Crescent Real Estate Equities, in partnership with Morgan Stanley Real Estate Fund, announces acquisition of The Woodlands Corporation.

FORT WORTH, Texas--(BUSINESS WIRE)--June 12, 1997--Crescent Real Estate Equities Company (NYSE:CEI), one of the country's largest real estate investment trusts, in partnership with Morgan Stanley Real Estate Fund II, L.P. (MSREF), has entered into a definitive agreement to acquire The Woodlands Corporation (TWC) in a transaction valued at approximately $543 million. TWC is a wholly owned subsidiary of Mitchell Energy & Development Corp. (NYSE:MND).

Crescent's participation in the venture with MSREF will be in the 35% to 50% range and will be finalized prior to closing of the transaction.

TWC substantially owns, develops and operates The Woodlands, a 27,000 acre master-planned development located 27 miles north of downtown Houston. Started in 1974, The Woodlands is one of the premier residential and commercial communities in the U.S. It is home to 740 companies and institutions with a total employment of more than 17,000 and a residential population of approximately 50,000. While only 50% developed, an estimated $4.1 billion has been invested by all parties in The Woodlands through residential, commercial and infrastructure improvements. Crescent currently owns interests in 1.2 million square feet of office and retail properties at The Woodlands in joint venture with TWC.

The principal assets and operating segments of TWC are detailed below.

Conference Center and Country Club

The 364 room executive conference center is one of the highest rated conference centers in the country. It currently serves as a year round training facility for Exxon Corporation and Shell Oil Company. The conference center offers 60,000 square feet of meeting space and is also one of the top ranked golf and tennis resorts in the U.S.

TWC owns and operates The Woodlands Country Club, a private golf and tennis club serving approximately 1,600 members. The club and conference center offer 81 holes of golf, including the Tournament Players Course, site of the PGA Tour's Shell Houston Open.

Single-Family Residential Development

TWC has developed and sold over 16,000 single-family lots since 1974. Over this period lot sales prices have increased 7% compounded annually. The Woodlands is ranked 1st in Texas and 7th in the nation in new home sales with over 1,000 new homes sold in the fiscal year ended Jan. 31, 1997. During this same period, over 1,000 single-family lots were sold. TWC has 6,400 residential acres remaining for sale or development which will support over 20,000 new single-family lots.

Commercial Land Development

TWC has approximately 2,900 acres of commercial land available for future development. The land will support construction of over 25 million square feet of office, tech, multi-family, industrial, retail and lodging properties. To date, approximately 1,500 acres of commercial land has been sold upon which approximately 10 million square feet of commercial and institutional properties has been developed.

Gerald W. Haddock, Crescent's president and chief executive officer, commented, "This transaction represents a unique opportunity to acquire one of the premier master-planned communities in the nation. We are pleased to create a strategic investment partnership with Morgan Stanley Real Estate Fund II, L.P., and working with the existing TWC management team we fully expect to complete George Mitchell's ultimate vision for The Woodlands."

George P. Mitchell, Mitchell Energy's chairman and chief executive officer, stated, "The overall development plan for The Woodlands is now well-established and most of the critical elements are in place. I'm confident that Crescent and Morgan Stanley, working with the same existing strong TWC management team, will carry forward with the same quality-of-life criteria we've established over the past two decades."

The transaction is expected to close over the next 30-45 days, subject to customary closing conditions.

Crescent is a fully integrated real estate company which, upon completion of certain pending transactions, will own through its subsidiaries a portfolio of real estate assets, consisting of 72 office properties and 6 retail properties totaling 21.5 million square feet, approximately 90 behavioral healthcare facilities, 4 full-service hotels totaling 1,471 rooms, 2 destination health and fitness resorts, and economic interests in 6 single family residential land developments. The office and retail properties are located primarily in 21 metropolitan submarkets in Texas and Colorado.

Morgan Stanley Real Estate Fund II, L.P., an affiliate of Morgan Stanley, Dean Witter, Discover & Co., is a leading international real estate investor with interests in more than $6 billion of properties worldwide.

CONTACT: Crescent Real Estate Equities Company, Fort Worth

Dallas E. Lucas, 817/877-0477

www.cei-crescent.com

or

Morgan Stanley & Co. Inc.

Owen D. Thomas, 212/761-4673