Crescent Real Estate Equities Announces Agreement to Acquire Houston Office Building.

FORT WORTH, Texas--(BUSINESS WIRE)--Jan. 8, 1998--Crescent Real Estate Equities Company (NYSE:CEI), one of the country's largest real estate investment trusts, today announced that it has agreed to acquire Post Oak Central, an approximate 1.3 million square foot class A office complex in suburban Houston.

The property is being acquired from a partnership including The Mutual Life Insurance Company of New York and a large public pension fund for approximately $155 million. The transaction is expected to close in February 1998, subject to customary due diligence and closing conditions.

Gerald W. Haddock, Crescent's president and chief executive officer commented, "Upon completion of this purchase, we will own approximately 10 million square feet of office space in Houston. With this significant ownership interest we are extremely well positioned to benefit from an accelerating market recovery that has far exceeded our expectations.

"In fact, during the first nine months of 1997, approximately 5 million square feet of Houston office space was absorbed which compares to 5 million square feet that was absorbed in the entire five year period from 1991-1995. As a result, at September 30, 1997, citywide class A occupancy rates have increased to 94% while class A rental rates have climbed 15% during the same period."

"This tremendous level of office space demand resulted from a diversifying economy which generated 66,000 new jobs in 1997. According to the Greater Houston Partnership, the city is expected to create an equally impressive 65,000 jobs in 1998.

"Spurred by not only the oil and gas industry, but also new business ventures resulting from utility deregulation and the expansion of the healthcare, engineering and technology sectors, we believe Houston office employment growth is poised to continue to exceed the national average, providing further impetus to rental rate growth."

"While we continue to see office acquisition opportunities in Houston and our other existing markets, the high volume of transactions we are currently reviewing include properties in new markets for us in other regions of the country offering comparable long-term investment returns.

"We anticipate announcing $600 million of such purchases in the first quarter of 1998. We are pleased with our 1998 external growth prospects considering the positive fundamentals supporting a continued shift from private to public ownership of real estate in the U.S."

Post Oak Central is located in the West Loop/Galleria suburban office market approximately 5 miles west of downtown Houston and 2.5 miles west of the Company's Greenway Plaza development. With 12.8 million square feet of class A office space, West Loop/Galleria is the largest suburban office market in Houston.

Post Oak Central was built from 1974-1981 and is 93% occupied as of August, 1997, with major tenants including Apache Corporation and Stewart Information Services.

As of August 31, 1997, the building had an approximate in-place weighted-average full-service rental rate of $12.54 per square foot, which is approximately 49% of estimated replacement cost rental rates, and a weighted-average remaining lease term of approximately 5.5 years.

As of September 30, 1997, the Galleria submarket had a class A office occupancy of 94% and a market rental rate of $18.18 per square foot.

Certain matters discussed within this press release are forward-looking statements within the meaning of the federal securities laws, and the transactions contemplated herein are subject to certain closing conditions.

Although Crescent believes that the expectations reflected in such forward looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.

Factors that could cause actual results to differ materially from Crescent's expectations include changes in real estate conditions (including rental rates and competing properties) or in industries in which our principal tenants compete, failure to consummate anticipated transactions, timely leasing of unoccupied square footage, timely releasing of occupied square footage upon expiration, finding acquisition opportunities which meet its investment strategy and other risks detailed from time to time in the Company's SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K, and annual reports on Form 10-K.

Crescent is a fully integrated real estate company, which upon completion of the pending acquisition, will own through its subsidiaries a portfolio of real estate assets, consisting primarily of 83 office properties and 7 retail properties totaling 30.7 million square feet, a 40% interest in 79 refrigerated warehouse facilities, 90 behavioral healthcare facilities, 6 full-service hotel properties totaling 1,962 rooms, 2 destination health and fitness resorts and economic interests in 5 residential development corporations.

The office rental properties are located primarily in 21 metropolitan submarkets in Texas and Colorado.

For further information, please contact Dallas E. Lucas, Chief Financial Officer, Crescent Real Estate Equities Company at 817/878-0426 or refer to Crescent's web page at www.cei-crescent.com .

CONTACT: Crescent Real Estate Equities Company

Dallas E. Lucas, 817/878-0426 (CFO)

web page: www.cei-crescent.com