Crescent Operating Signs Purchase Agreement for Healthcare Assets.

Business Editors and Medical Writers

FT. WORTH, Texas--(BUSINESS WIRE)--Feb. 16, 2000

Crescent Operating, Inc. (NASDAQ:COPI) ("Crescent Operating" or the "Company") announced today that a wholly owned subsidiary of Crescent Operating, COPI Healthcare, Inc., has entered into an agreement with Charter Behavioral Health Systems, LLC ("Charter") for the acquisition of Charter's core business, which consists of the assets used in the operation of 37 behavioral healthcare facilities, for $24.5 million. The asset purchase agreement was entered into in conjunction with Charter's filing for reorganization today in federal bankruptcy court in Delaware, and is subject to bankruptcy court approval and other conditions. Crescent Operating owns 90% of Charter, directly and indirectly. Magellan Health Services, Inc. (NYSE:MGL) owns the remaining 10% of Charter. Crescent Real Estate Equities Company (NYSE:CEI) ("Crescent Real Estate") is Charter's landlord in 30 of the 37 core facilities. Crescent Real Estate has agreed that if COPI Healthcare is successful in acquiring the operating assets, it will lease its 30 facilities to COPI Healthcare, provided that an agreement is reached on various terms of the lease and certain other conditions are satisfied.

Crescent Operating has previously written off all of its investment in Charter, and does not anticipate that the bankruptcy of Charter will result in any adverse financial effect on the Company, although Crescent Operating will incur legal and other expenses in connection with its involvement in the bankruptcy proceeding.

Crescent Operating anticipates that if it is successful in acquiring the selected operating assets of Charter, it will first fund the purchase through a bank loan, guaranteed by Richard Rainwater, Crescent Operating's chairman and a significant shareholder, on a compensated basis. The Company will then seek to refinance this facility through the sale of equity in COPI Healthcare or Crescent Operating. Crescent Operating currently intends to offer its existing shareholders the first opportunity to participate in any such refinancing, although the form of any such refinancing has not been determined. Management believes that this financing and refinancing arrangement will provide the Company's shareholders with the option to participate in a restructured Charter while protecting the Company from any further exposure to this business. The asset purchase agreement is subject to a number of conditions, including review by the participants in the bankruptcy proceeding and approval by the bankruptcy court. The bankruptcy court could also seek other bids for these assets from other interested parties and there is no assurance that COPI Healthcare's bid will be successful or that the conditions contained in its offer can be satisfied.

John C. Goff, Crescent Operating's President and Chief Executive Officer, commented, "Crescent Operating has been presented with an opportunity to invest in the best of the Charter facilities, which produce over 90% of Charter's present earnings from operations before rent. Charter is the country's leading private provider of behavioral healthcare, and it is important to restore the business to financial and operational stability. Mike French, Charter's President and Chief Executive Officer, and his management team have developed a business plan that we believe is the right one to return the operation of Charter's core facilities to a position of financial strength, recognizing that behavioral healthcare services must expand into the broader continuum of care to meet the needs of a changing society."

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, its interest in Charter, an interest in a temperature controlled logistics 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. Matters that relate to the bankruptcy proceeding of Charter, including the possible purchase of Charter's operating assets by COPI Healthcare, are inherently unpredictable as to both outcome and timing, and events could differ materially from Crescent Operating's expectation. 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.