Press Release: Crescent Real Estate Equities Company
November 9, 2001
FORT WORTH, TX -- Crescent Real Estate Equities Company (NYSE:CEI) announced third quarter funds from operations
(``FFO'') of $63.0 million, or $.51 per share and equivalent unit (diluted).
``Throughout the course of the year, we've been updating you on the effects of the weakening U.S. economy on our
business,'' commented John C. Goff, Chief Executive Officer. ``Recently, on October 15, 2001, we lowered our estimated
FFO for the third quarter to a range of $.50 to $.52 per share and our estimated FFO for the full year 2001 to
a range of $2.25 to $2.40 per share. Our office portfolio, which represents nearly 70% of our total asset base,
continues to be in-line with our original expectations. However, the economic slowdown and the lingering effects
of the September 11th tragedy have had an immediate impact on our resort/hotel operations and lot sales at our
Desert Mountain residential development property. We do not expect full recovery of these segments in the near
term. Having said that, we are confident about the future of our Company. We believe that our current share price
does not reflect the net asset value underlying our businesses, and as such, we recently repurchased 4 million
of our common shares.''
FINANCIAL REVIEW
FFO for the three months ended September 30, 2001 was $63.0 million, or $.51 per share and equivalent unit (diluted),
compared to $75.0 million, or $.60 per share and equivalent unit (diluted), for the same period in 2000.
FFO for the nine months ended September 30, 2001 was $216.6 million, or $1.75 per share and equivalent unit (diluted),
compared to $232.2 million, or $1.78 per share and equivalent unit (diluted), for the same period in 2000.
Net income available to common shareholders for the three months ended September 30, 2001 was $19.1 million, or
$.17 per share (diluted), compared to $78.2 million, or $.70 per share (diluted), for the same period in 2000.
Excluding the gain on asset sales, net income available to common shareholders for the three months ended September
30, 2001 was $18.0 million, or $.16 per share (diluted), compared to $14.5 million, or $.13 per share (diluted),
for the same period in 2000.
Net income available to common shareholders for the nine months ended September 30, 2001 was $58.5 million, or
$.53 per share (diluted), compared to $155.8 million, or $1.34 per share (diluted), for the same period in 2000.
Excluding the gain on asset sales, net income available to common shareholders for the nine months ended September
30, 2001 was $57.8 million, or $.53 per share (diluted), compared to $63.4 million, or $.54 per share (diluted),
for the same period in 2000.
BUSINESS SECTOR REVIEW
Office Sector (66% of Asset Value as of September 30, 2001)
Denny Alberts, President and Chief Operating Officer stated, ``We remain encouraged by our office sector performance
despite current economic conditions. Although our same-store NOI growth of 1.6% was down in the third quarter primarily
due to timing of expenses, rental income growth was nearly 7%. We continue to expect our full year 2001 same-store
NOI growth to be in the 4% to 5% range. Approximately 3.5 million square feet expire in 2002, of which almost 25%
has been re-signed. Of the total 2002 expiring square feet, nearly 40% is expiring in Houston where we expect rents
to continue to show strength.''
Office property same-store net operating income (``NOI'') on a GAAP and cash basis increased 1.6% and 3.0%, respectively,
for the three months ended September 30, 2001 over the same period in 2000 for the 25.5 million square feet of
office property space owned during both periods. Average occupancy for these properties for the three months ended
September 30, 2001 was 92.2% compared to 92.6% for the same period in 2000. As of September 30, 2001, the overall
office portfolio was approximately 93.0% leased based on executed leases. During both the three months ended September
30, 2001 and 2000, Crescent received $3.7 million of lease termination fees. Crescent's policy is to exclude lease
termination fees from its same-store NOI growth calculation.
Office property same-store NOI on a GAAP and cash basis increased 5.5% and 8.2%, respectively, for the nine months
ended September 30, 2001 over the same period in 2000 for the 25.5 million square feet of office property space
owned during both periods. Average occupancy for these properties for the nine months ended September 30, 2001
was 92.6% compared to 91.6% for the same period in 2000. During the nine months ended September 30, 2001 and 2000,
Crescent received $7.7 million and $5.9 million, respectively, of lease termination fees.
The Company leased 1.2 million net rentable square feet during the three months ended September 30, 2001, of which
656,000 square feet was renewed or re-leased. The weighted average FFO net effective rental rate increased 42%
over the expiring rates for the renewal or re-leased leases, all of which have commenced or will commence within
the next twelve months. Tenant improvements related to these leases were $1.42 per square foot per year and leasing
costs were $.92 per square foot per year.
The Company leased 2.9 million net rentable square feet during the nine months ended September 30, 2001, of which
1.5 million square feet was renewed or re-leased. The weighted average FFO net effective rental rate increased
36% over the expiring rates for the renewal or re-leased leases, all of which have commenced or will commence within
the next twelve months. Tenant improvements related to these leases were $1.44 per square foot per year and leasing
costs were $.83 per square foot per year.
On September 18, 2001, Crescent closed on the sale of Washington Harbour, a 536,000 square foot Class A office
property located in the Georgetown submarket of Washington, D.C. The sale generated net proceeds to Crescent of
approximately $153 million. Washington Harbour was the Company's only building in Washington, D.C.
Resort and Residential Development Sector (17% of Asset Value as of September 30, 2001)
Destination Resort Properties
Destination resort property same-store rental income decreased 12% for the three months ended September 30, 2001
over the same period in 2000 for the five properties owned during both periods. The average daily rate increased
2% and revenue per available room decreased 11% for the three months ended September 30, 2001 compared to the same
period in 2000. Weighted average occupancy was 72% for the three months ended September 30, 2001 compared to 84%
for the three months ended September 30, 2000.
Destination resort property same-store rental income decreased 3% for the nine months ended September 30, 2001
over the same period in 2000 for the five properties owned during both periods. The average daily rate increased
7% and revenue per available room decreased 4% for the nine months ended September 30, 2001 compared to the same
period in 2000. Weighted average occupancy was 72% for the nine months ended September 30, 2001 compared to 81%
for the nine months ended September 30, 2000.
Upscale Residential Development Properties
``As previously mentioned, Desert Mountain continues to underperform in today's economic environment,'' commented
Alberts. ``It did not meet original third quarter expectations, nor do we expect it to meet original expectations
for the fourth quarter. Therefore, in our guidance revision announced on October 15, 2001, we reduced our expectations
for Desert Mountain from an original 2001 FFO contribution of $41 million to a revised FFO contribution of between
$5 million and $15 million. The Woodlands and the Crescent Resort Development projects continue to perform in-line
with our original 2001 plan.''
Investment Sector (17% of Asset Value as of September 30, 2001)
Upscale Business-Class Hotel Properties
Upscale business-class hotel property same-store rental income decreased 14% for the three months ended September
30, 2001 over the same period in 2000 for the four properties owned during both periods. The average daily rate
decreased 3% and revenue per available room decreased 6% for the three months ended September 30, 2001 compared
to the same period in 2000. Weighted average occupancy was 72% for the three months ended September 30, 2001 compared
to 75% for the three months ended September 30, 2000.
Upscale business-class hotel property same-store rental income decreased 3% for the nine months ended September
30, 2001 over the same period in 2000 for the four properties owned during both periods. The average daily rate
increased 3% and revenue per available room decreased 3% for the nine months ended September 30, 2001 compared
to the same period in 2000. Weighted average occupancy was 72% for the nine months ended September 30, 2001 compared
to 76% for the nine months ended September 30, 2000.
Temperature-Controlled Logistics Investment
AmeriCold Logistics' same-store EBITDAR (earnings before interest, taxes, depreciation and amortization, and rent)
declined 21% and 15% for the three months and nine months ended September 30, 2001 compared to the same periods
in 2000. As a result, AmeriCold elected to defer $8.8 million (of the $36.8 million contracted rent) for the third
quarter, of which Crescent's share was $3.5 million. For the nine months ended September 30, 2001, AmeriCold's
rent deferral totaled $12.7 million (of the $102.5 million contracted rent), of which Crescent's share was $5.1
million. Included in Crescent's results for the three and nine months ended September 30, 2001 are charges of $3.5
million and $5.1 million, respectively, for valuation allowances related to Crescent's share of the deferred rent
receivable.
DIVIDEND POLICY
On October 15, 2001, the Company reduced its indicated annual dividend on common shares from $2.20 per share to
$1.50 per share.
``After considering our revised cash flow expectations in this uncertain economic environment and measuring our
payout ratios to our peer group, we came to the conclusion that the Company should reduce its common share dividend
to an annual $1.50 per share,'' stated Goff. ``We believe this dividend policy enhances the Company's financial
flexibility and growth rate going forward.''
BALANCE SHEET REVIEW
On October 15, 2001, the Company's Board of Trust Managers authorized an increase in the size of the Company's
original common share repurchase program, enacted in late 1999, from $500 million to $800 million.
From inception of the original program through December 31, 2000, the Company had repurchased approximately 14.5
million shares, nearly 12% of the Company's outstanding common shares as of December 31, 1999. The average price
per share was $19.43 for a total purchase price of approximately $280 million.
From January 1, 2001 through October 16, 2001, the Company had not repurchased common shares. Since October 17,
2001, the Company has repurchased 4 million shares. The average price per share was $18.03 for a total purchase
price of approximately $72 million. Repurchases are made in the open market at prevailing prices or in privately
negotiated transactions.
The Company expects the $300 million increase in the share repurchase program to be funded through financing arrangements
which, in some cases, could be secured by the repurchased shares, through equity offerings including preferred
and/or convertible securities, and through asset sales as management considers appropriate. Any purchases by the
Company will be made entirely at the discretion of management, and there can be no assurance that the Company will
purchase any amount of additional shares, or that it will purchase the maximum amount described. The Company may
also consider initiating repurchase offers.
2001 OUTLOOK
FFO Per Share
Crescent projects 2001 FFO to range between $2.25 and $2.40 per share.
2002 OUTLOOK
FFO Per Share
Crescent projects 2002 FFO to range between $2.15 and $2.30 per share, which assumes no further deterioration in
the current economic environment and no change in the Company's existing asset and capital base. For office property
same-store NOI growth, Crescent projects a range of 2% to 4% for 2002 over 2001, based on an average occupancy
range of 91% to 93%.
SUPPLEMENTAL INVESTMENT INFORMATION
For additional information related to Crescent's properties, please refer to the attached ``Supplement to Press
Release''.
CONFERENCE CALL, WEBCAST AND PRESENTATION
The Company also hosted a conference call and audio webcast, both open to the general public, at 10:00 A.M. Central
Time on Thursday, November 8, 2001, to discuss the third quarter results and provide a Company update. To participate
in the conference call, please dial (800) 818-4442 domestically or (706) 679-3110 internationally, or you may access
the audio webcast on the Company's website (www.cei-crescent.com) in
the Investor Relations section. A replay of the conference call will be available through November 14, 2001, by
dialing (800) 642-1687 domestically or (706) 645-9291 internationally with a passcode of 1917648. The webcast and
presentation will be available on Crescent's website for 30 days.
FORWARD-LOOKING STATEMENTS
This press release contains 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. These statements are generally
characterized by terms such as ``believe'', ``expect'' and ``may''.
Although the Company believes that the expectations reflected in such forward-looking statements are based upon
reasonable assumptions, the Company's actual results could differ materially from those described in the forward-looking
statements.
The following factors might cause such a difference:
Given these uncertainties, readers are cautioned not to place undue reliance on such statements. The Company
is not obligated to update these forward-looking statements to reflect any future events or circumstances.
ABOUT THE COMPANY
Crescent Real Estate Equities Company (NYSE:CEI) is one of the largest publicly held real estate investment trusts
in the nation and, through its subsidiaries, owns and manages some of the country's most desirable properties.
Its portfolio consists primarily of 75 office buildings totaling over 28 million square feet located in six states
and 26 sub-markets primarily in the southwestern U.S., as well as world-renowned luxury resorts and spas and upscale
residential developments. Crescent strives to expand the dimensions of business by providing exceptional customer
service and high-quality assets through strategic real estate investments.
CRESCENT REAL ESTATE EQUITIES COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
September 30, December 31,
2001 2000
------------- -------------
(unaudited) (audited)
ASSETS:
Investments in real estate:
Land $ 271,698 $ 310,301
Land held for investment or
development 108,274 116,480
Building and improvements 2,968,107 3,201,332
Furniture, fixtures and equipment 71,387 62,802
Less - accumulated depreciation (622,776) (564,805)
------------- -------------
Net investment in real estate $ 2,796,690 $ 3,126,110
Cash and cash equivalents $ 33,163 $ 38,966
Restricted cash and cash equivalents 92,732 94,568
Accounts receivable, net 67,757 42,200
Deferred rent receivable 78,088 82,775
Investments in real estate mortgages
and equity of unconsolidated
companies 815,013 845,317
Notes receivable, net 156,193 141,407
Other assets, net 100,269 160,426
------------- -------------
Total assets $ 4,139,905 $ 4,531,769
============= =============
LIABILITIES:
Borrowings under UBS Facility $ -- $ 553,452
Borrowings under Fleet Facility 155,000 --
Notes payable 1,928,930 1,718,443
Accounts payable, accrued expenses
and other liabilities 144,174 191,042
------------- -------------
Total liabilities $ 2,228,104 $ 2,462,937
------------- -------------
MINORITY INTERESTS:
Operating partnership, 6,602,299 and
6,995,823 units, respectively $ 84,110 $ 100,586
Investment joint ventures 232,779 236,919
------------- -------------
Total minority interests $ 316,889 $ 337,505
------------- -------------
SHAREHOLDERS' EQUITY:
Preferred shares, $.01 par value,
authorized 100,000,000 shares:
6 3/4% Series A Convertible
Cumulative Preferred Shares,
liquidation preference of $25.00 per
share, 8,000,000 shares issued and
outstanding at September 30, 2001
and December 31, 2000 $ 200,000 $ 200,000
Common shares, $.01 par value,
authorized 250,000,000 shares,
123,378,216 and 121,818,653 shares
issued and outstanding at
September 30, 2001 and
December 31, 2000, respectively 1,227 1,211
Additional paid-in capital 2,233,605 2,221,531
Retained deficit (522,170) (402,337)
Accumulated other comprehensive
income (35,025) (6,734)
------------- -------------
$ 1,877,637 $ 2,013,671
Less - shares held in treasury, at
cost, 14,484,798 and 14,468,623
common shares at September 30, 2001
and December 31, 2000, respectively (282,725) (282,344)
------------- -------------
Total shareholder's equity $ 1,594,912 $ 1,731,327
------------- -------------
Total liabilities and shareholders'
equity $ 4,139,905 $ 4,531,769
============= =============
TOTAL COMMON SHARES AND UNITS
OUTSTANDING 122,098,016 121,341,676
COMMON SHARE PRICE $ 21.45 $ 22.25
MARKET VALUE OF EQUITY $ 2,819,002 $ 2,899,852
TOTAL MARKET CAPITALIZATION INCLUDING
DEBT $ 4,902,932 $ 5,171,747
CRESCENT REAL ESTATE EQUITIES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
For the three months For the nine months
ended September 30, ended September 30,
----------------------- -----------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
(unaudited) (unaudited)
REVENUES:
Office properties $ 153,823 $ 151,347 $ 464,174 $ 447,989
Resort/hotel
properties 12,449 19,728 44,523 55,735
Interest and
other income 9,710 6,072 36,347 24,440
----------- ----------- ----------- -----------
Total revenues $ 175,982 $ 177,147 $ 545,044 $ 528,164
----------- ----------- ----------- -----------
EXPENSES:
Real estate taxes $ 21,159 $ 20,837 $ 66,304 $ 65,087
Repairs and
maintenance 10,782 7,836 31,374 30,602
Other rental
property operating 34,216 31,173 102,725 91,215
Corporate general
and administrative 6,221 5,305 18,374 14,632
Interest expense 44,908 50,458 139,189 154,544
Amortization of
deferred financing
costs 2,439 2,368 7,171 7,056
Depreciation and
amortization 31,643 30,988 92,818 93,608
Impairment and
other charges
related to real
estate assets 3,608 -- 18,932 --
----------- ----------- ----------- -----------
Total expenses $ 154,976 $ 148,965 $ 476,887 $ 456,744
----------- ----------- ----------- -----------
Operating income $ 21,006 $ 28,182 $ 68,157 $ 71,420
OTHER INCOME AND
EXPENSE:
Equity in net
income of
unconsolidated
companies:
Office
properties $ 1,520 $ 135 $ 3,841 $ 3,235
Residential
development
properties 7,263 5,934 27,703 28,115
Temperature-
controlled
logistics
properties (2,066) 637 2,285 4,865
Other 1,686 2,310 2,896 7,629
----------- ----------- ----------- -----------
Total equity in
net income of
unconsolidated
companies $ 8,403 $ 9,016 $ 36,725 $ 43,844
----------- ----------- ----------- -----------
Gain on property
sales, net 1,099 63,679 727 92,432
----------- ----------- ----------- -----------
Total other
income and
expense $ 9,502 $ 72,695 $ 37,452 $ 136,276
----------- ----------- ----------- -----------
INCOME BEFORE
MINORITY INTERESTS
AND EXTRAORDINARY
ITEM 30,508 100,877 105,609 207,696
Minority interests (8,049) (17,702) (26,138) (33,409)
----------- ----------- ----------- -----------
INCOME BEFORE
EXTRAORDINARY ITEM $ 22,459 $ 83,175 $ 79,471 $ 174,287
Extraordinary
item -
extinguishment of
debt -- -- (10,802) (3,928)
----------- ----------- ----------- -----------
NET INCOME $ 22,459 $ 83,175 $ 68,669 $ 170,359
6 3/4% Series A
Preferred Share
distributions (3,375) (3,375) (10,125) (10,125)
Share repurchase
agreement return -- (1,647) -- (4,441)
----------- ----------- ----------- -----------
NET INCOME AVAILABLE
TO COMMON
SHAREHOLDERS $ 19,084 $ 78,153 $ 58,544 $ 155,793
=========== =========== =========== ===========
BASIC EARNINGS PER
SHARE DATA:
Net income before
extraordinary item $ 0.18 $ 0.71 $ 0.64 $ 1.38
Extraordinary item -
extinguishment
of debt -- -- (0.10) (0.03)
----------- ----------- ----------- -----------
Net income - basic $ 0.18 $ 0.71 $ 0.54 $ 1.35
=========== =========== =========== ===========
DILUTED EARNINGS
PER SHARE DATA:
Net income before
extraordinary item $ 0.17 $ 0.70 $ 0.63 $ 1.37
Extraordinary item -
extinguishment
of debt -- -- (0.10) (0.03)
----------- ----------- ----------- -----------
Net income -
diluted $ 0.17 $ 0.70 $ 0.53 $ 1.34
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING -
BASIC 108,748,221 109,378,619 108,170,259 115,434,291
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING -
DILUTED 110,623,596 111,139,887 110,011,558 116,498,222
=========== =========== =========== ===========
DEBT SERVICE
COVERAGE RATIO 2.5 2.4 2.6 2.4
=========== =========== =========== ===========
CRESCENT REAL ESTATE EQUITIES COMPANY
STATEMENTS OF FUNDS FROM OPERATIONS
(dollars in thousands, except per share data)
For the three months For the nine months
ended September 30, ended September 30,
----------------------- -----------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
(unaudited) (unaudited)
NET INCOME $ 22,459 $ 83,175 $ 68,669 $ 170,359
ADJUSTMENTS:
Depreciation and
amortization of
real estate assets 30,840 30,727 89,859 90,872
Gain on property
sales, net (1,032) (63,679) (570) (92,432)
Extraordinary item -
extinguishment of
debt -- -- 10,802 3,928
Impairment and other
charges related to
real estate assets (19) -- 15,305 --
Adjustment for
investments in real
estate mortgages
and equity of
unconsolidated
companies:
Office properties 2,663 1,805 6,718 3,522
Residential
development
properties 3,015 8,828 9,224 24,551
Temperature-
controlled
logistics
properties 5,687 7,465 16,800 20,354
Unitholder minority
interest 2,712 10,058 9,903 21,152
6 3/4% Series A
Preferred Share
distributions (3,375) (3,375) (10,125) (10,125)
----------- ----------- ----------- -----------
FUNDS FROM
OPERATIONS (a) $ 62,950 $ 75,004 $ 216,585 $ 232,181
=========== =========== =========== ===========
INVESTMENT SEGMENTS:
Office properties $ 91,237 $ 92,917 $ 273,134 $ 266,341
Resort/hotel
properties 12,374 19,598 44,142 55,235
Residential
development
properties 10,278 14,761 36,927 52,665
Temperature-
controlled
logistics
properties 3,621 8,101 19,085 25,218
Corporate general &
administrative (6,221) (5,305) (18,374) (14,632)
Interest expense (44,908) (50,458) (139,189) (154,544)
6 3/4% Series A
Preferred Share
distributions (3,375) (3,375) (10,125) (10,125)
Other (b) (56) (1,235) 10,985 12,023
----------- ----------- ----------- -----------
FUNDS FROM
OPERATIONS (a) $ 62,950 $ 75,004 $ 216,585 $ 232,181
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING -
BASIC 108,748,221 109,378,619 108,170,259 115,434,291
WEIGHTED AVERAGE
SHARES/UNITS
OUTSTANDING -
DILUTED 123,828,194 125,161,533 123,483,871 130,507,995
DIVIDEND PAID PER
SHARE DURING PERIOD $ 0.55 $ 0.55 $ 1.65 $ 1.65
SUPPLEMENTAL
INFORMATION:
Rental income from
straight-line
rents $ 907 $ (2,772)$ (868)$ (11,410)
Residential
development
property capital
expenditures (145) (1,132) (343) (1,132)
Temperature-
controlled
logistics property
capital
expenditures (1,298) (1,980) (1,965) (1,980)
Non-incremental
revenue generating
exp.:
Resort/hotel
property capital
expenditures (2,399) (1,320) (6,656) (4,997)
Office property
capital
expenditures (3,287) (1,326) (7,740) (3,003)
Tenant improvement
and leasing costs (6,166) (8,431) (19,161) (24,996)
Depreciation and
amortization of
non-real estate
assets 858 -- 2,423 1,963
Amortization of
deferred financing
costs 2,439 2,368 7,171 7,056
(a) To calculate Basic Fund from Operations ("FFO") per share,
deduct Unitholder minority interest from FFO, and divide by
basic weighted average shares outstanding.
(b) Includes interest and other income, behavioral healthcare
income, preferred return paid to GMAC, other unconsolidated
companies, less depreciation and amortization of non-real
estate assets and amortization of deferred financing costs.
CRESCENT REAL ESTATE EQUITIES COMPANY
SUPPLEMENT TO PRESS RELEASE DATED NOVEMBER 8, 2001
As of September 30, 2001
OFFICE SECTOR
Same-store net operating income growth (in millions):
The following table shows the same-store net operating income growth on a GAAP basis for the 25.5 million square
feet of office property space owned during these periods.
Three Months Three Months Percentage/
Ended Ended Point
Sept. 30, Sept. 30, Increase/
2001 2000 (Decrease)
------------ ------------ -----------
Same-store Revenues $139.5 $130.7 6.7%
Same-store Expenses 63.0 55.4 13.7%
------ ------ ------
Net Operating Income $ 76.5 $ 75.3 1.6%
====== ====== ======
Weighted Average Occupancy 92.2% 92.6% (0.4)pt
Nine Months Nine Months Percentage/
Ended Ended Point
Sept. 30, Sept. 30, Increase/
2001 2000 (Decrease)
------------ ------------ -----------
Same-store Revenues $414.7 $385.8 7.5%
Same-store Expenses 187.8 170.7 10.0%
------ ------ ------
Net Operating Income $226.9 $215.1 5.5%
====== ====== ======
Weighted Average Occupancy 92.6% 91.6% 1.0pt
Leasing and rental rates:
The following table shows renewed or re-leased leasing activity and the percentage increase of signed leasing rates
compared to expiring leasing rates.
Three Months Ended September 30, 2001
--------------------------------------
Signed Expiring Percentage
Leases Leases Increase
------------ ---------- ------------
Renewed or Re-leased (1) 656,000 sf N/A N/A
Weighted Average Full-
Service Rental Rate (2) $24.38 psf $19.80 psf 23.1%
FFO Annual Net Effective
Rental Rate (3) $15.64 psf $11.03 psf 41.8%
Nine Months Ended September 30, 2001
--------------------------------------
Signed Expiring Percentage
Leases Leases Increase
------------ ---------- ------------
Renewed or Re-leased (1) 1,470,000 sf N/A N/A
Weighted Average Full-
Service Rental Rate (2) $24.07 psf $20.12 psf 19.6%
FFO Annual Net Effective
Rental Rate (3) $15.07 psf $11.09 psf 35.9%
(1) All of which have commenced or will commence during the next
twelve months.
(2) Including free rent, scheduled rent increases taken into
account under generally accepted accounting principles, and
expense recoveries.
(3) Calculated as weighted average full-service rental rate minus
operating expenses.
Significant leasing transactions:
The following table shows significant leases signed during the three months ended September 30, 2001.
New,
Renewal or
Property Location Business Type Re-leased
------------------------ ------------ ------------------ ---------
Briargate Office Centers Denver, CO Financial Services Re-leased
Briargate Office Centers Denver, CO Financial Services New
MCI Tower Denver, CO Communications Re-leased
Eleven Greenway Houston, Tx Technology Renewal
Five Greenway Houston, Tx Energy New
Five Greenway Houston, Tx Energy Re-leased
Five Greenway Houston, Tx Energy Renewal
Two Greenway Houston, Tx Medical Renewal
Three Westlake Houston, Tx Energy New
Austin Centre Austin, Tx Technology Renewal
FFO
Annual Percentage
Net Net Increase
Rentable Effective over
Lease Square Rental Expiring
Property Term Feet Rate Rate
------------------------ ------- ------- --------- ---------
Briargate Office Centers 5 yrs. 38,811 $14.50psf 23%
Briargate Office Centers 5 yrs. 31,702 $14.50psf N/A
MCI Tower 7 yrs. 124,988 $17.65psf 28%
Eleven Greenway 7 yrs. 46,798 $11.74psf 37%
Five Greenway 10 yrs. 40,695 $14.50psf N/A
Five Greenway 5 yrs. 39,868 $12.29psf 185%
Five Greenway 4 yrs. 196,984 $13.90psf 82%
Two Greenway 5 yrs. 39,292 $ 9.26psf 38%
Three Westlake 5 yrs. 62,304 $15.51psf N/A
Austin Centre 5 yrs. 30,074 $20.00psf 46%
Major Market Data:
Houston
Three Months Nine Months Twelve Months
Ended Ended Ended
Houston Class A Office September 30, September 30, December 31,
Property Data 2001 2001 2000
---------------------- ---------------- ---------------- -------------
Inventory at Period
End 68.2 million sf 68.2 million sf 67.1 million sf
Absorption 0.9 million sf 2.1 million sf 3.4 million sf
Occupancy at Period
End 90.0% 90.0% 87.3%
Newly Delivered -
Multi-Tenant 0 million sf 1.2 million sf 2.1 million sf
Construction -
Multi-Tenant at
Period End 2.6 million sf 2.6 million sf 1.9 million sf
Quoted Market Rental
Rate at Period End $20.85 psf $20.85 psf $20.36 psf
Source: CoStar Group
Crescent's Houston Class A As of As of
Office Property Data September 30, 2001 December 31, 2000
-------------------------- ------------------ -----------------
Inventory 8.6 million sf 8.6 million sf
Occupancy
(Based on Executed Leases) 94.0% 94.0%
Quoted Full-Service Rental Rate $23.02 psf $22.91 psf
Current Full-Service Rental Rate $20.94 psf $19.02 psf
Potential Full-Service Rental
Rate Growth 10% 21%
Source: Crescent internal reporting for all properties owned as of
September 30, 2001
Dallas
Three Months Nine Months Twelve Months
Ended Ended Ended
Dallas Class A Office September 30, September 30, December 31,
Property Data 2001 2001 2000
--------------------- --------------- --------------- ----------------
Inventory at Period
End 76.2 million sf 76.2 million sf 75.6 million sf
Absorption (0.7) million sf 1.1 million sf 5.1 million sf
Occupancy at Period
End 86.2% 86.2% 86.2%
Newly Delivered -
Multi-Tenant 0.1 million sf 1.3 million sf 2.0 million sf
Construction -
Multi-Tenant at
Period End 2.5 million sf 2.5 million sf 3.2 million sf
Quoted Market Rental
Rate at Period End $23.47 psf $23.47 psf $23.71 psf
Source: CoStar Group
Crescent's Dallas Class A As of As of
Office Property Data September 30, 2001 December 31, 2000
-------------------------------- ------------------ -----------------
Inventory 10.5 million sf 10.5 million sf
Occupancy
(Based on Executed Leases) 91.5% 92.7%
Quoted Full-Service Rental Rate $25.88 psf $25.99 psf
Current Full-Service Rental Rate $23.51 psf $22.56 psf
Potential Full-Service
Rental Rate Growth 10% 15%
Source: Crescent internal reporting for all properties owned as of
September 30, 2001
RESORT AND RESIDENTIAL DEVELOPMENT SECTOR
Destination Resort Properties
Because of Crescent's status as a real estate investment trust for federal income tax purposes, it does not operate
the resort properties and has leased all of them to Crescent Operating, Inc. pursuant to long-term leases. As previously
announced, Crescent has entered into an agreement to purchase the long-term leases from Crescent Operating, Inc.
Same-Store Rental Income Growth and Operating Statistics:
The following table shows same-store rental income growth for the five destination resort properties owned during
these periods. The table also shows weighted average occupancy, average daily rate and revenue per available room/guest
for the destination resort properties.
Three Months Three Months Percentage/
Ended Ended Point
Sept. 30, Sept. 30, Increase/
2001 2000 (Decrease)
------------ ------------ -----------
Same-Store Rental Income
(in thousands) $8,857 $10,083 (12)%
Weighted Average Occupancy 72% 84% (12)pts
Average Daily Rate $418 $408 2%
Revenue per Available
Room/Guest $294 $331 (11)%
Nine Months Nine Months Percentage/
Ended Ended Point
Sept. 30, Sept. 30, Increase/
2001 2000 (Decrease)
------------ ------------ -----------
Same-Store Rental Income
(in thousands) $27,050 $27,856 (3)%
Weighted Average Occupancy 72% 81% (9)pts
Average Daily Rate $469 $438 7%
Revenue per Available
Room/Guest $331 $345 (4)%
Upscale Residential Development Properties
Crescent's ownership interests in its residential development investments are primarily held through ownership
of real estate mortgages and non-voting stock. As previously announced, Crescent has entered into an agreement
to purchase the voting stock from Crescent Operating, Inc.
The Woodlands Land Development Company, L.P. and The Woodlands Commercial Properties Company, L.P. (collectively
``The Woodlands''), The Woodlands, Texas
Statistics:
The following table shows residential lot sales at an average price per lot and commercial land sales at an average
sales price per acre.
Three Months Ended Three Months Ended
September 30, 2001 September 30, 2000
------------------ ------------------
Residential Lot Sales 432 505
Average Sales Price per Lot $75,000 $46,000
Commercial Land Sales 6 acres 42 acres
Average Sales Price per Acre $381,000 $317,000
Nine Months Ended Nine Months Ended
September 30, 2001 September 30, 2000
------------------ ------------------
Residential Lot Sales 1,296 1,517
Average Sales Price per Lot $77,000 $45,000
Commercial Land Sales 83 acres 69 acres
Average Sales Price per Acre $332,000 $325,000
Future buildout of The Woodlands is estimated at approximately 12,300 residential lots and approximately 1,700
acres of commercial land, of which approximately 1,325 residential lots and 1,100 acres are currently in inventory.
Desert Mountain Properties Limited Partnership (``Desert Mountain''), Scottsdale, Arizona
Statistics:
The following table shows residential lot sales at an average price per lot.
Three Months Ended Three Months Ended
September 30, 2001 September 30, 2000
------------------ ------------------
Residential Lot Sales 17 22
Average Sales Price per Lot(1) $470,000 $721,000
Nine Months Ended Nine Months Ended
September 30, 2001 September 30, 2000
------------------ ------------------
Residential Lot Sales 59 139
Average Sales Price per Lot(1) $734,000 $616,000
(1) Including equity golf membership.
Approved future buildout of Desert Mountain is estimated to be approximately 300 residential lots, of which approximately
160 are currently in inventory.
Crescent Resort Development, Inc.
Statistics:
The following table shows total active projects, residential lot and residential unit sales, and average sales
price per lot and unit.
Three Months Ended Three Months Ended
September 30, 2001 September 30, 2000
------------------ ------------------
Active Projects 13 12
Residential Lot Sales 34 107
Residential Unit Sales:
Townhome Sales 1 4
Single-Family Home Sales - 1
Equivalent Timeshare
Unit Sales - -
Condominium Sales 10 11
Commercial Land Sales - 8
Average Sales Price per
Residential Lot $86,000 $184,000
Average Sales Price per
Residential Unit $1.7 million $1.5 million
Nine Months Ended Nine Months Ended
September 30, 2001 September 30, 2000
------------------ ------------------
Active Projects 13 12
Residential Lot Sales 108 133
Residential Unit Sales:
Townhome Sales 9 6
Single-Family Home Sales - 5
Equivalent Timeshare
Unit Sales - -
Condominium Sales 22 17
Commercial Land Sales - 8
Average Sales Price per
Residential Lot $64,000 $183,000
Average Sales Price per
Residential Unit $1.6 million $1.5 million
INVESTMENT SECTOR
Business-Class Hotel Properties
Because of Crescent's status as a real estate investment trust for federal income tax purposes, it does not operate
the business-class hotel properties and has leased all of them, except the Omni Austin Hotel in Austin, Texas,
to Crescent Operating, Inc. pursuant to long-term leases. The Omni Austin Hotel is leased, pursuant to a separate
long-term lease, to HCD Austin Corporation. As previously announced, Crescent has entered into an agreement to
purchase the long-term leases from Crescent Operating, Inc.
Same-Store Rental Income Growth and Operating Statistics:
The following table shows same-store rental income growth for the four business-class hotel properties owned during
these periods. The table also shows weighted average occupancy, average daily rate and revenue per available room
for the business-class hotel properties.
Three Months Three Months Percentage/
Ended Ended Point
Sept. 30, Sept. 30, Increase/
2001 2000 (Decrease)
------------ ------------ -----------
Same-Store Rental Income
(in thousands) $5,232 $6,101 (14)%
Weighted Average Occupancy 72% 75% (3)pts
Average Daily Rate $111 $114 (3)%
Revenue per Available Room $80 $85 (6)%
Nine Months Nine Months Percentage/
Ended Ended Point
Sept. 30, Sept. 30, Increase/
2001 2000 (Decrease)
------------ ------------ -----------
Same-Store Rental Income
(in thousands) $17,161 $17,762 (3)%
Weighted Average Occupancy 72% 76% (4)pts
Average Daily Rate $118 $115 3%
Revenue per Available Room $85 $88 (3)%
Temperature-Controlled Logistics Investment
Crescent holds an indirect 40% interest in the Temperature-Controlled Logistics Partnership, which owns the Temperature-Controlled
Logistics Corporation and the Temperature-Controlled Logistics Properties. The business operations associated with
the Temperature-Controlled Logistics Properties are owned by AmeriCold Logistics, in which the Company has no interest.
The Temperature-Controlled Logistics Corporation is entitled to receive lease payments from AmeriCold Logistics.
---------------------------------------------------------
Contact:
Crescent Real Estate Equities Company, Fort Worth
Investors:
Jane E. Mody, 817/321-1086
or
Jerry R. Crenshaw, 817/321-1492
or
Keira B. Moody, 817/321-1412
or
Media:
Sandra Porter, 817/321-1460