Boston Lodging Market Analysis: Trends, Projections & Developments

1. Rachel J. Roginsky, ISHC Pinnacle Advisory Group 76 Canal Street Boston, MA 02114 Telephone: 617-722-9916 Fax: 617-722-9917 rroginsky@pinnacle-advisory.com NAIOP Presentation Pinnacle Realty Investments Pinnacle Advisory Group

2. Lodging Statistics • National • Boston / Cambridge • Suburban Boston

3. Total United StatesRoom Supply/Demand Percent ChangeTwelve Month Moving Average To Dec 2002 Source: Smith Travel Research

4. Total United StatesRoom Demand Percent ChangeJan 2000 – Dec 2002 Source: Smith Travel Research

5. Total United StatesOccupancy and ADRTwelve Month Moving Average To Dec 2002 Source: Smith Travel Research

6. Top 25 MarketsOccupancy PercentDecember 2002 YTD INDUSTRY AVERAGE 59.2 % Source: Smith Travel Research

7. Top 25 MarketsADR Percent Change December 2002 YTD Year over Year INDUSTRY AVERAGE -1.5 % Source: Smith Travel Research

8. Top 25 MarketsRoom Supply Percent ChangeDecember 2002 YTD Year over Year INDUSTRY AVERAGE 1.8 % Source: Smith Travel Research

9. Boston / Cambridge Occupancy1989 – 2002 Source: Pinnacle Advisory Group

10. Boston / Cambridge Average Room Rate 1989-2002 Source: Pinnacle Advisory Group

11. Boston / Cambridge Lodging Supply 1989 - 2002 Source: Pinnacle Advisory Group

12. Suburban Boston Occupancy 1995-2002 Source: Pinnacle Advisory Group

13. Suburban Boston Average Room Rate 1995 - 2002 Source: Pinnacle Advisory Group

14. Suburban Boston Lodging Supply 1995 - 2002 Source: Pinnacle Advisory Group

15. Key Boston Lodging Market Issues New Supply Pipeline Boston Convention and Exhibition Center Changes in Demand

16. Boston / Cambridge New Supply Pipeline • Compound Annual Growth of 1.9% Between 1989 and 2002 • Inventory Growth of 4.9% Projected in 2003 • Projected Compound Annual Growth of 5.3% between 2002 and 2007

17. The Pipeline - Boston/Cambridge • Commonwealth Hotel–150 Rooms - April 2003 • Embassy Suites–273 Rooms - February 2003 • Hotel Marlowe -236 Rooms - March 2003 • Residence Inn – 168 Rooms – May 2003 • Jurys Doyle – 220 Rooms – April 2004 • Hotel Onyx– 112 Rooms – July 2004 • Charles Street Jail-300 Rooms – July 2004 • Hampton Inn Crosstown – 175 Rooms – July 2004 • Robin Brown Hotel –168 Rooms - Spring 2006

18. The Pipeline – Seaport District • Renaissance – 438-Rooms April 2005 • Sheraton HQ – 800-Rooms September 2005 • Intercontinental – 420-Rooms - July 2005 • Grand Hyatt – 500-Rooms – January 2006 • Anthony’s Pier 4 – 250-Rooms – April 2007

19. Boston Convention and Exhibition Center - BCEC • Projected Opening - June 2004 • HQ Hotel Projected Opening September 2005 • 24 Definite Events • 600,000 Room Nights Upon Stabilization • Currently 128,000 definite room nights on books for 2006

20. Convention Center Related Demand • In 2000 the Hynes Generated 400,000 Room Nights (7 occupancy points for the entire Boston Cambridge market) • Upon Stabilization the BCEC is expected to generate approximately 600,000 room nights in addition to 300,000 at the Hynes , which results in a total of 900,000 room nights (11 occupancy points)

21. Boston / Cambridge Demand 2002 (Estimated) Source: Pinnacle Advisory Group

22. The Future…..

23. Factors Affecting Future Demand • New Convention Center • New Office Supply and Vacancies • Logan Modernization • Completion of the Big Dig • Economy • Budget Cuts

24. Boston / Cambridge 2003 Projections 2002 2003 Change Occupancy 72% 70% -2 Pts. Rate $165.04 $161.74 -2.0% RevPAR $118.82 $113.21 -4.7%

25. Suburban Boston 2003 Projections 2002 2003 Change Occupancy 58% 57% -1 Pts. Rate $97.37 $94.42 -2.0% RevPAR $56.47 $54.39 -3.7%

26. Pinnacle Realty Investments NAIOP Presentation Rachel J. Roginsky, ISHC Pinnacle Advisory Group 76 Canal Street Boston, MA 02114 Telephone: 617-722-9916 Fax: 617-722-9917 rroginsky@pinnacle-advisory.com Pinnacle Advisory Group