LASALLE HOTEL PROPERTIES (Form: 8-K, Received: 08/16/2005 16:07:35)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 12, 2005

LASALLE HOTEL PROPERTIES

(Exact name of registrant specified in its charter)

Maryland

1-14045

36-4219376

(State or other jurisdiction of

incorporation or organization)

(Commission File Number)

(IRS Employer

Identification No.)

3 Bethesda Metro Center

Suite 1200

Bethesda, Maryland 20814

(Address of principal executive offices)

Registrant’s telephone number, including area code: (301) 941-1500

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On August 12, 2005, LaSalle Hotel Properties (the “Company”), our operating partnership, LaSalle Hotel Operating Partnership, L.P., and one of our subsidiaries entered into a contribution and sale agreement with W. Copley Boston Corporation (“WCBC”) and SCG Copley Square LLC (“SCG”) for the acquisition of the Westin Copley Place in Boston, Massachusetts. The Westin Copley Place is a AAA Four Diamond urban full-service hotel located in downtown Boston’s Back Bay neighborhood within two blocks of the Hynes Convention Center and less than 5 miles from Boston’s Logan International Airport. It has 803 guestrooms and over 47,000 square feet of meeting and function space. Pursuant to the agreement, the Company will acquire all of the outstanding interests in Westban Hotel Venture, a partnership which holds the Westin Copley Place as its sole asset. The aggregate consideration is approximately $318 million before expenses. The Company will assume a $210 million first mortgage on the property, issue to one of the current owners approximately $59 million in preferred units of our operating partnership and fund the balance with proceeds from the Company’s senior unsecured credit facility. The acquisition of the property is subject to certain restructuring events by the current owners and customary closing requirements and conditions. Accordingly, the Company can give no assurance that all or part of the transaction will be consummated or that, if consummated, it would follow all of the terms set forth in the agreements governing the transaction.

The operating partnership will issue approximately 2.3 million partnership units to SCG upon the closing of the transactions contemplated by the Contribution Agreement. These units will be a newly created series of preferred units, designated as the “7.25% Series C Cumulative Redeemable Preferred Units (liquidation preference $25 per unit).” The Series C Preferred Units are redeemable for 7.25% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, $.01 par value per share (liquidation preference $25 per share) of the Company.

The Contribution Agreement is filed herewith as Exhibit 10.1. The form of the Third Amendment to the Amended and Restated Agreement of Limited Partnership of the operating partnership establishing the designations, rights, powers, preferences and duties of the Series C Preferred Units is filed herewith as Exhibit 10.2. The form of the Articles Supplementary establishing the designations, rights, powers, preferences and duties of the Series C Preferred Shares is filed herewith as Exhibit 3.1.

ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.

The information set forth under Item 1.01 of this report is incorporated herein by reference. The issuance of the Series C Preferred Units will be affected upon the closing of the transactions contemplated by the Contribution Agreement in reliance upon an exemption from registration provided by Section 4(2) under the Securities Act of 1933, as amended.

ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR.

The information set forth under Item 1.01 of this report is incorporated herein by reference. Upon the closing of the transactions contemplated by the Contribution Agreement, the Company shall file Articles Supplementary establishing the designations, rights, powers, preferences and duties of the Series C Preferred Shares. The Articles Supplementary shall be effective as of the closing date of the Contribution Agreement.

ITEM 7.01 REGULATION FD DISCLOSURE.

LaSalle Hotel Properties announced that it had executed an agreement to acquire the Westin Copley Place in Boston, Massachusetts. A copy of the press release is filed as Exhibit 99.1 to this report and is incorporated by reference herein.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements

The balance sheets of Westban Hotel Venture (a partnership) as of June 30, 2005 (unaudited), December 31, 2004 and 2003, and the related statements of operations, partners’ capital and cash flows for the six months ended June 30, 2005 (unaudited) and 2004 (unaudited) and for the years ended December 31, 2004, 2003 and 2002 are set forth in this Report.

Westban Hotel Venture

(a Partnership)

Financial Statements


Report of Independent Registered Public Accounting Firm		2

Audited Financial Statements

Balance Sheets as of June 30, 2005 (unaudited), December 31, 2004 and 2003		3
Statements of Operations for the six months ended June 30, 2005 and 2004 (unaudited) and the three years in the period ended December 31, 2004		4
Statements of Partners’ Capital for the six months ended June 30, 2005 (unaudited) and the three years in the period ended December 31, 2004		5
Statements of Cash Flows for the six months ended June 30, 2005 and 2004 (unaudited) and the three years in the period ended December 31, 2004		6
Notes to Financial Statements		7

Independent Auditors’ Report

The Partners

Westban Hotel Venture:

We have audited the accompanying balance sheets of Westban Hotel Venture (the Partnership) as of December 31, 2004 and 2003 and the related statements of operations, partners’ capital, and cash flows for each of the years in the three-year period ended December 31, 2004. These financial statements are the responsibility of the General Partners of the Partnership. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the General Partners, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westban Hotel Venture as of December 31, 2004 and 2003 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

Chicago, Illinois

April 25, 2005

Westban Hotel Venture

(a Partnership)

Balance Sheets

June 30, 2005 (Unaudited), December 31, 2004 and 2003


	June 30, 2005		December 31, 2004	December 31, 2003
	(unaudited)
Assets
Current assets:
Cash and cash equivalents (note 2)	$	6,306,455	3,621,331	1,650,165
Accounts receivable (net of allowance for doubtful accounts of approximately $123,000 at June 30, 2005 (unaudited) and $54,000 and $83,000 at December 31, 2004 and 2003, respectively)
		4,597,572	2,855,536	3,196,972
Other receivables		187,271	76,725	110,690
Inventories – food, beverages and supplies		296,325	274,455	294,055
Prepaid expenses and other current assets		1,926,598	1,785,614	1,916,679

Total current assets		13,314,221	8,613,661	7,168,561

Property and equipment, at cost (note 2):
Building and improvements		93,726,575	93,726,575	93,726,575
Furniture, fixtures and equipment		69,301,559	67,667,182	65,161,739

		163,028,134	161,393,757	158,888,314

Less accumulated depreciation and amortization		85,330,691	81,858,868	75,105,941

Net property and equipment		77,697,443	79,534,889	83,782,373

Prepaid land and air rights, net of accumulated amortization of $1,481,051 at June 30, 2005 (unaudited) and $1,444,927 and $1,372,681 at December 31, 2004 and 2003, respectively		5,237,882	5,274,006	5,346,252
Deferred expenses, net of accumulated amortization of $1,782,262 at June 30, 2005 (unaudited) and $1,745,952 and $1,674,848 at December 31, 2004 and 2003, respectively		567,773	604,083	675,187

	$	96,817,319	94,026,639	96,972,373

Liabilities and Partners’ Capital
Current liabilities:
Current maturities of long-term debt (note 3)	$	1,719,759	1,674,728	1,590,519
Accounts payable		1,958,154	1,683,125	1,558,817
Accrued expenses		5,104,401	4,138,137	3,097,831

Total current liabilities		8,782,314	7,495,990	6,247,167

Long-term debt, excluding current maturities (note 3)		77,484,980	78,362,033	79,900,244

Total liabilities		86,267,294	85,858,023	86,147,411

Commitments and contingencies (notes 3, 4, and 8)

Partners’ capital		10,550,025	8,168,616	10,824,962

	$	96,817,319	94,026,639	96,972,373

See accompanying notes to financial statements.

Westban Hotel Venture

(a Partnership)

Statements of Operations

For the periods ended June 30, 2005 and 2004 (Unaudited), and the Years ended December 31, 2004, 2003, and 2002


	Periods Ended			Years Ended
	June 30, 2005		June 30, 2004	December 31, 2004	December 31, 2003	December 31, 2002
	(Unaudited)
Operating revenues:
Rooms	$	23,089,870	22,178,659	49,038,135	42,497,094	44,954,272
Food and beverage		14,182,866	15,037,321	29,038,721	25,444,510	23,991,608
Other operating departments		2,853,264	2,777,019	5,658,071	5,904,889	5,495,581
Other income		3,636	—	9,448	29,220	39,343

Total operating revenues		40,129,636	39,992,999	83,744,375	73,875,713	74,480,804

Operating expenses:
Rooms		5,227,202	4,926,975	10,226,235	9,061,782	9,068,652
Food and beverage		10,561,821	10,935,180	21,085,765	18,432,500	16,689,088
Other operating departments		825,194	801,982	1,612,262	1,475,230	1,565,954
Administrative and general and management fees (note 5)		4,650,408	4,460,944	9,721,328	8,523,519	9,292,373
Advertising and business promotion		2,396,010	2,589,294	5,170,192	4,389,710	4,122,209
Property maintenance and energy		3,409,946	3,523,163	7,070,850	6,122,199	5,813,988
Taxes, insurance and rent		2,279,551	2,564,683	4,798,754	5,068,145	5,258,128
Depreciation and amortization		3,544,257	3,404,643	6,896,277	6,519,772	6,051,240

Total operating expenses		32,894,389	33,206,864	66,581,663	59,592,857	57,861,632

Operating income		7,235,247	6,786,135	17,162,712	14,282,856	16,619,172

Other expense – interest		2,103,838	2,158,278	4,319,058	6,244,521	7,337,385

Net income	$	5,131,409	4,627,857	12,843,654	8,038,335	9,281,787

See accompanying notes to financial statements.

Westban Hotel Venture

(a Partnership)

Statements of Partners’ Capital

For the periods ended June 30, 2005 and 2004 (Unaudited), and the Years ended December 31, 2004, 2003, and 2002


	Urban Investment and Development Co.			Westin Copley Place Hotel Venture		Total partners’ capital
Balance at December 31, 2001	$	6,147,955		6,194,592		12,342,547

Distributions		(1,992,000	)	(2,008,000	)	(4,000,000	)
Net income		4,622,330		4,659,457		9,281,787

Balance at December 31, 2002		8,778,285		8,846,049		17,624,334

Distributions		(7,389,178	)	(7,448,529	)	(14,837,707	)
Net income		4,003,091		4,035,244		8,038,335

Balance at December 31, 2003		5,392,198		5,432,764		10,824,962

Distributions		(7,719,000	)	(7,781,000	)	(15,500,000	)
Net income		6,396,140		6,447,514		12,843,654

Balance at December 31, 2004		4,069,338		4,099,278		8,168,616

Distributions (unaudited)		(1,369,500	)	(1,380,500	)	(2,750,000	)

Net income (unaudited)		2,555,442		2,575,967		5,131,409

Balance at June 30, 2005 (unaudited)	$	5,255,280		5,294,745		10,550,025


Balance at December 31, 2003		5,392,198		5,432,764		10,824,962

Distributions (unaudited)		(3,237,000	)	(3,263,000	)	(6,500,000	)

Net income (unaudited)		2,304,673		2,323,184		4,627,857

Balance at June 30, 2004 (unaudited)	$	4,459,871		4,492,948		8,952,819

See accompanying notes to financial statements.

Westban Hotel Venture

(a Partnership)

Statements of Cash Flows

For the periods ended June 30, 2005 and 2004 (Unaudited), and the Years ended December 31, 2004, 2003, and 2002


	Periods Ended					Years ended
	June 30, 2005			June 30, 2004		December 31, 2004		December 31, 2003		December 31, 2002
	(Unaudited)
Cash flow from operating activities:
Net income	$	5,131,409		4,627,857		12,843,654		8,038,335		9,281,787
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,544,257		3,404,643		6,896,277		6,519,772		6,051,240
Deferred expenses		—		—		—		173,057		148,577
Changes in operating assets and liabilities:
Accounts receivable and other receivables, net		(1,852,582	)	(2,504,580	)	375,401		(141,770	)	308,913
Inventories		(21,870	)	(2,774	)	19,600		(3,620	)	(33,132	)
Prepaid expenses and other current assets		(140,984	)	327,795		131,065		(578,990	)	742,620
Accounts payable		275,029		1,426,186		124,308		(394,709	)	(1,354,346	)
Accrued expenses		966,264		2,246,328		1,040,306		(1,304,686	)	1,368,472

Net cash provided by operating activities		7,901,523		9,525,455		21,430,611		12,307,389		16,514,131

Cash flows used in investing activities – capital expenditures		(1,634,377	)	(1,396,282	)	(2,505,443	)	(2,961,765	)	(5,783,800	)

Cash flows used in financing activities:
Payment of deferred expenses		—		—		—		(639,530	)	—
Principal payments on retired long-term debt		—		—		—		(1,165,927	)	(1,627,425	)
Retirement of long-term debt		—		—		—		(80,883,855	)	—
Proceeds from long-term debt		—		—		—		82,000,000		—
Principal payments on long-term debt		(832,022	)	(655,385	)	(1,454,002	)	(509,237	)	—
Distributions to partners		(2,750,000	)	(6,500,000	)	(15,500,000	)	(14,837,707	)	(4,000,000	)

Net cash used in financing activities		(3,582,022	)	(7,155,385	)	(16,954,002	)	(16,036,256	)	(5,627,425	)

Net increase (decrease) in cash and cash equivalents		2,685,124		973,788		1,971,166		(6,690,632	)	5,102,906

Cash and cash equivalents at beginning of period		3,621,331		1,650,165		1,650,165		8,340,797		3,237,891

Cash and cash equivalents at end of period	$	6,306,455		2,623,953		3,621,331		1,650,165		8,340,797

Supplemental disclosure of cash flow information: Cash paid for interest	$	2,103,838		2,158,277		3,956,536		6,671,420		7,207,743

See accompanying notes to financial statements.

WESTBAN HOTEL VENTURE

(A Partnership)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

1. Organization

Westban Hotel Venture (the Partnership), a partnership between Westin Copley Place Hotel Venture (Westin) and Urban Investment and Development Co. (Urban), owns and operates the Westin Hotel Copley Place, located in Boston, Massachusetts. Westin and Urban hold ownership interests of 50.2% and 49.8%, respectively. Profits and losses and partnership contributions and distributions are allocated in the same percentages as ownership interests.

2. Significant Accounting Policies

Cash and cash equivalents include cash on hand and in banks and short-term investments having an original maturity of less than ninety days. These investments are recorded at cost, which approximates market.

Inventories are valued at the lower of cost (first-in, first-out) or market.

Expendable supplies consist of tableware, linens and uniforms. Tableware, noncirculating linens and uniforms are valued at cost (first-in, first-out), and amortized over their useful lives.

Property and equipment is stated at cost, including interest capitalized during the construction period. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the applicable assets (12 to 45 years).

The Partnership uses an annual group method of depreciation. Under this method, individual assets are not specifically identified for purposes of determining retirements, and fully depreciated asset groups are written off when evidence indicates that they are no longer in use. Proceeds from miscellaneous sales of depreciable property and equipment are credited to accumulated depreciation.

Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for Impairment or Disposal of Long-Lived Assets , provides a single accounting model for long-lived assets to be disposed of. In accordance with SFAS 144, long-lived assets, such as investment property, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are no longer depreciated. No impairment charges were required.

The Partnership has prepaid rent for the land and air rights to the property on which the hotel is located. This amount is being amortized over the life of the lease which expires in December 2077.

Deferred expenses consist of financing costs and lease commissions which are amortized on a straight-line basis over the term of the related debt or related lease.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

No provision has been made for Federal income taxes as the liability for such taxes would be that of the partners rather than the Partnership.

3. Long-Term Debt

The Partnership’s previous first mortgage loan, which had an outstanding principal balance of $80,883,855 and which was scheduled to mature November 14, 2003, was paid in full August 14, 2003 with the proceeds of a new first mortgage loan in the principal amount of $82,000,000 which was obtained from a different lender.

The current loan, which is secured by property and equipment, bears interest at the rate of 5.26% per year, requires monthly payments of principal and interest of $491,867, and matures in August 2013, when the principal balance of approximately $62,314,000 is due.

Principal repayments of long-term debt are due as follows:


Year ending December 31:
2005	$	1,674,728
2006		1,766,258
2007		1,862,791
2008		1,953,279
2009		2,071,352
Thereafter		70,708,353

	$	80,036,761

WESTBAN HOTEL VENTURE

(A Partnership)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

4. Leases

Operating leases with retail tenants provide for payments of fixed minimum rent with scheduled increases therein. In addition, the leases require the tenants to reimburse a portion of the hotel’s operating costs. The leases also require the tenants to pay additional base rent based upon a percentage of the tenants’ sales volumes.

Approximate minimum future rental revenue from noncancelable leases at December 31, 2004 is as follows:


Year:	Amount

2005	$	980,000
2006		985,000
2007		955,000
2008		765,000
2009		688,000
Thereafter		940,000

	$	5,313,000

5. Management Agreement

The Partnership entered into an agreement with Westin Hotel Company to provide various pre-opening services and to manage the hotel upon opening until December 31, 2008. Starwood Hotels and Resorts Worldwide, Inc. (Starwood) assumed this agreement upon its acquisition of Westin Hotel Company. Starwood has the option of extending the term for an additional 20 years. In connection with the management and operations of the hotel, Starwood provides the Partnership with marketing and reservation services and the services of certain full-time employees. The Partnership reimburses Starwood for such employees’ salaries and related benefits. Additionally, under the agreement, Starwood is entitled to fees for management, marketing and reservations services. Base management fees are 3% of gross revenues (as defined). In addition to the base management fee, Starwood is entitled to an incentive fee, as defined in the management agreement. Fees earned by Starwood for the periods ended June 30, 2005 and 2004, and the years ended December 31, 2004, 2003, and 2002 are as follows:


	Periods Ended			Years ended
	June 30, 2005 (Unaudited)		June 30, 2004 (Unaudited)	December 31, 2004	December 31, 2003	December 31, 2002
Base management fees	$	1,165,201	1,156,952	2,432,023	2,146,385	2,161,710
Incentive management fee		1,118,497	1,068,681	2,591,366	2,308,434	2,686,067
Marketing services		582,600	578,475	1,216,011	1,073,193	825,818
Reservation services		428,105	410,779	901,173	733,833	834,525

Total fees and services	$	3,294,403	3,214,887	7,140,573	6,261,845	6,508,120

Unpaid fees and services related to the above were $1,386,736 (unaudited), and $1,401,941 (unaudited) at June 30, 2005 and 2004, respectively and $1,015,686, $913,130, and $1,080,266 at December 31, 2004, 2003, and 2002, respectively.

Marketing services rebates due from Starwood totaled approximately $155,000 (unaudited), and $154,000 (unaudited) during the six months ended June 30, 2005 and 2004, respectively and $324,000, $286,000, and $297,000 in 2004, 2003, and 2002, respectively, of which approximately $155,000 (unaudited) was outstanding at June 30, 2005 and $21,000 and $64,000 was outstanding at December 31, 2004 and 2003, respectively. Such rebates were recognized as a reduction of marketing services.

WESTBAN HOTEL VENTURE

(A Partnership)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

6. Employee Benefit Plan

A defined contribution plan was established by Westin Hotel Company (assumed by Starwood) and adopted by the Partnership for all non-union hourly employees of the hotel. The accrual is calculated as 3% (maximum) of participating employees’ gross salaries and wages. Contributions made to the plan by the hotel aggregated approximately $222,000 (unaudited) and $223,000 (unaudited) for the six months ending June 30, 2005 and 2004, respectively and $453,000, $364,000, and $344,000 for 2004, 2003, and 2002, respectively. In addition, certain Westin employees are eligible for incentive compensation under profit sharing and bonus plans. Incentive compensation expenses payable were approximately $87,000 (unaudited) and $464,000 (unaudited) for the six months ending June 30, 2005 and 2004 and $701,000, $307,000, and $686,000 in 2004, 2003, and 2002, respectively.

7. Related-Party Transaction

An affiliate of Urban provides insurance brokerage services to the Partnership. During the six months ending June 30, 2005 and 2004, the Partnership incurred costs of approximately $ 37,000 (unaudited) and $32,000 (unaudited), respectively for such services, and approximately $47,000, $39,000, and $66,000 for such services in 2004, 2003, and 2002, respectively, all of which has been paid at year end and as of June 30, 2005.

8. Contingencies

Litigation

On March 4, 2003, Evelyn M. Forbes, as Executrix of the Estate of Charles H. Forbes, Jr., filed a seven count complaint styled Forbes v. Westban Hotel Investors, LLC, et. al, Case No. 03-1013F, in the Commonwealth of Massachusetts Superior Court Department. In the complaint plaintiff seeks, among other things, compensatory and punitive damages arising out of the death of Charles Forbes on June 24, 2002 who was allegedly electrocuted to death while on the premises of the hotel and in the process of repairing an escalator. The counts against Westban Hotel Investors, LLC are for wrongful death negligence, wrongful death punitive damages, and damages for violation of the Massachusetts Consumer Protection Act. Among the other named defendants is Starwood Hotels & Resort Worldwide, Inc., d/b/a Westin Hotels and Resorts and as Westin Copley Place Hotel. The Partnership tendered the defense of this matter to Fujitec America, Inc., the company engaged to perform escalator repair at the property. The tender was accepted. The insurance carrier for the escalator repair service has agreed to defend and indemnify the Partnership without reservation, except as to the extent of punitive damages, if any, and up to its policy limits. The case is still in discovery.

The Partnership is the defendant in certain other litigation arising in the ordinary course of business. In the opinion of management, the outcome of all such litigation is not expected to have a material adverse effect on the Partnership’s financial position or results of operations.

9. Subsequent Event

The Partnership made a cash distribution to partners of $2,750,000 on March 28, 2005.

On August 12, 2005, the Partnership entered into a contract to sell the Hotel to LaSalle Hotel Properties and LaSalle Hotel Lessee. The sale is expected to close in the third quarter of 2005 (unaudited).

On March 31, 2005, Starwood Capital acquired an indirect interest in the Partnership. As of the acquisition date, certain principals of Starwood Capital were also principals of Starwood. (unaudited)

(b) Pro Forma Financial Information

Unaudited Pro Forma Consolidated Financial Information

LASALLE HOTEL PROPERTIES

Pro Forma Consolidated Balance Sheet

As of June 30, 2005

(Unaudited, Dollar Amounts in Thousands Except per Share Data)

The accompanying unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2005 is presented as if the acquisition of the Westin Copley Place occurred on June 30, 2005.

The following unaudited Pro Forma Consolidated Balance Sheet is not necessarily indicative of what the actual financial position of the Company would have been assuming such transaction had been completed as of June 30, 2005, nor is it indicative of future financial positions of the Company if the acquisition occurs.

LASALLE HOTEL PROPERTIES

Pro Forma Consolidated Balance Sheet

As of June 30, 2005

(Unaudited, Dollar Amounts in Thousands Except per Share Data)


	(A) Historical			(B) Westin Copley Place			Pro Forma
Assets:
Investment in hotel properties, net	$	827,889		$	319,762		$	1,147,651
Property under development		42,440			—			42,440
Investment in joint venture		1,197			—			1,197
Cash and cash equivalents		9,148			(514	)		8,634
Restricted cash reserves		8,697			1,207			9,904
Rent receivable		2,334			—			2,334
Hotel receivables (net of allowance for doubtful accounts of approximately $453)		17,925			4,598			22,523
Deferred financing costs, net		5,265			—			5,265
Deferred tax asset		15,539			—			15,539
Prepaid expenses and other assets		19,303			7,009			26,312
Assets held for sale or disposed of, net		51,398			—			51,398

Total assets	$	1,001,135		$	332,062		$	1,333,197

Liabilities and Shareholders’ Equity:
Borrowings under credit facilities	$	82,229		$	57,000		$	139,229
Bonds payable		42,500			—			42,500
Mortgage loans		269,863			210,000			479,863
Accounts payable and accrued expenses		39,045			6,295			45,340
Advance deposits		6,066			767			6,833
Accrued interest		1,171			—			1,171
Distributions payable		5,562			—			5,562
Liabilities of assets held for sale and sold		2,392			—			2,392

Total liabilities		448,828			274,062			722,890

Minority interest in LaSalle Hotel Operating Partnership, L.P.		2,067			—			2,067
Minority interest attributable to preferred unit holders in LaSalle Hotel Operating Partnership, L.P.		—			58,000			58,000

Shareholders’ Equity:
Preferred shares, $.01 par value, 20,000,000 shares authorized,
10 ¹ / 4 % Series A - 3,991,900 shares issued and outstanding at June 30, 2005		40			—			40
8 ³ / 8 % Series B - 1,100,000 shares issued and outstanding at June 30, 2005		11			—			11
Common shares of beneficial interest, $.01 par value, 100,000,000 shares authorized, 30,063,558 shares issued and outstanding at June 30, 2005		301			—			301
Additional paid-in capital, including offering costs of $31,860 at June 30, 2005		621,468			—			621,468
Deferred compensation		(3,000	)		—			(3,000	)
Accumulated other comprehensive loss		1,177			—			1,177
Distributions in excess of retained earnings		(69,757	)		—			(69,757	)

Total shareholders’ equity		550,240			—			550,240

Total liabilities and shareholders’ equity	$	1,001,135		$	332,062		$	1,333,197

See notes to pro forma consolidated balance sheet.

LASALLE HOTEL PROPERTIES

Notes and Management’s Assumptions to the

Pro Forma Consolidated Balance Sheet

As of June 30, 2005

(Unaudited, Dollar Amounts in Thousands Except per Share Data)

(A)	Represents the unaudited Consolidated Balance Sheet of the Company as of June 30, 2005 as filed on Form 10-Q.

(B)

Represents the anticipated purchase of the Westin Copley Place as if it had occurred on June 30, 2005 for $318,000 plus transaction expenses of approximately $7 million. The source of the funding for the acquisition will be approximately $210 million first mortgage, $58 million Preferred C units, and approximately $57 million from the Company’s Credit Facility.

The following are the detailed balances comprising of:


Building and improvements	$	290,809
Furniture and equipment		28,953

Investment in Westin Copley Place	$	319,762

Prepaid land and air rights	$	5,238
Inventory		296
Prepaid insurance		335
Prepaid maintenance		39
Prepaid other		1,101

Prepaid expenses and other assets	$	7,009

Trade accounts payable	$	589
Accrued management fee		1,153
Accrued vacation		1,744
Accrued taxes		727
Accrued salaries		590
Accrued utilities		242
Accrued other		1,250

Accounts payable and accrued expenses	$	6,295

LASALLE HOTEL PROPERTIES

Pro Forma Consolidated Statement of Operations

For the year ended December 31, 2004

(Unaudited, Dollar Amounts in Thousands Except per Share Data)

The accompanying unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2004 is presented as if the following acquisitions (together the “Acquired Hotels”) had been consummated and leased as of January 1, 2004.

•

Indianapolis Marriott Downtown (purchased February 2004)

•

Hilton Old Town Alexandria (purchased May 2004)

•

Westin Copley Place (anticipated purchase third quarter 2005)

This pro forma consolidated statement should be read in conjunction with the historical financial statements and notes thereto included in the Company’s Annual Report on form 10-K for the year ended December 31, 2004, the audited financial statements of Westban Hotel Venture (a Partnership) included herein, and with the Company’s prior filings under form 8-K/A dated March 3, 2004 related to the Indianapolis Marriott Downtown acquisition and form 8-K/A dated July 1, 2004 related to the Hilton Old Town Alexandria acquisition. In management’s opinion, all adjustments necessary to reflect the effects of the significant acquisitions described above have been made.

The following unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what actual results of the Company would have been assuming such transactions had been completed as of January 1, 2004, nor is it indicative of the results of operations for future periods.

LASALLE HOTEL PROPERTIES

Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2004

(Unaudited, Dollar Amounts in Thousands Except per Share Data)


				Pro Forma Adjustments
	(A) Historical			(B) Acquisitions of Hotel Properties		(C) Acquisition Interest Expense			(D) Acquisition Income Tax Expense/ Minority Interest			Pro Forma
Revenues:
Hotel operating revenues:
Room revenue	$	152,100		$	55,212	$	—		$	—		$	207,312
Food and beverage revenue		86,404			31,656		—			—			118,060
Other operating department revenue		23,291			6,218		—			—			29,509

Total hotel operating revenues		261,795			93,086		—			—			354,881
Participating lease revenue		18,635			—		—			—			18,635
Other income		187			—		—			—			187

Total revenues		280,617			93,086		—			—			373,703

Expenses:
Hotel operating expenses:
Room		38,912			11,654		—			—			50,566
Food and beverage		59,951			22,907		—			—			82,858
Other direct		13,349			1,806		—			—			15,155
Other indirect		74,486			24,889		—			—			99,375

Total hotel operating expenses		186,698			61,256		—			—			247,954

Depreciation and other amortization		38,933			14,424		—			—			53,357
Real estate taxes, personal property taxes and insurance		11,891			5,121		—			—			17,012
Ground rent		3,493			—		—			—			3,493
General and administrative		8,398			62		—			—			8,460
Amortization of deferred financing costs		2,268			—		—			—			2,268
Lease termination, advisory transition, subsidiary purchase and contingent lease termination expense		850			—		—			—			850
Other expenses		632			—		—			—			632

Total operating expenses		253,163			80,863		—			—			334,026

Operating income		27,454			12,223		—			—			39,677
Interest income		361			—		—			—			361
Interest		(13,081	)		—		(14,120	)		—			(27,201	)

Income (loss) before income tax benefit, minority interest, equity in earnings of unconsolidated entities and discontinued operations		14,734			12,223		(14,120	)		—			12,837
Income tax benefit		3,507			—		—			439			3,946
Minority interest in LaSalle Hotel Operating Partnership, L.P.		(289	)		—		—			86			(203	)
Minority interest attributable to preferred unit holders in LaSalle Hotel Operating Partnership, L.P.		—			—		—			(4,205	)		(4,205	)
Equity in earnings of unconsolidated entities		853			—		—			—			853

Income (loss) before discontinued operations		18,805			12,223		(14,120	)		(3,680	)		13,228
Discontinued operations:
Income from operations of property disposed of, including gain on sale of property dispositions		4,614			—		—			—			4,614
Minority interest		(68	)		—		—			—			(68	)
Income tax benefit		(128	)		—		—			—			(128	)

Net income from discontinued operations		4,418			—		—			—			4,418
Net income (loss)		23,223			12,223		(14,120	)		(3,680	)		17,646
Distributions to preferred shareholders		(12,532	)		—		—			—			(12,532	)

Net income (loss) applicable to common shareholders	$	10,691		$	12,223	$	(14,120	)	$	(3,680	)	$	5,114

Earnings per Common Share - Basic:
Income applicable to common shareholders before discontinued operations and after dividends paid on unvested restricted shares	$	0.23										$	0.02
Discontinued operations		0.16											0.15

Net income applicable to common shareholders after dividends paid on unvested restricted shares	$	0.39										$	0.17

Earnings per Common Share - Diluted:
Income applicable to common shareholders before discontinued operations	$	0.23										$	0.02
Discontinued operations		0.16											0.15

Net income applicable to common shareholders	$	0.39										$	0.17

Weighted average number common shares outstanding:
Basic		26,740,506											29,366,872
Diluted		27,376,934											30,003,300

See notes to pro forma consolidated statement of operations.

LASALLE HOTEL PROPERTIES

Notes and Management’s Assumptions to the

Pro Forma Consolidated Statement of Operations

For the year ended December 31, 2004

(Unaudited, Dollar Amounts in Thousands Except per Share Data)

(A)	Represents the Company’s Consolidated Statement of Operations for the year ended December 31, 2004.

(B)

Pro forma net income for the anticipated Westin Copley Place acquisition is presented for the year ended December 31, 2004 of Westban Hotel Venture (a Partnership). Pro forma net income for the Indianapolis Marriott Downtown acquisition and the Hilton Old Town Alexandria acquisition is presented for the period from January 1, 2004 through their respective acquisition dates. Results of operations for the Indianapolis Marriott Downtown and the Hilton Old Town Alexandria subsequent to their acquisition dates are reflected in the Company’s historical Consolidated Statement of Operations for the year ended December 31, 2004. Pro forma net income from acquisitions of hotel properties are as follows:


	Indianapolis Marriott Downtown			Hilton Old Town Alexandria			Westin Copley Place			Total
Historical net income (1)	$	203		$	2,447		$	12,844		$	15,494
Adjustments to historical net income:
Add: Depreciation and amortization (2)		—			—			6,896			6,896
Interest expense (3)		—			—			4,319			4,319
Less: Depreciation on acquisition cost basis (4)		(491	)		(864	)		(13,131	)		(14,486	)

Pro forma net income adjustment from acquired hotels	$	(288	)	$	1,583		$	10,928		$	12,223

(1)

Represents historical net income and the hotel operations for the predecessor owners of the Acquired Hotels. Historical net income for the Westin Copley Place is based on audited financial statements for the year ended December 31, 2004. Historical net income for the Indianapolis Marriott Downtown and the Hilton Old Town Alexandria are based upon the historical net income reflected on the hotel operating statements for the period from January 1, 2004 through their respective acquisition dates.

(2)

Adjustment for historical depreciation basis and amortization of deferred loan costs included in 2004 historical net income of the Westin Copley Place. Depreciation and amortization are not included in the 2004 historical net income for the Indianapolis Marriott Downtown and the Hilton Old Town Alexandria, and, therefore, no adjustment is necessary. The Company has included its estimate of depreciation in the net income from hotel operations, based on the purchase price allocation of the Acquired Hotels (see (4) below).

(3)

Adjustment for interest expense on the respective predecessor owner’s mortgage notes included in 2004 historical net income for the Westin Copley Place. Interest expense is not included in the 2004 historical net income for the Indianapolis Marriott Downtown and the Hilton Old Town Alexandria, and, therefore, no adjustment is necessary.

(4)

Represents full year depreciation for the Westin Copley Place and pro rata depreciation for the Hilton Old Town Alexandria and the Indianapolis Marriott Downtown, based on the purchase price allocation of the operating real and personal property of the Acquired Hotels. Depreciation is computed using the straight-line method and is based upon the estimated useful life of forty years for building and improvements and five years for furniture and equipment. The portion of the cumulative depreciable basis for the Westin Copley Place allocated to building and improvements and furniture and equipment is $290,809 and $28,953, resulting in depreciation of $7,268 and $5,791, respectively.

(C)

Represents the Company’s estimated full year interest expense for the Westin Copley Place, and the pro rata interest expense for the Hilton Old Town Alexandria and the Indianapolis Marriott Downtown, on proceeds from borrowings to finance the acquisitions. The proceeds from borrowings and related interest expense for each acquisition is as follows:


	Indianapolis Marriott Downtown		Hilton Old Town Alexandria		Westin Copley Place		Total
Proceeds from borrowings	$	57,000	$	34,400	$	267,000	$	358,400

Net acquisition interest expense	$	299	$	693	$	13,128	$	14,120

(D)

Represents the expected income tax expense (benefit) and minority interest effect from the Acquired Hotels. As a wholly owned taxable-REIT subsidiary of the Company, LaSalle Hotel Lessee, Inc. (“LHL”) is required to pay taxes at the applicable rates. To calculate the income tax expense (benefit) expected to be realized by LHL, REIT expenses included in the pro forma net income adjustment from acquired hotels are added back, and participating lease expense is deducted, to arrive at LHL net income from the Acquired Hotels. Income tax expense (benefit) and minority interest are calculated assuming the hotels had been leased to LHL as of January 1, 2004 as follows:


	Indianapolis Marriott Downtown			Hilton Old Town Alexandria			Westin Copley Place			Total
Pro forma net income (loss) adjustment from Acquired Hotels	$	(288	)	$	1,583		$	10,928		$	12,223
Add: Depreciation		491			864			13,131			14,486
Real estate taxes, personal property taxes and insurance		176			146			4,799			5,121
Less: Participating lease expense (1)		(1,644	)		(3,215	)		(28,028	)		(32,887	)

LHL net income (loss) before income taxes from Acquired Hotels		(1,265	)		(622	)		830			(1,057	)
LHL estimated combined 2004 tax rate		41.5	%		41.5	%		41.5	%		41.5	%

Income tax expense (benefit)	$	(525	)	$	(258	)	$	344		$	(439	)

(1)	The 2004 participating lease expense is based on the Company’s internal estimates and is eliminated in consolidation. The LHL participating lease expense is presented solely to calculate LHL taxable income and consequently, the income tax expense.

The cumulative minority interest effect of the Acquired Hotels is calculated by using the Company’s 2004 weighted average minority interest percentage of 1.52% as follows:


	Indianapolis Marriott Downtown			Hilton Old Town Alexandria			Westin Copley Place			Total
Pro forma net income (loss) adjustment from Acquired Hotels	$	(288	)	$	1,583		$	10,928		$	12,223
Less: Net acquisition interest expense		(299	)		(693	)		(13,128	)		(14,120	)
Minority interest attributable to preferred unit holders in LaSalle Hotel Operating Partnership, L.P.		—			—			(4,205	)		(4,205	)
Income tax (expense) benefit		525			258			(344	)		439

Net income (loss) before minority interest		(62	)		1,148			(6,749	)		(5,663	)
Weighted average minority interest percentage		1.52	%		1.52	%		1.52	%		1.52	%

Minority interest		(1	)		17			(102	)		(86	)

The minority interest attributable to preferred unit holders represents the dividends paid on approximately 2.3 million of 7.25% preferred units which will be issued to a selling partner of Westban Hotel Venture.

Non-GAAP Financial Measures

Funds From Operations

The Company considers the non-GAAP measure of funds from operations (“FFO”) to be a key supplemental measure of the Company’s performance and should be considered along with, but not as alternatives to, net income as a measure of the Company’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider supplemental measurements of performance to be helpful in evaluating a real estate company’s operations. The Company believes that excluding the effect of extraordinary items, real estate-related depreciation and amortization, and the portion of these items related to unconsolidated entities, all of which are based on historical cost accounting and which may be of limited significance in evaluating current performance, can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common shareholders. However, FFO may not be helpful when comparing the Company to non-REITs.

The White Paper on FFO approved by NAREIT in April 2002 defines FFO as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of properties and items classified by GAAP as extraordinary, plus real estate-related depreciation and amortization (excluding amortization of deferred finance costs) and after comparable adjustments for the Company’s portion of these items related to unconsolidated entities and joint ventures. The Company computes FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company.

FFO does not represent cash generated from operating activities determined by GAAP and should not be considered as an alternative to net income, cash flow from operations or any other operating performance measure prescribed by GAAP. FFO is not a measure of the Company’s liquidity, nor is it indicative of funds available to fund the Company’s cash needs, including its ability to make cash distributions. FFO does not reflect cash expenditures for long-term assets and other items that have been and will be incurred. FFO may include funds that may not be available for management’s discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of these excluded items to the extent they are material to operating decisions or evaluation of the Company’s operating performance.

The following is a reconciliation between net income applicable to common shareholders and FFO for the year ended December 31, 2004, presented on an historical and pro forma basis (in thousands, except share data):


	Historical			Pro Forma
Funds From Operations (FFO):
Net income applicable to common shareholders	$	10,691		$	5,114
Depreciation		38,937			53,361
Equity in depreciation of joint venture		1,053			1,053
Amortization of deferred lease costs		46			46
Minority interest:
Minority interest in LaSalle Hotel Operating Partnership, L.P.		289			203
Minority interest in discontinued operations		68			68
Net gain on sale of properties disposed of		(2,636	)		(2,636	)

FFO	$	48,448		$	57,209

Weighted average number of common shares and units outstanding:
Basic		27,153,145			29,779,512
Diluted		27,789,574			30,415,940

EBITDA

The Company considers the non-GAAP measure of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to be a key measure of the Company’s performance and should be considered along with, but not as an alternative to, net income as a measure of the Company’s operating performance. Most real estate industry investors consider EBITDA a measurement of performance that is helpful in evaluating a REIT’s operations. The Company believes that excluding the effect of non-operating expenses and non-cash charges, and the portion of these items related to unconsolidated entities, all of which are based on historical cost accounting and which may be of limited significance in evaluating current performance, can help eliminate the accounting effects of depreciation and amortization, and financing decisions and facilitate comparisons of core operating profitability between periods and between REITs, even though EBITDA does not represent an amount that accrues directly to common shareholders.

EBITDA does not represent cash generated from operating activities determined by GAAP and should not be considered as an alternative to net income, cash flow from operations or any other operating performance measure prescribed by GAAP. EBITDA is not a measure of the Company’s liquidity, nor is it indicative of funds available to fund the Company’s cash needs, including its ability to make cash distributions. EBITDA does not reflect cash expenditures for long-term assets and other items that have been and will be incurred. EBITDA may include funds that may not be available for management’s discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of the excluded items to the extent they are material to operating decisions or evaluation of the Company’s operating performance.

The following is a reconciliation between net income applicable to common shareholders and EBITDA for the year ended December 31, 2004, presented on an historical and pro forma basis (in thousands).:


	Historical			Pro Forma
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA):
Net income applicable to common shareholders	$	10,691		$	5,114
Interest		13,081			27,201
Equity in interest expense of joint venture		573			573
Income tax benefit:
Income tax benefit		(3,507	)		(3,946	)
Income tax benefit from discontinued operations		128			128
Depreciation and other amortization		39,046			53,470
Equity in depreciation/amortization of joint venture		1,164			1,164
Amortization of deferred financing costs		2,268			2,268
Minority interest:
Minority interest in LaSalle Hotel Operating Partnership, L.P.		289			203
Minority interest attributable to preferred unit holders in LaSalle Hotel Operating Partnership, L.P.		—			4,205
Minority interest in discontinued operations		68			68
Distributions to preferred shareholders		12,532			12,532

EBITDA	$	76,333		$	102,980

LASALLE HOTEL PROPERTIES

Pro Forma Consolidated Statement of Operations

For the Six Months Ended June 30, 2005

(Unaudited, Dollar Amounts in Thousands Except per Share Data)

The accompanying unaudited Pro Forma Consolidated Statement of Operations for the six months ended June 30, 2005 is presented as if the acquisition of the Westin Copley Place had been consummated as of January 1, 2004.

This pro forma consolidated statement should be read in conjunction with the Company’s historical financial statements and notes thereto included in the Company’s Annual Report on form 10-K for the year ended December 31, 2004 and the audited financial statements of Westban Hotel Venture (a Partnership) included herein. In management’s opinion, all adjustments necessary to reflect the effects of the acquisition of the Westin Copley Place have been made.

The following unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what actual results of the Company would have been assuming such transaction had been completed as of January 1, 2004, nor is it indicative of the results of operations for future periods.

LASALLE HOTEL PROPERTIES

Pro Forma Consolidated Statement of Operations

For the Six Months Ended June 30, 2005

(Unaudited, Dollar Amounts in Thousands Except per Share Data)


				Pro Forma Adjustments
	(A) Historical			(B) Acquisition of the Westin Copley Place		(C) Acquisition Interest Expense			(D) Acquisition Income Tax Expense/ Minority Interest			Pro Forma
Revenues:
Hotel operating revenues:
Room revenue	$	94,502		$	23,090	$	—		$	—		$	117,592
Food and beverage revenue		46,046			14,183		—			—			60,229
Other operating department revenue		10,089			2,857		—			—			12,946

Total hotel operating revenues		150,637			40,130		—			—			190,767
Participating lease revenue		9,415			—		—			—			9,415
Other income		617			—		—			—			617

Total revenues		160,669			40,130		—			—			200,799

Expenses:
Hotel operating expenses:
Room		22,832			5,227		—			—			28,059
Food and beverage		31,413			10,562		—			—			41,975
Other direct		5,885			825		—			—			6,710
Other indirect		42,156			5,806		—			—			47,962

Total hotel operating expenses		102,286			22,420		—			—			124,706

Depreciation and other amortization		20,352			6,566		—			—			26,918
Real estate taxes, personal property taxes and insurance		6,435			2,280		—			—			8,715
Ground rent		1,769			—		—			—			1,769
General and administrative		5,234			4,650		—			—			9,884
Lease termination expense		1,018			—		—			—			1,018
Other expenses		130			—		—			—			130

Total operating expenses		137,224			35,916		—			—			173,140

Operating income (loss)		23,445			4,214		—			—			27,659
Interest income		205			—		—			—			205
Interest expense		(9,832	)		—		(6,854	)		—			(16,686	)

Income (loss) before income tax benefit, minority interest, equity in earnings of unconsolidated entities and discontinued operations		13,818			4,214		(6,854	)		—			11,178
Income tax benefit (expense)		(766	)		—		—			(170	)		(936	)
Minority interest in LaSalle Hotel Operating Partnership, L.P.		(157	)		—		—			58			(99	)
Minority interest attributable to preferred unit holders in LaSalle Hotel Operating Partnership, L.P.		—			—		—			(2,103	)		(2,103	)
Equity in earnings of unconsolidated entities		186			—		—			—			186

Income (loss) before discontinued operations		13,081			4,214		(6,854	)		(2,215	)		8,226
Discontinued operations:
Income from operations of property held for sale		(163	)		—		—			—			(163	)
Income (loss) from properties sold		(45	)										(45	)
Minority interest, net of tax		(7	)		—		—			—			(7	)
Income tax benefit		740			—		—			—			740

Net income from discontinued operations		525			—		—			—			525

Net income (loss)		13,606			4,214		(6,854	)		(2,215	)		8,751
Distributions to preferred shareholders		(6,266	)		—		—			—			(6,266	)

Net income (loss) applicable to common shareholders	$	7,340		$	4,214	$	(6,854	)	$	(2,215	)	$	2,485

Earnings per Common Share - Basic:
Income applicable to common shareholders before discontinued operations and after dividends paid on unvested restricted shares	$	0.23										$	0.06
Discontinued operations		0.01											0.02

Net loss applicable to common shareholders after dividends paid on unvested restricted shares	$	0.24										$	0.08

Earnings per Common Share - Diluted:
Income applicable to common shareholders before discontinued operations	$	0.23										$	0.06
Discontinued operations		0.01											0.02

Net loss applicable to common shareholders	$	0.24										$	0.08

Weighted average number common shares outstanding:
Basic		29,767,699											29,767,699
Diluted		30,245,373											30,245,373

See notes to pro forma consolidated statement of operations.

LASALLE HOTEL PROPERTIES

Notes and Management’s Assumptions to the

Pro Forma Consolidated Statement of Operations

For the Six Months Ended June 30, 2005

(Unaudited, Dollar Amounts in Thousands Except per Share Data)

(A)	Represents the Company’s Consolidated Statement of Operations for the six months ended June 30, 2005 as filed on Form 10-Q.

(B)	Pro forma net income for the anticipated Westin Copley Place acquisition is presented for the six months ended June 30, 2005 of Westban Hotel Venture (a Partnership). Pro forma net income from the acquisition of the Westin Copley Place is as follows:


Historical net income (1)	$	5,132
Adjustments to historical net income:
Add: Depreciation (2)		3,544
Interest expense (3)		2,104
Less: Depreciation on acquisition cost basis (4)		(6,566	)

Pro forma net income adjustment from Westin Copley Place	$	4,214

(1)	Represents the historical net income and the hotel operations based on the hotel’s operating statements for the six months ending June 30, 2005

(2)	Adjustment for historical depreciation basis included in 2005 historical net income of the Westin Copley Place. The Company has included its estimate of depreciation in the net income from hotel operations, based on the purchase price allocation of the Westin Copley Place (see (4) below).

(3)	Adjustment for interest expense of the predecessor owner mortgage note included in 2005 historical net income for the Westin Copley Place

(4)

Represents depreciation on the purchase price allocation of the operating real and personal property of the Westin Copley Place. Depreciation is computed using the straight-line method and is based upon the estimated useful life of forty years for building and improvements and five years for furniture and equipment. The portion of the cumulative depreciable basis for the Westin Copley Place allocated to building and improvements and furniture and equipment is $290,809 and $28,953, resulting in depreciation of $3,634 and $2,895, respectively.

(C)	Represents the Company’s estimated interest expense for the six months ended June 30, 2005 for the Westin Copley Place, on proceeds from borrowings to finance the acquisition. The proceeds from borrowings and related interest expense is as follows:


Proceeds from borrowings	$	267,000

Net acquisition interest expense	$	6,854

(D)

Represents the expected income tax expense and minority interest effect from the Westin Copley Place acquisition. As a wholly owned taxable-REIT subsidiary of the Company, LaSalle Hotel Lessee, Inc. (“LHL”) is required to pay taxes at the applicable rates. To calculate the income tax expense expected to be realized by LHL, REIT expenses included in the pro forma net income adjustment from acquired hotel is added back, and participating lease expense is deducted, to arrive at LHL net income from the acquisition of the Westin Copley Place. Income tax expense and minority interest are calculated assuming the hotel had been leased to LHL as of January 1, 2005 as follows:


Pro forma net income adjustment from Westin Copley Place	$	4,214
Add: Depreciation		6,566
Real estate taxes, personal property taxes and insurance		2,280
Less: Participating lease expense (1)		(12,651	)

LHL net income from Westin Copley Place		409
LHL estimated combined 2005 tax rate		41.5	%

Income tax expense	$	170

(1)	The 2005 participating lease expense is based on the Company’s internal estimates and is eliminated in consolidation. The LHL participating lease expense is presented solely to calculate LHL taxable income and consequently, the income tax expense.

The cumulative minority interest effect of the Westin Copley Place is calculated by using the Company’s weighted average minority interest percentage of 1.19% for the six months ended June 30, 2005 as follows:


Pro forma net income adjustment from Westin Copley Place	$	4,214
Less: Acquisition interest expense		(6,854	)
Minority interest attributable to preferred unit holders in LaSalle Hotel Operating Partnership, L.P.		(2,103	)
Income tax expense		(170	)

Net (loss) before minority interest		(4,913	)
Weighted average minority interest percentage		1.19	%

Minority interest		(58	)

Non-GAAP Financial Measures

Funds From Operations

The following is a reconciliation between net income applicable to common shareholders and FFO for the six months ended June 30, 2005, presented on an historical and pro forma basis (in thousands, except share data):


	Historical		Pro Forma
Funds From Operations (FFO):
Net income applicable to common shareholders	$	7,340	$	2,485
Depreciation		21,164		27,730
Equity in depreciation of joint venture		411		411
Amortization of deferred lease costs		23		23
Minority interest:
Minority interest in LaSalle Hotel Operating Partnership, L.P.		157		99
Minority interest in discontinued operations		7		7

FFO	$	29,102	$	30,755

Weighted average number of common shares and units outstanding:
Basic		30,127,805		30,127,805
Diluted		30,605,480		30,605,480

EBITDA

The following is a reconciliation between net loss applicable to common shareholders and EBITDA for the six months ended June 30, 2005, presented on an historical and pro forma basis (in thousands):


	Historical			Pro Forma
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA):
Net income applicable to common shareholders	$	7,340		$	2,485
Interest		9,837			16,691
Equity in interest expense of joint venture		341			341
Income tax benefit:
Income tax expense		766			936
Income tax benefit from discontinued operations		(740	)		(740	)
Depreciation and other amortization		21,269			27,835
Equity in depreciation/amortization of joint venture		456			456
Amortization of deferred financing costs
Minority interest:
Minority interest in LaSalle Hotel Operating Partnership, L.P.		157			99
Minority interest attributable to preferred unit holders in LaSalle Hotel Operating Partnership, L.P.		—			2,103
Minority interest in discontinued operations		7			7
Distributions to preferred shareholders		6,266			6,266

EBITDA	$	45,699		$	56,479

The following exhibits are included with this report:



Exhibit 3.1		Form of Articles Supplementary establishing and fixing the rights and preferences of 7.25% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, $.01 par value per share.

Exhibit 10.1		Contribution and Sale Agreement, dated August 12, 2005, by and among LaSalle Hotel Properties, LaSalle Hotel Operating Partnership, L.P., LaSalle Hotel Lessee, Inc., W. Copley Boston Corporation, and SCG Copley Square LLC.

Exhibit 10.2		Form of Third Amendment to the Amended and Restated Agreement of Limited Partnership of LaSalle Hotel Operating Partnership, L.P.

Exhibit 23.1		Consent of KPMG LLP

Exhibit 99.1		Press release dated August 16, 2005 issued by LaSalle Hotel Properties.

NOTE: The information in this report (including exhibit 99.1) furnished pursuant to Item 7.01 shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. This report will not be deemed an admission as to the materiality of any information contained herein that is required to be disclosed solely by regulation FD.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	LASALLE HOTEL PROPERTIES

Dated: August 16, 2005	BY:	/s/ HANS S. WEGER
		Hans S. Weger
		Executive Vice President, Treasurer and
		Chief Financial Officer

Exhibit 3.1

FORM OF

LASALLE HOTEL PROPERTIES

ARTICLES SUPPLEMENTARY

ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF

7.25% SERIES C CUMULATIVE REDEEMABLE PREFERRED

SHARES OF BENEFICIAL INTEREST,

$.01 PAR VALUE PER SHARE

LASALLE HOTEL PROPERTIES, a Maryland real estate investment trust (the “Trust”), having its principal office in Bethesda, Maryland, hereby certifies to the State Department of Assessments and Taxation of Maryland that:

FIRST : Pursuant to authority expressly vested in the Trustees by Article VI, Section 6.3 of the Articles of Amendment and Restatement of Declaration of Trust, dated April 24, 1998, as amended (the “Declaration of Trust”), the Trustees have duly classified and designated [ ] shares of the authorized but unissued preferred shares of the Trust as 7.25% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, $.01 par value per share, of the Trust (“Series C Preferred Shares”).

SECOND : The preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption of the Series C Preferred Shares are as follows:

7.25% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, $.01 par value per share

1. Designation and Number . A series of Preferred Shares, designated the “7.25% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, $.01 par value per share”, is hereby established. The number of authorized Series C Preferred Shares shall be [ ].

2. Relative Seniority . The Series C Preferred Shares will, with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Trust, rank (a) senior to all classes or series of Common Shares (as defined in the Declaration of Trust) and to all equity securities the terms of which provide that such equity securities shall rank junior to such Series C Preferred Shares; (b) on a parity with all equity securities issued by the Trust, other than those equity securities referred to in clauses (a) and (c); and (c) junior to all equity securities issued by the Trust which rank senior to the Series C Preferred Shares in accordance with Section 6(d). The term “equity securities” shall not include convertible debt securities.

3. Distributions .

(a) Holders of Series C Preferred Shares shall be entitled to receive, when and as

authorized by the Trustees, out of funds legally available for the payment of distributions, cumulative preferential cash distributions at the rate of seven and one-quarter percent (7.25%) per annum of the Twenty-five Dollars ($25.00) per share liquidation preference of the Series C Preferred Shares (equivalent to a fixed annual amount of $1.8125 per share). Such distributions shall accumulate on a daily basis and be cumulative from (but excluding) the original date of issuance and be payable quarterly in equal amounts in arrears on the fifteenth day of January, April, July and October of each year, beginning on October 15, 2005 (each such day being hereinafter called a “Distribution Payment Date”); provided that if any Distribution Payment Date is not a Business Day (as hereinafter defined), then the distribution which would otherwise have been payable on such Distribution Payment Date may be paid on the next succeeding Business Day with the same force and effect as if paid on such Distribution Payment Date, and no interest or additional distributions or other sums shall accrue on the amount so payable from such Distribution Payment Date to such next succeeding Business Day. Any distribution payable on the Series C Preferred Shares for any partial distribution period shall be prorated and computed on the basis of a 360-day year consisting of twelve 30-day months. Distributions shall be payable to holders of record as they appear in the share records of the Trust at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Distribution Payment Date falls or such other date designated by the Trustees for the payment of distributions that is not more than 90 nor less than 10 days prior to such Distribution Payment Date (each, a “Distribution Record Date”).

(b) No distribution on the Series C Preferred Shares shall be authorized by the Trustees or paid or set apart for payment by the Trust at such time as the terms and provisions of any agreement of the Trust, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c) Notwithstanding anything to the contrary contained herein, distributions on the Series C Preferred Shares shall accumulate whether or not the restrictions referred to in clause (b) exist, whether or not the Trust has earnings, whether or not there are funds legally available for the payment of such distributions and whether or not such distributions are authorized. Accumulated but unpaid distributions on the Series C Preferred Shares will accumulate as of the Distribution Payment Date on which they first become payable or on the date of redemption, as the case may be. Accumulated and unpaid distributions will not bear interest.

(d) If any Series C Preferred Shares are outstanding, no distributions will be authorized or paid or set apart for payment on any equity securities of the Trust of any other class or series ranking, as to distributions, on a parity with or junior to the Series C Preferred Shares unless full cumulative distributions have been or contemporaneously are authorized and paid or authorized and a sum sufficient for the payment thereof set apart for such payment on the Series C Preferred Shares for all past distribution periods and the then

current distribution period. When distributions are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series C Preferred Shares and all other equity securities ranking on a parity, as to distributions, with the Series C Preferred Shares, all distributions authorized, paid or set apart for payment upon the Series C Preferred Shares and all other equity securities ranking on a parity, as to distributions, with the Series C Preferred Shares shall be authorized and paid pro rata or authorized and set apart for payment pro rata so that the amount of distributions authorized per Series C Preferred Share and each such other equity security shall in all cases bear to each other the same ratio that accumulated distributions per Series C Preferred Share and other equity security (which shall not include any accumulation in respect of unpaid distributions for prior distribution periods if such equity securities do not have a cumulative distribution) bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any distribution payment or payments on Series C Preferred Shares which may be in arrears.

(e) Except as provided in clause (d), unless full cumulative distributions on the Series C Preferred Shares have been or contemporaneously are authorized and paid or authorized and a sum sufficient for the payment thereof is set apart for payment for all past distribution periods and the then current distribution period, no distributions (other than in Common Shares or other equity securities of the Trust ranking junior to the Series C Preferred Shares as to distributions and upon liquidation) shall be authorized or paid or set apart for payment nor shall any other distribution be authorized or made upon the Common Shares or any other equity securities of the Trust ranking junior to or on a parity with the Series C Preferred Shares as to distributions or upon liquidation, nor shall any Common Shares or any other equity securities of the Trust ranking junior to or on a parity with the Series C Preferred Shares as to distributions or upon liquidation be redeemed, purchased or otherwise acquired directly or indirectly for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such equity securities) by the Trust (except by conversion into or exchange for other equity securities of the Trust ranking junior to the Series C Preferred Shares as to distributions and upon liquidation, by redemption, purchase or acquisition of equity securities under incentive, benefit or share purchase plans of the Trust for officers, Trustees or employees or others performing or providing similar services, or by other redemption, purchase or acquisition of such equity securities for the purpose of preserving the Trust’s status as a REIT).

(f) Holders of Series C Preferred Shares shall not be entitled to any distribution, whether payable in cash, property or shares, in excess of full cumulative distributions on the Series C Preferred Shares as described above. Any distribution payment made on the Series C Preferred Shares shall first be credited against the earliest accumulated but unpaid distribution due with respect to such shares which remains payable.

(g) In determining whether a distribution by dividend, redemption or other acquisition of the Trust’s equity securities is permitted under Maryland law, no effect shall be given to amounts that would be needed, if the Trust were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights on dissolution are superior to those receiving the distribution.

(h) “Business Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to close.

4. Liquidation Rights .

(a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Trust (referred to herein sometimes as a “liquidation”), the holders of Series C Preferred Shares then outstanding shall be entitled to receive, out of the assets of the Trust legally available for distribution to shareholders (after payment or provision for payment of all debts and other liabilities of the Trust), a liquidation preference in cash of Twenty-five Dollars ($25.00) per Series C Preferred Share, plus an amount equal to all accumulated and unpaid distributions to the date of payment, before any distribution of assets is made to holders of Common Shares or any other equity securities of the Trust that rank junior to the Series C Preferred Shares as to liquidation rights.

(b) If, upon any such voluntary or involuntary liquidation, dissolution or winding up of the Trust, the assets of the Trust are insufficient to make full payment to holders of Series C Preferred Shares and to the corresponding amounts payable on all shares of other classes or series of equity securities of the Trust ranking on a parity with the Series C Preferred Shares as to liquidation rights, then the holders of the Series C Preferred Shares and all other such classes or series of equity securities shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled.

(c) Written notice of any such liquidation, dissolution or winding up of the Trust, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series C Preferred Shares at the respective address of such holders as the same shall appear on the share transfer records of the Trust.

(d) After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series C Preferred Shares will have no right or claim to any of the remaining assets of the Trust.

(e) None of a consolidation or merger of the Trust with or into another entity, a merger of another entity with or into the Trust, a statutory share exchange by the Trust or a sale, lease, transfer or conveyance of all or substantially all of the Trust’s property or business shall be considered a liquidation, dissolution or winding up of the Trust.

5. Redemption .

(a) Except as provided below, the Series C Preferred Shares are not redeemable

prior to January 1, 2021. To ensure that the Trust remains qualified as a real estate investment trust (“REIT”) for federal income tax purposes, however, the Series C Preferred Shares shall be subject to the provisions of Article VII of the Declaration of Trust pursuant to which Series C Preferred Shares owned by a shareholder in excess of the Ownership Limit (as defined in Article VII of the Declaration of Trust) shall automatically be transferred to a Charitable Trust (as defined in Article VII of the Declaration of Trust) and the Trust shall have the right to purchase such shares, as provided in Article VII of the Declaration of Trust. Notwithstanding the first sentence of this Section 5(a), at any time during the period from January 1, 2016 to and including December 31, 2016, the Trust, at its option, upon giving notice as provided below, may redeem the Series C Preferred Shares, in whole or in part, for cash, at a redemption price of Twenty-five Dollars ($25.00) per share, plus all accumulated and unpaid distributions on such Series C Preferred Shares to the date of such redemption (the “Redemption Right”). The Trust may also exercise its Redemption Right at any time and from time to time on or after January 1, 2021, upon giving notice as provided below.

(b) If fewer than all of the outstanding Series C Preferred Shares are to be redeemed pursuant to the Redemption Right, the shares to be redeemed shall be selected pro rata (as nearly as practicable without creating fractional shares) or by lot or in such other equitable method prescribed by the Trustees. If such redemption is to be by lot and, as a result of such redemption, any holder of Series C Preferred Shares would become a holder of a number of Series C Preferred Shares in excess of the Ownership Limit because such holder’s Series C Preferred Shares were not redeemed, or were only redeemed in part then, except as otherwise provided in the Declaration of Trust, the Trust will redeem the requisite number of Series C Preferred Shares of such holder such that no holder will hold in excess of the Ownership Limit subsequent to such redemption.

(c) Notwithstanding anything to the contrary contained herein, unless full cumulative distributions on all Series C Preferred Shares shall have been or contemporaneously are authorized and paid or authorized and a sum sufficient for the payment thereof set apart for payment for all past distribution periods and the then current distribution period, no Series C Preferred Shares shall be redeemed unless all outstanding Series C Preferred Shares are simultaneously redeemed; provided, however, that the foregoing shall not prevent the purchase by the Trust of Series C Preferred Shares pursuant to Article VII of the Declaration of Trust or otherwise in order to ensure that the Trust remains qualified as a REIT for federal income tax purposes or the purchase or acquisition of Series C Preferred Shares pursuant to a purchase or exchange offer made on the same terms to holders of all Series C Preferred Shares. In addition, unless full cumulative distributions on all Series C Preferred Shares have been or contemporaneously are authorized and paid or authorized and a sum sufficient for the payment thereof set apart for payment for all past distributions periods and the then current distribution period, the Trust shall not purchase or otherwise acquire directly or indirectly for any consideration, nor shall any monies be paid to or be made available for a sinking fund for the redemption of, any Series C Preferred Shares (except by conversion into or exchange for equity securities of the Trust ranking junior to the Series C Preferred Shares as to distributions and upon

liquidation; provided, however, that the foregoing shall not prevent any purchase or acquisition of Series C Preferred Shares for the purpose of preserving the Trust’s status as a REIT or pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series C Preferred Shares.)

(d) Immediately prior to any redemption of Series C Preferred Shares, the Trust shall pay, in cash, any accumulated and unpaid distributions through the redemption date, unless a redemption date falls after a Distribution Record Date and prior to the corresponding Distribution Payment Date, in which case each holder of Series C Preferred Shares at the close of business on such Distribution Record Date shall be entitled to the distribution payable on such shares on the corresponding Distribution Payment Date (including any accrued and unpaid distributions for prior periods) notwithstanding the redemption of such shares before such Distribution Payment Date. Except as provided above, the Trust will make no payment or allowance for unpaid distributions, whether or not in arrears, on Series C Preferred Shares for which a notice of redemption has been given.

(e) The following provisions set forth the procedures for redemption:

(i) Notice of redemption will be given by publication in a newspaper of general circulation in The City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the redemption date (and in any event no later than March 31, 2016, in the case of a redemption to occur between January 1, 2016 and December 31, 2016). A similar notice will be mailed by the Trust, postage prepaid, no less than 30 nor more than 60 days prior to the redemption date (and in any event no later than March 31, 2016, in the case of a redemption to occur between January 1, 2016 and December 31, 2016), addressed to the respective holders of record of the Series C Preferred Shares to be redeemed at their respective addresses as they appear on the share transfer records of the Trust. No failure to give such notice or any defect thereto or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series C Preferred Shares except as to the holder to whom notice was defective or not given.

(ii) In addition to any information required by law or by the applicable rules of any exchange upon which the Series C Preferred Shares may be listed or admitted to trading, such notice shall state: (A) the redemption date; (B) the redemption price; (C) the number of Series C Preferred Shares to be redeemed; (D) the place or places where the Series C Preferred Shares are to be surrendered for payment of the redemption price; and (E) that distributions on the Series C Preferred Shares to be redeemed will cease to accumulate on such redemption date. If less than all of the Series C Preferred Shares held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of Series C Preferred Shares held by such holder to be redeemed.

(iii) On or after the redemption date, each holder of Series C Preferred Shares to be redeemed shall present and surrender the certificates representing his Series C Preferred

Shares to the Trust at the place designated in the notice of redemption and thereupon the redemption price of such shares (including all accumulated and unpaid distributions up to the redemption date) shall be paid to or on the order of the person whose name appears on such certificate evidencing Series C Preferred Shares as the owner thereof and each surrendered certificate shall be canceled. If fewer than all the shares evidenced by any such certificate evidencing Series C Preferred Shares are to be redeemed, a new certificate shall be issued evidencing the unredeemed shares.

(iv) From and after the redemption date (unless the Trust defaults in payment of the redemption price), all distributions on the Series C Preferred Shares designated for redemption in such notice shall cease to accumulate and all rights of the holders thereof, except the right to receive the redemption price thereof (including all accumulated and unpaid distributions up to the redemption date), shall cease and terminate and such shares shall not thereafter be transferred (except with the consent of the Trust) on the Trust’s share transfer records, and such shares shall not be deemed to be outstanding for any purpose whatsoever. At its election, the Trust, prior to a redemption date, may irrevocably deposit the redemption price (including accumulated and unpaid distributions to the redemption date) of the Series C Preferred Shares so called for redemption in trust for the holders thereof with a bank or trust company, in which case the redemption notice to holders of the Series C Preferred Shares to be redeemed shall (A) state the date of such deposit, (B) specify the office of such bank or trust company as the place of payment of the redemption price and (C) require such holders to surrender the certificates evidencing such shares at such place on or about the date fixed in such redemption notice (which may not be later than the redemption date) against payment of the redemption price (including all accumulated and unpaid distributions to the redemption date). Any monies so deposited which remain unclaimed by the holders of the Series C Preferred Shares at the end of two years after the redemption date shall be returned by such bank or trust company to the Trust.

(f) Any Series C Preferred Shares that shall at any time have been redeemed shall, after such redemption, have the status of authorized but unissued Preferred Shares, without designation as to series until such shares are once more designated as part of a particular series by the Trustees.

6. Voting Rights .

(a) Holders of the Series C Preferred Shares will not have any voting rights, except as set forth below or as otherwise from time to time required by law. In any matter in which the holders of Series C Preferred Shares are entitled to vote, each such holder shall have the right to one vote for each Series C Preferred Share held by such holder. If the holders of the Series C Preferred Shares and the holders of another series of preferred shares are entitled to vote together as a single class on any matter, the holders of the Series C Preferred Shares and the holders of such other preferred shares shall each have one vote for each $25.00 of liquidation preference.

(b) Whenever distributions on any Series C Preferred Shares shall be in arrears

for six or more quarterly periods, whether or not consecutive (a “Preferred Distribution Default”), the holders of Series C Preferred Shares (voting as a single class with all other equity securities upon which like voting rights have been conferred and are exercisable (“Parity Preferred Shares”)) will be entitled to vote for the election of a total of two additional trustees of the Trust (each, a “Preferred Share Trustee”) at a special meeting called by the holders of at least 10% of the outstanding Series C Preferred Shares or the holders of at least 10% of any other series of Parity Preferred Shares so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of shareholders) or, if the request for a special meeting is received by the Trust less than 90 days before the date fixed for the next annual or special meeting of shareholders, at the next annual meeting of shareholders, and at each subsequent annual meeting until all distributions accumulated on the Series C Preferred Shares for the past distribution periods and the then current distribution period shall have been fully paid or authorized and a sum sufficient for the payment thereof set aside for payment in full.

(c) If and when all accumulated distributions and the distribution for the then current distribution period on the Series C Preferred Shares shall have been paid in full or authorized and set apart for payment in full, the holders of Series C Preferred Shares shall be divested of the voting rights set forth in clause (b) above (subject to revesting in the event of each and every Preferred Distribution Default) and, if all accumulated distributions and the distribution for the current distribution period have been paid in full or authorized by the Trustees and set apart for payment in full on all other series of Parity Preferred Shares upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Share Trustee so elected shall terminate. Any Preferred Share Trustee may be removed at any time with or without cause by the vote of, and shall not be removed otherwise than by the vote of, the holders of a majority of the outstanding Series C Preferred Shares when they have the voting rights set forth in clause (b) above and all other series of Parity Preferred Shares (voting as a single class). So long as a Preferred Distribution Default shall continue, any vacancy in the office of a Preferred Share Trustee may be filled by written consent of the Preferred Share Trustee remaining in office, or if none remains in office, by a vote of the holders of a majority of the outstanding Series C Preferred Shares when they have the voting rights set forth in clause (b) above and all other series of Parity Preferred Shares (voting as a single class). The Preferred Share Trustees shall each be entitled to one vote per trustee on any matter.

(d) So long as any Series C Preferred Shares remain outstanding, the Trust shall not, without the affirmative vote of the holders of at least two-thirds of the Series C Preferred Shares outstanding at the time, given in person or by proxy, either in writing or at a meeting (such series voting separately as a class), (i) authorize or create, or increase the authorized or issued amount of, any class or series of equity securities ranking senior to the Series C Preferred Shares with respect to payment of distributions or the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding up of the Trust, or reclassify any authorized equity securities of the Trust into any such equity securities, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such equity securities; or (ii) amend, alter or repeal the provisions of the

Declaration of Trust (including these Articles Supplementary), whether by merger or consolidation (in either case, an “Event”) or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series C Preferred Shares or the holders thereof; provided, however, that with respect to the occurrence of any Event set forth in (ii) above, so long as Series C Preferred Shares remain outstanding with the terms thereof materially unchanged, taking into account that upon the occurrence of an Event, the Trust may not be the surviving entity and such surviving entity may thereafter be the issuer of the Series C Preferred Shares, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers of the Series C Preferred Shares or the holders thereof; and provided further that (x) any increase in the amount of the authorized Preferred Shares or the creation or issuance of any other class or series of equity securities, or (y) any increase in the amount of authorized Series C Preferred Shares or any other class or series of equity securities, in the case of each of (x) or (y) above ranking on a parity with or junior to the Series C Preferred Shares with respect to payment of distributions and the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding up of the Trust, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(e) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series C Preferred Shares shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

7. Conversion . The Series C Preferred Shares are not convertible into or exchangeable for any other property or securities of the Trust at the option of holders thereof.

8. Application of Article VII . The Series C Preferred Shares are subject to the provisions of Article VII of the Declaration of Trust.

THIRD : The Series C Preferred Shares have been classified and designated by the Trustees under the authority contained in the Declaration of Trust.

FOURTH : These Articles Supplementary have been approved by the Trustees in the manner and by the vote required by law.

FIFTH : These Articles Supplementary shall be effective at the time the State Department of Assessments and Taxation of Maryland accepts these Articles Supplementary for record.

SIXTH : The undersigned President of the Trust acknowledges these Articles Supplementary to be the act of the Trust and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

IN WITNESS WHEREOF, LASALLE HOTEL PROPERTIES has caused these Articles Supplementary to be signed in its name and on its behalf by its President and witnessed by its Secretary on , 2005.


WITNESS:	LASALLE HOTEL PROPERTIES

	By:
Hans S. Weger		Jon E. Bortz
Secretary		President

Exhibit 10.1

Execution Version

CONTRIBUTION AND SALE AGREEMENT

Among

W. COPLEY BOSTON CORPORATION,

a Delaware corporation

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SCG COPLEY SQUARE LLC,

a Delaware limited liability company

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LASALLE HOTEL OPERATING PARTNERSHIP, L.P.,

a Delaware limited partnership

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LASALLE HOTEL PROPERTIES,

a Maryland real estate investment trust

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LASALLE HOTEL LESSEE, INC.

an Illinois corporation

August 12, 2005

TABLE OF CONTENTS


Article 1. Interpretation		2

1.1	Defined Terms	2
1.2	Interpretation	10
1.3	Schedules	11

Article 2. Contribution and Redemption; Adjustments; Earnest Money		12

2.1	Pre-Closing Restructuring	12
2.2	Acquisition of Interests in the Company by the Partnership	13
2.3	Closing Date Transactions and Payment of the Closing Date Consideration	14
2.4	Working Capital Adjustments	15
2.5	Principles for Preparation of Working Capital Statements	18
2.6	Adjustment for Accounts Receivable	21
2.7	Earnest Money	22

Article 3. Representations and Warranties of the Transferors		23

3.1	General Representations and Warranties	23
3.2	Securities Act and Other Representations and Agreements	29

Article 4. Representations and Warranties of the Partnership, the REIT and LaSalle Lessee		30

4.1	General Representations and Warranties	30
4.2	Representations to SCG	33

Article 5. Conditions to Closing		36

5.1	Completion of Due Diligence; Title	36
5.2	Conditions to the Obligation of the Partnership to Close	37
5.3	Conditions to the Obligation of the Transferors to Close	39
5.4	Additional Conditions to the Obligation of the Transferors to Close	40
5.5	Adjournment of Closing in Certain Circumstances	41

Article 6. Operation of the Project Prior to Closing; Other Covenants		41

6.1	Interim Covenants	41
6.2	Miscellaneous Interim and Other Covenants	42

Article 7. Closing		46

7.1	Place and Time of Closing	46
7.2	Actions	46
7.3	Closing Deliveries to Partnership	47
7.4	Closing Deliveries to Transferors	48
7.5	Closing Deliveries to SCG	49
7.6	Expenses	50

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Article 8. Indemnification		51

8.2	Indemnification Obligations of the Partnership	52
8.3	Claim Procedures	54
8.4	Defense of Claim	54
8.5	Right to Contest	55
8.6	Insurance	55
8.7	Limitation of Liability; Indemnity Escrow Agreement	56
8.8	Several Obligations of Transferors	57
8.9	Exclusivity of Indemnity	57

Article 9. Damage and Destruction; Condemnation		58

9.1	Damage and Destruction	58
9.2	Condemnation	59

Article 10. Tax Reduction Proceedings		60

Article 11. Termination		60

11.1	Termination	60

Article 12. Miscellaneous		62

12.1	Waiver	62
12.2	Brokers	62
12.3	Survival; Further Instruments	62
12.4	No Third Party Benefits	63
12.5	Entire Agreement	63
12.6	Waivers	63
12.7	Successors and Assigns	63
12.8	Amendments	64
12.9	Severability	64
12.10	Counterparts	64
12.11	Governing Law; Consent to Jurisdiction	64
12.12	Notices	64
12.13	Attorney’s Fees	66

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CONTRIBUTION AND SALE AGREEMENT

THIS CONTRIBUTION AND SALE AGREEMENT is made as of the 12 ^th day of August, 2005, by and among W. COPLEY BOSTON CORPORATION, a Delaware corporation (“ WCBC ”), SCG COPLEY SQUARE LLC, a Delaware limited liability company (“ SCG ” and, together with WCBC, the “ Transferors ”), LASALLE HOTEL OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “ Partnership ”), LASALLE HOTEL PROPERTIES, a Maryland real estate investment trust (the “ REIT ”), and LASALLE HOTEL LESSEE, INC., an Illinois corporation (“ LaSalle Lessee ”).

W I T N E S S E T H:

WHEREAS, initially capitalized terms used in these Recitals and not otherwise defined herein have the meanings ascribed to them in Section 1.1 of this Agreement;

WHEREAS, the Transferors, together with Urban (collectively, the “ Current Owners ”), are the indirect owners of all of the outstanding limited liability company interests in Westban Hotel Investors, LLC, a Delaware limited liability company (the “ Company ”);

WHEREAS, the Company is the tenant under the Master Lease relating to, and is the owner of, the hotel known as The Westin Copley Place in Boston, Massachusetts;

WHEREAS, upon completion of the pre-closing transactions contemplated by Section 2.1 of this Agreement (the “ Restructuring ”), including the liquidation of Westin Copley Place Hotel Venture, the redemption (the “ Redemption ”) of the interest in Westban Hotel Venture, a Massachusetts general partnership (“ Westban Venture ”), held by Urban, and the liquidation of the Westban Venture, the Transferors will be the direct owners of all of the outstanding limited liability company interests in the Company;

WHEREAS, following completion of the Restructuring, the Transferors desire to contribute to the Partnership and LaSalle Lessee, and the Partnership and LaSalle Lessee desire to acquire from the Transferors, all of the outstanding limited liability company interests in the Company (the “ Transferred Interests ”), following which the Partnership and LaSalle Lessee shall become the sole owners of all of the outstanding limited liability company interests in the Company, in each case on the terms and conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the premises and the respective undertakings of the parties hereinafter set forth, it is hereby agreed:

ARTICLE 1. INTERPRETATION.

1.1 Defined Terms . Wherever used in this Agreement, the words and phrases set forth below shall have the meanings set forth below, unless the context clearly requires otherwise:

“ 1933 Act ” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

“ 1934 Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“ Accounts Receivable Statement ” has the meaning ascribed thereto in Section 2.6(a).

“ Accredited Investor ” means a Person who qualifies as an “accredited investor” as defined in relevant securities laws, including under Rule 501 of the 1933 Act.

“ Affiliate ” means, when used with reference to a specified Person, (i) if such Person is an individual, any member of the immediate family of such Person or any trust for the benefit of such Person or any member of the immediate family of such Person, or (ii) any Person directly or indirectly controlled by, controlling or under common control with the Person in question. The term “ control ” means, for purposes of this definition, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“ Business Day ” means any day other than a Saturday, Sunday or other day on which banks in The City of New York are permitted or required to be closed.

“ Chilled Water Agreement ” means the Chilled Water Agreement entered into as of February 3, 1982 by and between Marriott Urban Boston Venture and UIDC of Massachusetts, Inc., a Delaware corporation.

“ Claim Notice ” has the meaning ascribed thereto in Section 8.3.

“ Class C Preferred Units ” means the Class C Preferred Units of the Partnership having the terms, including the redemption right, set forth in Schedule 7.5(a), to be issued by the Partnership to SCG pursuant to this Agreement.

“ Closing ” means the closing at which the Transferors convey title to the Transferred Interests to the Partnership, and the Partnership pays the Transferors the consideration specified herein, in each case on the terms set forth in Article 2.

“ Closing Date ” means August 31, 2005, or such other date as shall otherwise be agreed upon by the parties for the Closing; provided, however, that the Closing Date shall not be later than October 3, 2005 and that, at the request of the

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Transferors made on or prior to August 26, 2005, the Closing Date may be changed to September 1, 2005 (it being understood and agreed that the Closing Date shall in any event be the day following the “Closing Date” under the Redemption Agreement).

“ Closing Date Consideration ” has the meaning ascribed thereto in Section 2.2.

“ Closing Working Capital ” has the meaning ascribed thereto in Section 2.4(b).

“ Closing Working Capital Statement ” has the meaning ascribed thereto in Section 2.4(b).

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Collected Accounts ” has the meaning ascribed thereto in Section 2.6(a).

“ Company ” has the meaning ascribed thereto in the Recitals to this Agreement.

“ Confidentiality Agreement ” means the confidentiality agreement dated May 17, 2005 made between the Partnership and the Current Owners.

“ Consumables ” shall mean, collectively, all (i) food and beverages (including alcoholic and non-alcoholic beverages) owned by the Company, (ii) engineering, maintenance and housekeeping supplies (including soap, cleaning materials and matches) owned by the Company, and (iii) stationery, printing supplies and other supplies of any kind owned by the Company.

“ Contribution Events ” has the meaning ascribed thereto in Section 2.1.

“ Current Assets ” has the meaning ascribed thereto in Section 2.4(g).

“ Current Liabilities ” has the meaning ascribed thereto in Section 2.4(g).

“ Current Owners ” has the meaning ascribed thereto in the Recitals to this Agreement.

“ Defeasance ” means the defeasance of the indebtedness incurred under and evidenced by the Existing Financing Documents to be completed immediately prior to the consummation of the transactions contemplated by the Redemption Agreement.

“ Earnest Money ” has the meaning ascribed thereto in Section 2.7.

“ Earnest Money Escrow Agreement ” means the escrow agreement of even date herewith made among the Partnership, as depositor, the Title Company, as escrow agent, and the Transferors.

“ Effective Time ” has the meaning ascribed thereto in Section 2.4(a).

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“ Equipment Leases ” has the meaning ascribed thereto in Section 3.1(m).

“ ERISA ” has the meaning ascribed thereto in Section 3.1(q).

“ Escrow Fund ” has the meaning ascribed thereto in the Indemnity Escrow Agreement.

“ Estimated Closing Working Capital ” has the meaning ascribed thereto in Section 2.4(a).

“ Estimated Working Capital Statement ” has the meaning ascribed thereto in Section 2.4(a).

“ Existing Financing Documents ” means, collectively, the promissory note dated August 14, 2003 in the original principal amount of $82,000,000 issued by the Company in favor of Merrill Lynch, together with the security agreements and other agreements entered into in connection therewith, including the mortgage, security agreement and assignment of leases and rents made as of August 14, 2003 by the Company in favor of Merrill Lynch.

“ Expenses ” has the meaning ascribed thereto in Section 8.2(e).

“ Furniture, Fixtures and Equipment ” or “ FF&E ” means, collectively, all tangible personal property, excluding the Consumables, owned by the Company, located at the Project and used in connection with the ownership, operation and maintenance of the Project. The FF&E shall include all fixtures, furniture, furnishings, fittings, televisions, art work, vehicles, equipment, computer hardware and non-proprietary software, machinery, apparatus, appliances, china, glassware, linens, silverware, keys and uniforms owned by the Company and used in connection with the ownership, operation and maintenance of the Project.

“ GAAP ” means U.S. generally accepted accounting principles and practices consistently applied for all periods.

“ Governmental Authority ” means any federal, state, county or municipal court, tribunal, government, or any department, agency, bureau, board or commission, regulatory authority, or other governmental or similar type body, subdivision or instrumentality obtaining authority therefrom or created pursuant to any Law.

“ Improvements ” means all buildings, structures, fixtures and other improvements located or erected on the Land, including the hotel which is commonly known as “The Westin Copley Place.”

“ Indemnified Party ” has the meaning ascribed thereto in Section 8.3.

“ Indemnifying Party ” has the meaning ascribed thereto in Section 8.3.

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“ Indemnity Escrow Agent ” means an escrow agent under the Indemnity Escrow Agreement jointly selected by the Transferors and the Partnership, which Indemnity Escrow Agent shall be the same agent as the escrow agent under the “Indemnity Escrow Agreement” under the Redemption Agreement.

“ Indemnity Escrow Agreement ” means the indemnity escrow agreement, substantially in the form of Schedule B hereto, to be executed and delivered by the Transferors, the Partnership and the Indemnity Escrow Agent on the Closing Date.

“ Independent Auditor ” has the meaning ascribed thereto in Section 2.4(c).

“ Interest Rate Option Agreement ” has the meaning ascribed thereto in Section 2.5(k).

“ Knowledge of the Partnership ”, or words of similar import, means the actual knowledge, without duty of inquiry, of Michael Barnello, Alfred Young or Hans Weger.

“ Knowledge of the Transferors ”, or words of similar import, means the actual knowledge, without duty of inquiry, of Robert French, Gerard Teto, Rick Kleeman, Madison Grose or Patrick Meara.

“ Land ” means the interests of the Company under the Master Lease relating to the real property located at 10 Huntington Avenue in Boston, Massachusetts, more particularly described on Schedule A hereto, including all adjacent roadways, rights-of-way and alleys and any other rights appurtenant to any such real property, in each case to the extent the Company, as lessee under the Master Lease, has an interest therein.

“ Law ” or “ Laws ” means any applicable federal, state, foreign or local law, statute, ordinance, rule, code, regulation, order, judgment or decree.

“ Lien ” means any lien, mortgage, charge, option, security interest, tax lien (other than for Taxes not yet due and payable), pledge, encumbrance, conditional sale or title retention arrangement or any agreement to create or confer any of the foregoing, in each case whether arising by agreement or under any statute or law or otherwise.

“ Loan Opinions ” has the meaning ascribed thereto in Section 6.2(h).

“ Management Agreement ” means the management agreement dated October 30, 1980 made between Westban Venture, as owner, and Westin Hotel Company, as operator, as amended by the first amendment dated July 15, 1981, the second amendment dated January 1, 1992 and the third amendment dated December 20, 1995, and assigned by the two-tier assignment and assumption of agreements dated December 31, 1997 made between Westin Hotel Company, as assignor, Westin Boston Management Holding Co., as first tier assignee, and Westin

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Boston Management Co., as second tier assignee and predecessor-in-interest to the Operator, as assigned by the Assignment and Assumption of Management Agreement, dated as of August 14, 2003, between Westban Venture and the Company, as amended by the fourth amendment thereto, dated as of August 12, 2005.

“ Management Agreement Amendment ” means the fourth amendment to the Management Agreement, dated August 12, 2005.

“ Master Lease ” means the Lease of Air Rights and Certain Easements dated as of December 22, 1978 by and between the Massachusetts Turnpike Authority, as Landlord and Urban, as Tenant; as amended and restated as of January 31, 1980 and modified by Technical Memoranda dated November 12,1980, December 15, 1980 and May 18, 1981, notice of which is recorded with the Suffolk Registry of Deeds in Book 9804, Page 1 and filed with the Suffolk Registry District of the Land Court as Document No. 356809; the Sublease dated July 15, 1981 by and between Urban, as Landlord, and Westban Venture, as Tenant, notice of which is recorded with said Deeds in Book 9805, Page 129 and filed with said Registry District as Document No. 356834; as affected by a Non-Disturbance, Recognition and Direct Leasing Agreement dated July 15, 1981 by and among the Massachusetts Turnpike Authority, Urban and Westban Venture, recorded with said Deeds in Book 9805, Page 141, and filed with said Registry District as Document No. 356835; as further affected by a Notice of Direct Lease and Reconstitution Agreement dated November 20, 1986 by and among the Massachusetts Turnpike Authority, Urban, Westban Venture and Westin Copley Place Hotel Venture, recorded with said Deeds in Book 13145, Page 295, and filed with said Registry District as Document No. 414687; as assigned by Assignment and Assumption of Ground Lease dated as of August 14, 2003 by and between Westban Venture and the Company, recorded with said Deeds on August 15, 2003 in Book 32456, Page 56, and filed with said Registry District on August 15, 2003 as Document No. 663899.

“ Merrill Lynch ” means Merrill Lynch Mortgage Lending, Inc.

“ NYSE ” means the New York Stock Exchange.

“ Operator ” means Westin North America Management Company, as successor-in-interest to Westin Boston Management Co.

“ Ownership Limit Waiver Certification ” has the meaning ascribed in Section 7.5(g).

“ Partnership Agreement ” has the meaning ascribed thereto in Section 3.2(a).

“ Partnership Indemnified Parties ” has the meaning ascribed thereto in Section 8.1.

“ Permitted Exceptions ” has the meaning ascribed thereto in Section 5.1(b).

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“ Person ” means any natural person, corporation, limited partnership, limited liability company, limited liability partnership, general partnership, joint stock company, joint venture, real estate investment trust, association, company, trust, bank, trust company, land trust, vehicle trust, business trust or other organization irrespective of whether it is a legal entity, or any government or agency or political subdivision thereof.

“ Personal Property ” means, subject to Permitted Exceptions and the rights of third parties under the Master Lease and the Management Agreement, all tangible and intangible personal property now or hereafter located at the Project and used in connection with the operation of the Project, including (i) all building and construction materials, equipment, appliances, machinery and personal property owned by the Company and used in connection with the operation of the Project, (ii) the Consumables, (iii) the Furniture, Fixtures and Equipment, (iv) all permits, licenses, certificates and approvals issued to the Company in connection with the Project, (v) all rights of the Company, the Current Owners and Westban Venture to use the name of the Project and all other names, logos and designs used in connection with the Project, including the Project’s bars, restaurants, banquet rooms and meeting rooms, (vi) the right to use the Project’s telephone numbers and post office boxes, (vii) all booking agreements, (viii) all service marks and trademarks, (ix) all prepaid assets, including prepaid advertising and sales materials, (x) all plans and specifications, operating manuals, guaranties and warranties and any other items used in the operation of the Project, (xi) all books and records pertaining to the Project, including all documents relating to guests at the Project and employees at the Project, and (xii) any vehicles used in the operation of the Project; provided, however, the Personal Property does not include (a) any personal property owned by tenants under the Tenant Leases, (b) any personal property owned by the Operator, (c) any personal property owned by utility companies servicing the Project, (d) any personal property owned by lessors under the Equipment Leases, and (e) tools and equipment used by vendors in providing services under the Service and Supply Contracts.

“ Pinnacle ” means Pinnacle Realty Investments.

“ Pro-forma Title Policy ” has the meaning ascribed thereto in Section 5.1(b).

“ Pro Rata Portion ” means, with respect to a Transferor, the respective percentage set forth opposite the name of such Transferor under the caption “Pro Rata Portion” on Schedule C hereto.

“ Project ” means, collectively, the Land, the Personal Property and the Improvements.

“ Project Agreements ” means, collectively, the Existing Financing Documents, the Service and Supply Contracts, the Permitted Exceptions, the Tenant Leases, the Equipment Leases and any other lease, rental agreement, loan agreement, loan commitment, mortgage, deed of trust, easement, covenant or agreement affecting the Company’s interest in the Project or any part thereof.

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“ Project Material Adverse Change ” or “ Project Material Adverse Effect ” means (i) when used to qualify a representation or warranty of the Transferors contained herein, an adverse change or effect on the business, financial condition or results of operations of the Company and the Project, taken as a whole, which, together with all other breaches of such representation or warranty, would result in costs or damages to the Company, the Project or the Partnership in an amount exceeding one hundred thousand dollars ($100,000) and (ii) as used in the condition to the obligation of the Partnership set forth in Section 5.2(b), an adverse change or effect on the business, financial condition or results of operations of the Company and the Project, taken as a whole, which, when taken with all other Material Adverse Changes or Material Adverse Effects on the Partnership, the Company and the Project, would result in costs or damages to the Partnership, the Company or the Project in an amount exceeding five million dollars ($5,000,000).

“ Project Pro Rata Portion ” means, with respect to a Current Owner, the respective percentage set forth opposite the name of such Current Owner under the caption “Project Pro Rata Portion” on Schedule D hereto.

“ REA Agreement ” means, collectively, the Easement Agreement made as of February 22, 1982 by and among Urban Investment and Development Co., a Delaware corporation, UIDC of Massachusetts, Inc., a Delaware corporation, Westban Hotel Venture, a Massachusetts general partnership, and Marriott Urban Boston Venture, a Massachusetts general partnership.

“ Recipient Units ” has the meaning ascribed thereto in Section 4.2(a).

“ Redemption ” has the meaning ascribed thereto in the Recitals to this Agreement.

“ Redemption Agreement ” means the redemption agreement, dated as of the date hereof, between Urban and Westban Venture.

“ Refinancing Debt ” means the mortgage loan to be incurred by the Company and provided by a third-party unrelated to the Partnership or the REIT prior to the Closing in connection with the Defeasance and the transactions contemplated by the Redemption Agreement.

“ Refinancing Documents ” means the loan agreement, promissory note, mortgage and other security and other agreements to be entered into in connection with the Refinancing Debt.

“ Registration Rights Agreement ” has the meaning ascribed thereto in Section 7.5(e).

“ REIT Class C Preferred Shares ” means the Class C Preferred Shares of beneficial interest, $0.01 par value per share, of the REIT, having the terms set forth on Schedule 7.5(a) issuable in exchange for the Class C Preferred Units in accordance with the terms thereof.

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“ REIT Group Material Adverse Change ” or “ REIT Group Material Adverse Effect ” means a material adverse change or effect on the business, financial condition or results of operations of the REIT Group, taken as a whole.

“ REIT Group ” means, collectively, the REIT, the Partnership and LaSalle Lessee.

“ REIT Reports ” has the meaning ascribed thereto in Section 4.2(b).

“ Reorganization Events ” has the meaning ascribed thereto in Section 2.1.

“ Restructuring ” has the meaning ascribed thereto in the Recitals to this Agreement.

“ SCG Closing Date Consideration ” has the meaning ascribed thereto in Section 2.3(a).

“ SEC ” means the Securities and Exchange Commission.

“ Section 1445 ” has the meaning ascribed thereto in Section 3.1(u)(i).

“ Service and Supply Contracts ” has the meaning ascribed thereto in Section 3.1(l).

“ Special Finance Counsel ” has the meaning ascribed thereto in Section 6.2(h).

“ Subsequent REIT Reports ” has the meaning ascribed thereto in Section 4.2(b).

“ Subsidiary ” means (a) any entity of which the REIT owns directly or indirectly (x) at least a majority of the outstanding capital stock (or other shares of beneficial interest) or (y) at least a majority of the partnership, membership or other similar equity interests; or (b) any entity in which any member of the REIT Group (or other specified entity) is a general partner, including the Partnership.

“ Survey ” has the meaning ascribed thereto in Section 5.1(b).

“ Taking ” has the meaning ascribed thereto in Section 9.2.

“ Tax Protection Agreement ” has the meaning ascribed thereto in Section 7.5(f).

“ Tax Return ” means all federal, state, local and foreign income, franchise, sales and other tax returns.

“ Taxes ” means all taxes, charges, fees, levies or other assessments, including all net income, gross income, gross receipts, sales, use, service, service use, ad valorem , transfer, franchise, profits, license, lease, withholding, social security, payroll, employment, excise, estimated, severance, stamp, recording, occupation,

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real and personal property, gift, windfall profits or other taxes, customs, duties, fees, assessments or charges of any kind whatsoever, whether computed on a separate, consolidated, unitary, combined or other basis, together with any interest, fines, penalties, additions to tax or other additional amounts imposed thereon or with respect thereto imposed by any taxing authority (domestic or foreign).

“ Tenant Leases ” has the meaning ascribed thereto in Section 3.1(n).

“ Title Commitment ” has the meaning ascribed thereto in Section 5.1(b).

“ Title Company ” means First American Title Insurance Company (Chicago office).

“ Transaction Agreements ” means, collectively, this Agreement and each other agreement entered into in connection with the implementation of the transactions (other than the Restructuring) contemplated hereby, including the Registration Rights Agreement and the Tax Protection Agreement.

“ Transaction Events ” has the meaning ascribed thereto in Section 2.1.

“ Transferor Indemnified Parties ” has the meaning ascribed thereto in Section 8.2(a).

“ Transferors ” has the meaning ascribed thereto in the first paragraph of this Agreement.

“ Transferred Interests ” has the meaning ascribed thereto in the Recitals to this Agreement.

“ Urban ” means Urban Investment and Development Co., an Illinois general partnership.

“ WCBC Closing Date Consideration ” has the meaning ascribed thereto in Section 2.3(b).

“ Westban Venture ” has the meaning ascribed thereto in the Recitals to this Agreement.

“ Working Capital ” has the meaning ascribed thereto in Section 2.4(g).

“ Working Capital Statements ” has the meaning ascribed thereto in Section 2.5.

1.2 Interpretation . For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a)

the terms defined in this Agreement have the meanings ascribed to them herein and include the plural as well as the singular and the use of any gender herein shall include the other gender;

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(b)

the captions used in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define or limit the scope or content of this Agreement or any provision hereof;

(c)

the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision;

(d)

the term “include” or “including” shall mean without limitation by reason of enumeration and shall not be interpreted restrictively;

(e)

each reference to an “Article” of this Agreement shall include all Sections of such Article and, similarly, each reference to a “Section” shall include all subsections of such Section;

(f)

unless otherwise expressly provided in this Agreement, all monetary amounts used herein are expressed in US dollars; and

(g)

the words “ordinary course of business consistent with past practice” (or words of similar import), when used in respect of the Company, mean and refer to the nature, manner and extent of the business and operations of such entity, as such business and operations have been conducted prior to the date hereof.

1.3 Schedules . The following Schedules are attached to and form part of this Agreement:


Schedule A	-	Legal Description of the Land
Schedule B	-	Form of Indemnity Escrow Agreement
Schedule C	-	Pro Rata Portion
Schedule D	-	Project Pro Rata Portion
Schedule 2.1-A	-	Pre-Closing Consents and Approvals
Schedule 2.1-B	-	Reorganization Events
Schedule 2.5	-	Working Capital
Schedule 2.5(i)		Capital Expenditure Projects
Schedule 3.1(b)	-	Transferor Consents, Breaches
Schedule 3.1(g)	-	Condition of Project
Schedule 3.1(h)	-	Permits and Legal Compliance
Schedule 3.1(i)	-	Legal Proceedings
Schedule 3.1(l)	-	Service and Supply Contracts
Schedule 3.1(m)	-	Equipment Leases
Schedule 3.1(n)	-	Tenant Leases
Schedule 3.1(o)	-	Labor Contracts
Schedule 3.1(p)	-	Environmental Reports

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Schedule 3.1(r)	-	Estoppel under Management Agreement
Schedule 3.1(s)	-	Master Lease
Schedule 3.1(t)	-	Existing Financing Documents
Schedule 4.1(b)	-	REIT Group Consents, Breaches
Schedule 4.1(c)	-	Other REIT Group Consents
Schedule 4.2(e)	-	Capitalization of the REIT Group
Schedule 4.2(f)	-	Tax Matters of the REIT Group
Schedule 5.1(b)	-	Form of Pro-Forma Title Policy
Schedule 5.2(d)	-	Form of Affidavit to Title Company
Schedule 5.2(e)	-	Form of Assignment and Assumption Agreement
Schedule 5.3(c)	-	Certain Consents
Schedule 6.2(a)	-	Form of Master Lease Estoppel Certificate
Schedule 6.2(c)	-	Terms of Refinancing Debt
Schedule 7.3(b)	-	Form of FIRPTA Certificate
Schedule 7.3(e)	-	Form of Assignment of Transferred Interests
Schedule 7.3(g)	-	Form of Trademark Assignment
Schedule 7.5(a)	-	Forms of Articles Supplementary and Amendment to the Partnership Agreement
Schedule 7.5(c)	-	Form of Legal Opinion
Schedule 7.5(e)	-	Form of Registration Rights Agreement
Schedule 7.5(f)	-	Form of Tax Protection Agreement
Schedule 7.5(g)	-	Form of Ownership Limit Waiver Certification
Schedule 8.7(c)	-	Certain Litigation

ARTICLE 2. CONTRIBUTION AND REDEMPTION; ADJUSTMENTS; EARNEST MONEY.

2.1 Pre-Closing Restructuring . As of the day immediately prior to the consummation of the transactions contemplated by this Agreement, the Transferors shall, subject to the terms and conditions set forth herein and subject to the completion of the Defeasance, the incurrence of the Refinancing Debt and the receipt of the consents and approvals set forth in Schedule 2.1-A hereto, cause the Redemption to occur. Each of the Transferors, the Partnership and the REIT agrees that, subject to the terms and conditions of this Agreement, they will cooperate with, and provide reasonable assistance to, each other with a view to causing each of the events contemplated by the Redemption Agreement to occur prior to the Redemption (the “ Reorganization Events ”) to be completed with legal effect prior to the Closing under the Redemption Agreement. Immediately following the completion of the Reorganization Events, the Redemption will be completed and, on the Closing Date the distribution of the limited liability company interests in the Company held by Westban Venture to SCG and WCBC will occur and, subject to the terms and conditions of this Agreement, the parties shall cause the actions described in steps 1-7 of Schedule 2.1-B, and the other transactions contemplated by this Agreement (the “ Contribution Events ”), to be completed. Each of the Transferors, the Partnership and the REIT further agrees that the consummation of the Reorganization Events, the Redemption and the Contribution Events (collectively, the “Transaction Events”) will be initiated only if the parties are reasonably certain that all of the

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conditions to the occurrence of each of them will be satisfied and that it is reasonably likely that such Transaction Events will be consummated. Accordingly, each of the Transferors, the Partnership and the REIT agrees that it will provide to the other parties hereto, on the Closing Date and prior to the release of the documents and funds from escrow, an acknowledgement that all of the conditions to its obligations to consummate the transactions contemplated by this Agreement have been satisfied, and that each of the parties shall be entitled to rely on such acknowledgement. Without limitation of the foregoing, each of the Transferors, the Partnership and the REIT agrees that upon the effectiveness of any one of the Transaction Events hereunder or under the Redemption Agreement (including as set forth in the penultimate paragraph of Section 2.2 of the Redemption Agreement), they will make all commercially reasonable efforts to ensure the completion of all other Transaction Events and will not take any steps to adjourn, delay or interfere with the process in any way.

2.2 Acquisition of Interests in the Company by the Partnership. As of the day immediately following completion of the Redemption and the other pre-closing transactions described in Section 2.1, on the Closing Date, the Partnership will acquire from the Transferors ninety-nine percent (99%) of the outstanding Transferred Interests, and LaSalle Lessee will acquire one percent (1%) of the outstanding Transferred Interests from WCBC, through the consummation of the contribution or assignment of the Transferred Interests pursuant to Section 2.3. The aggregate amount to be received by the Transferors on Closing in connection with such transactions (the “ Closing Date Consideration ”) shall be an amount equal to the sum of the following:

(a)

$119,086,462.05 being the agreed aggregate equity value of the limited liability company interests in the Company held by the Transferors after giving effect to the Redemption (which agreed net equity value shall not, except as expressly set forth in the penultimate paragraph of this Section 2.2, be subject to adjustment), assuming that the outstanding principal amount of the indebtedness of the Company under the Existing Financing Documents immediately prior to the Defeasance is $78,791,908.24 and without giving effect to the incurrence of the Refinancing Debt or the receipt or the application of the proceeds thereof; and

(b)

the Transferors’ aggregate Project Pro Rata Portions of the Estimated Closing Working Capital (which may be negative) shown on the Estimated Working Capital Statement.

In the event that the outstanding principal amount of the indebtedness of the Company under the Existing Financing Documents immediately prior to the Defeasance exceeds $78,791,908.24, then the Closing Date Consideration shall be decreased by an amount equal to the Transferors’ aggregate Project Pro Rata Portions of such excess. In the event that the outstanding principal amount of the indebtedness of the Company under the Existing Financing Documents immediately prior to the Defeasance is less than $78,791,908.24, then the Closing Date Consideration shall be increased by an amount equal to the Transferors’ aggregate Project Pro Rata Portions of such shortfall. The amount of any such adjustment to the Closing Date Consideration shall be allocated

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between the Transferors in accordance with their respective Pro Rata Portions and shall be in the same form of consideration as set out in Section 2.3 (immediately available funds in the case of WCBC, and Class C Preferred Units in the case of SCG, with the number of such Class C Preferred Units to be calculated by using a value per Class C Preferred Unit of $25.00).

The Closing Date Consideration shall be paid in accordance with Section 2.3 and shall, to the extent provided therein, be adjusted in accordance with Sections 2.4, 2.5, 2.6 and 2.7 or as otherwise provided in this Agreement.

2.3 Closing Date Transactions and Payment of the Closing Date Consideration . Upon the terms and subject to the conditions of this Agreement, at the Closing the Partnership and LaSalle Lessee, neither of which is a disregarded entity under the Code, shall acquire from the Transferors, and the Transferors shall contribute or assign to the Partnership and LaSalle Lessee (it being understood and agreed that the Transferors will contribute ninety-nine percent (99%) of the Transferred Interests to the Partnership and that WCBC will assign one percent (1%) of the Transferred Interests to LaSalle Lessee), all of such Transferor’s Transferred Interest (i.e., on a collective basis, 100% of the outstanding limited liability company interests in the Company on the Closing Date) in exchange for the delivery of the Closing Date Consideration in the following manner:

(a)

to SCG, (i) a number of Class C Preferred Units equal to the result obtained by dividing (A) $58,543,231.02 (the “ SCG Closing Date Consideration ”) by (B) $25.00; and

(b)

to WCBC, an amount in cash equal to $60,543,231.03, 98% of which will be paid by the Partnership and 2% of which will be paid by LaSalle Lessee (the “ WCBC Closing Date Consideration ”).

The obligation of the Partnership and LaSalle Lessee (it being understood that all references in the remainder of this Article 2 to “the Partnership” shall, where the context requires, also be deemed to include LaSalle Lessee) to proceed with each of the foregoing transactions is subject to the conditions set forth herein, and if the conditions to the obligations of the Partnership to consummate the transactions contemplated hereby shall not have been satisfied, the Partnership shall have the right to terminate this Agreement and obtain a refund of the Earnest Money in addition to any other remedies it may have under the terms of this Agreement; provided, however, that such conditions shall be deemed to have been waived if the failure of such condition to be satisfied results from any act or omission of the Partnership in violation of this Agreement. Without limitation of the foregoing, each of the Transferors, the Partnership and REIT agrees that none of the transactions contemplated by this Agreement (including the contribution and sale of the Transferred Interests) shall be deemed to have occurred unless all such transactions and all of the transactions contemplated by the Redemption Agreement (including the Defeasance, the incurrence of the Refinancing Debt and the Redemption) shall have been consummated.

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2.4 Working Capital Adjustments .

(a) At least two (2) Business Days prior to the Closing, the Transferors in good faith shall prepare an unaudited estimated consolidated net Working Capital statement of the Company as of the Closing Date (the “ Estimated Working Capital Statement ”) setting forth an estimate of the Working Capital of the Company (the “ Estimated Closing Working Capital ”) as of 12:01 a.m. (Eastern Daylight Time) on the Closing Date (the “ Effective Time ”). The information contained in the Estimated Working Capital Statement shall be prepared in accordance with the principles set out in Sections 2.4(g) and 2.5 and on Schedule 2.5 hereto and shall be based on the books and records of the Company and Westban Venture and other information then available.

(b) As promptly as practicable, but in no event later than one hundred eighty (180) days after the Closing, the Partnership will deliver to the Transferors an unaudited consolidated Working Capital statement of the Company as of the Effective Time (the “ Closing Working Capital Statement ”) prepared by the Partnership on a basis consistent with the example calculation of Working Capital attached hereto as Schedule 2.5 and in accordance with the principles set out in Sections 2.4(f) and 2.5 and on Schedule 2.5 hereto, which Closing Working Capital Statement will reflect the Partnership’s determination of the actual Working Capital of the Company as of the Effective Time (the “ Closing Working Capital ”). Notwithstanding anything contained herein to the contrary, in the event that the final amount of real estate taxes that are actually payable in respect of the Project for the period ending at the Effective Time, the amount of rent under a Tenant Lease that is actually payable in respect of the Project for the period ending at the Effective Time or the amount of a specified payment due under the Chilled Water Agreement or the REA Agreement cannot be finally determined as of the date that is 180 days after the Closing, the amounts of such items shall be included on the Closing Working Capital Statement at the same level as the amounts of such items were included on the Estimated Working Capital Statement and when the amounts of such items are capable of finally being determined, the amounts of such items shall be adjusted in accordance with the procedures set forth in this Section 2.4.

(c) Following delivery of the Closing Working Capital Statement, the Transferors and their representatives and advisors will be permitted to review all books and records, documents and working papers and will have access to employees of the REIT and the Partnership that are required in connection with their review of the Closing Working Capital Statement. If the Transferors disagree with the Partnership’s determination of the Closing Working Capital, the Transferors shall notify the Partnership in writing of such disagreement (such notice setting forth the basis for such disagreement in reasonable detail) within fifteen (15) Business Days after receipt of the Closing Working Capital Statement and the Transferors and the Partnership thereafter shall negotiate in good faith to resolve any such disagreement. If the Transferors do not notify the Partnership of any such disagreement within such fifteen (15) Business Day period the Transferors shall be deemed to have waived any right to object to the Closing Working Capital Statement. If the Transferors and the Partnership are unable to resolve any such disagreement within thirty (30) days after the Partnership delivers the Closing Working Capital Statement to the Transferors, the Transferors and the Partnership shall submit the dispute to a “Big

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Four” public accounting firm jointly selected by the Transferors and the Partnership (the “ Independent Auditor ”) for resolution. If the Transferors and the Partnership are unable to agree upon an Independent Auditor, the Independent Auditor shall be selected by lot from the “Big Four” accounting firms (but excluding any firm which has previously audited the Westban Venture’s or the Partnership’s or the REIT’s financial statements). The Independent Auditor selected under this Section 2.4(c) shall also be the “Independent Auditor” selected under Section 2.3(c) of the Redemption Agreement.

(d) The Transferors and the Partnership shall use all reasonable efforts to cause the Independent Auditor to resolve all disagreements over the Closing Working Capital as soon as practicable, but in any event within 60 days after submission of the dispute to the Independent Auditor. The resolution of such disagreements and the determination of Closing Working Capital by the Independent Auditor shall be final and binding on the Transferors and the Partnership.

(e) The Independent Auditor will determine the allocation of its costs and expenses in determining the Closing Working Capital based upon the percentage which the portion of the contested amount not awarded to each party bears to the amount actually contested by such party. For example, if the Transferors claim the Closing Working Capital is $500 greater than the amount determined by the Partnership in the Closing Working Capital Statement, and if the Independent Auditor ultimately resolves the dispute by awarding the Partnership $300 of the $500 contested, then the costs and expenses of arbitration will be allocated 30.12% (i.e., the product of (i) the Transferors’ aggregate Project Pro Rata Portions and (ii) 300 divided by 500) to the Transferors and 20.08% (i.e., the Product of (i) the Transferors’ aggregate Project Pro Rata Portions and (ii) 200 divided by 500) to the Partnership.

(f) If the Closing Working Capital (as finally determined pursuant to this Section 2.4) is greater than the Estimated Closing Working Capital, the Partnership shall, within three (3) Business Days after the Closing Working Capital is finally determined pursuant to this Section 2.4, pay to each of the Transferors, in the same form of consideration as set out in Section 2.3 (immediately available funds, in the case of WCBC, or Class C Preferred Units in the case of SCG, with the number of such Class C Preferred Units to be calculated by using a value per Class C Preferred Unit of $25.00) (such form of consideration for each of WCBC and SCG being the “ Agreed Form of Consideration ”), such Transferor’s Project Pro Rata Portion of the difference between the Closing Working Capital and the Estimated Closing Working Capital. If the Closing Working Capital is less than the Estimated Closing Working Capital, each of the Transferors shall, within three (3) Business Days after the Closing Working Capital is finally determined pursuant to this Section 2.4, pay to the Partnership, in the Agreed Form of Consideration, an amount equal to such Transferor’s Project Pro Rata Portion of the difference between the Closing Working Capital and the Estimated Closing Working Capital.

(g) For purposes of this Section 2.4, the following terms have the meanings set forth below:

(i)

“ Current Assets ” means, without duplication, all current assets of the Company determined in accordance with the principles set out in Section 2.5 and Schedule 2.5.

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(ii)

“ Current Liabilities ” means, without duplication, all current liabilities of the Company determined in accordance with the principles set out in Section 2.5 and Schedule 2.5 excluding any reserves for contingent liabilities relating to litigation matters.

(iii)

“ Working Capital ” means Current Assets minus Current Liabilities.

(h) Any adjustment paid pursuant to this Section 2.4 shall be treated by all of the parties as an adjustment to the Closing Date Consideration for all purposes.

(i) The Estimated Closing Working Capital and the Closing Working Capital used for purposes of this Section 2.4 shall, for all purposes, be the same as the “Estimated Closing Working Capital” and “Closing Working Capital” that are used for purposes of Section 2.3 of the Redemption Agreement. Without limitation of the foregoing, (i) a disagreement with respect to the “Closing Working Capital” under this Agreement shall also constitute a disagreement with respect to the “Closing Working Capital” under the Redemption Agreement, a disagreement with respect to the “Closing Working Capital” under the Redemption Agreement shall also constitute a disagreement with respect to the Closing Working Capital under this Agreement, and disagreements with respect to the Closing Working Capital shall be resolved in the same manner, and in the same amount, under both this Agreement and the Redemption Agreement; (ii) the Partnership agrees to take, and to cause the Company to take, identical positions and actions, including actions with respect to settlement of any contested amount, under each of this Agreement and the Redemption Agreement with respect to the calculation of Closing Working Capital; and (iii) the Transferors agree to take identical positions and actions, including actions with respect to settlement of any contested amount, under this Agreement with respect to the calculation of Closing Working Capital as Urban takes under the Redemption Agreement with respect to the calculation of Closing Working Capital.

(j) Notwithstanding anything to the contrary contained herein but without duplication of any other adjustment to the amounts paid to the Transferors hereunder, (i) if the amount of the incentive management fee for the year-to-date period ended at the Effective Time included in the Closing Working Capital Statement exceeds the amount of such incentive fee for such period finally determined to be actually payable to the Operator under the Management Agreement, the Partnership shall, within fifteen days of such determination, pay to each of the Transferors an amount equal to such Transferor’s Project Pro Rata Portion of such excess and (ii) if the amount of the incentive management fee for the year-to-date period ended on the Closing Date included in the Closing Working Capital Statement is less than the amount of such incentive fee for such period finally determined to be actually payable to the Operator under the Management Agreement, each of the Transferors shall, within fifteen days of such determination, pay to the Partnership an amount equal to such Transferor’s Project Pro Rata Portion of such shortfall. The amount of any payment made to a Transferor pursuant to this Section 2.4(j) shall be in the Agreed Form of Consideration.

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2.5 Principles for Preparation of Working Capital Statements . The Estimated Working Capital Statement and the Closing Working Capital Statement (collectively, the “ Working Capital Statements ”) shall each be prepared as at the Effective Time and each component of such Working Capital Statements described in this Section 2.5 shall be reflected in accordance with the following principles and in accordance with Schedule 2.5 (and the calculation of each such item shall be made without duplication of any other item):

(a)

Cash . The Working Capital Statements shall record all petty cash funds at the Project, all cash in any operating or other accounts of the Project (including any accounts of, or held by, the Operator in respect of the Project) and the Company at the Effective Time (collectively, the “ Closing Cash ”). All Closing Cash shall, except as otherwise provided herein, constitute a Current Asset for purposes of calculating Working Capital hereunder. The Partnership and the Transferors shall make reasonable mutually satisfactory arrangements for counting such cash and determining the balances in the operating accounts as of the Effective Time. The Working Capital Statements shall also record the following adjustments to such Closing Cash to the extent required:

(i)

the Closing Cash shall only take account of one-half ( ¹ / 2 ) of the revenue from hotel rooms and parking at the Project for the night preceding the Closing;

(ii)

the Closing Cash shall be decreased by the amount of any outstanding tenant improvement obligations, outstanding leasing commissions or other outstanding landlord expenses in connection with any Tenant Leases as of the Effective Time, to the extent such amount is not included as a Current Liability; provided, however, that any outstanding tenant improvement obligations, leasing commissions or other outstanding landlord expenses in connection with (A) any Tenant Leases that are approved by the Partnership and entered into after the date of this Agreement or (B) the renewal or extension at the option of the tenant under a Tenant Lease which are payable pursuant to the terms of a Tenant Lease or any commission agreement that is listed on a Schedule to this Agreement shall be for the account of the Partnership and shall not decrease Closing Cash or constitute a Current Liability; and

(iii)

Closing Cash shall include all escrows held under the Existing Financing Documents immediately prior to the Defeasance and the Partnership shall be entitled to receive, directly or indirectly, all such escrows.

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(b)

Accounts Receivable . The Working Capital Statements shall include, as a Current Asset, the amount of 98% of all accounts receivable of the Company that have been outstanding for fewer than sixty (60) days as of the Effective Time (excluding any overdue payments from tenants under the Tenant Leases, which shall be paid to the Transferors as collected, it being understood and agreed that any payments received from a tenant under a Tenant Lease in respect of which there is an overdue payment as of the Effective Time shall be applied to the invoice attached to, or to the invoice or period referred to in, such payment, or if no such invoice or period is so attached or referred to, such payments will be applied to the amounts outstanding in respect of the period prior to the Effective Time and to amounts outstanding in respect of the period after the Effective Time in the respective pro rata portions of such outstanding amounts). The Closing Date Consideration shall be subject to adjustment in respect of accounts receivable of the Company as provided in Section 2.6 hereof.

(c)

Accounts Payable . The Working Capital Statements shall reflect a Current Liability at Closing for all accounts payable of the Company which have accrued prior to the Effective Time with respect to purchases of goods and services delivered prior to the Effective Time but not with respect to purchases of goods or services to be delivered on or after the Effective Time. Accounts payable shall mean the following items, in each case to the extent incurred by or for the benefit of the Company or the Project: (i) open accounts payable to trade vendors or suppliers of the Project’s hotel, restaurants, bars or similar facilities, (ii) amounts payable under any Service and Supply Contracts and Equipment Leases, (iii) amounts payable in respect of real estate taxes and utility charges (including charges for steam, water, electricity, gas and oil relating to the Project), and (iv) management fees payable under the Management Agreement, including any incentive management fees.

(d)

Employee Expenses . The Working Capital Statement shall reflect a Current Liability for any accrued and unpaid sick, personal and vacation days of the Company’s employees or for such obligations with respect to employees of the Operator for which the owner of the Project is responsible which have accrued prior to the Effective Time and any unfunded or underfunded pension obligations with respect to the Company’s employees or for such obligations with respect to employees of the Operator for which the owner of the Project is responsible which have accrued prior to the Effective Time.

(e)

No Duplication . All calculations of Estimated Closing Working Capital and Closing Working Capital shall be made without duplication of any item. For example, if an item is included as a Current Liability on a Working Capital Statement, such item shall not also be reduced from, or otherwise reduce, the amount of cash reflected on such Working Capital Statement. In no event shall any accounts payable in respect of goods or

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services to be delivered on or after the Effective Time constitute a Current Liability or a deduction to Current Assets unless any such payment is made to restore aggregate levels of Consumables or FF&E to within the range of the historical aggregate levels at which Consumables or FF&E have been maintained (as evidenced by the Operator’s books and records).

(f)

Exclusion of Debt Under Existing Financing Documents, Refinancing Debt and Defeasance. Each of the Estimated Closing Working Capital and the Closing Working Capital shall be prepared as of the time immediately before the consummation of, and without giving effect to, the transactions contemplated by this Agreement and the Redemption Agreement, including the Restructuring, the incurrence of the Refinancing Debt, the Defeasance and the Redemption. Accordingly, the indebtedness outstanding under the Existing Financing Documents, the Defeasance (including all costs incurred in connection therewith) and the incurrence of the Refinancing Debt, including any liabilities relating to the Defeasance or liabilities and escrows relating to the Refinancing Debt, and the receipt and application of the proceeds therefrom and the Redemption and all payments (whether or not the source of such payment is the Refinancing Debt) made to Urban in connection therewith shall be ignored and excluded for all purposes of calculating the Estimated Closing Working Capital and Closing Working Capital. Without limitation of the foregoing, in the event the proceeds of the Refinancing Debt are insufficient to pay in full the Defeasance, the costs relating to the incurrence of the Refinancing Debt and the payment of all amounts to be paid to Urban (including any amounts in respect of the Estimated Closing Working Capital) under the Redemption Agreement on the closing of the transactions contemplated by the Redemption Agreement, part of the Current Assets may be used to pay any such amounts, but no reduction in the amount of the Estimated Closing Working Capital or Closing Working Capital shall be made in respect of such payment. Except as set forth in the immediately preceding sentence, there shall be no distribution of Working Capital of the Company to the members of the Company during the period beginning as of the time as of which the Estimated Working Capital Statement is prepared and ending at the Closing, and in no event shall any amount included as a Current Asset on a Working Capital Statement be used to pay any expenses for which the Transferors are responsible pursuant to Section 7.6.

(g)

Brokerage Commission . The brokerage commission payable to Pinnacle in connection with the transactions contemplated by this Agreement shall constitute a Current Liability for purposes of the Estimated Closing Working Capital and the Closing Working Capital.

(h)

Certain Cancellations . Estimated Closing Working Capital and Closing Working Capital shall be reduced by any amounts received by the Operator or the Company prior to the Effective Time in respect of cancellations of room nights booked for nights on and after the Closing Date or other events booked for the Closing Date or thereafter.

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(i)

Capital Expenditures . If the capital expenditure projects listed on Schedule 2.5(i) are not completed and paid for prior to the Effective Time, the amount required to complete and pay for such projects shall constitute a Current Liability for purposes of the Estimated Closing Working Capital and the Closing Working Capital.

(j)

Starwood Marketing Adjustment . Estimated Closing Working Capital and Closing Working Capital shall be increased by an amount equal to 0.4% of the revenues for the Project during the period beginning on January 1, 2005 and ending on the Closing Date to the extent that the Operator has not already paid any such amount to the Company prior to the Closing Date.

(k)

Interest Rate Option Agreement . If, as of the Closing Date, the interest rate option agreement, dated August 3, 2005, purchased by the Company in connection with the transactions contemplated by this Agreement (the “ Interest Rate Option Agreement ”) affects the interest rate that would otherwise be payable on the Refinancing Debt, the Estimated Closing Working Capital and Closing Working capital shall be increased by an amount equal to $19,000. The Transferors agree that they will not permit the Company to amend, modify or terminate the Interest Rate Option Agreement without the prior consent of the Partnership prior to the Closing Date.

2.6 Adjustment for Accounts Receivable .

(a) On the date that is one hundred eighty (180) days after the Closing Date, the Partnership shall deliver to the Transferors a statement, dated as of such date (the “ Accounts Receivable Statement ”), setting forth, with respect to each account receivable included in the calculation of the Closing Working Capital, the amount of such account receivable that has been collected as of the date of the Accounts Receivable Statement (the “ Collected Accounts ”). In the event that the Transferors disagree with the Accounts Receivable Statement, the dispute resolution provisions of Section 2.4 relating to the Closing Working Capital Statement shall apply to the resolution of any disputes regarding the Accounts Receivable Statement.

(b) If the amount of the Collected Accounts (as finally determined pursuant to this Section 2.6) is greater than the credit for accounts receivable made in connection with the calculation of Working Capital (i.e., 98% of such accounts receivable), then the Partnership shall pay to each of the Transferors an amount equal to such Transferor’s Project Pro Rata Portion of the amount of such excess. If the amount of the Collected Accounts (as finally determined pursuant to this Section 2.6) is less than the credit for accounts receivable made in connection with the calculation of Working Capital (i.e., 98% of such accounts receivable), then each of the Transferors shall pay to the

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Partnership an amount equal to such Transferor’s Project Pro Rata Portion of the amount of such shortfall. The amount of any such payments made pursuant to this Section 2.6 shall be in the Agreed Form of Consideration.

(c) The Partnership shall instruct the Operator to use commercially reasonable efforts (with no obligation to sue) in accordance with the Operator’s past practice to collect any overdue payments from tenants under Tenant Leases and from accounts receivable that have been outstanding for sixty (60) days or more as of the Effective Time (which accounts receivable shall not constitute Current Assets) and any “attrition income” or cancellation fees payable in respect of any shortfalls against guaranteed bookings relating to nights preceding the Effective Time (it being understood and agreed that no amount of such “attrition income” or cancellation fees shall be included as a Current Asset on any Working Capital Statement) and remit such payments to the Transferors promptly upon receipt thereof.

(d) Without limitation of the foregoing, the Partnership will instruct the Operator to use commercially reasonable efforts in accordance with the Operator’s past practice (with no obligation to sue) to collect any amounts owing under any accounts receivable that remain unpaid as of the date of the Accounts Receivable Statement, and remit such amounts to the Transferors in their Pro Rata Portions promptly upon receipt thereof.

(e) No adjustment pursuant to this Section 2.6 of any amounts payable under this Agreement shall duplicate any adjustment made pursuant to any other Section of this Agreement.

(f) Any adjustment paid pursuant to this Section 2.6 shall be treated by all of the parties as an adjustment to the Closing Date Consideration for all purposes.

2.7 Earnest Money .

(a) Within two (2) Business Days after the execution of this Agreement, the Partnership shall deposit $5,000,000 (the “ Earnest Money ”) with the Title Company. The Earnest Money shall be held by the Title Company in accordance with the terms hereof and in accordance with the terms of the Earnest Money Escrow Agreement.

(b) If this Agreement is terminated due to the Partnership’s, the REIT’s or LaSalle Lessee’s default hereunder, the Earnest Money, together with all accrued interest thereon, shall be paid to the Company, as liquidated damages and as the Transferors’ sole and exclusive remedy. If the Closing occurs hereunder, the Earnest Money, together with all accrued interest thereon, shall be paid to WCBC and credited against the WCBC Closing Date Consideration. If the Closing does not occur hereunder or if the Redemption does not occur under the Redemption Agreement for any reason other than the Partnership’s or the REIT’s default hereunder, the Earnest Money, together with all accrued interest thereon, shall be refunded to the Partnership as liquidated damages, such remedy shall be the sole and exclusive remedy of the Partnership, the REIT and LaSalle Lessee unless the Closing has not occurred solely as a result of a default by the Transferors or the Redemption under the Redemption Agreement has not occurred solely as a result of a

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default by a party thereto, in each of which case the Partnership shall have the right, at its option, either (i) to seek specific performance of this Agreement in a judicial proceeding (it being understood and agreed, however, that (A) specific performance may not be effected under either this Agreement or the Redemption Agreement unless specific performance is effected under both this Agreement and the Redemption Agreement and (B) that the remedy of specific performance under this Agreement and the Redemption Agreement may be granted only if the Defeasance and the incurrence of the Refinancing Debt are effected on the terms and in the manner contemplated by this Agreement and the Redemption Agreement), or (ii) to receive a refund of the Earnest Money, together with all interest thereon, and to require the Transferors to reimburse the Partnership, in their respective Pro Rata Portions, for up to $500,000 of its out-of-pocket expenses incurred in connection with the transactions contemplated hereby; (it being understood and agreed that any such selected remedy specified in clause (i) or (ii) shall constitute liquidated damages and be the sole and exclusive remedy of the Partnership, REIT and LaSalle Lessee).

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFERORS .

3.1 General Representations and Warranties . Each Transferor hereby represents and warrants to the Partnership and the REIT as of the date hereof and as of the Closing as follows (all of which representations and warranties shall be deemed automatically remade as of the Closing), it being understood and agreed that each Transferor makes the representations and warranties contained in Sections 3.1(a), (b), (c), (q) and (u) as to itself only and that the inclusion of any item on any Schedule qualifying any of the representations and warranties shall not constitute an admission that such item is material or would result in a Project Material Adverse Effect:

(a)

Due Organization . Such Transferor is duly organized as a corporation or limited liability company, as applicable, and validly existing under the laws of its jurisdiction of incorporation or formation, as applicable. Such Transferor has full power and authority, and is duly authorized, to execute, enter into, deliver and perform this Agreement and its obligations hereunder.

(b)

Power . This Agreement and all other agreements, instruments and documents required to be executed or delivered by such Transferor pursuant hereto have been or (if and when executed) will be duly executed and delivered by such Transferor, and are or will be legal, valid and binding obligations of such Transferor. Except as set forth on Schedule 3.1(b), no consents and permissions are required to be obtained by such Transferor for the execution and performance of this Agreement and the other documents to be executed by such Transferor hereunder. Except as set forth on Schedule 3.1(b), the consummation of the transactions contemplated herein and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, any agreement or document to which such Transferor is a party or

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by which it is bound, or any order, rule or regulation of any court or of any Governmental Authority having jurisdiction over such Transferor, the Company or the Project.

(c)

Title . On the Closing Date, such Transferor will own good and marketable, legal and beneficial, title in and to its Transferred Interest which as of the Closing Date will be held free of any Liens, other than any Liens restricting transfer of the Transferred Interest that might arise out of the indebtedness under the Existing Financing Documents or under the Refinancing Debt.

(d)

Interests . On the Closing Date, the Transferred Interests will constitute all of the issued and outstanding limited liability company interests in the Company. Immediately prior to the Redemption, the Westban Venture will own all of the outstanding interest in the Company.

(e)

Corporate Existence . The Company is a limited liability company duly formed and in good standing under the laws of the State of Delaware, with the power and authority to own its properties and to conduct its business as conducted on the Closing Date.

(f)

Operating Statements . The Transferors have provided to the Partnership copies of each of the monthly unaudited operating statements relating to the Project for calendar year 2005 that have been delivered to the Transferors by the Operator prior to the date hereof. To the Knowledge of the Transferors, each of such operating statements has been prepared in accordance with the terms of the Management Agreement.

(g)

Condition of Project . Except as disclosed in the engineering reports listed on Schedule 3.1(g) or in any engineering reports obtained by the Partnership or any potential lender of the Refinancing Debt, the Transferors have not received any unsatisfied requirements for repairs, restorations or improvements with respect to the Project pursuant to the Existing Financing Documents, from any insurer of the Project (or any part thereof), from any tenant under a Tenant Lease or from any Governmental Authority, the failure of which to satisfy could reasonably be expected to have a Project Material Adverse Effect.

(h)

Permits and Legal Compliance . To the Knowledge of the Transferors, except as set forth on Schedule 3.1(h), the Company, the Operator or their respective Affiliates have all licenses, permits and certificates necessary for the use, occupancy and operation of the Project as currently conducted, including all certificates of occupancy and hotel, restaurant and liquor licenses, except where the failure to have any such licenses, permits or certificates could not reasonably be expected to have a Project Material Adverse Effect. To the Knowledge of the Transferors, the Project, including the use thereof, substantially complies with all material Project

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Agreements and all applicable laws, rules and regulations having the force of law, except for such non-compliance as could not reasonably be expected to have a Project Material Adverse Effect.

(i)

No Proceedings . There is not now pending or, to the Knowledge of the Transferors, threatened, any action, suit or proceeding before any court or governmental agency or body against the Project, the Company or the Transferors except as set forth in Schedule 3.1(i).

(j)

Eminent Domain . There are no pending or, to the Knowledge of the Transferors, threatened condemnation, eminent domain or similar proceedings relating to the Project or any portion thereof or any interest (whether legal, beneficial or otherwise) or estate therein.

(k)

Taxes . There are, to the Knowledge of the Transferors, no pending or threatened reassessments or special tax assessments against the Project, and the Project is separately assessed for real estate tax purposes.

(l)

Service and Supply Contracts . Attached hereto as Schedule 3.1(l) is a list of all contracts or agreements to which the Company (acting on its own) or, to the Knowledge of the Transferors, the Operator or the Company (where the Operator has acted as agent for the Company), is a party for the providing of services or supplies solely to, or management solely of, the Project, including all amendments and modifications thereto and assignments thereof (which contracts and agreements, together with the contracts and agreements entered into with respect to the Project after the date hereof with the consent of the Partnership pursuant to Article 6 below, are herein referred to collectively as the “ Service and Supply Contracts ”). The Transferors have delivered to the Partnership true and correct copies of the Service and Supply Contracts. Except as may be shown in Schedule 3.1(l), all of the Service and Supply Contracts are, to the Knowledge of the Transferors, in full force and effect and, to the Knowledge of the Transferors, there is no default under any of the Service and Supply Contracts which could reasonably be expected to have a Project Material Adverse Effect.

(m)

Equipment Leases . Attached hereto as Schedule 3.1(m) is a list of all equipment leases to which the Company (acting on its own) or, to the Knowledge of the Transferors, the Operator or the Company (where the Operator has acted as agent for the Company) is a party for the leasing of equipment solely for the Project, including a list of all amendments and modifications thereto and assignments thereof (which leases, together with the equipment leases entered into with respect to the Project after the date hereof pursuant to Article 6 below, are herein referred to collectively as the “ Equipment Leases ”). The Transferors have delivered to the Partnership true and correct copies of the Equipment Leases. Except as may be shown on Schedule 3.1(m), all of the Equipment Leases are, to the

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Knowledge of the Transferors, in full force and effect and, to the Knowledge of the Transferors, there is no existing default under the Equipment Leases which could reasonably be expected to have a Project Material Adverse Effect.

(n)

Tenant Leases . Attached hereto as Schedule 3.1(n) is a list of all outstanding leases or agreements to which the Company (acting on its own) or, to the Knowledge of the Transferors, the Operator or the Company (where the Operator has acted as agent for the Company) is a party, pursuant to which any person occupies, or has the right to occupy, space in the Project, other than subleases or agreements of lessees to which the Company is not a party and other than the rights of transient guests in connection with any hotel room or convention/meeting space booking or reservation, including all amendments and modifications thereto and assignments and guaranties thereof (which leases, agreements and other documents, together with the lease documents entered into after the date hereof with the consent of the Purchaser pursuant to Article 6 are referred to collectively as the “ Tenant Leases ”). The Transferors have delivered to the Partnership true and correct copies of the Tenant Leases. Except as shown on Schedule 3.1(n) or as set forth in the Tenant Leases or in any commission agreements listed on a Schedule to this Agreement, to the Knowledge of the Transferors: (a) the Tenant Leases are in full force and effect and there are no defaults under the Tenant Leases which could reasonably be expected to have a Project Material Adverse Effect; (b) there are no security deposits nor any rights to refunds of rents previously paid under the Tenant Leases, and all rents due to date have been paid on the Tenant Leases; (c) there are no brokerage commissions or fees due now or payable in the future in connection with the Tenant Leases (other than any Tenant Leases that are approved by the Partnership in accordance with the terms hereof); (d) all of the landlord’s concessions under the Tenant Leases (other than any Tenant Leases that are approved by the Partnership in accordance with the terms hereof) have been paid and performed in full (other than any unexpired rent abatement set forth in the Tenant Leases); and (e) no tenant currently in possession has notified the Transferors of any material, uncured defect or alleged defects in its premises or the common areas of the Project which remains uncured. In the event any such notices are received by the Company between the date of this Agreement and Closing, copies thereof shall be furnished to the Partnership.

(o)

Labor Contracts . To the Knowledge of the Transferors, attached hereto as Schedule 3.1(o) is a list of all employment contracts and collective bargaining contracts with respect to personnel employed by the Company. There are no unfair labor proceedings or strikes pending or, to the Knowledge of the Transferors, threatened with respect to the Project.

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(p)

Hazardous Wastes . To the Knowledge of the Transferors, except as set forth on any environmental study or report set forth on Schedule 3.1(p) or obtained by the Partnership or any potential lender of the Refinancing Debt, the Project is free of asbestos, PCBs, toxic wastes and other hazardous materials in amounts that exceed the maximum amounts permitted by Law or that are not in substantial compliance with all applicable environmental Laws, except for any such non-compliance as could not reasonably be expected to have a Project Material Adverse Effect. For purposes of this paragraph, “toxic wastes and other hazardous materials” shall include any hazardous, toxic or dangerous waste, substance or material defined as such in (or for purposes of) the Comprehensive Environmental Response, Compensation, and Liability Act, and so-called “Superfund” or “Superlien” law, or any Law regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect.

(q)

ERISA . Such Transferor is not and is not acting on behalf of an “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”) that is subject to ERISA, a “plan” within the meaning of Section 4975 of the Code or an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. § 2510.3-101 of any such employee benefit plan or plans subject to ERISA.

(r)

Management Agreement . The Management Agreement is in full force and effect and, except as contemplated by the definition thereof, has not been amended. The Transferors have previously delivered to the Partnership a true, correct and complete copy of the Management Agreement. To the Knowledge of the Transferors, there are no defaults under the Management Agreement that could reasonably be expected to have a Project Material Adverse Effect. Attached as Schedule 3.1(r) is a true and correct copy of an estoppel from the Operator relating to the Management Agreement.

(s)

Master Lease . The Master Lease is in full force and effect and, except as contemplated by the definition thereof, has not been amended. The Transferors have previously delivered to the Partnership a true, correct and complete copy of the Master Lease. Since August 31, 2003, the Company had not received, and to the Knowledge of the Transferors, prior to August 31, 2003, the Company did not receive, any notices from the lessor under the Master Lease alleging any defaults, claims, set-offs or defenses under the Master Lease that have not been cured or resolved. Except as set forth on Schedule 3.1(s), there are no material uncured defaults, claims, set-offs or defenses under, or events which, with the giving of notice or the passage of time or both could reasonably be expected to become material defaults under, the Master Lease.

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(t)

Existing Financing Documents . Attached hereto as Schedule 3.1(t) is a complete list of the Existing Financing Documents, including all amendments and modifications thereto. The Existing Financing Documents are in full force and effect. As of the date hereof, there is currently outstanding a principal balance of $78,926,283.05 under the Promissory Note that constitutes one of the Existing Financing Documents. The Transferors have previously delivered to the Partnership true, correct and complete copies of the Existing Financing Documents. To the Knowledge of the Transferors, there are no defaults under the Existing Financing Documents that could reasonably be expected to have a Project Material Adverse Effect.

(u)

Status as a United States Person .

(i)

Such Transferor certifies that it is not a foreign person within the meaning of Section 1445 of the Code (“ Section 1445 ”). To the extent that such Transferor is not a foreign person within the meaning of Section 1445, (1) such Transferor’s U.S. taxpayer identification number that has previously been provided to the Partnership is accurate, (2) such Transferor’s home address (in the case of an individual) or office address (in the case of an entity) is that address indicated in Section 12.12, and (3) if such Transferor subsequently becomes a foreign person within the meaning of Section 1445 prior to Closing, such Transferor shall notify the Partnership prior to the Closing.

(ii)

If such Transferor is or prior to the Closing becomes a foreign person within the meaning of Section 1445, the Partnership shall, and is authorized to, withhold ten percent (10%) of the amount realized (as such term is defined in Section 1001 of the Code) by such Transferor in connection with the transactions contemplated hereby, unless the Partnership shall receive from such Transferor a notice of nonrecognition transfer with respect to the Contribution by such Transferor (in a form to be provided by the Partnership).

(v)

Redemption Agreement . The Redemption Agreement is in full force and effect and has not been amended. The Transferors have previously delivered to the Partnership a true, correct and complete copy of the Redemption Agreement. To the Knowledge of the Transferors, there are no defaults under the Redemption Agreement.

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3.2 Securities Act and Other Representations and Agreements . SCG represents and warrants to, and covenants and agrees with, the Partnership as of the date hereof and as of the Closing as follows (all of which representations and warranties shall be deemed automatically remade as of the Closing):

(a)

Upon the issuance of Class C Preferred Units to SCG, SCG shall become subject to, and shall be bound by, the terms and provisions of the amended and restated partnership agreement of the Partnership, dated as of April 28, 1998, as amended through the date hereof and as amended in connection with the issuance of the Class C Preferred Units (as so amended, the “ Partnership Agreement ”), including the terms of the power of attorney contained in Section 15.11 thereof, as the Partnership Agreement may be amended and restated from time to time in accordance with its terms.

(b)

SCG has had a reasonable opportunity to ask questions of and receive information and answers from a person or persons acting on behalf of the REIT and the Partnership concerning their business and the transactions contemplated by this Agreement.

(c)

SCG is acquiring Class C Preferred Units solely for its own account as principal, for investment and not with a view to, or in connection with, any resale or distribution, and the Class C Preferred Units may not be transferred or otherwise disposed of by SCG otherwise than in transactions pursuant to a registration statement filed by the Partnership (which the Partnership has no obligation to file) or that are exempt from the registration requirements of the 1933 Act and all applicable state and foreign securities registration, and the REIT may refuse to transfer any Class C Preferred Units as to which evidence of such registration or exemptions of such registration requirements reasonably satisfactory to the REIT is not provided to it, which evidence may include the requirement of legal opinions regarding the exemption from such registration. If the REIT elects, in its sole discretion, to deliver to SCG REIT Class C Preferred Shares upon redemption of any Class C Preferred Units, the REIT Class C Preferred Shares will be acquired for its own account as principal, for investment and not with a view to, or in connection with, any resale or distribution in violation of applicable securities laws, and the REIT Class C Preferred Shares may not be transferred or otherwise disposed of by SCG otherwise than in transactions pursuant to a registration statement filed by the REIT with respect to such REIT Class C Preferred Shares (which it has an obligation to file only pursuant to the Registration Rights Agreement) or that are exempt from the registration requirements of the 1933 Act and all applicable state and foreign securities laws, and the REIT may refuse to transfer any REIT Class C Preferred Shares as to which evidence of such registration or exemptions of such registration reasonably satisfactory to the REIT is not provided to it, which evidence may include the requirements of legal opinions regarding the exemption from such registration.

(d)

SCG is an Accredited Investor and has sufficient knowledge and experience in financial, tax or business matters to enable SCG to evaluate the merits and risks of an investment in Class C Preferred Units. SCG has

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the ability to bear the economic risk of acquiring Class C Preferred Units and holding such units indefinitely and is able to afford the complete loss of its investment therein.

(e)

All information that SCG has provided to the Partnership concerning itself and its financial position is correct and complete as of the date hereof in all material respects, and if there should be any material change in such information prior to the issuance of Class C Preferred Units to SCG, it shall immediately provide such changed information to the Partnership.

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP, THE REIT AND LASALLE LESSEE.

4.1 General Representations and Warranties . Each of the Partnership, the REIT and LaSalle Lessee hereby jointly and severally represents and warrants to, and covenants and agrees with, the Transferors as of the date hereof and as of the Closing as follows (all of which representations shall be deemed automatically remade as of the Closing):

(a)

Organization; Standing; Etc.

(i)

The REIT is a real estate investment trust duly organized, validly existing and in good standing under the laws of the State of Maryland.

(ii)

The Partnership is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware.

(iii)

LaSalle Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois.

(iv)

Each member of the REIT Group has the power and authority to own its properties and is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the conduct of its business or the nature of its properties requires such registration, qualification, authorization or license.

(b)

Power . This Agreement and all other agreements, instruments and documents required to be executed or delivered by the Partnership, the REIT or LaSalle Lessee pursuant hereto have been or (if and when executed) will be duly executed and delivered by the Partnership, the REIT or LaSalle Lessee, as applicable, and are or will be legal, valid and binding obligations of the Partnership, the REIT or LaSalle Lessee, as applicable. Except as set forth on Schedule 4.1(b), no consents and permissions are required to be obtained by the Partnership, the REIT or LaSalle Lessee for the execution and performance of this Agreement and the other documents to be executed by the Partnership, the REIT or

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LaSalle Lessee hereunder. Except as set forth on Schedule 4.1(b), the consummation of the transactions contemplated herein and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, any agreement or document to which the Partnership, the REIT or LaSalle Lessee is a party or by which it is bound, or any order, rule or regulation of any court or of any Governmental Authority having jurisdiction over the Partnership, the REIT or LaSalle Lessee.

(c)

Consents and Approvals; No Violations . Except as set forth in Schedule 4.1(c), no filing with, and no permit, authorization, consent or approval of, any Governmental Authority is required to be obtained by any member of the REIT Group for the consummation of the transactions contemplated by this Agreement or the other Transaction Agreements, other than any filings required under the 1933 Act, the 1934 Act or state securities laws, and any filings required to be made with the Office of the Maryland Department of Taxation and Assessment, the Secretary of State of Delaware and the NYSE, except where the failure to so make same or obtain could not have a material adverse affect on such entity’s ability to execute and deliver, or perform its obligations under, this Agreement. Neither the execution and delivery of this Agreement or the other Transaction Agreements by the REIT, the Partnership or LaSalle Lessee nor the consummation by either of them of the transactions contemplated hereby or thereby nor compliance by each of them with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the organizational documents of either the REIT, the Partnership or LaSalle Lessee; (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any indenture, license, contract, agreement or other instrument or obligation to which the REIT, the Partnership or LaSalle Lessee is a party or by which any of them or any of their respective properties or assets may be bound; or (iii) to the Knowledge of the REIT, the Partnership or LaSalle Lessee violate any order, writ, injunction, decree, statute, rule or regulation applicable to either the REIT, the Partnership or LaSalle Lessee.

(d)

Investment Representations . (i) The Partnership and LaSalle Lessee are acquiring the Transferred Interests solely for its own account for the purpose of investment and not as a nominee or agent for any other person and not with a view to, or for offer or sale in connection with, any distribution of any thereof, and the Partnership and LaSalle Lessee acknowledge and agree that the Transferred Interests have not been registered under the 1933 Act, in reliance upon an exemption therefrom, and that the Transferred Interests have not been approved or disapproved by the SEC or by any federal or state agency; (ii) the Partnership and LaSalle Lessee are able to bear the economic risk of holding the

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Transferred Interests for an indefinite period and is able to afford the complete loss of its investment therein; (iii) the Partnership and LaSalle Lessee have been advised that unless the Transferred Interests are registered under the 1933 Act or an exemption from such registration is available, the Transferred Interests must be held indefinitely and the Partnership and LaSalle Lessee will continue to bear the economic risk of its investment in the Transferred Interests during the period of ownership; and (iv) each of the Partnership and LaSalle Lessee is an Accredited Investor.

(e)

Miscellaneous . The Partnership and LaSalle Lessee acknowledge and agree that they have been given the opportunity to inspect the Company and the Project and the files, books and records relating to the Project, the Company and the Westban Venture and that, except for the representations of the Transferors expressly set forth in this Agreement, the Partnership and LaSalle Lessee are relying solely on the investigation of the Company and the Project and of such files, books and records. Without limitation of the foregoing, except as expressly set forth in Section 3.1 above, the Partnership and LaSalle Lessee acknowledge and agree that they have relied on its own investigation, studies and projections as to the financial performance of the Company and the Project and the condition or operation of the Project, that they are not relying on any representation or warranty of the Transferors with respect to any financial statement of the Westban Venture or the Company or as to the condition or operation of the Project in making their decision to enter into this Agreement or to consummate the transactions contemplated hereby and that, except as expressly set forth in Section 3.1, the Transferors are not making any such representations and warranties.

(f)

Litigation . Except as set forth in the REIT Reports, no action, suit, claim, investigation or proceeding, whether legal or administrative or in mediation or arbitration, is pending or, to the Knowledge of the REIT Group, threatened, at law or in equity, against any member of the REIT Group or any of their respective Subsidiaries before or by any Governmental Authority which if determined adversely to any member of the REIT Group, would interfere in any material respect with the ability of such member of the REIT Group to perform its obligations pursuant to this Agreement or any Transaction Document or have a REIT Group Material Adverse Effect. There are no judgments, decrees or orders entered on a suit or proceeding against any member of the REIT Group or any of their respective Subsidiaries which, if determined adversely to any such member of the REIT Group or any of their respective Subsidiaries would materially adversely affect any member of the REIT Group’s ability to perform its respective obligations pursuant to this Agreement or the other Transaction Agreements, or which seeks to restrain, prohibit, invalidate, set aside, rescind, prevent or make unlawful this Agreement or the carrying out of this Agreement or the Transaction Agreements or have a REIT Group Material Adverse Effect.

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(g)

Bankruptcy, etc. No member of the REIT Group or any of its Subsidiaries has made a general assignment for the benefit of creditors, filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by any of its creditors, suffered the appointment of a receiver to take possession of all, or substantially all, of the assets of any member of the REIT Group or any of its Subsidiaries, suffered the attachment or other judicial seizure of all, or substantially all, of the assets of any member of the REIT Group or any of its Subsidiaries, admitted in writing its inability to pay its debts as they come due or made an offer of settlement, extension or composition to its creditors generally.

4.2 Representations to SCG . Each of the Partnership and the REIT hereby jointly and severally represents and warrants to, and covenants and agrees with, SCG as of the date hereof and as of the Closing as follows (all of which representations and warranties shall be deemed automatically remade as of the Closing):

(a)

Class C Preferred Units and REIT Class C Preferred Shares . Any Class C Preferred Units to be issued to SCG (the “ Recipient Units ”) at Closing will be duly authorized and, when issued by the Partnership, will be validly issued in accordance with the terms of the Partnership Agreement and Delaware law, and free of any Liens or pre-emptive rights. The REIT Class C Preferred Shares issuable upon redemption of the Recipient Units will be duly authorized and, upon such issuance, will be validly issued, fully paid and non-assessable, and free of any pre-emptive rights.

(b)

SEC Documents and Financial Statements . The REIT has made available to SCG on the REIT’s Website true and correct copies of each the following documents: (i) the REIT’s Annual Report on Form 10-K for the fiscal year ending December 31, 2004, (ii) the REIT’s quarterly report on Form 10-Q for the quarter ended March 31, 2005, and (iii) all of the REIT’s current reports on Form 8-K filed at any time subsequent to December 31, 2004 through the date hereof, all of which have been filed by REIT with the SEC (collectively, the “ REIT Reports ”). The REIT Reports were, and all reports filed by the REIT after the date hereof through the Closing Date (“ Subsequent REIT Reports ”) will be, prepared and filed in compliance with the 1934 Act and the rules and regulations promulgated by the SEC thereunder, and did not, or will not, as of their respective dates, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made or will be made, not misleading. The consolidated financial statements and the interim consolidated financial statements of the REIT included in the REIT Reports were prepared, and the consolidated financial statements of the REIT that will be included in any Subsequent REIT Reports will be

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prepared, in accordance with GAAP (except as may be indicated in the notes thereto) and fairly presented, or will fairly present, in all material respects the consolidated financial condition and results of operations of the REIT and its subsidiaries as at the dates thereof and for the periods then ended, subject, in the case of the interim consolidated financial statements, to normal year-end adjustments and any other adjustments described therein.

(c)

Investment Company Act of 1940 . None of the REIT, the Partnership or any of their respective Subsidiaries is at the date of this Agreement, or will be at the Closing, required to be registered with the SEC as an investment company under the Investment Company Act of 1940, as amended.

(d)

Subsidiaries . As of December 31, 2004, neither the REIT nor the Partnership had any active Subsidiaries other than those identified in the REIT Reports. Each Subsidiary of any member of the REIT listed in the REIT Reports has been duly organized, is validly existing and in good standing under the laws of the jurisdiction of its organization, has the power and authority to own its properties and to conduct its business and is duly registered, qualified and authorized to transact business and is in good standing in each jurisdiction in which the conduct of its business or the nature of its properties requires such registration, qualification or authorization, except where the failure to be in good standing, to have such power and authority or to be so qualified or authorized and in good standing could not reasonably be expected to have a REIT Group Material Adverse Effect. All of the outstanding capital stock, beneficial interests or other equity interests of the REIT, the Partnership and each Subsidiary listed in the REIT Reports have been duly authorized and validly issued, are fully paid and, in the case of corporate stock only, non-assessable.

(e)

Capitalization . As of December 31, 2004, the issued and outstanding shares of capital stock of the REIT and the issued and outstanding units of limited partnership interest of the Partnership were each as set forth in Schedule 4.2(e).

(f)

Tax Matters .

(i)

The REIT, beginning with its taxable year ended December 31, 2001 and through December 31, 2004 (i) has been subject to taxation as a real estate investment trust within the meaning of the Code and has satisfied all requirements to qualify as a real estate investment trust within the meaning of the Code for such years, (ii) has operated, and intends to continue to operate, in such a manner as to qualify as a real estate investment trust for the tax year ending December 31, 2005, and (iii) has not taken or omitted to take any action which would result in a challenge to its status as a real estate investment trust, and to the Knowledge of the Partnership, no such

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challenge is pending or threatened. No member of the REIT Group holds any asset that is subject to a consent filed pursuant to Section 341(f) of the Code and the regulations thereunder.

(ii)

To the Knowledge of the Partnership, each member of the REIT Group and each Subsidiary has (A) timely filed with the appropriate taxing authority all Tax Returns required to be filed by it (after giving effect to any filing extension granted by any Governmental Authority) and such Tax Returns were complete and accurate in all material respects and (B) has paid all Taxes shown as owed by each member of the REIT Group or any of the Subsidiaries on any Tax Return other than Taxes being contested in good faith and for which adequate reserves have been taken except, in each case, for such failures as could not reasonably be expected to have a REIT Group Material Adverse Effect. No member of the REIT Group or any of the Subsidiaries has executed or filed with the Internal Revenue Service or any other taxing authority any agreement now in effect extending the period for assessment or collection of any Tax. Except as set forth in Schedule 4.2(f), no member of the REIT Group or any of the Subsidiaries is a party to any material pending action or proceedings by any taxing authority for assessment or collection of any Tax, and no material claim for assessment or collection of any Tax has been asserted against it. No claim has been made by an authority in a jurisdiction where a member of the REIT Group or any of the Subsidiaries does not file Tax Returns that it is or may be subject to taxation by the jurisdiction. Except as set forth in Schedule 4.2(f), there is no material dispute or claim concerning any Tax liability of a member of the REIT Group or any of the Subsidiaries, (x) claimed or raised by any taxing authority in writing or (y) as to which a member of the REIT Group or any of the Subsidiaries has Knowledge, and no member of the REIT Group or the Subsidiaries has entered into or intends to enter into any agreements with any taxing authority, including but not limited to closing agreements, which could reasonably be expected to have a REIT Group Material Adverse Effect.

(iii)

Since January 1, 2004, no member of the REIT Group or the Subsidiaries has incurred (i) any material liability for Taxes under Sections 857(b), 860(c) or 4981 of the Code which could reasonably be expected to have a REIT Group Material Adverse Effect, or (ii) a material liability for Taxes other than Taxes incurred in connection with the ordinary course of business and such other liability for Taxes as could not be reasonably expected to have a REIT Group Material Adverse Effect. Except as described in Schedule 4.2(f), to the Knowledge of the Partnership, no event has occurred, and no condition or circumstances exists,

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which presents a material risk that any material Tax described in the preceding sentence with respect to the period described in said sentence will be imposed upon a member of the REIT or the Subsidiaries.

(iv)

The Partnership was not a publicly traded partnership within the meaning of Section 7704 of the Code and the regulations promulgated thereunder for any taxable year ending before January 1, 2005. In addition, no Subsidiary has taken the position, for federal income tax purposes, that it is a publicly traded partnership within the meaning of Section 7704 of the Code and the regulations promulgated thereunder for any taxable year ending before January 1, 2005.

(g)

Compliance with Organizational Documents . The REIT has complied in all material respects with all provisions of its declaration of trust and by-laws, in each case as in effect on the date hereof; the Partnership has complied in all material respects with all provisions of its certificate of limited partnership and partnership agreement, in each case as in effect on the date hereof.

(h)

Compliance with Laws . To the Knowledge of the Partnership, except as disclosed in the REIT Reports, neither the REIT nor the Partnership, nor any Subsidiary thereof, is in violation of any statute, Law, ordinance, regulation, rule, judgment, decree or order of any Governmental Authority applicable to its business, properties, or operations, except for such violations and failures to comply as could not, in the aggregate, reasonably be expected to have a material adverse affect on such entity’s ability to perform its obligations under this Agreement or any Transaction Document or have a REIT Group Material Adverse Effect.

ARTICLE 5. CONDITIONS TO CLOSING .

5.1 Completion of Due Diligence; Title .

(a) The Partnership acknowledges that it and its agents have been permitted access to the Project and to the books, records and reports relating to the Project, the Westban Venture and the Company for the purpose of inspecting same and that it has completed its due diligence review of the Project, the Westban Venture and the Company to its satisfaction. All information relating to the Project, the Westban Venture and the Company made available to the Partnership shall be treated as confidential and treated in accordance with the Confidentiality Agreement. The Partnership (and its agents) shall, from the date hereof through the Closing Date, continue to have the right, during normal business hours and subject to the terms of the Management Agreement, to meet with the Operator (including key employees and consultants) to discuss any matters relating to the operation of the Project. Any entry by the Partnership and its agents on the Project and any such meetings with the Operator shall be upon reasonable prior notice to the

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Transferors, shall be subject to the rights of guests, tenants and concessionaires at the Project and shall not unreasonably interfere with the use or operation of the Project. The Partnership will indemnify and hold the Transferors harmless against any and all injuries, claims, losses, damages and expenses arising out of any claims by third parties as a result of, or any physical damage directly or indirectly caused by, any entry, inspection or other activities undertaken by or on behalf of the Partnership in the course of its due diligence efforts.

(b) The Partnership acknowledges that it has received from the Transferors a current pro forma title insurance policy for the Project (the “ Title Commitment ”) together with legible copies of all exceptions appearing in such Title Commitment. Attached as Schedule 5.1(b) is a copy of a pro-forma title insurance policy to be delivered by the Title Company on the Closing Date (the “ Pro-Forma Title Policy ”) All matters in the Pro-Forma Title Policy are hereby deemed to be “ Permitted Exceptions ”. In addition to the foregoing, all matters affecting title to the Project first disclosed in any title continuation report received by the Partnership from the Title Company following the date hereof which are not disapproved by the Partnership in writing within five (5) Business Days following the receipt by the Partnership of such title continuation report, time being of the essence, shall also be deemed to be “ Permitted Exceptions ”. If the Partnership disapproves any such matters which are not Permitted Exceptions, the Transferors may, but shall not be obligated to, cure such matters, except as expressly set forth herein. Notwithstanding the foregoing, the Transferors shall, prior to the Closing Date (i) discharge any monetary liens on the Project (other than liens pursuant to the Existing Financing Documents (which liens shall be discharged in connection with the Defeasance) or relating to the Refinancing Documents) that they have voluntarily caused to be placed on the Project and that can be discharged by a liquidated amount and (ii) discharge or cause to be insured over by the Title Company in a manner reasonably acceptable to the Partnership any other monetary liens on the Project (other than liens pursuant to the Existing Financing Documents (which liens shall be discharged in connection with the Defeasance) or relating to the Refinancing Documents) up to $1,000,000 in the aggregate. The Partnership acknowledges that it has received from the Transferors an ALTA/ACSM survey of the Project (the “ Survey ”), including evidence identifying whether the Project is in a 100-year flood plain. As a condition to Closing, the Survey must be certified to the Partnership and the Title Company and to be amended so that the legal description of the Land contained therein conforms to the legal description of the Land contained in the Pro-Forma Title Policy.

5.2 Conditions to the Obligation of the Partnership to Close . The obligation of the Partnership and LaSalle Lessee to complete the Closing is subject to the fulfillment as of the Closing Date of the conditions set forth below, any one or more or which may be waived by the Partnership; provided, however, that any of the following conditions shall be deemed to have been waived if the failure of such condition to be satisfied results from any act or omission of the Partnership or LaSalle Lessee in violation of this Agreement:

(a)

the Restructuring shall have been completed on the terms set forth in Section 2.1, the transactions contemplated by the Redemption Agreement shall have been completed on the terms set forth therein and the

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Redemption Agreement shall be in full force and effect and there shall be no material defaults under the Redemption Agreement (including with respect to Urban’s representations, warranties and covenants thereunder); provided that the Current Owners may cause the Westban Venture to effect the Restructuring on terms different from those set forth in Section 2.1 and the redemption of Urban’s interests in the Westban Venture may be completed on terms different from those set forth in the Redemption Agreement as long as such different terms do not adversely affect the Partnership or the transactions contemplated by this Agreement, the other Transaction Agreements or the Redemption Agreement;

(b)

the due performance by the Transferors of all undertakings and agreements to be performed by them hereunder and the truth of each representation and warranty made by the Transferors pursuant to this Agreement at the Closing Date; provided that this condition shall be deemed to be satisfied unless that such failure to so perform such undertakings or agreements or for such representations and warranties to be true could reasonably be expected to have a Project Material Adverse Effect (as set forth in clause (ii) of the definition of such term) or a material adverse effect on the ability of the parties to consummate the transactions contemplated hereby; and provided further that in determining whether there has been an inaccuracy in, or breach of, a representation or warranty contained in this Agreement for purposes of this Section 5.2(b), the inclusion of an item on a Schedule to this Agreement as an exception to a representation or warranty shall be deemed also to be the inclusion of such item as an exception to each other representation or warranty to which such item may reasonably relate;

(c)

all agreements, documents and other deliveries required to be made to the Partnership pursuant to Article 7 shall have been made and delivered;

(d)

the Transferors shall have delivered an affidavit to the Title Company in the form of Schedule 5.2(d) hereto, and the Title Company shall have issued a title insurance policy in favor of the Company in substantially the form of the Pro-forma Title Policy; provided that this Section 5.2(d) shall be a condition to the obligations of the Partnership to close only if the Partnership shall have paid all premiums required to be paid by the Partnership prior to the issuance of such title policy;

(e)

each of the Redemption Agreement and the indemnity escrow agreement executed by Urban, the Indemnity Escrow Agent and the Westban Venture in connection therewith shall have been assigned to and assumed by the Company pursuant to an assignment and assumption agreement substantially in the form of Schedule 5.2(e) hereto, and all of the obligations of the parties to be performed through the Closing Date under the Redemption Agreement shall have been performed (it being understood and agreed that the Transferors shall cause Westban Venture to

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waive any conditions to the obligations of the Westban Venture thereunder at the direction of the Partnership; provided, that such waiver does not adversely affect the Transferors (it being understood and agreed that any such instruction so to waive any such condition shall constitute a waiver by the Partnership of any similar condition contained in this Agreement)); and

(f)

the Refinancing Debt shall have been incurred on the terms set forth on Schedule 6.2(c) and other commercially reasonable terms.

5.3 Conditions to the Obligation of the Transferors to Close . The obligation of the Transferors to complete the Closing is subject to the fulfillment as of the Closing Date of the conditions set forth below, any one or more of which may be waived by the Transferors; provided, however, that any of the following conditions shall be deemed to have been waived if the failure of such condition to be satisfied results from any act or omission of the Transferors in violation of this Agreement:

(a)

all actions required to be taken by, or consents or approvals to be obtained from, the parties listed or described on Schedule 2.1-A for the Restructuring to be effected on the terms set forth in Section 2.1-A shall have been taken or obtained, as applicable, and the transactions contemplated by the Redemption Agreement shall have been completed on the terms set forth therein; it being understood and agreed that the Current Owners may cause the Westban Venture to effect the Restructuring on terms different from those set forth in Section 2.1 and the redemption of Urban’s interests in the Westban Venture may be completed on terms different from those set forth in the Redemption Agreement as long as such different terms do not adversely affect the transactions contemplated by this Agreement, the other Transaction Agreements or the Redemption Agreement;

(b)

the due performance by the Partnership, the REIT and LaSalle Lessee of all undertakings and agreements to be performed by each of them hereunder and the truth in all material respects of each representation and warranty as set forth herein made by each of them pursuant to this Agreement at the Closing Date;

(c)

all consents set forth on Schedule 5.3(c) hereto, including the consent of Merrill Lynch, the Servicer and the rating agencies under the Existing Financing Documents, shall have been obtained and be in full force and effect;

(d)

(i) the Refinancing Debt shall be provided by a third party unaffiliated with any of the parties hereto and shall be non-recourse to the Company, except for customary non-recourse carveouts, and shall not be guaranteed by any of the Transferors or their respective Affiliates (other than the Company); (ii) none of the Current Owners or any of their respective

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Affiliates (other than the Company) shall be required to provide any guarantee, non-recourse carve-out, indemnity or other credit support, or otherwise incur any obligation or liability, in respect of the Refinancing Debt; (iii) the Refinancing Debt shall expressly provide that, in the event such Refinancing Debt shall have been funded but the transactions contemplated hereby are not consummated, such Refinancing Debt may be repaid without additional cost or penalty other than the payment of accrued and unpaid interest; and (iv) the terms of the Defeasance shall provide that, in the event the transactions contemplated hereby are not consummated, such Defeasance may be unwound (without effecting any prepayment of, or default with respect to, the Existing Financing Documents) without additional cost or penalty other than compensating the purchaser of the Defeasance collateral for any losses incurred by it in connection with the immediate resale of such Defeasance collateral.

(e)

the proceeds of the Refinancing Debt received by the Company shall be no less than the sum of the amount that is required to be paid in connection with the Defeasance and any premium relating thereto and the amount required to be paid to Urban at the Closing of the transactions contemplated by the Redemption Agreement (other than any amount to be paid to Urban in respect of Working Capital); and

(f)

all agreements, documents and other deliveries required to be made to the Transferors pursuant to Article 7 shall have been made and delivered.

5.4 Additional Conditions to the Obligation of the Transferors to Close . The obligation of the Transferors to complete the Closing is subject to the fulfillment as of the Closing Date of the conditions set forth below, any one of more of which may be waived by SCG:

(a)

the Partnership shall have issued, or caused to be issued, to SCG the Class C Preferred Units required to be delivered to SCG pursuant to this Agreement;

(b)

the REIT shall not have revoked its prior election pursuant to Section 856(c)(1) of the Code to be taxed as a real estate investment trust, and shall be in compliance with all applicable federal income tax laws, rules and regulations, including the Code, necessary to permit it to be taxed as a real estate investment trust. The REIT shall not have taken any action or have failed to take any action which would reasonably be expected to, also or in conjunction with any other factors, result in the loss of its status as a real estate investment trust for federal income tax purposes; and

(c)

all agreements, documents and other deliveries required to be made to SCG pursuant to Section 7.4 or 7.5 shall have been made and delivered.

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5.5 Adjournment of Closing in Certain Circumstances . If all of the third party consents and deliveries described in Sections 5.2 and 5.3 are not obtained by the Closing Date, either the Partnership or the Transferors shall, at their option, be entitled to a reasonable adjournment of the Closing Date to a date specified in a notice to the other which shall not be later than October 3, 2005, which adjourned Closing Date shall then be the Closing Date as defined in this Agreement, whereupon the Transferors or the Partnership, as applicable, shall have until such adjourned Closing Date to obtain all of such consents and deliveries. Each of the Transferors, the Partnership and REIT agrees that any adjournment of the Closing of the transactions contemplated by either the Redemption Agreement or this Agreement shall also constitute an adjournment of the Closing of the transactions contemplated by this Agreement or the Redemption Agreement, as the case may be.

ARTICLE 6. OPERATION OF THE PROJECT PRIOR TO CLOSING; OTHER COVENANTS .

6.1 Interim Covenants . From and after the date hereof through and including the Closing Date:

(a)

the Transferors shall not (and will not permit Urban to) instruct or request the Operator to operate and maintain the Project other than in substantially the same manner as it is currently being operated and maintained (normal wear and tear and damage by casualty excepted), including maintaining all Consumables and FF&E within the range of the historical levels at which such items have been maintained (as evidenced by the Operator’s books and records);

(b)

the Transferors shall not (and will not permit Urban to) instruct or request the Operator to maintain the Furniture, Fixtures and Equipment other than in the ordinary course of business, and not remove any of the Furniture, Fixtures or Equipment from the Project unless replaced with Furniture, Fixtures and Equipment of a quality comparable to that removed;

(c)

the Transferors shall not (and will not permit Urban to) instruct or request the Operator to fail to maintain, or cause to be maintained, all existing insurance carried by the Company on the Improvements so long as such insurance is available on commercially reasonable terms;

(d)

without the prior written consent of the Partnership, which consent shall not be unreasonably withheld, delayed or conditioned, the Transferors shall not (and will not permit Urban to) instruct or request the Operator to (i) enter into any new Project Agreements providing for annual payments in excess of $50,000 in the aggregate and that are not terminable on less than thirty (30) days prior written notice without penalty that is not paid by the Transferors, or materially modify, amend, terminate, cancel or grant any material concessions regarding any existing Project Agreements, including the Management Agreement, unless any such step is necessary

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or appropriate to operate or maintain the Project in the manner required by this Agreement or is required by applicable Law or by the Existing Financing Documents or by the insurance policies relating to the Project (in which event the Partnership’s consent shall not be required) or (ii) enter into any new Tenant Leases or any amendments to any existing Tenant Leases or (iii) except in connection with the Defeasance, amend or modify in any material respect any of the Existing Financing Documents or make any prohibited prepayments under the Existing Financing Documents;

(e)

without the prior written consent of the Partnership, which consent shall not be unreasonably withheld, delayed or conditioned, the Transferors shall not (and will not permit Urban to) amend or modify the Master Lease or the Management Agreement, and the Transferors will cause the Company to perform in all material respects its obligations under the Existing Financing Documents, the Master Lease and the Management Agreement;

(f)

without the prior written consent of the Partnership, which consent shall not be unreasonably withheld, delayed or conditioned, and except in the case of emergencies or as required by applicable Law or by any insurance company issuing insurance covering the Project, the Transferors shall not (and will not permit Urban to) make, or obligate the Company to make, any material alterations or modifications to the Project;

(g)

notwithstanding anything contained herein to the contrary, the Transferors shall have the right to cancel, or to instruct the Operator to cancel, any Equipment Lease if, in the reasonable judgment of the Transferors, the cost of such cancellation would be less than the cost of paying any fees required to be paid in respect of such Equipment Lease in connection with the transactions contemplated hereby; and

(h)

except as contemplated by the Redemption Agreement, or as permitted by Section 2.5(f), none of the proceeds of the Refinancing Debt shall be paid to any of the Current Owners.

6.2 Miscellaneous Interim and Other Covenants.

(a) The Transferors shall: (i) use commercially reasonable efforts to obtain estoppels from tenants under those Tenant Leases that contain covenants from the tenants to provide such estoppels, (ii) provide the affidavit to the Title Company contemplated by Section 5.2(d) hereof, and (iii) use commercially reasonable efforts to obtain from the landlord under the Master Lease an estoppel substantially in the form of Schedule 6.2(a), and to obtain an estoppel under the Chilled Water Agreement and an estoppel under the REA Agreement; provided, however, that the receipt of any such estoppels described in clause (i) or (iii) of this sentence shall not be a condition to the obligations of the Partnership or LaSalle Lessee to consummate the transactions contemplated by this Agreement. Notwithstanding the foregoing, after the date hereof, the Partnership shall, at

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its election, have the right to direct the process through which the parties will attempt to obtain the estoppel from the landlord under the Master Lease; provided that representatives of the Current Owners will have the right to participate in any meetings or teleconferences with representatives of the landlord under the Master Lease and the Partnership shall provide the Current Owners with copies of all correspondence with such landlord (it being understood and agreed that, prior to sending any such correspondence to such landlord, the Partnership shall provide drafts thereof to Madison Grose, as representative of the Current Owners, and shall accommodate any comments or changes to such correspondence as shall reasonably be made by Mr. Grose (it being understood and agreed that any failure by Mr. Grose to respond within 24 hours of the receipt of such draft shall be deemed to be approval by the Current Owners of such draft correspondence)). The Partnership agrees that, prior to the Closing, its discussions with the landlord shall be limited to trying to obtain such estoppel and that it will not attempt to modify any of the terms of the Master Lease and it will not bind, or attempt to bind, the Company, the Westban Venture or any of the Current Owners to any agreement with the landlord under the Master Lease. In the event that the landlord under the Master Lease advises or suggests, whether verbally or in writing, that it will refuse to execute and deliver an estoppel in the form of Schedule 6.2(a), the Current Owners shall have the right to reassume the direction of the process through which the parties will attempt to obtain such estoppel, and upon such assumption, but only upon such assumption, by the Current Owners, the receipt of an executed estoppel from the landlord under the Master Lease in the form of Schedule 6.2(a) shall become a condition to the obligations of the Partnership to consummate the transactions contemplated by this Agreement.

(b) Each of the Partnership and the Transferors shall cooperate with, and provide reasonable assistance to, each other with a view to causing the Restructuring, the obtaining of the Refinancing Debt, the Defeasance and the Redemption to occur, including by (i) using commercially reasonable efforts to obtain the consents and approvals that are conditions to the respective obligations of the parties under this Agreement, including, without limitation, the required consents to the Defeasance and the Redemption, (ii) if required by the lender of the Refinancing Debt, forming a new special purpose entity to own the Project and assigning agreements from the Westban Venture to such new special purpose entity and (iii) causing the Westban Venture to assign to such new special purpose entity the Project Agreements to which the Westban Venture is currently a party and any applicable licenses or permits held by the Westban Venture or its Affiliate (to the extent assignable).

(c) Each of the Partnership and the Transferors shall cooperate with one another in obtaining the Refinancing Debt on the terms set forth in Schedule 6.2(c) and otherwise on commercially reasonable terms, including reasonably approving and executing the Refinancing Documents. Notwithstanding any provision of this Agreement to the contrary, it is understood and agreed that (i) Refinancing Debt containing the terms and conditions set forth on Schedule 6.2(c) hereto and otherwise on commercially reasonable terms shall be deemed to be approved by the parties hereto; (ii) none of the Current Owners or any of their respective Affiliates (other than the Company) shall be required to provide any guarantee, non-recourse carve-out, indemnity or other credit support, or otherwise incur any obligation or liability, in respect of the Refinancing Debt or under the

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Refinancing Documents (including any representations, warranties, covenants or indemnities thereunder); (iii) the Refinancing Debt shall expressly provide that, in the event such Refinancing Debt shall have been funded but the transactions contemplated hereby are not consummated, such Refinancing Debt may be repaid without additional cost or penalty other than the payment of accrued and unpaid interest; and (iv) the terms of the Defeasance shall provide that, in the event the transactions contemplated hereby are not consummated, such Defeasance may be unwound (without effecting any prepayment of, or default with respect to, the Existing Financing Documents) without additional cost or penalty other than compensating the purchaser of the Defeasance collateral for any losses incurred by it in connection with the immediate resale of such Defeasance collateral. Notwithstanding the foregoing except as contemplated by Section 6.2(i), the Company shall not be required to enter into the Defeasance or the Refinancing Documents unless the terms and conditions of clauses (ii), (iii) and (iv) of the preceding sentence shall have been satisfied, and in the event such terms and conditions are not so satisfied, (a) the Transferors shall not be deemed to have breached this agreement if the Company does not consummate the Restructuring, the Defeasance, or the incurrence of the Refinancing Debt, (b) the Partnership shall not have the right to seek specific performance of this Agreement or the Redemption Agreement, and (c) this Agreement shall terminate and the Earnest Money shall be returned to the Partnership.

(d) The Transferors shall, upon consummation of the Redemption, assign or cause to be assigned the Redemption Agreement and the indemnity escrow agreement executed by Urban, the Escrow Agent and Westban Venture in connection therewith to the Company, and the Company shall assume the rights and obligations of the Westban Venture under the Redemption Agreement and such indemnity escrow agreement. The parties expressly agree that, upon such assignment of the Redemption Agreement and such indemnity escrow agreement, neither the Westban Venture nor the Transferors shall have any obligations or liabilities under the Redemption Agreement and the Partnership and the REIT agree that neither they nor any of their respective affiliates shall have or make any claims against the Westban Venture, either of the Transferors or any of their respective affiliates under either the Redemption Agreement or the indemnity escrow agreement executed in connection with the Redemption Agreement.

(e) The Transferors shall not permit the Redemption Agreement to be modified or amended and shall use their commercially reasonable efforts to cause the conditions to the obligations of the parties thereto that are in the control of the Transferors to be satisfied. In addition, in the event the Partnership seeks specific performance of this Agreement as permitted pursuant to the terms hereof and the Transferors do not contest the seeking of such remedy, the Transferors will, at the request and at the expense and cost solely of the Partnership, cause Westban Venture to seek specific performance of the Redemption Agreement.

(f) The Transferors will cause the Westban Venture partnership agreement to be amended effective immediately before the Redemption to provide that the capital accounts of the partners in the Westban Venture will be maintained in accordance with Treasury Regulations issued under Code Section 704(b) and to revalue the property of the Westban Venture in accordance with such Treasury Regulations and will cause the Company to make a timely election under Section 754 of the Code, effective for the taxable year that includes the Closing Date .

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(g) The Partnership will cause the Transferred Interests at all times to be held directly or indirectly for a period of two years following the Closing Date in the Partnership and LaSalle Lessee (or at least one other direct or indirect wholly-owned subsidiary of the Partnership that is not a disregarded entity under the Code).

(h) Subject to the provisions of Section 6.2(c), it is understood and agreed that the Partnership shall be responsible for negotiating the terms and conditions of the Refinancing Documents. The Partnership shall keep the Transferors regularly informed of the status of the negotiations relating to the Refinancing Debt and without limiting the provisions of Section 6.2(c), shall give the Transferors the opportunity to review and approve, which approval shall not be unreasonably withheld, any provision of the documentation relating to the Refinancing Debt regarding the ability of the borrower of the Refinancing Debt to repay such Refinancing Debt without additional cost, other than accrued interest, or penalty if the transactions contemplated hereby are not consummated. The Partnership shall appoint DLA Piper Rudnick Gray Cary US LLP as special finance counsel (the “ Special Finance Counsel ”) to provide legal opinions with respect to any new subsidiary of the Company party to any of the Refinancing Documents (the “ Loan Opinions ”) in connection with the incurrence and closing of the Refinancing Debt. For purposes of such Loan Opinions, the Special Finance Counsel shall be entitled to rely on the representations and warranties of the parties set forth in this Agreement, and in any certificates or other instruments required to be delivered pursuant to this Agreement. In addition, the Transferors and the Company and its Affiliates shall provide or cause to be provided to the Special Finance Counsel appropriate certificates of the Company and its Affiliates identifying (i) the governing instruments of such entity, (ii) all resolutions of the board of directors (or comparable body) taken in connection with the Refinancing Debt and the Defeasance and (iii) the signature of any corporate officer or other authorized signatory of such entity who has executed any of the documents or instruments relating to the Refinancing Debt and the Defeasance. The Transferors shall also provide or cause to be provided any legal opinions respecting the Company’s organization, existence, good standing, corporate authority, non-contravention and similar matters as shall be reasonably required in connection with the Defeasance, it being mutually agreed and understood, however, that the Loan Opinions will cover such matters in connection with the Refinancing Debt and the enforcement of the documents evidencing the Refinancing Debt.

(i) In the event that, as of the scheduled Closing Date, the third party lender selected by the Partnership is not willing to provide the Refinancing Debt at an effective interest rate of 6% per annum or less (after giving effect to the Interest Rate Option Agreement) or is otherwise unwilling to provide the Refinancing Debt on the terms specified on Schedule 6.2(c) or other commercially reasonable terms, then: (i) the Closing will be adjourned until October 3, 2005; provided, however, that the Closing Date may, at the request of the Transferors or the Partnership be adjourned to a date prior to October 3, 2005 as long as the party or parties making the request so to accelerate the Closing Date pays any amount of interest on the Existing Debt in excess of the amount of

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interest accrued through the actual date of the Defeasance and other incremental costs incurred in connection with the acceleration of such postponed Closing Date; (ii) the Partnership and/or the REIT will lend to the Company an amount sufficient to fund the Defeasance and to enable the Westban Venture to fund the Redemption on the terms and conditions set forth in the Redemption Agreement and the Westban Venture will effect the Redemption of Urban’s interest in the Westban Venture on the terms contemplated by the Redemption Agreement with the proceeds of such loan (it being understood and agreed that the obligation of the Partnership and/or the REIT to provide such funding shall not be subject to any financing contingency); (iii) the transactions contemplated by this Agreement shall, subject to clause (iv) below, be consummated on the terms contemplated hereby; provided that each of the SCG Closing Date Consideration and the WCBC Closing Date Consideration shall be decreased by an amount equal to $125,500 and (iv) the Transferors, the Partnership, the REIT and LaSalle Lessee will execute and deliver such amendments to this Agreement and the Tax Protection Agreement (including amendments permitting SCG, if necessary, to provide “bottom-tier” guarantees of the Partnership’s indebtedness) as are reasonably necessary or appropriate to provide for a restructuring of the transactions contemplated hereby and thereby and as do not adversely affect any party hereto or thereto (other than any adverse effect resulting from the fact that the Partnership and/or the REIT (or an Affiliate thereof), rather than a third-party lender, is the lender of the Refinancing Debt). In such event, notwithstanding anything to the contrary contained herein, the Company will not form a new special purpose entity to own the Project or to transfer the Project to another entity.

(j) The Current Owners shall have the right to control the filing of any transfer tax returns or other documents, and the defense, settlement or compromise of any current or future audit, examination, investigation or other proceeding, involving transfer, stamp deed or similar taxes in connection with the transactions contemplated by this Agreement or the Redemption Agreement.

(k) WCBC will cooperate as necessary with the Partnership with regard to tax matters relating to the transactions contemplated herein, including providing the Partnership with information regarding its basis necessary for the Partnership to complete is tax returns with respect to the acquisition of the Transferred Interests.

ARTICLE 7. CLOSING .

7.1 Place and Time of Closing . The Closing shall, unless the Transferors shall otherwise agree, occur on the Closing Date at the offices of Davies Ward Phillips & Vineberg LLP, 625 Madison Avenue, 12 ^th Floor, New York, New York 10022 at 9:00 a.m. on the Closing Date.

7.2 Actions . At the Closing, each party entitled to the benefit thereof shall satisfy itself that the other applicable party or parties are then in position to deliver the items specified below in Section 7.3, Section 7.4 or Section 7.5, as applicable, and that the conditions contained herein have been satisfied. Upon being so satisfied and concurrently with the delivery of the documents described below, the following, subject to the terms and conditions hereof, shall occur:

(a)

the Transferors shall convey the Transferred Interests to the Partnership; and

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(b)

the Partnership shall pay to the Transferors the consideration specified in Article 2 hereof, it being understood that the WCBC Closing Date Consideration shall be paid by wire transfer of immediately available funds.

7.3 Closing Deliveries to Partnership . At the Closing, the Partnership shall receive all of the following, in each case in form and substance reasonably satisfactory to the Partnership (it being agreed by the Partnership that the documents attached hereto as Schedules are satisfactory in form and substance to the Partnership):

(a)

a certificate from the Transferors that each of the representations and warranties contained in Article 3 hereof is true and correct as of the Closing Date, except for any such failures for such representations and warranties to be true and correct that could not reasonably be expected to have a Project Material Adverse Effect (as set forth in clause (ii) of the definition of such term) or a material adverse effect on the ability of the parties to consummate the transactions contemplated hereby (in the event that any changes have been made to such items since the date hereof, such certificate shall also contain an updated list of the Tenant Leases, the Service and Supply Contracts and/or the Equipment Leases, which updated lists the Transferors shall certify to be true and correct as of Closing) (it being understood and agreed that the delivery of such certificate does not affect the fact that the representations contained in Section 3.1 hereof shall be deemed to be remade by the Transferors as of the Closing Date on the terms set forth in Section 3.1 subject to the definition of Project Material Adverse Effect contained in clause (i) of the definition thereof);

(b)

an affidavit from each Transferor that it is not a “foreign person” or subject to withholding requirements under the Foreign Investment in Real Property Tax Act of 1980, as amended in the form attached hereto as Schedule 7.3(b);

(c)

a duly executed copy of the Indemnity Escrow Agreement;

(d)

documentation reasonably satisfactory to the Partnership to evidence that each of the Restructuring and the Redemption has taken place on the terms set forth herein;

(e)

assignments of the Transferred Interests substantially in the form attached hereto as Schedule 7.3(e), duly executed by the Transferors;

(f)

a certificate of the Transferors, duly executed by an authorized officer of each of the Transferors in such capacity, on the Transferors’ behalf, certifying that annexed thereto are the following documents:

(i)

a true, correct and complete copy of (x) the operating agreement for the Company, and (y) the certificate of formation of the Company and all amendments thereto, if any, as filed in the State of Delaware;

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(ii)

evidence that, immediately prior to the Closing Date, the Transferors own one hundred percent of the outstanding limited liability company interests in the Company;

(iii)

copies of the resolutions or similar documents of the Transferors authorizing the consummation of the transactions contemplated by this Agreement; and

(iv)

a copy of a good standing certificate from the Secretary of State of the State of Delaware as of a recent date for the Company,

and certifying, in the case of the documents described in clauses (i) and (iii) that such documents have not been otherwise modified or amended and are in full force and effect;

(g)

a trademark assignment substantially in the form of Schedule 7.3(g); and

(h)

opinions of counsel to each Transferor (which may be in-house counsel) to the effect that this Agreement has been duly executed, authorized and delivered by such Transferor.

7.4 Closing Deliveries to Transferors . At the Closing, the Transferors shall receive all of the following, in each case in form and substance reasonably satisfactory to the Transferors (it being agreed by the Transferors that the documents attached hereto as Schedules are satisfactory in form and substance to the Transferors):

(a)

payment of the WCBC Closing Date Consideration, as determined in accordance with Article 2 hereof, by wire transfer of immediately available funds;

(b)

a certificate from the REIT and the Partnership to the Transferors certifying that (i) the representations and warranties of the REIT Group contained in this Agreement are true and correct in all material respects as of the Closing Date as if made on the Closing Date, except to the extent that they expressly relate to an earlier date, or, if not, identifying in detail any and all variances and (ii) the REIT Group has performed or complied in all material respects with all of its agreements herein contained and required to be performed or complied with by it hereunder;

(c)

a duly executed copy of the Indemnity Escrow Agreement; and

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(d)

an opinion of counsel to the Partnership and the REIT (which may be in-house counsel) to the effect that this Agreement has been duly executed, authorized and delivered by the Partnership and the REIT.

7.5 Closing Deliveries to SCG . At the Closing, SCG shall receive all of the following, in each case in form and substance reasonably satisfactory to SCG (it being agreed by SCG that the documents attached hereto as Schedules to which it is a party are satisfactory in form to SCG):

(a)

a duly executed amendment to the Partnership Agreement providing for the issuance of the Class C Preferred Units to SCG and a copy of the Articles Supplementary of the REIT providing for the authorization and creation of the REIT Class C Preferred Shares as filed with the Maryland Department of Assessment and Taxation, in each case substantially in the form of Schedule 7.5(a) hereto;

(b)

a certificate of the REIT, duly executed by an authorized officer of the REIT in such capacity, on the REIT’s behalf and in its capacity as general partner of the Partnership, as the case may be, certifying that annexed thereto are the following documents:

(i)

a true and correct copy of (x) the Partnership Agreement, and (y) the certificate of limited partnership of the Partnership and all amendments thereto, if any, as filed in the State of Delaware;

(ii)

duly adopted resolutions authorizing the consummation of the transactions contemplated by this Agreement;

(iii)

a true and correct copy of the REIT’s declaration of trust and by-laws and the Partnership’s by-laws and all amendments thereto; and

(iv)

good standing certificates dated as of the most recent practicable date for each of the REIT and the Partnership,

and certifying, in the case of the documents described in clauses (i), (ii) and (iii), that such documents have not been otherwise modified or amended, and are in full force and effect;

(c)

an opinion of the REIT Group’s counsel substantially in the form attached as Schedule 7.5(c) hereto;

(d)

a certificate of the Partnership certifying to SCG that SCG has been admitted as a limited partner of the Partnership in respect of the Recipient Units, effective on the Closing Date, and that the Partnership’s books and records will, as of the Closing, indicate that SCG is the holder of the number of Recipient Units which is called for pursuant to this Agreement;

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(e)

a duly executed Registration Rights Agreement in the form of Schedule 7.5(e) hereto, with such amendments thereto (if any) as SCG may agree prior to the Closing Date (the “ Registration Rights Agreement ”);

(f)

a duly executed Tax Protection Agreement in the form of Schedule 7.5(f) hereto, with such amendments thereto (if any) as SCG may agree prior to the Closing Date (the “ Tax Protection Agreement ”); and

(g)

a duly executed Ownership Limit Waiver Certification of the REIT in the form of Schedule 7.5(g) hereto (the “ Ownership Limit Waiver Certification ”).

7.6 Expenses .

(a) The Partnership, on the one hand, and the Transferors, on the other hand, shall be responsible for and shall pay the following expenses on a ⁵⁰ / 50 basis, with the Partnership paying 50% of such expenses and each of the Transferors paying its Pro Rata Portion of 50% of such expenses: (i) any escrow or closing fees charged by the Title Company, (ii) all expenses of or related to the policies of owner’s title insurance (including, but not limited to, insurance premiums, the costs of endorsements and the cost of reinsurance), (iii) the cost of the Survey of the Project, (iv) any fees charged by the lessors under the Equipment Leases in an amount up to $5,000 in the aggregate (it being understood and agreed that the Transferors shall have the right to cancel any such Equipment Lease as provided in Section 6.1(g)), (v) all costs associated with transferring the employment of the employees relating to the Project, and all benefit plans in which any of such employees participate, to the Operator or one of its Affiliates in connection with the transactions contemplated by the Management Agreement Amendment and any other costs or expenses for which the Operator requires reimbursement in connection with the negotiation, execution and delivery of the Management Agreement Amendment, (vi) all interest accrued on the Refinancing Debt during the period beginning on the date of the incurrence thereof and ending on the day before the Closing Date, and (vii) any costs or expenses that may be incurred in connection with the unwinding of the Defeasance and the Refinancing Debt, including any amounts required to be paid to the servicer or any other party under the Existing Financing Documents in connection with any losses incurred with respect to the Defeasance collateral or otherwise (provided, however, that in the event the Defeasance and the Refinancing Debt are required to be unwound primarily as the result of the fault of either the Transferors or the Partnership, the party whose fault is the primary cause of such need to unwind the Defeasance and the Refinancing Debt shall pay all of the costs or expenses described in clauses (vi) and (vii)).

(b) The Partnership shall pay (i) all of the Partnership’s due diligence costs, (ii) its own legal expenses in finalizing and performing its obligations under this Agreement, including the legal fees incurred in connection with the legal opinion described in Section 7.4(d), (iii) all fees and expenses, including legal fees (other than legal fees of the Transferors), incurred by any party in connection with the preparation and negotiation of the Refinancing Documents or otherwise incurred in connection with the Refinancing

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Debt, (iv) the purchase price of any collateral to support the Defeasance, including any premium involved in such purchase, (v) all of the Partnership’s costs associated with the negotiation, execution and delivery of the Management Agreement Amendment other than the costs described in Section 7.6(a)(v), and (vi) all legal fees in excess of $20,000 incurred in connection with the legal opinion described in Section 7.5(c).

(c) The Transferors will pay (i) any and all state or local documentary or transfer taxes payable in connection with the transfer of the Transferred Interests to the Partnership provided in this Agreement, the redemption of Urban’s interest in the Westban Venture pursuant to the Redemption Agreement and/or the transfer of the Project to a new special purpose entity that is a subsidiary of the Company, (ii) their own legal expenses in finalizing and performing their obligations under this Agreement, including legal fees incurred in connection with the legal opinion described in Section 7.3(h) and their costs associated with the negotiation, execution and delivery of the Management Agreement Amendment, (iii) all legal fees and expenses incurred in connection with the Defeasance (other than any such legal fees or expenses incurred by the Partnership and other than the cost of the collateral to support the Defeasance, to be paid by the Partnership pursuant to Section 7.6(b)(iv)), (iv) the legal fees, in an amount not to exceed $20,000 (which amount shall be borne solely by SCG), incurred in connection with the legal opinion described in Section 7.5(c), (v) any fees charged by the lessors under the Equipment Leases in an amount in excess of $5,000 in the aggregate and (vi) any assumption or similar costs in respect of the transfer of the Master Lease if required pursuant to this Agreement.

ARTICLE 8. INDEMNIFICATION .

8.1 Indemnification Obligations of the Transferors . Each of the Transferors shall hold harmless, indemnify and defend the Partnership and its direct or indirect owners, partners, shareholders, officers, directors, employees and agents (the “ Partnership Indemnified Parties ”), solely (except to the extent provided in Section 8.7(c)) by the Partnership having the right to receive delivery of all or a portion of the Escrow Fund pursuant to the Indemnity Escrow Agreement, from and against such Transferor’s Project Pro Rata Portion of: (a) any and all obligations, liabilities, claims, liens or encumbrances that are not included as liabilities for purposes of calculating the Estimated Closing Working Capital or the Closing Working Capital, whether direct, contingent or consequential and no matter how arising, in any way related to or arising from the Project prior to the Closing Date, including, but not limited to (i) any damage to property or injury to or death of any person occurring prior to the Closing Date, (ii) claims by guests at the Project arising out of events occurring prior to Closing, (iii) obligations to pay any taxes in connection with the operation of the Project prior to Closing, and (iv) liabilities or obligations with respect to employees at the Project accruing prior to Closing but excluding any obligations, liabilities or claims arising or accruing from and after the Closing Date under any lien, encumbrance or contract that is permitted by or contemplated under any other term or provision of this Agreement or included on a Schedule to this Agreement; (b) any loss or damage to the Partnership resulting from any inaccuracy in or breach of any representation or warranty of the Transferors (except that, with respect to any breach of a representation by a Transferor of a representation

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contained in Section 3.1(a), 3.1(b), 3.1(c), 3.1(q), 3.1(u) or 3.2, such Transferor shall be liable for all of such loss or damage to the Partnership resulting from such breach but the other Transferor shall not be liable for any such loss or damage resulting from such breach) or resulting from any breach or default by the Transferors under this Agreement (unless this Agreement is terminated, in which case Article 11 shall govern); (c) any claims for brokerage commissions or fees in connection with leases of the Project executed prior to the Closing (other than any such leases that are approved by the Partnership pursuant to the terms hereof and other than any such claims that arise in connection with the renewal or extension at the option of the tenant under a Tenant Lease which is payable pursuant to the terms of a Tenant Lease or any commission agreement that is listed on a Schedule to this Agreement) except to the extent that such commissions have been included as a Current Liability on the Working Capital Statements; (d) any obligations existing on the Closing Date for tenant alterations, improvements and punchlist items in connection with the Project arising out of Tenant Leases executed prior to Closing (other than any such leases that are approved by the Partnership pursuant to the terms hereof and other than any such obligations that arise in connection with the renewal or extension at the option of the tenant under a Tenant Lease which is payable pursuant to the terms of a Tenant Lease or any commission agreement that is listed on a Schedule to this Agreement); (e) any wages, salaries, pension liabilities or fringe benefits accruing prior to Closing for the employees of the Company or for employees of the Operator for which the owner of the Project is responsible under the terms of the Management Agreement; (f) any and all state or local documentary or transfer taxes payable in connection with the transfer of the Transferred Interests to the Partnership provided in this Agreement or the redemption of Urban’s interest in the Westban Venture pursuant to the Redemption Agreement; and (g) all out-of-pocket costs and expenses of the Partnership Indemnified Parties, including reasonable attorneys’ fees, related to any actual or threatened actions, suits or judgments incident to any of the foregoing, whether or not any such action or suit is ever filed or such judgment is ever rendered.

8.2 Indemnification Obligations of the Partnership .

(a) The Partnership and the REIT shall hold harmless, indemnify and defend the Transferors and their respective direct or indirect owners, partners, shareholders, officers, directors, employees, and agents (the “ Transferor Indemnified Parties ”) from and against: (i) any and all obligations, liabilities, claims, liens or encumbrances (including those included as Liabilities for purposes of calculating Estimated Closing Working Capital or Closing Working Capital), whether direct, contingent or consequential and no matter how arising, in any way related to or arising from the Transferred Interests or the Project on or after the Closing Date, including, but not limited to, (A) any damage to property or injury to or death of any person occurring on or after the Closing Date, (B) claims by guests at the Project arising out of events occurring on or after the Closing Date, (C) obligations to pay any taxes in connection with the operation of the Project on or after the Closing Date (excluding taxes arising solely from the consummation of the Restructuring and the contribution and sale of the Transferred Interests hereunder), and (D) liabilities or obligations with respect to employees at the Project accruing on or after the Closing Date; (ii) any loss or damage to any Transferor Indemnified Party resulting from any inaccuracy in or breach of any representation or warranty of the Partnership or the REIT

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or resulting from any breach or default by the Partnership or the REIT under this Agreement or any of the other Transaction Agreements (subject, in the case of the Tax Protection Agreement, to the terms and conditions thereof); (iii) any wages, salaries, pension liabilities or fringe benefits accruing on or after the Closing Date for the employees of the Partnership or employees of the Operator for which the owner of the Project is responsible under the terms of the Management Agreement; and (iv) all out-of-pocket costs and expenses of the Transferor Indemnified Parties, including reasonable attorneys’ fees, related to any actual or threatened actions, suits or judgments incident to any of the foregoing, whether or not any such action or suit is ever filed or such judgment is ever rendered.

(b) In addition, the Partnership shall hold harmless, indemnify and defend any Transferor Indemnified Party from and against any losses, claims, damages, liabilities or expenses to which such Transferor Indemnified Party may become subject under the 1933 Act, the 1934 Act, or other federal, state or provincial law regulation, common law or otherwise, or in connection with the delivery by the Transferors of the management representation letters described in Section 12.15, insofar as any such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon any financial or other information relating to the Company or the Project included in any registration statement, prospectus or other offering document or report of the REIT, the Partnership or any of their Affiliates, and the Partnership will reimburse, as incurred, each such Transferor Indemnified Party and any partner, director, officer, employee, agent or controlling person thereof, for any legal or other expenses reasonably incurred by such Transferor Indemnified Party or such partner, director, officer, employee, agent or controlling person in connection with investigating, defending against or appearing as a third-party witness in connection with any such loss, claim, damage, liability, expense or action.

(c) In circumstances in which the indemnity agreement provided for in the preceding paragraph of this Section 8.2 is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, expenses or liabilities (or actions in respect thereof), each indemnifying party, in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, expenses or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect (i) the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the offering of the securities in connection with which such liability arose or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, not only such relative benefits but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages, expenses or liabilities (or actions in respect thereof).

(d) No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) or willful misconduct shall be entitled to indemnification or contribution under this Section 8.2 to the extent related to such fraudulent misrepresentation or willful misconduct from any person who was not guilty of such fraudulent misrepresentation or willful misconduct.

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(e) In connection with any matter as to which a Transferor Indemnified Party makes a claim for indemnification under Section 8.2(b), all out-of-pocket costs of defending any such matter, including out-of-pocket costs, attorneys’ fees, accountants’ fees, and disbursements and costs of attachment or similar bonds, investigations, (collectively, “ Expenses ”), in connection with any such matter shall be paid by the Partnership and the REIT in advance upon request of such Transferor Indemnified Party that the Partnership and the REIT pay such Expenses; provided, however that such Transferor Indemnified Party shall be required to reimburse the Partnership or the REIT, as applicable, for Expenses with respect to which such Transferor Indemnified Party is determined by a non-appealable final decision from a court of competent jurisdiction not to be entitled to indemnification.

8.3 Claim Procedures . Any indemnified party seeking indemnification under this Agreement (each, an “ Indemnified Party ”) shall, within the relevant limitation period provided in Section 12.3 to the extent applicable, promptly give the indemnifying party or parties (each, the “ Indemnifying Party ”) written notice (a “ Claim Notice ”) describing in reasonable detail the facts giving rise to any claims for indemnification hereunder and shall include in the Claims Notice (if then known) the amount or method of computation of the amount of such claim and a reference to the provision of this Agreement or any agreement, certificate or instrument delivered pursuant to this Agreement upon which such claim is based; provided, that the Indemnified Party shall provide a Claim Notice in respect of any action at law or in equity by or against a third party as to which indemnification will be sought as promptly as possible after the action or suit is commenced, it being understood that the failure to give such Claim Notice shall not relieve or otherwise affect the obligation of the Indemnifying Party to provide indemnification hereunder except to the extent the rights of the Indemnifying Party have been prejudiced thereby.

8.4 Defense of Claim . The Indemnifying Party shall have the right, at its own cost, to participate jointly in the defense of any claim or demand in connection with which the Indemnified Party has claimed indemnification under this Article 8, and may elect to take over the defense of such claim or demand through counsel of its own choosing by so notifying the Indemnified Party within sixty (60) days of receipt of the Indemnified Party’s notice of such claim or demand; provided the Indemnified Party has acknowledged in writing to the Indemnifying Party that the Indemnifying Party is responsible for such claim or demand. If the Indemnifying Party elects to take over the defense of any claim or demand pursuant to its right under this Article 8:

(a)

it shall keep the Indemnified Party reasonably informed as to the status of such matter and shall promptly send copies of all pleadings to the Indemnified Party; and

(b)

with respect to any issue involved in such claim or demand, it shall have the sole right to settle or otherwise dispose of such claim or demand on

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such terms as it shall deem appropriate; provided, however, that (x) it shall permit the Indemnified Party to participate in any settlement or defense through counsel chosen by the Indemnified Party; provided, that the fees and expenses of such counsel shall be borne by the Indemnified Party unless both the Partnership and one or more the Transferors are implicated with respect to such claim or demand, or threatened claim or demand, and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, in each of which cases the reasonable fees and expenses of counsel (including local counsel) will be at the expense of the Indemnifying Party, and all such fees and expenses will be reimbursed as they are incurred, and (y) it shall not settle any claim or demand without the written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. So long as the Indemnifying Party is vigorously contesting any such claim or demand in good faith, the Indemnified Party shall not pay or settle such claim without the written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

8.5 Right to Contest . If the Indemnifying Party does not notify the Indemnified Party within sixty (60) days after receipt of the Indemnified Party’s notice of such claim or demand that it is responsible for such claim or demand and has elected to take over the defense of such claim or demand, the Indemnified Party shall have the right to contest, compromise or settle such claim or demand, at the expense of the Indemnifying Party, in the exercise of its reasonable judgment; provided, however, that the consent of the Indemnifying Party to any compromise or settlement of such claim or demand shall be required, which consent shall not be unreasonably withheld or delayed.

8.6 Insurance . Contemporaneously with an admission by an Indemnifying Party that it has, or a determination that an Indemnifying Party has, an indemnification obligation under this Article 8, an Indemnified Party shall assign to the Indemnifying Party, and shall (at the cost and expense of the Indemnifying Party, which costs and expenses may, if the Transferors are the Indemnifying Party and the Indemnifying Party so elects, be funded out of the Escrow Fund) cooperate with the Indemnifying Party in pursuing, any available claims against insurers who may have provided insurance coverage for any losses and shall assign to the Indemnifying Party, any claims or rights it may have against any Person that may reduce the losses otherwise incurred by the Indemnified Party. Each party agrees that it shall cooperate with the other parties in the defense of any claim or action. If the Transferors are the Indemnifying Party, they shall have the right, subject to the consent of the Partnership, which consent shall not be unreasonably withheld, delayed or conditioned, to satisfy a claim loss to which an indemnification claim relates with the Escrow Fund. Without limitation of the foregoing, the amount of the Indemnifying Party’s liability under this Article shall be determined after taking into account any applicable insurance or other proceeds received by the Indemnified Party and any payments made by any insurance carrier in defending against any claim (it being understood and agreed that the Indemnified Party shall have no obligation to sue any insurance carrier in respect of insurance coverage).

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8.7 Limitation of Liability; Indemnity Escrow Agreement .

(a) If the Transferors are the Indemnifying Party, the amount of such Indemnifying Party’s liability under this Article 8 shall be determined net of any reserves, liability accruals or other provisions for such Losses included in calculating Closing Working Capital or Estimated Closing Working Capital (it being understood and agreed that there shall be no indemnification obligation of any such Indemnifying Party with respect to any Current Liability included on any such Working Capital Statement).

(b) IN NO EVENT SHALL ANY INDEMNIFYING PARTY BE LIABLE TO ANY INDEMNIFIED PARTY FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL OR OTHER SIMILAR DAMAGES, INCLUDING LOST PROFITS, LOST REVENUES, BUSINESS INTERRUPTION, COST OF CAPITAL OR LOSS OF BUSINESS REPUTATION OR OPPORTUNITY, OR PUNITIVE OR SPECIAL DAMAGES FOR ANY BREACH OR DEFAULT UNDER, OR ANY ACT OR OMISSION ARISING OUT OF OR IN ANY WAY RELATING TO, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, UNDER ANY FORM OF ACTION WHATSOEVER, WHETHER IN CONTRACT OR OTHERWISE (OTHER THAN INDEMNIFICATION FOR AMOUNTS PAID OR PAYABLE TO THIRD PARTIES IN RESPECT OF ANY THIRD PARTY CLAIM FOR WHICH INDEMNIFICATION HEREUNDER IS OTHERWISE REQUIRED AND OTHER THAN ACTUAL OUT-OF POCKET COSTS OR EXPENSES INCURRED BY AN INDEMNIFIED PARTY TO REMEDY ANY SUCH BREACH, DEFAULT, ACT OR OMISSION). By way of example, if the Transferors enter into a below-market lease with a third party before the Closing Date that is not approved by the Partnership pursuant to the terms hereof, the amount by which the aggregate amount of rent payments that would have been payable under a “market” lease for such space (as reasonably determined by the parties taking into account other similar leases in Boston, Massachusetts) exceeds the actual aggregate amount of rent payable under such lease, in each case as such payments shall be discounted to the Closing Date at a rate of interest equal to 6% shall be deemed to be a direct damage and not a consequential, indirect, incidental or other similar damage hereunder for which the Transferors shall not be liable to the Partnership. Similarly, if the Project is affected by an undisclosed unsatisfied requirement for repairs, the actual costs related to the repair of the Project and any lost rent under binding Tenant Leases then in effect shall be considered to be a direct damage for which the Transferors shall be liable to the Partnership; but, any other lost profits, lost revenue, business interruption, cost of capital interruption or business reputation or opportunity (including lost bookings) shall be deemed to be a consequential, indirect, incidental or other similar damage hereunder for which the Transferors shall not be liable to the Partnership. Without limitation of the foregoing, the parties expressly acknowledge and agree that, except as provided in Section 8.2, any losses, damages or liabilities incurred by any party under applicable securities laws, including the 1933 Act or the 1934 Act, shall constitute consequential, indirect, incidental or other similar damages hereunder for which no party hereto shall have any indemnification obligation under this Agreement.

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(c) On the Closing Date, each of the Transferors shall deposit with the Indemnity Escrow Agent the respective amount of cash (or a letter of credit reasonably satisfactory to the Partnership for such amount of cash) or Class C Preferred Units, as applicable, constituting the Escrow Fund required to deposited by such Transferor pursuant to the Indemnity Escrow Agreement, and such Escrow Fund shall be disbursed as provided in the Indemnity Escrow Agreement. Except with respect to an indemnification obligation arising out of a breach by any Transferor of a representation contained in Section 3.1(a), 3.1(b), 3.1(c), 3.1(q) or 3.1(u) or, Section 3.2, in the case of SCG, as to which this sentence shall not apply, any indemnification obligation of any of the Transferors shall, subject to the second sentence of Section 8.9(a), be satisfied solely out of the Escrow Fund established pursuant to the Indemnity Escrow Agreement and no Transferor shall have any liability pursuant to this Agreement in excess of sums on deposit in the Escrow Fund; provided, however, that the Transferors’ indemnification obligations with respect to their respective Project Pro Rata Portions of obligations, liabilities, claims, liens or encumbrances resulting from the litigation listed on Schedule 8.7(c) shall not be limited to the Escrow Fund established under the Indemnity Escrow Agreement unless the applicable insurance company insuring against any such claim has admitted coverage with respect to such claim and the amount of coverage under the applicable insurance policy is adequate to cover such claim (in which event the Transferors’ indemnification obligation in respect of such claim shall be limited to the Escrow Fund).

8.8 Several Obligations of Transferors . Notwithstanding anything contained herein to the contrary, the indemnification obligations of the Transferors hereunder shall be several and not joint, it being understood that (except as expressly provided in Section 8.7(b) and 8.7(c)), none of the Transferors shall be required to pay in excess of such Transferor’s Pro Rata Portion of any aggregate amount agreed or determined to be owing by the Transferors pursuant to this Article 8, subject to the limitation set forth in Section 8.7(c) (it being understood and agreed that, subject to the foregoing limitation, with respect to any breach of a representation by a Transferor of a representation contained in Section 3.1(a), 3.1(b), 3.1(c), 3.1(q) or 3.1(u), or Section 3.2, in the case of SCG, such Transferor shall be liable for all of such loss or damage to the Partnership resulting from such breach but no other Transferor shall be liable for any such loss or damage resulting from such breach).

8.9 Exclusivity of Indemnity .

(a) Except as set forth in Section 8.7(c), the indemnification provided in this Article 8 and the Indemnity Escrow Agreement shall be the sole and exclusive remedy after the Closing Date for damages available to the parties to this Agreement for breach of any of the representations, warranties, covenants and agreements contained herein. It is understood and agreed, however, that no adjustment to the consideration payable to the Transferors pursuant to Article 2 hereof shall be paid out of the Escrow Fund.

(b) Each of the parties acknowledges and agrees that, if the Closing occurs, for purposes of this Article 8 and for of determining whether there has been an inaccuracy in, or breach of, a representation or warranty contained in this Agreement: (i) the inclusion of an item on a Schedule to this Agreement as an exception to a representation or

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warranty shall be deemed also to be the inclusion of such item as an exception to each other representation or warranty to which such item may reasonably relate, and (ii) any item included as a liability in the calculation of Estimated Closing Working Capital or Closing Working Capital or any item of which the Partnership has Knowledge on or prior to the execution of this Agreement hereof shall be deemed to be included as an exception to each representation or warranty to which such item is applicable.

ARTICLE 9. DAMAGE AND DESTRUCTION; CONDEMNATION .

9.1 Damage and Destruction .

(a) If all or any part of the Project is damaged by fire or other casualty occurring following the date hereof and prior to the Closing Date, then:

(i)

if the casualty results in 20% or less of the hotel guest rooms at the Project being uninhabitable, or if the estimated cost of repair or restoration of the public areas of the hotel is less than or equal to $6,400,000, neither party shall have the right to terminate this Agreement and the parties shall nonetheless consummate this transaction in accordance with this Agreement, without any abatement of the Closing Date Consideration or any liability or obligation on the part of the Transferors by reason of said destruction or damage. In such event, the Transferors shall assign to the Partnership any right of the Transferors to receive proceeds under any applicable casualty insurance policy for the repair and restoration of the destruction or damage caused, and the amount of the Estimated Closing Working Capital and the Closing Working Capital shall be decreased by the amount of the deductible on such casualty insurance policy; and

(ii)

if the casualty results in 20% or more of the hotel guest rooms at the Project being uninhabitable, or if the estimated cost of repair or restoration of the public areas of the hotel exceeds $6,400,000, the Partnership shall have the option, exercisable within twenty (20) days after receipt of notice of the occurrence of such fire or other casualty and the estimated cost to repair the same, time being of the essence, to terminate this Agreement by delivering notice thereof to the Transferors, whereupon the Earnest Money (together with any interest accrued thereon) shall be returned to the Partnership and this Agreement shall be deemed cancelled and of no further force or effect, and neither party shall have any further rights or liabilities against or to the other except for such provisions which are expressly provided in this Agreement to survive the termination hereof. If a fire or other casualty described in this clause (ii) shall occur and the Partnership shall not timely elect to terminate this Agreement, then the Partnership and the Transferors shall consummate this transaction in accordance with

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this Agreement, without any abatement of the Closing Date Consideration or any liability or obligation on the part of the Transferors by reason of said destruction or damage and, in such event, the Transferors shall assign to the Partnership any of the Transferors’ right to receive proceeds under its casualty insurance policy for the repair and restoration of the destruction or damage caused, and, the amount of the Estimated Closing Working Capital and the Closing Working Capital shall be decreased by the amount of the deductible on such casualty insurance policy.

(b) The estimated cost to repair and/or restore shall be established by estimates obtained by Transferors from independent contractors, reasonably acceptable to the Partnership and the provisions of Section 9.1(c) below.

(c) The provisions of this Section 9.1 supersede the provisions of Section 5-1311 of the General Obligations Law of the State of New York. Any disputes under this Section 9.1 as to the cost of repair or restoration or the time for completion of such repair or restoration shall be resolved by expedited arbitration before a single arbitrator selected in accordance with the rules of the American Arbitration Association. Such arbitrator shall be an independent architect or engineer having at least ten (10) years of experience in the construction of hotels in Boston, Massachusetts. The determination of the arbitrator shall be conclusive and binding upon the parties. The costs and expenses of such Arbitrator shall be borne equally by the Transferors and the Partnership.

9.2 Condemnation .

(a) If, prior to the Closing Date, any part of the Project having a value of $25,000,000 or more is taken (other than a temporary taking for a period not to exceed two weeks), or if the Transferors shall receive an official notice from any Governmental Authority having eminent domain power over the Project of its intention to take, by eminent domain proceeding, any part of the Project having a value of $25,000,000 or more (a “ Taking ”), then the Partnership shall have the option, exercisable within ten (10) days after receipt of notice of such Taking, time being of the essence, to terminate this Agreement by delivering notice thereof to the other party, whereupon the Earnest Money (together with any interest earned thereon) shall be returned to the Partnership and this Agreement shall be deemed cancelled and of no further force or effect, and neither party shall have any further rights or liabilities against or to the other except pursuant to the provisions of this Agreement which are expressly provided to survive the termination hereof. If a Taking shall occur and neither party shall timely elect to terminate this Agreement, then the Partnership and the Transferors shall consummate this transaction in accordance with this Agreement, without any abatement of the Closing Date Consideration or any liability or obligation on the part of the Transferors by reason of such Taking; provided, however, that the Transferors shall, on the Closing Date, (i) assign and remit to the Partnership, and the Partnership shall be entitled to receive and keep, the net proceeds of any award or other proceeds of such Taking which may have been collected by the Transferors as a result of such Taking less the reasonable expenses incurred by the Transferors in connection with such Taking, or (ii) if no award or other

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proceeds shall have been collected, deliver to the Partnership an assignment of the Transferors’ right to any such award of other proceeds which may be payable to the Transferors as a result of such Taking and the Partnership shall reimburse the Transferors for the reasonable expenses incurred by the Transferors in connection with such Taking.

(b) The provisions of this Section 9.2 supersede the provisions of Section 5-1311 of the General Obligations Law of the State of New York.

ARTICLE 10. TAX REDUCTION PROCEEDINGS .

10.1 The Transferors may file and/or prosecute an application for the reduction of the assessed valuation of the Project or any portion thereof for real estate taxes for the 2004-2005 Boston, Massachusetts fiscal year (the “ 2005 Tax Year ”), or any fiscal period prior to the 2005 Tax Year. The Transferors shall have the right to withdraw, settle or otherwise compromise any protest or reduction proceeding affecting real estate taxes assessed against the Project for the 2005 Tax Year and any fiscal period prior to the 2005 Tax Year without the prior consent of the Partnership. The Partnership may file and/or prosecute an application for the reduction of the assessed valuation of the Project or any portion thereof for real estate taxes for the 2005-2006 Boston, Massachusetts fiscal year (the “ 2006 Tax Year ”). The Partnership shall have the right to withdraw, settle or otherwise compromise any protest or reduction proceeding affecting real estate taxes assessed against the Project for (i) the 2006 Tax Year, provided the Transferors shall have consented with respect thereto, which consent shall not be unreasonably withheld or delayed. The amount of any tax refunds (net of customary attorneys’ fees and other costs incurred by the Transferors or the Partnership in seeking such a reduction and subject to the rights with respect thereto, of any, of tenants) with respect to any portion of the Project for the tax year in which the Effective Time occurs shall be apportioned between the Transferors and the Partnership as of the Effective Time. If, in lieu of a tax refund, a tax credit is received with respect to any portion of the Project for the tax year in which the Effective Time occurs, then (x) within thirty (30) days after receipt by the Transferors or the Partnership, as the case may be, of evidence of the actual amount of such tax credit (net of attorneys’ fees and other costs incurred by the Transferors in obtaining such tax credit and subject to the rights with respect thereto, if any, of tenants), the tax credit apportionment shall be readjusted between the Transferors and the Partnership, and (y) upon realization by the Partnership of a tax savings on account of such credit, the Partnership shall pay to the Transferors an amount equal to the savings realized (as apportioned). All refunds, credits or other benefits applicable to any fiscal period prior to the 2005 Tax Year shall belong solely to the Transferors (and the Partnership shall have no interest therein) and, if the same shall be paid to the Partnership or anyone acting on behalf of the Partnership, the same shall be paid to the Transferors within five (5) days following receipt thereof, but the Partnership shall have no liability for attorney fees or their costs. The provisions of this Section 10.1 shall survive the Closing.

ARTICLE 11. TERMINATION .

11.1 Termination . This Agreement may be terminated at any time prior to the Closing Date:

(a)

by the mutual written agreement of the Partnership and the Transferors; or

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(b)

by the Partnership or the Transferors if any Governmental Authority shall have issued an order or taken any other action that restrains, enjoins or otherwise prohibits the consummation of the transactions contemplated hereby and such order or other action shall have become final and non-appealable; provided, however, that no party may terminate this Agreement pursuant to this Section 11.1(b) if such party has willfully taken an action that results in the issuance of such order or the taking of such action by a Governmental Authority; or

(c)

by either the Partnership or the Transferors if the Closing shall not have occurred on or prior to October 3, 2005; provided that the party or parties terminating this Agreement shall not be in breach of this Agreement at the time of such termination; or

(d)

by the Partnership: (i) pursuant to Section 9.1(a)(ii); (ii) pursuant to Section 9.2(a); (iii) if any act, omission, occurrence, condition, fact or event has occurred (including any breach by the Transferors of any of their representations, warranties, covenants or other agreements contained in this Agreement that has not been cured within thirty (30) days after the giving of written notice by the Partnership to the Transferors specifying such breach) that would reasonably be expected to give rise to the failure of a condition for the benefit of the Partnership set forth in Section 5.2 to be satisfied on or prior to the Closing Date (after giving effect to any adjournment of the Closing Date which may occur pursuant to Section 5.5), or (iv) pursuant to any other right under this Agreement for the Partnership to terminate this Agreement; or

(e)

by the Transferors if any act, omission, occurrence, condition, fact or event has occurred (including any breach by the Partnership or the REIT of any of its representations, warranties, covenants or other agreements contained in this Agreement that cannot be or has not been cured within thirty (30) days after the giving of written notice by the Transferors to the Partnership specifying such breach), that would reasonably be expected to give rise to the failure of a condition for the benefit of the Transferors set forth in Section 5.3 to be satisfied on or prior to the Closing Date (after giving effect to any adjournment of the Closing Date which may occur pursuant to Section 5.5), or pursuant to any other right under this Agreement for the Transferors to terminate this Agreement.

11.2 Effect of Termination .

(a) In the event of the termination of this Agreement by any party pursuant to Section 11.1, this Agreement shall forthwith terminate and have no further force and effect, except that (a) the covenants and agreements set forth in Section 7.6 (Expenses), Section 12.2 (Brokers) and this Section 11.2 shall survive such termination indefinitely,

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(b) the covenants and agreements set forth in Section 12.14 (Confidentiality) shall survive for a period of two (2) years after the termination of this Agreement and (c) nothing in this Section 11.2 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by another Party of its obligations under this Agreement.

ARTICLE 12. MISCELLANEOUS .

12.1 Waiver . Each party hereto may, at any time or times, at its election, waive any of the conditions to its obligations hereunder by a written waiver expressly detailing the extent of such waiver (and no other waiver or alleged waiver by such party shall be effective for any purpose). No such waiver shall reduce the rights or remedies of such party by reason of any breach by the other party or parties of any of its or their obligations hereunder.

12.2 Brokers . The Transferors represent and warrant that they have not hired any brokers or finders in connection with the Project or this transaction other than Pinnacle. The Partnership represents and warrants that it has not hired any brokers or finders in connection with the Project or this transaction. The Partnership shall be obligated to pay on the Closing Date the commission due Pinnacle to the extent such commission has been included as a liability on the Estimated Working Capital Statement and the Closing Working Capital Statement, and the Transferors shall be liable for any other amounts due to Pinnacle.

12.3 Survival; Further Instruments . All warranties, representations, covenants, obligations and agreements contained in or made pursuant to this Agreement (including, without limitation, the indemnification obligations under Article 8 hereof) shall survive the Closing hereunder and the transfers and conveyances and other transactions hereunder or contemplated hereby and any and all performances hereunder until the date that is the third anniversary of the Closing Date (except that bona fide claims first asserted in writing with specificity within the period referred to above shall not thereafter be barred); provided that the representations and warranties contained in Sections 3.1(a), 3.1(b), 3.1(c), 3.2, 4.1(a), 4.1(b), 4.1(c), 4.1(d), 4.1(e) and 4.2(a) shall survive indefinitely; provided further, however, that the indemnification obligations of the Transferors with respect to the third-party litigation claims described on Schedule 8.7(c) shall, as expressly set forth in, and subject to, Section 8.7(c), survive until the date that is the later to occur of (i) the third anniversary of the Closing Date and (ii) the date on which the applicable insurance company insuring against any such claim admits coverage with respect to such claim and the amount of coverage under the applicable insurance policy is adequate to cover such claim, but in no event later than the date on which such claim is resolved. Thereafter all such representations and warranties shall be extinguished, if applicable, and no claim for the recovery of any losses may be asserted against the Transferors in respect thereof. Each party will, whenever and as often as it shall be requested so to do by the other, cause to be executed, acknowledged or delivered any and all such further instruments and documents as may be necessary or proper, in the reasonable opinion of the requesting party, in order to carry out the intent and purpose of this Agreement and as is consistent with this Agreement.

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12.4 No Third Party Benefits . This Agreement is made for the sole benefit of the Partnership and the Transferors and their respective successors and assigns (subject to the limitation on assignment set forth in Section 12.7 below), and no other Person or Persons shall have any right or remedy or other legal interest of any kind under or by reason of this Agreement. Whether or not either party hereto elects to employ any or all the rights, powers or remedies available to it hereunder, such party shall have no obligation or liability of any kind to any third party by reason of this Agreement or by reason of any of such party’s actions or omissions pursuant hereto or otherwise in connection with this Agreement or the transactions contemplated hereby.

12.5 Entire Agreement . This Agreement (including all Schedules hereto) contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements between the parties hereto respecting such matters. Except as otherwise provided above, no remedy conferred upon a party in this Agreement is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute.

12.6 Waivers . Except as herein expressly provided, no waiver by a party of any breach of this Agreement or of any warranty or representation hereunder by another party shall be deemed to be a waiver of any other breach by such other party (whether preceding or succeeding and whether or not of the same or similar nature). No failure or delay by a party to exercise any right it may have by reason of the default of another party shall operate as a waiver of default or modification of this Agreement or shall prevent the exercise of any right by the first party while the other party continues to be so in default.

12.7 Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that none of the parties hereto may assign this Agreement without the prior written consent of the others, which consent may be withheld in such other parties’ sole and absolute discretion; provided, however, that after the date on which all adjustments to the Closing Date Consideration payable hereunder in connection with the delivery of the Closing Working Capital Statement pursuant to Section 2.4(f) shall have been paid in full, the Partnership may assign this Agreement to a direct or indirect wholly-owned Subsidiary; but such assignment shall in no way relieve the REIT or the Partnership of any of their respective obligations under this Agreement (it being understood and agreed that each of the REIT and the Partnership shall remain fully and primarily liable for all of their respective obligations under this Agreement notwithstanding any such assignment); and provided further, that WCBC may assign all of its rights to receive payments hereunder to one or more of its direct or indirect affiliates.

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12.8 Amendments . The provisions of this Agreement may not be amended, changed or modified orally, but only by an agreement in writing signed by the party against whom any amendment, change or modification is sought.

12.9 Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

12.10 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

12.11 Governing Law; Consent to Jurisdiction . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE PRINCIPLES THEREOF GOVERNING CONFLICTS OF LAWS), AND ANY ACTION OR PROCEEDING ARISING HEREUNDER SHALL ONLY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR IN A UNITED STATES DISTRICT COURT SITTING IN THE STATE OF NEW YORK. THE PARTIES EACH CONSENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND/OR A UNITED STATES DISTRICT COURT SITTING IN THE STATE OF NEW YORK. THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.

12.12 Notices . All notices and other communications which a party is required or desires to send to the other shall be in writing and shall be sent by messenger, facsimile, reputable overnight courier or registered or certified mail, postage prepaid, return receipt requested. Notices and other communications shall be deemed to have been given on the Business Day of actual receipt. If a notice is sent by facsimile, a copy of the notice shall be sent by one of the other methods specified above. Notices shall be addressed as follows:

To the Transferors:

W. Copley Boston Corporation

c/o Enpro International Inc.

152 W. 57 ^th Street

58 ^th Floor

New York, NY 10019

Attention: Mr. Robert French

Facsimile No. 212-974-0598

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and:

SCG Copley Square LLC

c/o Starwood Capital Group Global, L.L.C.

591 West Putnam Avenue

Greenwich, CT 06830

Attention: Madison Grose, Esq.

Facsimile No. (203) 422-7814

with a copy to:

Morrison & Foerster

425 Market Street

San Francisco, CA 94105-2482

Attention: Thomas F. Kostic, Esq.

Facsimile No. (415) 268-7522

and to:

Rinaldi, Finkelstein & Franklin, LLC

591 West Putnam Avenue

Greenwich, CT 06830

Attention: Ellis Rinaldi, Esq.

Facsimile No. (203) 422-7873

and to:

Davies Ward Phillips & Vineberg LLP

625 Madison Avenue, 12 ^th Floor

New York, NY 10022

Attention: Gerald D. Shepherd, Esq.

Facsimile No. (212) 308-0132

To the Partnership:

c/o LaSalle Hotel Properties

4800 Montgomery Lane, Suite M25

Bethesda, Maryland 20814

Attention: Chief Operating Officer

Facsimile No. (301) 941-1553

with a copy to:

Hagan & Vidovic, L.L.P.

200 East Randolph Drive

Chicago, Illinois 60601

Attention: R. K. Hagan, Esq.

Facsimile No. (312) 228-0982

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or to such other person and/or address as shall be specified by either party in a notice given to the other pursuant to the provisions of this Section 12.12.

12.13 Attorney’s Fees . In the event any party institutes legal proceedings to enforce its rights hereunder, the prevailing party in such litigation shall be paid all reasonable expenses of the litigation by the losing party, including its attorneys’ fees.

12.14 Confidentiality .

(a) Prior to any issuance by the Partnership or the REIT of a press release or other public announcement with respect to this Agreement or the transactions contemplated hereby, the Partnership and the REIT will afford the Current Owners a reasonable opportunity to review and comment upon any such press release or other public announcement and will accommodate comments reasonably made by the Current Owners regarding any references in any such press release to any of the Current Owners or any of their Affiliates or to the financial nature or character of the transactions contemplated by this Agreement or the Redemption Agreement (it being understood and agreed that the comments made by the Current Owners shall not preclude the Partnership or the REIT from making disclosure statements required to be made by applicable securities laws or regulations).

(b) Prior to the Closing, the Transferors shall not, and shall advise their investors whom they inform of the transactions contemplated hereby not to, issue a press release with respect to this Agreement or the transactions contemplated hereby. After the Closing, prior to any issuance by any Transferor of a press release or other public announcement with respect to this Agreement or the transactions contemplated hereby, each Transferor shall provide the Partnership the reasonable opportunity to review and comment upon any such press release or other public announcement and will accommodate comments reasonably made by the Partnership regarding any references in any such press release to the Partnership or any of its Affiliates or to the financial nature or character of the transactions contemplated by this Agreement or the Redemption Agreement.

12.15 Audit . From and after the date of this Agreement through the Closing Date, the Transferors will, at the expense of the Partnership and the REIT, provide the Partnership’s independent accountants with access to the books and records of the Westban Venture and the Company. Promptly upon the request of the Partnership, the Transferors will, at the expense of the Partnership and the REIT, provide the Partnership with unaudited interim financial statements of the Westban Venture for the six-month periods ended June 30, 2005 and June 30, 2004 and provide the Partnership’s independent accountants with a management representation “bring-down” letter with respect to the audited historical financial statements of Westban Venture for the years ended December 31, 2004, December 31, 2003 and December 31, 2002 and a management representation letter with respect to the unaudited financial statements of the Westban Venture for the six-month periods ended June 30, 2005 and June 30, 2004.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.


W. COPLEY BOSTON CORPORATION ,
		a Delaware corporation

By:		/s/ Desmond Hudson
Name:		Desmond Hudson
Title:		Vice President Accounting/Secretary

SCG COPLEY SQUARE LLC ,
		a Delaware limited liability company

By:		SCG Copley Square Business Trust, a Massachusetts business trust, its managing member

By:		/s/ Madison Grose
Name:		Madison Grose
Title:

LASALLE HOTEL OPERATING PARTNERSHIP, L.P .,
		a Delaware limited partnership

By:		LaSalle Hotel Properties, a Maryland real estate investment trust, its general partner

By:		/s/ Michael D. Barnello
Name:		Michael D. Barnello
Title:		Chief Operating Officer

LASALLE HOTEL PROPERTIES ,
		a Maryland real estate investment trust

By:		/s/ Michael D. Barnello
Name:		Michael D. Barnello
Title:		Chief Operating Officer

LASALLE HOTEL LESSEE, INC .
		an Illinois corporation

By:		/s/ Michael D. Barnello
Name:		Michael D. Barnello
Title:		President

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Exhibit 10.2

Form of

Third Amendment to the

Amended and Restated Agreement

of Limited Partnership

LaSalle Hotel Operating Partnership, L.P.

This Amendment is made as of , 2005 by and among LaSalle Hotel Properties, a Maryland real estate investment trust, as the general partner (the “Trust” or the “General Partner”) of LaSalle Hotel Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”), and as attorney-in-fact for the Persons named on Exhibit A to the Amended and Restated Agreement of Limited Partnership of LaSalle Hotel Operating Partnership, L.P., dated as of April 29, 1998, as amended by the First Amendment to the Amended and Restated Agreement of Limited Partnership, dated as of March 6, 2002 and by that Second Amendment to the Amended and Restated Agreement of Limited Partnership, dated as of September 30, 2003 (collectively, as amended, the “Partnership Agreement”), and SCG Copley Square LLC, a Delaware limited liability company (“SCG”) for the purpose of amending the Partnership Agreement. Capitalized terms used herein and not defined shall have the meanings given to them in the Partnership Agreement.

WHEREAS, Section 4.2A. of the Partnership Agreement authorizes the General Partner to cause the Partnership to issue additional Partnership Units in one or more classes or series, with such designations, preferences and relative, participating, optional or other special rights, powers and duties as shall be determined, subject to applicable Delaware law, by the General Partner; and

WHEREAS, pursuant to the authority granted to the General Partner pursuant to Sections 4.2A. and 14.1B. of the Partnership Agreement, the General Partner desires to amend the Partnership Agreement (i) to establish a new class of Partnership Units, the Series C Preferred Units (as hereinafter defined), and to set forth the designations, rights, powers, preferences and duties of such Series C Preferred Units, (ii) to issue the Series C Preferred Units to SCG and admit SCG as an Additional Limited Partner, and (iii) to make certain other changes to the Partnership Agreement.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the General Partner hereby amends the Partnership Agreement as follows:

1. Article 1 of the Partnership Agreement is hereby amended by adding the following definitions:

“Series C Preferred Cash Amount” means $25 multiplied by the Series C Preferred Shares Amount, plus accrued and unpaid distributions.

“Series C Preferred Conversion Factor” means 1.0; provided that, if the General Partner (i) declares or pays a dividend on its outstanding Series C Preferred Shares in Series C Preferred Shares or makes a distribution to all holders of its outstanding Series C Preferred Shares in Series C Preferred Shares, (ii) subdivides its outstanding Series C Preferred Shares or (iii) combines its outstanding Series C Preferred Shares into a smaller number of Series C Preferred Shares, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which shall be the number of Series C Preferred Shares issued and outstanding on the record date for such dividend, distribution, subdivision or combination (assuming for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time) and the denominator of which shall be the actual number of Series C Preferred Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, subdivision or combination; and provided further that if an entity shall cease to be the General Partner (the “Predecessor General Partner”) and another entity shall become the General Partner (the “Successor General Partner”), the Series C Preferred Conversion Factor shall be adjusted by multiplying the Series C Preferred Conversion Factor by a fraction, the numerator of which is $25.00, and the denominator of which is the liquidation preference of one Series C Preferred Share of the Successor General Partner, determined as of that same date. Any adjustment to the Series C Preferred Conversion Factor shall become effective immediately after the effective date of the event retroactive to the record date, if any, for the event giving rise thereto, it being intended that (x) adjustments to the Series C Preferred Conversion Factor are to be made to avoid unintended dilution or anti-dilution as a result of transactions in which Series C Preferred Shares are issued, redeemed or exchanged without a corresponding issuance, redemption or exchange of Partnership Units and (y) if a Specified Redemption Date shall fall between the record date and the effective date of any event of the type described above, that the Series C Preferred Conversion Factor applicable to such redemption shall be adjusted to take into account such event.

“Series C Preferred Shares” means the 7.25% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, $.01 par value per share (Liquidation Preference $25 per share) of the Trust, with the preferences, liquidation and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption of shares as described in the Articles Supplementary.

“Series C Preferred Shares Amount” means a number of Series C Preferred Shares equal to the product of the number of Series C Preferred Units offered for redemption by a Redeeming Partner times the Series C Preferred Conversion Factor, provided that, if the General Partner issues to all holders of Series C Preferred Shares rights, options, warrants or convertible or exchangeable securities entitling such holders to subscribe for or purchase Series C Preferred Shares or any other securities or property (collectively, the “rights”), then the Series C Preferred Shares Amount shall also include such rights that a holder of that number of Series C Preferred Shares would be entitled to receive.

“Series C Preferred Units” means the series of Partnership Units representing

units of Limited Partnership Interest designated as the 7.25% Series C Cumulative Redeemable Preferred Units (Liquidation Preference $25 per unit), with the preferences, liquidation and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption of units as described herein.

2. In accordance with Section 4.2A of the Partnership Agreement, set forth below are the terms and conditions of the Series C Preferred Units.

A. Designation and Number. A series of Partnership Units, designated as the 7.25% Series C Cumulative Redeemable Preferred Units, is hereby established. The maximum number of Series C Preferred Units shall be [ ].

B. Rank. The Series C Preferred Units will, with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Partnership, rank (a) senior to the Class A Units, Class B Units and to all Partnership Interests the terms of which specifically provide that such Partnership Interests shall rank junior to such Series C Preferred Units; (b) on a parity with all Partnership Interests issued by the Partnership, including the 10.25% Series A Cumulative Redeemable Preferred Units and 8.375% Series B Cumulative Redeemable Preferred Units, other than those Partnership Interests referred to in clauses (a) and (c); and (c) junior to all Partnership Interests issued by the Partnership the terms of which specifically provide that such Partnership Interests shall rank senior to the Series C Preferred Units.

C. Distributions .

(i) Pursuant to Section 5.1 of the Partnership Agreement, holders of Series C Preferred Units shall be entitled to receive, when, as and if declared by the Partnership acting through the General Partner, out of Available Cash, cumulative preferential cash distributions at the rate of seven and one-quarter percent (7.25%) per annum of the twenty-five dollars ($25.00) per share liquidation preference of the Series C Preferred Units (equivalent to a fixed annual amount of $1.8125 per unit). Distributions on the Series C Preferred Units shall accumulate on a daily basis and be cumulative from (but excluding) the original date of issuance and be payable quarterly in equal amounts in arrears on the fifteenth day of January, April, July, and October of each year, beginning on October 15, 2005 (each such day being hereinafter called a “Series C Preferred Unit Distribution Payment Date;” provided that if any Series C Preferred Unit Distribution Payment Date is not a Business Day, then the distribution which would otherwise have been payable on such Series C Preferred Unit Distribution Payment Date shall be paid on the next succeeding Business Day with the same force and effect as if paid on such Series C Preferred Unit Distribution Payment Date, and no interest or additional distributions or other sums shall accrue on the amount so payable from such Series C Preferred Unit Distribution Payment Date to such next succeeding Business Day. Any distribution (including the initial distribution) payable on the Series C Preferred Units for any partial distribution period shall be prorated and computed on the basis of a 360-day year consisting of twelve 30-day months. Distributions shall be payable to holders of record as they appear in the records of the Partnership at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Series C Preferred Unit Distribution Payment Date falls or such other date designated by the General Partner for the payment of distributions that is not more than 90 nor less than 10 days prior to such Series C Preferred Unit Distribution Payment Date (each, a “Series C Preferred Unit Distribution Record Date”).

(ii) No distribution on the Series C Preferred Units shall be authorized by the General Partner or paid or set apart for payment by the Partnership at such time as the terms and provisions of any agreement of the Partnership, including any agreement relating to its indebtedness, prohibits such authorization, payment or setting apart for payment or provides that such authorization, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such authorization or payment shall be restricted or prohibited by law.

(iii) Notwithstanding anything to the contrary contained herein, distributions with respect to the Series C Preferred Units shall accumulate whether or not the restrictions referred to in Subsection 2.C.(ii) exist, whether or not the Partnership has earnings, whether or not there is sufficient Available Cash for the payment thereof and whether or not such distributions are authorized. Accumulated but unpaid distributions on the Series C Preferred Units will accumulate as of the Series C Preferred Unit Distribution Payment Date on which they first become payable or on the date of redemption as the case may be. Accumulated and unpaid distributions will not bear interest.

(iv) If any Series C Preferred Units are outstanding, no distributions of cash or other property will be authorized or paid or set apart for payment on any Partnership Interests of the Partnership of any other class or series ranking, as to distributions, on a parity with or junior to the Series C Preferred Units unless full cumulative distributions have been or contemporaneously are authorized and paid or authorized and a sum sufficient for the payment thereof set apart for such payment on the Series C Preferred Units for all past distribution periods and the then current distribution period. When distributions are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series C Preferred Units and all other Partnership Interests ranking on a parity, as to distributions, with the Series C Preferred Units, all distributions authorized, paid or set apart for payment upon the Series C Preferred Units and all other units ranking on a parity, as to distributions, with the Series C Preferred Units shall be authorized and paid pro rata or authorized and set apart for payment pro rata so that the amount of distributions authorized per Series C Preferred Unit and each such other Partnership Interest shall in all cases bear to each other the same ratio that accumulated distributions per Series C Preferred Unit and other Partnership Interest (which shall not include any accumulation in respect of unpaid distributions for prior distribution periods if such Partnership Interests do not have a cumulative distribution) bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any distribution payment or payments on Series C Preferred Units which may be in arrears.

(v) Except as provided in subsection 2.C.(iv), unless full cumulative distributions on the Series C Preferred Units have been or contemporaneously are authorized and paid or authorized and a sum sufficient for the payment thereof is set apart for payment for all past distribution periods and the then current distribution period, no distributions (other than in Partnership Interests ranking junior to the Series C Preferred Units as to distributions and upon liquidation) shall be authorized or paid or set aside for payment nor shall any other distribution be authorized or made upon the Class A Units, Class B Units, or any other Partnership Interests ranking junior to or on a parity with the Series C Preferred Units as to

distributions or upon liquidation, nor shall any Class A Units, Class B Units, or any other Partnership Interests ranking junior to or on a parity with the Series C Preferred Units as to distributions or upon liquidation be redeemed, purchased or otherwise acquired directly or indirectly for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Partnership Interests) by the Partnership (except by conversion into or exchange for other Partnership Interests ranking junior to the Series C Preferred Units as to distributions and upon liquidation, dissolution or winding up of the affairs of the Partnership or by redemption, purchase or acquisition of Partnership Interests under incentive, benefit or unit purchase plans of the Partnership for Employees of the General Partner, the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them, or by redemption of Partnership Units corresponding to any Series C Preferred Shares or shares ranking on parity or junior to the Series C Preferred Shares as to distributions and upon liquidation to be purchased by the General Partner pursuant to Article VII of the Declaration of Trust to preserve the General Partner’s status as a real estate investment trust, provided that such redemption shall be upon the same terms as the corresponding purchase pursuant to Article VII of the Declaration of Trust).

(vi) Holders of Series C Preferred Units shall not be entitled to any distribution, whether payable in cash, property or Partnership Interests, in excess of full cumulative distributions on the Series C Preferred Units as described above. Any distribution payment made on the Series C Preferred Units shall first be credited against the earliest accumulated but unpaid distribution due with respect to such units which remains payable.

D. Allocation of Net Income and Net Losses . Notwithstanding anything contained in the Partnership Agreement to the contrary, so long as any Series C Preferred Units are outstanding, for each fiscal year, prior to any allocations of Net Income under the Partnership Agreement, the holders of Series C Preferred Units shall be allocated an amount of Net Income equal to the excess of: (i) the sum of (A) the aggregate amount of cash (or the fair market value of property) actually distributed to the holders of Series C Preferred Units during such fiscal year and all prior fiscal years other than distributions constituting a return of any prior capital contributions to a holder under paragraphs E and F hereof, plus (B) the amount of accrued but unpaid distributions owed to such holders of Series C Preferred Units as of the end of such fiscal year, over (ii) any prior allocations of Net Income to such holder under this paragraph D. In the event there are insufficient Net Income to allocate the full amount of Net Income required to be allocated to the holders of Series C Preferred Units under this paragraph D, then such Net Income shall be allocated to and among the holders of Series C Preferred Units, pro-rata , in proportion to the amount required to be allocated to them. For purposes of this paragraph D, a distribution shall be deemed to have been made in a fiscal year even if such distribution was actually made in the following fiscal year if the distribution in the following fiscal year was in payment of an accrued and unpaid distribution owed under paragraph C hereof. Any Net Income allocated pursuant to this Paragraph D shall be in lieu of and without duplication by any other allocation of Net Income under the Partnership Agreement. Notwithstanding anything contained in the Partnership Agreement to the contrary, so long as any Series C Preferred Units are outstanding, any Net Losses required to be allocated under Section 6.1(B) of the Partnership Agreement shall be allocated to and among the holders of the Series C Preferred Units and the other Partners in a manner so as to cause the balance of each Partner’s Capital Account to equal the amount that each such Partner would be entitled to be distributed if the Partnership sold all of its assets for their book value (as defined

in Treasury Regulation Section 1.704-1(b)), paid all of its liabilities, distributed the proceeds of such sale to the Partners in liquidation of the Partnership in the relative priorities of distributions of assets to the Partners upon the voluntary or involuntary dissolution, liquidation or winding up of the Partnership contained in paragraph E of this Amendment to the Partnership Agreement.

E. Liquidation Preference .

(i) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Partnership, the holders of the Series C Preferred Units shall be entitled to receive out of the assets of the Partnership legally available for distribution to the Partners pursuant to Section 13.2.A of the Partnership Agreement a liquidation preference in cash of $25.00 per Series C Preferred Unit, plus an amount equal to all accumulated and unpaid distributions to the date of payment, before any distribution of assets is made to holders of Class A Units, Class B Units or any other Partnership Interests that rank junior to the Series C Preferred Units as to liquidation rights.

(ii) If upon any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Partnership, the assets of the Partnership are insufficient to make such full payment to holders of the Series C Preferred Units and the corresponding amounts payable on all other Partnership Interests ranking on a parity with the Series C Preferred Units in the distribution of assets, then the holders of the Series C Preferred Units and other such Partnership Interests shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled.

(iii) Written notice of any such liquidation, dissolution or winding up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series C Preferred Units at the respective address of such holders as the same shall appear on the transfer records of the Partnership.

(iv) After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series C Preferred Units shall have no right or claim to any of the remaining assets of the Partnership.

(v) None of a consolidation or merger of the Partnership with or into another entity, a merger of another entity with or into the Partnership or a sale, lease or conveyance of all or substantially all of the Partnership’s property or business shall be considered a liquidation, dissolution or winding up of the affairs of the Partnership.

F. Redemption by the Partnership .

(i) Except as provided below, the Series C Preferred Units are not redeemable prior to January 1, 2021. At any time during the period from January 1, 2016 to and including December 31, 2016, the Partnership, at its option, upon giving notice as provided below, may redeem the Series C Preferred Units, in whole or in part, for cash, at a redemption price of Twenty-five Dollars ($25.00) per share, plus all accumulated and unpaid

distributions on such Series C Preferred Units to the date of such redemption (the “Redemption Right”). The Partnership may also exercise its Redemption Right at any time and from time to time on or after January 1, 2021 upon giving notice as provided below.

(ii) If fewer than all of the outstanding Series C Preferred Units are to be redeemed pursuant to the Redemption Right, the Series C Preferred Units to be redeemed shall be selected pro rata (as nearly as practicable without creating fractional shares) or by lot or in such other equitable method prescribed by the General Partner.

(iii) Notwithstanding anything to the contrary contained herein, unless full cumulative distributions on all Series C Preferred Units shall have been or contemporaneously are authorized and paid or authorized and a sum sufficient for the payment thereof set apart for payment for all past distribution periods and the then current distribution period, no Series C Preferred Units shall be redeemed unless all outstanding Series C Preferred Units are simultaneously redeemed; provided, however, that the foregoing shall not prevent the purchase or acquisition of Series C Preferred Units pursuant to a purchase or exchange offer made on the same terms to holders of all Series C Preferred Units. In addition, unless full cumulative distributions on all Series C Preferred Units have been or contemporaneously are authorized and paid or authorized and a sum sufficient for the payment thereof set apart for payment for all past distributions periods and the then current distribution period, the Partnership shall not purchase or otherwise acquire directly or indirectly for any consideration, nor shall any monies be paid to or be made available for a sinking fund for the redemption of, any Series C Preferred Units (except by conversion into or exchange for Partnership Interests ranking junior to the Series C Preferred Units as to distributions and upon liquidation; provided, however, that the foregoing shall not prevent any purchase or acquisition of Series C Preferred Units pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series C Preferred Units.)

(iv) Immediately prior to any redemption of Series C Preferred Units, the Partnership shall pay, in cash, any accumulated and unpaid distributions through the redemption date, unless a redemption date falls after a Series C Preferred Unit Distribution Record Date and prior to the corresponding Series C Preferred Unit Distribution Payment Date, in which case each holder of Series C Preferred Units at the close of business on such Series C Preferred Unit Distribution Record Date shall be entitled to the distribution payable on such units on the corresponding Series C Preferred Unit Distribution Payment Date (including any accrued and unpaid distributions for prior periods) notwithstanding the redemption of such units before such Series C Preferred Unit Distribution Payment Date. Except as provided above, the Partnership will make no payment or allowance for unpaid distributions, whether or not in arrears, on Series C Preferred Units for which a notice of redemption has been given.

(v) The following provisions set forth the procedures for redemption:

(a) Notice of redemption will be mailed by the Partnership, postage prepaid, no less than 30 nor more than 60 days prior to the redemption date (and in any event no later than March 31, 2016, in the case of a redemption to occur between January 1, 2016 and December 31, 2016) addressed to the respective holders of record of the Series C Preferred Units to be redeemed at their respective addresses as they appear on the transfer

records of the Partnership. No failure to give such notice or any defect thereto or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series C Preferred Units except as to the holder to whom notice was defective or not given.

(b) In addition to any information required by law, such notice shall state: (A) the redemption date; (B) the redemption price; (C) the number of Series C Preferred Units to be redeemed; (D) the place or places where the Series C Preferred Units are to be surrendered for payment of the redemption price; and (E) that distributions on the Series C Preferred Units to be redeemed will cease to accumulate on such redemption date. If less than all of the Series C Preferred Units held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of Series C Preferred Units held by such holder to be redeemed.

(c) On or after the redemption date, each holder of Series C Preferred Units to be redeemed shall present and surrender the certificates (if any or, if none, an assignment and such other documentation reasonably acceptable to the General Partner) representing his Series C Preferred Units to the Partnership at the place designated in the notice of redemption and thereupon the redemption price of such units (including all accumulated and unpaid distributions up to the redemption date) shall be paid to or on the order of the person whose name appears on such assignment or certificate representing Series C Preferred Units as the owner thereof and each surrendered certificate, if any, shall be canceled. If fewer than all the units represented by any such certificate representing Series C Preferred Units are to be redeemed, a new certificate, as applicable, shall be issued representing the unredeemed shares.

(d) From and after the redemption date (unless the Partnership defaults in payment of the redemption price), all distributions on the Series C Preferred Units designated for redemption in such notice shall cease to accumulate and all rights of the holders thereof, except the right to receive the redemption price thereof (including all accumulated and unpaid distributions up to the redemption date), shall cease and terminate and such units shall not thereafter be transferred (except with the consent of the Partnership) on the Partnership’s transfer records, and such units shall not be deemed to be outstanding for any purpose whatsoever. At its election, the Partnership, prior to a redemption date, may irrevocably deposit the redemption price (including accumulated and unpaid distributions to the redemption date) of the Series C Preferred Units so called for redemption in trust for the holders thereof with a bank or trust company, in which case the redemption notice to holders of the Series C Preferred Units to be redeemed shall (A) state the date of such deposit, (B) specify the office of such bank or trust company as the place of payment of the redemption price and (C) require such holders to surrender the certificates, if any, representing such units at such place on or about the date fixed in such redemption notice (which may not be later than the redemption date) against payment of the redemption price (including all accumulated and unpaid distributions to the redemption date). Any monies so deposited which remain unclaimed by the holders of the Series C Preferred Units at the end of two years after the redemption date shall be returned by such bank or trust company to the Partnership.

G. Voting Rights .

(i) Holders of the Series C Preferred Units will not have any voting rights or right to consent to or approve of any matter requiring the vote, consent or approval of the Limited Partners, Outside Limited Partners or Partners, except as set forth below or as otherwise from time to time required by law. In any matter in which the holders of Series C Preferred Units are entitled to vote, each such holder shall have the right to one vote for each Series C Preferred Unit held by such holder. If the holders of the Series C Preferred Units and the holders of another series of preferred units are entitled to vote together as a single class on any matter, the holders of the Series C Preferred Units and the holders of such other preferred units shall each have one vote for each $25.00 of liquidation preference.

(ii) So long as any Series C Preferred Units remain outstanding, the Partnership shall not, without the affirmative vote of the holders of at least two-thirds of the Series C Preferred Units outstanding at the time, given in person or by proxy, either in writing or at a meeting (such series voting separately as a class), (i) authorize or create, or increase the authorized or issued amount of, any Partnership Interest ranking senior to the Series C Preferred Units with respect to payment of distributions or the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding up of the Partnership, or reclassify any Partnership Interest of the Partnership into any such Partnership Interest, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such Partnership Interest; or (ii) amend, alter or repeal the provisions of the Partnership Agreement (including this Amendment), whether by merger or consolidation (in either case, an “Event”) or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series C Preferred Units or the holders thereof; provided, however, that with respect to the occurrence of any Event set forth in (ii) above, so long as Series C Preferred Units remain outstanding with the terms thereof materially unchanged, taking into account that upon the occurrence of an Event, the Partnership may not be the surviving entity and such surviving entity may thereafter be the issuer of the Series C Preferred Units, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers of the holders of the Series C Preferred Units; and provided further that (x) any increase in the amount of the authorized Preferred Units or the creation or issuance of any other Partnership Interests, or (y) any increase in the amount of authorized Series C Preferred Units or any other Partnership Interests, in the case of each of (x) or (y) above ranking on a parity with or junior to the Series C Preferred Units with respect to payment of distributions and the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding up of the Partnership, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(iii) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series C Preferred Units shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

H. Redemption Right by Limited Partner .

(i) Subject to the limitations below, at any time on or after the date of the issuance of the Series C Preferred Units to SCG, the Limited Partner holding such Series C

Preferred Units (if other than the General Partner or any Subsidiary of the General Partner) shall have the right (the “Limited Partner Redemption Right”) to require the Partnership to redeem such Series C Preferred Units, with such redemption to occur on the Specified Redemption Date and at a redemption price equal to and in the form of the Series C Preferred Cash Amount to be paid by the Partnership. Any such Limited Partner Redemption Right shall be exercised pursuant to a Notice of Redemption delivered to the Partnership (with a copy to the General Partner) by the Limited Partner who is exercising the Limited Partner Redemption Right (the “Redeeming Partner”). A Limited Partner may exercise the Limited Partner Redemption Right from time to time, without limitation as to frequency, with respect to part or all of the Series C Preferred Units that it owns, as selected by the Limited Partner, provided that a Limited Partner may not exercise the Limited Partner Redemption Right for less than one thousand (1,000) Series C Preferred Units unless such Redeeming Partner then holds less than one thousand (1,000) Series C Preferred Units, in which event the Redeeming Partner must exercise the Limited Partner Redemption Right for all of the Series C Preferred Units held by such Redeeming Partner.

(ii) The Redeeming Partner shall have no right with respect to any Series C Preferred Units so redeemed to receive any distributions paid after the Specified Redemption Date with respect to such Series C Preferred Units. In no event may a Redeeming Partner receive a distribution of cash with respect to a Series C Preferred Unit if such Limited Partner is entitled to receive a cash dividend as the holder of record of a Series C Preferred Share for which all or part of such Series C Preferred Unit has been or will be redeemed.

(iii) The Assignee of any Limited Partner may exercise the rights of such Limited Partner pursuant to this Section 2.H., and such Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Limited Partner’s Assignee. In connection with any exercise of such rights by such Assignee on behalf of such Limited Partner, the Series C Preferred Cash Amount shall be paid by the Partnership directly to such Assignee and not to such Limited Partner.

(iv) If the General Partner provides notice to the Limited Partners pursuant to Section 8.5.C of the Partnership Agreement, then the Specified Redemption Date is the date on which the Partnership and the General Partner receive notice of exercise of the Redemption Right.

(v) If a Limited Partner has delivered a Notice of Redemption, the General Partner may, in its sole and absolute discretion (subject to the limitations on ownership and transfer of Shares set forth in the Declaration of Trust), elect to assume directly and satisfy a Limited Partner Redemption Right by paying to the Redeeming Partner either the Series C Preferred Cash Amount or the Series C Preferred Shares Amount, as the General Partner determines in its sole and absolute discretion, on the Specified Redemption Date, whereupon the General Partner shall acquire the Series C Preferred Units offered for redemption by the Redeeming Partner and shall be treated for all purposes of this Agreement as the owner of such Series C Preferred Units. Unless the General Partner, in its sole and absolute discretion, shall exercise its right to assume directly and satisfy the Limited Partner Redemption Right, the General Partner shall not have any obligation to the Redeeming Partner or to the Partnership with respect to the Redeeming Partner’s exercise of the Limited Partner Redemption Right. If the General Partner shall exercise its right to satisfy the Limited Partner Redemption Right in

the manner described in the first sentence of this Section 2.H.(v) and shall fully perform its obligations in connection therewith, the Partnership shall have no right or obligation to pay any amount to the Redeeming Partner with respect to such Redeeming Partner’s exercise of the Limited Partner Redemption Right, and each of the Redeeming Partner, the Partnership and the General Partner shall, for federal income tax purposes, treat the transaction between the General Partner and the Redeeming Partner as a sale of the Redeeming Partner’s Series C Preferred Units to the General Partner. Nothing contained in this Section 2.H.(v) shall imply any right of the General Partner to require any Limited Partner to exercise the Limited Partner Redemption Right afforded to such Limited Partner pursuant to Section 2.H.(i).

(vi) If the General Partner determines to satisfy a Limited Partner Redemption Right by paying the Redeeming Partner in the form of Series C Preferred Shares, the total number of Series C Preferred Shares to be paid to the Redeeming Partner in exchange for the Series C Preferred Units to be redeemed by the Redeeming Partner shall be the applicable Series C Preferred Shares Amount. If this amount is not a whole number of Series C Preferred Shares, the Redeeming Partner shall be paid (i) that number of Series C Preferred Shares which equals the nearest whole number less than such amount plus (ii) an amount of cash to represent the fair value of the remaining fractional Series C Preferred Share which would otherwise be payable to the Redeeming Partner, based upon $25.00 per Series C Preferred Share.

(vii) Each Redeeming Partner agrees to execute such documents as the General Partner may reasonably require in connection with the issuance of Series C Preferred Shares upon exercise of the Limited Partner Redemption Right.

(viii) Notwithstanding the other provisions of this Section 2.H., a Limited Partner or Assignee shall not be entitled to exercise the Limited Partner Redemption Right pursuant to this Section 2.H. if (but only as long as) the delivery of Series C Preferred Shares to such Limited Partner or Assignee on the Specified Redemption Date (i) would be prohibited under the Declaration of Trust or pursuant to the terms of a waiver of ownership limit under the Declaration of Trust, or (ii) would be prohibited under applicable federal or state securities laws or regulations (in each case regardless of whether the General Partner would in fact assume and satisfy the Limited Partner Redemption Right).

(ix) Each Limited Partner covenants and agrees with the General Partner that all Partnership Units delivered for redemption shall be delivered to the Partnership or the General Partner, as the case may be, free and clear of all liens, and, notwithstanding anything contained herein to the contrary, neither the General Partner nor the Partnership shall be under any obligation to acquire Partnership Units which are or may be subject to any liens. Each Limited Partner further agrees that, if any state or local property transfer tax is payable as a result of the transfer of its Partnership Units to the Partnership or the General Partner, such Limited Partner shall assume and pay such transfer tax.

I. No Other Redemption Rights . Holders of Series C Preferred Units shall not be entitled to any rights provided to Limited Partners pursuant to Section 8.6 of the Partnership Agreement.

3. The holders of the Series C Preferred Units shall not have any rights to convert such units into units of any other class or series of units, or into any other securities of, or interests in, the Partnership.

4. No sinking fund shall be established for the retirement or redemption of Series C Preferred Units.

5. In accordance with Section 12.2 of the Partnership Agreement, SCG is hereby admitted as an Additional Partner. Exhibit A to the Partnership Agreement is hereby amended to reflect the issuance of the Series C Preferred Units provided for herein.

6. Except as modified herein, all terms and conditions of the Partnership Agreement shall remain in full force and effect, which terms and conditions the General Partner hereby ratifies and confirms.

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first set forth above.


LASALLE HOTEL OPERATING PARTNERSHIP, L.P.

By:		LaSalle Hotel Properties, a Maryland real estate investment trust, its General Partner, and attorney-in-fact of each Limited Partner

By:
Name:		Hans S. Wager
Title:		Chief Financial Officer

ADDITIONAL LIMITED PARTNER

SCG COPLEY SQUARE LLC , a Delaware limited liability company

By:
Name:
Title:

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Trustees

LaSalle Hotel Properties:

We consent to the incorporation by reference in the Registration Statements (Form S-3 No. 333-104054, Form S-3 No. 333-125057, Form S-3 No. 333-51476, Form S-3 No. 333-44872, Form S-3 No. 333-77371, Form S-3 No. 333-76373, Form S-8 No. 333-125058, Form S-8 No. 333-104056, Form S-8 No. 333-86911 and Form S-8 No. 333-72265) of LaSalle Hotel Properties of our report dated April 25, 2005, with respect to the balance sheets of Westban Hotel Venture as of December 31, 2004 and 2003, and the related statements of operations, partners’ capital and cash flows for each of the years in the three-year period ended December 31, 2004, which report appears in the Form 8-K of LaSalle Hotel Properties dated August 12, 2005.

/s/ KPMG LLP

Chicago, Illinois

August 16, 2005

Exhibit 99.1

LASALLE HOTEL PROPERTIES ANNOUNCES CONTRACT TO ACQUIRE WESTIN COPLEY PLACE

803-Room Full-Service Hotel Located In Downtown Boston

BETHESDA, MD, August 16, 2005 — LaSalle Hotel Properties (NYSE: LHO) today announced that it signed an agreement to acquire the Westin Copley Place in Boston, Massachusetts for approximately $318 million before expenses. The acquisition is expected to close in the third quarter. The Company currently intends to assume a $210 million first mortgage on the property, issue to one of the current owners approximately $59 million in preferred units that will have a coupon rate of 7.25% and fund the balance with proceeds from the Company’s senior unsecured credit facility. The contract to acquire the Westin Copley Place is subject to certain restructuring events by the current owners and customary closing requirements and conditions.

The AAA Four Diamond urban full-service hotel has 803 well-appointed guestrooms that feature sweeping views of the city and Westin’s signature Heavenly Bed and Heavenly Bath. The Westin Copley Place also contains over 47,000 square feet of meeting and function space. The hotel is located in downtown Boston’s Back Bay neighborhood within two blocks of the Hynes Convention Center and less than five miles from Boston’s Logan International Airport.

LaSalle Hotel Properties is a leading multi-tenant, multi-operator real estate investment trust, which owns interests in 22 upscale and luxury full-service hotels, totaling approximately 6,800 guest rooms in 14 markets in 10 states and the District of Columbia. The Company focuses on investing in upscale and luxury full-service hotels located in urban, resort and convention markets. LaSalle Hotel Properties seeks to grow through strategic relationships with premier internationally recognized hotel operating companies including, Westin Hotels and Resorts, Sheraton Hotels & Resorts Worldwide, Inc., Crestline Hotels and Resorts, Inc., Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels Corporation, Hilton Hotels Corporation, Benchmark Hospitality, White Lodging Services Corporation, Sandcastle Resorts & Hotels, Davidson Hotel Company, and the Kimpton Hotel & Restaurant Group, LLC.

This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. Forward-looking statements in this press release include, among others, statements about the Company’s plans and ability to assume debt, issue securities, obtain financing and close certain property acquisitions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, (i) the Company’s dependence on third-party managers of its hotels, including its inability to implement strategic business decisions directly, (ii) risks associated with the hotel industry, including competition, increases in wages, energy costs and other operating costs, actual or threatened terrorist attacks and downturns in general and local economic conditions, (iii) the availability and terms of financing and capital and the general volatility of securities markets, (iv) risks associated with the real estate industry, including environmental contamination and costs of complying with the Americans with Disabilities Act and similar laws, (v) interest rate increases, (vi) the possible failure of the Company to qualify as

a REIT and the risk of changes in laws affecting REITs, (vii) the possibility of uninsured losses, and (viii) the risk factors discussed in the Company’s Annual Report on Form 10-K. Accordingly, there is no assurance that the Company’s expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

# # #

Additional Contacts:

Hans Weger, Chief Financial Officer, LaSalle Hotel Properties – 301/941-1500

For additional information or to receive press releases via e-mail, please visit our website at

www.lasallehotels.com

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