Maryland		36-4219376
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

4800 Montgomery Lane, Suite M25, Bethesda, MD		20814
(Address of principal executive offices)		(Zip Code)

Class		Outstanding at October 18, 2002
Common Shares of Beneficial Interest ($0.01 par value)		18,702,429
10¼% Series A Cumulative Redeemable Preferred Shares ($0.01 par value)		3,991,900

				Page
PART I		Financial Information
Item 1.		Financial Statements		3
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		33
Item 4.		Controls and Procedures		34
PART II		Other Information
Item 1.		Legal Proceedings		35
Item 2.		Changes in Securities and Use of Proceeds		35
Item 3.		Defaults Upon Senior Securities		35
Item 4.		Submission of Matters to a Vote of Security Holders		35
Item 5.		Other Information		35
Item 6.		Exhibits and Reports on Form 8-K		35

		September 30, 2002				December 31, 2001
		(Unaudited)
ASSETS:
Investment in hotel properties, net (Note 1)		$	471,871			$	550,015
Investment in joint venture (Note 5)			4,652				5,320
Cash and cash equivalents			3,691				2,718
Restricted cash reserves (Note 13)			13,521				6,469
Rent receivable			3,875				3,640
Notes receivable			1,960				2,616
Hotel receivables (net of allowance for doubtful accounts of $203 and $125, respectively)			8,278				5,155
Deferred financing costs, net			2,774				4,445
Prepaid expenses and other assets			14,361				7,878
Assets held for sale, net (Note 7)			76,573				—
Total assets		$	601,556			$	588,256
LIABILITIES AND SHAREHOLDERS' EQUITY:
Borrowings under credit facilities (Note 6)		$	83,822			$	175,400
Bonds payable (Note 6)			42,500				42,500
Mortgage loans (Note 6)			58,929				118,562
Accounts payable and accrued expenses			17,123				13,072
Advance deposits			2,082				1,501
Accrued interest			422				1,038
Distributions payable			2,557				191
Liabilities of assets held for sale (Note 7)			59,604				—
Total liabilities			267,039				352,264
Minority interest in operating partnership			5,531				5,589
Minority interest in other partnerships			10				10
Commitments and contingencies			—				—
SHAREHOLDERS' EQUITY:
Preferred shares, $0.01 par value, 20,000,000 shares authorized, 3,991,900 shares issued and outstanding at September 30, 2002 and no shares issued and outstanding at December 31, 2001, respectively (Note 9)			40				—
Common shares of beneficial interest, $0.01 par value, 100,000,000 shares authorized, 18,702,429 and 18,673,706 shares issued and outstanding at September 30, 2002 and December 31, 2001, respectively (Note 9)			187				187
Additional paid-in capital, including $25,329 and $21,461 of offering costs at September 30, 2002 and December 31, 2001, respectively			374,300				278,060
Deferred compensation			(2,025	)			(2,601	)
Accumulated other comprehensive loss (Note 14)			(1,192	)			(883	)
Distributions in excess of retained earnings			(42,334	)			(44,370	)
Total shareholders' equity			328,976				230,393
Total liabilities and shareholders' equity		$	601,556			$	588,256

		For the nine months ended September 30,
		2002				2001
Revenues:
Hotel operating revenues:
Room revenue		$	66,285			$	55,565
Food and beverage revenue			34,662				25,505
Other operating department revenue			10,160				9,420
Participating lease revenue			17,511				26,568
Interest income			228				533
Equity in income of joint venture (Note 5)			246				549
Other income			17				199
Total revenues			129,109				118,339
Expenses:
Hotel operating expenses:
Room			16,509				12,952
Food and beverage			25,093				19,051
Other direct			5,323				5,304
Other indirect (Note 11)			31,646				26,104
Depreciation and other amortization			21,966				19,384
Real estate and personal property taxes and insurance			6,067				6,016
Ground rent (Note 13)			2,484				2,910
General and administrative			4,587				4,529
Interest			8,006				12,462
Amortization of deferred financing costs			1,651				1,333
Writedown of property held for sale (Note 8)			—				1,872
Lease termination, advisory transaction and subsidiary purchase expenses			—				1,929
Other expenses			7				3
Total expenses			123,339				113,849
Income before minority interest, income tax benefit, discontinued operations and extraordinary loss			5,770				4,490
Minority interest in operating partnership			(151	)			(128	)
Income before income tax benefit, discontinued operations and extraordinary loss			5,619				4,362
Income tax benefit (Note 4)			769				143
Income before discontinued operations and extraordinary loss			6,388				4,505
Discontinued operations (Note 7):
Income from operations of property held for sale			1,763				1,702
Minority interest			(44	)			(46	)
Income tax benefit (Note 4)			156				—
Net income from discontinued operations			1,875				1,656
Income before extraordinary loss			8,263				6,161
Extraordinary loss:
Extraordinary loss			—				(973	)
Minority interest			—				28
Net extraordinary loss			—				(945	)
Net income			8,263				5,216
Distributions to preferred shareholders			(5,853	)			—
Net income applicable to common shareholders		$	2,410			$	5,216

		For the nine months ended September 30,
		2002			2001
Earnings per Common Share—Basic:
Income applicable to common shareholders before discontinued operations and extraordinary loss		$	0.03		$	0.24
Discontinued operations			0.10			0.09
Extraordinary loss			—			(0.05	)
Net income applicable to common shareholders		$	0.13		$	0.28
Earnings per Common Share—Diluted:
Income applicable to common shareholders before discontinued operations and extraordinary loss		$	0.03		$	0.24
Discontinued operations			0.10			0.09
Extraordinary loss			—			(0.05	)
Net income applicable to common shareholders		$	0.13		$