Crescent Operating, Inc. Restructures Its Investment in CBHS.

FT. WORTH, Texas--(BUSINESS WIRE)--Sept. 14, 1999--

Crescent Operating, Inc. ("Crescent Operating") (Nasdaq:COPI) today announced that Crescent Operating, Crescent Real Estate Equities Company ("Crescent Real Estate") (NYSE:CEI), Magellan Health Services, Inc. ("Magellan") (NYSE:MGL) and Charter Behavioral Health Systems, LLC ("CBHS") have completed a recapitalization of CBHS and restructuring of the relationships among the parties pursuant to the parties' binding Letter Agreement dated August 10, 1999. CBHS is the lessee, under a master lease agreement, of approximately 88 psychiatric hospitals owned by Crescent Real Estate.

The restructuring of CBHS included the following transactions:

-- Magellan transferred its remaining hospital-based assets

(including Charter Advantage, Charter Franchise Services, LLC,

the call center assets, the Charter name and related intellectual

property and certain other assets) to CBHS. These transfers have

returned to CBHS all of the assets utilized by Magellan in

providing the franchise services and will also strengthen CBHS's

balance sheet.

-- Magellan and CBHS terminated the franchise agreement under which

Magellan had provided franchise services to CBHS, and Magellan

released CBHS from all accrued and unpaid franchise fees. As a

result, both CBHS's future obligations under its franchise

agreement with Magellan and the accrued but unpaid fees have been

eliminated.

-- Magellan transferred all but 10% of its common interest and all

of its preferred interest in CBHS to CBHS. As a result of the

transfers, Crescent Operating owns a 25% common interest and 100%

of the preferred interest in CBHS, and a limited partnership

controlled by individual officers of Crescent Operating, in which

Crescent Operating owns 100% of the economic interests, owns a

65% common interest in CBHS.

-- Magellan, CBHS, Crescent Real Estate and Crescent Operating

provided each other with mutual releases of all claims and

disputes against each other, with certain specified exceptions.

-- Magellan and CBHS modified and extended their existing

arrangement which designates CBHS as a preferred provider of

inpatient acute behavioral health services.

-- $2.5 million held in escrow in connection with a pending

arbitration between Magellan and Crescent Operating was released

to Crescent Operating in connection with the settlement and

mutual release of the related claims between Magellan and

Crescent Operating.

Rick Knight, Chief Financial Officer of Crescent Operating, commented, "Crescent Operating will not recognize any gain or loss as a result of this transaction. Additionally, Crescent Operating is not investing any additional funds in CBHS as part of this transaction and has no plan to invest additional funds in CBHS in the future. Under this structure, any losses that may be incurred by CBHS will not be reported by Crescent Operating under generally accepted accounting principles."

The revised CBHS structure allows for the following:

-- Crescent Operating maintains its current level of control over

CBHS and has obtained a 90% economic interest in CBHS without

being required to invest any additional funds.

-- As CBHS is a limited liability company, even with an increased

economic stake, Crescent Operating is not liable for the

obligations of CBHS, including the rental obligation of CBHS to

Crescent Real Estate.

-- Crescent Operating will control only two of the four board seats.

The other two seats will be controlled by a limited partnership

controlled by individual officers of Crescent Operating. Crescent

Operating will not control CBHS and will not consolidate the

results of CBHS for accounting purposes.

-- The transaction eliminates both CBHS's future obligations under

its franchise agreement with Magellan and the accrued but unpaid

fees.

-- The transaction modified and extended Magellan's designation of

CBHS as a preferred provider of inpatient acute behavioral

healthcare.

John C. Goff, Crescent Operating's, Chief Executive Officer commented, "These transactions have resulted in an infusion of cash to CBHS and have eliminated the franchise fee and simplified the capital structure. The closing of this transaction represents a significant step towards strengthening Charter and establishing a framework for the future and demonstrates that all parties involved are committed to the creation of a stronger Charter."

Crescent Operating is a diversified management company which through various subsidiaries and affiliates, owns, leases or operates a portfolio of assets consisting primarily of seven full-service hotels and two destination health and fitness resorts, an interest in a behavioral health company, an interest in a refrigerated warehouse operating company, an interest in three real estate development operations, and an equipment sales and leasing business.

Certain of the statements in this press release constitute forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although Crescent Operating believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, Crescent Operating's actual results could differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from Crescent Operating's expectations include, among others, the ability of the Company's segments to continue to achieve operating results at or above current levels and at a level sufficient to meet current projections, Crescent Operating's ability to service existing debt and meet other operating expenses, the availability of debt and equity financing, and the possibility that Crescent Operating's outstanding debt (some of which requires so-called balloon payments of principal) may be refinanced at higher interest rates or otherwise on terms less favorable to Crescent Operating, and other general risk factors. For a more complete discussion of these and other risk factors, please see Crescent Operating's SEC reports, including its annual report on Form 10-K, quarterly reports on Form 10-Q, reports on Form 8-K, and the Company's Registration Statement on Form S-4.

For further information, please contact Rick Knight, Chief Financial Officer at 817/339-2212. Crescent Operating is also online at www.crescentoperating.com.