Crescent Real Estate Settles Lawsuit over Compaq Center and Sells Land to the City of Houston.

Business Editors

FORT WORTH, Texas--(BUSINESS WIRE)--Jan. 2, 2003

Crescent Real Estate Equities Company (NYSE:CEI) announced that it has entered into an agreement with the City of Houston to settle a lawsuit related to the intended use of Compaq Center, located within Crescent's Greenway Plaza, a mixed-use office complex in Houston. As part of the settlement, Crescent has also sold to the City, at the City's request, land located in front of Houston's downtown convention center.

On July 5, 2001, Crescent filed a lawsuit in federal court to require the City of Houston to adhere to longstanding deed restrictions in place at Compaq Center. This suit was in response to the Houston City Council's July 3, 2001 approval of a proposal for Lakewood Church to lease Compaq Center for up to 60 years beginning in November of 2003 for use as a church -- a use not specified in the deed restrictions of the property.

Today, Crescent settled the lawsuit with the City, agreeing to allow Lakewood Church to occupy Compaq Center, provided that the new Lakewood Center is operated in much the same manner that Compaq Center has been operated. Agreements have been reached with Lakewood Church that will ensure the coordination of traffic patterns and exterior architectural and signage elements so that the Lakewood Center will remain compatible with the existing Greenway Plaza development. Event parking will also be limited to evenings and weekends under this agreement.

Denny Alberts, President and Chief Operating Officer, commented, "We are pleased to have reached an agreement that benefits Crescent, the City of Houston and Lakewood Church. Our focus throughout this process has been on holding firm our commitment to our customers at Greenway Plaza and ensuring that they continue to enjoy a first-class business environment. Our agreement with Lakewood, whereby we will exercise control over key operating functions, furthers that commitment."

Additionally, as part of the overall litigation settlement with the City, Crescent agreed to the City's request that Crescent sell to the City land in front of Houston's downtown George R. Brown Convention Center. The two parcels total 5.5 acres, leaving Crescent approximately 18 acres of undeveloped land adjacent to its Houston Center complex. Crescent received approximately $33 million in proceeds from the sale, resulting in a net gain of approximately $13 million which was included in Crescent's previous earnings guidance for the year ended Dec. 31, 2002.

"As a major business owner in the CBD, Crescent shares the City's vision of creating a world-class convention and destination city. We are pleased to assist the City in realizing its longtime goal of creating synergy between George R. Brown Convention Center, the new convention center hotel, the new basketball arena and the Minute Maid baseball park by selling it the land that sits in the middle of these sites," Alberts added.

ABOUT THE COMPANY

Crescent Real Estate Equities Company (NYSE:CEI) is one of the largest publicly held real estate investment trusts in the nation. Through its subsidiaries and joint ventures, Crescent owns and manages a portfolio of 74 premier office properties totaling over 29 million square feet located primarily in the Southwestern United States, with major concentrations in Dallas, Houston, Austin and Denver. In addition, the company has investments in world-class resorts and spas and upscale residential developments.