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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 1998
REGISTRATION NO. 333-47563
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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) 321-2100
(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) 321-2100
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
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Copies to:
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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 JUNE 17, 1998
PROSPECTUS
250,310 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 6 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.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE , 1998
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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 owns a
portfolio of real estate assets (the "Properties") located primarily in 21
metropolitan submarkets in Texas and Colorado. The Properties include 88 office
properties (the "Office Properties") with an aggregate of approximately 31.3
million net rentable square feet, 89 behavioral healthcare facilities (the
"Behavioral Healthcare Facilities"), seven full-service hotels with a total of
2,276 rooms and two destination health and fitness resorts that can accommodate
up to 452 guests daily (collectively, the "Hotel Properties"), the real estate
mortgages relating to and non-voting common stock in five residential
development corporations (the "Residential Development Corporations"), which in
turn, through joint venture or partnership arrangements, own interests in 12
residential development properties (the "Residential Development Properties")
and seven retail properties with an aggregate of approximately 771,000 net
rentable square feet (the "Retail Properties"). The Company also owns an
indirect 38% interest in each of two partnerships that currently own and/or
operate approximately 89 refrigerated warehouses with an aggregate of
approximately 424.5 million cubic feet and has entered into agreements to
acquire an additional five refrigerated warehouses with an aggregate of
approximately 60.9 million cubic feet (the "Refrigerated Warehouse Investment").
In addition, the Pending Investment (as defined in "Recent Developments --
Pending Investment") includes the proposed acquisition of a corporation that
owns four full-service casino/ hotels and two riverboat casinos (collectively,
the "Casino/Hotel Properties").
Upon completion of the Pending Investment, the Company will have completed
over $6.0 billion of real estate investments since the closing of the initial
public offering of its Common Shares on May 5, 1994, approximately $2.2 billion
of which will have been completed since December 31, 1997.
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 and the operating
activities of the Refrigerated Warehouse Investment. 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.
As of June 11, 1998, 120,104,648 common shares of beneficial interest of
the Company, par value $.01 per share (the "Common Shares"), 6,518,607 units of
ownership interest in the Operating Partnership ("Units") and 8,000,000 shares
of 6 3/4% Series A Convertible Cumulative Preferred Shares of beneficial
interest, par value $.01 per share (the "Series A Preferred Shares") were
outstanding.
The Company's executive offices are located at 777 Main Street, Suite 2100,
Fort Worth, Texas 76102, and its telephone number is (817) 321-2100.
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RECENT DEVELOPMENTS
PENDING INVESTMENT
The following briefly describes the Company's pending investment (the
"Pending Investment"). The Pending Investment is subject to various closing
conditions. There is no assurance that this investment will be completed.
Station Casinos, Inc. On January 16, 1998, the Company entered into an
agreement and plan of merger (the "Merger Agreement") under which Station
Casinos, Inc. ("Station") will merge (the "Merger") with and into the Company.
Station is an established multi-jurisdictional casino/hotel company that owns
and operates, through wholly-owned subsidiaries, six distinctly-themed
Casino/Hotel Properties, four of which are located in Las Vegas, Nevada, one of
which is located in Kansas City, Missouri and one of which is located in St.
Charles, Missouri. The Merger Agreement also provides for certain alternative
structures to facilitate the combinations of the businesses of the Company and
Station. As a result of the Merger, the Company will acquire the real estate and
other assets of Station, except to the extent operating assets are transferred
immediately prior to the Merger, as described below.
As part of the transactions associated with the Merger, it is presently
anticipated that certain operating assets and the employees of Station will be
transferred to a limited liability company (the "Station Lessee") immediately
prior to the Merger. The Station Lessee will be owned 50% by Crescent Operating,
Inc. ("Crescent Operating") or another affiliate established by the Company,
24.9% by an entity (the "Management Entity") owned by three of the existing
directors of Station (including its Chairman, President and Chief Executive
Officer) and 25.1% by a separate entity (the "Secondary Management Entity")
owned by other members of Station management. It is anticipated that the Station
Lessee will operate the six Casino/ Hotel Properties currently operated by
Station pursuant to a lease with the Company. The lease will have a 10-year
term, with one five-year renewal option. The Station Lessee will be required to
maintain the Casino/ Hotel Properties in good condition at its expense. The
Company will establish and maintain a reserve account to be used under certain
circumstances for the purchase of furniture, fixtures and equipment with respect
to the Casino/Hotel Properties, to be used from time to time to replace
furniture, fixtures and equipment. Under the lease, the Company also will have a
right of first refusal to acquire, and thereafter to include under the lease,
any additional casino and/or hotel properties which the Station Lessee desires
to acquire or operate.
The lease will provide for base and percentage rent but the amount of rent
has not yet been finally determined. It is anticipated, however, that total
rental payments under the lease will exceed 20% of total rental revenues on an
annualized basis. As a result of the percentage rent payments, the Operating
Partnership will participate in the economic operations of the Casino/Hotel
Properties only through its indirect participation in gross revenues. To the
extent that operations of the Casino/Hotel Properties may affect the ability of
the Station Lessee to pay rent, the Operating Partnership also may indirectly
bear the risks associated with any increases in expenses or decreases in
revenues. The amount of rent payable to the Operating Partnership under the
leases with respect to the Casino/Hotel Properties will depend on the ability of
the Station Lessee to maintain and increase revenues from the Casino/Hotel
Properties. Accordingly, the Operating Partnership's results of operations and
its ability to meet its obligations will be affected by such factors as changes
in general and local economic conditions, the level of demand for the services
of the Casino/Hotel Properties, competition in the hotel/casino industry and
other factors related to the operation of the Casino/Hotel Properties.
In order to effect the Merger, the Company will issue 0.466 Common Shares
of the Company for each share of common stock of Station (including each
restricted share) that is issued and outstanding immediately prior to the
Merger. In addition, the Company will create a new class of Preferred Shares
which will be exchanged, upon consummation of the Merger, for the shares of
$3.50 Convertible Preferred Stock of Station outstanding immediately prior to
the Merger. The new class of Preferred Shares will rank pari passu with the
Series A Preferred Shares as to rights to receive distributions and to
participate in distributions or payments upon any liquidation, dissolution or
winding up of the Company.
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The total value of the Merger transaction, including the Company's issuance
of Common Shares and Preferred Shares in connection with consummation of the
Merger and the Company's assumption and/or refinancing of approximately $919
million in existing indebtedness of Station and its subsidiaries, is
approximately $1.75 billion.
In connection with the transaction, the Company will also enter into a
Right of First Refusal and Noncompetition Agreement with the Station Lessee.
Under the agreement, the Company will grant the Station Lessee a right of first
refusal as to any lease arrangement (a "master lease") for a casino/hotel
property (defined as real estate on which hotel and casino or other
gaming-related operations are conducted) in which the operators of the business
conducted at the property prior to the date the property is owned or acquired by
the Company will cease to operate such business. The Station Lessee will grant
the Company a right of first refusal to invest, directly or indirectly, (i) in
casino/hotel properties (including the opportunity to provide services related
to real estate or to invest in a hotel property), real estate mortgages, real
estate derivatives, or entities that invest primarily in or have a substantial
portion of their assets in such types of real estate assets or (ii) any other
casino/hotel-related investments that can be structured as REIT-suitable
investments. In addition, without the prior written consent of the Management
Entity, the Company, Crescent Operating and their affiliates may not own,
operate or otherwise engage in activities related to any casino/hotel properties
other than casino/hotel properties operated and leased by the Station Lessee or
an entity under its control, provided that the Company may own a casino/hotel
property if a master lease arrangement already exists at the property, if
casino/hotel activities conducted at the property are incidental to the primary
business operations at the property or if the sellers or operators desire to
enter into a master lease arrangement with the Company. Under the agreement,
without the prior written consent of the Company, neither the Management Entity,
the Secondary Management Entity, nor any of the affiliates of either, may own,
operate or otherwise engage in any activities related to casino/hotel properties
that are not operated and leased by the Station Lessee or an entity under its
control.
In connection with the Merger, the Company also has agreed to purchase up
to $115 million of a new class of convertible preferred stock of Station prior
to consummation of the Merger. The purchase will be made in increments, or in a
single transaction upon call by Station subject to certain conditions, whether
or not the Merger is consummated.
Consummation of the Merger is subject to various conditions, including
Station's receipt of the approval of two-thirds of the holders of both its
common stock and its preferred stock, expiration or termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1974, and the
receipt by the Company and certain of its officers, trust managers and
affiliates of the approvals required under applicable gaming laws. The Company
anticipates that the Merger and the associated transactions will be consummated
in the third quarter of 1998. Certain individuals who own in the aggregate
approximately 41% of the outstanding capital stock of Station have agreed to
vote in favor of the Merger. There can be no assurance that the Merger will be
consummated on the terms described in this Prospectus Supplement or at all.
The Company will be entitled to receive a break-up fee of $54 million if
the Merger Agreement is terminated (i) by either the Company or the Board of
Directors of Station if any required approval of the Merger by the holders of
each class of capital stock of Station shall not have been obtained by reason of
the failure to obtain the required vote of stockholders, (ii) by the Company if
the Board of Directors of Station shall not recommend the Merger or shall
recommend a superior proposal or (iii) by the Board of Directors of Station if
it receives a superior proposal that the Company does not match or exceed.
COMPLETED INVESTMENTS
The following briefly describes the Company's investments since March 31,
1998.
Datran Center. On May 1, 1998, the Company acquired, subject to a ground
lease, Datran Center, two Class A office buildings, containing approximately
472,000 net rentable square feet located in the South Dade/Kendall submarket of
Miami, Florida. The purchase price was approximately $71 million of which
approximately $47 million was funded through the assumption of two mortgage
notes encumbering the
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leasehold interests in the land and the building and the remaining balance of
approximately $24 million through a borrowing under the Company's credit
facility (the "Credit Facility").
FINANCING ACTIVITIES
On December 19, 1997, the Company's line of credit from a consortium of
banks led by BankBoston, N.A. (the "Credit Facility") was increased to $550
million. The Credit Facility is unsecured and expires in June 2000.
On February 13, 1998, the Company increased the maximum borrowings
available under its bridge loan with BankBoston, N.A. to $250 million. The
increase in the maximum borrowings available and the additional borrowings
thereunder were made in connection with the funding of the purchase price of
Post Oak Central. The bridge loan is unsecured and expires in March 1998.
TRANSACTIONS WITH AFFILIATES OF UNION BANK OF SWITZERLAND AND MERRILL LYNCH
INTERNATIONAL
On August 12, 1997, the Company entered into two transactions with
affiliates of Union Bank of Switzerland. In one transaction, the Company sold
4,700,000 Common Shares to one of the affiliates for approximately $148 million
and received approximately $145 million in net proceeds. In the other
transaction, the Company entered into a forward share purchase agreement with a
second affiliate. Under the forward share purchase agreement, the Company
committed to purchase 4,700,000 Common Shares from the second affiliate by
August 12, 1998. The price to be paid by the Company for the 4,700,000 Common
Shares will be determined on the date the Company settles the forward share
purchase agreement and will include a forward accretion component, minus an
adjustment for the Company's distribution rate. The forward accretion component,
which is variable and cannot be determined at this time, represents a guaranteed
rate of return to the second affiliate. The Company may fulfill its settlement
obligations under the forward share purchase agreement in cash or Common Shares,
at its option. In the event that the Company issues additional Common Shares
pursuant to the forward share purchase agreement, the Company's net income per
Common Share and net book value per Common Share will decrease.
On December 12, 1997, the Company entered into two transactions with
Merrill Lynch International. In one transaction, the Company sold 5,375,000
Common Shares at $38.125 per share to Merrill Lynch International for
approximately $205 million and received approximately $199.9 million in net
proceeds. In the other transaction, the Company entered into a swap agreement
(the "Swap Agreement") with Merrill Lynch International relating to 5,375,000
Common Shares (the "Settlement Shares"), pursuant to which Merrill Lynch
International will sell, as directed by the Company on or before December 12,
1998, a sufficient number of Common Shares to achieve net sales proceeds equal
to the market value of the Settlement Shares on December 12, 1997 (approximately
$204.9 million), plus a forward accretion component, minus an adjustment for the
Company's distribution rate. The forward accretion component, which is variable
and cannot be determined at this time, represents a guaranteed rate of return to
Merrill Lynch International. The precise number of Common Shares that will be
required to be sold pursuant to the Swap Agreement will depend primarily on the
market price of the Common Shares at the time of settlement. The Common Shares
required to be sold by Merrill Lynch International pursuant to the Swap
Agreement are expected to be the same Common Shares initially issued by the
Company (although Merrill Lynch International, at its option, may substitute
other Common Shares that it holds). If however, as a result of a decrease in the
market price of the Common Shares, the number of Common Shares required to be
sold is greater than the number of Settlement Shares, the Company will deliver
additional Common Shares to Merrill Lynch International. In contrast, if such
number of Common Shares is less than the number of Settlement Shares as a result
of an increase in the market price of the Common Shares, Merrill Lynch
International will deliver Common Shares or, at the option of the Company, cash
to the Company. In the event that the Company issues additional Common Shares
pursuant to the Swap Agreement, the Company's net income per Common Share and
net book value per Common Share will decrease. On February 20, 1998, the Company
issued an additional 525,000 Common Shares to Merrill Lynch International as a
result of the decline in market price of the Common Shares from the date of
issuance on December 12, 1997 through February 12, 1998. The issuance of
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these shares did not have a material impact on the Company's net income per
Common Share or net book value per Common Share.
SERIES A PREFERRED STOCK OFFERING
On February 19, 1998, the Company completed a public offering of 8,000,000
Series A Preferred Shares in an aggregate principal amount of $200 million. The
Company used the net proceeds from the offering, equal to approximately $191.3
million, to repay certain amounts outstanding under the Credit Facility.
Distributions on the Series A Preferred Shares are cumulative from the date
of original issue and are payable quarterly in arrears on or about the fifteenth
day of February, May, August and November of each year, commencing May 15, 1998,
at the rate of 6 3/4% of the liquidation preference per annum (equivalent to
$1.6875 per annum per Series A Preferred Share).
The Series A Preferred Shares are convertible at any time, in whole or in
part, at the option of the holders thereof, into Common Shares at a conversion
price of $40.86 per Common Share (equivalent to a conversion rate of .6119
Common Shares per Series A Preferred Share), subject to adjustment in certain
circumstances. The Series A Preferred Shares generally are not redeemable prior
to February 18, 2003. On and after February 18, 2003, the Series A Preferred
Shares will be redeemable, in whole or in part, at the option of the Company, at
a redemption price of $25.00 per share, plus accrued and unpaid distributions,
if any. The Series A Preferred Shares have no stated maturity date and will not
be entitled to the benefit of any sinking fund or mandatory redemption
provisions.
The Series A Preferred Shares rank senior to the Common Shares as to rights
to receive distributions and to participate in distributions or payments upon
any liquidation, dissolution or winding up of the Company.
The Series A Preferred Shares have been listed on the NYSE under the symbol
"CEIPrA."
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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 March 31, 1998, the Company has experienced rapid growth, increasing its
total assets by approximately 1,781%, after giving pro forma effect to the
proposed Merger with Station and investments completed after March 31, 1998.
There can be no assurance that the Company will be able to manage its growth
effectively, or that the Company will be able to maintain its current rate of
growth in the future, and the failure to do so may have a material adverse
effect on the financial condition and results of operations of the Company.
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
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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 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 INVESTMENTS
Hotel Risks. The Company has leased the Hotel Properties to subsidiaries of
Crescent Operating, 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 2012. As a result,
the Company will participate in the
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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 Crescent Operating (the "Intercompany Agreement"), to
lease any hotel properties that it may acquire in the future to Crescent
Operating (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.
Lack of Control of Americold and URS. The Company owns, through two
subsidiaries, a 38% interest in each of two partnerships, one of which owns
Americold Corporation ("Americold") and the other of which owns URS Logistics,
Inc. ("URS"). Two subsidiaries of Vornado Realty Trust (collectively, "Vornado")
own a 60% interest in the partnerships. In addition, Crescent Operating owns the
remaining 2% interest in the partnerships through its ownership of all of the
voting stock of the two subsidiaries of the Company that hold the Company's
interests in the partnerships (representing an approximately 5% economic
interest in each of the subsidiaries of the Company). Thus, Crescent Operating,
as owner of the voting stock of the two subsidiaries, rather than the Company,
is entitled to approve certain major decisions relating to the partnerships.
Under the terms of the existing partnership agreements for each of the
partnerships, Vornado has the right to make all decisions relating to the
management and operation of the partnerships other than certain major decisions
that require the approval of both Crescent Operating and Vornado. The
partnership agreement for each of the partnerships provides for a buy-sell
arrangement upon a failure of Crescent Operating and Vornado to agree on any of
the specified major decisions which, until November 1, 2000, can only be
exercised by Vornado. See "-- Real Estate Risks Specific to the Company's
Business -- Risks of Joint Ownership of Assets."
Risks Associated with Proposed Casino/Hotel Properties Investment. In
connection with the Merger, the Company intends to lease the Casino/Hotel
Properties to the Station Lessee, which will be owned 50% by former management
of Station and 50% by Crescent Operating or one of its affiliates. The Company
expects that it will receive both base rent and a percentage of gross revenues
above a certain minimum level pursuant to the leases, which will expire in 2008,
subject to one, five-year renewal option. Although the rental payments have not
yet been finally determined, it is anticipated that base rental payments will
exceed 20% of current base rental revenues on an annual basis. As a result of
the percentage rent payments, the Company will participate in the economic
operations of the Casino/Hotel Properties only through its indirect
participation in gross revenues. To the extent that operations of the
Casino/Hotel Properties may affect the ability of the Station Lessee to pay
rent, the Company also may indirectly bear the risks associated with any
increases in expenses or decreases in revenues. The amount of rent payable to
the Company under the leases with respect to the Casino/Hotel Properties will
depend on the ability of the Station Lessee to maintain and increase revenues
from the Casino/Hotel Properties. Accordingly, the Company's results of
operations and its ability to meet its obligations will be affected by such
factors as changes in general and local economic conditions, the level of demand
for the services by the Casino/Hotel Properties, competition in the casino/hotel
industry and other factors related to the operation of the Casino/Hotel
Properties.
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<PAGE> 11
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
10
<PAGE> 12
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. See "-- Risks Relating to Control of Certain Investments -- Lack of
Control of Americold and URS."
Potential Conflicts of Interest. The Company has entered into the
Intercompany Agreement with Crescent Operating pursuant to which each has agreed
to provide the other with rights to participate in certain transactions. The
certificate of incorporation of Crescent Operating, as amended and restated,
generally prohibits Crescent Operating, 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 Crescent Operating are the lessees of each of the
Hotel Properties, and Crescent Operating 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 rent. 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 Crescent Operating, and Gerald W. Haddock also serves as
President, Chief Executive Officer and a director of Crescent Operating, 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 Crescent Operating. The common management and
ownership among these entities may lead to conflicts of interest in connection
with transactions between the Operating Partnership and Crescent Operating.
USE OF PROCEEDS
This Prospectus relates to Common Shares being offered and sold for the
account 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 Common Shares offered hereby. See "Plan of Distribution."
SELLING SHAREHOLDERS
GENERAL
This Prospectus relates to the offer and sale from time to time of up to
250,310 Common Shares (the "Shares") by Senterra Corporation, a Texas
Corporation ("Senterra"), Myron G. Blalock, III ("Blalock") and Neil H. Tofsky
("Tofsky," and, together with Senterra and Blalock, the "Selling Shareholders"),
which are the members of Senterra Real Estate Group, L.L.C., a Texas limited
liability company (formerly known as Senterra Development, L.L.C.) ("Senterra
Real Estate"). It is unknown if, when or in what amounts each of the Selling
Shareholders may offer the Shares for sale. There is no assurance that any of
the Selling Shareholders will sell any or all of the Shares offered hereby.
Senterra Real Estate formerly owned certain assets (the "Greenway
Operations") which it employed in its business operations of providing property
and asset management services to Greenway Plaza, a mixed-use development located
in Houston, Texas, consisting of 10 office buildings, retail and storage space,
a hotel, a private athletic club, a central plant and six parking garages.
Pursuant to an Asset Contribution Agreement dated as of October 7, 1996, as
amended on December 31, 1997 and on March 2, 1998, by and among the
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<PAGE> 13
Operating Partnership, Senterra Real Estate, Senterra, Blalock and Tofsky,
Senterra Real Estate contributed to the Operating Partnership all of its right,
title and interest in and to the properties, contracts, rights and other assets
used in or attributable to the Greenway Operations in exchange for a limited
partnership interest in the Operating Partnership and 125,155 Units having a
fair market value at the date of closing equal to $8,521,500. Immediately upon
issuance, Senterra Real Estate distributed 83,441, 20,857 and 20,857 Units to
Senterra, Blalock and Tofsky, respectively.
This Prospectus has been prepared pursuant to the Company's obligations
under that certain Registration Rights Agreement, dated as of March 2, 1998, by
and among Crescent Equities, the Operating Partnership and the Selling
Shareholders (the "Registration Rights Agreement"). In accordance with the
Registration Rights 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 Registration
Rights Agreement.
In addition, in the Registration Rights Agreement, the Company has agreed
to indemnify the 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 Securities Act may be permitted
pursuant to such agreements, the Company has been informed that, in the opinion
of the Securities and Exchange Commission (the "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 number of Shares that will be held by each
Selling Shareholder after completion of the Offering.
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 any of 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.
CERTAIN RELATIONSHIPS BETWEEN THE COMPANY AND CERTAIN SELLING SHAREHOLDERS
Senterra Real Estate is the property manager and marketing and leasing
agent for Greenway Plaza, which was acquired by the Operating Partnership on
August 15, 1996. On October 7, 1996, Senterra Real Estate and Crescent Real
Estate Funding III, L.P. ("Funding III"), Crescent Real Estate Funding IV, L.P.
("Funding IV") and Crescent Real Estate Funding V, L.P. ("Funding V"),
affiliates of the Company, entered into management and marketing and leasing
agreements extending the term during which Senterra Real Estate would provide
management, construction management and marketing services for Greenway Plaza
for two, three and five years following such acquisition, respectively. Senterra
Real Estate is providing similar services to the Operating Partnership for a
building in Houston, Texas known as 1800 West Loop South.
Also on October 7, 1996, each of Douglas W. Schnitzer ("Schnitzer"),
President of Senterra, and Blalock, Tofsky and Senterra Real Estate entered into
a Confidentiality and Noncompetition Agreement with the Operating Partnership,
Funding III, Funding IV and Funding V, which agreements were amended on December
31, 1997. Pursuant to such agreements, each of Schnitzer, Blalock, Tofsky and
Senterra Real Estate has agreed to maintain the confidentiality of certain
information relating to current and prospective tenants at Greenway Plaza and,
for a period of five years, not to interfere with tenant relationships at
Greenway Plaza or certain other office buildings within a specified radius
thereof and not to interfere with the Company's relationships with its
employees.
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<PAGE> 14
Crescent Equities has hired several Senterra employees to perform the
day-to-day operations of Greenway Plaza, and it is anticipated that Crescent
Equities will hire substantially all of the Senterra employees involved in the
day-to-day operations of Greenway Plaza prior to the expiration of the
management agreement between Senterra Real Estate and Funding III, Funding IV
and Funding V in October of 1998. In addition, Senterra is in the process of
implementing an agreement with Crescent Equities for the development of a
parking garage in Greenway Plaza that is expected to contain 1,000 to 1,500
parking spaces, pursuant to which Senterra will provide construction management
services for a proposed base fee of three percent of the cost of construction.
In addition to the transactions relating to the Greenway Operations
described above under "General," the Company assumed certain obligations of the
Operating Partnership to Senterra Real Estate set forth in an agreement entered
into as of December 13, 1996 between the Operating Partnership and Senterra Real
Estate, which obligations the Pricing Committee of the Board of Trust Managers
of the Company valued at $1,200,200. On January 6, 1998, the Company issued
30,933 Common Shares to Senterra Real Estate pursuant to an existing
registration statement, in exchange for the release by Senterra Real Estate of
such obligations.
COMMON SHARES OFFERED
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(1)(2) HEREBY
------------------- -------------- --------------
<S> <C> <C>
Senterra Corporation............................. 166,882 166,882
Myron G. Blalock, III............................ 41,714 41,714
Neil H. Tofsky................................... 41,714 41,714
------- -------
Total.................................. 250,310 250,310(3)
</TABLE>
- - - - - ---------------
(1) Excludes 30,933 Common Shares in which Senterra, Tofsky and Blalock have a
63.33%, 26.67% and 10% interest, respectively. Such Common Shares are held
of record by Senterra Real Estate.
(2) The number of Common Shares beneficially owned prior to the Offering
represents Units exchangeable for Common Shares, subject to certain
exceptions, on a one-for-two basis. Alternatively, the Units are
exchangeable, at the option of the Company, for cash.
(3) Based on the number of Units and Common Shares owned as of the date hereof
(but excluding the 30,933 Common Shares held of record by Senterra Real
Estate), none of the Selling Shareholders will own any Common Shares or
Units upon completion of the Offering.
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. 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,
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<PAGE> 15
(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 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. 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.
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<PAGE> 16
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 1998 Annual Meeting
of Stockholders.
(3) The Company's Annual Report on Form 10-K for the year ended December 31,
1997, as amended on May 15, 1997.
(4) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998.
(5) 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.
(6) The Company's Current Report on Form 8-K dated December 22, 1997 and filed
March 4, 1998.
(7) The Company's Current Report on Form 8-K dated January 6, 1998 and filed
January 6, 1998.
(8) The Company's Current Report on Form 8-K dated January 16, 1998 and filed
January 27, 1998, as amended on February 13, 1998, April 27, 1998 and June
10, 1998.
(9) The Company's Current Report on Form 8-K dated February 12, 1998 and filed
February 23, 1998.
(10) The Company's Current Report on Form 8-K dated February 13, 1998 and filed
February 18, 1998.
(11) The Company's Current Report on Form 8-K dated February 13, 1998 and filed
February 18, 1998.
(12) The Company's Current Report on Form 8-K dated April 17, 1998 and filed
April 28, 1998.
(13) The Company's Current Report on Form 8-K dated April 23, 1998 and filed
April 27, 1998.
(14) The Company's Current Report on Form 8-K dated June 15, 1998 and filed
June 16, 1998.
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) 321-2100).
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<PAGE> 17
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, 1997, 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 December 22, 1997 and filed on March 4, 1998, and (iii)
dated January 16, 1998 and filed on January 27, 1998, as amended on February 13,
1998, April 27, 1998 and June 10, 1998, 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.
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<PAGE> 18
======================================================
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
Recent Developments................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 11
Selling Shareholders.................. 11
Plan of Distribution.................. 13
Available Information................. 14
Incorporation of Certain Documents by
Reference........................... 15
Experts............................... 16
Legal Matters......................... 16
</TABLE>
======================================================
======================================================
250,310 SHARES
[CRESCENT LOGO]
COMMON SHARES
PROSPECTUS
JUNE , 1998
======================================================
<PAGE> 19
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....................................... $ 2,480.61
Printing, Engraving and Filing Expenses................ $ 10,000
Accounting Fees and Expenses........................... $ 5,000
Legal Fees and Expenses................................ $ 10,000
Miscellaneous.......................................... $ 1,500
----------
Total.................................................. $28,980.61
==========
</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> 20
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.
The Company has entered into indemnification agreements with each of the
Company's executive officers and trust managers. The indemnification agreements
require, among other things, that the Company indemnify such officers and trust
managers to the fullest extent permitted by law, and advance to the officers and
directors all related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. The Company also must
indemnify and advance expenses incurred by officers and directors seeking to
enforce their rights under the indemnification agreements and cover officers and
directors under the Company's directors' and officers' liability insurance, if
any. Although the indemnification agreements offer substantially the same scope
of coverage afforded by provisions in the Declaration of Trust and the Company's
Bylaws, they provide greater assurance to directors and executive officers that
indemnification will be available, because, as contracts, they cannot be
modified unilaterally in the future by the Board of Trust Managers or by the
stockholders to alter, limit or eliminate the rights they provide.
II-2
<PAGE> 21
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 Second Amended and Restated Agreement of Limited Partnership of Crescent Real Estate
Equities Limited Partnership dated November 1, 1997, as amended (filed as Exhibit 4.04
to the Registrant's Registration Statement on Form S-3 (File No. 333-56809) and
incorporated herein by reference)
*4.05 Registration Rights Agreement dated as of March 2, 1998 by and among Crescent Equities,
the Operating Partnership and the Selling Shareholders
4.06 Form of Certificate of 6 3/4% Series A Convertible Cumulative Preferred Shares of the
Company (filed as Exhibit 4.05 to the Company's Current Report on Form 8-K dated
February 13, 1998 and filed February 18, 1998 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 (Dallas), Certified Public Accountants, dated June 11,
1998 (filed herewith)
23.03 Consent of Arthur Andersen LLP (Atlanta), Certified Public Accountants, dated June 10,
1998 (filed herewith)
23.04 Consent of Arthur Andersen LLP (Las Vegas), Certified Public Accountants, dated June
11, 1998 (filed herewith)
*24.01 Powers of Attorney
</TABLE>
- - - - - ---------------
* Previously filed.
II-3
<PAGE> 22
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-4
<PAGE> 23
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 17th day of June,
1998.
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 June 17, 1998
- - - - - ----------------------------------------------------- Board
Richard E. Rainwater
/s/ JOHN C. GOFF* Trust Manager and Vice Chairman of June 17, 1998
- - - - - ----------------------------------------------------- the Board
John C. Goff
/s/ GERALD W. HADDOCK Trust Manager, President and Chief June 17, 1998
- - - - - ----------------------------------------------------- Executive Officer (Principal
Gerald W. Haddock Executive Officer)
/s/ DALLAS E. LUCAS Senior Vice President and Chief June 17, 1998
- - - - - ----------------------------------------------------- Financial Officer (Principal
Dallas E. Lucas Financial and Accounting
Officer)
/s/ ANTHONY M. FRANK* Trust Manager June 17, 1998
- - - - - -----------------------------------------------------
Anthony M. Frank
/s/ MORTON H. MEYERSON* Trust Manager June 17, 1998
- - - - - -----------------------------------------------------
Morton H. Meyerson
/s/ WILLIAM F. QUINN* Trust Manager June 17, 1998
- - - - - -----------------------------------------------------
William F. Quinn
/s/ PAUL E. ROWSEY, III* Trust Manager June 17, 1998
- - - - - -----------------------------------------------------
Paul E. Rowsey, III
/s/ MELVIN ZUCKERMAN* Trust Manager June 17, 1998
- - - - - -----------------------------------------------------
Melvin Zuckerman
</TABLE>
*By: /s/ GERALD W. HADDOCK
----------------------------------
Gerald W. Haddock
Attorney-In-Fact
II-5
<PAGE> 24
INDEX TO EXHIBITS
<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 Second Amended and Restated Agreement of Limited Partnership of Crescent Real Estate
Equities Limited Partnership dated November 1, 1997, as amended (filed as Exhibit 4.04
to the Registrant's Registration Statement on Form S-3 (File No. 333-56809) and
incorporated herein by reference)
*4.05 Registration Rights Agreement dated as of March 2, 1998 by and among Crescent Equities,
the Operating Partnership and the Selling Shareholders
4.06 Form of Certificate of 6 3/4% Series A Convertible Cumulative Preferred Shares of the
Company (filed as Exhibit 4.05 to the Company's Current Report on Form 8-K dated
February 13, 1998 and filed February 18, 1998 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 (Dallas), Certified Public Accountants, dated June 11,
1998 (filed herewith)
23.03 Consent of Arthur Andersen LLP (Atlanta), Certified Public Accountants, dated June 10,
1998 (filed herewith)
23.04 Consent of Arthur Andersen LLP (Las Vegas), Certified Public Accountants, dated June
11, 1998 (filed herewith)
*24.01 Powers of Attorney
</TABLE>
- - - - - ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 5.01
[LETTERHEAD OF SHAW, PITTMAN, POTTS & TROWBRIDGE]
June 17, 1998
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. 333-47563) filed by the Company on
March 9, 1998 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 250,310 common shares of beneficial interest of the Company, par value $.01
per share (the "Common Shares"), which are represented by 125,155 units (the
"Units") of ownership interest in Crescent Real Estate Equities Limited
Partnership, a Delaware limited partnership (the "Operating Partnership").
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 upon exchange of the 125,155 Units for Common Shares on a
one-for-two basis in accordance with the terms of the Operating Partnership's
limited partnership agreement, such 250,310 Common 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
<PAGE> 1
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 23, 1998 included in Crescent Real Estate Equities Company's Form 10-K
for the year ended December 31, 1997, and of our reports dated December 4, 1997
on Energy Centre, January 16, 1998 on Post Oak Central, and January 16, 1998 on
Washington Harbour 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
June 11, 1998
<PAGE> 1
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
June 10, 1998
<PAGE> 1
EXHIBIT 23.04
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
April 23, 1997 (except for Note 5 as to which the date is June 27, 1997 and
Note 14 as to which the date is January 16, 1998), with respect to the
consolidated financial statements of Station Casinos, Inc. as of March 31, 1997
and 1996 and for each of the three years in the period ended March 31, 1997,
included in Crescent Real Estate Equities Company's Form 8-K/A filed February
13, 1998 and to all references to our Firm included in this Registration
Statement.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
June 11, 1998
