<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 30, 1997
CRESCENT REAL ESTATE EQUITIES COMPANY
(formerly known as Crescent Real Estate Equities, Inc.)
(Exact name of Registrant as specified in its Charter)
Texas 1-13038 52-1862813
(State of Organization) (Commission File Number) (IRS Employer
Identification Number)
777 Main Street, Suite 2100
Fort Worth, Texas 76102
(Address of Principal Executive (Zip Code)
Offices)
(817) 877-0477
(Registrant's telephone number, including area code)
<PAGE> 2
The Form 8-K/A of Crescent Real Estate Equities Company (the
"Company"), is amending the previously filed Form 8-Ks dated June 20, 1997,
September 22, 1997 and September 30, 1997 to include the pro forma financial
statements as required by Item 7(b).
1
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS UNDER RULE 3-14 OF REGULATION S-X
None
(b) PRO FORMA FINANCIAL INFORMATION
Pro Forma Consolidated Balance Sheet as of June 30, 1997 (unaudited)
and notes thereto.
Pro Forma Consolidated Statements of Operations for the six months
ended June 30, 1997 and the year ended December 31, 1996 (unaudited) and
notes thereto.
(c) EXHIBITS
None
2
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: September 30, 1997 CRESCENT REAL ESTATE EQUITIES COMPANY
By: /s/ Dallas E. Lucas
--------------------------------
Dallas E. Lucas
Senior Vice President and
Chief Financial and Accounting
Officer
3
<PAGE> 5
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
Pro Forma Consolidated Balance Sheet as of June 30, 1997 and notes thereto .................................... F-2
Pro Forma Consolidated Statements of Operations for the six months ended June 30, 1997
and the year ended December 31, 1996 .......................................................................... F-5
</TABLE>
4
<PAGE> 6
CRESCENT REAL ESTATE EQUITIES COMPANY
PRO FORMA CONSOLIDATING FINANCIAL INFORMATION
(dollars in thousands)
The pro forma information for the year ended December 31, 1996 assumes
completion, in each case as of January 1, 1996 in determining operating and
other data, of (i) Crescent Real Estate Equities Company's (the "Company")
public offering of its common shares in October 1996 (the "October 1996
Offering") and the additional public offering of 450,000 common shares that
closed on October 9, 1996 and the use of the net proceeds therefrom to repay
approximately $168,000 of indebtedness and to fund approximately $289,000 of
Property acquisitions in the fourth quarter of 1996 and the first quarter of
1997, (ii) the Company's public offering of its common shares in April 1997
(the "April 1997 Offering") and the additional public offering of 500,000
common shares that closed on May 14, 1997 and the use of the net proceeds
therefrom to fund approximately $593,500 of Property acquisitions and other
investments in the second quarter of 1997, (iii) the Company's offering of
4,700,000 common shares to an affiliate of Union Bank of Switzerland (the "UBS
Offering") and the use of the net proceeds therefrom to repay approximately
$145,000 of indebtedness under the Credit Facility, (iv) Crescent Real Estate
Equities Limited Partnership's, the Company's operating partnership, issuance
of $400,000 of senior unsecured debt issued in a private placement on September
22, 1997 ("Note Offering") and the use of the net proceeds therefrom to fund
approximately $327,600 of the acquisition of the Houston Center mixed-use
property complex including the Four Seasons Hotel ("Houston Center"), to repay
approximately $50,000 of indebtedness under the Credit Facility to fund
approximately $10,000 of the acquisition of the Miami Center office property
and to repay approximately $7,200 of short-term indebtedness, (v) the Company's
issuance of 307,831 common shares that closed on September 22, 1997 ("Private
Placement") and the use of the net proceeds therefrom to repay approximately
$10,000 of indebtedness under the Credit Facility (vi) assumed indebtedness of
$97,100 in connection with the purchase of Fountain Place, and (vii) Property
acquisitions and other investments during 1996 and 1997 and the Pending
Investments.
The pro forma information for the six months ended June 30, 1997 assumes
completion, in each case as of January 1, 1997 in determining operating and
other data, and, in each case as of June 30, 1997 in determining balance sheet
data, of (i) the April 1997 Offering and the additional public offering of
500,000 common shares that closed on May 14, 1997 and the use of the net
proceeds therefrom to fund approximately $593,500 of property acquisitions and
other investments in the second quarter of 1997, (ii) the UBS Offering and the
use of the net proceeds therefrom to repay approximately $145,000 of
indebtedness under the Credit Facility, (iii) the Note Offering and the use of
the net proceeds therefrom to fund approximately $327,600 of the acquisition of
Houston Center, to repay approximately $50,000 of indebtedness under the Credit
Facility and to fund approximately $10,000 of the acquisition of the Miami
Center office property and to repay approximately $7,200 of short-term
indebtedness, (iv) the Private Placement and the use of the net proceeds
therefrom to repay approximately $10,000 of indebtedness under the Credit
Facility (v) assumed indebtedness of $97,100 in connection with the purchase
of Fountain Place, and (vi) Property acquisitions and other investments during
1997 and the Pending Investments.
The unaudited pro forma Consolidated Balance Sheet and Statements of
Operations should be read in conjunction with the historical audited financial
statements of the Company included in its Annual Report on Form 10-K for the
year ended December 31, 1996. In management's opinion, all adjustments necessary
to reflect the above discussed transactions have been made. The unaudited pro
forma Consolidated Balance Sheet and Statements of Operations are not
necessarily indicative of what actual results of operations of the Company would
have been for the period, nor does it purport to represent the Company's results
of operations for future periods.
F-1
<PAGE> 7
CRESCENT REAL ESTATE EQUITIES COMPANY
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
CRESCENT REAL
ESTATE EQUITIES
COMPANY PRO FORMA PRO FORMA
HISTORICAL(A) ADJUSTMENTS CONSOLIDATED
--------------- ----------- ------------
<S> <C> <C> <C>
Investments in real estate.......................... $2,628,792 $ 573,100(B) $3,201,892
Less -- accumulated depreciation.................... (236,967) -- (236,967)
---------- --------- ----------
Net investment in real estate............. 2,391,825 573,100 2,964,925
Cash and cash equivalents........................... 55,589 22,737(C) 78,326
Restricted cash and cash equivalents................ 28,429 -- 28,429
Accounts receivable, net............................ 17,324 -- 17,324
Deferred rent receivable............................ 23,266 -- 23,266
Investments in real estate mortgages and common
stock of unconsolidated subsidiaries.............. 41,993 309,741(D) 351,734
Notes receivable, net............................... 122,992 23,700(E) 146,692
Other assets, net................................... 98,362 5,231(F) 103,593
---------- --------- ----------
Total assets.............................. $2,779,780 $ 934,509 $3,714,289
========== ========= ==========
LIABILITIES
Borrowings under Credit Facility.................... $ 339,700 $ (6,300)(G) $ 333,400
Notes payable....................................... 792,796 267,709(H) 1,557,605
497,100(I)
Accounts payable, accrued expenses and other
liabilities....................................... 62,206 21,000(J) 83,206
---------- --------- ----------
Total liabilities......................... 1,194,702 779,509 1,974,211
---------- --------- ----------
MINORITY INTERESTS:
Operating partnership............................. 118,645 -- 118,645
Investment joint ventures......................... 28,369 -- 28,369
---------- --------- ----------
Total minority interest................... 147,014 -- 147,014
---------- --------- ----------
SHAREHOLDERS' EQUITY:
Common shares..................................... 970 50 1,020
Additional paid-in capital........................ 1,499,477 154,950 1,654,427
Deferred compensation on restricted shares........ (283) -- (283)
Retained deficit.................................. (62,100) -- (62,100)
---------- --------- ----------
Total shareholders' equity................ 1,438,064 155,000(K) 1,593,064
---------- --------- ----------
Total liabilities and shareholders'
equity.................................. $2,779,780 $ 934,509 $3,714,289
========== ========= ==========
</TABLE>
See accompanying notes to Pro Forma Consolidated Balance Sheet.
F-2
<PAGE> 8
CRESCENT REAL ESTATE EQUITIES COMPANY
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
ADJUSTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C>
(A) Reflects Crescent Real Estate Equities Company unaudited
consolidated historical balance sheet as of June 30,
1997...................................................... --
(B) Increase reflects the following:
Acquisition of Houston Center............................. $ 327,600
Acquisition of Miami Center office property............... 131,500
Pending acquisition of Fountain Place office property..... 114,000
---------
$ 573,100
=========
(C) Net increase reflects the following:
Equity investment in The Woodlands........................ $ (5,000)
Draw on the Credit Facility for working capital........... 22,700
Proceeds from Crescent Operating, Inc., ("COI") as a
result of COI's acquisition of the voting common stock
in The Woodlands and Desert Mountain................... 5,159
Proceeds from the Note Offering........................... 394,769
Acquisition of Houston Center............................. (327,600)
Acquisition of Miami Center............................... (10,000)
Partial repayment under the Credit Facility
using proceeds from the Note Offering.................. (50,000)
Repayment of Texas Commerce Bank Notes.................... (7,291)
---------
$ 22,737
=========
(D) Increase reflects the following:
42.5% equity investment in The Woodlands.................. $ 80,000
Sale of 100% of voting common stock to COI representing 5%
equity interest in The Woodlands....................... (1,915)
93% equity investment in Desert Mountain.................. 234,900
Sale of 100% of voting common stock to COI representing 5%
equity interest in Desert Mountain..................... (3,244)
---------
$ 309,741
=========
(E) Increase reflects the following:
Note Receivable from Desert Mountain...................... $ 23,700
=========
(F) Increase reflects the following:
Capitalized Note Offering costs........................... $ 5,231
=========
(G) Net decrease in borrowings under the Credit Facility as a
result of:
Partial repayment using the UBS Offering proceeds......... $(145,000)
Working capital draws..................................... 22,700
Equity investment in Desert Mountain...................... 13,900
Note Receivable from Desert Mountain...................... 23,700
Partial repayment using the proceeds of the Note
Offering............................................... (50,000)
Partial repayment using the proceeds from the
Private Placement...................................... (10,000)
Acquisition of Miami Center............................... 121,500
Pending acquisition of Fountain Place..................... 16,900
---------
$ (6,300)
=========
(H) Net increase in short-term borrowings as a result of:
Equity investment in The Woodlands........................ $ 75,000
Equity investment in Desert Mountain...................... 200,000
Repayment of Texas Commerce Bank Note using the
proceeds of the Note Offering and excess cash........... (7,291)
---------
$ 267,709
=========
</TABLE>
F-3
<PAGE> 9
(I) Increase in notes payable reflects the following:
Note Offering............................................. $ 400,000
Assumption of Note relating to Fountain Place
acquisition............................................ 97,100
---------
$ 497,100
=========
(J) Increase reflects the following:
Equity investment in Desert Mountain...................... $ 21,000
=========
(K) Increase reflects the following:
Proceeds of the UBS Offering.............................. $ 145,000
Net proceeds from the Private Placement .................. 10,000
---------
$ 155,000
=========
F-4
<PAGE> 10
CRESCENT REAL ESTATE EQUITIES COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CRESCENT PENDING
REAL ESTATE ACQUISITION
EQUITIES OF
COMPANY 1997 ACQUIRED HOUSTON MIAMI FOUNTAIN OTHER PRO FORMA
HISTORICAL(A) INVESTMENTS(B) CENTER(C) CENTER(D) PLACE(E) ADJUSTMENTS CONSOLIDATED
------------- -------------- --------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Rental property............ $174,882 $40,992 $26,152 $7,158 $10,935 $ -- $260,119
Interest and other
income................... 8,321 -- -- -- -- 4,821(F) 13,142
-------- ------- ------- ------ ------- -------- --------
Total revenues....... 183,203 40,992 26,152 7,158 10,935 4,821 273,261
-------- ------- ------- ------ ------- -------- --------
EXPENSES:
Real estate taxes.......... 17,622 2,059 2,520 1,237 1,410 -- 24,848
Repairs and maintenance.... 10,943 2,001 3,407 1,276 1,835 -- 19,462
Other rental property
operating................ 36,600 4,302 5,961 1,272 2,124 (283)(G) 49,468
(508)(H)
Corporate general and
administrative........... 7,483 -- -- -- -- -- 7,483
Interest expense........... 31,612 -- -- -- -- 36,332(I) 67,944
Depreciation and
amortization............. 30,291 8,682 3,751 1,643 1,425 -- 45,792
Amortization of deferred
financing costs.......... 1,220 -- -- -- -- 360(J) 1,580
-------- ------- ------- ------ ------- -------- --------
Total expenses....... 135,771 17,044 15,639 5,428 6,794 35,901 216,577
-------- ------- ------- ------ ------- -------- --------
Operating income
(loss)............. 47,432 23,948 10,513 1,730 4,141 (31,080) 56,684
-------- ------- ------- ------ ------- -------- --------
OTHER INCOME:
Equity in net income of
unconsolidated
subsidiaries............. 1,999 13,367 -- -- -- -- 15,366
-------- ------- ------- ------ ------- -------- --------
INCOME (LOSS) BEFORE MINORITY
INTERESTS.................. 49,431 37,315 10,513 1,730 4,141 (31,080) 72,050
Minority interests........... (7,586) -- -- -- -- (1,395)(K) (8,981)
-------- ------- ------- ------ ------- -------- --------
NET INCOME (LOSS)............ $ 41,845 $37,315 $10,513 $1,730 $ 4,141 $(32,475) $ 63,069
======== ======= ======= ====== ======= ======== ========
NET INCOME PER COMMON
SHARE(L)................... $ 0.62
========
</TABLE>
See accompanying notes to Pro Forma Consolidated Statement of Operations.
F-5
<PAGE> 11
CRESCENT REAL ESTATE EQUITIES COMPANY
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
ADJUSTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C> <C>
(A) Reflects Crescent Real Estate Equities Company unaudited consolidated
historical statement of operations for the six months ended June 30,
1997..................................................................... --
(B) Reflects the historical incremental rental income and operating expenses,
including an adjustment for depreciation based on acquisition price
associated with acquired investments assuming the investments were
acquired at the beginning of the period.................................. --
ACQUISITION
PROPERTY DATE
Greenway II office property............................ 1/17/97
Trammell Crow Center office property................... 2/28/97
Three Denver office properties......................... 2/28/97
Carter-Crowley Real Estate Assets...................... 5/09/97
Magellan Real Estate Assets (i)........................ 6/17/97
The Woodlands (ii)(iii)................................ 7/31/97
Desert Mountain (iv)................................... 8/29/97
--------------------
(i) Calculated to reflect the lease payment from the behavioral
healthcare facilities' lessee to the Company by applying the rent
provisions (as set forth in the facilities' lease agreement).
(ii) The Company has a 40.375% (after sale of voting common stock
to COI) non-voting equity investment in the limited partnership whose
primary holdings include The Woodland land assets.
(iii) The Company has a 42.5% equity investment in the limited
partnership whose primary holdings include the Woodlands commercial
property assets.
(iv) The Company has a 88.350% (after sale of voting common stock
to COI) non-voting equity investment in the limited partnership that owns
Desert Mountain.
(C) Reflects the historical incremental rental income and operating expenses,
including an adjustment for depreciation based on the acquisition price
for Houston Center, assuming the investment was acquired at the beginning
of the period............................................................ --
ACQUISITION
PROPERTY DATE
Houston Center mixed-use property complex.............. 9/22/97
Four Season's Hotel(i)................................. 9/22/97
(i) Historical operations of the hotel were adjusted to reflect the
lease payment from the hotel lessee to the Company calculated on a pro
forma basis.
(D) Reflects the historical incremental rental income and operating expenses,
including an adjustment for depreciation based on the acquisition price
associated with the acquisition of Miami Center, assuming the investment
was acquired at the beginning of the period.............................. --
(E) Reflects the historical incremental rental income and operating expenses,
including an adjustment for depreciation based on the acquisition price
associated with the pending acquisition of Fountain Place, assuming the
investment was acquired at the beginning of the period................... --
(F) Increase reflects the incremental interest income associated with the
following, assuming all had occurred at the beginning of the period.
Carter-Crowley Notes ($55,500 @ 10%) =$5,550
COI Note ($25,697 @ 12%) = $3,084
Desert Mountain Note ($23,700 @ 12%) = $2,844
</TABLE>
F-6
<PAGE> 12
<TABLE>
<S> <C> <C> <C>
Total.................................................. $11,478
Prorated for six months................................ 5,739
Less: Historical interest income....................... (918)
-----------
Total.................................................. $4,821
======
(G) Reflects the elimination of historical ground lessee's expense, as a
result of the Company acquiring the land underlying Trammell Crow Center,
assuming Trammell Crow Center was acquired at the beginning of the
period................................................................... $ (283)
======
(H) Decrease as a result of the elimination of third party property
management fees which terminated subsequent to acquisition of certain of
the properties........................................................... $ (508)
======
(I) Net increase as a result of interest costs for long and short-term
financing, as follows, net of repayment with proceeds of the Private
Placement Note Offering, Equity Offering to UBS in August 1997 and April
and May 1997 Equity Offerings, assuming the borrowings to finance
investment acquisitions and the assumption of debt and repayment, had all
occurred at the beginning of the period.
Credit Facility.................... $ 333,400 @ 6.89% $22,971
Debt Offering --
6.625% Notes due 2002............ 150,000 @ 6.625% 9,938
Debt Offering --
7.125% Notes due 2007............ 250,000 @ 7.125% 17,813
Pending Investment Note
Assumption....................... 97,100 @ 7.46% 7,244
FNBBI Loan......................... 235,000 @ 7.06% 16,591
FNBBII Loan........................ 200,000 @ 6.89% 13,780
LaSalle Note I..................... 239,000 @ 7.83% 18,714
LaSalle Note II.................... 161,000 @ 7.79% 12,542
Cigna Note......................... 63,500 @ 7.47% 4,743
Metropolitan Life Note............. 12,264 @ 8.88% 1,089
LaSalle Note III................... 115,000 @ 7.82% 8,993
Nomura Funding VI Note............. 8,741 @ 10.07% 880
Northwestern Life Note............. 26,000 @ 7.66% 1,992
---------- --------
Total annual amount................ $1,891,005 $137,290
Prorated for six months............ 68,645
Less: Capitalized interest......... (701)
Historical interest expense........ (31,612)
--------
$ 36,332
========
(J) Amortization of capitalized costs associated with the Note Offering for
initial purchasers' discounts ($4,731) and other costs ($500).
</TABLE>
<TABLE>
<CAPTION>
AMORTIZATION
OF FEES
NOTE ------------
<S> <C> <C> <C>
Note Offering -- 6.625% Notes due 2002................. $392
Note Offering -- 7.125% Notes due 2007................. 327
----
Total.................................................. $719
Prorated for six months................................ $ 360
=======
(K) Reflects adjustment needed to reflect minority partners' weighted average
11.48% interest in the net income of the Operating Partnership less joint
venture minority interests assuming completion of the Equity Offerings at
the beginning of the period............................................... $(1,395)
=======
(L) Reflects net income per share based on 102,336,027 weighted average common
shares assumed to be outstanding during the six months ended June 30,
1997...................................................................... --
</TABLE>
F-7
<PAGE> 13
CRESCENT REAL ESTATE EQUITIES COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PENDING
CRESCENT REAL ACQUISITION
ESTATE EQUITIES OF
COMPANY 1996 ACQUIRED 1997 ACQUIRED HOUSTON MIAMI FOUNTAIN OTHER
HISTORICAL(A) PROPERTIES(B) INVESTMENTS(C) CENTER(D) CENTER(E) PLACE(F) ADJUSTMENTS
--------------- ------------- --------------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Rental property........... $202,003 $89,185 $118,789 $51,204 $14,828 $22,507 $ --
Interest and other income... 6,858 -- -- 11,478(G)
-------- ------- -------- ------- ------- ------- --------
Total revenues...... 208,861 89,185 118,789 51,204 14,828 22,507 11,478
-------- ------- -------- ------- ------- ------- --------
EXPENSES:
Real estate taxes......... 20,606 8,176 7,773 5,094 2,498 2,250 --
Repairs and maintenance... 12,292 8,403 7,751 7,939 2,615 3,563 --
Other rental property
operating............... 40,915 21,346 16,972 12,309 2,598 4,022 (1,700)(H)
(1,433)(I)
Corporate general and
administrative.......... 4,674 -- -- -- -- -- 5,326(J)
Interest expense.......... 42,926 -- -- -- -- -- 93,262(K)
Depreciation and
amortization............ 40,535 12,727 23,978 7,502 3,288 2,850 --
Amortization of deferred
financing costs......... 2,812 -- -- -- -- -- 719(L)
-------- ------- -------- ------- ------- ------- --------
Total expenses...... 164,760 50,652 56,474 32,844 10,999 12,685 96,174
-------- ------- -------- ------- ------- ------- --------
Operating income
(loss)............ 44,101 38,533 62,315 18,360 3,829 9,822 (84,696)
OTHER INCOME:
Equity in net income of
unconsolidated
subsidiaries............ 3,850 -- 17,270 -- -- -- --
-------- ------- -------- ------- ------- ------- --------
INCOME (LOSS) BEFORE
MINORITY INTERESTS AND
EXTRAORDINARY ITEM........ 47,951 38,533 79,585 18,360 3,829 9,822 (84,696)
Minority interests.......... (9,510) (533) -- -- -- -- (3,876)(M)
-------- ------- -------- ------- ------- ------- --------
INCOME BEFORE EXTRAORDINARY
ITEM...................... 38,441 38,000 79,585 18,360 3,829 9,822 (88,572)
Extraordinary item.......... (1,306) -- -- -- -- -- --
-------- ------- -------- ------- ------- ------- --------
NET INCOME (LOSS)........... $ 37,135 $38,000 $ 79,585 $18,360 $ 3,829 $ 9,822 $(88,572)
======== ======= ======== ======= ======= ======= ========
PER SHARE DATA(N):
Income before extraordinary
item......................
Extraordinary item..........
Net income..................
<CAPTION>
PRO FORMA
CONSOLIDATED
------------
<S> <C>
REVENUES:
Rental property........... $498,516
Interest and other income... 18,336
--------
Total revenues...... 516,852
--------
EXPENSES:
Real estate taxes......... 46,397
Repairs and maintenance... 42,563
Other rental property
operating............... 95,029
Corporate general and
administrative.......... 10,000
Interest expense.......... 136,188
Depreciation and
amortization............ 90,880
Amortization of deferred
financing costs......... 3,531
--------
Total expenses...... 424,588
--------
Operating income
(loss)............ 92,264
OTHER INCOME:
Equity in net income of
unconsolidated
subsidiaries............ 21,120
--------
INCOME (LOSS) BEFORE
MINORITY INTERESTS AND
EXTRAORDINARY ITEM........ 113,384
Minority interests.......... (13,919)
--------
INCOME BEFORE EXTRAORDINARY
ITEM...................... 99,465
Extraordinary item.......... (1,306)
--------
NET INCOME (LOSS)........... $ 98,159
========
PER SHARE DATA(N):
Income before extraordinary
item...................... $ 0.97
Extraordinary item.......... (0.01)
--------
Net income.................. $ 0.96
========
</TABLE>
See accompanying notes to Pro Forma Consolidated Statement of Operations.
F-8
<PAGE> 14
CRESCENT REAL ESTATE EQUITIES COMPANY
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
ADJUSTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C> <C>
(A) Reflects Crescent Real Estate Equities Company consolidated historical
statement of operations for the year ended December 31, 1996............. --
(B) Reflects the historical incremental rental income and operating expenses,
including an adjustment for depreciation based on acquisition price
associated with all properties acquired in 1996, assuming the properties
were acquired at the beginning of the period............................. --
ACQUISITION
PROPERTY DATE
3333 Lee Parkway office property....................... 1/05/96
301 Congress Avenue office property(i)................. 4/18/96
Central Park Plaza office property..................... 6/13/96
Canyon Ranch -- Tucson resort(ii)...................... 7/26/96
The Woodlands office properties(iii)................... 7/31/96
Three Westlake Park office property.................... 8/16/96
1615 Poydras office property........................... 8/23/96
Greenway Plaza Portfolio............................... 10/07/96
Chancellor Park office property........................ 10/24/96
The Woodlands retail properties(iii)................... 10/31/96
Sonoma Mission Inn & Spa(ii)........................... 11/18/96
Canyon Ranch -- Lenox resort(ii)....................... 12/11/96
160 Spear Street office property....................... 12/13/96
Greenway I and IA office properties.................... 12/18/96
Bank One Tower office property......................... 12/23/96
Frost Bank Plaza office property....................... 12/27/96
--------------------
(i) The Company has a 1% general partner and a 49% limited partner
interest in the partnership that owns 301 Congress Avenue.
(ii) Historical operations of the hotel or/resort property were
adjusted to reflect the lease payments from the hotel lessee to the
Company calculated on a pro forma basis by applying the rent
provisions (as defined in the lease agreements).
(iii) The Company has a 75% interest in the partnership that owns
these properties.
</TABLE>
F-9
<PAGE> 15
<TABLE>
<S> <C> <C> <C>
(C) Reflects the historical incremental rental income and operating expenses,
including an adjustment for depreciation based on acquisition price
associated with acquired investments in 1997, assuming the investments
were acquired at the beginning of the period............................. --
Greenway II office property............................ 1/17/97
Trammell Crow Center office property................... 2/28/97
Three Denver office properties......................... 2/28/97
Carter-Crowley Real Estate Assets...................... 5/09/97
Magellan Real Estate Assets (i)........................ 6/17/97
The Woodlands (ii) (iii)............................... 7/31/97
Desert Mountain (iv)................................... 8/29/97
--------------------
(i) Calculated to reflect the lease payment from the behavioral
healthcare facilities' lessee to the Company by applying the
rent provisions (as set forth in the facilities' lease
agreement).
(ii) The Company has a 40.75% (after sale of voting common stock to
COI) non-voting equity investment in the limited partnership
whose primary holdings include The Woodlands land assets.
(iii) The Company has a 42.5% equity investment in the limited
partnership whose primary holdings include The Woodlands
commercial property assets.
(iv) The Company has a 88.50% (after sale of voting common stock to
COI) non-voting equity investment in the limited partnership
that owns Desert Mountain.
(D) Reflects the historical incremental rental income and operating expenses,
including an adjustment for depreciation based on the acquisition price
for Houston Center assuming the investment was acquired at the beginning
of the period............................................................ --
ACQUISITION
PROPERTY DATE
Houston Center mixed-use property complex.............. 9/22/97
Four Season's Hotel(i)................................. 9/22/97
--------------------
(i) Historical operations of the hotel were adjusted to reflect
the lease payment from the hotel lessee to the Company calculated on a
pro forma basis.
(E) Reflects the historical incremental rental income and operating expenses,
including an adjustment for depreciation based on the acquisition price
associated with the acquisition of Miami Center, assuming the investment
was acquired at the beginning of the period.............................. --
(F) Reflects the historical incremental rental income and operating expenses,
including an adjustment for depreciation based on the acquisition price
associated with the pending acquisition of Fountain Place, assuming the
investment was acquired at the beginning of the period................... --
(G) Increase reflects the incremental interest income associated with the
following, assuming all had occurred at the beginning of the period.
Carter-Crowley Notes ($55,500 @ 10%) = $5,550
COI Note ($25,697 @ 12%) = $3,084
Desert Mountain Note ($23,700 @ 12%) = $2,844
Total............................................................... $11,478
=======
(H) Reflects the elimination of historical ground lessee's expense, as a
result of the Company acquiring the land underlying Trammell Crow Center,
assuming Trammell Crow Center was acquired at the beginning of the
period................................................................... $(1,700)
=======
(I) Decrease as a result of the elimination of third party property
management fees which terminated subsequent to acquisition of certain of
the properties........................................................... $(1,433)
=======
</TABLE>
F-10
<PAGE> 16
<TABLE>
<S> <C>
(J) Increase reflects the estimated incremental general and administrative
costs associated with the increase in personnel due to numerous
acquisitions in 1996 and 1997 and pending investments in 1997............ $ 5,326
=======
(K) Net increase as a result of interest costs for long and short-term
financing, as follows, net of repayment with proceeds of the Private
Placement, Note Offering, Equity Offering to UBS in August 1997, April
and May 1997 Equity Offerings and the October 1996 Equity Offerings,
assuming the borrowings to finance investment acquisitions and the
assumption of debt and repayment, had all occurred at the beginning of
the period.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Credit Facility.......................... $333,400 @ 6.89% $22,971
Debt Offering --
6.625% Notes due 2002.................. 150,000 @ 6.625% 9,938
Debt Offering --
7.125% Notes due 2007.................. 250,000 @ 7.125% 17,813
Pending Investment Note Assumption....... 97,100 @ 7.46% 7,244
FNBBI Loan............................... 235,000 @ 7.06% 16,591
FNBBII Loan.............................. 200,000 @ 6.89% 13,780
LaSalle Note I........................... 239,000 @ 7.83% 18,714
LaSalle Note II.......................... 161,000 @ 7.79% 12,542
Cigna Note............................... 63,500 @ 7.47% 4,743
Metropolitan Life Note................... 12,264 @ 8.88% 1,089
LaSalle Note III......................... 115,000 @ 7.82% 8,993
Nomura Funding VI Note................... 8,741 @ 10.07% 880
Northwestern Life Note................... 26,000 @ 7.66% 1,992
--------- --------
Total annual amount...................... 1,891,005 $137,290
Less: Capitalized interest............... (1,102)
Historical interest expense.............. (42,926)
--------
$ 93,262
========
</TABLE>
(L) Amortization of capitalized costs associated with the Note Offering for
initial purchasers' discounts ($4,731) and other costs ($500).
<TABLE>
<CAPTION>
AMORTIZATION
NOTE OF FEES
---- ------------
<S> <C> <C>
Note Offering -- 6.625% Notes due 2002................. $392
Note Offering -- 7.125% Notes due 2007................. 327
----
Total.................................................. $ 719
=======
(M) Reflects adjustment needed to reflect minority partners' weighted average
11.48% interest in the net income of the Operating Partnership less joint
venture minority interests assuming completion of the Equity Offerings at
the beginning of the period............................................... ($3,876)
=======
(N) Reflects net income per share based on 102,336,027 weighted average common
shares assumed to be outstanding during the year ended December 31,
1996......................................................................
</TABLE>
F-11
