Crescent Real Estate Equities, Inc. Announces First Quarter Operating Results and Sale of Option to Acquire Rights in Ritz-Carlton Hotel Company.

NEW YORK--(BUSINESS WIRE)--May 4, 1995--Crescent Real Estate Equities, Inc. (NYSE:CEI), today announced its operating results for the first quarter ended March 31, 1995. Funds from operations were $12.6 million, or $.56 per share and equivalent unit, as compared to $10.9 million, or $.48 per share and equivalent unit, on a pro forma basis for the first quarter of 1994. First quarter net income was $3.8 million, or $.24 per share, compared with pro forma net income of $3.4 million, or $.21 per share, for the first quarter of 1994. Adjusted to reflect NAREIT's recently proposed changes to the definition of funds from operations, first quarter funds from operations were $11.9 million, or $.53 per share and equivalent unit, as compared to $10.5 million, or $.46 per share and equivalent unit, on a pro forma basis for the first quarter of 1994.

"Our first quarter operating results are in line with expectations," stated Gerald Haddock, president and chief operating officer. "Our submarkets continue to strengthen. Quoted rents for Class A office space in the Denver Tech Center market have increased by 15 percent to 18 percent in the first quarter of 1995 from the fourth quarter of 1994. Additionally, we continue to see strong interest in our available space in Two Renaissance Square located in Phoenix, Ariz. Overall, the weighted- average occupancy rate for Class A office space in our submarkets remained at 90 percent, while weighted-average rents increased to $16.52 from $16.28 at the end of 1994."

According to Haddock, "We also continued to execute upon our investment strategy in the first quarter by investing $88 million in two Class A office properties, comprising 587,000 square feet located in the North Dallas Tollway market, a 295 room resort hotel located at the Beaver Creek Ski Resort, and a mortgage note secured by a 248,000 square foot Class A office building located in Phoenix. Now that our successful add-on equity offering has provided us with over $600 million of buying power, our management attention is focused on the careful execution of our investment strategy for the remainder of 1995, with acquisition opportunities continuing to be in line with expectations."

As previously announced, Crescent joined an investment group led by Marriott International, Inc. ("Marriott") to acquire a 49 percent interest in the Ritz-Carlton Hotel Company ("RCHC"). Crescent's investment was intended to strategically position the company to explore with RCHC management opportunities to make investments in certain Ritz-Carlton hotel properties. In response to Marriott's offer to acquire the interests of each of Crescent and the other minority partners in the transaction, Crescent elected to sell its co-investment rights to Marriott. Crescent recently closed on this transaction and realized profit of $2.4 million which will be reflected in the company's second quarter operating results. Even though Crescent does not own an interest in RCHC, the company is continuing to work with RCHC management in evaluating opportunities for select investments in Ritz-Carlton hotel properties.

Crescent also announced that its Annual Meeting of Shareholders will be held on Monday, June 12, 1995 at the Millennium Hilton, 55 Church Street, New York, N.Y. at 10:00 a.m.

Crescent is a fully integrated real estate company which, through the UPREIT operating partnership structure, conducts its business activities and owns and operates a diversified portfolio of real estate assets, including 12 Class A office properties and two retail centers comprising approximately 5.5 million square feet, economic interests in four single family residential land developments and a 295 room resort hotel. -0-

                 CRESCENT REAL ESTATE EQUITIES, INC.
                         FINANCIAL HIGHLIGHTS
                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
                              (UNAUDITED)

                                                 QUARTER ENDED
                                                    MARCH 31,
                                                  1995     1994(A)
                                                -------   -------
RENTAL REVENUES                                 $25,208   $15,389
INTEREST AND OTHER INCOME                           747       230
RENTAL PROPERTY OPERATING EXPENSES                9,706     5,954
CORPORATE GENERAL AND ADMINISTRATIVE EXPENSES       798       625
INTEREST EXPENSE                                  4,470        83
DEPRECIATION AND AMORTIZATION                     6,598     5,618
INCOME FROM INVESTMENTS IN
  RESIDENTIAL DEVELOPMENT CORPORATIONS              937     1,154
MINORITY INTEREST (PARTNERSHIP UNITS)            (1,529)   (1,119)
NET INCOME (LOSS)                               $ 3,791   $ 3,374
FUNDS FROM OPERATIONS BEFORE
  MINORITY INTEREST (B)                         $12,567   $10,900
WEIGHTED-AVERAGE SHARES (16,047) AND
  UNITS (6,475) OUTSTANDING                      22,522    22,522
PER SHARE DATA:
  NET INCOME PER SHARE                          $   .24   $   .21
  FUNDS FROM OPERATIONS PER SHARE/UNIT          $   .56   $   .48

NOTES:
(A)  Operating results for the three months ended March 31, 1994 are
     presented as if the company's initial public offering, repayment
     of mortgage debt and related transactions had been completed on
     Jan. 1, 1994.

(B)  "Funds from Operations," is defined as net income (loss) (computed
     in accordance with generally accepted accounting principles),
     excluding gains (or losses) from debt restructuring and sales of
     property, plus depreciation and amortization, and after
     adjustments for the company's unconsolidated investments in
     residential development corporations.  Funds from Operations does
     not represent cash generated from operating activities in
     accordance with generally accepted accounting principles (which,
     unlike Funds from Operations, generally reflects all cash effects
     of transactions and other events that enter into the determination
     of net income).

     The proposed changes to the definition of funds from operations
     would exclude the addition to net income (loss) of depreciation
     and amortization related to non-real estate assets, such as
     deferred financing costs and corporate personal property.

                    SUMMARIZED BALANCE SHEET INFORMATION
                              (IN THOUSANDS)
                                (UNAUDITED)
                                                     MARCH 31,
                                                  1995       1994
                                               ---------   --------
CASH AND CASH EQUIVALENTS                       $ 30,373   $ 22,271
INVESTMENT PROPERTIES, NET                       484,617    224,865
TOTAL ASSETS                                     576,277    284,722
MORTGAGES AND NOTES PAYABLE                     242,842    280,462

CONTACT: Crescent Real Estate Equities, Ltd.,

Dallas Lucas, 212/836-4216