Holloway Lodging REIT Announces Completion of Pomeroy Acquisition and Confirms Distribution Increase



    /NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE
    UNITED STATES/

    HALIFAX, June 25 /CNW/ - Holloway Lodging Real Estate Investment Trust
(TSXV: HLR.UN, HLR.DB, HLR.DB.A) ("Holloway" or the "REIT") announced today
that it has completed the previously announced acquisition of ten hotel
properties located in northern Alberta and British Columbia from the Pomeroy
Group ("Pomeroy"), one of the largest hotel developers in western Canada. In
connection with the transaction Pomeroy and Holloway have entered into various
joint arrangements to expand their respective hotel portfolios.
    The aggregate purchase price for the hotels was approximately
$215 million, of which $20 million of the purchase price was satisfied by
issuing 3,738,317 units of the REIT to Pomeroy at a price of $5.35 per unit.
Holloway paid the balance of the purchase price in cash from the proceeds of a
$100 million mortgage financing on the acquired hotels and the public offering
of units and debentures that closed on June 21, 2007.
    The transaction is immediately accretive to distributable income and
future benefits from property management and other operating synergies are
expected to be realized. Now that the acquisition is complete, Holloway
confirmed that it will increase its monthly distributions to unitholders from
$0.0375 per month (or $0.45 annually) to $0.045 per month (or $0.54 annually).
This represents a 20% increase over the present distribution level.
Notwithstanding this significant increase, the REIT's overall payout ratio is
expected to decline from its current level owing to the accretion in
distributable income. The first increased distribution payment is expected to
be made in August to unitholders of record as of July 31, 2007.
    "We are delighted to have closed this important transaction for the REIT
and to confirm the anticipated increase in monthly distributions," said
Mr. Glenn Squires, Chief Executive Officer of Holloway.
    Canaccord Adams acted as the REIT's exclusive financial advisor in
connection with this transaction.
    After giving effect to the units issued to Pomeroy and pursuant to the
public offering that closed yesterday, the REIT now has 38,136,317 Units
issued and outstanding. After giving effect to the exchange of the 437,000
Class B limited partnership units of Holloway Lodging Limited Partnership that
are currently outstanding, there would be 38,573,317 units issued and
outstanding.
    Holloway also confirmed that it is proceeding with its previously
announced graduation from the TSXV to the TSX and expects to be listed on the
TSX in early July.

    About Holloway

    The REIT is a real estate investment trust listed as a Tier 2 issuer on
the TSX Venture Exchange with the objective of acquiring and maintaining a
growing portfolio of lodging properties with stable cash distributions.

    This press release contains forward-looking information within the
meaning of applicable securities laws. In some cases, forward-looking
information can be identified by terms such as "may", "will", "should",
"expect", "plan", "anticipate", "believe", "intend", "estimate", "predict",
"potential", "continue" or other similar expressions concerning matters that
are not historical facts. Forward looking-information is subject to certain
factors, including risks and uncertainties, that could cause actual results to
differ materially from what the REIT currently expects and there can be no
assurance that such statements will prove to be accurate. Some of these risks
and uncertainties are described under "Risk Factors" in the REIT's prospectus
dated June 13, 2007.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this press release.





For further information:

For further information: Mr. Glenn Squires, Chief Executive Officer or
Ms. Tracy Sherren, Chief Financial Officer, (902) 457-1907

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Holloway Lodging Real Estate Investment Trust

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