Crescent Real Estate Equities Company Holds Annual Shareholder Meeting; CEO John Goff Articulates the Company's Growth Strategy and Discusses the Roadmap to 2007 Earnings Target.

FORT WORTH, Texas -- Crescent Real Estate Equities Company (NYSE:CEI) held its annual meeting of shareholders at the Hotel Crescent Court in Dallas yesterday. At the meeting, Vice Chairman and Chief Executive Officer, John C. Goff, said that the Company's strategy revolves around three strategic growth platforms - office, resort residential and its investment in Canyon Ranch(R). "Our strategy is much simplified," Goff commented. "We have modernized our office platform by partnering with institutional capital, and we are focused on maximizing value from what we call our "lifestyle investments," particularly our investments in resort residential and Canyon Ranch."

Growth Platform #1 - Office

Goff explained that Crescent's office business, which holds steady at about 60% of Crescent's gross real estate assets, delivers superior returns when properties are held in a joint venture structure. "By partnering with institutional capital, we increase our return on equity by 300 to 500 basis points," said Goff. The reason for the increase is the fee generation that Crescent earns by managing and leasing the office properties on behalf of institutional partners. Today, the Company holds 43% of its office portfolio in joint ventures, and it will continue to joint venture portions of the remaining 57%, with equity valued at $1.4 billion, over the next few years.

Two additional aspects of the Company's office strategy are selective developments and mezzanine investments. Crescent plans to break ground on July 28 on a new 255,000 office building as an addition to its Hughes Center complex in Las Vegas. With Hughes Center currently 99% leased, the new building is primarily designed to accommodate the expansion plans of existing customers. In addition, Crescent has announced nearly $75 million of mezzanine financing investments since the end of 2004. The two to three year investments are currently generating, on average, an approximate 12% unlevered return on equity. The Company is currently anticipating investing up to $200 million in mezzanine investments.

Growth Platform #2 - Resort Residential

Goff discussed the thesis behind the capital Crescent has allocated to "lifestyle investments." "The investments," he said, "target the most powerful economic segment of our population - the baby boomers." According to Goff, who referred to statistics from the U.S. Census Bureau and other studies, the retiring baby boomer generation is seeking a gathering spot for their families, often a second home, in a resort location. This segment of the U.S. population is at peak income years and is set to inherit in excess of $7 trillion. This wealth and desire for living in a resort setting is what fuels demand for both investments in resort residential and Canyon Ranch.

Since Crescent's initial public offering in 1994, the Company has been involved in more than 35 residential development projects. Every project has been profitable, generating internal rates of return, on average, of more than 20%. The majority of the projects have been developed in partnership with East West Partners, led by its President, Harry Frampton. The most significant project of Crescent and East West Partners is in and around the Northstar ski area near Lake Tahoe, California. This project encompasses more than 2,600 luxury condominiums, fractional cabins, and homesites either started or scheduled for development over the next 8 to 12 years and is expected to generate in excess of $3.5 billion in sales. Including other projects that are in process, Crescent targets this segment to deliver $82 million in funds from operations ("FFO") in 2007. Out of the total cash expected to be received by Crescent from the segment in 2005-2007 of $700 million, $300 million is committed to be reinvested back into the segment, leaving $400 million of cash available to Crescent for investment in other business segments, debt reduction, dividend support and working capital.

Growth Platform #3 - Canyon Ranch

Goff explained that Crescent originally invested in the world-renowned Canyon Ranch in 1996, and until recently, owned 100% of the two Canyon Ranch resorts in Tucson, Arizona, and Lenox, Massachusetts, and 30% of the Canyon Ranch brand. In January 2005, Crescent and the founders of Canyon Ranch completed a restructuring of their investments to allow for all assets, including the resorts, the management company and the brand, to be combined under common ownership. Today, Crescent owns 48% of this new company, while the remaining 52% is owned by the founders. As part of this transaction, the new Canyon Ranch company raised $110 million of convertible preferred equity and $95 million of non-recourse long-term debt. As a result, Crescent received approximately $92 million in cash, and $50 million remained in the new Canyon Ranch company for resort enhancements, new business opportunities and working capital.

With the tremendous success of the Canyon Ranch resorts over the years, along with the success of the brand expansions to the spa in the Venetian Hotel and the spa aboard the Queen Mary 2, it became evident that there was strong demand from customers to live the Canyon Ranch experience year-round. This idea launched the Canyon Ranch Living concept, and the first development is under construction in Miami's South Beach. Canyon Ranch Living - Miami Beach is comprised of 586 condominium units, 150 of which will be operated as a hotel, and a 70,000 square-foot spa and wellness center. The beachfront development will offer the residents and hotel guests much of the programming for which Canyon Ranch is famous. Canyon Ranch is expected to receive $30 to $35 million in license and technical service fees during the construction and sale of the condominium units, in addition to approximately $2.5 million per year for the ongoing management of the spa and hotel. "Canyon Ranch Living provides substantial growth opportunities for the brand in numerous high-end locations. In partnership with experienced developers, Canyon Ranch invests its unique expertise as opposed to capital," Goff said. Additional markets being targeted include Manhattan, Boston, Washington D.C, Chicago and Los Angeles. Canyon Ranch is also considering Canyon Ranch Living developments in Crescent markets such as Las Vegas, Lake Tahoe, Houston and Dallas. In these locations, Crescent would participate in both sides of the project - as the developer and as an owner of Canyon Ranch.

2007 FFO Target

Goff stated that the Company is on track to reach its earnings target of $2.00 per share FFO by 2007. Further, Crescent expects that half of its earnings growth from now through 2007 should come from its existing investments (office, resort residential, Canyon Ranch, other resorts and hotels, and AmeriCold), while the other half is expected to come from the reinvestment of capital generated from strategic transactions the Company entered into at the end of 2004 and early 2005.

Shareholder Meeting Results

Messrs. Goff, Rowsey and Stallings were re-elected as Trust Managers. Shareholders also ratified the re-appointment of Ernst & Young LLP as the independent auditors.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally characterized by terms such as "believe," "expect," "anticipate" 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:

--The Company's ability, at its office properties, to timely lease unoccupied square footage and timely re-lease occupied square footage upon expiration on favorable terms, which continue to be adversely affected by existing real estate conditions (including the vacancy levels in particular markets, decreased rental rates and competition from other properties) and may also be adversely affected by general economic downturns;

--The continuation of relatively high vacancy rates, reduced rental rates and relatively high tenant concessions in the Company's office portfolio as a result of conditions within the Company's principal markets;

--The ability of the Company to reinvest available funds at anticipated returns and consummate anticipated office acquisitions on favorable terms and within anticipated time frames;

--Adverse changes in the financial condition of existing tenants, in particular El Paso Energy and its affiliates which provide 5.7% of the Company's annualized office revenues;

--Deterioration in the Company's resort/business-class hotel markets or in the economy generally;

--Deterioration in the market or in the economy generally and increases in construction costs associated with development of residential land or luxury residences, including single-family homes, town homes and condominiums;

--Financing risks, such as the Company's ability to generate revenue sufficient to service and repay existing or additional debt, increases in debt service associated with increased debt and with variable-rate debt, the Company's ability to meet financial and other covenants and the Company's ability to consummate financings and refinancings on favorable terms and within any applicable time frames;

--The ability of the Company to dispose of its investment land, and other non-core assets, on favorable terms and within anticipated time frames;

--The concentration of a significant percentage of the Company's assets in Texas;

--The existence of complex regulations relating to 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 to update these forward-looking statements to reflect any future events or circumstances.

ABOUT THE COMPANY

Crescent Real Estate Equities Company (NYSE: CEI) is a real estate investment trust headquartered in Fort Worth, Texas. Through its subsidiaries and joint ventures, Crescent owns and manages a portfolio of more than 75 premier office buildings totaling more than 30 million square feet located in select markets across the United States, with major concentrations in Dallas, Houston, Austin, Denver, Miami and Las Vegas. Crescent also makes strategic investments in resort residential development as well as resorts, including Canyon Ranch(R). For more information, visit the Company's website at http://www.crescent.com.