% of Total Revenues as dictated by the existing FF&E Escrow Agreement. As of 11/1/03, FF&E Reserves are projected by JLLH to be 4.0% of Total Revenues, reflecting new lender terms and industry standards.

13

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SCENARIO I: ASSUMPTIONS

10/31/03 $75 MILLION REFINANCING ASSUMPTIONS

Debt Assumptions
1/1/03 through 10/31/031	Existing TRST Debt: Annual Debt Service: $3.1 million
Refinancing (9/1/03 through 12/31/05)2:	Proceeds: $75 million
	Type: Interest Only LIBOR Debt
	LIBOR: 125 bps
	Spread: 185 bps
	Annual Increases: 25 bps (starting 11/1/03)
	Debt Service: 2003 — $7,450,000
	(includes TRST debt service for 1/1/03-10/31/03 and a $5 million prepayment made on 3/1/03)
	2004 — $2,512,500; 2005 -$2,700,000
Acquisition (2006 through 20102):	New Owner Financing: $70 million
	Type: Fixed Rate Amortizing Debt
	All-In Interest Rate: 6.5%
	Amortization: 25 years
	Debt Service: $5,671,700

12/31/03 Cash Account Balance
Beginning Balance3	$	26.4 million
+ Net Operating Income4	$	9.9 million
+Accrued Incentive Fees5	$	2.6 million
- Debt Service1	$	7.5 million
- CAPEX Above FF&E Reserve6	$	0 million
- Less WHLP A&G Expense	$	.4 million
- WHLP Quarterly Distribution7	$	3.6 million	($6.72 per quarter with a total of 135,600 LP units.)
Ending Balance8	$	27.3 million
10/31/03 TRST Debt Balance9	$	24.6 million
10/31/03 TRST Prepayment Penalty10	$	2.6 million
10/31/03 Starwood Subordinate Loan Balance11	$	10.9 million
10/31/03 Deferred Incentive Fee Balance12	$	9.0 million

¹ Existing TRST annual debt service payment as indicated in the WHLP 10K 12/31/02 SEC filing.

² Based on the proposed term sheet submitted by Column Financial as of 6/14/03.

³ 12/31/02 balance based on the WHLP 10K 12/31/02 SEC Filing and a reconciliation by Westin Realty Corp. (See Appendix)

⁴ 2003 estimated results based on the 2003 Reforecast as of 6/1/03 provided by The Westin Michigan Avenue. (See Appendix)

⁵ 2003 Incentive Fees are projected to be accrued and represent a non-cash expense for WHLP.

⁶ Based on The Westin Michigan Avenue Capital Plan as of 5/1/02 provided by Westin Realty Corp. (See Appendix)

⁷ Estimated based on the cash distribution to WHLP unit holders in 2002 as reported in the WHLP 10K 12/31/02 SEC Filing.

⁸ Totals may not foot due to rounding.

⁹ Revised balance derived after the $5 million principal prepayment made on 3/1/03 with accrued interest. (See Appendix).

¹⁰ Provided by LaSalle Investment Management as of 3/25/03.

¹¹ Balance derived based on12/31/01 actual balance of $10,404,000, as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%. (See Appendix)

¹² Based on JLLH projections, Westin Realty Corp and Westin Michigan Avenue provided payments and accruals (See Appendix).

14

DRAFT

SCENARIO II: YEAR-END 2006 SALE

15

DRAFT

A. 2006 YEAR-END SALE

16

DRAFT

A. DISTRIBUTION FOOTNOTES

(1)	The sales price range derived represents a minimum and maximum value estimated by JLLH (See Appendix).
(2)	JLLH estimate based on current hotel real estate and capital market conditions.
(3)	Revised 12/31/06 year-end balance based on the TRST Second Amendment Note Schedule taken from the WHLP 10Q 6/30/97 SEC Filing with one $5 million prepayment made on 3/1/03. (See Appendix)
(4)	12/31/05 Balance derived based on 12/31/02 actual balance of $10,404,000 as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%.
(5)	12/31/06 balance estimated by JLLH based on JLLH, Westin Realty Corp. and The Westin Michigan Avenue actual payments and projected accruals and payments.
(6)	Preliminary WHLP proxy process costs estimate provided by Westin Realty Corp.
(7)	Discounted to 10/31/03 present value terms, utilizing a 13.0% discount rate, the JLLH estimated WHLP cost of capital.
(8)	Assumes 135,600 Limited Partnership units as reported on the WHLP 10K 12/31/02 SEC Filing.
(9)	Assumes per unit distribution of $6.72 per quarter or $26.88 ($4.48 for 11/1/03-12/31/03), 135,600 WHLP units (based on the WHLP 10K 12/31/02 SEC Filing reported cash distributions), discounted quarterly to 8/31/03 present value terms (discounted for one quarter) by 13.0%, the JLLH estimated WHLP cost of capital.
(10)	Assumes a current Cash Account balance of $37.3 million as of 12/31/06. Of this amount, $17.3 million is distributed in 2006 and $10 million is withheld for Partnership A&G and Liquidation Expenses the sale, to be distributed one year following the sale. Assumes $2 million in legal administrative and other miscellaneous expenses related to liquidating the Partnership in addition to $400,000 incurred in A&G for one year following the sale (estimated by Westin Realty Corp.). The resulting $7.6 million is discounted to 10/31/03 present value terms assuming a 13.0% rate, the JLLH estimated WHLP cost of capital.

17

DRAFT

B.  2006 YEAR-END SALE WITH ADDITIONAL PREPAYMENTS

18

DRAFT

B.  DISTRIBUTION FOOTNOTES

(1)	The sales price range derived represents a minimum and maximum value estimated by JLLH (See Appendix).
(2)	JLLH estimate based on current hotel real estate and capital market conditions.
(3)	Revised 12/31/06 year-end balance based on the TRST Second Amendment Note Schedule taken from the WHLP 10Q 6/30/97 SEC Filing with four $5 million prepayment made on 3/1/03, 12/1/03, 6/1/03 and 12/1/03. (See Appendix)
(4)	12/31/06 Balance derived based on 12/31/02 actual balance of $10,404,000 as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%.
(5)	12/31/06 balance estimated by JLLH based on JLLH, Westin Realty Corp. and The Westin Michigan Avenue actual payments and projected accruals and payments.
(6)	Preliminary WHLP proxy process costs estimate provided by Westin Realty Corp.
(7)	Discounted to 10/31/03 present value terms, utilizing a 13.0% discount rate, the JLLH estimated WHLP cost of capital.
(8)	Assumes 135,600 Limited Partnership units as reported on the WHLP 10K 12/31/02 SEC Filing.
(9)	Assumes per unit distribution of $6.72 per quarter or $26.88 ($4.48 for 11/1/03-12/31/03), 135,600 WHLP units (based on the WHLP 10K 12/31/02 SEC Filing reported cash distributions), discounted quarterly to 8/31/03 present value terms (discounted for one quarter) by 13.0%, the JLLH estimated WHLP cost of capital.
(10)	Assumes a current Cash Account balance of $24.7 million as of 12/31/06. Of this amount, $14.7 million is distributed in 2006 and $10 million is withheld for Partnership A&G and Liquidation Expenses related to the sale, to be distributed one year after the sale. Assumes $2 million in legal administrative and other miscellaneous expenses related to liquidating the Partnership in addition to $400,000 incurred in A&G for one year following the sale (estimated by Westin Realty Corp.). The resulting $7.6 million is discounted to 10/31/03 present value terms assuming a 13.0% rate, the JLLH estimated WHLP cost of capital.

19

DRAFT

C.  10/31/03 $75 MILLION REFINANCING AND YE 2006 SALE

20

DRAFT

C. DISTRIBUTION FOOTNOTES

(16)	JLLH estimate of closing costs including due diligence, legal fees, title insurance, brokerage fees and interest rate cap. (See Appendix)
(17)	Revised 10/31/03 balance derived by LaSalle Investment Management based on a $5 million principal prepayment made on 3/1/03. (See Appendix)
(18)	Prepayment penalty provided by LaSalle Investment Management as of 3/25/03 after one $5 million principal prepayment made on 3/1/03.
(19)	10/31/03 balance derived based on 12/31/02 actual balance of $10,404,000, as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%. (See Appendix)
(20)	10/31/03 balance based on actuals and estimates provided by JLLH, Westin Realty Corp. and The Westin Michigan Avenue.
(21)	Preliminary WHLP proxy process costs estimate provided by Westin Realty Corp.
(22)	Based on current lender proposal which requires a $1.0 million Incentive Mgt. Fee Reserve and a $693,750 Liquidity Reserve (for three months of debt service at 4.04% of the $75M refinancing proceeds)
(23)	Assumes 135,600 Limited Partnership Units as indicated on the WHLP 10K 12/31/02 SEC Filing.
(24)	Sales proceeds represent minimum and maximum proceeds projected by JLLH (See Appendix).
(25)	12/31/06 balance based on the $75 million interest only refinancing proceeds.
(26)	12/31/06 balance estimated by JLLH based on its projections and actual payments and accruals provided by Westin Realty Corp. and The Westin Michigan Avenue.
(27)	Discounted to 10/31/03 present value terms, utilizing a 13.0% discount rate, the JLLH estimated WHLP cost of capital.
(28)	Net refinancing and sales proceeds represent minimum and maximum proceeds based on the refinancing proceeds and sales price ranges projected by JLLH.
(29)	Assumes per unit distribution of $6.72 per quarter or $26.88 ($4.88 for 11/1/03-12/31/03), 135,600 WHLP units (based on the WHLP 10K 12/31/02 SEC Filing reported cash distributions), discounted quarterly to 10/31/03 present value terms (discounted each quarter for nine quarters) by 13.0%, the JLLH estimated WHLP cost of capital.
(30)	Assumes a current Cash Account balance of $34.7 million as of year-end 2006. Of this amount, $24.7 million is distributed by in 2006 and $10 million is withheld for Partnership A&G and Liquidation Expenses related to the sale. Assumes a deduction of $2 million in legal administrative and other miscellaneous expenses related to liquidating the Partnership in addition to $400,000 per year incurred in Partnership A&G for one year following the sale (estimated by Westin Realty Corp.). The resulting $7.6 million is discounted to 10/31/03 present value terms by 13.0%, the JLLH estimated WHLP cost of capital.

21

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SCENARIO II: ASSUMPTIONS

SCENARIO II CASH FLOW ASSUMPTIONS

Occupancy1	Year 1: 2007 (Stabilized Year): 75.0%
ADR1	Year 1: 2007 (Stabilized Year): $174.65 Annual Growth Rate: 4.0%
DCF Analysis Discount Rate1	14.0%
DCF Analysis Terminal Capitalization Rate1	12.0%
WHLP Discount Rate2	14.0%
Annual Revenue Growth Rate1	3.5%
Annual Expense Growth Rate1	3.0%
Annual Capital Expenditures3	FF&E Reserve Amounts:
	2003: $2.2 million
	2004: $2.2 million
	2005: $2.3 million
	2006: $2.0 million
	2007: $2.1 million
	2008: $2.2 million
	2009: $2.2 million
	2010: $2.3 million
	2011: $2.4 million

¹ JLLH estimate based on the current hotel real estate and capital markets.

² Represents the WHLP weighted cost of capital, as estimated by JLLH.

³ Assumes no capital expenditures made above the JLLH projected FF&E Reserve, based on the Westin Michigan Avenue 2002 Capital Plan as of 5/1/02 provided by Westin Realty Corp. From 1/1/03 through 10/31/03, FF&E Reserves are 5% of Total Revenues as dictated by the existing FF&E Escrow Agreement. As of 11/1/03, FF&E Reserves are projected by JLLH to be 4.0% of Total Revenues, reflecting new lender terms and industry standards.

22

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SCENARIO II: ASSUMPTIONS

10/31/03 $75 MILLION REFINANCING ASSUMPTIONS

Debt Assumptions
1/1/03 through 10/31/031 Refinancing (9/1/03 through 12/31/05)2:	Existing TRST Debt: Annual Debt Service: $3.1 million Proceeds: $75 million
	Type: Interest Only LIBOR Debt
	LIBOR: 125 bps
	Spread: 185 bps
	Annual Increases: 25 bps (starting 11/1/03)
	Debt Service: 2003 — $7,450,000
	(includes TRST debt service for 1/1/03-10/31/03 and a    $5 million prepayment made on 3/1/03)
Acquisition (2006 through 20102):		2004 — $2,512,500; 2005 -$2,700,000 New Owner Financing: $70 million
	Type: Fixed Rate Amortizing Debt
	All-In Interest Rate: 6.5%
	Amortization: 25 years
	Debt Service: $5,671,700
12/31/03 Cash Account Balance
Beginning Balance3	$	26.4 million
+ Net Operating Income4	$	9.9 million
+Accrued Incentive Fees5	$	2.6 million
- Debt Service1	$	7.5 million
- CAPEX Above FF&E Reserve6	$	0 million
- Less WHLP A&G Expense	$	.4 million
- WHLP Quarterly Distribution7	$	3.6 million	($6.72 per quarter with a total of 135,600 LP units.)
Ending Balance8	$	27.3 million
10/31/03 TRST Debt Balance9	$	24.6 million
10/31/03 TRST Prepayment Penalty10	$	2.6 million
10/31/03 Starwood Subordinate Loan Balance11	$	10.9 million
10/31/03 Deferred Incentive Fee Balance12	$	9.0 million

¹ Existing TRST annual debt service payment as indicated in the WHLP 10K 12/31/02 SEC filing.

² Based on the proposed term sheet submitted by Column Financial as of 6/14/03.

³ 12/31/02 balance based on the WHLP 10K 12/31/02 SEC Filing and a reconciliation by Westin Realty Corp. (See Appendix)

⁴ 2003 estimated results based on the 2003 Reforecast as of 6/1/03 provided by The Westin Michigan Avenue. (See Appendix)

⁵ 2003 Incentive Fees are projected to be accrued and represent a non-cash expense for WHLP.

⁶ Based on The Westin Michigan Avenue Capital Plan as of 5/1/02 provided by Westin Realty Corp. (See Appendix)

⁷ Estimated based on the cash distribution to WHLP unit holders in 2002 as reported in the WHLP 10K 12/31/02 SEC Filing.

⁸ Totals may not foot due to rounding.

⁹ Revised balance derived after the $5 million principal prepayment made on 3/1/03 with accrued interest. (See Appendix).

¹⁰ Provided by LaSalle Investment Management as of 3/25/03.

¹¹ Balance derived based on12/31/01 actual balance of $10,404,000, as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%. (See Appendix)

¹² Based on JLLH projections, Westin Realty Corp and Westin Michigan Avenue provided payments and accruals (See Appendix).

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APPENDIX

Refinancing Closing Costs

TRST Revised Note Schedule with One $5 Million Prepayment

TRST Revised Note Schedule with Four $5 Million Prepayments

Starwood Subordinate Loan Schedule

Scenario I Deferred Incentive Fee Balances

Scenario II Deferred Incentive Fee Balances

Scenario I Statement of Projected Cash Flows

Scenario I Sale Proceeds (Valuation Matrix)

Scenario I Cash Account Balances

Scenario II Statement of Projected Cash Flows

Scenario II Sale Proceeds (Valuation Matrix)

Scenario II Cash Account Balances

The Westin Michigan Avenue 2003 Reforecast as of 6/1/03

The Westin Michigan Avenue 2004-2005 Projections as of 4/1/03

The Westin Michigan Avenue Capital Plan as of 5/1/02

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REFINANCING CLOSING COSTS

Refinancing Proceeds	$	75,000,000
Increased Property Insurance Costs		—
Interest Rate Cap	$	1,400,000
Lender Loan Fee	$	1,125,000
Mortgage Brokerage Fee	$	562,500
Lender Legal Costs	$	100,000
Borrower Legal Costs for Loan Closing	$	125,000
Appraisal Fees	$	10,500
Environmental and Engineering	$	20,000
Title Insurance	$	50,000
Preliminary WHLP Proxy Costs Estimate	$	1,500,000
(Generation, Binder, Solicitor, Printing, Mailing, Aggregating, Legal, Audit Review)
Total:	$	4,893,000
Breakdown:
Loan Closing	$	3,393,000
WHLP Proxy Costs	$	1,500,000
Total:	$	4,893,000

Source: Westin Realty Corp. and JLLH

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TRST REVISED NOTE SCHEDULE WITH ONE $5 MILLION PREPAYMENT

BASED ON 2nd AMENDMENT — ADJUSTED FOR $5M PREPAY ON 3/1/03

Payment Date	Beg. Balance		Rate			Interest		Payment		Principal Paid		Balance
9/1/2002		30,069,227		2.2125	%		665,282		773,152		107,870		29,961,356
12/1/2002		29,961,356		2.2125	%		662,895		773,152		110,257		29,851,099
3/1/2003		29,851,099		2.2125	%		660,456		5,773,152		5,112,696		24,738,403
6/1/2003		24,738,403		2.2125	%		547,337		773,152		225,815		24,512,588
9/1/2003		24,512,588		2.2125	%		542,341		773,152		230,811		24,281,777
12/1/2003		24,281,777		2.2125	%		537,234		773,152		235,918		24,045,859
3/1/2004		24,045,859		2.2125	%		532,015		773,152		241,137		23,804,722
6/1/2004		23,804,722		2.2125	%		526,679		773,152		246,473		23,558,249
9/1/2004		23,558,249		2.2125	%		521,226		773,152		251,926		23,306,324
12/1/2004		23,306,324		2.2125	%		515,652		773,152		257,500		23,048,824
3/1/2005		23,048,824		2.2125	%		509,955		773,152		263,197		22,785,627
6/1/2005		22,785,627		2.2125	%		504,132		773,152		269,020		22,516,607
9/1/2005		22,516,607		2.2125	%		498,180		773,152		274,972		22,241,635
12/1/2005		22,241,635		2.2125	%		492,096		773,152		281,056		21,960,580
3/1/2006		21,960,580		2.2125	%		485,878		773,152		287,274		21,673,305
6/1/2006		21,673,305		2.2125	%		479,522		773,152		293,630		21,379,675
9/1/2006		21,379,675		2.2125	%		473,025		773,152		300,127		21,079,537
11/30/2006		21,079,537		2.2125	%		466,385		21,545,922		21,079,537		(1	)

Source: Westin Realty Corp.

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TRST REVISED NOTE SCHEDULE WITH FOUR $5 MILLION PREPAYMENTS

BASED ON 2nd AMENDMENT — ADJUSTED FOR $5M PREPAYS ON 3/1/03, 12/1/03, 3/1/04 and 6/1/04

Payment Date	Beg. Balance		Rate			Interest		Payment		Principal Paid		Balance
9/1/2002		30,069,227		2.2125	%		665,282		773,152		107,870		29,961,356
12/1/2002		29,961,356		2.2125	%		662,895		773,152		110,257		29,851,099
3/1/2003		29,851,099		2.2125	%		660,456		5,773,152		5,112,696		24,738,403
6/1/2003		24,738,403		2.2125	%		547,337		773,152		225,815		24,512,588
9/1/2003		24,512,588		2.2125	%		542,341		773,152		230,811		24,281,777
12/1/2003		24,281,777		2.2125	%		537,234		5,773,152		5,235,918		19,045,859
3/1/2004		19,045,859		2.2125	%		421,390		5,773,152		5,351,762		13,694,097
6/1/2004		13,694,097		2.2125	%		302,982		5,773,152		5,470,170		8,223,927
9/1/2004		8,223,927		2.2125	%		181,954		773,152		591,198		7,632,729
12/1/2004		7,632,729		2.2125	%		168,874		773,152		604,278		7,028,451
3/1/2005		7,028,451		2.2125	%		155,504		773,152		617,648		6,410,804
6/1/2005		6,410,804		2.2125	%		141,839		773,152		631,313		5,779,491
9/1/2005		5,779,491		2.2125	%		127,871		773,152		645,281		5,134,210
12/1/2005		5,134,210		2.2125	%		113,594		773,152		659,558		4,474,653
3/1/2006		4,474,653		2.2125	%		99,002		773,152		674,150		3,800,502
6/1/2006		3,800,502		2.2125	%		84,086		773,152		689,066		3,111,436
9/1/2006		3,111,436		2.2125	%		68,841		773,152		704,311		2,407,113
11/30/2006		2,407,113		2.2125	%		53,257		2,460,358		2,407,101		—

Source: Westin Realty Corp.

27

DRAFT

STARWOOD SUBORDINATE LOAN SCHEDULE

Date	Interest		Principal		Ending Balance		Prime +1
12/31/2002		46,023.12		0.00		10,404,000.00		5.25	%
1/31/2003		46,390.44		0.00		10,450,390.44		5.25	%
2/28/2003		46,597.29		0.00		10,496,987.73		5.25	%
3/31/2003		46,805.06		0.00		10,543,792.79		5.25	%
4/30/2003		47,013.76		0.00		10,590,806.55		5.25	%
5/31/2003		47,223.39		0.00		10,638,029.94		5.25	%
6/30/2003		47,433.96		0.00		10,685,463.90		5.25	%
7/31/2003		45,376.63		0.00		10,730,840.52		5.00	%
8/31/2003		45,569.32		0.00		10,776,409.85		5.00	%
9/30/2003		45,762.84		0.00		10,822,172.68		5.00	%
10/31/2003		45,957.17		0.00		10,868,129.85		5.00	%
11/30/2003		46,152.33		0.00		10,914,282.19		5.00	%
12/31/2003		46,348.32		0.00		10,960,630.51		5.00	%
1/31/2004		46,545.14		0.00		11,007,175.65		5.00	%
2/28/2004		46,742.80		0.00		11,053,918.45		5.00	%
3/31/2004		46,941.30		0.00		11,100,859.75		5.00	%
4/30/2004		47,140.64		0.00		11,148,000.39		5.00	%
5/31/2004		47,340.82		0.00		11,195,341.21		5.00	%
6/30/2004		47,541.86		0.00		11,242,883.07		5.00	%
7/31/2004		47,743.75		0.00		11,290,626.82		5.00	%
8/31/2004		47,946.50		0.00		11,338,573.32		5.00	%
9/30/2004		48,150.11		0.00		11,386,723.42		5.00	%
10/31/2004		48,354.58		0.00		11,435,078.00		5.00	%
11/30/2004		48,559.92		0.00		11,483,637.92		5.00	%
12/31/2004		48,766.13		0.00		11,532,404.06		5.00	%
1/31/2005		48,973.22		0.00		11,581,377.28		5.00	%
2/28/2005		49,181.19		0.00		11,630,558.47		5.00	%
3/31/2005		49,390.04		0.00		11,679,948.51		5.00	%
4/30/2005		49,599.78		0.00		11,729,548.29		5.00	%
5/31/2005		49,810.41		0.00		11,779,358.71		5.00	%
6/30/2005		50,021.93		0.00		11,829,380.64		5.00	%
7/31/2005		50,234.36		0.00		11,879,615.00		5.00	%
8/31/2005		50,447.68		0.00		11,930,062.68		5.00	%
9/30/2005		50,661.91		0.00		11,980,724.59		5.00	%
10/31/2005		50,877.05		0.00		12,031,601.64		5.00	%
11/30/2005		51,093.10		0.00		12,082,694.74		5.00	%
12/31/2005		51,310.07		0.00		12,134,004.81		5.00	%
1/31/2006		51,527.97		0.00		12,185,532.78		5.00	%
2/28/2006		51,746.78		0.00		12,237,279.56		5.00	%
3/31/2006		51,966.53		0.00		12,289,246.09		5.00	%
4/30/2006		52,187.21		0.00		12,341,433.30		5.00	%
5/31/2006		52,408.83		0.00		12,393,842.13		5.00	%
6/30/2006		52,631.38		0.00		12,446,473.51		5.00	%
7/31/2006		52,854.89		0.00		12,499,328.40		5.00	%
8/31/2006		53,079.34		0.00		12,552,407.74		5.00	%
9/30/2006		53,304.75		0.00		12,605,712.48		5.00	%
10/31/2006		53,531.11		0.00		12,659,243.59		5.00	%
11/30/2006		53,758.43		0.00		12,713,002.02		5.00	%
12/31/2006		53,986.72		0.00		12,766,988.74		5.00	%

Source: Actuals through 8/31/02 provided by Westin Realty Corp.; Balance projection through 12/31/05 derived by JLLH

28

DRAFT

SCENARIO I DEFERRED INCENTIVE FEE BALANCES

		YE 2005 Sale With			YE 2005
		One Prepayment			With Four Prepayments			$75 M Refi and 2005 Sale
Balance at 12-31-1997		$	5,670,334		$	5,670,334		$	5,670,334
	1998 YTD IMF		1,189,915			1,189,915			1,189,915
	Payment of 1998 IMF		(594,958	)		(594,958	)		(594,958	)
Balance at 12-31-1998		$	6,265,291		$	6,265,291		$	6,265,291
	1999 YTD IMF		2,045,357			2,045,357			2,045,357
	Payment of 1999 IMF		(1,022,679	)		(1,022,679	)		(1,022,679	)
Balance at 12-31-1999		$	7,287,969		$	7,287,969		$	7,287,969
	2000 YTD IMF		189,823			189,823			189,823
	Payment of 2000 IMF		—			—			—
Balance at 12-31-2000		$	7,477,792		$	7,477,792		$	7,477,792
	2001 YTD IMF		2,434,560			2,434,560			2,434,560
	Payment of 2001 IMF		—			—			—
Balance at 12-31-2001		$	9,912,352		$	9,912,352		$	9,912,352
	4/30/02 payment to Starwood		(2,722,893	)		(2,722,893	)		(2,722,893	)
	2002 IMF		2,699,575			2,699,575			2,699,575
Balance at 12-31-2002		$	10,280,727		$	10,280,727		$	10,280,727
	Scheduled Payment 3/1/03		($3,451,643	)		($3,451,643	)		($3,451,643	)
	1/1/03-10/31/03 Estimated IMF	$	2,129,240		$	2,129,240		$	2,129,240
Balance at 10-31-2003		$	8,958,324		$	8,958,324		$	8,958,324
	10/31/03 Estimated Payment	$	—		$	—		$	(8,958,324	)
	10/31/03-12/31/03 Estimated IMF	$	440,414		$	440,414		$	440,414
	12/31/03 Estimated Payment	$	0		$	0		$	0
Balance at 12-31-2003		$	9,398,738		$	9,398,738		$	440,414
	2004 Estimated IMF	$	2,419,524		$	2,419,524		$	2,419,524
	2004 Estimated IMF Payment		($2,730,100	)		—			($2,859,938	)
Balance at 12-31-2004		$	9,088,162		$	11,818,262		$	-
	2005 Estimated IMF	$	2,279,150		$	2,279,150		$	2,279,150
	2005 Estimated IMF Payment		($2,295,524	)		($2,295,524	)		($2,279,150	)
Balance at 12-31-2005		$	9,071,788		$	11,801,888		$	-

Source: Payments 2001 – 04/30/02 and 3/31/03 Scheduled Payment – Westin Realty Corp.; 2002 and 1/1/03-12/31/03 Estimated IMF — The Westin Michigan Avenue; 6/30/03 Estimated Payment, 12/31/03 Estimated IMF and Payments through 2005 – JLLH

29

DRAFT

SCENARIO II DEFERRED INCENTIVE FEE BALANCES

		YE 2006 Sale With			YE 2006
		One Prepayment			With Four Prepayments			$75 M Refi and 2006 Sale
Balance at 12-31-1997		$	5,670,334		$	5,670,334		$	5,670,334
	1998 YTD IMF		1,189,915			1,189,915			1,189,915
	Payment of 1998 IMF		(594,958	)		(594,958	)		(594,958	)
Balance at 12-31-1998		$	6,265,291		$	6,265,291		$	6,265,291
	1999 YTD IMF		2,045,357			2,045,357			2,045,357
	Payment of 1999 IMF		(1,022,679	)		(1,022,679	)		(1,022,679	)
Balance at 12-31-1999		$	7,287,969		$	7,287,969		$	7,287,969
	2000 YTD IMF		189,823			189,823			189,823
	Payment of 2000 IMF		—			—			—
Balance at 12-31-2000		$	7,477,792		$	7,477,792		$	7,477,792
	2001 YTD IMF		2,434,560			2,434,560			2,434,560
	Payment of 2001 IMF		—			—			—
Balance at 12-31-2001		$	9,912,352		$	9,912,352		$	9,912,352
	4/30/02 payment to Starwood		(2,722,893	)		(2,722,893	)		(2,722,893	)
	2002 IMF		2,699,575			2,699,575			2,699,575
Balance at 12-31-2002		$	10,280,727		$	10,280,727		$	10,280,727
	Scheduled Payment 3/1/03		($3,451,643	)		($3,451,643	)		($3,451,643	)
	1/1/03-10/31/03 Estimated IMF	$	2,129,240		$	2,129,240		$	2,129,240
Balance at 10-31-2003		$	8,958,324		$	8,958,324		$	8,958,324
	10/31/03 Estimated Payment	$	—		$	—		$	(8,958,324	)
	10/31/03-12/31/03 Estimated IMF	$	440,414		$	440,414		$	440,414
	12/31/03 Estimated Payment	$	0		$	0		$	0
Balance at 12-31-2003		$	9,398,738		$	9,398,738		$	440,414
	2004 Estimated IMF	$	2,419,524		$	2,419,524		$	2,419,524
	2004 Estimated IMF Payment		($2,730,100	)		—			($2,859,938	)
Balance at 12-31-2004		$	9,088,162		$	11,818,262		$	-
	2005 Estimated IMF	$	2,279,150		$	2,279,150		$	2,279,150
	2005 Estimated IMF Payment		($2,295,524	)		($2,295,524	)		($2,279,150	)
Balance at 12-31-2005		$	9,071,788		$	11,801,888		$	-
	2006 Estimated IMF	$	2,923,599		$	2,923,599		$	2,822,603
	2006 Estimated IMF Payment		($4,454,332	)		($4,454,332	)		($2,500,452	)
Balance at 12-31-2006		$	7,541,054		$	10,271,154		$	322,151

Source: Payments 2001 – 04/30/02 and 3/31/03 Scheduled Payment – Westin Realty Corp.; 2002 and 1/1/03-12/31/03 Estimated IMF — The Westin Michigan Avenue; 6/30/03 Estimated Payment, 12/31/03 Estimated IMF and Payments through 2005 – JLLH

30

DRAFT

SCENARIO I STATEMENT OF PROJECTED CASH FLOWS

THE WESTIN MICHIGAN AVENUE
STATEMENT OF PROJECTED CASH FLOWS: YE 2005 SALE (1)

	2003			2004			2005			2006			2007			2008			2009			2010
Available Hotel Rooms		751			751			751			751			751			751			751			751
Available Room Nights		274,115			274,866			274,115			274,115			274,115			274,866			274,115			274,115
Occupied Room Nights		204,049			199,983			201,439			205,586			205,586			206,150			205,586			205,586
Occupancy		74.4	%		72.8	%		73.5	%		75.0	%		75.0	%		75.0	%		75.0	%		75.0	%
Average Daily Rate	$	149.29		$	152.50		$	157.92		$	167.93		$	174.65		$	181.63		$	188.90		$	196.46
Revenues Per Available Room	$	111.13		$	110.95		$	116.05		$	125.95		$	130.99		$	136.23		$	141.67		$	147.34

	2003					2004					2005					2006
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
REVENUES
Room	$	30,463		69.7	%	$	30,496		69.4	%	$	31,810		67.8	%	$	34,524		68.4	%
Food & Beverage		9,499		21.7	%		9,518		21.7	%		11,066		23.6	%		11,690		23.1	%
Telephone		1,111		2.5	%		1,155		2.6	%		1,007		2.1	%		1,064		2.1	%
Minor Operating Depts		17		0.0	%		66		0.1	%		81		0.2	%		85		0.2	%
Rent & Other Income		2,632		6.0	%		2,683		6.1	%		2,968		6.3	%		3,134		6.2	%
Total Revenues		43,723		100.0	%		43,918		100.0	%		46,933		100.0	%		50,498		100.0	%
DEPARTMENTAL EXPENSES
Room		7,249		23.8	%		7,244		23.8	%		7,635		24.0	%		8,025		23.2	%
Food & Beverage		6,835		72.0	%		7,188		75.5	%		8,300		75.0	%		8,534		73.0	%
Telephone		407		36.6	%		414		35.9	%		373		37.0	%		372		35.0	%
Minor Operating Depts		29		168.7	%		41		62.0	%		47		58.0	%		47		55.0	%
Rent & Other Departmental Exp.		293		11.1	%		286		10.7	%		300		10.1	%		251		8.0	%
Total Departmental Expenses		14,811		33.9	%		15,173		34.5	%		16,653		35.5	%		17,229		34.1	%
Gross Operating Income		28,911		66.1	%		28,745		65.5	%		30,279		64.5	%		33,269		65.9	%
UNDISTRIBUTED EXPENSES
Administrative & General		2,712		6.2	%		2,819		6.4	%		3,270		7.0	%		3,369		6.7	%
Advertising & Marketing		2,390		5.5	%		2,416		5.5	%		2,941		6.3	%		2,525		5.0	%
Repairs & Maintenance		1,671		3.8	%		1,605		3.7	%		1,830		3.9	%		1,885		3.7	%
Utilities		1,140		2.6	%		1,107		2.5	%		1,220		2.6	%		1,283		2.5	%
Total Undistributed Expenses		7,914		18.1	%		7,947		18.1	%		9,262		19.7	%		9,062		17.9	%
Gross Operating Profit		20,997		48.0	%		20,798		47.4	%		21,017		44.8	%		24,207		47.9	%
FIXED EXPENSES
Base Management Fee		1,530		3.5	%		1,537		3.5	%		1,643		3.5	%		1,767		3.5	%
Incentive Management Fee (2)		2,570		5.9	%		2,420		5.5	%		2,279		4.9	%		2,823		5.6	%
Real Estate Taxes		4,264		9.8	%		4,334		9.9	%		5,012		10.7	%		5,163		10.2	%
Insurance		346		0.8	%		392		0.9	%		453		1.0	%		467		0.9	%
Leases & Other		235		0.5	%		144		0.3	%		167		0.4	%		172		0.3	%
FF&E Reserve (3)		2,183		5.0	%		2,196		5.0	%		2,347		5.0	%		2,020		4.0	%
Total Fixed Expenses		11,127		25.4	%		11,023		25.1	%		11,901		25.4	%		12,411		24.6	%
Net Operating Income	$	9,871		22.6	%	$	9,775		22.3	%	$	9,117		19.4	%	$	11,795		23.4	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	2007					2008					2009					2010
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
REVENUES
Room	$	35,905		68.5	%	$	37,444		68.6	%	$	38,835		68.7	%	$	40,389		68.8	%
Food & Beverage		12,099		23.1	%		12,557		23.0	%		12,961		22.9	%		13,415		22.8	%
Telephone		1,101		2.1	%		1,143		2.1	%		1,180		2.1	%		1,221		2.1	%
Minor Operating Depts		88		0.2	%		91		0.2	%		94		0.2	%		98		0.2	%
Rent & Other Income		3,244		6.2	%		3,367		6.2	%		3,475		6.1	%		3,597		6.1	%
Total Revenues		52,438		100.0	%		54,602		100.0	%		56,545		100.0	%		58,719		100.0	%
DEPARTMENTAL EXPENSES
Room		8,266		23.0	%		8,538		22.8	%		8,770		22.6	%		9,033		22.4	%
Food & Beverage		8,470		70.0	%		8,790		70.0	%		9,073		70.0	%		9,390		70.0	%
Telephone		330		30.0	%		343		30.0	%		354		30.0	%		366		30.0	%
Minor Operating Depts		44		50.0	%		46		50.0	%		47		50.0	%		49		50.0	%
Rent & Other Departmental Exp.		260		8.0	%		269		8.0	%		278		8.0	%		288		8.0	%
Total Departmental Expenses		17,370		33.1	%		17,985		32.9	%		18,522		32.8	%		19,126		32.6	%
Gross Operating Income		35,068		66.9	%		36,616		67.1	%		38,024		67.2	%		39,593		67.4	%
UNDISTRIBUTED EXPENSES
Administrative & General		3,470		6.6	%		3,574		6.5	%		3,681		6.5	%		3,792		6.5	%
Advertising & Marketing		2,622		5.0	%		2,730		5.0	%		2,827		5.0	%		2,936		5.0	%
Repairs & Maintenance		1,942		3.7	%		2,000		3.7	%		2,060		3.6	%		2,122		3.6	%
Utilities		1,322		2.5	%		1,365		2.5	%		1,402		2.5	%		1,444		2.5	%
Total Undistributed Expenses		9,355		17.8	%		9,669		17.7	%		9,970		17.6	%		10,293		17.5	%
Gross Operating Profit		25,713		49.0	%		26,947		49.4	%		28,053		49.6	%		29,299		49.9	%
FIXED EXPENSES
	2007					2008					2009					2010
Base Management Fee		1,835		3.5	%		1,911		3.5	%		1,979		3.5	%		2,055		3.5	%
Incentive Management Fee (2)		3,161		6.0	%		3,340		6.1	%		3,495		6.2	%		3,673		6.3	%
Real Estate Taxes		5,318		10.1	%		5,477		10.0	%		5,641		10.0	%		5,811		9.9	%
Insurance		481		0.9	%		495		0.9	%		510		0.9	%		525		0.9	%
Leases & Other		177		0.3	%		182		0.3	%		188		0.3	%		193		0.3	%
FF&E Reserve (3)		2,098		4.0	%		2,184		4.0	%		2,262		4.0	%		2,349		4.0	%
Total Fixed Expenses		13,069		24.9	%		13,589		24.9	%		14,075		24.9	%		14,606		24.9	%
Net Operating Income	$	12,644		24.1	%	$	13,358		24.5	%	$	13,979		24.7	%	$	14,693		25.0	%

(1)	2003 is based on the Reforecast as of 6/1/03 and 2004-2005 Projections as of 4/1/03, provided by The Westin Michigan Avenue.
(2)	Incentive Fees are based on Net Cash Flow after debt service and owner required returns as specified in the Management Agreement. 2003-2005 Incentive Fees are based on the Property’s Reforecast and Projections as of 6/1/03 provided by The Westin Michigan Avenue.
(3)	FF&E Reserves are estimated to be 5% of Total Revenues through 2005, as dictated by the existing Chicago FF&E & Escrow Agreement. Beginning in 2006, FF&E Reserves are projected by JLLH to be 4% of Total Revenues, which reflects new lender terms.

31

DRAFT

SCENARIO I STATEMENT OF PROJECTED CASH FLOWS FOOTNOTES

(1)	2003 is based on the Reforecast as of 6/1/03 and 2004-2005 Projections as of 4/1/03, provided by The Westin Michigan Avenue.
(2)	Incentive Fees are based on Net Cash Flow after debt service and owner required returns as specified in the Management Agreement. 2003 Incentive Fees are based on the Property’s 2003 Reforecast as of 6/1/03 provided by The Westin Michigan Avenue.
(3)	FF&E Reserves are estimated to be 5% of Total Revenues from 1/1/03 through 10/31/03, as dictated by the existing Chicago FF&E & Escrow Agreement. Beginning in 11/1/03, FF&E Reserves are projected by JLLH to be 4% of Total Revenues, which reflects new lender terms.
(4)	Debt Service from 2003 through 2005 assumes the existing TRST Debt Service of approximately $3.1 million ($773,152 per quarter), as indicated in the WHLP 10K 12/31/02 SEC Filing, including one $5 million principal prepayment of the TRST made on 3/1/03. In order to project Incentive Fees, refinancing Debt Service approximately $5.7 million, $70 million in new debt financing proceeds, all-in interest rate of 6.5% and 25 year amortization.
(5)	Existing TRST annual debt service payment as indicated in the TRST Second Amendment Note Schedule in the WHLP 10Q 6/30/97 SEC Filing. (See Appendix)
(6)	Based on The Westin Michigan Avenue Capital Plan as of 5/1/02 provided by Westin Realty Corp. (See Appendix)
(7)	Quarterly Distributions are based on a per unit $6.72 payout per quarter or $26.88 per year ($4.88 for 11/1/03-12/31/03) and a total of 135,600 Limited Partnership Units, based on the 2002 cash distributions reported in the WHLP 10K 12/31/02 SEC Filing.

32

DRAFT

SCENARIO I CASH ACCOUNT BALANCES

A.

		2003				2004				2005
Debt Service (1)			8,093	18.5	%		3,093	7.0	%		3,093	6.6	%
Cash Available for Incentive Fees and WHLP			4,348	9.9	%		9,102	20.7	%		8,303	17.7	%
Cash Account:
	Beginning Balance (2)		26,401	60.4	%		27,347	62.3	%		29,984	63.9	%
	Plus: Net Operating Income		9,871	22.6	%		9,775	22.3	%		9,117	19.4	%
	Plus: Accrued Incentive Fee (4)		2,570	5.9	%		0	0.0	%		0	0.0	%
	Less: Debt Service (3)		7,450	17.0	%		3,093	7.0	%		3,093	6.6	%
	Less: CAPEX above FF&E Reserve (4)		0	0.0	%		0	0.0	%		0	0.0	%
	Less: WHLP A&G Expenses (5)		400	0.9	%		400	0.9	%		400	0.9	%
	Less Quarterly Distributions (6)		3,645	8.3	%		3,645	8.3	%		3,645	7.8	%
	Ending Balance		27,347	62.5	%		29,984	68.3	%		31,964	68.1	%

B.

		2003					2004					2005
Debt Service (1)			13,093		29.9	%		13,093		29.8	%		3,093	6.6	%
Cash Available for Incentive Fees and WHLP			(652	)	-1.5	%		(898	)	-2.0	%		8,303	17.7	%
Cash Account:
	Beginning Balance (2)		26,401		60.4	%		22,347		50.9	%		17,404	37.1	%
	Plus: Net Operating Income		9,871		22.6	%		9,775		22.3	%		9,117	19.4	%
	Plus: Accrued Incentive Fee (3)		2,570		5.9	%		2,420		5.5	%		0	0.0	%
	Less: Debt Service (1)		12,450		28.5	%		13,093		29.8	%		3,093	6.6	%
	Less: CAPEX above FF&E Reserve (4)		0		0.0	%		0		0.0	%		0	0.0	%
	Less: WHLP A&G Expenses (5)		400		0.9	%		400		0.9	%		400	0.9	%
	Less Quarterly Distributions (6)		3,645		8.3	%		3,645		8.3	%		3,645	7.8	%
	Ending Balance		22,347		51.1	%		17,404		39.6	%		19,383	41.3	%

C.

		2003				2004				2005
Debt Service (1)			7,901	18.1	%		2,513	5.7	%		2,700	5.8	%
Cash Available for Incentive Fees and WHLP			4,536	10.4	%		9,682	22.0	%		8,696	18.5	%
Cash Account:
	Beginning Balance (2)		26,401	60.4	%		27,535	62.7	%		30,753	65.5	%
	Plus: Net Operating Income		9,867	22.6	%		9,775	22.3	%		9,117	19.4	%
	Plus: Accrued Incentive Fee (3)		2,570	5.9	%		0	0.0	%		0	0.0	%
	Less: Debt Service (1)		7,258	16.6	%		2,513	5.7	%		2,700	5.8	%
	Less: CAPEX above FF&E Reserve (4)		0	0.0	%		0	0.0	%		0	0.0	%
	Less: WHLP A&G Expenses (5)		400	0.9	%		400	0.9	%		400	0.9	%
	Less Quarterly Distributions (6)		3,645	8.3	%		3,645	8.3	%		3,645	7.8	%
	Ending Balance		27,535	63.0	%		30,753	70.0	%		33,125	70.6	%

(1)	Debt Service assumes the existing TRST Debt Service of approximately $2.3 million ($773,152 per quarter), as indicated in the WHLP 10K 12/31/02 SEC Filing. For the Refinancing at 10/31/03, the TRST debt service through 10/31/03 is added to the new first mortgage debt service of 581,200 for 11/1/03 through 12/31/03. Debt service from 1/1/03 through 10/31/03 includes one $5 million principal prepayment of the TRST made on 3/1/03. Debt Service as of 12/1/06 is based on $75 million in financing proceeds, interest only, 125 bps LIBOR base, 185 bps spread with 25 bps annual increases. In order to project Incentive Fees, refinancing Debt Service approximately $5.7 million, $70 million in new debt financing proceeds, all-in interest rate of 6.5% and 25 year amortization.
(2)	Based on the WHLP 10K 12/31/02 SEC Filing and a reconciliation by Westin Realty Corp.
(3)	Existing TRST annual debt service payment as indicated in the TRST Second Amendment Note Schedule in the WHLP 10Q 6/30/97 SEC Filing. (See Appendix)
(4)	Based on The Westin Michigan Avenue 2002 Capital Plan as of 12/31/02, provided by The Westin Michigan Avenue and the Capital Plan as of 5/1/02 provided by Westin Realty Corp. (See Appendix)
(5)	Annual WHLP administrative costs provided by Westin Realty Corp.
(6)	Quarterly Distributions are based on a per unit $6.72 payout per quarter ($4.88 for 11/1/03-12/31/03) or $26.88 per year and a total of 135,600 Limited Partnership Units, based on the 2001 cash distributions reported in the WHLP 10K 12/31/01 SEC Filing.

33

DRAFT

34

DRAFT

SCENARIO II STATEMENT OF PROJECTED CASH FLOWS

THE WESTIN MICHIGAN AVENUE
STATEMENT OF PROJECTED CASH FLOWS: YE 2006 SALE (1)

	2003			2004			2005			2006			2007			2008			2009			2010			2011
Available Hotel Rooms		751			751			751			751			751			751			751			751			751
Available Room Nights		274,115			274,866			274,115			274,115			274,115			274,866			274,115			274,115			274,115
Occupied Room Nights		204,049			199,983			201,439			205,586			205,586			206,150			205,586			205,586			205,586
Occupancy		74.4	%		72.8	%		73.5	%		75.0	%		75.0	%		75.0	%		75.0	%		75.0	%		75	%
Average Daily Rate	$	149.29		$	152.50		$	157.92		$	167.93		$	174.65		$	181.63		$	188.90		$	196.46		$	204.31
Revenues Per Available Room	$	111.13		$	110.95		$	116.05		$	125.95		$	130.99		$	136.23		$	141.67		$	147.34		$	153.24

	2003					2004					2005					2006
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
REVENUES
Room	$	30,463		69.7	%	$	30,496		69.4	%	$	31,810		67.8	%	$	34,524		68.4	%
Food & Beverage		9,499		21.7	%		9,518		21.7	%		11,066		23.6	%		11,690		23.1	%
Telephone		1,111		2.5	%		1,155		2.6	%		1,007		2.1	%		1,064		2.1	%
Minor Operating Depts		17		0.0	%		66		0.1	%		81		0.2	%		85		0.2	%
Rent & Other Income		2,632		6.0	%		2,683		6.1	%		2,968		6.3	%		3,134		6.2	%
Total Revenues		43,723		100.0	%		43,918		100.0	%		46,933		100.0	%		50,498		100.0	%
DEPARTMENTAL EXPENSES
Room		7,249		23.8	%		7,244		23.8	%		7,635		24.0	%		8,025		23.2	%
Food & Beverage		6,835		72.0	%		7,188		75.5	%		8,300		75.0	%		8,534		73.0	%
Telephone		407		36.6	%		414		35.9	%		373		37.0	%		372		35.0	%
Minor Operating Depts		29		168.7	%		41		62.0	%		47		58.0	%		47		55.0	%
Rent & Other Departmental Exp.		293		11.1	%		286		10.7	%		300		10.1	%		251		8.0	%
Total Departmental Expenses		14,811		33.9	%		15,173		34.5	%		16,653		35.5	%		17,229		34.1	%
Gross Operating Income		28,911		66.1	%		28,745		65.5	%		30,279		64.5	%		33,269		65.9	%
UNDISTRIBUTED EXPENSES
Administrative & General		2,712		6.2	%		2,819		6.4	%		3,270		7.0	%		3,369		6.7	%
Advertising & Marketing		2,390		5.5	%		2,416		5.5	%		2,941		6.3	%		2,525		5.0	%
Repairs & Maintenance		1,671		3.8	%		1,605		3.7	%		1,830		3.9	%		1,885		3.7	%
Utilities		1,140		2.6	%		1,107		2.5	%		1,220		2.6	%		1,283		2.5	%
Total Undistributed Expenses		7,914		18.1	%		7,947		18.1	%		9,262		19.7	%		9,062		17.9	%
Gross Operating Profit		20,997		48.0	%		20,798		47.4	%		21,017		44.8	%		24,207		47.9	%
FIXED EXPENSES
Base Management Fee		1,530		3.5	%		1,537		3.5	%		1,643		3.5	%		1,767		3.5	%
Incentive Management Fee (2)		2,570		5.9	%		2,420		5.5	%		2,279		4.9	%		2,924		5.8	%
Real Estate Taxes		4,264		9.8	%		4,334		9.9	%		5,012		10.7	%		5,163		10.2	%
Insurance		346		0.8	%		392		0.9	%		453		1.0	%		467		0.9	%
Leases & Other		235		0.5	%		144		0.3	%		167		0.4	%		172		0.3	%
FF&E Reserve (3)		2,183		5.0	%		2,196		5.0	%		2,347		5.0	%		2,020		4.0	%
Total Fixed Expenses		11,127		25.4	%		11,023		25.1	%		11,901		25.4	%		12,512		24.8	%
Net Operating Income	$	9,871		22.6	%	$	9,775		22.3	%	$	9,117		19.4	%	$	11,694		23.2	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	2007					2008					2009					2010					2011
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
REVENUES
Room	$	35,905		68.5	%	$	37,444		68.6	%	$	38,835		68.7	%	$	40,389		68.8	%	$	42,004		68.9	%
Food & Beverage		12,099		23.1	%		12,557		23.0	%		12,961		22.9	%		13,415		22.8	%		13,884		22.8	%
Telephone		1,101		2.1	%		1,143		2.1	%		1,180		2.1	%		1,221		2.1	%		1,264		2.1	%
Minor Operating Depts		88		0.2	%		91		0.2	%		94		0.2	%		98		0.2	%		101		0.2	%
Rent & Other Income		3,244		6.2	%		3,367		6.2	%		3,475		6.1	%		3,597		6.1	%		3,723		6.1	%
Total Revenues		52,438		100.0	%		54,602		100.0	%		56,545		100.0	%		58,719		100.0	%		60,976		100.0	%
DEPARTMENTAL EXPENSES
Room		8,266		23.0	%		8,538		22.8	%		8,770		22.6	%		9,033		22.4	%		9,304		22.1	%
Food & Beverage		8,470		70.0	%		8,790		70.0	%		9,073		70.0	%		9,390		70.0	%		9,719		70.0	%
Telephone		330		30.0	%		343		30.0	%		354		30.0	%		366		30.0	%		379		30.0	%
Minor Operating Depts		44		50.0	%		46		50.0	%		47		50.0	%		49		50.0	%		51		50.0	%
Rent & Other Departmental Exp.		260		8.0	%		269		8.0	%		278		8.0	%		288		8.0	%		298		8.0	%
Total Departmental Expenses		17,370		33.1	%		17,985		32.9	%		18,522		32.8	%		19,126		32.6	%		19,750		32.4	%
Gross Operating Income		35,068		66.9	%		36,616		67.1	%		38,024		67.2	%		39,593		67.4	%		41,225		67.6	%
UNDISTRIBUTED EXPENSES
Administrative & General		3,470		6.6	%		3,574		6.5	%		3,681		6.5	%		3,792		6.5	%		3,905		6.4	%
Advertising & Marketing		2,622		5.0	%		2,730		5.0	%		2,827		5.0	%		2,936		5.0	%		3,049		5.0	%
Repairs & Maintenance		1,942		3.7	%		2,000		3.7	%		2,060		3.6	%		2,122		3.6	%		2,185		3.6	%
Utilities		1,322		2.5	%		1,365		2.5	%		1,402		2.5	%		1,444		2.5	%		1,488		2.4	%
Total Undistributed Expenses		9,355		17.8	%		9,669		17.7	%		9,970		17.6	%		10,293		17.5	%		10,627		17.4	%
Gross Operating Profit		25,713		49.0	%		26,947		49.4	%		28,053		49.6	%		29,299		49.9	%		30,598		50.2	%
FIXED EXPENSES
Base Management Fee		1,835		3.5	%		1,911		3.5	%		1,979		3.5	%		2,055		3.5	%		2,134		3.5	%
Incentive Management Fee (2)		3,161		6.0	%		3,340		6.1	%		3,495		6.2	%		3,673		6.3	%		3,860		6.3	%
	2007					2008					2009					2010					2011
Real Estate Taxes		5,318		10.1	%		5,477		10.0	%		5,641		10.0	%		5,811		9.9	%		5,985		9.8	%
Insurance		481		0.9	%		495		0.9	%		510		0.9	%		525		0.9	%		541		0.9	%
Leases & Other		177		0.3	%		182		0.3	%		188		0.3	%		193		0.3	%		199		0.3	%
FF&E Reserve (3)		2,098		4.0	%		2,184		4.0	%		2,262		4.0	%		2,349		4.0	%		2,439		4.0	%
Total Fixed Expenses		13,069		24.9	%		13,589		24.9	%		14,075		24.9	%		14,606		24.9	%		15,158		24.9	%
Net Operating Income	$	12,644		24.1	%	$	13,358		24.5	%	$	13,979		24.7	%	$	14,693		25.0	%	$	15,440		25.3	%

(1)	2003-2005 is based on the budget as of 41/03 provided by The Westin Michigan Avenue. (See Appendix)
(2)	Incentive Fees are based on Net Cash Flow after debt service and owner required returns as specified in the Management Agreement. 2003-2005 Incentive Fees are based on the Property’s Reforecast and Projections as of 4/1/03 provided by The Westin Michigan Avenue.
(3)	FF&E Reserves are estimated to be 5% of Total Revenues for Q1 and Q4 2003, as dictated by the FF&E Escrow Agreement. Beginning in Q4 2003, FF&E Reserves are projected by JLLH to be 4% of Total Revenues, which reflects new lender terms and concurrent with industry standards.

35

DRAFT

36

DRAFT

SCENARIO II CASH ACCOUNT BALANCES

A.

		2002				2003				2004				2005
Debt Service (1)			8,093	18.5	%		3,093	7.0	%		3,093	6.6	%		2,319	4.6	%
Cash Available for Incentive Fees and WHLP			4,348	9.9	%		9,102	20.7	%		8,303	17.7	%		12,299	24.4	%
Cash Account:
	Beginning Balance (2)		26,401	60.4	%		27,347	62.3	%		29,984	63.9	%		31,964	63.3	%
	Plus: Net Operating Income		9,871	22.6	%		9,775	22.3	%		9,117	19.4	%		11,694	23.2	%
	Plus: Accrued Incentive Fee (3)		2,570	5.9	%		0	0.0	%		0	0.0	%		0	0.0	%
	Less: Debt Service (1)		7,450	17.0	%		3,093	7.0	%		3,093	6.6	%		2,319	4.6	%
	Less: CAPEX above FF&E Reserve (4)		0	0.0	%		0	0.0	%		0	0.0	%		0	0.0	%
	Less: WHLP A&G Expenses (5)		400	0.9	%		400	0.9	%		400	0.9	%		400	0.8	%
	Less Quarterly Distributions (6)		3,645	8.3	%		3,645	8.3	%		3,645	7.8	%		3,645	7.2	%
	Ending Balance		27,347	62.5	%		29,984	68.3	%		31,964	68.1	%		37,294	73.9	%

B.

		2003					2004					2005				2006
Debt Service (1)			13,093		29.9	%		13,093		29.8	%		3,093	6.6	%		2,319	4.6	%
Cash Available for Incentive Fees and WHLP			(652	)	-1.5	%		(898	)	-2.0	%		8,303	17.7	%		12,299	24.4	%
Cash Account:
	Beginning Balance (2)		26,401		60.4	%		22,347		50.9	%		17,404	37.1	%		19,383	38.4	%
	Plus: Net Operating Income		9,871		22.6	%		9,775		22.3	%		9,117	19.4	%		11,694	23.2	%
	Plus: Accrued Incentive Fee (3)		2,570		5.9	%		2,420		5.5	%		0	0.0	%		0	0.0	%
	Less: Debt Service (1)		12,450		28.5	%		13,093		29.8	%		3,093	6.6	%		2,319	4.6	%
	Less: CAPEX above FF&E Reserve (4)		0		0.0	%		0		0.0	%		0	0.0	%		0	0.0	%
	Less: WHLP A&G Expenses (5)		400		0.9	%		400		0.9	%		400	0.9	%		400	0.8	%
	Less Quarterly Distributions (6)		3,645		8.3	%		3,645		8.3	%		3,645	7.8	%		3,645	7.2	%
	Ending Balance		22,347		51.1	%		17,404		39.6	%		19,383	41.3	%		24,713	48.9	%

C.

		2003				2004				2005				2006
Debt Service (1)			7,901	18.1	%		2,513	5.7	%		2,700	5.8	%		5,672	11.2	%
Cash Available for Incentive Fees and WHLP			4,536	10.4	%		9,682	22.0	%		8,696	18.5	%		8,441	16.7	%
Cash Account:
	Beginning Balance (2)		26,401	60.4	%		27,535	62.7	%		30,753	65.5	%		33,125	65.6	%
	Plus: Net Operating Income		9,867	22.6	%		9,775	22.3	%		9,117	19.4	%		11,290	22.4	%
	Plus: Accrued Incentive Fee (3)		2,570	5.9	%		0	0.0	%		0	0.0	%		0	0.0	%
	Less: Debt Service (1)		7,258	16.6	%		2,513	5.7	%		2,700	5.8	%		5,672	11.2	%
	Less: CAPEX above FF&E Reserve (4)		0	0.0	%		0	0.0	%		0	0.0	%		0	0.0	%
	Less: WHLP A&G Expenses (5)		400	0.9	%		400	0.9	%		400	0.9	%		400	0.8	%
	Less Quarterly Distributions (6)		3,645	8.3	%		3,645	8.3	%		3,645	7.8	%		3,645	7.2	%
	Ending Balance		27,535	63.0	%		30,753	70.0	%		33,125	70.6	%		34,699	68.7	%

(1)	Debt Service assumes the existing TRST Debt Service of approximately $2.3 million ($773,152 per quarter), as indicated in the WHLP 10K 12/31/02 SEC Filing. For the Refinancing at 10/31/03, the TRST debt service through 10/31/03 is added to the new first mortgage debt service of 581,200 for 11/1/03 through 12/31/03. Debt service from 1/1/03 through 10/31/03 includes one $5 million principal prepayment of the TRST made on 3/1/03. Debt Service as of 12/1/07 is based on $75 million in financing proceeds, interest only, 125 bps LIBOR base, 185 bps spread with 25 bps annual increases. In order to project Incentive Fees, refinancing Debt Service approximately $5.7 million, $70 million in new debt financing proceeds, all-in interest rate of 6.5% and 25 year amortization.
(2)	Based on the WHLP 10K 12/31/02 SEC Filing and a reconciliation by Westin Realty Corp.
(3)	Existing TRST annual debt service payment as indicated in the TRST Second Amendment Note Schedule in the WHLP 10Q 6/30/97 SEC Filing. (See Appendix)
(4)	Based on The Westin Michigan Avenue 2002 Capital Plan as of 12/31/02, provided by The Westin Michigan Avenue and the Capital Plan as of 5/1/02 provided by Westin Realty Corp. (See Appendix)
(5)	Annual WHLP administrative costs provided by Westin Realty Corp.
(6)	Quarterly Distributions are based on a per unit $6.72 payout per quarter ($4.88 for 11/1/03-12/31/03) or $26.88 per year and a total of 135,600 Limited Partnership Units, based on the 2001 cash distributions reported in the WHLP 10K 12/31/01 SEC Filing.

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CASH ACCOUNT BALANCE AS OF 12/31/02
Cash Balance as of 12.31.02

	Balance:			Source:
Total Cash Available	$	39,236,000		WHLP 10-K
Less: Current liabilities @12/31/02		($11,214,000	)	WHLP 10-K
Less: Restricted Cash included in cash balance		($3,143,000	)	WHLP 10-K
Add: Refund of restricted FF&E reserve	$	1,522,000		WHLP 10-K
Add: Restricted cash used to pay current liabilities (taxes)		—
Net Cash available	$	26,401,000

Source: WHLP 10K 12/31/02 SEC Filing and Westin Realty Corp.

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THE WESTIN MICHIGAN AVENUE 2003 REFORECAST AS OF 6/1/03

USER ID : 5071CON0	SLC OPERATING LIMITED PARTNERSHIP	DATE: 07/16/2003	TIME: 08:10:36
CURRENCY: USD	#5071, CHICAGO-WESTIN MICHIGAN A
	SUMMARY INCOME STATEMENT 2003

	Actuals/Current Forecast
	January		February		March		April		May		June		July		August		September		October
AVAILABLE ROOMS		23,281		21,028		23,281		22,530		23,281		22,530		23,281		23,281		22,530		23,281
OCCUPIED ROOMS		13,935		12,504		16,784		17,024		18,725		20,871		20,274		17,521		18,043		19,665
% OF OCCUPANCY		59.9		59.5		72.1		75.6		80.4		92.6		87.1		75.3		80.1		84.5
AVERAGE RATE		122.83		117.74		143.18		149.08		158.38		164.41		144.63		139.56		159.77		179.53
REVPAR		73.52		70.01		103.22		112.65		127.39		152.3		125.95		105.03		127.95		151.64
REVENUE ROOMS		1,711,590		1,472,208		2,403,119		2,537,924		2,965,747		3,431,306		2,932,217		2,445,317		2,882,735		3,530,365
FOOD & BEVERAGE		474,830		483,595		821,811		721,643		1,011,178		923,060		741,203		629,204		929,674		1,128,778
TELECOMMUNICATION		67,260		55,635		87,708		74,983		91,803		115,114		127,218		98,103		101,813		119,297
MINOR OPERATING DEPT		2,309		1,331		3,262		2,329		678		572		1,426		882		1,276		1,390
RENT & OTHER		228,073		184,183		195,123		227,776		232,240		209,566		230,074		231,845		240,172		239,609
TOTAL REVENUE		2,484,062		2,196,952		3,511,022		3,564,655		4,301,647		4,679,618		4,032,138		3,405,351		4,155,670		5,019,438
DEPT PROFIT
ROOMS		1,144,023		1,009,765		1,835,663		1,898,399		2,311,450		2,721,495		2,281,190		1,877,613		2,269,912		2,801,818
FOOD & BEVERAGE		39,723		75,013		248,294		234,420		297,431		324,227		188,930		119,386		302,069		372,202
TELECOMMUNICATION		34,005		15,637		61,161		42,029		55,124		78,175		91,972		66,494		68,922		83,188
MINOR OPERATING DEPT		-414		-3,327		-1,741		-558		-1,458		-811		-652		-661		-243		-184
RENT & OTHER		207,082		165,602		172,938		203,565		205,801		175,582		203,196		207,117		214,705		212,099
TOTAL DEPT PROFIT		1,424,418		1,262,690		2,316,316		2,377,855		2,868,347		3,298,669		2,764,636		2,269,949		2,855,366		3,469,123
UNDISTRIBUTED DEPTS ADMINISTRATIVE & GEN		189,385		144,474		122,244		155,941		142,794		155,482		190,765		164,209		180,795		171,631
CR CARD COMMISSION		50,332		36,619		51,595		67,952		68,043		90,362		69,756		58,913		71,893		86,836
MARKETING		176,457		78,706		182,345		223,294		248,396		270,215		222,223		186,810		206,646		243,260
REPAIRS & MAINTENANCE		151,142		133,100		123,443		133,292		138,244		169,565		161,073		135,854		129,002		131,905
ENERGY		85,503		111,458		120,990		87,644		80,475		84,808		115,147		109,449		93,053		78,038
TOTAL UNDISTRIBUTED DEPTS		652,818		504,357		600,618		668,123		677,952		770,433		758,964		655,234		681,389		711,671
GROSS OPER PROFIT		771,599		758,333		1,715,698		1,709,732		2,190,395		2,528,237		2,005,672		1,614,715		2,173,977		2,757,452
MGMT FEE BASE		86,942		76,893		122,886		124,763		150,558		163,787		141,125		119,187		145,448		175,680
MGMT FEE INCENTIVE		203,523		204,688		205,874		203,427		213,393		217,507		220,207		220,207		220,207		220,207
INCOME BEF FIXED CHG		481,134		476,752		1,386,938		1,381,542		1,826,444		2,146,943		1,644,340		1,275,321		1,808,321		2,361,565
RENT TAXES & INSURANCE		402,348		400,384		345,507		443,440		402,743		451,234		404,641		402,329		380,097		408,283
INTEREST		206,432		206,432		205,384		205,384		205,384		204,314		204,314		204,314		203,223		203,223
OWNERS EXPENSE				-1,515		2,059				-414,994
INCOME BEF DEPR		-127,646		-128,549		833,989		732,719		1,633,311		1,491,394		1,035,385		668,677		1,225,001		1,750,059
DEPR, AMORT & OTHER		799,979		799,979		799,979		471,434		717,709		717,709		717,710		717,710		717,710		717,710
INCOME BEF TAXES		-927,624		-928,528		34,010		261,285		915,601		773,685		317,675		-49,033		507,291		1,032,349
INCOME AFT TAXES		-927,624		-928,528		34,010		261,285		915,601		773,685		317,675		-49,033		507,291		1,032,349
ADD: INTEREST		206,432		206,432		205,384		205,384		205,384		204,314		204,314		204,314		203,223		203,223
ADD: DEPR, AMORT & OTHER		799,979		799,979		799,979		471,434		717,709		717,709		717,710		717,710		717,710		717,710
EBITDA		78,787		77,883		1,039,372		938,103		1,838,694		1,695,708		1,239,699		872,992		1,428,224		1,953,282

Source: The Westin Michigan Avenue

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THE WESTIN MICHIGAN AVENUE 2004-2005 PROJECTIONS AS OF 4/1/03

STARWOOD HOTELS & RESORTS WORLDWIDE

2003 Forecast Year-End — CHICAGO-WESTIN MICHIGAN A (5071)

			2004		2005
			Total		Total
STATISTICS
	Available Rooms			274,115		274,115
	Occupied Rooms			199,983		201,439
	Percentage of Occupancy			73		73.5
	Average Rate			152.5		157.92
	RevPar			111.25		116.05
REVENUE
	Rooms			30,496,499		31,810,424
	Food & Beverage			9,518,058		11,066,202
	Telecommunication			1,154,827		1,007,195
	Minor Operating Dept			65,861		80,576
	Rent & Other			2,682,733		2,968,200
		TOTAL REVENUE		43,917,978		46,932,597
DEPT PROFIT
	Rooms			23,252,382		24,175,922
	Food & Beverage			2,330,419		2,766,550
	Telecommunication			740,780		634,533
	Minor Operating Dept			25,036		33,842
	Rent & Other			2,396,241		2,668,412
		TOTAL DEPT PROFIT		28,744,858		30,279,259
UNDISTRIBUTED DEPTS
	Administrative & Gen			2,058,893		2,449,021
	Cr Card Commission			759,781		821,320
	Marketing			2,416,196		2,940,950
	Repairs & Maintenance			1,604,562		1,830,371
	Energy			1,107,231		1,220,248
		TOTAL UNDISTRIBUT		7,946,663		9,261,910
GROSS OPER PROFIT				20,798,194		21,017,349
	Mgmt Fee Base			1,537,129		1,642,641
	Mgmt Fee Incentive			2,419,524		2,279,150
INCOME BEF FIXED CH				16,841,541		17,095,558
	Rent Taxes & Insurance			4,870,449		5,632,326
	Interest			2,453,738		2,549,304
	Owners Expense			0		0
INCOME BEF DEPR/AM				9,517,354		8,913,928
	Depr & Amort			8,580,000		0
INCOME BEF TAXES				937,354		8,913,928
INCOME AFT TAXES				937,354		8,913,928
	ADD: Interest			2,453,738		2,549,304
	ADD: Depr & Amort			8,580,000		0
EBITDA				11,971,092		11,463,232
Occupied Rooms
	Transient			97,678		96,697
	Group			84,735		87,448
	Contracted			17,570		17,294
Average Rate
	Transient			144.16		151.52
	Group			172.33		175.42
	Contracted			75.73		82.98
Inclusions: 5071

Source: The Westin Michigan Avenue

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THE WESTIN MICHIGAN AVENUE CAPITAL PLAN AS OF 5/1/02

Name	Westin Michigan Avenue	0%
Property No:	5071

USD (Thousands)
																	TOTAL
1.1.0	EXPENDITURE SUMMARY		2002		2003		2004		2005		2006		2007		2008		02-08
1.1.1	RENOVATION - ROOMS AND CORRIDORS			—		—		—		—		—		—		—		—
1.1.2	RENOVATION - PUBLIC AREAS /MTG SPACE			2,152		750		—		—		—		—		—		2,902
1.1.3	RENOVATION - F&B OUTLETS			245		—		—		—		—		—		—		245
1.1.4		Subtotal Renovations		2,397		750		—		—		—		—		—		3,147
1.1.5
1.1.6	OPERATING EQUIPMENT			50		50		50		50		50		50		50		350
1.1.7	BRAND STANDARDS			102		—		—		—		—		—		—		102
1.1.8	REGULATORY / LIFESAFETY			656		444		—		—		—		—		—		1,100
1.1.9	BUILDING CUSTODIAL			357		322		665		350		350		—		—		2,044
1.1.10	PROPERTY IT			147		35		195		125		25		195		25		747
		Subtotal Custodial Maintenance & IT		1,312		851		910		525		425		245		75		4,343
1.1.11		TOTAL EXPENDITURES		3,709		1,601		910		525		425		245		75		7,490

Source: Westin Realty Corp.

41 EX-99.(C)(5) 10 p68165t3exv99wxcyx5y.htm EX-(C)(5)

Exhibit (c)(5)

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REFINANCING ANALYSIS

THE WESTIN
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May 7, 2003

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LASALLE HOTELS_TM

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TABLE OF CONTENTS

Table of Contents	i
Introduction	1
Executive Summary	2
Scenario I: YE 2003 Sale Base Case	5
Scenario II: YE 2005 Sale	7
Scenario III: Q2 2003 $75 Million Refinancing and YE 2005 Sale	9
Appendix	11

Refinancing Closing Costs

TRST Second Amendment Note Schedule

TRST Revised Note Schedule with a $5 million Prepayment

Starwood Subordinate Loan Schedule

Scenario II Deferred Incentive Fee Rollforward

Cash Account Balance as of 12/31/02

Scenario I Statement of Projected Cash Flows

Scenario I Sale Proceeds (Valuation Matrix)

Scenario II Statement of Projected Cash Flows

Scenario III Statement of Projected Cash Flows

Scenarios I and II Sale Proceeds (Valuation Matrix)

The Westin Michigan Avenue 2003 Reforecast as of 4/1/03

The Westin Michigan Avenue 2004-2005 Projections as of 4/1/03

The Westin Michigan Avenue Capital Plan as of 5/1/02

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LASALLE HOTELS_TM

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INTRODUCTION

Jones Lang LaSalle Hotels (“JLLH”) has been engaged by Starwood Hotels & Resorts, Worldwide, Inc. on behalf of Westin Realty Corp., the General Partner of the Westin Hotel Limited Partnership (“WHLP”), to provide a refinancing analysis of The Westin Michigan Avenue (the “Property”). We understand that the information contained within this report will be used by Westin Realty Corp. to determine the appropriate course of action regarding the sale or refinancing of the Property. The general terms of our appointment are set out in our letter dated October 31, 2001.

This report is based on the real estate and investment markets prevailing as of May 7, 2003.

The relevant Assumptions and Limiting Conditions upon which our report is prepared should be read in conjunction with this report.

In accordance with our standard practice, this report is confidential to the party to whom it is addressed. No responsibility is accepted to any third parties and neither the whole nor any part nor any reference thereto may be published in any document, statement or circular nor in communication with third parties without our prior written approval of the form and context in which it will appear.

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LASALLE HOTELS_TM

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EXECUTIVE SUMMARY

Jones Lang LaSaIle Hotels has analyzed The Westin Michigan Avenue under the three scenarios described below.

SCENARIO DESCRIPTION

Scenario I: YE 2003 Sale Base Case:

“As Is” value is calculated assuming no capital expenditures made above the FF&E Reserve in future years. This scenario assumes one $5 million prepayment has been made on the existing TRST loan on 3/1/03. Under this scenario, the sales price range is $93.8 million to $99.6 million, with a midpoint of $96.7 million. In order to account for the risk inherent in projecting cash flows(1) to derive a sales price for the 2003 sale year, a 13.0% discount rate(2) has been utilized. Under this scenario, given the uncertainty in the current market due to geopolitical and economic conditions as well as the Hotel’s declining operational projections, the lower end of the given price range is a more realistic assumption.

Scenario II: YE 2005 Sale:

“As Is” value is calculated assuming no capital expenditures made above the FF&E Reserve in future years. This scenario assumes one $5 million prepayment has been made on the existing TRST loan on 3/1/03. Under this scenario, the sales price range is $104.7 million to $111.3 million, with a midpoint of $108.0 million. In order to account for the risk inherent in projecting cash flows(1) to derive a sales price for the 2005 sale year, a 13.0% discount rate(2) has been utilized.

Scenario III: Q4 2003 $75 Million Refinancing and YE 2005 Sale:

This scenario assumes a $75 million refinancing occurs by 8/31/03, and a sale occurs by 12/31/05. This scenario assumes one $5 million prepayment has been made on the existing TRST loan on 3/1/03. The refinancing assumes an interest only LIBOR loan, with a LIBOR base rate of 150 bps, 215 bps spread, and 50 bps annual increases in LIBOR(2). A sensitivity analysis, which is intended to reflect the maximum LIBOR spread at which the refinancing and sale scenarios result in equal distribution to the Limited Partners, has been conducted with the spread of 257 bps over LIBOR (150 bps base, 215 bps spread with 50 bps annual increases and 42 bps for LIBOR fluctuation). These refinancing assumptions, with no adjustments for LIBOR fluctuation, were also applied in a $70 million refinancing scenario to analyze sensitivity relative to the loan amount.

In order to project cash flows for the purpose of calculating a future value of the Property at sale, assumptions were made as to the most likely terms a buyer would achieve for an acquisition financing. For acquisition financing, $70 million in proceeds, all-in fixed interest rate of 6.5% and 25-year amortization are assumed(2). In order to account for the risk inherent in projecting cash flows(1) to derive a sales price for the 2005 sale year, a 13.0% discount rate(2) has been utilized.

1	JLLH underwriting cash flow assumptions are based on The Westin Michigan Avenue’s historical operating performance, the 2003 Reforecast, 2004-2005 Projections as of 4/l/03 and current hotel industry standards. (See Appendix)
2	JLLH assumptions based on the current hotel real estate and capital market conditions.

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LASALLE HOTELS_TM

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Utilizing the assumptions discussed above and later in this report, the following is a summary of proceeds achievable for each scenario. A detailed description of each scenario is provided in the following pages.

REFINANCING SUMMARY

	Total Proceeds(1)					Midpoint		Per LP Unit (2)						Midpoint
Scenario I:
YE 2003 Sale (3)	$	67,979,800	to	$	73,424,000	$	70,701,900		$	501.33	to	$	541.47		$	521.40
Scenario II:
YE 2005 Sale (4)	$	70,538,500	to	$	75,322,000	$	72,930,300		$	520.20	to	$	555.47		$	537.83
Scenario III:
$75 M Refinancing and YE 2005 Sale (4)	$	71,054,300	to	$	75,837,800	$	73,446,100		$	524.00	to	$	559.28		$	541.64
(LIBOR Spread: 2.15% + 0.%)
$75 M Refinancing and YE 2005 Sale (4)	$	70,510,800	to	$	75,294,300	$	72,902,600		$	519.99	to	$	555.27		$	537.63
(LIBOR Spread: 2.15% + 0.42%)
$70 M Refinancing and YE 2005 Sale (4)	$	70,362,900	to	$	75,146,400	$	72,754,700		$	518.90	to	$	554.18		$	536.54
(LIBOR Spread: 2.15% + 0.%)

1.	Discounted to 8/31/03 present value terms.
2.	Assumes 135,600 Limited Partnership units, based on the WHLP 10K 12/31/02 SEC Filing.
3.	Based on a 2003 year-end sale price of $96.7 million
4.	Based on a 2005 midpoint sale price of $108.0 million

Amounts received by the WHLP in future years, i.e. sales proceeds at 12/31/05, quarterly distributions and the distribution of the Cash Account Balance, have been discounted at 13.0%, which represents the JLLH estimated WHLP weighted average cost of capital.

ASSUMPTIONS

Each scenario assumes the following sources of distributions to the Limited Partners:

1.	Proceeds from a sale and/or a refinancing;
2.	Quarterly Distribution payments ($6.72 per quarter per share or $26.88 per year) based on the cash distributions made in 2002 as reported in the WHLP 10K 12/31/02 SEC Filing; and
3.	Cash Account ending balance. This account equals the beginning Cash Account balance (based on the WHLP 10K 12/31/02 SEC Filing and reconciliation by Westin Realty Corp.) plus net cash flow from operations less debt service, less Quarterly Distribution payments, less total capital expenditures, less $10 million (withheld in the year of a sale transaction for WHLP liquidation expenses, subsequently distributed to the Limited Partners 12 months following the sale less $2.4 million in liquidation, legal and general and administrative expenses estimated by Westin Realty Corp.). Note: The $10 million amount is withheld for legal and liquidation costs while the $400,000 annual A&G expense accounts for the regular operation of the partnership, unrelated to the sale or refinancing of the Property.

JONES LANG
LASALLE HOTELS_TM

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This report has been made with the following general assumptions and limiting conditions:

1.	This report presents conclusions, projections and forecasts such as are typically used in the underwriting and valuation of income-producing properties, and are based on information provided by third parties. Actual results may vary from those presented in this report. There is no guaranty or warranty that conclusions, projections and forecasts presented within this report can be attained.
2.	The consultant is not obligated to predict future political, economic or social trends. The consultant assumes no responsibility for economic factors that may affect or alter the opinions in this report if said economic factors were not present as of the date of this report.
3.	Responsible ownership and competent property management are assumed.
4.	The information furnished by third parties is believed to be reliable, but no warranty is given for its accuracy and the consultant is not responsible for the accuracy of such information.
5.	The property is assumed to be free and clear of any or all liens or encumbrances unless otherwise stated.
6.	It is assumed that there are no hidden or unapparent conditions of the property, subsoil or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them.
7.	It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless a non-conformity has been identified, described and considered in the report.
8.	Possession of this report, or a copy thereof, does not carry with it the right of publication.
9.	Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the consultant, or the firm with which the consultant is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the consultant.

JONES LANG
LASALLE HOTELS_TM

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SCENARIO I: 2003 YEAR-END SALE BASE CASE

JONES LANG
LASALLE HOTELS_TM

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SCENARIO I: 2003 YEAR-END SALE BASE CASE DISTRIBUTION FOOTNOTES

(1)	The sales price range derived represents a minimum and maximum value estimated by JLLH (See Appendix).
(2)	JLLH estimate based on current hotel real estate and capital market conditions.
(3)	12/31/03 year-end balance revised based on the TRST Second Amendment Note Schedule taken from the WHLP 10Q 6/30/97 SEC Filing with one $5 million prepayment made on 3/1/03. (See Appendix)
(4)	Balance derived based on 12/31/02 actual balance of $10,404,000 as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%.
(5)	12/31/03 balance estimated by JLLH based on JLLH, Westin Realty Corp. and The Westin Michigan Avenue actual payments and projected accruals and payments (12/31/02 Balance of $10,280,727 less 3/1/03 payment of $3,451,643, plus 2003 Reforecast of $2,442,633)
(6)	Preliminary WHLP proxy process costs estimate provided by Westin Realty Corp.
(7)	Discounted to 8/31/03 present value terms, utilizing a 13.0% discount rate, the JLLH estimated WHLP cost of capital.
(8)	Assumes 135,600 Limited Partnership units as reported on the WHLP 10K 12/31/02 SEC Filing.
(9)	Assumes per unit distribution of $6.72 per quarter or $26.88, 135,600 WHLP units (based on the WHLP 10K 12/31/02 SEC Filing reported cash distributions), discounted quarterly to 8/31/03 present value terms (discounted for one quarter) by 13.0%, the JLLH estimated WHLP cost of capital.
(10)	Assumes a current Cash Account balance of $27.1 million as of 12/31/03. Of this amount, $17.1 million is distributed in 2003 and $10 million is withheld for Partnership A&G and Liquidation Expenses the sale. Assumes $2 million in legal administrative and other miscellaneous expenses related to liquidating the Partnership in addition to $400,000 incurred in A&G for one year following the sale (estimated by Westin Realty Corp.). The resulting $7.6 million is discounted to 8/31/03 present value terms assuming a 13.0% rate, the JLLH estimated WHLP cost of capital.

JONES LANG
LASALLE HOTELS_TM

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SCENARIO II: 2005 YEAR-END SALE

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LASALLE HOTELS_TM

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SCENARIO II: 2005 YEAR-END SALE DISTRIBUTION FOOTNOTES

(1)	The sales price range derived represents a minimum and maximum value estimated by JLLH (See Appendix).
(2)	JLLH estimate based on current hotel real estate and capital market conditions.
(3)	12/31/05 year-end balance revised based on the TRST Second Amendment Note Schedule taken from the WHLP 10Q 6/30/97 SEC Filing with one $5 million prepayment made on 3/1/03. (See Appendix)
(4)	Balance derived based on 12/31/02 actual balance of $10,404,000 as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime + 1, estimated by JLLH to be 5.25%.
(5)	12/31/05 balance estimated by JLLH based on JLLH, Westin Realty Corp. and The Westin Michigan Avenue actual payments and projected accruals and payments (See Appendix).
(6)	Preliminary WHLP proxy process costs estimate provided by Westin Realty Corp.
(7)	Discounted to 8/31/03 present value terms, utilizing a 13.0% discount rate, the JLLH estimated WHLP cost of capital.
(8)	Assumes 135,600 Limited Partnership units as reported on the WHLP 10K 12/31/02 SEC Filing.
(9)	Assumes per unit distribution of $6.72 per quarter or $26.88, 135,600 WHLP units (based on the WHLP 10K 12/31/02 SEC Filing reported cash distributions), discounted quarterly to 8/31/03 present value terms (discounted each quarter for nine quarters) by 13.0%, the JLLH estimated WHLP cost of capital.
(10)	Assumes a current Cash Account balance of $31.7 million as of 12/31/05. Of this amount, $21.7 million is distributed in 2005 and $10 million is withheld for Partnership A&G and Liquidation Expenses the sale. Assumes $2 million in legal administrative and other miscellaneous expenses related to liquidating the Partnership in addition to $400,000 incurred in A&G for one year following the sale (estimated by Westin Realty Corp.). The resulting $7.2 million is discounted to 8/31/03 present value terms assuming a 13.0% rate, the JLLH estimated WHLP cost of capital.

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LASALLE HOTELS_TM

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SCENARIO III: Q4 2003 $75 MILLION REFINANCING AND YE 2005 SALE

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LASALLE HOTELS_TM  9

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SCENARIO III: Q4 2003 $75 MILLION REFINANCING AND YE 2005 SALE DISTRIBUTION FOOTNOTES

(1)	JLLH estimate of closing costs including due diligence, legal fees, title insurance, brokerage fees and interest rate cap. (See Appendix)
(2)	Revised 8/31/03 balance derived by LaSalle Investment Management based on a $5 million principal prepayment made on 3/1/03. (See Appendix)
(3)	Prepayment penalty provided by LaSalle Investment Management as of 3/25/03 after one $5 million principal prepayment made on 3/1/03.
(4)	8/31/03 balance derived based on 12/31/02 actual balance of $10,404,000, as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime +1, estimated by JLLH to be 5.25%. (See Appendix)
(5)	8/31/03 balance based on actuals and estimates provided by JLLH, Westin Realty Corp. and The Westin Michigan Avenue.
(6)	Preliminary WHLP proxy process costs estimate provided by Westin Realty Corp.
(7)	Assumes 135,600 Limited Partnership Units as indicated on the WHLP 10K 12/31/02 SEC Filing.
(8)	Sales proceeds represent minimum and maximum proceeds projected by JLLH (See Appendix).
(9)	12/31/05 balance based on the $75 million interest only refinancing proceeds.
(10)	12/31/05 balance estimated by JLLH based on its projections and actual payments and accruals provided by Westin Realty Corp. and The Westin Michigan Avenue.
(11)	Discounted to 8/31/03 present value terms, utilizing a 13.0% discount rate, the JLLH estimated WHLP cost of capital.
(12)	Net refinancing and sales proceeds represent minimum and maximum proceeds based on the refinancing proceeds and sales price ranges projected by JLLH.
(13)	Assumes per unit distribution of $6.72 per quarter or $26.88, 135,600 WHLP units (based on the WHLP 10K 12/31/02 SEC Filing reported cash distributions), discounted quarterly to 8/31/03 present value terms (discounted each quarter for nine quarters) by 13.0%, the JLLH estimated WHLP cost of capital.
(14)	Assumes a current Cash Account balance of $31.6 million as of year-end 2005. Of this amount, $12.0 million is distributed by 12/31/05 and $10 million is withheld for Partnership A&G and Liquidation Expenses related to the sale. Assumes a deduction of $2 million in legal administrative and other miscellaneous expenses related to liquidating the Partnership in addition to $800,000 ($400,000 per year) incurred in Partnership A&G for one year following the sale (estimated by Westin Realty Corp.). The resulting $7.2 million is discounted to 8/31/03 present value terms by 13.0%, the JLLH estimated WHLP cost of capital.

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LASALLE HOTELS_TM

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SCENARIO III: Q4 2003 $75 MILLION REFINANCING AND YE 2005 SALE

$75 MILLION REFINANCING SCENARIO ASSUMPTIONS

Occupancy1	Year 1: 2006 (Stabilized Year): 73.0%
ADR1	Year 1: 2006 (Stabilized Year): $169.62
	Annual Growth Rate: 4.0%
DCF Analysis Discount Rate1	13.0%
DCF Analysis Terminal
Capitalization Rate1	12.0%
WHLP Discount Rate2	13.0%
Annual Revenue Growth Rate1	3.5%
Annual Expense Growth Rate1	3.0%
Annual Capital Expenditures3	FF&E Reserve Amounts:
	2003: $2.1 million
	2004: $2.2 million
	2005: $2.3 million
	2006: $2.0 million
	2007: $2.1 million
	2008: $2.1 million
	2009: $2.2 million
	2010: $2.3 million

1	JLLH estimate based on the current hotel real estate and capital markets.
2	Represents the WHLP weighted cost of capital, as estimated by JLLH.
3	Assumes no capital expenditures made above the JLLH projected FF&E Reserve, based on the Westin Michigan Avenue 2002 Capital Plan as of 5/1/02 provided by Westin Realty Corp. From 1/1/03 through 8/31/03, FF&E Reserves are 5% of Total Revenues as dictated by the existing FF&E Escrow Agreement. As of 9/1/03, FF&E Reserves are projected by JLLH to be 4.0% of Total Revenues, reflecting new lender terms and industry standards.

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LASALLE HOTELS_TM

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SCENARIO III: Q4 2003 $75 MILLION REFINANCING AND YE 2005 SALE

$75 MILLION REFINANCING SCENARIO ASSUMPTIONS (CONT.)

Debt Assumptions
1/1/03 through 8/31/031	Existing TRST Debt: Annual Debt Service: $3.1 million
Refinancing (9/1/03 through 12/31/05)2:	Proceeds: $75 million
	Type: Interest Only LIBOR Debt
	LIBOR: 150 bps
	Spread: 215 bps
	Annual Increases: 50 bps (starting l/1/04)
	Debt Service: 2003 — $7,971,300
	(includes TRST debt service for 1/1/03-8/31/03 and a $5 million prepayment made on 3/1/03) 2004 - $3,112,500; 2005 -$3,487,500
Acquisition (2006 through 20102):	New Owner Financing: $70 million
	Type: Fixed Rate Amortizing Debt
	All-In Interest Rate: 6.5%
	Amortization: 25 years
	Debt Service: $5,671,700
12/31/03 Cash Account Balance
Beginning Balance3	$26.4 million
+ Net Operating Income4	$  9.8 million
+Accrued Incentive Fees5	$  2.4 million
- Debt Service1	$  7.3 million
- CAPEX Above FF&E Reserve6	$     0 million
-Less WHLP A&G Expense	$    .4 million
- WHLP Quarterly Distribution7	$  3.6 million  ($6.72 per quarter with a total of 135,600 LP units.)
Ending Balance8	$27.2 million
8/31/03 TRST Debt Balance9	$25.0 million
8/31/03 TRST Prepayment Penalty10	$  2.6 minion
8/31/03 Starwood Subordinate Loan Balance11	$10.8 million
8/31/03 Deferred Incentive Fee Balance12	$  8.5 million

1	Existing TRST annual debt service payment as indicated in the WHLP 10K 12/31/02 SEC filing.
2	Based on the proposed term sheet submitted by Column Financial as of 4/11/03.
3	12/31/02 balance based on the WHLP 10K 12/31/02 SEC Filing and a reconciliation by Westin Realty Corp. (See Appendix)
4	2003 estimated results based on the 2003 Reforecast as of 3/1/03 provided by The Westin Michigan Avenue. (See Appendix)
5	2003 Incentive Fees are projected to be accrued and represent a non-cash expense for WHLP.
6	Based on The Westin Michigan Avenue Capital Plan as of 5/1/02 provided by Westin Realty Corp. (See Appendix)
7	Estimated based on the cash distribution to WHLP unit holders in 2002 as reported in the WHLP 10K 12/31/02 SEC Filing.
8	Totals may not foot due to rounding.
9	Revised balance derived by LaSalle Investment Management after the $5 million principal prepayment made on 3/1/03 with accrued interest. (See Appendix).
10	Provided by LaSalle Investment Management as of 3/25/03.
11	Balance derived based on 12/31/01 actual balance of $10,404,000, as reported in the WHLP 10K 12/31/02 SEC Filing, compounded at prime + 1, estimated by JLLH to be 5.25%. (See Appendix)
12	Based on JLLH projections, Westin Realty Corp and Westin Michigan Avenue provided payments and accruals (See Appendix).

JONES LANG
LASALLE HOTELS_TM

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APPENDIX

Refinancing Closing Costs

TRST Second Amendment Note Schedule

TRST Revised Note Schedule with a $5 million Prepayment

Starwood Subordinate Loan Schedule

Scenario II Deferred Incentive Fee Rollforward

Cash Account Balance as of 12/31/02

Scenario I Statement of Projected Cash Flows

Scenario I Sale Proceeds (Valuation Matrix)

Scenario II Statement of Projected Cash Flows

Scenario III Statement of Projected Cash Flows

Scenarios I and II Sale Proceeds (Valuation Matrix)

The Westin Michigan Avenue 2003 Reforecast as of 4/1/03

The Westin Michigan Avenue 2004-2005 Projections as of 4/1/03

The Westin Michigan Avenue Capital Plan as of 5/1/02

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LASALLE HOTELS_TM

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REFINANCING CLOSING COSTS

Refinancing Proceeds		$	75,000,000
Increased Property Insurance Costs		$	0
Interest Rate Cap		$	424,500
Lender Loan Fee		$	1,125,000
Mortgage Brokerage Fee		$	562,500
Lender Legal Costs		$	100,000
Borrower Legal Costs for Loan Closing		$	125,000
Appraisal Fees		$	10,500
Environmental and Engineering		$	20,000
Title Insurance		$	50,000
Preliminary WHLP Proxy Costs Estimate		$	1,500,000
(Generation, Binder, Solicitor, Printing, Mailing, Aggregating, Legal, Audit Review)
	Total:	$	3,917,500
Breakdown:
Loan Closing		$	2,417,500
WHLP Proxy Costs		$	1,500,000
Total		$	3,917,500

Source: Westin Realty Corp. and JLLH

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TRST REVISED NOTE SCHEDULE

BASED ON 2nd AMENDMENT – ADJUSTED FOR $5M PREPAY ON 3/1/03

Payment Date	Beg. Balance		Rate			Interest		Payment		Principal Paid		Balance
9/1/2002		30,069,227		2.2125	%		665,282		773,152		107,870		29,961,356
12/1/2002		29,961,356		2.2125	%		662,895		773,152		110,257		29,851,099
3/1/2003		29,851,099		2.2125	%		660,456		5,773,152		5,112,696		24,738,403
6/1/2003		24,738,403		2.2125	%		547,337		773,152		225,815		24,512,588
9/1/2003		24,512,588		2.2125	%		542,341		773,152		230,811		24,281,777
12/1/2003		24,281,777		2.2125	%		537,234		773,152		235,918		24,045,859
3/1/2004		24,045,859		2.2125	%		532,015		773,152		241,137		23,804,722
6/1/2004		23,804,722		2.2125	%		526,679		773,152		246,473		23,558,249
9/1/2004		23,558,249		2.2125	%		521,226		773,152		251,926		23,306,324
12/1/2004		23,306,324		2.2125	%		515,652		773,152		257,500		23,048,824
3/1/2005		23,048,824		2.2125	%		509,955		773,152		263,197		22,785,627
6/1/2005		22,785,627		2.2125	%		504,132		773,152		269,020		22,516,607
9/1/2005		22,516,607		2.2125	%		498,180		773,152		274,972		22,241,635
12/1/2005		22,241,635		2.2125	%		492,096		773,152		281,056		21,960,580
3/1/2006		21,960,580		2.2125	%		485,878		773,152		287,274		21,673,305
6/1/2006		21,673,305		2.2125	%		479,522		773,152		293,630		21,379,675
9/1/2006		21,379,675		2.2125	%		473,025		773,152		300,127		21,079,537
11/30/2006		21,079,537		2.2125	%		466,385		21,545,922		21,079,537		(1	)

Source: Westin Realty Corp.

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LASALLE HOTELS_TM

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STARWOOD SUBORDINATE LOAN SCHEDULE

		Interest		Principal		Ending Balance		Prime +1
12/31/2002			46,023.12		0.00		10,404,000.00		5.25	%
	1/31/2003		46,390.44		0.00		10,450,390.44		5.25	%
	2/28/2003		46,597.29		0.00		10,496,987.73		5.25	%
	3/31/2003		46,805.06		0.00		10,543,792.79		5.25	%
	4/30/2003		47,013.76		0.00		10,590,806.55		5.25	%
	5/31/2003		47,223.39		0.00		10,638,029.94		5.25	%
	6/30/2003		47,433.96		0.00		10,685,463.90		5.25	%
	7/31/2003		47,645.46		0.00		10,733,109.36		5.25	%
	8/31/2003		47,857.91		0.00		10,780,967.26		5.25	%
	9/30/2003		48,071.30		0.00		10,829,038.56		5.25	%
10/31/2003			48,285.64		0.00		10,877,324.20		5.25	%
11/30/2003			48,500.95		0.00		10,925,825.15		5.25	%
12/31/2003			48,717.21		0.00		10,974,542.36		5.25	%
	1/31/2004		48,934.43		0.00		11,023,476.79		5.25	%
	2/28/2004		49,152.63		0.00		11,072,629.41		5.25	%
	3/31/2004		49,371.79		0.00		11,122,001.21		5.25	%
	4/30/2004		49,591.94		0.00		11,171,593.14		5.25	%
	5/31/2004		49,813.06		0.00		11,221,406.21		5.25	%
	6/30/2004		50,035.17		0.00		11,271,441.38		5.25	%
	7/31/2004		50,258.28		0.00		11,321,699.66		5.25	%
	8/31/2004		50,482.37		0.00		11,372,182.03		5.25	%
	9/30/2004		50,707.47		0.00		11,422,889.50		5.25	%
10/31/2004			50,933.57		0.00		11,473,823.07		5.25	%
11/30/2004			51,160.68		0.00		11,524,983.75		5.25	%
12/31/2004			51,388.80		0.00		11,576,372.54		5.25	%
	1/31/2005		51,617.94		0.00		11,627,990.48		5.25	%
	2/28/2005		51,848.09		0.00		11,679,838.57		5.25	%
	3/31/2005		52,079.28		0.00		11,731,917.85		5.25	%
	4/30/2005		52,311.50		0.00		11,784,229.35		5.25	%
	5/31/2005		52,544.75		0.00		11,836,774.10		5.25	%
	6/30/2005		52,779.04		0.00		11,889,553.14		5.25	%
	7/31/2005		53,014.38		0.00		11,942,567.52		5.25	%
	8/31/2005		53,250.76		0.00		11,995,818.28		5.25	%
	9/30/2005		53,488.20		0.00		12,049,306.48		5.25	%
10/31/2005			53,726.70		0.00		12,103,033.19		5.25	%
11/30/2005			53,966.26		0.00		12,156,999.45		5.25	%
12/31/2005			54,206.89		0.00		12,211,206.34		5.25	%

Source: 12/31/2002 actual balance taken from the WHLP 12/31/02 10K SEC filing; 2003-2005 projected by JLLH.

JONES LANG
LASALLE HOTELS_TM

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SCENARIO II DEFERRED INCENTIVE FEE ROLLFORWARD

Incentive Management Fee Rollforward 2001-2005

		Scenario I			Scenario II			Scenario III
Balance at 12-31-2001		$	9,912,352		$	9,912,352		$	9,912,352
	4/30/02 payment to Starwood		(2,722,893	)		(2,722,893	)		(2,722,893	)
	2002 IMF		2,699,575			2,699,575			2,699,575
Balance at 12-31-2002		$	10,280,727		$	10,280,727		$	10,280,727
	Scheduled Payment 3/1/03		($3,451,643	)		($3,451,643	)		($3,451,643	)
	1/1/03-8/31/03 Estimated IMF	$	1,629,945		$	1,629,945		$	1,629,945
Balance at 8-31-2003		$	8,459,029		$	8,459,029		$	8,459,029
	8/31/03 Estimated Payment	$	—		$	—		$	(8,459,029	)
	9/1/03-12/31/03 Estimated IMF	$	812,688		$	812,688		$	812,688
	12/31/03 Estimated Payment		—		$	0			($812,688	)
Balance at 12-31-2003		$	9,271,717		$	9,271,717		$	-
	2004 Estimated IMF		—		$	2,419,524		$	2,419,524
	2004 Estimated IMF Payment		—			($2,730,100	)		($2,419,524	)
Balance at 12-31-2004		$	—		$	8,961,141		$	-
	2005 Estimated IMF		—		$	2,279,150		$	2,279,150
	2005 Estimated IMF Payment		—			($2,295,524	)		($2,098,078	)
Balance at 12-31-2005		$	—		$	8,944,767		$	181,072

Source: Payments 2001 — 04/30/02 and 3/31/03 Scheduled Payment- Westin Realty Corp.; 2002 and 1/1/03-12/31/03 Estimated IMF -
The Westin Michigan Avenue; 6/30/03 Estimated Payment, 12/31/03 Estimated 1MF and Payments through 2005 — JLLH

JONES LANG
LASALLE HOTELS_TM

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SCENARIO I STATEMENT OF PROJECTED CASH FLOWS

THE WESTIN MICHIGAN AVENUE
STATEMENT OF PROJECTED CASH FLOWS: 2003 YEAR-END SALE (1)

		2003					2004					2005					2006					2007					2008
Available Hotel Rooms		751					751					751					751					751					751
Available Room Nights		274,115					274,115					274,115					274,115					274,115					274,866
Occupied Room Nights		201,061					199,983					200,104					200,104					200,104					200,652
Occupancy		73.3%					73.0%					73.0%					73.0%					73.0%					73.0%
Average Daily Rate		$150.79					$152.50					$157.84					$169.62					$176.40					$183.46
Revenues Per Available Room		$110.60					$111.26					$115.22					$123.82					$128.77					$133.93
		Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
REVENUES
Room		$	30,318		69.4	%	$	30,497		69.4	%	$	31,584		67.8	%	$	33,941		68.6	%	$	35,299		68.7	%	$	36,811		68.8	%
Food & Beverage			9,488		21.7	%		9,517		21.7	%		10,994		23.6	%		11,378		23.0	%		11,777		22.9	%		12,222		22.8	%
Telephone			1,222		2.6	%		1,154		2.6	%		1,001		2.1	%		1,036		2.1	%		1,072		2.1	%		1,112		2.1	%
Minor Operating Depts			53		0.1	%		66		0.2	%		80		0.2	%		83		0.2	%		86		0.2	%		89		0.2	%
Rent & Other Income			2,675		6.1	%		2,682		6.1	%		2,948		6.3	%		3,051		6.2	%		3,157		6.1	%		3,277		6.1	%
Total Revenues			43,656		100.0	%		43,916		100.0	%		46,606		100.0	%		49,489		100.0	%		51,391		100.0	%		53,512		100.0	%
DEPARTMENTAL EXPENSES
Room			7,214		23.8	%		7,243		23.8	%		7,584		24.0	%		7,811		23.0	%		8,046		22.8	%		8,310		22.6	%
Food & Beverage			7,053		74.3	%		7,185		75.5	%		8,245		75.0	%		8,534		75.0	%		8,833		75.0	%		9,167		75.0	%
Telephone			407		36.3	%		414		35.9	%		370		37.0	%		383		37.0	%		397		37.0	%		412		37.0	%
Minor Operating Depts			61		114.9	%		41		62.0	%		46		58.0	%		48		58.0	%		50		58.0	%		52		58.0	%
Rent & Other Departmental Exp			287		10.7	%		119		4.4	%		300		10.2	%		309		10.1	%		318		10.1	%		318		9.7	%
Total Departmental Expenses			15,022		34.4	%		15,003		34.2	%		16,545		35.5	%		17,085		34.5	%		17,643		34.3	%		18,258		34.1	%
Gross Operating Income			28,634		65.6	%		28,914		65.8	%		30,060		64.5	%		32,404		65.5	%		33,748		65.7	%		35,254		65.9	%
UNDISTRIBUTED EXPENSES
Administrative & General			2,751		6.3	%		1,166		2.7	%		3,271		7.0	%		3,369		6.8	%		3,470		6.8	%		3,574		6.7	%
Advertising & Marketing			2,308		5.3	%		2,415		5.5	%		2,936		6.3	%		2,474		5.0	%		2,570		5.0	%		2,676		5.0	%
Repairs & Maintenance			1,615		3.7	%		664		1.5	%		1,830		3.9	%		1,885		3.8	%		1,942		3.8	%		2,000		3.7	%
Utilities			1,137		2.6	%		1,108		2.5	%		1,213		2.6	%		1,249		2.5	%		1,286		2.5	%		1,335		2.5	%
Total Undistributed Expenses			7,810		17.9	%		5,353		12.2	%		9,250		19.8	%		8,977		18.1	%		9,267		18.0	%		9,585		17.9	%
Gross Operating Profit			20,824		47.7	%		23,560		53.6	%		20,811		44.7	%		23,426		47.3	%		24,481		47.6	%		25,670		48.0	%
FIXED EXPENSES
Base Management Fee			1,528		3.5	%		1,537		3.5	%		1,631		3.5	%		1,732		3.5	%		1,799		3.5	%		1,873		3.5	%
Incentive Management Fee (2)			2,443		5.6	%		2,420		5.5	%		2,279		4.9	%		2,783		5.6	%		2,930		5.7	%		3,100		5.8	%
Real Estate Taxes			4,264		9.8	%		4,334		9.9	%		5,012		10.8	%		5,163		10.4	%		5,318		10.3	%		5,477		10.2	%
Insurance			387		0.9	%		392		0.9	%		453		1.0	%		467		0.9	%		481		0.9	%		495		0.9	%
Leases & Other			243		0.6	%		144		0.3	%		167		0.4	%		172		0.3	%		177		0.3	%		182		0.3	%
FF&E Reserve (3)			2,183		5.0	%		2,196		5.0	%		2,330		5.0	%		1,980		4.0	%		2,056		4.0	%		2,140		4.0	%
Total Fixed Expenses			11,047		25.3	%		11,023		25.1	%		11,873		25.5	%		12,296		24.8	%		12,760		24.8	%		13,268		24.8	%
Net Operating Income		$	9,777		22.4	%	$	12,537		28.5	%	$	8,938		19.2	%	$	11,131		22.5	%	$	11,721		22.8	%	$	12,401		23.2	%
Cash Flow Before Incentive Mgt Fees		$	12,219		28.0	%	$	14,957		34.1	%	$	11,217		24.1	%	$	13,913		28.1	%	$	14,651		28.5	%	$	15,502		29.0	%
Debt Service (4)			8,093		18.5	%		5,672		12.9	%		5,672		12.2	%		5,672		11.5	%		5,672		11.0	%		5,672		10.6	%
Cash Available for Incentive Fees and WHLP			4,127		9.5	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%		0		0.0	%
Cash Account:
	Beginning Balance (6)		26,401		60.5	%
	Plus: Net Operating Income		9,777		22.4	%
	Plus: Accrued Incentive Fee		2,443		5.6	%
	Less: Debt Service (4)		7,450		17.1	%
	Less: CAPEX above FF&E Reserve (7)		0		0.0	%
	Less: WHLP A&G Expenses (8)		400		0.9	%
	Less: Quarterly Distributions (5)		3,645		8.3	%
	Ending Balance		27,126		62.1	%

JONES LANG
LASALLE HOTELS_TM

18

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

SCENARIO I STATEMENT OF PROJECTED CASH FLOWS FOOTNOTES

(1)	2003-2005 is based on the Reforecast and Projections as of 4/1/03 provided by The Westin Michigan Avenue.
(2)	Incentive Fees are based on Net Cash Flow after debt service and owner required returns as specified in the Management Agreement. 2003 Incentive Fees are based on the Property’s 2003 Reforecast as of 4/1/03 provided by The Westin Michigan Avenue.
(3)	FF&E Reserves are estimated to be 5% of Total Revenues from 1/1/03 through 8/31/03, as dictated by the existing Chicago FF&E & Escrow Agreement. Beginning in 9/1/03, FF&E Reserves are projected by JLLH to be 4% of Total Revenues, which reflects new lender terms.
(4)	Debt Service from 1/1/03 through 12/31/2003 assumes the existing TRST Debt Service of approximately $3.1 million ($773,152 per quarter), as indicated in the WHLP 10K 12/31/02 SEC Filing, including one $5 million principal prepayment of the TRST made on 3/1/03. In order to project Incentive Fees, refinancing Debt Service approximately $5.7 million, $70 million in new debt financing proceeds, all-in interest rate of 6.5% and 25 year amortization.
(5)	Existing TRST annual debt service payment as indicated in the TRST Second Amendment Note Schedule in the WHLP 10Q 6/30/97 SEC Filing. (See Appendix)
(6)	Based on The Westin Michigan Avenue Capital Plan as of 5/1/02 provided by Westin Realty Corp. (See Appendix)
(7)	Quarterly Distributions are based on a per unit $6.72 payout per quarter or $26.88 per year and a total of 135,600 Limited Partnership Units, based on the 2002 cash distributions reported in the WHLP 10K 12/31/02 SEC Filing.

JONES LANG
LASALLE HOTELS_TM

19

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

SCENARIO I YE 2003 SALE PROCEEDS (VALUATION MATRIX)

THE WESTIN MICHIGAN AVENUE
ASSET VALUE ANALYSIS (000s): YE 2003 SALE

	2004			2005			2006			2007			2008		2009
Net Cash Flow from Operations	$	12,537		$	8,938		$	11,131		$	11,721		$	12,401	$	12,836
										2009 Net Cash Flow					$	12,836
										Terminal Cap Rate:						12.0	%
										2008 Residual Value:					$	106,963
										Less Closing Costs (2.0%)						($2,139	)
										Net Reversion Proceeds:					$	104,823
Cash Flow to Investor	$	12,537		$	8,938		$	11,131		$	11,721		$	117,225
Cash on Cash Return		13.0	%		9.3	%		11.5	%		12.1	%

Discount Rate	13.0	%	Midpoint Valuation Summary	Gross $	%
Number of Rooms	751		PV Residual	$56,894	58.9%
			PV Income Stream	$39,728	41.1%
			Present Value	$96,622	100.0%

Valuation Matrix ($000’S / $ Per Room/ Going in Yield on Year 1)
	Terminal Cap Rate
Discount Rate	11.50%			11.75%			12.00%			12.25%			12.50%
	$	102,793		$	101,472		$	100,207		$	98,993		$	97,828
12.0%	$	136,875		$	135,116		$	133,431		$	131,815		$	130,263
		12.2	%		12.4	%		12.5	%		12.7	%		12.8	%
	$	100,921		$	99,630		$	98,392		$	97,205		$	96,065
12.5%	$	134,383		$	132,663		$	131,015		$	129,434		$	127,917
		12.4	%		12.6	%		12.7	%		12.9	%		13.1	%
	$	99,096		$	97,833		$	96,622		$	95,461		$	94,346
13.0%	$	131,952		$	130,270		$	128,658		$	127,112		$	125,628
		12.7	%		12.8	%		13.0	%		13.1	%		13.3	%
	$	97,315		$	96,079		$	94,895		$	93,759		$	92,669
13.5%	$	129,580		$	127,935		$	126,358		$	124,846		$	123,394
		12.9	%		13.0	%		13.2	%		13.4	%		13.5	%
	$	95,577		$	94,369		$	93,210		$	92,099		$	91,033
14.0%	$	127.267		$	125,657		$	124,115		$	122,636		$	121,215
		13.1	%		13.3	%		13.5	%		13.6	%		13.8	%

JONES LANG
LASALLE HOTELS_TM

20

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

SCENARIO II STATEMENT OF PROJECTED CASH FLOWS

THE WESTIN MICHIGAN AVENUE
STATEMENT OF PROJECTED CASH FLOWS: 2005 YEAR-END SALE (1)

		2003					2004					2005					2006					2007					2008					2009					2010
Available Hotel Rooms		751					751					751					751					751					751					751					751
Available Room Nights		274,115					274,115					274,115					274,115					274,115					274,866					274,115					274,115
Occupied Room Nights		201,061					199,983					201,439					200,104					200,104					200,652					200,104					200,104
Occupancy		73.3%					73.0%					73.5%					73.0%					73.0%					73.0%					73.00%					73.00%
Average Daily Rate		$150.79					$152.50					$157.92					$169.62					$176.40					$183.46					$190.80					$198.43
Revenues Per Available
Room		$110.60					$111.25					$116.05					$123.82					$128.77					$133.93					$139.28					$144.85
		Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
REVENUES
Room		$	30,318		69.4	%	$	30,496		69.4	%	$	31,810		67.8	%	$	33,941		68.6	%	$	35,299		68.7	%	$	36,811		68.8	%	$	38,179		68.9	%	$	39,706		69.0	%
Food & Beverage			9,488		21.7	%		9,518		21.7	%		11,066		23.6	%		11,378		23.0	%		11,777		22.9	%		12,222		22.8	%		12,616		22.8	%		13,057		22.7	%
Telephone			1,222		2.6	%		1,155		2.6	%		1,007		2.1	%		1,036		2.1	%		1,072		2.1	%		1,112		2.1	%		1,148		2.1	%		1,188		2.1	%
Minor Operating Depts			53		0.1	%		66		0.1	%		81		0.2	%		83		0.2	%		86		0.2	%		89		0.2	%		92		0.2	%		95		0.2	%
Rent & Other Income			2,675		6.1	%		2,683		6.1	%		2,968		6.3	%		3,051		6.2	%		3,157		6.1	%		3,277		6.1	%		3,382		6.1	%		3,501		6.1	%
Total Revenues			43,656		100.0	%		43,918		100.0	%		46,933		100.0	%		49,489		100.0	%		51,391		100.0	%		53,512		100.0	%		55,417		100.0	%		57,548		100.0	%
DEPARTMENTAL EXPENSES
Room			7,214		23.8	%		7,244		23.8	%		7,635		24.0	%		7,811		23.0	%		8,046		22.8	%		8,310		22.6	%		8,536		22.4	%		8,792		22.1	%
Food & Beverage			7,053		74.3	%		7,188		75.5	%		8,300		75.0	%		8,306		73.0	%		8,597		73.0	%		8,922		73.0	%		9,209		73.0	%		9,532		73.0	%
Telephone			407		36.3	%		414		35.9	%		373		37.0	%		362		35.0	%		375		35.0	%		389		35.0	%		402		35.0	%		416		35.0	%
Minor Operating Depts			61		114.9	%		41		62.0	%		47		58.0	%		46		55.0	%		47		55.0	%		49		55.0	%		51		55.0	%		52		55.0	%
Rent & Other Departmental Exp			287		10.7	%		286		10.7	%		300		10.1	%		309		10.1	%		318		10.1	%		318		9.7	%		318		9.4	%		318		9.1	%
Total Departmental Expenses			15,022		34.4	%		15,173		34.5	%		16,653		35.5	%		16,834		34.0	%		17,383		33.8	%		17,988		33.6	%		18,515		33.4	%		19,110		33.2	%
Gross Operating Income			28,634		65.6	%		28,745		65.5	%		30,279		64.5	%		32,654		66.0	%		34,008		66.2	%		35,524		64.4	%		36,902		66.6	%		38,438		66.8	%
UNDISTRIBUTED EXPENSES
Administrative & General			2,751		6.3	%		2,819		6.4	%		3,270		7.0	%		3,369		6.8	%		3,470		6.8	%		3,574		6.7	%		3,681		6.8	%		3,792		6.6	%
Advertising & Marketing			2,308		5.3	%		2,416		5.5	%		2,941		6.3	%		2,474		5.0	%		2,570		5.0	%		2,676		5.0	%		2,771		5.0	%		2,877		5.0	%
Repairs & Maintenance			1,615		3.7	%		1,605		3.7	%		1,830		3.9	%		1,885		3.8	%		1,942		3.8	%		2,000		3.7	%		2,060		3.7	%		2,122		3.7	%
Utilities			1,137		2.6	%		1,107		2.5	%		1,220		2.6	%		1,249		2.5	%		1,286		2.5	%		1,335		2.5	%		1,378		2.5	%		1,426		2.5	%
Total Undistributed Expenses			7,810		17.9	%		7,947		18.1	%		9,262		19.7	%		8,977		18.1	%		9,267		18.0	%		9,585		17.9	%		9,890		17.8	%		10,217		17.8	%
Gross Operating Profit			20,824		47.7	%		20,798		47.4	%		21,017		44.8	%		23,677		47.8	%		24,740		48.1	%		25,939		48.5	%		27,012		48.5	%		28,221		49.0	%
FIXED EXPENSES
Base Management Fee			1,528		3.5	%		1,537		3.5	%		1,643		3.5	%		1,732		3.5	%		1,799		3.5	%		1,873		3.5	%		1,940		3.5	%		2,014		3.5	%
Incentive Management Fee(2)			2,443		5.6	%		2,420		5.5	%		2,279		4.9	%		2,348		4.7	%		2,982		5.8	%		3,154		5.9	%		3,303		6.0	%		3,475		6.0	%
Real Estate Taxes			4,264		9.8	%		4,334		9.9	%		5,012		10.7	%		5,163		10.4	%		5,318		10.3	%		5,477		10.2	%		5,641		10.2	%		5,811		10.1	%
Insurance			387		0.9	%		392		0.9	%		453		1.0	%		467		0.9	%		481		0.9	%		495		0.9	%		510		0.9	%		525		0.9	%
Leases & Other			243		0.6	%		144		0.3	%		167		0.4	%		172		0.3	%		177		0.3	%		182		0.3	%		188		0.3	%		193		0.3	%
FF&E Reserve (3)			2,183		5.0	%		2,196		5.0	%		2,347		5.0	%		1,980		4.0	%		2,056		4.0	%		2,140		4.0	%		2,217		4.0	%		2,302		4.0	%
Total Fixed Expenses			11,047		25.3	%		11,023		25.1	%		11,901		25.4	%		11,860		24.0	%		12,812		24.9	%		13,322		24.9	%		13,799		24.9	%		14,321		24.9	%
Net Operating Income		$	9,777		22.4	%	$	9,775		22.3	%	$	9,117		19.4	%	$	11,817		23.9	%	$	11,928		23.2	%	$	12,617		23.6	%	$	13,213		23.8	%	$	13,901		24.2	%
Cash Flow Before Incentive Mgt. Fees		$	12,219		28.0	%	$	12,195		27.8	%	$	11,396		24.3	%	$	14,164		28.6	%	$	14,911		29.0	%	$	15,771		29.5	%	$	16,516		29.8	%	$	17,376		30.2	%
Debt Service (4)			8,093		18.5	%		3,093		7.0	%		3,093		6.6	%		5,672		11.5	%		5,672		11.0	%		5,672		10.6	%		5,672		10.2	%		5,672		9.9	%
Cash Available for Incentive Fees and WHLP			4,127		9.5	%		9,102		20.7	%		8,303		17.7	%		8,492		17.2	%		9,239		18.0	%		10,099		18.9	%		10,845		19.6	%		11,704		20.3	%
Cash Account:
	Beginning Balance (6)		26,401		60.5	%		27,126		61.8	%		29,763		63.4	%
	Plus: Net Operating Income		9,777		22.4	%		9,775		22.3	%		9,117		19.4	%
	Plus: Accrued Incentive Fee (7)		2,443		5.6	%		0		0.0	%		0		0.0	%
	Less: Debt Service (4)		7,450		17.1	%		3,093		7.0	%		3,093		6.6	%
	Less: CAPEX above FF&E Reserve (8)		0		0.0	%		0		0.0	%		0		0.0	%
	Less: WHLP A&G Expenses (8)		400		0.9	%		400		0.9	%		400		0.9	%
	Less: Quarterly Distributions (5)		3,645		8.3	%		3,645		8.3	%		3,645		7.8	%
	Ending Balance		27,126		62.1	%		29,763		67.8	%		31,742		67.6	%

JONES LANG
LASALLE HOTELS_TM

21

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

SCENARIO II STATEMENT OF PROJECTED CASH FLOWS FOOTNOTES

(1)	2003-2005 is based on the Reforecast as of 4/1/03 provided by The Westin Michigan Avenue.
(2)	Incentive Fees are based on Net Cash Flow after debt service and owner required returns as specified in the Management Agreement. 2003-2005 Incentive Fees are based on the Property’s Reforecast and Projections as of 4/1/03 provided by The Westin Michigan Avenue.
(3)	FF&E Reserves are estimated to be 5% of Total Revenues from 1/1/03 through 8/31/03, as dictated by the existing Chicago FF&E & Escrow Agreement. Beginning in 9/1/03, FF&E Reserves are projected by JLLH to be 4% of Total Revenues, which reflects new lender terms.
(4)	Debt Service from 1/1/03 through 8/31/03 assumes the existing TRST Debt Service of approximately $1.5 million ($773,152 per quarter), as indicated in the WHLP 10K 12/31/02 SEC Filing added to the new first mortgage debt service of 912,000 million for 9/1/03 through 12/31/03. Debt service from 1/1/03 through 8/31/03 includes one $5 million principal prepayment of the TRST made on 3/1/03. Debt Service as of 9/1/03 through 12/31/05 is based on $75 million in financing proceeds, interest only, 150 bps LIBOR base, 215 bps spread with 50 bps annual increases. In order to project Incentive Fees, refinancing Debt Service approximately $5.7 million, $70 million in new debt financing proceeds, all-in interest rate of 6.5% and 25 year amortization.
(5)	Existing TRST annual debt service payment as indicated in the TRST Second Amendment Note Schedule in the WHLP 10Q 6/30/97 SEC Filing. (See Appendix)
(6)	Based on The Westin Michigan Avenue Capital Plan as of 5/1/02 provided by Westin Realty Corp. (See Appendix) .
(7)	Quarterly Distributions are based on a per unit $6.72 payout per quarter or $26.88 per year and a total of 135,600 Limited Partnership Units, based on the 2002 cash distributions reported in the WHLP 10K 12/31/02 SEC Filing.

JONES LANG
LASALLE HOTELS_TM

22

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

SCENARIO III STATEMENT OF PROJECTED CASH FLOWS

THE WESTIN MICHIGAN AVENUE
STATEMENT OF PROJECTED CASH FLOWS: Q4 2003 $75M REFINANCE and YE 2005 SALE (1)

		2003					2004					2005					2006					2007					2008					2009					2010
Available Hotel Rooms		751					751					751					751					751					751					751					751
Available Room Nights		274,115					274,115					274,115					274,115					274,115					274,866					274,115					274,115
Occupied Room Nights		201,061					199,983					201,439					200,104					200,104					200,652					200,104					200,104
Occupancy		73.3%					73.0%					73.5%					73.0%					73.0%					73.0%					73.0%					73.0%
Average Daily Rate		$150.79					$152.50					$157.92					$169.62					$176.40					$183.46					$190.80					$198.43
Revenues Per Available
Room		$110.60					$111.25					$116.05					$123.82					$128.77					$133.93					$139.28					$144.85
		Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
REVENUES
Room		$	30,318		69.4	%	$	30,496		69.4	%	$	31,810		67.8	%	$	33,941		68.6	%	$	35,299		68.7	%	$	36,811		68.8	%	$	38,179		68.9	%	$	39,706		69.0	%
Food & Beverage			9,488		21.7	%		9,518		21.7	%		11,066		23.6	%		11,378		23.0	%		11,777		22.9	%		12,222		22.8	%		12,616		22.8	%		13,057		22.7	%
Telephone			1,222		2.6	%		1,155		2.6	%		1,007		2.1	%		1,036		2.1	%		1,072		2.1	%		1,112		2.1	%		1,148		2.1	%		1,188		2.1	%
Minor Operating Depts			53		0.1	%		66		0.1	%		81		0.2	%		83		0.2	%		86		0.2	%		89		0.2	%		92		0.2	%		95		0.2	%
Rent & Other Income			2,675		6.1	%		2,683		6.1	%		2,968		6.3	%		3,051		6.2	%		3,157		6.1	%		3,277		6.1	%		3,382		6.1	%		3,501		6.1	%
Total Revenues			43,656		100.0	%		43,918		100.0	%		46,933		100.0	%		49,489		100.0	%		51,391		100.0	%		53,512		100.0	%		55,417		100.0	%		57,548		100.0	%
DEPARTMENTAL EXPENSES
Room			7,214		23.8	%		7,244		23.8	%		7,635		24.0	%		7,811		23.0	%		8,046		22.8	%		8,310		22.6	%		8,536		22.4	%		8,792		22.1	%
Food & Beverage			7,053		74.3	%		7,188		75.5	%		8,300		75.0	%		8,306		73.0	%		8,597		73.0	%		8,922		73.0	%		9,209		73.0	%		9,532		73.0	%
Telephone			407		36.3	%		414		35.9	%		373		37.0	%		362		35.0	%		375		35.0	%		389		35.0	%		402		35.0	%		416		35.0	%
Minor Operating Depts			61		114.9	%		41		62.0	%		47		58.0	%		46		55.0	%		47		55.0	%		49		56.0	%		51		55.0	%		52		55.0	%
Rent & Other Departmental Exp			287		10.7	%		286		10.7	%		300		10.1	%		309		10.1	%		318		10.1	%		318		9.7	%		318		9.4	%		318		9.1	%
Total Departmental Expenses			15,022		34.4	%		15,173		34.5	%		16,653		35.5	%		16,834		34.0	%		17,383		33.8	%		17,988		33.6	%		18,515		33.4	%		19,110		33.2	%
Gross Operating Income			28,634		65.6	%		28,745		65.5	%		30,279		64.5	%		32,654		66.0	%		34,008		66.2	%		35,524		66.4	%		38,902		66.6	%		38,438		66.8	%
UNDISTRIBUTED EXPENSES
Administrative & General			2,751		6.3	%		2,819		6.4	%		3,270		7.0	%		3,369		6.8	%		3,470		6.8	%		3,574		6.7	%		3,681		6.6	%		3,792		6.6	%
Advertising & Marketing			2,308		5.3	%		2,416		5.5	%		2,941		6.3	%		2,474		5.0	%		2,570		5.0	%		2,676		5.0	%		2,771		5.0	%		2,877		5.0	%
Repairs & Maintenance			1,615		3.7	%		1,605		3.7	%		1,830		3.9	%		1,885		3.8	%		1,942		3.8	%		2,000		3.7	%		2,060		3.7	%		2,122		3.7	%
Utilities			1,137		2.6	%		1,107		2.5	%		1,220		2.6	%		1,249		2.5	%		1,286		2.5	%		1,335		2.5	%		1,378		2.5	%		1,426		2.5	%
Total Undistributed Expenses			7,810		17.9	%		7,947		18.1	%		9,262		19.7	%		8,977		18.1	%		9,267		18.0	%		9,585		17.9	%		9,890		17.8	%		10,217		17.8	%
Gross Operating Profit			20,824		47.7	%		20,798		47.4	%		21,017		44.8	%		23,677		47.8	%		24,740		48.1	%		25,939		48.5	%		27,012		48.7	%		28,221		49.0	%
FIXED EXPENSES
Base Management Fee			1,528		3.5	%		1,537		3.5	%		1,643		3.5	%		1,732		3.5	%		1,799		3.5	%		1,873		3.5	%		1,940		3.5	%		2,014		3.5	%
Incentive Management Fee (2)			2,443		5.6	%		2,420		5.5	%		2,279		4.9	%		2,348		4.7	%		2,982		5.8	%		3,154		5.9	%		3,303		6.0	%		3,475		6.0	%
Real Estate Taxes			4,264		9.8	%		4,334		9.9	%		5,012		10.7	%		5,163		10.4	%		5,318		10.3	%		5,477		10.2	%		5,641		10.2	%		5,811		10.1	%
Insurance			387		0.9	%		392		0.9	%		453		1.0	%		467		0.9	%		481		0.9	%		495		0.9	%		510		0.9	%		525		0.9	%
Leases & Other			243		0.6	%		144		0.3	%		167		0.4	%		172		0.3	%		177		0.3	%		182		0.3	%		188		0.3	%		193		0.3	%
FF&E Reserve (3)			2,183		5.0	%		2,196		5.0	%		2,347		5.0	%		1,980		4.0	%		2,056		4.0	%		2,140		4.0	%		2,217		4.0	%		2,302		4.0	%
Total Fixed Expenses			11,047		25.3	%		11,023		25.1	%		11,901		25.4	%		11,860		24.0	%		12,812		24.9	%		13,322		24.9	%		13,799		24.9	%		14,321		24.9	%
Net Operating Income		$	9,777		22.4	%	$	9,775		22.3	%	$	9,117		19.4	%	$	11,817		23.9	%	$	11,928		23.2	%	$	12,617		23.6	%	$	13,213		23.8	%	$	13,901		24.2	%
Cash Flow Before Incentive Mgt. Fees		$	12,219		28.0	%	$	12,195		27.8	%	$	11,396		24.3	%	$	14,164		28.6	%	$	14,911		29.0	%	$	15,771		29.5	%	$	16,516		29.8	%	$	17,376		30.2	%
Debt Service (4)			7,971		18.3	%		3,113		7.1	%		3,488		7.4	%		5,672		11.5	%		5,672		11.0	%		5,672		10.6	%		5,672		10.2	%		5,672		9.9	%
Cash Available for Incentive Fees and WHLP			4,248		9.7	%		9,082		20.7	%		7,908		16.9	%		8,492		17.2	%		9,239		18.0	%		10,099		18.9	%		10,845		19.6	%		11,704		20.3	%
Cash Account:
	Beginning Balance (6)		26,401		60.5	%		27,247		62.0	%		29,865		63.6	%
	Plus: Net Operating Income		9,777		22.4	%		9,775		22.3	%		9,117		19.4	%
	Plus: Accrued Incentive Fee (7)		2,443		5.6	%		0		0.0	%		181		0.4	%
	Less: Debt Service (4)		7,328		16.8	%		3,113		7.1	%		3,488		7.4	%
	Less: CAPEX above FF&E Reserve (8)		0		0.0	%		0		0.0	%		0		0.0	%
	Less: WHLP A&G Expenses (8)		400		0.9	%		400		0.9	%		400		0.9	%
	Less: Quarterly Distributions (5)		3,645		8.3	%		3,645		8.3	%		3,645		7.8	%
	Ending Balance		27,247		62.4	%		29,865		68.0	%		31,630		67.4	%

JONES LANG
LASALLE HOTELS_TM

23

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

SCENARIO III STATEMENT OF PROJECTED CASH FLOWS FOOTNOTES

(1)	2003-2005 is based on the budget as of 41/03 provided by The Westin Michigan Avenue. (See Appendix)
(2)	Incentive Fees are based on Net Cash Flow after debt service and owner required returns as specified in the Management Agreement. 2003-2005 Incentive Fees are based on the Property’s Reforecast and Projections as of 4/1/03 provided by The Westin Michigan Avenue.
(3)	FF&E Reserves are estimated to be 5% of Total Revenues for Q1 and Q4 2003, as dictated by the FF&E Escrow Agreement. Beginning in Q4 2003, FF&E Reserves are projected by JLLH to be 4% of Total Revenues, which reflects new lender terms and concurrent with industry standards.
(4)	Debt Service Q1 through Q3 2003 Debt Service assumes existing TRST Debt Service of approximately $2.1 million ($773,152 per quarter), as indicated in the WHLP 10K 12/31/01 SEC Filing added to Debt Service of 0.9 million for Q4 2003. Debt service in Q1 through Q3 2003 includes one $5 million principal prepayment of the TRST debt made on 3/1/03. Debt Service beginning in Q4 2003 through year-end 2005 is based on $75 million in financing proceeds, interest only, financing proceeds, all-in interest rate of 6.5% and 25 year amortization.
(5)	Based on the WHLP 10K 12/31/02 SEC Filing and a reconciliation by Westin Realty Corp.
(6)	Existing TRST annual debt service payment as indicated in the TRST Second Amendment Note Schedule in the WHLP 10Q 6/30/97 SEC Filing. (See Appendix)
(7)	Based on The Westin Michigan Avenue 2002 Capital Plan as of 12/31/02, provided by The Westin Michigan Avenue and the Capital Plan as of 4/1/02 provided by Westin Realty Corp. (See Appendix)
(8)	Annual WHLP administrative costs provided by Westin Realty Corp.
(9)	Quarterly Distributions are based on a per unit $6.72 payout per quarter or $26.88 per year and a total of 135,600 Limited Partnership Units, based on the 2001 cash distributions reported in the WHLP 10K 12/31/01 SEC Filing.

JONES LANG
LASALLE HOTELS_TM

24

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

SCENARIOS II and III YE 2005 SALE PROCEEDS (VALUATION MATRIX)

THE WESTIN MICHIGAN AVENUE
ASSET VALUE ANALYSIS (000s): Q2 2003 $75M REFINANCE and YE 2005 SALE

	2006			2007			2008			2009			2010		2011
Net Cash Flow from Operations	$	11,817		$	11,928		$	12,617		$	13,213		$	13,901	$	14,387
													2011 Net Cash Flow		$	14,387
													Terminal Cap Rate:			12.0	%
													2010 Residual Value:		$	119,892
													Less Closing Costs (2.0%)			($2,398	)
													Net Reversion Proceeds:		$	117,494
Cash Flow to Investor	$	11,817		$	11,928		$	12,617		$	13,213		$	131,395
Cash on Cash Return		10.9	%		11.0	%		11.7	%		12.2	%

	13.0%		Midpoint Valuation Summary	Gross $		%
Number of Rooms		751	PV Residual	$	63,771		59.1	%
			PV Income Stream	$	44,192		40.9	%
			Present Value	$	107,963		100.0	%

Valuation Matrix ($000’S / $ Per Room/ Going in Yield on Year 1)

	Terminal Cap Rate
Discount
Rate	11.50%			11.75%			12.00%			12.25%			12.50%
	$	114,893		$	113,413		$	111,994		$	110,634		$	109,328
12.0%	$	152,987		$	151,016		$	149,127		$	147,315		$	145,576
		10.3	%		10.4	%		10.6	%		10.7	%		10.8	%
	$	112,788		$	111,341		$	109,953		$	108,623		$	107,345
12.5%	$	150,184		$	148,257		$	156,409		$	144,638		$	142,937
		10.5	%		10.6	%		10.7	%		10.9	%		11.0	%
	$	110,735		$	109,320		$	107,963		$	106,661		$	105,412
13.0%	$	147,451		$	145,565		$	143,759		$	142,026		$	140,362
		10.7	%		10.8	%		10.9	%		11.1	%	$	11.2	%
	$	108,733		$	107,348		$	106,021		$	104,748		$	103,525
13.5%	$	144,784		$	142,940		$	141,172		$	139,477		$	137,850
		10.9	%		11.0	%		11.1	%		11.3	%		11.4	%
	$	106,779		$	105,424		$	104,126		$	102,880		$	101,685
14.0%	$	142,182		$	140,378		$	138,649		$	136,991		$	135,399
		11.1	%		11.2	%		11.3	%		11.5	%		11.6	%

Source: JLLH

JONES LANG
LASALLE HOTELS_TM

25

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

CASH ACCOUNT BALANCE AS OF 12/31/02

Cash Account Balance as of 12.31.02

	Balance:			Source:
Total Cash Available	$	39,236,000		WHLP 10-K
Less: Current liabilities @12/31/02		($11,214,000	)	WHLP 10-K
Less: Restricted Cash included in cash balance		($3,143,000	)	WHLP 10-K
Add: Refund of restricted FF&E reserve	$	1,522,000		WHLP 10-K
Add: Restricted cash used to pay current liabilities (taxes)		–
Net Cash available	$	26,401,000

Source: WHLP 10K 12/31/02 SEC Filing and Westin Realty Corp.

JONES LANG
LASALLE HOTELS_TM

26

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

THE WESTIN MICHIGAN AVENUE 2003 REFORECAST AS OF 4/1/03

USER ID: 5071CON0
CURRENCY: USD SLC OPERATING LIMITED PARTNERSHIP
#5071, CHICAGO-WESTIN MICHIGAN A
SUMMARY INCOME STATEMENT DATE: 04/16/2003 TIME: 08:46:41

               2003

	Actuals/Current Forecast
	January		February		March		April		May		June		July
AVAILABLE ROOMS		23,281		21,028		23,281		22,530		23,281		22,530		23,281
OCCUPIED ROOMS		13,935		12,504		16,784		17,144		18,848		20,000		18,622
% OF OCCUPANCY		59.9		59.5		72.1		76.1		81		88.8		80
AVERAGE RATE		122.83		117.74		143.18		149.91		161.81		170.07		149.42
REVPAR		73.52		70.01		103.22		114.07		131		150.97		119.52
REVENUE
ROOMS		1,711,590		1,472,208		2,403,119		2,570,085		3,049,774		3,401,437		2,782,576
FOOD & BEVERAGE		474,830		483,595		821,811		659,533		1,074,065		976,213		674,802
TELECOMMUNICATION		67,260		55,635		87,708		88,678		105,422		111,099		110,194
MINOR OPERATING DEPT		2,309		1,331		3,262		3,471		3,811		4,038		6,017
RENT & OTHER		228,073		184,183		195,123		227,075		240,096		250,001		237,547
TOTAL REVENUE		2,484,062		2,196,952		3,511,022		3,548,842		4,473,167		4,742,789		3,811,136
DEPT PROFIT
ROOMS		1,144,023		1,009,765		1,835,663		1,949,566		2,340,242		2,667,730		2,167,427
FOOD & BEVERAGE		39,723		75,013		248,294		133,386		338,622		290,447		105,612
TELECOMMUNICATION		34,005		15,637		61,161		56,545		67,783		68,967		76,782
MINOR OPERATING DEPT		-414		-3,327		-1,741		-1,890		-2,345		-2,273		-16
RENT & OTHER		207,082		165,602		172,938		201,574		213,593		222,077		211,358
TOTAL DEPT PROFIT		1,424,418		1,262,690		2,316,316		2,339,182		2,957,896		3,246,948		2,561,163
UNDISTRIBUTED DEPTS
ADMINISTRATIVE & GEN		189,385		144,474		122,244		158,633		171,554		211,059		168,264
CR CARD COMMISSION		50,332		36,619		51,595		61,395		77,386		82,050		65,933
MARKETING		176,457		78,706		182,345		213,236		224,476		241,588		210,961
REPAIRS & MAINTENANCE		151,142		133,100		123,443		141,200		131,683		133,457		138,546
ENERGY		85,503		111,458		120,990		85,368		81,023		98,390		105,453
TOTAL UNDISTRIBUTED DEPTS		652,818		504,357		600,618		659,833		686,122		766,544		689,156
GROSS OPER PROFIT		771,599		758,333		1,715,698		1,679,349		2,271,774		2,480,403		1,872,008
MGMT FEE BASE		86,942		76,893		122,886		124,209		156,561		165,998		133,390
MGMT FEE INCENTIVE		203,523		204,688		205,874		203,172		203,172		203,172		203,172
INCOME BEF FIXED CHG		481,134		476,752		1,386,938		1,351,968		1,912,041		2,111,234		1,535,446
RENT TAXES & INSURANCE		402,348		400,384		345,507		451,789		410,886		459,736		408,161
INTEREST		206,432		206,462		205,384		205,384		205,384		204,314		204,314
OWNERS EXPENSE				-1,515		2,059
INCOME BEF DEPR		-127,646		-128,549		833,989		694,796		1,295,771		1,447,183		922,970
DEPR, AMORT & OTHER		799,979		799,979		799,979		799,979		799,979		799,979		799,979
INCOME BEF TAXES		-927,624		-928,528		34,010		-105,183		495,792		647,204		122,991
INCOME AFT TAXES		-927,624		-928,528		34,010		-105,183		495,792		647,204		122,991
ADD: INTEREST		206,432		206,432		205,384		205,384		205,384		204,314		204,314
ADD: DEPR, AMORT & OTHER		799,979		799,979		799,979		799,979		799,979		799,979		799,979
EBITDA		78,787		77,883		1,039,372		900,179		1,501,155		1,651,498		1,127,285

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Actuals/Current Forecast
	August		September		October		November		December		Total		%
AVAILABLE ROOMS		23,281		22,530		23,281		22,530		23,281		274,115
OCCUPIED ROOMS		16,993		17,919		19,609		15,772		12,931		201,061
% OF OCCUPANCY		73		79.5		84.2		70		55.5		73.3
AVERAGE RATE		139.39		160.7		179.97		152.31		135.19		150.79
REVPAR		101.74		127.81		151.58		106.63		75.09		110.6
REVENUE
ROOMS		2,368,575		2,879,614		3,529,024		2,402,276		1,748,177		30,318,455		69.4
FOOD & BEVERAGE		647,826		932,265		1,120,307		767,470		854,956		9,487,672		21.9
TELECOMMUNICATION		100,736		106,385		116,786		94,196		78,036		1,122,135		2.6
MINOR OPERATING DEPT		5,503		6,516		7,129		5,588		4,200		53,176		0.1
RENT & OTHER		228,699		237,752		237,300		208,200		200,696		2,674,744		6
TOTAL REVENUE		3,351,339		4,162,532		5,010,545		3,477,730		2,886,065		43,656,182		100
DEPT PROFIT
ROOMS		1,813,333		2,273,387		2,804,558		1,818,594		1,279,763		23,104,052		76.2
FOOD & BEVERAGE		107,957		290,092		358,892		184,570		261,959		2,434,567		25.5
TELECOMMUNICATION		69,887		74,003		81,533		63,380		45,276		714,959		63
MINOR OPERATING DEPT		-915		452		1,036		1,329		2,204		-7,898		-1
RENT & OTHER		204,516		212,440		209,861		185,557		181,607		2,388,204		89.2
TOTAL DEPT PROFIT		2,194,778		2,850,373		3,455,881		2,253,430		1,770,809		28,633,884		65.4
UNDISTRIBUTED DEPTS
ADMINISTRATIVE & GEN		161,870		174,118		169,647		157,959		169,378		1,998,585		4.6
CR CARD COMMISSION		57,978		72,012		86,682		60,165		49,929		752,076		1.7
MARKETING		181,483		206,183		242,271		182,986		167,517		2,308,208		5.3
REPAIRS & MAINTENANCE		137,722		128,502		131,583		129,364		134,821		1,614,563		3.7
ENERGY		104,554		92,420		77,818		84,245		89,355		1,136,576		2.6
TOTAL UNDISTRIBUTED DEPTS		643,607		673,235		708,002		614,718		611,000		7,810,010		17.9
GROSS OPER PROFIT		1,551,172		2,177,139		2,747,879		1,638,712		1,159,809		20,823,875		47.6
MGMT FEE BASE		117,297		145,689		175,369		121,721		101,012		1,527,966		3.5
MGMT FEE INCENTIVE		203,172		203,172		203,172		203,172		203,172		2,442,633		5.6
INCOME BEF FIXED CHG		1,230,703		1,828,278		2,369,338		1,313,819		855,624		16,853,275		38.5
RENT TAXES & INSURANCE		406,269		384,608		413,098		406,789		404,353		4,893,928		11
INTEREST		204,314		203,223		203,223		203,223		202,110		2,453,738		5.6
OWNERS EXPENSE												544		0
INCOME BEF DEPR		620,120		1,240,447		1,753,017		703,807		249,161		9,505,066		21.9
DEPR, AMORT & OTHER		799,979		799,979		799,979		799,979		799,979		9,599,747		21.8
INCOME BEF TAXES		-179,859		440,468		953,038		-96,172		-550,818		-94,681		0.1
INCOME AFT TAXES		-179,859		440,468		953,038		-96,172		-550,818		-94,681		0.1
ADD: INTEREST		204,314		203,223		203,223		203,223		202,110		2,453,738		5.6
ADD: DEPR, AMORT & OTHER		799,979		799,979		799,979		799,979		799,979		9,599,747		21.8
EBITDA		824,434		1,443,670		1,956,240		907,030		451,271		11,958,804		27.4

Source: The Westin Michigan Avenue

JONES LANG
LASALLE HOTELS_TM

27

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

THE WESTIN MICHIGAN AVENUE 2004–2005 PROJECTIONS AS OF 4/1/03

STARWOOD HOTELS & RESORTS WORLDWIDE
2003 Forecast Year-End — CHICAGO-WESTIN MICHIGAN A (5071)

			2004		2005
			Total		Total
STATISTICS
	Available Rooms			274,115		274,115
	Occupied Rooms			199,983		201,439
	Percentage of Occupancy			73		73.5
	Average Rate			152.5		157.92
	RevPar			111.25		116.05
REVENUE
	Rooms			30,496,499		31,810,424
	Food & Beverage			9,518,058		11,066,202
	Telecommunication			1,154,827		1,007,195
	Minor Operating Dept			65,861		80,576
	Rent & Other			2,682,733		2,968,200
		TOTAL REVENUE		43,917,978		46,932,597
DEPT PROFIT
	Rooms			23,252,382		24,175,922
	Food & Beverage			2,330,419		2,766,550
	Telecommunication			740,780		634,533
	Minor Operating Dept			25,036		33,842
	Rent & Other			2,396,241		2,668,412
		TOTAL DEPT PROFIT		28,744,858		30,279,259
UNDISTRIBUTED DEPTS
	Administrative & Gen			2,058,893		2,449,021
	Cr Card Commission			759,781		821,320
	Marketing			2,416,196		2,940,950
	Repairs & Maintenance			1,604,562		1,830,371
	Energy			1,107,231		1,220,248
		TOTAL UNDISTRIBUT		7,946,663		9,261,910
GROSS OPER PROFIT				20,798,194		21,017,349
	Mgmt Fee Base			1,537,129		1,642,641
	Mgmt Fee Incentive			2,419,524		2,279,150
INCOME BEF FIXED CHG				16,841,541		17,095,558
	Rent Taxes & Insurance			4,870,449		5,632,326
	Interest			2,453,738		2,549,304
	Owners Expense			0		0
INCOME BEF DEPR/AMO				9,517,354		8,913,928
	Depr & Amort			8,580,000		0
INCOME BEF TAXES				937,354		8,913,928
INCOME AFT TAXES				937,354		8,913,928
	ADD: Interest			2,453,738		2,549,304
	ADD: Depr & Amort			8,580,000		0
EBITDA				11,971,092		11,463,232
Occupied Rooms
	Transient			97,678		96,697
	Group			84,735		87,448
	Contracted			17,570		17,294
Average Rate
	Transient			144.16		151.52
	Group			172.33		175.42
	Contracted			75.73		82.98
Inclusions: 5071

Source: The Westin Michigan Avenue

JONES LANG
LASALLE HOTELS_TM

28

DRAFT

THE WESTIN
MICHIGAN AVENUE
Chicago

THE WESTIN MICHIGAN AVENUE CAPITAL PLAN AS OF 5/1/02

Name	Westing Michigan Avenue	0	%
Property No	5071

					USD (Thousands)
																			TOTAL
1.1.0		EXPENDITURE SUMMARY			2002		2003		2004		2005		2006		2007		2008		02-08
	1.1.1	RENOVATION — ROOMS AND CORRIDORS				—		—		—		—		—		—		—		—
	1.1.2	RENOVATION — PUBLIC AREAS/MTG SPACE				2,152		750		—		—		—		—		—		2,902
	1.1.3	RENOVATION — F&B OUTLETS				245		—		—		—		—		—		—		245
			Subtotal Renovations			2,397		750		—		—		—		—		—		3,147
	1.1.4
	1.1.5
	1.1.6	OPERATING EQUIPMENT				50		50		50		50		50		50		50		350
	1.1.7	BRAND STANDARDS				102		—		—		—		—		—		—		102
	1.1.8	REGULATORY / LIFESAFETY				656		444		—		—		—		—		—		1,100
	1.1.9	BUILDING CUSTODIAL				357		322		665		350		350		—		—		2,044
	1.1.10	PROPERTY IT				147		35		195		125		25		195		25		747
			Subtotal Custodial Maintenance & IT			1,312		851		910		525		425		245		75		4,343
	1.1.11			TOTAL EXPENDITURES		3,709		1,601		910		525		425		245		75		7,490

Source: Westin Realty Corp.

JONES LANG
LASALLE HOTELS_TM

29

EX-99.(C)(6) 11 p68165t3exv99wxcyx6y.htm EX-(C)(6)

Exhibit (c)(6)

Appraisal Update Report
The Westin Michigan Avenue -
Chicago
Chicago, Illinois

Prepared by:
HVS International
116 New Montgomery, Suite 620
San Francisco, California 94105
(415) 896-0868
(415) 896-0516 fax

Submitted to:
Mr. Siddharth Narang
Director - Acquisitions & Development
909 North Michigan Avenue Corporation
C/O Starwood Hotels & Resorts Worldwide, Inc.
777 Westchester Avenue
White Plains, New York 10604
(914) 640-8400
(914) 640-8274 fax
siddharth.narang@starwoodhotels.com

September 25, 2000

Mr. Siddharth Narang
Director - Acquisitions & Development
909 North Michigan Avenue Corporation
C/O Starwood Hotels & Resorts Worldwide, Inc.
777 Westchester Avenue
White Plains, New York 10604
(914) 640-8400
(949) 760-9680 fax
siddharth.narang@starwoodhotels.com

Re: The Westin Michigan Avenue – Chicago
Chicago, Illinois
HVS Reference Number: 2000040151

Dear Mr. Narang:

Pursuant to your request, we herewith submit our appraisal update pertaining to the above-captioned property. We have inspected the site and analyzed the hotel market conditions in the downtown Chicago area. Note that this appraisal update was prepared and should be used in conjunction with our self-contained appraisal report, HVS reference number 1999040002, dated March 8, 1999.

Based on the available data, our analysis, and our experience in the hotel industry, it is our opinion that the “as is” market value of the fee simple and leased fee interests in the 751-unit subject property described in this report, subject to Westin Hotels & Resorts management, as of September 6, 2000, the day the subject property was inspected, is:

$124,600,000

ONE HUNDRED TWENTY-FOUR MILLION SIX HUNDRED
THOUSAND DOLLARS

The “as is” value takes into account a capital deduction of approximately $4,400,000 in order to complete the 1999/00 renovation program currently underway. This deduction is intended to reflect the actions of a prudent investor in the subject property, and is necessary to achieve the projections set forth in this appraisal update. Our value conclusion reflects the value of the property “as is,” after the deduction of the cost of renovation. “As is” market value estimates the market value of a property in the condition observed upon inspection and as it physically and legally exists without hypothetical conditions, assumptions, or qualifications as of the date of inspection.

2

This report is intended for use by 909 North Michigan Avenue Corporation, C/O Starwood Hotels and Resorts, and its subsidiaries, affiliates, lenders and joint venture partners in connection with the potential sale or refinancing of the subject property. Any responsibility of HVS International is limited to the client and its joint venture partners, and use of our product by third parties shall be solely at the risk of the client and/or third parties. The client and its joint venture partners shall be entitled to rely on this update and the March 8, 1999 report.

Our report is made in conformance with, and subject to, the requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), as provided by the Appraisal Foundation, and Title IX (and amendments) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). We do hereby certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings and valuation.

The valuation is expressly made subject to all normal and specific assumptions and limiting conditions, a copy of which is included in the this appraisal update report.

Sincerely,
HVS INTERNATIONAL

Namit Malhotra
Assistant Vice President

Suzanne R. Mellen, CRE, MAI
Managing Director

NM/SRM/dft

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Quality Assurance

Quality Assurance

The HVS International division of M&R Valuation Services, Inc., strives to achieve the highest standards of quality during all phases of the appraisal process. It is our goal to provide clients with the finest update appraisal report available. The following staff members acknowledge their contribution to this report.

Daniel F. Turman - Editing and Report Production
Editor (Extension 216)

Namit Malhotra - Fieldwork, Analysis, and Text
Assistant Vice President (Extension 218)

Suzanne R. Mellen, CRE, MAI - Fieldwork, Analysis, and Review
Managing Director (Extension 108)

We are available to answer any questions and are pleased to have provided you with the finest quality product available. Paula Hood (extension 201) is available to answer any billing questions. We look forward to serving you again in the future.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Table of Contents

Table of Contents

1.	Summary of Salient Data and Conclusions		1
2.	Appraisal Update		3
		Nature of the Assignment	3
		Description of the Real Estate	6
		Market Area Analysis	10
		Supply and Demand Analysis	17
		Occupancy and Average Rate Analysis	31
		Highest and Best Use	36
		Approaches to Value	36
		Income Capitalization Approach	36
		Sales Comparison Approach	53
		Cost Approach	54
		Reconciliation	55
	Addenda
		Engagement Letter
	Qualifications
		Namit Malhotra
		Suzanne R. Mellen, CRE, MAI

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Summary of Salient Data and Conclusions 1

1.     Summary of Salient Data and Conclusions

Property:	The Westin Michigan Avenue – Chicago
Location:	10650 North Central Expressway
	Chicago, Illinois 60611
Date of Inspection:	September 6, 2000
Interests Appraised:	Fee simple and leased fee
Date of Value:	September 6, 2000
Land:
Area:	± 0.938 acres, or ± 40,958 square feet
Zoning:	B6 - 6 - Restricted Central Business District
Assessor’s Parcel Numbers:	17-03-213-005, 006
Flood Zone:	C
Improvements:
Guestrooms:	751
Floors:	16 and 27
Food and Beverage Facilities
Grill on the Alley (Leased):	200 Seats
Cafe A La Carte:	N/A
Meeting Space:	39,965 square feet
Parking:	209 garage spaces
Years Built/Renovated:	Main Building - 1963/1999
	Tower - 1972/1999
Summary of Value Parameters:
Highest and Best Use (as if vacant):	Transient lodging facility
Highest and Best Use (as improved):	Transient lodging facility
Exposure Period:	Less than or equal to twelve months
Stabilized Year:	2002/2003

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Summary of Salient Data and Conclusions 2

Estimates of Market Value:
Income Capitalization Approach:	$124,600,000
Sales Comparison Approach:	$75,000,000 to $139,000,000
Cost Approach:	Not Applicable
Market Value Conclusion:	$124,600,000
Per Room:	$165,900

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 3

2.     Appraisal Update

Nature of the Assignment	The subject of the appraisal update is the fee simple and leased fee interests in a ± 40,958-square-foot (± 0.938-acre) site currently improved with a full-service lodging facility known as the Westin Michigan Avenue. The subject property contains 751 rentable units, a leased restaurant, a freestanding quick-service coffee and pastry kiosk, 39,965 square feet of meeting space, a business center, a fitness room, a gift shop, an underground parking garage with 209 spaces, and a typical complement of back-of-the-house facilities. The property is located in the city of Chicago, the county of Cook and state of Illinois. The hotel’s civic address is 909 North Michigan Avenue, Chicago, Illinois 60611.
Objective of the Appraisal Update	The objective of the appraisal update is to estimate the “as is” market value of the subject property. The original appraisal of the subject property has a date of value of March 8, 1999.
	Property management’s 1999/00 renovation plan is currently underway, and is expected to be completed by April 2001. It is important to note that the subject property has undergone extensive renovations since our prior appraisal, the most important being the renovations of the Main Building. The Main Building was closed in the beginning of 2000 for the replacement of HVAC and electrical systems. The soft and case goods in the guestrooms and hallways were also replaced. In addition, the subject property’s main restaurant, The Chelsea Restaurant and Bar, was closed; and was replaced by the Grill on the Alley, which is a leased restaurant and lounge. According to property management, approximately 9,900 square feet of underutilized administrative and public space was converted to meeting space as part of the renovation of the hotel’s public and back-of-the-house areas. Most of this additional meeting space came about as a result of the conversion of third-floor administrative offices into breakout rooms. All the renovated areas of the hotel are in excellent condition, while the other areas of the subject property appeared in adequate condition, at the time of inspection.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 4

	Another variation in the subject market since our prior appraisal is the opening of three additional lodging facilities and changes to the proposed additions to supply. These developments will be discussed in greater detail later in this report.
	Our appraisal update involves a careful analysis of the property itself and the economic, demographic, political, physical, and environmental factors that have influenced real estate values since our prior appraisal.
Exposure Period	The exposure period, referring to the amount of time necessary for the real estate to have been exposed retrospectively, prior to our date of value, is estimated to be less than or equal to 12 months. According to the most recent National Investor Survey published by CB Richard Ellis, exposure time has increased in the past six months due to reduced REIT activity and a more stable real estate investment environment. The survey reports average exposure periods of 7.4 months for Class A hotels, 9.2 months for Class B hotels, and 10.6 months for Class C hotels. These data differ slightly with investor survey results from the Korpacz Real Estate Investor Survey published by PricewaterhouseCoopers. This survey references marketing time with the average stated as 6.85 months. Marketing times, as reported by the Korpacz survey, average 6.31 for full-service hotels, 6.89 for economy/limited-service hotels, 6.64 for luxury hotels, and 7.55 for extended-stay hotels.
Use of the Appraisal Update	This report is intended for use by 909 North Michigan Avenue Corporation, C/O Starwood Hotels and Resorts, and its subsidiaries, affiliates, lenders and joint venture partners in connection with the potential sale or refinancing of the subject property. Any responsibility of HVS International is limited to the client and its joint venture, and use of our product by third parties shall be solely at the risk of the client and/or third parties. The client and its joint venture partners shall be entitled to rely on this update and the March 8, 1999 report.
	This report is only valid when used in conjunction with our original appraisal report, HVS reference number 1999040002, dated March 8, 1999, with a date of value of February 1, 1999.
Scope of the Assignment	All information was collected and analyzed by the signatories to this report. Operating history and descriptive data for the property were supplied by 909 North Michigan Avenue Corporation, C/O Starwood Hotel & Resorts Worldwide, Inc. We have investigated numerous improved sales in the market area and have spoken with buyers, sellers,

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 5

	brokers, property developers, and public officials. In addition, we have investigated the general economy of the area affecting the subject property, as well as the specifics of the competitive hotel market. The value conclusion of the complete appraisal is based upon this investigation and analysis and is conveyed in this appraisal update report.
Property Right Appraised	The property rights appraised are the fee simple and leased fee interests in the land and improvements, including furniture, fixtures, and equipment, subject to Westin Hotels & Resorts management. A fee simple interest is defined as “absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat.“1 The property is managed by Westin Hotels and Resorts, a hotel management company that provides management expertise, brand-name affiliation, and a central reservations system. Westin Hotels and Resorts is a subsidiary of Starwood Hotels and Resorts. As was reviewed in the “Income Capitalization Approach” section of our previous report, Westin Hotels and Resorts management is an efficient operator of the subject property. The subject property is encumbered by a management agreement. We assume upon sale continued management of the property by Westin Hotels and Resorts. As such, we have deducted general and incentive management fees in our forecast, as stipulated in the management agreement, which was synopsized in the addenda to our prior report.
	A leased fee interest is defined as “an ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease.“2 The subject’s leased fee interest consists of the Grill on the Alley Restaurant and Lounge, and several smaller retail spaces.
Methodology	The methodology used to develop this appraisal update is also consistent with that of the original appraisal. The value conclusion is based upon this investigation and analysis and is conveyed in this appraisal update.

¹ Appraisal Institute. The Dictionary of Real Estate Appraisal. 3rd ed. Chicago: Appraisal Institute, 1993, p. 140.

² ibid., p. 204.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 6

Ownership and Assumptions	The subject property is owned by 909 North Michigan Avenue Corporation, a wholly owned subsidiary of Starwood Hotels & Resorts Worldwide, Inc., the Westin Chicago Limited Partnership, and Westin Hotels Limited Partnership; ownership has remained unchanged in the past three years.
	A portion of the subject property’s basement extends beneath the sidewalk of Delaware Place on land owned by the city of Chicago. In 1998, the subject property paid $33,581 to the city for a vaulted space permit to allow for this extension. According to property management, this annual lease expense has remained unchanged for at least the past four years and is unlikely to escalate beyond inflation in future years. For the purposes of this appraisal, we assume that this amount will increase at inflation in our projections.
	The subject’s leased fee interest consists of the Grill on the Alley Restaurant and Lounge, and several smaller retail spaces. For purpose of this appraisal, we have assumed that the lease income generated will increase at inflation throughout our projections.
	No other changes have affected the subject property’s ownership since the prior appraisal.
Pertinent Dates	The subject property was inspected by Namit Malhotra, on September 6, 2000. Suzanne R. Mellen, CRE, MAI, did not inspect the property, but participated in the analysis and review. The effective date of the appraisal update is September 6, 2000. All projections are expressed in inflated dollars, and the value estimate represents 2000 dollars.
Description of the Real Estate	The subject property contains 751 rentable units, a leased restaurant, a freestanding quick-service coffee and pastry kiosk, 39,965 square feet of meeting space, a business center, a fitness room, a gift shop, an underground parking garage with 209 spaces, and a typical complement of back-of-the-house facilities.
	Improvements
	The hotel consists of a main building and tower, with the development covering nearly all developable portions of the subject site’s ± 0.938 acres. The 16-story main building was constructed in 1963, and the 27-story tower was constructed in 1972. The main building occupies the western portion of the parcel, which fronts Michigan Avenue, and the tower

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 7

occupies the eastern portion. The subject property also has three lower levels, which contain the hotel’s back-of-the-house facilities, engineering spaces, and a parking garage. As mentioned previously, the subject property’s improvements have undergone a major renovation since our prior appraisal and are generally on par with those of its competitors.

Several changes have affected the subject property’s improvements since the prior appraisal, including the addition of meeting space, the leasing of the restaurant, and renovations to the main building; the subject property has also undergone reconfiguration of its back-of-the-house areas. The eastern portion of the main building’s 16th floor, an unfinished space that was formerly a fitness center, was refinished to house the administrative offices for the hotel, previously located on the third floor. In addition, the accounting department, previously located on the third floor, was relocated to a boardroom in the basement, adjacent to the cafeteria. On the second floor, a spiral staircase connecting the first and second floors became superfluous (not required per fire code), as the Grill on the Alley increased the space allocation from that of the previous Chelsea Restaurant and Bar to include a portion of the lobby. The 200-seat restaurant’s menu is classic American grill - prime steaks, fresh seafood, traditional dishes such as chicken pot pie or meatloaf and mashed potatoes, and homemade desserts. There are two other Grill on the Alley restaurants under operation, one in San Jose, California, and another one in Beverly Hills, California.

An additional meeting room was created with the reallocation of restaurant space. Other minor changes include a relocation of the business center and the Service Express department.

All the renovated areas of the hotel are in excellent condition, while the other areas of the subject property appeared in adequate condition at the time of inspection. The capital expenses that are budgeted for 2000 are discussed in the following section.

Capital Expenditures

We have reviewed the management’s updated actual 1998, 1999 and planned 2000 capital expenditures, many items of which changed from the 1998, 1999 and 2000 capital expenditure budgets provided in our prior appraisal. As provided by property management, the following chart details the most recent rendition of this budget.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 8

Updated Capital Expenditure Budgets

			Actual		Budget		Spent		Balance
Item			1998		1999 and 2000		Upto Sep 2000		Remaining
Renovation
	Guestroom miscellaneous				$	75,000			$	75,000
	Guestroom televisions					324,385	$	178,101		146,284
	Guestroom safes					375,500				375,500
	Guestroom renovation					13,600,676		13,600,676
	Guestroom renovation - 179 Tower rooms		$	1,250,665
	Guestroom renovation - remaining Tower rooms			4,869,556
	Completion of 10 Tower suites			150,000
	Mock-up room for Main building renovation			20,908
	Guestroom renovation - 18 corner suites			540,000
	Renovation - Presidential and State Suites					436,247		436,247
		Subtotal	$	6,831,129	$	14,811,808	$	14,215,024	$	596,784
Fire & Life Safety/ADA
	ADA guest elevators
	Fire & life safety
		Subtotal
Rooms Department
	Rooms miscellaneous		$	110,462	$	30,383	$	30,383
	Suite conversion
	Mattresses (319 in 1998 & 516 in 1999)			76,732
	Convert Rex meeting rooms to guestrooms			11,996		250,000		34,492	$	215,508
	Hallway carpeting			630,000
	Signage and electronic reader boards					140,000				140,000
		Subtotal	$	829,190	$	420,383	$	64,875	$	355,508
Food and Beverage/Meeting Space
	F & B miscellaneous		$	76,662		153,849		142,960	$	10,889
	Banquet room sound system
	Consort/Monarch renovation					813,500		96,498		717,002
	Governor’s suite renovation
	Public washrooms			23,929
	Convert suite to boardroom			14,639
	3rd-floor renovation			111,258
	Grill in the Alley capital obligation					677,534		677,534
	Construct new function room on 2nd floor					72,057		72,057
	Convert 3rd-floor offices to meeting rooms					1,190,440		1,190,440
	Minibars (390 in 1998 & 349 in 1999)			195,451		163,078		163,078
		Subtotal	$	421,939	$	3,070,458	$	2,342,567	$	727,891
Systems
	EDP miscellaneous		$	200,325	$	103,258	$	103,258
	Telephone switch					750,000		286	$	749,714
	Fidelio			30,000		190,000				190,000
	Non project additions					168,806		168,806
	ADP					54,720		51,720
	Miscellaneous					49,000
			$	230,325	$	1,315,784	$	324,070	$	939,714

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 9

Updated Capital Expenditure Budgets (Continued)

			Actual		Budget		Spent		Balance
Item			1998		1999 and 2000		Upto Sep 2000		Remaining
Administration and Engineering
	Health-club miscellaneous
	Replace and rebalance domestic water		$	225,000
	Boilers
	Engineering miscellaneous				$	75,000	$	75,000
	Elevators modernization
	Ice machines
	Resurface service areas - 12 floors
	Engineering misc. (Tower room HVAC controls)			177,823
	Public area telephone booths			3,489
	Installation of coils					900		900
	Manitowoc ice machines			51,867
	Convert old health club to administrative office			39,603		383,689		383,689
	Cafeteria upgrade			4,591
	Chillers			33,260		639,271		639,271
	Replace trash compactor and lift			31,779
	Employee locker rooms					255,005		18,709	$	236,296
		Subtotal	$	567,412	$	1,353,865	$	1,117,569	$	236,296
Building, Grounds, Other
	Pool roof
	Exterior facade
	Exterior signage
	Awning illumination
	Reclad planters in stone to match building
	New sidewalk		$	78,790
	Brick exterior facade			1,183
	Replace 5th-floor roof			100,000
	Replace 17th-floor roof			163,832
	Replace 29th-floor elevator roof				$	102,300	$	102,300
	Fire exit stairway from 2nd floor			30,463
	Construct replacement fire exit from 2nd floor					87,908		87,908
	Garage entrance facade, floor, ceiling renovation					13,024		2,224	$	10,800
	Concrete restoration of loading dock and garage ramps					33,550		33,550
	Lobby					1,500,000		12,216		1,487,784
	Lobby artwork
	Lobby softgoods replacement			26,543
	Service Express build-out			77,031
	Water pipe risers (Main Building)			9,060
	4-pipe HVAC system (Main Building)			2,650,000
	Copper domestic water pipes (Main Building)			820,000
	Engineering miscellanous
	Architectural/Engineering study fees - Lobby/Public areas					50,000		7,313		42,687
		Subtotal	$	3,956,902	$	1,786,782	$	245,511	$	1,541,271
Total Capital Expenditures			$	12,806,897	$	22,759,080	$	18,309,616	$	4,449,464
Total Capital Expenditures (Per Room)			$	17,053	$	30,305	$	24,380	$	5,925

Source: Starwood Hotels & Resorts

As shown, the updated 1999 and 2000 capital expenditure budget totals $22,759,080, as compared to the $16,957,000 presented in the prior budget.

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 10

	The largest budgeted increase is for the guestroom renovations. At the time of our inspection, approximately $18.3 million of the 1999 and 2000 budget had been spent. The remainder of the budgeted amount, $4.4 million, has been deducted from our income capitalization approach value conclusion. The major projects remaining include the reconfiguration of the lobby, and upgrades to the hotel’s telephone switch. The lobby decor is in good condition as a result of its renovation in 1995; however, due to the hotel’s layout and the allocation of space on the hotel’s first floor to retail tenants along Michigan Avenue, the subject property’s lobby is long and narrow. During peak periods of check-in and check-out, the hotel’s lobby is easily congested. Moreover, the narrow lobby is not representative of the size and quality of the hotel as a whole, thereby reducing the overall guest experience. According to property management, a study is being done to reorient the lobby space to improve access and to enhance the overall impression of the hotel for future guests.
	The appraisers feel that these projects are considered necessary for the subject property to remain competitive in the marketplace and to achieve the projections set forth in our forecast of income and expense. As such, this appraisal assumes a capital deduction of $4.4 million, in addition to the normal deduction for reserves for replacement. In our opinion, a prudent buyer of the subject property would consider these expenditures necessary to ensure the long-term competitiveness of the subject property.
	We have forecast a reserve for replacement for the subject property of 4.0% of total revenues. The appraisers were not provided with the a 2001 capital expenditure budget for the subject property.
	The appraisers are not professional cost estimators. No professional estimate has been prepared to determine the exact extent and cost of the budgeted capital improvements. Should the property require additional capital improvements in excess of the reserve forecast, then our estimate of the subject’s market value may decline by the additional cost. We urge any party interested in the subject property to retain a professional cost estimator to determine the capital expenditure requirements.
Market Area Analysis	Market area trends have remained relatively stable relative to those discussed in our prior appraisal, with the differences considered in the following discussion.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 11

Airport Statistics

The following table shows historical air passenger trends for Chicago O’Hare International Airport and Chicago Midway Airport between 1992 and 1999, and year-to-date through June 2000.

Air Passenger Statistics - O’Hare International Airport and Midway International Airport

	O’Hare International Airport									Midway International Airport
Year	Domestic		International		Total		% Change			Domestic		International		Total		% Change
1992		59,217,188		5,223,899		64,441,087		—			4,620,889		3,335		4,624,224		—
1993		59,191,702		5,899,466		65,091,168		1.0	%		6,757,274		4,819		6,762,093		46.2	%
1994		60,293,999		6,174,270		66,468,269		2.1			9,543,308		18,675		9,561,983		41.4
1995		60,418,513		6,790,451		67,208,964		1.1			9,952,326		31,009		9,983,335		4.4
1996		61,935,067		7,218,461		69,153,528		2.9			9,823,462		15,821		9,839,283		(1.4	)
1997		62,442,401		7,936,284		70,378,685		1.8			9,826,171		2,980		9,829,151		(0.1	)
1998		63,599,789		8,902,199		72,501,988		3.0			11,419,629		559		11,420,188		16.2
1999		62,878,889		9,731,232		72,610,121		0.1			13,585,029		233		13,585,262		19.0
YTD June 99		3,417,000		4,540,000		7,957,000					6,405,000		123		6,405,123
YTD June 00		3,492,516		5,067,326		8,559,842		7.6	%		7,485,124		1,976		7,487,100		16.9	%
Average Annual Compounded Percentage Change (1992-99)								1.7									16.6

Source: Chicago Department of Aviation

Chicago O’Hare International Airport (ORD) is currently served by 46 airlines. From 1992 to 1999, total passengers at ORD steadily increased at an average annual rate of 1.7%. In 1994,a $618-million international terminal was completed, which increased capacity for international flights. Chicago O’Hare International Airport is the world’s busiest commercial airport. In the year-to-date 2000 period the passenger counts are up by 7.6%, based largely on an increase in international arrivals, associated with a extremely strong convention year. However, going forward, growth in total passengers is expected to be minimal in the future, as the airport is approaching its operational capacity.

Alternatively, Chicago Midway Airport is served by 15 airlines and handles more corporate jet aircraft than Chicago O’Hare International Airport. In addition to the major air carriers, the airport is served by several discount airlines such as Frontier, Southwest, and Vanguard. Total passenger counts at the airport increased substantially in 1998 and 1999 and year-to date through June 2000, by 16.2%, 19.0%, and 16.9%, respectively. According to airport officials, approximately $100 million has been invested

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 12

in recent years to improve the airport’s parking, terminal, and airfield facilities. These improvements, combined with the increased cost of flying on major airlines and the comparatively easy accessibility of Chicago Midway Airport, have contributed to the sharp increase in passenger counts.

Office Space Statistics

Trends in occupied office can be reliable indicators of lodging demand; firms that occupy office space often exhibit a strong propensity to attract commercial visitors. Although it is difficult to quantify hotel demand based on the amount of occupied office space, changes in the amount of occupied office space or office space vacancy rates may have a proportional impact on commercial demand, and a less direct effect on group meeting demand. The following chart summarizes office space statistics for the Chicago downtown and suburban office markets between 1997 and the first quarter of 2000.

Office Space Statistics - Chicago Downtown and Suburban

Chicago Downtown Office Market

		Net Rentable Area
		Square Feet					Vacancy Rate
Submarket		1999			1st Qt. 2000		1997			1998			1999			1st Qt. 2000
West Loop			—			—		10.6	%		12.2	%		7.0	%		6.4	%
Central Loop			—			—		12.9			16.8			8.4			7.7
East Loop			—			—		19.9			19.1			15.5			12.7
N. Michigan Avenue			—			—		13.9			15.7			7.7			7.9
River North			—			—		7.8			14.3			5.5			4.2
	Totals		105,000,000	*		105,800,000		13.8	%		15.6	%		10.5	%		8.3	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

		Net Absorption (Square Feet)
Submarket		1997			1998		1999		1st Qt. 2000
West Loop			64,047			1,147,562		259,215		160,767
Central Loop			1,557,393			62,186		383,071		285,602
East Loop			(181,019	)		145,851		564,604		536,100
N. Michigan Avenue			300,204			213,884		147,534		16,436
River North			65,062			162,533		23,157		36,849
	Totals		1,805,687			1,732,016		1,377,581		1,002,882

Chicago Suburban Office Market

		Net Rentable Area
		Square Feet					Vacancy Rate
Submarket		1999			1st Qt. 2000		1997			1998			1999			1st Qt. 2000
North Suburbs			—			—		8.0	%		7.5	%		9.2	%		9.0	%
Northwest Suburbs			—			—		8.0			7.0			8.4			9.4
O’Hare			—			—		10.3			9.2			9.1			8.7
East-West Tollway			—			—		9.0			9.3			12.6			12.2
West Cook			—			—		N/A			N/A			18.6			18.0
South Suburbs			—			—		13.6			13.4			16.5			15.7
	Totals		87,900,000	*		89,600,000		9.0	%		8.6	%		10.5	%		10.5	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

		Net Absorption (Square Feet)
Submarket		1997			1998			1999			1st Qt. 2000
North Suburbs			—			—			1,191,760			489,693
Northwest Suburbs			—			—			286,858			245,522
O’Hare			—			—			(95,687	)		(53,559	)
East-West Tollway			—			—			865,663			769,775
West Cook			—			—			11,872			(8,044	)
South Suburbs			—			—			(15,985	)		(21,548	)
	Totals		2,700,000	*		2,700,000	*		2,244,481			1,588,141

* Rounded Value

Source: CB Richard Ellis

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 14

A surge in leasing activity due to strong demand and delayed occupancies has tightened up the downtown Chicago office market. The first quarter 2000 vacancy rate dropped significantly, to 8.3%, from 10.5% in year-end 1999. Net absorption was at 1,002,882 square feet during the first quarter of 2000, the strongest start in years, due to of several occupancies being pushed into 2000; this compares to the 134,918 square feet absorbed during the same period in 1999. During the fourth quarter of 1999, the first new speculative office space since 1992 was delivered to the market. The trend continues with four buildings under construction, or 2,454,000 square feet, in the downtown office market. Based on current construction schedules, two of the buildings, or 754,000 square feet, will be completed later this year, with the remaining two buildings scheduled for completion in 2001.

The suburban office market is benefiting from the ongoing expansion of major technology and communications companies; much of the space is being leased to established companies with corporate or regional headquarters in the area are now spinning off new divisions. Strong absorption during the first quarter of 2000 accounted for the stable vacancy rate in the Chicago suburban office market, as demand for space kept pace with extensive supply expansion. The net amount of space leased during the quarter was nearly 1.6 million square feet, the strongest start in nearly a decade. Absorption for the remainder of the year is projected to be strong, but at levels lower than that at which supply is being added. An additional 21 buildings are scheduled to open by year-end, and speculative development will top 3.8 million square feet, 300,000 square feet more than in 1999. Year-to-date, 1,776,134 square feet has been completed and 2,414,122 square feet is currently under construction.

Convention Statistics

The following table presents statistics provided by the Chicago Convention and Tourism Bureau relating to the total number of conventions, trade shows, and meetings held along with total attendance from 1991 to 1998, an estimate for 1999, and projections for 2000. This is the most current data available.

Chicago Convention Statistics

			1990		1991			1992			1993			1994			1995
Conventions
	Number of			1,102		1,105			1,055			1,224			1,377			1,205
	Attendance			510,869		333,407			470,768			567,493			712,472			853,466
Trade Shows
	Number of			136		205			192			180			165			153
	Attendance			1,787,160		2,092,600			1,998,250			1,952,550			1,961,799			2,006,604
Corporate Meetings
	Number of			27,108		28,288			28,835			34,317			35,993			37,499
	Attendance			893,089		931,853			951,566			1,132,457			1,187,769			1,237,525
Total Events
	Number of			28,346		29,598			30,082			35,721			37,535			38,857
		Percent Change		—		4.4	%		1.6	%		18.7	%		5.1	%		3.5	%
	Attendance			3,191,118		3,357,860			3,420,584			3,652,500			3,862,040			4,097,595
		Percent Change		—		5.2	%		1.9	%		6.8	%		5.7	%		6.1	%
Room Nights Booked *				—		—			—			—			—			—
				—		—			—			—			—			—

[Additional columns below]

[Continued from above table, first column(s) repeated]

												Estimated			Projected
			1996			1997			1998			1999			2000
Conventions
	Number of			1,545			1,381			1,474			1,573			1,729
	Attendance			1,094,144			977,826			1,134,097			1,179,790			1,204,309
Trade Shows
	Number of			140			163			172			179			178
	Attendance			2,435,353			2,176,451			2,524,283			2,638,667			2,707,272
Corporate Meetings
	Number of			34,288			32,273			32,707			34,016			34,900
	Attendance			1,131,500			1,065,000			1,170,000			1,210,950			1,242,435
Total Events
	Number of			35,973			33,817			34,353			35,768			36,807
		Percent Change		(7.4	)%		(6.0	)%		1.6	%		4.1	%		2.9	%
	Attendance			4,660,997			4,219,277			4,828,380			5,029,407			5,154,016
		Percent Change		13.7	%		(9.5	)%		14.4	%		4.2	%		2.5	%
Room Nights Booked *				1,890,177			1,853,739			1,748,777			1,893,825			2,179,236
				—			(1.9	)%		(5.7	)%		8.3	%		15.1	%

Annual Compounded Percent Change, 1990 - 1998:
Number of Events	2.8	%
Attendance	6.1	%

* Figures represent room nights booked through the CCTB only

Source: Chicago Convention and Tourism Bureau

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 16

Despite the adverse affects of the recession during the early 1990s, the total number of events held and attendance in Chicago consistently increased from 1990 through 1995. In 1996, the number of total events decreased as the result of displacement from the Democratic National Convention, which was held in August of that year, while the total number of attendees increased by 13.7%. McCormick Place is the largest trade show building in the country. The completion of the $987-million McCormick Place expansion in 1997 nearly doubled the size of the facility. Beginning in 1998, Chicago assumed the annual host-city role for future COMDEX conventions. The convention, produced in cooperation with Microsoft Corporation, annually draws over 100,000 attendees and generates nearly $151 million in expenditures. Between 1996 and (estimated) 2000, the number of room nights booked through the CCTB has increased at a compound annual rate of 3.6%, with an 8.1% increase in (estimated) 1999, and a 15.1% increase in (estimated) 2000. However, 2001 is expected to be a weak convention year. Based on data provided by the Chicago Convention and Tourism Bureau, there were a projected 2,179,236 room nights booked through the bureau in 2000; the total number of room nights booked in 2001, as of June 30, 2000, was at 1,630,076, or roughly a decline of 25%. Although more room nights are expected to be picked up, given the lead time between June 30, 2000 and December 2001, the coming convention year is not expected to be as strong as 2000.

Tourist Attractions

The following statistics show the increase in the number of Chicago tourist attraction attendance from 1995 to 1999.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 17

Chicago Tourist Attraction Attendance

											Average Annual
											Compounded
	1995		1996		1997		1998		1999		Percent Change
Attraction
Navy Pier		3,000,000		4,500,000		6,081,200		8,248,000		7,750,000		26.8	%
John G. Shedd Aquarium		1,844,927		1,775,765		1,802,385		1,981,000		1,851,618		0.1
Museum of Science and Industry		2,012,284		1,760,813		1,680,234		1,750,000		1,656,611		(4.7	)
Art Institute of Chicago		2,248,576		1,669,842		1,723,549		1,537,157		1,358,412		(11.8	)
Field Museum of Natural History		1,263,453		1,212,475		1,390,481		1,450,923		1,501,465		4.4
Lincoln Park Zoo*		4,000,000		4,000,000		3,000,000		3,000,000		N/A		(6.9	)
Chicago Cultural Center		486,521		565,882		566,538		623,006		N/A		6.4
Festival
Taste of Chicago *		3,000,000		3,250,000		3,460,000		3,065,000		3,695,000		5.3	%
Air and Water Show *		2,000,000		2,100,000		2,400,000		2,200,000		2,200,000		2.4
Chicago Blues Festival *		500,000		600,000		660,000		660,000		700,000		8.8
Venetian Night *		500,000		500,000		500,000		500,000		550,000		2.4
Chicago Jazz Festival *		300,000		310,000		300,000		310,000		360,000		4.7
* Estimated

Source: Chicago Convention and Tourism Bureau

	Chicago offers a variety of experiences for tourists, as well as for commercial and group meeting visitors. Attractions such as the Magnificent Mile, Sears Tower, Navy Pier, and the Museum of Science and Industry make Chicago a destination choice for a significant number of visitors.
Supply and Demand Analysis	Regional Supply and Demand Overview
	Updated supply and demand compiled by Smith Travel Research (STR) were obtained for the subject hotel market. Specifically, the following data include statistics on the subject property and all of its primary and secondary competitors discussed later in this report. Information since 1994 is presented in the following table.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 18

Subject Hotel Market Trends

				%			Average		%									Room
Year	Occupancy			Change			Rate		Change			Supply			Demand			Sales
1994		70.4	%		—		$	118.33		—			—			—			—
1995		71.8			2.0	%		123.96		4.8	%		0.0	%		2.0	%		6.9	%
1996		74.9			4.3			137.84		11.2			0.0			4.4			16.1
1997		75.9			1.3			148.75		7.9			0.0			1.3			9.3
1998		74.3			(2.1	)		162.60		9.3			2.6			0.5			9.8
1999		74.7			0.5			166.84		2.6			5.2			5.7			8.4
YTD 6/99		72.8	%		—		$	161.87		—			—			—
YTD 6/00		71.5			(1.8	)%		170.50		5.3	%		3.9	%		2.0	%		7.4	%

Source: Smith Travel Research

A review of the STR data yields the following observations:
	•	After remaining constant until 1997, the guestroom supply increased in 1998, 1999, and year-to-date June 2000, due to the opening of the Hyatt Regency McCormick Place in July 1998, the Wyndham Hotel in April 1999, and the Park Hyatt in June 2000.
	•	Year-to-date through June 2000 demand has increased by 2.0%, compared to the same period last year.
	•	Average rate has increased at a compound annual rate of 7.1%, with strong growth seen from 1995 through 1998. Average room rates have increased in the year-to-date June 2000 period while occupancy has suffered. Occupancy increased steadily between 1994 and 1997, but with the onset of new supply, and 9.3% increase in average rate, occupancy declined slightly in 1998. In 1999, occupancy remained relatively stable, as the influx of new supply impeded significant average rate growth.
	•	RevPAR increased by a compounded annual rate of 8.4% between 1995 and 1999.
	•	With demand levels strong and the marketwide occupancy rate in the mid-70% range, the market’s hotels have remained aggressive in pursuing gains in average rate. This growth pattern is expected to continue, albeit at a slower rate.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 19

Supply Analysis
Since the previous appraisal, the composition of the competitive market has more or less remained unchanged, with the following exceptions.
	•	The Wyndham Hotel opened in April 1999, and the Park Hyatt opened in June 2000.
	•	Given the extensive renovations at the subject property, the Holiday Inn Chicago City Center has been removed from our competitive set, as this hotel’s average daily rate of $139 in 1999 is significantly below that of the subject property.

The following chart sets forth summary statistics for year-end 1998 through projected 2000, measuring, among other factors, the historical rate of demand growth for the subject’s market. The data are based on our market research and pertain specifically to those hotels described in the sections of this report addressing competitors.

Primarily Competitive Review

												Estimated 1999 Market
									Segmentation												Estimated 1998
	Year		No. of		Meeting		Meeting					Grp.												Average
Property/Location	Opened		Rooms		Space		Space/Rm.		Comm.			Mtg.			Leis.			Cont.			Occ.			Rate		RevPAR
The Westin Michigan Avenue
909 N. Michigan Ave.		1963/72		751		39,965		53.2		30	%		44	%		12	%		14	%		71.0	%	$	159.91	$	113.54
Chicago Marriott Downtown
540 N. Michigan Ave.		1978		1,172		58,800		50.2		30			55			15			0			79.0			166.00		131.14
The Drake Hotel
140 E. Walton Pl.		1920		535		27,700		51.8		40			35			25			0			70.0			203.00		142.10
Hotel Inter-Continental
605 N. Michigan Ave.		1929/90		842		44,142		52.4		30			60			10			0			82.0			175.00		143.50
Radisson Hotel & Suites
160 E. Huron St.		1973		341		18,000		52.8		35			35			25			5			78.0			149.00		116.22
Crowne Plaza Allerton
701 N. Michigan Ave.		1923/99		443		11,000		24.8		30			40			30			0			60.0			155.00		93.00
Wyndham Chicago
633 N. St. Calir St.		1999		418		21,000		50.2		30			60			10			0			0.0			0.00		0.00
Subtotal/Average				4,502		220,607		49.0		32	%		49	%		16	%		3	%		74.8	%	$	169.07	$	126.50
Secondary Competition				2,586						29	%		54	%		12	%		5	%		75.0	%	$	159.63	$	119.77
Total/Average				7,088						31	%		51	%		15	%		4	%		74.9	%	$	165.44	$	123.92

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Estimated 1999													Projected 2000
				Average				Occupancy			Yield						Average				Occupancy			Yield
Property/Location	Occ.			Rate		RevPAR		Penetration			Penetration			Occ.			Rate		RevPAR		Penetration			Penetration
The Westin Michigan Avenue
909 N. Michigan Ave.		72.9	%	$	155.90	$	113.65		97.9	%		90.2	%		71.6	%	$	171.46	$	122.77		95.7	%		92.1	%
Chicago Marriott Downtown
540 N. Michigan Ave.		79.0			171.00		135.09		106.1			107.2			79.0			185.00		146.15		105.6			109.7
The Drake Hotel
140 E. Walton Pl.		72.0			211.00		151.92		96.7			120.6			76.0			215.00		163.40		101.6			122.6
Hotel Inter-Continental
605 N. Michigan Ave.		76.0			190.00		144.40		102.1			114.6			78.0			198.00		154.44		104.2			115.9
Radisson Hotel & Suites
160 E. Huron St.		80.0			149.00		119.20		107.5			94.6			80.0			153.00		122.40		106.9			91.8
Crowne Plaza Allerton
701 N. Michigan Ave.		55.0			163.00		89.65		73.9			71.2			62.0			155.00		96.10		82.9			72.1
Wyndham Chicago
633 N. St. Calir St.		63.0			158.00		99.54		84.6			79.0			64.0			165.00		105.60		85.5			79.2
Subtotal/Average		73.1	%	$	173.75	$	126.96		98.2	%		100.8	%		74.2	%	$	182.35	$	135.36		99.2	%		101.6	%
Secondary Competition		76.7	%	$	162.07	$	124.37		103.1	%		98.7	%		75.9	%	$	170.82	$	129.61		101.4	%		97.3	%
Total/Average		74.4	%	$	169.29	$	126.00		100.0	%		100.0	%		74.8	%	$	178.08	$	133.26		100.0	%		100.0	%

Competitive Review - Secondary Competitors

								Estimated 1999
								Market Segmentation
	Actual Rm.		Percentage			Weighted					Grp.
Property	Count		Competitive			Rm. Count		Comm.			Mtg.			Leis.			Cont.
Swissotel		630		50	%		315		45	%		40	%		10	%		5	%
Hyatt Regency Chicago		2,019		50			1,010		15			65			10			10
Westin River North		425		50			213		45			40			15			0
Renaisance		535		50			268		35			50			15			0
Omni Suites		347		25			87		65			25			10			0
Doubletree Guest Suites		345		25			86		60			10			30			0
Embassy Suites		358		25			90		50			35			15			0
Sheraton Chicago Hotel & Tower		1,204		10			120		17			74			9			0
Chicago Hilton & Towers		1,543		10			154		21			68			11			1
Palmer House Hilton		1,640		10			164		35			50			15			0
Hyatt Regency McCormick Place		800		10			80		15			65			10			10
Total/Average		9,846					2,586		29	%		54	%		12	%		5	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Estimated 1998							Estimated 1999							Projected 2000
				Average							Average							Average
Property	Occupancy			Rate		RevPAR		Occupancy			Rate		RevPAR		Occupancy			Rate		RevPAR
Swissotel		76.0	%	$	158.00	$	120.08		75.0	%	$	162.00	$	121.50		78.0	%	$	164.00	$	127.92
Hyatt Regency Chicago		76.0			144.00		109.44		77.0			146.00		112.42		75.0			158.00		118.50
Westin River North		68.0			185.00		125.80		79.0			181.00		142.99		78.0			190.00		148.20
Renaisance		75.0			191.00		143.25		79.0			188.00		148.52		79.0			200.00		158.00
Omni Suites		78.0			192.00		149.76		75.0			200.00		150.00		77.0			210.00		161.70
Doubletree Guest Suites		73.0			169.00		123.37		73.0			168.00		122.64		66.0			172.00		113.52
Embassy Suites		82.0			179.00		146.78		83.0			176.00		146.08		81.0			177.00		143.37
Sheraton Chicago Hotel & Tower		77.0			155.00		119.35		79.0			168.00		132.72		77.0			172.00		132.44
Chicago Hilton & Towers		75.0			153.00		114.75		75.0			163.00		122.25		74.0			172.00		127.28
Palmer House Hilton		77.0			156.00		120.12		75.0			161.00		120.75		73.0			165.00		120.45
Hyatt Regency McCormick Place		49.0			153.00		74.97		69.0			152.00		104.88		74.0			160.00		118.40
Total/Average		75.0	%	$	159.63	$	119.77		76.7	%	$	162.07	$	124.37		75.9		$	170.82	$	129.61

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 21

The subject property’s competitive set was discussed in detail in our previous appraisal and has not materially changed. Estimates of occupancy and average daily rate for 1999 and year-end 2000 serve as the basis for our projections of occupancy for the subject market and the subject property.

In terms of market performance, marketwide occupancy is estimated to remain stable increasing nominally from 74.4% in 1999 to 74.8% by year-end 2000. Average rate is projected to increase, from $169.29 in 1999 to $178.08 by year-end 2000. The improvement in average room rate is attributed to the healthy economic conditions in Chicago and the Midwest.

Additions to Supply

It is important to consider any new hotels that may have an impact on the subject property’s operating performance. According to city of Chicago planners, the hotel sector has been experiencing unprecedented growth recently, especially in the mid-size, full-service market.

During 1998, six new hotels opened in Chicago’s central business district (CBD), equating to 2,207 new rooms. These included the Allegro Hotel, the Hampton Inn & Suites, the Crowne Plaza Silversmith, the Hyatt McCormick Place, the Loews House of Blues Hotel, and the Hotel Monaco. During 1999, an additional six hotels opened with 1,721 new rooms. These included the Holiday Inn & Suites, the Wyndham Hotel, the Crowne Plaza Allerton (conversion), the Homewood Suites, the Burnham Hotel, and the Hilton Garden Inn. In June 2000, the 203-room Park Hyatt opened at the intersection of Chicago Avenue and Rush Street.

At the time of our fieldwork, there were seven new hotels, with 2,509 guestrooms, under construction or in the preconstruction stage of development. There were two other hotels, with 1,854 combined rooms, that are considered speculative, rumored for development in downtown Chicago. The following table summarizes the proposed hotels.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 22

Proposed Additions to Supply in the Downtown Chicago, Illinois Area

Number

Projected

Percentage

Weighted

Property

of Rooms

Location

Status

Opening

Competitive

No. of Rms

Competitive:

Park Hyatt

203

Chicago & Rush

Open

06/01/2000

25

%

51

Le Meridien

313

Michigan & Grand

Construction

03/01/2001

25

78

Embassy Suites River East

456

Fairbanks & Illinois

Construction

05/01/2001

25

114

Peninsula Hotel

340

730 N. Michigan

Construction

06/01/2001

10

34

Hotel Sofitel

415

Wabash & Chestnut

Construction

01/01/2002

50

208

Non Competitive:

Hilton Suites

425

Illinois & Columbus

Construction

01/01/2003

N/A

N/A

Marriott Suites

357

Dearborn & Randolph

Pre-Construction

07/01/2003

N/A

N/A

Speculative

Mandarin Oriental

260

55 E. Edie

Under review

N/A

N/A

N/A

Adam’s Mark

1,594

Illinois & Columbus

Under review

N/A

N/A

N/A

Total

4,363

485

Our fieldwork, which included discussions with hotel operators, developers, and government officials, ascertained the following information about each of the nonspeculative developments.

Park Hyatt

In 1996, the 255-unit Park Hyatt Chicago at 800 North Michigan Avenue was demolished. The site is located at the northeast corner of Rush Street and Chicago Avenue, a prominent and heavily trafficked location just west of North Michigan Avenue, adjacent to the historic Water Tower Visitors Center. Hyatt Development replaced the demolished property with a new Park Hyatt, which opened in June 2000. The new improvements include a 65-story, 725,000-square-foot complex containing a 203-room Park Hyatt hotel with an estimated 8,000 square feet of meeting space, 140 luxury condominiums, and 20,000 square feet of street-level retail space. As a participant in the luxury segment of the lodging market, this property is expected to compete primarily with the Ritz-Carlton and the Four Seasons, which are not direct competitors of the subject property. Allocated construction costs for the Park Hyatt, which features upscale amenities and large suites, were reported to be $340,000 per room. Due to its significantly smaller guestroom inventory and luxury orientation, we consider this hotel 25% competitive with the subject property.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 23

Le Meridien Hotel

Le Meridien Hotel is being developed as part of the North Bridge Development by a joint venture between the John Buck Company of Chicago, its partner Morgan Stanley Real Estate Funds, and Granada Group PLC. This property was earlier planned as a Wyndham Grand Bay; Wyndham sold its interests to Granada Group PLC in July 2000. Construction is underway at 520 North Michigan Avenue, at the site of the former McGraw Hill Building. The historic façade of the existing structure will be preserved and will front the newly developed hotel. This lodging facility will be part of a $450,000,000 mixed-use development that will span several prime blocks in the Chicago CBD and house a 220,000-square-foot Nordstrom and a 115,000-square-foot retail arcade featuring 35 specialty stores. The North Bridge complex extends from 520 to 600 North Michigan Avenue and will also include entertainment outlets such as Disney Quest, a five-level, 85,000-square-foot, urban interactive entertainment complex. Le Meridien will offer 313 spacious and luxurious guestrooms and suites; world-class dining in specialty restaurants; and 8,000 square feet of meeting space. Le Meridien is expected to be operational by March 2001; given its room count and limited meeting space, we consider it 25% competitive with the subject property.

Embassy Suites River East

This hotel is proposed to be part of the larger mixed-use River East Master Plan, which includes retail, residential, and theater developments. This 456-unit, all-suite hotel is expected to open in May 2001, and is expected to be owned and operated by Hilton Hotels Corporation. Due to its significantly smaller guestroom inventory and its anticipated market orientation, we consider this hotel to be 25% competitive with the subject property.

Peninsula Hotel

The 340-unit Peninsula Hotel is being constructed at 730 North Michigan Drive, in the heart of the “Magnificent Mile.” The hotel is expected to be operational in mid-2001. As a participant in the luxury segment of the lodging market, this property is expected to compete primarily with the Ritz-Carlton and the Four Seasons, which are not direct competitors of the subject property. Due to its significantly smaller guestroom inventory and its luxury orientation, we consider this hotel to be 10% competitive with the subject property.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 24

Hotel Sofitel

The Hotel Sofitel is proposed for the intersection of Chestnut St. and Wabash, approximately one mile south of the subject property. Reportedly, the land for the Hotel Sofitel has been purchased and zoning approval is pending. Accor, the developer of the Hotel Sofitel, spent a reported $11,200,000 for a 25,000-square-foot parcel to develop the hotel. Thus, we believe this project is highly likely to come to fruition, with an opening date of January 2002. Due to its anticipated orientation, and brand affiliation, we consider this hotel to be 50% competitive with the subject property.

Hilton Suites

A 425-unit Hilton Suites hotel is proposed for a parcel of land located at the intersection of Illinois Avenue and Columbus Drive. The property is part of the larger Grand Pier Center Mixed-Use Development, which includes retail space, residential development, a theater complex, and parking. Construction of the mixed-use development is currently underway. The hotel forms the third and final stage of this development, and is expected to open in 2003. Based on this hotel’s room count, and anticipated commercial orientation, we do not expect it to be competitive with the subject property.

Marriott Suites

Host Marriott has just obtained formal approval from the city of Chicago to develop a 357-unit, all-suite Marriott Suites hotel. The site is located at the intersection of Randolph Street and Dearborn Street. The expected opening date is July 2003. Due to its smaller guestroom inventory, as well as its anticipated transient nature, we do not consider this hotel competitive with the subject property.

In addition to the preceding projects, numerous projects are in varying stages of early predevelopment. According to local brokers, developers, and city officials, given the increased tightening of development capital, most of the pending projects not currently under construction are not likely to come to fruition. As such, we consider these projects to be very speculative. Specifically the 1,594-room Adam’s Mark hotel, if built, will be competitive with the subject property. However, the developer has been unable to obtain approval of the plans, and city officials are unable to

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 25

provide any timeline as to when this hotel might obtain necessary permits. Therefore, it has not been factored into this analysis.

While we have taken reasonable steps to investigate proposed hotel projects and their status, due to the nature of real estate development, it is impossible to determine with certainty every hotel that will be opened in the future, or what their marketing strategies and effect in the market will be. Depending on the outcome of current and future projects, the value of the subject property may be positively or negatively affected.

Demand Analysis

The following chart presents the most recent market trends for the subject hotel market. The data pertain to the subject property and the properties previously identified as its primary competition.

Summary of Changes in Market Conditions

	Accommodated		Percent			Room Nights		Percent			Market			Market		Percent			Market		Percent
Year	Room Nights		Change			Available		Change			Occupancy			ADR		Change			RevPAR		Change
1997		1,816,230		—			2,405,241		—			75.5	%	$	151.18		—		$	114.16		—
1998		1,812,568		(0.2)	%		2,419,881		0.6	%		74.9			165.44		9.4	%		123.92		8.6	%
1999		1,895,227		4.6			2,546,465		5.2			74.4			169.29		2.3			126.00		1.7
Proj. 2000		1,935,910		2.1			2,587,011		1.6			74.8			178.08		5.2			133.26		5.8
Average Annual Compounded Percent Change 1997-99				2.2	%				2.9	%							5.8	%				5.1	%

Source: HVS International

As indicated in the previous chart, between 1997 and 1999, lodging demand in the subject market, as measured by accommodated room nights, increased by 2.2% per annum, while the marketwide average rates increased by 5.8% per annum.

Projections for 2000 indicate a 2.1% increase in accommodated room nights. Consequently, occupancy is also projected to increase to 74.8%, while average rate is projected to increase by 5.8%.

Demand Analysis Using Market Segmentation

Based on our fieldwork, area analysis, and knowledge of the local lodging market, we have estimated the 1998 distribution of accommodated hotel

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 26

room night demand, by segment, for the market as a whole and for the subject property. The 1999 accommodated room night demand is estimated to have been captured by the 6,977 weighted rooms of the subject property and its primary and secondary competitors:

Marketwide Accommodated Room Night Demand

	Annual Room					Annual Room
	Night Demand		Percentage of			Night Demand		Percentage
Market Segment	Market		Total			Subject		Total
Commercial		582,977		30.8	%		60,468		30.2	%
Group Meeting		964,705		50.9			87,107		43.5
Leisure		279,322		14.7			23,980		12.0
Contract		68,595		3.6			28,648		14.3
Total		1,895,598		100.0	%		200,202		100.0	%

Group meeting demand dominates the local market, at 50.9% of the 1999 room night demand. This is followed by commercial demand with 31.0% of the total, leisure demand with 14.7%, and, lastly, contract demand with 3.6%. The subject property’s demand mix differs from that of the market in that The Westin accommodates a significantly larger proportion of leisure and contract demand, at 12.0% and 14.3%, respectively. Due to the subject property’s location along North Michigan Avenue, it draws both international and domestic transient guests. Using the distribution of accommodated hotel demand as a starting point, we will analyze the characteristics of each market segment in an effort to determine future trends in room night demand.

Commercial

The commercial segment represents demand drawn from local businesses, which are primarily large firms in The Loop. Commercial demand tends to be the least price-sensitive segment and peaks on Monday through Thursday nights in the spring and fall months. The subject market experiences extremely high commercial demand and often sells out on weeknights during the peak seasons of late fall through early spring. Trends in this demand segment tend to be tied to changes in total employment, occupied office space, and air passenger statistics. Based on current economic indicators and discussions with area hotel operators, we project base commercial demand growth of 2.0% in 2000. Commercial

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 27

demand is then projected to grow by 1.0% in 2001 and each year thereafter.

Group Meeting

As previously discussed, the Chicago Convention and Tourism Bureau has had considerable success in attracting both large and numerous conventions. With the completion of the 800-unit Hyatt Regency McCormick Place in July 1998, the city’s ability to attract ever larger convention business has been further enhanced. Reportedly the convention bookings for 2002 will be strong, while 2001 is anticipated to be an off year due to the cyclical nature of the convention schedule. Significant additional group meeting demand is generated by the self-contained group meetings booked by hotels in the market, such as the subject property, which contain a substantial amount of meeting space.

Based on current economic indicators and discussions with area hotel operators, we project group meeting demand to increase by 1.0% in 2000. Group meeting demand is projected to decline by 6.0% in 2001, based on the soft prebooking trend discussed earlier. Group meeting demand is then expected to grow by 3.0% in 2002 and 2.5% in 2003 and each year thereafter.

Leisure

Future leisure demand is related to the overall economic health of the region and the nation. Trends in retail sales, retail sector employment, total employment, and air traffic counts tend to correlate most directly with leisure demand. The primary leisure demand generator for the subject property and its competitors is the shopping attractions along the Magnificent Mile. On the whole, the potential for leisure demand growth is considered to be relatively minor, particularly considering the high level of occupancy already noted in peak periods. We have forecast annual base leisure demand growth at 1.0% in 2000 and each year thereafter.

Contract

Trends in contract demand may be considered to be most directly correlated with airport traffic. However, as the least lucrative source of market demand, hotel operators tend to resist further contracting as market conditions improve. When other demand sources rebound, low-rated contract demand is generally foregone. Given the strength of

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 28

the market, contract demand has not been projected to grow perceptibly during the forecast period.

Latent Demand

In order to quantify unaccommodated demand (or turnaway demand) we analyzed room night statistics for various competitive properties. Based on the market’s typical seasonal and weekly demand patterns, as well as the market orientation of the competitive hotels, we estimate that 2.0% of the market’s commercial demand, 4.0% of its group meeting demand, and 1.0% of its leisure demand is currently unaccommodated. The resulting calculation of unaccommodated room nights is roundly 53,041 rooms, or 145 rooms unaccommodated daily.

As was detailed earlier, a total of 596 weighted rooms (including the partial-year opening of the 100% competitive Wyndham Chicago) will be added to the existing competitive supply of 6,977 rooms by 2002. Based on the number of new rooms entering the market, we estimate the potential demand mix to be attracted to the market based on the market segmentation of 40% commercial, 40% group meeting, and 20% leisure demand, and an assumed stabilized occupancy of 75%. We estimate that, of the new hotels’ accommodated demand, 10% of commercial demand, 20% of group meeting demand, and 15% of leisure demand will be induced. The following chart details our quantification of total induced demand.

Total Induced Demand Calculation

																					Total
		Total Additional			No. of				Market Segment				Estimated				Percentage				Induced
Market Segment		Room Supply			Days				Percentage				Occupancy				Induced				Room Nights
Commercial	(		596	X		365	)	X		40	%	X		75.0	%	X		10.0	%	=		6,500
Group Meeting	(		596	X		365	)	X		40		X		75.0		X		20.0		=		13,000
Leisure	(		596	X		365	)	X		20		X		75.0		X		15.0		=		4,900
Contract	(		596	X		365	)	X		0		X		75.0		X		0.0		=		0
																	Total Induced					24,400

As the increases in supply are forecast to occur over the next few years, the induced demand is phased in. The induced demand projections for each forecast year are based on the ratio of the build up of new rooms per year to the total new supply. The following chart details our induced demand projection.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 29

Induced Demand Forecast

		2000			2001			2002			2003			2004			2005
Phase-in:			24	%		54	%		100	%		100	%		100	%		100	%
Commercial			1,535			3,524			6,500			6,500			6,500			6,500
Group Meeting			3,071			7,048			13,000			13,000			13,000			13,000
Leisure			1,157			2,656			4,900			4,900			4,900			4,900
Contract			0			0			0			0			0			0
	Total		5,763			13,228			24,400			24,400			24,400			24,400

Based on this procedure, we forecast the following average annual compounded market segment growth rates. It should be noted that these growth rates also consider latent demand, both unaccommodated and induced demand.

Forecast of Demand Growth by Segment

	2000			2001			2002			2003			2004			2005
Commercial		2.0	%		1.0	%		1.0	%		1.0	%		1.0	%		1.0	%
Group Meeting		1.0			(6.0	)		3.0			2.5			2.5			2.5
Leisure		1.0			1.0			1.0			1.0			1.0			1.0
Contract		0.0			0.0			0.0			0.0			0.0			0.0
Weighted Average*		2.2	%		(1.4	)%		3.8	%		1.7	%		1.7	%		1.7	%
*Includes latent demand

Forecast of Marketwide Occupancy

The forecast of marketwide occupancy is based on a forecast of marketwide demand and supply. Based on our market research and discussions with hotel operators, we have estimated the year-end 2000 occupancy rates of the subject’s competitors. The 1999 areawide estimate of room night demand, by market segment, forms the historical base demand. To the segmented demand based, we have applied annual growth factors that were derived from the most relevant economic and demographic data previously analyzed. In the following table, total demand is then divided by the forecast of market supply, rendering an overall estimate of areawide occupancy. Thus, the forecast of marketwide occupancy is calculated as follows.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 30

Forecast of Marketwide Occupancy

	Historical			2000			2001			2002			2003			2004			2005
Commercial
Growth Rate		—			2.0	%		1.0	%		1.0	%		1.0	%		1.0	%		1.0	%
Accommodated Demand		582,977			594,636			600,582			606,588			612,654			618,781			624,969
Latent Demand					4,344			10,036			18,632			18,753			18,876			18,999
Group Meeting
Growth Rate		—			1.0	%		(6.0)	%		3.0	%		2.5	%		2.5	%		2.5	%
Accommodated Demand		964,705			974,352			915,891			943,368			966,952			991,126			1,015,904
Latent Demand					12,277			26,909			50,735			51,678			52,645			53,636
Leisure
Growth Rate		—			1.0	%		1.0	%		1.0	%		1.0	%		1.0	%		1.0	%
Accommodated Demand		279,322			282,115			284,936			287,785			290,663			293,570			296,506
Latent Demand					1,823			4,201			7,778			7,807			7,836			7,865
Contract
Growth Rate		—			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Accommodated Demand		68,595			68,595			68,595			68,595			68,595			68,595			68,595
Latent Demand					0			0			0			0			0			0
Totals
Commercial		582,977			598,980			610,618			625,220			631,407			637,657			643,968
Group Meeting		964,705			986,629			942,800			994,103			1,018,630			1,043,771			1,069,540
Leisure		279,322			283,938			289,137			295,563			298,470			301,406			304,371
Contract		68,595			68,595			68,595			68,595			68,595			68,595			68,595
TOTAL DEMAND		1,895,598			1,938,142			1,911,150			1,983,481			2,017,102			2,051,429			2,086,474
Annual Forecasted Growth		—			2.2	%		(1.4)	%		3.8	%		1.7	%		1.7	%		1.7	%
Existing Supply		6,977			7,088			7,088			7,088			7,088			7,088			7,088
Park Hyatt					30 1			51			51			51			51			51
Hotel Sofitel					0			0 2			208			208			208			208
Le Maridien					0			65			78 3			78			78			78
Peninsula Hotel					0			20			34 4			34			34			34
Embassy Suites					0			76			114			114 5			114			114
Available Rooms/Night		6,977			7,117			7,299			7,572			7,572			7,572			7,572
Nights per Year		365			365			365			365			365			365			365
TOTAL SUPPLY		2,546,465			2,597,816			2,664,314			2,763,853			2,763,853			2,763,853			2,763,853
Overall Supply Growth		—			2.0	%		2.6	%		3.7	%		0.0	%		0.0	%		0.0	%
MARKETWIDE OCCUPANCY		74.4	%		74.6	%		71.7	%		71.8	%		73.0	%		74.2	%		75.5	%

1    June 2000 opening of the 25% competitive 203-unit Park Hyatt

2    January 2001 opening of the 50% competitive 415-unit Sofitel Hotel

3    March 2001 opening of the 25% competitive 313-unit Le Meridien

4    June 2001 opening of the 10% competitive 340-unit Peninsula Hotel

5    May 2001 opening of the 25% competitive 456-unit Embassy Suites

The marketwide occupancy rate is expected to decrease as the rate of new supply entering the market in 2000, 2001, and 2202 and is expected to

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 31

	exceed the projected rate of demand growth; marketwide occupancy is forecast to decrease to the low-70% range over this period. As the new room supply is absorbed, marketwide demand is forecast to eventually recover to the low- to mid-70% range by the end of our projection.
Occupancy and Average Rate Analysis	In the following section of this report, we set forth a basis for forecasting occupancy and average rate. Occupancy and average rate attainment, to some degree, may be manipulated by management. For example, a management philosophy may focus on cutting rates in order to maximize volume. In the following forecast, we have projected what we expect to be the most optimal mix of occupancy and average rate attainment based on market conditions, representing an operating approach that we believe would be followed by professional management. Occupancy results are highly dependent upon the pricing strategy employed by management. In the case of a more aggressive pricing strategy, a lower occupancy ratio may result, and vice versa.
	Occupancy Projection - Penetration Factor Analysis

In order to prepare a forecast of occupancy for the subject property, we have reviewed the historical penetration factors for the subject property and its competitors, by segment, for 1999. The following chart summarizes these data.

1999 Penetration Factors by Segment

Property	Commercial			Group Meeting			Leisure			Contract			Overall
The Westin Michigan Avenue		96.4	%		83.9	%		79.8	%		388.0	%		97.9	%
Chicago Marriott Downtown		103.5			114.7			108.0			0.0			106.1
The Drake Hotel		125.8			66.5			164.1			0.0			96.7
Hotel Inter-Continental		99.6			120.4			69.3			0.0			102.1
Radisson Hotel & Suites		122.3			73.9			182.3			148.5			107.5
Crowne Plaza Allerton		72.1			58.1			150.4			0.0			73.9
Wyndham Chicago		82.6			99.8			57.4			0.0			84.6
Secondary Competition		98.2			109.0			84.5			137.5			103.1

In 1999, the subject property accommodated roundly 98% of its fair share of market demand, a slight increase from the 94% penetration in 1998. Nevertheless, The Westin has a low commercial penetration due to its distance from The Loop relative to most of its competition. Additionally, the subject property is underserved in terms of meeting space for a property of its room inventory. Consequently, the subject property

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 32

negotiates lower-rated contract demand, which supports the hotel’s occupancy during weak demand periods, but also reduces the overall average rate.

The secondarily competitive market had an overall penetration of 103.1%, characterized by above-market penetration of the group meeting and contract segments.

In preparing our forecast of the subject property’s occupancy, we have considered management’s historical rooms statistics as well as their budget for 2000. Reflecting both the improvements in the quality of the guestroom product resulting from the ongoing renovation as well as rising competitive pressure, the subject property’s penetration of the commercial segment is forecast to decline to 90% in 2000, increase to 100% in 2001, and stabilize at 105% in 2002. The decline in 2000, is based largely on year-to-date statistics, as the property was undergoing renovations at the time of inspection. With the increase in The Westin’s capacity to hold self-contained meetings in the enhanced meeting space, we forecast an increase in the hotel’s penetration level from 84.0% in 1999, to 85.0% in 2000 and 95.0% in 2001 and thereafter. We forecast the subject property’s leisure penetration to increase to 90% by 2002, up from 79.8% in 1999. Per the plan by management, contract demand is forecast to decrease over the next couple of years. Given the completion of the renovations, we expect the hotel will decrease its base of contract demand, effectively reducing its penetration level to 275.0% in 2001, before decreasing to a stabilized level of 210.0% in 2002.

Based on these projections and the subject property’s recent results and analyzed market mix, the following chart sets forth the forecast of the subject property’s occupancy.

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 33

Forecast of the Subject Property’s Occupancy

	Historical			2000			2001			2002			2003			2004			2005			2006
Commercial
Demand		582,977			598,980			610,618			625,220			631,407			637,657			643,968			650,343
Penetration Factor		96.4	%		90.0	%		100.0	%		105.0	%		105.0	%		105.0	%		105.0	%		105.0	%
Capture		60,468			56,883			62,823			65,109			65,753			66,404			67,061			67,725
Group Meeting
Demand		964,705			986,629			942,800			994,103			1,018,630			1,043,771			1,069,540			1,095,954
Penetration Factor		83.9	%		85.0	%		95.0	%		95.0	%		95.0	%		95.0	%		95.0	%		95.0	%
Capture		87,107			88,491			92,149			93,664			95,975			98,344			100,772			103,260
Leisure
Demand		279,322			283,938			289,137			295,563			298,470			301,406			304,371			307,366
Penetration Factor		79.8	%		75.0	%		85.0	%		90.0	%		90.0	%		90.0	%		90.0	%		90.0	%
Capture		23,980			22,470			25,285			26,382			26,642			26,904			27,168			27,436
Contract
Demand		68,595			68,595			68,595			68,595			68,595			68,595			68,595			68,595
Penetration Factor		388.0	%		388.0	%		275.0	%		210.0	%		210.0	%		210.0	%		210.0	%		210.0	%
Capture		28,648			28,081			19,408			14,287			14,287			14,287			14,287			14,287
Total Capture		200,202			195,925			199,665			199,442			202,656			205,938			209,288			212,708
Available Room Nights		274,115			274,115			274,115			274,115			274,115			274,115			274,115			274,115
Occupancy		73.0	%		71.5	%		72.8	%		72.8	%		73.9	%		75.1	%		76.4	%		77.6	%
Rounded		73	%		71	%		73	%		73	%		74	%		75	%		76	%		78	%
Fiscalized					72			73			74			75			76			77			78
Overall Penetration
Fair Share		10.8	%		10.6	%		10.3	%		9.9	%		9.9	%		9.9	%		9.9	%		9.9	%
Market Share		10.6			10.1			10.4			10.1			10.0			10.0			10.0			10.0
Overall Penetration		98.1			95.8			101.5			101.4			101.3			101.2			101.1			101.1
Market Mix
Commercial		30	%		29	%		31	%		33	%		32	%		32	%		32	%		32	%
Group Meeting		44			45			46			47			47			48			48			49
Leisure		12			11			13			13			13			13			13			13
Contract		14			14			10			7			7			7			7			7
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

For purposes of this analysis, we have utilized 2002/03 as the stabilized year, with an occupancy rate of 74% and an overall penetration level of 101.4%. The stabilized occupancy is intended to reflect the anticipated results of the property over its remaining economic life, given any and all changes in the life cycle of the hotel. Thus, the stabilized occupancy

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 34

excludes from consideration any abnormal relationship between supply and demand, as well as any nonrecurring conditions that may result in unusually high or low occupancies above this stabilized level. We believe it equally possible for additional new competition and temporary economic downturns to force occupancy below this selected point of stability.

Average Rate Analysis

Using The Westin Michigan Avenue – Chicago’s actual average rates (historical 1999 average rates, similar to our occupancy analysis) as a starting point, we have applied a forecasted growth rate to each segment’s rate. It is important to note that room rate inflation does not necessarily conform to the underlying monetary inflation rate. Lodging facilities are typically most influenced by market conditions indicated by the relationship between supply and demand. As reviewed earlier, the subject’s competitive lodging market indicated an average rate increase of 2.3% in 1999.

The subject property’s average rate declined by 2.5% in 1999. However, the subject property is expecting to end 2000 with an average rate 10.0% higher than the 1999 level. Based on year-to-date data, management expects to achieve an year end-2000 average rate of $171.46. Year-to-date through June 2000 the subject property’s average rate is 7.9%, higher than the rate achieved during the same period last year.

In this appraisal, we have applied a base underlying inflation rate of 3.0% in all years of our projection. As mentioned throughout this narrative, the renovations just completed are expected to have a positive and direct impact upon average rates as well as occupancy. However, this is tempered by increased competitive pressures in the market. For the commercial segment, we have forecast rate growth of 8.0% in 2000, 4.5% in 2001, and tapering to a stabilized 3.0% in 2001. Similarly, we have forecast group meeting segment rate growth of 14.0% in 2000 and 3.5% in 2001, before stabilizing at 3.0% in 2002. These rates of growth are deemed to be supportable, given the extent of the anticipated renovation program and year-to-date 2000 performance. We have forecast 8.0% rate growth for the leisure segment in 2000, before stabilizing at 3.0% in 2001 and thereafter. Contract crew demand is projected to increase by 2.5% in 2000 and 3.0% thereafter, reflecting contracted rates

The following table illustrates the methodology we have used for projecting the subject property’s average rate. In the table, various growth

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 35

rates are applied to the segmented average rate levels. The segmented average rates are then multiplied by the number of room nights projected for each segment. An overall forecast of rooms revenue results, from which an overall average rate may be calculated.

Forecast of Average Rate by Market Segment

Segmented ADR Growth Rates
Commercial		N/A		8.0	%		4.5	%		3.0	%		3.0	%		3.0	%
Group Meeting		N/A		14.0			3.5			3.0			3.0			3.0
Leisure		N/A		8.0			3.0			3.0			3.0			3.0
Contract		N/A		2.5			3.0			3.0			3.0			3.0
Segmented ADR
Commercial	$	188.56	$	203.64		$	212.81		$	219.19		$	225.77		$	232.54
Group Meeting		157.20		179.21			185.48			191.04			196.78			202.68
Leisure		133.25		143.91			148.23			152.67			157.25			161.97
Contract		101.94		104.49			107.62			110.85			114.18			117.60
Segmented Rooms Captured
Commercial		60,468		56,883			62,823			65,109			65,753			66,404
Group Meeting		87,107		88,491			92,149			93,664			95,975			98,344
Leisure		23,980		22,470			25,285			26,382			26,642			26,904
Contract		28,648		28,081			19,408			14,287			14,287			14,287
Total		200,202		195,925			199,665			199,442			202,656			205,938
Segmented Rooms Revenue (000s)
Commercial	$	11,402	$	11,584		$	13,369		$	14,271		$	14,845		$	15,442
Group Meeting		13,693		15,858			17,092			17,894			18,886			19,932
Leisure		3,195		3,234			3,748			4,028			4,190			4,358
Contract		2,920		2,934			2,089			1,584			1,631			1,680
Total	$	31,211	$	33,610		$	36,298		$	37,777		$	39,551		$	41,412
Imputed ADR	$	155.90	$	171.55		$	181.79		$	189.41		$	195.16		$	201.09
Overall Growth		N/A		10.0	%		6.0	%		4.2	%		3.0	%		3.0	%

Fiscal Year:		2000/01		2001/02		2002/03		2003/04
Average Rate	$	178.40	$	186.89	$	193.26	$	199.12
Expressed in Base-Year Dollars	$	169.81	$	172.71	$	173.40	$	173.46

For purposes of this analysis, we have used 2002/03 as the stabilized year. The stabilized average daily rate deflated to 1999 dollars equates to $173.40.

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 36

This average rate, compared with the 1999 result of $155.90, indicates a real increase in average rate through the stabilized year. Due to the anticipated change in market mix, the overall rate growth of 6.0% projected in 2000, is higher than the individual segmented rate growth projections. We are forecasting the subject property will displace contract demand for higher rated commercial, group meeting and leisure demand.

The following chart summarizes our forecast of occupancy and average rate for the subject property through the stabilized year.

Forecast of Occupancy and Average Rate

	2000/01			2001/02			Stabilized
Occupancy		72.0	%		73.0	%		74.0	%
Average Rate	$	178.40		$	186.89		$	193.26

Highest and Best Use	The highest and best use of the subject site both as if vacant and as improved continues to be as a transient lodging facility.
Approaches to Value	Consistent with the prior appraisal, the value estimate relies primarily on the income approach, with secondary consideration of the sales comparison approach. As in our prior appraisal, we were unable to reach a reliable value conclusion via the cost approach.
Income Capitalization Approach	The income capitalization approach is based on the principle that the value of a property is indicated by its net return, or what is known as the present worth of future benefits. The future benefits of income-producing properties, such as hotels, are the net income before debt service and depreciation (as estimated by a forecast of income and expense) and any anticipated reversionary proceeds from a sale. These future benefits can be converted into an indication of market value through a mortgage-equity capitalization process and discounted cash flow analysis. The overall rates derived from our valuation are also reviewed as a valuation cross check.
	Because the subject property is an existing hotel, its historical income and expense experience can serve as a basis for projections. The 10-year forecast of income and expense was prepared based on hotel operating statements (actual revenue and expenses) for the years 1998 and 1999, as well as year-to-date statements through June for 1999 and 2000 and results for the trailing 12 months through June 2000; the statements are unaudited. The following charts present these historical operating

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 37

statements. In addition, revenue and expense forecasts are based on our interview with the property’s general manager and a review of the comparable operating statements in our in-house database.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update        38

Historical Operating Performance - Westin Michigan Avenue

Year:		1999		1998
Total Rooms:		751		745
Occupied Rooms:		199,924		193,020
Occupancy:		72.9%		71.0%
Average Rate:	$	155.90	$	159.91

				$ (000s)		% of Gross			PAR 1		POR 2		$ (000s)		% of Gross			PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms			$	31,168		68.4	%	$	41,502	$	155.90	$	30,866		66.8	%	$	41,428	$	159.91
	Food				8,508		18.7			11,329		42.56		9,304		20.1			12,488		48.20
	Beverage				1,573		3.5			2,095		7.87		1,840		4.0			2,470		9.53
	Telephone				1,468		3.2			1,955		7.34		1,513		3.3			2,030		7.84
	Garage				1,055		2.3			1,405		5.28		1,131		2.4			1,517		5.86
	Business Center				48		0.1			64		0.24		73		0.2			98		0.38
	Other Income				1,717		3.8			2,286		8.59		1,474		3.2			1,978		7.63
		Total			45,537		100.0			60,636		227.77		46,199		100.0			62,009		239.35
DEPARTMENTAL EXPENSES*
	Rooms				7,208		23.1			9,597		36.05		7,279		23.6			9,770		37.71
	Food & Beverage				8,551		84.8			11,386		42.77		8,443		75.8			11,332		43.74
	Telephone				398		27.1			530		1.99		405		26.8			544		2.10
	Garage				432		40.9			575		2.16		432		38.2			580		2.24
	Business Center				36		75.4			48		0.18		43		59.4			58		0.22
	Other Income				296		17.2			394		1.48		355		24.1			476		1.84
		Total			16,921		37.2			22,531		84.64		16,957		36.7			22,760		87.85
DEPARTMENTAL INCOME					28,617		62.8			38,105		143.14		29,242		63.3			39,249		151.50
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General				2,990		6.6			3,981		14.95		3,178		6.9			4,265		16.46
	Management Fee				1,594		3.5			2,122		7.97		998		2.2			1,340		5.17
	Marketing				3,315		7.3			4,415		16.58		3,045		6.6			4,088		15.78
	Property Oper. & Maint				1,678		3.7			2,234		8.39		1,774		3.8			2,381		9.19
	Energy				959		2.1			1,278		4.80		1,089		2.4			1,462		5.64
		Total			10,536		23.2			14,030		52.70		10,085		21.9			13,536		52.25
HOUSE PROFIT					18,080		39.6			24,075		90.44		19,157		41.4			25,713		99.25
FIXED EXPENSES
	Property Taxes				3,756		8.2			5,001		18.79		3,380		7.3			4,537		17.51
	Insurance				426		0.9			567		2.13		428		0.9			574		2.22
	Reserve for Replacement				1,821		4.0			2,425		9.11		1,848		4.0			2,480		9.57
	Equipment & Other Rent				286		0.6			380		1.43		284		0.6			382		1.47
	Incentive Management Fee				2,045		4.5			2,724		10.23		1,190		2.6			1,597		6.16
		Total			8,334		18.2			11,098		41.69		7,130		15.4			9,570		36.94
			NET INCOME	$	9,746		21.4	%	$	12,977	$	48.75	$	12,027		26.0	%	$	16,143	$	62.31
	Food to Rooms						27.3	%								30.1	%
	Beverage to Food						18.5									19.8
	F&B to Rooms						32.3									36.1
	Telephone to Rooms						4.7									4.9
	Garage to Rooms						3.4									3.7
	Business Center to Rooms						0.2									0.2
	Other Income to Rooms						5.5									4.8

* Departmental expenses expressed as a percentage of departmental revenues

¹ Per Available Room

² Per Occupied Room

HVS International, San Francisco, California The Westin Michigan Avenue —Chicago Appraisal Update 39

Historical Operating Performance - Westin Michigan Avenue (continued)

Period:	YTD June 2000			YTD June 1999
Total Rooms:		751		751
Occupied Rooms:		87,692		91,929
Occupancy:		64.2	%	67.6	%
Average Rate:		$167.63		$155.34

				$ (000s)		% of Gross			PAR 1		POR 2		$ (000s)		% of Gross			PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms			$	14,699		70.5	%	$	19,573	$	167.63	$	14,280		67.4	%	$	19,015	$	155.34
	Food				3,644		17.5			4,852		41.56		4,153		19.6			5,530		45.17
	Beverage				493		2.4			656		5.62		821		3.9			1,093		8.93
	Telephone				587		2.8			781		6.69		695		3.3			925		7.56
	Garage				457		2.2			608		5.21		450		2.1			599		4.89
	Business Center				15		0.1			20		0.17		23		0.1			31		0.25
	Other Income				946		4.5			1,260		10.79		759		3.6			1,011		8.26
		Total			20,841		100.0			27,750		237.66		21,181		100.0			28,203		230.40
DEPARTMENTAL EXPENSES*
	Rooms				3,682		25.0			4,902		41.98		3,568		25.0			4,752		38.82
	Food & Beverage				3,614		87.4			4,813		41.22		4,296		86.4			5,720		46.73
	Telephone				183		31.1			243		2.08		213		30.7			284		2.32
	Garage				251		54.9			334		2.86		211		46.8			281		2.29
	Business Center				16		109.2			21		0.18		19		79.9			25		0.20
	Other Income				76		8.0			101		0.87		143		18.8			191		1.56
		Total			7,821		37.5			10,415		89.19		8,450		39.9			11,251		91.92
DEPARTMENTAL INCOME					13,019		62.5			17,336		148.46		12,731		60.1			16,952		138.49
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General				1,409		6.8			1,876		16.07		1,604		7.6			2,136		17.45
	Management Fee				729		3.5			971		8.32		741		3.5			987		8.06
	Marketing				1,346		6.5			1,793		15.35		1,589		7.5			2,116		17.29
	Property Oper. & Maint				908		4.4			1,209		10.35		849		4.0			1,130		9.23
	Energy				415		2.0			552		4.73		434		2.0			578		4.72
		Total			4,807		23.2			6,401		54.82		5,217		24.6			6,947		56.75
HOUSE PROFIT					8,212		39.3			10,935		93.64		7,514		35.5			10,005		81.74
FIXED EXPENSES
	Property Taxes				1,964		9.4			2,615		22.39		1,896		8.9			2,524		20.62
	Insurance				172		0.8			229		1.96		207		1.0			276		2.25
	Reserve for Replacement				0		0.0			0		0.00		0		0.0			0		0.00
	Equipment & Other Rent				148		0.7			197		1.68		139		0.7			185		1.51
	Incentive Management Fee				0		0.0			0		0.00		668		3.2			889		7.27
		Total			2,283		10.9			3,040		26.04		2,910		13.8			3,874		31.65
			NET INCOME	$	5,929		28.4	%	$	7,895	$	67.60	$	4,604		21.7	%	$	6,131	$	50.09
	Food to Rooms						24.8	%								29.1	%
	Beverage to Food						13.5									19.8
	F&B to Rooms						28.1									34.8
	Telephone to Rooms						4.0									4.9
	Garage to Rooms						3.1									3.1
	Business Center to Rooms						0.1									0.2
	Other Income to Rooms						6.4									5.3

[Additional columns below]

[Continued from above table, first column(s) repeated]

				Trailing 12 Months - June 2000
				751
				195,687
				71.4		%
				$161.42
				$ (000s)			% of Gross			PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms			$	31,587			69.9	%	$	42,060	$	161.42
	Food				8,000			17.7			10,652		40.88
	Beverage				1,245			2.8			1,658		6.36
	Telephone				1,360			3.0			1,811		6.95
	Garage				1,062			2.4			1,414		5.43
	Business Center				39			0.1			52		0.20
	Other Income				1,904			4.2			2,535		9.73
		Total			45,197			100.1			60,183		230.97
DEPARTMENTAL EXPENSES*
	Rooms				7,321			23.2			9,748		37.41
	Food & Beverage				7,870			85.1			10,479		40.22
	Telephone				367			27.0			489		1.88
	Garage				472			44.4			628		2.41
	Business Center				34			85.4			45		0.17
	Other Income				229			12.0			305		1.17
		Total			16,292			36.0			21,694		83.26
DEPARTMENTAL INCOME					28,905			64.1			38,488		38,488.37
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General				2,794			6.2			3,721		14.28
	Management Fee				1,582			3.5			2,106		8.08
	Marketing				3,072			6.8			4,091		15.70
	Property Oper. & Maint				1,737			3.8			2,313		8.88
	Energy				940			2.1			1,252		4.81
		Total			10,126			22.4			13,483		51.75
HOUSE PROFIT					18,779			41.7			25,005		95.96
FIXED EXPENSES
	Property Taxes				3,824			8.5			5,092		19.54
	Insurance				391			0.9			521		2.00
	Reserve for Replacement				1,821			4.0			2,425		9.31
	Equipment & Other Rent				294			0.7			392		1.50
	Incentive Management Fee				1,377			3.0			1,834		7.04
		Total			7,708			17.1			10,264		39.39
			NET INCOME	$	11,071			24.6	%	$	14,741	$	56.57
	Food to Rooms							25.3	%
	Beverage to Food							15.6
	F&B to Rooms							29.3
	Telephone to Rooms							4.3
	Garage to Rooms							3.4
	Business Center to Rooms							0.1
	Other Income to Rooms							6.0

* Departmental expenses expressed as a percentage of departmental revenues

¹ Per Available Room

² Per Occupied Room

Premise of Forecast

The forecast of income and expense is intended to reflect the appraisers’ subjective estimate of how a typical buyer would project the subject property’s future operating results. Depending on the dynamics of the

HVS International, San Francisco, California The Westin Michigan Avenue—Chicago Appraisal Update 40

local market, a typical buyer’s projection may be adjusted upward or downward. We have attempted to consider these factors in formulating this forecast.

HVS International uses a fixed and variable component model to project a lodging facility’s revenue and expense levels. This model is based on the premise that hotel revenues and expenses have fixed expense components and those that vary directly with occupancy and facility usage. A projection can be made by taking a known level of revenue or expense and calculating its fixed and variable components. The fixed component is then held constant except for inflationary increases, while the variable component is adjusted for the percent change between the projected occupancy and facility usage and that which produced the known level of revenue or expense.

Revenues

In developing the forecast of revenues for the subject property, we have relied on the subject property’s historical operating performance. The following our any significant changes in our projections from our previous appraisal.

• Rooms revenue is projected based on the occupancy and average rate forecasts presented previously. Occupancy is forecast to stabilize at 74% and average rate is forecast to stabilize at $193.26 in the third projection year;

• The subject property’s food and beverage revenue was previously generated by one restaurant and lounge, a coffee stand, room service and the hotel’s meeting and banquet space where catering charges are generated. However, as of June 2000, the subject property’s restaurant has been leased, with lease income added to the other income category. The following table summarizes the allocation of the subject property’s food and beverage revenue.

HVS International, San Francisco, California The Westin Michigan Avenue—Chicago Appraisal Update 41

Food and Beverage Revenue

	Total Year		Chelsea Restaurant		Non Restaurant		Revenue Per
	1999		& Bar		Revenue		Occupied Room
Food Revenue	$	8,508,389	$	901,031	$	7,607,358	$	38.05
Beverage Revenue		1,573,225		531,533		1,041,692		5.21

	Year-to-date		Chelsea		Non Restaurant		Revenue Per
	June 2000		Restaurant & Bar		Revenue		Occupied Room
Food Revenue	$	3,644,193	$	257,209	$	3,386,984	$	38.62
Beverage Revenue		492,581		105,929		386,652		4.41

	Year-to-date		Chelsea		Non Restaurant		Revenue Per
	June 1999		Restaurant & Bar		Revenue		Occupied Room
Food Revenue	$	4,152,689	$	452,769	$	3,699,920	$	40.25
Beverage Revenue		820,853		264,254		556,599		6.05

	Trailing Twelve		Chelsea		Non Restaurant		Revenue Per
	Months		Restaurant & Bar		Revenue		Occupied Room
Food Revenue	$	7,999,893	$	705,471	$	7,294,422	$	37.28
Beverage Revenue		1,244,953		373,208		871,745		4.45

• We have utilized the food and beverage revenue excluding the restaurant for the trailing-twelve-month period ended June 2000, as the basis for our food and beverage revenue forecast. In 2001/00, the first projection year, the food revenue equates $38.11 per occupied room, or 21.4% of rooms revenue. The beverage revenue equates to $4.95 per occupied room, or 13.0% of food revenue.

• Other income for the subject property includes revenues generated by in-room movies, vending machines, the gift shop, lease income and other miscellaneous sources. The base rental income from the Grill on the Alley, which opened in June 2000, equates to $18,000 per month. As such, other income is forecast at 5.7% of rooms revenue in the stabilized year of operations. Based on the base and percentage rent terms of the letter of intent, the proposed restaurant’s sales must exceed $3.6 million annually (6.0% of sales) to exceed the base rent during the initial 10-year term. The Chelsea Restaurant and Bar, which closed in June 2000, achieved annual sales of $1.4 million in 1999 and $1.6 million in 1999, considerably

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 42

lower than the break-even point of the percentage rent trigger. Based on these considerations and reflecting conservatism, our restaurant rent forecast is based on the minimum base rent over the period.

Expenses

Similar to our revenue forecasts, our expense forecasts are based on the subject property’s historical operating performance. The following are the significant changes in our projections from our previous appraisal.

• The subject property’s rooms department expense equated to 23.1% of departmental revenue in 1999. Rooms expense is forecast at 22.8% of departmental revenue in the first projection year, decreasing to 21.9% of departmental revenue in the third projection year, as occupancy and rooms revenue are forecast to gradually increase in the near future.

• Food and beverage expense equated to 84.8% of departmental revenue in 1999. However, the Chelsea Restaurant was the least profitable of the various food and beverage components at the subject property. As the Grill on The Alley is a leased restaurant, its revenues and expenses are not included in the food and beverage department. As such, we have projected food and beverage expense at 74.6% of departmental revenue in the third projection year. The relatively high departmental profitability forecast is attributed to the subject’s anticipated mixture of group meeting and banquet demand, traditionally higher-margin business than restaurant sales.

• In addition to the 3.5% base fee, Westin Hotel Company receives an incentive fee equal to 20.0% of net operating cash flow. The net operating cash flow is calculated by deducting the management fee, property taxes, insurance equipment leases, and capital reserve or actual capital expenditures from the house profit. A synopsis of the hotel management agreement was included in the addenda of our prior report. Note that the incentive management fees for the first projection year reflect subtracted capital/reserve for replacement as budgeted by subject property management. In 2001/02 and thereafter, we have subtracted from the reserve for replacement amounts indicated previously. This procedure was repeated for the remaining years in the projection.

HVS International, San Francisco, California The Westin Michigan Avenue Chicago Appraisal Update 43

• As previously mentioned, a reserve for replacement has been forecast at 4.0% of total revenue each year, in line with industry norms.

Overall profitability of the subject property is projected to remain between 25.6% and 27.1% throughout the projection period.

The following chart details our 10-year forecast of income and expense for the subject property, the first year beginning September 6, 2000 and ending September 5, 2001.

Ten-Year Forecast of Income and Expense, Westin Michigan Avenue - Chicago

Fiscal Year:	2000/01					2001/02					2002/03					2003/04					2004/05
Number of Rooms:	751					751					751					751					751
Occupied Rooms:	197,363					200,104					202,845					202,845					202,845
Occupancy:	72.0%					73.0%					74.0%					74.0%					74.0%
Average Rate:	$178.40					$186.89					$193.26					$199.06					$205.03
			% of					% of					% of					% of					% of
	$ (000s)		Gross			$ (000s)		Gross			$ (000s)		Gross			$ (000s)		Gross			$ (000s)		Gross
DEPARTMENTAL REVENUE
Rooms	$	35,210		72.9	%	$	37,397		73.4	%	$	39,202		73.4	%	$	40,378		73.4	%	$	41,589		73.4	%
Food		7,522		15.6			7,828		15.3			8,146		15.3			8,390		15.3			8,642		15.3
Beverage		976		2.0			1,016		2.0			1,057		2.0			1,089		2.0			1,121		2.0
Telephone		1,350		2.8			1,408		2.8			1,468		2.8			1,512		2.8			1,557		2.8
Garage		1,105		2.3			1,143		2.2			1,182		2.2			1,217		2.2			1,254		2.2
Business Center		50		0.1			52		0.1			54		0.1			55		0.1			57		0.1
Other Income		2,094		4.3			2,166		4.2			2,240		4.2			2,307		4.2			2,376		4.2
Total		48,307		100.0			51,010		100.0			53,349		100.0			54,948		100.0			56,596		100.0
DEPT. EXPENSES*
Rooms		8,017		22.8			8,303		22.2			8,599		21.9			8,857		21.9			9,123		21.9
Food & Beverage		6,408		75.4			6,631		75.0			6,861		74.6			7,067		74.6			7,279		74.6
Telephone		381		28.2			394		28.0			408		27.8			420		27.8			433		27.8
Garage		494		44.7			510		44.6			526		44.5			542		44.5			558		44.5
Business Center		40		80.0			41		78.8			43		79.6			44		80.0			45		78.9
Other Income		252		12.0			260		12.0			268		12.0			276		12.0			284		12.0
Total		15,592		32.3			16,139		31.6			16,705		31.3			17,206		31.3			17,722		31.3
DEPT. INCOME		32,715		67.7			34,871		68.4			36,644		68.7			37,742		68.7			38,874		68.7
UNDISTRIBUTED OPER. EXPENSES
Admin. & General		3,206		6.6			3,328		6.5			3,445		6.5			3,548		6.5			3,654		6.5
Management Fee		1,691		3.5			1,785		3.5			1,867		3.5			1,923		3.5			1,981		3.5
Marketing		3,378		7.0			3,506		6.9			3,629		6.8			3,738		6.8			3,850		6.8
Franchise Fees		0		0.0			0		0.0			0		0.0			0		0.0			0		0.0
PO & M		1,790		3.7			1,858		3.6			1,924		3.6			1,981		3.6			2,041		3.6
Energy		1,019		2.1			1,052		2.1			1,085		2.0			1,118		2.0			1,152		2.0
Total		11,084		22.9			11,529		22.6			11,950		22.4			12,308		22.4			12,678		22.4
HOUSE PROFIT		21,631		44.8			23,342		45.8			24,694		46.3			25,434		46.3			26,196		46.3
FIXED EXPENSES
Property Taxes		3,947		8.2			4,066		8.0			4,188		7.9			4,313		7.8			4,443		7.9
Insurance		448		0.9			461		0.9			475		0.9			489		0.9			504		0.9
Reserve for Repl.		1,932		4.0			2,040		4.0			2,134		4.0			2,198		4.0			2,264		4.0
Equipment & Other Rent		300		0.6			309		0.6			318		0.6			328		0.6			338		0.6
Incentive Management		1,783		3.7			2,936		5.8			3,142		5.9			3,237		5.9			3,333		5.9
Total		8,410		17.4			9,812		19.3			10,257		19.3			10,565		19.2			10,882		19.3
NET INCOME	$	13,221		27.4	%	$	13,530		26.5	%	$	14,437		27.0	%	$	14,869		27.1	%	$	15,314		27.0	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

Fiscal Year:	2005/06					2006/07					2007/08					2008/09					2009/10
Number of Rooms:	751					751					751					751					751
Occupied Rooms:	202,845					202,845					202,845					202,845					202,845
Occupancy:	74.0%					74.0%					74.0%					74.0%					74.0%
Average Rate:	$211.18					$217.52					$224.04					$230.76					$237.69
			% of					% of					% of					% of					% of
	$ (000s)		Gross			$ (000s)		Gross			$ (000s)		Gross			$ (000s)		Gross			$ (000s)		Gross
DEPARTMENTAL REVENUE
Rooms	$	42,837		73.4	%	$	44,122		73.4	%	$	45,446		73.4	%	$	46,809		73.4	%	$	48,213		73.4	%
Food		8,901		15.3			9,168		15.3			9,443		15.3			9,727		15.3			10,018		15.3
Beverage		1,155		2.0			1,190		2.0			1,225		2.0			1,262		2.0			1,300		2.0
Telephone		1,604		2.8			1,652		2.8			1,702		2.8			1,753		2.8			1,805		2.8
Garage		1,292		2.2			1,330		2.2			1,370		2.2			1,411		2.2			1,454		2.2
Business Center		59		0.1			60		0.1			62		0.1			64		0.1			66		0.1
Other Income		2,447		4.2			2,521		4.2			2,596		4.2			2,674		4.2			2,755		4.2
Total		58,295		100.0			60,043		100.0			61,844		100.0			63,700		100.0			65,611		100.0
DEPT. EXPENSES*
Rooms		9,396		21.9			9,678		21.9			9,968		21.9			10,267		21.9			10,576		21.9
Food & Beverage		7,497		74.6			7,722		74.6			7,954		74.6			8,193		74.6			8,438		74.6
Telephone		446		27.8			459		27.8			473		27.8			487		27.8			502		27.8
Garage		575		44.5			592		44.5			610		44.5			628		44.5			647		44.5
Business Center		46		78.0			48		80.0			49		79.0			51		79.7			52		78.8
Other Income		293		12.0			302		12.0			311		12.0			320		12.0			330		12.0
Total		18,253		31.3			18,801		31.3			19,365		31.3			19,946		31.3			20,545		31.3
DEPT. INCOME		40,042		68.7			41,242		68.7			42,479		68.7			43,754		68.7			45,066		68.7
UNDISTRIBUTED OPER. EXPENSES
Admin. & General		3,764		6.5			3,877		6.5			3,993		6.5			4,113		6.5			4,237		6.5
Management Fee		2,040		3.5			2,102		3.5			2,165		3.5			2,230		3.5			2,296		3.5
Marketing		3,966		6.8			4,084		6.8			4,207		6.8			4,333		6.8			4,463		6.8
Franchise Fees		0		0.0			0		0.0			0		0.0			0		0.0			0		0.0
PO & M		2,102		3.6			2,165		3.6			2,230		3.6			2,297		3.6			2,366		3.6
Energy		1,186		2.0			1,222		2.0			1,258		2.0			1,296		2.0			1,335		2.0
Total		13,058		22.4			13,450		22.4			13,853		22.4			14,269		22.4			14,697		22.4
HOUSE PROFIT		26,984		46.3			27,792		46.3			28,626		46.3			29,485		46.3			30,369		46.3
FIXED EXPENSES
Property Taxes		4,576		7.8			4,713		7.8			4,855		7.9			5,000		7.8			5,150		7.8
Insurance		519		0.9			535		0.9			551		0.9			567		0.9			584		0.9
Reserve for Repl.		2,332		4.0			2,402		4.0			2,474		4.0			2,548		4.0			2,624		4.0
Equipment & Other Rent		348		0.6			358		0.6			369		0.6			380		0.6			392		0.6
Incentive Management		3,434		5.9			3,536		5.9			3,642		5.9			3,752		5.9			3,865		5.9
Total		11,209		19.2			11,544		19.2			11,891		19.3			12,247		19.2			12,615		19.2
NET INCOME	$	15,775		27.1	%	$	16,248		27.1	%	$	16,735		27.0	%	$	17,238		27.1	%	$	17,754		27.1	%

* Departmental expenses expressed as a percentage of departmental revenues

HVS International, San Francisco, California The Westin Michigan Avenue—Chicago Appraisal Update 45

Income Capitalization

The projected net operating income was converted to a value estimate using the Simultaneous Valuation Formula,³ a 10-year mortgage-equity discounted cash flow analysis. The conversion of a property’s forecasted net income into an estimate of value is based on the premise that investors typically purchase real estate with a small amount of equity cash (25% to 40%) and a large amount of mortgage financing (60% to 75%).

Other investment parameters used by the appraisers in the income capitalization approach include an overall capitalization rate and total property yield, or “free and clear” discount rate. A terminal capitalization rate is utilized to calculate the property’s reversionary sales proceeds at the end of the assumed 10-year holding period in the discounted cash flow analysis.

Since our prior appraisal, the availability of capital for hotel transactions has lessened and the underwriting and terms of debt financing have become more restrictive. We find today that lenders will lend at loan-to-value ratios between 60% and 70% and corresponding mortgage rates between 250 and 400 basis points over the yield on U.S. treasury notes. The current 10-year treasury note yield is 5.68%, indicating an interest rate range from 8.18% to 9.68%. In the appraisers’ opinion a mortgage rate of 9.0% and a 65% loan-to-value ratio is appropriate for the subject property.

The following chart summarizes the investment parameters that were used in the valuation:

³ Suzanne R. Mellen. “Simultaneous Valuation: A New Technique.” Appraisal Journal. April, 1983.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 46

Income Approach Parameters

Stabilized Year:	3
Inflation:	3%
Loan/Value:	65%
Amortization:	25
Term:	10
Int.Rate:	9.0%
Terminal Cap Rate:	10.5%
Broker Comm.%:	3.0%
Equity Yield:	19.0%
Mortgage Constant:	0.100704
Fp:	0.152011

Valuation of Mortgage and Equity Components

The valuation of the mortgage and equity components is accomplished through use of an algebraic equation that calculates the exact amount of debt and equity that the hotel will be able to support based on the anticipated cash flow and the specific return requirements demanded by the mortgage lender (interest rate) and the equity investor (equity yield). The sum of the equity and mortgage components equals $129,007,000, or roundly $129,000,000. Using the variables summarized above, and following the deduction of $4,400,000 in capital expenditures it is our opinion that the market value of the fee simple and leased fee interests in the subject property via the income capitalization approach, as of September 1, 2000, is $123,591,000, or say, $124,600,000.

Proof of Value

The value is mathematically proven by calculating the yields to the mortgage and equity components during the projection period. If the mortgagee achieves a 9.0% yield and the equity yield is 19.0% then the preceding value conclusion via the income capitalization approach is correct.

The annual debt service is calculated by multiplying the mortgage component by the mortgage constant.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 47

Mortgage Component (65%)		$	83,854,000
Equity Component (35%)			45,152,000
	Total	$	129,007,000
Mortgage Component		$	83,854,000
Mortgage Constant			0.100704
	Annual Debt Service	$	8,444,397

The 11-year forecast of net income and 10-year forecast of net income to equity are presented in the following table.

11-Year Forecast of Net Income and 10-Year Forecast of Net Income to Equity

	2000/01			2001/02			2002/03			2003/04			2004/05			2005/06
Occupancy		72	%		73	%		74	%		74	%		74	%		74	%
Average Rate	$	178.40		$	186.89		$	193.26		$	199.06		$	205.03		$	211.18
Net Income Before Debt Service	$	13,221		$	13,530		$	14,437		$	14,869		$	15,314		$	15,775
Less: Debt Service		8,444			8,444			8,444			8,444			8,444			8,444
Net Income to Equity	$	4,777		$	5,086		$	5,993		$	6,425		$	6,870		$	7,331
Debt Coverage Ratio		1.57			1.60			1.71			1.76			1.81			1.87
Cash-on-Cash Return		10.6	%		11.3	%		13.3	%		14.2	%		15.2	%		16.2	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	2006/07			2007/08			2008/09			2009/10			2010/11
Occupancy		74	%		74	%		74	%		74	%		74	%
Average Rate	$	217.52		$	224.04		$	230.76		$	237.69		$	244.82
Net Income Before Debt Service	$	16,248		$	16,735		$	17,238		$	17,754		$	18,288
Less: Debt Service		8,444			8,444			8,444			8,444
Net Income to Equity	$	7,804		$	8,291		$	8,794		$	9,310
Debt Coverage Ratio		1.92			1.98			2.04			2.10
Cash-on-Cash Return		17.3	%		18.4	%		19.5	%		20.6	%

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 49

The debt coverage ratio and cash-on-cash return calculated in the first projection year are both considered acceptable and attractive returns in the current market. The net proceeds to equity upon sale of the property are determined by deducting sales expenses (brokerage and legal fees) and the outstanding mortgage balance.

The equity residual at the end of the 10th year is calculated by deducting brokerage and legal fees and the mortgage balance from the reversionary value. The reversionary value is calculated as the 11th year’s net income capitalized by the terminal capitalization rate. The calculation is shown as follows.

Reversionary Value ($18,288,000 /0.1050)			$	174,171,000
Less:
	Brokerage and Legal Fees			5,225,000
	Mortgage Balance			69,380,000
		Net Sale Proceeds to Equity	$	99,566,000

The overall property yield (before debt service), the yield to the lender, and the yield to the equity position have been calculated by computer with the following results.

Overall Property Yields

			Projected Yield
			(Internal Rate of Return)
Position	Value		Over 10-Year Holding Period
Total Property	$	129,007,000		13.3	%
Mortgage		83,854,000		8.9	*
Equity		45,152,000		19.0

* Whereas the mortgage constant and value are calculated on the basis of monthly mortgage payments, the yield in this proof assumes single annual payments. As a result, the proof’s derived yield is slightly less than that actually input.

Based on the subject property’s improvements in a strong urban locale, recent renovations, the strong local and regional economies, as well as stable market conditions, we believe that these internal rates of return are reasonable. The discounted cash flow procedure substantiating the yield to each position is presented as follows.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 50

Total Property Yield

	Net Income before					Present Worth of $1			Discounted
Year	Debt Service					Factor @ 13.3%			Cash Flow
2000/01	$	13,221,000			x		0.882696	=	$	11,670,000
2001/02		13,530,000			x		0.779153	=		10,542,000
2002/03		14,437,000			x		0.687755	=		9,929,000
2003/04		14,869,000			x		0.607079	=		9,027,000
2004/05		15,314,000			x		0.535867	=		8,206,000
2005/06		15,775,000			x		0.473007	=		7,462,000
2006/07		16,248,000			x		0.417522	=		6,784,000
2007/08		16,735,000			x		0.368545	=		6,168,000
2008/09		17,238,000			x		0.325313	=		5,608,000
2009/10		186,700,000	*		x		0.287153	=		53,611,000
						Total Property Value			$	129,007,000
*10th year net income of				$17,754,000		plus sales proceeds of			$	168,946,000

Mortgage Component Yield

	Total Annual					Present Worth of $1			Discounted
Year	Debt Service					Factor @ 8.9%			Cash Flow
2000/01	$	8,444,000			x		0.918021	=	$	7,752,000
2001/02		8,444,000			x		0.842762	=		7,116,000
2002/03		8,444,000			x		0.773673	=		6,533,000
2003/04		8,444,000			x		0.710248	=		5,997,000
2004/05		8,444,000			x		0.652023	=		5,506,000
2005/06		8,444,000			x		0.598570	=		5,054,000
2006/07		8,444,000			x		0.549500	=		4,640,000
2007/08		8,444,000			x		0.504452	=		4,260,000
2008/09		8,444,000			x		0.463098	=		3,910,000
2009/10		77,825,000	*		x		0.425133	=		33,086,000
						Value Of Mortgage Component			$	83,854,000
*10th year debt service of				$8,444,000		plus outstanding mortgage balance			$	69,380,000

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 51

Equity Component Yield

	Net Income					Present Worth of $1			Discounted
Year	to Equity					Factor @ 19.0%			Cash Flow
2000/01	$	4,777,000			x		0.840331	=	$	4,014,000
2001/02		5,086,000			x		0.706157	=		3,592,000
2002/03		5,993,000			x		0.593406	=		3,556,000
2003/04		6,425,000			x		0.498657	=		3,204,000
2004/05		6,870,000			x		0.419037	=		2,879,000
2005/06		7,331,000			x		0.352130	=		2,581,000
2006/07		7,804,000			x		0.295906	=		2,309,000
2007/08		8,291,000			x		0.248659	=		2,062,000
2008/09		8,794,000			x		0.208956	=		1,838,000
2009/10		108,876,000	*		x		0.175592	=		19,118,000
		Value of Equity Component							$	45,153,000
*10th year net income to equity				$9,310,000		plus sales proceeds of			$	99,566,000

Investor Surveys - We have also reviewed three recent investor surveys: Korpacz Real Estate Investor Survey for the third quarter of 1999; CB Richard Ellis’ National Investor Survey for the fourth quarter of 1999; and the CRE/RERC Real Estate Report for the second quarter of 2000. The measured yields and other parameters vary from survey to survey, but include equity yield rates (alternately known as “leveraged” yield rates), discount rates (alternately known as “free and clear” equity internal rates of return), and terminal capitalization rates (alternately known as “exit” or “reversion” capitalization rates). The following chart summarizes the range of equity yield, total property yield, and terminal capitalization rates indicated by the hotel sales and the investor surveys for full-service hotels. The averages for each survey are listed directly underneath the ranges.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 52

Summary of Investor Parameters

	Equity Yield Rate		Discount Rate		Terminal Rate		Overall Rate
Source	Average		Average		Average		Average
HVS/Hotel Sales		0.6% - 38.5%		5.4% - 20.9%	NR			6.0% - 17.3%
Average *		18.50%		12.70%				9.60%
Korpacz Survey				9.0% - 16.0%		8.0% - 12.0%		8.0% - 13.0%
Full-Service Hotels -	NR			13.10%		10.60%		10.22%
3rd Quarter, 1999
CB Richard Ellis National Investor Survey
Class A Hotels-	NR			12.0% - 14.%0		8.5% - 12.5%		8.5% - 11.0%
4th Quarter, 1999				13.00%		10.83%		9.83%
CRE/RERC Real Estate Report	NR			13.0% - 18.0%		11.0% - 12.5%		10.0% - 11.5%
All Hotels -				14.10%		11.40%		10.60%
2nd Quarter, 2000

NR = Not reported by Survey
*	Average overall rate is based on projected first year’s net income

Discount Rate

Among the sets of surveys, discount rates range from 5.4% to 20.9%, with survey averages between 12.7% and 14.1%. The assumed debt and equity rates of return result in a discount rate of 13.3% for the subject property. This is an appropriate discount rate for the full-service, first-class, subject hotel operating in a strong regional economy.

Overall Capitalization Rates

The following chart shows how overall capitalization rates for the subject property have been derived based on our estimate of market value via the income capitalization approach. Note that in the following chart, the historical net income has been adjusted to reflect management fees and reserves consistent with the premise of the forecast. Also, the stabilized year’s net income has been deflated to first-year dollars.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 53

Overall Capitalization Rates

	Net Operating		Overall
Year	Income		Capitalization Rate
1999 Historical	$	9,746,000		7.6	%
2000/01 Forecast		13,221,000		10.2
Deflated Stabilized		13,608,000		10.5
2000 Dollars

Based on the quality of the subject property, its location and competitive environment, and all factors having an impact on the economic viability of the project, we believe that these rates are reasonable.

Income Conclusion

Utilizing the income capitalization approach, the subject property was valued by estimating the present worth of future net income before debt service and depreciation for a 10-year period. Projections were prepared through an analysis of historical income, an analysis of the subject’s competitive environment, and comparisons with comparable operations. To convert the forecasted income stream into an estimate of value, the net income was allocated to mortgage and equity components based on market rates of return and loan-to-value ratios. The sum of the mortgage and equity components equated to an “as is” value of $124,600,000 assuming that the $4,400,000 capital improvement plan is completed. Thus, our estimate of the market value of the fee simple and leased fee interest in the subject property, as of September 1, 2000, via the income capitalization approach is rounded to $124,600,000, or $165,900 per room.

Sales Comparison
Approach The sales comparison approach also used the same methodology as in the prior appraisal. Sales transactions of full-service hotels in Chicago have been researched, and the unadjusted sales prices for the five sales presented in our prior appraisal ranged from roundly $131,700 to $215,000 per room. One additional relevant sale has taken place in downtown Chicago since the prior appraisal. The details are presented as follows:

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 54

Property:	Chicago Marriott Downtown
Location:	Chicago, Illinois
Number of Rooms:	1,172
Date of Sale:	January 2000
Grantor:	Morgan Stanley Dean Witter & John Buck Co.
Grantee:	LaSalle Hotel Properties/The Carlyle Group
Sales Price:	$175,000,000
Price per Room:	$149,317
Estimated 1999 RevPAR:	$135.00
Interest Conveyed:	Fee simple
Terms:	Not disclosed
Confirmation:	LaSalle Hotel Properties
Comments:	This high-rise, 1,172-room, full-service hotel is centrally located on Michigan Avenue, on the city block bounded by Ohio, Grand Streets and Rush Streets and Michigan Avenue, approximately two miles north of the subject property. A $40-million renovation was completed in May 1999, and included lobby redesign, new hard- and soft-goods, and public-area and meeting-room renovations. The hotel site is part of the North Bridge project being developed by Morgan Stanley Dean Witter and John Buck Company. The Carlyle Group contributed 90% of the equity, and LaSalle contributed the remaining 10%. Marriott International continues to manage the hotel. This hotel is considered a primary competitor of the subject property.
This sale falls within the range presented in our prior appraisal.

Cost Approach No significant changes have occurred since the prior appraisal that would render this approach more applicable.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 55

Reconciliation	The reconciliation, which is the last step in the appraisal process, involves summarizing and correlating the data and procedures employed throughout the analysis. The final value conclusion is arrived at after reviewing the estimates indicated by the cost, sales comparison, and income capitalization approaches. The relative significance, applicability, and defensibility of each indicated value are considered, and the greatest weight is given to that approach deemed most appropriate for the property being appraised. The purpose of this report is to update the estimated market value of the fee simple interest in the subject property that was provided in our previous appraisal, dated March 8, 1999. Our prior appraisal yielded an estimated market value of the fee simple interest in the subject property of roundly $100,900,000, as of February 1, 1999, which reflected $16,600,000 in capital deductions. Our appraisal update involves a careful analysis of the property itself and the economic, demographic, political, physical, and environmental factors that influence real estate values.
	Our experience indicates that the procedures used in estimating market value by the income capitalization approach are comparable to those employed by the hotel investors who constitute the marketplace. For this reason, and based on the changes in the subject’s lodging market since the prior appraisal, we believe that the income capitalization approach produces the most supportable value estimate, and it is given the greatest weight in our final estimate of the subject property’s market value.
Value Conclusion	Based on the available data, our analysis, and our experience in the hotel industry, it is our opinion that the market value of the fee simple and leased fee interests in the 751-unit subject property described in this report, as of September 6, 2000, the day the subject property was inspected, is:
	$124,600,000
	ONE HUNDRED TWENTY-FOUR MILLION SIX HUNDRED THOUSAND DOLLARS
	The “as is” value takes into account a capital deduction of approximately $4,400,000 in order to complete the 1999/00 renovation program currently underway. This deduction is intended to reflect the actions of a prudent investor in the subject property, and is necessary to achieve the projections set forth in this appraisal report. This estimate reflects the value of the property “as is,” after the deduction of the cost of renovation.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Appraisal Update 56

“As is” market value estimates the market value of a property in the condition observed upon inspection and as it physically and legally exists without hypothetical conditions, assumptions, or qualifications as of the date of inspection.

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Addenda

Addenda

Engagement Letter

HVS International, San Francisco, California The Westin Michigan Avenue — Chicago Qualifications

Qualifications

Namit Malhotra
Elaine Sahlins
Suzanne R. Mellen, CRE, MAI

HVS International, San Francisco, California Qualifications of Namit Malhotra

Namit Malhotra

Employment 2000 to present	HVS INTERNATIONAL San Francisco, California Assisstant Vice President
1997 to 2000	HVS INTERNATIONAL Vancouver, British Columbia Vice President
1993 to 1996	WEDGEWOOD HOTEL Vancouver, British Columbia
1991 to 1993	AL KHALEEJ PALACE HOTEL Dubai, UAE
1990 to 1991	HOLIDAY INN - YALE New Haven, Connecticut
Professional Affiliations	Member of ETA SIGMA DELTA      International Hospitality Management Society
Education	University of New Haven - New Haven, CT      Hotel and Restaurant Management
	B.S. - University of British Columbia, Vancouver, BC
	Urban Land Economics

HVS International, San Francisco, California Qualifications of Namit Malhotra

Corporate and Institutional Clients Served	Acorn Homes Archon Financial, L.P. Bankers Trust Company
	Bank of America
	Bass Hotels and Resorts
	Best Western International
	Canadian Pacific Hotels
	Canad Centre Inc.
	Capital Co. of America
	Centennial Hotels Limited
	CNL Real Estate Advisors, Inc.
	Continental Wingate Capital
	Donaldson, Lufkin & Jenrette
	GE Capital Corporation
	Goddard & Smith
	GMAC Commercial Mortgage Corp.
	Greenwich Capital Markets, Inc.
	Hilton International
	Hongkong Bank of Canada
	Hospitality Inns Inc.
	Lake Windermere Resort
	Langshire Hotel Limited
	Larco Enterprises Inc.
	Lehman Brothers
	Marathon Developments Inc.
	MayFair Properties Inc.
	McCarthy Tetrault
	Ocwen Capital Corporation
	Pacrim Developments Inc.
	Park Georgia Group
	Patriot American
	R.C.I.F. Group
	Royop Hospitality
	Shelter Canadian Properties Ltd.
	Starwood Financial Trust
	Suburban Capital Markets Inc.
	Three Sisters Resort
	Trilogy Developments

HVS International, San Francisco, California Qualifications of Namit Malhotra

PARTIAL LIST OF HOTELS AND MOTELS APPRAISED OR EVALUATED
BY NAMIT MALHOTRA

ALBERTA
Proposed Full-Service, Calgary	NEWFOUNDLAND
Holiday Inn Airport, Calgary
Proposed Best Western, Calgary	Proposed Super 8, Bay Roberts
Proposed Hotel, Calgary
Proposed Super 8, Calgary South	QUEBEC
Proposed Super 8 - Calgary
Proposed Wingate Inn, Calgary	Inter-Continental, Montreal
Sheraton Suites Eau Claire, Calgary
Hampton Inn & Suites, Calgary Radisson, Calgary	Saskatchewan
Proposed All-Suite Hotel, Canmore	Proposed Wingate Inn, Saskatoon
Proposed Residence Inn, Canmore	Radisson, Saskatoon
Proposed Convention Centre, Canmore
Proposed Marriott Resort, Canmore	UNITED STATES
Proposed 60-Unit Hotel, Drumheller
Sheraton Grand Edmonton, Edmonton	The Clarion Suites, Anchorage, AK
Coast Terrace Inn, Edmonton	Quality Inn, Tuba City, AZ
Proposed Super 8, Fort McMurray	Embassy Suites, Brea, CA
Best Western Kananaskis Inn, Kananaskis	Sheraton, Newport Beach, CA
Proposed Travelodge, Stoney Plain	Proposed Hawthorn Suites, Novato, CA Embassy Suites, Santa Ana, CA
BRITISH COLUMBIA Proposed Super 8, Coquitlam	Hilton Garden Inn, Milpitas, CA Candlewood Suites, Milpitas, CA Best Western, Yuba City, CA
Proposed Ltd. Service, Coquitlam	BW Cantebury Inn & Suites, Coralville, IA
Proposed Super 8, Fort St. John	Valley River Inn, Eugene, OR
Proposed Hotel, Invermere	Holiday Inn Express, Peducha, KY
Proposed Wingate Inn, Langley	Doubletree Guest Suites, Plymoth Meeting, PA
Proposed Hotel, Langley	Holiday Inn Express, Nashville, TN
Proposed Hotel, Quesnel	Hampton Inn, Houston, TX
Proposed Four Points Hotel, Richmond	Proposed Hotel, Addison, TX
Proposed Hilton Hotel, Richmond	Hampton Inn Airport, SeaTac, WA
Proposed Strata-Title, Sun Peaks	Proposed Courtyard, Seattle, WA
Proposed Holiday Inn, Surrey	Proposed Comfort Inn, Tacoma, WA
Proposed Convention Centre Hotel, Vancouver	Residence Inn, Tukwila, WA
Proposed Full-Service Resort, Westbank	Four Seasons Inn, Wenatchee, WA
Proposed Hyatt Hotel, Whistler	WestCoast Wenatchee Center, Wenatchee, WA
Proposed Inter-Continental, Vancouver	Holiday Inn - SeaTac, SeaTac, WA
Proposed Hilton, Vancouver	Wyndham Garden Inn, Brookfield, WI
Proposed Limited Service ,Victoria
ONTARIO
Cambridge Suites, Toronto
Radisson Don Valley, Toronto
Proposed Wingate, Ottawa
MANITOBA
Proposed Casino Hotel, Winnipeg

HVS International, San Francisco, California Qualifications of Elaine Sahlins

Elaine Sahlins

Employment 1997 to present	HVS INTERNATIONAL San Francisco, California Director (Hotel-Motel Valuations, Market Studies)
1989 to 1997	BANK OF AMERICA San Francisco, California Review Appraiser (Hotel-Motel, Casino, and Commercial Real Estate Valuations, Appraisal Management)
1987 to 1989	VMS REALTY PARTNERS Chicago, Illinois Senior Acquisition Analyst (Hotel-Resort Market Studies, Due Diligence, Operation Studies, Investment Analysis)
1984 to 1985	JUDSON HOTELS New York, New York Credit/Collection Manager/Paymaster (Credit Policies and Procedures, Payroll Administration)
1983 to 1984	PIERRE HOTEL New York, New York Guest History Supervisor (Marketing and MIS Administration)
Professional Affiliations	Certified General Real Estate Appraiser - States of California and Nevada
Education	AB - Barnard College, Columbia University
	MPS - School of Hotel Administration, Cornell University
	Professional Coursework - Appraisal Institute

 

HVS International, San Francisco, California Qualifications of Elaine Sahlins

PARTIAL LIST OF HOTELS, MOTELS AND CASINOS APPRAISED OR EVALUATED
BY ELAINE SAHLINS

ALASKA

Cusack’s Ramada Inn, Anchorage
Hawthorne Suites, Anchorage
Westmark Hotel, Anchorage
Best Western Bidarka inn, Homer

ARIZONA

Best Western, Flagstaff
E-Z Metro Center, Phoenix
Scottsdale Princess Resort, Scottsdale

CALIFORNIA

Renaissance Hotel, Beverly Hills
Embassy Suites, Brea
Embassy Suites, Emeryville
Cambell Inn, Campbell
Hilton Garden Inn, Campbell
Pruneyard, Campbell
Carlsbad Inn Hotel, Carlsbad
Carmel Mission Inn, Carmel
Carmel Valley Ranch, Carmel
Highlands Inn, Carmel
Pine Inn Hotel & Retail, Carmel
Doubletree Hotel, Cathedral City
The Trees Inn, Concord
Proposed Hilton Garden Inn, Corte Madera
Red Lion Hotel, Costa Mesa
Singing Hills Ranch, El Cajon
Best Western, El Toro
Days inn Emeryville, Emeryville
Holiday Inn, Foster City
Blackstone Plaza Inn, Fresno
Chateau Inn, Fresno
Piccadilly Inn Airport, Fresno
Piccadilly Inn Shaw, Fresno
Piccadilly Inn University, Fresno
Proposed Motel 6, Gilroy
Days Inn-LAX, Inglewood
Hyatt Hotel, La Jolla
Scripps Inn, La Jolla
Marriott Rancho Las Palmas, Las Palmas
Springtown Motel, Livermore
West Coast Hotel & Marina, Long Beach
Beverly Hills Residence Inn, Los Angeles
Crowne Plaza-LAX
Hilton-LAX, Los Angeles
Holiday inn, Marina Del Rey
Marriott, Marina Del Rey
Stanford Park Hotel, Menlo Park

Candlewood Hotel, Milpitas
Hilton Garden Inn Hotel, Milpitas
Larkspur/Hilton Garden, Milpitas
Monterey Plaza Hotel, Monterey
Jack London Inn, Oakland
Resort at Squaw Creek, Olympic Valley
Proposed Hotel, Pacifica
Stanford Park Hotel, Palo Alto
Stanford Terrace Inn, Palo Alto
Hacienda Hotel, Patterson
Proposed Hotel, Pinole
Embassy Suites, Pleasant Hill
Candlewood Hotel, Pleasanton
Pleasanton Hilton Hotel, Pleasanton
Sierra Suites, Pleasanton
Summerfield Suites, Pleasanton
Holiday Inn, Rancho Bernardo
Comfort Inn Rancho Cordova, Rancho Cordova
Hallmark Suites Hotel, Rancho Cordova
Westin Mission Hills, Rancho Mirage
Microtel Inn & Suites, Redding
Hotel & Convention Center, Prop., Roseville
Hyatt Regency Hotel, Sacramento
Candlewood Hotel, Sacramento
Prop. Candlewood Hotel, Sacramento
Hilton Garden Inn, Sacramento
Bay Club Hotel & Marina, San Diego
Carmel Highland Doubletree, San Diego
Comfort Suites, San Diego
Holiday Inn Miramar, San Diego
Pacific Terrace Inn, San Diego
Radisson Suite Hotel, San Diego
The Clift Hotel, San Francisco
Comfort Inn by the Bay, San Francisco
Fairmont Hotel, San Francisco
Hotel Rex, San Francisco
Kensington Park Hotel, San Francisco
Mission/Steuart Hotel, San Francisco
Powell West Hotel, San Francisco
Richilieu Hotel, San Francisco
Sir Francis Drake Hotel, San Francisco
Tuscan Inn, San Francisco
Westin St. Francis Hotel, San Francisco
Radisson Plaza Hotel Airport, San Francisco
San Jose Fairmont, San Jose
Twin Oaks Golf Course, San Marcos
Santa Barbara Club Resort, Santa Barbara
Days Inn Hotel Seaside, Seaside
Holiday Inn, South San Francisco
Embassy Suites, Santa Clara
Sheraton Miramar Hotel, Santa Monica
Ramada Inn Airport North, South San Francisco
Ramada Inn, Retail, Apts., West Hollywood

Microtel Inn & Suites, Willows

COLORADO

Hyatt Regency BeaverCreek, Avon
Old Towne Guesthouse Inn, Colorado Springs
Denver Embassy Suites, Denver
Silvertree Hotel, Snowmass
Wildwood Lodge, Snowmass
Days Inn at Vail, Vail

CONNECTICUT

Stamford Tara Hotel, Stamford

DISTRICT OF COLUMBIA

Comfort Inn, Washington, D.C.

FLORIDA

Boca Raton Hotel and Resort, Boca Raton
Holiday Inn, Ft. Lauderdale
Pier 66 Hotel & Marina, Ft. Lauderdale
Proposed Resort, Key Biscayne
Hyatt Resort, Key West
Howard Johnson Inn, Kissimmee
Knights Inn-Kissimmee, Kissimmee
Ramada Inn-Jacksonville, Jacksonville
Best Western, Orlando
Days Inn, Orlando
Orlando Twin Towers, Orlando
Comfort Inn, Pensacola

HAWAII

Westin Kauai, Kalapaki Beach, Lihue

IDAHO

Resort Development, Coeur d’Alene
Super 8, Coeur d’Alene
Super 8, Lewiston
Motels of America, Lewiston
Super 8, Ponderay

ILLINOIS

Jumers Chateau, Bloomington
Westin Hotel, Chicago
Jumers Continental Inn, Galesburg
Jumers Castle, Peoria

HVS International, San Francisco, California Qualifications of Elaine Sahlins

Doubletree Hotel - North Shore, Skokie
Jumers Castle Lodge, Urbana

INDIANA

Fairfield Inn, Fort Wayne
Four Points Sheraton, Indianapolis
Omni Severin Hotel, Indianapolis

IOWA

Jumers Castle Lodge, Bettendorf

LOUISIANA

Boomtown New Orleans, Harvey
Days Inn, New Orleans

MASSACHUSETTS

Copley Plaza Hotel, Boston
Sheraton Tara Lexington, Lexington
Proposed Sierra Suites Hotel, Waltham

MISSISSIPPI

Boomtown Biloxi, Biloxi
Treasure Bay Hotel & Casino, Biloxi
University Inn, Oxford
Proposed Hotel, Tunica

MISSOURI

RiverFront Station, St. Charles

MONTANA

Sheraton Hotel, Billings
Holiday Inn-Parkside, Missoula

NEW JERSEY

Holiday Inn, Jamesburg

NEVADA

Ormsby House, Carson City
Crystal Park Casino Hotel, Crystal City
Gem Casino, Henderson
Joker’s Wild Casino, Henderson
Tom’s Sunset Casino, Henderson
Aladdin Hotel & Casino, Las Vegas

Boardwalk Hotel & Casino, Las Vegas
Boulder Station, Las Vegas
El Morocco Motel, Las Vegas
Eureka Saloon Casino, Las Vegas
Hacienda Casino Hotel, Las Vegas
La Concha Motel, Las Vegas
MGM Grand, Las Vegas
Monte Carlo Casino Hotel, Las Vegas
New York, New York Hotel & Casino, Las Vegas
Palace Station, Las Vegas
Proposed Sunset Station, Las Vegas
Rio Hotel, Las Vegas
Santa Fe Casino Hotel, Las Vegas
Texas Station, Las Vegas
Peppermill Resort Hotel, Mesquite
Whiskey Pete’s, Primm
Holiday inn, Reno
Proposed Hotel, Sparks
Hobey’s Casino, Sun Valley
Nevada Crossing Casino, Wendover

NEW YORK

Omni Park Central Hotel, New York
Proposed Soho Hotel, New York

OHIO

200-Room Boutique Hotel, Cleveland
Fairfield Inn, Columbus
Holiday Inn-Airport, Columbus

OREGON

Monarch Hotel & Convention Ctr., Clackamas
Proposed Hilton Garden Inn, Corvallis
Candlewood Hotel, Hillsboro
Avalon Hotel, Portland
Sunriver Resort, Portland
Execulodge, Salem
Gateway Motor Inn
Nendels Motor Inn, Springfield

TEXAS

Amarillo Super 8 Motel, Amarillo
The Crescent Hotel, Dallas
Fairmont Hotel, Dallas
Melrose Hotel, Dallas

UTAH

Cavanaugh’s Olympus Hotel, Salt Lake City

VIRGINIA

Holiday Inn, Arlington
Sheraton Inn Coliseum
Richmond Holiday Inn, Richmond

WASHINGTON

Best Western Bellevue Inn, Bellevue
Candlewood Hotel, Bellevue
Residence Inn, Bellevue
Pony Soldier Inn, Chehalis
Homecourt All Suite Hotel, Kent
Alexis Hotel, Seattle
University Plaza Motor, Seattle
West Coast Paramount, Seattle
West Coast Vance Hotel, Seattle
Embassy Suites, Tukwila

WISCONSIN

Holiday Inn-Airport, Milwaukee
Milwaukee Marriott Hotel, Milwaukee

WYOMING

Executive Inn, Evanston
Super 8, Jackson

BRITISH VIRGIN ISLANDS

Little Dix Bay, Virgin Gorda

CANADA

Tritel Hotel “Ramada” Montreal
L’Emerillon Hotel, Quebec City

U.S. VIRGIN ISLANDS

Caneel Bay Resort, St. John
Frenchman’s Reef Resort, St. Thomas
Grand Palazzo Hotel, St. Thomas

EUROPE

Proposed Monte Carlo Resort, Monaco
Proposed Dordogne Resort, France
Hanbury Manor, Great Britain

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Suzanne R. Mellen, CRE, MAI

Employment	HVS INTERNATIONAL
1985 to present	San Francisco, California
	Managing Director
	(Hotel-Motel Valuations, Market Studies, Feasibility Reports, and Investment
	Counseling)
1981 to 1985	HOSPITALITY VALUATION SERVICES
	Mineola, New York
	Director of Consulting and Valuation Services
	(Hotel-Motel Valuations, Market Studies, Feasibility Reports, and Investment
	Counseling)
1980 to 1981	MORGAN GUARANTY TRUST COMPANY
	New York, New York
	Real Estate Appraiser and Consultant
	(Real Estate Investment Valuation and Analysis)
1980	LAVENTHOL & HORWATH
	New York, New York
	Senior Consultant
	(Management Advising Services – Market and Feasibility Studies)
1978 to 1980	HELMSLEY-SPEAR HOSPITALITY SERVICES
	New York, New York
	Senior Consultant
	(Management Advising Services – Market and Feasibility Studies)
1976 to 1978	WESTERN INTERNATIONAL HOTELS
	The Plaza, New York City
	Management Trainee
	(Rooms Operations and Accounting)
1976	HARLEY, LITTLE ASSOCIATES
	Toronto, Canada
	Junior Consultant
	(Food Facilities Design, Market Studies)

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Professional Affiliations	Appraisal Institute – Member (MAI)
	• Board of Directors – San Francisco Bay Area Chapter (1994, 1995)
	• Education Committee Chairperson – Northern California Chapter 11
	• Workshop Committee Chairperson – Northern California Chapter 11
	• Division of Courses – National Committee
	• Continuing Education Committee – New York Committee
	• Director, Real Estate Computer Show – New York Chapter
	American Society of Real Estate Counselors – Member (CRE)
	• Vice Chair – Northern California Chapter (1994, 1995)
	• Chair – Northern California Chapter (1996)
	National Association of Review Appraisers & Mortgage Underwriters (CRA)
	International Society of Hotel Consultants – Member (ISHC)
	Cornell Hotel Society
	San Francisco Board of Realtors
	American Hotel and Motel Association
	California Hotel and Motel Association
	National Trust for Historic Preservation
	Urban Land Institute
Education	BS – School of Hotel Administration, Cornell University
	Liberal Arts Undergraduate Study – Carnegie Mellon University
	Completion of MAI course work – Appraisal Institute
	New York University – School of Continuing Education – Real Estate Division
State Certification	Arizona, California, Colorado, Hawaii, Michigan, Nevada, Utah, Virginia, and
	Washington
Teaching and Lecture	American Institute of Real Estate Appraisers – Approved Instructor -
Assignments	Hotel/Motel Valuations
	California Hotel and Motel Association, 1985 Annual Convention -
	Development Overview
	1995 – Annual Meeting – The Capital Expenditure Requirements
	Citibank, N.A. – Hotel/Motel Valuations
	Cornell University – Real Estate Finance

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Teaching and Lecture	Cornell Center for Professional Development – Hotel Workouts
Assignments (cont’d)	Country Hospitality Conference – Hotel Development Challenges in the Nineties
	Econo-Travel Motor Hotel Corp., Annual Financial Seminar – Hotel Valuation
	Institute of Property Taxation, 1984 Real Estate Symposium – Simultaneous
	Valuation
	National Association of Review Appraisers and Mortgage Underwriters -
	Reviewing a Hotel Appraisal Report 1990
	National Conference of State Tax Judges – Valuation and the Hospitality
	Industry
	Northwest Center for Professional Development – 1986-87 Hotel Development
	Seminars
	Southhampton College – Feasibility Studies and Appraisals
	University of Denver – Hotel/Motel Valuation
	American Bar Association – Property Tax ‘92 – Income Approach
	UCLA Hotel Industry Investment Conference, 1995, 1996
	NYU Hospitality Industry Investment Conference, 1991, 1992, 1993, 1994,
	1995
	Jeffer, Mangels, Butler & Marmaro Forum – Answers to Three of the Most
	Provocative Questions in Hotel Valuation Today
Published Articles
The Appraisal Journal	“Simultaneous Valuation: A New Technique,” April 1983
Appraisal Review & Mortgage	“How to Review a Hotel Appraisal,” November 1989
Underwriting Journal
California Inntouch Magazine	“Value and Proper Use of Feasibility Studies,” December 1990
The Hotel Valuation Journal	“The Future of Full-Service Hotel Development”
	“How Much Should I Pay For the Land?,” January 1996
The HVS Journal	“Strong Rates of Return Driving Hotel Development,” January 1998
	“Hotel Cap Rates and Values – The 1998 Rollercoaster Ride and What Lies
	Ahead,” January 1999
Computer Software
“Simultaneous Capitalization	Software for the capitalization of a variable income stream
Software”
Appearance as an Expert	Superior Court of the State of Arizona, County of Maricopa
Witness	Superior Court of the State of California, City and County of San Francisco
	Superior Court of the State of California, County of Los Angeles (Deposition)
	Superior Court of the State of California, County of San Diego, North
	County
	Branch

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Federal Tax Court, New York, New York

U.S. District Court, Eastern District of Arkansas, Little Rock, Arkansas

U.S. District Court, Central District of California (Deposition)

U.S. District Court, Southern District of California

Federal Bureau of Investigation, New York, New York (Deposition)

U.S. Bankruptcy Court, Northern District of California

U.S. Bankruptcy Court, Eastern District of California

U.S. Bankruptcy Court, Colorado (Deposition)

U.S. Bankruptcy Court, Southern District of Texas, Houston Division

U.S. Bankruptcy Court, Utah, Salt Lake City

U.S. Bankruptcy Court, Southern District of California

American Arbitration Association, Los Angeles

American Arbitration Association, San Francisco

Tax Appeal Board

Los Angeles County, California
Contra Costa County, California
Orange County, California
San Francisco County, California
San Mateo County, California
Utah County, Utah

	Aegon USA Realty Advisors, Inc.
Corporate and Institutional	Aetna Life Insurance Co.
Clients Served	Aetna Real Estate Investment
	Allied Capital Advisors, Inc.
	American Hotels, Inc.
	American Realcorp
	American Savings and Loan
	Amfac Parks & Resorts
	AMRESCO
	Amstart Group, Inc.
	Andrew Daveridge Corp.
	ARCON, Inc.
	Avista
	Bank of America
	Bank Boston
	The Bank of New York
	Bank of Nova Scotia
	Bank of San Francisco
	Bank of the West
	Bankers Trust Company
	Banque Nationale de Paris
	Barclay’s Bank
	The Beacon Companies
	Boykin Management Co.
	Broad, Schultz, Larson & Wineberg
	Burlingame Bank and Trust Comp.
	Buss-Shelger Associates
	C. A. Rickert & Associates
	Caesars World Gaming
	Cala Properties
	California Federal Bank
	California Department
	of Transportation
	CIBC World Markets
	Carlsbad Estate Holding, Inc.
	Carpenters Pension Trust for
	Southern California
	Carroll, Burdick, McDonough
	CASC Corporation
	Case, Knowlson, Mobley, Burnett
	and Luber
	Central Core Corp.
	Champion Development Group
	Chartwell Leisure
	Chase Manhattan Bank
	Chase Real Estate Finance Group
	Chemical Bank
	CIGNA Capital Advisors, Inc.
	Citibank

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Corporate and Institutional	Citicorp Real Estate, Inc.
Clients Served (cont’d)	City and County of San Francisco
	City of Boulder, Colorado
	Cleary, Gottlieb, Steen & Hamilton
	Contra Costa County
	Coast Commercial Bank
	Column Financial, Inc.
	Coopers & Lybrand
	Comerica Bank – California
	Commercial Bank of Korea, Ltd.
	Coudert Brothers
	Credit Lyonnais
	Credit Suisse First Boston
	Cupertino National Bank and Trust
	Dai-Ichi Kangyo Bank, Ltd.
	Daiwa Bank
	Days Inns
	Deutsche Morgan Grenfell
	Disney Development Company
	Dollar Savings and Loan
	Doubletree Inns
	Drury Inns
	Duckor & Spradling
	EDA, U.S. Government
	EPAM Corporation
	Equitable Real Estate Investment
	Management
	E. S. Merriman & Sons
	Estate of James Campbell
	Eureka Bank
	Exchange Bank
	Farmers National Bank
	Fidelity Federal Savings & Loan
	First Boston
	First Federal Savings and Loan
	First Interstate Bank
	First National Bank
	First Security
	Fox Hotel Investors
	Fred Reed & Associates
	Fiji Bank
	GECC Commercial Real Estate
	GMAC Commercial Mortgage Co.
	Geller & Company
	General Electric Capital Company
	Gibraltar Savings and Loan
	Equitable Life Assurance Society
	Gibson, Dunn & Crutcher
	Goldman Sachs
	Graham Taylor Hospitality Group
	Gray, Cary, Ames & Frye
	Gray, Cary, Ware & Freidenrich
	Great Eagle Holdins Limited
	Great Western Bank
	Greenwich Capital Markets
	Greystone
	HMG Lodging Management
	HYPO Securities
	Hardage Suite Hotels
	Hare, Brewer & Kelley, Inc.
	Haruyoshi Kanko K.K.
	Heller, Ehrman, White & McAuliffe
	Heller Real Estate Financial Services
	The Heymann Group, Inc.
	Hibernia Bank
	Hodges Ward Elliott
	Holiday Inns
	Hong Kong Bank
	Hongkong Bank Alliance
	Host Marriott
	Hotel Investors Trust
	Howard Johnson’s
	Hudson Hotels Corporation
	Huntington Bank
	Hyatt Development Corporation
	ITT Sheraton Corporation
	Impac Hotel Group
	Inter-Continental
	International Bank of California
	International Bank of Singapore
	Intracorp Developments, Ltd.
	J.E. Robert Company, Inc.
	J. W. Colachis Company
	Japan Airlines
	Jeffer, Mangels, Butler, & Marmaro
	John B. Coleman & Co.
	John Q. Hammons
	John Hancock Life Insurance
	Key Bank of New York
	Key Corporation

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Kwong Hing Investment Center

Lake County Business Outreach and

    Response Team

Lankford & Associates

Larkspur Hospitality, LLC

Latham & Watkins

Laurence Peters & Co.

Lehman Brothers, Inc.

Leisure Sports, Inc.

Leonard, Street & Deinard

Local Federal Bank, F.S.B

Long Term Credit Bank of

    Japan, Ltd.

Lovitt & Hannan, Inc.

M&M Development Co.

The Maher Company

Marriott Hotels

Mellon Bank

Mercury Savings and Loan

Merril Lynch

Miramar Asset Management, Inc.

Mitsui Trust & Banking Co., Ltd.

The Money Store Commercial

    Mortgage, Inc.

Morgan Guaranty Trust

Morgan Stanley & Co.

Morrison & Foerster

NS Development Co.

Nations Credit Commercial Corp.

Nations Financial Capital Corp.

Network Mortgage Services

Nomura Asset Capital Corp.

Nomura Securities International,

Inc.

Northwinds N.V.

Ny-West Development

Ocean Links Corp.

Octavian, Inc.

O’Neill Hotels & Resorts

ORIX USA Corp.

Orrick, Herrington & Sutcliffe

Outlook Income Fund

OZ Resorts and Entertainment

The Pacific Bank

Pacific Hotel Group

Pacific Union Company

Pannell Kerr Forster

Parabas Bank

Park Plaza International

Patrick M. Nesbitt Associates, Inc.

Patriot American Hospitality

Paul, Hastings, Janofsky & Walker

Peninsula Bank of Commerce

Picadilly Inns

Pillsbury, Madison & Sutro

Presideo Group

Property Capital Trust

Prudential Realty Group

Punjab National Bank

Queen Emma Foundation

R.C. Hedreen Co.

RT Capital Corporation

Radisson Hospitality Worldwide

Ramada Inns

Real Estate Capital Markets

Red Lion Hotels & Inns

The RIM Corp.

Riverboat Delta King, Inc.

S.D. Malkin Properties, Inc.

Sage Hospitality Resources

San Francisco International Airport

San Leandro Development Services

Department

Seafirst Bank

Security Pacific National Bank

Salomon Brothers

Seven Seas Associates, LLC

Shearman & Sterling

Simpson, Thatcher & Bartlett

Société General

Solit Interest Group

Sonoma Valley Bank

Southern California Savings

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Ssang Yong Engineering and

    Construction Company, Limited

Starwood Lodging

Stephen W. Noey & Associates

Stern & Goldberg

Stonebridge Realty Advisors

Strategic Hotel Capital, Inc.

Strategic Realty Advisors, Inc.

Streich Lang

Suburban Capital Markets, Inc.

Sumitomo Bank

Sunriver Resort

Swig Investment Company

TCF Bank

TYBA Group, Inc.

Teachers Insurance and Annuity

    Association

Three Sisters Resorts

Tipton Management

Tokai Bank

Tom Grant, Jr.

Transamerica Realty Services, Inc.

Travelers Insurance Company

The Travelers Companies

Treadway Hotels

Tully & Wezelman, P.C

Union Bank

United Pacific Bank

U.S. Bancorp

U.S. Trust Company

VMS Realty

Villa del Lago Associates

W.R.C. Properties, Inc.

Wailua Associates

Wells Fargo Bank, N.A.

Wells Fargo RETECHS

West Coast Bancorp

West LB

Westin Hotels & Resorts

Windsor Capital Group

Wolf, Rifkin & Shapiro

Woodfin Suites Hotel Co.

Wrather Corp.

Yasuda Trust and Banking Co., Ltd.

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

PARTIAL LIST OF HOTELS AND MOTELS APPRAISED OR EVALUATED
BY SUZANNE R. MELLEN, CRE, MAI

ALABAMA

Fairfield Inn, Birmingham
Ramada Inn, Gadsden
Proposed Hotel, Mobile
Fairfield Inn, Montgomery
Holiday Inn, Montgomery
Howard Johnson’s, Montgomery
Residence Inn, Montgomery

ALASKA

Best Western Barratt Inn, Anchorage
Clarion Suites Hotel, Anchorage
Hawthorne Suites, Anchorage
Hotel Captain Cook, Anchorage
Northern Lights Hotel, Anchorage
Rose Garden Hotel, Anchorage
Sheraton Anchorage Hotel, Anchorage

ARIZONA

Best Western, Flagstaff
Motel 6, Flagstaff
Rodeway Inn, Flagstaff
Woodlands Plaza Hotel, Flagstaff
Bright Angel Lodge, Grand Canyon
El Tovar Hotel, Grand Canyon
Kachina Lodge, Grand Canyon
Maswik Lodge, Grand Canyon
Moqui Lodge, Grand Canyon
Phantom Ranch, Grand Canyon
Thunderbird Lodge, Grand Canyon
Yavapai Lodge, Grand Canyon
Best Western Green Valley, Green Valley
Hampton Inn-Proposed, Holbrook
Rodeway Inn, Kingman
Nautical Inn, Lake Havasu
Best Western Executive Park Hotel, Phoenix
Bobby McGee’s Conglomeration, Phoenix
Caravan Inn, Phoenix
Crescent Hotel, Phoenix
Doubletree Inn, Phoenix
Embassy Suites-Camelback, Phoenix
Embassy Suites-Camelhead, Phoenix
Fountain Suites Hotel, Phoenix
Full-Service Hotel, Proposed, Phoenix
Granada Royale Camelhead, Phoenix
Holiday Inn, Phoenix
Holiday Inn Crowne Plaza, Phoenix
Hyatt Regency, Phoenix
Knights Inn, Phoenix
Omni Adams Hotel, Phoenix
Quality Inn, Phoenix
Courtyard by Marriott, Scottsdale
Doubletree Inn, Scottsdale
Holiday Inn Old Town, Scottsdale
Marriott Camelback Inn, Scottsdale
Phoenician Resort, Scottsdale
Red Lion-La Posada, Scottsdale
Rodeway Inn, Scottsdale
Scottsdale Conference Resort, Scottsdale
Scottsdale Hilton Resort, Scottsdale
Scottsdale Princess, Scottsdale
Proposed Summerfield Suites, Scottsdale
Sunburst Resort Hotel & Conference Center, Scottsdale
L’Auberge de Sedona, Sedona
Los Abrigados, Sedona
Orchard’s Inn & Grill, Sedona
Motel 6, Sierra Vista
Country Suites Hotel, Tempe
Mixed-Use Development, Tuba City
Clarion Tucson, Tucson
Doubletree Inn, Tucson
Loews Ventana Canyon Resort, Tucson
Lodge at Ventana Canyon, Tucson
Marriott Hotel, Prop., & Starr Pass, Tucson
Marriott Resort, Prop., Tucson
Proposed Hotel, Tucson
Proposed Microtel Inn, Tucson
Radisson Suite Hotel, Tucson
Rodeway Inn, Tucson
Westward Look Resort, Tucson
Shilor Inn, Yuma

ARKANSAS

Hilton, Hot Springs
Holiday Inn, Little Rock
Red Carpet Inn, Little Rock

CALIFORNIA

Radisson Hotel, Agoura Hills
Ramada Inn, Agoura Hills
Anaheim Marriott, Anaheim
Anaheim Park Motor Inn, Anaheim
Best Western Anaheim Inn, Anaheim
Best Western Stovall’s Inn, Anaheim
Best Western Pavillions Inn, Anaheim
Boulevard Inn, Anaheim
Carousel Inn and Suites, Anaheim
Disneyland Hotel, Anaheim
Doubletree Hotel, Anaheim
Golden Forest Motel, Anaheim
Hilton Hotel, Anaheim
Holiday Inn, Anaheim
Howard Johnson Hotel, Anaheim
Jolly Roger, Anaheim
Marriott Courtyard, Anaheim
Pan Pacific Hotel, Anaheim
Pitcairn Inn, Anaheim
Ramada Maingate Hotel, Anaheim
Raffles Inn & Suites, Anaheim
Station Inn, Anaheim
TraveLodge Inn at the Park, Anaheim
WestCoast Anaheim Hotel, Anaheim
Proposed Fairfield Suites, Arcadia
Proposed Hilton Garden Inn, Arcadia
Auburn Inn, Auburn
Sleep Inn, Auburn
Ramada, Augora Hills
Allstar Inn, Bakersfield
Clarion Suites, Bakersfield
Economy Inn, Bakersfield (2)
Marriott Courtyard, Bakersfield
Red Lion Hotel, Bakersfield
Residence Inn, Bakersfield
Sheraton Hotel, Bakersfield
Travelodge Hotel, Bakersfield
Hilton Hotel, Baldwin Park
Allstar Inn, Barstow
Economy Inn, Barstow
Holiday Inn Express, Belmont
Proposed Summerfield Suites, Belmont
Summerfield Suites, Belmont
Berkeley Marina Marriott, Berkeley
Shattuck Hotel, Berkeley
Beverly Hills Country Club, Beverly Hills
Beverly Hilton, Beverly Hills
Beverly Wilshire, Beverly Hills
Four Seasons Hotel, Beverly Hills
L’Ermitage, Beverly Hills
Peninsula Beverly Hills, Beverly Hills
Regent Beverly Wilshire Hotel, Beverly Hills
Renaissance Hotel, Beverly Hills
Best Western, Big Bear Lake
Motel 6, Big Bear Lake
Proposed hotel, Big Bear Lake

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Post Ranch Inn, Big Sur
Ventana Inn, Big Sur
Rodeway Inn, Blythe
Embassy Suites Hotel, Brea
Holiday Inn, Brentwood
Hilton Residential Suites, Brisbane
Rancho Santa Barbara Marriott, Buellton
Fairfield Inn, Buena Park
Hampton Inn, Buena Park
Marriott Courtyard, Buena Park
Burbank Airport HIlton, Burbank
Hilton Hotel, Burbank
Ramada Inn, Burbank
Hyatt Regency, Burlingame
Hyatt Regency SFO, Burlingame
Airport Marriott, Burlingame
Radisson Plaza-Proposed, Burlingame
Good Nite Inn, Buttonwillow
Country Inn, Calabassas
Good Nite Inn, Calabassas
Del Norte Inn, Camarillo
Good Nite Inn, Camarillo
Cambria Pines Lodge, Cambria
Best Western Fireside Inn, Cambria
Campbell Inn, Campbell
Hilton Garden Inn, Campbell
Pruneyard Inn, Campbell
Proposed Hotel, Capitola
Allstar Inn, Carlsbad
Carlsbad Inn, Carlsbad
Four Seasons Resort Aviara, Carlsbad
Inn of America, Carlsbad
La Costa Resort and Spa, Carlsbad
Legoland, Carlsbad
Olympic Resort, Carlsbad
Carmel Mission Inn, Carmel
Carmel Valley Ranch, Carmel
Highlands Inn, Carmel
Proposed Hotel, Casa de Fruta
Doubletree Hotel, Cathedral City
Proposed Hotel, Cathedral City
Royce Hotel, Cathedral City
Sheraton Cerritos Towne Center, Cerritos
Sheraton Hotel, Cerritos
Neighborhood Inn-Proposed, Chatsworth
Days Inn, Chico
Holiday Inn, Chico
Proposed Microtel Inn and Suites, Chico
Red Lion Hotel, Chico
Otay Valley Travel Lodge, Chula Vista
Harris Ranch, Coalinga
Howard Johnson’s, Colton
Concord Hilton, Concord
Sheraton Hotel, Concord
Trees Inn, Concord
Motel 6, Corona
Loews Coronado Bay Resort, Coronado
Proposed Hilton Garden Inn, Corte Madera
Ha’Penny Inn, Costa Mesa
Marriott Suites, Costa Mesa
Red Lion Hotel, Costa Mesa
Residence Inn, Costa Mesa
Pacifica Hotel & Conference Center, Culver City
Ramada Inn, Culver City
Hilton Garden Inn, Cupertino
Marriott Courtyard, Cupertino
Ritz-Carlton Laguna Niguel, Dana Point
Proposed Spa, Danville
Furnace Creek Inn, Death Valley
Furnace Creek Resort, Death Valley
Stove Pipe Wells Village, Death Valley
Hilton Hotel, Del Mar
Marriott Resort & Spa, Desert Springs
Days Inn Diamond Bar, Diamond Bar
Best Western, El Toro
Carlos Murphy’s Restaurant, Emeryville
Days Inn, Emeryville
Hardage Suites Hotel Site, Emeryville
Lyon’s Restaurant, Emeryville
Woodfin Suite Hotel, Prop., Emeryville
Woodfin Suite Hotel, Emeryville
Budget Motel, Encinitas
Hilton Garden Inn, Proposed, Escondido
Marriott Tenaya Lodge, Fish Camp
Proposed Hotel, Folsom
All-Suites-Proposed, Foster City
Clubtel-Proposed, Foster City
Holiday Inn, Foster City
Marriott Courtyard, Foster City
Hilton, Fremont
Marriott Courtyard, Fremont
Motel 6, Fremont
Quality Inn, Fremont
Proposed Westin Clubsport, Fremont
Allstar Inn, Fresno (2)
Chateau Inn, Fresno
Economy Inn, Fresno (2)
Hacienda Resort and Conference Center, Fresno
Holiday Inn, Fresno
Marriott Courtyard, Fresno
Picadilly Inns, Fresno (3)
Travelers Inn, Fresno (3)
Sierra Sport and Racquet Club, Fresno
Griswold’s Hotel, Fullerton
Marriott Hotel, Fullerton
Hyatt Regency-Proposed, Goleta
Motel 6, Gilroy
Red Lion Hotel, Glendale
Ocean Colony Resort, Half Moon Bay
Proposed Healdsburg Plaza Hotel, Healdsburg
Hollywood Clarion Roosevelt, Hollywood
Hollywood Palm Hotel, Hollywood
Waterfront Hilton, Huntington Beach
Grand Champions Resort, Indian Wells
Miramonte Resort, Indian Wells
Hilton Orange County Airport, Irvine
Marriott Courtyard, Irvine
Registry Hotel, Irvine
Amador Inn, Jackson
Proposed Hotel, Kern Co.
Lafeyette Park Hotel, Lafeyette
Surf & Sand Hotel, Laguna Beach
Ritz-Carlton Hotel, Laguna Niguel
Hyatt Hotel, La Jolla
Residence Inn, La Jolla
Scripps Inn, La Jolla
Hilton Lodge, Lake Arrowhead
Lake Arrowhead Resort, Lake Arrowhead
Proposed Hotel, Lake Country
Resort at Squaw Creek, Lake Tahoe
Marriott Courtyard, Larkspur
Marriott Rancho Las Palmas, Las Palmas
Proposed 50-Unit Motel, Little Lake
Residence Inn, Livermore
Embassy Suites, Lompoc
Breakers Hotel, Long Beach
Holiday Inn, Long Beach
Holiday Inn - Airport, Long Beach
Hyatt Regency, Long Beach
Marriott Hotel, Long Beach
Residence Inn, Long Beach
West Coast Hotel & Marina, Long Beach
Airport Park Hotel, Los Angeles
Biltmore Hotel, Los Angeles
Checkers Hotel, Los Angeles
Courtyard by Marriott, Los Angeles
Crowne Plaza LAX, Los Angeles
Doubletree Hotel at LAX, Los Angeles
Econolodge-Proposed, Los Angeles

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Embassy Suites, Los Angeles
Four Seasons, Los Angeles
Hilton Hotel & Towers, Los Angeles
Hilton LAX, Los Angeles
Holiday Inn Brentwood/Bel Air, Los Angeles
Holiday Inn-LAX, Los Angeles
Holiday Inn Crowne Plaza-LAX, Los Angeles
Holiday Inn Express-Van Nuys, Los Angeles
Hotel Inter-Continental, Los Angeles
Hotel Sofitel Ma Maison, Los Angeles
Marriott Courtyard-LAX, Los Angeles
New Seoul Hotel, Los Angeles
Playa Vista Development, Los Angeles
Proposed Residence Inn Beverly Hills, Los Angeles
Sofitel Ma Maison, Los Angeles
Westin Bonaventure, Los Angeles
Westmoreland Place, Los Angeles
Hotel & Restaurant, Proposed, Los Gatos
Los Gatos Lodge, Los Gatos
Economy Inns of America Motel, Madera
Courtyard by Marriott , Mira Mesa
Barnabey’s Hotel, Manhattan Beach
Courtyard by Marriott, Marina del Rey
Doubletree Hotel, Marina del Rey
Holiday Inn Express, Marina del Rey
Marina Suites Hotel, Marina del Rey
Marina Beach Hotel, Marina del Rey
Marriott Hotel, Marina del Rey
Hill House, Mendocino
Stanford Park Hotel, Menlo Park
Comfort Inn, Millbrae
Candlewood Hotel, Milpitas
Hilton Garden Inn, Milpitas
Holiday Inn, Milpitas
Holiday Inn, Miramar
Motel Orleans, Modesto
Red Lion Hotel, Modesto
Miramar Resort Hotel, Montecito
Doubletree Fisherman’s Wharf, Monterey
Doubletree Inn, Monterey
Monterey Plaza Hotel, Monterey
Proposed Hotel, Monterey
Sheraton Hotel, Monterey
Inn at Morro Bay, Morro Bay
Proposed Hilton Garden Inn, Mountain View
Proposed Westin ClubSport, Mountain View
Aetna Springs Resort, Proposed, Napa
Best Western Inn, Napa Valley
Clarion Inn, Napa Valley
Inn at Napa Valley, Napa Valley
Sheraton Inn Napa Valley, Napa
Proposed Windmill Inn, Napa Valley
Silverado, Napa Valley
Newark/Fremont Hilton, Newark
Park Inn, Newark
Hyatt Newporter, Newport Beach
Marriott Suites, Newport Beach
Proposed Newport Coast Development, Newport Beach
Newporter Resort Hotel, Newport Beach
Sheraton Hotel, Newport Beach
Shilo Inn, Oakhurst
Holiday Inn Oakland Airport, Oakland
Parc Oakland Hotel, Oakland
Resort at Squaw Creek, Olympic Valley
Clarion Hotel, Ontario
Holiday Inn, Ontario
Red Lion HoteI, Ontario
Residence Inn, Orange
Woodfin Suite Hotel, Orange
Hilton Garden Inn, Proposed, Oxnard
Holiday Inn, Oxnard
Proposed Hotel, Pacifica
Super 8 Motel, Palmdale
Embassy Suite, Palm Desert
Hawthorne Suites, Palm Desert
Canyon Resort Hotel, Palm Springs
Desert Princess, Palm Springs
Hyatt Palm Springs, Palm Springs
Marriott Rancho Las Palma, Palm Springs
Palm Canyon, Palm Springs
Palm Springs Spa Hotel, Palm Springs
Spa Hotel & Mineral Springs, Palm Springs
Wyndham Hotel, Palm Springs
Cardinal Hotel, Palo Alto
Holiday Inn, Palo Alto
Proposed Hotel, Palo Alto
Stanford Park Hotel, Palo Alto
Stanford Terrace Inn, Palo Alto
Ambassador College Hotel, Prop., Pasadena
Holiday Inn Express, Pasadena
Marriott Courtyard, Pasadena
Hacienda Hotel, Patterson
Proposed Hotel and Restaurant, Patterson
Cascade Ranch Lodge, Pescadero
Elks Lodge, Petaluma
Beverly Hills Residence Inn, Pico
Proposed Hotel, Pinole
Best Western Grande Arroyo, Pismo Beach
Proposed Hilton, Pismo Beach
Fairfield Inn, Placentia
AmeriSuites & Homstead Village, Pleasant Hill
Black Angus Restaurant, Pleasant Hill
Embassy Suites, Pleasant Hill
Pleasant Hill Inn, Pleasant Hill
Residence Inn, Pleasant Hill
Savoy Restaurant, Pleasant Hill
Woodfin Suite Hotel, Proposed, Pleasant Hill
Candlewood Hotel, Pleasanton
Hilton Hotel, Pleasanton
Holiday Inn, Pleasanton
Marriott Courtyard, Pleasanton
Pleasanton Hilton Hotel, Pleasanton
Sierra Suites, Pleasanton
Summerfield Suites, Pleasanton
Shilo Inn, Pomona
Country Inn, Port Hueneme
Holiday Inn, Rancho Bernardo
Economy Inn, Rancho Cordova
Hallmark Suites Hotel, Rancho Cordova
Marriott Courtyard, Rancho Cordova
Quality Suites, Rancho Cordova
Marriott’s Rancho Las Palmas, Rancho Mirage
Grand Manor Inn, Redding
Microtel Inn & Suites, Redding
Motel Orleans East, Redding
Motel 6, Redding
Park Terrace, Redding
Red Lion Inn, Redding
Shasta Inn, Redding
Good Nite Inn, Redlands
Sheraton Redondo Beach, Redondo Beach
Hotel Sofitel at Redwood Shores, Redwood City
Carriage Inn, Ridgecrest
Good Nite Inn, Rohnert Park
Ramada Limited Hotel, Rohnert Park
Red Lion Hotel, Rohnert Park
Hilton Gardens Hotel, Roseville
Hotel & Convention Center, Prop., Roseville
Mission Inn, Riverside
Allstar Inn, Sacramento (4)
Arco Arena, Sacramento
Proposed Candlewood Hotel, Sacramento
Candlewood Hotel, Sacramento
Clarion Hotel, Sacramento
Proposed Convention Hotel, Sacramento
Proposed Docks Hotel, Sacramento
Dodge City Motel, Sacramento

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Hilton Garden Inn, Sacramento
Hilton Hotel, Sacramento
Hilton Inn, Sacramento
Holiday Inn, Sacramento
Hyatt Regency, Sacramento
Hyatt Regency at Capitol Park, Sacramento
Marriott Courtyard, Sacramento
Motel Orleans, Sacramento
Peregrine Real Estate Trust, Sacramento
Radisson Hotel, Sacramento
Red Lion Hotel – Sacramento, Sacramento
Red Lion – Sacramento Inn, Sacramento
Residence Inn South Natomas, Sacramento
Riverboat Delta King, Sacramento
Sacramento Hilton, Sacramento
Sacramento Inn, Sacramento
Sierra Inn, Sacramento
Sterling Hotel, Sacramento
Travelers Inn, Sacramento
Proposed Vizcaya Catering Hall, Sacramento
Woodlake Inn, Sacramento
Proposed 60-Unit Hotel, Sacramento
Marriott Courtyard, San Bruno
Best Western Hanalei, San Diego
Best Western Seven Seas Lodge, San Diego
Carmel Highland Doubletree, San Diego
Clarion Bay View, San Diego
Comfort Inn Old Town, San Diego
Proposed Coutryard, San Diego
Doubletree Hotel at Horton Plaza, San Diego
Embassy Suites – La Jolla, San Diego
Executive Lodge, San Diego
Hanalei Hotel, San Diego
Proposed Hilton Garden Inn, San Diego
Holiday Inn, San Diego
Holiday Inn Express Sea World, San Diego
Hotel Del Coronado
Howard Johnson, San Diego
Hyatt Islandia, San Diego
Hyatt Regency, San Diego
Intercontinental Hotel, San Diego
Kings Inn, San Diego
La Jolla Village Inn, San Diego
Marriott Hotel and Marina, San Diego
Marriott Mission Valley, San Diego
Marriott Suites, San Diego
Mission Valley Inn, San Diego
Mission Valley Hilton, San Diego
Radisson Hotel, San Diego
Ramada Limited Suites, San Diego
Rancho Bernardo Inn, San Diego
Red Lion Hotel, San Diego
Residence Inn, San Diego
Renaissance Hotel, Proposed, San Diego
Summer House Inn, San Diego
Sheraton Grand, San Diego
Sheraton Harbor Island East, San Diego
Sheraton Hotel & Marina, San Diego
Super 8 Motel-Point Loma, San Diego
Symphony Towers, San Diego
Town and Country Hotel, San Diego
U.S. Grant Hotel, San Diego
Westin Horton Plaza, San Diego
Wyndham Emerald Hotel, San Diego
ANA Hotel, San Francisco
Bellevue Hotel, San Francisco
Campton Place, San Francisco
Cartwright Hotel, San Francisco
Chancellor Hotel, San Francisco
The Clift Hotel, San Francisco
Comfort Inn by the Bay, San Francisco
Donatello Hotel, San Francisco
Embarcadero Inn, San Francisco
Excipio San Francisco, San Francisco
Fairmont Hotel, San Francisco
Four Seasons Clift, San Francisco
Grand Hyatt, San Francisco
Griffon Hotel, San Francisco
Harbor Court Hotel, San Francisco
Proposed Hilton Garden Inn, San Francisco
Hilton Hotel SFO, San Francisco
Hilton San Francisco Airport North, San Francisco
Holiday Inn-Civic Center, San Francisco
Holiday Inn-Fisherman’s Wharf, San Francisco
Holiday Inn-Golden Gateway, San Francisco
Holiday Inn-SFO, San Francisco
Holiday Lodge, San Francisco
Hotel Diva, San Francisco
Hotel Griffon & Roti Restaurant, San Francisco
Hotel Nikko, San Francisco
Hotel Rex, San Francisco
Hotel Triton, San Francisco
Hotel Union Square, San Francisco
Howard Johnson’s Pickwick Hotel, San Francisco
Hyatt at Fisherman’s Wharf, San Francisco
Hyatt Regency, San Francisco
Hyatt Regency Embarcadero, San Francisco
Proposed Hotel, San Francisco
Proposed Inn at Fisherman’s Wharf, San Francisco
Inn at the Opera, San Francisco
Juliana Hotel, San Francisco
King George Hotel, San Francisco
Lambourne Hotel, San Francisco
Le Meridien Hotel, San Francisco
The Majestic, San Francisco
Mark Twain Hotel, San Francisco
Marriott Fisherman’s Wharf, San Francisco
Maxwell Hotel, The, San Francisco
Mission & Steuart Hotel, Proposed, San Francisco
Orchard Hotel, San Francisco
Parc Fifty-Five, San Francisco
Park Hyatt, San Francisco
Piers 30/32, San Francisco
Portman Hotel, San Francisco
Prescott Hotel, San Francisco
Presidio Travelodge, San Francisco
Queen Anne Hotel, San Francisco
Ramada Fisherman’s Wharf, San Francisco
Ramada Hotel, San Francisco
Ramada Plaza Hotel, San Francisco
Regis Hotel, San Francisco
Richilieu Hotel, San Francisco
Ritz Carlton-Proposed, San Francisco
San Francisco Airport Hilton, San Francisco
San Francisco Hilton, San Francisco
San Francisco Hotel, San Francisco
San Francisco Marriott, San Francisco
Savoy Hotel, San Francisco
Sheraton Fisherman’s Wharf, San Francisco
Sir Francis Drake Hotel, San Francisco
Stanford Court, San Francisco
Super 8 Motel at Fisherman’s Wharf
Proposed Inn at 2961 Pacific Avenue, San Francisco
Tuscan Inn, San Francisco
Westin St. Francis Hotel, San Francisco
Marriott Courtyard, San Francisco Airport
Crowne Plaza, San Jose
Fairmont Hotel, San Jose
Holiday Inn, San Jose
Hyatt San Jose, San Jose
Hyatt St. Claire, San Jose
Ramada Renaissance Hotel, San Jose
Radisson Plaza Hotel Airport, San Jose
Red Lion-San Jose, San Jose

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Proposed Sierra Suites, San Jose
Islander Lodge Motel, San Leandro
Apple Farm Inn, San Luis Obispo
Embassy Suites Hotel, San Luis Obispo
Pacific Suites Hotel, San Luis Obispo
Twin Oaks Golf Course, San Marcos
Benjamin Franklin Hotel, San Mateo
Dunfey Hotel, San Mateo
Holiday Inn, San Mateo
Holiday Inn Express, San Mateo
Hilton Hotel, San Pedro
Embassy Suites, San Rafael
Marriott Hotel, San Ramon
Proposed Hotel, San Ramon
Residence Inn, San Ramon
California Palms, Santa Ana
Compri Hotel, Santa Ana
Embassy Suites, Santa Ana
Executive Inn, Santa Ana
Executive Lodge, Santa Ana
Orange County Ramada Hotel, Santa Ana
Quality Suites, Santa Ana
El Encanto Hotel, Santa Barbara

Fess Parker’s DoubleTree Resort, Santa Barbara
Fess Parker’s Red Lion Resort, Santa Barbara
Santa Barbara Inn, Santa Barbara
Santa Barbara Club Resort & Spa, Santa Barbara
San Ysidro Ranch, Santa Barbara
Budget Inn, Santa Clara
Embassy Suites, Santa Clara
Howard Johnson’s Hotel, Santa Clara
Marriott Hotel, Santa Clara
Quality Suites, Santa Clara
Hilton Garden Inn, Santa Clarita
Hilton Town Center, Santa Clarita
Inn at Pasatiempo, Santa Cruz
Dream Inn, Santa Cruz
Motel 6, Santa Maria
Santa Maria Airport Hilton, Santa Maria
Proposed Hotel, San Mateo
Casa Del Mar, Santa Monica
Holiday Inn, Santa Monica
Holiday Inn at the Pier, Santa Monica
Loews Santa Monica Beach Hotel, Santa Monica
Ocean Avenue Hotel, Santa Monica
Proposed EconoLodge, Santa Monica
Park Hyatt Hotel, Santa Monica
Santa Monica Beach Hotel, Santa Monica
Sheraton Miramar Hotel, Santa Monica
Holiday Inn, Santa Nella
Flamingo Hotel, Santa Rosa
Fountain Grove Inn, Santa Rosa
Holiday Inn, Santa Rosa
Days Inn Seaside, Seaside
Embassy Suites, Seaside
Seaside 8, Seaside
Radisson Valley Center Hotel, Sherman Oaks
Ramada Inn, Solana Beach
Danish Country Inn, Solvang
Lodge at Sonoma, Prop., Sonoma
Red Lion Inn, Sonoma
Sonoma Valley Inn, Sonoma
Hardage Suites Hotel Site, Sorrento Mesa
Proposed Woodfin Suite Hotel, Sorrento Mesa
Timberwolf Lodge, South Lake Tahoe
Crown Sterling Suites, South San Francisco
Grosvenor Hotel, South San Francisco
Holiday Inn, South San Francisco
La Quinta Inn, South San Francisco
Proposed 390-room hotel, South San Francisco
Ramada Inn, South San Francisco
Proposed Hotel, Squaw Valley
Harvest Inn, St. Helena
Meadowood Resort, St. Helena
Motel Orleans, Stockton
Sheraton Hotel-Proposed, Stockton
Stockton Hilton, Stockton
Holiday Inn, Sunnyvale
Neighborhood Suites Hotel, Sunnyvale
The Proposed Grand Hotel, Sunnyvale
Residence Inn Silicon Valley II, Sunnyvale
Sunnyvale Hilton, Sunnyvale
Super 8, Sunnyvale
Good Nite Inn, Sylmar
Embassy Suites-Temecula, Temecula
Temecula Creek Inn & Golf, Temecula
Temecula Inn, Temecula
Hilton Hotel, Torrance
Holiday Inn - Torrance, Torrance
MCA Hotel, Proposed, Universal City
Hilton Garden Inn, Valencia
Holiday Inn, Van Nuys
Hotel Van Nuys, Van Nuys
Habortown Marina Resort, Ventura
Ocean Resorts/Harbortown Hotel, Ventura
Sheraton Hotel, Ventura
Holiday Inn, Walnut Creek
Marriott Hotel, Walnut Creek
Parkside Hotel, Walnut Creek
Proposed Royce Hotel, Walnut Creek
Walnut Creek Marriott, Walnut Creek
Proposed Westin ClubSport, Walnut Creek
Le Bel Age, West Hollywood
Le Dufy, West Hollywood
Le Mondrian, West Hollywood
Le Montrose, West Hollywood
Ramada Hotel, West Hollywood
Summerfield Suites, West Hollywood
Golden Pheasant, Willows
Microtel Inn & Suites, Willows
Whittier Hilton, Whittier
Proposed Hotel, Woodland
Woodland Hotel & Conference Center-Proposed, Woodland
Warner Center Marriott, Woodland Hills
Skylonda Retreat, Woodside
Marriott Tenaya Lodge-Proposed, Yosemite
Bonanza & Convention Center, Yuba City
Motel Orleans, Yuba City

COLORADO

Hotel Jerome, Aspen
Hampton Inn, Aurora
Holiday Inn Southeast, Aurora
Downtown Boulder Hotel, Boulder
Hilton Harvest House, Boulder
Holiday Inn, Boulder
Proposed Casino Hotel, Central City
Best Western Le Baron Hotel, Colorado Springs
Proposed Double Eagle Casino Hotel, Colorado Springs
Embassy Suites, Colorado Springs
Hilton, Colorado Springs
Proposed Double Eagle Casino Hotel, Cripple Creek
Le Baron Hotel, Denver
Brown Palace, Denver
Days Inn-Arapahoe, Denver
Days Inn-Colfax, Denver
Embassy Suites, Denver
Radisson, Denver
Denver Hilton, Englewood
Proposed Summerfield Suites, Greenwood Village
Proposed Hampton Inn, Lakewood

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Silvertree Hotel, Snowmass
Wildwood Lodge, Snowmass
Westin Hotel, Vail

CONNECTICUT

Holiday Inn, Darien
Proposed Days Inn, Enfield
Hartford Hilton, Hartford
Motel 6, Hartford
Residence Inn, Meriden
Executive Hotel, Stamford
Harley Hotel, Stamford
Holiday Inn-Crowne Plaza, Stamford
Fairfield Inn, Windsor Locks

DISTRICT OF COLUMBIA

ANA Hotel, Washington
Fairmont Hotel, Washington
Harambee House, Washington
Hyatt Regency, Washington
Ritz-Carlton, Washington
River Inn, Washington
St. James, Washington
Sheraton Washington Hotel, Washington

FLORIDA

Holiday Inn, Altamonte Springs
Embassy Suites, Boca Raton
Petite Suites, Boca Raton
Holiday Inn, Clearwater
Holiday Inn Gulfview, Clearwater
Holiday Inn Surfside, Clearwater Beach
Doubletree Oceanfront, Ft. Lauderdale
Galleria Doubletree Guest Suites, Ft. Lauderdale
Holiday Inn-Airport, Ft. Lauderdale
Holiday Inn-Beach, Ft. Lauderdale
Holiday Inn-North, Ft. Lauderdale
Fairfield Inn, Gainesville
Embassy Suites, Lake Buena Vista
Embassy Suites Orlando, Buena Vista
Woodfin Suite Hotel, Proposed, Lake Buena Vista
Holiday Inn-Madeira, Madeira Beach
Fairfield Inn, Miami
Holiday Inn-Calder, Miami
Fairfield Inn International, Miami
Fairfield Inn South, Miami
Holiday Inn-International Drive, Orlando
Holiday Inn-Lee Road, Orlando
Peabody Hotel, Orlando
Sheraton Jetport Inn, Orlando
Sheraton Lakeside, Orlando
Holiday Inn, Palm Beach Gardens
Plantation Sheraton Suites, Plantation
Holiday Inn-Lido Beach, Sarasota
Holiday Inn-Airport, Tampa
Ramada Inn, Tampa

GEORGIA

Fairfield Inn Northlake, Atlanta
Proposed Hyatt-Airport, Atlanta
Motel 6, Atlanta
Neighborhood Inn, Atlanta
Residence Inn, Atlanta
Stouffer’s Hotel-Proposed, Atlanta
Westin Peachtree Plaza, Atlanta
Fairfield Inn, College Park
Holiday Inn-Crowne Plaza, College Park
Fairfield Inn-Gwinnett, Duluth
Howard Johnson’s Forsyth
Fairfield Inn, Marrietta
Fairfield Inn, Morrow
Fairfield Inn, Norcross
Motel 6, Norcross
Fairfield Inn, Savannah

HAWAII

Ritz-Carlton Mauna Lani
Royal Sea Cliff Resort, Hawaii
Gateway Hotel, Honolulu
Miramar Hotel, Honolulu
Outrigger East Hotel, Honolulu
Outrigger Waikiki Hotel, Honolulu
Outrigger West Hotel, Honolulu
Sand Villa Hotel, Honolulu
Coco Palms Resort, Kauai
Westin Kauai at Kauai Lagoons Resort, Kauai
Grand Wailea Resort, Maui
Kea Lani Resort, Maui
Maui Lu Resort, Maui
Royal Hawaiian Hotel, Oahu

IDAHO

Motel 6, Coeur d’Alene
Resort Development, Coeur d’Alene
Cotton Tree Inn, Pocatello

ILLINOIS

Indian Lakes Resort, Bloomingdale
Jumer’s Chateau, Bloomington
Super 8 Motel, Bloomington
Super 8 Motel, Champagne
Fairmont Hotel, Chicago
Hyatt at University Village, Chicago
Mayfair Regent, Chicago
Proposed Radisson Hotel, Chicago
Westin Hotel, Chicago
Woodfin Suite Hotel, Proposed, Chicago
Super 8 Motel, Crystal Lake
Super 8 Motel, Decatur
Proposed Hotel, Des Plaines
Radisson Suites, Downers Grove
Hampton Inn, Elk Grove
Holiday Inn, Elmhurst
Orrington Hotel, Evanston
Drury Inn, Fairview Heights
Jumer’s Continental Inn, Galesburg
Fairfield Inn, Hinsdale
Proposed Westin Hotel & ClubSport, Hoffman Estates
Nordic Hills Resort, Itasca
Empresss Hotel & Casino, Joliet
Holiday Inn, Joliet
Fairfield Inn, Lansing
Fairfield Inn, Normal
Fairfield Inn, Peoria
Jumer’s Castle, Peoria
Super 8 Motel, Peru
Fairfield Inn, Rockford
Marriott Hotel, Schaumburg
Proposed Woodfin Suite Hotel, Schaumberg
DoubleTree Hotel - North Shore, Skokie
Jumer’s Castle, Urbana
Super 8 Motel, Waukegan

INDIANA

Super 8 Motel, Columbus
Fairfield Inn, Fort Wayne
Sheraton Hotel, Gary
Empress Casino, Hammond

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Caesars Riverboat Casino Complex-Proposed, Harrison County
Fairfield Inn, Indianapolis
Four Points Sheraton, Indianapolis
Motel 6, Indianapolis
Westin Hotel, Indianapolis
Woodfin Suite Hotel, Prop., Indianapolis
Wyndham Garden Hotel, Indianapolis
Hilton Inn, Jeffersonville
Brown County Inn, Nashville

IOWA

Jumers Castle Lodge, Bettendorf
Holiday Inn, Cedar Falls
Collins Plaza, Cedar Rapids
Fairfield Inn, Cedar Rapids
Fairfield Inn, Clive

KANSAS

Proposed Emerald City Resort, Kansas City
The Emerald City Resort Hotel, Kansas City
Fairfield Inn, Merriam
Fairfield Inn, Overland Park
Canterbury Inn/Knights Inn, Wichita

KENTUCKY

Holiday Inn-Central, Louisville
Holiday Inn-Northeast, Louisville
Ramada Inn East, Louisville

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

LOUISIANA

Howard Johnson’s, Alexandria
Embassy Suites, Baton Rouge
Hilton Hotel, Baton Rouge
Horseshoe Casino, Bossier City
Sheraton At New Orleans Airport, Kenner
Fairmont Hotel, New Orleans
Harrah’s Jazz Casino, New Orleans
Chateau Sonesta, New Orleans
Hyatt Regency, New Orleans
The Iberville Hotel, New Orleans
Lakeside DoubleTree, New Orleans
The Maison Dupuy, New Orleans
Ramada Inn St. Charles, New Orleans

MAINE

Inn by the Sea, Cape Elizabeth

MARYLAND

Holiday Inn, Aberdeen
Marriott Waterfront Hotel, Annapolis
Maryland Inn, Annapolis
Residence Inn, Bethesda
Best Western Motor Lodge, Chicopee
Abbey, College Park
Holiday Inn, Laurel
Days Inn, Rockville
DoubleTree Hotel, Rockville
Holiday Inn Crowne Plaza, Rockville
Ramada Inn, Rockville

MASSACHUSETTS

Marriott Copley Place, Boston
Meridien Hotel, Boston
Residence Inn, Boston
Federal House Inn, South Lee
Holiday Inn, Springfield
Sheraton, Sturbridge
Proposed Sierra Suites Hotel, Waltham
Proposed Summerfield Suites Hotel, Waltham
Proposed Sierra Suites Hotel, Woburn

MICHIGAN

Fairfield Inn, Auburn Hills
Super 8 Motel, Battle Creek
Howard Johnson’s, Belleville
Fairfield Inn, Canton
Holiday Inn, Detroit
Golden Harp-Proposed, Detroit
Radisson Hotel, Farmington Hills
Fairfield Inn, Kalamazoo
Super 8 Motel, Kalamazoo
Embassy Suites-Proposed, Livonia
Embassy Suites, Livonia
Fairfield Inn, Madison Heights
Super 8 Motel, Mount Pleasant
Super 8 Motel, Muskegon
Inn at the Bridge, Port Huron
Fairfield Inn, Romulus
Super 8 Motel, Saginaw
Proposed Woodfin Suite Hotel, Southfield
Comfort Suites, Sterling Heights
Holiday Inn, Troy
Fairfield Inn, Warren
Holiday Inn, Warren
Motel 6, Warren
Super 8 Motel, Wyoming

MINNESOTA

Holiday Inn, Duluth
Motel 6, Minneapolis
Proposed Motel, Montevideo
Motel 6, Rochester
Radisson Plaza Hotel, Rochester

MISSISSIPPI

Treasure Bay Hotel & Casino, Biloxi
Motel 6, Hattiesburg
Howard Johnson’s, Jackson
Quality Inn, Oxford
Horseshoe Casino Center, Robinsonville
Sam’s Town Hotel & Gambling Hall Robinsonville

MISSOURI

Fairfield Inn, Hazelwood
Holiday Inn, Kansas City
Sam’s Town Hotel & Gambling Hall, Kansas City
Holiday Inn, Springfield
Clarion Hotel, St. Louis
Executive Inn, St. Louis
Holiday Inn Sports Complex, St. Louis
Sheraton Airport, St. Louis
Sheraton Westport, St. Louis
Proposed Hotel, Unity Village

MONTANA

Holiday Inn, Bozeman
Holiday Inn, Missoula
Red Lion Hotel, Missoula

NEBRASKA

Marriott Hotel, Omaha
Red Lion Inn, Omaha

NEVADA

Ormsby House Hotel and Casino, Carson City
Eldorado Casino, Henderson
Joker’s Wild Casino, Henderson
Airport Inn, Las Vegas
Aladdin Hotel & Casino, Las Vegas
Alexis Park Hotel, Las Vegas
California Hotel & Casino, Las Vegas
Fremont Hotel & Casino, Las Vegas
Proposed Hilton Garden Inn, Las Vegas
Proposed Homewood Suites, Las Vegas
Hotel & Casino El Rancho, Las Vegas
Howard Johnson Hotel & Casino, Las Vegas
Jockey Club, Las Vegas
Paradise Resort Hotel, Las Vegas
Residence Inn, Las Vegas
Sam’s Town Hotel & Gambling Hall, Las Vegas
Stardust Resort and Casino, Las Vegas
Sunrise Hotel & Casino, Las Vegas
Proposed Hotel, Sparks

NEW JERSEY

Deauville Hotel, Atlantic City
Harrah’s Marina Hotel Casino, Atlantic City
Sands Hotel & Casino, Atlantic City
Tropicana Hotel & Casino, Atlantic City
Cherry Hill Inn, Cherry Hill
Proposed Ramada Inn, Elizabeth
Proposed Ramada Inn, Franklin Township
Proposed Summerfield Suites Morristown, Hanover
Proposed Summerfield Suites Parsippany, Hanover
Holiday Inn, Jamesburg

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Headquarters Plaza, Morristown
Howard Johnson’s Mount Holly
Mt. Laurel Hilton, Mt. Laurel
Holiday Inn, Newark
Howard Johnson’s, Saddle Brook
DoubleTree Hotel, Somerset
Marriott Hotel, Somerset
Motel, Wrightstown
Five Churches Chicken Restaurants, Various Locations

NEW MEXICO

Doubletree Hotel, Albuquerque
Hampton Inn, Albuquerque
Ramada Hotel Classic, Albuquerque
Radisson Inn, Albuquerque
Las Cruces Hilton, Las Cruces
Homewood Suites, Santa Fe
Inn at Loretto, Santa Fe
Sheraton de Santa Fe, Santa Fe
Rancho Ramada Inn de Taos, Taos

NEW YORK

Hilton Hotel, Albany
Buffalo Hotel, Buffalo
Proposed Airport Hotel, Buffalo
Nevele Hotel, Ellenville
Howard Johnson’s, Elmsford
Ramada Inn, Hauppauge
Hilton Hotel, Lake Placid
Proposed Hotel, New Rochelle
Ramada Plaza, New Rochelle
Sheraton Inn, New Rochelle
Barbizon Plaza Hotel, New York
Berkshire Place, New York
Century Paramount Hotel, New York
Essex House, New York
Executive Hotel, New York
Halloran House, New York
Hampton House, New York
Holland Hotel, New York
Howard Hotel, New York
Marriott Eastside, New York
Mayfair Regent, New York
Nova-Park Gotham, New York
Parker Meridien Hotel, New York
Proposed Soho Hotel, New York
Tudor Hotel, New York
York Club, New York
Sheraton Inn, Ossining
Proposed Hotel, Saratoga
Howard Johnson’s, Smithtown
Hampton Inn, Syracuse
Sheraton Nassau Hotel, Uniondale
Turning Stone Casino, Verona
Roger Smith Hotel, White Plains
Fairfield Inn, Williamsville

NORTH CAROLINA

Fairfield Inn, Charlotte
Fairfield Inn, Durham
Motel 6, Durham
Fairfield Inn, Fayetteville
Embassy Suites, Greensboro
Fairfield Inn, Greensboro
Hilton Inn, Greensboro
Fairfield Inn, Raleigh
Hilton Inn, Raleigh
Motel 6, Rocky Mount
Cleghorn Plantation, Rutherfordton
Fairfield Inn, Wilmington
Hilton Inn, Winston-Salem

OHIO

Holiday Inn Cascade, Akron
Embassy Suites, Blue Ash
Fairfield Inn, Brook Park
Proposed Embassy Suites, Cincinnati
Howard Johnson’s, Cincinnati
Marriott Inn, Cincinnati
Radisson Inn, Cincinnati
Residence Inn, Cincinnati
Vernon Manor, Cincinnati
Holiday Inn Lakeside, Cleveland
Hotel, Proposed, Cleveland
Sheraton Hopkins, Cleveland
200-Room Boutique Hotel, Cleveland
Fairfield Inn, Columbus
Holiday Inn, Columbus
Holiday Inn - Airport, Columbus
Woodfin Hotel, Columbus
Daytonian Hilton, Dayton
Fairfield Inn, Dayton
Motel 6, Dayton
Proposed Woodfin Suite Hotel, Dublin
Fairfield Inn, Holland
Holiday Inn, Toledo
Fairfield Inn, Willoughby

OKLAHOMA

Fountainhead Resort, Mclntosh County
Arrowhead Resort, Pittsburgh County

OREGON

Red Lion Inn, Astoria
Inn at Face Rock, Bandon
Shilo Inn, Beaverton
Proposed Hotel, Bend
Red Lion Inn - North, Bend
Red Lion Inn - Coos Bay, Coos Bay
Proposed Hilton Garden Inn, Corvallis
Econolodge, Eugene
Execulodge, Eugene
Red Lion Inn, Eugene
Big Creek Resort, Florence
Salishan Lodge, Gleneden Beach
Shilo Inn, Grants Pass
Candlewood Hotel, Hillsboro
Proposed Courtyard Hotel, Hillsboro
Proposed Residence Inn, Hillsboro
Red Lion Inn, Medford
Residence Inn, Lake Oswego
Red Lion Hotel, Pendleton
Avalon Hotel, Portland
Columbia River Red Lion, Portland
Embassy Suites, Portland
Holiday Inn, Portland
Proposed Sheraton Suites, Portland
Red Lion Hotel-Portland Downtown, Portland
Red Lion Inn-Lloyd Center, Portland
Residence Inn-Lloyd Center, Portland
Residence Inn, Proposed, Portland
Sunriver Resort, Portland
Vintage Plaza Hotel, Portland
Wells Building, Portland
West Coast Benson Hotel, Portland
Proposed Westin Hotel, Portland
Capitol Inn, Salem
Execulodge, Salem
Red Lion Inn, Seaside
Red Lion Inn, Springfield
Skamanla Lodge, Stevenson
Sunriver Resort, Sunriver

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Embassy Suites, Tigard
Red Lion Inn, Tigard

PENNSYLVANIA

Embassy Suites - Pittsburgh, Coraopolis
Days Inn, Danville
Ramada Inn, Erie
Fairfield Inn, Harrisburg
Rittenhouse Towers, Philadelphia
Fairfield Inn, Pittsburgh
Motel 6, Pittsburgh
Embassy Suites, Philadelphia
DoubleTree Guest Suites, Plymouth Meeting
Hilton At Lackawanna Station, Scranton

SOUTH CAROLINA

Holiday Inn, Charleston
Holiday Inn - Airport, Charleston
Holiday Inn, Charleston-Riverview
Travelodge, Charleston
Embassy Suites, Columbia
Motel 6, Columbia
Fairfield Inn, Greenville
Ramada Inn, Greenville
Fairfield Inn, Florence
Fairfield Inn, Hilton Head
Hilton Head Inn, Hilton Head
Holiday Inn Express, Hilton Head
Hyatt Regency, Hilton Head
Save Inn, Lake Hartwell

SOUTH DAKOTA

Proposed Four Points Hotel, Sioux Falls

TENNESSEE

Motel 6, Chattanooga
Holiday Inn, Jackson
Fairfield Inn, Johnson City
Holiday Inn, Memphis
Howard Johnson - Airport, Memphis
Motel 6, Memphis
Days Inn, Nashville
Hampton Inn, Nashville
Hampton Inn, Pigeon Forge

TEXAS

Courtyard by Marriott, Addison
Proposed Hotel, Addison
Proposed Marriott Courtyard, Addison
Proposed Summerfield Suites Hotel, Addison
Days Inn, Amarillo
Motel 6, Amarillo
Super 8 Motel, Amarillo
Holiday Inn, Austin
Holiday Inn - Airport, Austin
Sheraton Hotel, Austin
Proposed Woodfin Suite Hotel, Austin
Days Inn, Corpus Christi
Doubletree Inn, Dallas
Fairmont Hotel, Dallas
Hyatt Regency, Dallas
Marriott Park Central, Dallas
Marriott Quorum, Dallas
Melrose Hotel, Dallas
Motel 6, Dallas
Park Plaza, Dallas
Ramada Inn Convention Center, Dallas
Residence Inn, Dallas
Summit Hotel, Dallas
Howard Johnson’s, East Dallas
Allstar Inn, El Paso
Embassy Suites, El Paso
Travelers Inn, El Paso
Proposed Westin Hotel, Frisco
Metro Center Hotel, Fort Worth
Embassy Suites, Houston
Holiday Inn-Hobby, Houston
Houston House, Houston
Houstonian Hotel, Houston
Motel 6, Houston
Residence Inn, Houston
Stouffer Renaissance, Houston
Proposed Hampton Inn, Irving
Summerfield Suites, Irving
Holiday Inn, Lubbock
Townplace Suites, Plano
Crockett Hotel, San Antonio
Fairmont Hotel, San Antonio

UTAH

Utah Trails Resort, Kanab
Seven Peaks Resort Hotel, Provo
Cavanaugh’s Olympus Hotel, Salt Lake City
Red Lion Hotel, Salt Lake City

VIRGINIA

Howard Johnson’s, Alexandria
Embassy Suites Crystal City, Arlington
Hyatt Arlington, Arlington
Holiday Inn Crowne Plaza, Crystal City
Motel 6, Fredericksburg
Fairfield Inn, Hampton
Omni International Hotel, Norfolk
Embassy Suites, Richmond
Holiday Inn West End, Richmond

WASHINGTON

Best Western Bellevue Inn, Bellevue
Candlewood Hotel, Bellevue
DoubleTree Bellevue Center, Bellevue
Embassy Suites, Bellevue
Hampton Inn, Bellevue
Red Lion Inn Bellevue Center, Bellevue
Residence Inn, Bellevue
Semiahmoo Hotel Company, Blaine
Semi-ah-moo Resort, Blaine
Motel 6, Issaquah
Red Lion Inn, Kelso
Embassy Suites, Lynnwood
Residence Inn, Lynnwood
Red Lion Inn, Pasco
Residence Inn, Redmond
Hilton Gardens Hotel, Redmond
Red Lion Inn, Richland
Best Western Tower Inn, Richland
Hampton Inn, Sea-Tac
Holiday Inn Sea-Tac, Sea-Tac
Red Lion Hotel, Sea-Tac
Alexis Hotel, Seattle
Doubletree Inn, Seattle
Extended-Stay Hotel, Proposed, Seattle
Hampton Inn, Seattle
Holiday Inn Crowne Plaza, Seattle
Madison Hotel, Seattle
Red Lion Hotel, Seattle
Proposed Seattle Hotel, Seattle
West Coast Paramount, Seattle
West Coast Sea-Tac Hotel, Seattle
West Coast Vance Hotel, Seattle
Springhill Suites, Seattle

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

The Bay Silverdale Hotel, Silverdale
Red Lion Inn, Spokane
Red Lion Inn, Spokane Valley
Park Shore Inn, Tacoma
Red Lion Inn, Tacoma
Sheraton Hotel, Tacoma
Doubletree Suites, Tukwila
Embassy Suites, Tukwila
Residence Inn, Tukwila
Hampton Inn, Tukwila
Red Lion Inn at the Quay, Vancouver
Residence Inn, Vancouver
Red Lion Inn, Wenatchee
Red Lion Inn, Yakima

WEST VIRGINIA

Holiday Inn Charleston House, Charleston
Holiday Inn, Huntington
Howard Johnson’s, Wheeling

WISCONSIN

Fairfield Inn, Brookfield
Milwaukee Marriott Hotel, Brookfield
Wyndham Garden Hotel, Brookfield
Super 8 Motel, Jamesville
Super 8 Motel, Kenosha
Fairfield Inn, Madison
Holiday Inn-Airport, Milwaukee
Holiday Inn-West, Milwaukee

WYOMING

Days Inn, Casper
Flying L Skytel, Cody

CANADA

119-Unit Hotel, Canmore, Alberta
EconoLodge, Hull, Quebec
Sutton Place Hotel & Apartments, Toronto

FRANCE

Marriott Champs Elysee, Paris

GUAM

Royal Palm Resort, Tumon
Hyatt Regency Hotel, Tumon Bay
Proposed Hotel, Tamuning

MEXICO

Esperanza Hotel, Proposed, Cabos San Lucas
Omni Hotel, Ixtapa
La Jolla de Mismaloya, Puerto Vallarta

PUERTO RICO

Carib Inn, San Juan

VARIOUS

Starwood Analysis

EX-99.(C)(7) 12 p68165t3exv99wxcyx7y.htm EX-(C)(7)

Exhibit (c)(7)

Self-Contained Appraisal Report
The Westin Hotel – Chicago
Chicago, Illinois

Prepared by:
HVS International
116 New Montgomery, Suite 620
San Francisco, California 94105
(415) 896-0868

Submitted to:
Mr. Joseph Long
Vice President - Acquisitions & Development
Starwood Hotels & Resorts
2231 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
(602) 852-3387

March 8, 1999

Mr. Joseph Long
Vice President - Acquisitions & Development
Starwood Hotels & Resorts
2231 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
(602) 852-3387

Re:	The Westin Hotel – Chicago
	Chicago, Illinois
	HVS Reference Number: 1999040002

Dear Mr. Long:

Pursuant to your request, we herewith submit our self-contained appraisal report pertaining to the above-captioned property. We have inspected the site and facilities and analyzed the hostelry market conditions in the Chicago, Illinois area.

Based on the available data, our analysis, and our experience in the hotel industry, it is our opinion that the market value of the fee simple interest in the 751-unit subject property described in this report, as of February 1, 1999, is:

$100,900,000

ONE HUNDRED MILLION NINE HUNDRED THOUSAND DOLLARS

This conclusion represents the market value of the subject property “as is,” assuming the deduction of $16,600,000 in capital improvements. This expenditure is considered necessary to achieve the operating results projected in this appraisal.

Our report is made in conformance with, and subject to, the requirements of the Uniform Standards of Appraisal Practice (USPAP), as provided by the Appraisal Foundation, as well as the requirements of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). We do hereby certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings and valuation.

This report is intended only for use by Starwood Hotels and Resorts in connection with the potential sale or refinancing of the subject property. It

2

may not be distributed to or relied upon by other persons or entities without our written permission.

The valuation is expressly made subject to all normal and specific assumptions and limiting conditions, a copy of which is included in the attached appraisal report.

Very truly yours,
HVS International

Stephen L. Chan
Senior Associate

Suzanne R. Mellen, CRE, MAI
Managing Director

SLC/SRM/leg

HVS International, San Francisco, California Quality Assurance

Quality Assurance

The HVS International division of M&R Valuation Services, Inc. strives to achieve the highest standards of quality during all phases of the appraisal process. It is our goal to provide clients with the finest appraisal report available. The following staff members acknowledge their contribution to this report.

Linda E. Gee - Editing and Report Production
Editor (Extension 209)

Stephen L. Chan - Fieldwork, Analysis, and Text
Senior Associate (Extension 206)

Suzanne R. Mellen, CRE, MAI - Analysis and Review
Managing Director (Extension 108)

We are available to answer any questions and are pleased to have provided you with the finest quality product available. Paula Hood (extension 201) is available to answer any billing questions. We look forward to serving you again in the future.

TABLE OF CONTENTS

EX-(a)(1)(A)

EX-(a)(1)(B)

EX-(a)(1)(C)

EX-(a)(1)(D)

EX-(a)(1)(E)

EX-(c)(2)

EX-(c)(4)

EX-(c)(5)

EX-(c)(6)

EX-(c)(7)

EX-(d)(1)

HVS International, San Francisco, California Table of Contents

Table of Contents

1.	Summary of Salient Data and Conclusions		1
2.	Nature of the Assignment		3
3.	Description of the Land		8
4.	Description of the Improvements		12
5.	Zoning		26
6.	Assessed Value and Taxes		27
7.	Market Area and Neighborhood Analysis		30
8.	Supply and Demand Analysis		44
9.	Occupancy and Average Rate Analysis		76
10.	Highest and Best Use		86
11.	Approaches to Value		89
12.	Income Capitalization Approach		92
13.	Cost Approach		127
14.	Sales Comparison Approach		130
15.	Reconciliation of Value Indications		139
16.	Statement of Assumptions and Limiting Conditions		141
17.	Certification		145
	Addenda
		Explanation of Simultaneous Valuation Formula
		Engagement Letter
		Legal Description
		Appraiser’s State of Illinois Temporary License
		Synopsis of Hotel Management Agreement
		Synopsis of Restaurant Letter of Intent
		Photographs of Subject Property
	Qualifications
		Stephen L. Chan
		Suzanne R. Mellen, CRE, MAI

HVS International, San Francisco, California Summary of Salient Data and Conclusions 1

1. Summary of Salient Data and Conclusions

Property:	The Westin Hotel – Chicago
Location:	909 North Michigan Avenue
	Chicago, Illinois 60611
Date of Inspection:	February 1, 1999
Interest Appraised:	Fee simple
Date of Value:	February 1, 1999
Land:
Area:	±0.938 acres, or ±40,958 square feet
Zoning:	B6 - 6 - Restricted Central Business District
Assessor’s Parcel Numbers:	17-03-213-005, 006
Flood Zone:	C
Improvements:
Guestrooms:	751
Floors:	16 and 27
Food and Beverage Facilities
The Chelsea Restaurant and Bar:	144 seats
Cafe A La Carte:	Not applicable
Meeting Space:	30,045 square feet
Parking:	209 garage spaces
Years Built:	Main Building - 1963
	Tower - 1972
Summary of Value Parameters:
Highest and Best Use (as if vacant):	Mixed-use, full-service transient lodging facility with retail
Highest and Best Use (as improved):	Full-service transient lodging facility
Exposure Period:	Less than or equal to one year
Stabilized Year:	2000/01

HVS International, San Francisco, California Summary of Salient Data and Conclusions 2

Estimates of Value:
Income Capitalization Approach:	$100,900,000
Sales Comparison Approach:	$75,000,000 to $139,000,000
Cost Approach	Not Applicable
Personal Property:
Value in Exchange:	$5,300,000
Value in Use:	$10,100,000

HVS International, San Francisco, California Nature of the Assignment 3

2. Nature of the Assignment

Subject of the Appraisal

The subject of the appraisal is the fee simple interest in a ±40,958-square-foot ( ±0.938-acre) parcel of land improved with a first-class, full-service lodging facility known as the The Westin Hotel – Chicago. The subject property contains 751 rentable units, a 144-seat full-service restaurant, a free-standing quick-service coffee and pastry kiosk, approximately 30,000 square feet of meeting space, a business center, a fitness room, a gift shop, an underground parking garage with 209 spaces, and a typical complement of back-of-the-house facilities. The property is located in the city of Chicago, the county of Cook, and the state of Illinois. The hotel’s civic address is 909 North Michigan Avenue, Chicago, Illinois 60611.

Objective of the Appraisal

The objective of the appraisal is to estimate the market value “as is” of the subject property. The following definition of market value has been agreed upon by agencies that regulate federal financial institutions in the United States:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1.	buyer and seller are typically motivated;
2.	both parties are well informed or well advised, and acting in what they consider their own best interests;
3.	a reasonable time is allowed for exposure in the open market;

HVS International, San Francisco, California Nature of the Assignment 4

4.	payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and
5.	the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.1

“As is” market value estimates the market value of a property in the condition observed upon inspection and as it physically and legally exists without hypothetical conditions, assumptions, or qualifications as of the date of inspection.

Exposure Period

The exposure period, referring to the amount of time necessary for the real estate to have been exposed retrospectively, prior to the date of value, is estimated to be less than or equal to one year, assuming the continuation of current market conditions. Market activity decreased in the lodging industry during the second half of 1998 due to a reduction in capital available for transactions. Following the Asian and Russian fiscal crises, the August stock market downturn, and the subsequent reaction of the CMBS market, the terms of hotel mortgages became more restrictive and capital became less available. Most market participants with whom we speak are of the opinion that this is a temporary situation and that capital will return to the lodging industry by 2000. Due to the underlying strength of the lodging industry, the subject property remains an attractive investment.

Use of the Appraisal

This appraisal is being prepared for use by Starwood Hotels & Resorts in connection with the potential sale or refinancing of the subject property. No information presented in this report should be distributed to or relied upon by the public or third parties without the express written consent of HVS International.

Property Rights Appraised

The property right appraised is the fee simple ownership of the land and improvements, including furniture, fixtures, and equipment. Fee simple interest is defined as “absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”² The subject property is being appraised as a going concern (i.e., an open and operating facility).

¹   Federal Register. Vol. 55, No. 165, August 24, 1990; p. 34696

²   Appraisal Institute. The Dictionary of Real Estate Appraisal. 3rd ed. Chicago: Author, 1993, p. 140.

HVS International, San Francisco, California Nature of the Assignment 5

Method of Study

The methodology used to develop this appraisal is based on the market research and valuation techniques set forth in the textbooks we authored for the American Institute of Real Estate Appraisers and the Appraisal Institute, entitled The Valuation of Hotels and Motels,³ Hotels, Motels and Restaurants: Valuations and Market Studies,⁴ The Computerized Income Approach to Hotel/Motel Market Studies and Valuations,⁵ and Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations.⁶ The specific steps incorporated in our analysis are outlined as follows:

1.	The subject site will be evaluated from the viewpoint of its physical utility for the operation of a hotel, as well as access, visibility, and other relevant locational factors.
2.	The subject’s existing improvements will be inspected for their quality of construction, design, layout efficiency, and items of physical deterioration and functional obsolescence.
3.	The surrounding economic environment, on both an area and neighborhood level, will be reviewed to identify specific hostelry-related economic and demographic trends that may have an impact on future demand for hotels.
4.	Dividing the market for transient accommodations into individual segments will allow us to define specific market characteristics for the types of travelers expected to utilize the area’s hotels. The factors that will be investigated include purpose of visit, average length of stay, facilities and amenities required, seasonality, daily demand fluctuations, and price sensitivity.
5.	An analysis of existing and proposed competition will provide an indication of the current accommodated demand, along with market penetration and the degree of competitiveness.

³   Rushmore, Stephen. The Valuation of Hotels and Motels. Chicago: American Institute of Real Estate Appraisers, 1978.

⁴   Rushmore, Stephen. Hotels, Motels and Restaurants: Valuations and Market Studies. Chicago: American Institute of Real Estate Appraisers, 1983.

⁵   Rushmore, Stephen. The Computerized Income Approach to Hotel/Motel Market Studies and Valuations. Chicago: American Institute of Real Estate Appraisers, 1990.

⁶   Rushmore, Stephen. Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations. Chicago: American Institute of Real Estate Appraisers, 1992.

HVS International, San Francisco, California Nature of the Assignment 6

6.	Documentation for an occupancy and average rate projection will be derived from a room night analysis utilizing the build-up approach based on an analysis of lodging activity.
7.	A detailed projection of income and expense made in accordance with the Uniform System of Accounts for Hotels will show the anticipated economic benefits of the subject property and provide the basis for the income capitalization approach.
8.	The appraisal will consider the three approaches to value: cost, sales comparison, and income capitalization. Because lodging facilities are income-producing properties that are normally bought and sold on the basis of capitalization of their anticipated stabilized earning power, the greatest weight is given to the value indicated by the income capitalization approach. We find that most hotel investors employ a similar procedure in formulating their purchase decisions, and thus the income capitalization approach most closely reflects the rationale of typical buyers.

Scope of the Assignment

All information was collected and analyzed by the signatories to this report. Operating history and descriptive data for the property were supplied by property management. We have investigated numerous improved sales in the market area and have spoken with buyers, sellers, brokers, property developers, and public officials. In addition, we have investigated the general economy of the area affecting the subject property, as well as the specifics of the competitive hotel market. The value conclusion of the complete appraisal is based upon this investigation and analysis and is conveyed in this self-contained report.

Ownership and Management History and Assumptions

The subject property is owned by 909 North Michigan Avenue Corporation, the Westin Chicago Limited Partnership, and Westin Hotels Limited Partnership; ownership has remained unchanged in the past three years. The property is managed by Westin Hotels and Resorts, a hotel management company that provides management expertise, brand-name affiliation, and a central reservations system. Westin Hotels and Resorts is a subsidiary of Starwood Hotels and Resorts. As will be reviewed in the “Income Capitalization Approach” section of this report, Westin Hotels and Resorts management is an efficient operator of the subject property. The subject property is encumbered by a management agreement. We assume upon sale continued management of the property by Westin Hotels and

HVS International, San Francisco, California Nature of the Assignment 7

Resorts. As such, we have deducted general and incentive management fees in our forecast, as stipulated in the management agreement, which is synopsized in the addenda to this report.

A portion of the subject property’s basement extends beneath the sidewalk of Delaware Place on land owned by the City of Chicago. In 1998, the subject property paid $33,581 to the city for a vaulted space permit to allow for this extension. According to property management, the amount has remained unchanged for atleast the past three years and is unlikely to escalate beyond inflation in future years. For pruposes of this appraisal, we assume that this amount will increase at inflation in our projections.

Pertinent Dates

The effective date of the appraisal is February 1, 1999. All projections are expressed in inflated dollars, and the value estimate represents 1999 dollars. The subject property was inspected by Stephen L. Chan on February 1, 1999. Suzanne R. Mellen, CRE, MAI, did not inspect the property, but participated in the analysis and review.

HVS International, San Francisco, California Description of the Land 8

3. Description of the Land

The suitability of the land for the operation of a lodging facility is an important consideration affecting the economic viability of a property and its overall value. Factors such as size, topography, access, visibility, and the availability of utilities have a direct impact on the desirability of a particular site.

Size and Topography

The subject property is situated on two connected parcels totaling ±0.938 acres, located at the northeast corner of Michigan Avenue and Delaware Place in the northern end of Chicago’s premier retail district, generally known as the “Magnificent Mile,” an area comparable to San Francisco’s Union Square and New York City’s Madison Avenue. The site’s boundaries and frontages are described as follows.

Subject Site’s Boundaries

Direction	Length (Feet)		Boundary
North		±381.0	Office building
East		±107.5	Delaware Place Bank
South		±381.0	Delaware Place
West		±107.5	Michigan Avenue

On the following page is a copy of the assessor’s parcel map depicting the rectangular shape of the subject site. The site is flat and at grade with the surrounding area.

Site Use

The subject site does not contain any excess development potential. The site is fully improved with the hotel improvements.

Access and Visibility

Access to the subject property is primarily gained from Michigan Avenue, a six-lane, north-south thoroughfare that is the primary commercial roadway through Chicago’s Central Business District and the “Magnificent Mile” retail district. Motorists traveling to Chicago or the hotel will likely come via Lake

Illustration: Assessor’s Parcel Map

HVS International, San Francisco, California Description of the Land 9

Shore Drive or Interstates 90 and 94. The most expedient route to the subject property from either direction of Lake Shore Drive is to exit onto Michigan Avenue and proceed south. From Michigan Avenue, motorists turn left onto Delaware Place. As it passes The Westin Hotel, Delaware Place is a two-lane, one-way, west-to-east roadway. Delaware Place forms the subject property’s southern boundary; the hotel’s main entrance fronts this street.

From Interstates 90/94, motorists take the Ohio Street exit and proceed east until reaching Michigan Avenue. From Ohio Street, motorists make a left turn onto Michigan Avenue and proceed north.

Considering the site’s access on a broader scale, a number of state and interstate roadways connect to the subject property’s location. Lake Shore Drive is a six-lane roadway that serves as the primary north-south arterial through Chicago. Fourteen miles in length, Lake Shore Drive is noted for its scenic route along Chicago’s border with Lake Michigan.

Interstate 90 (I-90) originates in Boston and extends west through Albany and Buffalo, New York; Cleveland and Toledo, Ohio; Chicago, Illinois; southern Minnesota and South Dakota; and northeastern Wyoming. This highway then turns northwest before terminating in Seattle, Washington.

Interstate 94 (I-94) is another major east-west highway that originates in Detroit and continues west through Chicago, Milwaukee, Madison, Minneapolis, and southern North Dakota before terminating at its intersection with I-90 outside of Billings, Montana. In downtown Chicago, I-90 and I-94 combine to form the Kennedy Expressway; north of the downtown district, I-90 extends northwest (where it is known as the Northwest Tollway) and I-94 extends north to become the Edens Expressway and the Tri-State Tollway (upon its intersection with Interstate 294).

Interstate 290, which is also known as the Eisenhower Expressway, originates in downtown Chicago immediately south of “The Loop” (Chicago’s Central Business District) and extends west for approximately 14 miles to Interstate 294.

Interstate 55 (I-55), which is also known as the Stevenson Expressway, originates in Chicago and continues in a southwesterly direction through St. Louis, Memphis, and Jackson before terminating just north of New Orleans. Michigan Avenue provides direct access to I-55.

HVS International, San Francisco, California Description of the Land 10

From “The Loop,” motorists drive north along Michigan Avenue and make a right turn onto Delaware Place. From the northern and southern approaches, the subject property’s 27-story structure and lighted signage afford it excellent visibility. However, surrounding high-rise structures partially obscure the subject property from the east and west.

Airport Access

Air transportation to the Chicago area is provided by the O’Hare International Airport and the Midway Airport. O’Hare is located roughly 20 miles northwest of the subject property via I-90. The Midway Airport is situated roughly 10 miles southwest of the subject property, near I-55. Motorists can reach the subject property from O’Hare via the Kennedy Expressway, as outlined previously; access to the Midway Airport is gained via I-55, as described above. The approximate driving time from either airport without traffic is 35 minutes.

Proximity to Demand Generators

Of particular importance to area lodging properties is convention activity. Convention activity in Chicago is primarily generated at three venues: McCormick Place, Navy Pier, and the Merchandise Mart. Michigan Avenue and Lake Shore Drive provide access from the subject property to McCormick Place, which is situated approximately three and one-half miles south of The Westin Hotel. Navy Pier is located approximately one mile southeast of the subject property, extending along Grand Street from Lake Shore Drive onto Lake Michigan. The Merchandise Mart, which is approximately one mile southwest of the subject property, occupies a city block bounded by Kinzie Avenue, Wells Street, the Chicago River, and Orleans Street.

As a result of its North Michigan Avenue location, The Westin Hotel is more distant from these convention venues relative to most of its competitors; however, this disadvantage is mitigated by The Westin Hotel’s ready access to Lake Shore Drive. By using the Lake Shore Drive route to McCormick Place and Navy Pier, hotel guests can reach both venues while avoiding the congestion on Michigan Avenue. Traffic allowing, guests of the subject property can reach McCormick Place in roughly 10 minutes, and Navy Pier in 3 minutes. In addition, the subject property occupies a central location with respect to first-class retail, restaurant, and cultural attractions. By virtue of the excellent transportation network in the subject property’s immediate vicinity, The Westin Hotel enjoys access that is comparable or superior to that of its competitors.

Utilities

The subject property is served by all necessary utilities, supplied by the following entities.

HVS International, San Francisco, California Description of the Land 11

Natural Gas:	Enron Capital & Trade
Water and Sewage:	City of Chicago
Electricity:	Commonwealth Edison
Local-Distance Telephone:	Ameritech
Pay-Per-View Movie System:	On-Command

Legal Description

A copy of the subject property’s legal description is presented in the addenda to this report. The appraisers are not experts in interpreting legal descriptions. The description appears to be accurate; however, we suggest obtaining verification of this description from a qualified expert.

Soil and Subsoil Conditions

Geological and soil reports were not provided to the appraisers or made available for review during the preparation of this report. The appraisers are not qualified to evaluate soil conditions other than by a visual inspection of the surface. No extraordinary conditions were apparent.

Nuisances and Hazards

The appraisers have not been informed of any site-specific nuisances or hazards, and no visible signs of asbestos or toxic ground contaminants were apparent at the time of our inspection. Because the appraisers are not experts in this field, we do not warrant the absence of asbestos or hazardous waste and urge the reader to obtain an independent analysis of these factors.

Flood Zone

According to city of Chicago officials and Federal Emergency Management Agency (FEMA) panel #170074-0060B, effective June 1, 1981, the subject land is located in flood zone C, which is defined as “areas of minimal flooding.”

Conclusion

The subject site’s size, shape, topography, access, visibility, potential hazards, and availability of utilities have been examined and evaluated, with the following advantages and disadvantages noted.

Advantages:

• Prominent Michigan Avenue location and proximity to first-class retail, restaurant, and cultural attractions;

• Excellent access to Lake Shore Drive;

• All necessary utilities to the site; and

• No potential flood hazard.

Disadvantages:

• Limited development potential; and

• Limited visibility from some downtown roadways.

The physical advantages of the subject site are considered to outweigh the drawbacks. The appraisers conclude that the subject site is physically appropriate for its current improvement with a first-class, full-service hotel.

HVS International, San Francisco, California Description of the Improvements 12

4. Description of the Improvements

The quality of a lodging facility’s physical improvements has a direct influence on marketability, attainable occupancy, and average room rate. The design and functionality of the structure can also affect operating efficiency and overall profitability. This section investigates the subject property’s physical improvements and personal property to determine how they contribute to total value.

Property Overview and Layout

The subject property contains 751 rentable units, a 144-seat full-service restaurant, a free-standing quick-service coffee and pastry kiosk, approximately 30,000 square feet of meeting space, a business center, a fitness room, a gift shop, an underground parking garage with 209 spaces, and a typical complement of back-of-the-house facilities. The hotel consists of a main building and tower, with the development covering nearly all developable portions of the subject site’s 0.938 acres. The 16-story main building was constructed in 1963, and the 27-story tower was constructed in 1972. The main building occupies the western portion of the parcel, which fronts Michigan Avenue, and the tower occupies the eastern portion. The subject property also has three lower levels, which contain the hotel’s back-of-the-house facilities, engineering spaces, and a parking garage.

Despite its age, the subject property’s exterior is attractively designed. The main building’s brick facade contains sand-colored vertical stripes and is enhanced by its high-rise construction, which adds to its urban design. The tower’s facade consists of glazed concrete and steel panels. Although parts of the improvements differ in date of construction, internally the main building and the tower are seamlessly connected.

The subject property’s lodging product is competitive in the downtown Chicago market. Although the guestrooms and hallways exhibit signs of aging, recent renovations have been completed on the hotel’s public areas, most notably the hotel’s lobby, meeting space, and food and beverage outlets. A number of competitive hotels have also initiated their own renovation programs.

HVS International, San Francisco, California Description of the Improvements 13

Facilities Summary

The following table summarizes the subject property’s facilities.

Summary of Facilities - The Westin Hotel – Chicago

Guestroom Configuration		Number of Units
King			347
Doubles			366
Parlor Suites			12
Crown Suites			9
Royal Suites			7
Coronet Suites			5
Suites			5
	Existing Total		751

Food and Beverage Facilities		Seating Capacity
The Chelsea Restaurant and Bar			144
Cafe A La Carte		NA
	Total		144

Meeting Rooms		Square Feet
Wellington Ballroom			7,750
Cotillion Ballroom			5,333
Windsor			930
Buckingham			1,830
Consulate 1			727
Consulate 2			489
Consulate 3			523
Governor’s Suite			2,200
Boardroom			558
Mayfair			1,559
Regent 1			988
Regent 2			843
Conference Room			500
Rex 1			468
Rex 2			468
Rex 3			468
Consort Room			3,257
Monarch 1			577
Monarch 2			577
	Total		30,045

Infrastructure	Number and Description
Garage	209 stalls
Elevators	6 guest
	4 service
	1 freight
Life-safety systems	Fully sprinklered, individual smoke alarms
Construction details	Concrete and steel support columns

Additional Amenities
Fitness room	Concierge
Gift shop	Valet parking/laundry
Business center

HVS International, San Francisco, California Description of the Improvements 14

The subject property’s foundation is poured concrete and steel support columns and beams. The roof is a concrete deck covered with a composition membrane ballasted by gravel. Vertical transportation is provided by six guest and four service elevators, in addition to one freight elevator.

Guest Access and Lobby Space

The hotel’s main entrance faces south onto Delaware Place and is distinguished by a partially enclosed glass entryway which is illuminated at night. The hotel’s lobby is located inside this entryway. Guests entering through the front entrance find Cafe A La Carte and assorted lobby furnishings to the left, or west, the entrance to the Chelsea Restaurant and Bar directly ahead, or north, and additional couch and chair settings to the east, or right, of the entrance. Further east are the registration desk and numerous front-desk agent stations. The front office is located directly behind the guest registration desk. A bank of guest elevators serving the main building and upscale street-level retail shops are located further west of the lobby. A concierge desk, a gift shop, and a second bank of elevators serving the tower are located just beyond the guest registration area. Further east of this area is the hotel’s parking garage entrance. At either end of the lobby, a circular staircase connects the first floor with meeting rooms on the second floor.

The lobby decor is in good condition as a result of its renovation in 1995; however, due to the hotel’s layout and the allocation of space on the hotel’s first floor to retail tenants along Michigan Avenue, the subject property’s lobby is long and narrow. During peak periods of check-in and check-out, the hotel’s cramped lobby is easily congested, resulting in operational difficulties. Moreover, the narrow lobby is not representative of the size and quality of the hotel as a whole, thereby reducing the overall guest experience. According to property management, a study is being done to reorient the lobby space to improve access and to enhance the overall impression of the hotel for future guests.

As mentioned previously, the entrance to the hotel’s underground parking is at the eastern portion of the hotel tower. The receiving area is located within the parking garage. The parking allotment, numbering 209 spaces, is reportedly sufficient. The cost of nightly valet parking is $24.95, at the upper end of the range of comparable hotel parking facilities.

Guestrooms

The 751 guestrooms of the subject property are contained in two interconnected buildings. The 16-story main building, which fronts Michigan Avenue, contains 353 guestrooms, while the 27-story tower

HVS International, San Francisco, California Description of the Improvements 15

contains the remaining 398 guestrooms. In 1998, all of the guestrooms in the tower building were completely renovated. The guestrooms in the main building are slated to begin renovations in the fourth quarter of 1999. Each guestroom is located off a double-loaded, interior-access “I”-shaped corridor, with the two elevator banks situated at the center of each building. The following passage describes the condition of the guestrooms in the subject property’s two buildings.

Main Building Guestrooms

Compared to the competitive market, the condition of The Westin’s main building guestroom supply is satisfactory, but non-competitive. The 350-square foot modules are of average size and are similar to those of most of the competitors; however, a number of competitive hotels have recently completed or are currently planning major renovations. Typical guestroom furnishings are described as follows.

• One king, or two double beds with wall-mounted headboards;

• Nightstand between each double bed with an AM/FM clock radio, and telephone with data port and voice mail;

• Wall-mounted bedside lamps;

• Armoire with chest of drawers and remote-controlled color television with On-Command movie system;

• Reading lamp and arm chair;

• Color-coordinated wall-to-wall carpeting, vinyl wall covering, bedspreads, drapes, and color prints;

• Work desk with two side chairs, table lamp, and push-button telephone with data port;

• Wall-mounted, hard-wired smoke detector and ceiling-mounted sprinkler;

• Wall-mounted thermostat with limited climate control connected to two-pipe HVAC system;

• Minibar chest with coffeemaker and vanity mirror;

• Closet with luggage rack, iron and ironing board; and

• Bathroom with flush ceramic commode, tiled floor, marble countertop, tub with plastic tub liner, and hair dryer.

HVS International, San Francisco, California Description of the Improvements 16

Photographs in the addenda to this report depict the interior of a typical main building guestroom. Main Building guestroom softgoods are in need of replacement; casegoods were last replaced in 1972 and appear very dated. According to property management, several major changes are planned for the main building, which will be detailed in the capital expenditures section of this report.

Tower Building Guestrooms

Approximately $6 million, or $15,000 per room, was spent on the renovation of the tower building guestrooms in 1998. According to the property engineer, all of the guestrooms in the tower were stripped down, gutted, and furnishings were entirely replaced. The guestrooms’ old vinyl wall covering was replaced with a higher-quality, heavy-weight commercial paper. New carpeting, bedspreads, drapery, and wall coverings feature attractively decorated patterns in contemporary designs and colors. Guestroom casegoods consist of hardwoods with a rich cherry stain. The guestrooms’ foyer area is laid with black Italian marble tile, which is also used atop the nightstand and in the bathroom vanity. The formerly cramped bathroom area was expanded by moving the bathroom walls outward into space that was inefficiently occupied by a minibar. The bathroom features an oversized vanity mirror, a cast-iron tub with marble-tiled tub walls, and a new sprinkler head. The minibar has been relocated within the armoire, which also contains a 25-inch television. It is recommended that the reader review the photographs of a renovated guestroom in the report’s addenda in conjunction with the description of the guestroom furnishings. The design, quality, layout, and condition of the tower building guestrooms are considered to be excellent.

Food and Beverage Facilities

The subject property contains one restaurant and a quick-service kiosk. As noted above, the 144-seat Chelsea Restaurant and Bar is The Westin’s full-service lunch and dinner restaurant, featuring typical Continental cuisine. The outlet is adjacent to the lobby and features a full bar area. Although the outlet does not have any exposure to natural illumination, the space is brightly lit and features attractively designed murals and artwork. The restaurant was completely renovated in 1994 and 1995 at a cost of approximately $455,000, or $3,200 per seat.

According to property management, restaurant revenues have eroded in recent years due to increased competition and the public’s lack of interest in non-branded hotel restaurants. Consequently, management has sought to lease the restaurant to an outside operator. Property management

HVS International, San Francisco, California Description of the Improvements 17

indicates that Los Angeles-based Grill Concepts, Inc. will occupy the existing restaurant space and a portion of the lobby to operate their full-service Grill Restaurant. A letter of intent has been synopsized in the addenda to this report. The existing restaurant will be closed in April 1999 and the space will be renovated for approximately five months; in the interim, temporary food and beverage service will be accommodated in a second-floor meeting room. The Grill Restaurant is scheduled to open in October 1999.

The free-standing quick-service kiosk, Cafe A La Carte, serves coffee, deli sandwiches, snacks, and baked goods. The kiosk, located in the lobby, is readily accessible to the meeting areas on the second floor, and is popular with group meeting attendees seeking a quick snack or beverage.

Meeting Space

Historically, The Westin has drawn roughly 49% of its room night demand from the group meeting segment, and roughly 69% of its food and beverage revenue from banquet-related business. The meeting space is flexible, well equipped, nicely furnished, and supported by ample pre-function space and easy access to service areas. Nearly all of the meeting space is located on the second and third floors of the hotel. The subject property’s 7,750-square-foot main ballroom features nearly 14-foot ceilings and can accommodate 840 banquet seats. The 5th floor contains three small meeting rooms, while the 16th floor features the elegant Consort and Monarch Rooms, which have spectacular views of Michigan Avenue. Overall, The Westin’s meeting space is in excellent condition owing to a complete renovation that entailed new carpeting, wall covering, and a lighting and sound system. In all, nearly $2 million in renovations has been completed since 1996.

According to property management, approximately 6,600 square feet of administrative and underutilized public space will be converted to meeting space as part of the reorganization of the hotel’s public and back-of-the-house areas. Most of this additional meeting space will come as a result of conversion of the third-floor administrative offices to breakout rooms. The proposed reorganization will be discussed in greater detail in the capital expenditures section of the report.

HVS International, San Francisco, California Description of the Improvements 18

Other Facilities

The subject property also features a business center on the second floor, with computer rental, fax, and secretarial services. The subject property’s fitness room, which is on the third floor, contains men’s and women’s locker rooms, each with a sauna, and a modest array of exercise equipment, including Stairmasters, treadmills and free weights. The hotel also features a W.H. Smith gift shop and a concierge desk, and offers valet laundry service.

Back-of-the-House Facilities

The Westin’s service and administrative areas are ample and logically placed. The front office is located behind the front desk and the remaining administrative offices are located on the third floor. This area houses reservations, sales, catering, accounting, the general manager, and other executive staff.

There are three kitchen and food service areas in the hotel. A kitchen is located on the first-floor area adjacent to the Chelsea Restaurant and Bar. A main kitchen occupies the northern portions of the building on the second floor and includes hot lines dedicated to the two second-floor ballrooms. A third kitchen is located on the 16th floor serving the Consort and Monarch Rooms. The kitchens are well equipped, and feature ample storage and preparation space.

Other service areas are located on the first level immediately below street grade and contain the housekeeping department, maintenance shops, and employee support areas. All of the hotel’s laundry is contracted out to a third-party vendor. The collection of laundry is facilitated by a central chute which is connected to all of the hotel’s floors.

The Westin’s heating, ventilation, and air conditioning (HVAC) are provided by a number of systems located throughout the property. In particular, the hotel’s domestic hot water and heat are supplied by two gas-fired boilers, located in the hotel’s second-floor basement, that were rebuilt in 1996 and 1997. These boilers feed into three 7,400-gallon hot water tanks.

Cooling of the hotel is provided by two 600-ton chillers located above the 16th floor of the western portion of the hotel. The property engineer reports that these two chillers operate in good working order; however, as they are nearly 40 years old, they are approaching the end of their useful life and are scheduled to be replaced in 1999 as part of the capital budget considered in the appraisal.

HVS International, San Francisco, California Description of the Improvements 19

According to property management, the inflexibility of the hotel’s guestroom heating and cooling system has been a source of guest complaints. Heating and cooling of the main building and tower guestrooms are conducted via a basic two-pipe system. Most modern hotels located in areas with varying climates utilize a four-pipe system which offers the diversity of individualized guestroom temperature control. Property management has budgeted $2,650,000 in 1999 to convert the antiquated two-pipe system to four pipes in the main building’s guestrooms.

In terms of fire-safety systems, each guestroom has a hard-wired smoke detector and all areas of the hotel are fully sprinklered. The property does not have an emergency generator; however, one is planned (but not yet budgeted) for installation in 2000.

Asbestos

According to subject property management, the hotel contains no active asbestos. The appraisers did not identify any asbestos in the property during the course of our inspection; however, we are not experts in this field. Any interested buyer is advised to contact an outside expert and should be aware that any costs of containment or removal would have a direct and downward effect on our estimate of “as is” market value.

ADA Conformance

Following the January 26, 1992, passage of the Americans with Disabilities Act (ADA), the subject property is subject to new physical standards. ADA standards principally address the number and accessibility of guestrooms designed to accommodate physically challenged guests, though a variety of safety standards are also included that can touch on the status of building systems. Due to the high, and sometimes prohibitive, cost of ADA conformance, necessary improvements have generally been limited to what is “readily achievable.” When a property is being refurbished, efforts are expected to be made to address ADA standards. For example, if, in the refurbishment, a vanity is being replaced, at that time the vanity should be raised so that it conforms with ADA standards. According to property management, the subject property conforms to all the current federal ADA guidelines. The Westin offers 15 guestrooms that meet ADA requirements and approximately $281,000 was spent in 1996 for ADA compliance.

Capital Expenditures

As previously mentioned, the subject property’s main building was constructed in 1963 and the hotel tower in 1972; as of the time of this report, the improvements are 36 and 27 years old. Although the subject property’s foundation and structure are reportedly in good condition, a number of the hotel’s building systems, departments, and furnishings have

HVS International, San Francisco, California Description of the Improvements 20

approached the end of their useful life and are in need of replacement. In addition to The Westin, a number of its competitors have recently completed or are planning major renovations in the following months. The Westin must undergo significant capital expenditures, or risk increased vulnerability in its competitive position. As a result, management has initiated a significant capital expenditures program.

To improve The Westin’s competitive position, as well as to lend support for the attainment of higher average rates, subject property management initiated a significant and comprehensive capital expenditures program that began in 1995 and is estimated to be completed by 2000. The following table presents actual capital expenditures for 1996, 1997, and 1998, and the budget for 1999 and 2000.

HVS International, San Francisco, California Description of the Improvements 21

Capital Expenditures Budget

			Actual		Actual		Actual		Budget
Item			1996		1997		1998		1999 and 2000		Total all years
Renovation
	Guestroom renovation		$	62,000
	Guestroom renovation - 179 Tower rooms				$	304,000	$	1,250,665
	Guestroom renovation - remaining Tower rooms							4,869,556
	Completion of 10 Tower Suites							150,000
	Mock-up room for Main Building renovation							20,908
	Guestroom renovation - 18 corner suites							540,000
	Renovation - 324 Main Building rooms								$	8,907,000
	Renovation - Presidential and State Suites									250,000
	Suite parlors									350,000
		Subtotal	$	62,000	$	304,000	$	6,831,129	$	9,507,000	$	16,704,129
Fire & Life Safety/ADA
	ADA guest elevators		$	281,000
	Fire & life safety			3,000
		Subtotal	$	284,000							$	284,000
Rooms Department
	Rooms miscellaneous		$	168,000	$	103,000	$	110,462	$	75,000
	Suite conversion					45,000
	Mattresses (319 in 1998 & 516 in 1999)							76,732
	Convert Rex meeting rooms to guestrooms							11,996
	Hallway carpeting							630,000
	Signage and electronic reader boards
		Subtotal	$	168,000	$	148,000	$	829,190	$	75,000	$	1,220,190
Food and Beverage/Meeting Space
	F & B miscellaneous		$	118,000	$	196,000	$	76,662	$	75,000
	Banquet room sound system			45,000		32,000
	Consort/Monarch renovation			130,000
	Governor’s Suite renovation			227,000		2,000
	Public washrooms			215,000		385,000		23,929
	Convert suite to boardroom					75,000		14,639
	3rd-floor renovation					500,000		111,258
	Grill Restaurant capital obligation									550,000
	1,500 banquet chairs									225,000
	Construct new function room on 2nd floor									200,000
	Convert 3rd-floor offices to meeting rooms									650,000
	Move business center to current banquet office									25,000
	Minibars (390 in 1998 & 349 in 1999)							195,451		180,000
		Subtotal	$	735,000	$	1,190,000	$	421,939	$	1,905,000	$	4,251,939
Systems
	EDP Miscellaneous		$	138,000	$	515,000	$	200,325	$	100,000	$	953,325

HVS International, San Francisco, California Description of the Improvements 22

Capital Expenditures Budget - Continued

			Actual		Actual		Actual		Budget
Item			1996		1997		1998		1999 and 2000		Total all years
Administration and Engineering
	Health-club miscellaneous		$	212,000
	Boilers			100,000
	Engineering miscellaneous			117,000	$	325,000
	Elevators modernization			233,000		230,000
	Ice machines					56,000
	Resurface service areas - 12 floors					48,000
	Engineering misc. (Tower room HVAC controls)						$	177,823
	Public area telephone booths						$	3,489
	Replace and rebalance domestic water systems								$	225,000
	Manitowoc Ice Machines							51,867
	Convert old health club to administrative office							39,603		500,000
	Cafeteria upgrade							4,591
	Chillers							33,260		500,000
	Replace trash compactor and lift							31,779
	Two-line guestroom telephones and related									75,000
		Subtotal	$	662,000	$	659,000	$	342,412	$	1,300,000	$	2,963,412
Building, Grounds, Other
	Pool roof		$	79,000
	Exterior facade			690,000
	Exterior signage			34,000
	Awning illumination			13,000
	Reclad planters in stone to match building				$	150,000
	New sidewalk					275,000	$	78,790
	Brick exterior facade					300,000		1,183
	Replace 5th-floor roof						$	100,000
	Replace 17th-floor roof							163,832
	Replace 29th-floor elevator roof								$	100,000
	Fire exit stairway from 2nd floor							30,463
	Construct replacement fire exit from 2nd floor									75,000
	Garage entrance facade, floor, ceiling renovation									250,000
	Concrete restoration of loading dock and garage ramps									50,000
	Lobby			4,000
	Lobby artwork			10,000
	Lobby softgoods replacement							26,543
	Service Express build-out							77,031
	Water pipe risers - Main Building							9,060
	4-pipe HVAC system (Main Building)									2,650,000
	Copper domestic water pipes (Main Building)									820,000
	Engineering miscellanous									75,000
	Architectural/Engineering study fees - Lobby/Public areas									50,000
		Subtotal	$	830,000	$	725,000	$	486,902	$	4,070,000	$	6,111,902
Total Capital Expenditures (all years)			$	2,879,000	$	3,541,000	$	9,111,897	$	16,957,000
									(say)		$	32,500,000

Source: Westin Hotels & Resorts

HVS International, San Francisco, California Description of the Improvements 23

In 1996, management completed approximately $2.9 million in capital improvements; the majority of these expenditures focused upon upgrading the hotel’s meeting space and public areas. In 1997, approximately $3.5 million was spent, with primary emphasis on renovating the remaining meeting spaces, public areas, and improving the curb appeal of the hotel’s street-level exterior. In 1998, the bulk of the $9.1-million capital expenditure was directed toward renovation of the tower building guestrooms. In 1999 and 2000, a total of roundly $17 million has been budgeted, focusing on four main areas: guestroom renovation and system upgrade, reorganization of hotel departments, and the Grill Restaurant. According to property management, approximately $5.75 million of the $17 million will be spent in 1999, with the remainder in 2000.

Main Building Guestroom Renovation and System Upgrade

Management has budgeted $9.5 million toward a complete renovation of the main building guestrooms. This renovation will essentially mirror the project that was undertaken for the tower guestrooms. However, the main building’s domestic water piping will be upgraded for $820,000 and the two-pipe HVAC will be converted to a four-pipe system for $2,650,000. These expenditures will bring the guestrooms to a four-star quality level, increase its competitiveness, and extend the life of the subject property.

According to the property engineer, only a small portion of the guestrooms contained in a single floor will be out of the guestroom inventory for the renovation program at any one time. Moreover, the renovation will occur during the hotel’s slowest quarter of the year, thereby minimizing guest impact and the loss in rooms revenue. We have considered the phased renovations of the upgraded guestrooms in our forecast of the subject property’s occupancy and average rate. Once the main building guestroom renovation is complete, The Westin will have a fully renovated guestroom product which will be considered to be superior to most, if not all, of its primary competition in the market.

Departmental Reorganization

According to property management, the subject property was constructed with an inadequate amount of meeting space considering the size of its guestroom inventory. According to the director of sales and the general manager, meeting space is in demand by the market for off-site meetings and group functions.

HVS International, San Francisco, California Description of the Improvements 24

As a result of its age, The Westin Hotel exhibits functional obsolescence in its design and layout. In order to fully maximize the potential of the hotel, property management has sought a reorganization of a number of departments within the hotel in order to increase much needed meeting space. Some aspects of the plan are dramatic, while others are merely superficial. The eastern portion of the main building’s 16th floor, an unfinished space that was formerly a fitness center, currently being used for long-term storage, will be refinished to house the administrative offices for the hotel, currently located on the third floor. In addition, the accounting department, also located on the third floor, will be relocated to a boardroom in the basement, adjacent to the cafeteria. Lastly, the 3rd-floor fitness room will be relocated to a structure that will be erected on top of the 16th-floor roof in an area which formerly held a swimming pool. The vacancy on the third floor will be filled by breakout rooms for group meetings.

On the second floor, a spiral staircase connecting the first and second floors will become superfluous (not required per fire code), as the Grill Restaurant will increase its space from the existing Chelsea Restaurant and Bar to include a portion of the lobby. From this new space, an additional meeting room will be created. Other minor changes include a relocation of the business center and the Service Express department.

As a result, approximately 6,000 square feet of meeting space will be created. Future board meetings will be conducted in the breakout rooms which will occupy the space vacated by these departments. Additional meeting space will allow the subject property to better sell itself to groups in an increasingly competitive market and become less reliant on traditionally weak commercial demand.

Grill Restaurant

As mentioned previously, the Chelsea Bar and Restaurant is set to close by April 1999 to make way for a leased restaurant. According to property management, a total of $3 million will be allocated to the renovation, of which $550,000 has been pledged by property management.

In addition, other expenditures being considered in 2000 and beyond, but not yet budgeted, include re-skinning the facade and upgrading all guestroom windows, reorganizing the hotel lobby space, and the installation of an emergency generator. Our projection of the subject property’s future operating performance does not reflect these speculative projects.

HVS International, San Francisco, California Description of the Imrpovements 25

Capital Expenditures Conclusion

As of the date of inspection, approximately $15.5 million has been spent since 1996. An additional $17.0 million is budgeted in 1999 and 2000 for a total of roundly $32.5 million for all years. This amount represents a significant capital infusion that will completely change the hotel’s guestroom product and significantly raise the caliber of the hotel to a four-star property. Considering the level of necessary capital improvements, as well as the age of the subject property, we are of the opinion that a long-term reserve for replacement equal to 5.0% of total revenues is necessary to maintain the subject property’s long-term competitive position.

Of the $17 million in capital expenditures in 1999 and 2000, approximately $5.75 million will be spent in 1999, and $11.25 million in 2000. We have deducted a total of $16.567 million from the subject property’s “as improved” value, reflecting $5.75 million spend in 1999 and $11.25 million discounted for one year at a safe rate of return of 4.0%. Such an expenditure is considered necessary for The Westin to maintain its competitive position, and its benefits are reflected in our forecast of occupancy and average rate.

Conclusion

The Westin Hotel – Chicago is a full-service, high-rise urban hotel that was constructed in the 1960s and 1970s. Upgrades to the subject property’s meeting space, restaurant, and lobby were completed in recent years. However, the hotel’s guestrooms, hallways, and building systems require upgrading and replacement, which, as discussed, will be addressed by extensive capital expenditures over the coming year.

With a significant capital infusion dedicated to the upgrade of the guestroom inventory, public spaces, and building systems, the subject property will be positioned to benefit from future improvement in the local market conditions and achieve the operating projections in this appraisal. To ensure the quality and integrity of the personal property and physical plant through the projection period, we have forecast a reserve for replacement equal to 5.0% of total revenues. This ratio is in line with industry standards, and is considered to be appropriate given the subject property’s quality of furniture, fixtures, and equipment, as well as the size of the hotel.

HVS International, San Francisco, California Zoning 26

5. Zoning

According to the city of Chicago zoning regulations, the subject property is zoned as follows.

B6 - 6 - Restricted Central Business District

The purpose of this zone is to provide retail, professional and personal services for the downtown area of Chicago. A variety of commercial uses are expressly permitted in this zone, including hotels and motels. Development standards in the district call for a maximum floor area ratio of 12:1; however, the ordinance allows certain exceptions in certain instances. Parking requirements stipulate that no parking is required for buildings with a floor area that is not more than two times the lot area in square feet or 140,000 square feet, whichever is greater. For the next 280,000 square feet of floor area in excess of this exemption, one parking space shall be provided for each 5,000 square feet. For all additional floor area, one parking space shall be provided for each 2,500 square feet. Based on the subject property building’s estimated 637,000 square feet, as determined by the property engineer, the Westin must provide approximately 143 parking spaces. The subject improvements contain 209 spaces. We assume that all necessary permits and approvals have been secured, including an appropriate liquor license, and that the subject property is in conformance with local building codes and all other applicable regulations.

HVS International, San Francisco, California Assessed Value and Taxes 27

6.     Assessed Value and Taxes

Property tax is one of the primary revenue sources of municipalities. Based on the concept that the tax burden should be distributed in proportion to the value of all properties within a taxing jurisdiction, a system of assessments is established by the local assessor. Theoretically, the assessed value placed on each parcel bears a definite relationship to market value, so properties of equal market value will have similar assessments and properties with higher and lower values will have proportionately larger and smaller assessments.

Depending on the taxing policy of the municipality, property taxes can be based on the value of the real property or the value of the personal property and the real property. The taxing jurisdiction governing the subject property assesses real property only. In Cook County, the assessor’s fair market value is based on triennial reassessments.

Historical Assessed Value and Taxes

According to the Cook County assessor’s records, the subject property’s 1997 assessed value (taxes payable in 1998) is set forth as follows.

Historical 1997 Assessed Value

Land		$	2,912,653
Improvements			14,802,947
	Total Assessed Value	$	17,715,600
Equalization Factor			2.1489
Equalized Valuation		$	38,069,053
Applied Tax Rate			8.843	%
Total 1997 Taxes		$	3,366,446

In 1989, the assessed value ratio for commercial properties of more than three stories was set at 38% of market value. The assessor’s determination of value is multiplied by the assessment ratio to yield a property’s assessed value. The state of Illinois also applies an equalization rate that changes

HVS International, San Francisco, California Assessed Value and Taxes 28

each year; the effective tax rate is equal to the tax rate multiplied by the equalization factor, and is expressed as the tax per $100 of assessed value. The following table sets forth the historical tax rates, equalization factors, and effective tax rates for the subject property’s jurisdiction.

Historical Tax Rates

Year	Tax Rate			Equalization Factor			Tax Rate		% Change
1990		9.964	%		1.9946	%		19.8742		—
1991		9.474			2.0523			19.4435		(2.2	)
1992		9.659			2.0897			20.1844		3.8
1993		9.590			2.1407			20.5293		1.7
1994		9.422			2.1135			19.9134		(3.0	)
1995		9.365			2.1243			19.8941		(0.1	)
1996		9.453			2.1517			20.3400		2.2	%
1997		8.843			2.1489			19.0027		(6.6)	%
Average Annual Compounded Percent Change 1990-97										(0.6)	%

Effective tax rates in the subject property’s taxing jurisdictions have fluctuated. Our projection of the subject property’s tax burden is primarily based on estimated increases in the assessed value and the underlying monetary inflation rate.

Projection of Property Taxes

Taxes are levied on the basis of calendar years, but are not payable until the following calendar year. Thus, the subject property paid taxes in 1998 that were based on its 1997 assessment. For accounting purposes, however, The Westin’s reported tax expense is based on an estimate of the year’s actual tax burden (which is not known until the following year when it is payable). Our forecast of The Westin’s tax burden for 1999 is based on estimated increases in the property’s assessed value and the 1998 effective tax rate; these calculations yield a projected tax burden of $3,490,000 in 1998. In subsequent projection periods, property taxes are expected to rise by 3.0% annually, in tandem with the assumed underlying inflation rate.

HVS International, San Francisco, California Assessed Value and Taxes 29

As a check on our projections of the subject property’s tax burden, we have compared the subject property’s assessed value with that of comparable hotels in Chicago’s downtown. The following table presents the assessed values of three hotels relative to the number of rooms in their guestroom inventories.

Assessed Values of Hotels in Chicago

	Sheraton Hotel		Fairmont Hotel		Radisson Hotel &		Subject
	Chicago, IL		Chicago, IL		Chicago, IL		Property
Total Assessed Value	$	27,679,957	$	17,092,400	$	5,586,000	$	15,747,200
Number of Rooms		1,204		692		341		751
Assessed Value of Improvements/Room	$	22,990	$	24,700	$	16,381	$	20,968

The assessed value of the comparable hotels in Chicago ranges from roundly $16,000 per room to $25,000 per room. The subject property’s assessed value per room is within the range of the comparable Chicago hotels.

HVS International, San Francisco, California Market Area and Neighborhood Analysis 30

7.     Market Area and Neighborhood Analysis

The economic vitality of the market surrounding the subject property is an important consideration in forecasting lodging demand and income potential. Economic and demographic trends that reflect the amount of visitation provide a basis from which to project hostelry demand. The purpose of the market area analysis is to review available economic and demographic data to determine whether the local market will undergo economic growth, stability, or decline. In addition to predicting the direction of the economy, the rate of change must be quantified. These trends are then correlated based on their propensity to reflect variations in lodging demand with the objective of forecasting the amount of growth or decline in transient visitation by individual market segment (e.g., commercial, group meeting, and leisure).

Market Area Overview

Cook is one of the nine counties that constitute the Metropolitan Statistical Area (MSA); the remaining eight counties are DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will. Cook County, which encompasses the city of Chicago, comprises almost 75% of the metropolitan area’s population.

Located in the northeastern portion of Illinois, at the base of Lake Michigan, Chicago is the third most populous city in the United States, behind New York and Los Angeles. As the headquarters of the nation’s two largest food processors (Beatrice and Kraft), two major commodities and futures exchanges (the Board of Trade and the Chicago Mercantile), and a multitude of domestic and international financing institutions, Chicago is considered to be the financial and industrial center of the Midwest, and second only to New York in the United States. Together, the Chicago exchanges account for more than 75% of commodities traded worldwide. Chicago is the nation’s leader in stock options trading, currency futures, and interest rate futures, and ranks second in precious metals trading.

Illustration: Regional Map

HVS International, San Francisco, California Market Area and Neighborhood Analysis 31

Because of its strategic location and extensive network of interstate highways, railroads, and commercial flight paths, Chicago has long been one of the major transportation hubs of the nation. The Chicago area ships a greater tonnage of manufactured goods by rail than any other production center in the nation. Passenger activity at Chicago’s O’Hare International Airport totaled more than 72 million in 1998, making it the world’s busiest passenger airport. The O’Hare Airport carries more freight and mail than any other facility in the country, and the value of its import and export shipments exceeds that of any other inland facility in the nation.

Chicago is the headquarters location of numerous multi-billion-dollar companies. Seventy-eight of the Fortune 1,000 industrial and services companies maintain corporate headquarters in the metropolitan area. The city is a center of education and research, boasting 12 major colleges and universities.

Demographic and Economic Review

The following demographic and economic review sets forth population, per-capita income, and retail sales for Cook County, the Chicago MSA, the state of Illinois, and the United States as a whole from 1980 through 2000. While not directly correlated with hotel room night demand, population and retail sales serve as a general measure of a market’s health. The per-capita income reflects the economic well-being of the populace.

HVS International, San Francisco, California Market Area and Neighborhood Analysis 32

Demographic and Economic Review

										Average Annual % Change
		1980		1990		1997		2000		1980-90			1990-97			1997-00
Resident Population (Thousands)
	Cook County		5,246.5		5,104.7		5,096.5		5,093.0		-0.3	%		-0.0	%		-0.0	%
	Chicago, IL MSA		7,245.8		7,424.6		7,766.9		7,861.4		0.2	%		0.6	%		0.4	%
	State of Illinois		11,435.4		11,446.8		11,891.7		12,018.0		0.0	%		0.5	%		0.4	%
	United States		227,225.6		240,133.9		257,804.6		265,225.5		0.6	%		1.0	%		1.0	%
Per Capita Personal Income*
	Cook County	$	20,140.0	$	23,246.0	$	26,076.0	$	27,007.0		1.4	%		1.7	%		1.2	%
	Chicago, IL MSA		20,422.0		24,294.0		27,056.0		28,155.0		1.8	%		1.6	%		1.3	%
	State of Illinois		18,792.0		22,059.0		24,399.0		25,386.0		1.6	%		1.5	%		1.3	%
	United States		16,994.0		19,112.0		20,283.0		21,443.0		1.2	%		0.9	%		1.9	%
W&P Wealth Index
	Cook County		114.7		111.7		115.4		115.1
	Chicago, IL MSA		117.3		117.3		120.6		120.9
	State of Illinois		109.2		107.4		109.6		109.8
	United States		100.0		100.0		100.0		100.0
Total Retail Sales (Millions)*
	Cook County	$	37,477.3	$	38,733.0	$	41,590.6	$	41,705.4		0.3	%		1.0	%		0.1	%
	Chicago, IL MSA		53,514.1		59,752.3		66,934.9		68,058.2		1.1	%		1.6	%		0.6	%
	State of Illinois		81,296.5		87,111.9		97,127.0		98,611.6		0.7	%		1.6	%		0.5	%
	United States		1,636,425.6		1,859,759.1		1,984,283.0		2,143,737.6		1.3	%		0.9	%		2.6	%

* Inflation Adjusted

Source: Woods & Poole Economics, Washington, DC

The population of Cook County declined slightly between 1980 and 1990 due to the relocation of major corporations from downtown Chicago to the surrounding suburbs. Population again decreased marginally from 1990 to 1997 as displaced manufacturing employees sought opportunities in other parts of the country. Through 2000, Cook County’s population is forecasted to continue the downward trend as businesses continue the shift from expensive downtown office space to less expensive office space in the surrounding suburbs.

Per-capita personal income and the W&P Wealth Index data presented in the preceding chart indicate that Cook County is significantly more affluent than the state and the nation. The Chicago MSA historically achieved an even higher wealth index than the county. Both the county

HVS International, San Francisco, California Market Area and Neighborhood Analysis 33

and the MSA have achieved growth rates in personal income since 1980 that are generally above those of the state and the nation. Through 2000, personal income growth is projected to increase; however, it is expected to be outpaced by national income growth.

Total county and MSA retail sales have experienced real annual growth since 1980. While underperforming the state, retail sales growth in the county and the MSA has been above that of the nation. Though slightly moderated from historical levels, continued growth in total retail sales of the subject market area is projected through 2000.

Workforce Characteristics

The characteristics of an area’s workforce provide an indication of the type and amount of transient visitation likely to be generated by local businesses. Sectors such as finance, insurance, and real estate (FIRE), wholesale trade, and services produce a considerable number of visitors who are not particularly rate sensitive. The government sector often generates transient room nights, but per-diem reimbursement allowances often limit the accommodations selection to budget and mid-priced lodging facilities. Contributions from manufacturing, construction, and transportation, communications, and public utilities (TCPU) employers can also be important, depending upon the company type. The following table sets forth Cook County’s workforce distribution by business sector in 1980, 1990, and 1997, as well as a forecast for 2000.

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Historical and Projected Employment - - Cook County (000s)

				Percent					Percent					Percent
Industry		1980		of Total			1990		of Total			1997		of Total
Farm			1.2		0.0	%		0.7		0.0	%		0.5		0.0	%
Agriculture			6.6		0.2			11.8		0.4			14.5		0.5
Mining			5.7		0.2			4.2		0.1			3.5		0.1
Construction			105.3		3.6			125.5		4.0			115.6		3.6
Manufacturing			645.8		22.1			476.3		15.1			431.9		13.5
T.C.P.U.			170.1		5.8			191.3		6.1			198.3		6.2
Total Trade			659.5		22.6			677.8		21.5			641.6		20.1
	Wholesale Trade		223.5		7.7			214.9		6.8			177.1		5.6
	Retail Trade		436.0		14.9			462.9		14.7			464.5		14.6
F.I.R.E.			279.4		9.6			358.5		11.4			338.8		10.6
Services			683.2		23.4			936.4		29.8			1,074.3		33.7
Total Government			361.2		12.4			363.4		11.6			370.0		11.6
	Federal Civilian Govt.		57.2		2.0			61.4		2.0			52.4		1.6
	Federal Military Govt.		14.6		0.5			20.3		0.6			12.7		0.4
	State & Local Govt.		289.4		9.9			281.6		9.0			304.9		9.6
TOTAL			2,918.1		100.0	%		3,146.0		100.0	%		3,189.1		100.0	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

							Average Annual Compounded
							Percent Change
				Percent
Industry		2000		of Total			1980-97			1990-97			1997-00
Farm			0.5		0.0	%		(4.7	)%		(3.3	)%		(2.5	)%
Agriculture			14.7		0.5			4.7			3.0			0.4
Mining			3.5		0.1			(2.9	)		(2.9	)		0.1
Construction			114.8		3.6			0.5			(1.2	)		(0.2	)
Manufacturing			419.1		13.1			(2.3	)		(1.4	)		(1.0	)
T.C.P.U.			197.3		6.2			0.9			0.5			(0.2	)
Total Trade			627.0		19.6			(0.2	)		(0.8	)		(0.8	)
	Wholesale Trade		168.8		5.3			(1.4	)		(2.7	)		(1.6	)
	Retail Trade		458.2		14.3			0.4			0.0			(0.5	)
F.I.R.E.			344.2		10.7			1.1			(0.8	)		0.5
Services			1,108.7		34.6			2.7			2.0			1.1
Total Government			375.9		11.7			0.1			0.3			0.5
	Federal Civilian Govt.		51.8		1.6			(0.5	)		(2.3	)		(0.3	)
	Federal Military Govt.		12.7		0.4			(0.8	)		(6.4	)		(0.0	)
	State & Local Govt.		311.4		9.7			0.3			1.1			0.7
TOTAL			3,205.7		100.0	%		0.5	%		0.2	%		0.2	%

Source: Woods & Poole Economics, Inc.

Total employment in Cook County increased at an average annual rate of 0.5% between 1980 and 1997. Due to the effects of the national economic recession in the early 1990s and a recovery in 1997, total employment in the subject market area increased at a compounded average rate between 1990 and 1997. Employment projections for Cook County suggest that growth will remain stable at 0.2%, due primarily to positive growth in agriculture services, the finance, insurance, and a lower level of decline in government industries.

Between 1980 and 1997, the services sector replaced most of the jobs lost in the manufacturing sector. As a result, the services sector increased from 23.4% of total employment in 1980 to 33.7% of total employment in 1997, and is by far the largest segment of the economy. Manufacturing, on the other hand, declined from 22.1% to 13.5% of total employment during the same period. Although future growth in services is anticipated to be more moderate than historical growth trends, the projected annual growth rate of 1.1% from 1997 to 2000 is a still a strong rate that bodes well for future hotel demand.

HVS International, San Francisco, California Market Area and Neighborhood Analysis 35

Providing additional context for understanding the nature of the regional economy, the following chart presents a list of the major employers in the Chicago area.

Major Employers in the Chicago Area

	Number of
Firm	Employees
U.S. Government		73,506
Chicago Public Schools		43,605
City of Chicago		41,312
Cook County		16,809
Sears Roebuck		26,073
Jewel Food Stores		24,386
Motorola, Inc.		23,000
State of Illinois		22,563
Ameritech Corp.		18,356
Dominick’s Finer Foods		18,000
Advocate Health Care		17,607
United Airlines		16,555
Abbott Laboratories		15,300
AT&T Corp.		15,000
First Chicago NBD Corp.		14,910
Commonwealth Edison Co.		13,042
Chicago Transit Authority		12,677
University of Illinois at Chicago		11,780
American Airlines		11,609
Walgreen Co.		11,100
Anderson Worldwide		8,286
Rush-Presbyterian St. Luke’s Medical Center		8,126
Montgomery Ward & Co.		8,104
Loyola University of Chicago		7,500
Allstate Corp.		7,200

Source: Chicago Economic Development Commission

Due to its central location and healthy economics, Chicago is a highly desirable place for firms to relocate; more than 30 Fortune 500 companies are headquartered in the Chicago area.

Unemployment Statistics

The following table presents historical average unemployment rates for the Chicago MSA, versus those of the state of Illinois and the nation, from 1990 to 1997.

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Unemployment Statistics

Year	Chicago MSA			Illinois			United States
1990		6.0	%		6.2	%		5.5	%
1991		7.0			7.2			6.7
1992		7.4			7.6			7.4
1993		7.3			7.5			6.8
1994		5.6			5.7			6.1
1995		5.1			5.2			5.6
1996		5.0			5.3			5.4
1997		4.2			4.5			5.0

Source: Bureau of Labor Statistics

Historically, the Chicago MSA has had a lower unemployment rate than the state of Illinois but higher than that of the United States. As indicated in the above data, the national economic recession of 1990-92 resulted in an increase in the unemployment rate to a peak of 7.4% in 1992. Due to strong job creation led by the technology and services sectors, the Chicago MSA has had a lower unemployment rate than both the state and the nation since 1994.

Office Space Statistics

Chicago is the primary metropolitan area in Cook County, and the county remains the dominant commercial core of the MSA in terms of the concentration of office space and major employers.

Chicago’s office market is the third largest in North America and Europe, after New York City and Los Angeles. More than $10 billion in construction has been completed in Chicago’s Central Business District since 1979. This concentration is equivalent to approximately one-third of all office space built in the last century. Office space statistics for Chicago area submarkets between 1997 to 1998 are presented as follows.

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Office Space Statistics - Chicago Area

						Vacancy Rate									Net Absorption
		Number of
Submarket		Buildings		Square Feet		1997			Mid-1998			1998			1997			Mid-1998		1998
West Loop			46		25,440,000		10.6	%		7.4	%		12.2	%		64,047			829,000		1,147,562
Central Loop			96		44,480,000		12.9			10.8			16.8			1,557,393			948,000		62,186
East Loop			58		21,259,000		19.9			17.8			19.1			(181,019	)		364,000		145,851
N. Michigan Avenue			44		12,869,000		13.9			8.9			15.7			300,204			594,000		213,884
River North			40		2,746,000		7.8			6.8			14.3			65,062			25,000		162,533
	Totals		284		106,794,000		13.8	%		11.1	%		15.6	%		1,805,687			2,760,000		1,732,016

Source: CB Commercial

Due to its large inventory of office space, Chicago has historically had relatively high vacancy rates. In the late 1980s and early 1990s, demand for suburban office space increased as a result of out-migration by downtown firms to outlying areas. However, as with most major cities, a revitalized urban downtown core has recently regained favor. Overall, the downtown office market posted a 1998 vacancy rate of 15.6%, compared with the peak in the low-20% range in the early 1990s. The availability and competitive pricing of Class A downtown office space provide an opportunity for growing firms, as well as new and relocating companies, to operate in one of the nation’s most active business centers.

Convention Activity

Downtown Chicago’s central location attracts millions of attendees and exhibitors to some of the nation’s largest and best convention and trade show facilities each year, providing a significant portion of the area demand for overnight accommodations. The city is host to more conventions, trade shows, and corporate meetings than any other city in the world.

The success of Chicago as a major convention destination is a result of many factors. The city’s central United States location is a logical choice for major organizations and trade show exhibitors. Moreover, as Chicago receives more direct flights than any other city in the United States, air travel to the area is simplified. Lastly, Chicago is armed with a large and diverse range of meeting and hotel facilities that can accommodate medium- to the largest-sized group events.

McCormick Place is the largest exhibition and meeting facility in North America. The complex offers over 1.6 million square feet of exposition space, plus 52 meeting rooms, four theaters, and five banquet rooms. The completion of the $987-million McCormick Place expansion in early 1997

HVS International, San Francisco, California Market Area and Neighborhood Analysis 38

brought an additional 870,000 square feet of exhibition space and 170,000 square feet of meeting space.

The renovation of Chicago’s historic Navy Pier (which had its grand opening in the summer of 1996) has proven to be a huge success. Chicago’s world-class landmark was restored and expanded as a year-round tourist attraction and convention center for exhibitions, meetings, and special events and features 170,000 square feet of exhibit space and 48,000 square feet of meeting space. In addition to McCormick Place and Navy Pier, Chicago also offers secondary venues such as the Merchandise Mart and the O’Hare Exposition Center. The following table presents the total meeting square footage of various Chicago area convention venues.

Chicago Convention Venues

Venue	Meeting Space (in Sq. Ft.)
McCormick Place		2,200,000
Navy Pier		170,000
Merchandise Mart		65,000

The following table presents statistics provided by the Chicago Convention and Tourism Bureau relating to the total number of conventions, trade shows, and meetings held with total attendance from 1990 to 1997, with the estimate for 1998 and projections for 1999.

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Chicago Convention Statistics

			1990		1991			1992			1993			1994
Conventions
	Number of			1,102		1,105			1,055			1,224			1,377
	Attendance			510,869		333,407			470,768			567,493			712,472
Trade Shows
	Number of			136		205			192			180			165
	Attendance			1,787,160		2,092,600			1,998,250			1,952,550			1,961,799
Corporate Meetings
	Number of			27,108		28,288			28,835			34,317			35,993
	Attendance			893,089		931,853			951,566			1,132,457			1,187,769
Total Events
	Number of			28,346		29,598			30,082			35,721			37,535
		Percent Change		—		4.4	%		1.6	%		18.7	%		5.1	%
	Attendance			3,191,118		3,357,860			3,420,584			3,652,500			3,862,040
		Percent Change		—		5.2	%		1.9	%		6.8	%		5.7	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

												Estimated		Projected
			1995			1996			1997			1998		1999
Conventions
	Number of			1,205			1,135			1,150			1,431		1,465
	Attendance			853,466			874,712			930,000			1,012,920		1,037,760
Trade Shows
	Number of			153			140			135			156		160
	Attendance			2,006,604			2,122,422			2,130,000			2,290,080		2,346,240
Corporate Meetings
	Number of			37,499			37,787			43,000			33,364		34,182
	Attendance			1,237,525			1,246,987			1,500,000			1,101,000		1,128,000
Total Events
	Number of			38,857			39,062			44,285			34,951		35,807
		Percent Change		3.5	%		0.5	%		13.4	%		—		2.4	%
	Attendance			4,097,595			4,244,121			4,560,000			4,404,000		4,512,000
		Percent Change		6.1	%		3.6	%		7.4	%		—		2.4	%
Annual Compounded Percent Change, 1990 - 1997:
Number of Events				5.5	%
Attendance				4.9	%

Source: Chicago Convention and Tourism Bureau

Despite the adverse affects of the recession during the early 1990s, the total number of events held and attendance in Chicago have consistently increased since 1990. In 1996,the number of total events held increased only slightly as the result of displacement from the Democratic National Convention, which was held in August. According to local hoteliers, the convention center has strong bookings for 2000 and 2002, while 1999 and 2001 will be slower convention years.

Airport Traffic

Airport passenger counts are important indicators of lodging demand. Depending on the type of service provided by a particular airfield, a sizable percentage of arriving passengers may require hotel accommodations.

Two main airports serving the greater Chicago metropolitan area are the Chicago/O’Hare International Airport, which is located 10 miles west of downtown Chicago, and the Chicago/Midway Airport, which is located 15 miles southwest of downtown. With these two airports, the subject market is served by more than 50 major domestic and international carriers that offer non-stop service to the business centers of Europe and Asia.

HVS International, San Francisco, California Market Area and Neighborhood Analysis 40

Trends showing changes in passenger counts also reflect local business activity and the overall economic health of the area.

O’Hare and Midway International Airport Statistics

	O’Hare International Airport								Midway International Airport
Year	Domestic		International		Total				Domestic		International		Total
1992		59,218,188		5,223,899		64,442,087	—			4,620,889		3,335		4,624,224	—
1993		59,191,702		5,899,466		65,091,168	1.0	%		6,757,274		4,819		6,762,093	46.2	%
1994		60,293,999		6,174,270		66,468,269	2.1			9,543,308		18,675		9,561,983	41.4
1995		60,462,218		6,791,140		67,253,358	1.2			9,891,207		31,009		9,922,216	3.8
1996		61,935,067		7,218,481		69,153,548	2.8			9,797,038		15,821		9,812,859	(1.1	)
1997		62,924,653		7,326,489		70,251,142	1.6			9,946,386		3,564		9,949,950	1.4
1998		63,614,152		8,871,066		72,485,218	3.2			11,418,96		32,966		11,451,935	15.1
Average Annual Compounded Percentage Change (1992-1998)							2.0	%							16.3	%

Source: Chicago Department of Aviation

The O’Hare International Airport is the world’s busiest airport in terms of passenger enplanements, and is ranked third among national airports in cargo tonnage enplaned. The O’Hare International Airport carries more freight and mail than any other facility in the country, and the value of its import and export shipments exceeds that of any other inland facility in the nation. According to the city of Chicago’s Department of Aviation, there were roundly 72,485,000 passenger arrivals and departures at O’Hare in 1998, representing an increase of 3.2% over the passenger count registered in 1997.

Alternately, the Midway Airport is served by 16 commercial airlines and handles more corporate jet aircraft than the O’Hare International Airport. According to airport officials, approximately $100 million has been invested in recent years for parking, terminal, and airfield improvements. The facility is located approximately 10 miles southwest of the subject site. In recent years, Southwest Airlines has become the dominant carrier at Midway, and the addition of new discount airlines such as American Trans Air has increased Midway’s commercial traffic.

HVS International, San Francisco, California Market Area and Neighborhood Analysis 41

Leisure Attractions

The following description of the area’s leisure attractions reflects the variety of activities that draw leisure travelers to the Chicago area either as a destination or as an interesting stopping point on a longer journey.

• Chicago’s Magnificent Mile shopping district is considered one of the premier shopping areas in the nation, with upscale shops such as Saks Fifth Avenue, Marshall Fields, Tiffany and Company, Cartier, and Neiman Marcus, as well as mass-market retailers such as Banana Republic, Niketown, and Eddie Bauer. The Magnificent Mile is located along Michigan Avenue, which is one block west of the subject site.

• Navy Pier is a major leisure attraction on Chicago’s lakefront. Since relocating there in October 1996, the Chicago Children’s Museum has tripled its attendance. Other attractions include a 440-seat Imax Theater, a six-story glass-enclosed atrium called the Crystal Gardens, an outdoor ice-skating rink, an indoor in-line skating rink, a Ferris wheel with enclosed seating, and regular performances by the Navy Pier Pops Orchestra. In addition, a TV production and editing studio, a 1,000-seat performing arts center, and a 400-seat children’s theater have all recently opened. As mentioned, Navy Pier also serves as a meeting destination which induces group demand to area hotels. Navy Pier is one and one-half miles northeast of the subject site.

• Lincoln Park Zoo is a 35-acre zoo that is the nation’s oldest. The zoo is located within Lincoln Park, which fronts Lake Michigan and stretches nearly six miles.

• The Art Institute of Chicago features post-World War II works by artists including Warhol, Picasso, and Hockney. Other attractions include the Field Museum, the Shedd Aquarium, the Adler Planetarium, and the Museum of Science and Industry.

• Sears Tower Skydeck, which is 110 stories high, offers unrestricted views of the Chicago skyline and four neighboring states.

• Chicago has professional basketball, baseball (two), and football teams, the Bulls, the Cubs and White Sox, and the Bears.

Lastly, sightseeing and tourist attractions include varied architectural landmarks and trips along the Chicago River.

HVS International, San Francisco, California Market Area and Neighborhood Analysis 42

Neighborhood Analysis

The neighborhood surrounding a lodging facility often has an impact on a hotel’s status, image, class, style of operation, and sometimes its ability to attract and properly serve a particular market segment. The subject property’s neighborhood can affect its occupancy, average rate, food and beverage revenues, and overall profitability.

The subject site’s neighborhood can be geographically defined as the length of North Michigan Avenue between Oak Street to the north and the Chicago River to the south. This north-south corridor, known as the Magnificent Mile, is recognized as one of the nation’s premier retail areas. Department stores such as Marshall Fields, Bloomingdale’s, Neiman Marcus, and Lord & Taylor are located along this avenue, as well as national retailers such as Crate & Barrel, FAO Schwartz, Levi’s, Eddie Bauer, Niketown, North Face, Gap, and Sony. Smaller high-end boutique shops are located beyond the subject neighborhood to the northwest along Oak and Walton Streets.

Although the primary character of the neighborhood is retail oriented, the area also contains high-rise office buildings, upscale residential developments, restaurants, and full-service hotels within the mature, relatively densely developed commercial neighborhood.

Just north of the subject neighborhood is Chicago’s famous Gold Coast, an affluent residential neighborhood with an active nightlife and entertainment scene. To the east is Streeterville, one of the city’s wealthier neighborhoods, which contains Northwestern Memorial Hospital, Northwestern University’s city campus, and the Museum of Contemporary Art. Further east of Streeterville is Navy Pier. To the south of the subject neighborhood and just across the Chicago River is Illinois Center, a relatively new commercial district. Further south lies The Loop, Chicago’s Central Business District. To the west of the subject neighborhood is River North, which features the largest concentration of art galleries outside Manhattan. The area also contains the Merchandise Mart, the world’s largest home furnishings showroom. River North also features numerous comedy clubs, nightclubs, and restaurants.

Overall, the supportive nature of the development in the immediate and surrounding areas is considered appropriate for, and conducive to, the operation of a first-class transient lodging facility.

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Conclusion

Economic analysis of the subject property’s region alludes to continued positive growth, albeit at slowing rates of growth into the future. As will be detailed in the subsequent sections of this report, hotel demand in the subject’s competitive market has steadily increased in each year since 1990, a trend that is chiefly attributed to the revitalization of Chicago’s downtown and the strength of the Midwest’s economy. However, growth in demand is not likely to continue indefinitely, and has already begun to slow, due to financial turmoil abroad and its impact upon exports and manufacturing.

The “Supply and Demand Analysis’ section of this appraisal will relate the historical and projected growth trends reviewed herein to specific market segments based on their propensity to reflect changes in lodging demand. This analysis will provide a basis for forecasting changes in room night demand in the subject property’s market area.

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8.     Supply and Demand Analysis

In the economic principle of supply and demand, price varies directly, but not proportionately, with demand and inversely, but not proportionately, with supply. In the lodging industry, supply is measured by the number of guestrooms available and demand is measured by the number of guestrooms accommodated; the net effect of supply and demand is gauged by the occupancy rate. The balance of lodging supply and demand towards equilibrium results in a prevailing price, or the average rate.

Regional Supply and Demand Overview

Supply and demand data for the subject property’s competitive market, which represents the primary and secondary competitive properties, was compiled by Smith Travel Research (STR). STR is an independent research firm which compiles data on the lodging industry. We find that STR data are generally relied upon by typical hotel buyers. Information since 1992 is presented in the following table.

Subject Property’s Competitive Hotel Market Trends

												% Change from Previous Year
				%			Average		%									Room
Year	Occupancy			Change			Rate		Change			Supply			Demand			Sales
1992		63.9	%		—		$	110.23		—			—			—			—
1993		67.8			6.1	%		113.31		2.8	%		1.5	%		7.7	%		10.7	%
1994		70.4			3.8			117.69		3.9			0.0			3.9			7.9
1995		71.6			1.7			123.36		4.8			0.0			1.8			6.7
1996		74.9			4.6			137.44		11.4			0.0			4.5			16.5
1997		76.1			1.6			149.64		8.9			0.0			1.6			10.6
1998		75.6			(0.7	)		162.49		8.6			3.6			2.9			11.7

Source: Smith Travel Research

In reviewing the data compiled by STR, it is important to note some of the inherent limitations. We have found that since hotels are occasionally dropped in and out of the sample and since not every property reports

HVS International, San Francisco, California Supply and Demand Analysis 45

data in a totally consistent and timely manner, the overall quality of this information may be affected. These variables can sometimes skew the data for a particular market. However, we find that STR data are generally relied upon by typical hotel buyers, and these data will therefore be considered in this study.

The marketwide occupancy increased steadily from 63.9% in 1992, when the nation was still experiencing the impact of the economic recession, to a peak of 76.1% in 1997. Occupancy decreased slightly to 75.6% in 1998 as supply additions outpaced the growth in demand. The marketwide average rate increased by an average annual compounded rate of 6.7% from 1992 to 1998, with strong growth rates in 1996, 1997, and 1998 of 11.4%, 8.9%, and 8.6%, respectively. The decline in market occupancy is attributed to the opening of several new properties, most notably the 800-unit Hyatt Regency McCormick Place. Nevertheless, average rate was strong in 1998, a result of strong group demand, increasing tourism from domestic and foreign sources, and strong commercial activity.

With demand levels strong and the marketwide occupancy rate in the mid-70% range, areawide hotels have remained aggressive in pursuing gains in average rate. This growth pattern is expected to continue, albeit at a slower rate.

SUPPLY ANALYSIS

An integral component of the supply and demand relationship is the current and anticipated supply of competitive lodging facilities. Currently, the city of Chicago contains over 62 hotels featuring more than 27,000 hotel rooms in the downtown area. The area south of the Chicago River has over 20 hotels, and the North Michigan Avenue area offers over 42 hotels.

Based on our evaluation of the market orientation, chain affiliation, location, facilities, and amenities of the area’s hotels, we have identified five first-class full-service hotels that compete directly with the subject property. The competitive properties are all located along or nearby the Magnificent Mile corridor, an area characterized by upscale retail development, class A and B office buildings, and restaurants.

Including the 751-unit subject property, the 1998 primarily competitive supply equaled 4,141 guestrooms in six lodging facilities. In addition, the subject property also competes to a limited degree with other full-service hotels throughout Chicago. Although the facilities, rate structures, or market orientations of these hotels prevent their inclusion among the

HVS International, San Francisco, California Supply and Demand Analysis 46

primarily competitive supply, they do compete with the subject property to some extent. The room count of each secondary competitor has been weighted to reflect the degree to which it will compete with the subject property; the aggregate weighted room count of the secondary competitors was 2,586 in 1998. The weighted competitive set totaled 6,727 rooms in 1998.

The following chart describes the characteristics pertinent to the subject property and each of its competitors for 1996, 1997, and 1998. The data were compiled through interviews and a review of our in-house store of operating data. In the following chart, the 1998 occupancy and yield penetration factors are calculated for each hotel. These penetration factors are calculated by dividing the subject property’s occupancy and RevPAR results by those of the market. (RevPAR is the product of occupancy and average rate and is therefore a measure of “yield.”)

COMPETITIVE REVIEW —  PRIMARY COMPETITORS

									Estimated 1998 Market Segmentation
	Year		No. of		Meeting		Meeting
Property/Location	Opened		Rooms		Space		Space/Rm		Com’l			Grp Mtg			Leisure			Contract
The Westin Hotel 909 N. Michigan Ave.		1963/72		751		30,045		40.0		21	%		49	%		21	%		9	%
Chicago Marriott 540 N. Michigan Ave.		1978		1,172		58,800		50.2		30			55			15			0
Drake Hotel 140 E. Walton Pl.		1920		535		27,700		51.8		40			35			25			0
Hotel Inter-Continental 605 N. Michigan Ave.		1929/90		842		44,142		52.4		40			50			10			0
Radisson Hotel & Suites 160 E. Huron St.		1973		341		18,000		52.8		35			35			25			5
Holiday Inn - Chicago City Center 300 E. Ohio St.		1976		500		16,011		32.0		30			45			20			5
Subtotal/Average				4,141		194,698		47.0		32	%		48	%		18	%		3	%
Secondary Competition				2,586						29	%		54	%		13	%		5	%
Total/Average				6,727						31	%		50	%		16	%		3	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Estimated 1996							Estimated 1997
				Average							Average
Property/Location	Occ.			Rate		RevPAR		Occ.			Rate		RevPAR
The Westin Hotel 909 N. Michigan Ave.		69.7	%	$	129.31	$	90.13		72.3	%	$	141.88	$	102.58
Chicago Marriott 540 N. Michigan Ave.		80.0			143.00		114.40		81.0			158.00		127.98
Drake Hotel 140 E. Walton Pl.		71.2			170.00		121.04		70.0			185.00		129.50
Hotel Inter-Continental 605 N. Michigan Ave.		79.0			148.00		116.92		79.0			150.00		118.50
Radisson Hotel & Suites 160 E. Huron St.		72.0			128.00		92.16		73.0			135.00		98.55
Holiday Inn - Chicago City Center 300 E. Ohio St.		74.0			120.00		88.80		76.0			130.00		98.80
Subtotal/Average		75.4	%	$	141.19	$	106.49		76.3	%	$	151.60	$	115.73
Secondary Competition		76.5	%	$	135.47	$	103.59		75.2	%	$	148.44	$	111.69
Total/Average		75.8	%	$	139.01	$	105.40		75.9	%	$	150.41	$	114.21

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Estimated 1998
				Average				Occupancy			Yield
Property/Location	Occ.			Rate		RevPAR		Penetration			Penetration
The Westin Hotel 909 N. Michigan Ave.		71.3	%	$	159.11	$	113.45		93.6	%		93.1	%
Chicago Marriott 540 N. Michigan Ave.		79.0			166.00		131.14		103.8			107.6
Drake Hotel 140 E. Walton Pl.		70.0			192.00		134.40		91.9			110.3
Hotel Inter-Continental 605 N. Michigan Ave.		82.0			155.00		127.10		107.7			104.3
Radisson Hotel & Suites 160 E. Huron St.		79.0			146.00		115.34		103.8			94.7
Holiday Inn - Chicago City Center 300 E. Ohio St.		75.0			137.00		102.75		98.5			84.3
Subtotal/Average		76.6	%	$	160.38	$	122.80		100.6	%		100.8	%
Secondary Competition		75.4	%	$	159.50	$	120.33		99.1	%		98.7	%
Total/Average		76.1	%	$	160.05	$	121.86		100.0	%		100.0	%

COMPETITIVE REVIEW –  SECONDARY COMPETITORS

								Estimated 1998
								Market Segmentation
	Actual Rm		Percentage			Weighted
Property	Count		Competitive			Rm. Count		Com’l			Grp Mtg			Leisure			Contract
Swissotel		630		50	%		315		45	%		40	%		10	%		5	%
Hyatt Regency Chicago		2,019		50			1,010		15			65			10			10
Westin River North		425		50			213		45			40			15			0
Renaissance		535		50			268		35			50			15			0
Omni Suites		347		25			87		65			25			10			0
Doubletree Guest Suites		345		25			86		60			10			30			0
Embassy Suites		358		25			90		50			35			15			0
Sheraton Chicago Hotel & Towers		1,204		10			120		17			74			9			0
Chicago Hilton & Towers		1,543		10			154		15			65			20			0
Palmer House Hilton		1,640		10			164		35			50			15			0
Hyatt Regency McCormick Place		800		10			80		10			80			10			0
Total/Average		9,846					2,586		29	%		54	%		13	%		5	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Estimated 1996							Estimated 1997							Estimated 1998
				Average							Average							Average
Property	Occ.			Rate		RevPAR		Occ.			Rate		RevPAR		Occ.			Rate		RevPAR
Swissotel		73.0	%	$	142.00	$	103.66		73.0	%	$	147.00	$	107.31		76.0	%	$	158.00	$	120.08
Hyatt Regency Chicago		78.0			123.00		95.94		77.0			135.00		103.95		77.0			144.00		110.88
Westin River North		77.0			140.00		107.80		66.0			168.00		110.88		68.0			185.00		125.80
Renaissance		76.0			151.00		114.76		73.0			175.00		127.75		73.0			191.00		139.43
Omni Suites		77.0			169.00		130.13		78.0			177.00		138.06		78.0			192.00		149.76
Doubletree Guest Suites		70.0			140.00		98.00		74.0			154.00		113.96		73.0			173.00		126.29
Embassy Suites		80.0			159.00		127.20		80.0			169.00		135.20		83.0			178.00		147.74
Sheraton Chicago Hotel & Towers		76.0			127.00		96.52		76.0			134.00		101.84		76.0			150.00		114.00
Chicago Hilton & Towers		80.0			143.00		114.40		81.0			158.00		127.98		81.0			163.00		132.03
Palmer House Hilton		72.0			136.00		97.92		75.0			142.00		106.50		75.0			149.00		111.75
Hyatt Regency McCormick Place		—			—		—		—			—		—		49.0			153.00		74.97
Total/Average		76.5	%	$	135.47	$	103.59		75.2	%	$	148.44	$	111.69		75.4	%	$	159.50	$	120.33

Illustration: Competition Map

Competitive Review - Secondary Competitors

HVS International, San Francisco, California Supply and Demand Analysis 48

The subject property is a premier first-class urban hotel; as such, its most direct competitors are nationally recognized, full-service hotels. These high-rise urban hotels range in date of construction from the 1920s to the 1970s. As will be detailed further, a number of these properties have recently completed or are scheduled to undergo extensive renovation programs.

The competitive market recorded an overall occupancy rate of 76.1% in 1998, up from the 75.9% attained in 1997, while average rate increased from roughly $150 to $160. The improvement in these variables is attributed to the healthy economic conditions in Chicago and the Midwest.

Among the primary competitive set, the Chicago Marriott is The Westin’s most direct competitor. The Marriott’s central Michigan Avenue location, strong reservation system, and recognized brand presence result in its superlative occupancy and yield penetration levels. The Drake Hotel leads the market in yield penetration as a result of its significantly higher average rate. The Drake commands the highest rate among the competitive set due to its higher ratio of suite units (55 out of 535), as well as its historic charm and spectacular views of Lake Michigan.

Primary Competitors

As for the competition, each primary competitor was inspected and evaluated. Descriptions of our findings are summarized on the following pages.

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Historical Operating Performance

								Occupancy			Yield
Year	Occupancy			Average Rate		RevPAR		Penetration			Penetration
1996		80.0	%	$	143.00	$	114.40		105.5	%		108.5	%
1997		81.0			158.00		127.98		106.7			112.1
1998		79.0			166.00		131.14		103.8			107.6

This high-rise, 1,172-room, full-service hotel is centrally located on Michigan Avenue, on the city block bounded by Ohio and Grand Streets between Rush Street and Michigan Avenue, approximately nine blocks or one-half of a mile south of the subject property.

In addition to guestrooms, the hotel is equipped with 58,800 square feet of meeting space, the largest complement among the competitive set. Moreover, the meeting facilities contain two large-capacity ballrooms. The hotel also features a concierge level, three restaurants, three lounges, an indoor swimming pool, two basketball courts, and a health club. The hotel recently completed a renovation of the meeting space during the first quarter of 1997.

The institutional feel of the hotel is amplified by the large scale of the building and its style of construction, which dates back to 1978. John Buck Company, the hotel’s owners, addressed this issue with a major $12-million renovation program which was completed in June 1998. The renovation added executive conference rooms, re-designed the main entrance on Rush Street, and entailed a complete lobby renovation and a new facade over the nine-story section of the hotel facing Michigan Avenue and Ohio Streets.

This renovation program occurred in conjunction with a larger retail and entertainment project known as North Bridge. The North Bridge development encompasses a six-square-block area just east of North Michigan Avenue and includes a 260,000-square-foot Nordstrom store, a 13-story luxury hotel (under construction), a recently completed 40,000-square-foot Virgin Entertainment Megastore, and a Disney Quest entertainment center.

Despite having the largest guestroom inventory among the competitive set, the Marriott’s occupancy penetration is among the highest in the market. This feat is attributable to a number of contributing factors. The Marriott benefits from a highly visible and central location, a commanding

HVS International, San Francisco, California Supply and Demand Analysis 51

presence in the group meeting segment as a result of its large guestroom inventory and meeting space capable of supporting large-scale groups, and Marriott’s Honored Guest Awards program, which attracts a highly loyal base of commercial and leisure travelers. Consequently, despite its size, the Marriott managed a very strong occupancy and average rate in 1998. With the recently completed renovation program and the greater North Bridge project, the Marriott’s commanding position in the competitive market will only be strengthened.

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[GRAPHICS TO COME]

Drake Hotel	Location:	140 E. Walton Place
		Chicago, Illinois
	Number of Rooms:	535

Historical Operating Performance

								Occupancy			Yield
Year	Occupancy			Average Rate		RevPAR		Penetration			Penetration
1996		71.2	%	$	170.00	$	121.04		93.9	%		114.8	%
1997		70.0			185.00		129.50		92.2			113.4
1998		70.0			192.00		134.40		91.9			110.3

The historic Drake Hotel originally opened in 1920, and went through several different owners until 1996, when it was acquired by Hilton International. The hotel occupies a highly visible site at the north end of Michigan Avenue, with spectacular views of Lake Michigan and the Gold Coast, just one block north of The Westin Hotel.

HVS International, San Francisco, California Supply and Demand Analysis 53

The hotel features 535 guestrooms, including 55 suites, an executive club floor, four restaurants, 27,700 square feet of meeting space, a business center, an exercise room, valet parking, and retail shops.

The hotel exudes a historic charm and elegance throughout its lobby and restaurants; however, the public areas exhibit a degree of wear. The Drake’s softgoods and casegoods have been periodically refurbished, while the bathrooms are in good condition. The guestroom modules are comparable in size and furnishing to the subject property’s current guestrooms, but are inferior to the newly renovated units.

In terms of operational performance, the Drake Hotel led the market in terms of RevPAR in 1998, due to its market-leading average rates. As mentioned previously, the strong average rate at the Drake is attributed to its historic charm and scenic views, as no other primarily competitive property has comparable views of Lake Michigan.

HVS International, San Francisco, California Supply and Demand Analysis 54

[GRAPHICS TO COME]

Hotel Inter-Continental	Location:	605 N. Michigan Ave.
		Chicago, Illinois
	Number of Rooms:	842

Historical Operating Performance

								Occupancy			Yield
Year	Occupancy			Average Rate		RevPAR		Penetration			Penetration
1996		79.0	%	$	148.00	$	116.92		104.2	%		110.9	%
1997		79.0			150.00		118.50		104.0			103.8
1998		82.0			155.00		127.10		107.7			104.3

The Hotel Inter-Continental is located at the southeast quadrant of the intersection of Michigan Avenue and Grand Street at the southern end of the Magnificent Mile, approximately 10 blocks or one-half of a mile south of the subject property. Like The Westin and the Marriott, the Hotel Inter-Continental occupies a highly prominent location nearby numerous retail stores and restaurants.

HVS International, San Francisco, California Supply and Demand Analysis 55

The hotel consists of two towers. The hotel’s historic south tower was originally constructed in 1929 as the Medinah Athletic Club; the contemporary north tower was added in 1990.

The hotel contains 842 units, including 40 suites. Guestrooms feature oversized desks and dual-line phones with voice mail. Guestroom baths contain a telephone, hair dryers, and terry cloth robes. The guestroom modules in the south tower are smaller than the subject property’s and are supplied by a two-pipe HVAC system. Overall, the furnishings of the south tower are comparable to those of the subject property, while those of the more modern north tower are considered to be superior. Nevertheless, the subject property’s proposed renovated units will be vastly superior to the Inter-Continental’s.

The hotel also contains four food and beverage outlets, approximately 44,100 square feet of meeting space, a business center, and a fitness center with an indoor swimming pool, saunas, aerobics, and exercise rooms.

Like the Marriott, the Hotel Inter-Continental benefits from a central location and sizable meeting facilities. As such, the Hotel Inter-Continental accommodates 50% of its total demand from the group meeting segment. The hotel’s operating performance has significantly improved in recent years as a result of improved marketing and some modest renovations on its south tower guestrooms. With the Inter-Continental brand joining the Bass family of hotels (Holiday Inn, Crowne Plaza), the Hotel Inter-Continental Chicago is expected to continue its strong performance in the market.

HVS International, San Francisco, California Supply and Demand Analysis 56

[GRAPHICS TO COME]

Radisson Hotel & Suites	Location:	160 E. Huron Street
		Chicago, Illinois
	Number of Rooms:	341

HVS International, San Francisco, California Supply and Demand Analysis 57

Historical Operating Performance

								Occupancy			Yield
Year	Occupancy			Average Rate		RevPAR		Penetration			Penetration
1996		72.0	%	$	128.00	$	92.16		95.0	%		87.4	%
1997		73.0			135.00		98.55		96.1			86.3
1998		79.0			146.00		115.34		103.8			94.7

The Radisson Hotel & Suites is located in the northwest quadrant of the intersection of Huron and St. Clair Streets, approximately five blocks or one-quarter of a mile south of the subject property. The hotel is just east of Michigan Avenue and fronts Huron Street to the south. As a result, the hotel is not visible from roadways other than Huron Street, although other Chicago hotels have like weaknesses. Despite the locational challenges, the hotel benefits from its proximity to Blue Cross/Blue Shield and Northwestern University Memorial Hospital, as well as Northwestern University’s city campus.

The Radisson Hotel & Suites is a 40-story, mixed-use hotel and office tower, composed of a 341-unit hotel, including 94 suites, 93,000 square feet of office space, and a 170-space parking facility.

Built in 1973, the property underwent $11 million in renovations in 1995 and 1996, which included a major refurbishment of the exterior of the building, replacement of soft- and casegoods in hotel guestrooms and suites, a leased restaurant and lounge, banquet and meeting space, and a rooftop pool overlooking the city and Lake Michigan. The hotel also features 18,000 square feet of meeting space, including the recently completed RadiCenter 7, a 5,500-square-foot conference facility.

As a result of its mixed-use structure, the hotel suffers from a small, compact lobby. Furthermore, due to the configuration of the building, the layout of the guestroom corridors is irregular in shape, resulting in unusual guestroom configurations. The guestrooms are in very good condition following a renovation that was completed in 1996. Guestrooms feature dual-line phones and VCRs. The furnishings are superior to the subject property’s current guestrooms, but will be inferior to the newly renovated units.

Due to the Radisson’s small meeting space and its location, the group meeting segment accounted for only 35% of the property’s demand in 1998. Moreover, contract demand comprises 5% of the hotel’s demand. In 1998, the property achieved an above-market occupancy; however, its yield penetration was considerably weaker.

HVS International, San Francisco, California Supply and Demand Analysis 58

[GRAPHICS TO COME]

Holiday Inn -	Location:	300 E. Ohio St.
Chicago City Center		Chicago, Illinois
	Number of Rooms:	500

Historical Operating Performance

								Occupancy			Yield
Year	Occupancy			Average Rate		RevPAR		Penetration			Penetration
1996		74.0	%	$	120.00	$	88.80		97.6	%		84.3	%
1997		76.0			130.00		98.80		100.1			86.5
1998		75.0			137.00		102.75		98.5			84.3

The Holiday Inn is located at the northeast corner of Ohio Street and Fairbanks Avenue approximately eight blocks southeast of The Westin. Among the competitive set, the Holiday Inn is most distant from the Magnificent Mile, the primary demand generator for area hotels. Unlike the other competitive hotels, the immediate surrounding of the Holiday Inn is predominantly residential.

HVS International, San Francisco, California Supply and Demand Analysis 59

However, the recent reopening of Navy Pier to the east eases the Holiday Inn’s challenging location.

Originally constructed in 1976, the high-rise 500-unit Holiday Inn features approximately 16,000 square feet of meeting space, a cafe, a sports bar, a bakery, and valet parking. Additionally, guests have access to the adjacent McClurg Court Sports Complex and Health Club, a full-service city athletic club.

The hotel’s lobby is expansive and attractively decorated following a recent renovation. Although the guestroom corridors were in good condition, the guestroom casegoods and softgoods appeared dated. Overall, the guestrooms were comparable in size and furnishings to those of the subject property, but will be inferior to the proposed renovated units.

As a result of its poor location, the Holiday Inn has consistently had the lowest RevPAR of the competitive set, with an average rate $23 below marketwide levels. This hotel will be most susceptible to the impact of new competition.

HVS International, San Francisco, California Supply and Demand Analysis 60

Secondary Competitors

In addition to the primary competitors, the subject property also competes to a degree with other full-service hotels in the subject area. A total of 2,586 weighted guestrooms representing 11 full-service hotels constituted the secondary competition in 1998. These properties range from all-suite hotels (Omni Suites, Doubletree Guest Suites, and Embassy Suites) to large convention hotels (Hyatt Regency Chicago, Sheraton Chicago Hotel & Towers, Chicago Hilton & Towers, Palmer House Hilton, and Hyatt Regency McCormick Place) to first-class commercial and group hotels (Swissotel, Westin River North, and Renaissance) that compete indirectly with the subject property for group meeting and commercial business. Of the secondary hotels, six are located south of the Chicago River (Swissotel, Hyatt Regency Chicago, Renaissance, Chicago Hilton & Towers, Palmer House Hilton, and Hyatt Regency McCormick Place), in the area known as downtown or “The Loop.” These hotels are secondarily competitive to the subject property due to differences in their location, orientation, or facilities, and have been weighted based on these factors.

With a weighted total of 2,586 guestrooms, the secondary competitors were estimated to have attained a weighted annual occupancy of 75.4% and an average rate of roundly $160 in 1998.

Additions to Supply

It is important to consider any new hotels that may have an impact on the subject property’s operating performance. According to the city of Chicago, the hotel sector has been experiencing unprecedented growth recently, especially in the full-service market.

During 1998, six new hotels opened in Chicago’s central business district (CBD), equating to 2,207 new rooms. By 2000, eight new hotels are expected to add 2,132 new rooms. Developments proposed for the CBD beyond 2000 could add another 14 new hotels, containing roundly 5,400 rooms. According to area developer, planners, and lenders, it is unlikely that as much as 7,500 room will be added to the market over the next five years. For purposes of this appraisal, we have factored into our analysis only those projects considered to be directly or secondarily competitive with The Westin Hotel based on their projected number of units, location, market orientation, distance from the subject property, and projected opening date, as indicated in the following table. In addition, the weighted competitiveness factor that has been applied is also identified. This table is based on information compiled through discussions with planners in the city of Chicago, area brokers, and corporate representatives of various hotel chains.

Proposed Additions to Supply in the Downtown Chicago, Illinois Area

	Number			Distance from		Projected	Percentage	Weighted
Property	of Rooms	Location	Orientation	Subject Property	Status	Opening	Competitive	No. of Rms
Primarily Competitive:
Wyndham Chicago	418	633 N. St. Clair	Full-service	0.3 mi. S	Construction	04/01/99	100%	418
Crowne Plaza Allerton	443	N. Michigan & Superior	Full-service	0.2 mi. S	Construction	06/01/99	100	443
Secondarily Competitive:
Hotel Sofitel	420	Chestnut & Wabash Sts.	Upscale Full-service	0.2 mi. W	Approvals	10/01/01	50	210
McGraw Hill/Grand Bay	310	520 N. Michigan Avenue	Luxury Full-service	0.5 mi. S	Construction	07/01/00	25	78
Park Hyatt	203	801 N. Rush Street	Boutique Luxury	0.2 mi. SW	Construction	04/01/00	25	51
Radisson St. George	386	230 N. Michigan	Boutique Full-service	0.8 mi. S	Construction	04/01/00	25	97
Speculative or Non-Competitive:
Hilton Garden Inn	357	540 N. Wabash Street	Focused-service	0.5 mi. S	Construction	06/01/00	NC	NC
Homewood Suites	220	531 N. Wabash Street	Premium Extended-stay	0.5 mi. S	Construction	06/01/00	NC	NC
Holiday Inn and Suites	152	506 W. Harrison St.	Full-service	2.5 mi. S	Construction	01/01/00	NC	NC
Cashmere Hotel
(Reliance Building)	122	32 North State St.	Boutique Full-service	1.5 mi. S	Construction	01/01/00	NC	NC
Total	3,031							1,296

NC - Non-Competitive
SP - Speculative

HVS International, San Francisco, California Supply and Demand Analysis 62

Our fieldwork, which included discussions with hotel operators, developers, and government officials, indicates that there are six potential additions to supply which we consider will be competitive with the subject property. Overall, we account for the addition of 1,296 weighted competitive rooms over the next few years. These additions account for an increase of 19.3% over the existing competitive market of 6,727 rooms. The following analysis details each of the new additions to supply that are considered to be competitive.

Primarily Competitive Additions to Supply

Wyndham Chicago

An office building at 633 North St. Clair Street is currently being converted to a Wyndham hotel. The 418-unit hotel is located just east of Michigan Avenue at the northeast corner of Ontario Street and North St. Clair, approximately seven blocks south of the subject property. The project is scheduled for completion by April 1999. We anticipate the Wyndham Chicago to be directly competitive with the subject property due to its brand affiliation and anticipated rate structure.

Crowne Plaza Allerton

The 443-room Allerton Hotel was purchased by the Bristol Hotel Company from the Allerton Hotel Partnership in January 1997. The total purchase price was $35,000,000; Bristol has committed to investing an additional $41,000,000 to upgrade the aged hotel, originally built in 1923. The completed hotel is expected to have 57 suites, a fitness center, a full-service restaurant and lounge/bar, as well as ± 11,000 square feet of meeting space. The renovated hotel is estimated for opening June 1999 as a Crowne Plaza hotel. The hotel will compete with the subject property based on its anticipated average rate structure and its brand affiliation. The hotel, which is located at 701 North Michigan Avenue, is anticipated to be 100% competitive with the subject property.

Secondarily Competitive Additions to Supply

Hotel Sofitel

The Hotel Sofitel is proposed for the intersection of Chestnut St. and Wabash, approximately three blocks west of the subject property. Reportedly, the land for the Hotel Sofitel has been purchased, and zoning approval is pending. Accor, the developer of the Hotel Sofitel, spent a reported $11,200,000 for a 25,000-square-foot parcel to develop the hotel. Thus, we believe this project is highly likely, with an opening date of October 2001. The Hotel Sofitel will be 50% competitive with the subject

HVS International, San Francisco, California Supply and Demand Analysis 63

property due to its upper upscale orientation comparable to the Renaissance Hotel.

Grand Bay Hotel

The Grand Bay Hotel is being developed as part of the North Bridge Development by a joint venture between the John Buck Company of Chicago, its partner Morgan Stanley Real Estate Funds, and Wyndham International. Construction is underway at 520 North Michigan Avenue, at the site of the former McGraw Hill Building. The historic facade of the existing structure will be preserved and will front the newly developed hotel. This lodging facility will be part of a $450,000,000 mixed-use development that will span several prime blocks in the Chicago CBD and house a 220,000-square-foot Nordstrom and a 115,000-square-foot retail arcade featuring 35 specialty stores. The North Bridge complex extends from 520 to 600 North Michigan Avenue and will also include entertainment outlets such as Disney Quest, a five-level, 85,000-square-foot, urban interactive entertainment complex. The Grand Bay Hotel will offer a Golden Door City Spa, the urban version of its spa brand; 310 spacious and luxurious guestrooms and suites; world-class dining in specialty restaurants; and 8,000 square feet of meeting space. The Grand Bay Hotel is expected to be operational by July 2000, and we anticipate that it will be 25% competitive with the subject property due to its anticipated rate structure and luxury accommodations.

Park Hyatt

In 1996, the 255-unit Park Hyatt Chicago on 800 North Michigan Avenue was demolished. The site is located at the northeast corner of Rush and Chicago Streets, a prominent and heavily trafficked location just west of North Michigan Avenue, adjacent to the historic Water Tower Visitors Center. Hyatt Development’s initial plans for the site include a 65-story, 725,000-square-foot complex containing a 203-room Park Hyatt hotel with an estimated 8,000 square feet of meeting space, 140 luxury condominiums, and 20,000 square feet of street-level retail space. As a participant in the luxury segment of the lodging market, this property is expected to compete primarily with the Ritz-Carlton, and the Four Seasons, which are not competitors of the subject property. Construction costs for the Park Hyatt, which will feature upscale amenities and large suites, are reported to be $340,000 per room. Due to its significantly smaller guestroom inventory and its luxury orientation, we consider this hotel project to be

HVS International, San Francisco, California Supply and Demand Analysis 64

25% competitive with the subject property. The hotel is projected to be operational by April 2000.

Radisson St. George

The Radisson St. George is a conversion of two existing buildings, the 38-story Carbon and Carbide Building located at 230 North Michigan Avenue just south of the Chicago River. The proposed hotel will contain 386 guestrooms, one restaurant and several lounges, approximately 15,900 square feet of meeting space, ±5,885 square feet of leased retail space, a fitness center, and a 37-space parking garage. According to the developers the Radisson St. George is anticipated to be an upscale boutique hotel, and as such, we consider this hotel to be 25% competitive with the subject property and is slated to open in April 2000.

Speculative and/or Non-Competitive Additions to Supply

In addition to the above-mentioned proposed additions, to supply, the appraisers are aware of four other hotel projects (Hilton Garden Inn, Homewood Suites, Holiday Inn and Suites, and Cashmere Hotel-Reliance Building) that are currently under construction. However, none of those proposed properties are considered to be competitive with the subject property due to their locations, facilities, and market orientations.

In addition to the preceding projects, numerous projects set forth in the following chart are in varying stages of early pre-development. According to local brokers, developers, and city officials, given the increased tightening of development capital, most of the pending projects not currently under construction are not likely to come to fruition. As such, we consider these projects to be very speculative. Due to the speculative nature of the following projects, they have not been included in our analysis.

HVS International, San Francisco, California Supply and Demand Analysis 65

Speculative Proposed Additions to Supply in the Downtown Chicago, Illinois Area

		Number
Property		of Rooms	Location	Orientation	Status
Proposed Projects with Zoning Board Approval
	Extended Stay	396	630 N. Wabash	Extended-stay	TBA
	Metreon (pending approval)	N/A	State, Grand, Ohio	Full-service	TBA
	Millennium Center	320	601 N. Dearborn	Full-service	TBA
	Donnelly Lakeside Center Hotel	534	350 E. Cermack Rd.	Full-service	TBA
	River North Center	250	Kinzie, Hubbard, Dearborn	Full-service	TBA
	Central Station	1,000	1200 South Michigan	Full-service	TBA
	River East Center	456	350 East Illinois	Full-service	TBA
	Grand Pier Development	500	250 East Illinois	Full-service	TBA
	River East Development	600	River East	Full-service	TBA
Proposed Projects Pending Zoning Approval
	Blackstone Hotel - Marriott	335	636 S. Michigan Avenue	Full-service	TBA
	Peninsula	332	730 North Michigan Ave.	Luxury	TBA
	AmeriSuites	180	600 N. Dearborn	Limited-service	TBA
	Prime	400	300 N. LaSalle	Full-service	TBA
	Youth Hostel	120	Congress Street	Hostel	TBA
	Homestead Village	239	St. Claire and Ontario	Economy Extended-stay	TBA
	Total	5,662

Based on our fieldwork, no other new lodging development is planned in the near future. While over 7,000 possible new hotel rooms have been identified, it is highly unlikely that all of these projects will be developed. Each addition to supply may lessen the feasibility of subsequent developments. In addition, financing for new hotel development is very difficult to obtain at the current time. The appraisers’ forthcoming forecast of stabilized occupancy and average rate is intended to reflect the risk of future additions to supply.

DEMAND ANALYSIS

The following chart presents the most recent market trends for the subject hotel market. The data pertain to the properties previously identified as primary and secondary competitors in this section.

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Historical Market Trends

	Accommodated		Percent			Room Nights		Percent			Market			Market		Percent			Market		Percent
Year	Room Nights		Change			Available		Change			Occupancy			ADR		Change			RevPAR		Change
1996		1,836,090		—			2,421,666		—			75.8	%	$	139.01		—		$	105.40		—
1997		1,838,722		0.1	%		2,421,666		0.0	%		75.9			150.41		8.2	%		114.21		8.4	%
1998		1,858,294		1.1			2,440,686		0.8			76.1			160.05		6.4			121.86		6.7
Average Annual Compounded Percent Change 1996-98				0.6	%				0.4	%							7.3	%				7.5	%

Source: HVS International

Synchronous with the overall Chicago hotel market, demand increased from 1996 to 1997, boosting occupancy to 75.9%. Over this same period, average rate increased by 8.2% to $150.41. The increase in both occupancy and average rate resulted in a 8.4% increase in marketwide RevPAR in 1997. In 1998, marketwide occupancy levels increased slightly, while marketwide average rate increased by 6 .4% that year; as a result, marketwide RevPAR increased by 6.7%.

Demand Analysis Using Market Segmentation

For the purpose of demand analysis, the overall market is divided into individual segments based on the nature of travel present in a given area. Although a market may have various segments, the three primary classifications occurring in most areas are commercial, group meeting, and leisure. For this analysis, a fourth demand segment is identified, known as contract. Contract demand is chiefly associated with airline crews.

Market segmentation is a useful procedure because individual classifications often exhibit unique characteristics in terms of growth potential, seasonality of demand, average length of stay, double occupancy, facility requirements, price sensitivity, and so forth. By quantifying the room night demand by market segment and analyzing the characteristics of each segment, the future demand for transient accommodations can be projected. Demand for transient accommodations in the subject market area is generated primarily by the following four market segments.

Segment 1	Commercial
Segment 2	Group Meeting
Segment 3	Leisure
Segment 4	Contract

HVS International, San Francisco, California Supply and Demand Analysis 67

Based on our fieldwork, area analysis, and knowledge of the local lodging market, we have estimated the 1998 distribution of accommodated hotel room night demand, by segment, for the market as a whole and for the subject property. The 1998 accommodated room night demand is estimated to have been captured by the 6,727 weighted rooms of the subject property and its primary and secondary competitors.1998

Marketwide Accommodated Room Night Demand - 1998

	Annual Room					Annual Room
	Night Demand		Percentage of			Night Demand		Percentage of
Market Segment	Market		Total			Subject		Total
Commercial		576,296		31.0	%		41,043		21.0	%
Group Meeting		928,115		49.9			95,768		49.0
Leisure		291,792		15.7			41,043		21.0
Contract		62,091		3.3			17,590		9.0
Total		1,858,294		100.0	%		195,444		100.0	%

Group meeting demand dominates the local market, at 49.9% of the 1998 room night demand. This is followed by commercial demand at 31.0% of the total, leisure demand at 15.7%, and, lastly, contract demand at 3.3%. The subject property’s demand mix differs from that of the market in that The Westin accommodates a significantly larger proportion of leisure and contract demand at 21.0% and 9.0%, respectively. Due to the subject property’s location along North Michigan Avenue, it draws both international and domestic leisure guests. In addition, the subject property’s commercial demand at 21.0% is less than that of the market due to the subject property’s distance from the commercial district, “The Loop,” compared to most of its primary competitors. Beginning in 1998, the subject property added airline crew contract business, which accounted for 9.0% of the property’s total demand. Using the distribution of accommodated hotel demand as a starting point, we will analyze the characteristics of each market segment in an effort to determine future trends in room night demand.

Commercial

The commercial segment represents demand drawn from local businesses, which are primarily large firms in The Loop area. Commercial demand tends to be the least price-sensitive segment and peaks on Monday through Thursday nights in the spring and fall months. The subject

HVS International, San Francisco, California Supply and Demand Analysis 68

market experiences extremely high commercial demand and often sells out on weeknights during the peak seasons of late fall through early spring. Trends in this demand segment tend to be tied to changes in total employment, occupied office space, and air passenger statistics. Based on current economic indicators and discussions with area hotel operators, we project base commercial demand growth at 3.0% in 1999 and 2.0% in 2000 as new hotel supply enters the market. Commercial demand is projected to grow by 1.5% in 2001 and each year thereafter.

Group Meeting

The group meeting segment includes commercial, association, and social meetings, seminars, and gatherings of 10 or more people. Commercial group demand typically peaks in the spring and fall, whereas social group demand peaks in the summer. The average length of stay for typical meetings ranges from three to five days. Most commercial groups meet during the weekday period of Monday through Thursday, but social groups will sometimes gather on weekends.

Group meeting patronage is generally quite profitable for hotels and motels. Although room rates are discounted for large groups, the hotel benefits from the use of meeting space and revenues generated by in-house banquets and cocktail receptions. Facilities that are necessary to attract meetings and conventions include function areas with adequate space for breakout, meals, and receptions; recreational amenities; and a sufficient number of guestrooms to house the attendees.

A significant amount of group meeting demand in the subject market area is generated by the McCormick Place Convention Center and Navy Pier. The subject market area is considered to compete with first-tier convention center cities such as New York City, Las Vegas, San Francisco, and San Diego. As mentioned previously, a prominent selling point for meeting planners is Chicago’s central location from nearly all points of the country, as well as its convention-friendly atmosphere with a plethora of large hotels and restaurants. McCormick Place is the largest convention center in North America. As previously discussed, the Chicago Convention and Tourism Bureau has had considerable success in attracting large and multiple conventions. With the completion of the 800-unit Hyatt Regency McCormick Place in July 1998, the city’s ability to attract ever larger convention business has been further enhanced. Reportedly the convention bookings for 2000 and 2002 will be strong, while 1999 is anticipated to be a moderately off year due to the cyclical nature of the

HVS International, San Francisco, California Supply and Demand Analysis 69

convention schedule. Significant additional group meeting demand is generated by self-contained group meetings booked by hotels in the market, such as the subject property, which contain a substantial amount of meeting space.

Based on current economic indicators and discussions with area hotel operators, we project group meeting demand to increase by 1.0% in 1999 due to the weakness of citywide conventions. Group meeting demand is projected to grow by a base rate of 2.5% in 2000, based on the strength of the convention center’s pre-bookings, as well as groups wanting to meet in the first year of the new century. Group meeting demand is projected to decline by 1.0% in 2001 after the strength in 2000 and to grow by 2.0% in 2002. No growth is projected in 2003, while 1.5% is growth is projected in 2004 and each year thereafter.

Leisure

The leisure market segment consists of individuals and families who are spending time in the area or passing through en route to other destinations. Their travel purposes may include sightseeing, recreation, visiting friends and relatives, or numerous other non-business activities. Leisure demand is strongest Friday and Saturday nights and all week during holiday periods and the summer months. These peak periods generally correlate negatively with commercial visitation, underscoring the stabilizing effect of capturing weekend and summer tourist travel. The typical length of stay ranges from one to four days, depending on the destination and travel purpose, and the rate of double occupancy typically ranges from 1.8 to 2.5 people per room.

Aside from contracted demand sources, leisure travelers tend to represent the most price-sensitive segment in the lodging market. Ease of highway access and proximity to tourist attractions and retail centers are important locational considerations. Some of the generators of leisure demand in the subject area include the many attractions of Chicago, including the Magnificent Mile, the Sears Tower, the Art Institute of Chicago, and most recently, Navy Pier.

Future leisure demand is related to the overall economic health of the region and the nation. Trends in retail sales, retail sector employment, total employment, and air traffic counts tend to correlate most directly with leisure demand. The primary leisure demand generator for the subject property and its competitors is the shopping attractions along the

HVS International, San Francisco, California Supply and Demand Analysis 70

Magnificent Mile. On the whole, the potential for leisure demand growth is considered to be relatively minor, particularly considering the high level of occupancy already noted in peak periods. We have forecast annual base leisure demand to grow at 1.0% in 1999 and thereafter.

Contract

Contract demand in the Chicago market is primarily associated with airline crews flying in and out of the O’Hare International Airport. Airlines contract with local operators for extended periods of time to ensure the availability of accommodations. Because they are able to guarantee a specific usage on a daily basis, airlines are usually able to negotiate a highly discounted room rate. This type of demand can benefit a lodging facility because by providing a base of occupancy during slow demand periods. However, offsetting the occupancy benefit is the fact that the rooms are contracted at significantly discounted rates.

Of the primarily competitive hotels, the subject property, the Radisson Hotel, and the Holiday Inn - Chicago City Center accommodate this lower-rated demand segment. Trends in contract demand may be considered to be most directly correlated with airport traffic. However, as the least lucrative source of market demand, hotel operators tend to resist further contracting as market conditions improve. When other demand sources rebound, low-rated contract demand is generally foregone. Contract demand growth of 1.0% in 1999 and thereafter is projected over the forecast period.

Latent Demand

The previous table illustrated the estimated 1998 accommodated room night demand in the competitive market. Because this estimate is based on occupancies, it includes only those hotel rooms that were used by guests. Latent demand considers guests who could not be accommodated by the existing competitive supply and can be divided into unaccommodated demand and induced demand.

Unaccommodated Demand

Unaccommodated demand refers to individuals who are unable to secure accommodations in the market because all of the local hotels are filled. These travelers must defer their trips, settle for less desirable accommodations, or stay in properties located outside the market area. Because this demand did not yield occupied room nights, it is not included in the estimate of historical accommodated room night demand.

HVS International, San Francisco, California Supply and Demand Analysis 71

If additional lodging facilities are expected to enter the market, it is reasonable to assume that these guests will be able to secure hotel rooms in the future, and it is necessary to quantify the unaccommodated demand. Considering the high occupancy level of the competitive market, which ended 1997 at 75.9%, and 1998 at 76.1%, we believe that there is a level of unaccommodated demand. Our interviews with local hotel managers and in-house database figures indicate that during the peak season, which extends from late April to October, the competitive hotels achieve occupancy levels from the high-80% to mid-90% range.

In order to quantify unaccommodated demand (or turnaway demand) we analyzed room night statistics for various competitive properties. Based on the market’s typical seasonal and weekly demand patterns as well as the market orientation of the competitive hotels, we estimate that 2.0% of the market’s commercial, and 3.0% of group meeting demand is currently unaccommodated. The resulting calculation of unaccommodated room nights is roundly 39,369 rooms, or 108 rooms unaccommodated daily.

Induced Demand

Induced demand represents additional room nights that are likely to be attracted to the market following the introduction of new supply or new demand generators. We are of the opinion that the new hotels will induce additional demand by their individual marketing and sales efforts. In forecasting induced demand, we have considered the overall expansion to the market supply over the next few years. As was detailed earlier, a total of 1,336 weighted rooms (including the partial-year opening of the 10% competitive 800-unit Hyatt Regency McCormick Place) will be added to the existing competitive supply of 6,727 rooms in 1999, 2000, and 2001. Based on the number of new rooms entering the market, we estimate the potential demand mix to be attracted to the market based on the market segmentation of 40% commercial, 40% group meeting, and 20% leisure demand, and an assumed stabilized occupancy of 73%. We estimate that, of the new hotels’ accommodated demand, 10% of commercial demand, 20% of group meeting demand, and 15% of leisure demand will be induced. The following chart details our quantification of total induced demand.

HVS International, San Francisco, California Supply and Demand Analysis 72

Total Induced Demand Calculation

																					Total
		Total Additional			No. of				Market Segment				Estimated				Percentage				Induced
Market Segment		Room Supply			Days				Percentage				Occupancy				Induced				Room Nights
Commercial	(		1,336	X		365	)	X		40	%	X		73.0	%	X		10.0	%	=		14,200
Group Meeting	(		1,336	X		365	)	X		40		X		73.0		X		20.0		=		28,500
Leisure	(		1,336	X		365	)	X		20		X		73.0		X		15.0		=		10,700
Contract	(		1,336	X		365	)	X		0		X		73.0		X		0.0		=		0
																	Total Induced					53,400

As the increases in supply are forecast to occur over the next few years, the induced demand is phased in. The induced demand projections for each forecast year are based on the ratio of the build up of new rooms per year to the total new supply. The following chart details our induced demand projection.

Induced Demand Forecast

		1999			2000			2001			2002			2003			2004
Phase-in:			46	%		79	%		88	%		100	%		100	%		100	%
Commercial			6,534			11,164			12,526			14,200			14,200			14,200
Group Meeting			13,113			22,407			25,139			28,500			28,500			28,500
Leisure			4,923			8,412			9,438			10,700			10,700			10,700
Contract			0			0			0			0			0			0
	Total		24,570			41,983			47,103			53,400			53,400			53,400

Based on this procedure, we forecast the following average annual compounded market segment growth rates. It should be noted that these growth rates also consider latent demand, both unaccommodated and induced demand.

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Forecasted Annual Growth Rates

	1999			2000			2001			2002			2003			2004
Commercial		3.0	%		2.0	%		1.5	%		1.5	%		1.5	%		1.5	%
Group Meeting		1.0			2.5			(1.0	)		2.0			0.0			1.5
Leisure		1.0			1.0			1.0			1.0			1.0			1.0
Contract		1.0			1.0			1.0			1.0			1.0			1.0
Contract
Weighted Average*		3.9	%		3.6	%		0.6	%		2.2	%		0.6	%		1.4	%

*Includes latent demand

Forecast of Marketwide Occupancy

The forecast of marketwide occupancy is based on a forecast of marketwide supply and demand. Based on our market research and discussions with hotel operators, we have estimated the year-end 1998 occupancy rates of the subject’s competitors. The 1998 areawide estimate of room night demand, by market segment, forms the historical base demand. To the segmented demand base we have applied annual growth factors that were derived from the most relevant economic and demographic data previously analyzed. To the accommodated demand forecasts, we have added latent demand, which comprises both unaccommodated demand and induced demand. In the following table, total demand is then divided by the forecast of market supply, rendering an overall estimate of areawide occupancy. Our market supply forecast accounts for the addition of the 418-unit Wyndham Chicago, the 443-unit Crowne Plaza Allerton, the 420-unit Hotel Sofitel, the 310-unit Grand Bay Hotel, the 203-unit Park Hyatt, and the 386-unit Radisson St. George. Thus, the forecast of marketwide occupancy is calculated as follows.

HVS International, San Francisco, California Supply and Demand Analysis 74

Forecast of Marketwide Occupancy

		Historical			1999			2000			2001			2002			2003			2004			2005
Commercial
Growth Rate			—			3.0	%		2.0	%		1.5	%		1.5	%		1.5	%		1.5	%		1.5	%
Accommodated Demand			576,296			593,585			605,457			614,539			623,757			633,113			642,610			652,249
Latent Demand						11,996			20,684			23,367			26,675			26,862			27,052			27,245
Group Meeting
Growth Rate			—			1.0	%		2.5	%		(1.0)	%		2.0	%		0.0	%		1.5	%		1.5	%
Accommodated Demand			928,115			937,396			960,831			951,223			970,247			970,247			984,801			999,573
Latent Demand						26,052			45,069			50,311			57,607			57,607			58,044			58,487
Leisure
Growth Rate			—			1.0	%		1.0	%		1.0	%		1.0	%		1.0	%		1.0	%		1.0	%
Accommodated Demand			291,792			294,709			297,656			300,633			303,639			306,675			309,742			312,839
Latent Demand						4,923			8,412			9,438			10,700			10,700			10,700			10,700
Contract
Growth Rate			—			1.0	%		1.0	%		1.0	%		1.0	%		1.0	%		1.0	%		1.0	%
Accommodated Demand			62,091			62,712			63,339			63,972			64,612			65,258			65,911			66,570
Latent Demand						0			0			0			0			0			0			0
Totals
Commercial			576,296			605,581			626,141			637,906			650,432			659,975			669,662			679,494
Group Meeting			928,115			963,448			1,005,900			1,001,534			1,027,854			1,027,854			1,042,845			1,058,060
Leisure			291,792			299,632			306,068			310,071			314,339			317,375			320,442			323,539
Contract			62,091			62,712			63,339			63,972			64,612			65,258			65,911			66,570
	TOTAL DEMAND		1,858,294			1,931,373			2,001,448			2,013,483			2,057,237			2,070,462			2,098,860			2,127,663
Annual Forecasted Growth			—			3.9	%		3.6	%		0.6	%		2.2	%		0.6	%		1.4	%		1.4	%
Existing Supply			6,687			6,727			6,727			6,727			6,727			6,727			6,727			6,727
	Wyndham Chicago					315	1		418			418			418			418			418			418
	Crowne Plaza Allerton					260	2		443			443			443			443			443			443
	McGraw Hill/Grand Bay								39	3		78			78			78			78			78
	Park Hyatt								38	4		51			51			51			51			51
	Radisson St. George								72	5		97			97			97			97			97
	Hotel Sofitel											53	6		210			210			210			210
Available Rooms/Night			6,687			7,301			7,737			7,865			8,022			8,022			8,022			8,022
Nights per Year			365			365			365			365			365			365			365			365
	TOTAL SUPPLY		2,440,686			2,664,998			2,823,964			2,870,707			2,928,194			2,928,194			2,928,194			2,928,194
Overall Supply Growth			—			9.2	%		6.0	%		1.7	%		2.0	%		0.0	%		0.0	%		0.0	%
	MARKETWIDE OCCUPANCY		76.1	%		72.5	%		70.9	%		70.1	%		70.3	%		70.7	%		71.7	%		72.7	%

1	April 1999 opening of the 100% competitive 418-unit Wyndham Chicago
2	June 1999 opening of the 100% competitive 443-unit Crowne Plaza Allerton
3	July 2000 opening of the 25% competitive 310-unit McGraw Hill/Grand Bay Hotel
4	April 2000 opening of the 25% competitive 203-unit Park Hyatt
5	April 2000 opening of the 25% competitive 386-unit Radisson St. George
6	October 2001 opening of the 50% competitive 420-unit Hotel Sofitel

The marketwide occupancy rate is expected to decrease as the rate of new supply entering the market in 1999, 2000, and 2001 is expected to exceed the projected rate of demand growth; marketwide occupancy is forecast to

HVS International, San Francisco, California Supply and Demand Analysis 75

decrease to the low-70% range over this period. As the new room supply is absorbed, marketwide demand is forecast to eventually recover to the lowto mid-70% range at the end of our projection.

Conclusion

The subject property is considered to be primarily competitive with 5 first-class, full-service hotels and less directly with 11 hotels, all of which are located in downtown Chicago. This competitive market has historically maintained strong levels of occupancy, with average rate growth in recent years. Recent market performance reflects the strength of the economy of Chicago, the Midwest, and the nation at large. Many of the hotels in the competitive market, including the subject property, have recently undergone, are undergoing, or are planning major refurbishments, augmenting their respective market positions. Due to the strong market conditions, several new hotels are under construction or are planned in the near future. Of the new and proposed additions to supply, we have accounted for six new hotels totaling 1,296 weighted guestrooms in our analysis. Overall, the competitive environment for lodging facilities is anticipated to increase, due to new additions to supply and the anticipated improvements in competitive hotels. The Westin’s prominent location, strong brand affiliation, superior facilities, strong group meeting orientation, and planned renovations will likely moderate the impact of the anticipated new competitive supply upon the subject property. Our forecast of occupancy and average rate for the subject property is detailed in the following section.

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9.     Occupancy and Average Rate Analysis

Subject Property’s Historical Occupancy

The following table sets forth the subject property’s annual occupancy and average rate results since 1995.

Historical Annual Occupancy and Average Rate

	Room					Percent			Average		Percent			Calculated		Percent
Year	Count		Occupancy			Change			Rate		Change			Rooms Revenue		Change
1995		739		65.4	%		—		$	114.62		—		$	20,210,000		—
1996		739		69.7			6.6	%		129.31		12.8	%		24,311,000		20.3	%
1997		739		72.3			3.7			141.88		9.7			27,669,000		13.8
1998		751		71.3			(1.4	)		159.11		12.1			31,097,000		12.4
Average Annual Compounded Percent Change 1995-98							2.9	%				11.6	%				15.4	%

From 1995 through 1998, the subject property’s occupancy increased steadily from 65.4% to a peak of 72.3% in 1997, before settling to 71.3% in 1998, representing an average annual compounded change of 2.9% during the period. The decline in occupancy in 1998 is attributed to increased competitive pressure from newly opened hotels in “The Loop” area detailed previously in the “Demand and Supply Analysis” section of this report. During this same period, the subject property was able to increase its average rate, which grew from $114.62 in 1995 to $159.11 in 1998, at an average annual compounded change of 11.6%. Management effectively increased rates to take advantage of the capacity demand. In 1997, average rates increased by 9.7% before showing a 12.1% increase in 1998, due predominantly to the benefits of the renovated tower guestrooms. Aggressive rate increases have been made, especially in the commercial, group, and leisure segments, thereby turning away more price-sensitive sources of demand. The increase in average rate has been possible due to the strong national economy, as well as the subject’s high-quality product as a result of the ongoing renovations. As a result, RevPAR has increased at an average annual compounded rate of 15.4% since 1995.

HVS International, San Francisco, California Occupancy and Average Rate Analysis 77

In order to assess the subject hotel’s seasonality and more recent occupancy and average rate results, the following chart sets forth the historical occupancy and average rate of the subject property on a monthly basis for 1996, 1997, and 1998.

Monthly Occupancy and Average Rate

	1996					1997					1998
				Average					Average					Average
Month	Occupancy			Rate		Occupancy			Rate		Occupancy			Rate
January		32.8	%	$	118.22		41.1	%	$	121.17		47.5	%	$	126.37
February		37.7			114.71		60.3			112.06		58.7			125.26
March		69.4			119.31		64.9			123.85		62.0			138.83
April		70.9			118.63		73.5			130.19		73.9			157.54
May		75.7			130.89		72.7			149.43		86.1			161.35
June		88.1			131.31		87.5			151.03		69.1			171.56
July		75.4			118.05		78.1			127.32		80.8			146.78
August		82.0			131.45		80.5			141.31		78.3			159.55
September		82.1			135.11		92.0			150.34		75.9			175.64
October		88.2			143.76		86.7			160.11		80.9			185.01
November		79.8			138.60		79.9			155.52		78.9			181.21
December		54.3			133.68		55.8			143.22		49.7			159.79
Annual Avg.		69.8	%	$	129.33		72.7	%	$	140.86		70.2	%	$	159.56

The subject property’s demand levels tend to peak in the summer and fall months of July through October, with the rise and fall of group meeting and leisure demand. Subject management is able to raise rack rates during this peak period, resulting in higher average rates during the summer and fall months. December and January tend to be the slowest months in terms of occupancy and average rate due to Chicago’s oppressive winter weather.

As shown above, average rates have steadily increased in each year, corresponding to the strengthening of the local economy, increased group meeting demand, and recent renovations to the hotel product. Also apparent in the monthly statistics is the improvement in the seasonal occupancy levels. Traditionally weak months of the year have steadily improved as a result of the better distribution of convention demand by the convention bureau and the subject property’s management of the various demand segments.

Premise of Projections

In the following section of this report, we set forth a basis for forecasting

HVS International, San Francisco, California Occupancy and Average Rate Analysis 78

occupancy and average rate. Occupancy and average rate attainment, to some degree, may be manipulated by management. For example, a management philosophy may focus on cutting rates in order to maximize volume. In the following forecast, we have projected what we expect to be the most optimal mix of occupancy and average rate attainment based on the market conditions, representing an operating approach that we believe would be followed by professional management. Occupancy results are highly dependent upon the pricing strategy employed by management. In the case of a more aggressive pricing strategy, a lower occupancy ratio may result, and vice versa.

Subject Property’s Occupancy Projection - Penetration Factor Analysis

The subject property’s forecasted market share and occupancy levels are based upon its anticipated competitive posture within the market, as quantified by its penetration factor. The penetration factor is the ratio between a property’s market share and its fair share. If a property with a fair share of 5% is capturing 5% of the market demand in a given year, then its occupancy will equal the marketwide occupancy, and its penetration factor will equal 100% (5% ÷ 5% = 100%). If the same property achieves a market share in excess of its fair share, then its occupancy will be greater than the marketwide occupancy, and its penetration factor will be greater than 100%. For example, if a property’s fair share is 5% and its market share is 7%, then its penetration factor is 140% (7% ÷ 5% = 140%). Conversely, if the property captures less than its fair share, then its occupancy will be below the marketwide average, and its penetration factor will be less than 100%.

Penetration factors can be calculated for each market segment of a property, and for the property as a whole. For example, leisure segment penetration can be determined by dividing the subject property’s leisure room nights captured (property’s total room nights captured multiplied by property’s leisure segment percentage) by the hotel’s fair share of total areawide leisure demand (property’s fair share percentage multiplied by the market’s total leisure room night demand).

In order to prepare a forecast of occupancy for the subject property, we have reviewed the historical penetration factors for the subject property and its competitors, by segment, for 1998. The following chart summarizes these data.

HVS International, San Francisco, California Occupancy and Average Rate Analysis 79

1998 Historical Penetration Factors by Segment

Property	Commercial			Group Meeting			Leisure			Contract			Overall
The Westin Hotel		63.4	%		91.9	%		125.2	%		252.2	%		93.6	%
Chicago Marriott		100.4			114.3			99.1			0.0			103.8
Drake Hotel		118.6			64.4			146.4			0.0			91.9
Hotel Inter-Continental		138.9			107.8			68.6			0.0			107.7
Radisson Hotel & Suites		117.1			72.7			165.2			155.3			103.8
Holiday Inn - Chicago City		95.3			88.8			125.5			147.4			98.5
Secondary Competition		92.5			106.6			79.9			138.5			99.1

In 1998, the subject property accommodated roundly 94% of its fair share of market demand, a slight decrease from the 95% penetration in 1997. However, the decrease in occupancy penetration has been offset by an increase in average rates, reflecting the renovations made to the tower guestrooms and the meeting space. Nevertheless, The Westin has a low commercial penetration due to its distance from The Loop area relative to most of its competition. Additionally, the subject property is underserved in terms of meeting space for a property of its size. Consequently, the subject property accommodates lower-rated airline contract crew demand, which supports the hotel’s occupancy during weak demand periods, but also reduces the overall average rate.

The Hotel Inter-Continental is the leader in the commercial market penetration, as well as in the overall penetration, while the Marriott and the Radisson are leaders in the group meeting and leisure segments, respectively. The overall secondarily competitive market had an overall penetration of 99.1%, with an above-market penetration of the group meeting and contract segments.

In preparing our forecast of the subject property’s occupancy, we have considered management’s historical rooms statistic reports as well as their budget for 1999. Reflecting the improvements in the quality of the guestroom product planned in the ongoing renovation offset by rising competitive pressure, the subject property’s penetration of the commercial segment is forecast to remain essentially stable at historical levels of 63.0% throughout the projection period. With the increase in The Westin’s capacity to hold self-contained meetings in the future group meeting space, we forecast an increase in the hotel’s penetration level from 92.0% in 1999, to 98.0% in 2000, to 101.0% in 2001. In 2002, group meeting is forecast to increase to a penetration level of 106.0% and stabilize at that level

HVS International, San Francisco, California Occupancy and Average Rate Analysis 80

thereafter. We forecast the subject property’s leisure penetration to remain stable at 122.0% throughout our projection period. Per the plan by management, contract demand is forecast to increase in 1999 to 410.0%, from historical levels. Although the contract demand carries an opportunity cost in average rate, considering the level of proposed additions to supply, we consider this action to be prudent. Following the completion of the renovations, we forecast this low rated demand segment to recede to a penetration level of 375.0% in 2001, before decreasing to a stabilized level of 300.0% in 2002.

The following chart sets forth our forecast of occupancy, based on our forecast of penetration factors by segment, for the subject property. Our occupancy projection begins as of February 1, 1999.

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Projection of Subject Property’s Occupancy

		Historical			1999			2000			2001			2002			2003			2004			2005
Commercial
Demand			576,296			605,581			626,141			637,906			650,432			659,975			669,662			679,494
Penetration Factor			63.4	%		63.0	%		63.0	%		63.0	%		63.0	%		63.0	%		63.0	%		63.0	%
Capture			41,043			39,242			38,290			38,374			38,360			38,923			39,494			40,074
Group Meeting
Demand			928,115			963,448			1,005,900			1,001,534			1,027,854			1,027,854			1,042,845			1,058,060
Penetration Factor			91.9	%		92.0	%		98.0	%		102.0	%		106.0	%		106.0	%		106.0	%		106.0	%
Capture			95,768			91,170			95,687			97,546			101,993			101,993			103,481			104,990
Leisure
Demand			291,792			299,632			306,068			310,071			314,339			317,375			320,442			323,539
Penetration Factor			125.2	%		122.0	%		122.0	%		122.0	%		122.0	%		122.0	%		122.0	%		122.0	%
Capture			41,043			37,600			36,245			36,121			35,900			36,246			36,597			36,950
Contract
Demand			62,091			62,712			63,339			63,972			64,612			65,258			65,911			66,570
Penetration Factor			252.2	%		410.0	%		410.0	%		375.0	%		300.0	%		300.0	%		300.0	%		300.0	%
Capture			17,590			26,447			25,207			22,907			18,145			18,327			18,510			18,695
Total Capture			195,444			194,458			195,430			194,949			194,398			195,489			198,081			200,710
Available Room Nights			274,115			274,115			274,115			274,115			274,115			274,115			274,115			274,115
Occupancy			71.3	%		70.9	%		71.3	%		71.1	%		70.9	%		71.3	%		72.3	%		73.2	%
Rounded			71	%		71	%		71	%		71	%		71	%		71	%		72	%		73	%
Fiscalized						71			71			71			71			71			72			73
Overall Penetration
Fair Share			11.2	%		10.3	%		9.7	%		9.5	%		9.4	%		9.4	%		9.4	%		9.4	%
Market Share			10.5			10.1			9.8			9.7			9.4			9.4			9.4			9.4
Overall Penetration			93.6			97.9			100.6			101.4			100.9			100.9			100.8			100.8
Market Mix
Commercial			21	%		20	%		20	%		20	%		20	%		20	%		20	%		20	%
Group Meeting			49			47			49			50			52			52			52			52
Leisure			21			19			19			19			18			19			18			18
Contract			9			14			13			12			9			9			9			9
	Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

Based on our analysis, we have considered 2002/2003 as the stabilized year, with an occupancy rate of 71% and an overall penetration factor of roundly 101%, slightly above its fair share, reflective of its attractive, newly renovated upscale product and good location. The stabilized occupancy is intended to reflect the anticipated results of the property over its

HVS International, San Francisco, California Occupancy and Average Rate Analysis 82

remaining economic life, given any and all changes in the life cycle of the hotel. Although The Westin Hotel may operate at occupancies above this stabilized level, we believe it equally possible for additional new competition and temporary economic downturns to force occupancy below this selected point of stability.

Subject Property’s Average Rate Analysis

Using The Westin Hotel – Chicago’s historical average rates (historical 1998 average rates, similar to our occupancy analysis) as a starting point, we have applied a forecasted growth rate to each segment’s rate. It is important to note that room rate inflation does not necessarily conform to the underlying monetary inflation rate. Lodging facilities are typically most influenced by market conditions indicated by the relationship between supply and demand. As reviewed earlier, the subject’s competitive lodging market indicated an average rate increase of 8.1% in 1997, followed by an increase of 6.4% in 1998.

The subject property achieved a 12.1% increase in average rate in 1998, higher than the average rate growth of the market. We have reviewed the subject property’s market segmentation reports and noted that significant increases have been made in all segments. However, room nights decreased in 1998 in the commercial and group meeting segments as noted on the following chart.

1998 Room Statistics Analysis

								Room Night %					ADR %
					Demand			Change from			Average		Change from
Segment	Revenue		Room Nights		Mix			Prior-Year Period			Rate		Prior-Year Period
Commercial	$	7,231,682		39,782		21	%		(13.1	)%	$	181.78		16.4	%
Group meeting		14,751,066		95,228		49			(7.2	)		154.90		10.9
Leisure		6,773,077		40,902		21			23.8			165.59		19.8
Contract		1,630,508		18,072		9			32.9			90.22		3.8
Total/Average	$	30,386,333		175,912		100	%		(0.5	)%	$	156.64		12.2	%

We have estimated 1999 average rate levels based upon the subject property’s 1999 operating budget prepared by property management, our projections of penetration levels by segment, our discussion with area hotel operators, and our understanding of the current and anticipated levels of lodging demand in Chicago.

HVS International, San Francisco, California Occupancy and Average Rate Analysis 83

Although new supply will impact the market, we consider the recent improvements to the hotel and the upcoming renovations of the hotel’s guestrooms will largely insulate The Westin from these adverse effects. More likely, the less desirable hotels with secondary locations and deficiencies in guestroom conditions will most likely be affected by the additions to supply. Typically, managers generally hope to engineer rate growth in future years as a result of guestroom improvements which will support the attainment of higher average rates. This strategy will reportedly be employed by Westin management.

In this appraisal, we have applied a base underlying inflation rate of 3.0% in all years of our projection. As mentioned throughout this narrative, the scheduled renovations will have a positive and direct impact upon average rates as well as occupancy. However, this is tempered by increased competitive pressures in the market. For the commercial segment, we have forecast rate growth of 9.0% in 1999, 6.0% in 2000, and tapering to 4.0% in 2001, before stabilizing at 3.0% in 2002. Similarly, we have forecast group meeting segment rate growth of 6.0% in 1999, 5.0% in 2000, 4.0% in 2001, before stabilizing at 3.0% in 2002. These rates of growth are deemed to be supportable given the extent of the anticipated renovation program. We have forecast 5.0% rate growth for the leisure segment in 1999, 4.0% in 2000 and 2001, before stabilizing at 3.0% thereafter. Airline contract crew demand is projected to increase by 6.0% in 1999 and 3.0% thereafter, reflecting contractual rates.

The following table illustrates the methodology we have used for projecting the subject property’s average rate. As a context for the average rate growth factors, note that we have applied a base underlying inflation rate of 3.0% for average rate. Similar to the occupancy projection, our forecast of average rates is based on our first year of projection beginning February 1, 1999.

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Forecast of Average Rate

	Historical		1999			2000			2001			2002			2003
Segmented ADR Growth Rates
Commercial		N/A		9.0	%		6.0	%		4.0	%		3.0	%		3.0	%
Group Meeting		N/A		6.0			5.0			4.0			3.0			3.0
Leisure		N/A		5.0			4.0			4.0			3.0			3.0
Contract		N/A		6.0			3.0			3.0			3.0			3.0
Segmented ADR
Commercial	$	185.00	$	201.65		$	213.75		$	222.30		$	228.97		$	235.84
Group Meeting		157.00		166.42			174.74			181.73			187.18			192.80
Leisure		167.35		175.72			182.75			190.06			195.76			201.63
Contract		91.00		96.46			99.35			102.33			105.40			108.57
Segmented Rooms Captured
Commercial		41,043		39,242			38,290			38,374			38,360			38,923
Group Meeting		95,768		91,170			95,687			97,546			101,993			101,993
Leisure		41,043		37,600			36,245			36,121			35,900			36,246
Contract		17,590		26,447			25,207			22,907			18,145			18,327
Total		195,444		194,458			195,430			194,949			194,398			195,489
Segmented Rooms Revenue (000s)
Commercial	$	7,593	$	7,913		$	8,184		$	8,531		$	8,783		$	9,179
Group Meeting		15,036		15,173			16,721			17,727			19,091			19,664
Leisure		6,869		6,607			6,624			6,865			7,028			7,308
Contract		1,601		2,551			2,504			2,344			1,913			1,990
Total	$	31,098	$	32,244		$	34,033		$	35,467		$	36,815		$	38,141
Imputed ADR	$	159.11	$	165.81		$	174.14		$	181.93		$	189.38		$	195.11
Overall Growth		N/A		4.2	%		5.0	%		4.5	%		4.1	%		3.0	%

Fiscal Year:	1999/00		2000/01		2001/02		2002/03
Average Rate	$	166.52	$	174.81	$	182.56	$	189.86
Expressed in Base-Year Dollars	$	161.26	$	164.36	$	166.65	$	168.27

For purposes of this analysis, we have used 2000/01 as the stabilized year for average rate. The stabilized average daily rate deflated to base-year dollars equates to $168.27. Compared to the subject property’s year-end 1998 result of $159.11, this indicates projected real growth of roundly $9.00 through the stabilized year. As mentioned, the ongoing renovations are

HVS International, San Francisco, California Occupancy and Average Rate Analysis 85

expected to help increase the subject property’s future average rate at greater than inflationary levels.

The chart below summarizes our forecast of occupancy and average rate for The Westin Hotel – Chicago through the stabilized year.

Forecast of Occupancy and Average Rate

	1999/00			2000/01			2001/02			Stabilized
Occupancy		71.0	%		71.0	%		71.0	%		71.0	%
Average Rate	$	166.52		$	174.81		$	182.56		$	189.86

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10. Highest and Best Use

The Appraisal Institute recognizes the concept of highest and best use as a fundamental element in the determination of value of real property, either as if vacant or as improved. Highest and best use is defined as follows:

The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability.⁷

As if Vacant

An analysis as to the highest and best use of the land should be made first and may be influenced by many factors. In estimating highest and best use, there are four stages of analysis:

1.	Physically possible use. What uses of the site are physically possible?
	Because of the size of the subject site (± 0.938 acres), a number of singular or combined uses appear to be possible. The topography is generally flat and the site offers lengthy frontage on both Michigan Avenue and Delaware Place. As such, physically possible uses include residential or commercial uses, such as retail or hotel use.
2.	Legally permissible use. What uses are permitted by zoning and deed restrictions?
	As detailed in the “Zoning” section of this report, the subject site is located in B6 - 6 - Restricted Central Business District, which allows for a wide variety of commercial development. Development standards in the district call for a maximum floor area ratio of 12:1;

⁷ Appraisal Institute. The Dictionary of Real Estate Appraisal. 3rd ed. Chicago: Author, 1992, p. 149.

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	however, the ordinance allows certain exceptions in certain instances. As such, potential development could include high-density use. The ± 0.938-acre site has sufficient capacity for a large, high-density hotel, as well as other allowable forms of commercial development, likely to be a high-density, mixed-used development, including restaurants, and theaters. Office buildings and residential uses are not specified in the district’s permitted uses.
3.	Financially feasible use. Which possible and permissible uses will produce a net return to the owner of the site?
	Of the legal uses, the subject site is suited to hotel or retail development. The subject property is located within a major shopping district with high volumes of foot and vehicular traffic. Furthermore, the surrounding neighborhood is supportive of these uses. Recent retail and hotel development in the area indicate that the site would be financially feasible for either use.
4.	Maximally productive use. Among the feasible uses, which use will produce the highest net return or the highest present worth?
	In consideration of the foregoing factors influencing development in the subject’s immediate area, it is the appraisers’ opinion that the highest and best use of the subject site as if vacant is for the development of a mixed-use, full-service transient lodging facility with retail development on the lower levels.

As Improved

After determining the highest and best use of the land, an analysis and opinion indicating the highest and best use of the property should be made.

It is important to recognize the possibility that the highest and best use of the land could differ from the highest and best use of the property. This may occur where a site has existing improvements and the highest and best use of the land differs from the property’s current use. Nevertheless, the current property use will continue until the value of the land under its highest and best use, less existing improvement demolition costs, exceeds the total value of the property in its present use.

As noted above, in estimating highest and best use, there are four stages of analysis:

HVS International, San Francisco, California Highest and Best Use 88

1.	Physically possible use. What uses of the site are physically possible?
2.	Legally permissible use. What uses are permitted by zoning and deed restrictions?
3.	Financially feasible use. Which possible and permissible uses will produce a net return to the owner of the site?
4.	Maximally productive use. Among the feasible uses, which use will produce the highest net return or the highest present worth?

Based on a review of the economic considerations and alternatives of the subject property, since the value of the land does not exceed the value of the hotel less the cost of demolition, it is our opinion that the highest and best use of the subject property, as currently improved, continues to be as a full-service transient lodging facility.

The anticipated renovations of the existing improvements, as detailed previously in the “Description of the Improvements” section of the report, will support the attainment of higher average rates and occupancy. These renovations further support the highest and best use of the subject property as a full-service transient lodging facility.

HVS International, San Francisco, California Approaches to Value 89

11. Approaches to Value

In appraising real estate for market value, the professional appraiser has three approaches from which to select: the cost, sales comparison, and income capitalization approaches. Although all three valuation procedures are given consideration, the inherent strengths of each approach and the nature of the subject property must be evaluated to determine which will provide supportable estimates of market value. The appraiser is then free to select one or more of the appropriate approaches in arriving at a final value estimate.

Cost Approach

The cost approach estimates market value by computing the current cost of replacing the property and subtracting any depreciation resulting from physical deterioration, functional obsolescence, and external (or economic) obsolescence. The value of the land, as if vacant and available, is then added to the depreciated value of the improvements to produce a total value estimate.

The cost approach may provide a reliable estimate of value in the case of new properties; however, as buildings and other improvements grow older and begin to deteriorate, the resultant loss in value becomes increasingly difficult to quantify accurately. We find that knowledgeable hotel buyers generally base their purchase decisions on economic factors such as projected net income and return on investment. Because the cost approach does not reflect these income-related considerations and requires a number of highly subjective depreciation estimates, this approach is given minimal weight in the hotel valuation process. As a result of the subject property’s age and the inapplicability of this valuation method, the cost approach was considered but was not applied in this analysis.

Sales Comparison Approach

The sales comparison approach estimates the value of a property by comparing it to similar properties sold on the open market. To obtain a supportable estimate of value, the sales price of a comparable property must be adjusted to reflect any dissimilarities between it and the property being appraised.

HVS International, San Francisco, California Approaches to Value 90

The sales comparison approach may provide a useful value estimate in the case of simple forms of real estate such as vacant land and single-family homes, where the properties are homogeneous and the adjustments are few and relatively simple to compute. In the case of complex investments such as shopping centers, office buildings, restaurants, and lodging facilities, where the adjustments are numerous and more difficult to quantify, the sales comparison approach loses much of its reliability.

Hotel investors typically do not employ the sales comparison approach in reaching their final purchase decisions. Factors such as the numerous insupportable adjustments that are necessary and the general inability to determine the true financial terms and human motivations of comparable transactions often make the results of the sales comparison approach questionable. Although the sales comparison approach may provide a range of values that supports the final estimate, reliance on this approach beyond the establishment of broad parameters is rarely justified by the quality of the sales data.

The market-derived capitalization rates sometimes used by appraisers are susceptible to the same shortcomings inherent in the sales comparison approach. To substantially reduce the reliability of the income capitalization approach by employing capitalization rates obtained from unsupported market data weakens the final value estimate and ignores the typical investment analysis procedures employed by hotel purchasers.

Income Capitalization Approach

The income capitalization approach takes a property’s projected net income before debt service and allocates this future benefit to the mortgage and equity components based on market rates of return and loan-to-value ratios. Through a discounted cash flow and income capitalization procedure, the value of each component is calculated. The total of the mortgage component and the equity component equals the value of the property. This approach is often selected as the preferred valuation method for income-producing properties because it most closely reflects the investment rationale of knowledgeable buyers.

Reconciliation

The final step in the valuation process is the reconciliation and correlation of the value indications. Factors that are considered in assessing the reliability of each approach include the purpose of the appraisal, the nature of the subject property, and the reliability of the data used. In reconciliation, the applicability and supportability of each approach are considered and the range of value indications is examined. The most

HVS International, San Francisco, California Approaches to Value 91

significant weight is given to the approach that produces the most reliable solution and most closely reflects the criteria used by typical investors.

Our nationwide experience with numerous hostelry buyers and sellers indicates that the procedures used in estimating market value by the income capitalization approach are comparable to those employed by the hotel and motel investors who constitute the marketplace. For this reason, the income capitalization approach produces the most supportable value estimate, and it is generally given the greatest weight in the hotel valuation process.

HVS International, San Francisco, California Income Capitalization Approach 92

12. Income Capitalization Approach

The income capitalization approach is based on the principle that the value of a property is indicated by the net return to the going concern or what is also known as the present worth of future benefits. The future benefits from income-producing properties, such as hotels and motels, are the net income before debt service and depreciation, derived from a forecast of income and expense. These future benefits can then be converted into an indication of market value through a capitalization process and discounted cash flow analysis.

Using the income capitalization approach, the subject property has been valued by analyzing the local market for transient accommodations, examining existing and proposed competition, and developing a forecast of income and expense that reflects current and future anticipated income trends, as well as area cost components, up through a stabilized year of operation.

The forecast of income and expense is expressed in current dollars as of the date of each forecasted year. The last forecasted year, or what is referred to as the stabilized year, is intended to reflect the anticipated operating results of the property over its remaining economic life, given any and all applicable stages of build-up, plateau, and decline in the life cycle of the hotel. Therefore, such income and expense estimates from the stabilized year forward exclude from consideration any abnormal relation of supply and demand, and also any transitory or nonrecurring conditions which may result in unusual revenue or expenses of the property.

As stated in the textbook entitled Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations, published by the Appraisal Institute, “of the three valuation approaches available to the appraiser, the income capitalization approach generally provides the most persuasive and supportable conclusions when valuing a lodging facility.” This text notes that using a 10-year forecast and an equity yield rate “most accurately reflects the actions of typical hotel buyers, who purchase

HVS International, San Francisco, California Income Capitalization Approach 93

properties based on their leveraged discounted cash flow.” The simpler procedure of using a 10-year forecast and a discount rate is “less reliable because the derivation of the discount rate has little support. Moreover, it is difficult to adjust the discount rate for changes in the cost of capital.”⁸

The subject property has been valued using a 10-year discounted cash flow analysis in which the cash flow to equity and the equity reversion are discounted to the present value at the equity yield rate and the income to the mortgagee is discounted at a mortgage interest rate. The sum of the equity and mortgage values is the total property value.

To convert the forecasted income stream into an estimate of value, the anticipated net income (before debt service and depreciation) is allocated to the mortgage and equity components based on market rates of return and loan-to-value ratios. The total of the mortgage component and the equity component equals the value of the property. The process of estimating the value of the mortgage and equity components is described as follows.

1.	The terms of typical hotel financing are set forth, including interest rate, amortization term, and loan-to-value ratio.
2.	An equity yield rate of return is established. Many hotel buyers base their equity investments on a 10-year equity yield rate projection that takes into account ownership benefits such as periodic cash flow distributions, residual sale or refinancing distributions that return any property appreciation and mortgage amortization, income tax benefits, and various non-financial considerations such as status and prestige. The equity yield rate is also known as the internal rate of return on equity.
3.	The value of the equity component is calculated by first deducting the annual debt service from the projected net income before debt service, leaving the net income to equity for each projection year. The net income as of the 11th year is capitalized into a reversionary value. After deducting the mortgage balance at the end of the 10th year and the typical brokerage and legal costs, the equity residual is discounted back to the date of value at the equity yield rate. The net income to equity for each of the 10 projection years is also

⁸     Rushmore, S. Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations. Chicago: Appraisal Institute, 1992, p. 236.

HVS International, San Francisco, California Income Capitalization Approach 94

	discounted to the present value. The sum of these discounted values equates to the value of the equity component. Adding the equity component to the initial mortgage balance yields the overall property value.
	Because the mortgage and the debt service amounts are unknown but the loan-to-value ratio was determined in step #1, the preceding calculation can be solved through an iterative process or by use of a linear algebraic equation that computes the total property value. The algebraic equation that solves for the total property value using a 10-year mortgage/equity technique was developed by Suzanne R. Mellen, CRE, MAI, managing director of the San Francisco office of HVS International. A complete discussion of the technique is presented in her article entitled, “Simultaneous Valuation: A New Technique.”9
4.	The value is proven by allocating the total property value between the mortgage and equity components and verifying that the rates of return set forth in steps #1 and #2 can be met from the forecasted net income.

Review of Operating History

Because the subject property is an existing hotel with an established operating performance, its historical income and expense experience serves as the primary basis for projections. The following income and expense statements for 1995, 1996, 1997, and 1998 were provided by property management and are unaudited. We have reported the historical income and expense statistics according to the Uniform System of Accounts for Hotels. Due to the conversion of parlor suites to rentable guestrooms, the subject property’s guestroom count has increased from 740 in 1997 to 745 in 1998. According to property management, our projections reflect the most current and final count of 751 guestrooms.

⁹ Suzanne R. Mellen, CRE, MAI. “Simultaneous Valuation: A New Technique.” Appraisal Journal. April 1983.

HVS International, San Francisco, California Income Capitalization Approach 95

Historical Operating Performance - The Westin Hotel – Chicago

Year:				1998										1997
Total Rooms:				745										740
Occupied Rooms:				193,984										195,025
Occupancy:				71.3	%									72.3	%
Average Rate:			$	159.11									$	141.88
			$ (000s)			% of Gross			PAR 1		POR 2		$ (000s)			% of Gross			PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms		$	30,866			69.3	%	$	41,430	$	159.11	$	27,671			68.3	%	$	37,393	$	141.88
	Food			6,578			14.8			8,829		33.91		6,443			15.9			8,707		33.04
	Beverage			1,840			4.1			2,470		9.49		1,849			4.6			2,499		9.48
	Telephone			1,513			3.4			2,031		7.80		1,268			3.1			1,714		6.50
	Garage			1,131			2.5			1,518		5.83		1,066			2.6			1,441		5.47
	F&B Other			1,381			3.1			1,853		7.12		1,242			3.1			1,678		6.37
	Other Income			1,224			2.7			1,642		6.31		1,002			2.5			1,355		5.14
		Total		44,531			99.9			59,773		229.56		40,542			100.1			54,787		207.88
DEPARTMENTAL EXPENSES*
	Rooms			7,279			23.6			9,770		37.52		6,424			23.2			8,681		32.94
	Food & Beverage			7,097			84.3			9,527		36.59		6,834			82.4			9,235		35.04
	Telephone			405			26.8			544		2.09		437			34.5			591		2.24
	Garage			432			38.2			580		2.23		395			37.0			534		2.02
	Other Income			75			6.2			101		0.39		56			5.5			75		0.28
		Total		15,289			34.3			20,522		78.81		14,145			34.9			19,116		72.53
DEPARTMENTAL INCOME				29,242			65.6			39,251		150.75		26,397			65.2			35,672		135.35
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General			3,248			7.3			4,360		16.74		3,238			8.0			4,376		16.60
	Management Fee			998			2.2			1,340		5.15		907			2.2			1,226		4.65
	Marketing			3,045			6.8			4,088		15.70		2,696			6.6			3,643		13.82
	Property Oper. & Maint.			1,774			4.0			2,381		9.14		1,460			3.6			1,973		7.49
	Energy			1,089			2.4			1,462		5.62		1,070			2.6			1,446		5.49
		Total		10,155			22.7			13,631		52.35		9,371			23.0			12,664		48.05
HOUSE PROFIT				19,087			42.9			25,620		98.40		17,026			42.2			23,008		87.30
FIXED EXPENSES
	Property Taxes			3,380			7.6			4,537		17.42		3,316			8.2			4,482		17.01
	Insurance			428			1.0			574		2.21		410			1.0			554		2.10
	Equipment & Other Rent			284			0.6			382		1.47		227			0.6			307		1.16
		Total		5,282			11.9			7,091		27.23		5,568			13.8			7,524		28.55
		NET INCOME	$	13,805			31.0	%	$	18,529	$	71.17	$	11,458			28.4	%	$	15,484	$	58.75
	Food to Rooms						21.3	%									23.3	%
	Beverage to Food						28.0										28.7
	F&B to Rooms						27.3										30.0
	Telephone to Rooms						4.9										4.6
	Garage to Rooms						3.7										3.9
	F&B Other to Rooms						4.5										4.5
	Other Income to Rooms						4.0										3.6

* Departmental expenses expressed as a percentage of departmental revenues

¹ Per Available Room

² Per Occupied Room

HVS International, San Francisco, California Income Capitalization Approach 96

Historical Operating Performance — The Westin Hotel Chicago

Year:				1996										1995
Total Rooms:				740										740
Occupied Rooms:				188,889										176,551
Occupancy:				69.7	%									65.4	%
Average Rate:			$	129.31									$	114.62
			$ (000s)			% of Gross			PAR 1		POR 2		$ (000s)			% of Gross			PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms		$	24,426			67.7	%	$	33,008	$	129.31	$	20,237			66.6	%	$	27,347	$	114.62
	Food			5,768			16.0			7,795		30.54		5,165			17.0			6,980		29.26
	Beverage			1,816			5.0			2,454		9.61		1,716			5.6			2,319		9.72
	Telephone			1,193			3.3			1,613		6.32		998			3.3			1,349		5.65
	Garage			1,099			3.0			1,485		5.82		1,062			3.5			1,435		6.02
	F&B Other			931			2.6			1,259		4.93		728			2.4			984		4.13
	Other Income			872			2.4			1,178		4.62		470			1.5			635		2.66
		Total		36,106			100.0			48,791		191.15		30,376			99.9			41,049		172.05
DEPARTMENTAL EXPENSES*
	Rooms			5,565			22.8			7,520		29.46		5,136			25.4			6,941		29.09
	Food & Beverage			6,202			81.8			8,382		32.84		6,159			89.5			8,323		34.88
	Telephone			399			33.5			540		2.11		362			36.3			490		2.05
	Garage			383			34.8			518		2.03		358			33.7			484		2.03
	Other Income			55			6.4			75		0.29		59			12.6			80		0.34
		Total		12,605			34.9			17,034		66.73		12,075			39.8			16,317		68.39
DEPARTMENTAL INCOME				23,501			65.1			31,757		124.41		18,302			60.1			24,732		103.66
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General			3,349			9.3			4,526		17.73		3,246			10.7			4,386		18.38
	Management Fee			2,338			6.5			3,159		12.38		684			2.3			924		3.87
	Marketing			2,567			7.1			3,469		13.59		2,418			8.0			3,268		13.70
	Property Oper. & Maint.			1,602			4.4			2,165		8.48		1,535			5.1			2,075		8.70
	Energy			1,063			2.9			1,436		5.63		944			3.1			1,275		5.34
		Total		10,919			30.2			14,755		57.81		8,827			29.2			11,928		49.99
HOUSE PROFIT				12,582			34.9			17,002		66.60		9,475			30.9			12,804		53.67
FIXED EXPENSES
	Property Taxes			3,249			9.0			4,391		17.20		3,064			10.1			4,140		17.35
	Insurance			127			0.4			171		0.67		21			0.1			28		0.12
	Equipment & Other Rent			234			0.6			316		1.24		180			0.6			243		1.02
		Total		3,610			10.0			4,878		19.11		3,265			10.8			4,412		18.49
		NET INCOME	$	8,972			24.9	%	$	12,124	$	47.49	$	6,211			20.1	%	$	8,392	$	35.18
	Food to Rooms						23.6	%									25.5	%
	Beverage to Food						31.5										33.2
	F&B to Rooms						31.0										34.0
	Telephone to Rooms						4.9										4.9
	Garage to Rooms						4.5										5.2
	F&B Other to Rooms						3.8										3.6
	Other Income to Rooms						3.6										2.3

* Departmental expenses expressed as a percentage of departmental revenues

¹ Per Available Room

² Per Occupied Room

HVS International, San Francisco, California Income Capitalization Approach 97

The Westin’s steadily improving operating performance is reflected in its historical levels of net income. Net operating income during the period increased from a low of $6,211,000, or 20.1% of total revenues, in 1995, to a high of $13,805,000, or 31.0% of total revenues, in 1998. Gains in net operating income have been consistent with the gains in average rate.

Among departmental revenues, rooms revenue increased significantly from 1995 to 1998 as both occupancy and average rate have increased. Food revenues also increased significantly from 1995 to 1998, but at a slower rate of growth than rooms revenue. Beverage revenue also increased in dollar terms during this same period, but decreased as a percentage of food revenue, mainly attributed to the public becoming more health conscious and thus consuming less alcohol. Telephone revenue steadily increased from 1995 in dollar terms due to the increase in occupancy, as well as on a per-occupied-room basis due to increases in the price of phone calls. Garage revenue increased in dollar terms, albeit at a slower rate of growth. Revenues for food and beverage other and other income, which contains guest laundry, retail rent and the business center, significantly improved between 1995 and 1998.

According to property management, other income revenue will increase in 1999 as the restaurant lease will begin on the Grill Restaurant. Conversely, food and beverage revenues will decrease as a result of the loss in sales at the restaurant.

In terms of departmental performance, the rooms departmental expense has been relatively stable over the historical period. Food and beverage expense has increased moderately. Telephone expense as a percentage of departmental revenue decreased from 36.3% in 1995 to 26.8% in 1998, which management attributes to technology improvements and better negotiated corporate long-distance rates. Garage expense increased as a ratio of departmental revenue from 33.7% in 1995 to 38.2% in 1998. Other income fluctuated in dollar terms and as a percentage of departmental revenue over the historical period. Overall, the hotel’s departmental income steadily increased from 60.1% of total revenues in 1995 to 65.6% of total revenues in 1998.

Among the undistributed operating expenses, administrative and general peaked at $4,526 per available room in 1996, but has since declined to $4,360 per available room in 1998 due to cost containment. Management fees increased from 1995 to 1998 as the revenues and profitability of the

HVS International, San Francisco, California Income Capitalization Approach 98

subject property increased. Note that according to the hotel management agreement, the base management fee is equal to 3.5% of annual gross revenues. However, Westin reduced the base management fee to 2.25% of annual gross revenues from December 1993 to November 1998. The base management fee reverted back to the original 3.5% of annual gross revenues in December 1998. The management fees indicated in the statements prior to 1997 include incentive and base management fees. Marketing expenses per available room increased from 1995 to 1998 due to increases in the frequent travel program cost and staff bonuses. Property operations and maintenance expenses per available room generally increased from 1995 to 1998, but decreased slightly both in dollar terms and on a per-available-room basis in 1997 due to the reduction in payroll related to the reduced maintenance on building systems that were scheduled for replacement. Energy expense per available room increased marginally from 1995 to 1998.

Fixed expenses historically included property taxes, insurance, and equipment rent. Property taxes increased steadily from 1995 to 1998. Insurance expense increased from 1995 to 1998 with an unusually low insurance expense registered in 1995. Equipment rent generally increased in dollar terms from 1995 to 1998, but stabilized at 0.6% of total revenues over the historical period. The subject property’s financial statements do not show a deduction for the reserve for replacement of 5.0% of gross revenues.

Comparable Statements

The following chart presents 1996 and 1997 operating statements from three comparable first-class, full-service hotels in Chicago. While the hotel’s actual historical operating ratios provide a good basis for projecting the hotel’s future performance, we also reviewed comparable hotel statistics to gauge the subject’s anticipated performance upon hypothetical sale and installation of professional, third-party management.

HVS International, San Francisco, California Income Capitalization Approach 99

Comparable Statements of Income and Expense

			Comparable #1					Comparable #2					Comparable #3
			Chicago, Illinois					Chicago, Illinois					Chicago, Illinois
Year:				1997					1996					1996
Total Rooms:				~ 1,000-1,500					~ 800-900					~ 600-700
Occupied Rooms:				~300,000					~200,000					~200,000
Occupancy:				~ 70-80	%				~ 70-75	%				~ 70-80	%
Average Rate:			~ $	140-160				~ $	130-140				~ $	140-150
			PAR 1			POR 2		PAR 1			POR 2		PAR 1			POR 2
DEPARTMENTAL REVENUE
	Rooms		$	25,622		$	148.24	$	15,077		$	136.24	$	14,656		$	147.53
	Food			10,500			60.75		6,163			55.69		6,467			65.10
	Beverage			2,309			13.36		1,113			10.06		2,068			20.82
	Telephone			1,224			7.08		400			3.61		1,054			10.61
	Miscellaneous			883			5.11		—			—		717			7.22
		Total		40,537			234.53		22,752			205.60		24,962			251.28
DEPARTMENTAL EXPENSES*
	Rooms			5,482			31.72		3,841			34.71		3,930			39.56
	Food & Beverage			7,490			43.33		5,134			46.40		6,937			69.83
	Telephone			412			2.39		390			3.52		363			3.65
		Total		13,385			77.44		9,365			84.63		11,229			113.04
DEPARTMENTAL INCOME				27,153			157.09		13,387			120.98		13,732			138.24
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General			2,644			15.30		1,918			17.33		1,781			17.92
	Management Fee			1,390			8.04		559			5.05		631			6.35
	Marketing			2,177			12.59		1,671			15.10		1,452			14.62
	Property Oper. & Maint.			1,525			8.82		1,950			17.63		1,182			11.90
	Energy			1,242			7.19		437			3.95		864			8.70
		Total		8,978			51.94		6,536			59.06		5,909			59.49
HOUSE PROFIT				18,175			105.15		6,852			61.92		7,823			78.75
FIXED EXPENSES
	Property Taxes			3,537			20.46		1,261			11.40		1,720			17.32
	Insurance			38			0.22		37			0.33		20			0.20
	Miscellaneous			1,500			8.68		313			2.83		—			—
		Total		5,074			29.36		1,610			14.55		1,740			17.52
		NET INCOME	$	13,101		$	75.79	$	5,241		$	47.37	$	6,083		$	61.24

* Departmental expenses are expressed as a percentage of departmental revenues

¹ Per Available Room

² Per Occupied Room

As indicated in the previous chart, the departmental income levels for the comparable hotel statements were roundly 55% to 67% of total revenues, which is lower than the subject property’s 66%. House profit for the comparable hotel statements equated to between roundly 30% to 45% of total revenues, compared to the subject property’s 43%. Overall, net operating income for the comparable hotel statements was between roundly 23% and 32% of total revenues, which is again lower than the

HVS International, San Francisco, California Income Capitalization Approach 100

subject property’s 31%. However, note that the comparable statements date from 1997 and 1996, before the additional run-up in rooms revenue in 1998 which has further positively impacted profitability.

In developing our forecasts for the subject property, we have analyzed key operating ratios and profit ratios. In the following narrative, specific line items from the preceding chart will be cited as a basis for the detailed forecast.

Inflation Analysis

To forecast income and expense levels, we must establish a general rate of inflation. The appraisers researched recent changes in Consumer Price Index data for the Chicago-Gary-Kenosha MSA. The following table shows how the consumer price index for the urban consumer, all items, has changed within the Chicago-Gary-Kenosha MSA since 1990.

Consumer Price Index - Chicago-Gary-Kenosha MSA

	Consumer		Percentage
Year	Price Index		Change
1990		131.7		—
1991		137.0		4.0	%
1992		141.1		3.0
1993		145.4		3.0
1994		148.6		2.2
1995		153.3		3.2
1996		157.4		2.7
1997		161.7		2.7
1998		165.0		2.0
Average Annual Compounded % Change 1990-98				2.9	%

Source: Bureau of Labor Statistics

In consideration of the above data, as well as other factors such as the property’s age and our assessment of probable property appreciation levels, we have applied an underlying inflation rate of 3.0% to all appropriate revenue and expense items throughout our projections. This stabilized inflation rate takes into account normal, recurring inflation cycles. Inflation is likely to fluctuate above and below this level during the projection period.

Fixed and Variable Component Analysis

In forecasting revenues and expenses for a lodging facility, HVS International uses a fixed and variable component model. The logic behind this model is based on the premise that hotel revenue and expenses

HVS International, San Francisco, California Income Capitalization Approach 101

have a component that is fixed and another component that varies directly with occupancy and facility use. Therefore, a projection can be made by taking a known level of revenue or expense and calculating the fixed component, as well as the variable portion. The fixed component is then held at a constant level, while the variable component is adjusted for the percentage change between the projected occupancy and facility use, which produces the known level of revenue or expense.

The following table illustrates the revenue and expense categories that can be projected using this fixed and variable component model. These percentages show the portion of each category that is typically fixed and variable. The last column describes the basis for calculating the percentage of variability.

Range of Fixed and Variable Ratios

Revenue and Expense Category		Percent Fixed					Percent Variable					Index of Variability
Revenues
	Food		25	—	50	%		50	—	75	%	Occupancy
	Beverage		0	—	30			70	—	100		Food Revenue
	Telephone		10	—	40			60	—	90		Occupancy
	Other Income		30	—	60			40	—	70		Occupancy
Departmental Expenses
	Rooms		50	—	70			30	—	50		Occupancy
	Food & Beverage		35	—	60			40	—	65		Food & Beverage Revenue
	Telephone		55	—	75			25	—	45		Telephone Revenue
	Other Income		40	—	60			40	—	60		Other Income
Undistributed Operating Expenses
	Administrative & General		65	—	85			15	—	35		Total Revenue
	Management Fee			0					100			Total Revenue
	Marketing		65	—	85			15	—	35		Total Revenue
	Franchise Fees			0					100			Rooms Revenue
	Repairs & Maintenance		55	—	75			25	—	45		Total Revenue
	Energy		80	—	95			5	—	20		Total Revenue
Fixed Expenses
	Property Taxes			100					0			Total Revenue
	Insurance			100					0			Total Revenue
	Reserve for Replacement			0					100			Total Revenue

This forecast of revenue and expense is accomplished through a step-by-step approach, following the format of the Uniform System of Accounts for Hotels. Each category of revenue and expense is estimated

HVS International, San Francisco, California Income Capitalization Approach 102

separately and combined at the end in the final statement of income and expense.

Forecast of Income and Expense

The following description sets forth the basis for the forecast of income and expense. We anticipate that it will take four years for the subject property to reach a stabilized level of operation. The following text refers directly to the two subsequent charts where the forecast of income and expense is shown in greater detail through the stabilized year (the first chart) and with lesser detail through the 10-year projection period (the second chart). In the detailed chart, revenue and expense figures are shown as ratios to total revenue, total available rooms (PAR), and total occupied rooms (POR). In the 10-year chart, the figures are expressed only as ratios to total revenue.

Rooms Revenue

Rooms revenue is determined by two variables: occupancy and average room rate. In the section entitled “Occupancy and Average Rate Analysis,” we projected occupancy and average rate for the subject property. The subject property’s occupancy is projected to stabilize in the fourth projection year at an occupancy rate of 71% with an average daily rate of $189.86, reflecting moderate improvement over historical levels. The stabilized occupancy and average rate take into account the renovation of the main building guestrooms and market forces brought about by the addition of supply. From the stabilized year forward, the average rate is forecast to increase in line with inflation, at 3.0% per year. Note that 12 parlor suites were converted to rentable guestroom units with pull-down wall beds. As a result, the hotel’s guestroom inventory increased from 740 in 1997 to 745 in 1998, reflecting the mid-year addition. The annual room count for 1999 and thereafter will be 751.

Food and Beverage Revenue

The subject property’s food and beverage revenue is generated by two food and beverage outlets (Chelsea Restaurant and Bar and Cafe A La Carte), room service, and the roughly 30,000 square feet of meeting space where catering charges are generated. The Westin’s food and beverage revenue has increased in dollar terms, but has not kept up with the growth in rooms revenues due to the lackluster results of the Chelsea Bar and Restaurant. In 1995, food and beverage revenue represented 25.5% of rooms revenue; in 1998, it was 21.3%. Increased dining options available to guests and restaurant patrons in the downtown area have resulted in declining sales at the subject property’s main restaurant. However, banquet sales continue to be the food and beverage revenue mainstay, representing 60% of departmental revenue (for accounting purposes, food

HVS International, San Francisco, California Income Capitalization Approach 103

and beverage other is a separate line item), although banquet sales are also under increased competitive pressures.

As mentioned, the restaurant will close in April and undergo an extensive $3-million renovation and expansion, reopening as the Grill Restaurant under a lease agreement with Los Angeles-based Grill Concepts, Inc. A temporary facility will operate during the interim. As such, our forecast for food and beverage revenue reflects a partial operating year for the existing restaurant, a temporary operation for five months and closure for the remaining balance of the fiscal year beginning February 1, 1999. Conversely, restaurant rent will be a new revenue generator under the other income line item.

We anticipate that the additional meeting space will result in moderately higher food and beverage revenue over the long term. However, the conversion of the restaurant to lease will result in lower food and beverage sales overall.

To provide support for our assumption, we performed an analysis of the subject property’s food and beverage department, breaking down revenue by outlet. Our analysis indicated that the Chelsea Restaurant & Bar contributed between 19.0% to 20.2% of total food and beverage revenues in 1997 and 1998, as indicated in the following chart.

Chelsea Restaurant & Bar Revenue Contribution to Total Food & Beverage Revenues

		1998		% of Total			1997		% of Total
TOTAL F&B REVENUES
	Chelsea Restaurant	$	1,603,037		19.04	%	$	1,677,138		20.22	%
	Total Revenues		8,417,917					8,292,660
FOOD REVENUES
	Chelsea Restaurant		997,885		15.17	%		1,058,887		16.43	%
	Total Revenues		6,577,730					6,443,238
BEVERAGE REVENUES
	Chelsea Restaurant		605,151		32.89	%		618,250		33.43	%
	Total Revenues		1,840,187					1,849,422

With the closure of the Chelsea Restaurant & Bar, we forecast a removal of this outlet’s contribution to food and beverage revenues at 15.0% and 33.0% of total food and beverage revenues, respectively.

HVS International, San Francisco, California Income Capitalization Approach 104

As such, we have forecast food revenue to stabilize at 16.9% of rooms revenue and beverage revenue to stabilize at 22.0% of food revenue, reflecting the benefits of the additional meeting space capacity offset by the reduction in the restaurant’s contribution to sales.

Telephone Revenue

Telephone revenue is derived from charges to guests for local and long-distance calls. With the exception of 1997, telephone revenue as a percentage of rooms revenue has been consistent at 4.9% per year. Because of the increase in rooms revenue as a result of the ongoing renovations, telephone revenue as a ratio to rooms revenue is forecast to decrease to 4.5% of rooms revenue in the stabilized year.

Garage Revenue

The subject property generates garage revenue as a result of nightly parking charges. According to property management, rates were last increased in 1997 to $24.95 per night, at the upper end of the range of comparable parking facility rates. As such, we consider garage revenue to be maximized at this level and forecast inflationary revenue growth over the projection.

Food and Beverage Other Income

Group meetings, functions, and banquets generate sales as a result of audio and visual rental, public room rentals, and service charges, which we have classified as food and beverage other income. Food and beverage other income increased as a ratio of rooms revenue from 3.6% in 1995 to 4.5% in 1998. Reflecting the subject property’s increased meeting space capacity, we have forecast food and beverage other income at 4.8% of rooms revenue in the stabilized year.

Other Income

Other income is generated by retail rent, guest laundry, group cancellation fees, no show revenues, and vending machines. These departments have seen revenues increase steadily over the past three years. This line item will be augmented by the introduction of restaurant rent from the Grill Restaurant, whose terms have been synopsized in the addenda to this report. Based on the base and percentage rent terms of the letter of intent, the proposed restaurant’s sales must exceed $3.6 million annually (6.0% of sales) to exceed the $240,000 of base rent during the initial 10-year term. According to property management, the Grill Restaurant concept is anticipated to achieve strong sales. This is supported by the popularity of these establishments in other major cities, such as the Grill Restaurant in the Fairmont Hotel in San Jose, California. Nevertheless, the Chelsea Restaurant and Bar achieved annual sales of $1.6 million in 1998 and $1.7 million in 1997, considerably lower than the break-even point of the percent rent trigger. Based on these considerations and reflecting

HVS International, San Francisco, California Income Capitalization Approach 105

conservatism, our restaurant rent forecast is based on the minimum base rent over the period. Other operating departments revenue has been forecast at 4.3% of rooms revenue in the stabilized year.

Rooms Expense

Rooms expense consists of items relating to the sale and upkeep of guestrooms and public space. Salaries, wages, and employee benefits account for a substantial portion of this category. Although the wages paid to room attendants tend to be highly occupancy sensitive, they are somewhat offset by the relatively fixed payroll for front desk personnel, public area cleaners, the housekeeper, and the assistant manager. The overall result is that salaries, wages, and employee benefits are only moderately occupancy sensitive.

In 1998, the subject property’s rooms departmental expense equated to 23.6% of rooms revenue, up slightly from 23.2% in 1997. In future years, the Westin’s rooms departmental expense ratio is expected to remain at these levels despite the expected increases in average rate due to the higher level of upkeep for the newly renovated guestrooms. Specifically, we have forecast rooms expense at 23.9% in the first forecast year, improving to 22.9% in the stabilized year.

Food and Beverage Expense

Expenses for this department consist of items related to the operation of a hotel’s food, beverage, and banquet facilities. Cost of sales and payroll are moderately to highly volume sensitive and comprise a substantial portion of this category. Only very slightly volume sensitive are china, glassware, and linen; operating supplies; other operating expenses; and uniforms. Although the other expense items are primarily fixed, they represent a relatively insignificant factor.

Despite the increasing portion of total revenues drawn from banquets, the subject property’s food and beverage expense ratio increased from 81.8% in 1996 to 84.3% in 1998, after decreasing from a high of 89.5% in 1995. Banquet sales represented 54% of food and beverage revenue in 1998. Typically, banquet sales have a greater proportion of controllable expenses.

To determine the impact of the closure of the restaurant upon overall food and beverage departmental profitability, we performed an analysis of the Chelsea Restaurant & Bar’s and the overall food and beverage department’s expenses.

HVS International, San Francisco, California Income Capitalization Approach 106

Chelsea Restaurant & Bar Expenses to Total Food & Beverage Expenses

		1998		% of Total			1997		% of Total
TOTAL F&B EXPENSES
	Chelsea Restaurant	$	1,321,022		18.61	%	$	1,460,254		21.37	%
	Non-Rest		5,776,457					5,373,702
	Total Expenses		7,097,479					6,833,956
		1998		% of Total			1997		% of Total
TOTAL Profitability
	Chelsea Restaurant		282,015		21.36	%		216,884		14.87	%
	Total Expenses		1,320,438					1,458,704
		1998					1997
Departmental Expenses to Revenues
	Chelsea Restaurant		82.4%					87.1%
	Non-Rest		84.8					81.2
	Total Expenses		84.3					82.4

As indicated in the preceding table, the restaurant’s expenses as a ratio to the total food and beverage department decreased in 1998. Consequently, its profit contribution increased. As a percentage of departmental expenses to revenues, the restaurant incurred higher expense ratios than non-restaurant operations in 1997. However, this was reversed in 1998. Overall, we consider the closure of the restaurant to have no impact upon food and beverage expenses or profitability.

In 1999, with the increase in meeting space as a result of the departmental reorganization, the hotel’s mix of banquet revenue is anticipated to increase. We have forecast food and beverage expense to improve slightly to 83.5% of departmental revenue in the stabilized year.

Telephone Expense

The subject property’s telephone departmental expense has generally declined as a percentage of departmental revenues since 1995. The subject property is able to receive volume discounts with more telephone usage. Based on the historical results, we have forecast telephone expense to stabilize at 28.2% in the second projection year, increasing at the rate of inflation thereafter.

Garage Expense

The expenses of this department reflect costs of staffing and costs for operating supplies associated with cleaning equipment, valet tickets, and tapes. Cleaning, security, loss/damage, and insurance are also costs associated with the operation of this facility. This departmental expense increased from 33.7% of departmental revenue in 1995 to 38.2% in 1998. Management attributes this increased to higher labor costs. Based on these

HVS International, San Francisco, California Income Capitalization Approach 107

results, we have forecast garage expense at 37.2% of departmental revenue in the stabilized year, increasing at the rate of inflation thereafter.

Other Operating Departments Expense

Other operating departments expense as a percentage of revenue fluctuated from 5.5% to 12.6% over the historical period. Based on the most recent historical results, we have forecast other operating departments expense to stabilize at 5.7% of departmental revenue in 2000/01, increasing at the rate of inflation thereafter.

Administrative and General Expense

Administrative and general expenses include the salaries and wages of all administrative personnel not directly associated with a particular department. Expense items related to the management and operation of the property are also normally allocated to this category.

Most administrative and general expenses are relatively fixed. The exceptions are cash overages and shortages; commissions on credit card charges; credit and collection charges; provision for doubtful accounts, which are moderately affected by the quantity of transactions or total revenue; and salaries, wages, and benefits, which are slightly influenced by volume.

The subject property’s administrative and general expense, on a per-available-room basis, decreased from $4,376, or 8.0% of total revenues, in 1997, to $4,360, or 7.3% of total revenues, in 1998. The decrease is chiefly attributed to a reduction of redundant security staff at the hotel and the elimination of a profit improvement manager position, a function which is now performed by all department heads. Going forward, the forthcoming reduction of management in the restaurant operation will further reduce expenses. Taking into consideration all these effects, we have forecast administrative and general expense at $4,565 per available room, or 7.3% of total revenues, in the stabilized year.

Management Fees

As we are assuming the hypothetical sale of the subject property, with continued management of the property by Westin Hotels and Resorts or a comparable professional hotel management company, we have deducted management fees charged at current market rates subsequent to the hypothetical sale of 3.5% of gross revenues.

Marketing Expense

The marketing category is unique in that all of the expense items, with the exception of franchise fees and commissions, are totally controlled by management. Most lodging facilities establish an annual marketing budget which sets forth all planned expenditures. If the budget is followed

HVS International, San Francisco, California Income Capitalization Approach 108

throughout the period, total marketing expenses can be accurately forecast.

Although there is a lag period before results are realized, marketing expenditures are unusual because the benefits are often extended over a long period. Depending on the type and scope of the advertising and promotion program implemented, the lag time can be as short as a few weeks or as long as several years. However, the positive results of an effective marketing campaign tend to linger, and a property often enjoys the benefits of a concentrated sales effort for many months.

In 1998, the subject property’s marketing expense increased to $4,088 per available room, up from $3,643 per available room in 1997. The major contributors to the increase are the Westin frequent guest awards program. Based on the most recent historical figures, we have forecast marketing expense at $4,261 per available room in the first year of our projection, stabilizing at $4,378 in the second projection year.

Property Operations and Maintenance Expense

Property operations and maintenance is another expense category that is largely controlled by management. Except for repairs that are necessary to keep the facility open and to prevent damage (e.g., plumbing, heating, and electrical), most maintenance items can be deferred for varying lengths of time. All expense items in this category are relatively fixed. Maintenance is an accumulating expense. If management elects to postpone performing a required procedure, the expenditure has not been eliminated or saved, but only deferred payment until a later date.

The age of a lodging facility greatly influences the required level of maintenance. A new or thoroughly renovated property is protected for several years by modern equipment and manufacturers’ warranties. A well-organized preventive maintenance system often helps delay deterioration, but most facilities face higher property operations and maintenance costs each year, regardless of what the occupancy trend might be.

In 1998, the subject property’s property operations and maintenance expenses equated to $2,381 per available room, or 4.0% of total revenues, which is an increase from the $1,973 per available room in 1997. With the lease of the restaurant in 1999, we anticipate maintenance costs to decrease slightly in 2000 and thereafter. Based on these factors, we have forecast property operations and maintenance expense at $2,500 per available room

HVS International, San Francisco, California Income Capitalization Approach 109

in the first projection year, stabilizing at $2,446 in the second projection year.

Energy Expense

The significance of energy costs to hotel operators has increased considerably in the past several years. Public areas and corridors, must be continually lighted and heated or air conditioned, whether the house is full or serving only one guest. The energy cost of an additional occupied room (i.e., a few hours of light, television, and heat or air conditioning) is minimal. The design and layout of a lodging facility have a notable impact on the level of energy expense it incurs.

In 1998, the subject property’s energy expense equated to $1,462 per available room, up slightly from the $1,446 per-available-room expense recorded in 1997. As such, we have forecast energy expense at $1,498 per available room in the stabilized year, with inflationary gains anticipated thereafter.

Property Taxes

As described in the “Assessed Value and Taxes” section, our forecast of the Westin’s tax burden for 1999 is based on estimated increases in the property’s assessed value and the 1998 effective tax rate; these calculations yield a projected tax burden of $3,490,000 in 1999/00. In subsequent projection periods, property taxes are expected to rise by 3.0% annually, in tandem with the assumed underlying inflation rate.

Insurance

The insurance expense category includes general and liability, as well as the cost of insuring the building and its contents against damage or destruction from fire, weather, sprinkler leakage, boiler explosion, plate glass breakage, and so forth. Insurance rates are based on many factors, including building design and construction, fire detection and extinguishing equipment, fire district, distance from fire house, and the area’s fire experience.

The subject property’s historical insurance expense equated to approximately 1.0% of total revenues. Based on the historical data, we have forecast insurance expense at 0.9% of total revenues in the first projection year, with inflationary gains projected thereafter.

Reserve for Replacement

Furniture, fixtures, and equipment are essential to the operation of a lodging facility, and their quality often influences the class of a property. Included in this category are all non-real estate items that are normally capitalized, not expensed. Furniture, fixtures, and equipment are exposed to heavy use and must be replaced at regular intervals. The useful life of

HVS International, San Francisco, California Income Capitalization Approach 110

these items is determined by their quality, durability, and the amount of guest traffic and use. Periodic replacement of furniture, fixtures, and equipment is essential to maintain the quality, image, and income of a lodging facility. Since capitalized expenditures are not included in the operating statement, but nevertheless affect an owner’s cash flow, an appraisal should reflect these expenses in the form of an appropriate reserve for replacement. The annual deduction of a reserve for replacement from the projected income stream effectively provides for a return of furniture, fixtures, and equipment.

While a reserve is not an actual operating expense, hotels require periodic refurbishment and capital reinvestment to maintain their competitive position. In the current market, reserves for replacement are typically deducted at between 3% and 5% of total revenues. Considering the historical level of necessary capital improvements, as well as the age of the subject property, we are of the opinion that a long-term reserve for replacement equal to 5.0% of total revenues is necessary to maintain the subject property’s long-term competitive position.

Equipment Leases

Equipment rent includes the lease of front office and back-of-the-house equipment. In 1998, the subject property’s equipment rent expense equated to $284,422. The following table presents the operating lease payments for 1999 as provided by property management.

Operating Lease Payments - 1999

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Item	Payments
Copiers, Faxes	$	108,191
Telephone Equipment		79,472
Ice Machines		9,311
Mail Machine, Scale, Interface		5,680
3rd Floor Copier		920
Credit Card Authorization		10,619
Omninote System		4,978
8 Housekeeping Radios		1,686
Arch Paging Pagers		4,270
Ricoh Fax		2,000
O’Hare Fax Machine		569
Ameritech Pagers		349
Drinking Water Units		371
IBM		212
Bearcom		9,175
Ikon Office Supply		456
Telecheck		5,357
Total Lease Payments	$	243,614

According to property management, the number and amount of equipment leases will remain consistent. Based on the 1998 amount, we forecast equipment rent to be roundly $294,000 in the first projection year, with inflationary gains thereafter.

Incentive Management Fees

In addition to the 3.5% base fee, Westin Hotel Company receives an incentive fee equal to 20.0% of net operating cash flow. A synopsis of the hotel management agreement is attached in the addenda to this report. The first three years’ incentive fee was calculated as follows:

Calculation of Hotel Incentive Fee (000s)

		1999/00			2000/01			2001/02
HOUSE PROFIT		$	19,219		$	20,852		$	21,916
	Less: Management Fee		1,615			1,650			1,717
	Less: Taxes		3,490			3,595			3,703
	Less: Insurance		420			432			445
	Less: Equipment Leases		294			303			312
	Less: Capital/Reserve for Replacement		5,750			11,250			2,453
NET OPERATING CASH FLOW		$	7,650		$	3,622		$	13,286
	Incentive Management Fee %		20	%		20	%		20	%
INCENTIVE MANAGEMENT FEE		$	1,530		$	724		$	2,657

HVS International, San Francisco, California Income Capitalization Approach 112

Note that the subtracted capital/reserve for replacement in the first and second projection year reflects capital expenditures as budgeted by subject property management. In 2001/02 and thereafter, we have subtracted from the reserve for replacement amounts indicated previously. This procedure was repeated for the remaining years in the projection.

Summary of Projections

Based on the preceding analyses, the forecast of income and expense has been formulated. The first chart presented below reflects a detailed presentation of the forecast through the stabilized year, with the revenue and expense items expressed in terms of both total available rooms (PAR) and total occupied rooms (POR). Following the forecast through the stabilized year is the 10-year forecast of income and expense, presented with a lesser degree of detail. The forecasts pertain to fiscal operating years beginning February 1, 1999, and are expressed in inflated dollars for each year, assuming an underlying inflation rate of 3.0% throughout our projections. Departmental expense ratios are expressed as a ratio to departmental revenues.

Forecast of Income and Expense Through the Stabilized Year - The Westin Hotel - Chicago, IL

Fiscal Year:				1998	Historical
Number of Rooms:				740
Occupancy:				71.8	%
Average Rate:			$	159.11
Occupied Rooms:				193,984
			$ (000s)			% of Gross			PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms		$	30,866			69.3	%	$	41,710	$	159.11
	Food			6,578			14.8			8,889		33.91
	Beverage			1,840			4.1			2,487		9.49
	Telephone			1,513			3.4			2,044		7.80
	Garage			1,131			2.5			1,528		5.83
	F&B Other			1,381			3.1			1,866		7.12
	Other Income			1,224			2.7			1,653		6.31
		Total Revenues		44,531			99.9			60,177		229.56
DEPARTMENTAL EXPENSES *
	Rooms			7,279			23.6			9,836		37.52
	Food & Beverage			7,097			84.3			9,591		36.59
	Telephone			405			26.8			548		2.09
	Garage			432			38.2			584		2.23
	Other Income			75			6.2			102		0.39
		Total Dept. Expenses		15,289			34.3			20,661		78.81
DEPARTMENTAL INCOME				29,242			65.6			39,516		150.75
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General			3,248			7.3			4,389		16.74
	Management Fee			998			2.2			1,349		5.15
	Marketing			3,045			6.8			4,115		15.70
	Property Oper. & Maint.			1,774			4.0			2,397		9.14
	Energy			1,089			2.4			1,472		5.62
		Total Operating Expenses		10,155			22.7			13,723		52.35
HOUSE PROFIT				19,087			42.9			25,794		98.40
FIXED EXPENSES
	Property Taxes			3,380			7.6			4,568		17.42
	Insurance			428			1.0			578		2.21
	Reserve for Replacement			—			—			—		—
	Equipment & Other Rent			284			0.6			384		1.47
	Incentive Management Fees			1,190			2.7			1,608		6.13
		Total		5,282			11.9			5,530		21.10
NET INCOME			$	13,805			31.0	%	$	18,655	$	71.17

[Additional columns below]

[Continued from above table, first column(s) repeated]

Fiscal Year:				1999/00
Number of Rooms:				751
Occupancy:				71.0	%
Average Rate:			$	166.52
Occupied Rooms:				194,622
			$ (000s)			% of Gross			PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms		$	32,408			70.3	%	$	43,153	$	166.52
	Food			6,328			13.7			8,426		32.51
	Beverage			1,752			3.8			2,333		9.00
	Telephone			1,537			3.3			2,047		7.90
	Garage			1,195			2.6			1,591		6.14
	F&B Other			1,610			3.5			2,144		8.27
	Other Income			1,300			2.8			1,731		6.68
		Total Revenues		46,130			100.0			61,425		237.02
DEPARTMENTAL EXPENSES *
	Rooms			7,739			23.9			10,305		39.76
	Food & Beverage			6,868			85.0			9,145		35.29
	Telephone			434			28.2			578		2.23
	Garage			445			37.2			593		2.29
	Other Income			78			6.0			104		0.40
		Total Dept. Expenses		15,564			33.7			20,724		79.97
DEPARTMENTAL INCOME				30,566			66.3			40,700		157.05
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General			3,504			7.6			4,666		18.00
	Management Fee			1,615			3.5			2,150		8.30
	Marketing			3,201			6.9			4,262		16.45
	Property Oper. & Maint.			1,878			4.1			2,501		9.65
	Energy			1,149			2.5			1,530		5.90
		Total Operating Expenses		11,347			24.6			15,109		58.30
HOUSE PROFIT				19,219			41.7			25,591		98.75
FIXED EXPENSES
	Property Taxes			3,490			7.6			4,647		17.93
	Insurance			420			0.9			559		2.16
	Reserve for Replacement			2,307			5.0			3,072		11.85
	Equipment & Other Rent			294			0.6			391		1.51
	Incentive Management Fees			1,530			3.3			2,037		7.86
		Total		8,041			17.4			10,707		41.32
NET INCOME			$	11,178			24.3	%	$	14,884	$	57.43

[Additional columns below]

[Continued from above table, first column(s) repeated]

Fiscal Year:				2000/01
Number of Rooms:				751
Occupancy:				71.0	%
Average Rate:			$	174.81
Occupied Rooms:				194,622
			$ (000s)			% of Gross					PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms		$	34,022			72.1	%	$	45,302		$	174.81
	Food			5,900			12.5			7,856			30.32
	Beverage			1,298			2.8			1,728			6.67
	Telephone			1,583			3.4			2,108			8.13
	Garage			1,231			2.6			1,639			6.33
	F&B Other			1,658			3.5			2,208			8.52
	Other Income			1,462			3.1			1,947			7.51
		Total Revenues		47,154			100.0			62,788			242.29
DEPARTMENTAL EXPENSES *
	Rooms			7,971			23.4			10,614			40.96
	Food & Beverage			6,011			83.5			8,004			30.89
	Telephone			447			28.2			595			2.30
	Garage			458			37.2			610			2.35
	Other Income			83			5.7			111			0.43
		Total Dept. Expenses		14,970			31.7			19,933			76.92
DEPARTMENTAL INCOME				32,184			68.3			42,855			165.37
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General			3,429			7.3			4,566			17.62
	Management Fee			1,650			3.5			2,197			8.48
	Marketing			3,289			7.0			4,379			16.90
	Property Oper. & Maint.			1,838			3.9			2,447			9.44
	Energy			1,126			2.4			1,499			5.79
		Total Operating Expenses		11,332			24.1			15,089			58.23
HOUSE PROFIT				20,852			44.2			27,766			107.14
FIXED EXPENSES
	Property Taxes			3,595			7.6			4,787			18.47
	Insurance			432			0.9			575			2.22
	Reserve for Replacement			2,358			5.0			3,140			12.12
	Equipment & Other Rent			303			0.6			403			1.56
	Incentive Management Fees			724			1.5			965			3.72
		Total		7,412			15.6			9,870			38.09
NET INCOME			$	13,440			28.6	%	$	17,896		$	69.06

[Additional columns below]

[Continued from above table, first column(s) repeated]

Fiscal Year:				2001/02
Number of Rooms:				751
Occupancy:				71.0	%
Average Rate:			$	182.56
Occupied Rooms:				194,622
			$ (000s)			% of Gross			PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms		$	35,530			72.4	%	$	47,310	$	182.56
	Food			6,077			12.4			8,092		31.22
	Beverage			1,337			2.7			1,780		6.87
	Telephone			1,631			3.3			2,172		8.38
	Garage			1,268			2.6			1,688		6.52
	F&B Other			1,708			3.5			2,274		8.78
	Other Income			1,501			3.1			1,999		7.71
		Total Revenues		49,052			100.0			65,316		252.04
DEPARTMENTAL EXPENSES *
	Rooms			8,210			23.1			10,932		42.18
	Food & Beverage			6,191			83.5			8,244		31.81
	Telephone			460			28.2			613		2.36
	Garage			472			37.2			628		2.43
	Other Income			85			5.7			113		0.44
		Total Dept. Expenses		15,418			31.4			20,530		79.22
DEPARTMENTAL INCOME				33,634			68.6			44,786		172.82
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General			3,543			7.2			4,718		18.20
	Management Fee			1,717			3.5			2,286		8.82
	Marketing			3,398			6.9			4,525		17.46
	Property Oper. & Maint.			1,899			3.9			2,529		9.76
	Energy			1,161			2.4			1,546		5.97
		Total Operating Expenses		11,718			23.9			15,603		60.21
HOUSE PROFIT				21,916			44.7			29,182		112.61
FIXED EXPENSES
	Property Taxes			3,703			7.5			4,931		19.03
	Insurance			445			0.9			593		2.29
	Reserve for Replacement			2,453			5.0			3,266		12.60
	Equipment & Other Rent			312			0.6			415		1.60
	Incentive Management Fees			2,657			5.4			3,538		13.65
		Total		9,570			19.4			12,743		49.17
NET INCOME			$	12,346			25.3	%	$	16,439	$	63.43

[Additional columns below]

[Continued from above table, first column(s) repeated]

Fiscal Year:				2002/03
Number of Rooms:				751
Occupancy:				71.0	%
Average Rate:			$	189.86
Occupied Rooms:				194,622
			$ (000s)			% of Gross			PAR 1		POR 2
DEPARTMENTAL REVENUE
	Rooms		$	36,951			72.5	%	$	49,202	$	189.86
	Food			6,259			12.3			8,334		32.16
	Beverage			1,377			2.7			1,834		7.08
	Telephone			1,680			3.3			2,237		8.63
	Garage			1,306			2.6			1,739		6.71
	F&B Other			1,759			3.5			2,342		9.04
	Other Income			1,578			3.1			2,101		8.11
		Total Revenues		50,910			100.0			67,790		261.58
DEPARTMENTAL EXPENSES *
	Rooms			8,457			22.9			11,261		43.45
	Food & Beverage			6,377			83.5			8,491		32.77
	Telephone			474			28.2			631		2.44
	Garage			486			37.2			647		2.50
	Other Income			89			5.6			119		0.46
		Total Dept. Expenses		15,883			31.2			21,149		81.61
DEPARTMENTAL INCOME				35,027			68.8			46,640		179.97
UNDISTRIBUTED OPERATING EXPENSES
	Administrative & General			3,658			7.2			4,871		18.80
	Management Fee			1,782			3.5			2,373		9.16
	Marketing			3,508			6.9			4,671		18.02
	Property Oper. & Maint.			1,960			3.8			2,610		10.07
	Energy			1,196			2.3			1,593		6.15
		Total Operating Expenses		12,104			23.7			16,117		62.19
HOUSE PROFIT				22,923			45.1			30,523		117.78
FIXED EXPENSES
	Property Taxes			3,814			7.5			5,079		19.60
	Insurance			459			0.9			611		2.36
	Reserve for Replacement			2,546			5.0			3,390		13.08
	Equipment & Other Rent			321			0.6			427		1.65
	Incentive Management Fees			2,800			5.5			3,729		14.39
		Total		9,940			19.5			13,236		51.07
NET INCOME			$	12,983			25.6	%	$	17,287	$	66.71

* Departmental expenses expressed as a percentage of departmental revenues

¹ Per Available Room

² Per Occupied Room

10-year Forecast of Income and Expense - The Westin Hotel - Chicago

Fiscal Year:			1999/00						2000/01						2001/02						2002/03
Number of Rooms:				751						751						751						751
Occupied Rooms:				194,622						194,622						194,622						194,622
Occupancy:				71.0	%					71.0	%					71.0	%					71.0	%
Average Rate:			$	166.52					$	174.81					$	182.56					$	189.86
						% of						% of						% of						% of
			$ (000s)			Gross			$ (000s)			Gross			$ (000s)			Gross			$ (000s)			Gross
DEPARTMENTAL REVENUE
	Rooms		$	32,408			70.3	%	$	34,022			72.1	%	$	35,530			72.4	%	$	36,951			72.5	%
	Food			6,328			13.7			5,900			12.5			6,077			12.4			6,259			12.3
	Beverage			1,752			3.8			1,298			2.8			1,337			2.7			1,377			2.7
	Telephone			1,537			3.3			1,583			3.4			1,631			3.3			1,680			3.3
	Garage			1,195			2.6			1,231			2.6			1,268			2.6			1,306			2.6
	F&B Other			1,610			3.5			1,658			3.5			1,708			3.5			1,759			3.5
	Other Income			1,300			2.8			1,462			3.1			1,501			3.1			1,578			3.1
		Total		46,130			100.0			47,154			100.0			49,052			100.0			50,910			100.0
DEPT. EXPENSES*
	Rooms			7,739			23.9			7,971			23.4			8,210			23.1			8,457			22.9
	Food & Beverage			6,868			85.0			6,011			83.5			6,191			83.5			6,377			83.5
	Telephone			434			28.2			447			28.2			460			28.2			474			28.2
	Garage			445			37.2			458			37.2			472			37.2			486			37.2
	Other Income			78			6.0			83			5.7			85			5.7			89			5.6
		Total		15,564			33.7			14,970			31.7			15,418			31.4			15,883			31.2
DEPT. INCOME				30,566			66.3			32,184			68.3			33,634			68.6			35,027			68.8
UNDISTRIBUTED OPER. EXPENSES
	Admin. & General			3,504			7.6			3,429			7.3			3,543			7.2			3,658			7.2
	Management Fee			1,615			3.5			1,650			3.5			1,717			3.5			1,782			3.5
	Marketing			3,201			6.9			3,289			7.0			3,398			6.9			3,508			6.9
	PO&M			1,878			4.1			1,838			3.9			1,899			3.9			1,960			3.8
	Energy			1,149			2.5			1,126			2.4			1,161			2.4			1,196			2.3
		Total		11,347			24.6			11,332			24.1			11,718			23.9			12,104			23.7
HOUSE PROFIT				19,219			41.7			20,852			44.2			21,916			44.7			22,923			45.1
FIXED EXPENSES
	Property Taxes			3,490			7.6			3,595			7.6			3,703			7.5			3,814			7.5
	Insurance			420			0.9			432			0.9			445			0.9			459			0.9
	Reserve for Repl.			2,307			5.0			2,358			5.0			2,453			5.0			2,546			5.0
	Equipment & Other Rent			294			0.6			303			0.6			312			0.6			321			0.6
	Incentive Management Fees			1,530			3.3			724			1.5			2,657			5.4			2,800			5.5
		Total		8,041			17.4			7,412			15.6			9,570			19.4			9,940			19.5
NET INCOME			$	11,178			27.6	%	$	13,440			30.1	%	$	12,346			30.7	%	$	12,983			31.1	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

Fiscal Year:			2003/04						2004/05						2005/06
Number of Rooms:				751						751						751
Occupied Rooms:				194,622						194,622						194,622
Occupancy:				71.0	%					71.0	%					71.0	%
Average Rate:			$	195.56					$	201.42					$	207.47
						% of						% of						% of
			$ (000s)			Gross			$ (000s)			Gross			$ (000s)			Gross
DEPARTMENTAL REVENUE
	Rooms		$	38,059			72.5	%	$	39,201			72.5	%	$	40,377			72.5	%
	Food			6,447			12.3			6,640			12.3			6,839			12.3
	Beverage			1,418			2.7			1,460			2.7			1,504			2.7
	Telephone			1,730			3.3			1,782			3.3			1,835			3.3
	Garage			1,345			2.6			1,385			2.6			1,427			2.6
	F&B Other			1,812			3.5			1,867			3.5			1,923			3.5
	Other Income			1,632			3.1			1,699			3.1			1,751			3.1
		Total		52,443			100.0			54,034			100.0			55,656			100.0
DEPT. EXPENSES*
	Rooms			8,710			22.9			8,972			22.9			9,241			22.9
	Food & Beverage			6,568			83.5			6,765			83.5			6,968			83.5
	Telephone			488			28.2			503			28.2			518			28.2
	Garage			501			37.2			516			37.3			531			37.2
	Other Income			91			5.6			94			5.5			97			5.5
		Total		16,358			31.2			16,850			31.2			17,355			31.2
DEPT. INCOME				36,085			68.8			37,184			68.8			38,301			68.8
UNDISTRIBUTED OPER. EXPENSES
	Admin. & General			3,768			7.2			3,881			7.2			3,997			7.2
	Management Fee			1,836			3.5			1,891			3.5			1,948			3.5
	Marketing			3,613			6.9			3,722			6.9			3,834			6.9
	PO&M			2,019			3.8			2,080			3.8			2,142			3.8
	Energy			1,232			2.3			1,269			2.3			1,307			2.3
		Total		12,468			23.7			12,843			23.7			13,228			23.7
HOUSE PROFIT				23,617			45.1			24,341			45.1			25,073			45.1
FIXED EXPENSES
	Property Taxes			3,928			7.5			4,046			7.5			4,168			7.5
	Insurance			473			0.9			487			0.9			501			0.9
	Reserve for Repl.			2,622			5.0			2,702			5.0			2,783			5.0
	Equipment & Other Rent			331			0.6			340			0.6			351			0.6
	Incentive Management Fees			2,885			5.5			2,975			5.5			3,064			5.5
		Total		10,239			19.5			10,550			19.5			10,867			19.5
NET INCOME			$	13,378			31.1	%	$	13,791			31.1	%	$	14,206			31.1	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

Fiscal Year:			2006/07						2007/08						2008/09
Number of Rooms:				751						751						751
Occupied Rooms:				194,622						194,622						194,622
Occupancy:				71.0	%					71.0	%					71.0	%
Average Rate:			$	213.69					$	220.10					$	226.70
						% of						% of						% of
			$ (000s)			Gross			$ (000s)			Gross			$ (000s)			Gross
DEPARTMENTAL REVENUE
	Rooms		$	41,589			72.5	%	$	42,836			72.5	%	$	44,121			72.5	%
	Food			7,045			12.3			7,256			12.3			7,474			12.3
	Beverage			1,550			2.7			1,596			2.7			1,644			2.7
	Telephone			1,890			3.3			1,947			3.3			2,005			3.3
	Garage			1,469			2.6			1,514			2.6			1,559			2.6
	F&B Other			1,980			3.5			2,040			3.5			2,101			3.5
	Other Income			1,796			3.1			1,842			3.1			1,890			3.1
		Total		57,319			100.0			59,031			100.0			60,794			100.0
DEPT. EXPENSES*
	Rooms			9,518			22.9			9,804			22.9			10,098			22.9
	Food & Beverage			7,177			83.5			7,392			83.5			7,614			83.5
	Telephone			533			28.2			549			28.2			566			28.2
	Garage			547			37.2			564			37.3			581			37.3
	Other Income			100			5.6			103			5.6			106			5.6
		Total		17,875			31.2			18,412			31.2			18,965			31.2
DEPT. INCOME				39,444			68.8			40,619			68.8			41,829			68.8
UNDISTRIBUTED OPER. EXPENSES
	Admin. & General			4,117			7.2			4,241			7.2			4,368			7.2
	Management Fee			2,006			3.5			2,066			3.5			2,128			3.5
	Marketing			3,949			6.9			4,067			6.9			4,189			6.9
	PO&M			2,207			3.9			2,273			3.9			2,341			3.9
	Energy			1,346			2.3			1,387			2.3			1,428			2.3
		Total		13,625			23.8			14,034			23.8			14,454			23.8
HOUSE PROFIT				25,819			45.0			26,585			45.0			27,375			45.0
FIXED EXPENSES
	Property Taxes			4,293			7.5			4,421			7.5			4,554			7.5
	Insurance			516			0.9			532			0.9			548			0.9
	Reserve for Repl.			2,866			5.0			2,952			5.0			3,040			5.0
	Equipment & Other Rent			361			0.6			372			0.6			383			0.6
	Incentive Management Fees			3,155			5.5			3,248			5.5			3,344			5.5
		Total		11,191			19.5			11,525			19.5			11,869			19.5
NET INCOME			$	14,628			31.0	%	$	15,060			31.0	%	$	15,506			31.0	%

* Departmental expenses expressed as a percentage of departmental revenues

HVS International, San Francisco, California Income Capitalization Approach 115

Capitalization of Net Income Into Market Value Estimate

The forecasted net income has been converted into an estimate of market value by a discounted cash flow, mortgage-equity capitalization technique. It is the opinion of the appraisers that this technique is most appropriate for valuing the subject property in that it mirrors the actions of hotel investors who will typically leverage their purchases with borrowed capital. Equity generally makes up a smaller percentage (25% to 40%) and mortgage financing makes up the majority (60% to 75%) of the purchase price. The amounts and terms of available mortgage financing and the rates of return that are required to attract sufficient equity capital form the basis for allocating the net income between the mortgage and equity components and deriving a value estimate.

Other investment parameters used by the appraisers in the income capitalization approach include an overall capitalization rate and total property yield, or “free and clear” discount rate. A terminal capitalization rate is utilized to calculate the property’s reversionary sales proceeds at the end of the assumed 10-year holding period in the discounted cash flow analysis. Once the value of the property is estimated via the mortgage-equity capitalization technique, the appraisers perform analyses to cross-check the appropriateness of the value estimate based upon other market derived parameters. The overall capitalization rate equating the subject’s first year’s net income to the estimated market value is compared with overall rates derived from comparable hotel sales. The total property yield, which is the discount rate equating the hotel’s forecasted net income before debt service to the estimated market value, is also compared with total property yields derived from comparable hotel sales.

Selection of Valuation Parameters

Mortgage Component

Data for the mortgage component may be developed from statistics of actual hotel mortgages made by long-term permanent lenders. The American Council of Life Insurance, which represents 20 large life insurance companies, publishes quarterly information pertaining to the hotel mortgages issued by its member companies. The following table summarizes the average mortgage interest rates of the hotel loans made by these lenders. In addition, the A corporate bond yield (as reported by Moody’s Bond Record) is shown for the purpose of comparison.

HVS International, San Francisco, California Income Capitalization Approach 116

Average Interest Rate and A Corporate Bond Yield

				Average A
	Average			Corporate
Period	Interest Rate			Bond Yield
2nd Quarter 1998		7.44	%		6.98	%
1st Quarter 1998		7.26			7.00
4th Quarter 1997		7.65			7.46
3rd Quarter 1997		8.44			7.42
2nd Quarter 1997		8.85			7.84
1st Quarter 1997		8.25			7.71
4th Quarter 1996		9.49			7.54
3rd Quarter 1996		8.96			7.90
2nd Quarter 1996		8.82			7.93
1st Quarter 1996		7.79			7.37
4th Quarter 1995		8.44			7.28
3rd Quarter 1995		8.61			7.67
2nd Quarter 1995		9.25			7.87
1st Quarter 1995		9.14			8.50
3rd Quarter 1994		9.64			8.48
2nd Quarter 1994		9.38			8.28

Sources: American Council of Life Insurance; Moody’s Bond Record

Because of the six- to nine-month lag time inherent in reporting and publishing hotel mortgage statistics, it is necessary to update this information to reflect current lending practices. Research by HVS International indicates that there is a close mathematical relationship between the average interest rate of a hotel mortgage and the concurrent yield on an A corporate bond. Through a regression analysis, this relationship is expressed as follows.

			Y = 2.585847 + 0.796744 X
Where:	Y X	= =	Estimated Hotel/Motel Mortgage Interest Rate Current Average A Corporate Bond Yield (Coefficient of correlation is 96.4%)

Interest rates have fluctuated in recent months. The average yield on A corporate bonds, as reported by Moody’s Bond Record, for January 19, 1999, was 6.65%. Using a factor of 6.65% in the above equation produces an estimated hotel/motel interest rate (Y) of 7.88%.

HVS International, San Francisco, California Income Capitalization Approach 117

In addition to the mortgage interest rate estimate derived from this regression analysis, HVS International constantly monitors the terms of hotel mortgage loans made by our institutional lending clients. In the current market, hotel projects are typically able to secure mortgage financing at interest rates ranging from 8.0% to 9.5%, depending on the location, affiliation, operator, and loan-to-value ratio. According to our discussions with lenders and brokers, current interest rates for lodging properties range from 250 to 400 basis points over the corresponding yield on U.S. treasury notes. The current 10-year treasury note yield is 4.83%, indicating an interest rate range from 7.33% to 8.83%. Alternately, the current 30-year treasury note yield is 5.30%, indicating an interest rate range from 7.80% to 9.30%.

Based on the preceding analysis of the current lodging industry mortgage market and adjustments for specific factors such as the property’s location and local hotel market conditions, it is our opinion that an 8.5% interest, 25-year amortization mortgage with a 0.096627 constant is appropriate for the subject property. We are of the opinion that a loan-to-value ratio of 65% of the hotel’s market value as determined by this appraisal is attainable in the current lending environment. A direct correlation between the interest rate and the loan-to-value ratio exists, where at a lower interest rate, a lower loan-to-value ratio is applied.

Equity Component

The remaining capital required for a hotel investment generally comes from the equity investor. The rate of return that an equity investor expects over a 10-year holding period is known as the equity yield. Unlike the equity dividend, which is a short-term rate of return, an equity yield specifically considers a long-term holding period (generally 10 years), annual inflation-adjusted cash flows, property appreciation, mortgage amortization, and proceeds from a sale at the end of the holding period.

It is difficult to quantify the rate of return required by equity investors who are seeking to purchase hotel properties. To establish an appropriate equity yield rate, HVS International uses two sources of data: hotel sales and investor surveys.

Hotel Sales - In the following chart, equity yield rates pertaining to the sales of various hotels are detailed, as well as total property yields (i.e., discount rates) and overall capitalization rates based on the forecasted net income for the first projection year. HVS International appraised each of these hotels prior to sale and derived the following indicators based on actual sales price and our forecast of net income. Debt component variables (interest rate and loan-to-value ratio) are based on those assumed for the respective appraisals. Note that a discussion of the discount rates and overall capitalization rates is also included in the following narrative.

HVS International, San Francisco, California Income Capitalization Approach 118

Summary of Derived Rates and Yields

											Overall Rate Based on
											Net Operating Income
					Total
		No. of		Date	Property			Equity			Stabilized			Historical			Projected
Hotel	City and State	Rooms		of Sale	Yield			Yield			Year			Year			Year One
Grand Wailea Resort	Maui, HI		761	12/98		12.6	%		20.3	%		9.0	%		6.6	%		6.6	%
Hotel Rex	San Francisco, CA		94	11/98		11.7			17.4			9.5			6.5			9.6
Ritz-Carlton Hotel	San Francisco,CA		336	9/98		11.1			17.2			8.9			7.1			8.1
Richelieu Hotel	San Francisco, CA		157	6/98		11.4			17.4			9.2			7.3			8.1
Loews Santa Monica	Santa Monica, CA		343	3/98		7.1			4.5			6.6			5.1			7.0
Sheraton Fisherman’s Wharf	San Francisco, CA		524	2/98		11.6			17.2			9.4			9.6			8.6
Bell Rock Inn	Sedona, AZ		174	2/98		8.7			9.3			7.9			6.8			9.9
Hyatt Regency	Savannah, GA		346	1/98		12.3			18.5			9.8			9.8			10.1
Harrisburg Marriott	Harrisburg, PA		348	1/98		14.3			22.7			11.6			8.7			10.2
Residence Inn	Bellevue, WA		120	1/98		9.9			10.9			8.6			10.5			10.1
Holiday Inn	Beachwood, OH		174	1/98		11.5			14.9			9.4			11.2			9.7
Residence Inn	Tukwila, WA		144	1/98		8.5			6.7			8.0			8.6			8.5
Residence Inn	San Diego, CA		144	1/98		14.4			24.0			11.4			9.5			12.4
Residence Inn	Sacramento, CA		126	1/98		13.1			20.5			10.7			8.5			11.0
Hilton Suites	Romulus, MI		151	12/97		10.9			14.3			9.3			8.5			8.7
Westin Arizona Biltmore	Phoenix, AZ		620	12/97		5.4			N/A			5.8			6.2			6.0
Chateau Inn	Fresno, CA		78	12/97		8.0			5.7			9.4			8.0			9.6
Picadilly Inn University	Fresno, CA		190	12/97		12.4			16.6			10.5			5.5			10.2
Picadilly Inn Airport	Fresno, CA		185	12/97		7.9			5.7			8.0			3.4			8.1
Picadilly Inn Shaw	Fresno, CA		196	12/97		14.5			22.6			11.7			8.7			10.4
Governor Morris Hotel	Morristown, NJ		198	10/97		12.4			16.2			9.9			4.7			10.0
DoubleTree Hotel	Chesterfield, MO		223	9/97		12.3			17.7			11.2			8.3			11.2
Ritz-Carlton	Amelia Island, FL		449	9/97		7.0			0.6			7.0			6.6			6.8
DoubleTree Post Oak	Houston, TX		449	9/97		13.4			19.8			10.6			8.6			10.2
Sheraton Hotel	Concord, CA		323	9/97		9.9			12.4			8.9			7.7			7.8
Grand Hotel	Cape May, NJ		165	8/97		18.8			33.2			14.9			14.4			15.3
Hotel Del Coronado	Coronado, CA		691	8/97		11.4			17.2			8.1			4.7			7.2
Courtyard by Marriott	Orange, OH		113	7/97		12.1			16.4			10.3			10.2			10.6
Holiday Inn Westlake	Westlake, OH		266	7/97		12.0			16.4			9.8			10.8			10.1
Radisson Inn	Beachwood, OH		196	7/97		12.6			17.8			10.1			10.7			10.4
Radisson Inn	Akron, OH		130	7/97		11.5			15.0			9.6			8.9			8.9
Ramada Hotel	So. San Francisco, CA		175	7/97		13.1			19.0			12.7			7.6			7.7
Holiday Inn	So. San Francisco, CA		224	7/97		13.8			21.9			10.4			9.1			11.7
Ambassador West	Chicago, IL		219	7/97		13.4			20.1			10.7			7.2			9.5
Westin Tabor Center	Denver, CO		420	6/97		12.8			19.9			10.3			8.3			9.8
DoubleTree Resort	Cathedral City, CA		300	6/97		11.3			14.8			10.1			N/A			6.0
Westin Hotel	Indianapolis, IN		573	6/97		17.5			30.2			13.2			12.5			13.2
Holiday Inn	Birmingham, AL		227	5/97		25.9			48.4			22.5			8.7			14.3
Days Inn Bay Bridge	Emeryville, CA		154	4/97		10.9			13.7			10.5			8.7			7.04
Sheraton Park Place	St. Louis Park, MN		297	4/97		14.1			20.9			11.4			6.0			6.5

Source: HVS International

\

HVS International, San Francisco, California Income Capitalization Approach 119

Investor Surveys - We have also reviewed four recent investor surveys: Korpacz Real Estate Investor Survey for the third quarter of 1998; Landauer Hospitality Services’ Hotel Investment Outlook for 1998; CRE/RERC Real Estate Report for the fourth quarter of 1998; and CB Commercial’s National Investor Survey for the second quarter of 1998. The measured yields and other parameters vary from survey to survey, but include equity yield rates (alternately known as “leveraged” yield rates), discount rates (alternately known as “free and clear” equity internal rates of return), and terminal capitalization rates (alternately known as “exit” or “reversion” capitalization rates). The following chart summarizes the range of equity yield, total property yield, and terminal capitalization rates indicated by the hotel sales and the investor surveys for full-service hotels. The averages for each survey are listed directly underneath the ranges.

Summary of Investor Parameters

	Equity Yield Rate			Discount Rate			Terminal Rate			Overall Rate
Source	Average			Average			Average			Average
HVS/Hotel Sales		0.6% - 48.4	%		5.4% - 25.9	%	NR				2.2% - 14.4	%
Average *		17.54%			12.43%						9.50%
Landauer Survey	NR				12.75%			10.16%			9.98%
Full-Service Hotels - 1998
Korpacz Survey					9.0% - 16.0	%		8.0% - 12.0	%		8.0% - 12.0	%
Full-Service Hotels -	NR				13.00%			10.24%			9.56%
3rd Quarter, 1998
CRE/RERC Real Estate Report	NR				11.5% - 13.0	%		10.0% - 14.0	%		9.5% - 12.0	%
All Hotels -					12.20%			11.10%			10.10%
4th Quarter, 1998
CB Commercial Survey	NR				11.3% - 16.0	%		9.5% - 11.5	%		8.5% - 10.9	%
Class A - 2nd Quarter, 1998					12.80%			10.40%			9.60%

NR = Not reported by Survey

* Average overall rate is based on historical net income

Equity Yield Rate

Among the surveys, equity yield rates range from 0.6% to 48.4%, with the average at 17.54%. Our selection of an equity yield rate is based on the

HVS International, San Francisco, California Income Capitalization Approach 120

assumed debt parameters, the risk inherent in achieving the projected income stream, and the age, condition, and location of the subject property. Considering the preceding considerations and giving significant weight to the subject property’s prime location along Michigan Avenue, and its improving profitable performance, it is our opinion that the equity market would require a 19.0% return over an assumed 10-year holding period. Implicit in the equity yield rate is the anticipated receipt of all future before-tax benefits accruing to the equity position, which include increasing annual dividends resulting from inflation and, ultimately, equity build-up resulting from property appreciation and debt amortization.

Discount Rate

Among the sales data and surveys, discount rates range from 5.4% to 25.9%, with survey averages clustered around 12.2% to 13.0%. As will be proven later in this section, the assumed debt and equity rates of return result in a discount rate of 13.02%. Both the applied equity yield rate and the imputed discount rate are considered to be appropriate for the fee simple and leased fee interest in the proposed subject property.

Terminal Capitalization Rate

Inherent in this valuation process is the assumption of a sale at the end of the 10-year holding period. The estimated reversionary sales price as of this date is calculated by capitalizing the 11th year’s net income by an overall terminal capitalization rate. An allocation for the seller’s brokerage and legal fees is deducted from this sales price, and the net proceeds to the equity interest (also known as the equity residual) are calculated by deducting the outstanding mortgage balance from the reversion. Among the surveys, terminal capitalization rates range from 8.0% to 14.0%, with survey averages between 10.16% and 11.1% for full-service hotels. Based on the subject property’s strong location, age, condition, recent renovations, and chain affiliation, we have applied a terminal capitalization rate of 10.0%.

Valuation of Mortgage and Equity Components

The valuation of the mortgage and equity components is accomplished through use of an algebraic equation that calculates the exact amount of debt and equity that the hotel will be able to support based on the anticipated cash flow and the specific return requirements demanded by the mortgage lender (interest rate) and the equity investor (equity yield).

HVS International, San Francisco, California Income Capitalization Approach 121

An explanation of this equation, called the Simultaneous Valuation Formula¹⁰, is included in the addenda to this report.

Using the variables summarized above, we estimate the “as is” market value of the fee simple interest in the subject property via the income capitalization approach, as of February 1, 1999 to be $100,851,000, or say, $100,900,000. The “as is” market value reflects the deduction of $16,600,000 in capital improvements. As mentioned previously in the “Description of the Improvements” section of the report, a total of $17,000,000 in capital expenditures has been budgeted in 1999 and 2000. We have deducted a total of $16.567 million from the subject property’s “as improved” value, reflecting $5.75 million spend in 1999 and $11.25 million discounted for one year at a safe rate of return of 4.0%. This expenditure is considered necessary to achieve the operating results projected in this appraisal.

Proof of Value

The “as improved” value is mathematically proven by calculating the yields to the mortgage and equity components during the projection period. If the mortgagee achieves an 8.5% yield and the equity yield is 19.0% then the preceding value conclusion via the income capitalization approach is correct.

The annual debt service is calculated by multiplying the mortgage component by the mortgage constant.

Mortgage Component (65%)		$	76,322,000
Equity Component (35%)			41,096,000
	Total	$	117,418,000
Mortgage Component		$	76,322,000
Mortgage Constant			0.096627
	Annual Debt Service	$	7,374,785

The 11-year forecast of net income and 10-year forecast of net income to equity are presented in the following table.

¹⁰ Suzanne R. Mellen, CRE, MAI. “Simultaneous Valuation: A New Technique.”
Appraisal Journal. April 1983.

11-Year Forecast of Net Income and 10-Year Forecast of Net Income to Equity

	1999/00			2000/01			2001/02			2002/03			2003/04
Occupancy		71	%		71	%		71	%		71	%		71	%
Average Rate	$	166.52		$	174.81		$	182.56		$	189.86		$	195.56
Net Income Before
Debt Service	$	11,178		$	13,440		$	12,346		$	12,983		$	13,378
Less: Debt Service		7,375			7,375			7,375			7,375			7,375
Net Income to Equity	$	3,803		$	6,065		$	4,971		$	5,608		$	6,003
Debt Coverage Ratio		1.52			1.82			1.67			1.76			1.81
Cash-on-Cash Return		9.3	%		14.8	%		12.1	%		13.6	%		14.6	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	2004/05			2005/06			2006/07			2007/08			2008/09			2009/10
Occupancy		71	%		71	%		71	%		71	%		71	%			71	%
Average Rate	$	201.42		$	207.47		$	213.69		$	220.10		$	226.70			$	233.50
Net Income Before
Debt Service	$	13,791		$	14,206		$	14,628		$	15,060		$	15,506			$	15,966
Less: Debt Service		7,375			7,375			7,375			7,375			7,375
Net Income to Equity	$	6,416		$	6,831		$	7,253		$	7,685		$	8,131
Debt Coverage Ratio		1.87			1.93			1.98			2.04			2.10
Cash-on-Cash Return		15.6	%		16.6	%		17.6	%		18.7	%		19.8	%

HVS International, San Francisco, California Income Capitalization Approach 123

The debt coverage ratio and cash-on-cash return calculated in the first projection year are both considered acceptable and attractive returns in the current market. The net proceeds to equity upon sale of the property are determined by deducting sales expenses (brokerage and legal fees) and the outstanding mortgage balance.

The equity residual at the end of the 10th year is calculated by deducting brokerage and legal fees and the mortgage balance from the reversionary value. The reversionary value is calculated as the 11th year’s net income capitalized by the terminal capitalization rate. The calculation is shown as follows.

Reversionary Value ( $15,966,000 /0.1000 )			$	159,660,000
Less:
	Brokerage and Legal Fees			4,790,000
	Mortgage Balance			62,409,000
		Net Sale Proceeds to Equity	$	92,461,000

The overall property yield (before debt service), the yield to the lender, and the yield to the equity position have been calculated by computer with the following results.

Overall Property Yields

			Projected Yield
			(Internal Rate of Return)
Position	Value		Over 10-Year Holding Period
Total Property	$	117,418,000		13.0	%
Mortgage		76,322,000		8.4	*
Equity		41,096,000		19.0

*Whereas the mortgage constant and value are calculated on the basis of monthly mortgage payments, the yield in this proof assumes single annual payments. As a result, the proof’s derived yield is slightly less than that actually input.

Based on the quality of the subject property, its location and competitive environment, and all factors having an impact on the economic viability of the project, we believe that these internal rates of return are reasonable. The discounted cash flow procedure substantiating the yield to each position is presented as follows.

HVS International, San Francisco, California Income Capitalization Approach 124

Total Property Yield

	Net Income before				Present Worth of $1			Discounted
Year	Debt Service				Factor @ 13.0%			Cash Flow
1999/00	$	11,178,000		x		0.884791	=	$	9,890,000
2000/01		13,440,000		x		0.782854	=		10,522,000
2001/02		12,346,000		x		0.692662	=		8,552,000
2002/03		12,983,000		x		0.612861	=		7,957,000
2003/04		13,378,000		x		0.542254	=		7,254,000
2004/05		13,791,000		x		0.479781	=		6,617,000
2005/06		14,206,000		x		0.424506	=		6,031,000
2006/07		14,628,000		x		0.375599	=		5,494,000
2007/08		15,060,000		x		0.332326	=		5,005,000
2008/09		170,376,000	*	x		0.294039	=		50,097,000
					Total Property Value			$	117,419,000

* 10th year net income of $15,506,000 plus sales proceeds of $154,870,000

Mortgage Component Yield

	Total Annual				Present Worth of $1			Discounted
Year	Debt Service				Factor @ 8.4%			Cash Flow
1999/00	$	7,375,000		x		0.922253	=	$	6,802,000
2000/01		7,375,000		x		0.850551	=		6,273,000
2001/02		7,375,000		x		0.784423	=		5,785,000
2002/03		7,375,000		x		0.723437	=		5,335,000
2003/04		7,375,000		x		0.667192	=		4,921,000
2004/05		7,375,000		x		0.615320	=		4,538,000
2005/06		7,375,000		x		0.567481	=		4,185,000
2006/07		7,375,000		x		0.523361	=		3,860,000
2007/08		7,375,000		x		0.482671	=		3,560,000
2008/09		69,783,000	*	x		0.445145	=		31,064,000
					Value Of Mortgage Component			$	76,323,000

* 10th year debt service of $7,375,000 plus outstanding mortgage balance of      $62,409,000

HVS International, San Francisco, California Income Capitalization Approach 125

Equity Component Yield

	Net Income				Present Worth of $1			Discounted
Year	to Equity				Factor @ 19.0%			Cash Flow
1999/00	$	3,803,000		x		0.706170	=		4,283,000
2000/01		6,065,000		x		0.706170	=		4,283,000
2001/02		4,971,000		x		0.593422	=		2,950,000
2002/03		5,608,000		x		0.498676	=		2,797,000
2003/04		6,003,000		x		0.419057	=		2,516,000
2004/05		6,416,000		x		0.352150	=		2,259,000
2005/06		6,831,000		x		0.295925	=		2,021,000
2006/07		7,253,000		x		0.248677	=		1,804,000
2007/08		7,685,000		x		0.208973	=		1,606,000
2008/09		100,593,000	*	x		0.175608	=		17,665,000
	Value of Equity Component							$	41,097,000

* 10th year net income to equity of $8,131,000 plus sales proceeds of       $92,462,000

Overall
Capitalization Rates

The following chart shows how overall capitalization rates for the subject property have been derived based on our estimate of market value via the income capitalization approach. Note that in the following chart, historical 1998 net income has been adjusted to reflect a management fee equal to 3.5% of total revenues and a reserve for replacement equal to 5.0% of total revenues, consistent with the premise of the forecast. Also, the stabilized year’s net income has been deflated to first-year dollars at the underlying 3.0% inflation rate.

HVS International, San Francisco, California Income Capitalization Approach 126

Overall Capitalization Rates

		Net Operating		Overall
Year		Income		Capitalization Rate
	1998 Historical	$	12,202,000		10.4	%
1999/00 Forecast			11,178,000		9.5
Deflated Stabilized 1999 Dollars			12,668,000		10.8

The overall capitalization rates are supported by the previously noted market data. In the review of rates of return derived from hotel sales and surveys, the overall capitalization rates based on first-year net income ranged from 2.2% to 14.4%, with the averages forming a tighter range from 9.5% to 10.1%. On the whole, given the hotel’s prominent location in downtown Chicago, the planned renovations and investments made to the property, and the hotel’s strong brand affiliation, the rates are considered appropriate for a hotel such as the subject property.

Conclusion

Utilizing the income capitalization approach, the subject property was valued by estimating the present worth of future net income before debt service and depreciation for a 10-year period. Projections were prepared through an analysis of historical income, an analysis of the subject’s competitive environment, and comparisons with comparable operations. To convert the forecasted income stream into an estimate of value, the net income was allocated to mortgage and equity components based on market rates of return and loan-to-value ratios. Using the variables summarized above, we estimate the “as is” market value of the fee simple interest in the subject property via the income capitalization approach, as of February 1, 1999 to be $100,851,000, or say, $ 100,900,000. The “as is” market value reflects the deduction of $16,600,000 in capital improvements. This expenditure is considered necessary to achieve the operating results projected in this appraisal.

HVS International, San Francisco, California Cost Approach 127

13. Cost Approach

The cost approach is founded on the principle of substitution, which implies that no prudent person will pay more for a property than the amount for which a site can be acquired and a building constructed of equal desirability and utility without undue delay. The cost approach estimates market value by first calculating the current cost of replacing the improvements. Appropriate deductions are made for depreciation resulting from physical deterioration and functional and external obsolescence. The value of the land is added to the depreciated replacement cost to provide an estimate of market value.

As addressed in prior sections of this report, the cost approach has limited utility in the valuation of existing hotels. The quantification of external and incurable functional obsolescence is based on numerous subjective adjustments. It is our experience that knowledgeable purchasers of complex hotel properties are more concerned with the economics of the investment. For an existing property such as the subject property, the cost approach has little significance. In light of its minimal value and the difficulty in quantifying the varying sources of depreciation, we have not applied the cost approach for this analysis. We have, however, used the cost approach to value the subject property’s personal property, as follows.

Personal Property

Personal property is an integral part of a transient lodging facility. Without furniture, fixtures, and equipment, a hotel could not operate its facilities and rent its guestrooms, and thus would not be able to generate any income attributable to the real property. Personal property and real property are uniquely combined in a hotel; unlike an office or other commercial building, a hotel would have to close its doors without furniture, fixtures, and equipment.

The physical separation of personal property from real property in a hotel is a theoretical issue rather than a practical matter. Lodging facilities are generally sold with their furniture, fixtures, and equipment in place. While a lender may be restricted from financing the purchase of personal

HVS International, San Francisco, California Cost Approach 128

property, without personal property a hotel’s real property would have little value.

In accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), the appraisers have delineated the market value of the subject’s personal property. The removal of personal property from a hotel for sale would result in a very minimal sales price. Furniture, fixtures, and equipment, once installed, depreciate very rapidly. Most furnishings in a hotel can command little more than a salvage value substantially lower than the original cost when sold separately from the improvements.

The following table sets forth a depreciation schedule developed by HVS International for determining the market value, or “value in exchange,” of a hotel’s furniture, fixtures, and equipment. The depreciation estimates represent the average depreciation applicable to the entirety of a hotel’s personal property, and are applied to the original cost of furniture, fixtures, and equipment.

Furniture, Fixtures, and Equipment Depreciation Schedule

Average Age (Years)	Percent Depreciated
1		40	%
2		60
3		70
4		75
5		80
6		85
7		89
8		92
9		95
10		98

Source: HVS International

The subject property’s furniture, fixtures, and equipment are estimated to be, on average, five years old. The current replacement cost of the hotel’s furniture, fixtures, and equipment is estimated to be $35,000 per room, or a total of $26,290,000. Applying the five-year depreciation factor of 80% to the $26,290,000 depreciable base results in an estimated market value of the hotel’s personal property of $5,257,000, or roundly $5,300,000.

The personal property of a lodging facility may alternately be valued as a critical component of an ongoing business. The “value in use” recognizes that the personal property of a hotel has an economic value greater than

HVS International, San Francisco, California Cost Approach 129

its salvage value due to its contribution to the income generating capability of the property as a whole.

An estimation of the value of personal property in use is also based upon an appraiser’s judgment of the average age or remaining life of a hotel’s personalty. This approach recognizes that the personal property will continue to contribute to the value of the total property until it is retired and replaced. This contrasts with market or salvage value which considers the personal property to be separate from the improvements for sale.

The depreciated book value of a hotel’s personal property provides a basis for determining the value of furniture, fixtures, and equipment, because it considers the original cost and annual book depreciation of the personalty. However, the actual years remaining in the life of a hotel’s furniture, fixtures, and equipment are generally greater than that expressed in the depreciation schedule utilized for tax purposes. The longevity of personal property depends upon its original quality and durability, timeliness of style, and consistent cleaning and maintenance. The valuation of personal property in use requires that the depreciated book value be adjusted to reflect the appraisers’ judgment of the condition and remaining useful life of a hotel’s furniture, fixtures, and equipment.

Based upon our inspection of the subject property, we estimate the value in use of the subject’s personal property to be roughly 10% of the total value. Applying the ratio to the “as is” market value of the subject property of $100,900,000 equates to a value in use of roundly $10,100,000. Thus, the estimated value of the subject’s personal property, as both “value in exchange” and “value in use,” is estimated as follows.

Estimates of Personal Property Value
	Value in Exchange:	$	5,300,000
	Value in Use:		10,100,000

HVS International, San Francisco, California Sales Comparison Approach 130

14. Sales Comparison Approach

The sales comparison approach estimates the value of a property by comparing it to similar properties recently sold or being offered in the open market. Market value is indicated by the price at which equally desirable properties have sold, or for which they can be purchased. The sales comparison approach is based on the principle of substitution, which asserts that when a property is replaceable, its value is limited to the cost of acquiring an equally desirable substitute (assuming that no costly delay is incurred in making the substitution).

Hotel real estate investors typically do not employ the sales comparison approach in reaching their final purchase decisions. Factors such as the numerous insupportable adjustments that are necessary and the general inability to determine the true financial terms and human motivations of comparable transactions often make the results of the sales comparison approach questionable. Although the sales comparison approach may provide a range of values that supports the final estimate of value, reliance on this approach beyond the establishment of broad parameters is rarely justified by the quality of the sales data.

Hotel Sales
Overview

The market for hotel investments nationwide has recently slowed due to a reduction in both equity and debt capital available for real estate acquisitions. Many hotel buyers and conduit lenders have withdrawn from the market due to the downturn in lodging REIT and C-Corp. stock prices and the uncertainty of the capital markets. It is unclear at this time whether the market is experiencing a temporary lull or whether we are at the start of a prolonged downturn. Hotel market lenders and investors with whom we speak regularly indicate that they are taking a “wait and see” approach until the capital market normalizes. Despite these factors, the underlying performance of the lodging industry in the United States is still extremely strong. With less capital available for new hotel construction, the lodging industry should be able to weather any future economic recession with only a minor contraction in earnings. Private equity capital and traditional debt from commercial banks and credit companies are expected to continue to fuel hotel transactions over the near

HVS International, San Francisco, California Sales Comparison Approach 131

term until conduit lenders and public lodging companies return to the market.

Comparable
Sales Data

Based on data provided by the Hospitality Market Data Exchange and compiled by the six offices of HVS International, and discussions with real estate professionals in the Chicago area, we have identified six transactions involving hotels that have some degree of comparability to the subject property; each of the transactions involves downtown Chicago properties. The sales are presented in order of recency, as follows.

HVS International, San Francisco, California Sales Comparison Approach 132

Summary of Sales

Sale #1:
Property:	Westin Chicago River North
Location:	320 N. Dearborn Street
	Chicago, Illinois
Number of Rooms:	424
Date of Sale:	January 1999
Grantor:	Sumitomo Life Realty, Inc.
Grantee:	Lend Lease Real Estate Investments, Inc.
Sales Price:	$91,000,000
Price per Room:	$215,000
Interest Conveyed:	Fee simple
Comments:	This property originally opened as the Hotel Nikko in 1987. The hotel was developed by Japan Airlines Development Co. for reportedly $70 million in a highly leveraged deal. In late 1996, Sumitomo Life took over the property and reflagged it as a Westin. The property is located just north of the Chicago River and features 424 guestrooms, including 17 suites, a restaurant and lounge, 25,800 square feet of meeting space, a fitness room, and business center. Lend Lease had been the asset manager of the property prior to its sale.

HVS International, San Francisco, California Sales Comparison Approach 133

Sale #2:
Property:	Summerfield Suites
Location:	166 East Superior Street
	Chicago, Illinois
Number of Rooms:	120
Date of Sale:	March 1998
Grantor:	Summerfield Suites Corporation
Grantee:	Hospitality Properties Trust
Sales Price:	$15,806,760
Price per Room:	$131,723
Interest Conveyed:	Fee simple
Confirmed by:	Laura Dolan, property management
Comments:	This property, which was built in 1980, is located two blocks east of the “Magnificent Mile.” The 120-unit, all-suite property features a restaurant, a lounge, a business center, an outdoor swimming pool, a fitness center, and approximately 1,500 square feet of meeting space. The suites range from studio units to one-bedroom and executive suites; most units feature a small kitchen facility. The property was last renovated in 1995.

HVS International, San Francisco, California Sales Comparison Approach 134

Sale #3:
Property:	Swissotel
Location:	323 East Wacker Drive
	Chicago, Illinois
Date of Sale:	August 1997
Grantor:	American National Bank & Trust
Grantee:	BRE / Swiss L.L.C.
Number of Rooms:	630
Sales Price:	$125,000,000 (including a planned $12-million renovation)
Price per Room:	$198,412
Interest Conveyed:	Fee simple
Confirmed by:	Tim Mitchell, property management
Comments:	The Swissotel Chicago, which is located at the Illinois Center, offers 630 guestrooms, including 36 suites. In 1998, the Swissotel Chicago completed a $12-million renovation of its guestrooms, business center, and meeting rooms. The first phase of the two-phase renovation was completed in April 1996, coinciding with the opening of the hotel’s Palm Restaurant. The second phase consisted of refurbishing all 630 rooms and suites with new wall coverings, floor coverings, and furniture. Overall, the property features two restaurants, a lounge, a rooftop health club with swimming pool and whirlpool, and ± 28,000 square feet of meeting space.

HVS International, San Francisco, California Sales Comparison Approach 135

Sale #4:
Property:	Radisson Hotel
Location:	160 East Huron Street
	Chicago, Illinois
Date of Sale:	July 1997
Grantor:	American Realty Company
Grantee:	CapStar Hotel Company
Number of Rooms:	341
Sales Price:	$46,000,000 (includes $1.3 million in capital expenditures)
Price per Room:	$134,897
Interest Conveyed:	Fee simple
Confirmed by:	CapStar Hotel Company (SEC: 10-Q)
Comments:	This primary competitor of the subject property is located a half-block off North Michigan Avenue. The Radisson Hotel & Suites is a 40-story, mixed-use hotel and office tower, comprising a 341-room hotel, 93,000 square feet of office space, and a 170-space parking facility. Built in 1971, the property has undergone $11 million in renovations during the past two years, which included a major refurbishment of the exterior of the building and replacement of soft- and casegoods in hotel guestrooms and suites. Upgrades were also made to the leased restaurant and lounge, ± 18,000 square feet of meeting space, and a rooftop pool. While the hotel is in very good physical condition, approximately $1.3 million will be spent on interior and exterior renovations to complement CapStar’s marketing and operating strategy. This property was sold in connection with the Georgetown Inn in Washington, D.C., a 95-room luxury boutique hotel.

HVS International, San Francisco, California Sales Comparison Approach 136

Sale #5:
Property:	Embassy Suites
Location:	600 North State Street
	Chicago, Illinois
Date of Sale:	March 1997
Grantor:	Koar-Shaw Chicago Investment, Ltd.
Grantee:	Interstate Hotels
Number of Rooms:	358
Sales Price:	$67,000,000
Price per Room:	$187,151
Interest Conveyed:	Fee simple
Confirmed by:	Lisa O’Connor at Interstate Hotels
Comments:	The Chicago Embassy Suites is a full-service, upscale hotel located at the intersection of Ontario and State Streets in the River North district. The 11-story, 358 two-room suites hotel opened in 1991 and has approximately 9,700 square feet of meeting space. The hotel will remain an Embassy Suites and Interstate will manage the property.

HVS International, San Francisco, California Sales Comparison Approach 137

Sale #6:
Property:	The Allerton Hotel
Location:	701 North Michigan Avenue
	Chicago, Illinois
Number of Rooms:	383
Date of Sale:	January 1997
Grantor:	Allerton Hotel Partnership
Grantee:	Bristol Hotel Company
Sales Price:	$62,000,000 (including $27 million renovation)
Price per Room:	$161,880
Interest Conveyed:	Fee simple
Confirmed by:	Shirley Zlotky, Bristol Hotel Company
Comments:	The 383-room Allerton Hotel is a historic property that was built in 1923. Bristol Hotel Company purchased the property and has made an additional $41,000,000 investment to upgrade the aged hotel and add 60 additional guestrooms. The completed hotel is expected to include a fitness center, a full-service restaurant and lounge/bar, as well as ± 15,000 square feet of meeting space. The renovated hotel is estimated to open in June 1999 as a Crowne Plaza hotel. This property was considered in our analysis as a new, competitive addition to supply.

HVS International, San Francisco, California Sales Comparison Approach 138

Review of Sales

The unadjusted sales prices from the six transactions range from roundly $131,700 to $215,000 per room. The high end of the range is formed by the sale of the Westin Chicago River North, which sold in January 1999. The low end of the range is formed by the Summerfield Suites, which sold in March 1998. This property, originally built in 1980, is located two blocks from the shopping area of Michigan Avenue. The recent sale of the Westin River North is considered the most applicable of the comparable sales for deriving a value estimate of the subject property.

To account for the subject property’s incentive management fee, we have deducted roundly $31,000 per room from the comparable hotel sales, as detailed in the following table.

Incentive Management Fee Deduction (000s)

Incentive Mgmt. Fee - Stabilized Year	$	2,800
Deflated Stabilized (@3.0%)		2,488
Overall Cap. Rate		10.8	%
Direct Cap Incentive Management Fee	$	230
Per Room (751 rooms)	$	0

The resulting comprable hotel sales range from $101,000 to $186,000 per room, following the adjustment for the subject property’s incentive management fee.

Conclusion

We were able to research six sales of hotels that have a high degree of comparability to the subject property. Based on the preceding data, we conclude the “as is” market value ranges from $100,000 to $185,000 per room for the subject property. Multiplying this per-room value conclusion by the subject property’s room count, 751, renders a total value range conclusion of roundly $75,000,000 to $139,000,000 via the sales comparison approach. The income capitalization approach indicates a value of $100,900,000, or $134,300 per room, which falls in the middle of this range due.

HVS International, San Francisco, California Reconciliation of Value Indications 139

15. Reconciliation of Value Indications

The reconciliation, which is the last step in the appraisal process, involves summarizing and correlating the data and procedures employed throughout the analysis. The final value conclusion is arrived at after reviewing the estimates indicated by the cost, sales comparison, and income capitalization approaches. The relative significance, applicability, and defensibility of each indicated value are considered, and the greatest weight is given to that approach deemed most appropriate for the property being appraised. The purpose of this report is to estimate the market value of the fee simple interest in the subject property; our appraisal involves a careful analysis of the property itself and the economic, demographic, political, physical, and environmental factors that influence real estate values. Based on the data set forth in this report, the following value indications were developed.

Approach	Value Indication
Cost	Not Applicable
Sales Comparison	$75,000,000 to $139,000,000
Income Capitalization	$	100,900,000

Cost Approach

Because the cost approach does not reflect the economic factors that motivate knowledgeable hotel investors (i.e., projected net income and return on investment), the cost approach is given limited weight in the valuation of income-producing properties. Furthermore, the difficulty in estimating and substantiating a number of highly subjective variables (such as effective age, accrued depreciation, and the remaining economic life of the improvements) limits the applicability of the cost approach as an effective valuation method. Moreover, lodging facilities are rarely sold or purchased on the basis of depreciated cost. Considering the property’s age and condition, we consider this approach inapplicable in the valuation of the subject property.

HVS International, San Francisco, California Reconciliation of Value Indications 140

Sales Comparison Approach

The sales comparison approach uses actual sales of similar properties to provide an indication of the subject property’s value. Although we have investigated a number of sales in an attempt to develop a range of value indications, several adjustments are necessary to render these sales prices applicable to the subject property. The adjustments, which tend to be subjective, diminish the reliability of the sales comparison approach; furthermore, typical hotel investors employ a sales comparison procedure only to establish broad value parameters.

Income Capitalization Approach

To estimate the subject property’s value via the income capitalization approach, we have analyzed the local market for transient accommodations, examined the competitive environment, projected occupancy and average rate levels, and developed a forecast of income and expense that reflects anticipated income trends and cost components through a stabilized year of operation. The subject property’s projected net income before debt service was allocated to the mortgage and equity components based on market rates of return and loan-to-value ratios. Through a discounted cash flow and income capitalization procedure, the value of each component was calculated; the total of the mortgage and equity components equates to the value of the property.

Our nationwide experience indicates that the procedures used in estimating market value by the income capitalization approach are comparable to those employed by the hotel investors who constitute the marketplace. For this reason, we believe that the income capitalization approach produces the most supportable value estimate, and it is given the greatest weight in our final estimate of the subject property’s market value.

Value Conclusion

Careful consideration has been given to the strengths and weaknesses of the three approaches to value discussed above. In recognition of the purpose of this appraisal, we have given primary weight to the value indicated by the income capitalization approach. Based on our analysis, it is our opinion that the “as is” market value of the fee simple interest in the The Westin Hotel – Chicago, as of February 1, 1999, is:

$100,900,000

ONE HUNDRED MILLION NINE HUNDRED THOUSAND DOLLARS

HVS International, San Francisco, California Statement of Assumptions and Limiting Conditions 141

16. Statement of Assumptions and Limiting Conditions

1.	This report is to be used in whole and not in part.
2.	No responsibility is assumed for matters of a legal nature, nor do we render any opinion as to title, which is assumed to be marketable and free of any deed restrictions and easements. The property is valued as though free and clear unless otherwise stated.
3.	There are no hidden or unapparent conditions of the property, sub-soil or structures, such as underground storage tanks, that would render it more or less valuable. No responsibility is assumed for these conditions or any engineering that may be required to discover them.
4.	Other than discussed in the report, we have not considered the existence of potentially hazardous materials used in the construction or maintenance of the building, such as asbestos, urea formaldehyde foam insulation, pesticides, lead-based paints, or PCBs, nor have we considered the presence of any form of toxic waste. The appraisers are not qualified to detect any hazardous substances and urge the client to retain an expert in this field if desired.
5.	We have made no survey of the property, and assume no responsibility in connection with such matters. Sketches, photographs, maps, and other exhibits are included to assist the reader in visualizing the property. It is assumed that the use of the land and improvements is within the boundaries of the property described, and that there is no encroachment or trespass unless noted.
6.	All information, financial operating statements, estimates, and opinions obtained from parties not employed by HVS International

HVS International, San Francisco, California Statement of Assumptions and Limiting Conditions 142

	are assumed to be true and correct. We can assume no liability resulting from misinformation.
7.	Unless noted, we assume that there are no encroachments, zoning violations, or building violations encumbering the subject property.
8.	The property is assumed to be in full compliance with all applicable federal, state, local, and private codes, laws, consents, licenses, and regulations (including a liquor license where appropriate), and that all licenses, permits, certificates, franchises, and so forth can be freely renewed or transferred to a purchaser.
9.	All mortgages, liens, encumbrances, leases, and servitudes have been disregarded unless specified otherwise.
10.	No portions of this report may be reproduced in any form without our permission, and the report cannot be disseminated to the public through advertising, public relations, news, sales, or other media.
11.	We are not required to give testimony or attendance in court by reason of this analysis without previous arrangements, and only when our standard per diem fees and travel costs are paid prior to the appearance.
12.	If the reader is making a fiduciary or individual investment decision and has any questions concerning the material presented in this report, it is recommended that the reader contact us.
13.	We take no responsibility for any events or circumstances that take place subsequent to either the date of value or the date of our field inspection, whichever occurs first.
14.	The quality of a lodging facility’s on-site management has a direct effect on a property’s economic viability and value. The financial forecasts presented in this analysis assume responsible ownership and competent management. Any variance from this assumption may have a significant impact on the projected operating results and value estimate.
15.	The estimated operating results presented in this report are based on an evaluation of the overall economy, and neither take into account nor make provision for the effect of any sharp rise or

HVS International, San Francisco, California Statement of Assumptions and Limiting Conditions 143

	decline in local or national economic conditions. To the extent that wages and other operating expenses may advance during the economic life of the property, we expect that the prices of rooms, food, beverages, and services will be adjusted to at least offset these advances. We do not warrant that the estimates will be attained, but they have been prepared on the basis of information obtained during the course of this study and are intended to reflect the expectations of typical investors.
16.	This analysis assumes continuation of all Internal Revenue Service tax code provisions as stated or interpreted on either the date of value or the date of our field inspection, whichever occurs first.
17.	Many of the figures presented in this report were generated using sophisticated computer models that make calculations based on numbers carried out to three or more decimal places. In the interest of simplicity, most numbers have been rounded to the nearest tenth of a percent. Thus, these figures may be subject to small rounding errors.
18.	Although this analysis employs various mathematical calculations to provide value indications, the final estimate is subjective and may be influenced by our experience and other factors not specifically set forth in this report.
19.	Any distribution of the total value between the land and improvements or between partial ownership interests applies only under the stated use. Moreover, separate allocations between components are not valid if this report is used in conjunction with any other analysis.
20.	The Americans with Disabilities Act (ADA) became effective on January 26, 1992. We have conducted no specific compliance survey to determine whether the subject property is in conformity with the various detailed requirements of the ADA. It is possible that the property does not comply with the requirements of the act, and this could have an unfavorable effect on the property value. Because we have no direct evidence regarding this issue, our estimate of value does not consider possible non-compliance with the ADA.

HVS International, San Francisco, California Statement of Assumptions and Limiting Conditions 144

21.	This study was prepared by HVS International, a division of M&R Valuation Services, Inc. All opinions, recommendations and conclusions expressed during this assignment have been rendered by the staff of M&R Valuation Services, Inc., acting solely as employees and not as individuals.
22.	Our forecast and valuation is predicated upon the continued management of the property by Westin Hotels and Resorts upon hypothetical sale.
23.	We assume that the potential “Y2K problem” will have no negative impact on the operation of the subject property. Any departure from this assumption may have a significant influence on our conclusions.

HVS International, San Francisco, California Certification 145

17. Certification

We, the undersigned appraisers, hereby certify:

1.	that the statements and opinions presented in this report, subject to the limiting conditions set forth, are correct to the best of our knowledge and belief;
2.	that Stephen L. Chan personally inspected the property described in this report; Suzanne R. Mellen, CRE, MAI, did not inspect the property but did participate in the analysis and review;
3.	that the appraisers have extensive experience in the valuation of hotels and believe that they are competent to undertake this appraisal;
4.	that we have no current or contemplated interests in the real estate that is the subject of this report;
5.	that we have no personal interest or bias with respect to the subject matter of this report or the parties involved;
6.	that this report sets forth all of the limiting conditions (imposed by the terms of this assignment) affecting the analyses, opinions, and conclusions presented herein;
7.	that the fee paid for the preparation of this report is not contingent upon the amount of the value estimate;
8.	that this report has been prepared in accordance with and is subject to the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute;
9.	that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives;

HVS International, San Francisco, California Certification 146

10.	that this report has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (as adopted by the Appraisal Foundation);
11.	that no one other than the undersigned prepared the analyses, conclusions, and opinions concerning real estate that are set forth in this appraisal report;
12.	that as of the date of this report, Suzanne R. Mellen, CRE, MAI, has completed the requirements of the continuing education program of the Appraisal Institute;
13.	that this appraisal is not based on a requested minimum value, a specific value, or the approval of a loan;
14.	that our engagement in this assignment was not contingent upon the development or reporting of predetermined results.

/s/ Stephen L. Chan

Stephen L. Chan, as an employee of

M&R Valuation Services, Inc.

/s/ Suzanne R. Mellen

Suzanne R. Mellen, CRE, MAI, as an

employee of M&R Valuation Services, Inc.

HVS International, San Francisco, California Addenda

Addenda

Explanation of Simultaneous Valuation Formula
Engagement Letter
Legal Description
Appraiser’s State of Illinois Temporary License
Synopsis of Hotel Management Agreement
Synopsis of Restaurant Letter of Intent
Photographs of Subject Property

HVS International, San Francisco, California Simultaneous Valuation Formula

Explanation of the Simultaneous Valuation Formula

The algebraic equation known as the simultaneous valuation formula, which solves for the total property value using a 10-year mortgage and equity technique, was developed by Suzanne R. Mellen, CRE, MAI, Managing Director of the San Francisco office of HVS International. A complete discussion of the technique is presented in her article entitled, “Simultaneous Valuation: A New Technique.”¹⁷

The process of solving for the value of the mortgage and equity components begins by deducting the annual debt service from the projected income before debt service, leaving the net income to equity for each year. The net income as of the 11th year is capitalized into a reversionary value using the terminal capitalization rate. The equity residual, which is the total reversionary value less the mortgage balance at that point in time and less any brokerage and legal costs associated with the sale, is discounted to the date of value at the equity yield rate. The net income to equity for each projection year is also discounted back to the date of value. The sum of these discounted values equals the value of the equity component. Because the equity component comprises a specific percentage of the total value, the value of the mortgage and the total property can be computed easily. This process can be expressed in two algebraic equations that set forth the mathematical relationships between the known and unknown variables using the following symbols.

¹⁷ Suzanne R. Mellen. “Simultaneous Valuation: A New Technique,” Appraisal Journal, April, 1983.

HVS International, San Francisco, California Simultaneous Valuation Formula

NI	=	Net income available for debt service
V	=	Value
M	=	Loan-to-value ratio
f	=	Annual debt service constant
n	=	Number of years in the projection period
de	=	Annual cash available to equity
dr	=	Residual equity value
b	=	Brokerage and legal cost percentage
P	=	Fraction of the loan paid off during the projection period
fp	=	Annual constant required to amortize the entire loan during the projection period
Rr	=	Overall terminal capitalization rate that is applied to net income to calculate the total property reversion (sales price at the end of the projection period)
1/Sn	=	Present worth of $1 factor (discount factor) at the equity yield rate

Using these symbols, the following formulas can be used to express some of the components of this mortgage and equity valuation process.

Debt Service – A property’s debt service is calculated by first determining the mortgage amount that equals the total value (V) multiplied by the loan-to-value ratio (M). Debt service is derived by multiplying the mortgage amount by the annual debt service constant (f). The following formula represents debt service.

f x M x V = Debt Service

Net Income to Equity (Equity Dividend) – The net income to equity (d_e) is the property’s net income before debt service (NI) less debt service. The following formula represents the net income to equity.

NI - (f x M x V) = d_e

Reversionary Value – The value of the hotel at the end of the tenth year is calculated by dividing the 11th-year net income before debt service (NI¹¹)

HVS International, San Francisco, California Simultaneous Valuation Formula

by the terminal capitalization rate (R_r). The following formula represents the property’s tenth-year reversionary value.

(NI¹¹/R_r) = Reversionary Value

Brokerage and Legal Costs – When a hotel is sold, certain costs are associated with the transaction. Normally, the broker is paid a commission and the attorney collects legal fees. In the case of hotel transactions, brokerage and legal costs typically range from 1% to 4% of the sales price. Because these expenses reduce the proceeds to the seller, they are usually deducted from the reversionary value in the mortgage and equity valuation process. Brokerage and legal costs (b), expressed as a percentage of reversionary value (NI¹¹/R_r), are calculated by application of the following formula.

b (NI¹¹/R_r) = Brokerage and Legal Costs

Ending Mortgage Balance – The mortgage balance at the end of the tenth year must be deducted from the total reversionary value (debt and equity) in order to determine the equity residual. The formula used to determine the fraction of the loan remaining (expressed as a percentage of the original loan balance) at any point in time (P) takes the annual debt service constant of the loan over the entire amortization period (f) less the mortgage interest rate (i), and divides it by the annual constant required to amortize the entire loan during the ten-year projection period (f_p) less the mortgage interest rate. The following formula represents the fraction of the loan paid off (P).

(f - i)/(f_p - i) = P

If the fraction of the loan paid off (expressed as a percentage of the initial loan balance) is P, then the remaining loan percentage is expressed as 1 - P. The ending mortgage balance is the fraction of the remaining loan (1 - P) multiplied by the initial loan amount (M x V). The following formula represents the ending mortgage balance.

(1 - P) x M x V

Equity Residual Value – The value of the equity upon the sale at the end of the projection period (d_r) is the reversionary value less the brokerage and legal costs and the ending mortgage balance. The following formula represents the equity residual value.

HVS International, San Francisco, California Simultaneous Valuation Formula

(NI¹¹/R_r) - - (b (NI¹¹/R_r) - ((1 - P) x M x V) = d_r

Annual Cash Flow to Equity – The annual cash flow to equity consists of the equity dividend for each projection year plus the equity residual at the end of the tenth year. The following formula represents the annual cash flow to equity.

NI¹ - (f x M x V) = d_e¹

NI² - (f x M x V) = d_e²

NI¹⁰ - (f x M x V) = d_e¹⁰

(NI¹¹/R_r) - (b (NI¹¹/R_r) - ((1 - P) x M x V) = d_r

Value of the Equity – If the initial mortgage amount is calculated by multiplying the loan-to-value ratio (M) by the property value (V), then the equity value is one minus the loan-to-value ratio multiplied by the property value. The following formula represents the value of the equity.

(1 - M) V

Discounting the Cash Flow to Equity to the Present Value – The cash flow to equity in each projection year is discounted to the present value at the equity yield rate (1/Sⁿ). The sum of these cash flows is the value of the equity (1 - M) V. The following formula represents the calculation of equity as the sum of the discounted cash flows.

(d_e¹ x 1/S¹) + (d_e² x 1/S²) + . . . + (d_e¹⁰ x 1/S¹⁰) + (d_r x 1/S¹⁰) = (1 - M) V

Combining the Equations: Annual Cash Flow to Equity and Discounting the Cash Flow to Equity to the Present Value – The last step is to arrive at one overall equation that shows that the annual cash flow to equity plus the yearly discounting to the present value equals the value of the equity.

((NI¹ - (f x M x V)) 1/S¹) + ((NI² - (f x M x V)) 1/S²) + . . .

((NI¹⁰ - (f x M x V)) 1/S¹⁰) +

(((NI¹¹/R_r) - - (b (NI¹¹ /R_r)) - ((1 - P) x M x V)) 1/S¹⁰) = (1 -M) V

Because the only unknown in this equation is the property’s value (V), it can be solved readily.

HVS International, San Francisco, California Simultaneous Valuation Formula

10-Year Projection of Income and Expense – Because the fixed and variable forecast of income and expense is carried out only to the stabilized year, it is necessary to continue the projection to the 11th year. In most cases, net income before debt service beyond the stabilized year is projected at an assumed inflation rate. By increasing a property’s revenue and expenses at the same rate of inflation, net income remains constant as a percentage of total revenue, and the dollar amount escalates at the annual inflation rate. Hotel investors are currently using inflation rates of approximately 3.0% annually. The 10-year forecast of income and expense illustrates the subject property’s net income, which is assumed to increase by 3.0% annually subsequent to the hotel’s stabilized year of operation.

Solving for Value Using the Simultaneous Valuation Formula – In the case of the subject property, the following known variables have been determined.

Table 1: Summary of Known Variables

Interest Rate		i	8.3	%
Loan-To-Value Ratio		M	65.0	%
Debt Service Constant		f	0.094614
Equity Yield	1/Sn		19.0	%
Brokerage and Legal Fees		b	3.0	%
Annual Constant Required to Amortize the Loan in 10 Years	fp		0.147183
Terminal Capitalization Rate	Rr		10.00	%

The following table illustrates the present worth of a $1 factor at the 19.0% equity yield rate.

HVS International, San Francisco, California Simultaneous Valuation Formula

Table 2: Present Worth of $1 Factor at the Equity Yield Rate

	Present Worth of $1
Fiscal Year	Factor @19.0%
1999/00		0.840340
2000/01		0.706172
2001/02		0.593425
2002/03		0.498679
2003/04		0.419060
2004/05		0.352153
2005/06		0.295928
2006/07		0.248681
2007/08		0.208976
2008/09		0.175611

Using these known variables, the following intermediary calculations must be made before applying the simultaneous valuation formula. The fraction of the loan paid off during the projection period is calculated as follows.

          P = ( 0.094614 - 0.083 ) / ( 0.147183 - 0.083 ) = 0.187282

The annual debt service is calculated as f x M x V.

              (f x M x V) = 0.094614 x 0.65 x V = 0.061499 V

Inserting the known variables into the hotel valuation formula produces the following.

( 11,178,000 -	0.061499 V )	x	0.840336	+
( 13,440,000 -	0.061499 V )	x	0.706165	+
( 12,346,000 -	0.061499 V )	x	0.593416	+
( 12,983,000 -	0.061499 V )	x	0.498669	+
( 13,378,000 -	0.061499 V )	x	0.419049	+
( 13,791,000 -	0.061499 V )	x	0.352142	+
( 14,206,000 -	0.061499 V )	x	0.295918	+
( 14,628,000 -	0.061499 V )	x	0.248671	+
( 15,060,000 -	0.061499 V )	x	0.208967	+
( 15,506,000 -	0.061499 V )	x	0.175602	+

((( 15,966,000 / 0.100 ) - ( 0.03 x ( 15,966,000 / 0.100 )) -

(( 1 - 0.187282 ) x 0.65 x V)) x 0.175602 )= ( 1 - 0.65 )V

HVS International, San Francisco, California Simultaneous Valuation Formula

Like terms are combined as follows.

$84,053,966 - 0.359605 V	=	(1 - 0.65)V
$84,053,966	=	0.70961 V
V	=	$84,053,966 / 0.70961
V	=	$118,451,688
Total Property Value as Indicated by the Income Capitalization Approach (Say)	=	$118,500,000

This conclusion represents the market value “as improved” before the deduction for capital expenditures.

HVS International, San Francisco, California Synopsis of Hotel Management Agreement

Synopsis of Hotel Management Agreement

Operator:

Westin Hotel Company

Owners:

909 North Michigan Avenue Corporation, The Westin Chicago Limited Partnership, and Westin Hotels Limited Partnership

Date of Agreement:

August 21, 1986, amended and restated from previous management agreement dated January 1, 1975.

Term:

Until December 31, 2026.

Fees:

Base management fee equal to 3.5% of annual gross revenues.

Annual incentive management fee equal to:

1) 10% of net operating cash flow of WHLP through 1989;

2) 15% in 1990 through 1993;

3) 20% thereafter.

Reserve for Replacement:

1) July 1, 1986 through December 31, 1986	0.2% of gross revenue
2) 1987	2.5% of gross revenue
3) 1988	3.5% of gross revenue
4) 1989 and beyond	4.0% of gross revenue

Assignment:

Subject to certain conditions, so long as no default attributable to Westin has occurred and is continuing, including an event of termination, Westin shall have the right, without owner’s consent, to assign, transfer or convey all or any of its right, title and interest under this agreement:

1) to a Westin affiliate with a net worth of at least $10,000,000;

2) to any successor or assignee of Westin that may result from merger, consolidation, or reorganization; or

3) to another entity that acquires all or substantially all of the business and assets of Westin.

HVS International, San Francisco, California Synopsis of Hotel Management Agreement

Subject to certain conditions, so long as no default attributable to owner has occurred and is continuing, including an event of termination, owner shall have the right, without Westin’s approval, to assign, transfer or convey its right, title and interest in the hotel and in this agreement to a person or entity:

1) with a material interest in the ownership and/or management of any hotel that, directly or indirectly, is in competition with any of the Westin Hotels; provided however, that this prohibition shall not apply in the event that the assignee is a major U.S. life insurance company, bank, or pension fund, or 50% or greater controlled subsidiary of such an entity; or

2) who or which (after giving effect to such transfer or conveyance) would have a net worth of less than $10,000,000.

HVS International, San Francisco, California Synopsis of Restaurant Letter of Intent

Synopsis of Restaurant Letter of Intent

Lessor:

The Westin Chicago Limited Partnership

Lessee:

Grill Concepts, Inc.

Date of Letter:

May 20, 1998

Term:

Ten (10) years

Size and Location:

Approximately 6,500 square feet of enclosed space located in the lobby floor of the hotel.

Option Periods:

If gross sales for the lease year ending December 31, 2008 equal or exceeds $5 million, then the leasee shall have the right to renew the lease for a period of five (5) years (the “First Option”).

If gross sales for the lease year ending December 31, 2013 equal or exceeds $6 million, then the leasee shall have the right to renew the lease for a period of five (5) years (the “Second Option”).

Minimum Base Rent:

Initial Ten-Year Term

$18,000 per month ($216,000/yr.), with a credit against the earliest minimum rent due during the first three years equal to $4,167/mo. Minimum rent will be increased on the fifth anniversary by the percentage increase in the CPI, not to exceed 15%.

First Option Period

$23,400 per month ($280,800/yr.)

Second Option Period

$26,100 per month ($313,200/yr.)

Commencement Date:

Minimum base rent shall be due commencing on the earlier of 240 days after delivery of possession, or the day restaurant opens for business.

HVS International, San Francisco, California Synopsis of Restaurant Letter of Intent

Percentage Rent:

Lessor pays monthly rent of 6% of the first $4 million of gross sales, plus 8% of gross sales over $4 million, exceeds minimum base rent.

Condition of Premises:

Lessor shall deliver the premises as is where is. Lessee will at its expense complete a total demolition and renovation of the premises. Lessor will provide lessee a cash allowance equal to $550,000 for permanent improvement of the premises.

Property Taxes/Utilities:

Triple net

Charge to Guestrooms:

Hotel guests will be able to charge to their hotel portfolios for which the hotel may assess a 2.9% fee.

Operational Matters:

Lessee will make its menu and food and beverage services available to the hotel for room service at a 25% discount from restaurant prices, using restaurant’s china, silver, and glassware.

Illustration: View of Subject Property from Michigan Avenue

Illustration: Front Entrance

Illustration: Registration Area

Illustration: Lobby

Illustration: Chelsea Restaurant and Bar

Illustration: Cafe A La Carte

Illustration: Fitness Room

Illustration: Unfinished 16th-Floor Space

Illustration: Prefunction Meeting Corridor

Illustration: Typical Renovated Guestroom

Illustration: Typical Renovated Guestroom

Illustration: Typical Renovated Guestroom

Illustration: Typical Renovated Guestroom Bath

Illustration: Typical Guestroom Corridor

Illustration:    Typical Unrenovated Guestroom

Illustration:    Typical Unrenovated Guestroom

Illustration: Typical Unrenovated Guestroom Bathroom

HVS International, San Francisco, California Qualifications

Qualifications

Stephen L. Chan
Suzanne R. Mellen, CRE, MAI

HVS International, San Francisco, California Qualifications of Stephen L. Chan

Stephen L. Chan

Employment
1995 to present

HVS International
San Francisco, California
Senior Associate
(Hotel/Motel Valuations, Market Studies, Feasibility Reports, and Investment Counseling)

1994

Statler Hotel
Ithaca, New York
Front Office Clerk

1993

Hotel Hyakumangoku
Kaga-shi, Ishikawa-ken, Japan
Front Office Intern

1992

Hong Kong Hyatt Regency
Tsim Sha Tsui, Hong Kong
Front Office Intern

Professional Affiliations

Cornell Hotel Society

Education

BS - School of Hotel Administration, Cornell University

HVS International, San Francisco, California Qualifications of Stephen L.Chan

Corporate and Institutional
Clients Served

Aetna
AMRESCO CAPITAL
Angeles Mortgage Investment Trust
Archon Financial
Bank of the West
Bankers Trust
BLR Real Estate Partnership
Canadian Imperial Bank of Commerce
Capital Company of America
CIBC Wood Gundy
Chase Real Estate Finance Group
Chase Manhattan
Coopers & Lybrand
Deutsche Morgan Grenfell
EPAM Corporation
Eureka Bank
FINOVA Capital
GMAC Commercial Mortgage Corporation
Host Marriott
Hudson Hotels Corp.
Hypo Securities
International Bank of California
International Bank of Singapore
KeneVentures
Kennedy-Wilson
Larkspur Hospitality LLC
Lehman Brothers
Leisure Sports
Local Federal Bank of South Dakota
Long Term Credit Bank of Japan
Midland Loan Services
Mitsui Trust
Morgan Stanley
Nomura Asset Capital Corporation
OCWEN Financial
ORIX USA
Paine Webber
Pacific Hotel Group
Peninsula Bank of Commerce
Pleasanton Hilton
Sage Hospitality
R.C. Hedreen Co.
Starwood Lodging Corporation
The Bank of New York
TIAA-CREF
Tishman Hotel Corporation
Tokai Bank
Union Bank of California
US Bancorp
Westin Hotels & Resorts
West LB
Yasuda Trust

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Suzanne R. Mellen, CRE, MAI

Employment
1985 to present

HVS INTERNATIONAL
San Francisco, California
Managing Director
(Hotel-Motel Valuations, Market Studies, Feasibility Reports, and Investment Counseling)

1981 to 1985

HOSPITALITY VALUATION SERVICES
Mineola, New York
Director of Consulting and Valuation Services
(Hotel-Motel Valuations, Market Studies, Feasibility Reports, and Investment Counseling)

1980 to 1981

MORGAN GUARANTY TRUST COMPANY
New York, New York
Real Estate Appraiser and Consultant
(Real Estate Investment Valuation and Analysis)

1980

LAVENTHOL & HORWATH
New York, New York
Senior Consultant
(Management Advising Services - Market and Feasibility Studies)

1978 to 1980

HELMSLEY-SPEAR HOSPITALITY SERVICES
New York, New York
Senior Consultant
(Management Advising Services - Market and Feasibility Studies)

1976 to 1978

WESTERN INTERNATIONAL HOTELS
The Plaza, New York City
Management Trainee
(Rooms Operations and Accounting)

1976

HARLEY, LITTLE ASSOCIATES
Toronto, Canada
Junior Consultant
(Food Facilities Design, Market Studies)

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Professional Affiliations

Appraisal Institute - Member (MAI)

• Board of Directors - San Francisco Bay Area Chapter (1994, 1995)

• Education Committee Chairperson - Northern California Chapter 11

• Workshop Committee Chairperson - Northern California Chapter 11

• Division of Courses - National Committee

• Continuing Education Committee - New York Committee

• Director, Real Estate Computer Show - New York Chapter

American Society of Real Estate Counselors - Member (CRE)

• Vice Chair - Northern California Chapter (1994, 1995)

• Chair - Northern California Chapter (1996)

National Association of Review Appraisers & Mortgage Underwriters (CRA)

International Society of Hotel Consultants - Member (ISHC)

Cornell Hotel Society

San Francisco Board of Realtors

American Hotel and Motel Association

California Hotel and Motel Association

National Trust for Historic Preservation

Urban Land Institute

Education

BS - School of Hotel Administration, Cornell University

Liberal Arts Undergraduate Study - Carnegie Mellon University

Completion of MAI course work - Appraisal Institute

New York University - School of Continuing Education - Real Estate Division

State Certification

Arizona, California, Colorado, Hawaii, Michigan, Nevada

Teaching and Lecture Assignmments

American Institute of Real Estate Appraisers - Approved Instructor - Hotel/Motel Valuations
California Hotel and Motel Association, 1985 Annual Convention - Development Overview
1995 - Annual Meeting - The Capital Expenditure Requirements
Citibank, N.A. - Hotel/Motel Valuations
Cornell University - Real Estate Finance

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Teaching and Lecture Assignments (cont’d)

Cornell Center for Professional Development - Hotel Workouts
Country Hospitality Conference - Hotel Development Challenges in the Nineties

Econo-Travel Motor Hotel Corp., Annual Financial Seminar - Hotel Valuation

Institute of Property Taxation, 1984 Real Estate Symposium - Simultaneous Valuation

National Association of Review Appraisers and Mortgage Underwriters - Reviewing a Hotel Appraisal Report 1990

National Conference of State Tax Judges - Valuation and the Hospitality Industry

Northwest Center for Professional Development - 1986-87 Hotel Development Seminars

Southhampton College - Feasibility Studies and Appraisals

University of Denver - Hotel/Motel Valuation

American Bar Association - Property Tax ‘92 - Income Approach

UCLA Hotel Industry Investment Conference, 1995, 1996

NYU Hospitality Industry Investment Conference, 1991, 1992, 1993, 1994, 1995

Jeffer, Mangels, Butler & Marmaro Forum - Answers to Three of the Most Provocative Questions in Hotel Valuation Today

Published Articles
The Appraisal Journal

“Simultaneous Valuation: A New Technique,” April 1983

Appraisal Review & Mortgage Underwriting Journal

“How to Review a Hotel Appraisal,” November 1989

California Inntouch Magazine

“Value and Proper Use of Feasibility Studies,” December 1990

The Hotel Valuation Journal

“The Future of Full-Service Hotel Development”

Computer Software
“Simultaneous Capitalization Software”

Software for the capitalization of a variable income stream

Appearance as an Expert Witness

Superior Court of the State of Arizona, County of Maricopa

Superior Court of the State of California, City and County of San Francisco

Superior Court of the State of California, County of Los Angeles (Deposition)

Superior Court of the State of California, County of San Diego, North County

     Branch

Federal Tax Court, New York, New York

U.S. District Court, Eastern District of Arkansas, Little Rock, Arkansas

U.S. District Court, Central District of California (Deposition)

U.S. District Court, Southern District of California

Federal Bureau of Investigation, New York, New York (Deposition)

U.S. Bankruptcy Court, Northern District of California

U.S. Bankruptcy Court, Eastern District of California

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

U.S. Bankruptcy Court, Colorado (Deposition)
U.S. Bankruptcy Court, Southern District of Texas, Houston Division
U.S. Bankruptcy Court, Utah, Salt Lake City
U.S. Bankruptcy Court, Southern District of California
American Arbitration Association, Los Angeles
American Arbitration Association, San Francisco
Tax Appeal Board
Los Angeles County, California
Contra Costa County, California
Orange County, California
San Francisco County, California
San Mateo County, California

Corporate and Institutional Clients Served

Aegon USA Realty Advisors, Inc.
Aetna Life Insurance Co.
Aetna Real Estate Investment
Allied Capital Advisors, Inc.
American Hotels, Inc.
American Realcorp
American Savings and Loan
Amfac Parks & Resorts
AMRESCO
Amstart Group, Inc.
Andrew Daveridge Corp.
ARCON, Inc.
Avista
Bank of America
Bank Boston
The Bank of New York
Bank of Nova Scotia
Bank of San Francisco
Bank of the West
Bankers Trust Company
Banque Nationale de Paris
Barclay’s Bank
The Beacon Companies
Boykin Management Co.
Broad, Schultz, Larson & Wineberg
Burlingame Bank and Trust Comp.
Buss-Shelger Associates
C. A. Rickert & Associates
Caesars World Gaming
Cala Properties
California Federal Bank
California Department of Transportation
Canadian Imperial Bank of Commerce
Carlsbad Estate Holding, Inc.
Carpenters Pension Trust for Southern California
Carroll, Burdick, McDonough
CASC Corporation
Case, Knowlson, Mobley, Burnett and Luber
Central Core Corp.
Champion Development Group
Chartwell Leisure
Chase Manhattan Bank
Chase Real Estate Finance Group
Chemical Bank
CIGNA Capital Advisors, Inc.
Citibank
Citicorp Real Estate, Inc.
City and County of San Francisco
City of Boulder, Colorado
Cleary, Gottlieb, Steen & Hamilton
Coast Commercial Bank
Column Financial, Inc.
Contra Costa County
Coopers & Lybrand
Comerica Bank - California
Commercial Bank of Korea, Ltd.
Coudert Brothers
Credit Lyonnais
Credit Suisse First Boston
Cupertino National Bank and Trust

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Corporate and Institutional Clients Served (cont’d)

Dai-Ichi Kangyo Bank, Ltd.	Hare, Brewer & Kelley, Inc.
Daiwa Bank	Haruyoshi Kanko K.K.
Days Inns	Heller, Ehrman, White & McAuliffe
Deutsche Morgan Grenfell	Heller Real Estate Financial Services
Disney Development Company	The Heymann Group, Inc.
Dollar Savings and Loan	Hibernia Bank
Doubletree Inns	Hodges Ward Elliott
Drury Inns	Holiday Inns
Duckor & Spradling	Hong Kong Bank
EDA, U.S. Government	Hongkong Bank Alliance
EPAM Corporation	Host Marriott
Equitable Real Estate Investment Management	Hotel Investors Trust
E. S. Merriman & Sons	Howard Johnson’s
Estate of James Campbell	Hudson Hotels Corporation
Eureka Bank	Huntington Bank
Exchange Bank	Hyatt Development Corporation
Farmers National Bank	ITT Sheraton Corporation
Fidelity Federal Savings & Loan	Impac Hotel Group
First Boston	Inter-Continental
First Federal Savings and Loan	International Bank of California
First Interstate Bank	International Bank of Singapore
First National Bank	Intracorp Developments, Ltd.
First Security	J.E. Robert Company, Inc.
Fox Hotel Investors	J. W. Colachis Company
Fred Reed & Associates	Japan Airlines
Fiji Bank	Jeffer, Mangels, Butler, & Marmaro
GECC Commercial Real Estate	John B. Coleman & Co.
GMAC Commercial Mortgage Co.	John Q. Hammons
Geller & Company	John Hancock Life Insurance
General Electric Capital Company	Key Bank of New York
Gibraltar Savings and Loan	Key Corporation
Equitable Life Assurance Society	Kwong Hing Investment Center
Gibson, Dunn & Crutcher	Lake County Business Outreach and Response Team
Goldman Sachs	Lankford & Associates
Graham Taylor Hospitality Group	Larkspur Hospitality, LLC
Gray, Cary, Ames & Frye	Latham & Watkins
Gray, Cary, Ware & Freidenrich	Laurence Peters & Co.
Great Eagle Holdins Limited	Lehman Brothers, Inc.
Great Western Bank	Leisure Sports, Inc.
Greenwich Capital Markets	Leonard, Street & Deinard
Greystone	Local Federal Bank, F.S.B.
HMG Lodging Management	Long Term Credit Bank of Japan, Ltd.
HYPO Securities
Hardage Suite Hotels

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Lovitt & Hannan, Inc.	Presideo Group
M&M Development Co.	Property Capital Trust
The Maher Company	Prudential Realty Group
Marriott Hotels	Punjab National Bank
Mellon Bank	Queen Emma Foundation
Mercury Savings and Loan	R.C. Hedreen Co.
Merril Lynch	RT Capital Corporation
Miramar Asset Management, Inc.	Radisson Hospitality Worldwide
Mitsui Trust & Banking Co., Ltd.	Ramada Inns
The Money Store Commercial Mortgage, Inc.	Real Estate Capital Markets
Morgan Guaranty Trust	Red Lion Hotels & Inns
Morgan Stanley & Co.	The RIM Corp.
Morrison & Foerster	Riverboat Delta King, Inc.
NS Development Co.	S.D. Malkin Properties, Inc.
Nations Credit Commercial Corp.	Sage Hospitality Resources
Nations Financial Capital Corp.	San Francisco International Airport
Network Mortgage Services	San Leandro Development Services Department
Nomura Asset Capital Corp.	Seafirst Bank
Nomura Securities International, Inc.	Security Pacific National Bank
Northwinds N.V.	Salomon Brothers
Ny-West Development	Seven Seas Associates, LLC
Ocean Links Corp.	Shearman & Sterling
Octavian, Inc.	Simpson, Thatcher & Bartlett
O’Neill Hotels & Resorts	Société General
ORIX USA Corp.	Solit Interest Group
Orrick, Herrington & Sutcliffe	Sonoma Valley Bank
Outlook Income Fund	Southern California Savings
OZ Resorts and Entertainment	Ssang Yong Engineering and Construction Company, Limited
The Pacific Bank	Starwood Lodging
Pacific Hotel Group	Stephen W. Noey & Associates
Pacific Union Company	Stern & Goldberg
Pannell Kerr Forster	Stonebridge Realty Advisors
Parabas Bank	Strategic Hotel Capital, Inc.
Park Plaza International	Strategic Realty Advisors, Inc.
Patrick M. Nesbitt Associates, Inc.	Streich Lang
Patriot American Hospitality	Suburban Capital Markets, Inc.
Paul, Hastings, Janofsky & Walker	Sumitomo Bank
Peninsula Bank of Commerce	Sunriver Resort
Picadilly Inns
Pillsbury, Madison & Sutro

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Swig Investment Company
TCF Bank
TYBA Group, Inc.
Teachers Insurance and Annuity Association
Three Sisters Resorts
Tipton Management
Tokai Bank
Tom Grant, Jr.
Transamerica Realty Services, Inc.
Travelers Insurance Company
The Travelers Companies
Treadway Hotels
Tully & Wezelman, P.C.
Union Bank
United Pacific Bank
U.S. Bancorp
U.S. Trust Company
VMS Realty
Villa del Lago Associates
W.R.C. Properties, Inc.
Wailua Associates
Wells Fargo Bank, N.A.
Wells Fargo RETECHS
West Coast Bancorp
West LB
Westin Hotels & Resorts
Windsor Capital Group
Wolf, Rifkin & Shapiro
Woodfin Suites Hotel Co.
Wrather Corp.
Yasuda Trust and Banking Co., Ltd.

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

PARTIAL LIST OF HOTELS AND MOTELS APPRAISED OR EVALUATED
BY SUZANNE R. MELLEN, CRE, MAI

ALABAMA

Fairfield Inn, Birmingham
Ramada Inn, Gadsden
Proposed Hotel, Mobile
Fairfield Inn, Montgomery
Holiday Inn, Montgomery
Howard Johnson’s, Montgomery

ALASKA

Best Western Barratt Inn, Anchorage
Clarion Suites Hotel, Anchorage
Hawthorne Suites, Anchorage
Hotel Captain Cook, Anchorage
Northern Lights Hotel, Anchorage
Rose Garden Hotel, Anchorage
Sheraton Anchorage Hotel, Anchorage

ARIZONA

Best Western, Flagstaff
Motel 6, Flagstaff
Rodeway Inn, Flagstaff
Woodlands Plaza Hotel, Flagstaff
Bright Angel Lodge, Grand Canyon
El Tovar Hotel, Grand Canyon
Kachina Lodge, Grand Canyon
Maswik Lodge, Grand Canyon
Moqui Lodge, Grand Canyon
Phantom Ranch, Grand Canyon
Thunderbird Lodge, Grand Canyon
Yavapai Lodge, Grand Canyon
Best Western Green Valley, Green Valley
Hampton Inn-Proposed, Holbrook
Rodeway Inn, Kingman
Nautical Inn, Lake Havasu
Best Western Executive Park Hotel, Phoenix
Bobby McGee’s Conglomeration, Phoenix
Caravan Inn, Phoenix
Crescent Hotel, Phoenix
Doubletree Inn, Phoenix
Embassy Suites-Camelback, Phoenix
Embassy Suites-Camelhead, Phoenix
Fountain Suites Hotel, Phoenix
Granada Royale Camelhead, Phoenix
Holiday Inn, Phoenix
Holiday Inn Crowne Plaza, Phoenix
Hyatt Regency, Phoenix
Knights Inn, Phoenix
Omni Adams Hotel, Phoenix
Quality Inn, Phoenix
Courtyard by Marriott, Scottsdale
Doubletree Inn, Scottsdale
Holiday Inn Old Town, Scottsdale
Marriott Camelback Inn, Scottsdale
Phoenician Resort, Scottsdale
Red Lion-La Posada, Scottsdale
Rodeway Inn, Scottsdale
Scottsdale Conference Resort, Scottsdale
Scottsdale Hilton Resort, Scottsdale
Scottsdale Princess, Scottsdale
Proposed Summerfield Suites, Scottsdale
Sunburst Resort Hotel & Conference Center, Scottsdale
L’Auberge de Sedona, Sedona
Los Abrigados, Sedona
Orchard’s Inn & Grill, Sedona
Motel 6, Sierra Vista
Country Suites Hotel, Tempe
Clarion Tucson, Tucson
Doubletree Inn, Tucson
Loews Ventana Canyon Resort, Tucson
Lodge at Ventana Canyon, Tucson
Proposed Microtel Inn, Tucson
Radisson Suite Hotel, Tucson
Rodeway Inn, Tucson
Shilor Inn, Yuma

ARKANSAS

Hilton, Hot Springs
Holiday Inn, Little Rock
Red Carpet Inn, Little Rock

CALIFORNIA

Radisson Hotel, Agoura Hills
Ramada Inn, Agoura Hills
Anaheim Marriott, Anaheim
Anaheim Park Motor Inn, Anaheim
Best Western Anaheim Inn, Anaheim
Best Western Stovall’s Inn, Anaheim
Best Western Pavillions Inn, Anaheim
Boulevard Inn, Anaheim
Carousel Inn and Suites, Anaheim
Disneyland Hotel, Anaheim
Doubletree Hotel, Anaheim
Golden Forest Motel, Anaheim
Hilton Hotel, Anaheim
Holiday Inn, Anaheim
Howard Johnson Hotel, Anaheim
Jolly Roger, Anaheim
Marriott Courtyard, Anaheim
Pan Pacific Hotel, Anaheim
Pitcairn Inn, Anaheim
Ramada Maingate Hotel, Anaheim
Raffles Inn & Suites, Anaheim
Station Inn, Anaheim
TraveLodge Inn at the Park, Anaheim
WestCoast Anaheim Hotel, Anaheim
Proposed Fairfield Suites, Arcadia
Proposed Hilton Garden Inn, Arcadia
Auburn Inn, Auburn
Sleep Inn, Auburn
Ramada, Augora Hills
Allstar Inn, Bakersfield
Clarion Suites, Bakersfield
Economy Inn, Bakersfield (2)
Marriott Courtyard, Bakersfield
Red Lion Hotel, Bakersfield
Sheraton Hotel, Bakersfield
Hilton Hotel, Baldwin Park
Allstar Inn, Barstow
Economy Inn, Barstow
Holiday Inn Express, Belmont
Proposed Summerfield Suites, Belmont
Berkeley Marina Marriott, Berkeley
Shattuck Hotel, Berkeley
Beverly Hills Country Club, Beverly Hills
Beverly Hilton, Beverly Hills
Beverly Wilshire, Beverly Hills
L’Ermitage, Beverly Hills
Peninsula Beverly Hills, Beverly Hills
Best Western, Big Bear Lake
Motel 6, Big Bear Lake
Proposed hotel, Big Bear Lake
Post Ranch Inn, Big Sur
Ventana Inn, Big Sur
Rodeway Inn, Blythe
Embassy Suites Hotel, Brea
Holiday Inn, Brentwood
Fairfield Inn, Buena Park
Hampton Inn, Buena Park
Marriott Courtyard, Buena Park
Hilton Hotel, Burbank
Ramada Inn, Burbank
Hyatt Regency, Burlingame
Airport Marriott, Burlingame
Radisson Plaza-Proposed, Burlingame

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Good Nite Inn, Buttonwillow
Country Inn, Calabassas
Good Nite Inn, Calabassas
Del Norte Inn, Camarillo
Good Nite Inn, Camarillo
Cambria Pines Lodge, Cambria
Best Western Fireside Inn, Cambria
Campbell Inn, Campbell
Hilton Garden Inn, Campbell
Pruneyard Inn, Campbell
Proposed Hotel, Capitola
Allstar Inn, Carlsbad
Carlsbad Inn, Carlsbad
Inn of America, Carlsbad
La Costa Resort and Spa, Carlsbad
Legoland, Carlsbad
Olympic Resort, Carlsbad
Carmel Mission Inn, Carmel
Carmel Valley Ranch, Carmel
Highlands Inn, Carmel
Proposed Hotel, Casa de Fruta
Doubletree Hotel, Cathedral City
Proposed Hotel, Cathedral City
Royce Hotel, Cathedral City
Sheraton Cerritos Towne Center, Cerritos
Neighborhood Inn-Proposed, Chatsworth
Days Inn, Chico
Holiday Inn, Chico
Proposed Microtel Inn and Suites, Chico
Red Lion Hotel, Chico
Otay Valley Travel Lodge, Chula Vista
Harris Ranch, Coalinga
Howard Johnson’s, Colton
Concord Hilton, Concord
Sheraton Hotel, Concord
Trees Inn, Concord
Motel 6, Corona
Loews Coronado Bay Resort, Coronado
Proposed Hilton Garden Inn, Corte Madera
Ha’Penny Inn, Costa Mesa
Marriott Suites, Costa Mesa
Red Lion Hotel, Costa Mesa
Residence Inn, Costa Mesa
Pacifica Hotel & Conference Center, Culver City
Ramada Inn, Culver City
Hilton Garden Inn, Cupertino
Marriott Courtyard, Cupertino
Ritz-Carlton Laguna Niguel, Dana Point
Proposed Spa, Danville
Furnace Creek Inn, Death Valley
Furnace Creek Resort, Death Valley
Stove Pipe Wells Village, Death Valley
Hilton Hotel, Del Mar
Marriott Resort & Spa, Desert Springs
Days Inn Diamond Bar, Diamond Bar
Best Western, El Toro
Carlos Murphy’s Restaurant, Emeryville
Days Inn, Emeryville
Hardage Suites Hotel Site, Emeryville
Lyon’s Restaurant, Emeryville
Proposed Woodfin Suites, Emeryville
Budget Motel, Encinitas
Marriott Tenaya Lodge, Fish Camp
Proposed Hotel, Folsom
All-Suites-Proposed, Foster City
Clubtel-Proposed, Foster City
Holiday Inn, Foster City
Marriott Courtyard, Foster City
Hilton, Fremont
Marriott Courtyard, Fremont
Motel 6, Fremont
Quality Inn, Fremont
Proposed Westin Clubsport, Fremont
Allstar Inn, Fresno (2)
Chateau Inn, Fresno
Economy Inn, Fresno (2)
Hacienda Resort and Conference Center, Fresno
Holiday Inn, Fresno
Marriott Courtyard, Fresno
Picadilly Inns, Fresno (3)
Travelers Inn, Fresno (3)
Sierra Sport and Racquet Club, Fresno
Griswold’s Hotel, Fullerton
Marriott Hotel, Fullerton
Hyatt Regency-Proposed, Goleta
Motel 6, Gilroy
Red Lion Hotel, Glendale
Ocean Colony Resort, Half Moon Bay
Proposed Healdsburg Plaza Hotel, Healdsburg
Hollywood Clarion Roosevelt, Hollywood
Hollywood Palm Hotel, Hollywood
Waterfront Hilton, Huntington Beach
Grand Champions Resort, Indian Wells
Hilton-Orange County Airport, Irvine
Marriott Courtyard, Irvine
Registry Hotel, Irvine
Amador Inn, Jackson
Proposed Hotel, Kern Co.
Lafeyette Park Hotel, Lafeyette
Surf & Sand Hotel, Laguna Beach
Residence Inn, La Jolla
Scripps Inn, La Jolla
Hilton Lodge, Lake Arrowhead
Lake Arrowhead Resort, Lake Arrowhead
Proposed Hotel, Lake Country
Resort at Squaw Creek, Lake Tahoe
Marriott Courtyard, Larkspur
Proposed 50-Unit Motel, Little Lake
Residence Inn, Livermore
Embassy Suites, Lompoc
Breakers Hotel, Long Beach
Holiday Inn, Long Beach
Holiday Inn - Airport, Long Beach
Hyatt Regency, Long Beach
Marriott Hotel, Long Beach
Residence Inn, Long Beach
West Coast Hotel & Marina, Long Beach
Airport Park Hotel, Los Angeles
Biltmore Hotel, Los Angeles
Checkers Hotel, Los Angeles
Courtyard by Marriott, Los Angeles
Crowne Plaza LAX, Los Angeles
Doubletree Hotel at LAX, Los Angeles
Econolodge-Proposed, Los Angeles
Embassy Suites, Los Angeles
Four Seasons, Los Angeles
Hilton Hotel & Towers, Los Angeles
Hilton LAX, Los Angeles
Holiday Inn Brentwood/Bel Air, Los Angeles
Holiday Inn-LAX, Los Angeles
Holiday Inn Crowne Plaza-LAX, Los Angeles
Holiday Inn Express-Van Nuys, Los Angeles
Hotel Inter-Continental, Los Angeles
Hotel Sofitel Ma Maison, Los Angeles
Marriott Courtyard-LAX, Los Angeles
New Seoul Hotel, Los Angeles
Playa Vista Development, Los Angeles
Proposed Residence Inn Beverly Hills, Los Angeles
Sofitel Ma Maison, Los Angeles
Westin Bonaventure, Los Angeles
Westmoreland Place, Los Angeles
Los Gatos Lodge, Los Gatos
Economy Inns of America Motel, Madera
Marriott Courtyard, Mira Mesa
Barnabey’s Hotel, Manhattan Beach
Doubletree Hotel, Marina del Rey
Holiday Inn Express, Marina del Rey
Marina Suites Hotel, Marina del Rey

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Marina Beach Hotel, Marina del Rey
Marriott Hotel, Marina del Rey
Hill House, Mendocino
Stanford Park Hotel, Menlo Park
Comfort Inn, Millbrae
Candlewood Hotel, Milpitas
Hilton Garden Inn, Milpitas
Holiday Inn, Milpitas
Holiday Inn, Miramar
Motel Orleans, Modesto
Red Lion Hotel, Modesto
Miramar Resort Hotel, Montecito
Doubletree Fisherman’s Wharf, Monterey
Doubletree Inn, Monterey
Monterey Plaza Hotel, Monterey
Sheraton Hotel, Monterey
Inn at Morro Bay, Morro Bay
Proposed Hilton Garden Inn, Mountain View
Proposed Westin ClubSport, Mountain View
Best Western Inn, Napa Valley
Clarion Inn, Napa Valley
Inn at Napa Valley, Napa Valley
Sheraton Inn Napa Valley, Napa
Proposed Windmill Inn, Napa Valley
Silverado, Napa Valley
Newark/Fremont Hilton, Newark
Park Inn, Newark
Hyatt Newporter, Newport Beach
Marriott Suites, Newport Beach
Proposed Newport Coast Development, Newport Beach
Newporter Resort Hotel, Newport Beach
Sheraton Hotel, Newport Beach
Shilo Inn, Oakhurst
Holiday Inn Oakland Airport, Oakland
Parc Oakland Hotel, Oakland
Resort at Squaw Creek, Olympic Valley
Clarion Hotel, Ontario
Holiday Inn, Ontario
Red Lion HoteI,Ontario
Residence Inn, Orange
Woodfin Suites, Orange
Holiday Inn, Oxnard
Proposed hotel, Pacifica
Super 8 Motel, Palmdale
Embassy Suite, Palm Desert
Canyon Resort Hotel, Palm Springs
Desert Princess, Palm Springs
Marriott Rancho Las Palma, Palm Springs
Palm Canyon, Palm Springs
Palm Springs Spa Hotel, Palm Springs
Spa Hotel & Mineral Springs, Palm Springs
Cardinal Hotel, Palo Alto
Holiday Inn, Palo Alto
Stanford Park Hotel, Palo Alto
Stanford Terrace Inn, Palo Alto
Holiday Inn Express, Pasadena
Marriott Courtyard, Pasadena
Hacienda Hotel, Patterson
Proposed hotel and restaurant, Patterson
Cascade Ranch Lodge, Pescadero
Elks Lodge, Petaluma
Beverly Hills Residence Inn, Pico
Best Western Grande Arroyo, Pismo Beach
Proposed Hilton, Pismo Beach
Fairfield Inn, Placentia
Ameri-Suites & Homstead Village, Pleasant Hill
Black Angus Restaurant, Pleasant Hill
Pleasant Hill Inn, Pleasant Hill
Savoy Restaurant, Pleasant Hill
Candlewood Hotel, Pleasanton
Hilton Hotel, Pleasanton
Holiday Inn, Pleasanton
Marriott Courtyard, Pleasanton
Sierra Suites, Pleasanton
Summerfield Suites, Pleasanton
Shilo Inn, Pomona
Country Inn, Port Hueneme
Holiday Inn, Rancho Bernardo
Economy Inn, Rancho Cordova
Hallmark Suites Hotel, Rancho Cordova
Marriott Courtyard, Rancho Cordova
Quality Suites, Rancho Cordova
Marriott’s Rancho Las Palmas,
Rancho Mirage
Grand Manor Inn, Redding
Microtel Inn & Suites, Redding
Motel Orleans East, Redding
Motel 6, Redding
Park Terrace, Redding
Red Lion Inn, Redding
Shasta Inn, Redding
Good Nite Inn, Redlands
Sheraton Redondo Beach, Redondo Beach
Hotel Sofitel at Redwood Shores, Redwood City
Carriage Inn, Ridgecrest
Good Nite Inn, Rohnert Park
Ramada Limited Hotel, Rohnert Park
Red Lion Hotel, Rohnert Park
Mission Inn, Riverside
Allstar Inn, Sacramento (4)
Arco Arena, Sacramento
Proposed Candlewood Hotel, Sacramento
Clarion Hotel, Sacramento
Proposed Convention Hotel, Sacramento
Proposed Docks Hotel, Sacramento
Dodge City Motel, Sacramento
Hilton Hotel, Sacramento
Hilton Inn, Sacramento
Holiday Inn, Sacramento
Hyatt Regency at Capitol Park, Sacramento
Marriott Courtyard, Sacramento
Motel Orleans, Sacramento
Peregrine Real Estate Trust, Sacramento
Radisson Hotel, Sacramento
Red Lion Hotel–Sacramento, Sacramento
Red Lion–Sacramento Inn, Sacramento
Residence Inn South Natomas, Sacramento
Riverboat Delta King, Sacramento
Sacramento Hilton, Sacramento
Sacramento Inn, Sacramento
Sierra Inn, Sacramento
Sterling Hotel, Sacramento
Travelers Inn, Sacramento
Proposed Vizcaya Catering Hall, Sacramento
Woodlake Inn, Sacramento
Proposed 60-Unit Hotel, Sacramento
Marriott Courtyard, San Bruno
Best Western Hanalei, San Diego
Best Western Seven Seas Lodge, San Diego
Carmel Highland Doubletree, San Diego
Clarion Bay View, San Diego
Comfort Inn Old Town, San Diego
Proposed Coutryard, San Diego
Doubletree Hotel at Horton Plaza, San Diego
Embassy Suites–La Jolla, San Diego
Executive Lodge, San Diego
Hanalei Hotel, San Diego
Proposed Hilton Garden Inn, San Diego
Holiday Inn, San Diego
Holiday Inn Express Sea World, San Diego
Hotel Del Coronado
Howard Johnson, San Diego
Hyatt Islandia, San Diego
Hyatt Regency, San Diego
Intercontinental Hotel, San Diego
Kings Inn, San Diego
La Jolla Village Inn, San Diego
Marriott Hotel and Marina, San Diego
Marriott Mission Valley, San Diego

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Marriott Suites, San Diego
Mission Valley Inn, San Diego
Mission Valley Hilton, San Diego
Radisson Hotel, San Diego
Ramada Limited Suites, San Diego
Red Lion Hotel, San Diego
Residence Inn, San Diego
Summer House Inn, San Diego
Sheraton Harbor Island East, San Diego
Sheraton Grand, San Diego
Super 8 Motel-Point Loma, San Diego
Symphony Towers, San Diego
Town and Country Hotel, San Diego
U.S. Grant Hotel, San Diego
Wyndham Emerald Hotel, San Diego
ANA Hotel, San Francisco
Bellevue Hotel, San Francisco
Campton Place, San Francisco
Cartwright Hotel, San Francisco
Chancellor Hotel, San Francisco
The Clift Hotel, San Francisco
Comfort Inn by the Bay, San Francisco
Donatello Hotel, San Francisco
Embarcadero Inn, San Francisco
Fairmont Hotel, San Francisco
Four Seasons Clift, San Francisco
Grand Hyatt, San Francisco
Griffon Hotel, San Francisco
Harbor Court Hotel, San Francisco
Proposed Hilton Garden Inn, San Francisco
Hilton Hotel SFO, San Francisco
Holiday Inn-Civic Center, San Francisco
Holiday Inn-Fisherman’s Wharf, San Francisco
Holiday Inn-Golden Gateway, San Francisco
Holiday Inn-SFO, San Francisco
Holiday Lodge, San Francisco
Hotel Diva, San Francisco
Hotel Griffon & Roti Restaurant, San Francisco
Hotel Nikko, San Francisco
Hotel Rex, San Francisco
Hotel Triton, San Francisco
Hotel Union Square, San Francisco
Howard Johnson’s Pickwick Hotel, San Francisco
Hyatt at Fisherman’s Wharf, San Francisco
Hyatt Regency Embarcadero, San Francisco
Proposed Inn at Fisherman’s Wharf, San Francisco
Inn at the Opera, San Francisco
Juliana Hotel, San Francisco
King George Hotel, San Francisco
Lambourne Hotel, San Francisco
Le Meridien Hotel, San Francisco
The Majestic, San Francisco
Mark Twain Hotel, San Francisco
Marriott Fisherman’s Wharf, San Francisco
Orchard Hotel, San Francisco
Parc Fifty-Five, San Francisco
Park Hyatt, San Francisco
Portman Hotel, San Francisco
Prescott Hotel, San Francisco
Presidio Travelodge, San Francisco
Queen Anne Hotel, San Francisco
Ramada Fisherman’s Wharf, San Francisco
Ramada Hotel, San Francisco
Ramada Plaza Hotel, San Francisco
Regis Hotel, San Francisco
Ritz Carlton-Proposed, San Francisco
San Francisco Airport Hilton, San Francisco
San Francisco Hilton, San Francisco
San Francisco Hotel, San Francisco
San Francisco Marriott, San Francisco
Savoy Hotel, San Francisco
Sheraton Fisherman’s Wharf, San Francisco
Sir Francis Drake Hotel, San Francisco
Stanford Court, San Francisco
Super 8 Motel at Fisherman’s Wharf
Proposed Inn at 2961 Pacific Avenue, San Francisco
Tuscan Inn, San Francisco
Westin St. Francis Hotel, San Francisco
Marriott Courtyard, San Francisco Airport
Fairmont Hotel, San Jose
Holiday Inn, San Jose
Hyatt San Jose, San Jose
Hyatt St. Claire, San Jose
Ramada Renaissance Hotel, San Jose
Red Lion-San Jose, San Jose
Proposed Sierra Suites, San Jose
Islander Lodge Motel, San Leandro
Apple Farm Inn, San Luis Obispo
Embassy Suites Hotel, San Luis Obispo
Pacific Suites Hotel, San Luis Obispo
Twin Oaks Golf Course, San Marcos
Benjamin Franklin Hotel, San Mateo
Dunfey Hotel, San Mateo
Holiday Inn, San Mateo
Holiday Inn Express, San Mateo
Hilton Hotel, San Pedro
Embassy Suites, San Rafael
Marriott Hotel, San Ramon
California Palms, Santa Ana
Compri Hotel, Santa Ana
Embassy Suites, Santa Ana
Executive Inn, Santa Ana
Executive Lodge, Santa Ana
Orange County Ramada Hotel, Santa Ana
Quality Suites, Santa Ana
El Encanto Hotel, Santa Barbara
Fess Parker’s Red Lion Resort, Santa Barbara
Fess Park er’s DoubleTree Resort, Santa Barbara
Santa Barbara Inn, Santa Barbara
San Ysidro Ranch, Santa Barbara
Budget Inn, Santa Clara
Embassy Suites, Santa Clara
Howard Johnson’s Hotel, Santa Clara
Marriott Hotel, Santa Clara
Quality Suites, Santa Clara
Hilton Garden Inn, Santa Clarita
Hilton Town Center, Santa Clarita
Inn at Pasatiempo, Santa Cruz
Dream Inn, Santa Cruz
Motel 6, Santa Maria
Santa Maria Airport Hilton, Santa Maria
Proposed Hotel, San Mateo
Casa Del Mar, Santa Monica
Holiday Inn, Santa Monica
Holiday Inn at the Pier, Santa Monica
Loews Santa Monica Beach Hotel, Santa Monica
Ocean Avenue Hotel, Santa Monica
Proposed EconoLodge, Santa Monica
Park Hyatt Hotel, Santa Monica
Santa Monica Beach Hotel, Santa Monica
Holiday Inn, Santa Nella
Flamingo Hotel, Santa Rosa
Fountain Grove Inn, Santa Rosa
Holiday Inn, Santa Rosa
Days Inn Seaside, Seaside
Embassy Suites, Seaside
Seaside 8, Seaside
Radisson Valley Center Hotel, Sherman Oaks
Ramada Inn, Solana Beach
Danish Country Inn, Solvang
Red Lion Inn, Sonoma
Sonoma Valley Inn, Sonoma
Hardage Suites Hotel Site, Sorrento Mesa
Proposed Woodfin Suites, Sorrento Mesa

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Timberwolf Lodge, South Lake Tahoe
Crown Sterling Suites, South San Francisco
Grosvenor Hotel, South San Francisco
Holiday Inn, South San Francisco
La Quinta Inn, South San Francisco
Proposed 390-room hotel, South San Francisco
Ramada Inn, South San Francisco
Harvest Inn, St. Helena
Meadowood Resort, St. Helena
Motel Orleans, Stockton
Sheraton Hotel-Proposed, Stockton
Stockton Hilton, Stockton
Holiday Inn, Sunnyvale
Neighborhood Suites Hotel, Sunnyvale
The Proposed Grand Hotel, Sunnyvale
Residence Inn Silicon Valley II, Sunnyvale
Sunnyvale Hilton, Sunnyvale
Super 8, Sunnyvale
Good Nite Inn, Sylmar
Embassy Suites-Temecula, Temecula
Temecula Creek Inn & Golf, Temecula
Temecula Inn, Temecula
Hilton Hotel, Torrance
Holiday Inn - Torrance, Torrance
MCA Hotel-Proposed, Universal City
Hilton Garden Inn, Valencia
Holiday Inn, Van Nuys
Hotel Van Nuys, Van Nuys
Habortown Marina Resort, Ventura
Ocean Resorts/Harbortown Hotel, Ventura
Sheraton Hotel, Ventura
Holiday Inn, Walnut Creek
Marriott Hotel, Walnut Creek
Parkside Hotel, Walnut Creek
Proposed Royce Hotel, Walnut Creek
Walnut Creek Marriott, Walnut Creek
Proposed Westin ClubSport, Walnut Creek
Le Bel Age, West Hollywood
Le Dufy, West Hollywood
Le Mondrian, West Hollywood
Le Montrose, West Hollywood
Ramada Hotel, West Hollywood
Microtel Inn & Suites, Willows
Whittier Hilton, Whittier
Woodland Hotel & Conference Center-Proposed, Woodland
Warner Center Marriott, Woodland Hills
Skylonda Retreat, Woodside
Marriott Tenaya Lodge-Proposed, Yosemite
Motel Orleans, Yuba City

COLORADO

Hotel Jerome, Aspen
Hampton Inn, Aurora
Holiday Inn Southeast, Aurora
Downtown Boulder Hotel, Boulder
Hilton Harvest House, Boulder
Holiday Inn, Boulder
Proposed casino hotel, Central City
Best Western Le Baron Hotel, Colorado Springs
Proposed Double Eagle Casino Hotel, Colorado Springs
Embassy Suites, Colorado Springs
Hilton, Colorado Springs
Proposed Double Eagle Casino Hotel, Cripple Creek
Le Baron Hotel, Denver
Brown Palace, Denver
Days Inn-Arapahoe, Denver
Days Inn-Colfax, Denver
Embassy Suites, Denver
Radisson, Denver
Denver Hilton, Englewood
Proposed Summerfield Suites, Greenwood Village
Proposed Hampton Inn, Lakewood
Silvertree Hotel, Snowmass
Wildwood Lodge, Snowmass
Westin Hotel, Vail

CONNECTICUT

Holiday Inn, Darien
Proposed Days Inn, Enfield
Hartford Hilton, Hartford
Motel 6, Hartford
Executive Hotel, Stamford
Harley Hotel, Stamford
Holiday Inn-Crowne Plaza, Stamford
Fairfield Inn, Windsor Locks

DISTRICT OF COLUMBIA

ANA Hotel, Washington
Fairmont Hotel, Washington
Harambee House, Washington
Hyatt Regency, Washington
Ritz-Carlton, Washington
River Inn, Washington
St. James, Washington
Sheraton Washington Hotel, Washington

FLORIDA

Holiday Inn, Altamonte Springs
Embassy Suites, Boca Raton
Petite Suites, Boca Raton
Holiday Inn, Clearwater
Holiday Inn Gulfview, Clearwater
Holiday Inn Surfside, Clearwater Beach
Doubletree Oceanfront, Ft. Lauderdale
Galleria Doubletree Guest Suites, Ft. Lauderdale
Holiday Inn-Airport, Ft. Lauderdale
Holiday Inn-Beach, Ft. Lauderdale
Holiday Inn-North, Ft. Lauderdale
Fairfield Inn, Gainesville
Holiday Inn-Madeira, Madeira Beach
Fairfield Inn, Miami
Holiday Inn-Calder, Miami
Fairfield Inn International, Miami
Fairfield Inn South, Miami
Holiday Inn-International Drive, Orlando
Holiday Inn-Lee Road, Orlando
Peabody Hotel, Orlando
Sheraton Jetport Inn, Orlando
Sheraton Lakeside, Orlando
Holiday Inn, Palm Beach Gardens
Plantation Sheraton Suites, Plantation
Holiday Inn-Lido Beach, Sarasota
Holiday Inn-Airport, Tampa
Ramada Inn, Tampa

GEORGIA

Fairfield Inn Northlake, Atlanta
Proposed Hyatt-Airport, Atlanta
Motel 6, Atlanta
Neighborhood Inn, Atlanta
Stouffer’s Hotel-Proposed, Atlanta
Westin Peachtree Plaza, Atlanta
Fairfield Inn, College Park
Holiday Inn-Crowne Plaza, College Park
Fairfield Inn-Gwinnett, Duluth
Howard Johnson’s Forsyth
Fairfield Inn, Marrietta
Fairfield Inn, Morrow

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Fairfield Inn, Norcross
Motel 6, Norcross
Fairfield Inn, Savannah

HAWAII

Ritz-Carlton Mauna Lani
Royal Sea Cliff Resort, Hawaii
Gateway Hotel, Honolulu
Miramar Hotel, Honolulu
Outrigger East Hotel, Honolulu
Outrigger Waikiki Hotel, Honolulu
Outrigger West Hotel, Honolulu
Sand Villa Hotel, Honolulu
Coco Palms Resort, Kauai
Westin Kauai at Kauai Lagoons Resort, Kauai
Grand Wailea Resort, Maui
Kea Lani Resort, Maui
Maui Lu Resort, Maui
Royal Hawaiian Hotel, Oahu

IDAHO

Motel 6, Coeur d’Alene
Cotton Tree Inn, Pocatello

ILLINOIS

Indian Lakes Resort, Bloomingdale
Jumer’s Chateau, Bloomington
Super 8 Motel, Bloomington
Super 8 Motel, Champagne
Fairmont Hotel, Chicago
Mayfair Regent, Chicago
Proposed Radisson Hotel, Chicago
Westin Hotel, Chicago
Super 8 Motel, Crystal Lake
Super 8 Motel, Decatur
Proposed Hotel, Des Plaines
Radisson Suites, Downers Grove
Hampton Inn, Elk Grove
Holiday Inn, Elmhurst
Orrington Hotel, Evanston
Drury Inn, Fairview Heights
Jumer’s Continental Inn, Galesburg
Fairfield Inn, Hinsdale
Proposed Westin Hotel & ClubSport, Hoffman Estates
Nordic Hills Resort, Itasca
Holiday Inn, Joliet
Fairfield Inn, Lansing
Fairfield Inn, Normal
Fairfield Inn, Peoria
Jumer’s Castle, Peoria
Super 8 Motel, Peru
Fairfield Inn, Rockford
Proposed Woodfin Suites, Schaumberg
DoubleTree Hotel – North Shore, Skokie
Jumer’s Castle, Urbana
Super 8 Motel, Waukegan

INDIANA

Super 8 Motel, Columbus
Fairfield Inn, Fort Wayne
Sheraton Hotel, Gary
Caesars Riverboat Casino Complex-Proposed, Harrison County
Fairfield Inn, Indianapolis
Four Points Sheraton, Indianapolis
Motel 6, Indianapolis
Westin Hotel, Indianapolis
Wyndham Garden Hotel, Indianapolis
Hilton Inn, Jeffersonville
Brown County Inn, Nashville

IOWA

Jumers Castle Lodge, Bettendorf
Holiday Inn, Cedar Falls
Collins Plaza, Cedar Rapids
Fairfield Inn, Cedar Rapids
Fairfield Inn, Clive

KANSAS

Proposed Emerald City Resort, Kansas City
Fairfield Inn, Merriam
Fairfield Inn, Overland Park
Canterbury Inn/Knights Inn, Wichita

KENTUCKY

Holiday Inn-Central, Louisville
Holiday Inn-Northeast, Louisville
Ramada Inn East, Louisville

LOUISIANA

Howard Johnson’s, Alexandria
Embassy Suites, Baton Rouge
Hilton Hotel, Baton Rouge
Horseshoe Casino, Bossier City
Sheraton At New Orleans Airport, Kenner
Fairmont Hotel, New Orleans
Harrah’s Jazz Casino, New Orleans
Hyatt Regency, New Orleans
The Iberville Hotel, New Orleans
Lakeside DoubleTree, New Orleans
The Maison Dupuy, New Orleans
Ramada Inn St. Charles, New Orleans

MAINE

Inn by the Sea, Cape Elizabeth

MARYLAND

Holiday Inn, Aberdeen
Marriott Waterfront Hotel, Annapolis
Maryland Inn, Annapolis
Residence Inn, Bethesda
Best Western Motor Lodge, Chicopee
Abbey, College Park
Holiday Inn, Laurel
Days Inn, Rockville
DoubleTree Hotel, Rockville
Holiday Inn Crowne Plaza, Rockville
Ramada Inn, Rockville

MASSACHUSETTS

Marriott Copley Place, Boston
Meridien Hotel, Boston
Federal House Inn, South Lee
Holiday Inn, Springfield
Sheraton, Sturbridge
Proposed Sierra Suites Hotel, Waltham
Proposed Summerfield Suites Hotel, Waltham
Proposed Sierra Suites Hotel, Woburn

MICHIGAN

Fairfield Inn, Auburn Hills
Super 8 Motel, Battle Creek
Howard Johnson’s, Belleville
Fairfield Inn, Canton
Holiday Inn, Detroit

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Golden Harp-Proposed, Detroit
Radisson Hotel, Farmington Hills
Fairfield Inn, Kalamazoo
Super 8 Motel, Kalamazoo
Embassy Suites-Proposed, Livonia
Embassy Suites, Livonia
Fairfield Inn, Madison Heights
Super 8 Motel, Mount Pleasant
Super 8 Motel, Muskegon
Inn at the Bridge, Port Huron
Fairfield Inn, Romulus
Super 8 Motel, Saginaw
Proposed Woodfin Suites, Southfield
Comfort Suites, Sterling Heights
Holiday Inn, Troy
Fairfield Inn, Warren
Holiday Inn, Warren
Motel 6, Warren
Super 8 Motel, Wyoming

MINNESOTA

Holiday Inn, Duluth
Motel 6, Minneapolis
Proposed Motel, Montevideo
Motel 6, Rochester
Radisson Plaza Hotel, Rochester

MISSISSIPPI

Treasure Bay Hotel & Casino, Biloxi
Motel 6, Hattiesburg
Howard Johnson’s, Jackson
Quality Inn, Oxford
Horseshoe Casino Center, Robinsonville
Sam’s Town Hotel & Gambling Hall Robinsonville

MISSOURI

Fairfield Inn, Hazelwood
Holiday Inn, Kansas City
Sam’s Town Hotel & Gambling Hall, Kansas City
Holiday Inn, Springfield
Clarion Hotel, St. Louis
Executive Inn, St. Louis
Holiday Inn Sports Complex, St. Louis
Sheraton Airport, St. Louis
Proposed Hotel, Unity Village

MONTANA

Holiday Inn, Bozeman
Holiday Inn, Missoula
Red Lion Hotel, Missoula

NEBRASKA

Marriott Hotel, Omaha
Red Lion Inn, Omaha

NEVADA

Ormsby House Hotel and Casino, Carson City
Eldorado Casino, Henderson
Joker’s Wild Casino, Henderson
Airport Inn, Las Vegas
Aladdin Hotel & Casino, Las Vegas
Alexis Park Hotel, Las Vegas
California Hotel & Casino, Las Vegas
Fremont Hotel & Casino, Las Vegas
Proposed Hilton Garden Inn, Las Vegas
Proposed Homewood Suites, Las Vegas
Hotel & Casino El Rancho, Las Vegas
Howard Johnson Hotel & Casino, Las Vegas
Jockey Club, Las Vegas
Paradise Resort Hotel, Las Vegas
Residence Inn, Las Vegas
Sam’s Town Hotel & Gambling Hall, Las Vegas
Stardust Resort and Casino, Las Vegas
Sunrise Hotel & Casino, Las Vegas

NEW JERSEY

Deauville Hotel, Atlantic City
Harrah’s Marina Hotel Casino, Atlantic City
Sands Hotel & Casino, Atlantic City
Tropicana Hotel & Casino, Atlantic City
Cherry Hill Inn, Cherry Hill
Proposed Ramada Inn, Elizabeth
Proposed Ramada Inn, Franklin Township
Proposed Summerfield Suites Morristown, Hanover
Proposed Summerfield Suites Parsippany, Hanover
Holiday Inn, Jamesburg
Headquarters Plaza, Morristown
Howard Johnson’s Mount Holly
Mt. Laurel Hilton, Mt. Laurel
Holiday Inn, Newark
Howard Johnson’s, Saddle Brook
DoubleTree Hotel, Somerset
Marriott Hotel, Somerset
Motel, Wrightstown
Five Churches Chicken Restaurants, Various Locations

NEW MEXICO

Doubletree Hotel, Albuquerque
Hampton Inn, Albuquerque
Ramada Hotel Classic, Albuquerque
Las Cruces Hilton, Las Cruces
Homewood Suites, Santa Fe
Inn at Loretto, Santa Fe
Sheraton de Santa Fe, Santa Fe
Rancho Ramada Inn de Taos, Taos

NEW YORK

Hilton Hotel, Albany
Buffalo Hotel, Buffalo
Proposed Airport Hotel, Buffalo
Nevele Hotel, Ellenville
Howard Johnson’s, Elmsford
Ramada Inn, Hauppauge
Hilton Hotel, Lake Placid
Proposed Hotel, New Rochelle
Ramada Plaza, New Rochelle
Sheraton Inn, New Rochelle
Barbizon Plaza Hotel, New York
Berkshire Place, New York
Century Paramount Hotel, New York
Executive Hotel, New York
Halloran House, New York
Hampton House, New York
Holland Hotel, New York
Howard Hotel, New York
Mayfair Regent, New York
Nova-Park Gotham, New York
Parker Meridien Hotel, New York
Proposed Soho Hotel, New York
Tudor Hotel, New York
York Club, New York
Sheraton Inn, Ossining
Proposed Hotel, Saratoga
Howard Johnson’s, Smithtown
Hampton Inn, Syracuse
Sheraton Nassau Hotel, Uniondale
Turning Stone Casino, Verona

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Roger Smith Hotel, White Plains
Fairfield Inn, Williamsville

NORTH CAROLINA

Fairfield Inn, Charlotte
Fairfield Inn, Durham
Motel 6, Durham
Fairfield Inn, Fayetteville
Embassy Suites, Greensboro
Fairfield Inn, Greensboro
Hilton Inn, Greensboro
Fairfield Inn, Raleigh
Hilton Inn, Raleigh
Motel 6, Rocky Mount
Cleghorn Plantation, Rutherfordton
Fairfield Inn, Wilmington
Hilton Inn, Winston-Salem

OHIO

Holiday Inn Cascade, Akron
Embassy Suites, Blue Ash
Fairfield Inn, Brook Park
Proposed Embassy Suites, Cincinnati
Howard Johnson’s, Cincinnati
Marriott Inn, Cincinnati
Radisson Inn, Cincinnati
Vernon Manor, Cincinnati
Holiday Inn Lakeside, Cleveland
Sheraton Hopkins, Cleveland
Fairfield Inn, Columbus
Holiday Inn, Columbus
Holiday Inn - Airport, Columbus
Woodfin Hotel, Columbus
Daytonian Hilton, Dayton
Fairfield Inn, Dayton
Motel 6, Dayton
Proposed Woodfin Suites, Dublin
Fairfield Inn, Holland
Holiday Inn, Toledo
Fairfield Inn, Willoughby

OKLAHOMA

Fountainhead Resort, Mclntosh County
Arrowhead Resort, Pittsburgh County

OREGON

Red Lion Inn, Astoria
Inn at Face Rock, Bandon
Shilo Inn, Beaverton
Proposed Hotel, Bend
Red Lion Inn - North, Bend
Red Lion Inn - Coos Bay, Coos Bay
Proposed Hilton Garden Inn, Corvallis
Econolodge, Eugene
Execulodge, Eugene
Red Lion Inn, Eugene
Big Creek Resort, Florence
Salishan Lodge, Gleneden Beach
Shilo Inn, Grants Pass
Candlewood Hotel, Hillsboro
Proposed Courtyard Hotel, Hillsboro
Proposed Residence Inn, Hillsboro
Red Lion Inn, Medford
Residence Inn, Lake Oswego
Red Lion Hotel, Pendleton
Avalon Hotel, Portland
Columbia River Red Lion, Portland
Embassy Suites, Portland
Holiday Inn, Portland
Proposed Sheraton Suites, Portland
Red Lion Hotel-Portland Downtown, Portland
Red Lion Inn-Lloyd Center, Portland
Residence Inn-Lloyd Center, Portland
Sunriver Resort, Portland
Vintage Plaza Hotel, Portland
Wells Building, Portland
West Coast Benson Hotel, Portland
Proposed Westin Hotel, Portland
Capitol Inn, Salem
Execulodge, Salem
Red Lion Inn, Seaside
Red Lion Inn, Springfield
Skamanla Lodge, Stevenson
Sunriver Resort, Sunriver
Embassy Suites, Tigard
Red Lion Inn, Tigard

PENNSYLVANIA

Embassy Suites - Pittsburgh, Coraopolis
Days Inn, Danville
Fairfield Inn, Harrisburg
Rittenhouse Towers, Philadelphia
Fairfield Inn, Pittsburgh
Motel 6, Pittsburgh
Hilton At Lackawanna Station, Scranton
DoubleTree Guest Suites, Plymouth Meeting

SOUTH CAROLINA

Holiday Inn, Charleston
Holiday Inn - Airport, Charleston
Holiday Inn, Charleston-Riverview
Travelodge, Charleston
Embassy Suites, Columbia
Motel 6, Columbia
Fairfield Inn, Greenville
Ramada Inn, Greenville
Fairfield Inn, Florence
Fairfield Inn, Hilton Head
Hilton Head Inn, Hilton Head
Holiday Inn Express, Hilton Head
Hyatt Regency, Hilton Head
Save Inn, Lake Hartwell

SOUTH DAKOTA

Proposed Four Points Hotel, Sioux Falls

TENNESSEE

Motel 6, Chattanooga
Holiday Inn, Jackson
Fairfield Inn, Johnson City
Holiday Inn, Memphis
Howard Johnson - Airport, Memphis
Motel 6, Memphis
Days Inn, Nashville
Hampton Inn, Nashville

TEXAS

Courtyard by Marriott, Addison
Proposed Marriott Courtyard, Addison
Proposed Summerfield Suites Hotel, Addison
Days Inn, Amarillo
Motel 6, Amarillo
Super 8 Motel, Amarillo
Holiday Inn, Austin
Holiday Inn - Airport, Austin
Sheraton Hotel, Austin
Proposed Woodfin Suites, Austin
Days Inn, Corpus Christi
Doubletree Inn, Dallas
Fairmont Hotel, Dallas

HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI

Hyatt Regency, Dallas
Marriott Park Central, Dallas
Marriott Quorum, Dallas
Melrose Hotel, Dallas
Motel 6, Dallas
Park Plaza, Dallas
Ramada Inn Convention Center, Dallas
Summit Hotel, Dallas
Howard Johnson’s, East Dallas
Allstar Inn, El Paso
Embassy Suites, El Paso
Travelers Inn, El Paso
Proposed Westin Hotel, Frisco
Metro Center Hotel, Fort Worth
Embassy Suites, Houston
Holiday Inn-Hobby, Houston
Houston House, Houston
Houstonian Hotel, Houston
Motel 6, Houston
Stouffer Renaissance, Houston
Proposed Hampton Inn, Irving
Holiday Inn, Lubbock
Townplace Suites, Plano
Crockett Hotel, San Antonio
Fairmont Hotel, San Antonio

UTAH

Utah Trails Resort, Kanab
Seven Peaks Resort Hotel, Provo
Cavanaugh’s Olympus Hotel, Salt Lake City
Red Lion Hotel, Salt Lake City

VIRGINIA

Howard Johnson’s, Alexandria
Hyatt Arlington, Arlington
Holiday Inn Crowne Plaza, Crystal City
Motel 6, Fredericksburg
Fairfield Inn, Hampton
Omni International Hotel, Norfolk
Embassy Suites, Richmond
Holiday Inn West End, Richmond

WASHINGTON

Best Western Bellevue Inn, Bellevue
DoubleTree Bellevue Center, Bellevue
Embassy Suites, Bellevue
Hampton Inn, Bellevue
Red Lion Inn Bellevue Center, Bellevue
Semi-ah-moo Resort, Blaine
Motel 6, Issaquah
Red Lion Inn, Kelso
Embassy Suites, Lynwood
Red Lion Inn, Pasco
Residence Inn, Redmond
Red Lion Inn, Richland
Best Western Tower Inn, Richland
Hampton Inn, Sea-Tac
Holiday Inn Sea-Tac, Sea-Tac
Red Lion Hotel, Sea-Tac
Alexis Hotel, Seattle
Doubletree Inn, Seattle
Hampton Inn, Seattle
Holiday Inn Crowne Plaza, Seattle
Madison Hotel, Seattle
Red Lion Hotel, Seattle
Proposed Seattle Hotel, Seattle
West Coast Paramount, Seattle
West Coast Sea-Tac Hotel, Seattle
West Coast Vance Hotel, Seattle
The Bay Silverdale Hotel, Silverdale
Red Lion Inn, Spokane
Red Lion Inn, Spokane Valley
Park Shore Inn, Tacoma
Red Lion Inn, Tacoma
Sheraton Hotel, Tacoma
Doubletree Suites, Tukwila
Hampton Inn, Tukwila
Red Lion Inn at the Quay, Vancouver
Red Lion Inn, Wenatchee
Red Lion Inn, Yakima

WEST VIRGINIA

Holiday Inn Charleston House, Charleston
Holiday Inn, Huntington
Howard Johnson’s, Wheeling

WISCONSIN

Fairfield Inn, Brookfield
Milwaukee Marriott Hotel, Brookfield
Wyndham Garden Hotel, Brookfield
Super 8 Motel, Jamesville
Super 8 Motel, Kenosha
Fairfield Inn, Madison
Holiday Inn-Airport, Milwaukee
Holiday Inn-West, Milwaukee

WYOMING

Days Inn, Casper
Flying L Skytel, Cody

CANADA

EconoLodge, Hull, Quebec
Sutton Place Hotel & Apartments, Toronto

FRANCE

Marriott Champs Elysee, Paris

GUAM

Royal Palm Resort, Tumon
Proposed Hotel, Tamuning

MEXICO

Omni Hotel, Ixtapa
La Jolla de Mismaloya, Puerto Vallarta

PUERTO RICO

Carib Inn, San Juan

EX-99.(D)(1) 13 p68165t3exv99wxdyx1y.txt EX-(D)(1) Exhibit (d)(1) ======================================================= AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF WESTIN HOTELS LIMITED PARTNERSHIP ======================================================= TABLE OF CONTENTS

PAGE 1. DEFINITIONS .......................................................... 2 2. CONTINUATION AND GOVERNANCE OF THE PARTNERSHIP ....................... 7 2.01 Continuation and Governance .................................... 7 2.02 Name ........................................................... 7 2.03 Principal Place of Business .................................... 7 2.04 Name, Place of Residence, and Capital Contribution ............. 7 2.05 Term ........................................................... 8 2.06 Registered Office and Agent for Service ........................ 8 3. BUSINESS OF THE PARTNERSHIP .......................................... 8 3.01 Purpose of the Partnership ..................................... 8 3.02 Authority of the Partnership ................................... 8 4. PARTNERS AND CAPITAL CONTRIBUTIONS ................................... 8 4.01 Contributions by General Partner ............................... 8 4.02 Contributions of Limited Partners .............................. 9 4.03 Return of Capital Only From Partnership Assets ................. 9 4.04 Priority and Return of Capital ................................. 9 4.05 Withdrawal of Capital Contributions ............................ 9 4.06 Advances by General Partner .................................... 9 5. CAPITAL ACCOUNTS ..................................................... 10 5.01 Establishment of Capital Accounts .............................. 10 5.02 Determination of Capital Accounts .............................. 10 6. CAPITAL CONTRIBUTIONS TO THE HOTEL PARTNERSHIPS; REIMBURSEMENT OF EXPENSES .......................................................... 10 6.01 Capital Contributions to the Hotel Partnerships ................ 10 6.02 Reimbursement of Expenses ...................................... 10 7. ALLOCATIONS AND DISTRIBUTIONS ........................................ 12 7.01 Allocation of Taxable Income and Taxable Loss .................. 12 7.02 Distribution of Net Cash Flow .................................. 14 7.03 Allocation of Gain or Loss Resulting From Sale of Property ..... 15 7.04 Distribution of Proceeds from Interim Capital Transactions ..... 17 7.05 Distribution of Proceeds from a Final Capital Transaction ...... 18 7.06 Deficit Capital Accounts at Liquidation ........................ 19

(1) 8. MANAGEMENT AND OPERATION OF BUSINESS.................................19 8.01 General Authority of the General Partner.......................19 8.02 Specific Duties and Authority of the General Partner............19 8.03 Limitations on Authority of the General Partner.................23 8.04 Independent Activities..........................................24 8.05 General Partner or Affiliates Dealing With the Partnership......24 8.06 Potential Liability of the General Partner......................25 8.07 Indemnification of General Partner and its Affiliates...........25 8.08 Right of Notice and Opportunity to Purchase.....................26 8.09 Power of Attorney...............................................28 9. STATUS OF LIMITED PARTNERS...........................................29 9.01 Limited Liability...............................................29 9.02 Rights of Limited Partners......................................29 9.03 Restrictions on Powers..........................................30 9.04 Relationship with the General Partner...........................30 9.05 Effect of Bankruptcy, Death or Incompetency of Limited Partner..............................................30 10. CHANGES IN GENERAL PARTNER AND TRANSFERS OF ITS INTERESTS............31 10.01 Sale or Transfer of the General Partner's Interest.............31 10.02 Expulsion of the General Partner...............................31 10.03 Withdrawal of General Partner..................................32 10.04 Continuing Liability...........................................32 10.05 Admission of Additional General Partner........................32 10.06 Effect of Bankruptcy, Death, Dissolution, Incompetency, Withdrawal or Expulsion of a General Partner...................33 11. TRANSFER OF LIMITED PARTNERS' INTERESTS; ADMISSION OF SUBSTITUTED LIMITED PARTNERS.....................................................33 11.01 Transfer of Interests..........................................33 11.02 Assignment; Substituted Limited Partners.......................35 11.03 Joint Ownership of Interest....................................36 12. BOOKS, RECORDS, ACCOUNTING, TAX ELECTIONS AND BANKING................36 12.01 Books and Records..............................................36 12.02 Custody of Partnership Funds; Bank Accounts....................37 12.03 Accountants....................................................37 12.04 Reports to Partners............................................37 12.05 Fiscal Year....................................................38 12.06 Tax Elections..................................................38 13. SALE, DISSOLUTION AND LIQUIDATION....................................39 13.01 Dissolution of Partnership.....................................39 13.02 Winding Up and Distribution....................................39 (2) 14. AMENDMENTS.............................................................. 40 14.01 General Provisions............................................... 40 14.02 Limitations on Amendments........................................ 41 14.03 Amendments on Admission or Withdrawal of a General Partner....... 41 15 GENERAL PROVISIONS...................................................... 42 15.01 Arbitration...................................................... 42 15.02 Burden and Benefit............................................... 42 15.03 Notification..................................................... 42 15.04 Method of Giving Consent......................................... 43 15.05 Severability of Provisions....................................... 43 15.06 Miscellaneous.................................................... 43 SIGNATURES.............................................................. 43 SCHEDULE A.............................................................. 43 (3) NOTE: FOR CALIFORNIA RESIDENTS, IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES. =========================================================== AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF WESTIN HOTELS LIMITED PARTNERSHIP =========================================================== This Amended and Restated Agreement of Limited Partnership is made and entered into as of December 31, 1986, and shall be effective for the fiscal year ending December 31, 1986, and thereafter, by and among WESTIN REALTY CORP., a Delaware corporation, as the sole General Partner ("General Partner"), and WESTIN REALTY CORP., a Delaware corporation, as the attorney-in-fact for the Limited Partners. WHEREAS: A. A mistake exists in setting forth the percentages of depreciation deductions and/or Accelerated Cost Recovery System (ACRS) deductions allocable to (1) the Partners in the Agreement of Limited Partnership of Westin Hotels Limited Partnership, dated August 13, 1986, as amended ("Partnership Agreement"); (2) the partners in the Agreement of Limited Partnership of The Westin St. Francis Limited Partnership, dated August 13, 1986, as amended; and (3) the partners in the Agreement of Limited Partnership of The Westin Chicago Limited Partnership, dated August 13, 1986, as amended (the Agreements of Limited Partnership for The St. Francis Limited Partnership and The Chicago Limited Partnership collectively are referred to hereinafter as the "Hotel Partnership Agreements"); B. The General Partner desires to amend the Partnership Agreement pursuant to its power of attorney under Section 8.09 hereof in order to correct the mistake and to set forth the entire restated agreement governing the Partnership in a single instrument; 1 C. The Hotel Partnership Agreements also will be corrected so that the amendment to the Partnership Agreement will not have any material effect upon the rights, obligations and duties of the Limited Partners hereunder; NOW, THEREFORE, in consideration of the foregoing and of other good and valuable consideration, the parties agree that the Partnership Agreement is hereby amended to read in its entirety as follows: 1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings set forth below: 1.01 "Act." The Delaware Revised Uniform Limited Partnership Act, as amended to date, or corresponding provisions of subsequent legislation. 1.02 "Adjusted Base Amount." At any specified time, the Base Amount, (a) reduced by all amounts distributed to (i) the General Partners to, but not including, such specified time pursuant to (i) Section 7.04(f) or (ii) Section 7.05(c) in excess of those amounts necessary to provide the General Partner with a cumulative, but not compounded, annual l2% Return on the weighted average balance of its Adjusted Base Amount; or (ii) to the Hotel General Partners to, but not including, such specified time pursuant to the Agreements of Limited Partnership of the Hotel Partnerships, and (b) increased by all amounts contributed to the Partnership by the General Partner pursuant to Section 4.01(a) to, but not including, such specified time. 1.03 "Adjusted Capital Contribution." At any specified time, the Capital Contribution of any Limited Partner, or the Limited Partners, as a class, as the case may be, reduced by all amounts distributed to such Limited Partner, or the Limited Partners, as a class, as the case may be (to, but not including, such specified time) pursuant to: (a) Section 7.04(d); or (b) Section 7.05(c) in excess of those amounts necessary to provide the Limited Partner, or the Limited Partners as a class, with a cumulative, but not compounded, annual 12% Return on the weighted average balance of their Adjusted Capital Contribution. 1.04 "Affiliate." An Affiliate of a specified Person means (a) any Person directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities of the specified Person; (b) any Person 10% or more of whose outstanding voting 2 securities are directly or indirectly owned, controlled or held with power to vote by the specified Person; (c) any Person directly or indirectly controlling, controlled by or under common control with the specified person; (d) any officer, director or partner of the specified Person; and (e) any Person of which the specified Person is an officer, director or partner. 1.05 "Agreement." This Amended and Restated Agreement of Limited Partnership, as such may be amended, modified or supplemented from time to time. 1.06 "Base Amount." $12,400,000. 1.07 "Capital Account." The Capital Account of each Partner maintained and determined pursuant to Article 5. 1.08 "Capital Contributions." For purposes of this Agreement and the Act (a) when used with reference to the Limited Partners as a class, the $135,600,000 agreed value of the assets contributed to the Partnership by Westin Realty Corp., as an original Limited Partner, as set forth in Section 4.02; and (b) when used with reference to the General Partner, the amount of money and the value of any property contributed by the General Partner as set forth in Section 4.01. The Capital Contribution of any particular Limited Partner is such Limited Partner's Proportionate Share of the Capital Contributions of the Limited Partners, as a class. For federal income tax purposes, the Capital Contributions of any Partner or any class of Partners, as the case may be, shall be determined by reference to the fair market value of the contributed property. 1.09 "Certificate." The Certificate of Limited Partnership of the Partnership filed in the office of the Secretary of State of Delaware, pursuant to the provisions of the Act, as amended from time to time. 1.10 "Code." The Internal Revenue Code of 1954, as amended to date, or corresponding provisions of subsequent revenue laws. 1.11 "Consent." The written consent of a Person to do the act or thing for which the consent is solicited, as provided in Section 15.04, or the act of granting such consent, as the context may require. 1.12 "General Partner." Westin Realty Corp., and any other Person who is subsequently admitted to the Partnership as a General Partner in accordance with the terms of this Agreement. 1.13 "Hotel Corporations." St. Francis Hotel Corporation and 909 North Michigan Avenue Corporation, current owners of the Hotel Properties. 1.14 "Hotel Partnerships." The Westin St. Francis Limited Partnership, which will own the Westin St. Francis (San Francisco, California), and The Westin Chicago Limited Partnership, which will own 3 the Westin Hotel (Chicago, Illinois). "Hotel Partnership" refers to any one of the Hotel Partnerships. 1.15 "Hotel Properties." The real and personal (whether tangible or intangible) property including the land to be contributed to the Hotel Partnerships by the Hotel Corporations. "Hotel Property" refers to the real and personal property to be contributed to either of the Hotel Partnerships. 1.16 "Incentive Management Fee." The Incentive Management Fee payable by a Hotel Partnership to Westin Hotel Company under the Management Agreement for the Hotel Property of such Hotel Partnership. 1.17 "Interest." A Partner's interest in the Partnership as determined under the Act and this Agreement; provided, however, until John S. Calvert withdraws, he shall be deemed to hold a 1% interest in the Partnership. 1.18 "Limited Partner." Any Person who is a Limited Partner in the Partnership (whether an original Limited Partner or a Substituted Limited Partner) at the time of reference thereto, in such Person's capacity as a Limited Partner in the Partnership. 1.19 "Majority Vote of the Limited Partners." The Consent of the Limited Partners who collectively hold more than 50% of the Units. 1.20 "Management Agreement." The separate agreement entered into between each Hotel Partnership and Westin Hotel Company, as manager, for the management of a Hotel Property. 1.21 "Maximum Indebtedness." With respect to both Hotel Properties, fifty percent (50%) of the then appraised value of the Hotel Properties or $130,000,000, whichever amount is greater, or with respect to only one Hotel Property, fifty percent (50%) of the then appraised value of the Hotel Property or fifty percent (50%) of the appraised value of the Hotel Property as of January 31, 1986, whichever amount is greater. In all events, the appraised value as referred to herein is the value determined by an independent qualified real estate and hotel appraiser. 1.22 "Minimum Gain." The meaning ascribed to that term in the proposed Treasury Regulations under Section 704(b) of the Code published in the Federal Register on March 9, 1983, as modified by any amended proposed Regulation or final Regulation. 1.23 "Mortgage Loans." The loans in an aggregate amount of $116,150,000 to be made by the Teacher Retirement System of Texas to the Hotel Corporations and secured by the Hotel Properties. 1.24 "Net Cash Flow." With respect to a fiscal period, all cash receipts and funds received by the Partnership (other than (i) Capital Contributions to the Partnership, (ii) the proceeds of any borrowing by the Partnership, including any borrowing on behalf of a Hotel Partnership, (iii) any amounts distributed to the Partnership from a 4 Hotel Partnership from or as a result of any Sale or refinancing of a Hotel Partnership from or as a result of any Sale or refinancing of a Hotel Property, or the liquidation of any Hotel Partnership, (iv) any amounts distributed to the Partnership from a Hotel Partnership for deposit in the Partnership's cash management fund and representing working capital or other reserves of the Hotel Partnership, (v) the proceeds of the Sale or refinancing of the Partnership's limited partnership interest in any Hotel Partnership, or (vi) the proceeds of the liquidation of the Partnership) less the sum of the following to the extent made from such cash receipts or other funds received by the Partnership (other than the aforesaid funds and funds withdrawn from Partnership reserves therefor): (a) all sums paid to lenders including, but not by way of limitation, all principal and interest payments on mortgages and other indebtedness of the Partnership or the Hotel Partnerships including all principal and interest payments on the Mortgage Loans (but not principal or interest payments on any Subordinated Loan); (b) all cash expenditures incurred incident to the normal operation of the Partnership's business, including without limitation those expenses of the General Partner and its Affiliates reimbursed by the Partnership pursuant to the provisions hereof (but not including Incentive Management Fees); (c) all cash contributed or advanced to or on behalf of the Hotel Partnerships, whether for capital improvements to, or renovation of, the Hotel Properties but not including cash contributed to a Hotel Partnership pursuant to Section 6.01; and (d) such reserves as the General Partner in its sole discretion deems to be reasonably required for the proper operation of the Partnership's business; 1.25 "Notification." A writing, containing the information required by this Agreement to be communicated to any Person, sent as provided in Section 15.03. 1.26 "Partners." The General Partner and all Limited Partners, collectively, where no distinction is required by the context in which the term is used. The term "Partner" refers to any of the Partners. 1.27 "Partnership." The limited partnership formed and continued pursuant to the Certificate and governed by this Agreement. 1.28 "Person." Any individual, corporation, partnership, trust or other entity. 1.29 "Proportionate Share." With respect to any Limited Partner's Capital Contribution or aliquot share of Net Cash Flow, Sale or Refinancing Proceeds, Taxable Income or Taxable Loss, as the case may be, the product of the total Capital Contributions of, or the total Net Cash Flow or Sale or Refinancing Proceeds distributable, or Taxable Income or Taxable Loss allocable, to the Limited Partners multiplied by a fraction 5 the numerator of which is the number of Units owned by such Partner and the denominator of which is 135,600. 1.30 "Prospectus." The Prospectus contained in the Registration Statement in effect at the time of reference thereto; except that if the Prospectus filed by the Partnership pursuant to Rule 424(b) or Rule 424(c) under the Securities Act of 1933 differs from the Prospectus contained in the Registration Statement in effect at such time, then the term "Prospectus" refers to the Rule 424(b) or Rule 424(c) Prospectus from and after the time it is mailed to the Securities and Exchange Commission for filing. 1.31 "Registration Statement." The registration statement on file with the Securities and Exchange Commission pursuant to the Securities Act of 1933 for the registration of the Units to be sold by Westin Realty Corp. at the time such registration statement becomes effective; except that if the Partnership files a post-effective amendment to the Registration Statement or a new Registration Statement and the Prospectus included therein may be used by the Partnership pursuant to Rule 429 under the Securities Act of 1933 (or any corresponding provision of succeeding rules or regulations of the Securities and Exchange Commission), then the term "Registration Statement," from and after the declaration of the effectiveness of such post-effective amendment or such new Registration Statement, shall refer to the Registration Statement as amended by such post-effective amendment thereto or the then effective Registration Statement, as the case may be. 1.32 "Return." When used with reference to a stated dollar amount (such as a $95 Return or a $150 Return), the stated dollar amount per Unit, or, after any distribution to the Limited Partners pursuant to Section 7.04(d) or Section 7.05(c), the product of the stated dollar amount multiplied by a fraction the numerator of which is the Adjusted Capital Contributions of the Limited Partners and the denominator of which is the Capital Contributions of the Limited Partners. When used with reference to a stated percentage (such as a 12% Return), the stated percentage of the Adjusted Capital Contribution of a Limited Partner, or of the Adjusted Capital Contributions of the Limited Partners as a class, as the case may be, in the case of the Limited Partners; or the stated percentage of the Adjusted Base Amount, in the case of the General Partner. 1.33 "Sale." The sale, exchange, involuntary conversion, condemnation or other disposition of property by the Partnership or a Hotel Partnership. 1.34 "Sale or Refinancing Proceeds." The net cash proceeds distributed to the Partnership from a Hotel Partnership from or as a result of any Sale or refinancing of the Hotel Property of such Hotel Partnership or the liquidation of any Hotel Partnership, any amount contributed to the Partnership by the General Partner pursuant to Section 4.01(a), or the net cash proceeds to the Partnership from the Sale of the limited partnership interests in a Hotel Partnership or the liquidation of the Partnership, after deducting (i) any expenses incurred in connection therewith, (ii) any amounts applied by the General Partner in 6 its sole discretion towards the payment of any indebtedness of the Partnership or the Hotel Partnerships including payments of principal and interest on the Mortgage Loans (but not including payments of principal and interest on any Subordinated Loans or payment of Incentive Management Fees), (iii) the payment of any other expenses and (iv) the establishment of any reserves deemed reasonably necessary by such General Partner. 1.35 "Subordinated Loan." A loan by the General Partner or any of its Affiliates made pursuant to, and governed by the terms of, Section 8.02(c) to provide funds to the Partnership for contribution by the Partnership to any Hotel Partnership for normal or extraordinary improvements to, or renovation of, or other capital expenditures relating to, the Hotel Property of such Hotel Partnership. 1.36 "Substituted Limited Partner." A transferee of an Interest of a Limited Partner who has been admitted to the Partnership in accordance with the terms of this Agreement. 1.37 "Taxable Income" or "Taxable Loss." The taxable income or taxable loss of the Partnership (including the Partnership's share of any taxable income or loss from the Hotel Partnerships) under the Code, including, without limitation, each item of Partnership income, gain, loss, deduction or credit (including any credit recapture), as determined in accordance with such methods of accounting as are permitted by the Code and selected by the General Partner. 1.38 "Unit." After the withdrawal of John S. Calvert, a Unit will represent one one-hundred thirty-five thousand six hundredth (1/135,600) of the total Interests of the Limited Partners as a class, with each Unit representing a Capital Contribution of $1,000. 2. CONTINUATION AND GOVERNANCE OF THE PARTNERSHIP. 2.01 Continuation and Governance. The parties hereto, having formed the Partnership by filing the Certificate pursuant to the Act, hereby continue the limited partnership so formed and agree that the Partnership shall be governed pursuant to the provisions of the Act, on the terms and conditions set forth herein. 2.02 Name. The name of the Partnership is Westin Hotels Limited Partnership. 2.03 Principal Place of Business. The principal place of business of the Partnership shall be The Westin Building, 2001 Sixth Avenue, Seattle, Washington 98121, or at such other location as may be determined by the General Partner upon written notice to the Limited Partners. In addition, the General Partner has the right to establish and maintain such other offices and places of business of the Partnership either within or without the State of Delaware as it may from time to time determine. 2.04 Name, Place of Residence, and Capital Contribution. The names and addresses of each Limited Partner and General Partner, and the capital contributed by each of the Partners, are set forth on Schedule A which is attached hereto and incorporated herein by reference. 7 2.05 Term. The term of the Partnership commenced on the date the Certificate was first filed in the Office of the Secretary of State of the State of Delaware and shall continue until December 31, 2036, unless sooner terminated in accordance with the provisions of this Agreement or as otherwise provided by law. 2.06 Registered Office and Agent for Service. The registered agent of the Partnership for service of process on the Partnership shall be the Corporation Trust Company, having an office at 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The registered office which the Partnership is required to maintain in the State of Delaware shall be the office of such agent at Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. 3. BUSINESS OF THE PARTNERSHIP. 3.01 Purpose of the Partnership. The purpose and character of the business of the Partnership is to invest in, own, operate, lease, sell and otherwise deal with the Hotel Properties by acquiring, holding, selling, exchanging or otherwise disposing of limited partnership interests in the Hotel Partnerships. The Partnership shall not engage in any other activity. 3.02 Authority of the Partnership. In order to carry out its purpose and not in limitation thereof, the Partnership is empowered and authorized to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of its purpose, and for the protection and benefit of the Partnership, as permitted under the Act. 4. PARTNERS AND CAPITAL CONTRIBUTIONS. 4.01 Contributions by General Partner. Westin Realty Corp. shall serve as the General Partner and shall initially make only a nominal contribution to the capital of the Partnership as General Partner. The General Partner shall have no further obligation to make any Capital Contribution to the Partnership, except that (a) if a distribution is made to the general partner of a Hotel Partnership ("Hotel General Partner") pursuant to the Agreement of Limited Partnership of such Hotel Partnership, prior to such time as the Limited Partners in the Partnership have received distributions in an amount which, together with all prior distributions to the Limited Partners pursuant to Section 7.02 and 7.04, would result in their having received a cumulative, but not compounded, annual 12% Return on the weighted average balance of their Adjusted Capital Contributions and an amount equal to their Adjusted Capital Contributions, the General Partner shall contribute to the Partnership, in cash, an amount equal to the amount so distributed to the Hotel General Partner, and (b) if the General Partner is required to eliminate a deficit balance in its Capital Account, as required by Section 7.06, the General Partner shall contribute to the Partnership, in cash, such amount as may be required by Section 7.06. 8 4.02 Contributions of Limited Partners. John S. Calvert and Westin Realty Corp. shall serve as the original Limited Partners. John S. Calvert shall contribute $20 to the Partnership. Westin Realty Corp. shall contribute to the Partnership 100% of the limited partnership interests it owns or will acquire in the Hotel Partnerships. The value of such contribution as determined by the General Partner is $135,600,000, for which Westin Realty Corp. shall receive 135,600 Units. Upon admission of any Substituted Limited Partner, John S. Calvert shall withdraw from the Partnership as a Limited Partner and his capital contribution shall be refunded to him; provided, however, that he may again become a Limited Partner in accordance with the provisions set forth herein. The Limited Partners, including the original Limited Partners and any and all Substituted Limited Partners, shall have no further obligation to make any Capital Contribution to the Partnership, except as provided in Section 4.05 below. 4.03 Return of Capital Only From Partnership Assets. No Partner shall been titled to the return of any Capital Contribution out of any assets other than the assets of the Partnership and then only strictly in accordance with the provisions of this Agreement. No Partner, including the General Partner or any of its Affiliates, shall have any personal liability for the return or repayment for the Capital Contribution of any other Partner except as and to the extent required by Sections 4.01, 4.02 and 7.06. 4.04 Priority and Return of Capital. Except as expressly provided for by the provisions of this Agreement, no Limited Partner shall have priority over any other Limited Partner, either as to the return of all or a portion of Capital Contributions or as to allocations of Taxable Income or Taxable Loss, or as to distributions of Net Cash Flow or Sale or Refinancing Proceeds. 4.05 Withdrawal of Capital Contributions. Except as provided in Section 4.02, no Partner shall have the right to the withdrawal or reduction of its Capital Contribution. In accordance with the Act, a limited partner of a partnership may, under certain circumstances, be required to return to the partnership, for the benefit of partnership creditors, amounts previously returned or distributed to such partner as a return of capital and distributions wrongfully made to such limited partner. It is the intent of the Partners that no return or distribution to any Limited Partner of Net Cash Flow pursuant to Section 7.02 or of Sale or Refinancing Proceeds pursuant to Section 7.04(d) or Section 7.05(c) shall be deemed a return or withdrawal of capital, even if such return or distribution represents, for federal income tax purposes or otherwise (in whole or in part), a distribution of depreciation or any other non-cash item accounted for as a loss or deduction from or offset to the Partnership's income, and that no Limited Partner shall be obligated to pay any such amount to, or for the account of, the Partnership or any creditor of the Partnership. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Limited Partner is obligated to make any such payment, such obligation shall be the obligation of such Limited Partner and not of the General Partner. 4.06 Advances by General Partner. Although it is not presently contemplated, the General Partner, or any of its Affiliates, subject to the provisions of Section 8.03(b)(iii), may in its discretion advance funds to the Partnership for use in funding Partnership operations if the need therefor should occur. Any such advances shall be for purposes other than those which a 9 Subordinated Loan would be made pursuant to Section 8.02(c) and shall be for a period not to exceed three years which period, however, may be renewed at the end of each term. Notwithstanding the foregoing, as long as capital expenditures for a Hotel Property do not exceed the amount reserved for such expenditures pursuant to the Management Agreement for such Hotel Property advances can be made for any purpose. The aggregate amount of such advances shall become an obligation of the Partnership to the General Partner or Affiliate, and shall be paid with interest; provided that the per annum interest rate does not exceed the prime rate quoted by the Bank of America, N.T. & S.A., from time to time, plus one percentage point, compounded quarterly, or such lower rate as would be charged by an unrelated lending institution on a comparable loan for the same purpose. 5. CAPITAL ACCOUNTS. 5.01 Establishment of Capital Accounts. The Partnership shall establish and maintain a Capital Account for each Partner. 5.02 Determination of Capital Accounts. The "Capital Account" for each Partner for federal income tax purposes shall be determined and maintained in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv) as amended from time to time. 6. CAPITAL CONTRIBUTIONS TO THE HOTEL PARTNERSHIPS; REIMBURSEMENT OF EXPENSE. 6.01 Capital Contributions to the Hotel Partnerships. The Partnership shall contribute to the capital of the Hotel Partnerships (i) cash in the amounts and at the times provided in Sections 7.02, 7.04 and 7.05 and (ii) any cash required to be contributed by the Partnership to any Hotel Partnership to eliminate a deficit balance in the Partnership's capital account under the terms of the Agreement of Limited Partnership of such Hotel Partnership. 6.02 Reimbursement of Expenses. Subject to Section 12.04, the General Partner will be reimbursed by the Partnership for any direct or indirect expenses incurred in performing services for the Partnership or, on behalf of the Partnership, for any Hotel Partnership, including, but not limited to, the expenses set forth below. (a) The Partnership will reimburse the General Partner and its Affiliates for administrative expenses. Administrative expenses shall be the actual cost of goods, materials and administrative services used for or by the partnership whether incurred by the General Partners, Affiliates or nonAffiliates in performing the following general functions: (i) Partnership accounting, which shall include without limitation the following: preparation and documentation of Partnership accounting and audits; preparation and documentation of budgets, economic surveys, projections of Taxable Income or Taxable Loss, cash flow and working capital requirements; preparation of regulatory and tax reports; costs of any accounting, statistical or bookkeeping equipment necessary for the maintenance of the books and records of the Partnership; and costs of preparation and dissemination of informational material and documentation relating 10 to potential Sale or refinancing of Hotel Properties or the Partnership's limited partnership interests in the Hotel Partnerships. (ii) Investor communications, which shall include without limitation the following: initiation, review and approval of Partnership reports and communications to Limited Partners, including those filed with regulatory agencies; expenses in connection with cash distributions made by the Partnership to Limited Partners, and communications, bookkeeping and clerical work necessary in maintaining relations with Limited Partners, including the costs of design, production, printing and mailing reports of the Partnership, conducting elections in any circumstance requiring a vote of the Limited Partners, holding meetings with Limited Partners, and preparing proxy statements and soliciting proxies in connection therewith; and expenses in connection with preparing and mailing reports required to be furnished to Limited Partners for tax reporting or other purposes, including reports required to be filed with the Securities and Exchange Commission and other federal or state regulatory agencies, or expenses associated with furnishing reports to Limited Partners which the General Partner deems to be in the best interests of the Partnership. (iii) Investor documentation, which shall include without limitation the following: printing, engraving and other expenses and taxes or fees in connection with the issuance, distribution, transfer, registration and recordation of documents evidencing ownership of Interests. (iv) Legal services, which shall include without limitation the following: expenses of revising and amending the Partnership Agreement or Certificate or converting, modifying or terminating the Partnership or this Agreement; monitoring litigation, if any; and costs incurred in connection with any litigation in which the Partnership is involved as well as any examination, investigation or other proceeding conducted by any regulatory agency with regard to the Partnership, including legal and accounting fees in connection therewith, subject to the provisions of Section 8.07, and costs of qualifying or licensing the Partnership. (v) Tax Services, which shall include without limitation the following: tax planning for the Partnership; preparation and documentation of Partnership state and federal tax returns; review of tax projections; and communications to Limited Partners and other matters specifically required as a "Tax Matters Partner" under the Code. (vi) Computer services, which shall include without limitation the following: costs of any computer equipment, software license fees and maintenance, service bureau and other related professional fees and expenses used for or by the Partnership, including maintenance of investor records and processing of accounting records related to the Partnership. (vii) Such other 11 related administrative expenses as are necessary to the prudent operation of the Partnership. (b) Actual costs of goods and materials, as used in this Agreement, means the actual costs to the General Partner or its Affiliates of goods and materials used for or by the Partnership or the amount which the Partnership would be required to pay an independent third party for comparable goods and materials, if lower. (c) Actual costs of administrative services, as used in this Agreement, means the pro rata cost of personnel (as if such persons were employees of the Partnership) associated therewith. The costs for such services to be reimbursed to the General Partner or its Affiliates shall be at the General Partner's actual cost, or the amount which the Partnership would be required to pay an independent third party for comparable services in the same geographic location, if lower. The General Partner and its Affiliates shall not be reimbursed for (i) depreciation, utilities, capital equipment and other administrative items (except that the General Partner and its Affiliates may be reimbursed for computer time expenses incurred solely in connection with the administration of the Partnership); and (ii) salaries, fringe benefits, travel expenses and other administrative items incurred by or allocated to any controlling persons of the General Partner or its Affiliates (except that the General Partner and its Affiliates may be reimbursed for travel expenses incurred in extraordinary circumstances). For purposes of this Section 6.02(c)(ii), "controlling person" means: the Chairman or any member of the Board of Directors; executive management, including the President, Vice-Presidents and Executive Vice-Presidents, the Secretary and the Treasurer; and any Person holding 5% or more of the voting securities of the General Partner or any of its Affiliates. (d) Notwithstanding the above, the Partnership shall not reimburse the General Partner for the expenses related to services for which the General Partner or any of its Affiliates is entitled to compensation by way of a separate fee (including the Incentive Management Fee). It is the intent of this Agreement that the General Partner and its Affiliates shall be reimbursed only for costs and expenses which are in addition to those normally incurred by Westin Hotel Company and its Affiliates as part of their hotel management and marketing services and for which Westin Hotel Company and its Affiliates have not received compensation or have not been reimbursed under the terms of any Management Agreement. (e) Expenses of the Partnership shall be billed directly to and paid by the Partnership, and, except as permitted by this Section 6.02, no reimbursements shall be made therefor to the General Partner or any of its Affiliates. 7. ALLOCATIONS AND DISTRIBUTIONS. 7.01 Allocation of Taxable Income and Taxable Loss. All Taxable Income and Taxable Loss (excluding Taxable Income and Taxable Loss arising out of the Sale of a Hotel Property, or from the liquidation of a Hotel Partnership, or from the Sale of the Partnership's interest in a Hotel Partnership or from the liquidation of the Partnership) for any fiscal year of the Partnership shall be 12 allocated to the Partners' pro rata in proportion to the Net Cash Flow distributable to such Partners with respect to such fiscal year, as set forth in Section 7.02 (it being understood that Net Cash Flow contributed to any Hotel Partnership by the Partnership pursuant to Sections 7.02(b), (c) or (d) is not distributed or distributable to any Partner and does not affect allocations of Taxable Income or Taxable Loss); provided, however, that (a) depreciation deductions and/or Accelerated Cost Recovery System (ACRS) deductions allocated to the Partnership from the Hotel Partnerships shall be allocated 7.4545% to the General Partner and 92.5455% to the Limited Partners; provided, however, that if the amounts so allocated to the General Partner are in excess of said General Partner's basis in the Partnership at the end of the Partnership's taxable year, such excess shall, subject to Section 7.01(b), be directly allocated to the Hotel General Partners by the Hotel Partnerships to the extent that the deductibility thereof by the Hotel General Partners is not so limited; (b) the General Partner shall be allocated at least 1% of Taxable Income and Taxable Loss; (c) if there is no distributable Net Cash Flow with respect to the fiscal year, subject to Section 7.01(a), such Taxable Income or Taxable Loss shall be allocated 99% to the Limited Partners and 1% to the General Partner; (d) notwithstanding Sections 7.01(a) through (c), as of the end of any fiscal year of the Partnership, the cumulative Taxable Loss allocated to the Limited Partners shall be equal to that which would have been allocated to such Limited Partners under this Agreement and the Agreements of Limited Partnership of the Hotel Partnerships, combined, prior to their amendment and restatement as of December 31, 1986; (e) if at the end of any fiscal year of the Partnership (i) any Limited Partner has a deficit Capital Account balance resulting in whole or in part from the allocation of Taxable Loss (or items thereof) attributable to nonrecourse debt which is secured by the Hotel Properties, and (ii) the aggregate of the deficit Capital Account balances of all such Limited Partners exceeds the Minimum Gain, then all Taxable Income for such period shall be allocated first to such Limited Partners pro rata in proportion to their deficit Capital Account balances until all available Taxable Income shall have been allocated or until the aggregate deficit Capital Account balances of all such Limited Partners shall have been reduced to an amount not greater than the Minimum Gain; (f) there shall not be allocated to any Limited Partner Taxable Loss as a result of which there would be a deficit balance in such Limited Partner's Capital Account in excess of the deficit permitted by application of the Minimum Gain rule described in Section 7.01(e) as of the end of the fiscal year of the Partnership to which such allocation relates. In determining whether such allocation causes or increases a deficit balance in any Limited Partner's Capital Account as of the end of the fiscal year of the Partnership, such Limited Partner's Capital 13 Account shall first be reduced for distributions that, as of the end of such year, reasonably are expected to be made to such Limited Partner, but only to the extent they exceed offsetting increases to such Limited Partner's Capital Account and that reasonably are expected to occur during (or prior to) the fiscal years of the Partnership in which such distributions reasonably are expected to be made; (g) if during any fiscal year of the Partnership any Partner unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(5) or (6), there shall be allocated to such Partner items of Taxable Income in an amount and manner sufficient to eliminate (or in the case of a Partner who is obligated to contribute a deficit capital account balance after liquidation pursuant to Section 7.06, to reduce to the required amount of such contribution) such Partner's deficit Capital Account balance as quickly as possible; (h) under Regulations prescribed by the Secretary of the Treasury pursuant to Section 704(c) of the Code, items of Taxable Income and Taxable Loss with respect to property contributed to the Partnership by a Partner shall be shared among Partners so as to take account of the variation between the basis of the property to the Partnership and its fair market value at the time of contribution; and (i) in the event that a Partner acquires, sells or exchanges an Interest during the taxable year or that such Partner's aggregate Interest is reduced (whether by admission of a Substituted Limited Partner or otherwise), such Partner's Proportionate Share of Taxable Income or Taxable Loss for such year shall be adjusted to take into account the varying interest of that Partner in the Partnership during the taxable year (such determination to be made by the General Partner in accordance with a convention not prohibited by Section 706(d) of the Code and the Regulations thereunder). 7.02 Distribution of Net Cash Flow. Net Cash Flow for each fiscal year of the Partnership shall be distributed by the General Partner to the Partners not less frequently than quarterly. The General Partner shall determine the amounts of Net Cash Flow to be distributed to the Partners as follows: (a) 100% of the Net Cash Flow then being distributed shall be paid to the Limited Partners in accordance with their respective Proportionate Shares of Net Cash Flow until, with respect to such fiscal year, the Limited Partners have received an amount equal to an annual noncumulative 3.6 mil. Return per Unit; (b) 100% of any remaining Net Cash Flow then being distributed shall be contributed by the Partnership to the capital of the Hotel Partnerships, pro rata in proportion to the Incentive Management Fees payable by the Hotel Partnerships with respect to such fiscal year, until the Partnership shall have contributed to the Hotel Partnerships an amount equal to 50% of the aggregate Incentive Management Fees payable by the Hotel Partnerships with respect to such fiscal year; 14 (c) subject to the proviso to subsection (f) below, 70% of any remaining Net Cash Flow then being distributed shall be paid to the Limited Partners in accordance with their respective Proportionate Shares of Net Cash Flow and 30% shall be contributed by the Partnership to the capital of the Hotel Partnerships, pro rata in proportion to the aggregate amounts of current Incentive Management Fees then payable by the Hotel Partnerships, until such aggregate amounts of current Incentive Management Fees then payable by the Hotel Partnerships are paid; (d) subject to the proviso to subsection (f) below, 70% of any remaining Net Cash Flow then being distributed shall be paid to the Limited Partners in accordance with their respective Proportionate Shares of Net Cash Flow and 30% shall be contributed by the Partnership to the capital of the Hotel Partnerships, pro rata in proportion to the aggregate amounts of deferred Incentive Management Fees then payable by the Hotel Partnerships, until such aggregate amounts of deferred Incentive Management Fees then payable by the Hotel Partnerships are paid; (e) subject to the proviso to subsection (f) below, 70% of any remaining Net Cash Flow then being distributed shall be paid to the Limited Partners in accordance with their respective Proportionate Shares of Net Cash Flow and 30% shall be paid to the General Partner until the General Partner shall have received pursuant to this subsection (e) an amount equal to the sum of (i) all payments of deferred Incentive Management Fees made during any fiscal years prior to the time the Limited Partners have received an annual noncumulative $150 Return per Unit during such fiscal years and (ii) 60% of all payments of deferred Incentive Management Fees made during any fiscal years after the time the Limited Partners have received an annual noncumulative $150 Return per Unit during such fiscal years; (f) thereafter, 70% of any remaining Net Cash Flow then being distributed shall be paid to the Limited Partners in accordance with their Proportionate Shares of Net Cash Flow, and 30% shall be paid to the General Partner; provided, however, that at any time during any such fiscal year that the Limited Partners shall have received an amount equal to an annual noncumulative $150 Return per Unit, then the 70%/30% apportionment in subsections (c), (d) and (e) of this Section 7.02 shall be replaced with a 50%/50% apportionment. Notwithstanding the foregoing, in the event that at the time of any distribution of Net Cash Flow neither Westin Realty Corp. nor any of its Affiliates is a General Partner as a result of expulsion pursuant to Section 10.02, all Net cash Flow then being distributed shall be contributed by the Partnership to the capital of the Hotel Partnerships (before any of the foregoing applications) until the Partnership shall have contributed to the Hotel Partnerships an amount equal to all current and deferred Incentive Management Fees then payable by the Hotel Partnerships. 7.03 Allocation of Gain or Loss resulting from Sale of Property. In the event the Partnership realizes Taxable Income or Taxable Loss from the Sale of a Hotel Property, or from the liquidation of a Hotel Partnership, or from the Sale of the Partnership's limited partnership interest in a Hotel 15 Partnership, or from the liquidation of the Partnership, such Taxable Income (hereinafter the "Gain on Sale") and Taxable Loss (hereinafter the "Loss on Sale") shall be allocated among the Partners as follows: (a) the Gain on Sale shall be allocated (i) to those Partners with deficit balances in their Capital Accounts resulting in whole or in part from allocations of Taxable Loss (or items thereof) attributable to nonrecourse indebtedness secured by the Hotel Properties, pro rata in proportion to their deficit Capital Account balances, until all available Gain on Sale is so allocated or until the aggregate deficit Capital Account balances of all such Partners is reduced to an amount not greater than the Minimum Gain; (ii) to those Partners who have deficit balances in their Capital Accounts, pro rata in proportion to such deficit balances until such deficit balances shall have been eliminated and the balances in their Capital Accounts shall have been restored to zero; (iii) to the Limited Partners until their positive Capital Account balances equal an amount which if distributed to them, together with all prior cash distributions to the Limited Partners pursuant to Sections 7.02 and 7.04, would result in their having received a cumulative, but not compounded, annual 12% Return on the weighted average balance of their Adjusted Capital Contributions and an amount equal to their Adjusted Capital Contributions; (iv) to the General Partner until its positive Capital Account balance equals an amount which if distributed to it, together with all prior cash distributions to the General Partner pursuant to Section 7.02 and 7.04, would result in the General Partner's having received a cumulative, but not compounded, annual 12% Return on the weighted average balance of its Adjusted Base Amount and an amount equal to its Adjusted Base Amount; and (v) thereafter, 70% to the Limited Partners in accordance with their respective Proportionate Shares of Gain on Sale and 30% to the General Partner. In determining the size of the deficit balance in a Partner's Capital Account and the amount of the Gain on Sale that must be allocated to restore such Capital Account to zero, distributions of Sale or Refinancing Proceeds resulting from the transaction that produced the Gain on Sale and any allocations made pursuant to the provisions of this Section 7.03 shall be disregarded. (b) In the event that the Gain on Sale to be allocated under this Section 7.03 includes an ordinary income element by reason of Sections 1245 or 1250 of the Code, then the gain allocated to each Partner under this Section 7.03 shall be characterized as ordinary income in accordance with each Partner's varying interest in Taxable Income or Taxable Loss of 16 the Partnership during the taxable years in which the deductions were claimed which gave rise to the recapture liability. (c) Any Loss on Sale shall be allocated to the Partners who have positive balances in their Capital Accounts, pro rata in proportion to such positive balances. (d) In the event that a Limited Partner acquires, sells or exchanges an Interest during the taxable year or that its aggregate Interest is reduced (whether by admission of a Substituted Limited Partner or otherwise), such Limited Partner's Proportionate Share of Taxable Income or Taxable Loss for such year shall be adjusted to take into account the varying interest of that Limited Partner in the Partnership during the taxable year (such determination to be made by the General Partner in accordance with a convention not prohibited by Section 706(d) of the Code and the Regulations thereunder). 7.04 Distribution of Proceeds from Interim Capital Transactions. Sale or Refinancing Proceeds received in any fiscal year of the Partnership from are financing of a Hotel Property or a Sale of a Hotel Property or the Partnership's interest in a Hotel Partnership or liquidation of a Hotel Partnership which does not result in the liquidation of the Partnership shall be distributed by the General Partner in the following order of priority: (a) all Sale or Refinancing Proceeds then being distributed shall be applied to payment in full of the principal of and interest on any Subordinated Loans related to the Hotel Partnership affected by any of the aforementioned events (the "Subject Hotel Partnership"); (b) any remaining Sale or Refinancing Proceeds then being distributed shall be contributed by the Partnership to the capital of the Subject Hotel Partnership until the Partnership shall have contributed to the Subject Hotel Partnership an amount equal to all current and deferred Incentive Management Fees then payable by the Subject Hotel Partnership. (c) any remaining Sale or Refinancing Proceeds then being distributed shall be paid to the Limited Partners in accordance with their respective Proportionate Shares of Sale or Refinancing Proceeds until, together with all prior cash distributions to the Limited Partners under Section 7.02 and this Section 7.04(c), they shall have received a cumulative, but not compounded, annual 12% Return on the weighted average balance of their Adjusted Capital Contributions; (d) any remaining Sale or Refinancing proceeds then being distributed shall be paid to the Limited Partners in accordance with their Proportionate Shares of Sale or Refinancing Proceeds until they shall have received an amount equal to their Adjusted Capital Contributions; (e) any remaining Sale or Refinancing Proceeds then being distributed shall be paid to the General Partner until, together with all prior cash distributions to the General Partner pursuant to Section 7.02 and this Section 7.04(e), it shall have received a cumulative, but not 17 compounded, annual 12% Return on the weighted average balance of its Adjusted Base Amount; (f) any remaining Sale or Refinancing Proceeds then being distributed shall be paid to the General Partner until it shall have received an amount equal to its Adjusted Base Amount reduced by any amounts distributed to the Hotel General Partners pursuant to the Agreements of Limited Partnership of the Hotel Partnerships at such specified time; and (g) thereafter, 70% of any remaining Sale or Refinancing Proceeds then being distributed shall be paid to the Limited Partners in accordance with their respective Proportionate Shares of Sale or Refinancing Proceeds and 30% shall be paid to the General Partner. 7.05 Distribution of Proceeds from a Final Capital Transaction. Sale or Refinancing Proceeds received in any fiscal year of the Partnership from a Sale or refinancing of one or both Hotel Properties, or a Sale of Partnership's interest in one or both Hotel Partnerships, or a liquidation of one or both Hotel Partnerships which results in the liquidation of the Partnership shall be distributed by the General Partner in the following order of priority: (a) all Sale or Refinancing Proceeds then being distributed shall be applied to payment in full of the principal of and interest on any Subordinated Loans related to the Hotel Partnership affected by any of the aforementioned events (the "Subject Hotel Partnership"); (b) any remaining Sale or Refinancing Proceeds then being distributed shall be contributed by the Partnership to the capital of the Subject Hotel Partnership until the Partnership shall have contributed to the Subject Hotel Partnership an amount equal to all current and deferred Incentive Management Fees then payable by the Subject Hotel Partnership; and (c) any remaining Sale or Refinancing Proceeds then being distributed shall be paid to the Partners who have positive balances in their Capital Accounts pro rata in proportion to such positive Capital Account balances, provided, however, that if, at such time, a Private Letter Ruling has been obtained from the Internal Revenue Service which would so permit, without affecting the allocations of Taxable Income or Taxable Loss to any of the Partners in prior years, then until the Limited Partners have been distributed an amount which, together with all prior distributions to the Limited Partners pursuant to Sections 7.02 and 7.04, would result in their having received a cumulative, but not compounded, annual 12% Return on the weighted average balance of their Adjusted Capital Contributions and an amount equal to their Adjusted Capital Contributions, any distribution to the General Partner shall not exceed the lesser of: (i) the amount of its positive Capital Account Balance, or (ii) 1% of the total amount being distributed to the Partners pursuant to this Section 7.05(c). 18 Distributions pursuant to this Section 7.05(c) shall be made by the end of the taxable year of the liquidation or within 90 days after the date of such liquidation, whichever is later. 7.06 Deficit Capital Accounts at Liquidation. It is understood and agreed that one purpose of Section 7.04 is to insure that none of the Partners has a deficit Capital Account balance after liquidation and to insure that all allocations under this Article 7 have substantial economic effect. The Partners and the Partnership do not intend or expect that any Limited Partner will have a deficit Capital Account balance after liquidation and, notwithstanding anything to the contrary in this Agreement, the provisions of this Agreement shall be construed and interpreted to give effect to such intention. If for any reason, the General Partner has a deficit Capital Account balance after liquidation, the General Partner will be deemed to have received unexpected and unintended deductions or distributions to the extent of such deficit Capital Account balance and shall be obligated to contribute to the Partnership at such time cash in an amount equal to the lesser of (i) the deficit balance in such Capital Account, or (ii) the aggregate amount distributed or distributable to the Hotel General Partners pursuant to Article 7 of the Agreements of Limited Partnership of the Hotel Partnerships, reduced by all Capital Contributions of the General Partner to, but not including, such specified time. Such contribution shall be made by the end of the taxable year of liquidation or 90 days after the date of such liquidation, whichever is later. Thereafter, such cash shall be distributed to those Limited Partners with positive Capital Account balances pro rata in proportion to such positive Capital Account balances. 8. MANAGEMENT AND OPERATION OF BUSINESS. 8.01 General Authority of the General Partner. Except as expressly limited by the provisions of this Agreement, the General Partner shall have complete and exclusive discretion in the management and control of the affairs and business of the Partnership and shall possess all powers necessary, convenient or appropriate to carrying out the purposes and business of the Partnership. The General Partner shall possess and enjoy with respect to the Partnership all of the rights and powers of a partner of a partnership without limited partners to the extent permitted by Delaware law. 8.02 Specific Duties and Authority of the General Partner. (a) The General Partner shall devote such time to the Partnership as shall be reasonably required in order to discharge its obligations to the Partnership. Subject to Section 8.05, the General Partner may delegate any or all of its powers, rights and obligations under this Agreement, and may appoint, contract or otherwise deal with any Person, including employees of its Affiliates, to perform any acts or services for the Partnership as the General Partner may approve. Without limitation on any power that may be conferred upon it by law, and except as hereinafter stated and subject to the limitations in Section 8.01, the General Partner shall have the power to: (i) make and enter into such contracts as the General Partner deems reasonably necessary for the efficient conduct and operation of the Partnership business; 19 (ii) compromise, submit to arbitration, sue on or defend all claims in favor of or against the Partnership; (iii) make and revoke any election permitted the Partnership by any taxing authority; (iv) do all acts the General Partner deems necessary or appropriate for the protection and preservation of the Partnership assets; (v) make distributions and allocations to the Partners in accordance with Article 7 of this Agreement; (vi) resolve all questions relating to potential conflicts of interest between the Partnership and the General Partner, or any of its Affiliates, in accordance with the General Partner's fiduciary duty; (vii) execute on behalf of the Partnership any documents or of any kind that the General Partner may deem appropriate or advisable to carry out the purposes of the Partnership; (viii) make all payments required of the Partnership under the terms of this Agreement, including such payments and reimbursements as the General Partner, or any of its Affiliates, may be entitled to receive under the terms of this Agreement; (ix) contest any determination by the Internal Revenue Service which the General Partner deems to be adverse to the best interests of the Partnership, and in such regard, the General Partner is designated as the "Tax Matters Partner" for the Partnership; (x) invest Partnership funds, on a temporary basis pending distribution, in U.S. government securities, securities issued or guaranteed by U.S. government agencies, securities issued or guaranteed by state or municipalities, certificates of deposit and time or demand deposits in commercial banks, banker's acceptances, savings and loan associations deposits or deposits in members of the Federal Home Loan Bank System, such interest-bearing or non-interest bearing investment, including, without limitation, firm repurchase agreements for direct obligations of the United States of America or any instrumentality thereof for the payment of which the full faith and credit of the United States of America is pledged or commercial paper rated A-1 or better by Standard & Poor's Corporation or prime-1 or better by NCO/Moody's Commercial Paper Division of Moody's Investor's Service, Inc., or the successor to either of them, as shall reasonably be designated by the General Partner; (xi) establish such banking relationships as the General Partner deems necessary to manage short term liquidity requirements and, subject to the provisions of Section 12.02, open, maintain and 20 close bank accounts and draw checks and other orders for the payment of money; (xii) engage such independent attorneys, accountants, appraisers or such other experts and advisers as the General Partner may deem necessary or advisable; (xiii) subject to the provisions of Section 8.03, borrow money on behalf of the Partnership and make, accept, endorse and execute promissory notes, drafts, bills of exchange and other instruments and evidences of indebtedness and secure the payment of any Partnership indebtedness by mortgage, pledge or assignment of or security interest in all or any part of the property then owned or thereafter acquired by the Partnership; (xiv) commence or defend litigation that pertains to the Partnership or any Partnership assets, and arrange for the settlement of any pending or threatened litigation, by or against the Partnership, through compromise, arbitration or otherwise; (xv) sell, transfer, assign or otherwise dispose of any assets belonging to the Partnership, in whole or in part, and take such action without obtaining any further Consent or approval from the Partners, except that any Sale of the Partnership's limited partnership interest in a Hotel Partnership shall be subject to (A) Westin Hotel Company's right of notice and opportunity to purchase as set forth in Section 8.08, (B) the provisions of Section 8.03 and (C) in the case of a sale to the General Partner or any of its Affiliates, the procurement of a letter of opinion at the General Partner's or Affiliate's own expense, as the case may be, from an "independent and qualified adviser" (as that term is defined in Comment V.A. 3(b) of the Statement of Policy regarding Real Estate Programs of the North American Securities Administrators Association, Inc. currently in effect) that the terms of such sale are fair and at least as favorable to the Partnership as a sale to an unaffiliated purchaser in similar circumstances; (xvi) take any and all action on behalf of the Partnership as may be necessary in order to meet the obligations or exercise the rights the Partnership may have as a limited partner in the Hotel Partnerships, except that the Partnership's Consent to sell any Hotel Property shall be subject to (A) Westin Hotel Company's right of notice and opportunity to purchase as set forth in Section 8.08 and (B) the provisions of Section 8.03; (xvii) submit, from time to time, to any appropriate state securities administrator all documents, papers, statistics and reports required to be filed with or submitted to such state securities administrator; and (xviii) call a meeting of Limited Partners from time to time as the General Partner deems necessary or advisable. No Person dealing with the General Partner shall be required to determine its authority to make any undertaking or to execute any instrument on 21 behalf of the Partnership, nor to determine any fact or circumstances bearing upon the existence of such authority, and all such undertakings or instruments shall contain such provisions as the General Partner may deem appropriate or expedient. (b) The General Partner shall use its best efforts to maintain its net worth at a level sufficient to assure that, under applicable present and future requirements set by statute (including the Code), the Internal Revenue Service (including Rev. Proc. 72-13, to the extent applicable) or the courts, the Partnership will not fail to be classified as a partnership for tax purposes on account of the insufficient net worth of the General Partner, and, further, that the General Partner shall also use its best efforts to cause Westin Hotel Company to contribute additional capital to the General Partner so that the General Partner will at all times have a net worth sufficient to meet all present or future requirements of the Code to assure that the Partnership will be classified as a partnership for tax purposes. (c) If any Hotel Partnership shall require funds for normal or extraordinary improvements to, or renovation of, or other capital expenditures relating to, its Hotel Property and such financing is not available from unaffiliated lenders on terms the General Partner determines to be commercially reasonable and in the best interest of the Partnership, the General Partner may, subject to the terms of this Section 8.02(c), loan such funds to the Partnership for contribution to such Hotel Partnership to fund such expenditures. Such loans shall bear interest compounded quarterly at an annual rate equal to the prime rate quoted by the Bank of America, N.T. & S.A., from time to time, plus one percentage point or such lower rate as would be charged by an unrelated lending institution on a comparable loan for the same purpose and in the same locality as the Hotel Property for which the loan is made. Such interest shall accrue and shall be paid, together with the principal amount of such loan, at the earlier to occur of (i) the fifteenth (15th) anniversary of such loan and (ii) as provided in Sections 7.04 and 7.05, the Sale of such Hotel Property, the liquidation of such Hotel Partnership, or the Sale of the Partnership's interest in such Hotel Partnership or the liquidation of the Partnership. In addition, prepayment charge or penalty will be required. (d) Beginning in 1994, the General Partner in cooperation with the Hotel Partnerships and on behalf of the Partnership will actively review opportunities to sell or refinance the Hotel Properties or the Partnership's interest in the Hotel Partnerships and to act upon such opportunity to the extent that the General Partner and the Hotel Partnerships reasonably believe that such action is in the best interests of the Partnership and the Hotel Partnerships. By the end of 2001, however, the General Partner, in cooperation with the Hotel Partners and on behalf of the Partnership, will use its best efforts to sell or refinance the Hotel Properties or the Partnership's interest in the Hotel Partnerships. (e) Notwithstanding any other provision of this Agreement, [THE] following transactions are expressly prohibited: 22 (i) the Partnership shall not make any loans to the General Partner or any of its Affiliates other than the Hotel Partnerships; (ii) the Partnership shall not give the General Partner or any of its Affiliates an exclusive right to sell or exclusive employment to sell or refinance the Hotel Properties for the Hotel Partnerships or the Partnership's interests in the Hotel Partnerships; (iii) no rebates or "give ups" may be received by the General Partner nor any of its Affiliates, nor may the General Partner or any of its Affiliates participate in any reciprocal business arrangements which would have the effect of circumventing any of the provisions of this Agreement; (iv) the Partnership shall not pay refinancing fees or sales commissions to the General Partner or any of its Affiliates in connection with refinancing or Sale of one or both of the Hotel Properties; and (v) the Partnership shall not commit less than 80% of the Capital Contributions of the Limited Partners to acquisition of interests in the Hotel Properties. 8.03 Limitations on Authority of General Partner. (a) Without the Consent of all the Limited Partners the General Partner shall not have the authority to: (i) do any act in contravention of this Agreement; (ii) except as otherwise provided in this Agreement, do any act which would make it impossible to carry on the ordinary business of the Partnership; (iii) confess a judgment against the Partnership; (iv) possess Partnership property, or assign its rights in specific Partnership property, for other than a Partnership purpose; (v) admit a Person as a General Partner, except as provided in this Agreement; (vi) admit a Person as Limited Partner, except as provided in this Agreement; or (vii) knowingly perform any act that would subject any Limited Partner to liability as a general partner in any jurisdiction. (b) Without a Majority Vote of the Limited Partners the General Partner shall not have the authority to: 23 (i) sell or transfer the Partnership's limited partnership interest in any Hotel Partnership to any Person or Persons (other than the granting or subsequent foreclosure of a lien against such interest given to secure any bona fide indebtedness otherwise rightfully incurred); (ii) consent to the Sale by any Hotel Partnership of any Hotel Property to any Person or Persons (other than the granting or subsequent foreclosure of a lien against such Hotel Property given to secure any bona fide indebtedness otherwise rightfully incurred); (iii) borrow on behalf of the Partnership and the Hotel Partnerships, whether such borrowings are from unaffiliated lenders or from the General Partner or its Affiliates and whether such borrowings are secured or unsecured, an amount which when aggregated with all other indebtedness incurred by the Partnership and Hotel Partnerships exceeds Maximum Indebtedness; or (iv) accept from the General Partner or any of its Affiliates any loan, secured or unsecured, other than an advance or Subordinated Loan made pursuant to Sections 4.06 or 8.02(c). 8.04 Independent Activities. Neither the General Partner, its Affiliates nor any of their employees shall be required to manage the Partnership as its sole and exclusive function, and it may have other business interests and engage in other activities in addition to those relating to the Partnership, including the rendering of advice or services of any kind to investors in the making or management of other investments or real estate properties. Neither the Partnership nor any Partner shall have any right by virtue of this Agreement or the partnership relationship created hereby in or to such other investments or activities or to the income or proceeds derived therefrom, and the pursuit of such ventures, even if directly competitive with and damaging to the business of the Partnership, shall not be deemed wrongful or improper. Neither the General Partner nor its Affiliates shall be obligated to present any particular investment opportunity to the Partnership or the Partners even if such opportunity is of a character which, if presented to the Partnership, could be taken by the Partnership, and the General Partner shall have the right to take such investment for its own account (individually or as a trustee) or to recommend to others any such particular investment opportunity. 8.05 General Partner or Affiliates Dealing With the Partnership. The General Partner and its Affiliates shall have the right to contract or otherwise deal with the Partnership for the sale of goods or services if: (a) compensation for such goods or services is reasonable and is paid only for goods or services actually furnished to the Partnership; (b) the goods or services to be furnished shall be necessary to the Partnership; (c) the terms for the furnishing of such goods or services shall, in the opinion of the General Partner, be at least as favorable to the 24 Partnership as would be obtainable in an arm's length transaction and generally no less favorable than those provided by the General [PARTNER] and its Affiliates to third parties for comparable goods and services in similar market areas; (d) the General Partner or its Affiliate shall have been previously engaged in the business of rendering such services or selling or leasing such goods, as an ordinary and ongoing business, and, in the case of any Affiliate providing capital improvement services, offers such services to other Westin hotels besides the Hotel Properties; and (e) all services or goods for which the General Partner or an Affiliate is to receive compensation (with the exception of the Management Agreements) shall be embodied in a written contract which precisely describes the services to be rendered and all compensation to be paid, which contract may only be modified by Majority Vote of the Limited Partners and is terminable without penalty on sixty (60) days notice. 8.06 Potential Liability of the General Partner. The General Partner shall not be liable, responsible or accountable in damages or otherwise to the Partnership or any of the Partners for any act or omission performed or omitted by the General Partner in good faith on behalf of the Partnership and in a manner reasonably believed by the General Partner to be within the scope of its authority and in, or not opposed to, the best interests of the Partnership. 8.07 Indemnification of General Partner and its Affiliates. (a) Neither the General Partner nor any of its Affiliates shall be liable, responsible or accountable in damages or otherwise to the Partnership or any Limited Partner for any loss or damage incurred by reason of any act or omission performed or omitted by the General Partner or such Affiliate in good faith either on behalf of the Partnership or in furtherance of the interests of the Partnership and in a manner reasonably believed by it to be within the scope of the authority granted to it by this Agreement or by law or by the Consent of the Limited Partners in accordance with the provisions of this Agreement, provided that the General Partner or such Affiliate was not guilty of negligence, misconduct or any other breach of fiduciary duty with respect to such act or omission. (b) To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, (including any action by or in the right of the Partnership), by reason of any act or omission or alleged act or omission arising out of such Person's activities as a General Partner or as an officer, director, shareholder or Affiliate of the General Partner if such activities were performed in good faith either on behalf of the Partnership or in furtherance of the interests of the Partnership, and in a manner reasonably believed by such Person to be within the scope of the authority conferred by this Agreement or by law or by the Consent of the Limited Partners in accordance with the provisions of this Agreement, against losses, damages or expenses for which such Person has not 25 otherwise been reimbursed (including attorneys' fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred by such Person in connection with such action, suit or proceeding so long as such Person was not guilty of negligence, misconduct or any other breach of fiduciary duty with respect to such acts or omissions, provided that the satisfaction of any indemnification and any holding harmless shall be from and limited to Partnership assets and no Limited Partner shall have any personal liability on account thereof, and provided that such an indemnification of an Affiliate shall be limited to losses, damages or expenses to which the Affiliate is subject because it has performed a fiduciary obligation of the General Partner on behalf of the General Partner. (c) The Partnership shall not pay the premiums or incur any expenses concerning that portion of liability insurance which insures the General Partner or any of its Affiliates for any liability as to which the General Partner may not be indemnified pursuant to this Section 8.07. (d) Notwithstanding subsections (a), (b) and (c) above, neither the General Partner nor its Affiliates nor any person acting as broker-dealer in connection with the offering of Interests pursuant to the Prospectus shall be indemnified for any losses, liabilities or expenses arising from or out of an alleged violation of federal or state securities laws unless such activities were performed in good faith either on behalf of the Partnership or in furtherance of the interests of the Partnership, and in a manner reasonably believed by such Person to be within the scope of the authority conferred by this Agreement or by law or by the Consent of the Limited Partners in accordance with the provisions of this Agreement and (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular indemnitee, provided that a court approves indemnification of litigation costs; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and related costs should be made. Any Person seeking indemnification pursuant to this Section 8.07 will apprise the court of the positions of the Securities and Exchange Commission and appropriate state securities commissions with respect to indemnification for securities laws violations before seeking court approval for indemnification. 8.08 Right of Notice and Opportunity to Purchase. Notwithstanding anything in this Agreement to the contrary, in the event that, as a result of expulsion pursuant to Section 10.02, neither Westin Realty nor any of its Affiliates is a General Partner, then the General Partner shall have the following additional obligations and duties: (a) If the Partnership determines with respect to a Partnership's interest in a Hotel Partnership or a Hotel Partnership determines with respect to a Hotel Property, including in either case any offer to purchase by the General Partner or any of its Affiliates, that it will offer to sell, solicit offers to purchase, including engaging any sales broker for the purpose of making or soliciting offers, or negotiate with 26 any Person in respect of such offer or solicitation (a "Solicited Offer"), then the General Partner shall notify Westin in writing of its intention, or the intention of the Hotel Partnership, prior to making any offer to sell or commencing any such solicitation or negotiation. For purposes of this Section 8.08(a), a Solicited Offer shall be subject to the provisions of Section 8.08(b) below. (b) If the Partnership receives from any Person or Persons, other than Westin or any of its Affiliates, a bona fide offer to purchase the Partnership's limited partnership interest in a Hotel Partnership, or a Hotel Partnership receives a bona fide offer to purchase such Hotel Partnership's Hotel Property, then the General Partner shall (i) notify Westin Hotel Company ("Westin") in writing of the details of the terms and conditions of the offer, including the name of the offeror, upon receipt of such offer; and (ii) except in the case of a Solicited Offer, afford Westin, or any of its Affiliates, the opportunity to submit its own offer within 45 days of receipt of such notice or 48 hours prior to the time the Partnership or Hotel Partnership must respond to such offer, whichever date is earlier, but in no event less than 72 hours following receipt of such notice; or (iii) in the case of a Solicited Offer, afford Westin, or any of its Affiliates, the opportunity to submit its own offer within 45 days of receipt of such notice or 48 hours prior to the time the Partnership or Hotel Partnership must respond to such offer, whichever date is earlier, but in no event less than 30 days following receipt of such notice; provided, however, that if such Solicited Offer is by the General Partner, or any of its Affiliates, Westin, or any of its Affiliates, will have not less than 90 days from receipt of such notice to submit its own offer; provided further, however, that if Westin Realty Corp. shall have been removed for cause based on fraud or on intentional or knowing unlawful conversion of Partnership assets for its own use, any Solicited Offer from the General Partner or any of its Affiliates will be deemed not to be a Solicited Offer, and the rights of Westin and its Affiliate will be governed by Section 8.08(b)(ii) above. If the Partnership shall have received an offer and notified Westin thereof as provided in clause (i), the Partnership shall not be precluded by the provisions of this subsection (b) from soliciting or continuing to solicit, or receiving or continuing to receive, other offers from any Person (whether in response to the original offer, or an offer from Westin or any of its Affiliates, or an offer from any other Person or otherwise); provided, however, that any offer in addition to the offers of which Westin was notified as provided in clause (i) shall be subject to the provisions of this subsection (b). (c) The General Partner shall not accept any offer and shall not Consent to the acceptance of any offer by a Hotel Partnership, other than from Westin or any of is Affiliates, unless the General Partner has 27 complied with the provisions set forth in subsection (a) and (b). If such conditions have been complied with and either (i) the General Partner, in the exercise of its fiduciary duty, determines that the final offer by Westin or its Affiliates is not the offer most favorable to the Partnership and is not in the best interest of the Partnership, or (ii) Westin and its Affiliates shall have failed to respond within the time provided for in subsection (b), or (iii) Westin and its Affiliates shall have waived in writing their rights under this Agreement, then the Partnership shall be free to sell such interest in the Hotel Partnership or Consent to the sale of the Hotel Property by the Hotel Partnership, as the case may be, to the Person or Persons on the terms and at the price specified in such offer. If such purchase and sale is not thereafter consummated with the Person or Persons who submitted the offer and on the basis of the terms and at the price originally proposed at the time stated in the offer, if any, or if not so stated, within 120 days from the date of acceptance, then Westin's rights as set forth in this Section shall apply to any new offer or any different terms or the submission of the same offer by any other Person or Persons. 8.09 Power of Attorney. (a) Each Partner hereby irrevocably appoints the General Partner, with full power of substitution, as its true and lawful attorney-in-fact, with full power and authority to make, execute, acknowledge, publish and file: (i) any amendments to this Agreement or to the Certificate pursuant to the Act and the laws of any state in which such documents are required to be filed; (ii) any certificates, instruments and documents as may be requested by, or may be appropriate under, the laws of any state or other jurisdiction in which the Partnership is doing or intends to do business; (iii) any other instrument which may be required to be filed by the Partnership under the laws of any state or by any governmental agency, or which the General Partner deems advisable to file; (iv) any documents which may be required to effect the continuation of the Partnership, the admission of Substituted Limited Partners, the dissolution and termination of the Partnership pursuant to the terms of this Agreement, or the surrender of any rights or the assumption of any additional responsibilities by the General Partner; and (v) any document which may be required to effect an amendment to this Agreement to correct any mistake, omission or inconsistency, or to cure any ambiguity herein, to the extent such amendments are permitted by Section l4.01(d) hereof. 28 (b) The foregoing grant of authority: (i) is a special power of attorney, coupled with an interest, and shall survive the death of any Partner; (ii) may be exercised by the General Partner for each and every Partner acting as attorney-in-fact for each and every Partner; and (iii) shall survive the delivery of an assignment by a Limited Partner of all or any portion of its Interest and shall be fully binding upon such Limited Partner's assignee; except that the power of attorney shall survive such assignment with respect to the assignor Limited Partner for the sole purpose of enabling the General Partner to execute, acknowledge and file any instrument necessary to effect the admission of the assignee of such Interest as a Substituted Limited Partner. 9. STATUS OF LIMITED PARTNERS. 9.01 Limited Liability. No Limited Partner shall be personally liable for any debts, liabilities or obligations of the Partnership, whether to the Partnership, or to any of the Partners, or to creditors of the Partnership, beyond the amount contributed and required to be contributed by the Limited Partner to the capital of the Partnership, the Limited Partner's share of the accumulated but undistributed profits of the Partnership and the amount of any distribution (including the return of any Capital Contribution) made to the Limited Partner that must be returned to the Partnership pursuant to applicable state law. 9.02 Rights of Limited Partners. No Limited Partner, as such, shall take any part in or interfere in any manner with the management and control of the business of the Partnership, nor shall any Limited Partner, as such, transact any business for the Partnership or have any authority or power to sign for or bind the Partnership or the General Partner. Subject to the restrictions of Section 9.03, the following actions may be taken by the Partnership if approved by a Majority Vote of the Limited Partners or such greater vote as may be indicated: (a) amend this Agreement, except as provided in Section 14.02 hereof; (b) approve certain sales or borrowings by the Partnership as provided in Section 8.03(b); (c) approve the transfer of the General Partner's Interest as provided in Section 10.01; (d) expel the General Partner or any successor General Partner with or without cause; (e) elect a new General Partner or General Partners upon the adjudication of incompetency, expulsion, withdrawal, death or dissolution of the General Partner or any successor General Partner; 29 (f) expel a general partner of a Hotel Partnership with or without cause in accordance with the terms of the Agreement of Limited Partnership of the Hotel Partnership; (g) elect to dissolve the Partnership; and (h) upon submission to the General Partner by Limited Partners owning ten percent (10%) or more of the Units of any matter upon which Limited Partners may vote pursuant to this Agreement, the General Partner shall, within fifteen (15) days of such submission, submit such matter to the Limited Partners as a whole for a vote. Included in such submission shall be a detailed statement of the action proposed, including a verbatim statement of the wording of any resolution proposed for adoption by the Limited Partners and of any proposed amendment to this Agreement. The General Partner will provide proxies or written consent forms which specify a choice between approval and disapproval of each matter to be acted upon by such vote, and Limited Partners shall return such proxies or consents within thirty (30) days. A majority in interest of the Limited Partners entitled to vote shall constitute a quorum for purposes of any such vote. All expenses of the voting and such notification shall be borne by the Partnership. 9.03 Restrictions on Powers. Notwithstanding Section 9.02 hereof, no Limited Partner shall have the authority or power to act on behalf of, or to bind, the Partnership, the General Partner or any Limited Partner, and no Limited Partner shall have the right to take any action which would extend the term of the Partnership, change the Partnership to a general partnership, change the limited liability of the Limited Partners or affect the partnership status of the Partnership for federal income tax purposes. Nor shall the Limited Partners have the right to enlarge the General Partner's or any of its Affiliate's obligation to make Capital Contributions beyond that set forth in Section 4.01 or diminish (i) the rights of the General Partner or its Affiliates with respect to the General Partner's interest in the Partnership including the General Partner's interest in Net Cash Flow as set forth in Section 7.02 and Sale or Refinancing Proceeds as set forth in Sections 7.04 and 7.05, (ii) the fees and compensation payable to the General Partner and its Affiliates as set forth in Article 6 hereof, (iii) the right to notice and opportunity to purchase granted to Westin Hotel Company under Section 8.08 or (iv) other benefits to which the General Partner or its Affiliates are entitled under the provisions of this Agreement, without the Consent of the affected General Partner or affected Affiliate. 9.04 Relationship with the General Partner. No Limited Partner shall have an interest in the individual assets of the General Partner or its Affiliates or in the proceeds of any sales of the assets of the General Partner or its Affiliates by virtue of acquiring or owning an Interest in the Partnership. 9.05 Effect of Bankruptcy, Death or Incompetency of a Limited Partner. The bankruptcy, death, dissolution, termination or adjudication of incompetency of a Limited Partner shall not cause the termination or dissolution of the Partnership and the business of the Partnership shall continue. Upon any such occurrence, the trustee, receiver, executor, administrator, committee, guardian or conservator of such 30 Limited Partner for the purpose of settling or managing its estate or property, or to assign all or any part of its Interest and to join with the assignee in satisfying conditions precedent to the admission of the assignee as a Substituted Limited Partner. 10. CHANGES IN GENERAL PARTNER AND TRANSFERS OF ITS INTERESTS 10.01 Sale or Transfer of the General Partner's Interest. If the General Partner desires to sell or transfer its Interest in the Partnership to a Person who is not a General Partner, such transfer shall be permitted if, and only if, the proposed transferee is approved as a successor General Partner as follows: (a) the proposed transfer and transferee has been approved by Majority Vote of the Limited Partners, unless the transferee is an Affiliate of the General Partner in which case no such approval of the Limited Partners shall be required; (b) the provisions of Section 10.03, if applicable, shall have been satisfied; and (c) the provisions of clauses (a) through (d) of Section 10.05 shall have been satisfied. 10.02 Expulsion of the General Partner. (a) The General Partner may be expelled from the Partnership with or without cause by Majority Vote of the Limited Partners. Limited Partners owning ten percent (10%) or more of the Units shall have a right to propose to the Limited Partners the question of expulsion. (b) Written notice of the proposal of expulsion and expulsion of the General Partner shall be served upon the General Partner by certified or registered mail, return receipt requested, or by personal service. The notice shall set forth the day upon which the expulsion is to become effective, which date shall not be less than sixty (60) days after the service of the notice upon the General Partner. (c) The General Partner expelled pursuant to this Section shall not have any right to participate in the management or affairs of the Partnership upon the effective date of the expulsion. (d) In the event the expelled General Partner is the sole General Partner, the Limited Partners, by Majority Vote of the Limited Partners, shall obtain a substitute General Partner, who shall satisfy the conditions set forth in clauses (a) through (d) of Section 10.05. (e) If the General Partner shall have been expelled for cause based on fraud or on international or knowing unlawful conversion of Partnership assets for its own use, the substitute General Partner shall have the right to purchase the Interest of the expelled General Partner at its then fair market value. The fair market value of such Interest shall be determined by negotiation between the expelled General Partner and the substitute General Partner. If they are unable to reach an agreement on the fair market value of the Interest within sixty (60) days following the giving of the notice to the expelled General Partner, the 31 valuation issue shall be submitted to a committee composed of three appraisers, one chosen by the expelled General Partner, one chosen by the substitute General Partner and the third chosen by the two appraisers so chosen. If the substitute General Partner fails to give the expelled General Partner written notice within sixty (60) days of becoming a General Partner of the substitute General Partner's intent to exercise its right hereunder, or such right is waived or the expelled General Partner's Interest is not subject to sale under this subsection (e), then the expelled General Partner shall retain its share of Taxable Income or Taxable Loss, Net Cash Flow and Sale or Refinancing Proceeds under this Agreement, but shall not have any right to participate in the management or affairs of the Partnership. 10.03 Withdrawal of General Partner. The General Partner may not withdraw from the Partnership without Majority Vote of the Limited Partners; provided, however, that the General Partner may substitute in its stead as General Partner any Person which is an Affiliate of Westin Hotel Company and shall have acquired, by merger, consolidation or otherwise, substantially all of its assets or stock and succeeded to and continued its business if (a) such Person has a net worth comparable to that of the General Partner and (b) the conditions set forth in Section 10.05 shall have been satisfied. 10.04 Continuing Liability. In the event the General Partner withdraws from the Partnership or sells, transfers or assigns its entire Interest in the Partnership pursuant to the provisions of this Agreement, the General Partner shall be, and shall remain, liable for all obligations and liabilities incurred by the General Partner prior to the effective date of such occurrence and shall be free of any obligation or liability incurred on account of the activities of the Partnership from and after such effective date. 10.05 Admission of Additional General Partner. The General Partner may, at any time, designate additional Persons to be General Partners; provided that the Interests of the Limited Partners shall not be affected thereby. Any such additional Person shall become an additional General Partner only upon meeting the following conditions: (a) the designated Person shall have accepted and agreed to be bound by all the terms and provisions of this Agreement; (b) the designated Person shall have provided the Partnership with evidence satisfactory to counsel for the Partnership of its authority to become a General Partner and to be bound by all the terms and conditions of this Agreement; (c) counsel for the Partnership, at the expense of the General Partner, shall have rendered an opinion that the admission of the designated Person is in conformity with the Act and that none of the actions taken in connection with the admission of the designated Person will cause the termination or dissolution of the Partnership or will cause it to be classified other than as a partnership for federal income tax purposes; and (d) any required or appropriate amendments and filings required under the Act shall have been properly made. 32 Each Limited Partner hereby Consents to the admission of any successor or additional General Partner pursuant to Section 10.03 or this Section 10.05 and no further Consent or approval shall be required. 10.06 Effect of Bankruptcy, Death, Dissolution, Incompetency, Withdrawal or Expulsion of a General Partner. (a) In the event of the death, dissolution, adjudication of incompetency, withdrawal or expulsion of a General Partner, the business of the Partnership shall be continued by the remaining General Partner or General Partners, if any, or if there is no remaining or successor General Partner of General Partners, the Partnership shall be dissolved and liquidated unless within ninety (90) days all the Limited Partners vote to continue the Partnership business and designate a new General Partner pursuant to Section 10.05 and effective as of the date of such event. The Partnership shall not be dissolved and liquidated in the event of the bankruptcy of a General Partner unless then required under Section 13.01 below, For purposes of this Agreement, the "bankruptcy" of a General Partner shall be deemed to have occurred if any of the events set forth in Sec. 17-402(4) or any successor section of the Act occurs. (b) Upon the death, dissolution, adjudication of incompetency or withdrawal of a General Partner, such General Partner shall immediately cease to be a General Partner, and the Interest of the General Partner may be sold or transferred only in accordance with the provisions and the procedures of Section 10.01 hereof. In the event such Interest is not sold or transferred in accordance with these procedures, the Interest of such General Partner shall be treated as the Interest of an expelled General Partner and shall be subject to all the provisions and procedures of Section 10.02 hereof. 11. TRANSFER OF LIMITED PARTNERS' INTERESTS; ADMISSION OF SUBSTITUTED LIMITED PARTNERS 11.01 Transfer of Interests. (a) No sale, exchange, transfer, assignment, gift, pledge, encumbrance, hypothecation or other disposition ("transfer") of a Limited Partner's Interest in the Partnership, whether voluntary or involuntary, shall be valid or effective, and the Partnership shall not be obligated to recognize for any purpose any purported transfer, if in the opinion of counsel to the Partnership it would be likely to: (i) violate the registration requirements of the Securities Act of 1933, as amended; (ii) violate the laws of any state, or the rules or regulations of any government agency (including those relating to suitability standards), applicable to such transfer; (iii) cause the Partnership to be treated as an association taxable as a corporation for federal income tax purposes; 33 (iv) result in the Partnership's being considered to have terminated within the meaning of Section 708 of the Code; or (v) result in the inability of a Hotel Partnership to obtain or continue in effect any license permitting the service or sale of alcoholic beverages in the Hotel Property. Prior to any voluntary transfer, the transferring Limited Partner or its representative must provide sufficient information to permit counsel to the Partnership to make a determination that the transfer does not violate the provisions of this subsection (a). (b) The General Partner may suspend transfers if and when any such transfer would result in the transfer of 40% or more of the Interest in the Partnership when added to the total of all other sales or exchanges of Interest within the preceding twelve months. (c) Any transfer of an Interest of a Limited Partner shall be recognized by the Partnership as of the last business day of each calendar quarter during which the Partnership receives instruments of transfer and the payment of all transfer taxes. (d) No Limited Partner shall transfer all or any portion of its Interest except as permitted in this Article 11. In the event of any authorized transfer which shall result in multiple ownership of any Limited Partner's Interest, the General Partner may require one or more trustees or nominees to be designated to represent the entire Interest for the purpose of receiving all notices which may be given and all payments which may be made under this Agreement and exercising all rights which such transferees have pursuant to this Agreement. (e) Any successor to a Limited Partner or transferee of a Limited Partner's Interest hereunder shall be bound by the provisions of this Agreement. Prior to recognizing any assignment of a Limited Partner's Interest that has been transferred in accordance with this Section 11.01, the General Partner may require the transferring Limited Partner to execute and acknowledge a written instrument of assignment in form and substance satisfactory to the General Partner. Any assignee who is not a Partner at the time of the assignment shall be entitled to the allocations and distributions attributable to the Interest assigned to it and to transfer and assign such Interest in accordance with the terms of this Agreement; provided, however, such assignee shall not be entitled to the other rights of a Limited Partner until it becomes a Substituted Limited Partner. Notwithstanding the above, the Partnership and the General Partner shall incur no liability for allocations and distributions made in good faith to the transferring Limited Partner until the written instrument of assignment has been received by the Partnership and recorded on its books and the effective date of the assignment has passed. 34 11.02 Assignment; Substituted Limited Partners. (a) Subject to the provisions of subsection (b) below, no assignee of a Limited Partner's Interest is entitled to become a Substituted Limited Partner until: (i) The General Partner shall have given its prior written consent, which consent may be withheld in its absolute discretion; (ii) the transferring Limited Partner and the assignee shall have executed and acknowledged such other instrument or instruments as the General Partner may deem necessary or desirable to effect such admission; (iii) the assignee shall have accepted, adopted and approved in writing all of the terms and provisions of this Agreement as the same may have been amended; and (iv) the assignee shall pay or obligate itself to pay, as the General Partner may require, all reasonable expenses connected with its admission as a Substituted Limited Partner. (b) The General Partner hereby consents to the admission of any of the transferees listed below of a Limited Partner's Interest in the Partnership not otherwise prohibited by Section 11.01(a): (i) to any General Partner; (ii) to any person by gift, bequest or other transfer without consideration; (iii) to a spouse or former spouse pursuant to an agreement for division of community property or other property settlement agreement in the event of a marital dissolution of legal separation; (iv) to any parent, subsidiary or other corporation whose ultimate stockholders are the same as the stockholders of a corporate Limited Partner; (v) by court order, to any trustee, receiver or creditor upon the bankruptcy of a Limited Partner; or (vi) to any guardian or conservator appointed by a court order upon an adjudication of incompetency of a Limited Partner. (c) As soon as practicable after the last business day of each calendar quarter, the General Partner shall amend the books and records of the Partnership in order to admit to the Partnership as Substituted Limited Partners all Persons entitled to such admission, as provided by this Section 11.02, who had not therefore been admitted to the Partnership, and to reflect the withdrawal from the Partnership, and termination of the Interest, of Limited Partners who have transferred 35 their entire Interest. The admission of any Person as a Limited Partner shall be effective upon the amendment of the books and records of the Partnership to show such admission. (d) For the purpose of allocating Taxable Income and Taxable Loss, a Person shall be treated as having become, and is appearing in the records of the Partnership as, a Limited Partner on such date as a transfer to such Person was recognized by the Partnership pursuant to Section 11.01(c). Until a Person entitled to admission to the Partnership as a Substitute Limited Partner pursuant to Section 11.02(a) and (b) shall be admitted to the Partnership pursuant to Section 11.02(c), such Person shall be entitled to all the rights of an assignee of limited partnership interests under the Act. (e) Any Limited Partner who shall transfer all of his Interest shall cease to be a Limited Partner of the Partnership. (f) The transfer of a Limited Partner's interest or any part thereof pursuant to Section 11.01 and the admission of a Substituted Limited Partner pursuant to this Section 11.02 shall not be cause for dissolution of the Partnership. 11.03 Joint Ownership of Interest. An Interest of a Limited Partner may be acquired by two or more individuals as joint tenants with right of survivorship or, to the extent permitted under local law, as tenants in common, tenants by the entireties or as community property. Any Consent of the Limited Partner under the Agreement shall require the action or vote of all owners of any such jointly-held Interest, unless a Consent that allows less than all of such owners to act or vote for all has been executed by those owners not acting or voting. Upon the death of one owner of an Interest held by joint tenants with right of survivorship or by tenants by the entireties, such Interest shall become owned solely by the survivor or survivors as Limited Partners and not as assignees. The Partnership need not recognize the death of one of the owners of an Interest held by joint tenants with right of survivorship or tenants by the entireties until it shall have received notice of such death. Upon the death of one owner of an Interest held by tenants in common, such decedent's Interest shall pass to the decedent's heirs. Subject to the restrictions set forth in Section 11.01, upon request to the General Partner by any owner of a jointly-held Interest, the General Partner shall cause such Interest to be divided into as many equal Interests as there are owners of such jointly-held Interest, which shall thereafter be owned by each of the former owners. 12. BOOKS, RECORDS, ACCOUNTING, TAX ELECTIONS AND BANKING. 12.01 Books and Records. The books and records of the Partnership shall be maintained on an accrual basis in accordance with generally accepted accounting principles. These and all other records of the Partnership, including information relating to the status of the Partnership's property, information with respect to the sale by the General Partner or any of its Affiliates of goods or services to the Partnership, and a list of the names and addresses of all Limited Partners, shall be kept at the principal office of the Partnership and shall be available for examination and photocopying there by any Partner or its duly authorized representatives, at any reasonable time. Any Partner, or its duly authorized representative, upon Notification to the General Partner 36 and upon praying the costs of the collection, duplication and mailing, shall, for a valid business purpose relating to the conduct of the Partnership's business, be entitled to a copy of the list of names and addresses of all other Partners or, at the discretion of the General Partner, to access to the list of names and addresses of all other Partners. 12.02 Custody of Partnership Funds; Bank Accounts. (a) The General Partner shall have fiduciary responsibility for the safekeeping and use of all funds and assets of the Partnership whether or not in the immediate possession or control of the General Partner. The funds of the Partnership shall not be commingled with the funds of any other Person, and the General Partner shall not employ such funds in any manner except for or the benefit of the Partnership. (b) All funds of the Partnership not otherwise invested pursuant to Section 8.02(a)(x) shall be deposited in one or more accounts maintained in such banking institutions as the General Partner shall determine or shall be invested in short-term liquid securities or shall be left in escrow, and withdrawals shall be made only in the regular course of Partnership business on such signature or signatures as the General Partner may, from time to time, determine. 12.03 Accountants. The accountants for the Partnership shall be such firm or firms of certified public accountants as shall be selected by and approved by the General Partner. The accountants, Westin Hotel Company or its Affiliates shall prepare for execution by the General Partner all federal income tax returns of the Partnership. 12.04 Reports to Partners. The General Partner shall prepare and distribute to the Limited Partners the following reports: (a) within seventy-five (75) days after the end of the fiscal year, such information as shall be necessary for the preparation by the Partners of their federal income tax returns; (b) within one hundred twenty (120) days after the end of each fiscal year of the Partnership, an annual report, including financial statements satisfying the requirements of Form 10-K under the Securities Exchange Act of 1934, if required to be filed with the Securities and Exchange Commission, certified by independent public accountants and a report (which shall be audited) setting forth the amount of fees and other compensation and remuneration paid by the Partnership for that year to the General Partner and its Affiliates; (c) within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Partnership, a quarterly report containing the information required by Form 10-K under the Securities Exchange Act of 1934, if required to be filed with the Securities and Exchange Commission, and a report in narrative form describing dealings between the Partnership and General Partner or its Affiliates, including (i) any new contract arrangement entered into by the Partnership and the General Partner or its Affiliates during the period then ended and (ii) the amount of all fees and other compensation 37 and distribution paid by the Partnership for such period to the General Partner or any of its Affiliates; (d) such additional reports as the General Partner in its sole discretion may deem appropriate; and (e) in the event that the Partnership is not required to file reports under the Securities Exchange Act of 1934, the General Partner shall prepare and distribute to the Limited Partners (instead of the reports required by paragraphs (b) and (c) of this Section 12.04), (i) within one hundred twenty (120) days after the end of each fiscal year of the Partnership, an annual report setting forth distributions to the Limited Partners for the year then ended, and separately identifying distributions from Net Cash Flow and Sale or Refinancing Proceeds, and containing (A) a balance sheet as of the end of the fiscal year and statements of income, Partners' equity and changes in financial position (which shall be audited) and a cash flow statement for the year then ended; (B) a report of the activities of the Partnership during the year then ended; and (C) for the years 1986 and 1987, a table comparing actual results to the financial forecast appearing in the Prospectus; and (ii) within 45 days of the end of each fiscal quarter, a report containing unaudited financial information for such quarter and a report in narrative form including the information set forth in paragraph (c) of this Section 12.04. Within the scope of the annual audited report of the fees and other compensation and remuneration paid by the Partnership to the General Partner and its Affiliates to be prepared pursuant to paragraph (b) of this Section 12.04, the independent certified public accountants shall verify the allocation of reimbursable costs to the Partnership. The method of verification shall at a minimum provide (i) a verification of the time records of individual employees, the costs of whose services were reimbursed and (ii) a verification of the specific nature of the work performed by each such employee. The method of verification shall be in accordance with generally accepted auditing standards and shall accordingly include such tests of the accounting records and such other auditing procedures that the General Partner's or the Affiliate's independent certified public accountants consider appropriate in the circumstances. The additional costs of such verification will be itemized by such accountants and may be reimbursed to the General Partner or an Affiliate by the Partnership in accordance with Section 6.02 only to the extent that such reimbursement, when added to the cost for administrative services rendered, does not exceed the competitive rate for such services. 12.05 Fiscal Year. The fiscal year of the Partnership is the calendar year. 12.06 Tax Elections. (a) All elections under the Code with respect to the reporting of allowable deductions of the Partnership shall be made and determined in accordance with the method deemed by the General Partner to be in the best interests of the Partnership. 38 (b) In the event of a transfer of all or any part of the Interest of the General Partner or of a Limited Partner, the Partnership may elect, pursuant to Sections 743 or 754 of the Code (or any corresponding provisions of succeeding law), to adjust the tax basis of the Partnership property. However, notwithstanding an election pursuant to Section 754 having been made with respect to the Interest of any Partner, the balances shall, for all purposes of this Agreement, be made without taking into account adjustments resulting from such election and such adjustments shall only be taken into account on the income tax returns of the Partners affected thereby. 13. SALE, DISSOLUTION AND LIQUIDATION. 13.01 Dissolution of Partnership. The Partnership shall be dissolved upon the earliest to occur of: (a) the expiration of the term of the Partnership; (b) the withdrawal, expulsion, death, dissolution or adjudication of incompetency of a General Partner who is at that time the sole General Partner, subject to the right of the Partners to continue the Partnership pursuant to Section 10.06 hereof; (c) the dissolution of both Hotel Partnerships and final liquidation of their assets, or the Sale of substantially all of the Partnership's assets and collection of all the proceeds therefrom; (d) the election to dissolve the Partnership by Majority Vote of the Limited Partners; and (e) any other event causing the dissolution of the Partnership under the laws of the State of Delaware. 13.02 Winding Up and Distribution. (a) Upon the dissolution of the Partnership pursuant to Section 13.01, the Partnership business shall be wound up and its assets liquidated as provided for herein and the net proceeds of such liquidation shall be distributed in accordance with the definition of Sale or Refinancing Proceeds and the provisions of Section 7.05. The liquidation and winding up shall be under the direction of the General Partner. If there shall not then be any General Partner. Limited Partners by Majority Vote of the Limited Partners may designate a Person to assume responsibility for the liquidation and winding up of the Partnership. The Person or Persons who assume such responsibility (whether they be the General Partner or not) are referred to herein as "the Liquidator." (b) The Liquidator shall file all certificates and notices of the dissolution of the Partnership at such times and in such places as are required by law. The Liquidator shall proceed without any unnecessary delay to sell, subject to Section 8.08, if applicable, and otherwise liquidate the Partnership's property and assets; provided, however, if the Liquidator shall determine that an immediate sale of part or all of 39 the Partnership property would cause undue loss to the Partners, the Liquidator may defer the liquidation unless prohibited from doing so by applicable law. Upon the complete liquidation and distribution of the Partnership assets, the Partners shall cease to be Partners of the Partnership, and the Liquidator shall execute, acknowledge and cause to be filed all certificates and notices required by the law to terminate the Partnership. The Liquidator in its discretion may retain an amount as a cash reserve for contingent expenses and liabilities of the Partnership after complete liquidation. Any funds remaining in such cash reserve one year from the date the Certificate of Dissolution is filed shall be distributed to the Partners in accordance with Section 7.05. (c) Upon the dissolution of the Partnership pursuant to Section 13.01, the accountants for the Partnership shall promptly prepare, and the Liquidator shall furnish to each Partner, a statement setting forth the assets and liabilities of the Partnership upon its dissolution. Promptly following the complete liquidation and distribution of the Partnership property and assets, the Partnership's accountants shall prepare, and the Liquidator shall furnish to each Partner, a statement showing the manner in which the Partnership assets were liquidated and distributed. (d) All expenses incurred in connection with the liquidation and winding up shall be paid as debts of the Partnership and shall have priority over any distribution to be made to the Partners as a result of the liquidation and winding up. 14. AMENDMENTS. 14.01 General Provisions. (a) Amendments to this Agreement to reflect the designation of a successor or additional General Partner or the withdrawal or expulsion of the General Partner or to correct an ambiguity, mistake, omission or inconsistency in the Agreement, or to make any change required by the Securities and Exchange Commission or any state securities or "blue sky" commission, shall be made at the time and in the manner referred to in Section 14.03. Any other amendments to this Agreement, except for those within the General Partner's power of attorney under Section 8.09, may be proposed in the following manner: (i) by the General Partner, who shall give notice to the Limited Partners of the context of such amendment and a statement of the purpose of such amendment; or (ii) by Limited Partners owning ten percent (10%) or more of the Units, who shall submit to the General Partner the text of such proposed amendment, together with a statement of the purpose of such amendment. The General Partner shall, within twenty (20) days after receipt of any proposal under this subsection (ii), give notice to all Limited Partners of such proposed amendment and such statement of purpose, together with the views, if any, of the General Partner with respect to such proposed amendment (including whether such proposed amendment is permitted by the Act, will 40 impair the limited liability of the Limited Partners, or will adversely affect the classification or cause the termination of the Partnership as a partnership for federal income tax purposes). (b) Amendments proposed pursuant to Section 14.01(a) above, subject to the provisions of Section 14.03, shall be adopted if approved by a Majority Vote of the Limited Partners. (c) The General Partner shall, within a reasonable time after the adoption of any amendment to this Agreement, make any official filings or publications required or desirable to reflect such amendment, including any required filing for recordation of any amendment to the Certificate. (d) Amendments to correct any mistake, omission or inconsistency, to cure any ambiguity in the Agreement or to reflect the surrender of any rights or the assumption of any additional responsibilities by the General Partner may be made by the General Partner without obtaining the prior Consent of the Limited Partners; provided, however, no such amendment shall be permitted if it would have a material effect upon the rights, obligations and duties of the Limited Partners hereunder. 14.02 Limitations on Amendments. Notwithstanding the provisions of Sections 9.02(a) and 14.01, no amendment to this Agreement may: (a) enlarge the obligations of any Partner under this Agreement or convert the Interest of any Limited Partner into the Interest of a General Partner or modify the limited liability of any Limited Partner without the Consent of such Partner; (b) modify (i) the fees and compensation payable to the General Partner and its Affiliates as provided in Article 6 without the Consent of the General Partner; (ii) the order and method provided in Article 7 for allocation of Taxable Income and Taxable Loss and distributions of Net Cash Flow and Sale or Refinancing Proceeds of the Partnership without the Consent of the Partner adversely affected; (iii) the right to notice and opportunity to purchase granted Westin Hotel Company, or its assigns, in Section 8.08 without the Consent of Westin Hotel Company; or (iv) the right of the General Partner and its Affiliates and their employees to engage in other activities pursuant to Section 8.04 without the Consent of the General Partner; or (c) amend this Section without the Consent of all Partners. 14.03 Amendments on Admission or Withdrawal of a General Partner. (a) Amendments to reflect the designation of a successor or additional General Partner shall be adopted if the conditions specified in Section 10.01 or Section 10.05, as the case may be, shall have been satisfactorily complied with and the amendment shall have been signed by the General Partner and by such successor or additional General Partner. (b) Amendments to reflect the withdrawal or expulsion of the General Partner, if the business of the Partnership is continued, shall 41 be adopted if the conditions specified in Article 10 shall have satisfactorily complied with and the amendment shall have been signed by the substitute or successor General Partner. 15. GENERAL PROVISIONS. 15.01 Arbitration. Any dispute, controversy or claim arising out of or in connection with, or relating to, this Agreement or any breach or alleged breach hereof, except allegations of violations of federal or state securities law, shall, upon the request of any party involved, be submitted to, and settled by, arbitration in the City of Seattle, State of Washington, pursuant to the rules then in effect of the American Arbitration Association (or at any other place or under any other form of arbitration mutually acceptable to the parties so involved). Any award rendered shall be final and conclusive upon the parties and a judgment thereon may be entered in the highest court of the forum, state or federal, having jurisdiction. The expenses of the arbitration shall be borne equally by the parties to the arbitration, provided that each party shall pay for and bear the cost of its own experts, evidence and counsel's fees, except that in the discretion of the arbitrator any award may include the cost of a party's counsel if the arbitrator expressly determines that the party against whom such award is entered has caused the dispute, controversy or claim to be submitted to arbitration as a dilatory tactic. 15.02 Burden and Benefit. The covenants and agreements contained herein shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the respective parties hereto. 15.03 Notification. (a) Any Notification to any Limited Partner shall be in writing and given at the address of such Partner set forth in the books and records of the Partnership, or such other mailing address of which such Limited Partner shall advise the General Partner in writing. Any Notification to the Partnership or the General Partner shall be in writing and given at the principal office of the General Partner at The Westin Building, 2001 Sixth Avenue, Seattle, Washington 98121. The General Partner may at any time change the location of its principal office. Notification of any such change shall be given to the Partners on or before the date of any such change. (b) Any Notification shall be deemed to have been duly given if personally delivered or sent by United States mails or by telegram or telex confirmed by letter and will be deemed given, unless earlier received, (i) if sent by certified or registered mail, return receipt requested, or by first-class mail, five calendar days after being deposited in the United States mails, postage prepaid, (ii) if sent by United States Express Mail, two calendar days after being deposited in the United States mails, postage prepaid, (iii) if sent by telegram or telex or facsimile transmission, on the date sent provided confirmatory notice is sent by first-class mail, postage prepaid, and (iv) if delivered by hand, on the date of receipt. 42 15.04 Method of Giving Consent. Any Consent required by this Agreement maybe given by a writing delivered by the consenting Partner and received by the General Partner at or prior to the doing of the act or thing for which the Consent is solicited, provided that such Consent shall not have been nullified by notice to the General Partner of such nullification by the consenting Partner prior to the doing of the act or thing for which the Consent was solicited. 15.05 Severability of Provisions. Each provision of this Agreement shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this Agreement is determined to be invalid or contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Agreement which are valid. 15.06 Miscellaneous. This Agreement, in addition to any and all subscription documents executed by any of the parties, contains all of the representations and the entire contract between the parties hereto. All references to the neuter herein shall include both the masculine and the feminine. The captions and titles preceding the text of each section, together with the table of contents hereof, shall be disregarded in the construction of this Agreement. This Agreement and the rights of the Partners hereunder shall be governed by and construed in accordance with the laws of the State of Delaware. The General Partner shall decide any questions arising with respect to this Partnership which are not expressly provided for herein. IN WITNESS WHEREOF, this Agreement has been duly executed by the parties as of the date set forth beside their signatures. GENERAL PARTNER WESTIN REALTY CORP. Dated: 2/18/1987 By /s/ Raymond J. Witty --------------- --------------------------------- Name: Raymond J. Witty Title: Vice President Address: The Westin Building 2001 Sixth Avenue Seattle, WA 98121 43 LIMITED PARTNERS By WESTIN REALTY CORP. as Attorney-in-Fact Dated: 2/18/1987 By /s/ Raymond J. Witty --------------- --------------------------------- Name: Raymond J. Witty Title: Vice President Address: The Westin Building 2001 Sixth Avenue Seattle, WA 98121 44 SCHEDULE A GENERAL PARTNER:

NAME CAPITAL CONTRIBUTIONS Westin Realty Corp................................... $20

LIMITED PARTNERS:

NAME CAPITAL CONTRIBUTIONS Limited Partners..................................... $135,600,000

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EX-99.(A)(1)(A)

exv99wxayx1yxay

EX-99.(A)(1)(B)

exv99wxayx1yxby

EX-99.(A)(1)(C)

exv99wxayx1yxcy

EX-99.(A)(1)(D)

exv99wxayx1yxdy

EX-99.(A)(1)(E)

exv99wxayx1yxey

EX-99.(C)(2)

exv99wxcyx2y

EX-99.(C)(4)

exv99wxcyx4y

EX-99.(C)(5)

exv99wxcyx5y

EX-99.(C)(6)

exv99wxcyx6y

EX-99.(C)(7)

exv99wxcyx7y

EX-99.(D)(1)

                                                                  Exhibit (d)(1)








            =======================================================

             AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                       WESTIN HOTELS LIMITED PARTNERSHIP

            =======================================================

                               TABLE OF CONTENTS



                                                                           PAGE
                                                                     
1.   DEFINITIONS ..........................................................   2

2.   CONTINUATION AND GOVERNANCE OF THE PARTNERSHIP .......................   7

     2.01  Continuation and Governance ....................................   7
     2.02  Name ...........................................................   7
     2.03  Principal Place of Business ....................................   7
     2.04  Name, Place of Residence, and Capital Contribution .............   7
     2.05  Term ...........................................................   8
     2.06  Registered Office and Agent for Service ........................   8

3.   BUSINESS OF THE PARTNERSHIP ..........................................   8

     3.01  Purpose of the Partnership .....................................   8
     3.02  Authority of the Partnership ...................................   8

4.   PARTNERS AND CAPITAL CONTRIBUTIONS ...................................   8

     4.01  Contributions by General Partner ...............................   8
     4.02  Contributions of Limited Partners ..............................   9
     4.03  Return of Capital Only From Partnership Assets .................   9
     4.04  Priority and Return of Capital .................................   9
     4.05  Withdrawal of Capital Contributions ............................   9
     4.06  Advances by General Partner ....................................   9

5.   CAPITAL ACCOUNTS .....................................................  10
     5.01  Establishment of Capital Accounts ..............................  10
     5.02  Determination of Capital Accounts ..............................  10

6.   CAPITAL CONTRIBUTIONS TO THE HOTEL PARTNERSHIPS; REIMBURSEMENT
     OF EXPENSES ..........................................................  10

     6.01  Capital Contributions to the Hotel Partnerships ................  10
     6.02  Reimbursement of Expenses ......................................  10

7.   ALLOCATIONS AND DISTRIBUTIONS ........................................  12

     7.01  Allocation of Taxable Income and Taxable Loss ..................  12
     7.02  Distribution of Net Cash Flow ..................................  14
     7.03  Allocation of Gain or Loss Resulting From Sale of Property .....  15
     7.04  Distribution of Proceeds from Interim Capital Transactions .....  17
     7.05  Distribution of Proceeds from a Final Capital Transaction ......  18
     7.06  Deficit Capital Accounts at Liquidation ........................  19



                                      (1)



8.   MANAGEMENT AND OPERATION OF BUSINESS.................................19

     8.01 General  Authority of the General Partner.......................19
     8.02 Specific Duties and Authority of the General Partner............19
     8.03 Limitations on Authority of the General Partner.................23
     8.04 Independent Activities..........................................24
     8.05 General Partner or Affiliates Dealing With the Partnership......24
     8.06 Potential Liability of the General Partner......................25
     8.07 Indemnification of General Partner and its Affiliates...........25
     8.08 Right of Notice and Opportunity to Purchase.....................26
     8.09 Power of Attorney...............................................28

9.   STATUS OF LIMITED PARTNERS...........................................29

     9.01 Limited Liability...............................................29
     9.02 Rights of Limited Partners......................................29
     9.03 Restrictions on Powers..........................................30
     9.04 Relationship with the General Partner...........................30
     9.05 Effect of Bankruptcy, Death or Incompetency
          of Limited Partner..............................................30

10.  CHANGES IN GENERAL PARTNER AND TRANSFERS OF ITS INTERESTS............31

     10.01 Sale or Transfer of the General Partner's Interest.............31
     10.02 Expulsion of the General Partner...............................31
     10.03 Withdrawal of General Partner..................................32
     10.04 Continuing Liability...........................................32
     10.05 Admission of Additional General Partner........................32
     10.06 Effect of Bankruptcy, Death, Dissolution, Incompetency,
           Withdrawal or Expulsion of a General Partner...................33

11.  TRANSFER OF LIMITED PARTNERS' INTERESTS; ADMISSION OF SUBSTITUTED
     LIMITED PARTNERS.....................................................33

     11.01 Transfer of Interests..........................................33
     11.02 Assignment; Substituted Limited Partners.......................35
     11.03 Joint Ownership of Interest....................................36

12.  BOOKS, RECORDS, ACCOUNTING, TAX ELECTIONS AND BANKING................36

     12.01 Books and Records..............................................36
     12.02 Custody of Partnership Funds; Bank Accounts....................37
     12.03 Accountants....................................................37
     12.04 Reports to Partners............................................37
     12.05 Fiscal Year....................................................38
     12.06 Tax Elections..................................................38

13.  SALE, DISSOLUTION AND LIQUIDATION....................................39

     13.01 Dissolution of Partnership.....................................39
     13.02 Winding Up and Distribution....................................39



                                      (2)

                                                                       
14.  AMENDMENTS.............................................................. 40

     14.01  General Provisions............................................... 40
     14.02  Limitations on Amendments........................................ 41
     14.03  Amendments on Admission or Withdrawal of a General Partner....... 41

15   GENERAL PROVISIONS...................................................... 42

     15.01  Arbitration...................................................... 42
     15.02  Burden and Benefit............................................... 42
     15.03  Notification..................................................... 42
     15.04  Method of Giving Consent......................................... 43
     15.05  Severability of Provisions....................................... 43
     15.06  Miscellaneous.................................................... 43

     SIGNATURES.............................................................. 43

     SCHEDULE A.............................................................. 43



                                      (3)


NOTE: FOR CALIFORNIA RESIDENTS, IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER
OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION
THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

           ===========================================================
              AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                        WESTIN HOTELS LIMITED PARTNERSHIP
           ===========================================================

This Amended and Restated Agreement of Limited Partnership is made and entered
into as of December 31, 1986, and shall be effective for the fiscal year ending
December 31, 1986, and thereafter, by and among WESTIN REALTY CORP., a Delaware
corporation, as the sole General Partner ("General Partner"), and WESTIN REALTY
CORP., a Delaware corporation, as the attorney-in-fact for the Limited Partners.

WHEREAS:

      A. A mistake exists in setting forth the percentages of depreciation
deductions and/or Accelerated Cost Recovery System (ACRS) deductions allocable
to (1) the Partners in the Agreement of Limited Partnership of Westin Hotels
Limited Partnership, dated August 13, 1986, as amended ("Partnership
Agreement"); (2) the partners in the Agreement of Limited Partnership of The
Westin St. Francis Limited Partnership, dated August 13, 1986, as amended; and
(3) the partners in the Agreement of Limited Partnership of The Westin Chicago
Limited Partnership, dated August 13, 1986, as amended (the Agreements of
Limited Partnership for The St. Francis Limited Partnership and The Chicago
Limited Partnership collectively are referred to hereinafter as the "Hotel
Partnership Agreements");

      B. The General Partner desires to amend the Partnership Agreement pursuant
to its power of attorney under Section 8.09 hereof in order to correct the
mistake and to set forth the entire restated agreement governing the Partnership
in a single instrument;



                                       1


      C. The Hotel Partnership Agreements also will be corrected so that the
amendment to the Partnership Agreement will not have any material effect upon
the rights, obligations and duties of the Limited Partners hereunder;

      NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the parties agree that the Partnership Agreement is
hereby amended to read in its entirety as follows:

1.    DEFINITIONS.

      For purposes of this Agreement, the following terms shall have the
meanings set forth below:

            1.01 "Act." The Delaware Revised Uniform Limited Partnership Act, as
      amended to date, or corresponding provisions of subsequent legislation.

            1.02 "Adjusted Base Amount." At any specified time, the Base Amount,

                  (a) reduced by all amounts distributed to

                        (i) the General Partners to, but not including, such
                  specified time pursuant to (i) Section 7.04(f) or (ii) Section
                  7.05(c) in excess of those amounts necessary to provide the
                  General Partner with a cumulative, but not compounded, annual
                  l2% Return on the weighted average balance of its Adjusted
                  Base Amount; or

                        (ii) to the Hotel General Partners to, but not
                  including, such specified time pursuant to the Agreements of
                  Limited Partnership of the Hotel Partnerships, and

                  (b) increased by all amounts contributed to the Partnership by
            the General Partner pursuant to Section 4.01(a) to, but not
            including, such specified time.

            1.03 "Adjusted Capital Contribution." At any specified time, the
      Capital Contribution of any Limited Partner, or the Limited Partners, as a
      class, as the case may be, reduced by all amounts distributed to such
      Limited Partner, or the Limited Partners, as a class, as the case may be
      (to, but not including, such specified time) pursuant to:

                  (a) Section 7.04(d); or

                  (b) Section 7.05(c) in excess of those amounts necessary to
            provide the Limited Partner, or the Limited Partners as a class,
            with a cumulative, but not compounded, annual 12% Return on the
            weighted average balance of their Adjusted Capital Contribution.

            1.04 "Affiliate." An Affiliate of a specified Person means (a) any
      Person directly or indirectly owning, controlling or holding with power to
      vote 10% or more of the outstanding voting securities of the specified
      Person; (b) any Person 10% or more of whose outstanding voting


                                       2


      securities are directly or indirectly owned, controlled or held with power
      to vote by the specified Person; (c) any Person directly or indirectly
      controlling, controlled by or under common control with the specified
      person; (d) any officer, director or partner of the specified Person; and
      (e) any Person of which the specified Person is an officer, director or
      partner.

            1.05 "Agreement." This Amended and Restated Agreement of Limited
      Partnership, as such may be amended, modified or supplemented from time to
      time.

            1.06 "Base Amount." $12,400,000.

            1.07 "Capital Account." The Capital Account of each Partner
      maintained and determined pursuant to Article 5.

            1.08 "Capital Contributions." For purposes of this Agreement and the
      Act (a) when used with reference to the Limited Partners as a class, the
      $135,600,000 agreed value of the assets contributed to the Partnership by
      Westin Realty Corp., as an original Limited Partner, as set forth in
      Section 4.02; and (b) when used with reference to the General Partner, the
      amount of money and the value of any property contributed by the General
      Partner as set forth in Section 4.01. The Capital Contribution of any
      particular Limited Partner is such Limited Partner's Proportionate Share
      of the Capital Contributions of the Limited Partners, as a class. For
      federal income tax purposes, the Capital Contributions of any Partner or
      any class of Partners, as the case may be, shall be determined by
      reference to the fair market value of the contributed property.

            1.09 "Certificate." The Certificate of Limited Partnership of the
      Partnership filed in the office of the Secretary of State of Delaware,
      pursuant to the provisions of the Act, as amended from time to time.

            1.10 "Code." The Internal Revenue Code of 1954, as amended to date,
      or corresponding provisions of subsequent revenue laws.

            1.11 "Consent." The written consent of a Person to do the act or
      thing for which the consent is solicited, as provided in Section 15.04, or
      the act of granting such consent, as the context may require.

            1.12 "General Partner." Westin Realty Corp., and any other Person
      who is subsequently admitted to the Partnership as a General Partner in
      accordance with the terms of this Agreement.

            1.13 "Hotel Corporations." St. Francis Hotel Corporation and 909
      North Michigan Avenue Corporation, current owners of the Hotel Properties.

            1.14 "Hotel Partnerships." The Westin St. Francis Limited
      Partnership, which will own the Westin St. Francis (San Francisco,
      California), and The Westin Chicago Limited Partnership, which will own


                                       3


      the Westin Hotel (Chicago, Illinois). "Hotel Partnership" refers to any
      one of the Hotel Partnerships.

            1.15 "Hotel Properties." The real and personal (whether tangible or
      intangible) property including the land to be contributed to the Hotel
      Partnerships by the Hotel Corporations. "Hotel Property" refers to the
      real and personal property to be contributed to either of the Hotel
      Partnerships.

            1.16 "Incentive Management Fee." The Incentive Management Fee
      payable by a Hotel Partnership to Westin Hotel Company under the
      Management Agreement for the Hotel Property of such Hotel Partnership.

            1.17 "Interest." A Partner's interest in the Partnership as
      determined under the Act and this Agreement; provided, however, until John
      S. Calvert withdraws, he shall be deemed to hold a 1% interest in the
      Partnership.

            1.18 "Limited Partner." Any Person who is a Limited Partner in the
      Partnership (whether an original Limited Partner or a Substituted Limited
      Partner) at the time of reference thereto, in such Person's capacity as a
      Limited Partner in the Partnership.

            1.19 "Majority Vote of the Limited Partners." The Consent of the
      Limited Partners who collectively hold more than 50% of the Units.

            1.20 "Management Agreement." The separate agreement entered into
      between each Hotel Partnership and Westin Hotel Company, as manager, for
      the management of a Hotel Property.

            1.21 "Maximum Indebtedness." With respect to both Hotel Properties,
      fifty percent (50%) of the then appraised value of the Hotel Properties or
      $130,000,000, whichever amount is greater, or with respect to only one
      Hotel Property, fifty percent (50%) of the then appraised value of the
      Hotel Property or fifty percent (50%) of the appraised value of the Hotel
      Property as of January 31, 1986, whichever amount is greater. In all
      events, the appraised value as referred to herein is the value determined
      by an independent qualified real estate and hotel appraiser.

            1.22 "Minimum Gain." The meaning ascribed to that term in the
      proposed Treasury Regulations under Section 704(b) of the Code published
      in the Federal Register on March 9, 1983, as modified by any amended
      proposed Regulation or final Regulation.

            1.23 "Mortgage Loans." The loans in an aggregate amount of
      $116,150,000 to be made by the Teacher Retirement System of Texas to the
      Hotel Corporations and secured by the Hotel Properties.

            1.24 "Net Cash Flow." With respect to a fiscal period, all cash
      receipts and funds received by the Partnership (other than (i) Capital
      Contributions to the Partnership, (ii) the proceeds of any borrowing by
      the Partnership, including any borrowing on behalf of a Hotel Partnership,
      (iii) any amounts distributed to the Partnership from a


                                       4


      Hotel Partnership from or as a result of any Sale or refinancing of a
      Hotel Partnership from or as a result of any Sale or refinancing of a
      Hotel Property, or the liquidation of any Hotel Partnership, (iv) any
      amounts distributed to the Partnership from a Hotel Partnership for
      deposit in the Partnership's cash management fund and representing working
      capital or other reserves of the Hotel Partnership, (v) the proceeds of
      the Sale or refinancing of the Partnership's limited partnership interest
      in any Hotel Partnership, or (vi) the proceeds of the liquidation of the
      Partnership) less the sum of the following to the extent made from such
      cash receipts or other funds received by the Partnership (other than the
      aforesaid funds and funds withdrawn from Partnership reserves therefor):

                  (a) all sums paid to lenders including, but not by way of
            limitation, all principal and interest payments on mortgages and
            other indebtedness of the Partnership or the Hotel Partnerships
            including all principal and interest payments on the Mortgage Loans
            (but not principal or interest payments on any Subordinated Loan);

                  (b) all cash expenditures incurred incident to the normal
            operation of the Partnership's business, including without
            limitation those expenses of the General Partner and its Affiliates
            reimbursed by the Partnership pursuant to the provisions hereof (but
            not including Incentive Management Fees);

                  (c) all cash contributed or advanced to or on behalf of the
            Hotel Partnerships, whether for capital improvements to, or
            renovation of, the Hotel Properties but not including cash
            contributed to a Hotel Partnership pursuant to Section 6.01; and

                  (d) such reserves as the General Partner in its sole
            discretion deems to be reasonably required for the proper operation
            of the Partnership's business;

            1.25 "Notification." A writing, containing the information required
      by this Agreement to be communicated to any Person, sent as provided in
      Section 15.03.

            1.26 "Partners." The General Partner and all Limited Partners,
      collectively, where no distinction is required by the context in which the
      term is used. The term "Partner" refers to any of the Partners.

            1.27 "Partnership." The limited partnership formed and continued
      pursuant to the Certificate and governed by this Agreement.

            1.28 "Person." Any individual, corporation, partnership, trust or
      other entity.

            1.29 "Proportionate Share." With respect to any Limited Partner's
      Capital Contribution or aliquot share of Net Cash Flow, Sale or
      Refinancing Proceeds, Taxable Income or Taxable Loss, as the case may be,
      the product of the total Capital Contributions of, or the total Net Cash
      Flow or Sale or Refinancing Proceeds distributable, or Taxable Income or
      Taxable Loss allocable, to the Limited Partners multiplied by a fraction


                                       5


      the numerator of which is the number of Units owned by such Partner and
      the denominator of which is 135,600.

            1.30 "Prospectus." The Prospectus contained in the Registration
      Statement in effect at the time of reference thereto; except that if the
      Prospectus filed by the Partnership pursuant to Rule 424(b) or Rule 424(c)
      under the Securities Act of 1933 differs from the Prospectus contained in
      the Registration Statement in effect at such time, then the term
      "Prospectus" refers to the Rule 424(b) or Rule 424(c) Prospectus from and
      after the time it is mailed to the Securities and Exchange Commission for
      filing.

            1.31 "Registration Statement." The registration statement on file
      with the Securities and Exchange Commission pursuant to the Securities Act
      of 1933 for the registration of the Units to be sold by Westin Realty
      Corp. at the time such registration statement becomes effective; except
      that if the Partnership files a post-effective amendment to the
      Registration Statement or a new Registration Statement and the Prospectus
      included therein may be used by the Partnership pursuant to Rule 429 under
      the Securities Act of 1933 (or any corresponding provision of succeeding
      rules or regulations of the Securities and Exchange Commission), then the
      term "Registration Statement," from and after the declaration of the
      effectiveness of such post-effective amendment or such new Registration
      Statement, shall refer to the Registration Statement as amended by such
      post-effective amendment thereto or the then effective Registration
      Statement, as the case may be.

            1.32 "Return." When used with reference to a stated dollar amount
      (such as a $95 Return or a $150 Return), the stated dollar amount per
      Unit, or, after any distribution to the Limited Partners pursuant to
      Section 7.04(d) or Section 7.05(c), the product of the stated dollar
      amount multiplied by a fraction the numerator of which is the Adjusted
      Capital Contributions of the Limited Partners and the denominator of which
      is the Capital Contributions of the Limited Partners. When used with
      reference to a stated percentage (such as a 12% Return), the stated
      percentage of the Adjusted Capital Contribution of a Limited Partner, or
      of the Adjusted Capital Contributions of the Limited Partners as a class,
      as the case may be, in the case of the Limited Partners; or the stated
      percentage of the Adjusted Base Amount, in the case of the General
      Partner.

            1.33 "Sale." The sale, exchange, involuntary conversion,
      condemnation or other disposition of property by the Partnership or a
      Hotel Partnership.

            1.34 "Sale or Refinancing Proceeds." The net cash proceeds
      distributed to the Partnership from a Hotel Partnership from or as a
      result of any Sale or refinancing of the Hotel Property of such Hotel
      Partnership or the liquidation of any Hotel Partnership, any amount
      contributed to the Partnership by the General Partner pursuant to Section
      4.01(a), or the net cash proceeds to the Partnership from the Sale of the
      limited partnership interests in a Hotel Partnership or the liquidation of
      the Partnership, after deducting (i) any expenses incurred in connection
      therewith, (ii) any amounts applied by the General Partner in


                                       6

      its sole discretion towards the payment of any indebtedness of the
      Partnership or the Hotel Partnerships including payments of principal and
      interest on the Mortgage Loans (but not including payments of principal
      and interest on any Subordinated Loans or payment of Incentive Management
      Fees), (iii) the payment of any other expenses and (iv) the establishment
      of any reserves deemed reasonably necessary by such General Partner.

            1.35 "Subordinated Loan." A loan by the General Partner or any of
      its Affiliates made pursuant to, and governed by the terms of, Section
      8.02(c) to provide funds to the Partnership for contribution by the
      Partnership to any Hotel Partnership for normal or extraordinary
      improvements to, or renovation of, or other capital expenditures relating
      to, the Hotel Property of such Hotel Partnership.

            1.36 "Substituted Limited Partner." A transferee of an Interest of
      a Limited Partner who has been admitted to the Partnership in accordance
      with the terms of this Agreement.

            1.37 "Taxable Income" or "Taxable Loss." The taxable income or
      taxable loss of the Partnership (including the Partnership's share of any
      taxable income or loss from the Hotel Partnerships) under the Code,
      including, without limitation, each item of Partnership income, gain,
      loss, deduction or credit (including any credit recapture), as determined
      in accordance with such methods of accounting as are permitted by the Code
      and selected by the General Partner.

            1.38 "Unit." After the withdrawal of John S. Calvert, a Unit will
      represent one one-hundred thirty-five thousand six hundredth (1/135,600)
      of the total Interests of the Limited Partners as a class, with each Unit
      representing a Capital Contribution of $1,000.

2.    CONTINUATION AND GOVERNANCE OF THE PARTNERSHIP.

      2.01 Continuation and Governance. The parties hereto, having formed the
Partnership by filing the Certificate pursuant to the Act, hereby continue the
limited partnership so formed and agree that the Partnership shall be governed
pursuant to the provisions of the Act, on the terms and conditions set forth
herein.

      2.02 Name. The name of the Partnership is Westin Hotels Limited
Partnership.

      2.03 Principal Place of Business. The principal place of business of the
Partnership shall be The Westin Building, 2001 Sixth Avenue, Seattle, Washington
98121, or at such other location as may be determined by the General Partner
upon written notice to the Limited Partners. In addition, the General Partner
has the right to establish and maintain such other offices and places of
business of the Partnership either within or without the State of Delaware as it
may from time to time determine.

      2.04 Name, Place of Residence, and Capital Contribution. The names and
addresses of each Limited Partner and General Partner, and the capital
contributed by each of the Partners, are set forth on Schedule A which is
attached hereto and incorporated herein by reference.


                                       7


      2.05 Term. The term of the Partnership commenced on the date the
Certificate was first filed in the Office of the Secretary of State of the State
of Delaware and shall continue until December 31, 2036, unless sooner terminated
in accordance with the provisions of this Agreement or as otherwise provided by
law.

      2.06 Registered Office and Agent for Service. The registered agent of the
Partnership for service of process on the Partnership shall be the Corporation
Trust Company, having an office at 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The registered office which the Partnership is required
to maintain in the State of Delaware shall be the office of such agent at
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801.

3.    BUSINESS OF THE PARTNERSHIP.

      3.01 Purpose of the Partnership. The purpose and character of the business
of the Partnership is to invest in, own, operate, lease, sell and otherwise deal
with the Hotel Properties by acquiring, holding, selling, exchanging or
otherwise disposing of limited partnership interests in the Hotel Partnerships.
The Partnership shall not engage in any other activity.

      3.02 Authority of the Partnership. In order to carry out its purpose and
not in limitation thereof, the Partnership is empowered and authorized to do any
and all acts and things necessary, appropriate, proper, advisable, incidental to
or convenient for the furtherance and accomplishment of its purpose, and for the
protection and benefit of the Partnership, as permitted under the Act.

4.    PARTNERS AND CAPITAL CONTRIBUTIONS.

      4.01 Contributions by General Partner. Westin Realty Corp. shall serve as
the General Partner and shall initially make only a nominal contribution to the
capital of the Partnership as General Partner. The General Partner shall have no
further obligation to make any Capital Contribution to the Partnership, except
that

            (a) if a distribution is made to the general partner of a Hotel
      Partnership ("Hotel General Partner") pursuant to the Agreement of Limited
      Partnership of such Hotel Partnership, prior to such time as the Limited
      Partners in the Partnership have received distributions in an amount
      which, together with all prior distributions to the Limited Partners
      pursuant to Section 7.02 and 7.04, would result in their having received a
      cumulative, but not compounded, annual 12% Return on the weighted average
      balance of their Adjusted Capital Contributions and an amount equal to
      their Adjusted Capital Contributions, the General Partner shall contribute
      to the Partnership, in cash, an amount equal to the amount so distributed
      to the Hotel General Partner, and

            (b) if the General Partner is required to eliminate a deficit
      balance in its Capital Account, as required by Section 7.06, the General
      Partner shall contribute to the Partnership, in cash, such amount as may
      be required by Section 7.06.


                                       8


      4.02 Contributions of Limited Partners. John S. Calvert and Westin Realty
Corp. shall serve as the original Limited Partners. John S. Calvert shall
contribute $20 to the Partnership. Westin Realty Corp. shall contribute to the
Partnership 100% of the limited partnership interests it owns or will acquire in
the Hotel Partnerships. The value of such contribution as determined by the
General Partner is $135,600,000, for which Westin Realty Corp. shall receive
135,600 Units. Upon admission of any Substituted Limited Partner, John S.
Calvert shall withdraw from the Partnership as a Limited Partner and his capital
contribution shall be refunded to him; provided, however, that he may again
become a Limited Partner in accordance with the provisions set forth herein. The
Limited Partners, including the original Limited Partners and any and all
Substituted Limited Partners, shall have no further obligation to make any
Capital Contribution to the Partnership, except as provided in Section 4.05
below.

      4.03 Return of Capital Only From Partnership Assets. No Partner shall been
titled to the return of any Capital Contribution out of any assets other than
the assets of the Partnership and then only strictly in accordance with the
provisions of this Agreement. No Partner, including the General Partner or any
of its Affiliates, shall have any personal liability for the return or repayment
for the Capital Contribution of any other Partner except as and to the extent
required by Sections 4.01, 4.02 and 7.06.

      4.04 Priority and Return of Capital. Except as expressly provided for by
the provisions of this Agreement, no Limited Partner shall have priority over
any other Limited Partner, either as to the return of all or a portion of
Capital Contributions or as to allocations of Taxable Income or Taxable Loss, or
as to distributions of Net Cash Flow or Sale or Refinancing Proceeds.

      4.05 Withdrawal of Capital Contributions. Except as provided in Section
4.02, no Partner shall have the right to the withdrawal or reduction of its
Capital Contribution. In accordance with the Act, a limited partner of a
partnership may, under certain circumstances, be required to return to the
partnership, for the benefit of partnership creditors, amounts previously
returned or distributed to such partner as a return of capital and distributions
wrongfully made to such limited partner. It is the intent of the Partners that
no return or distribution to any Limited Partner of Net Cash Flow pursuant to
Section 7.02 or of Sale or Refinancing Proceeds pursuant to Section 7.04(d) or
Section 7.05(c) shall be deemed a return or withdrawal of capital, even if such
return or distribution represents, for federal income tax purposes or otherwise
(in whole or in part), a distribution of depreciation or any other non-cash item
accounted for as a loss or deduction from or offset to the Partnership's income,
and that no Limited Partner shall be obligated to pay any such amount to, or for
the account of, the Partnership or any creditor of the Partnership. However, if
any court of competent jurisdiction holds that, notwithstanding the provisions
of this Agreement, any Limited Partner is obligated to make any such payment,
such obligation shall be the obligation of such Limited Partner and not of the
General Partner.

      4.06 Advances by General Partner. Although it is not presently
contemplated, the General Partner, or any of its Affiliates, subject to the
provisions of Section 8.03(b)(iii), may in its discretion advance funds to the
Partnership for use in funding Partnership operations if the need therefor
should occur. Any such advances shall be for purposes other than those which a


                                       9


Subordinated Loan would be made pursuant to Section 8.02(c) and shall be for a
period not to exceed three years which period, however, may be renewed at the
end of each term. Notwithstanding the foregoing, as long as capital expenditures
for a Hotel Property do not exceed the amount reserved for such expenditures
pursuant to the Management Agreement for such Hotel Property advances can be
made for any purpose. The aggregate amount of such advances shall become an
obligation of the Partnership to the General Partner or Affiliate, and shall be
paid with interest; provided that the per annum interest rate does not exceed
the prime rate quoted by the Bank of America, N.T. & S.A., from time to time,
plus one percentage point, compounded quarterly, or such lower rate as would be
charged by an unrelated lending institution on a comparable loan for the same
purpose.

5.    CAPITAL ACCOUNTS.

      5.01 Establishment of Capital Accounts. The Partnership shall establish
and maintain a Capital Account for each Partner.

      5.02 Determination of Capital Accounts. The "Capital Account" for each
Partner for federal income tax purposes shall be determined and maintained in
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv) as amended from
time to time.

6.    CAPITAL CONTRIBUTIONS TO THE HOTEL PARTNERSHIPS; REIMBURSEMENT OF EXPENSE.

      6.01 Capital Contributions to the Hotel Partnerships. The Partnership
shall contribute to the capital of the Hotel Partnerships (i) cash in the
amounts and at the times provided in Sections 7.02, 7.04 and 7.05 and (ii) any
cash required to be contributed by the Partnership to any Hotel Partnership to
eliminate a deficit balance in the Partnership's capital account under the terms
of the Agreement of Limited Partnership of such Hotel Partnership.

      6.02 Reimbursement of Expenses. Subject to Section 12.04, the General
Partner will be reimbursed by the Partnership for any direct or indirect
expenses incurred in performing services for the Partnership or, on behalf of
the Partnership, for any Hotel Partnership, including, but not limited to, the
expenses set forth below.

            (a) The Partnership will reimburse the General Partner and its
      Affiliates for administrative expenses. Administrative expenses shall be
      the actual cost of goods, materials and administrative services used for
      or by the partnership whether incurred by the General Partners, Affiliates
      or nonAffiliates in performing the following general functions:

                  (i) Partnership accounting, which shall include without
            limitation the following: preparation and documentation of
            Partnership accounting and audits; preparation and documentation of
            budgets, economic surveys, projections of Taxable Income or Taxable
            Loss, cash flow and working capital requirements; preparation of
            regulatory and tax reports; costs of any accounting, statistical or
            bookkeeping equipment necessary for the maintenance of the books and
            records of the Partnership; and costs of preparation and
            dissemination of informational material and documentation relating


                                       10


            to potential Sale or refinancing of Hotel Properties or the
            Partnership's limited partnership interests in the Hotel
            Partnerships.

                  (ii) Investor communications, which shall include without
            limitation the following: initiation, review and approval of
            Partnership reports and communications to Limited Partners,
            including those filed with regulatory agencies; expenses in
            connection with cash distributions made by the Partnership to
            Limited Partners, and communications, bookkeeping and clerical work
            necessary in maintaining relations with Limited Partners, including
            the costs of design, production, printing and mailing reports of the
            Partnership, conducting elections in any circumstance requiring a
            vote of the Limited Partners, holding meetings with Limited
            Partners, and preparing proxy statements and soliciting proxies in
            connection therewith; and expenses in connection with preparing and
            mailing reports required to be furnished to Limited Partners for tax
            reporting or other purposes, including reports required to be filed
            with the Securities and Exchange Commission and other federal or
            state regulatory agencies, or expenses associated with furnishing
            reports to Limited Partners which the General Partner deems to be in
            the best interests of the Partnership.

                  (iii) Investor documentation, which shall include without
            limitation the following: printing, engraving and other expenses and
            taxes or fees in connection with the issuance, distribution,
            transfer, registration and recordation of documents evidencing
            ownership of Interests.

                  (iv) Legal services, which shall include without limitation
            the following: expenses of revising and amending the Partnership
            Agreement or Certificate or converting, modifying or terminating the
            Partnership or this Agreement; monitoring litigation, if any; and
            costs incurred in connection with any litigation in which the
            Partnership is involved as well as any examination, investigation or
            other proceeding conducted by any regulatory agency with regard to
            the Partnership, including legal and accounting fees in connection
            therewith, subject to the provisions of Section 8.07, and costs of
            qualifying or licensing the Partnership.

                  (v) Tax Services, which shall include without limitation the
            following: tax planning for the Partnership; preparation and
            documentation of Partnership state and federal tax returns; review
            of tax projections; and communications to Limited Partners and other
            matters specifically required as a "Tax Matters Partner" under the
            Code.

                  (vi) Computer services, which shall include without limitation
            the following: costs of any computer equipment, software license
            fees and maintenance, service bureau and other related professional
            fees and expenses used for or by the Partnership, including
            maintenance of investor records and processing of accounting records
            related to the Partnership.

                  (vii) Such other



                                       11


            related administrative expenses as are necessary to the prudent
            operation of the Partnership.

            (b) Actual costs of goods and materials, as used in this Agreement,
      means the actual costs to the General Partner or its Affiliates of goods
      and materials used for or by the Partnership or the amount which the
      Partnership would be required to pay an independent third party for
      comparable goods and materials, if lower.

            (c) Actual costs of administrative services, as used in this
      Agreement, means the pro rata cost of personnel (as if such persons were
      employees of the Partnership) associated therewith. The costs for such
      services to be reimbursed to the General Partner or its Affiliates shall
      be at the General Partner's actual cost, or the amount which the
      Partnership would be required to pay an independent third party for
      comparable services in the same geographic location, if lower. The General
      Partner and its Affiliates shall not be reimbursed for (i) depreciation,
      utilities, capital equipment and other administrative items (except that
      the General Partner and its Affiliates may be reimbursed for computer time
      expenses incurred solely in connection with the administration of the
      Partnership); and (ii) salaries, fringe benefits, travel expenses and
      other administrative items incurred by or allocated to any controlling
      persons of the General Partner or its Affiliates (except that the General
      Partner and its Affiliates may be reimbursed for travel expenses incurred
      in extraordinary circumstances). For purposes of this Section 6.02(c)(ii),
      "controlling person" means: the Chairman or any member of the Board of
      Directors; executive management, including the President, Vice-Presidents
      and Executive Vice-Presidents, the Secretary and the Treasurer; and any
      Person holding 5% or more of the voting securities of the General Partner
      or any of its Affiliates.

            (d) Notwithstanding the above, the Partnership shall not reimburse
      the General Partner for the expenses related to services for which the
      General Partner or any of its Affiliates is entitled to compensation by
      way of a separate fee (including the Incentive Management Fee). It is the
      intent of this Agreement that the General Partner and its Affiliates shall
      be reimbursed only for costs and expenses which are in addition to those
      normally incurred by Westin Hotel Company and its Affiliates as part of
      their hotel management and marketing services and for which Westin Hotel
      Company and its Affiliates have not received compensation or have not been
      reimbursed under the terms of any Management Agreement.

            (e) Expenses of the Partnership shall be billed directly to and paid
      by the Partnership, and, except as permitted by this Section 6.02, no
      reimbursements shall be made therefor to the General Partner or any of its
      Affiliates.

7.    ALLOCATIONS AND DISTRIBUTIONS.

      7.01 Allocation of Taxable Income and Taxable Loss. All Taxable Income and
Taxable Loss (excluding Taxable Income and Taxable Loss arising out of the Sale
of a Hotel Property, or from the liquidation of a Hotel Partnership, or from the
Sale of the Partnership's interest in a Hotel Partnership or from the
liquidation of the Partnership) for any fiscal year of the Partnership shall be


                                       12

allocated to the Partners' pro rata in proportion to the Net Cash Flow
distributable to such Partners with respect to such fiscal year, as set forth in
Section 7.02 (it being understood that Net Cash Flow contributed to any Hotel
Partnership by the Partnership pursuant to Sections 7.02(b), (c) or (d) is not
distributed or distributable to any Partner and does not affect allocations of
Taxable Income or Taxable Loss); provided, however, that

            (a) depreciation deductions and/or Accelerated Cost Recovery System
      (ACRS) deductions allocated to the Partnership from the Hotel Partnerships
      shall be allocated 7.4545% to the General Partner and 92.5455% to the
      Limited Partners; provided, however, that if the amounts so allocated to
      the General Partner are in excess of said General Partner's basis in the
      Partnership at the end of the Partnership's taxable year, such excess
      shall, subject to Section 7.01(b), be directly allocated to the Hotel
      General Partners by the Hotel Partnerships to the extent that the
      deductibility thereof by the Hotel General Partners is not so limited;

            (b) the General Partner shall be allocated at least 1% of Taxable
      Income and Taxable Loss;

            (c) if there is no distributable Net Cash Flow with respect to the
      fiscal year, subject to Section 7.01(a), such Taxable Income or Taxable
      Loss shall be allocated 99% to the Limited Partners and 1% to the General
      Partner;

            (d) notwithstanding Sections 7.01(a) through (c), as of the end of
      any fiscal year of the Partnership, the cumulative Taxable Loss allocated
      to the Limited Partners shall be equal to that which would have been
      allocated to such Limited Partners under this Agreement and the Agreements
      of Limited Partnership of the Hotel Partnerships, combined, prior to their
      amendment and restatement as of December 31, 1986;

            (e) if at the end of any fiscal year of the Partnership (i) any
      Limited Partner has a deficit Capital Account balance resulting in whole
      or in part from the allocation of Taxable Loss (or items thereof)
      attributable to nonrecourse debt which is secured by the Hotel Properties,
      and (ii) the aggregate of the deficit Capital Account balances of all such
      Limited Partners exceeds the Minimum Gain, then all Taxable Income for
      such period shall be allocated first to such Limited Partners pro rata in
      proportion to their deficit Capital Account balances until all available
      Taxable Income shall have been allocated or until the aggregate deficit
      Capital Account balances of all such Limited Partners shall have been
      reduced to an amount not greater than the Minimum Gain;

            (f) there shall not be allocated to any Limited Partner Taxable Loss
      as a result of which there would be a deficit balance in such Limited
      Partner's Capital Account in excess of the deficit permitted by
      application of the Minimum Gain rule described in Section 7.01(e) as of
      the end of the fiscal year of the Partnership to which such allocation
      relates. In determining whether such allocation causes or increases a
      deficit balance in any Limited Partner's Capital Account as of the end of
      the fiscal year of the Partnership, such Limited Partner's Capital

                                       13


      Account shall first be reduced for distributions that, as of the end of
      such year, reasonably are expected to be made to such Limited Partner, but
      only to the extent they exceed offsetting increases to such Limited
      Partner's Capital Account and that reasonably are expected to occur during
      (or prior to) the fiscal years of the Partnership in which such
      distributions reasonably are expected to be made;

            (g) if during any fiscal year of the Partnership any Partner
      unexpectedly receives an adjustment, allocation or distribution described
      in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(5) or (6), there
      shall be allocated to such Partner items of Taxable Income in an amount
      and manner sufficient to eliminate (or in the case of a Partner who is
      obligated to contribute a deficit capital account balance after
      liquidation pursuant to Section 7.06, to reduce to the required amount of
      such contribution) such Partner's deficit Capital Account balance as
      quickly as possible;

            (h) under Regulations prescribed by the Secretary of the Treasury
      pursuant to Section 704(c) of the Code, items of Taxable Income and
      Taxable Loss with respect to property contributed to the Partnership by a
      Partner shall be shared among Partners so as to take account of the
      variation between the basis of the property to the Partnership and its
      fair market value at the time of contribution; and

            (i) in the event that a Partner acquires, sells or exchanges an
      Interest during the taxable year or that such Partner's aggregate Interest
      is reduced (whether by admission of a Substituted Limited Partner or
      otherwise), such Partner's Proportionate Share of Taxable Income or
      Taxable Loss for such year shall be adjusted to take into account the
      varying interest of that Partner in the Partnership during the taxable
      year (such determination to be made by the General Partner in accordance
      with a convention not prohibited by Section 706(d) of the Code and the
      Regulations thereunder).

      7.02 Distribution of Net Cash Flow. Net Cash Flow for each fiscal year of
the Partnership shall be distributed by the General Partner to the Partners not
less frequently than quarterly. The General Partner shall determine the amounts
of Net Cash Flow to be distributed to the Partners as follows:

            (a) 100% of the Net Cash Flow then being distributed shall be paid
      to the Limited Partners in accordance with their respective Proportionate
      Shares of Net Cash Flow until, with respect to such fiscal year, the
      Limited Partners have received an amount equal to an annual noncumulative
      3.6 mil. Return per Unit;

            (b) 100% of any remaining Net Cash Flow then being distributed shall
      be contributed by the Partnership to the capital of the Hotel
      Partnerships, pro rata in proportion to the Incentive Management Fees
      payable by the Hotel Partnerships with respect to such fiscal year, until
      the Partnership shall have contributed to the Hotel Partnerships an amount
      equal to 50% of the aggregate Incentive Management Fees payable by the
      Hotel Partnerships with respect to such fiscal year;



                                       14

            (c) subject to the proviso to subsection (f) below, 70% of any
      remaining Net Cash Flow then being distributed shall be paid to the
      Limited Partners in accordance with their respective Proportionate Shares
      of Net Cash Flow and 30% shall be contributed by the Partnership to the
      capital of the Hotel Partnerships, pro rata in proportion to the aggregate
      amounts of current Incentive Management Fees then payable by the Hotel
      Partnerships, until such aggregate amounts of current Incentive Management
      Fees then payable by the Hotel Partnerships are paid;

            (d) subject to the proviso to subsection (f) below, 70% of any
      remaining Net Cash Flow then being distributed shall be paid to the
      Limited Partners in accordance with their respective Proportionate Shares
      of Net Cash Flow and 30% shall be contributed by the Partnership to the
      capital of the Hotel Partnerships, pro rata in proportion to the aggregate
      amounts of deferred Incentive Management Fees then payable by the Hotel
      Partnerships, until such aggregate amounts of deferred Incentive
      Management Fees then payable by the Hotel Partnerships are paid;

            (e) subject to the proviso to subsection (f) below, 70% of any
      remaining Net Cash Flow then being distributed shall be paid to the
      Limited Partners in accordance with their respective Proportionate Shares
      of Net Cash Flow and 30% shall be paid to the General Partner until the
      General Partner shall have received pursuant to this subsection (e) an
      amount equal to the sum of (i) all payments of deferred Incentive
      Management Fees made during any fiscal years prior to the time the Limited
      Partners have received an annual noncumulative $150 Return per Unit during
      such fiscal years and (ii) 60% of all payments of deferred Incentive
      Management Fees made during any fiscal years after the time the Limited
      Partners have received an annual noncumulative $150 Return per Unit during
      such fiscal years;

            (f) thereafter, 70% of any remaining Net Cash Flow then being
      distributed shall be paid to the Limited Partners in accordance with their
      Proportionate Shares of Net Cash Flow, and 30% shall be paid to the
      General Partner; provided, however, that at any time during any such
      fiscal year that the Limited Partners shall have received an amount equal
      to an annual noncumulative $150 Return per Unit, then the 70%/30%
      apportionment in subsections (c), (d) and (e) of this Section 7.02 shall
      be replaced with a 50%/50% apportionment.

      Notwithstanding the foregoing, in the event that at the time of any
distribution of Net Cash Flow neither Westin Realty Corp. nor any of its
Affiliates is a General Partner as a result of expulsion pursuant to Section
10.02, all Net cash Flow then being distributed shall be contributed by the
Partnership to the capital of the Hotel Partnerships (before any of the
foregoing applications) until the Partnership shall have contributed to the
Hotel Partnerships an amount equal to all current and deferred Incentive
Management Fees then payable by the Hotel Partnerships.

      7.03 Allocation of Gain or Loss resulting from Sale of Property. In the
event the Partnership realizes Taxable Income or Taxable Loss from the Sale of a
Hotel Property, or from the liquidation of a Hotel Partnership, or from the Sale
of the Partnership's limited partnership interest in a Hotel


                                       15


Partnership, or from the liquidation of the Partnership, such Taxable Income
(hereinafter the "Gain on Sale") and Taxable Loss (hereinafter the "Loss on
Sale") shall be allocated among the Partners as follows:

            (a) the Gain on Sale shall be allocated

                  (i) to those Partners with deficit balances in their Capital
            Accounts resulting in whole or in part from allocations of Taxable
            Loss (or items thereof) attributable to nonrecourse indebtedness
            secured by the Hotel Properties, pro rata in proportion to their
            deficit Capital Account balances, until all available Gain on Sale
            is so allocated or until the aggregate deficit Capital Account
            balances of all such Partners is reduced to an amount not greater
            than the Minimum Gain;

                  (ii) to those Partners who have deficit balances in their
            Capital Accounts, pro rata in proportion to such deficit balances
            until such deficit balances shall have been eliminated and the
            balances in their Capital Accounts shall have been restored to zero;

                  (iii) to the Limited Partners until their positive Capital
            Account balances equal an amount which if distributed to them,
            together with all prior cash distributions to the Limited Partners
            pursuant to Sections 7.02 and 7.04, would result in their having
            received a cumulative, but not compounded, annual 12% Return on the
            weighted average balance of their Adjusted Capital Contributions and
            an amount equal to their Adjusted Capital Contributions;

                  (iv) to the General Partner until its positive Capital Account
            balance equals an amount which if distributed to it, together with
            all prior cash distributions to the General Partner pursuant to
            Section 7.02 and 7.04, would result in the General Partner's having
            received a cumulative, but not compounded, annual 12% Return on the
            weighted average balance of its Adjusted Base Amount and an amount
            equal to its Adjusted Base Amount; and

                  (v) thereafter, 70% to the Limited Partners in accordance with
            their respective Proportionate Shares of Gain on Sale and 30% to the
            General Partner.

      In determining the size of the deficit balance in a Partner's Capital
      Account and the amount of the Gain on Sale that must be allocated to
      restore such Capital Account to zero, distributions of Sale or Refinancing
      Proceeds resulting from the transaction that produced the Gain on Sale and
      any allocations made pursuant to the provisions of this Section 7.03 shall
      be disregarded.

            (b) In the event that the Gain on Sale to be allocated under this
      Section 7.03 includes an ordinary income element by reason of Sections
      1245 or 1250 of the Code, then the gain allocated to each Partner under
      this Section 7.03 shall be characterized as ordinary income in accordance
      with each Partner's varying interest in Taxable Income or Taxable Loss of


                                       16


      the Partnership during the taxable years in which the deductions were
      claimed which gave rise to the recapture liability.

            (c) Any Loss on Sale shall be allocated to the Partners who have
      positive balances in their Capital Accounts, pro rata in proportion to
      such positive balances.

            (d) In the event that a Limited Partner acquires, sells or exchanges
      an Interest during the taxable year or that its aggregate Interest is
      reduced (whether by admission of a Substituted Limited Partner or
      otherwise), such Limited Partner's Proportionate Share of Taxable Income
      or Taxable Loss for such year shall be adjusted to take into account the
      varying interest of that Limited Partner in the Partnership during the
      taxable year (such determination to be made by the General Partner in
      accordance with a convention not prohibited by Section 706(d) of the Code
      and the Regulations thereunder).

      7.04 Distribution of Proceeds from Interim Capital Transactions. Sale or
Refinancing Proceeds received in any fiscal year of the Partnership from are
financing of a Hotel Property or a Sale of a Hotel Property or the Partnership's
interest in a Hotel Partnership or liquidation of a Hotel Partnership which does
not result in the liquidation of the Partnership shall be distributed by the
General Partner in the following order of priority:

            (a) all Sale or Refinancing Proceeds then being distributed shall be
      applied to payment in full of the principal of and interest on any
      Subordinated Loans related to the Hotel Partnership affected by any of the
      aforementioned events (the "Subject Hotel Partnership");

            (b) any remaining Sale or Refinancing Proceeds then being
      distributed shall be contributed by the Partnership to the capital of the
      Subject Hotel Partnership until the Partnership shall have contributed to
      the Subject Hotel Partnership an amount equal to all current and deferred
      Incentive Management Fees then payable by the Subject Hotel Partnership.

            (c) any remaining Sale or Refinancing Proceeds then being
      distributed shall be paid to the Limited Partners in accordance with their
      respective Proportionate Shares of Sale or Refinancing Proceeds until,
      together with all prior cash distributions to the Limited Partners under
      Section 7.02 and this Section 7.04(c), they shall have received a
      cumulative, but not compounded, annual 12% Return on the weighted average
      balance of their Adjusted Capital Contributions;

            (d) any remaining Sale or Refinancing proceeds then being
      distributed shall be paid to the Limited Partners in accordance with their
      Proportionate Shares of Sale or Refinancing Proceeds until they shall have
      received an amount equal to their Adjusted Capital Contributions;

            (e) any remaining Sale or Refinancing Proceeds then being
      distributed shall be paid to the General Partner until, together with all
      prior cash distributions to the General Partner pursuant to Section 7.02
      and this Section 7.04(e), it shall have received a cumulative, but not


                                       17


      compounded, annual 12% Return on the weighted average balance of its
      Adjusted Base Amount;

            (f) any remaining Sale or Refinancing Proceeds then being
      distributed shall be paid to the General Partner until it shall have
      received an amount equal to its Adjusted Base Amount reduced by any
      amounts distributed to the Hotel General Partners pursuant to the
      Agreements of Limited Partnership of the Hotel Partnerships at such
      specified time; and

            (g) thereafter, 70% of any remaining Sale or Refinancing Proceeds
      then being distributed shall be paid to the Limited Partners in accordance
      with their respective Proportionate Shares of Sale or Refinancing Proceeds
      and 30% shall be paid to the General Partner.

      7.05 Distribution of Proceeds from a Final Capital Transaction. Sale or
Refinancing Proceeds received in any fiscal year of the Partnership from a Sale
or refinancing of one or both Hotel Properties, or a Sale of Partnership's
interest in one or both Hotel Partnerships, or a liquidation of one or both
Hotel Partnerships which results in the liquidation of the Partnership shall be
distributed by the General Partner in the following order of priority:

            (a) all Sale or Refinancing Proceeds then being distributed shall be
      applied to payment in full of the principal of and interest on any
      Subordinated Loans related to the Hotel Partnership affected by any of the
      aforementioned events (the "Subject Hotel Partnership");

            (b) any remaining Sale or Refinancing Proceeds then being
      distributed shall be contributed by the Partnership to the capital of the
      Subject Hotel Partnership until the Partnership shall have contributed to
      the Subject Hotel Partnership an amount equal to all current and deferred
      Incentive Management Fees then payable by the Subject Hotel Partnership;
      and

            (c) any remaining Sale or Refinancing Proceeds then being
      distributed shall be paid to the Partners who have positive balances in
      their Capital Accounts pro rata in proportion to such positive Capital
      Account balances, provided, however, that if, at such time, a Private
      Letter Ruling has been obtained from the Internal Revenue Service which
      would so permit, without affecting the allocations of Taxable Income or
      Taxable Loss to any of the Partners in prior years, then until the Limited
      Partners have been distributed an amount which, together with all prior
      distributions to the Limited Partners pursuant to Sections 7.02 and 7.04,
      would result in their having received a cumulative, but not compounded,
      annual 12% Return on the weighted average balance of their Adjusted
      Capital Contributions and an amount equal to their Adjusted Capital
      Contributions, any distribution to the General Partner shall not exceed
      the lesser of:

                  (i) the amount of its positive Capital Account Balance, or

                  (ii) 1% of the total amount being distributed to the Partners
            pursuant to this Section 7.05(c).


                                       18


      Distributions pursuant to this Section 7.05(c) shall be made by the end of
      the taxable year of the liquidation or within 90 days after the date of
      such liquidation, whichever is later.

      7.06 Deficit Capital Accounts at Liquidation. It is understood and agreed
that one purpose of Section 7.04 is to insure that none of the Partners has a
deficit Capital Account balance after liquidation and to insure that all
allocations under this Article 7 have substantial economic effect. The Partners
and the Partnership do not intend or expect that any Limited Partner will have a
deficit Capital Account balance after liquidation and, notwithstanding anything
to the contrary in this Agreement, the provisions of this Agreement shall be
construed and interpreted to give effect to such intention. If for any reason,
the General Partner has a deficit Capital Account balance after liquidation, the
General Partner will be deemed to have received unexpected and unintended
deductions or distributions to the extent of such deficit Capital Account
balance and shall be obligated to contribute to the Partnership at such time
cash in an amount equal to the lesser of (i) the deficit balance in such Capital
Account, or (ii) the aggregate amount distributed or distributable to the Hotel
General Partners pursuant to Article 7 of the Agreements of Limited Partnership
of the Hotel Partnerships, reduced by all Capital Contributions of the General
Partner to, but not including, such specified time. Such contribution shall be
made by the end of the taxable year of liquidation or 90 days after the date of
such liquidation, whichever is later. Thereafter, such cash shall be distributed
to those Limited Partners with positive Capital Account balances pro rata in
proportion to such positive Capital Account balances.

8.    MANAGEMENT AND OPERATION OF BUSINESS.

      8.01 General Authority of the General Partner. Except as expressly limited
by the provisions of this Agreement, the General Partner shall have complete and
exclusive discretion in the management and control of the affairs and business
of the Partnership and shall possess all powers necessary, convenient or
appropriate to carrying out the purposes and business of the Partnership. The
General Partner shall possess and enjoy with respect to the Partnership all of
the rights and powers of a partner of a partnership without limited partners to
the extent permitted by Delaware law.

      8.02 Specific Duties and Authority of the General Partner.

            (a) The General Partner shall devote such time to the Partnership as
      shall be reasonably required in order to discharge its obligations to the
      Partnership. Subject to Section 8.05, the General Partner may delegate any
      or all of its powers, rights and obligations under this Agreement, and may
      appoint, contract or otherwise deal with any Person, including employees
      of its Affiliates, to perform any acts or services for the Partnership as
      the General Partner may approve. Without limitation on any power that may
      be conferred upon it by law, and except as hereinafter stated and subject
      to the limitations in Section 8.01, the General Partner shall have the
      power to:

                  (i) make and enter into such contracts as the General Partner
            deems reasonably necessary for the efficient conduct and operation
            of the Partnership business;


                                       19


                  (ii) compromise, submit to arbitration, sue on or defend all
            claims in favor of or against the Partnership;

                  (iii) make and revoke any election permitted the Partnership
            by any taxing authority;

                  (iv) do all acts the General Partner deems necessary or
            appropriate for the protection and preservation of the Partnership
            assets;

                  (v) make distributions and allocations to the Partners in
            accordance with Article 7 of this Agreement;

                  (vi) resolve all questions relating to potential conflicts of
            interest between the Partnership and the General Partner, or any of
            its Affiliates, in accordance with the General Partner's fiduciary
            duty;

                  (vii) execute on behalf of the Partnership any documents or of
            any kind that the General Partner may deem appropriate or advisable
            to carry out the purposes of the Partnership;

                  (viii) make all payments required of the Partnership under the
            terms of this Agreement, including such payments and reimbursements
            as the General Partner, or any of its Affiliates, may be entitled to
            receive under the terms of this Agreement;

                  (ix) contest any determination by the Internal Revenue Service
            which the General Partner deems to be adverse to the best interests
            of the Partnership, and in such regard, the General Partner is
            designated as the "Tax Matters Partner" for the Partnership;

                  (x) invest Partnership funds, on a temporary basis pending
            distribution, in U.S. government securities, securities issued or
            guaranteed by U.S. government agencies, securities issued or
            guaranteed by state or municipalities, certificates of deposit and
            time or demand deposits in commercial banks, banker's acceptances,
            savings and loan associations deposits or deposits in members of the
            Federal Home Loan Bank System, such interest-bearing or non-interest
            bearing investment, including, without limitation, firm repurchase
            agreements for direct obligations of the United States of America or
            any instrumentality thereof for the payment of which the full faith
            and credit of the United States of America is pledged or commercial
            paper rated A-1 or better by Standard & Poor's Corporation or
            prime-1 or better by NCO/Moody's Commercial Paper Division of
            Moody's Investor's Service, Inc., or the successor to either of
            them, as shall reasonably be designated by the General Partner;

                  (xi) establish such banking relationships as the General
            Partner deems necessary to manage short term liquidity requirements
            and, subject to the provisions of Section 12.02, open, maintain and


                                       20


            close bank accounts and draw checks and other orders for the payment
            of money;

                  (xii) engage such independent attorneys, accountants,
            appraisers or such other experts and advisers as the General Partner
            may deem necessary or advisable;

                  (xiii) subject to the provisions of Section 8.03, borrow money
            on behalf of the Partnership and make, accept, endorse and execute
            promissory notes, drafts, bills of exchange and other instruments
            and evidences of indebtedness and secure the payment of any
            Partnership indebtedness by mortgage, pledge or assignment of or
            security interest in all or any part of the property then owned or
            thereafter acquired by the Partnership;

                  (xiv) commence or defend litigation that pertains to the
            Partnership or any Partnership assets, and arrange for the
            settlement of any pending or threatened litigation, by or against
            the Partnership, through compromise, arbitration or otherwise;

                  (xv) sell, transfer, assign or otherwise dispose of any assets
            belonging to the Partnership, in whole or in part, and take such
            action without obtaining any further Consent or approval from the
            Partners, except that any Sale of the Partnership's limited
            partnership interest in a Hotel Partnership shall be subject to (A)
            Westin Hotel Company's right of notice and opportunity to purchase
            as set forth in Section 8.08, (B) the provisions of Section 8.03 and
            (C) in the case of a sale to the General Partner or any of its
            Affiliates, the procurement of a letter of opinion at the General
            Partner's or Affiliate's own expense, as the case may be, from an
            "independent and qualified adviser" (as that term is defined in
            Comment V.A. 3(b) of the Statement of Policy regarding Real Estate
            Programs of the North American Securities Administrators
            Association, Inc. currently in effect) that the terms of such sale
            are fair and at least as favorable to the Partnership as a sale to
            an unaffiliated purchaser in similar circumstances;

                  (xvi) take any and all action on behalf of the Partnership as
            may be necessary in order to meet the obligations or exercise the
            rights the Partnership may have as a limited partner in the Hotel
            Partnerships, except that the Partnership's Consent to sell any
            Hotel Property shall be subject to (A) Westin Hotel Company's right
            of notice and opportunity to purchase as set forth in Section 8.08
            and (B) the provisions of Section 8.03;

                  (xvii) submit, from time to time, to any appropriate state
            securities administrator all documents, papers, statistics and
            reports required to be filed with or submitted to such state
            securities administrator; and

                  (xviii) call a meeting of Limited Partners from time to time
            as the General Partner deems necessary or advisable. No Person
            dealing with the General Partner shall be required to determine its
            authority to make any undertaking or to execute any instrument on


                                       21



            behalf of the Partnership, nor to determine any fact or
            circumstances bearing upon the existence of such authority, and all
            such undertakings or instruments shall contain such provisions as
            the General Partner may deem appropriate or expedient.

            (b) The General Partner shall use its best efforts to maintain its
      net worth at a level sufficient to assure that, under applicable present
      and future requirements set by statute (including the Code), the Internal
      Revenue Service (including Rev. Proc. 72-13, to the extent applicable) or
      the courts, the Partnership will not fail to be classified as a
      partnership for tax purposes on account of the insufficient net worth of
      the General Partner, and, further, that the General Partner shall also use
      its best efforts to cause Westin Hotel Company to contribute additional
      capital to the General Partner so that the General Partner will at all
      times have a net worth sufficient to meet all present or future
      requirements of the Code to assure that the Partnership will be classified
      as a partnership for tax purposes.

            (c) If any Hotel Partnership shall require funds for normal or
      extraordinary improvements to, or renovation of, or other capital
      expenditures relating to, its Hotel Property and such financing is not
      available from unaffiliated lenders on terms the General Partner
      determines to be commercially reasonable and in the best interest of the
      Partnership, the General Partner may, subject to the terms of this Section
      8.02(c), loan such funds to the Partnership for contribution to such Hotel
      Partnership to fund such expenditures. Such loans shall bear interest
      compounded quarterly at an annual rate equal to the prime rate quoted by
      the Bank of America, N.T. & S.A., from time to time, plus one percentage
      point or such lower rate as would be charged by an unrelated lending
      institution on a comparable loan for the same purpose and in the same
      locality as the Hotel Property for which the loan is made. Such interest
      shall accrue and shall be paid, together with the principal amount of such
      loan, at the earlier to occur of (i) the fifteenth (15th) anniversary of
      such loan and (ii) as provided in Sections 7.04 and 7.05, the Sale of such
      Hotel Property, the liquidation of such Hotel Partnership, or the Sale of
      the Partnership's interest in such Hotel Partnership or the liquidation of
      the Partnership. In addition, prepayment charge or penalty will be
      required.

            (d) Beginning in 1994, the General Partner in cooperation with the
      Hotel Partnerships and on behalf of the Partnership will actively review
      opportunities to sell or refinance the Hotel Properties or the
      Partnership's interest in the Hotel Partnerships and to act upon such
      opportunity to the extent that the General Partner and the Hotel
      Partnerships reasonably believe that such action is in the best interests
      of the Partnership and the Hotel Partnerships. By the end of 2001,
      however, the General Partner, in cooperation with the Hotel Partners and
      on behalf of the Partnership, will use its best efforts to sell or
      refinance the Hotel Properties or the Partnership's interest in the Hotel
      Partnerships.

            (e) Notwithstanding any other provision of this Agreement, [THE]
      following transactions are expressly prohibited:



                                       22


                  (i) the Partnership shall not make any loans to the General
            Partner or any of its Affiliates other than the Hotel Partnerships;

                  (ii) the Partnership shall not give the General Partner or any
            of its Affiliates an exclusive right to sell or exclusive employment
            to sell or refinance the Hotel Properties for the Hotel Partnerships
            or the Partnership's interests in the Hotel Partnerships;

                  (iii) no rebates or "give ups" may be received by the General
            Partner nor any of its Affiliates, nor may the General Partner or
            any of its Affiliates participate in any reciprocal business
            arrangements which would have the effect of circumventing any of the
            provisions of this Agreement;

                  (iv) the Partnership shall not pay refinancing fees or sales
            commissions to the General Partner or any of its Affiliates in
            connection with refinancing or Sale of one or both of the Hotel
            Properties; and

                  (v) the Partnership shall not commit less than 80% of the
            Capital Contributions of the Limited Partners to acquisition of
            interests in the Hotel Properties.

      8.03 Limitations on Authority of General Partner.

            (a) Without the Consent of all the Limited Partners the General
      Partner shall not have the authority to:

                  (i) do any act in contravention of this Agreement;

                  (ii) except as otherwise provided in this Agreement, do any
            act which would make it impossible to carry on the ordinary business
            of the Partnership;

                  (iii) confess a judgment against the Partnership;

                  (iv) possess Partnership property, or assign its rights in
            specific Partnership property, for other than a Partnership purpose;

                  (v) admit a Person as a General Partner, except as provided in
            this Agreement;

                  (vi) admit a Person as Limited Partner, except as provided in
            this Agreement; or

                  (vii) knowingly perform any act that would subject any Limited
            Partner to liability as a general partner in any jurisdiction.

            (b) Without a Majority Vote of the Limited Partners the General
      Partner shall not have the authority to:



                                       23


                  (i) sell or transfer the Partnership's limited partnership
            interest in any Hotel Partnership to any Person or Persons (other
            than the granting or subsequent foreclosure of a lien against such
            interest given to secure any bona fide indebtedness otherwise
            rightfully incurred);

                  (ii) consent to the Sale by any Hotel Partnership of any Hotel
            Property to any Person or Persons (other than the granting or
            subsequent foreclosure of a lien against such Hotel Property given
            to secure any bona fide indebtedness otherwise rightfully incurred);

                  (iii) borrow on behalf of the Partnership and the Hotel
            Partnerships, whether such borrowings are from unaffiliated lenders
            or from the General Partner or its Affiliates and whether such
            borrowings are secured or unsecured, an amount which when aggregated
            with all other indebtedness incurred by the Partnership and Hotel
            Partnerships exceeds Maximum Indebtedness; or

                  (iv) accept from the General Partner or any of its Affiliates
            any loan, secured or unsecured, other than an advance or
            Subordinated Loan made pursuant to Sections 4.06 or 8.02(c).

      8.04 Independent Activities. Neither the General Partner, its Affiliates
nor any of their employees shall be required to manage the Partnership as its
sole and exclusive function, and it may have other business interests and engage
in other activities in addition to those relating to the Partnership, including
the rendering of advice or services of any kind to investors in the making or
management of other investments or real estate properties. Neither the
Partnership nor any Partner shall have any right by virtue of this Agreement or
the partnership relationship created hereby in or to such other investments or
activities or to the income or proceeds derived therefrom, and the pursuit of
such ventures, even if directly competitive with and damaging to the business of
the Partnership, shall not be deemed wrongful or improper. Neither the General
Partner nor its Affiliates shall be obligated to present any particular
investment opportunity to the Partnership or the Partners even if such
opportunity is of a character which, if presented to the Partnership, could be
taken by the Partnership, and the General Partner shall have the right to take
such investment for its own account (individually or as a trustee) or to
recommend to others any such particular investment opportunity.

      8.05 General Partner or Affiliates Dealing With the Partnership. The
General Partner and its Affiliates shall have the right to contract or otherwise
deal with the Partnership for the sale of goods or services if:

            (a) compensation for such goods or services is reasonable and is
      paid only for goods or services actually furnished to the Partnership;

            (b) the goods or services to be furnished shall be necessary to the
      Partnership;

            (c) the terms for the furnishing of such goods or services shall, in
      the opinion of the General Partner, be at least as favorable to the


                                       24


      Partnership as would be obtainable in an arm's length transaction and
      generally no less favorable than those provided by the General [PARTNER]
      and its Affiliates to third parties for comparable goods and services in
      similar market areas;

            (d) the General Partner or its Affiliate shall have been previously
      engaged in the business of rendering such services or selling or leasing
      such goods, as an ordinary and ongoing business, and, in the case of any
      Affiliate providing capital improvement services, offers such services to
      other Westin hotels besides the Hotel Properties; and

            (e) all services or goods for which the General Partner or an
      Affiliate is to receive compensation (with the exception of the Management
      Agreements) shall be embodied in a written contract which precisely
      describes the services to be rendered and all compensation to be paid,
      which contract may only be modified by Majority Vote of the Limited
      Partners and is terminable without penalty on sixty (60) days notice.

      8.06 Potential Liability of the General Partner. The General Partner shall
not be liable, responsible or accountable in damages or otherwise to the
Partnership or any of the Partners for any act or omission performed or omitted
by the General Partner in good faith on behalf of the Partnership and in a
manner reasonably believed by the General Partner to be within the scope of its
authority and in, or not opposed to, the best interests of the Partnership.

      8.07 Indemnification of General Partner and its Affiliates.

            (a) Neither the General Partner nor any of its Affiliates shall be
      liable, responsible or accountable in damages or otherwise to the
      Partnership or any Limited Partner for any loss or damage incurred by
      reason of any act or omission performed or omitted by the General Partner
      or such Affiliate in good faith either on behalf of the Partnership or in
      furtherance of the interests of the Partnership and in a manner reasonably
      believed by it to be within the scope of the authority granted to it by
      this Agreement or by law or by the Consent of the Limited Partners in
      accordance with the provisions of this Agreement, provided that the
      General Partner or such Affiliate was not guilty of negligence, misconduct
      or any other breach of fiduciary duty with respect to such act or
      omission.

            (b) To the fullest extent permitted by law, the Partnership shall
      indemnify and hold harmless any Person who was or is a party or is
      threatened to be made a party to any threatened, pending or completed
      action, suit or proceeding, (including any action by or in the right of
      the Partnership), by reason of any act or omission or alleged act or
      omission arising out of such Person's activities as a General Partner or
      as an officer, director, shareholder or Affiliate of the General Partner
      if such activities were performed in good faith either on behalf of the
      Partnership or in furtherance of the interests of the Partnership, and in
      a manner reasonably believed by such Person to be within the scope of the
      authority conferred by this Agreement or by law or by the Consent of the
      Limited Partners in accordance with the provisions of this Agreement,
      against losses, damages or expenses for which such Person has not


                                       25


      otherwise been reimbursed (including attorneys' fees, judgments, fines and
      amounts paid in settlement) actually and reasonably incurred by such
      Person in connection with such action, suit or proceeding so long as such
      Person was not guilty of negligence, misconduct or any other breach of
      fiduciary duty with respect to such acts or omissions, provided that the
      satisfaction of any indemnification and any holding harmless shall be from
      and limited to Partnership assets and no Limited Partner shall have any
      personal liability on account thereof, and provided that such an
      indemnification of an Affiliate shall be limited to losses, damages or
      expenses to which the Affiliate is subject because it has performed a
      fiduciary obligation of the General Partner on behalf of the General
      Partner.

            (c) The Partnership shall not pay the premiums or incur any expenses
      concerning that portion of liability insurance which insures the General
      Partner or any of its Affiliates for any liability as to which the General
      Partner may not be indemnified pursuant to this Section 8.07.

            (d) Notwithstanding subsections (a), (b) and (c) above, neither the
      General Partner nor its Affiliates nor any person acting as broker-dealer
      in connection with the offering of Interests pursuant to the Prospectus
      shall be indemnified for any losses, liabilities or expenses arising from
      or out of an alleged violation of federal or state securities laws unless
      such activities were performed in good faith either on behalf of the
      Partnership or in furtherance of the interests of the Partnership, and in
      a manner reasonably believed by such Person to be within the scope of the
      authority conferred by this Agreement or by law or by the Consent of the
      Limited Partners in accordance with the provisions of this Agreement and
      (i) there has been a successful adjudication on the merits of each count
      involving alleged securities law violations as to the particular
      indemnitee, provided that a court approves indemnification of litigation
      costs; (ii) such claims have been dismissed with prejudice on the merits
      by a court of competent jurisdiction as to the particular indemnitee; or
      (iii) a court of competent jurisdiction approves a settlement of the
      claims against a particular indemnitee and finds that indemnification of
      the settlement and related costs should be made. Any Person seeking
      indemnification pursuant to this Section 8.07 will apprise the court of
      the positions of the Securities and Exchange Commission and appropriate
      state securities commissions with respect to indemnification for
      securities laws violations before seeking court approval for
      indemnification.

      8.08 Right of Notice and Opportunity to Purchase. Notwithstanding anything
in this Agreement to the contrary, in the event that, as a result of expulsion
pursuant to Section 10.02, neither Westin Realty nor any of its Affiliates is a
General Partner, then the General Partner shall have the following additional
obligations and duties:

            (a) If the Partnership determines with respect to a Partnership's
      interest in a Hotel Partnership or a Hotel Partnership determines with
      respect to a Hotel Property, including in either case any offer to
      purchase by the General Partner or any of its Affiliates, that it will
      offer to sell, solicit offers to purchase, including engaging any sales
      broker for the purpose of making or soliciting offers, or negotiate with


                                       26


      any Person in respect of such offer or solicitation (a "Solicited Offer"),
      then the General Partner shall notify Westin in writing of its intention,
      or the intention of the Hotel Partnership, prior to making any offer to
      sell or commencing any such solicitation or negotiation. For purposes of
      this Section 8.08(a), a Solicited Offer shall be subject to the provisions
      of Section 8.08(b) below.

            (b) If the Partnership receives from any Person or Persons, other
      than Westin or any of its Affiliates, a bona fide offer to purchase the
      Partnership's limited partnership interest in a Hotel Partnership, or a
      Hotel Partnership receives a bona fide offer to purchase such Hotel
      Partnership's Hotel Property, then the General Partner shall

                  (i) notify Westin Hotel Company ("Westin") in writing of the
            details of the terms and conditions of the offer, including the name
            of the offeror, upon receipt of such offer; and

                  (ii) except in the case of a Solicited Offer, afford Westin,
            or any of its Affiliates, the opportunity to submit its own offer
            within 45 days of receipt of such notice or 48 hours prior to the
            time the Partnership or Hotel Partnership must respond to such
            offer, whichever date is earlier, but in no event less than 72 hours
            following receipt of such notice; or

                  (iii) in the case of a Solicited Offer, afford Westin, or any
            of its Affiliates, the opportunity to submit its own offer within 45
            days of receipt of such notice or 48 hours prior to the time the
            Partnership or Hotel Partnership must respond to such offer,
            whichever date is earlier, but in no event less than 30 days
            following receipt of such notice; provided, however, that if such
            Solicited Offer is by the General Partner, or any of its Affiliates,
            Westin, or any of its Affiliates, will have not less than 90 days
            from receipt of such notice to submit its own offer; provided
            further, however, that if Westin Realty Corp. shall have been
            removed for cause based on fraud or on intentional or knowing
            unlawful conversion of Partnership assets for its own use, any
            Solicited Offer from the General Partner or any of its Affiliates
            will be deemed not to be a Solicited Offer, and the rights of Westin
            and its Affiliate will be governed by Section 8.08(b)(ii) above.

      If the Partnership shall have received an offer and notified Westin
      thereof as provided in clause (i), the Partnership shall not be precluded
      by the provisions of this subsection (b) from soliciting or continuing to
      solicit, or receiving or continuing to receive, other offers from any
      Person (whether in response to the original offer, or an offer from Westin
      or any of its Affiliates, or an offer from any other Person or otherwise);
      provided, however, that any offer in addition to the offers of which
      Westin was notified as provided in clause (i) shall be subject to the
      provisions of this subsection (b).

            (c) The General Partner shall not accept any offer and shall not
      Consent to the acceptance of any offer by a Hotel Partnership, other than
      from Westin or any of is Affiliates, unless the General Partner has


                                       27


      complied with the provisions set forth in subsection (a) and (b). If such
      conditions have been complied with and either (i) the General Partner, in
      the exercise of its fiduciary duty, determines that the final offer by
      Westin or its Affiliates is not the offer most favorable to the
      Partnership and is not in the best interest of the Partnership, or (ii)
      Westin and its Affiliates shall have failed to respond within the time
      provided for in subsection (b), or (iii) Westin and its Affiliates shall
      have waived in writing their rights under this Agreement, then the
      Partnership shall be free to sell such interest in the Hotel Partnership
      or Consent to the sale of the Hotel Property by the Hotel Partnership, as
      the case may be, to the Person or Persons on the terms and at the price
      specified in such offer. If such purchase and sale is not thereafter
      consummated with the Person or Persons who submitted the offer and on the
      basis of the terms and at the price originally proposed at the time stated
      in the offer, if any, or if not so stated, within 120 days from the date
      of acceptance, then Westin's rights as set forth in this Section shall
      apply to any new offer or any different terms or the submission of the
      same offer by any other Person or Persons.

      8.09 Power of Attorney.

            (a) Each Partner hereby irrevocably appoints the General Partner,
      with full power of substitution, as its true and lawful attorney-in-fact,
      with full power and authority to make, execute, acknowledge, publish and
      file:

                  (i) any amendments to this Agreement or to the Certificate
            pursuant to the Act and the laws of any state in which such
            documents are required to be filed;

                  (ii) any certificates, instruments and documents as may be
            requested by, or may be appropriate under, the laws of any state or
            other jurisdiction in which the Partnership is doing or intends to
            do business;

                  (iii) any other instrument which may be required to be filed
            by the Partnership under the laws of any state or by any
            governmental agency, or which the General Partner deems advisable to
            file;

                  (iv) any documents which may be required to effect the
            continuation of the Partnership, the admission of Substituted
            Limited Partners, the dissolution and termination of the Partnership
            pursuant to the terms of this Agreement, or the surrender of any
            rights or the assumption of any additional responsibilities by the
            General Partner; and

                  (v) any document which may be required to effect an amendment
            to this Agreement to correct any mistake, omission or inconsistency,
            or to cure any ambiguity herein, to the extent such amendments are
            permitted by Section l4.01(d) hereof.



                                       28


            (b) The foregoing grant of authority:

                  (i) is a special power of attorney, coupled with an interest,
            and shall survive the death of any Partner;

                  (ii) may be exercised by the General Partner for each and
            every Partner acting as attorney-in-fact for each and every Partner;
            and

                  (iii) shall survive the delivery of an assignment by a Limited
            Partner of all or any portion of its Interest and shall be fully
            binding upon such Limited Partner's assignee; except that the power
            of attorney shall survive such assignment with respect to the
            assignor Limited Partner for the sole purpose of enabling the
            General Partner to execute, acknowledge and file any instrument
            necessary to effect the admission of the assignee of such Interest
            as a Substituted Limited Partner.

9.    STATUS OF LIMITED PARTNERS.

      9.01 Limited Liability. No Limited Partner shall be personally liable for
any debts, liabilities or obligations of the Partnership, whether to the
Partnership, or to any of the Partners, or to creditors of the Partnership,
beyond the amount contributed and required to be contributed by the Limited
Partner to the capital of the Partnership, the Limited Partner's share of the
accumulated but undistributed profits of the Partnership and the amount of any
distribution (including the return of any Capital Contribution) made to the
Limited Partner that must be returned to the Partnership pursuant to applicable
state law.

      9.02 Rights of Limited Partners. No Limited Partner, as such, shall take
any part in or interfere in any manner with the management and control of the
business of the Partnership, nor shall any Limited Partner, as such, transact
any business for the Partnership or have any authority or power to sign for or
bind the Partnership or the General Partner. Subject to the restrictions of
Section 9.03, the following actions may be taken by the Partnership if approved
by a Majority Vote of the Limited Partners or such greater vote as may be
indicated:

            (a) amend this Agreement, except as provided in Section 14.02
      hereof;

            (b) approve certain sales or borrowings by the Partnership as
      provided in Section 8.03(b);

            (c) approve the transfer of the General Partner's Interest as
      provided in Section 10.01;

            (d) expel the General Partner or any successor General Partner with
      or without cause;

            (e) elect a new General Partner or General Partners upon the
      adjudication of incompetency, expulsion, withdrawal, death or dissolution
      of the General Partner or any successor General Partner;



                                       29


            (f) expel a general partner of a Hotel Partnership with or without
      cause in accordance with the terms of the Agreement of Limited
      Partnership of the Hotel Partnership;

            (g) elect to dissolve the Partnership; and

            (h) upon submission to the General Partner by Limited Partners
      owning ten percent (10%) or more of the Units of any matter upon which
      Limited Partners may vote pursuant to this Agreement, the General Partner
      shall, within fifteen (15) days of such submission, submit such matter to
      the Limited Partners as a whole for a vote. Included in such submission
      shall be a detailed statement of the action proposed, including a verbatim
      statement of the wording of any resolution proposed for adoption by the
      Limited Partners and of any proposed amendment to this Agreement. The
      General Partner will provide proxies or written consent forms which
      specify a choice between approval and disapproval of each matter to be
      acted upon by such vote, and Limited Partners shall return such proxies or
      consents within thirty (30) days. A majority in interest of the Limited
      Partners entitled to vote shall constitute a quorum for purposes of any
      such vote. All expenses of the voting and such notification shall be borne
      by the Partnership.

      9.03 Restrictions on Powers. Notwithstanding Section 9.02 hereof, no
Limited Partner shall have the authority or power to act on behalf of, or to
bind, the Partnership, the General Partner or any Limited Partner, and no
Limited Partner shall have the right to take any action which would extend the
term of the Partnership, change the Partnership to a general partnership, change
the limited liability of the Limited Partners or affect the partnership status
of the Partnership for federal income tax purposes. Nor shall the Limited
Partners have the right to enlarge the General Partner's or any of its
Affiliate's obligation to make Capital Contributions beyond that set forth in
Section 4.01 or diminish (i) the rights of the General Partner or its Affiliates
with respect to the General Partner's interest in the Partnership including the
General Partner's interest in Net Cash Flow as set forth in Section 7.02 and
Sale or Refinancing Proceeds as set forth in Sections 7.04 and 7.05, (ii) the
fees and compensation payable to the General Partner and its Affiliates as set
forth in Article 6 hereof, (iii) the right to notice and opportunity to purchase
granted to Westin Hotel Company under Section 8.08 or (iv) other benefits to
which the General Partner or its Affiliates are entitled under the provisions of
this Agreement, without the Consent of the affected General Partner or affected
Affiliate.

      9.04 Relationship with the General Partner. No Limited Partner shall have
an interest in the individual assets of the General Partner or its Affiliates or
in the proceeds of any sales of the assets of the General Partner or its
Affiliates by virtue of acquiring or owning an Interest in the Partnership.

      9.05 Effect of Bankruptcy, Death or Incompetency of a Limited Partner. The
bankruptcy, death, dissolution, termination or adjudication of incompetency of a
Limited Partner shall not cause the termination or dissolution of the
Partnership and the business of the Partnership shall continue. Upon any such
occurrence, the trustee, receiver, executor, administrator, committee, guardian
or conservator of such


                                       30

Limited Partner for the purpose of settling or managing its estate or property,
or to assign all or any part of its Interest and to join with the assignee in
satisfying conditions precedent to the admission of the assignee as a
Substituted Limited Partner.

10.   CHANGES IN GENERAL PARTNER AND TRANSFERS OF ITS INTERESTS

      10.01 Sale or Transfer of the General Partner's Interest. If the General
Partner desires to sell or transfer its Interest in the Partnership to a Person
who is not a General Partner, such transfer shall be permitted if, and only if,
the proposed transferee is approved as a successor General Partner as follows:

            (a) the proposed transfer and transferee has been approved by
      Majority Vote of the Limited Partners, unless the transferee is an
      Affiliate of the General Partner in which case no such approval of the
      Limited Partners shall be required;

            (b) the provisions of Section 10.03, if applicable, shall have been
      satisfied; and (c) the provisions of clauses (a) through (d) of Section
      10.05 shall have been satisfied.

      10.02 Expulsion of the General Partner.

            (a) The General Partner may be expelled from the Partnership with or
      without cause by Majority Vote of the Limited Partners. Limited Partners
      owning ten percent (10%) or more of the Units shall have a right to
      propose to the Limited Partners the question of expulsion.

            (b) Written notice of the proposal of expulsion and expulsion of the
      General Partner shall be served upon the General Partner by certified or
      registered mail, return receipt requested, or by personal service. The
      notice shall set forth the day upon which the expulsion is to become
      effective, which date shall not be less than sixty (60) days after the
      service of the notice upon the General Partner.

            (c) The General Partner expelled pursuant to this Section shall not
      have any right to participate in the management or affairs of the
      Partnership upon the effective date of the expulsion.

            (d) In the event the expelled General Partner is the sole General
      Partner, the Limited Partners, by Majority Vote of the Limited Partners,
      shall obtain a substitute General Partner, who shall satisfy the
      conditions set forth in clauses (a) through (d) of Section 10.05.

            (e) If the General Partner shall have been expelled for cause based
      on fraud or on international or knowing unlawful conversion of Partnership
      assets for its own use, the substitute General Partner shall have the
      right to purchase the Interest of the expelled General Partner at its then
      fair market value. The fair market value of such Interest shall be
      determined by negotiation between the expelled General Partner and the
      substitute General Partner. If they are unable to reach an agreement on
      the fair market value of the Interest within sixty (60) days following the
      giving of the notice to the expelled General Partner, the


                                       31


      valuation issue shall be submitted to a committee composed of three
      appraisers, one chosen by the expelled General Partner, one chosen by the
      substitute General Partner and the third chosen by the two appraisers so
      chosen. If the substitute General Partner fails to give the expelled
      General Partner written notice within sixty (60) days of becoming a
      General Partner of the substitute General Partner's intent to exercise its
      right hereunder, or such right is waived or the expelled General Partner's
      Interest is not subject to sale under this subsection (e), then the
      expelled General Partner shall retain its share of Taxable Income or
      Taxable Loss, Net Cash Flow and Sale or Refinancing Proceeds under this
      Agreement, but shall not have any right to participate in the management
      or affairs of the Partnership.

      10.03 Withdrawal of General Partner. The General Partner may not withdraw
from the Partnership without Majority Vote of the Limited Partners; provided,
however, that the General Partner may substitute in its stead as General Partner
any Person which is an Affiliate of Westin Hotel Company and shall have
acquired, by merger, consolidation or otherwise, substantially all of its assets
or stock and succeeded to and continued its business if (a) such Person has a
net worth comparable to that of the General Partner and (b) the conditions set
forth in Section 10.05 shall have been satisfied.

      10.04 Continuing Liability. In the event the General Partner withdraws
from the Partnership or sells, transfers or assigns its entire Interest in the
Partnership pursuant to the provisions of this Agreement, the General Partner
shall be, and shall remain, liable for all obligations and liabilities incurred
by the General Partner prior to the effective date of such occurrence and shall
be free of any obligation or liability incurred on account of the activities of
the Partnership from and after such effective date.

      10.05 Admission of Additional General Partner. The General Partner may, at
any time, designate additional Persons to be General Partners; provided that the
Interests of the Limited Partners shall not be affected thereby. Any such
additional Person shall become an additional General Partner only upon meeting
the following conditions:

            (a) the designated Person shall have accepted and agreed to be bound
      by all the terms and provisions of this Agreement;

            (b) the designated Person shall have provided the Partnership with
      evidence satisfactory to counsel for the Partnership of its authority to
      become a General Partner and to be bound by all the terms and conditions
      of this Agreement;

            (c) counsel for the Partnership, at the expense of the General
      Partner, shall have rendered an opinion that the admission of the
      designated Person is in conformity with the Act and that none of the
      actions taken in connection with the admission of the designated Person
      will cause the termination or dissolution of the Partnership or will cause
      it to be classified other than as a partnership for federal income tax
      purposes; and

            (d) any required or appropriate amendments and filings required
      under the Act shall have been properly made.



                                       32


Each Limited Partner hereby Consents to the admission of any successor or
additional General Partner pursuant to Section 10.03 or this Section 10.05 and
no further Consent or approval shall be required.

      10.06 Effect of Bankruptcy, Death, Dissolution, Incompetency, Withdrawal
or Expulsion of a General Partner.

            (a) In the event of the death, dissolution, adjudication of
      incompetency, withdrawal or expulsion of a General Partner, the business
      of the Partnership shall be continued by the remaining General Partner or
      General Partners, if any, or if there is no remaining or successor General
      Partner of General Partners, the Partnership shall be dissolved and
      liquidated unless within ninety (90) days all the Limited Partners vote to
      continue the Partnership business and designate a new General Partner
      pursuant to Section 10.05 and effective as of the date of such event. The
      Partnership shall not be dissolved and liquidated in the event of the
      bankruptcy of a General Partner unless then required under Section 13.01
      below, For purposes of this Agreement, the "bankruptcy" of a General
      Partner shall be deemed to have occurred if any of the events set forth in
      Sec. 17-402(4) or any successor section of the Act occurs.

            (b) Upon the death, dissolution, adjudication of incompetency or
      withdrawal of a General Partner, such General Partner shall immediately
      cease to be a General Partner, and the Interest of the General Partner may
      be sold or transferred only in accordance with the provisions and the
      procedures of Section 10.01 hereof. In the event such Interest is not sold
      or transferred in accordance with these procedures, the Interest of such
      General Partner shall be treated as the Interest of an expelled General
      Partner and shall be subject to all the provisions and procedures of
      Section 10.02 hereof.

11.   TRANSFER OF LIMITED PARTNERS' INTERESTS; ADMISSION OF SUBSTITUTED LIMITED
      PARTNERS

      11.01 Transfer of Interests.

            (a) No sale, exchange, transfer, assignment, gift, pledge,
      encumbrance, hypothecation or other disposition ("transfer") of a Limited
      Partner's Interest in the Partnership, whether voluntary or involuntary,
      shall be valid or effective, and the Partnership shall not be obligated to
      recognize for any purpose any purported transfer, if in the opinion of
      counsel to the Partnership it would be likely to:

                  (i) violate the registration requirements of the Securities
            Act of 1933, as amended;

                  (ii) violate the laws of any state, or the rules or
            regulations of any government agency (including those relating to
            suitability standards), applicable to such transfer;

                  (iii) cause the Partnership to be treated as an association
            taxable as a corporation for federal income tax purposes;



                                       33


                  (iv) result in the Partnership's being considered to have
            terminated within the meaning of Section 708 of the Code; or

                  (v) result in the inability of a Hotel Partnership to obtain
            or continue in effect any license permitting the service or sale of
            alcoholic beverages in the Hotel Property.

Prior to any voluntary transfer, the transferring Limited Partner or its
representative must provide sufficient information to permit counsel to the
Partnership to make a determination that the transfer does not violate the
provisions of this subsection (a).

            (b) The General Partner may suspend transfers if and when any such
      transfer would result in the transfer of 40% or more of the Interest in
      the Partnership when added to the total of all other sales or exchanges of
      Interest within the preceding twelve months.

            (c) Any transfer of an Interest of a Limited Partner shall be
      recognized by the Partnership as of the last business day of each calendar
      quarter during which the Partnership receives instruments of transfer and
      the payment of all transfer taxes.

            (d) No Limited Partner shall transfer all or any portion of its
      Interest except as permitted in this Article 11. In the event of any
      authorized transfer which shall result in multiple ownership of any
      Limited Partner's Interest, the General Partner may require one or more
      trustees or nominees to be designated to represent the entire Interest for
      the purpose of receiving all notices which may be given and all payments
      which may be made under this Agreement and exercising all rights which
      such transferees have pursuant to this Agreement.

            (e) Any successor to a Limited Partner or transferee of a Limited
      Partner's Interest hereunder shall be bound by the provisions of this
      Agreement. Prior to recognizing any assignment of a Limited Partner's
      Interest that has been transferred in accordance with this Section 11.01,
      the General Partner may require the transferring Limited Partner to
      execute and acknowledge a written instrument of assignment in form and
      substance satisfactory to the General Partner. Any assignee who is not a
      Partner at the time of the assignment shall be entitled to the allocations
      and distributions attributable to the Interest assigned to it and to
      transfer and assign such Interest in accordance with the terms of this
      Agreement; provided, however, such assignee shall not be entitled to the
      other rights of a Limited Partner until it becomes a Substituted Limited
      Partner. Notwithstanding the above, the Partnership and the General
      Partner shall incur no liability for allocations and distributions made in
      good faith to the transferring Limited Partner until the written
      instrument of assignment has been received by the Partnership and recorded
      on its books and the effective date of the assignment has passed.



                                       34


      11.02 Assignment; Substituted Limited Partners.

            (a) Subject to the provisions of subsection (b) below, no assignee
      of a Limited Partner's Interest is entitled to become a Substituted
      Limited Partner until:

                  (i) The General Partner shall have given its prior written
            consent, which consent may be withheld in its absolute discretion;

                  (ii) the transferring Limited Partner and the assignee shall
            have executed and acknowledged such other instrument or instruments
            as the General Partner may deem necessary or desirable to effect
            such admission;

                  (iii) the assignee shall have accepted, adopted and approved
            in writing all of the terms and provisions of this Agreement as the
            same may have been amended; and

                  (iv) the assignee shall pay or obligate itself to pay, as the
            General Partner may require, all reasonable expenses connected with
            its admission as a Substituted Limited Partner.

            (b) The General Partner hereby consents to the admission of any of
      the transferees listed below of a Limited Partner's Interest in the
      Partnership not otherwise prohibited by Section 11.01(a):

                  (i) to any General Partner;

                  (ii) to any person by gift, bequest or other transfer without
            consideration;

                  (iii) to a spouse or former spouse pursuant to an agreement
            for division of community property or other property settlement
            agreement in the event of a marital dissolution of legal separation;

                  (iv) to any parent, subsidiary or other corporation whose
            ultimate stockholders are the same as the stockholders of a
            corporate Limited Partner;

                  (v) by court order, to any trustee, receiver or creditor upon
            the bankruptcy of a Limited Partner; or

                  (vi) to any guardian or conservator appointed by a court order
            upon an adjudication of incompetency of a Limited Partner.

            (c) As soon as practicable after the last business day of each
      calendar quarter, the General Partner shall amend the books and records of
      the Partnership in order to admit to the Partnership as Substituted
      Limited Partners all Persons entitled to such admission, as provided by
      this Section 11.02, who had not therefore been admitted to the
      Partnership, and to reflect the withdrawal from the Partnership, and
      termination of the Interest, of Limited Partners who have transferred


                                       35


      their entire Interest. The admission of any Person as a Limited Partner
      shall be effective upon the amendment of the books and records of the
      Partnership to show such admission.

            (d) For the purpose of allocating Taxable Income and Taxable Loss, a
      Person shall be treated as having become, and is appearing in the records
      of the Partnership as, a Limited Partner on such date as a transfer to
      such Person was recognized by the Partnership pursuant to Section
      11.01(c). Until a Person entitled to admission to the Partnership as a
      Substitute Limited Partner pursuant to Section 11.02(a) and (b) shall be
      admitted to the Partnership pursuant to Section 11.02(c), such Person
      shall be entitled to all the rights of an assignee of limited partnership
      interests under the Act.

            (e) Any Limited Partner who shall transfer all of his Interest shall
      cease to be a Limited Partner of the Partnership.

            (f) The transfer of a Limited Partner's interest or any part thereof
      pursuant to Section 11.01 and the admission of a Substituted Limited
      Partner pursuant to this Section 11.02 shall not be cause for dissolution
      of the Partnership.

      11.03 Joint Ownership of Interest. An Interest of a Limited Partner may be
acquired by two or more individuals as joint tenants with right of survivorship
or, to the extent permitted under local law, as tenants in common, tenants by
the entireties or as community property. Any Consent of the Limited Partner
under the Agreement shall require the action or vote of all owners of any such
jointly-held Interest, unless a Consent that allows less than all of such owners
to act or vote for all has been executed by those owners not acting or voting.
Upon the death of one owner of an Interest held by joint tenants with right of
survivorship or by tenants by the entireties, such Interest shall become owned
solely by the survivor or survivors as Limited Partners and not as assignees.
The Partnership need not recognize the death of one of the owners of an
Interest held by joint tenants with right of survivorship or tenants by the
entireties until it shall have received notice of such death. Upon the death of
one owner of an Interest held by tenants in common, such decedent's Interest
shall pass to the decedent's heirs. Subject to the restrictions set forth in
Section 11.01, upon request to the General Partner by any owner of a
jointly-held Interest, the General Partner shall cause such Interest to be
divided into as many equal Interests as there are owners of such jointly-held
Interest, which shall thereafter be owned by each of the former owners.

12.   BOOKS, RECORDS, ACCOUNTING, TAX ELECTIONS AND BANKING.

      12.01 Books and Records. The books and records of the Partnership shall be
maintained on an accrual basis in accordance with generally accepted accounting
principles. These and all other records of the Partnership, including
information relating to the status of the Partnership's property, information
with respect to the sale by the General Partner or any of its Affiliates of
goods or services to the Partnership, and a list of the names and addresses of
all Limited Partners, shall be kept at the principal office of the Partnership
and shall be available for examination and photocopying there by any Partner or
its duly authorized representatives, at any reasonable time. Any Partner, or its
duly authorized representative, upon Notification to the General Partner


                                       36


and upon praying the costs of the collection, duplication and mailing, shall,
for a valid business purpose relating to the conduct of the Partnership's
business, be entitled to a copy of the list of names and addresses of all other
Partners or, at the discretion of the General Partner, to access to the list of
names and addresses of all other Partners.

      12.02 Custody of Partnership Funds; Bank Accounts.

            (a) The General Partner shall have fiduciary responsibility for the
      safekeeping and use of all funds and assets of the Partnership whether or
      not in the immediate possession or control of the General Partner. The
      funds of the Partnership shall not be commingled with the funds of any
      other Person, and the General Partner shall not employ such funds in any
      manner except for or the benefit of the Partnership.

            (b) All funds of the Partnership not otherwise invested pursuant to
      Section 8.02(a)(x) shall be deposited in one or more accounts maintained
      in such banking institutions as the General Partner shall determine or
      shall be invested in short-term liquid securities or shall be left in
      escrow, and withdrawals shall be made only in the regular course of
      Partnership business on such signature or signatures as the General
      Partner may, from time to time, determine.

      12.03 Accountants. The accountants for the Partnership shall be such firm
or firms of certified public accountants as shall be selected by and approved by
the General Partner. The accountants, Westin Hotel Company or its Affiliates
shall prepare for execution by the General Partner all federal income tax
returns of the Partnership.

      12.04 Reports to Partners. The General Partner shall prepare and
distribute to the Limited Partners the following reports:

            (a) within seventy-five (75) days after the end of the fiscal year,
      such information as shall be necessary for the preparation by the Partners
      of their federal income tax returns;

            (b) within one hundred twenty (120) days after the end of each
      fiscal year of the Partnership, an annual report, including financial
      statements satisfying the requirements of Form 10-K under the Securities
      Exchange Act of 1934, if required to be filed with the Securities and
      Exchange Commission, certified by independent public accountants and a
      report (which shall be audited) setting forth the amount of fees and other
      compensation and remuneration paid by the Partnership for that year to the
      General Partner and its Affiliates;

            (c) within forty-five (45) days after the end of each of the first
      three fiscal quarters of each fiscal year of the Partnership, a quarterly
      report containing the information required by Form 10-K under the
      Securities Exchange Act of 1934, if required to be filed with the
      Securities and Exchange Commission, and a report in narrative form
      describing dealings between the Partnership and General Partner or its
      Affiliates, including (i) any new contract arrangement entered into by the
      Partnership and the General Partner or its Affiliates during the period
      then ended and (ii) the amount of all fees and other compensation


                                       37


      and distribution paid by the Partnership for such period to the General
      Partner or any of its Affiliates;

            (d) such additional reports as the General Partner in its sole
      discretion may deem appropriate; and

            (e) in the event that the Partnership is not required to file
      reports under the Securities Exchange Act of 1934, the General Partner
      shall prepare and distribute to the Limited Partners (instead of the
      reports required by paragraphs (b) and (c) of this Section 12.04), (i)
      within one hundred twenty (120) days after the end of each fiscal year of
      the Partnership, an annual report setting forth distributions to the
      Limited Partners for the year then ended, and separately identifying
      distributions from Net Cash Flow and Sale or Refinancing Proceeds, and
      containing (A) a balance sheet as of the end of the fiscal year and
      statements of income, Partners' equity and changes in financial position
      (which shall be audited) and a cash flow statement for the year then
      ended; (B) a report of the activities of the Partnership during the year
      then ended; and (C) for the years 1986 and 1987, a table comparing actual
      results to the financial forecast appearing in the Prospectus; and (ii)
      within 45 days of the end of each fiscal quarter, a report containing
      unaudited financial information for such quarter and a report in narrative
      form including the information set forth in paragraph (c) of this Section
      12.04.

            Within the scope of the annual audited report of the fees and other
      compensation and remuneration paid by the Partnership to the General
      Partner and its Affiliates to be prepared pursuant to paragraph (b) of
      this Section 12.04, the independent certified public accountants shall
      verify the allocation of reimbursable costs to the Partnership. The method
      of verification shall at a minimum provide (i) a verification of the time
      records of individual employees, the costs of whose services were
      reimbursed and (ii) a verification of the specific nature of the work
      performed by each such employee. The method of verification shall be in
      accordance with generally accepted auditing standards and shall
      accordingly include such tests of the accounting records and such other
      auditing procedures that the General Partner's or the Affiliate's
      independent certified public accountants consider appropriate in the
      circumstances. The additional costs of such verification will be itemized
      by such accountants and may be reimbursed to the General Partner or an
      Affiliate by the Partnership in accordance with Section 6.02 only to the
      extent that such reimbursement, when added to the cost for administrative
      services rendered, does not exceed the competitive rate for such services.

      12.05 Fiscal Year. The fiscal year of the Partnership is the calendar
year.

      12.06 Tax Elections.

            (a) All elections under the Code with respect to the reporting of
      allowable deductions of the Partnership shall be made and determined in
      accordance with the method deemed by the General Partner to be in the best
      interests of the Partnership.



                                       38


            (b) In the event of a transfer of all or any part of the Interest of
      the General Partner or of a Limited Partner, the Partnership may elect,
      pursuant to Sections 743 or 754 of the Code (or any corresponding
      provisions of succeeding law), to adjust the tax basis of the Partnership
      property. However, notwithstanding an election pursuant to Section 754
      having been made with respect to the Interest of any Partner, the balances
      shall, for all purposes of this Agreement, be made without taking into
      account adjustments resulting from such election and such adjustments
      shall only be taken into account on the income tax returns of the Partners
      affected thereby.

13.   SALE, DISSOLUTION AND LIQUIDATION.

      13.01 Dissolution of Partnership. The Partnership shall be dissolved upon
the earliest to occur of:

            (a) the expiration of the term of the Partnership;

            (b) the withdrawal, expulsion, death, dissolution or adjudication of
      incompetency of a General Partner who is at that time the sole General
      Partner, subject to the right of the Partners to continue the Partnership
      pursuant to Section 10.06 hereof;

            (c) the dissolution of both Hotel Partnerships and final liquidation
      of their assets, or the Sale of substantially all of the Partnership's
      assets and collection of all the proceeds therefrom;

            (d) the election to dissolve the Partnership by Majority Vote of the
      Limited Partners; and

            (e) any other event causing the dissolution of the Partnership under
      the laws of the State of Delaware.

      13.02 Winding Up and Distribution.

            (a) Upon the dissolution of the Partnership pursuant to Section
      13.01, the Partnership business shall be wound up and its assets
      liquidated as provided for herein and the net proceeds of such liquidation
      shall be distributed in accordance with the definition of Sale or
      Refinancing Proceeds and the provisions of Section 7.05. The liquidation
      and winding up shall be under the direction of the General Partner. If
      there shall not then be any General Partner. Limited Partners by Majority
      Vote of the Limited Partners may designate a Person to assume
      responsibility for the liquidation and winding up of the Partnership. The
      Person or Persons who assume such responsibility (whether they be the
      General Partner or not) are referred to herein as "the Liquidator."

            (b) The Liquidator shall file all certificates and notices of the
      dissolution of the Partnership at such times and in such places as are
      required by law. The Liquidator shall proceed without any unnecessary
      delay to sell, subject to Section 8.08, if applicable, and otherwise
      liquidate the Partnership's property and assets; provided, however, if the
      Liquidator shall determine that an immediate sale of part or all of


                                       39


      the Partnership property would cause undue loss to the Partners, the
      Liquidator may defer the liquidation unless prohibited from doing so by
      applicable law. Upon the complete liquidation and distribution of the
      Partnership assets, the Partners shall cease to be Partners of the
      Partnership, and the Liquidator shall execute, acknowledge and cause to be
      filed all certificates and notices required by the law to terminate the
      Partnership. The Liquidator in its discretion may retain an amount as a
      cash reserve for contingent expenses and liabilities of the Partnership
      after complete liquidation. Any funds remaining in such cash reserve one
      year from the date the Certificate of Dissolution is filed shall be
      distributed to the Partners in accordance with Section 7.05.

            (c) Upon the dissolution of the Partnership pursuant to Section
      13.01, the accountants for the Partnership shall promptly prepare, and
      the Liquidator shall furnish to each Partner, a statement setting forth
      the assets and liabilities of the Partnership upon its dissolution.
      Promptly following the complete liquidation and distribution of the
      Partnership property and assets, the Partnership's accountants shall
      prepare, and the Liquidator shall furnish to each Partner, a statement
      showing the manner in which the Partnership assets were liquidated and
      distributed.

            (d) All expenses incurred in connection with the liquidation and
      winding up shall be paid as debts of the Partnership and shall have
      priority over any distribution to be made to the Partners as a result of
      the liquidation and winding up.

14.   AMENDMENTS.

      14.01 General Provisions.

            (a) Amendments to this Agreement to reflect the designation of a
      successor or additional General Partner or the withdrawal or expulsion of
      the General Partner or to correct an ambiguity, mistake, omission or
      inconsistency in the Agreement, or to make any change required by the
      Securities and Exchange Commission or any state securities or "blue sky"
      commission, shall be made at the time and in the manner referred to in
      Section 14.03. Any other amendments to this Agreement, except for those
      within the General Partner's power of attorney under Section 8.09, may be
      proposed in the following manner:

                  (i) by the General Partner, who shall give notice to the
            Limited Partners of the context of such amendment and a statement of
            the purpose of such amendment; or

                  (ii) by Limited Partners owning ten percent (10%) or more of
            the Units, who shall submit to the General Partner the text of such
            proposed amendment, together with a statement of the purpose of such
            amendment. The General Partner shall, within twenty (20) days after
            receipt of any proposal under this subsection (ii), give notice to
            all Limited Partners of such proposed amendment and such statement
            of purpose, together with the views, if any, of the General Partner
            with respect to such proposed amendment (including whether such
            proposed amendment is permitted by the Act, will


                                       40


            impair the limited liability of the Limited Partners, or will
            adversely affect the classification or cause the termination of the
            Partnership as a partnership for federal income tax purposes).

            (b) Amendments proposed pursuant to Section 14.01(a) above, subject
      to the provisions of Section 14.03, shall be adopted if approved by a
      Majority Vote of the Limited Partners.

            (c) The General Partner shall, within a reasonable time after the
      adoption of any amendment to this Agreement, make any official filings or
      publications required or desirable to reflect such amendment, including
      any required filing for recordation of any amendment to the Certificate.

            (d) Amendments to correct any mistake, omission or inconsistency, to
      cure any ambiguity in the Agreement or to reflect the surrender of any
      rights or the assumption of any additional responsibilities by the General
      Partner may be made by the General Partner without obtaining the prior
      Consent of the Limited Partners; provided, however, no such amendment
      shall be permitted if it would have a material effect upon the rights,
      obligations and duties of the Limited Partners hereunder.

      14.02 Limitations on Amendments. Notwithstanding the provisions of
Sections 9.02(a) and 14.01, no amendment to this Agreement may:

            (a) enlarge the obligations of any Partner under this Agreement or
      convert the Interest of any Limited Partner into the Interest of a General
      Partner or modify the limited liability of any Limited Partner without the
      Consent of such Partner;

            (b) modify (i) the fees and compensation payable to the General
      Partner and its Affiliates as provided in Article 6 without the Consent of
      the General Partner; (ii) the order and method provided in Article 7 for
      allocation of Taxable Income and Taxable Loss and distributions of Net
      Cash Flow and Sale or Refinancing Proceeds of the Partnership without the
      Consent of the Partner adversely affected; (iii) the right to notice and
      opportunity to purchase granted Westin Hotel Company, or its assigns, in
      Section 8.08 without the Consent of Westin Hotel Company; or (iv) the
      right of the General Partner and its Affiliates and their employees to
      engage in other activities pursuant to Section 8.04 without the Consent of
      the General Partner; or

            (c) amend this Section without the Consent of all Partners.

      14.03 Amendments on Admission or Withdrawal of a General Partner.

            (a) Amendments to reflect the designation of a successor or
      additional General Partner shall be adopted if the conditions specified in
      Section 10.01 or Section 10.05, as the case may be, shall have been
      satisfactorily complied with and the amendment shall have been signed by
      the General Partner and by such successor or additional General Partner.

            (b) Amendments to reflect the withdrawal or expulsion of the General
      Partner, if the business of the Partnership is continued, shall


                                       41


      be adopted if the conditions specified in Article 10 shall have
      satisfactorily complied with and the amendment shall have been signed by
      the substitute or successor General Partner.

15.   GENERAL PROVISIONS.

      15.01 Arbitration. Any dispute, controversy or claim arising out of or in
connection with, or relating to, this Agreement or any breach or alleged breach
hereof, except allegations of violations of federal or state securities law,
shall, upon the request of any party involved, be submitted to, and settled by,
arbitration in the City of Seattle, State of Washington, pursuant to the rules
then in effect of the American Arbitration Association (or at any other place or
under any other form of arbitration mutually acceptable to the parties so
involved). Any award rendered shall be final and conclusive upon the parties and
a judgment thereon may be entered in the highest court of the forum, state or
federal, having jurisdiction. The expenses of the arbitration shall be borne
equally by the parties to the arbitration, provided that each party shall pay
for and bear the cost of its own experts, evidence and counsel's fees, except
that in the discretion of the arbitrator any award may include the cost of a
party's counsel if the arbitrator expressly determines that the party against
whom such award is entered has caused the dispute, controversy or claim to be
submitted to arbitration as a dilatory tactic.

      15.02 Burden and Benefit. The covenants and agreements contained herein
shall be binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the respective parties hereto.

      15.03 Notification.

            (a) Any Notification to any Limited Partner shall be in writing and
      given at the address of such Partner set forth in the books and records of
      the Partnership, or such other mailing address of which such Limited
      Partner shall advise the General Partner in writing. Any Notification to
      the Partnership or the General Partner shall be in writing and given at
      the principal office of the General Partner at The Westin Building, 2001
      Sixth Avenue, Seattle, Washington 98121. The General Partner may at any
      time change the location of its principal office. Notification of any such
      change shall be given to the Partners on or before the date of any such
      change.

            (b) Any Notification shall be deemed to have been duly given if
      personally delivered or sent by United States mails or by telegram or
      telex confirmed by letter and will be deemed given, unless earlier
      received, (i) if sent by certified or registered mail, return receipt
      requested, or by first-class mail, five calendar days after being
      deposited in the United States mails, postage prepaid, (ii) if sent by
      United States Express Mail, two calendar days after being deposited in the
      United States mails, postage prepaid, (iii) if sent by telegram or telex
      or facsimile transmission, on the date sent provided confirmatory notice
      is sent by first-class mail, postage prepaid, and (iv) if delivered by
      hand, on the date of receipt.



                                       42


      15.04 Method of Giving Consent. Any Consent required by this Agreement
maybe given by a writing delivered by the consenting Partner and received by the
General Partner at or prior to the doing of the act or thing for which the
Consent is solicited, provided that such Consent shall not have been nullified
by notice to the General Partner of such nullification by the consenting Partner
prior to the doing of the act or thing for which the Consent was solicited.

      15.05 Severability of Provisions. Each provision of this Agreement shall
be considered separable and if for any reason any provision which is not
essential to the effectuation of the basic purposes of this Agreement is
determined to be invalid or contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those provisions of this
Agreement which are valid.

      15.06 Miscellaneous. This Agreement, in addition to any and all
subscription documents executed by any of the parties, contains all of the
representations and the entire contract between the parties hereto. All
references to the neuter herein shall include both the masculine and the
feminine. The captions and titles preceding the text of each section, together
with the table of contents hereof, shall be disregarded in the construction of
this Agreement. This Agreement and the rights of the Partners hereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.
The General Partner shall decide any questions arising with respect to this
Partnership which are not expressly provided for herein.

      IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
as of the date set forth beside their signatures.

                                     GENERAL PARTNER

                                          WESTIN REALTY CORP.


Dated:  2/18/1987                         By        /s/ Raymond J. Witty
      ---------------                         ---------------------------------
                                                   Name:  Raymond J. Witty
                                                   Title: Vice President

                                          Address:  The Westin Building
                                                    2001 Sixth Avenue
                                                    Seattle, WA  98121


                                       43


                                     LIMITED PARTNERS

                                          By  WESTIN REALTY CORP.
                                              as Attorney-in-Fact

Dated:  2/18/1987                         By        /s/ Raymond J. Witty
      ---------------                         ---------------------------------
                                                   Name:  Raymond J. Witty
                                                   Title: Vice President

                                          Address:  The Westin Building
                                                    2001 Sixth Avenue
                                                    Seattle, WA  98121




                                       44


                                   SCHEDULE A

                                GENERAL PARTNER:



                           NAME                                 CAPITAL
                                                             CONTRIBUTIONS
                                                          

Westin Realty Corp...................................             $20


                                LIMITED PARTNERS:



                           NAME                                 CAPITAL
                                                             CONTRIBUTIONS
                                                          

Limited Partners.....................................         $135,600,000




                                       45