Crescent Real Estate Announces Second Quarter Results; Company Reports Second Quarter Office Property Same-Store NOI Growth of 7.6%.Business Editors FORT WORTH, Texas--(BUSINESS WIRE)--Aug. 9, 2001 Crescent Real Estate Equities Company Crescent Real Estate Equities Co. (NYSE: CEI) is a Fort Worth, Texas-based real estate investor with holdings mainly in office and hotel properties, including several landmark buildings in the southern United States. (NYSE NYSE See: New York Stock Exchange :CEI CEI Competitive Enterprise Institute CEI Conferenza Episcopale Italiana (Italian bishop conference) CEI Central European Initiative CEI Comitato Elettrotecnico Italiano (Italian Electrotechnical Committee) ) announced second quarter 2001 funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO FFO See: Funds from operations ") of $.66 per share. "In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite current economic conditions, we are pleased to report earnings in excess of our expectations for the second quarter. The office sector performed favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. , with same-store NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics growth of nearly 8% and FFO net effective rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. rate growth on expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. rents of over 40%. In addition, we realized office termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. and development fees as well as net gains from non-core investments, which enabled us to beat management's expectations for the quarter," commented John C. Goff n. 1. A silly clown. 1. A game. See Golf. , Chief Executive Officer. "We are also pleased to have completed four strategic transactions since our last earnings report. We finalized See finalization. $970 million of debt refinancing Refinancing An extension and/or increase in amount of existing debt. arrangements in May, which among other things returned us to the status of an unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. borrower BORROWER, contracts. He to whom a thing is lent at his request. 2. The contract of loan confers rights, and imposes duties on the borrower' 1. In general, he has the right to use the thing borrowed, during the time and for the purpose intended between the . In June June: see month. , Crescent crescent, emblematic representation of the quarter moon. The crescent and star, ancient Byzantine symbols that became the emblems of Constantinople, were also assumed as the standard of the Ottoman Turks. entered into an agreement to purchase the lease interests of the destination resort and business-class hotel properties and the voting stock Voting stock The shares in a corporation that entitle the shareholder to vote. voting stock Stock for which the holder has the right to vote in the election of directors, in the appointment of auditors, or in other matters brought up at the of the residential development corporations owned by Crescent Operating. The acquisition, scheduled to close in the fourth quarter, will greatly simplify our overall structure and enhance operating efficiencies. Additionally, this allows Crescent Operating to emerge as a newly focused entity, with improved capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. including a new investor, a new CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. for the equipment business and a new strategy. We also created two strategic joint-venture alliances in the office sector, both of which have furthered our efforts in generating capital organically for future opportunities." "We remain encouraged by our office sector performance, particularly in the Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; CBD (Component Based Development) Building applications with components (objects). See component software. CBD - component based development , where we continue to see countercyclical coun·ter·cy·cli·cal adj. Intended to compensate for immoderate developments in a business cycle: a countercyclical federal aid program. trends in absorption absorption [Lat.,=sucking from], taking of molecules of one substance directly into another substance. It is contrasted with adsorption, in which the molecules adhere only to the surface of the second substance. and rental rate growth. In the destination resort and upscale residential sector, we're we're Contraction of we are. we're we are focused on aggressively managing the business in an effort to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the impact
of today's economy," Goff added.HIGHLIGHTS
-- FFO for the three months ended June 30, 2001 was $81.4 million, or $.66 per
share and equivalent unit (diluted), which equates to a 4.8% increase over the
prior year.
-- Office property same-store net operating income ("NOI") for the three months
ended June 30, 2001 increased 7.6% over the same period in 2000 for properties
owned during both periods.
-- Renewed or re-leased space totaled 443,000 net rentable square feet during
the three months ended June 30, 2001, resulting in a 41% increase in the FFO
annual net effective rental rate over expiring rates for the same space.
-- On May 15, 2001, Crescent announced that it had finalized debt refinancing
arrangements totaling $970 million.
-- On June 5, 2001, Crescent announced that it had entered into a joint venture
arrangement with a pension fund advised by JPMorgan Fleming Asset Management
("JPMorgan") to construct 5 Houston Center, Crescent's current office
development project located in downtown Houston.
-- On June 29, 2001, Crescent announced that it had entered into a definitive
agreement with Crescent Operating, Inc. ("COPI") for the acquisition of their
resort/hotel lease interests, voting stock of the residential development
corporations and other assets.
-- On July 31, 2001, Crescent announced that it had entered into joint-venture
arrangements with an affiliate of General Electric Pension Trust ("GE") on two
Crescent office properties, Four WestLake Park, located in suburban Houston,
and Bank One Tower, located in downtown Austin.
FINANCIAL REVIEW FFO for the three months ended June 30, 2001 was $81.4 million, or $.66 per share and equivalent unit (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), compared to $82.0 million, or $.63 per share and equivalent unit (diluted), for the same period in 2000. FFO for the six months ended June 30, 2001 was $153.6 million, or $1.25 per share and equivalent unit (diluted), compared to $157.2 million, or $1.18 per share and equivalent unit (diluted), for the same period in 2000. Net income available to common shareholders (after extraordinary items related to extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt of $10.8 million or $.10 per share) for the three months ended June 30, 2001 was $11.6 million, or $.10 per share (diluted), compared to $32.0 million, or $.27 per share (diluted), for the same period in 2000. Net income available to common shareholders (after extraordinary items related to extinguishment of debt of $10.8 million or $.10 per share) for the six months ended June 30, 2001 was $39.5 million, or $.36 per share (diluted), compared to $77.6 million, or $.65 per share (diluted), for the same period in 2000. BUSINESS SECTOR REVIEW Office Sector (68% of Asset Value as of June 30, 2001) Office property same-store NOI increased 7.6% for the three months ended June 30, 2001 over the same period in 2000 for the 27.1 million square feet of office property space owned during both periods. Average occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy for these properties for the three months ended June 30, 2001 was 93.1% compared to 92.0% for the same period in 2000. As of June 30, 2001, the overall office portfolio was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 93.5% leased based on executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. leases. During the three months ended June 30, 2001, Crescent received $2.3 million of lease termination fees termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. . Office property same-store NOI increased 8.0% for the six months ended June 30, 2001 over the same period in 2000 for the 27.1 million square feet of office property space owned during both periods. Average occupancy for these properties for the six months ended June 30, 2001 was 93.1% compared to 91.5% for the same period in 2000. During the six months ended June 30, 2001, Crescent received $4.0 million of lease termination fees. The Company leased 698,000 net rentable square feet during the three months ended June 30, 2001, of which 443,000 square feet was renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. or re-leased. The weighted average FFO net effective rental rate increased 41% 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 $1.64 per square foot per year and leasing costs were $.70 per square foot per year. The Company leased 1.5 million net rentable square feet during the six months ended June 30, 2001, of which 814,000 square feet was renewed or re-leased. The weighted average FFO net effective rental rate increased 31% 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 $1.46 per square foot per year and leasing costs were $.77 per square foot per year. On June 5, 2001, Crescent announced that it had entered into a joint venture arrangement with JPMorgan to construct 5 Houston Center, the previously announced development within Crescent's Houston Center mixed-use mixed-use adj. Containing or zoned for commercial and residential facilities or development: a 40-story mixed-use tower; a mixed-use parcel of land. complex. The joint venture is structured such that JPMorgan holds a 75% equity interest, and Crescent holds the remaining 25% equity interest. In addition, Crescent will develop, manage and lease the property on a fee basis. The Class A office property, which will consist of 577,000 net rentable square feet, is currently 74% leased. The project is scheduled for completion in the fall of 2002. On July July: see month. 31, 2001, Crescent announced that it had entered into joint-venture arrangements with GE on two of Crescent's office properties. The joint ventures are structured such that GE holds an 80% interest in each of Four WestLake Park Westlake Park can mean:
People with the given name Katy:
n. A geographic, economic, or specialized subdivision of a market. adj. Being below what is usual in a particular market: submarket wages; submarket interest rates. of Houston, and Bank One Tower, a 390,000 square foot Class A office property located in downtown Downtown (called a "city centre" in British English) is a term used in North America when referring to a city's core, usually both in a geographical and commercial / community sense. Austin Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum . Crescent will continue to hold the remaining 20% interests and will manage and lease the properties on a fee basis. Total proceeds to Crescent, including financing on the two properties, was approximately $120 million. Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the H. Alberts, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , commented on the overall office sector, "Our markets are being affected by the economic environment. Increased sublease sublease n. the lease of all or a portion of premises by a tenant who has leased the premises from the owner. A sublease may be prohibited by the original lease, or require written permission from the owner. space, for one, is providing our existing and prospective office customers with more options. But we believe that the quality of our assets and customer base, enhanced by the quality of our customer service, will allow us to continue to report favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. operating performance in our office sector." Resort and Residential Development Sector (16% of Asset Value as of June 30, 2001) Destination Resort Properties Destination resort property same-store rental income Noun 1. rental income - income received from rental properties income - the financial gain (earned or unearned) accruing over a given period of time increased 2% for the three months ended June 30, 2001 over the same period in 2000 for the five properties owned during both periods. The average daily rate increased 11% and revenue per available room decreased 4% for the three months ended June 30, 2001 compared to the same period in 2000. Destination resort property same-store rental income increased 2% for the six months ended June 30, 2001 over the same period in 2000 for the five properties owned during both periods. The average daily rate increased 9% and revenue per available room decreased 1% for the six months ended June 30, 2001 compared to the same period in 2000. Upscale Residential Development Properties "The economic uncertainty affected the performance of our upscale residential development results again in the second quarter. Specifically, Desert Mountain continues to be our main concern, as it did not meet second quarter volume expectations. The Woodlands Woodlands refers to several places:
v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. the effect of the economy on these developments and the impact to our sales projections," commented Alberts. Investment Sector (16% of Asset Value as of June 30, 2001) Upscale Business-Class Hotel Properties Upscale business-class hotel property same-store rental income decreased 3% for the three months ended June 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 7% for the three months ended June 30, 2001 compared to the same period in 2000. Upscale business-class hotel property same-store rental income increased 2% for the six months ended June 30, 2001 over the same period in 2000 for the four properties owned during both periods. The average daily rate increased 5% and revenue per available room decreased 2% for the six months ended June 30, 2001 compared to the same period in 2000. Temperature-Controlled Logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. Investment AmeriCold Logistics' same-store EBITDAR Earnings Before Interest, Taxes, Depreciation, Amortization, and Restructuring Costs - EBITDAR An indicator of a company's financial performance calculated as: = Revenue - Expenses (excluding tax, interest, depreciation, amortization, and restructuring costs) (earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. in the second quarter $3.9 million of rent, of which Crescent's share was $1.6 million. Included in Crescent's results for the three and six months ended June 30, 2001 is a charge for $1.6 million for a valuation allowance related to Crescent's share of the deferred rent receivable. BALANCE SHEET REVIEW On May 15, 2001, Crescent announced that it had finalized $970 million of debt refinancing arrangements, which consist of a $400 million unsecured revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. and three secured term loans totaling $570 million. The $400 million unsecured revolving line of credit replaces a $300 million secured revolving line of credit and reduces the variable interest rate by over 60 basis points while extending the maturity period by two years. Together, the refinanced revolving line of credit and term loans reduce the Company's overall borrowing costs by approximately 25 basis points while extending the average debt maturity period on total debt from 4.2 years to 5.1 years. Total proceeds were used to retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. the existing revolving line of credit and various term loans, which represented 81% of Crescent's maturing debt through 2004. AGREEMENT TO ACQUIRE CRESCENT OPERATING ASSETS Operating Assets Another term for working capital. On June 29, 2001, Crescent announced that it had entered into a definitive agreement with COPI COPI Chevron Overseas Petroleum Inc. COPI Construction Output Price Index (UK) COPI Court-Ordered Protected Individual for the acquisition of their resort/hotel lease interests, voting stock of the residential development corporations and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. for $78.4 million. The acquisition agreement takes advantage of the REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). Modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, Act, legislation which became effective January January: see month. 1, 2001. The new legislation allows Crescent, through its subsidiaries, to operate or lease certain of its investments that are currently operated or leased by COPI. Crescent will satisfy the purchase price through a cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and certain debt owed to Crescent by COPI or its subsidiaries. Closing of the transaction is scheduled to occur following approval by the shareholders of COPI and the satisfaction of customary closing conditions. 2001 OUTLOOK FFO Per Share Crescent remains committed to its previously issued guidance of 2001 FFO range between $2.60 and $2.62 per share, of which $.59 to $.60 per share is expected for the third quarter. 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 At 10:00AM CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT on August 9, 2001, Crescent will hold a conference call to discuss the Company's second quarter results. During the call the Company will hold a question and answer session concerning business and financial matters affecting the Company. These discussions may contain information that has not been previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). . The Company will also make reference during the call to a presentation that will be posted on the Company's website (www.cei-crescent.com) in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section. To access the conference call via phone, please dial 800/818-4442 domestically or 706/679-3110 internationally. A replay will be available through August 15, 2001, by dialing 800/642-1687 domestically or 706/645-9291 internationally and using a replay access code of 1380906. Simultaneous with the conference call will be an audio webcast on the Company's website in the Investor Relations section. The webcast and presentation will be available on Crescent's website for 30 days. FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. 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: -- Financing risks, such as the ability to generate revenue sufficient to service existing debt, increases in debt service associated with variable-rate Variable-rate A varible-rate agreement, as distinguished from a fixed-rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. debt, the ability to meet existing financial covenants and the Company's ability to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. planned financings and refinancings on the terms and within the time frames anticipated; -- The Company's ability to timely lease unoccupied square footage and timely re-lease re-lease tr.v. re-leased, re-leas·ing, re-leas·es To lease again: re-leased the car. occupied oc·cu·py tr.v. oc·cu·pied, oc·cu·py·ing, oc·cu·pies 1. To fill up (time or space): a lecture that occupied three hours. 2. To dwell or reside in. 3. square footage upon expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created on favorable terms; -- The Company's inability to consummate the proposed transaction with COPI; -- The Company's inability to close anticipated sales of assets; -- Adverse changes in real estate conditions (including rental rates and competition from other properties and new development of competing properties or a general downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the economy); -- Adverse changes in conditions in the resort/business-class hotel markets or in the market for residential land or luxury residences, which include single-family sin·gle-fam·i·ly adj. Relating to or being a dwelling designed for one family only: a single-family home; single-family occupancy. homes, townhomes and condominiums (including a general downturn in the economy); -- Adverse change in conditions in the temperature-controlled logistics business (including both industry-specific conditions and a general downturn in the economy which may further jeopardize jeop·ard·ize tr.v. jeop·ard·ized, jeop·ard·iz·ing, jeop·ard·izes To expose to loss or injury; imperil. See Synonyms at endanger. the ability of the Company's tenant to pay all rent due to the Company); -- Adverse changes in the financial condition of existing tenants; -- The concentration of a significant percentage of the Company's assets in Texas; -- The Company's ability to find acquisition and development opportunities which meet the Company's investment strategy; -- The existence of complex regulations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's status as a REIT, the effect of future changes in REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT; and -- Other risks detailed from time to time in the Company's filings with the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such statements. The Company is not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to update these forward-looking statements to reflect any future events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . ABOUT THE COMPANY Crescent Real Estate Equities Company, one of the country's largest real estate investment trusts, owns and manages, through its subsidiaries, a diversified diversified (di·verˑ·s portfolio primarily consisting of Class A office properties, destination resorts, and upscale residential developments. Its mission is to expand the dimensions of business to its customers and maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. value to its shareholders by distinguishing itself as the undisputed leader in each of its businesses. Crescent will accomplish these goals by providing exceptional customer service and asset quality, and by executing a disciplined real estate investment and operating strategy that focuses on market leadership, innovative growth opportunities, and outstanding customer, employee and partner alliances.
CRESCENT REAL ESTATE EQUITIES COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, December 31,
2001 2000
---- ----
(unaudited) (audited)
ASSETS:
Investments in real estate:
Land $ 299,972 $ 310,301
Land held for investment or development 108,274 116,480
Building and improvements 3,223,918 3,201,332
Furniture, fixtures and equipment 67,149 62,802
Less - accumulated depreciation (614,274) (564,805)
------------- --------------
Net investment in real estate $ 3,085,039 $ 3,126,110
Cash and cash equivalents $ 23,514 $ 38,966
Restricted cash and cash equivalents 79,479 94,568
Accounts receivable, net 54,849 42,200
Deferred rent receivable 84,426 82,775
Investments in real estate mortgages
and equity of unconsolidated companies 799,120 845,317
Notes receivable, net 155,100 141,407
Other assets, net 201,114 160,426
------------- --------------
Total assets $ 4,482,641 $ 4,531,769
============= ==============
LIABILITIES:
Borrowings under UBS Facility $ -- $ 553,452
Borrowings under Fleet Facility 370,000 --
Notes payable 2,000,015 1,718,443
Accounts payable, accrued expenses
and other liabilities 141,205 191,042
------------- --------------
Total liabilities $ 2,511,220 $ 2,462,937
------------- --------------
MINORITY INTERESTS:
Operating partnership, 6,602,299, and
6,995,823 units, respectively $ 88,664 $ 100,586
Investment joint ventures 235,194 236,919
------------- --------------
Total minority interests $ 323,858 $ 337,505
------------- --------------
SHAREHOLDERS' EQUITY:
Preferred shares, $.01 par value,
authorized 100,000,000 shares:
6 3/4% Series A Convertible Cumulative
Preferred Shares, 8,000,000 shares
issued and outstanding at June 30,
2001 and December 31, 2000 $ 200,000 $ 200,000
Common shares, $.01 par value,
authorized 250,000,000 shares,
123,020,202, and 121,818,653 shares
issued and outstanding at June 30,
2001 and December 31, 2000, respectively 1,223 1,211
Additional paid-in capital 2,229,252 2,221,531
Retained deficit (481,487) (402,337)
Accumulated other comprehensive income (19,081) (6,734)
------------- --------------
$ 1,929,907 $ 2,013,671
Less - shares held in treasury, at
cost, 14,468,623 common shares at
June 30, 2001 and December 31, 2000 (282,344) (282,344)
------------- --------------
Total shareholders' equity $ 1,647,563 $ 1,731,327
------------- --------------
Total liabilities and shareholders'
equity $ 4,482,641 $ 4,531,769
============= ==============
TOTAL COMMON SHARES AND UNITS
OUTSTANDING 121,756,177 121,341,676
COMMON SHARE PRICE $24.57 $22.25
MARKET VALUE OF EQUITY $3,191,549 $2,899,852
TOTAL MARKET CAPITALIZATION
INCLUDING DEBT $5,561,564 $5,171,747
CRESCENT REAL ESTATE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
For the three months For the six months
ended June 30, ended June 30,
------------------------- -------------------------
2001 2000 2001 2000
---- ---- ---- ----
(unaudited) (unaudited)
REVENUES:
Office properties $ 156,457 $ 147,534 $ 310,351 $ 296,642
Resort/Hotel
properties 16,125 18,463 32,074 36,007
Interest and
other income 17,634 9,232 26,637 18,368
------------ ------------ ------------ ------------
Total revenues $ 190,216 $ 175,229 $ 369,062 $ 351,017
------------ ------------ ------------ ------------
EXPENSES:
Real estate taxes $ 22,259 $ 21,579 $ 45,145 $ 44,250
Repairs and
maintenance 10,098 10,569 20,592 22,766
Other rental
property operating 35,180 29,776 68,509 60,042
Corporate general
and administrative 6,889 4,082 12,153 9,327
Interest expense 46,833 51,836 94,281 104,086
Amortization of
deferred financing
costs 2,307 2,341 4,732 4,688
Depreciation and
amortization 30,629 31,718 61,175 62,620
Impairment and other
charges related
to real estate
assets 13,174 -- 15,324 --
------------ ------------ ------------ ------------
Total expenses $ 167,369 $ 151,901 $ 321,911 $ 307,779
------------ ------------ ------------ ------------
Operating income $ 22,847 $ 23,328 $ 47,151 $ 43,238
OTHER INCOME AND EXPENSE:
Equity in net income
of unconsolidated
companies:
Office and retail
properties $ 1,228 $ 396 $ 2,321 $ 3,100
Residential
development
properties 9,732 11,717 20,440 22,181
Temperature-
controlled
logistics
properties 1,632 192 4,35 4,228
Other (636) 2,978 1,210 5,319
------------ ------------ ------------ ------------
Total equity in
net income of
unconsolidated
companies $ 11,956 $ 15,283 $ 28,322 $ 34,828
------------ ------------ ------------ ------------
(Loss) gain on
property sales,
net (702) 6,126 (372) 28,753
------------ ------------ ------------ ------------
Total other
income and
expense $ 11,254 $ 21,409 $ 27,950 $ 63,581
------------ ------------ ------------ ------------
INCOME BEFORE
MINORITY INTERESTS 34,101 44,737 75,101 106,819
AND EXTRAORDINARY
ITEM
Minority interests (8,337) (8,675) (18,089) (15,707)
------------ ------------ ------------ ------------
INCOME BEFORE
EXTRAORDINARY ITEM $ 25,764 $ 36,062 $ 57,012 $ 91,112
Extraordinary item -
extinguishment
of debt (10,802) -- (10,802) (3,928)
------------ ------------ ------------ ------------
NET INCOME $ 14,962 $ 36,062 $ 46,210 $ 87,184
6 3/4% Series A
Preferred Share
distributions (3,375) (3,375) (6,750) (6,750)
Share repurchase
agreement return -- (718) -- (2,794)
------------ ------------ ------------ ------------
NET INCOME AVAILABLE
TO COMMON
SHAREHOLDERS $ 11,587 $ 31,969 $ 39,460 $ 77,640
============ ============ ============ ============
BASIC EARNINGS PER
SHARE DATA:
Net income before
extraordinary item $ 0.21 $ 0.28 $ 0.47 $ 0.69
Extraordinary item -
extinguishment
of debt (0.10) -- (0.10) (0.03)
------------ ------------ ------------ ------------
Net income - basic $ 0.11 $ 0.28 $ 0.37 $ 0.66
============ ============ ============ ============
DILUTED EARNINGS PER
SHARE DATA:
Net income before
extraordinary item $ 0.20 $ 0.27 $ 0.46 $ 0.68
Extraordinary item -
extinguishment
of debt (0.10) -- (0.10) (0.03)
------------ ------------ ------------ ------------
Net income -
diluted $ 0.10 $ 0.27 $ 0.36 $ 0.65
============ ============ ============ ============
WEIGHTED AVERAGE
SHARES OUTSTANDING -
BASIC 108,370,320 115,367,972 107,876,496 118,487,477
============ ============ ============ ============
WEIGHTED AVERAGE
SHARES OUTSTANDING -
DILUTED 110,482,434 116,341,065 109,742,202 119,156,678
============ ============ ============ ============
DEBT SERVICE
COVERAGE RATIO 2.7 2.4 2.7 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 six months
ended June 30, ended June 30,
--------------------- --------------------
2001 2000 2001 2000
---- ---- ---- ----
(unaudited) (unaudited)
NET INCOME $ 14,962 $ 36,062 $ 46,210 $ 87,184
ADJUSTMENTS:
Depreciation and
amortization of real
estate assets 29,524 30,353 59,019 60,145
Loss (gain) on property
sales, net 792 (6,126) 462 (28,753)
Extraordinary item -
extinguishment of debt 10,802 -- 10,802 3,928
Impairment and other charges
related to real estate
assets 14,174 -- 15,324 --
Adjustment for investments
in real estate mortgages
and equity of unconsolidated
companies:
Office and retail
properties 2,015 1,789 4,055 1,717
Residential development
properties 3,851 11,144 6,209 15,723
Temperature-controlled
logistics properties 5,507 7,438 11,113 12,889
Unitholder minority
interest 3,122 4,712 7,191 11,094
Preferred Share
distributions (3,375) (3,375) (6,750) (6,750)
--------- --------- --------- ---------
FUNDS FROM
OPERATIONS (a) $ 81,374 $ 81,997 $ 153,635 $ 157,177
========= ========= ========= =========
INVESTMENT SEGMENTS:
Office and retail
properties $ 91,744 $ 87,213 $ 181,897 $ 173,424
Hotel properties 16,016 18,346 31,768 35,637
Residential development
properties 13,582 22,861 26,648 37,904
Temperature-controlled
logistics properties 7,139 7,630 15,464 17,117
Corporate general &
administrative (6,889) (4,082) (12,153) (9,327)
Interest expense (46,833) (51,836) (94,281) (104,086)
Preferred Share
distributions (3,375) (3,375) (6,750) (6,750)
Other (b) 9,990 5,240 11,042 13,258
--------- --------- --------- ---------
FUNDS FROM
OPERATIONS (a) $ 81,374 $ 81,997 $ 153,635 $ 157,177
========= ========= ========= =========
WEIGHTED AVERAGE
SHARES OUTSTANDING
- BASIC 108,370,320 115,367,972 107,876,496 118,487,477
WEIGHTED AVERAGE
SHARES/UNITS
OUTSTANDING -
DILUTED 123,722,972 130,390,711 123,350,589 133,168,379
DIVIDEND PAID PER
SHARE DURING PERIOD $ 0.55 $ 0.55 $ 1.10 $ 1.10
SUPPLEMENTAL INFORMATION:
Rental income from
straight-line rents $ (850) $ (4,185) $ (1,775) $ (8,638)
Residential development
capital expenditures (66) -- (198) --
Temperature-controlled
capital expenditures -- (1,485) (667) (1,980)
Non-incremental revenue
generating exp.:
Hotel property capital
expenditures (2,937) (1,444) (4,257) (3,677)
Office and retail
property capital
expenditures (2,664) (1,007) (4,453) (1,677)
Tenant improvement
and leasing costs (6,537) (9,186) (12,995) (16,565)
Depreciation and
amortization of non-real
estate assets 810 1,102 1,565 1,963
Amortization of deferred
financing costs 2,307 2,341 4,732 4,688
(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 AUGUST 9, 2001
As of June 30, 2001
OFFICE SECTOR
Same-store net operating income growth (in millions):
The following table shows the same-store net operating income
growth for the 27.1 million square feet of office property space owned
during these periods.
Three Months Three Months
Ended Ended Percentage/Point
June 30, 2001 June 30, 2000 Increase/(Decrease)
------------- ------------- ------------------
Same-store Revenues $151.3 $139.6 8.4%
Same-store Expenses 67.3 61.5 9.4%
----- ----- -----
Net Operating Income $84.0 $78.1 7.6%
===== ===== =====
Weighted Average
Occupancy 93.1% 92.0% 1.1pts
Six Months Six Months
Ended Ended Percentage/Point
June 30, 2001 June 30, 2000 Increase/(Decrease)
------------- ------------- -----------------
Same-store Revenues $299.4 $276.9 8.1%
Same-store Expenses 134.0 123.8 8.2%
------ ------ ------
Net Operating Income $165.4 $153.1 8.0%
====== ====== ======
Weighted Average Occupancy 93.1% 91.5% 1.6pts
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 June 30, 2001
--------------------------------
Signed Leases Expiring Leases Percentage
------------- --------------- Increase
----------
Renewed or Re-leased (1) 443,000 sf N/A N/A
Weighted Average Full-
Service Rental Rate (2) $24.50 psf $20.05 psf 22.2%
FFO Annual Net Effective
Rental Rate (3) $15.46 psf $10.95 psf 41.2%
Six Months Ended June 30, 2001
------------------------------
Signed Leases Expiring Leases Percentage
------------- --------------- Increase
--------
Renewed or Re-leased (1) 814,000 sf N/A N/A
Weighted Average Full-
Service Rental Rate (2) $23.83 psf $20.37 psf 17.0%
FFO Annual Net Effective
Rental Rate (3) $14.61 psf $11.14 psf 31.1%
(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 June 30, 2001.
New,
Business Renewal or
Property Location Type Re-leased
-------- -------- --------- ----------
Professional
Five Greenway Houston, Tx Services Renewal
Three Westlake Houston, Tx Energy New
Three Westlake Houston, Tx Energy Re-leased
Two Houston Center Houston, Tx Energy Re-leased
Four Houston Center Houston, Tx Energy Re-leased
FFO
Annual Percentage
Net Net Increase
Rentable Effective over
Lease Square Rental Expiring
Property Term Feet Rate Rate
--------
Five Greenway 5 yrs. 26,719 $14.59 psf 101%
Three Westlake 6 yrs. 44,034 $12.30 psf N/A
Three Westlake 6 yrs. 44,034 $12.71 psf 34%
Two Houston Center 2 yrs. 31,214 $17.95 psf 243%
Four Houston Center 3 yrs. 56,346 $16.95 psf 26%
Major Market Data:
Dallas
Three Months Six Months Twelve Months
Dallas Class A Office Ended Ended Ended
Property Data June 30, 2001 June 30, 2001 December 31,2000
-------------------- ------------- ------------- ----------------
Inventory at Period
End 76.7 million sf 76.7 million sf 75.6 million sf
Absorption 0.6 million sf 1.6 million sf 5.1 million sf
Occupancy at Period
End 87.6% 87.6% 86.2%
Newly Delivered -
Multi-Tenant 0.4 million sf 1.2 million sf 2.0 million sf
Construction -
Multi-Tenant at Period
End 2.3 million sf 2.3 million sf 3.2 million sf
Quoted Market Rental
Rate at Period End $22.93 psf $22.93 psf $23.71 psf
Source: CoStar Group
Crescent's Dallas Class A Office As of As of
Property Data June 30, 2001 December 31,2000
-------------------------------- ------------- ----------------
Inventory 10.5 million sf 10.5 million sf
Occupancy (Based on Executed Leases) 92.6% 92.7%
Quoted Full-Service Rental Rate $25.94 psf $25.99 psf
Current Full-Service Rental Rate $23.41 psf $22.56 psf
Potential Full-Service Rental Rate Growth 11% 15%
Source: Crescent internal reporting for all properties owned as of
June 30, 2001
Houston
Three Months Six Months Twelve Months
Houston Class A Office Ended Ended Ended
Property Data June 30, 2001 June 30, 2001 December 31,2000
--------------------- ------------- ------------- ----------------
Inventory at Period End 68.4 million sf 68.4 million sf 67.1 million sf
Absorption 0.6 million sf 1.2 million sf 3.4 million sf
Occupancy at Period End 87.5% 87.5% 87.3%
Newly Delivered -
Multi-Tenant 0.7 million sf 1.3 million sf 2.1 million sf
Construction -
Multi-Tenant at Period
End 2.1 million sf 2.1 million sf 1.9 million sf
Quoted Market Rental
Rate at Period End $20.88 psf $20.88 psf $20.36 psf
Source: CoStar Group
Crescent's Houston Class A Office As of As of
Property Data June 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 $22.91 psf $22.91 psf
Current Full-Service Rental Rate $20.81 psf $19.02 psf
Potential Full-Service Rental Rate
Growth 10% 21%
Source: Crescent internal reporting for all properties owned as of
June 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. in the fall of 2001.
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
Ended Ended Percentage/Point
June 30, 2001 June 30, 2000 Increase (Decrease)
------------- ------------- -------------------
Same-Store Rental
Income (in thousands) $9,044 $8,880 2%
Weighted Average Occupancy 65% 75% (10)pts
Average Daily Rate $479 $432 11%
Revenue per Available
Room/Guest $303 $316 (4)%
Six Months Six Months
Ended Ended Percentage/Point
June 30, 2001 June 30, 2000 Increase (Decrease)
------------- ------------- -------------------
Same-Store Rental
Income (in thousands) $18,193 $17,773 2%
Weighted Average Occupancy 72% 79% (7)pts
Average Daily Rate $494 $454 9%
Revenue per Available
Room/Guest $349 $353 (1)%
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. in the fall of 2001.
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
June 30, 2001 June 30, 2000
------------------ ------------------
Residential Lot Sales 483 449
Average Sales Price per Lot $86,000 $44,000
Commercial Land Sales 74 acres 6 acres
Average Sales Price per Acre $324,000 $428,000
Six Months Ended Six Months Ended
June 30, 2001 June 30, 2000
---------------- ----------------
Residential Lot Sales 864 1,012
Average Sales Price per Lot $78,000 $45,000
Commercial Land Sales 77 acres 27 acres
Average Sales Price per Acre $329,000 $338,000
Future buildout of The Woodlands is estimated at approximately
12,700 residential lots and approximately 1,700 acres of commercial
land, of which approximately 1,300 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
June 30, 2001 June 30, 2000
------------------ ------------------
Residential Lot Sales 23 73
Average Sales Price per Lot(1) $1,029,000 $635,000
Six Months Ended Six Months Ended
June 30, 2001 June 30, 2000
---------------- ----------------
Residential Lot Sales 42 117
Average Sales Price per Lot(1) $841,000 $597,000
(1) Including equity golf membership.
Approved future buildout of Desert Mountain is estimated to be in
excess of 500 residential lots, of which approximately 175 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
June 30, 2001 June 30, 2000
------------------ ------------------
Active Projects 12 13
Residential Lot Sales 72 21
Residential Unit Sales:
Townhome Sales 4 -
Single-Family Home Sales - 3
Equivalent Timeshare Unit Sales - -
Condominium Sales 3 5
Commercial Land Sales - -
Average Sales Price per
Residential Lot $48,000 $182,000
Average Sales Price per
Residential Unit $1.7 million $1.5 million
Six Months Ended Six Months Ended
June 30, 2001 June 30, 2000
---------------- ----------------
Active Projects 12 13
Residential Lot Sales 74 26
Residential Unit Sales:
Townhome Sales 8 2
Single-Family Home Sales - 4
Equivalent Timeshare Unit
Sales - -
Condominium Sales 12 6
Commercial Land Sales - -
Average Sales Price per
Residential Lot $54,000 $175,000
Average Sales Price per
Residential Unit $1.5 million $1.6 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. in the fall of 2001.
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
Ended Ended Percentage/Point
June 30, 2001 June 30, 2000 Increase (Decrease)
------------- ------------- ------------------
Same-Store Rental
Income (in thousands) $6,105 $6,298 (3)%
Weighted Average Occupancy 72% 80% (8)pts
Average Daily Rate $122 $118 3%
Revenue per Available Room $88 $95 (7)%
Six Months Six Months
Ended Ended Percentage/Point
June 30, 2001 June 30, 2000 Increase (Decrease)
------------- ------------- ------------------
Same-Store Rental Income
(in thousands) $11,929 $11,661 2%
Weighted Average Occupancy 72% 77% (5)pts
Average Daily Rate $122 $116 5%
Revenue per Available Room $88 $90 (2)%
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. The lease terms have
recently been restructured, as referenced in Crescent's fourth quarter
2000 earnings press release dated February 22, 2001 and Form 10-K for
the year ended December 31, 2000.
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