<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): January 29, 1997
CRESCENT REAL ESTATE EQUITIES COMPANY
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C> <C>
Texas 1-13038 52-1862813
(State of Organization) (Commission File Number) (IRS Employer Identification Number)
</TABLE>
<TABLE>
<S> <C>
777 Main Street, Suite 2100
Fort Worth, Texas 76102
(Address of Principal Executive (Zip Code)
Offices)
</TABLE>
(817) 877-0477
(Registrant's telephone number, including area code)
<PAGE> 2
The Form 8-K of Crescent Real Estate Equities Company (the "Company"),
dated January 29, 1997 and filed March 24, 1997, is being amended to restate the
disclosure contained in Item 5 thereof in its entirety to reflect updated
information relating to the proposed spin-off of an affiliated entity, the
proposed acquisition of certain assets and the financing of these transactions.
<PAGE> 3
ITEM 5. OTHER EVENTS
PROPOSED SPIN-OFF
Crescent Real Estate Equities Company ("Crescent Equities"), which
operates as a real estate investment trust (a "REIT") for federal income tax
purposes, intends to establish a new corporation ("Crescent Affiliate"), the
shares of which will be distributed by Crescent Real Estate Equities Limited
Partnership, which is the operating partnership of Crescent Equities (the
"Operating Partnership"), to its partners (including Crescent Equities).
Crescent Equities will then distribute the shares of Crescent Affiliate as a
dividend to its shareholders in a spin-off.
Prior to the spin-off, Crescent Equities and its subsidiaries
(collectively, the "Company") will provide to Crescent Affiliate approximately
$40.8 million in the form of cash contributions and loans to be used by
Crescent Affiliate to acquire certain assets described below. The Company will
also make available to Crescent Affiliate a line of credit in the amount of
approximately $20.0 million to be used by Crescent Affiliate to fulfill certain
ongoing obligations associated with these assets. In addition, Crescent
Affiliate will obtain certain rights pursuant to the terms of an intercompany
agreement to be entered into with the Company in connection with the spin-off.
The spin-off is designed to provide the shareholders of the Company at
the time of the spin-off with the ability to benefit from both the real estate
operations of the Company and the related business operations of Crescent
Affiliate. The spin-off of Crescent Affiliate will result in Crescent
Affiliate's becoming a public company, the shares of which are expected to be
publicly traded no later than the effective date of the spin-off.
ACQUISITION OF CARTER-CROWLEY PORTFOLIO
On February 10, 1997, the Company entered into a contract to acquire,
for $383.3 million, substantially all of the assets (the "Carter-Crowley
Portfolio") of Carter-Crowley, Inc. ("Carter-Crowley"), an unaffiliated company
controlled by the family of Donald J. Carter. The Carter-Crowley Portfolio
includes 14 office properties (the "Carter-Crowley Office Portfolio"), with an
aggregate of approximately 3.0 million net rentable square feet, approximately
1,216 acres of commercially zoned, undeveloped land located in the Dallas/Fort
Worth metropolitan area, two multifamily residential properties located in the
Dallas/Fort Worth metropolitan area, marketable securities, an approximately 12%
limited partner interest in the limited partnership that owns the Dallas
Mavericks NBA basketball franchise, secured and unsecured promissory notes and
certain other assets (including operating businesses). A portion of the
Carter-Crowley Portfolio will be acquired by the Company and a portion will be
acquired by Crescent Affiliate with funds received from the Company in the form
of cash contributions and loans. The Company has exercised its right under the
contract to require Carter-Crowley to liquidate the approximately $47.0 million
of marketable securities and reduce the total purchase price by a corresponding
amount to $336.3 million. The assets in the Carter-Crowley Portfolio have been
preliminarily allocated between the Company and Crescent Affiliate and the
purchase price preliminarily allocated among these assets. These allocations of
assets and purchase prices are subject to adjustment prior to closing of the
transaction.
The Company anticipates that it will acquire assets from the Carter-Crowley
Portfolio, with an aggregate purchase price of approximately $308.0 million,
consisting primarily of the Carter-Crowley Office Portfolio, the two multifamily
residential properties, the approximately 1,216 acres of undeveloped land and
the secured and unsecured promissory notes relating primarily to the Dallas
Mavericks. In addition to the promissory notes relating to the Dallas Mavericks,
it is anticipated that the Company will obtain rights from the current holders
of the majority interest in the Dallas Mavericks to a contingent $10.0 million
payment if a new arena is built within a 75-mile radius of Dallas.
The remainder of the Carter-Crowley Portfolio will be purchased by Crescent
Affiliate utilizing cash contributions and loan proceeds that will be provided
to Crescent Affiliate by the Company. These assets, which have an estimated
value of approximately $28.3 million, are expected to consist primarily of the
approximately 12% limited partner interest in the limited partnership that owns
the Dallas Mavericks, an approximately 1% interest in a private venture capital
fund, a 100% interest in a construction equipment sale, leasing and services
company, certain direct non-operating working interests in various oil and gas
wells and an approximately 35% limited partner interest in two oil and gas
limited partnerships that own working interests in various oil and gas wells.
The Company has preliminarily allocated approximately $205.0 million
(approximately $68.33 per square foot) of the purchase price to the
Carter-Crowley Office Portfolio. The Carter-Crowley Office Portfolio contains
an aggregate of approximately 3.0 million net rentable square feet in seven
suburban Dallas submarkets. The buildings, which were constructed principally
between 1980 and 1986, range in size from approximately 40,000 to approximately
634,000 net rentable square feet and, as of December 31, 1996, were 91% leased.
The acquisition of the Carter-Crowley Office Portfolio will increase the
Company's ownership of office space in the Dallas market to more than 8.7
million net rentable square feet and to 13% of the Class A office space in the
Dallas market. The weighted average full-service rental rates for the
Carter-Crowley Office Portfolio were $12.18 per leased square foot, compared to
a weighted average quoted market rental rate for the submarkets in which the
Carter-Crowley Office Portfolio is located of $18.63 per square foot. The
Carter-Crowley Office Portfolio has a weighted average remaining lease term of
3.75 years. Major tenants include CompUSA, Inc., Aetna Life Insurance Company,
United States Data Corporation and Northern Telecom, Inc.
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The following table provides information for the Carter-Crowley Office
Portfolio by submarket as of December 31, 1996.
<TABLE>
<CAPTION>
TOTAL
NET WEIGHTED AVERAGE OFFICE WEIGHTED AVERAGE
NUMBER RENTABLE PERCENT FULL-SERVICE SUBMARKET QUOTED MARKET
OF AREA LEASED AT RENTAL RATE PER PERCENT RENTAL RATE PER
CLASSIFICATION, SUBMARKET PROPERTIES (SQ. FT.) PROPERTIES SQUARE FOOT(1) LEASED(2) SQUARE FOOT(2)(3)
- ------------------------------------- ---------- --------- ---------- ---------------- --------- -----------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Stemmons Freeway..................... 1 634,381 92% $12.54 60%(4) $16.87
Far North Dallas..................... 3 494,496 98 12.67 98 20.88
Uptown/Turtle Creek.................. 2 485,088 79 12.20 86 22.99
Richardson/Plano..................... 2 418,234 100 13.23 98 19.14
LBJ Freeway.......................... 1 213,915 89 13.08 95 20.32
Las Colinas.......................... 1 74,861 99 11.95 95 23.14
-- --------- --- ------ -- ------
Subtotal/Weighted Average.......... 10 2,320,975 92% $12.67 92% $19.93
-- --------- --- ------ -- ------
CLASS B
Central Expressway................... 2 413,721 85% $11.04 82% $13.82
LBJ Freeway.......................... 1 244,879 92 9.61 91 14.92
Far North Dallas..................... 1 40,525 100 10.75 90 15.56
-- --------- --- ------ -- ------
Subtotal/Weighted Average.......... 4 699,125 88% $10.50 89% $14.31
-- --------- --- ------ -- ------
TOTAL/WEIGHTED AVERAGE....... 14 3,020,100 91% $12.18 91% $18.63
== ========= === ====== == ======
</TABLE>
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(1) Calculated based on base rent payable as of December 31, 1996, without
giving effect to free rent or scheduled rent increases that would be taken
into account under generally accepted accounting principles, and including
expenses payable by tenants.
(2) Source -- Jamison Research, Inc.
(3) Represents full-service rental rates. These rates do not necessarily
represent the amounts at which available space in the Carter-Crowley Office
Portfolio will be leased. The weighted average subtotals and total are based
on total net rentable square feet in each submarket of the Class A and/or
Class B office properties, as applicable, in the Carter-Crowley Office
Portfolio.
(4) Includes two buildings with an aggregate of approximately 530,000 net
rentable square feet which, subsequent to December 31, 1996, have been
reclassifed as "owner occupied" and will not be included in Class A office
space in 1997. Excluding these two buildings, management estimates that the
percent leased in this submarket would have been approximately 75% as of
December 31, 1996.
The Carter-Crowley Office Portfolio is leased to more than 450 tenants, the
major tenants having principal businesses in the industry sectors of technology,
financial services and media services. None of the tenants in the 14 office
properties comprising the Carter-Crowley Office Portfolio lease over 10% of the
aggregate net rentable area.
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The aggregate tax basis for the Carter-Crowley Office Portfolio of
depreciable real property and personal property is not available at this time
since the acquisition has not closed.
The 1996 realty tax rate for the Carter-Crowley Office Portfolio was $2.52
per $100 of the $148.5 million assessed value. The total amount of tax at this
rate for 1996 was approximately $3.7 million.
For the year ended December 31, 1996, utility expense for the
Carter-Crowley Office Portfolio was approximately $5.0 million and expenses for
repairs, maintenance and contract services were approximately $4.4 million.
The Company has no immediate plans to redevelop any of the properties
within the Carter-Crowley Office Portfolio and believes such properties are
adequately covered by insurance. The seller of the Carter-Crowley Office
Portfolio has acquired the 14 office properties at different times over the
last seven years; therefore, the year-end occupancy and average base rent per
leased square foot for the Carter-Crowley Office Portfolio is only available
for 1996. See table above.
The following table sets forth for the Carter-Crowley Office Portfolio a
schedule of lease expirations for leases in place as of December 31, 1996 for
each of the 10 years beginning with January 1, 1997, assuming that none of the
tenants exercises renewal options and excluding 290,590 square feet of unleased
space.
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE OF ANNUAL BASE
NUMBER OF NET RENTABLE OF LEASED TOTAL ANNUAL RENT PER
TENANTS AREA SUBJECT NET RENTABLE ANNUAL BASE BASE RENT SQUARE FOOT
WITH TO EXPIRING AREA SUBJECT RENT UNDER REPRESENTED BY FOR NET
EXPIRING LEASES TO EXPIRING EXPIRING EXPIRING RENTABLE AREA
YEAR AND LEASE EXPIRATION LEASES (SQUARE FEET) LEASES LEASES(1) LEASES EXPIRING(1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1997 91 176,724 6.5% $2,015,800 5.5% $11.41
1998 111 419,145 15.4 5,281,006 14.4 12.60
1999 102 389,846 14.3 4,829,621 13.2 12.39
2000 78 591,687 21.7 8,180,128 22.4 13.83
2001 58 413,361 15.1 5,703,691 15.6 13.80
2002 15 183,282 6.7 2,423,756 6.6 13.22
2003 7 366,656 13.4 5,201,805 14.2 14.19
2004 5 100,041 3.7 1,398,813 3.8 13.98
2005 0 0 0 0 0 0
2006 2 41,072 1.5 635,055 1.8 15.46
2007 and thereafter 1 47,696 1.7 906,224 2.5 19.00
</TABLE>
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(1) Calculated based on base rent payable as of the expiration date of the
lease, for net rentable square feet expiring, without giving effect to
free rent or scheduled rent increases that would be taken into account
under generally accepted accounting principles and excluding all expenses
payable by tenants.
The pro forma financial information reflects the acquisition of the
Carter-Crowley Office Portfolio and the two multifamily residential properties.
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<PAGE> 6
MAGELLAN TRANSACTION
On January 29, 1997, the Company entered into an agreement with Magellan
Health Services, Inc. ("Magellan") to acquire substantially all of the real
estate assets of Magellan's domestic hospital provider business as currently
owned and operated by a wholly owned subsidiary of Magellan. The Magellan
transaction involves various components, certain of which will relate to the
Company and certain of which will relate to Crescent Affiliate. None of the
Magellan transactions will be consummated unless all of the transactions are
consummated. Closing of the transactions is subject to various closing
conditions and to approval of the transactions by the stockholders of Magellan,
and is expected to occur in the second quarter of 1997.
The total purchase price for the assets to be acquired in the Magellan
transaction is $400 million. Of this amount, it is anticipated that $390
million will be paid by the Company for the acquisition of approximately 90
behavioral healthcare facilities (the "Magellan Facilities") and certain
warrants to purchase shares of common stock of Magellan, and $10 million will be
paid by Crescent Affiliate for its interest in a limited liability company
("CBHS") and certain warrants to purchase shares of common stock of Magellan.
CBHS will be owned 50% by Crescent Affiliate and 50% by Magellan, subject to
potential dilution of each of Magellan and Crescent Affiliate by up to 5% in
connection with future incentive compensation of management of CBHS.
The principal component of the transaction is the Company's acquisition of
the Magellan Facilities, which are to be leased to CBHS, and the subsidiaries of
CBHS, under a triple-net lease. The lease will require the payment of annual
minimum rent in the amount of $40 million, increasing in each subsequent year
during the 12-year term at a 5% compounded annual rate. The lease provides for
four, five-year renewal options. All maintenance and capital improvement costs
will be the responsibility of CBHS during the term of the lease. In addition,
CBHS will pay annually an additional $20 million under the lease, at least $10
million of which must be used, as directed by CBHS, for capital expenditures
each year and up to $10 million of which may be used, if requested by CBHS, to
cover capital expenditures, property taxes, insurance premiums and franchise
fees. CBHS's failure to pay the additional $20 million is not a default under
the lease unless the Company has expended funds for capital expenditures,
property taxes, insurance premiums or franchise fees. In connection with the
Magellan transaction, the Company also will receive warrants to purchase
1,283,311 shares of common stock of Magellan, at an exercise price of $30.00
per share, with such warrants exercisable, in increments, during the period
from May 1998 through May 2009.
In connection with the closing of the Magellan transaction, Crescent
Affiliate will acquire its interest in CBHS in exchange for an initial payment
of $10 million, with an additional $2.5 million payable to CBHS within five
days following the closing. Magellan will acquire its interest in CBHS in
exchange for the contribution of certain assets, with an additional $2.5
million payable to CBHS in cash within five days following the closing. In
addition, each of Crescent Affiliate and Magellan will agree to lend to CBHS,
upon request by Magellan during the five years following the closing, up to an
aggregate of $17.5 million. Any such loans will bear interest at the rate of
10% per annum and have a term of five years. CBHS, as lessee of the Magellan
Facilities, will be responsible for operating the Magellan Facilities. CBHS
will derive assistance in its role as operator of the Magellan Facilities
through a franchise arrangement with an initial term of 12 years to be entered
into between CBHS (and its subsidiaries), as franchisees, and Magellan, as
franchisor. Pursuant to a franchise arrangement with an initial term of 12
years (and four, five-year renewal options), Magellan will provide to CBHS and
its subsidiaries certain services necessary or desirable for the operation of
the business to be conducted at the Magellan Facilities (including the
provision of policies, procedures and protocols for operation of the Magellan
Facilities and of a toll-free patient referral number) in exchange for an
annual franchise fee of $81 million plus the greater of annual cost-of-living
adjustments or a percentage of CBHS's gross revenues, as defined in the
franchise agreement. The payment by CBHS to Magellan of the annual franchise
fee will be subordinated to the payment by CBHS to the Company of annual
minimum rent. In addition, Magellan will not have the right to terminate the
franchise agreement due to the nonpayment of the franchise fee as a result of
the subordination of the franchise fee to the annual minimum rent. In
connection with the Magellan transaction, Crescent Affiliate will also acquire
warrants to purchase 1,283,311 shares of common stock of Magellan. These
warrants will have the same terms as the warrants purchased by the Company from
Magellan. In addition, Crescent Affiliate will issue to Magellan warrants to
purchase up to 2.5% of its common stock outstanding on the closing date, with
such warrants exercisable only in the same proportion as the Company and
Crescent Affiliate, in the aggregate, exercise their warrants to purchase
common stock of Magellan.
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<PAGE> 7
STRUCTURE OF CRESCENT AFFILIATE AND CERTAIN RELATIONSHIPS
Intercompany Agreement. It is anticipated that, under an intercompany
agreement to be entered into in connection with the spin-off, the Company and
Crescent Affiliate will agree to provide each other with rights to participate
in certain transactions and to make certain investments. For example, Crescent
Affiliate will agree not to acquire or make investments in real estate unless
it has notified the Company of the acquisition or investment opportunity, and
the Company has determined not to make such acquisitions or investments.
Crescent Affiliate also will agree to assist the Company in structuring and
consummating any such acquisition or investment in real estate which the
Company elects to pursue, on terms to be determined by the Company. Similarly,
the Company will provide Crescent Affiliate with a right of first offer (i) to
become lessee of any real property that may be acquired by the Company as to
which the Company, consistent with its status as a REIT, must enter into a
"master" lease arrangement and (ii) to participate in transactions, or make
investments, where the Company is unable to pursue the entire transaction or
investment. The Company may, but will not be required to, offer Crescent
Affiliate the opportunity to participate in transactions, or make investments,
where the Company is able to pursue the entire transaction or investment. In
addition, each party will notify the other party of investment opportunities
developed by such party or of which such party is aware but is unable or
unwilling to pursue. The Company, in its sole discretion, will make all
decisions as to its ability or inability to pursue transactions or investments.
It is also anticipated that Crescent Affiliate will enter into negotiations
with the lessees of certain of the Hotel Properties to acquire the rights of
such lessees. No such negotiations are currently ongoing, however, and there is
no assurance that any such agreements will be reached.
Management and Management Relationships. It is expected that Messrs.
Richard E. Rainwater, John C. Goff and Gerald W. Haddock will hold the same
offices with Crescent Affiliate that they currently hold with the Company. In
addition, it is expected that the board of directors of Crescent Affiliate will
consist of seven members, five of whom (including Messrs. Rainwater, Goff and
Haddock) are currently trust managers of the Company and two of whom are
persons who will not be affiliated with the Company or Crescent Affiliate.
Although each of Messrs. Rainwater, Goff and Haddock is committed to the
success of Crescent Affiliate, they are also committed to the success of
Crescent Equities. None of Mr. Rainwater, Mr. Goff or Mr. Haddock is committed
to spending a particular amount of time on Crescent Affiliate's affairs, nor
will any of them devote his full time to Crescent Affiliate.
Officers and directors of a corporation owe fiduciary duties to the
stockholders of that corporation. There is a risk that the common membership of
management and members of the Boards of Crescent Affiliate and Crescent
Equities will lead to conflicts of interests in connection with transactions
between the two companies. Crescent Affiliate was formed with specific purpose
clauses in an effort to avoid conflicts of interest issues by identifying at
the outset which types of opportunities will be pursued by each company. These
clauses provide that Crescent Affiliate's purposes include performing the
intercompany agreement and refraining from pursuing REIT-suitable
opportunities, until Crescent Equities has been offered, and has declined, the
opportunities.
Certain Relationships with Magellan. Messrs. Rainwater, Goff and Haddock and
Mr. Rainwater's children own shares of common stock of Magellan amd warrants to
acquire shares of common stock of Magellan. Mr. Rainwater, either directly or
indirectly, owns approximately 2,474,000 shares, and warrants to acquire
1,237,000 shares, of common stock of Magellan. Mr. Rainwater's children, either
directly or indirectly, own approximately 320,000 shares, and warrants to
acquire 160,000 shares, of common stock of Magellan. Messrs. Goff and Haddock
each own, directly or indirectly, approximately 57,000 shares, and warrants to
acquire 28,000 shares, of common stock of Magellan. The Magellan transaction is
subject to the approval of Magellan's stockholders.
The warrants entitle the warrant holders to purchase, at any time until
the January 25, 2000 expiration date, up to 2,000,000 shares of common stock of
Magellan at a purchase price of $26.15 per share. Agreements executed in
connection with the acquisition of the warrants (the "Private Placement")
provide, among other things, for the adjustment of the number of shares of
common stock of Magellan that can be purchased under the warrants and the
purchase price, respectively, for certain dilutive events, for registration
rights for shares, including the shares of common stock of Magellan underlying
the warrants, which registration rights have been exercised, and for a variety
of other customary provisions, including, without limitation, certain
restrictions on the private sale of such shares, certain preemptive rights to
acquire additional securities issued by Magellan for cash in a private
placement transaction (which have been waived to the extent they may apply to
the Magellan transaction), and standstill covenants restricting the purchase of
additional shares of common stock of Magellan by Mr. Rainwater and his
affiliates in certain circumstances.
Darla D. Moore is married to Mr. Rainwater and is a director of
Magellan. As part of the arrangements pursuant to which Mr. Rainwater acquired
securities of Magellan, an affiliate of Mr. Rainwater has the right to
designate a nominee acceptable to Magellan for election as a director of
Magellan for so long as Mr. Rainwater and his affiliates (collectively, the
"Rainwater Group") continue to own beneficially a specified minimum number of
shares of common stock of Magellan. Mr. Rainwater's affiliate proposed Ms. Moore
as its nominee for director, and Ms. Moore was elected a director by the
Magellan Board on February 22, 1996.
As part of the Private Placement, Magellan agreed (i) to pay a
transaction fee of $150,000; (ii) to reimburse certain expenses of Rainwater,
Inc. in connection with the Private Placement; (iii) to pay the Rainwater
Group an annual monitoring fee of $75,000 commencing on March 31, 1996; and
(iv) to reimburse the Rainwater Group for reasonable fees and expenses (up to a
maximum of $25,000 annually) incurred in connection with its ownership of
common stock of Magellan and the warrants. Magellan also agreed to reimburse
the Rainwater Group in the future for one additional filing under the
Hart-Scott Rodino Act if such a filing is required in connection with an
exercise of the warrants.
From January 25, 1996 through December 31, 1996, Magellan paid to the
Rainwater Group under the Private Placement an aggregate of $306,344,
consisting of a transaction fee of $150,000, expense reimbursement in
connection with the Private Placement of $86,156, and monitoring fees and
expenses of $70,188. These amounts exclude directors' fees and expense
reimbursement paid to Ms. Moore in her capacity as a director of Magellan.
EFFECT OF CONSUMMATION OF PROPOSED TRANSACTIONS
General. Upon completion of the spin-off, the Magellan transaction, and
the acquisition of the Carter-Crowley Portfolio, the Company and Crescent
Affiliate will exist as separate public companies that, on an aggregate basis,
will own the assets acquired as a result of the consummation of the Magellan
transaction and the acquisition of the Carter-Crowley Portfolio, as described
herein.
The Company. The Company will have purchased approximately $698.0 million
of assets, consisting primarily of the 90 Magellan Facilities and the warrants
to purchase 1,283,311 shares of the common stock of Magellan and the 14 office
properties included in the Carter-Crowley Office Portfolio. These assets also
will include approximately 1,216 acres of commercially zoned, undeveloped land
located in the Dallas/Fort Worth metropolitan area, two multifamily residential
properties located in the Dallas/Fort Worth metropolitan area and secured and
unsecured promissory notes relating primarily to the Dallas Mavericks. The
Company anticipates that it will fund these acquisitions (as well as its
obligations to Crescent Affiliate, as described below) through proceeds of an
offering of its Common Shares and additional borrowings under new or existing
financing arrangements. Through a prospectus supplement to its existing shelf
registration statement, the Company is offering for sale to the public, in an
underwritten public offering, 17,500,000 Common Shares, excluding shares
relating to any underwriters' over-allotment option. If the 17,500,000 Common
Shares are sold, management intends to apply net proceeds of the offering to
fund the transactions described in this report and to arrange additional
borrowings to fund the remaining costs of the transactions.
Crescent Affiliate. Crescent Affiliate will be a public company, the
securities of which initially will be owned by the shareholders of the Company
and the limited partners of the Operating Partnership on the record date for the
spin-off. The assets of Crescent Affiliate will be acquired by Crescent
Affiliate utilizing cash contributions of approximately $12.2 million and loans
of approximately $28.6 million provided to Crescent Affiliate by the Company in
the aggregate amount of approximately $40.8 million. Crescent Affiliate intends
to use these funds to acquire assets that will consist primarily of a 50%
interest in CBHS, warrants to purchase 1,283,311 shares of common stock of
Magellan, an approximately 12% limited partner interest in the limited
partnership that owns the Dallas Mavericks, an approximately 1% interest in a
private venture capital fund, a 100% interest in a construction equipment sale,
leasing and services company, certain direct non-operating working interests in
various oil and gas wells and an approximately 35% limited partner interest in
two oil and gas limited partnerships that own working interests in various oil
and gas wells. In addition, Crescent Affiliate will have available to it
approximately $20.0 million under a line of credit from the Company to fulfill
certain ongoing obligations associated with these assets.
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<PAGE> 8
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: April 9, 1997 CRESCENT REAL ESTATE EQUITIES COMPANY
By: /s/ Dallas E. Lucas
--------------------------------
Dallas E. Lucas
Senior Vice President and
Chief Financial Officer
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