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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1997
REGISTRATION NO. 333-37565
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CRESCENT REAL ESTATE EQUITIES COMPANY
(Exact Name of Registrant as Specified in Its Charter)
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TEXAS 52-1862813
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
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777 MAIN STREET, SUITE 2100
FORT WORTH, TEXAS 76102
TELEPHONE: (817) 877-0477
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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GERALD W. HADDOCK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CRESCENT REAL ESTATE EQUITIES COMPANY
777 MAIN STREET, SUITE 2100
FORT WORTH, TEXAS 76102
TELEPHONE: (817) 877-0477
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
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Copies to:
<TABLE>
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ROBERT B. ROBBINS, ESQ. DAVID M. DEAN, ESQ.
SYLVIA M. MAHAFFEY, ESQ. CRESCENT REAL ESTATE EQUITIES COMPANY
SHAW, PITTMAN, POTTS & TROWBRIDGE 777 MAIN STREET, SUITE 2100
2300 N STREET, N.W. FORT WORTH, TEXAS 76102
WASHINGTON, D.C. 20037
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after the effective date of the Registration
Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
of the Securities Act of 1933, please check the following box. [ ]
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED OCTOBER 29, 1997
PROSPECTUS
6,110,000 SHARES
[CRESCENT LOGO]
COMMON SHARES
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All of the common shares of beneficial interest, par value $.01 per share
(the "Common Shares"), of Crescent Real Estate Equities Company ("Crescent
Equities") offered hereby (the "Offering") are being offered by the Selling
Shareholders identified herein. See "Selling Shareholders." Crescent Equities
will not receive any of the proceeds from the sale of the Common Shares offered
hereby. The Common Shares are listed and traded on the New York Stock Exchange
(the "NYSE") under the symbol "CEI."
The sale or distribution of all or any portion of the Common Shares offered
hereby may be effected from time to time by the Selling Shareholders directly,
indirectly through brokers or dealers or in a distribution by one or more
underwriters on a firm commitment or best efforts basis, on the NYSE, in the
over-the-counter market, on any national securities exchange on which the Common
Shares are listed or traded, in privately negotiated transactions or otherwise,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. See "Plan of Distribution."
SEE "RISK FACTORS" AT PAGE 2 HEREIN FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE COMPANY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS OCTOBER , 1997
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THE COMPANY
On December 31, 1996, Crescent Real Estate Equities Company, a Texas real
estate investment trust ("Crescent Equities"), became the successor to Crescent
Real Estate Equities, Inc., a Maryland corporation (the "Predecessor
Corporation"), through the merger of the Predecessor Corporation and CRE Limited
Partner, Inc., a subsidiary of the Predecessor Corporation, into Crescent
Equities. The term "Company" includes, unless the context otherwise requires,
Crescent Equities, the Predecessor Corporation, Crescent Real Estate Equities
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), and the other subsidiaries of Crescent Equities.
The Company is a fully integrated real estate company, operated as a real
estate investment trust for federal income tax purposes (a "REIT"), which, as of
October 24, 1997, owned a portfolio of real estate assets (the "Properties")
that included 78 office properties (the "Office Properties") with an aggregate
of approximately 26.6 million net rentable square feet, approximately 90
behavioral healthcare facilities (the "Behavioral Healthcare Facilities"), five
full-service hotels with a total of 1,900 rooms and two destination health and
fitness resorts that can accommodate up to 442 guests daily (collectively, the
"Hotel Properties"), the real estate mortgages and non-voting common stock in
five residential development corporations (the "Residential Development
Corporations") and seven retail properties (the "Retail Properties") with an
aggregate of approximately 771,000 net rentable square feet. The Office
Properties and the Retail Properties are located primarily in 21 metropolitan
submarkets in Texas and Colorado.
The Company owns its assets and carries on its operations and other
activities, including providing management, leasing and development services for
certain of its Properties, through the Operating Partnership and its other
subsidiaries. The Company also has an economic interest in the development
activities of the Residential Development Corporations. The structure of the
Company is designed to facilitate and maintain its qualification as a REIT and
to permit persons contributing Properties (or interests therein) to the Company
to defer some or all of the tax liability that they otherwise might incur.
The Company's executive offices are located at 777 Main Street, Suite 2100,
Fort Worth, Texas 76102, and its telephone number is (817) 877-0477.
RISK FACTORS
Prospective investors should carefully consider the following summary
information in conjunction with the other information contained in this
Prospectus before purchasing Securities.
CONCENTRATION OF ASSETS
A significant portion of the Company's assets are, and revenues are derived
from, Properties located in the metropolitan areas of Dallas-Fort Worth and
Houston, Texas. Due to this geographic concentration, any deterioration in
economic conditions in the Dallas-Fort Worth or Houston metropolitan areas or
other geographic markets in which the Company in the future may acquire
substantial assets could have a substantial effect on the financial condition
and results of operations of the Company.
RISKS ASSOCIATED WITH THE ACQUISITION OF SUBSTANTIAL NEW ASSETS
From the closing of the Company's initial public offering in May 1994
through September 30, 1997, the Company has experienced rapid growth, increasing
its total assets by approximately 940 percent. There can be no assurance that
the Company will be able to manage its growth effectively and the failure to do
so may have a material adverse effect on the financial condition and results of
operations of the Company.
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PURCHASES FROM FINANCIALLY DISTRESSED SELLERS
Implementation of the Company's strategy of investing in real estate assets
in distressed circumstances has resulted in the acquisition of certain
Properties from owners that were in poor financial condition, and such strategy
is expected to result in the purchase of additional properties under similar
circumstances in the future. In addition to general real estate risks,
properties acquired in distress situations present risks related to inadequate
maintenance, negative market perception and continuation of circumstances which
precipitated the distress originally.
CHANGE IN POLICIES
The Board of Trust Managers provides guidance to the senior management of
the Operating Partnership regarding the Company's operating and financial
policies and strategies, including its policies and strategies with respect to
acquisitions, growth, operations, indebtedness, capitalization and
distributions. These policies and strategies may be revised, from time to time,
without shareholder approval. Changes in the Company's policies and strategies
could adversely affect the Company's financial condition and results of
operations. In addition, the Company has the right and intends to acquire
additional real estate assets pursuant to and consistent with its investment
strategies and policies without shareholder approval.
POSSIBLE ADVERSE CONSEQUENCES OF OWNERSHIP LIMIT
The limitation on ownership of Common Shares set forth in the Company's
Restated Declaration of Trust (the "Declaration of Trust") could have the effect
of discouraging offers to acquire the Company and of inhibiting or impeding a
change in control and, therefore, could adversely affect the shareholders'
ability to realize a premium over the then-prevailing market price for the
Common Shares in connection with such a transaction.
RELIANCE ON KEY PERSONNEL
The Company is dependent on the efforts of Mr. Richard E. Rainwater,
Chairman of the Board of Trust Managers, and other senior management personnel.
While the Company believes that it could find replacements for these key
executives, the loss of their services could have an adverse effect on the
operations of the Company. Mr. Rainwater has no employment agreement with the
Company and, therefore, is not obligated to remain with the Company for any
specified term. John C. Goff, Trust Manager and Vice Chairman of the Board of
Trust Managers, and Gerald W. Haddock, President, Chief Executive Officer and
Trust Manager, have entered into employment agreements with the Company, and
each of Messrs. Rainwater, Goff and Haddock has entered into a noncompetition
agreement with the Company. The Company has not obtained key-man insurance for
any of its senior management personnel.
RISKS RELATING TO QUALIFICATION AND OPERATION AS A REIT
The Company intends to continue to operate in a manner so as to qualify as
a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). A
qualified REIT generally is not taxed at the corporate level on income it
currently distributes to its shareholders, so long as it distributes at least 95
percent of its taxable income currently and satisfies certain other highly
technical and complex requirements. Unlike many REITs, which tend to make only
one or two types of real estate investment, the Company invests in a broad range
of real estate products, and certain of its investments are more complicated
than those of other REITs. As a result, the Company is likely to encounter a
greater number of interpretative issues under the REIT qualification rules, and
more such issues which lack clear guidance, than are other REITs. The Company,
as a matter of policy, regularly consults with outside tax counsel in
structuring its new investments. The Company has received an opinion from Shaw,
Pittman, Potts & Trowbridge ("Tax Counsel") that the Company qualified as a REIT
under the Code for its taxable years ending on or before December 31, 1996, is
organized in conformity with the requirements for qualification as a REIT under
the Code and its proposed manner of operation will enable it to continue to meet
the requirements for qualification as a REIT. However, this opinion is based
upon certain representations made by the Company and the Operating Partnership
and upon
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existing law, which is subject to change, both retroactively and prospectively,
and to possibly different interpretations. Furthermore, Tax Counsel's opinion is
not binding upon either the Internal Revenue Service or the courts. Because the
Company's qualification as a REIT in its current and future taxable years
depends upon its meeting the requirements of the Code in future periods, no
assurance can be given that the Company will continue to qualify as a REIT in
the future. If, in any taxable year, the Company were to fail to qualify as a
REIT for federal income tax purposes, it would not be allowed a deduction for
distributions to shareholders in computing taxable income and would be subject
to federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates. In addition, unless entitled to
relief under certain statutory provisions, the Company would be disqualified
from treatment as a REIT for federal income tax purposes for the four taxable
years following the year during which the qualification was lost. The additional
tax liability resulting from the failure to so qualify would significantly
reduce the amount of funds available for distribution to shareholders.
RISKS RELATING TO DEBT
The Company's organizational documents do not limit the level or amount of
debt that it may incur. It is the Company's current policy to pursue a strategy
of conservative use of leverage, generally with a ratio of debt to total market
capitalization targeted at approximately 40 percent, although this policy is
subject to reevaluation and modification by the Company and could be increased
above 40 percent. The Company has based its debt policy on the relationship
between its debt and its total market capitalization, rather than the book value
of its assets or other historical measures that typically have been employed by
publicly traded REITs, because management believes that market capitalization
more accurately reflects the Company's ability to borrow money and meet its debt
service requirements. Market capitalization is, however, more variable than book
value of assets or other historical measures. There can be no assurance that the
ratio of indebtedness to market capitalization (or any other measure of asset
value) or the incurrence of debt at any particular level would not adversely
affect the financial condition and results of operations of the Company.
RISKS RELATING TO CONTROL OF CERTAIN PROPERTIES
Hotel Risks. The Company has leased the Hotel Properties to subsidiaries of
Crescent Operating, Inc. ("COI"), and such subsidiaries, rather than the
Company, are entitled to exercise all rights of the owner of the respective
hotel. The Company will receive both base rent and a percentage of gross sales
above a certain minimum level pursuant to the leases, which expire between 2004
and 2007. As a result, the Company will participate in the economic operations
of the Hotel Properties only through its indirect participation in gross sales.
To the extent that operations of the Hotel Properties may affect the ability of
such subsidiaries to pay rent, the Company also may indirectly bear the risks
associated with any increases in expenses. Each of the Hotel Properties is
managed pursuant to a management agreement. The amount of rent payable to the
Company under the leases with respect to the Hotel Properties will depend on the
ability of such subsidiaries and the managers of the Hotel Properties to
maintain and increase revenues from the Hotel Properties. Accordingly, the
Company's results of operations will be affected by such factors as changes in
general economic conditions, the level of demand for rooms and related services
at the Hotel Properties, the ability of the subsidiaries and the managers of the
Hotel Properties to maintain and increase gross revenues at the Hotel
Properties, competition in the hotel industry and other factors relating to the
operation of the Hotel Properties. In addition, the Company expects, in
accordance with the terms of an intercompany agreement between the Company and
COI (the "Intercompany Agreement"), to lease any hotel properties that it may
acquire in the future to COI (or a subsidiary or subsidiaries) which, as lessees
of any such hotel properties, will be entitled to exercise all rights of the
owner. See "-- Real Estate Risks Specific to the Company's Business -- Potential
Conflicts of Interest."
Lack of Control of Residential Development Corporations. The Company is not
able to elect the boards of directors of the Residential Development
Corporations, and does not have the authority to control the management and
operation of the Residential Development Corporations. As a result, the Company
does not have the right to control the timing or amount of dividends paid by the
Residential Development Corporations and, therefore, does not have the authority
to require that funds be distributed to it by any of these entities.
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GENERAL REAL ESTATE RISKS
Uncontrollable Factors Affecting Performance and Value. The economic
performance and value of the Company's real estate assets will be subject to all
of the risks incident to the ownership and operation of real estate. These
include the risks normally associated with changes in general national, regional
and local economic and market conditions. Such local real estate market
conditions may include excess supply and competition for tenants, including
competition based on rental rates, attractiveness and location of the property
and quality of maintenance, insurance and management services. In addition,
other factors may affect the performance and value of a property adversely,
including changes in laws and governmental regulations (including those
governing usage, zoning and taxes), changes in interest rates (including the
risk that increased interest rates may result in decreased sales of lots in the
Residential Development Properties) and the availability of financing.
Illiquidity of Real Estate Investments. Because real estate investments are
relatively illiquid, the Company's ability to vary its portfolio promptly in
response to economic or other conditions will be limited. In addition, certain
significant expenditures, such as debt service (if any), real estate taxes, and
operating and maintenance costs, generally are not reduced in circumstances
resulting in a reduction in income from the investment. The foregoing and any
other factor or event that would impede the ability of the Company to respond to
adverse changes in the performance of its investments could have an adverse
effect on the Company's financial condition and results of operations.
Environmental Matters. Under various federal, state and local laws,
ordinances and regulations, an owner or operator of real property may become
liable for the costs of removal or remediation of certain hazardous or toxic
substances released on or in its property, as well as certain other costs
relating to hazardous or toxic substances. Such liability may be imposed without
regard to whether the owner or operator knew of, or was responsible for, the
release of such substances. The presence of, or the failure to remediate
properly, such substances, when released, may adversely affect the owner's
ability to sell the affected real estate or to borrow using such real estate as
collateral. Such costs or liabilities could exceed the value of the affected
real estate. The Company has not been notified by any governmental authority of
any non-compliance, liability or other claim in connection with any of the
Properties and the Company is not aware of any other environmental condition
with respect to any of the Properties that management believes would have a
material adverse effect on the Company's business, assets or results of
operations. Prior to the Company's acquisition of its Properties, independent
environmental consultants conducted or updated Phase I environmental assessments
(which generally do not involve invasive techniques such as soil or ground water
sampling) on the Properties. None of these Phase I assessments or updates
revealed any materially adverse environmental condition not known to the Company
or the independent consultants preparing the assessments. There can be no
assurance, however, that environmental liabilities have not developed since such
environmental assessments were prepared, or that future uses or conditions
(including, without limitation, changes in applicable environmental laws and
regulations) will not result in imposition of environmental liability.
REAL ESTATE RISKS SPECIFIC TO THE COMPANY'S BUSINESS
Investment Risks. In implementing its investment strategies, the Company
has invested in a broad range of real estate assets, and in the future, may
invest in additional types of real estate assets not currently included in its
portfolio. There can be no assurance, however, that the Operating Partnership
will be able to implement its investment strategies successfully in the future.
As a result of its real estate investments, the Operating Partnership will be
subject to risks, in addition to general real estate risks, relating to the
specific assets and asset types in which it invests. For example, the Operating
Partnership is subject to risks that, upon expiration, leases for space in the
Office Properties and Retail Properties may not be renewed, the space may not be
re-leased, or the terms of renewal or re-lease (including the cost of required
renovations or concessions to tenants) may be less favorable than current lease
terms. In addition, the Company is subject to risks relating to the Behavioral
Healthcare Facilities, including the effect of any failure of the tenant to make
required lease payments (which equal more than 10% of the Company's current base
rental revenues), the effects of factors, such as regulation of the healthcare
industry and limitations on government disbursement programs, on the ability of
the tenant to make the required lease payments, and the limited number of
replacement tenants in
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the event of default under, or non-renewal of, the lease. Similarly, the Company
is subject to the risk that the success of its investment in the Hotel
Properties will be highly dependent upon the ability of the Hotel Properties to
compete in such features as access, location, quality of accommodations, room
rate structure and, to a lesser extent, the quality and scope of other amenities
such as food and beverage facilities.
Risks of Joint Ownership of Assets. The Company has the right to invest in
properties and assets jointly with other persons or entities. Joint ownership of
properties, under certain circumstances, may involve risks not otherwise
present, including the possibility that the Company's partners or co-investors
might become bankrupt, that such partners or co-investors might at any time have
economic or other business interests or goals which are inconsistent with the
business interests or goals of the Company, and that such partners or co-
investors may be in a position to take action contrary to the instructions or
the requests of the Company or contrary to the Company's policies or objectives,
including the Company's policy with respect to maintaining its qualification as
a REIT.
Potential Conflicts of Interest. The Company has entered into the
Intercompany Agreement with COI pursuant to which each has agreed to provide the
other with rights to participate in certain transactions. The certificate of
incorporation of COI, as amended and restated, generally prohibits COI, for so
long as the Intercompany Agreement remains in effect, from engaging in
activities or making investments that a REIT could make, unless the Operating
Partnership was first given the opportunity but elected not to pursue such
activities or investments. In addition, subsidiaries of COI are the lessees of
each of the Hotel Properties, and COI owns a 50% interest in the entity which is
the lessee of the Behavioral Healthcare Facilities and the Company's largest
tenant in terms of current base rental. Richard E. Rainwater and John C. Goff
are, respectively, the Chairman of the Board and the Vice Chairman of the Board
of both the Company and COI, and Gerald W. Haddock also serves as President,
Chief Executive Officer and a director of COI, and serves as President, Chief
Executive Officer and a trust manager of the Company. As of September 30, 1997,
senior management and the trust managers of the Company beneficially owned
approximately 17.2% of the Company's common equity (consisting of Common Shares
and Units, including vested options to purchase Common Shares and Units) and
approximately the same percentage of the outstanding common stock of COI. The
common management and ownership among these entities may lead to conflicts of
interest in connection with transactions between the Operating Partnership and
COI.
RECENT DEVELOPMENTS
COMPLETED INVESTMENTS
The following briefly describes the Company's Property acquisitions
completed during the period from June 30, 1997 through October 28, 1997, which
are not described in a previously filed Form 8-K.
The Woodlands Corporation. On July 31, 1997, the Company and certain Morgan
Stanley funds (the "Morgan Stanley Group") acquired The Woodlands Corporation, a
subsidiary of Mitchell Energy Corporation, for approximately $543 million. In
connection with the acquisition, the Company and the Morgan Stanley Group made
equity investments of approximately $80 million and $109 million, respectively.
The remaining approximately $354 million and associated acquisition and
financing costs of approximately $15 million were financed by the two limited
partnerships, described below, through which the investment was made. The
Woodlands Corporation was the principal owner, developer and operator of The
Woodlands, an approximately 27,000-acre, master-planned residential and
commercial community located 27 miles north of downtown Houston, Texas. The
Woodlands, which is approximately 50% developed, includes a shopping mall,
retail centers, office buildings, a hospital, club facilities, a community
college, a performance pavilion and numerous other amenities.
The acquisition was made through The Woodlands Commercial Properties
Company, L.P. ("Woodlands-CPC"), a limited partnership in which the Morgan
Stanley Group holds a 57.5% interest and the Company holds a 42.5% interest, and
the Woodlands Land Development Company, L.P. ("Woodlands-LDC"), a limited
partnership in which the Morgan Stanley Group holds a 57.5% interest and a newly
formed Residential Development Corporation, The Woodlands Land Company, Inc.
("WLC"), holds a 42.5%
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interest. The Company currently owns all of the non-voting common stock,
representing a 95% economic interest in WLC and, effective September 29, 1997,
COI owns all of the voting common stock, representing a 5% economic interest, in
WLC. The Company is the managing general partner of Woodlands-CPC and WLC is the
managing general partner of Woodlands-LDC.
In connection with the acquisition, Woodlands-CPC acquired The Woodlands
Corporation's 25% general partner interest in the partnerships that own
approximately 1.2 million square feet of Office and Retail Properties in The
Woodlands. The Company previously held a 75% limited partner interest in each of
these partnerships and, as a result of the acquisition, the Company's indirect
economic ownership interest in these Properties increased to approximately 85%.
The other assets acquired by Woodlands-CPC include a 364-room executive
conference center, a private golf and tennis club serving approximately 1,600
members and offering 81 holes of golf, and approximately 400 acres of land that
will support commercial development of more than 3.5 million square feet of
office, multi-family, industrial, retail and lodging properties. In addition,
Woodlands-CPC acquired The Woodlands Corporation's general partner interests,
ranging from one to 50 percent, in additional office and retail properties and
in multi-family and light industrial properties. Woodlands-LDC acquired
approximately 6,400 acres of land that will support development of more than
20,000 lots for single-family homes and approximately 2,500 acres of land that
will support more than 21.5 million net rentable square feet of commercial
development. The executive conference center, including the golf and tennis club
and golf courses, is operated and leased by a wholly owned subsidiary of a
partnership owned 42.5% by a subsidiary of COI and 57.5% by the Morgan Stanley
Group.
Desert Mountain. On August 29, 1997, the Company acquired, through a newly
formed Residential Development Corporation, Desert Mountain Development
Corporation ("DMDC"), the majority economic interest in Desert Mountain
Properties Limited Partnership ("DMPL"), the partnership that owns Desert
Mountain, a master-planned, luxury residential and recreational community in
northern Scottsdale, Arizona. The partnership interest was acquired from a
subsidiary of Mobil Land Development Corporation for approximately $235 million.
The sole limited partner of DMPL is Sonora Partners Limited Partnership
("Sonora") whose principal owner is Lyle Anderson, the original developer of
Desert Mountain. A portion of Sonora's interest in DMPL is exchangeable for
Common Shares of the Company. Sonora currently owns a 7% economic interest in
DMPL, and DMDC, which is the sole general partner of DMPL, owns the remaining
93% economic interest. The Company owns all of the non-voting common stock,
representing a 95% economic interest, and, effective September 29, 1997, COI
owns all of the voting common stock, representing a 5% economic interest, in
DMDC. The Company also holds a residential development property mortgage on
Desert Mountain. DMPL has entered into an advisory agreement with the Lyle
Anderson Company pursuant to which Mr. Anderson provides advisory services in
connection with the operation and development of Desert Mountain.
Desert Mountain is an 8,300-acre property that is zoned for the development
of more than 4,500 lots, approximately 1,500 of which have been sold. However,
the current plans for Desert Mountain contemplate limiting development in order
to maintain the exclusive nature of the community. Desert Mountain also includes
The Desert Mountain Club, a private golf, tennis and fitness club serving over
1,600 members. The club offers four Jack Nicklaus signature 18-hole golf
courses, including Cochise, site of the Senior PGA Tour's The Tradition golf
tournament.
U.S. Home Building. On October 15, 1997, the Company acquired the U.S.
Home Building, a 21-story Class A office building located in the West
Loop/Galleria suburban office submarket of Houston, Texas, for approximately
$45.0 million. The U.S. Home Building is located approximately five miles west
of downtown Houston and approximately 2.5 miles west of the Company's Greenway
Plaza properties. Built in 1982, the building is located on approximately 1.9
acres and contains approximately 400,000 net rentable square feet. Major tenants
of the U.S. Home Building include U.S. Home Corporation and Nextel
Communications, Inc.
NOTE OFFERING
On September 22, 1997, the Operating Partnership completed a private
offering of senior unsecured Notes (the "Notes") in an aggregate principal
amount of $400,000,000. The Notes were issued in two series,
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the 6 5/8% Notes due 2002 (the "2002 Notes") and the 7 1/8% Notes due 2007 (the
"2007 Notes"). The 2002 Notes were issued in an aggregate principal amount of
$150,000,000, bear interest at a rate of 6 5/8% per annum payable semi-annually
in arrears and mature on September 15, 2002. The 2007 Notes were issued in an
aggregate principal amount of $250,000,000, bear interest at a rate of 7 1/8%
per annum payable semi-annually in arrears and mature on September 15, 2007. The
interest rate on the Notes is subject to temporary increase by 50 basis points
in the event that a registered offer to exchange the Notes for notes of the
Operating Partnership with terms identical in all material respects to the Notes
is not consummated or a shelf registration statement with respect to the resale
of the Notes is not declared effective by the Securities and Exchange Commission
(the "Commission") on or before the 180th day following the date of original
issuance of the Notes. The interest rate on the Notes also is subject to
temporary or permanent increase by 37.5 basis points in the event that, within
the period from the date of original issuance of the Notes to the first
anniversary of original issuance, the Notes are not assigned, or do not retain,
an investment grade rating (as defined in the Notes) by specified rating
agencies. These adjustments may apply simultaneously.
The Notes are redeemable, in whole or in part, at the option of the
Operating Partnership upon payment of principal, accrued and unpaid interest and
the premium specified in the Notes. The Notes also contain certain covenants,
including limitations on the ability of the Operating Partnership and its
subsidiaries to incur additional debt, other than certain intercompany debt that
is subordinate to payment of the Notes, unless certain asset and income tests
are satisfied.
FINANCING ACTIVITIES
On September 22, 1997, the Company's line of credit from a consortium of
banks led by BankBoston, N.A. (the "Credit Facility") was increased to $450
million to enhance the Company's financial flexibility in making new real estate
investments. Concurrently with such increase, the interest rate on advances
under the Credit Facility was decreased from the Eurodollar rate plus 138 basis
points to the Eurodollar rate plus 120 basis points. The Credit Facility is
unsecured and expires in June 2000.
USE OF PROCEEDS
This Prospectus relates to Common Shares being offered and sold for the
accounts of the Selling Shareholders. The Company will not receive any proceeds
from the sale of the Common Shares but will pay all expenses related to the
registration of the Shares. See "Plan of Distribution."
SELLING SHAREHOLDERS
This Prospectus relates to the offer and sale from time to time of up to
6,110,000 Common Shares (the "Shares"). The Shares are offered by (i) UBS
Securities (Portfolio) LLC, a Delaware limited liability company
("UBS-Portfolio"), as to 4,700,000 of the Shares and (ii) Union Bank of
Switzerland, London Branch ("UBS-LB"), acting through its agent, UBS Securities
LLC ("UBS-Securities"), as to 1,410,000 of the Shares (each, individually, a
"Selling Shareholder," and both collectively, the "Selling Shareholders"). It is
unknown if, when, or in what amounts a Selling Shareholder may offer the Shares
for sale. There is no assurance that the Selling Shareholders will sell any or
all of the Shares offered hereby.
This Prospectus has been prepared pursuant to the Company's obligations
under that certain Purchase Agreement, dated August 11, 1997, by and among
Crescent Equities, UBS-Portfolio and UBS-LB (the "Purchase Agreement"). In
accordance with the Purchase Agreement, which contains customary representations
and warranties relating to the Company, this Prospectus (and the registration
statement of which it is a part) relates to sales of the Shares by the Selling
Shareholders, subject to the terms and conditions set forth in the Purchase
Agreement.
In addition, in the Purchase Agreement, the Company has agreed to indemnify
the several Selling Shareholders against certain civil liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act"),
or to contribute to payments the Selling Shareholders may be required to make in
respect thereof. Insofar as indemnification of the Selling Shareholders for
liabilities arising under the
8
<PAGE> 10
Securities Act may be permitted pursuant to such agreements, the Company has
been informed that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
Because the Selling Shareholders may offer all or some of the Shares
pursuant to the Offering, and because there are currently no agreements,
arrangements or understandings with respect to the sale of any of the Shares
that will be held by the Selling Shareholders after completion of the Offering,
no estimate can be given as to the principal amount of the Shares that will be
held by the Selling Shareholders after completion of the Offering.
Neither Selling Shareholder has held any position or office or held any
other material relationship with the Company or any of its affiliates within the
past three years, other than (a) UBS-Portfolio, which purchased 4,700,000 Common
Shares from the Company for approximately $148 million (at a price per share
equal to the last reported sale price of the Common Shares on the date of
execution of the Purchase Agreement) pursuant to the Purchase Agreement; and (b)
UBS-LB, which does not currently own any Common Shares, but which entered into a
forward stock purchase agreement with the Company on August 12, 1997, pursuant
to which the Company has committed to purchase from UBS-LB 4,700,000 Common
Shares in exchange for cash or Common Shares. In addition, UBS-Securities
received from the Company a placement fee equal to 2% of the gross proceeds of
the offering to UBS-Portfolio.
The Selling Shareholders and any broker or dealer to or through whom any of
the Shares are sold may be deemed to be underwriters within the meaning of the
Securities Act with respect to the Shares offered hereby, and any profits
realized by the Selling Shareholders or such brokers or dealers may be deemed to
be underwriting commissions. Brokers' commissions and dealers' discounts, taxes
and other selling expenses to be borne by the Selling Shareholders are not
expected to exceed normal selling expenses for sales. The registration of the
Shares under the Securities Act shall not be deemed an admission by the Selling
Shareholders or the Company that the Selling Shareholders are underwriters for
purposes of the Securities Act of any Shares offered under this Prospectus.
9
<PAGE> 11
The following chart shows, according to the Company's records, the number
of Common Shares currently held by each Selling Shareholder and the number of
Shares of each Selling Shareholder being offered hereby:
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY NUMBER OF
NAME OF OWNED PRIOR TO SHARES OFFERED
SELLING SHAREHOLDER OFFERING HEREBY
------------------- -------------- --------------
<S> <C> <C>
UBS Securities (Portfolio) LLC.................. 4,700,000 4,700,000
Union Bank of Switzerland, London Branch........ -- 1,410,000
--------- ---------
Total................................. 4,700,000 6,110,000
</TABLE>
PLAN OF DISTRIBUTION
The sale or distribution of all or any portion of the Shares may be
effected from time to time by the Selling Shareholders directly, indirectly
through brokers or dealers or in a distribution by one or more underwriters on a
firm commitment or best efforts basis, on the NYSE, in the over-the-counter
market, on any other national securities exchange on which the Common Shares are
listed or traded, in privately negotiated transactions or otherwise, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. It is anticipated that the Selling
Shareholders will sell their Shares principally to or through UBS-Securities, a
registered broker-dealer that is an affiliate of the Selling Shareholders. The
Company will not receive any of the proceeds from the sale of the Shares.
The methods by which the Shares may be sold or distributed include, without
limitation, (i) a block trade (which may involve crosses) in which the broker or
dealer so engaged will attempt to sell the Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction, (ii)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus, (iii) exchange distributions and/or
secondary distributions in accordance with the rules of the NYSE, (iv) ordinary
brokerage transactions and transactions in which the broker solicits purchasers,
(v) pro rata distributions as part of the liquidation and winding up of the
affairs of the Selling Shareholders, and (vi) privately negotiated transactions.
The Selling Shareholders may from time to time deliver all or a portion of the
Shares to cover a short sale or sales or upon the exercise, settlement or
closing of a call equivalent position or a put equivalent position. The Selling
Shareholders and the broker-dealers participating in the distribution of the
Shares may be deemed "underwriters" within the meaning of the Securities Act and
any profit on the sale of the Shares by the Selling Shareholders and any
commissions received by any such broker-dealers may be regarded as underwriting
commissions under the Securities Act. Underwriters, brokers, dealers or agents
may be entitled, under agreements with the Company, to indemnification against
and contribution toward certain civil liabilities, including liabilities under
the Securities Act. The Selling Shareholders may sell all or any portion of the
Shares in reliance upon Rule 144 under the Securities Act. The Shares may be
sold from time to time at varying prices determined at the time of sale or at
negotiated prices.
The Company will pay all expenses in connection with the registration of
the Shares. The Selling Shareholders will pay for any brokerage or underwriting
commissions and taxes of any kind (including, without limitation, transfer
taxes) with respect to any disposition, sale or transfer of the Shares.
Shares not sold pursuant to the registration statement on Form S-3 of which
this Prospectus is a part (the "Registration Statement") may be subject to
certain restrictions under the Securities Act and could be sold, if at all, only
pursuant to Rule 144 or another exemption from the registration requirements of
the Securities Act. In general, under Rule 144, a person (or persons whose
Shares are aggregated) who has satisfied a one-year holding period may, under
certain circumstances, sell within any three-month period a number of Shares
which does not exceed the greater of one percent of the Company's outstanding
Common Shares or the average weekly reported trading volume of the Company's
Common Shares during the four calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of Shares by a person who is not
an affiliate of the Company and who has satisfied a two-year holding period
without any volume limitation.
10
<PAGE> 12
Therefore, both during and after the effectiveness of the Registration
Statement, sales of the Shares may be made by the Selling Shareholders pursuant
to Rule 144.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. Such
reports, proxy statements and other information can be inspected at the Public
Reference Section maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 and the following regional
offices of the Commission: Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511 and Seven World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a Web
site (http://www.sec.gov) that contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission.
In addition, the Company's Common Shares are listed on the NYSE and such
reports, proxy statements and other information concerning the Company can be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission the Registration Statement, of
which this Prospectus is a part, under the Securities Act, with respect to the
Shares. This Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other documents are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or documents filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference and the
exhibits and schedules thereto. For further information regarding the Company
and the Shares, reference is hereby made to the Registration Statement and such
exhibits and schedules which may be obtained from the Commission at its
principal office in Washington, D.C. upon payment of the fees prescribed by the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed under the Exchange Act by the
Company (Exchange Act file number 1-13038) with the Commission and are
incorporated herein by reference:
(1) The Registration Statement on Form 8-B filed on March 24, 1997 registering
the Common Shares of the Company under Section 12(b) of the Exchange Act.
(2) The Proxy Statement in connection with the Company's 1997 Annual Meeting
of Stockholders.
(3) The Company's Annual Report on Form 10-K for the year ended December 31,
1996, as amended on April 30, 1997 and May 16, 1997.
(4) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997.
(5) The Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, as amended on August 28, 1997.
(6) The Company's Current Report on Form 8-K dated January 29, 1997 and filed
March 24, 1997, as amended on April 9, 1997, April 24, 1997, May 23, 1997
and July 2, 1997.
(7) The Company's Current Report on Form 8-K dated February 28, 1997 and filed
March 17, 1997, as amended on March 21, 1997.
(8) The Company's Current Report on Form 8-K dated April 9, 1997 and filed
April 10, 1997, as amended on April 24, 1997.
(9) The Company's Current Report on Form 8-K dated April 22, 1997 and filed
April 24, 1997.
11
<PAGE> 13
(10) The Company's Current Report on Form 8-K dated May 8, 1997 and filed May
12, 1997.
(11) The Company's Current Report on Form 8-K dated June 20, 1997 and filed
September 30, 1997, as amended on October 1, 1997.
(12) The Company's Current Report on Form 8-K dated July 22, 1997 and filed
July 23, 1997.
(13) The Company's Current Report on Form 8-K dated August 11, 1997 and filed
August 13, 1997.
(14) The Company's Current Report on Form 8-K dated September 22, 1997 and
filed September 22, 1997.
(15) The Company's Current Report on Form 8-K dated September 22, 1997 and
filed September 30, 1997, as amended on October 1, 1997.
(16) The Company's Current Report on Form 8-K dated September 28, 1997 and
filed October 27, 1997.
(17) The Company's Current Report on Form 8-K dated September 30, 1997 and
filed September 30, 1997, as amended on October 1, 1997.
(18) The Company's Current Report on Form 8-K dated September 30, 1997 and
filed October 1, 1997, as amended on October 9, 1997.
(19) The Company's Current Report on Form 8-K dated October 8, 1997 and filed
October 14, 1997.
(20) The Company's Current Report on Form 8-K dated October 22, 1997 and filed
October 28, 1997.
All documents filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to termination
of the offering of Shares to which this Prospectus relates shall be deemed to be
incorporated by reference in this Prospectus and shall be part hereof from the
date of filing of such document.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), or in any other
subsequently filed document that is also incorporated or deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. Subject to the
foregoing, all information appearing in this Prospectus is qualified in its
entirety by the information appearing in the documents incorporated by
reference.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the documents incorporated by reference
in this Prospectus (other than exhibits and schedules thereto, unless such
exhibits or schedules are specifically incorporated by reference into the
information that this Prospectus incorporates). Written or telephonic requests
for copies should be directed to Crescent Real Estate Equities Company, 777 Main
Street, Suite 2100, Fort Worth, Texas, 76102, Attention: Company Secretary
(telephone number: (817) 877-0477).
EXPERTS
The financial statements and schedule incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, as amended, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements incorporated in this Prospectus by reference to
the Company's Current Reports on Form 8-K (i) dated January 29, 1997 and filed
on March 24, 1997, as amended on April 9, 1997, April 24, 1997, May 23, 1997 and
July 2, 1997, (ii) dated February 28, 1997 and filed on March 17, 1997, as
amended on March 21, 1997, (iii) dated June 20, 1997 and filed on September 30,
1997, as amended on October 1,
12
<PAGE> 14
1997, (iv) dated September 22, 1997 and filed on September 30, 1997, as amended
on October 1, 1997, (v) dated September 30, 1997 and filed on September 30,
1997, as amended on October 1, 1997 and (vi) dated October 22, 1997 and filed
October 28, 1997, respectively, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
LEGAL MATTERS
The legality of the issuance of the Shares will be passed upon for the
Company by Shaw, Pittman, Potts & Trowbridge.
13
<PAGE> 15
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
SUCH DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company........................... 2
Risk Factors.......................... 2
Recent Developments................... 6
Use of Proceeds....................... 8
Selling Shareholders.................. 8
Plan of Distribution.................. 10
Available Information................. 11
Incorporation of Certain Documents by
Reference........................... 11
Experts............................... 12
Legal Matters......................... 13
</TABLE>
======================================================
======================================================
6,110,000 SHARES
[CRESCENT LOGO]
COMMON SHARES
PROSPECTUS
OCTOBER , 1997
======================================================
<PAGE> 16
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be incurred in connection with the issuance and
distribution of the Common Shares covered by this Registration Statement, all of
which will be paid by the Registrant, are as follows:
<TABLE>
<S> <C>
Registration Fee............................................ $ 72,846
Printing, Engraving and Filing Expenses..................... $ 12,500
Accounting Fees and Expenses................................ $ 1,000
Legal Fees and Expenses..................................... $ 12,500
Miscellaneous............................................... $ 1,500
--------
Total....................................................... $100,346
========
</TABLE>
ITEM 15. INDEMNIFICATION OF TRUST MANAGERS AND OFFICERS.
The Company's Restated Declaration of Trust (the "Declaration of Trust")
provides that no trust manager shall be liable to the Company for any act,
omission, loss, damage, or expense arising from the performance of his duties to
the Company save only for his own willful misfeasance or willful malfeasance or
gross negligence. In addition to, but in no respect whatsoever in limitation of
the foregoing, the liability of each trust manager for monetary damages shall be
eliminated to the fullest extent permitted by applicable law. The Declaration of
Trust also provides that no amendment thereto may limit or eliminate this
limitation of liability with respect to events occurring prior to the effective
date of such amendment.
The Company's Declaration of Trust provides that the trust managers and
officers shall be indemnified to the maximum extent permitted by Texas law.
Under current Texas law, the trust will indemnify a person who was, is, or is
threatened to be made a named defendant or respondent in a proceeding because
the person is or was a trust manager or officer if it is determined that the
person (i) conducted himself in good faith; (ii) reasonably believed: (a) in the
case of conduct in his official capacity as a trust manager or officer of the
real estate investment trust, that his conduct was in the real estate investment
trust's best interests; and (b) in all other cases, that his conduct was at
least not opposed to the real estate investment trust's best interests; and
(iii) in the case of any criminal proceeding, had no reasonable cause to believe
that his conduct was unlawful. Except to the extent provided in the following
sentence, a trust manager or officer may not be indemnified (i) in respect of a
proceeding in which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the benefit resulted from
an action taken in the person's official capacity; or (ii) in which the person
is found liable to the real estate investment trust. Notwithstanding the
foregoing, a person may be indemnified against judgments, penalties (including
excise and similar taxes), fines, settlements, and reasonable expenses actually
incurred by the person in connection with the proceeding; provided that if the
person is found liable to the real estate investment trust or is found liable on
the basis that personal benefit was improperly received by the person, the
indemnification (i) is limited to reasonable expenses actually incurred by the
person in connection with the proceeding, and (ii) shall not be made in respect
of any proceeding in which the person shall have been found liable for willful
or intentional misconduct in the performance of his duty to the real estate
investment trust. In addition, the Company's Declaration of Trust and Bylaws
require it to pay or reimburse, in advance of the final disposition of a
proceeding, reasonable expenses incurred by a present or former trust manager or
officer made a party to a proceeding by reason of his status as a trust manager
or officer, provided that the Company shall have received (i) a written
affirmation by the trust manager or officer of his good faith belief that he has
met the standard of conduct necessary for indemnification by the Company as
authorized by the Bylaws and (ii) a written undertaking by or on his behalf to
repay the amount paid or reimbursed by the Company if it shall ultimately be
determined that the standard of conduct was not met. The Company's Declaration
of Trust and Bylaws also permit the Company to provide indemnification, payment
or reimbursement of expenses to any employee or agent of the Company in such
capacity. The Company's Declaration of Trust and Bylaws also permit the Company
to indemnify a
II-1
<PAGE> 17
person who was or who agreed to appear as a witness or other participant in a
proceeding at a time when he is not named a defendant or respondent in the
proceeding. Any indemnification, payment or reimbursement of the expenses
permitted by the Declaration of Trust and Bylaws shall be furnished in
accordance with the procedures provided for indemnification and payment or
reimbursement of expenses under Texas Real Estate Investment Trust Act for trust
managers.
The limited partnership agreement of the Operating Partnership contains
indemnification provisions comparable to those contained in the Declaration of
Trust.
The Company carries insurance that purports to insure officers and trust
managers of the Company against certain liabilities incurred by them in the
discharge of their official functions.
ITEM 16. EXHIBITS.
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-3, including those incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
4.01 Restated Declaration of Trust of the Registrant (filed as Exhibit No. 4.01 to the
Registrant's Registration Statement on Form S-3 (File No. 333-21905) (the "1997 Form
S-3") and incorporated herein by reference)
4.02 Amended and Restated Bylaws of the Registrant (filed as Exhibit 4.02 to the
Registrant's Registration Statement on Form S-3 (File No. 333-23005) and incorporated
herein by reference)
4.03 Form of Common Share Certificate (filed as Exhibit No. 4.03 to the 1997 Form S-3 and
incorporated herein by reference)
4.04 First Amended and Restated Agreement of Limited Partnership of Crescent Real Estate
Equities Limited Partnership dated May 5, 1994 (filed as Exhibit 10.01 to the
Registrant's Registration Statement on Form S-11 (File No. 33-78188) and incorporated
herein by reference)
4.05 Purchase Agreement, dated as of August 11, 1997, by and among the Registrant and the
Selling Shareholders (filed as Exhibit 4.01 to the Registrant's Current Report on Form
8-K dated August 11, 1997 and filed August 13, 1997 and incorporated herein by
reference)
5.01 Opinion of Shaw, Pittman, Potts & Trowbridge as to the legality of the securities being
registered by Crescent Real Estate Equities Company (filed herewith)
23.01 Consent of Shaw, Pittman, Potts & Trowbridge (included in its opinion filed as Exhibit
5.01 to this Registration Statement)
23.02 Consent of Arthur Andersen LLP, Certified Public Accountants, dated October 28, 1997
(filed herewith)
23.03 Consent of Arthur Andersen LLP, Certified Public Accountants, dated October 24, 1997
(filed herewith)
*24.01 Powers of Attorney
</TABLE>
- ---------------
* Previously filed.
II-2
<PAGE> 18
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Worth, State of Texas, on the 28th day of
October, 1997.
CRESCENT REAL ESTATE EQUITIES COMPANY
By: /s/ GERALD W. HADDOCK
-------------------------------------
Gerald W. Haddock
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ RICHARD E. RAINWATER* Trust Manager and Chairman of the October 28, 1997
- ----------------------------------------------------- Board
Richard E. Rainwater
/s/ JOHN C. GOFF* Trust Manager and Vice Chairman of October 28, 1997
- ----------------------------------------------------- the Board
John C. Goff
/s/ GERALD W. HADDOCK Trust Manager, President and Chief October 28, 1997
- ----------------------------------------------------- Executive Officer (Principal
Gerald W. Haddock Executive Officer)
/s/ DALLAS E. LUCAS Senior Vice President and Chief October 28, 1997
- ----------------------------------------------------- Financial Officer (Principal
Dallas E. Lucas Financial and Accounting
Officer)
/s/ ANTHONY M. FRANK* Trust Manager October 28, 1997
- -----------------------------------------------------
Anthony M. Frank
/s/ MORTON H. MEYERSON* Trust Manager October 28, 1997
- -----------------------------------------------------
Morton H. Meyerson
/s/ WILLIAM F. QUINN* Trust Manager October 28, 1997
- -----------------------------------------------------
William F. Quinn
/s/ PAUL E. ROWSEY, III* Trust Manager October 28, 1997
- -----------------------------------------------------
Paul E. Rowsey, III
/s/ MELVIN ZUCKERMAN* Trust Manager October 28, 1997
- -----------------------------------------------------
Melvin Zuckerman
</TABLE>
*By: /s/ GERALD W. HADDOCK
----------------------------------
Gerald W. Haddock
Attorney-In-Fact
II-4
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INDEX TO EXHIBITS
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EXHIBIT NO. DESCRIPTION OF EXHIBIT
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4.01 Restated Declaration of Trust of the Registrant (filed as Exhibit No. 4.01 to the
Registrant's Registration Statement on Form S-3 (File No. 333-21905) (the "1997 Form
S-3") and incorporated herein by reference)
4.02 Amended and Restated Bylaws of the Registrant (filed as Exhibit 4.02 to the
Registrant's Registration Statement on Form S-3 (File No. 333-23005) and incorporated
herein by reference)
4.03 Form of Common Share Certificate (filed as Exhibit No. 4.03 to the 1997 Form S-3 and
incorporated herein by reference)
4.04 First Amended and Restated Agreement of Limited Partnership of Crescent Real Estate
Equities Limited Partnership dated May 5, 1994 (filed as Exhibit 10.01 to the
Registrant's Registration Statement on Form S-11 (File No. 33-78188) and incorporated
herein by reference)
4.05 Purchase Agreement, dated as of August 11, 1997, by and among the Registrant and the
Selling Shareholders (filed as Exhibit 4.01 to the Registrant's Current Report on Form
8-K dated August 11, 1997 and filed August 13, 1997 and incorporated herein by
reference)
5.01 Opinion of Shaw, Pittman, Potts & Trowbridge as to the legality of the securities being
registered by Crescent Real Estate Equities Company (filed herewith)
23.01 Consent of Shaw, Pittman, Potts & Trowbridge (included in its opinion filed as Exhibit
5.01 to this Registration Statement)
23.02 Consent of Arthur Andersen LLP, Certified Public Accountants, dated October 28, 1997
(filed herewith)
23.03 Consent of Arthur Andersen LLP, Certified Public Accountants, dated October 24, 1997
(filed herewith)
*24.01 Powers of Attorney
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* Previously filed.
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EXHIBIT 5.01
[LETTERHEAD OF SHAW, PITTMAN, POTTS & TROWBRIDGE]
October 28, 1997
Crescent Real Estate Equities Company
777 Main Street, Suite 2100
Fort Worth, Texas 76102
RE: CRESCENT REAL ESTATE EQUITIES COMPANY
Ladies and Gentleman:
We have acted as counsel to Crescent Real Estate Equities Company, a Texas
real estate investment trust (the "Company"), in connection with the
Registration Statement on Form S-3 (File No. 333-37565) filed by the Company on
October 9, 1997 with the Securities and Exchange Commission under the Securities
Act of 1933, as amended to date (the "Registration Statement"), and any
subsequent amendments thereto, relating to the offering by certain Selling
Shareholders (as defined in the Registration Statement) from time to time of up
to 6,110,000 common shares of beneficial interest, par value $.01 per share (the
"Common Shares"). Of the 6,110,000 Common Shares offered hereby, 4,700,000
Common Shares are outstanding (the "Outstanding Shares") and up to the remaining
1,410,000 Common Shares (the "Additional Shares") are issuable in accordance
with the terms of that certain Forward Stock Purchase (the "Agreement"), dated
August 12, 1997, between the Company and Union Bank of Switzerland, London
Branch.
Based upon our examination of originals and copies of such documents,
corporate records, certificates of officers of the Company and other instruments
as we have deemed necessary and upon the laws as presently in effect, we are of
the opinion that (i) the Outstanding Shares were validly issued by the Company
and are fully paid and nonassessable and (ii) upon issuance of the Additional
Shares in accordance with the Agreement, and the Company's receipt of the
consideration provided for therein, the Additional Shares will be validly issued
by the Company, fully paid and nonassessable.
We hereby consent to your filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus included therein.
Very truly yours,
Shaw, Pittman, Potts & Trowbridge
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EXHIBIT 23.02
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
January 17, 1997 included in Crescent Real Estate Equities Company's Form 10-K
for the year ended December 31, 1996, and of our reports dated February 14, 1997
on Trammell Crow Center, March 18, 1997 on Carter-Crowley Real Estate Portfolio,
July 23, 1997 on Fountain Place, August 21, 1997 on Miami Center, August 22,
1997 on Houston Center, and October 15, 1997 on Bank One Center included in
Crescent Real Estate Equities Company's Forms 8-K and to all references to our
Firm included in this Registration Statement.
ARTHUR ANDERSEN, LLP
Dallas, Texas
October 28, 1997
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EXHIBIT 23.03
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
November 7, 1996 on the Provider Segment of Magellan Health Services, Inc.
included in Crescent Real Estate Equities Company's Form 8-K dated January 29,
1997, as amended by Form 8-K/A on July 2, 1997, and to all references to our
Firm included in this Registration Statement.
ARTHUR ANDERSEN, LLP
Atlanta, Georgia
October 24, 1997
