UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

Filed by the Registrant þ
Filed by a Party other than the Registrant o

Check the appropriate box:

þ		Preliminary Proxy Statement
o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to §240.14a-12

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o		No fee required.
þ		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	(1)		Title of each class of securities to which transaction applies:
			Common Shares of Beneficial Interest, par value $0.01 per share, of Crescent Real Estate      Equities Company (“Company Common Shares”) Units of Limited Partnership Interest of Crescent Real Estate Equities Limited Partnership      (“CREELP Limited Partnership Units”)
	(2)		Aggregate number of securities to which transaction applies:
			102,893,011 Company Common Shares 810,156 Company Common Shares underlying options to purchase Company Common Shares 8,511,173 CREELP Limited Partnership Units 729,926 CREELP Limited Partnership Units underlying options to purchase CREELP Limited Partnership Units 2,406,750 CREELP Limited Partnership Units issued pursuant to restricted unit awards (“Restricted Unit Awards”)
	(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
			The filing fee was determined based upon the sum of

	•		the product of 102,893,011 Company Common Shares multiplied by the merger consideration of $22.80 per share;
	•		the product of 8,511,173 CREELP Limited Partnership Units multiplied by the product of the merger consideration of $22.80 per share multiplied by two (2);
	•		$51,756,182, the amount expected to be paid upon cancellation of outstanding options; and
	•		$109,747,800, the amount expected to be paid upon cancellation of Restricted Unit Awards.

			In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying 0.0000307 by the sum of the preceding sentence.
	(4)		Proposed maximum aggregate value of transaction:
			$2,895,574,120
	(5)		Total fee paid:
			$88,895

o		Fee paid previously with preliminary materials.
o		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	(1)		Amount Previously Paid:
	(2)		Form, Schedule or Registration Statement No.:
	(3)		Filing Party:
	(4)		Date Filed:

                    , 2007

Dear Shareholder,

     You are cordially invited to attend a special meeting of shareholders of Crescent Real Estate Equities Company, a Texas real estate investment trust (the “Company”), to be held at the Hotel Crescent Court, 400 Crescent Court, Dallas, Texas on                     , 2007 at                     , Central Daylight Saving Time. At the special meeting, we will ask you to approve both the merger of the Company with and into Moon Acquisition LLC, a Delaware limited liability company and affiliate of Morgan Stanley Real Estate, which we refer to as the company merger, and the Agreement and Plan of Merger, dated as of May 22, 2007, by and among the Company, Crescent Real Estate Equities Limited Partnership, Moon Acquisition Holdings LLC, Moon Acquisition LLC and Moon Acquisition Limited Partnership, which we refer to as the merger agreement. If the company merger is completed, you, as a holder of our common shares of beneficial interest, will be entitled to receive $22.80 in cash in exchange for each share you own, as more fully described in the enclosed proxy statement.

     After careful consideration, our board of trust managers unanimously (subject to the recusal of two trust managers) approved the company merger, the merger agreement and the other transactions contemplated by the merger agreement, and has declared the company merger, the merger agreement and the other transactions contemplated by the merger agreement advisable and in the best interests of the Company and our shareholders.

     Our board of trust managers recommends (subject to the recusal of two trust managers) that you vote “FOR” the proposal to approve the company merger and the merger agreement.

     The company merger and the merger agreement must be approved by the affirmative vote of holders of at least two-thirds of the outstanding common shares entitled to vote on the matter at the special meeting. The proxy statement accompanying this letter provides you with more specific information concerning the special meeting, the company merger, the merger agreement and the other transactions contemplated by the merger agreement. We encourage you to read carefully the enclosed proxy statement, including the exhibits. You may also obtain more information about the Company from us or from documents we have filed with the Securities and Exchange Commission.

     Your vote is very important regardless of the number of our common shares that you own. Whether or not you plan to attend the special meeting, we request that you mark, sign, date and return the enclosed proxy card as promptly as possible in the postage-prepaid envelope provided to ensure your representation and the presence of a quorum at the meeting. Alternatively, you may vote by Internet. The enclosed proxy card contains instructions regarding voting, including instructions regarding Internet voting. If you attend the special meeting, you may continue to have your shares voted as instructed in the proxy, or, if you are a holder of record of our common shares, you may withdraw your proxy at the special meeting and vote your shares in person.

     Be advised that if you fail to vote by proxy or in person, or fail to instruct your broker on how to vote, it will have the same effect as a vote against approval of the company merger, the merger agreement and the other transactions contemplated by the merger agreement.

     Thank you for your cooperation and your continued support.

Sincerely,

John C. Goff
Vice-Chairman of the Board and
Chief Executive Officer

     This proxy statement is dated                     , 2007 and is first being mailed to our shareholders on or about                     , 2007.

777 Main Street, Suite 2100
Fort Worth, Texas 76102

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON                     , 2007

Dear Shareholder:

     You are cordially invited to attend a special meeting of the shareholders of Crescent Real Estate Equities Company, a Texas real estate investment trust (the “Company”, “we” or “us”), which will be held at the Hotel Crescent Court, 400 Crescent Court, Dallas, Texas on                     , 2007 at                     , Central Daylight Saving Time. The special meeting is being held for the purpose of acting on the following matters:

     1. to consider and vote on a proposal to (a) approve the Agreement and Plan of Merger, dated as of May 22, 2007, by and among the Company, Crescent Real Estate Equities Limited Partnership, Moon Acquisition Holdings LLC, Moon Acquisition LLC and Moon Acquisition Limited Partnership, which we refer to as the merger agreement, and (b) approve the merger of the Company with and into Moon Acquisition LLC, which we refer to as the company merger; and

     2. to consider and vote on any other business that properly comes before the special meeting or any adjournments or postponements of the special meeting, including adjournments and postponements for the purpose of soliciting additional proxies.

     If the company merger is completed, you, as a holder of our common shares, will be entitled to receive $22.80 in cash in exchange for each share you own, as more fully described in the accompanying proxy statement.

     After careful consideration, our board of trust managers unanimously (subject to the recusal of two trust managers) approved the company merger, the merger agreement and the other transactions contemplated by the merger agreement, and has declared the company merger, the merger agreement and the other transactions contemplated by the merger agreement advisable and in the best interests of the Company and its shareholders.

     Our board of trust managers (subject to the recusal of two trust managers) recommends that you vote “FOR” the proposal to approve the company merger and the merger agreement.

     All holders of record of our common shares and our Series A and Series B preferred shares, as of the close of business on the record date, which is                     , 2007, are entitled to receive notice of this special meeting. However, only holders of our common shares at the close of business on the record date are entitled to vote at the special meeting or any postponements or adjournments of the special meeting. The vote of the holders of our Series A and Series B preferred shares is not required to approve the company merger or the merger agreement and is not being solicited.

     The proposal to approve the merger agreement and approve the company merger must be approved by the affirmative vote of at least two-thirds of the outstanding common shares entitled to vote on the matter at the special meeting. Accordingly, regardless of the number of shares that you own, your vote is important.

     Be advised, if you are a shareholder of record and you fail to authorize a proxy or attend the special meeting, the effect will be that the common shares that you own will not be counted for purposes of determining whether a quorum is present and will have the same effect as a vote against the proposal to approve the merger agreement and the company merger.

     Even if you plan to attend the special meeting in person, we request that you authorize your proxy by either marking, signing, dating and promptly returning the enclosed proxy card in the postage-paid envelope or submitting your proxy or voting instructions by Internet.

     If you own our common shares as a record holder, any proxy may be revoked at any time prior to its exercise by delivery of a properly executed, later-dated proxy card, by submitting your proxy or voting instructions by Internet at a later date than your previously submitted proxy, by filing a written revocation of your proxy with our Corporate Secretary at our address set forth above or by your voting in person at the special meeting. Attendance at the meeting will not, in itself, constitute revocation of a previously granted proxy. If you have instructed a broker to vote your shares, the above-described options for changing your vote do not apply and instead you must follow the instructions received from your broker to change your vote.

     We encourage you to read this proxy statement carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, MacKenzie Partners, Inc., toll-free at 1-800-322-2885. In addition, you may obtain information about us from certain documents that we have filed with the Securities and Exchange Commission and from our website at www.crescent.com. Information contained on our website is not part of, or incorporated in, the proxy statement.

		By Order of the Board of Trust Managers,
, 2007		David M. Dean
Fort Worth, Texas		Secretary

TABLE OF CONTENTS

SUMMARY			1
The Parties to the Mergers			1
The Special Meeting			2
Record Date, Notice and Quorum			2
Required Vote			2
Voting By Our Trust Managers and Executive Officers			3
The Mergers and Related Transactions			3
Recommendation of Our Board of Trust Managers			4
Opinion of Our Financial Advisor			4
Financing Commitment and Guarantees			5
Treatment of Series A and Series B Preferred Shares			5
Treatment of Partnership Units in Crescent Real Estate Equities Limited Partnership			5
Treatment of Options to Purchase Common Shares, Options to Purchase Partnership Units and Restricted Unit Awards			6
Interests of Our Trust Managers and Executive Officers			7
No Solicitation of Transactions			8
Conditions to the Mergers			8
Termination of the Merger Agreement			8
Termination Fee and Expenses			10
Regulatory Matters			10
Litigation Relating to the Mergers			10
Dissenters’ Rights of Appraisal			11
Material United States Federal Income Tax Consequences			11
Delisting and Deregistration of Our Common Shares and Our Series A and Series B Preferred Shares; Deregistration of Partnership Units			12
Market Price and Dividend Data			12
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGERS			12
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			17
THE PARTIES TO THE MERGERS			18
THE SPECIAL MEETING			19
Date, Time and Purpose of the Special Meeting			19
Record Date, Notice and Quorum			20
Required Vote			20
Voting by our Trust Managers and Executive Officers			20
Voting Agreements			21
Proxies and Revocation			21

 i

Adjournments and Postponements			22
THE MERGERS			22
General Description of the Mergers			22
Background of the Mergers			23
Reasons for the Mergers			29
Recommendation of Our Board of Trust Managers			31
Opinion of Our Financial Advisor			31
Financing Commitment			38
Guarantees and Remedies			38
Interests of Our Trust Managers and Executive Officers			38
Indemnification of Our Trust Managers and Officers			42
Regulatory Matters			42
Litigation Relating to the Mergers			42
Material United States Federal Income Tax Consequences			44
Delisting and Deregistration of Our Common Shares and Our Series A and Series B Preferred Shares; Deregistration of Partnership Units			48
THE MERGER AGREEMENT			48
Structure			49
Effective Times			49
Organizational Documents			50
Management			50
Treatment of Shares, Options to Purchase Common Shares, Options to Purchase Partnership Units and Restricted Unit Awards			50
Treatment of Partnership Units in Crescent Real Estate Equities Limited Partnership			51
No Further Ownership Rights			51
Payment Procedures			52
Representations and Warranties			53
Covenants Relating to Conduct of Our Business			56
No Solicitation of Transactions			59
Employee Benefits			60
Agreement to Take Further Action			61
Restructuring Transactions			62
WARN Act Notices			62
Conditions to the Mergers			63
Termination			65
Termination Fee and Expenses			67
Amendment			68
MARKET PRICE OF OUR COMMON SHARES			69

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, EXECUTIVE OFFICERS AND TRUST MANAGERS			70
DISSENTERS’ RIGHTS OF APPRAISAL			73
MULTIPLE SHAREHOLDERS SHARING ONE ADDRESS			74
SUBMISSION OF SHAREHOLDER PROPOSALS			74
OTHER MATTERS			75
WHERE YOU CAN FIND MORE INFORMATION			75

Exhibit A: Merger Agreement
Exhibit B: Opinion of Financial Advisor
Exhibit C: Section 25.20 of the Texas Real Estate Investment Trust Act

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGERS

     The following questions and answers address briefly some questions you may have regarding the special meeting and the proposed mergers. These questions and answers may not address all questions that may be important to you as a shareholder. Please refer to the more detailed information contained elsewhere in this proxy statement, as well as the additional documents to which it refers or which it incorporates by reference, including the merger agreement, a copy of which is attached to this proxy statement as Exhibit A. We encourage you to read the merger agreement carefully and in its entirety, as it is the principal document governing the mergers.

Q: Why am I receiving this proxy statement and proxy card?

A: You are being asked to consider and approve the company merger, the merger agreement and the transactions contemplated therein. You are being asked to cast one vote per common share of which you are the holder of record, for or against the above transaction. For additional information about the mergers, please review the merger agreement attached to this proxy statement as Exhibit A and incorporated by reference into this proxy statement.

Q: What is the proposed transaction?

A: The proposed transaction is the acquisition of the company and, through such acquisition, the ownership of its subsidiaries, including the operating partnership, by affiliates of Morgan Stanley Real Estate pursuant to the merger agreement. Once the company merger and the merger agreement have been approved by our shareholders and the other closing conditions under the merger agreement have been satisfied or waived, the company will be merged with and into REIT Merger Sub with REIT Merger Sub continuing as the surviving entity. Immediately after the company merger, Moon Acquisition Limited Partnership will merge with and into the operating partnership, with the operating partnership surviving the operating partnership merger and continuing to exist as a subsidiary of REIT Merger Sub. For additional information about the mergers, please review the merger agreement attached to this proxy statement as Exhibit A and incorporated by reference into this proxy statement.

Q: As a common shareholder of Crescent, what will I receive as a result of the company merger?

A: In exchange for each outstanding common share that you own immediately prior to the merger effective time, you will receive the common share merger consideration, which is an amount equal to $22.80 in cash, without interest. The amount of the common share merger consideration will only be adjusted to the extent that we are required to make distributions for certain tax purposes prior to the merger effective time.

Q: Will I receive any regular quarterly dividends with respect to the common shares that I own?

A: No. Under the terms of the merger agreement, we may not declare or pay any other dividends to you without the prior written consent of Moon Parent other than as may be required to maintain our qualification as a REIT and avoid certain company-level taxes. We do not anticipate making any further distributions to maintain our qualification as a REIT as a result of the receipt of the common share merger consideration by our common shareholders being able to qualify as a distribution for such purposes.

Q: Why are no regular quarterly dividends being paid?

A: Dividends paid year-to-date by us, combined with the payment of the common share merger consideration, are anticipated to exceed the minimum required distributions to maintain our qualification as a REIT.

Q: When do you expect the mergers to be completed?

A: We are working toward completing the mergers as quickly as possible, and we anticipate that the mergers will be completed in the third quarter of 2007. In order to complete the company merger, we must obtain the requisite shareholder approval of the company merger and satisfy, or have waived, the other closing conditions

under the merger agreement. The operating partnership merger does not require the approval of any of our common shareholders.

Q: Who is soliciting my proxy?

A: This proxy is being solicited by our board of trust managers.

Q: What vote of common shareholders is required to approve the company merger and the merger agreement?

A: Approval of the proposal to approve the merger agreement and consummate the company merger requires the affirmative vote of the holders of at least two-thirds of the outstanding common shares entitled to vote on the matter at the special meeting. Because the required vote is based on the number of votes entitled to be cast in person or by proxy rather than on the number of votes cast in person or by proxy, failure to vote your shares (including as a result of broker non-votes) and abstentions will have the same effect as voting against the proposal to approve the merger agreement and the company merger. The operating partnership merger does not require the approval of any of our shareholders.

Q: If the company merger is completed, when can I expect to receive the common shares merger consideration for my common shares?

A: Promptly after the completion of the company merger, you will receive a letter of transmittal describing how you may exchange your common shares for the common share merger consideration. You should not send your share certificates to us or anyone else until you receive these instructions.

Q: When and where is the special meeting?

A: The special meeting of shareholders will take place on ___at 10:00 a.m., Central Daylight Saving Time, at the Hotel Crescent Court, 400 Crescent Court, Dallas, Texas.

Q: Who can vote and attend the special meeting?

A: All of our common shareholders of record as of the close of business on ___, the record date for the special meeting, are entitled to receive notice of and attend the special meeting or any adjournments or postponements of the special meeting and are entitled to vote at the special meeting or any adjournments or postponements of the special meeting. Each common share entitles you to one vote on each matter properly brought before the special meeting. The vote of the holders of our Series A and Series B preferred shareholders is not required to approve the company merger or the merger agreement and is not being solicited.

Q: How does the common share merger consideration compare to the market price of the common shares?

A: The cash consideration of $22.80 for each of our common shares represents an approximate 8.8% premium to the closing price of our common shares on May 21, 2007, the last trading day before we received Greenhill’s oral opinion with respect to the fairness of the mergers, an approximate 12.2% premium to the average closing price of our common shares for the 30-day period ended May 21, 2007, an approximate 12.2% premium to the average closing price of our common shares for the 60-day period ended May 21, 2007, and an approximate 11.2% premium to the average closing price of our common shares for the 90-day period ended May 21, 2007.

Q: How does our board of trust managers recommend that I vote?

A: Our board of trust managers (subject to the recusal of two trust managers) recommends that our common shareholders vote in favor of the proposal to approve the merger agreement and the company merger. In making this determination, John C. Goff, our Chief Executive Officer and Vice Chairman of our board of trust managers, and Dennis H. Alberts, our President and Chief Operating Officer, recused themselves.

Q: Do any of the company’s executive officers and trust managers or any other person have any interest in the mergers that is different than mine?

A: Yes. Our trust managers and executive officers may have interests in the mergers that are different from, or in addition to, yours, including the consideration that they would receive with respect to their options to purchase our common shares, options to purchase partnership units, and restricted units in connection with the mergers. Further, under certain circumstances, our executive officers will be entitled to certain severance payments and benefits following the closing of the mergers. Please see “The Mergers — Interests of Our Trust Managers and Executive Officers” on page 38 for additional information about possible interests that our trust managers and executive officers may have in the mergers that are different than yours.

Q: How do I cast my vote?

A: If you are a common shareholder of record on the record date, you may vote in person at the special meeting or authorize a proxy for the special meeting. You can authorize your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed, postage paid envelope, or, if you prefer, by following the instructions on your proxy card for Internet proxy authorization.

Q: How do I cast my vote if my common shares are held of record in “street name”?

A: If you hold your common shares in “street name” through a broker, bank or other nominee, your broker, bank or nominee will not vote your shares unless you provide instructions on how to vote. You must obtain a proxy form from the broker, bank or other nominee that is the record holder of your shares and provide the record holder of your shares with instructions on how to vote your shares, in accordance with the voting directions provided by your broker, bank or nominee. If your shares are held in “street name,” please refer to the voting instruction card used by your broker, bank or other nominee, or contact them directly, to see if you may submit voting instructions using the Internet or telephone.

Q: What will happen if I abstain from voting or fail to vote?

A: If you abstain from voting, fail to cast your vote in person or by proxy or if you hold your shares in “street name” and fail to give voting instructions to the record holder of your shares, it will have the same effect as a vote against the proposal to approve the merger agreement and the company merger.

Q: How will proxy holders vote my shares?

A: If you properly submit a proxy prior to the special meeting, your common shares will be voted as you direct. If you submit a proxy but no direction is otherwise made, your common shares will be voted “FOR” the proposal to approve the merger agreement and the company merger.

Q: What happens if I sell my shares before the special meeting?

A: If you held your common shares on the record date but transfer them prior to the merger effective time, you will retain your right to vote at the special meeting, but not the right to receive the common share merger consideration for the common shares. The right to receive such consideration will pass to the person who owns the shares you previously owned when the company merger becomes effective.

Q: Can I change my vote after I have mailed my proxy card?

A: Yes. If you own our common shares as a record holder, you may revoke a previously granted proxy at any time before it is exercised by filing with our Corporate Secretary a notice of revocation or a duly executed proxy bearing a later date, submitting voting instructions again by Internet, or by attending the meeting and voting in person. Attendance at the meeting will not, in itself, constitute revocation of a previously granted proxy. If you have instructed a broker to vote your shares, the above-described options for changing your vote do not apply and instead you must follow the instructions received from your broker to change your vote.

Q: Is the company merger expected to be taxable to me?

A: Yes. The receipt of the common share merger consideration for each common share pursuant to the company merger will be a taxable transaction for U.S. federal income tax purposes. Generally, for U.S. federal income tax purposes, you will recognize gain or loss measured by the difference, if any, between the common share merger consideration received in exchange for our common shares and your adjusted tax basis in our common shares. In addition, under certain circumstances, we may be required to withhold a portion of your common share merger consideration under applicable tax laws. You should read “The Mergers — Material United States Federal Income Tax Consequences” on page 44 for a more complete discussion of the U.S. federal income tax consequences. Tax matters can be complicated, and the tax consequences of the company merger to you will depend on your particular tax situation. We encourage you to consult your tax advisor regarding the tax consequences of the company merger to you.

Q: Should I send in my share certificates now?

A: No. Shortly after the company merger is completed, you will receive a letter of transmittal with instructions informing you how to send your share certificates to the paying agent in order to receive the common share merger consideration. You should use the letter of transmittal to exchange share certificates for the common share merger consideration to which you are entitled. DO NOT SEND ANY SHARE CERTIFICATES WITH YOUR PROXY.

Q: What rights do I have if I oppose the company merger?

A: If you are a common shareholder of record, you can vote against the company merger by indicating a vote against the proposal on your proxy card and signing and mailing your proxy card, by submitting voting instructions against the proposal to approve the merger agreement and the company merger by Internet or voting against the proposal to approve the merger agreement and the company merger in person at the special meeting. If you hold your shares in “street name,” you can vote against the company merger in accordance with the voting instructions provided to you by the record holder of your shares. Subject to certain conditions, you are entitled to dissenters’ rights under Texas law. Please see “Dissenters’ Rights of Appraisal” on page 73.

Q: What will happen to the common shares that I currently own after completion of the company merger?

A: Following the completion of the company merger, your shares will be canceled and will represent only the right to receive your portion of the common share merger consideration. Trading in our common shares on the New York Stock Exchange will cease. Price quotations for our common shares will no longer be available and we will cease filing periodic reports with the Securities and Exchange Commission (the “SEC”).

Q: Have any shareholders already agreed to approve the company merger or the operating partnership merger?

A: Yes. The Chairman of our board of trust managers, Richard E. Rainwater, who directly, indirectly or beneficially owns or controls, as of April 25, 2007, 5,173,949 common shares (other than those issuable upon conversion of partnership units) and 5,723,667 partnership units, has entered into an agreement with Moon Parent and REIT Merger Sub in which he has agreed to vote the common shares that he is entitled to vote in his capacity as the beneficial holder of such shares in favor of the proposal to approve the merger agreement and the company merger. Similarly, we and Crescent Real Estate Equities, Ltd., the sole general partner of the operating partnership, have entered into an agreement with Moon Parent, REIT Merger Sub and Partnership Merger Sub pursuant to which we and Crescent Real Estate Equities, Ltd. have agreed to vote all of our interests in the operating partnership in favor of the proposal to approve the merger agreement approve the operating partnership merger. In addition, our executive officers and trust managers have informed us that they intend to vote our common shares that they beneficially own in favor of the proposal to approve the merger agreement and the company merger.

Q: Where can I find more information about the company?

A: We file certain information with the SEC. You may read and copy this information at the SEC’s public reference facilities. You may call the SEC at 1-800-SEC-0330 for information about these facilities. This information is also available at the Internet site the SEC maintains at www.sec.gov and on our website at www.crescent.com. Information contained on our website is not part of, or incorporated in, this proxy statement. You can also request copies of these documents from us. See “Where You Can Find More Information” on page 75.

Q: Who will solicit and pay the cost of soliciting proxies?

A: We will bear the cost of soliciting proxies for the special meeting. Our board of trust managers is soliciting your proxy on our behalf. Our officers, trust managers and employees may solicit proxies by telephone and facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies. We have retained MacKenzie Partners, Inc. to assist us in the solicitation of proxies, and will pay up to $30,000, plus reimbursement of out-of-pocket expenses, to MacKenzie Partners, Inc. for its services. We will also request that banking institutions, brokerage firms, custodians, trustees, nominees, fiduciaries and other like parties forward the solicitation materials to the beneficial owners of common shares held of record by such person, and we will, upon request of such record holders, reimburse forwarding charges and out-of-pocket expenses.

Q: Who can help answer my other questions?

A: If you have more questions about the special meeting, the mergers or authorizing your proxy, you should contact our proxy solicitation agent, MacKenzie Partners, Inc., as follows:

MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016

1-800-322-2885 or call collect to 212-929-5500

If your broker holds your shares, you should also call your broker for additional information.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     Information both included and incorporated by reference in this proxy statement may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on various assumptions and describe our future plans, strategies, and expectations, are generally identified by our use of words such as “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and similar expressions, whether in the negative or affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations, including completing the mergers on the terms summarized in this proxy statement. All statements regarding our expected financial position, business and financing plans are forward-looking statements.

     Except for historical information, matters discussed in this proxy statement are subject to known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

     Factors which could have a material adverse effect on our operations and future prospects or the completion of the mergers include, but are not limited to:

	•		the satisfaction of the conditions to consummate the company merger, including the receipt of the required shareholder and regulatory approvals;
	•		the satisfaction of the conditions to consummate the operating partnership merger, including the receipt of the required consent of the limited partners and regulatory approvals;
	•		the availability of Moon Parent’s financing required to complete the mergers;
	•		the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement;
	•		the failure of the mergers to close for any other reason;
	•		the amount of the costs, fees, expenses and charges related to the mergers and the actual terms of certain financings that will need to be obtained for the mergers;
	•		the outcome of the legal proceedings that have been or may be instituted against us and others following announcement of our entering into the merger agreement;
	•		the impact of substantial indebtedness that will need to be incurred to finance the consummation of the mergers;
	•		risks that the proposed transaction disrupts current plans and operations including potential difficulties in employee retention;
	•		our exclusive remedy against Moon Parent, REIT Merger Sub and Partnership Merger Sub with respect to any breach of the merger agreement is to seek damages up to the amount of $300 million, which may not be adequate to cover our damages;
	•		the effect of the announcement of the proposed mergers on our customer relationships, operating results and business generally;
	•		actions, strategies and performance of affiliates that we may not control or companies in which we have made investments;

	•		any change in market conditions that would impair our ability to complete our previously announced strategic plan;
	•		our geographic market concentration may cause our overall operating results to be less favorable than operating results in the strongest markets;
	•		general economic and market conditions, particularly as they affect the real estate market;
	•		our ability to maintain our status as a REIT for federal and state income tax purposes; and
	•		the effect of war, terrorism or catastrophic events.

     These risks and uncertainties, along with the risks that are set forth in the “Risk Factors,” “Legal Proceedings” and “Management Discussion and Analysis of Results of Operations and Financial Condition” sections of our or the operating partnership’s SEC filings, including our and the operating partnership’s most recent filings on Forms 10-Q and 10-K, should be considered in evaluating any forward-looking statements contained in this proxy statement. All forward-looking statements speak only as of the date of this proxy statement. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section.

     All information contained in this proxy statement concerning Moon Parent and its subsidiaries or the financing arrangements related to the mergers has been supplied by Moon Parent, REIT Merger Sub and Partnership Merger Sub and has not been independently verified by us.

THE PARTIES TO THE MERGERS

Crescent Real Estate Equities Company
777 Main Street, Suite 2100
Fort Worth, Texas 76102
(817) 321-2100

     We operate as a real estate investment trust, or REIT, for federal income tax purposes and provide management, leasing and development services for some of our properties. Through our subsidiaries and joint ventures, we own and manage a portfolio of 68 premier office buildings totaling 27 million square feet located in select markets across the United States with major concentrations in Dallas, Houston, Austin, Denver, Miami, and Las Vegas. We also hold investments in resort residential developments in locations such as Scottsdale, AZ, Vail Valley, CO, and Lake Tahoe, CA; in destination resorts such as Fairmont Sonoma Mission Inn^® Sonoma, CA; in a wellness lifestyle leader, Canyon Ranch^®; and in AmeriCold Realty Trust, a temperature-controlled logistics company. Additional information about us is available on our website at http://www.crescent.com. The information contained on our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document on file with or furnished to the SEC. Our common shares are listed on the New York Stock Exchange under the symbol “CEI.” For additional information about us and our business, please refer to “Where You Can Find More Information” on page 75.

Crescent Real Estate Equities Limited Partnership
777 Main Street, Suite 2100
Fort Worth, Texas 76102
(817) 321-2100

     The operating partnership is a Delaware limited partnership through which we conduct substantially all of our business and own, either directly or indirectly through subsidiaries of the operating partnership, substantially all of our assets.

Moon Acquisition Holdings LLC
c/o Morgan Stanley Real Estate
1585 Broadway
New York, NY 10036
(212) 761-4000

     Moon Acquisition Holdings LLC, which we refer to as Moon Parent, is a Delaware limited liability company formed in connection with the mergers by affiliates of Morgan Stanley Real Estate.

     Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking and Lending. Since 1991, Morgan Stanley Real Estate has acquired $121.5 billion of real estate assets worldwide and currently manages $55.6 billion in real estate on behalf of its clients. In addition, Morgan Stanley Real Estate provides a complete range of market-leading investment banking services to its clients including advice on strategy, mergers, acquisitions and restructurings, as well as underwriting public and private debt and equity financings. Morgan Stanley is also a global leader in real estate lending and, using its own capital, originated approximately $35.5 billion in commercial mortgages in 2006. Morgan Stanley (NYSE: MS) is a global financial services firm and a market leader in securities, investment management, and credit services.

Moon Acquisition LLC
c/o Morgan Stanley Real Estate
1585 Broadway
New York, NY 10036
(212) 761-4000

     Moon Acquisition LLC, which we refer to as REIT Merger Sub, is a Delaware limited liability company and a wholly owned subsidiary of Moon Parent. REIT Merger Sub was formed in connection with the mergers by Moon Parent.

Moon Acquisition Limited Partnership
c/o Morgan Stanley Real Estate
1585 Broadway
New York, NY 10036
(212) 761-4000

     Moon Acquisition Limited Partnership, which we refer to as Partnership Merger Sub, is a Delaware limited partnership and a subsidiary of REIT Merger Sub. Partnership Merger Sub was formed in connection with the mergers by Moon Parent.

THE SPECIAL MEETING

Date, Time and Purpose of the Special Meeting

     This proxy statement is being furnished to our common shareholders in connection with the solicitation of proxies from our common shareholders by our board of trust managers for use at a special meeting to be held on                     , at                     , Central Daylight Saving Time. The special meeting will take place at the Hotel Crescent Court, 400 Crescent Court, Dallas, Texas. The purpose of the special meeting is for you to consider and vote upon a proposal to approve the merger agreement and the company merger of Crescent Real Estate Equities Company with and into REIT Merger Sub with REIT Merger Sub surviving the company merger, and to transact any other business that may properly come before the special meeting or any adjournments or postponements of the special meeting. Our common shareholders must approve the merger agreement and the company merger. A copy of the merger agreement is attached as Exhibit A to this proxy statement, which we encourage you to read carefully in its entirety.

Record Date, Notice and Quorum

     All holders of record of our common shares and our Series A and Series B preferred shares as of the close of business on the record date, which is                     , 2007, are entitled to receive notice of the special meeting. However, only our common shareholders at the close of business on the record date are entitled to vote at the special meeting or any postponements or adjournments of the special meeting. On the record date, there were                      common shares outstanding.

     The holders of a majority of our common shares that were outstanding as of the close of business on the record date, represented in person or by proxy, will constitute a quorum for purposes of the special meeting. A quorum is necessary to hold the special meeting. Any of our common shares held by any of our subsidiaries are not considered to be outstanding for purposes of determining a quorum. Common shares held by shareholders present at the meeting in person who do not vote and ballots marked “abstain,” “against” or “withhold authority” will be counted as present at the meeting for quorum purposes. If a broker submits a proxy indicating that it does not have discretionary authority as to certain shares to vote on a particular matter (broker non-votes), those shares will not be considered as present with respect to such matter. Under the rules of the New York Stock Exchange, brokers are precluded from exercising their voting discretion with respect to the approval of non-routine matters, such as the company merger or the merger agreement.

Required Vote

     Completion of the mergers requires approval of the proposal to approve the merger agreement and the company merger by the affirmative vote of the holders of at least two-thirds of the outstanding common shares entitled to vote on the matter at the special meeting. Each common share that was outstanding on the record date entitles the holder to cast one vote at the special meeting.

     Record holders may vote or cause their shares to be voted using one of the following methods:

	•		mark, sign, date and return the enclosed proxy card by mail; or
	•		authorize your proxy or submit voting instructions by Internet by following the instructions included with your proxy card; or
	•		appear and vote in person by ballot at the special meeting.

     Regardless of whether you plan to attend the special meeting, we request that you complete and return a proxy for your common shares as described above as promptly as possible.

     If you own common shares through a bank, brokerage firm or nominee (i.e., in “street name”), you must provide voting instructions in accordance with the instructions on the voting instruction card that your bank, brokerage firm or nominee provides to you. You should instruct your bank, brokerage firm or nominee as to how to vote your common shares, following the directions contained in such voting instruction card. If you have not received such voting instructions or require further information regarding such voting instructions, contact your broker, bank or nominee who can give you directions on how to vote your common shares.

Voting by our Trust Managers and Executive Officers

     As of the record date, our executive officers and trust managers beneficially owned an aggregate of approximately                      common shares, entitling them to exercise in the aggregate approximately                     % of the voting power of common shares entitled to vote at the special meeting. Our executive officers and trust managers have informed us that they intend to vote their common shares in favor of the proposal to approve the company merger and the merger agreement.

Voting Agreements

     The Chairman of our board of trust managers, Richard E. Rainwater, who directly, indirectly or beneficially owns or controls, as of April 25, 2007, 5,173,949 common shares (other than those issuable upon conversion of partnership units) and 5,723,667 partnership units, has entered into an agreement with Moon Parent and REIT Merger Sub in which he has agreed to vote the common shares that he is entitled to vote in his capacity as the beneficial holder of such shares in favor of the proposal to approve the merger agreement and the company merger. Similarly, we and Crescent Real Estate Equities, Ltd., the sole general partner of the operating partnership, have entered into an agreement with Moon Parent, REIT Merger Sub and Partnership Merger Sub pursuant to which we and Crescent Real Estate Equities, Ltd. have agreed to vote all of our interests in the operating partnership in favor of the proposal to approve the merger agreement and the operating partnership merger.

Proxies and Revocation

     If you authorize a proxy, your common shares will be voted at the special meeting as you indicate on your proxy. If no instructions are indicated on your signed proxy card, your shares will be voted “FOR” the proposal to approve the merger agreement and the company merger.

     If you are a record holder of common shares, you may revoke your proxy at any time, but only before the proxy is voted at the special meeting, in any of three ways:

	•		by delivering, prior to the date of the special meeting, a written revocation of your proxy dated after the date of the proxy that is being revoked to our Corporate Secretary at 777 Main Street, Suite 2100, Fort Worth, Texas 76102; or
	•		by delivering to our Corporate Secretary a later-dated, duly executed proxy or by authorizing your proxy or submitting voting instructions by Internet at a date after the date of the previously authorized proxy relating to the same shares; or
	•		by attending the special meeting and voting in person by ballot.

     Attendance at the special meeting will not, in itself, constitute revocation of a previously authorized proxy.

     If you own our common shares in “street name,” you may revoke or change a previously authorized proxy by following the instructions provided by the bank, brokerage firm, nominee or other party that is the registered owner of our common shares.

     We do not expect that any matter other than (i) the proposal to approve the merger agreement and the company merger and (ii) to consider and vote on any other business that properly comes before the special meeting or any adjournments or postponements of the special meeting, including adjournments and postponements for the purpose of soliciting additional proxies, will be brought before the special meeting. If, however, such a matter is properly presented at the special meeting or any adjournments or postponements of the special meeting, the persons appointed as proxies will have discretionary authority to vote the shares represented by duly executed proxies in accordance with their discretion and judgment.

     We will pay the costs of soliciting proxies for the special meeting. Our officers, trust managers and employees may solicit proxies by telephone and facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies. We will also request that individuals and entities holding our common shares in their names, or in the names of their nominees, that are beneficially owned by others, send proxy materials to and obtain proxies from those beneficial owners, and, upon request, will reimburse those holders for their reasonable expenses in performing those services. We have retained MacKenzie Partners, Inc. to assist us in the solicitation of proxies, and will pay up to $30,000, plus reimbursement of out-of-pocket expenses, to MacKenzie Partners, Inc. for its services. In addition, our arrangement with MacKenzie Partners, Inc. includes provisions obligating us to indemnify it for certain liabilities that could arise in connection with its solicitation of proxies on our behalf.

Adjournments and Postponements

     Although it is not currently expected, the special meeting may be adjourned or postponed for the purpose of soliciting additional proxies if we have not received sufficient proxies to constitute a quorum or sufficient votes to approve the merger agreement and the company merger at the special meeting of shareholders. Any adjournments or postponements may be made without notice, other than by an announcement at the special meeting, by approval of the holders of a majority of the votes cast on the matter at the special meeting, whether or not a quorum exists. If no instructions are indicated on your signed proxy card, your shares will be voted in favor of an adjournment. Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow shareholders who have already sent in their proxies to revoke them at any time prior to their use.

THE MERGERS

General Description of the Mergers

     Under the terms of the merger agreement, certain funds managed by Morgan Stanley Real Estate will indirectly acquire us and our subsidiaries, including the operating partnership, through their ownership of Moon Parent. To accomplish this, the following transactions will occur:

	•		On the closing date of the mergers, we will be merged with and into REIT Merger Sub with REIT Merger Sub continuing as the surviving entity following the company merger and our common shares issued and outstanding immediately prior to the company merger effective time and not subject to dissenters’ rights (other than shares held by us or our subsidiaries or REIT Merger Sub, which will be automatically canceled and retired and cease to exist with no payment being made, and shares held by properly dissenting shareholders) will automatically be canceled and converted into the right to receive cash, without interest, equal to $22.80 per common share, reduced by the per share amount, if any, distributed to holders of our common shares relating to distributions we make that are necessary for us either to maintain our status as a real estate investment trust or to avoid the imposition of corporate level tax or excise tax under the U.S. Internal Revenue Code of 1986, as amended;
	•		Immediately following the company merger, Partnership Merger Sub will merge with and into the operating partnership with the operating partnership surviving and each limited partnership unit of the operating partnership (other than units held by Crescent affiliates or restricted units) will receive cash, without interest, equal to $45.60 per unit (assuming we do not make any distributions that are necessary for us either to maintain our status as a real estate investment trust or to avoid the imposition certain U.S. federal tax), which is the product of (A) the common share merger consideration multiplied by (B) two;
	•		Any unexercised and unexpired option to purchase common shares issued under our equity incentive plans held immediately prior to the company merger effective time (regardless of whether it is vested or exercisable at that time) will, at the company merger effective time, be canceled upon the surrender and cancellation of the option agreement representing the option, together with the delivery of a written instrument executed by the holder thereof, and, in exchange therefor, REIT Merger Sub will pay to the holder thereof cash in an amount equal to the product of (A) the number of common shares issuable upon exercise of such option (assuming full vesting) and (B) the excess, if any, of the common share merger consideration over the exercise price per common share, which cash payment will be treated as compensation and will be net of any applicable federal or state withholding tax;
	•		Any unexercised and unexpired option to purchase partnership units issued under our equity incentive plans held immediately prior to the company merger effective time (regardless of whether it is vested or exercisable at that time) will, at the company merger effective time, be canceled upon the surrender and cancellation of the option agreement representing the option, together with the delivery of a written instrument executed by the holder thereof, and, in exchange therefor, Partnership Merger Sub will pay to the holder thereof cash in an amount equal to the product of (A) the number of partnership units issuable upon exercise of such option (assuming full vesting) and (B) the excess, if any, of the

operating partnership merger consideration over the exercise price per partnership unit, which cash payment will be treated as compensation and will be net of any applicable federal or state withholding tax;

	•		Other than certain restricted unit awards forfeited prior to the company merger effective time, any unpaid and unexpired restricted unit award held immediately prior to the company merger effective time (regardless of whether it is vested at that time) will, at the operating partnership merger effective time, be canceled upon the surrender of the agreement representing the restricted unit award (or a reasonably satisfactory affidavit of lost agreement), together with the delivery of a written instrument executed by the holder thereof, and, in exchange therefor, Partnership Merger Sub will pay to the holder thereof cash in an amount, without interest, per restricted unit equal to the operating partnership merger consideration, plus accrued and unpaid dividends; and
	•		Prior to the company merger effective time, each of the Series A and Series B preferred shares issued and outstanding will be redeemed by us for cash pursuant to the terms of such securities; to the extent such redemptions do not occur, the Series A preferred shares issued and outstanding immediately prior to the company merger effective time will automatically be converted into, and canceled in exchange for, the right to receive the greater of (A) the redemption price per share specified in our charter documents and (B) the common share merger consideration on an as-converted basis pursuant to the terms of our charter documents, and the Series B preferred shares issued and outstanding immediately prior to the company merger effective time will automatically be converted into, and canceled in exchange for, the right to receive the redemption price per share specified in our charter documents.

     After completion of the redemptions and the consummation of the mergers, REIT Merger Sub will own all of the equity interests previously owned by us in the operating partnership and other subsidiaries, including Crescent Real Estate Equities, Ltd.’s general partnership interest and our approximately 81% limited partnership interest in the operating partnership.

     This proxy statement does not constitute a solicitation of consents in respect of the operating partnership merger and does not constitute an offer to exchange or convert any partnership units in the operating partnership that you may own for or into newly issued preferred units or common units in the surviving operating partnership.

Background of the Mergers

     In late 2005, our board of trust managers began to consider whether we could enhance shareholder value by taking advantage of abundant private acquisition capital and historically high real estate values in many of our markets by selling our office and hotel properties. Our board of trust managers considered the advice of management and Lehman Brothers Inc. (“Lehman”) and decided to explore the possibility of effecting a strategic recapitalization of the Company. The central elements of this plan involved the selling of our office properties and our resort and hotel properties in separate portfolio transactions and thereafter recapitalizing and transitioning Crescent into a C-corporation to focus on and pursue the lifestyle and wellness business associated with its resort residential development and Canyon Ranch businesses.

     With the assistance of Lehman, we conducted a targeted and confidential sales process for our office portfolio beginning in early 2006, which was to be followed by a similar sales process for our resort and hotel portfolio. In connection with the potential office portfolio sale, we executed confidentiality agreements with a number of prospective purchasers, including Morgan Stanley Real Estate. The office portfolio sales process yielded two offers to acquire the entire portfolio of office properties, as well as offers for certain components of the portfolio. Neither of the portfolio offers was at a price that our board of trust managers believed, after consultation with Lehman, was reflective of the aggregate market value of our office properties if sold individually. As a result, our board of trust managers determined not to proceed with the prospective office portfolio bidders and elected instead to pursue marketing the properties and addressing the offers for components separately through sales of smaller portfolios and individual assets.

     We also undertook a sales process for our resort and hotel properties portfolio beginning in May 2006. We executed confidentiality agreements with a number of prospective purchasers of the properties. The sales process yielded two offers to acquire the portfolio of resort and hotel properties at prices reasonably acceptable to our board of trust managers. We negotiated a sales contract with one of the prospective purchasers, who eventually determined not to move forward on its initially indicated price. We then entered into negotiations with the second prospective purchaser.

     Contemporaneously with the office and resort and hotel marketing efforts, our board of trust managers authorized our management to determine if there were any investors with an interest in participating in the contemplated recapitalization of the remaining assets of the company into a publicly traded C-corporation. During the spring of 2006, our representatives informally discussed possible C-corporation recapitalization transactions with several potential counterparties, including Morgan Stanley Real Estate. Although these discussions did not generate acceptable pricing or terms for the C-corporation recapitalization component of the strategic recapitalization plan for the Company, during the spring and early summer of 2006 several of these counterparties did express an interest in exploring the possibility of acquiring the company. However, except as described below, none of these parties made a formal offer to us.

     By August 2006, these discussions resulted in a formal offer from an investment group to purchase all of our assets other than our office and hotel assets, with the expectation that we would then liquidate our office, resort and hotel assets as part of the continuing sales activities described above. As a part of its offer (the “August Offer”), the investment group required the continued participation of, and a significant equity investment from, senior management. In addition, an affiliate of Morgan Stanley had agreed to provide certain senior subordinated debt as a part of the financing of the August Offer being arranged by the investment group. After receipt of the August Offer, we suspended our negotiations with the second bidder from the sales process for our resort and hotel portfolio and any sales efforts on the office portfolio.

     In contemplation of receiving the August Offer, our board of trust managers formed a special committee of independent trust managers composed of Paul E. Rowsey, III, Anthony M. Frank, William F. Quinn and Terry N. Worrell (the “Special Committee”) to represent our public shareholders in considering the offer as well as alternative transactions. The Special Committee hired Greenhill & Co., LLC (“Greenhill”) as its financial adviser and Carrington, Coleman, Sloman & Blumenthal, L.L.P. as its legal counsel. During the fall of 2006 the Special Committee considered the August Offer and, on October 23, 2006, formally rejected the August Offer due to execution and structuring risks associated with that offer.

     On November 7, 2006, we announced that “[d]uring 2006, the Company has conducted an extensive review of its strategic alternatives,” that we had received the August Offer, that our board had “established a special committee of independent trust managers to assist in its consideration of strategic alternatives and to respond to the [August Offer],” that we had rejected the August Offer and that we were continuing to review our strategic alternatives.

     From November 2006 to February 2007, management and our board of trust managers continued to analyze the prospects for our various assets and business lines in light of the evolving market conditions and the results of our strategic process to date. In early 2007, our board of trust managers decided to implement a new strategic plan (the “Plan”) which was designed to simplify our business model in order to become a pure-play office REIT. We announced the Plan on March 1, 2007. Under the Plan, we intended to (i) sell our resort and hotel properties, our resort residential developments, virtually all of our suburban Dallas office properties, all of our Austin office properties and our single office properties in Phoenix, Arizona, and Seattle, Washington, (ii) reduce our general and administrative expenses, (iii) retire debt and (iv) consider alternatives for our investment in Canyon Ranch in conjunction with the founders of Canyon Ranch.

     Since March 1, we have been engaged in implementing the Plan. As of today, we have made the following progress with implementing the Plan:

•

sold our resort and hotel portfolio other than the Fairmont Sonoma Mission Inn, which is under contract to be sold;

	•		sold our property in Seattle, Washington, and an office property under development and another office property in Austin, Texas;
	•		placed our portfolio of selected Dallas office properties under contract;
	•		contracted for the sale of our remaining Austin office properties and our Phoenix office property;
	•		commenced the initial marketing process for our resort residential development investments, which we have suspended as a result of our entry into the merger agreement; and
	•		commenced our reduction of general and administrative expenses.

     During late 2006 and early 2007, representatives of a number of companies, including Morgan Stanley Real Estate and another party (the “Other Party”), had indicated an interest to our management and Greenhill regarding the possibility of acquiring us. With the exception of the contacts described below with Morgan Stanley Real Estate and the Other Party, none of these discussions led to any proposals by any of the parties.

     On March 6, 2007, representatives of Morgan Stanley Real Estate contacted our management to express a preliminary interest in acquiring us. Management discussed this interest with our chairman of the board, our lead independent director, the chairman of the Special Committee and Greenhill. Based on those discussions, we and Greenhill indicated to Morgan Stanley Real Estate that our board of trust managers would entertain offers for our entire business. No details regarding any potential transaction were discussed.

     Also during March 2007, our board of trust managers authorized management and Greenhill to work with the founders of Canyon Ranch to evaluate a variety of options for that business, including a possible sale of our interest to the founders and a joint sale of all of the Canyon Ranch businesses. This process has been suspended as a result of our entry into the merger agreement.

     On March 9, 2007, Morgan Stanley Real Estate delivered a letter (the “March 9 Letter”) to us indicating its interest in purchasing us for a price of between $22.50 and $23.00 per share, subject to due diligence. Morgan Stanley Real Estate indicated that it was a sophisticated, experienced and capable purchaser of companies like us and that its bid did not contemplate the participation of our management. It also indicated that its offer was subject to two to three weeks of customary due diligence. The offer also recognized that a potential transaction may have important tax and structuring considerations, which referred primarily to its desire to purchase assets, its concern regarding possible tax liabilities, and its requirement that we suspend further dividend payments.

     On March 10, 2007, our board of trust managers held a special meeting to discuss the progress of our implementation of the Plan and the March 9 Letter. At that meeting our board of trust managers created a working group composed of members of our board of trust managers, our management and our advisors to develop and recommend a response to the March 9 Letter. Our board of trust managers determined that it was appropriate for our management to work with the board in connection with the March 9 Letter since the letter did not contemplate management’s participation in the transaction.

     On March 12, 2007, our board of trust managers held a special meeting to consider approval of the resort and hotel portfolio sale contract and to hear and consider the working group’s recommendation for responding to the March 9 Letter. At that meeting our board of trust managers approved the resort and hotel portfolio sale contract, authorized the retention of Greenhill to represent us in connection with the Morgan Stanley Real Estate proposal and authorized the working group to engage in discussions with Morgan Stanley Real Estate regarding a possible acquisition of us.

     On March 14, 2007, we entered into an engagement letter with Greenhill regarding its representation of us. Greenhill met with Morgan Stanley Real Estate and conveyed that our board of trust managers believed the offer contained in the March 9 Letter was inadequate, but indicated that our board of trust managers would be willing to consider an offer in excess of $24 per share for us and that our board of trust managers believed that any offer would require a fiduciary-out provision with a low break-up fee in order to permit a realistic opportunity for other bidders to make offers for us following announcement of a transaction. At that meeting, Morgan Stanley Real Estate

indicated that it would need to obtain a step-up in tax basis in our assets and that it would need to consider the cost and structuring implications associated with obtaining the basis step-up.

     Between March 14 and March 24, 2007, Morgan Stanley Real Estate was provided with limited confidential information relating to us, under the terms of a pre-existing confidentiality agreement. Additionally, our representatives and Morgan Stanley Real Estate had informal discussions in which we reiterated our concerns with the price offered in the March 9 Letter and the need for an ability to entertain other offers. Morgan Stanley Real Estate indicated that our assets did not support a valuation of over $24 per share and disagreed with our assessment of the appropriate size of a break-up fee in connection with the board’s fiduciary out provision (i.e., that provision in the deal that would allow our board to accept a higher price for the company) because the proposed transaction was not a management buy-out and because the Company had been actively entertaining offers for parts or all of the company since the end of 2005. Though there was a difference between the parties in values and other terms, each party believed that the other was sufficiently interested in a transaction to engage in a serious exploration of a transaction.

     On March 24, 2007, we entered into a confidentiality agreement with Morgan Stanley Real Estate pursuant to which, among other things, we agreed to negotiate exclusively with Morgan Stanley Real Estate until April 9, 2007, which period would automatically extend until April 16, 2007 if we did not terminate the exclusivity period.

     Between March 24, 2007 and April 9, 2007, Morgan Stanley Real Estate conducted extensive due diligence. During this time, our representatives, Greenhill and our other advisors participated in numerous meetings and telephone conversations during which information was conveyed to Morgan Stanley Real Estate.

     On April 10, 2007, Morgan Stanley Real Estate delivered a letter to our board of trust managers (the “April 10 Letter”) offering to purchase us for $22.75 per common share (based on a share count of 128.2 million). The April 10 Letter contemplated that any further declared dividends would be considered a deduction from the proposed purchase price. The offer was not contingent on receipt of financing and contemplated a deal protection and fiduciary out structure similar to a recent Morgan Stanley Real Estate acquisition which provided for a break-up fee of approximately 3% of equity value, among other items.

     On April 10, 2007, our board of trust managers met to discuss the April 10 Letter. At that meeting our board of trust managers discussed the offer contained in the April 10 Letter, including the deal protection mechanisms and dividend restrictions included in the offer. Our board of trust managers also discussed the asset valuations likely underlying the proposal as well as the progress we had made at executing our Plan and the various execution risks inherent in fully executing the Plan. Specifically, our board of trust managers considered execution risks inherent in selling our interests in joint venture arrangements, such as our resort residential development and Canyon Ranch business, which involve complex ownership and control structures and long-standing personal relationships with the joint venture partners.

     On April 16, 2007, our board of trust managers declared our expected first quarter dividend of $0.375 per common share. This dividend was paid on May 15, 2007 to common shareholders of record on April 30, 2007.

     On April 19, 2007, our board of trust managers met to discuss the status of the discussions with Morgan Stanley Real Estate. Our board of trust managers discussed the status of our hotel and office sale processes, as well as the prospects for the marketing and sale of the resort residential business, which was expected to commence soon. Our board of trust managers then received a presentation from Greenhill relating to the valuation of the company and trading multiples for the company as a whole and the company after complete implementation of the Plan. Our board of trust managers also discussed our management’s views on valuation of different assets. Our board of trust managers discussed the long-term prospects for the value of the company, as well as the importance of the fiduciary-out provisions in any transaction with a prospective purchaser. Pillsbury Winthrop Shaw Pittman LLP, company counsel, also advised our board of trust managers on its fiduciary duties in the context of the offer made in the April 10 Letter and the likely process if our board of trust managers elected to negotiate a transaction with Morgan Stanley Real Estate.

     Based on the April 19, 2007 board deliberations and at the direction of our board of trust managers, the working group requested that Greenhill deliver a counterproposal of $23.25 per common share with payment of the $0.375 per share dividend declared on April 16, 2007 not deducted, but with no future payment of dividends, and a

fiduciary out provision that included a break-up fee equal to 1% of equity value for 45 days, which would increase to 3% thereafter. Greenhill delivered the offer to Morgan Stanley Real Estate on April 22, 2007.

     Also on April 19, 2007, certain members of our management met with representatives of the Other Party and its investment banker. At that meeting, the representatives indicated that the Other Party had access to unspecified sources of equity capital and debt financing that would permit it to make an offer to acquire us. On April 24, 2007, we received a letter from the Other Party offering to acquire us for $24 per common share (the “April 24 Letter”). The April 24 Letter contemplated, among other things, that we and the Other Party would enter into a preliminary agreement, after which the Other Party would conduct due diligence. If at the end of the due diligence period, the Other Party was willing to execute a definitive purchase agreement on the terms outlined in the preliminary agreement and, if we were unwilling to do so, we would owe the Other Party an unspecified break-up fee. Our board of trust managers authorized Greenhill to meet with the Other Party to discuss the April 24 Letter and attempt to ascertain if the Other Party had access to the necessary equity and debt to finance the offer represented in the April 24 Letter.

     On April 26, 2007, our board of trust managers met to discuss and approve the sales of its portfolios of suburban Dallas and Austin office properties. At the meeting our board of trust managers also discussed the status of the discussions with Morgan Stanley Real Estate. As of the time of that meeting, we had not received a response from Morgan Stanley Real Estate to the offer delivered by Greenhill on April 22.

     After our board of trust managers meeting on April 26, Morgan Stanley Real Estate contacted Greenhill to indicate that it would change its offer to $22.75 per common share, with no deduction for the dividend declared by us on April 16, 2007, no further dividend payments, and a reduced break-up fee of $0.50 per common share (or approximately 2.2% of equity value). Members of the working group discussed the Morgan Stanley Real Estate offer and determined to counter with a price of $23 per share and a break-up fee of 1.5% of equity value for the first 45 days, rising to 3% thereafter. Morgan Stanley Real Estate declined to accept the counteroffer. On April 27, 2007, our board of trust managers met, and Greenhill described these discussions.

     On May 1, 2007, our board of trust managers met to discuss the status of the discussions with Morgan Stanley Real Estate. At the meeting our board of trust managers discussed the course of negotiations with Morgan Stanley Real Estate in detail. Our board of trust managers determined to defer the question of whether to continue discussions with Morgan Stanley Real Estate to a meeting to be held in the following few days.

     On May 2, 2007, Greenhill met with representatives of the Other Party and its financial backer. At that meeting Greenhill indicated that the Other Party would need to demonstrate the availability of equity and debt financing in order for us to consider further discussions with the Other Party. Our board of trust managers considered the Other Party’s position in the marketplace and its lack of equity as a deterrent to entering into further discussions with the Other Party. On May 8, 2007, the Other Party contacted Greenhill and stated that the Other Party was not interested in pursuing a transaction with us due to complications concerning our joint venture holdings, difficulty obtaining financing, uncertainty regarding tax structuring, and concern over transaction-related costs.

     On May 7, 2007, our board of trust managers met to continue deliberations relating to the discussions with Morgan Stanley Real Estate. At the beginning of the meeting, John C. Goff, our Chief Executive Officer and Vice Chairman of our board of trust managers, and Dennis H. Alberts, our President and Chief Operating Officer, offered of their own volition to waive the vesting of and to forfeit, for the benefit of the shareholders, the portions of their respective restricted stock awards that were designated for vesting when the share price targets of $25.50 and $27.00 were hit and that would have vested in connection with an acquisition of the company by Morgan Stanley Real Estate. They explained that the proposed forfeitures, the value of which totaled approximately $10.3 million, were intended to be for the benefit of the shareholders. Thereafter, our board of trust managers received a presentation from Greenhill describing the Morgan Stanley Real Estate offer. Our board of trust managers discussed the alternatives available to us in light of the offer received from Morgan Stanley Real Estate, including continuing to implement the Plan, accepting the offer from Morgan Stanley Real Estate, or conducting a more formal sale process for our business. Our board of trust managers considered the valuation information provided by Greenhill as well as net asset value information provided by our management. In addition, our board of trust managers considered the execution risks inherent in the Plan. Based on these considerations, our board of trust managers decided to authorize

the working group to negotiate with Morgan Stanley Real Estate to attempt to reach a definitive agreement for the acquisition of us at a price of $22.75 per common share (plus the value of the forfeitures by Messrs. Goff and Alberts described above), with no right to pay future dividends, and a fiduciary out provision that included a break-up fee of $0.50 per share (approximately 2.2% of equity value). The forfeitures, which were accepted by our board of trust managers on May 21, 2007, are applicable to the mergers or any other transaction our board of trust managers determines to accept in lieu of the mergers.

     On May 9, 2007, we and Morgan Stanley Real Estate entered into an exclusivity agreement pursuant to which both of us agreed to negotiate exclusively with the other until 12:00 p.m., Central Daylight Saving Time, on May 19, 2007.

     From May 10 through May 22, 2007, our representatives and Morgan Stanley Real Estate engaged in an intensive due diligence process and negotiated a definitive merger agreement. The merger agreement negotiations addressed, among other areas, the scope of the fiduciary protections to be included in the agreement, the guarantees to be given by affiliates of Morgan Stanley Real Estate, the scope of the limitations on our business activities between execution and the closing of the mergers, the conditions to each party’s obligations to close the mergers and each party’s rights to terminate the merger agreement, the nature and breadth of the representations and warranties to be made by us and the terms of severance to be provided to any of our employees terminated in connection with the mergers. During this period, the parties also continued to negotiate the price per share to be paid by Morgan Stanley Real Estate in connection with the mergers. The final purchase price of $22.80 per common share was agreed based on the $22.75 per share price offered by Morgan Stanley Real Estate, and a proportional increase to such price to reflect the value of the equity award forfeitures by Messrs. Goff and Alberts that was partially offset by additional costs of the transaction identified by Morgan Stanley Real Estate.

     On May 20, 2007 and continuing to May 21, our board of trust managers met twice to consider the merger agreement and the transactions contemplated by the merger agreement. At those meetings members of the working group briefed our board of trust managers on the content of the merger agreement and the few remaining open issues on the merger agreement. Greenhill made a presentation to the board of trust managers and provided its oral advice that the consideration to be received by our common shareholders pursuant to the merger agreement was fair to our common shareholders from a financial point of view. The board of trust managers considered the merger agreement and the transactions contemplated by the merger agreement, Greenhill’s advice as to the fairness of the merger consideration, the execution risks associated with the Plan, the future prospects for shareholders to realize value from implementation of the Plan, and other factors discussed below under “—Reasons for the Merger.” Based on these deliberations, the board of trust managers accepted the recommendation of the working group and approved the mergers and the merger agreement, subject to appropriate resolution of the remaining open issues on the merger agreement.

     On May 21, 2007, consistent with their offers made on May 7, Messrs. Goff and Alberts waived the vesting of and agreed to forfeit, for the benefit of the shareholders, the portions of their respective restricted stock awards that were designated for vesting when the share price targets of $25.50 and $27.00 were hit and that would have vested in connection with the mergers.

     On May 21 and 22, 2007, the parties resolved the remaining open issues on the merger agreement consistent with the direction and authorization of our board of trust managers.

     The merger agreement was signed on May 22, 2007, and we issued a press release announcing the execution of the merger agreement that evening.

     Certain of the factors considered by our board of trust managers are described in greater detail under the heading “Reasons for the Mergers.”

Reasons for the Mergers

     Our board of trust managers considered both our short-term and long-term interests, as well as those of our shareholders and the holders of units of limited partnership interest in the operating partnership. In particular, our board of trust managers considered the following factors, which in the aggregate it deemed favorable, in reaching its decision to approve the mergers, the merger agreement and the other transactions contemplated by the merger agreement and to recommend approval of the merger agreement and the company merger to our common shareholders:

	•		the current and historical market prices of our common shares, specifically the fact that our common shares traded below management’s net asset value estimates until August 2006, when market rumors of our possible sale apparently began to circulate, and the fact that the cash merger consideration of $22.80 per share represented an approximate 8.8% premium to the closing price of our common shares on May 21, 2007, the last trading day before we received Greenhill’s oral opinion with respect to the fairness of the mergers, an approximate 12.2% premium to the average closing price of our common shares for the 30-day period ended May 21, 2007, an approximate 12.2% premium to the average closing price of our common shares for the 60-day period ended May 21, 2007, and an approximate 11.2% premium to the average closing price of our common shares for the 90-day period ended May 21, 2007;
	•		although we had begun to implement the Plan, the mergers provide greater certainty of enhanced value to our shareholders than pursuing the Plan as a result of the risks and uncertainties in implementing the Plan, including the execution risks associated with selling our joint venture investments, and the costs associated with implementing the Plan, including sales costs, debt pre-payment penalties and tax costs that may have been incurred as a result of selling assets held in our taxable REIT subsidiaries;
	•		assuming we were able to fully implement our Plan, although we had been successful in the past in implementing our business strategy, the mergers provide greater certainty of enhanced value to our shareholders than pursuing our business strategy of operating a pure-play office REIT as a result of the risks and uncertainties associated with that business, including those associated with changes in general economic conditions, changes in supply or demand for properties, market fluctuations in rental rates, fluctuations in interest rates, and changes in the debt and equity markets;
	•		favorable conditions for sale transactions in the real estate markets generally, including prices for real estate assets being extremely high and the number of large portfolio acquisitions and public real estate mergers in recent years occurring at favorable pricing;
	•		the high probability that the mergers would be completed based on, among other things, Morgan Stanley Real Estate’s proven ability to complete large acquisition transactions, Morgan Stanley Real Estate’s extensive experience in the real estate industry, the lack of a financing condition, and the $300 million guarantee of Moon Parent’s, REIT Merger Sub’s and Partnership Merger Sub’s obligations under the merger agreement by affiliates of Morgan Stanley Real Estate;
	•		the terms and conditions of the merger agreement, which were reviewed by our board of trust managers with our financial and legal advisors, and in particular the fact that such terms were the product of arm’s-length negotiations between the parties with management not participating as equity investors with Morgan Stanley Real Estate and the break-up fee of 2.2% of the equity value of the transaction being below the average break-up fee of several recent transactions identified by Greenhill;
	•		the financial analysis of Greenhill, and its oral opinion, which was subsequently confirmed in writing, to our board of trust managers that as of May 21, 2007, and based upon and subject to the factors and assumptions set forth therein, the consideration of $22.80 per common share, in cash, to be received by our common shareholders pursuant to the merger agreement was fair from a financial point of view to such shareholders, and the consideration of $45.60 per partnership unit, in cash, to be received by the

holders of partnership units pursuant to the merger agreement was fair from a financial point of view to such holders (see “— Opinion of Our Financial Advisor” on page 31);

	•		our ability, under the merger agreement, under certain circumstances, to consider and respond to an unsolicited written acquisition proposal, and if, after consultation with our financial advisors, the board of trust managers determines in good faith that such acquisition proposal is a superior proposal and determines in good faith, after consultation with legal counsel, that failure to take such action would be inconsistent with the board’s duties to our shareholders under applicable law, and Moon Parent chooses not to negotiate improvements to the merger agreement to make it superior, our ability to terminate the merger agreement upon the payment of a termination fee of $64.2 million;
	•		the fact that our management team recommended the mergers to our board of trust managers;
	•		the fact that the all cash merger consideration will provide our shareholders with immediate fair value, in cash, for their investment in our shares; and
	•		the company merger and merger agreement is subject to the approval of our common shareholders.

     Our board of trust managers also considered the following potentially negative factors in its deliberations concerning the merger agreement and the mergers:

	•		the company merger would preclude our shareholders from having the opportunity to participate in the future performance of our assets, future earnings growth, future appreciation of the value of our common shares or future dividends that could be expected if the Plan were successfully implemented;
	•		the significant costs involved in connection with entering into and completing the mergers and the substantial time and effort of management required to consummate the mergers and related disruptions to the operation of our business;
	•		the restrictions on the conduct of our business prior to the completion of the mergers, which could delay or prevent us from undertaking business opportunities that may arise pending completion of the mergers;
	•		the pending mergers or failure to complete the mergers may cause substantial harm to relationships with our employees and may divert management and employee attention away from the day to day operation of our business;
	•		our inability to solicit competing acquisition proposals and the possibility that the $64.2 million termination fee or up to $10 million expense reimbursement payable by us upon the termination of the merger agreement under certain circumstances could discourage other potential bidders from making a competing bid to acquire us;
	•		the fact that an all-cash merger would be taxable to our shareholders for U.S. federal income tax purposes;
	•		our inability to take action to cause specific performance or require Moon Parent to complete the mergers, and our exclusive remedy for such failure to complete the mergers being to seek damages up to the amount of Morgan Stanley Real Estate affiliates’ $300 million guarantee; and
	•		some of our trust managers and executive officers may have interests in the mergers that are different from, or in addition to, Crescent’s shareholders (see “— Interests of Our Trust Managers and Executive Officers” on page 38).

     The foregoing discussion of the factors considered by our board of trust managers is not intended to be exhaustive, but rather includes the material factors considered by our board of trust managers. In reaching its decision to approve the mergers, the merger agreement and the other transactions contemplated by the merger agreement, our board of trust managers did not quantify or assign any relative weights to the factors considered and

individual trust managers may have given different weights to different factors. In the event the mergers are not completed for any reason, we expect to continue to pursue the Plan with the intention of delivering further improvement in our financial results and enhanced shareholder value.

Recommendation of Our Board of Trust Managers

     After careful consideration, our board of trust managers has unanimously (subject to the recusal of two trust managers) approved the company merger, the merger agreement and the other transactions contemplated by the merger agreement and has declared the company merger, the merger agreement and the other transactions contemplated by the merger agreement advisable and in the best interests of Crescent and our shareholders. In making this determination, John C. Goff, our Chief Executive Officer and Vice Chairman of our board of trust managers, and Dennis H. Alberts, our President and Chief Operating Officer, recused themselves. Our board of trust managers (subject to the recusal of two trust managers) recommends that you vote “FOR” the proposal to approve the merger agreement and the company merger.

Opinion of Our Financial Advisor

     On May 21, 2007, Greenhill & Co., LLC, which we refer to as Greenhill, rendered its oral opinion, which was subsequently confirmed in writing, to our board of trust managers that, as of May 21, 2007 and based upon and subject to the factors and assumptions set forth therein, the $22.80 in cash per common share to be received by our common shareholders pursuant to the merger agreement was fair from a financial point of view to such holders.

     The full text of the written opinion of Greenhill, dated May 21, 2007, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Exhibit B to this proxy statement. The summary of Greenhill’s opinion that is set forth below is qualified in its entirety by reference to the full text of the opinion. You are urged to read the opinion in its entirety.

     Greenhill provided its opinion for the information and assistance of our board of trust managers in connection with its consideration of the mergers. The Greenhill opinion is not a recommendation as to how any common shareholder should vote with respect to the company merger.

     In connection with rendering the opinion described above, Greenhill reviewed, among other things:

	•		the draft of the merger agreement presented to our board of trust managers on May 21, 2007;
	•		the guarantees described in “— Guarantees and Remedies”;
	•		certain of our publicly available financial statements;
	•		certain research analysts’ estimates of our future financial performance;
	•		certain other publicly available business and financial information relating to us that Greenhill deemed relevant; and
	•		certain information, including financial forecasts and projections and other financial and operating data concerning us, prepared by our management.

     Greenhill also held discussions with members of our senior management regarding their assessment of the past and current business operations, financial condition, and future prospects of Crescent. In addition, Greenhill reviewed the reported price and trading activity for Crescent common shares, compared certain financial and stock market information for Crescent with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations in the office real estate industry specifically and in other real estate industries generally and performed such other studies and analyses, and considered such other factors, as it considered appropriate.

     Greenhill assumed and relied upon, without independent verification, the accuracy and completeness of all of the financial, accounting, legal, tax and other information discussed with or reviewed by it for purposes of rendering its opinion. In that regard, Greenhill assumed, with the consent of our board of trust managers, that the financial forecasts prepared by our management were reasonably prepared on a basis reflecting our best currently available estimates and good faith judgments as to our future financial performance, and Greenhill relied upon such forecasts in arriving at its opinion. Greenhill expressed no opinion with respect to such forecasts or the assumptions upon which they are based. In addition, Greenhill did not conduct a physical inspection of our properties or facilities, nor did we make any independent evaluation or appraisal of our assets and liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) or any of our subsidiaries, nor was any such evaluation or appraisal of our assets or liabilities or any of our subsidiaries furnished to Greenhill. Greenhill’s opinion does not address our underlying business decision to engage in the transaction. Greenhill’s opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Greenhill as of, May 21, 2007. Subsequent developments may affect Greenhill’s opinion, but it has no obligation to update, revise or reaffirm its opinion.

     The preparation of a fairness opinion is a complex process and is not necessarily suited to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth below, without considering the analyses as a whole, could create an incomplete view of the processes underlying Greenhill’s opinion. In arriving at its fairness determination, Greenhill considered the results of all of its analyses and did not attribute any particular weight to any single factor or analysis considered by it. Rather, Greenhill made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in Greenhill’s analyses as a comparison is directly comparable to us or the contemplated transaction.

     The following is a summary of the material financial analyses delivered by Greenhill to our board of trust managers in connection with rendering the opinion described above, but does not purport to be a complete description of the financial analyses performed by Greenhill. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Greenhill’s financial analyses. We provided Greenhill with 127,694,812 as the number of fully diluted outstanding common shares of Crescent for purposes of this analysis. This number of fully diluted outstanding common shares of Crescent included 102,893,011 outstanding shares, 17,022,346 shares issuable upon conversion of partnership units, 4,813,500 shares issuable upon conversion of Series A and B restricted units net of forfeitures, 664,294 shares issuable pursuant to an exchange agreement with a joint venture partner, and 2,301,661 shares issuable with respect to options to purchase common shares of Crescent (calculated using the treasury method). Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before May 21, 2007 and is not necessarily indicative of current market conditions.

     Net Asset Value Analysis. Greenhill analyzed our net asset value per share using asset valuations provided by our management, based on our current asset holdings and assuming no discount attributable to the various assets in which we own a joint venture share. Using this information provided by our management, Greenhill calculated an illustrative per diluted share net asset value of the common shares of Crescent equal to between $23.92 and $24.14.

     In addition, Greenhill performed a net asset value analysis on us using net asset valuations provided by the our management, but assuming execution of our strategic plan, announced on March 1, 2007, which contemplated various asset sales and debt prepayments as well as the disposition of our interests in Canyon Ranch. These transactions would have resulted in the incurrence by us of various costs, including transaction costs, debt prepayment penalties, and taxes owed by our taxable REIT subsidiary upon the sale of certain hotel assets and resort residential properties, and potential capital gains taxes due on the sale of other assets. Accordingly, using information provided by our management, Greenhill adjusted the net asset value downward for these costs. Additionally, Greenhill added to the net asset value the projected dividends to be paid to shareholders for the remainder of 2007, representing the estimated cash flows to shareholders during such period. After making such adjustments, and based on information provided by our management, Greenhill estimated our net asset value after costs related to executing our strategic plan at between $22.91 and $23.10 per diluted share.

     Greenhill also noted public research analysts’ estimates of per share net asset value of the common shares of Crescent obtained from BB&T Capital Markets, Bear Stearns, Citigroup, Green Street Advisors, Merrill Lynch, Morgan Stanley, and RBC Capital Markets as of May 21, 2007, ranging from $18.00 to $28.00, with an average estimate of $22.40 and a median estimate of $21.62. A subset of the firms providing estimates of per share net asset value also provided per share target prices for the common shares of Crescent. These firms included BB&T Capital Markets, Bear Stearns, Green Street Advisors, Morgan Stanley, and RBC Capital Markets. Their per share target price ranged from $20.00 to $28.00, with an average target price of $21.93 and a median target price of $20.66.

     In addition to considering the net asset value estimates described above, Greenhill also examined our significant holdings of non-control positions in a number of joint ventures with other parties and their potential adverse impact on valuation. Greenhill believes, in its professional judgment, that as a result of reduced decision and management rights and other structural complexities inherent in these holdings, it is appropriate to consider a minority-discount to the above net asset value estimates with respect to such joint venture holdings. In estimating a reasonable discount to net asset value as a result of these positions, Greenhill reviewed the ownership structures and key terms of selected major joint ventures in which we are a stakeholder and applied a range of minority discounts of between 5% and 10% to our management’s valuation estimates (which on their own did not include any adjustment for minority holdings) for those holdings. This analysis yielded potential discount related to our joint venture holdings of between $81 and $161 million, or approximately $0.63 and $1.26 per diluted share.

     Dividend Discount Analysis. Greenhill calculated illustrative net present value ranges of the common shares of Crescent by using projected dividend payments for Crescent for the five years from 2007 through 2011 and illustrative residual value indications at the end of the year 2011 based on multiples ranging from 16.0x to 18.0x forward (2012) estimated funds from operations (“FFO”) per diluted common share, assuming full implementation of our strategic plan. The projected dividend payments and projected FFO per share were based on information provided by our management to our board of trust managers. The FFO multiple range selected was based on Greenhill’s professional judgment, which included an analysis of the FFO trading multiples of other publicly traded companies which Greenhill considered most relevant to us after implementation of our strategic plan. The comparable companies selected are identified in the following section entitled “Trading Multiple Analysis.” The projected dividend payments and the illustrative residual value indications derived from this analysis were then discounted to an illustrative present value using equity discount rates ranging from 8.25% to 8.75%. This range of discount rates was based on Greenhill’s professional judgment, including an analysis of the cost of equity and weighted average cost of capital for comparable companies. The results of this analysis are summarized below:

Net Present Value Per Share

								Equity Discount Rate
								8.25%				8.50%				8.75%
Terminal				16.0x				$	21.41			$	21.19			$	20.97
Multiple of				17.0x				$	22.61			$	22.38			$	22.14
2012E FFO				18.0x				$	23.81			$	23.56			$	23.32

     Trading Multiple Analysis. Using publicly available information, Greenhill reviewed and analyzed certain financial information, ratios and public market multiples, where applicable, for the following publicly traded companies in the REIT industry:

Alexandria Real Estate Equities Inc.		Kilroy Realty Corp.
BioMed Realty Trust Inc.		Liberty Property Trust
Boston Properties Inc.		Mack-Cali Realty Corp.
Brandywine Realty Trust		Maguire Properties Inc.
Brookfield Properties Corp.		Parkway Properties Inc.
Corporate Office Properties Trust Inc.		PS Business Parks Inc.
Cousins Properties Inc.		Republic Property Trust
Digital Realty Trust Inc.		SL Green Realty Corp.
Douglas Emmett Inc.		Vornado Realty Trust
Highwoods Properties Inc.		Washington REIT
HRPT Properties Trust

Using publicly available information, Greenhill then compared certain financial information, ratios and public market multiples for the following publicly traded companies, which were selected from the list above:

Brandywine Realty Trust
Highwoods Properties Inc.
Liberty Property Trust
Mack-Cali Realty Corp.
Parkway Properties Inc.
PS Business Parks Inc.

     Although none of the selected companies is directly comparable to us, the companies included were selected because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain of our operations based on the industry in which the companies operate, and the property characteristics and asset quality of the companies. Accordingly, a complete analysis of the results of the following calculations cannot be limited to a quantitative review of such results and involves complex considerations and judgments concerning the differences in the financial and operating characteristics of the comparable companies and other factors that could affect the public share prices of the comparable companies, as well as the price of our common shares.

     The multiples and ratios for us and each of the selected companies were calculated using their respective closing prices on May 21, 2007 and were based on the most recent publicly available information at that time.

     Greenhill calculated illustrative implied prices of our common shares by multiplying the SNL Financial Consensus forward estimated FFO per common share for the year 2007 as of May 21, 2007 by a range of multiples from 13.0x to 16.5x. This range of multiples was chosen based upon estimated 2007 FFO multiples per diluted share for the selected comparable companies. This analysis yielded illustrative implied prices for our common shares ranging from $16.77 to $21.29 per diluted share.

     In addition, Greenhill calculated illustrative implied prices of our common shares by multiplying the SNL Financial Consensus forward estimated adjusted funds from operations (“AFFO”) per common share for the year 2007 as of May 21, 2007 by a range of multiples from 18.0x to 21.5x. This range of multiples was chosen based upon estimated 2007 AFFO multiples per diluted share for the selected comparable companies. This analysis yielded illustrative implied prices for our common shares ranging from $17.82 to $21.29 per diluted share.

     Historical Trading Analysis. Greenhill reviewed the historical trading prices for Crescent common shares for the five-year period ended May 21, 2007. In addition, Greenhill analyzed the relationship between the $22.80 per diluted Crescent common share, in cash, to be received by our common shareholders pursuant to the merger agreement and the prices of Crescent common shares during certain periods within the one-year period ended May

21, 2007. This analysis indicated that the price per diluted share to be paid to our common shareholders pursuant to the merger agreement represented:

		Metric				Premium
One Day Prior Price (May 21, 2007)		$	20.95				8.8	%
30-Day Average Price		$	20.32				12.2	%
60-Day Average Price		$	20.32				12.2	%
90-Day Average Price		$	20.50				11.2	%

     Precedent Transactions Analysis. Using publicly available information, Greenhill analyzed premiums paid in selected announced transactions across all REIT sectors during the period from 2005 through May 21, 2007, based on the closing price one day prior to announcement, 30-days prior to announcement and 90-days prior to announcement. Additionally, Greenhill reviewed the estimated FFO multiples paid in transactions within the office REIT sector. Specifically, Greenhill reviewed the following transactions:

Date
Announced		Acquiror		Target
Office
Nov-06		The Blackstone Group		Equity Office Properties Trust
Aug-06		Morgan Stanley Real Estate		Glenborough Realty Trust
Aug-06		SL Green Realty		Reckson Associates Realty
Jun-06		Brookfield Properties & Blackstone		Trizec Properties
Mar-06		The Blackstone Group		CarrAmerica Realty
Feb-06		LBA Realty LLC		Bedford Property Investors
Dec-05		GE Real Estate / Trizec Properties		Arden Realty Trust
Oct-05		Brandywine Realty Trust		Prentiss Properties Trust
Jun-05		DRA Advisors LLC		CRT Properties
Apartments
Feb-06		Morgan Stanley Real Estate		Town & Country Trust
Oct-05		Morgan Stanley Real Estate		AMLI Residential Properties
Jun-05		ING Clarion		Gables Residential Trust
Retail
Feb-07		Centro Properties Group		New Plan Excel Realty Trust
Feb-07		Simon Property Group		Mills Corporation
Oct-06		Developers Diversified Realty		Inland Retail
Jul-06		Kimco Realty		Pan Pacific Retail
Jul-06		Centro Properties		Heritage Property Investment Trust
Aug-04		General Growth Properties		The Rouse Company
Healthcare
Jan-07		Ventas		Sunrise REIT (Canada)
Oct-06		Public Sector Pension		Retirement Residence (Canada)
May-06		Health Care Property Investors		CNL Retirement Properties
Hotels
Apr-07		Aimbridge (with Apollo)		Eagle Hospitality Properties Trust
Apr-07		JER Partners		Highland Hospitality
Apr-07		Apollo Investment Corporation		Innkeepers USA Trust
Mar-07		Inland American		Winston Hotels
Jan-07		Morgan Stanley Real Estate		CNL Hotels & Resorts
Industrial
Oct-06		Crown Castle International		Global Signal
Aug-06		ING Real Estate		Summit REIT (Canada)
Dec-05		CalEast Industrial Investors		CenterPoint Properties Trust
Jun-05		ProLogis		Catellus Development Corp
Storage
Mar-06		Public Storage		Shurgard Storage Centers
Net-Lease
Mar-07		Macquarie / Kaupthing Bunadarbanki		Spirit Finance
Oct-06		GE Capital Solutions		Trustreet Properties
Oct-06		Record Realty		Government Properties Trust

Greenhill selected these precedent transactions on the basis of a range of factors, including the industry in which the target companies operate, and the property characteristics and asset quality of the target companies. For each of the

selected transactions, Greenhill calculated and compared the implied forward FFO multiple and the implied premiums offered relative to historical trading prices. Greenhill then used its professional judgment, based on its knowledge of the specific transactions, to determine the appropriate forward FFO multiple range and implied premium range to compare to the proposed acquisition of Crescent. The results of these analyses are summarized as follows:

($US millions, except per share data)

		Crescent				Multiple Range												Implied Per Share Value
Metric		Statistic				Low				—				High				Low				—			High
Price / 2007E Consensus FFO*		$	1.29				15.0x				—				18.0x			$	19.35				—			$	23.22
Premium to Price as of 5/21/07		$	20.95				8.0	%			—				20.0	%		$	22.63				—			$	25.14

     Greenhill prepared these analyses for purposes of providing its opinion to our board of trust managers as to the fairness from a financial point of view of the $22.80 per diluted common share, in cash, to be received by our common shareholders pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Crescent, Morgan Stanley or Greenhill or any other person assumes responsibility if future results are materially different from those forecast.

     The common share merger consideration was determined through arms’ length negotiations between us and Morgan Stanley and its affiliates and was approved by our board of trust managers. Greenhill provided advice to us during these negotiations. Greenhill did not, however, recommend any specific amount of consideration to us or our board of trust managers or that any specific amount of consideration constituted the only appropriate consideration for the company merger. Greenhill was not requested by our board of trust managers to address, nor does the opinion delivered by Greenhill address, the consideration to be received by the holders of the Series A or Series B preferred shares upon their redemption.

     Greenhill, as part of its investment banking business, is continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions and other transactions as well as for corporate and other purposes. Greenhill has acted as financial advisor to us in connection with, and has participated in certain of the negotiations leading to, the transactions contemplated by the merger agreement. In addition, Greenhill has provided certain investment banking services to us from time to time, including having acted as advisor to a special committee of our board of trust managers in connection with the evaluation of several potential transactions and other corporate actions. The aggregate fees received by Greenhill from the investment banking services it rendered to us and our affiliates as described above were approximately $1.5 million (excluding fees in connection with the mergers and related transactions).

     Our board of trust managers selected Greenhill as our financial advisor because Greenhill is a recognized investment banking firm whose professionals have substantial experience in transactions similar to the transactions contemplated by the merger agreement. Pursuant to a letter agreement, dated March 14, 2007, we engaged Greenhill to act as our financial advisor in connection with the transactions contemplated by the merger agreement. Pursuant to the terms of this engagement letter, upon execution of the engagement letter we paid Greenhill an advisory fee of $1.0 million. Upon announcement of the mergers, we paid Greenhill an opinion fee of $4.0 million. Finally, in the event of a sale of 50% or more of our outstanding common shares or assets, we have agreed to pay Greenhill a transaction fee equal to $7.5 million, all of which is payable upon consummation of the transactions contemplated by the merger agreement. In addition, we have agreed to reimburse Greenhill for its reasonable expenses, including attorneys’ fees and disbursements, and to indemnify Greenhill and related persons against various liabilities, including certain liabilities under the federal securities laws.

Financing Commitment

     Moon Parent is paying an aggregate purchase price of approximately $6.5 billion. This amount, which we refer to as the aggregate purchase price, is expected to be funded by a combination of equity contributions by Moon Parent, debt financing and assumption of outstanding debt.

     In connection with the execution and delivery of the merger agreement, an affiliate of Moon Parent obtained a debt commitment letter from Barclays Capital Real Estate Inc., which we refer to as the lender, providing for debt financing in an aggregate principal amount not to exceed the lesser of (i) $3.8 billion and (ii) 85% of our total capitalization (including property debt and corporate debt) excluding property-level debt, existing mezzanine loans and subordinate debt, corporate debt and cash. The debt commitment letter terminates on October 31, 2007, unless extended in accordance with its terms and the closing of the loan is conditioned on the satisfaction of the conditions precedent to Moon Parent’s obligation to consummate the mergers and other customary closing conditions. The lender has the right to terminate the debt commitment letter under certain circumstances, including if the merger agreement has been terminated prior to the closing of the mergers.

     The merger agreement does not contain a financing condition. Moon Parent has agreed to use its reasonable best efforts to arrange the financing on the terms and conditions described in the debt commitment letter in the event that the lender terminates or otherwise fails to perform pursuant to the debt commitment letter. If any portion of Moon Parent’s debt financing becomes unavailable on the terms and conditions contemplated in the debt commitment letter, Moon Parent is obligated to use its reasonable best efforts to arrange to obtain that portion from alternative sources on comparable or more favorable terms. Moon Parent is obligated to keep us informed of the status of its efforts to arrange debt financing and to give us prompt notice of any material breach by any party of the debt commitment letter or of any termination of the debt commitment letter. Before it permits any material amendment or modification to be made to, or any waiver of any material provision or remedy under, the debt commitment letter which would or would be reasonably expected to materially and adversely affect or delay in any material respect Moon Parent’s ability to consummate the mergers, Moon Parent must first obtain our written consent (which shall not be unreasonably withheld or delayed). With certain exceptions, we have agreed to provide, and to cause our subsidiaries and our and their representatives to provide, all reasonable cooperation in connection with the arrangement of the debt financing as may be reasonably requested by Moon Parent.

Guarantees and Remedies

     In connection with the merger agreement, affiliates of Morgan Stanley Real Estate have agreed unconditionally and irrevocably to guarantee the punctual and complete payment when due of the payment obligations, and the timely performance when required of all other obligations, of Moon Parent, REIT Merger Sub and Partnership Merger Sub under the merger agreement, up to a maximum amount, in the aggregate of $300 million. The guarantees will terminate on the final release or discharge of the guaranteed obligations.

     We cannot seek specific performance to require Moon Parent, REIT Merger Sub or Partnership Merger Sub to complete the mergers, and our exclusive remedy for the failure of Moon Parent, REIT Merger Sub and Partnership Merger Sub to complete the mergers is to seek damages up to the amount of the $300 million guarantee from the guarantors, affiliates of Morgan Stanley Real Estate. If all other closing conditions have been satisfied or waived, but Moon Parent fails to obtain adequate financing to complete the mergers, such failure will constitute a breach of Moon Parent’s covenants under the merger agreement. In that event, so long as we and the operating partnership are not in material breach of our respective obligations under the merger agreement, we would be able to (1) terminate the merger agreement, (2) receive from Moon Parent an amount equal to all our reasonable out-of-pocket costs and expenses incurred by us in connection with the proposed transaction in an amount not to exceed $10 million and (3) take legal action against the affiliates of Morgan Stanley Real Estate that provided the guarantees, to seek damages of up to a maximum of $300 million.

Interests of Our Trust Managers and Executive Officers

     Our trust managers and executive officers may have interests in the mergers that are different from, or in addition to, yours, including the following:

	•		unvested common share options held by our trust managers and executive officers will be canceled at the company merger effective time in exchange for the right to receive a single lump sum cash payment equal to the product of (A) the number of common shares issuable upon exercise of such options (assuming full vesting) and (B) the excess, if any, of the common share merger consideration over the exercise price per common share;
	•		unvested partnership unit options held by our executive officers will be canceled at the company merger effective time in exchange for the right to receive a single lump sum cash payment equal to the product of (A) the number of partnership units issuable upon exercise of such options (assuming full vesting) and (B) the excess, if any, of the operating partnership merger consideration over the exercise price per partnership unit; and
	•		restricted unit awards owned by our executive officers (whether or not then vested) will be accelerated in accordance with their terms and canceled at the operating partnership merger effective time in exchange for the right to receive a single lump sum cash payment equal to the product of (A) the number of partnership units issuable upon vesting of such awards (assuming full vesting) and (B) the operating partnership merger consideration, plus accrued but unpaid dividends.

     Also, John C. Goff, our Chief Executive Officer and Vice Chairman of our board of trust managers, and Dennis H. Alberts, our President and Chief Operating Officer, had each previously received restricted unit awards that would have fully vested in connection with the mergers. On May 21, 2007, Messrs. Goff and Alberts waived the vesting of and agreed to forfeit, for the benefit of the shareholders, the portions of their respective restricted stock awards that were designated for vesting when the share price targets of $25.50 and $27.00 were hit and that would have vested in connection with the mergers. The forfeitures, the value of which totaled approximately $10.3 million, are applicable to the mergers or any transaction our board of trust managers determines to accept in lieu of the mergers.

     In addition, each of our executive officers will be entitled to severance benefits pursuant to our Change in Control Separation Plan, which became effective as of May 22, 2007, if the mergers are completed and within the 12-month period thereafter the executive officer (i) terminates his or her employment for “good reason,” other than at a time when a basis for termination for “cause” (as defined in the Change in Control Separation Plan) exists, or (ii) is terminated without cause. “Good reason” for termination means the occurrence, without the executive officer’s prior written consent, of one or more of the following events following the completion of the mergers:

	•		the assignment of the executive officer to any employment status or position other than a position reasonably equivalent to the position or offices that the executive officer performs (including without limitation a diminution in the nature or scope of the executive officer’s authority or responsibilities, a material change to the executive officer’s reporting responsibilities or the duties that the executive officer performs);
	•		a reduction in the executive officer’s aggregate cash compensation (including base salary and any bonus potential); or
	•		the relocation of the executive officer’s office or principal place of work from its current location to a location more than 50 miles from such current location.

The severance benefits will be comprised of (a) a lump sum severance payment equal to 12 months of the executive officer’s base salary, except that John C. Goff, our Chief Executive Officer, and Dennis H. Alberts, our President and Chief Operating Officer, will receive 18 months of their respective base salary and 150% of the average of their respective cash bonuses paid to them in 2004, 2005 and 2006; (b) health care continuation coverage for up to 12 months following termination of employment; and (c) outplacement assistance.

     The following table sets forth an estimate of the potential cash severance payments that could be payable as described above in the event the executive officer becomes entitled to such severance amount pursuant to our Change in Control Separation Plan following the mergers (assuming for illustrative purposes that the executive officer’s employment is terminated on October 31, 2007 and utilizing current base salaries). This table does not include an amount attributable to the value of the health care continuation coverage and outplacement assistance to be received by the executive officer.

		Amount of
		Potential Cash
		Severance
Executive Officers		Payment
John C. Goff		$	2,550,000
Dennis H. Alberts		$	1,375,000
John P. Albright		$	325,000
Jerry R. Crenshaw, Jr.(1)		$	425,833
David M. Dean		$	365,000
Thomas G. Miller		$	350,000
Kenneth S. Moczulski(2)			—
Jane E. Mody		$	385,000
Jane B. Page		$	350,000
Paul R. Smith		$	350,000
John L. Zogg, Jr.		$	350,000
Christopher T. Porter		$	237,600
Suzanne K. Stevens		$	237,600

     The following table summarizes (a) the vested and unvested options to purchase our common shares with exercise prices of less than $22.80 per common share, (b) the vested and unvested options to purchase partnership units in the operating partnership with exercise prices of less than $45.60 per partnership unit and (c) the unvested restricted unit awards in exchange for which our executive officers and trust managers will receive merger consideration.

		No. of				Weighted
		Shares				Average
		Underlying				Exercise				Number of
		Vested				Price of				Outstanding
		And				Vested and				Restricted				Aggregate
		Unvested				Unvested				Unit				Resulting
Name		Options(2)				Options				Awards				Consideration(3)
Executive Officers
John C. Goff(1)			3,600,000			$	17.23				1,140,000	(4)		$	47,934,000	(4)
Dennis H. Alberts(1)			703,400			$	18.12				740,000	(5)		$	21,393,912	(5)
John P. Albright			60,465			$	17.55				152,500			$	3,971,441
Jerry R. Crenshaw, Jr.			338,865			$	16.68				250,000			$	8,238,854
David M. Dean			327,819			$	16.76				250,000			$	8,145,027
Thomas G. Miller			97,160			$	16.49				250,000			$	6,778,080
Kenneth S. Moczulski			532,000			$	18.40				42,000			$	3,298,400
Jane E. Mody			300,000			$	17.51				265,000			$	8,116,500
Jane B. Page			202,613			$	16.58				250,000			$	7,425,253
Paul R. Smith			200,000			$	17.90				250,000			$	7,100,000
John L. Zogg, Jr.			205,468			$	16.89				250,000			$	7,379,316
Christopher T. Porter			—				—				90,000			$	2,214,000
Suzanne K. Stevens			42,131			$	15.81				79,500			$	2,291,596
Trust Managers
Richard E. Rainwater			—				—				—				—
Anthony M. Frank			70,000			$	18.29				—			$	315,700
William F. Quinn			70,000			$	18.29				—			$	315,700
Paul E. Rowsey, III			70,000			$	18.29				—			$	315,700
Robert W. Stallings			56,000			$	17.67				—			$	287,280
Terry N. Worrell			56,000			$	17.67				—			$	287,280

     All of our trust managers were fully aware of the foregoing interests of our executive officers, trust managers and certain other persons in the mergers and, except for Messrs. Goff and Alberts who recused themselves, considered them prior to approving the mergers and the merger agreement.

     Morgan Stanley Real Estate is currently assessing its staffing requirements with respect to the ongoing business operations of the surviving entity. As a result, it is possible that the surviving entity might offer an employment opportunity to one or more of our executive officers upon or after the completion of the mergers. However, no determination has been made regarding which, if any, executive officers may be offered employment or the terms of any such employment opportunity, including compensation.

Indemnification of Our Trust Managers and Officers

     The merger agreement provides that for a period of at least six years after the merger effective time, the organizational documents of REIT Merger Sub, the partnership agreement of the operating partnership and the organizational documents of any applicable subsidiary of ours or any “primarily controlled company” (as defined in the merger agreement) will contain indemnification provisions that are no less favorable than the indemnification provisions in our existing charter and bylaws, the operating partnership’s partnership agreement or the applicable organizational documents of our subsidiaries, and that those provisions will not be amended, repealed or modified during that period in any manner that would affect adversely the rights of any person who at or prior to the merger effective time were our, our subsidiaries’ or any primarily controlled company’s trust managers, officers, directors, employees, agents, or fiduciaries, except as required by law and then only to the minimum extent required by law.

     Moon Parent, REIT Merger Sub and Partnership Merger Sub have agreed to indemnify, to the fullest extent we or any of our subsidiaries, as the case may be, are authorized or permitted to indemnify our own managers, directors, trust managers, officers or trustees under Texas law or the applicable law of the jurisdiction where any such subsidiary was formed (as applicable), persons who were, at or before the date of the merger agreement or during the period between the signing of the merger agreement and the merger effective time, our, our subsidiaries’ or any “related entities’” (as defined in the merger agreement) managers, directors, trust managers, officers or trustees with respect to any legal action arising out of or relating to their duties or services as our, our subsidiaries’ or any related entities’ managers, directors, trust managers, officers or trustees occurring at or prior to the merger effective time and, subject to certain conditions, shall pay related reasonable legal fees, costs and expenses incurred by them.

     The merger agreement permits, with respect to claims arising from facts or events that occurred on or prior to the merger effective time, us to purchase a “tail insurance policy” of at least the same coverage and amounts and containing terms and conditions that are no less favorable to our, our subsidiaries’ or any primarily controlled company’s managers, directors, trust managers, officers, employees, agents, partners or fiduciaries as our and our subsidiaries’ existing policy or policies, for the benefit of our, our subsidiaries’ or any primarily controlled company’s current and former managers, directors, trust managers, officers, employees, agents, or fiduciaries with a claims period of six years from the closing with respect to trust managers’ and officers’ liability insurance for claims arising from facts or events that occurred on or prior to the closing. The obligations described above must be assumed by any successor entity to the surviving corporation as a result of any consolidation, merger or transfer of all or substantially all of its properties and assets.

Regulatory Matters

     We currently are unaware of any material federal, state or foreign regulatory requirements or approvals that are required for the execution of the merger agreement or the completion of either the company merger or the operating partnership merger other than potential filings and necessary approvals, if any, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the acceptance for record of the articles of merger in respect of the company merger by the country clerk of Tarrant County, Texas, in accordance with the Texas REIT Act, and the filing of certificates of merger with the Secretary of State of the State of Delaware, in accordance with the Delaware Limited Liability Company Act and the Delaware Revised Uniform Limited Partnership Act.

Litigation Relating to the Mergers

     On May 24, 2007, a purported shareholder class action lawsuit related to the merger agreement was filed in the District Court of Tarrant County, Texas, naming us and each of our trust managers as defendants. The lawsuit, Edward Tansey vs. Crescent Real Estate Equities Company, et al. (Cause No. 352-225130-07), alleges, among other things, that $22.80 per share in cash to be paid to our common shareholders in connection with the company merger

is “grossly unfair,” that the individual trust manager defendants breached their fiduciary duties to our common shareholders in negotiating and approving the merger agreement, and that we aided and abetted our trust managers in such alleged breach. The complaint seeks relief (i) declaring that the action is properly maintainable as a class action; (ii) declaring that the merger agreement was entered into in breach of the fiduciary duties of defendants; (iii) enjoining defendants from consummating the company merger; (iv) directing defendants to exercise their fiduciary duties to obtain a transaction that is in the best interests of our shareholders; (v) rescinding, to the extent that it has already been implemented, the merger agreement; (vi) imposing a constructive trust; and (vii) awarding attorneys’ and experts’ fees to the plaintiff.

     On May 25, 2007, a shareholder derivative petition for breach of fiduciary duty related to the merger agreement was filed in the District Court of Tarrant County, Texas, naming each of our trust managers, as well as Morgan Stanley Real Estate and Morgan Stanley & Co., Inc. (the “Morgan Stanley Defendants”) as defendants and naming us as a nominal defendant. The lawsuit, John Gomez vs. Richard Rainwater, et al. (Cause No. 141-224134-07), alleges, among other things, that $22.80 per share in cash to be paid to our common shareholders in connection with the company merger “substantially undervalues the Company and is an unfair price,” that the individual trust manager defendants breached their fiduciary duties to our common shareholders in negotiating and approving the merger agreement, that the Morgan Stanley Defendants aided and abetted our trust managers in such alleged breach, that our trust managers abused their ability to control and influence us, that our trust managers committed waste of corporate assets, and that our trust managers usurped a corporate opportunity (and were aided and abetted by the Morgan Stanley Defendants in that wrongdoing). The complaint seeks relief (i) enjoining defendants from consummating the company merger; (ii) directing defendants to exercise their fiduciary duties to obtain a transaction that is in the best interests of our shareholders; (iii) rescinding, to the extent that it has already been implemented, the merger agreement; (iv) imposing a constructive trust; and (v) awarding attorneys’ and experts’ fees to the plaintiff.

     On May 30, 2007, a shareholder derivative petition for breach of fiduciary duty related to the merger agreement was filed in the District Court of Tarrant County, Texas, naming each of our trust managers, as well as the Morgan Stanley Defendants as defendants and naming us as a nominal defendant. The lawsuit, Willard Nelson vs. Richard Rainwater, et al. (Cause No. 141-224214-07), alleges, among other things, that $22.80 per share in cash to be paid to our common shareholders in connection with the company merger “substantially undervalues the Company and is an unfair price,” that the individual trust manager defendants breached their fiduciary duties to our common shareholders in negotiating and approving the merger agreement, that the Morgan Stanley Defendants aided and abetted our trust managers in such alleged breach, that our trust managers abused their ability to control and influence us, that our trust managers committed waste of corporate assets, and that our trust managers usurped a corporate opportunity (and were aided and abetted by the Morgan Stanley Defendants in that wrongdoing). The complaint seeks relief (i) enjoining defendants from consummating the company merger; (ii) directing defendants to exercise their fiduciary duties to obtain a transaction that is in the best interests of our shareholders; (iii) rescinding, to the extent that it has already been implemented, the merger agreement; (iv) imposing a constructive trust; and (v) awarding attorneys’ and experts’ fees to the plaintiff.

     On June 11, 2007, a purported shareholder class action lawsuit related to the merger agreement was filed in the District Court of Tarrant County, Texas, naming us and each of our trust managers, as well as Moon Acquisition Holdings, LLC, Moon Acquisition, LLC and Moon Acquisition Limited Partnership (the “Moon Defendants”), as defendants. The lawsuit, Edward Acuff vs. Richard Rainwater, et al. (Case No. 067-224428-07), alleges, among other things, that $22.80 per share in cash to be paid to our common shareholders in connection with the company merger is an “insufficient price,” that the individual trust manager defendants breached their fiduciary duties to our common shareholders in negotiating and approving the merger agreement, and that we and the Moon Defendants aided and abetted the trust managers in such alleged breach. The complaint seeks relief (i) declaring that the action is properly maintainable as a class action; (ii) enjoining defendants from consummating the company merger; (iii) declaring that the termination fee provisions of the merger agreement are unfair and enjoining the payment of such termination fees; (iv) declaring that the merger agreement was entered into in breach of the fiduciary duties of defendants and that the Moon Defendants aided and abetted such breach; and (v) awarding interest, attorneys’ fees and experts’ fees to the plaintiff.

     We intend to vigorously defend each of these actions. However, even if these lawsuits are determined to be without merit, they may potentially delay or, if the delay is substantial enough to prevent the closing of the mergers by October 31, 2007, prevent the closing of the mergers.

Material United States Federal Income Tax Consequences

     The following is a summary of the material United States federal income tax consequences of the merger to holders of our common shares who receive cash for their shares pursuant to the company merger. This summary is based on current law, is for general information only and is not tax advice. This summary is based on the Code, applicable Treasury Regulations, and administrative and judicial interpretations thereof, each as in effect as of the date hereof, all of which are subject to change or different interpretations, possibly with retroactive effect. This summary assumes that our common shares are held as capital assets. We have not requested, and do not plan to request, any rulings from the Internal Revenue Service (“IRS”) concerning the tax treatment to our shareholders of the merger, and the statements in this proxy statement are not binding on the IRS or any court. We can provide no assurance that the tax consequences contained in this discussion will not be challenged by the IRS, or if challenged, will be sustained by a court.

     This summary does not address all of the tax consequences that may be relevant to us or to particular holders of our common shares in light of their personal circumstances. In particular, this summary does not address the tax consequences of:

	•		banks, insurance companies or other financial institutions;
	•		broker-dealers;
	•		traders;
	•		expatriates and former long-term residents;
	•		tax-exempt organizations;
	•		individual retirement accounts and other tax-deferred accounts;
	•		persons who are subject to alternative minimum tax;
	•		persons who hold their common shares as a position in a “straddle” or as part of a “hedging,” “conversion” or other risk-reduction transaction;
	•		persons deemed to sell their common shares under the constructive sale provisions of the Code;
	•		United States persons that have a functional currency other than the United States dollar;
	•		except to the extent specifically discussed below, non-U.S. Holders (as defined below);
	•		non-U.S. Holders who at any time have held, directly and by attribution, more than 5% of our common shares;
	•		regulated investment companies;
	•		real estate investment trusts;
	•		mutual funds;
	•		subchapter S corporations;

	•		partnerships or other entities treated as partnerships for United States federal income tax purposes and partners in such partnerships; or
	•		persons who acquired our common shares upon the exercise of stock options or otherwise as compensation.

     In addition, this discussion does not address any state, local or foreign tax consequences of the company merger. You are urged to consult your tax advisors regarding the specific tax consequences to you of the company merger and our election to be taxed as a REIT.

     For purposes of this discussion, a “U.S. Holder” means a holder of our common shares that is:

	•		a citizen or resident of the United States as determined under the Code;
	•		a corporation or other entity treated as a corporation for United States federal income tax purposes created or organized in or under the laws of the United States or any state or the District of Columbia;
	•		an estate, the income of which is subject to United States federal income taxation regardless of its source; or
	•		a trust (a) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust, or (b) that was in existence on August 20, 1996, was treated as a United States person on the previous day, and elected to continue to be so treated.

     If any entity that is treated as a partnership for United States federal income tax purposes holds our common shares, the tax treatment of its partners or members generally will depend upon the status of the partner or member and the activities of the entity. If you are a partner of a partnership or a member of a limited liability company or other entity classified as a partnership for United States federal income tax purposes and that entity is holding our common shares, you should consult your tax advisor.

     As used in this section, a “non-U.S. Holder” means a beneficial owner of our common shares that is an individual, corporation, estate or trust that is not a U.S. Holder as described above.

     Consequences of the Company Merger to Us

     We elected to be taxed as a REIT under the Code beginning with our taxable year ended December 31, 1994. We believe that we have been organized and have operated in a manner that will allow us to qualify for taxation as a REIT under the Code commencing with our taxable year ended December 31, 1994 and continuing through the closing date. Qualification and taxation as a REIT depend upon our ability to meet, through actual annual (or in some cases quarterly) operating results, requirements relating to income, asset ownership, income distribution levels and diversity of share ownership, and the various other REIT qualification requirements imposed under the Code. In any year in which we qualify as a REIT, in general, we will not be subject to U.S. federal income tax on that portion of our net taxable income that we timely distribute to shareholders.

     Under the merger agreement, we will merge with and into REIT Merger Sub, and REIT Merger Sub will be the surviving corporation.

     For United States federal income tax purposes, we will treat the company merger as if we had sold all of our assets to REIT Merger Sub and, then, made a liquidating distribution of all of the common share merger consideration to our common shareholders in exchange for our common shares. Provided that we retain our qualification as a REIT through the merger effective time, and certain other conditions are met, we generally can deduct such deemed liquidating distribution against our net taxable income for our taxable year which includes the

company merger and, therefore, we would not expect to be taxed on any of our income and gain realized from the sale of our assets or ordinary income earned during our taxable year which includes the company merger.

     Consequences of the Company Merger to U.S. Holders of Our Common Shares

     In general, a U.S. Holder’s receipt of cash in exchange for common shares pursuant to the company merger will be a taxable transaction for United States federal income tax purposes. In general, a U.S. Holder will recognize capital gain or loss as a result of the company merger measured by the difference, if any, between the common share merger consideration received in exchange for our common shares and the holder’s adjusted tax basis in our common shares. Gain or loss will be calculated separately for each block of common shares, with a block consisting of common shares acquired at the same cost in a single transaction. Such gain or loss will constitute long-term capital gain or loss if the U.S. Holder held such shares for more than one year as of the effective time of the company merger. However, if a U.S. Holder recognizes loss upon the receipt of cash in the company merger in exchange for common shares that it has held for six months or less, at the effective time of the company merger, after applying certain holding period rules, the loss recognized will be treated as a long-term capital loss to the extent such holder received distributions from us which were required to be treated as long-term capital gains. Long-term capital gains of noncorporate taxpayers generally are taxable at a maximum federal income tax rate of 15%. Capital gains of corporate stockholders generally are taxable at the regular tax rates applicable to corporations. The deductibility of capital losses may be subject to limitations. In addition, the IRS has the authority to prescribe, but has not yet prescribed, regulations that would apply a tax rate of 25% to a portion of capital gain realized by a noncorporate shareholder on the sale of REIT shares that would correspond to the REIT’s “unrecaptured Section 1250 gain.”

     Consequences of the Company Merger to Non-U.S. Holders of Our Common Shares

     Generally, a non-U.S. Holder’s gain or loss from the company merger will be determined in the same manner as that of a U.S. Holder. The United States federal income tax consequences of the company merger to a particular non-U.S. Holder will depend on various factors, including whether the receipt of the common share merger consideration is taxed under the provisions of Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, governing sales of REIT shares or whether the receipt of the common share merger consideration is taxed under the provisions of FIRPTA governing distributions from REITs. If the FIRPTA provisions governing sales of REIT shares apply, the non-U.S. Holder will be taxed as described below under “—Taxable Sale of Shares.” If the provisions governing distributions from REITs apply, for United States federal income tax purposes, the company merger will be treated as a sale of our assets followed by a liquidating distribution from us to our common shareholders of the net proceeds from the asset sale, with the tax consequences described below under “–Distribution of Gain from the Disposition of U.S. Real Property Interests by the Company.” The IRS has taken a position in a recent pronouncement that would result in application of the “distribution” provisions to the extent the merger consideration is attributable to gain from our sale of United States real property interests, and not the taxable sale provisions, unless a special exception applies (the “5% Exception,” discussed below). Because the question may not be fully settled at this point, both sets of provisions are discussed below. In general, the provisions governing the taxation of distributions by REITs can be less favorable to non-U.S. Holders than the taxation of sales or exchanges of REIT shares by non-U.S. Holders, and non-U.S. Holders should consult their tax advisors regarding the possible application of those provisions.

     Distribution of Gain from the Disposition of U.S. Real Property Interests. The IRS stated in recently-released Notice 2007-55 that it is taking the position that REIT liquidating distributions are subject to tax under Section 897(h)(1) of the Code to the extent attributable to gain from the sale of U.S. real estate assets. Thus, under Notice 2007-55, the common share merger consideration received by a non-U.S. Holder is subject to tax under FIRPTA as a distribution to the extent it is attributable to gain from the deemed sale of our U.S. real estate assets in the merger, and not as a sale of our common shares, unless the 5% Exception (described below) applies. If the distribution were taxed under FIRPTA, the gain recognized by a non-U.S. Holder generally would be subject to United States federal income tax on a net basis to the extent attributable to gain from the deemed sale of our real estate assets, and a corporate non-U.S. Holder could also be subject to the branch profits tax on such FIRPTA gain. On the other hand, the 5% Exception would apply to a non-U.S. Holder of our common shares if the non-U.S. Holder does not own more than 5% of our common shares at any time during the one-year period ending on the date of the distribution. In this case, the FIRPTA tax would not apply, and the non-U.S. Holder may be taxed as described below under “–Taxable Sale of Shares.” However, there is also a risk that rules applicable to capital gains distributions made to non-U.S. Holders qualifying for the 5% Exception would apply. These rules provide that capital gains distributions are treated as ordinary dividends to such non-U.S. Holders. Accordingly, the common share merger consideration could be treated as an ordinary dividend distribution from us to the extent attributable to capital gain from the deemed sale of our assets, in which case that portion of the common share merger consideration you receive would be subject to United States federal withholding tax at a 30% rate.

     Taxable Sale of Shares. Subject to the discussion of backup withholding and of distribution of gain from the disposition of U.S. real property interests above, to the extent the company merger is treated as a taxable sale of our common shares, the non-U.S. Holder should not be subject to United States federal income taxation on any gain or loss from the company merger unless: (i) the gain is effectively connected with the non-U.S. Holder’s conduct of a trade or business in the United States; (ii) the non-U.S. Holder is an individual present in the United States for 183 days or more in the taxable year of the company merger and certain other requirements are met; or (iii) such common shares constitute a “U.S. real property interest” under FIRPTA.

     A non-U.S. Holder whose gain is effectively connected with the conduct of a trade or business in the United States will be subject to United States federal income tax on such gain on a net basis in the same manner as a U.S. Holder. In addition, a non-U.S. Holder that is a corporation may be subject to the 30% branch profits tax on such effectively connected gain.

     A non-U.S. Holder who is an individual present in the United States for 183 days or more in the taxable year of the company merger and who meets certain other requirements will be subject to a flat 30% tax on the gain derived from the merger, which may be offset by United States source capital losses. In addition, the non-U.S. Holder may be subject to applicable alternative minimum taxes.

     If a non-U.S. Holder’s common shares constitute a “U.S. real property interest” under FIRPTA, such holder will be subject to United States federal income tax on the gain recognized in the company merger on a net basis in the same manner as a U.S. Holder. A non-U.S. Holder’s common shares generally will not constitute a U.S. real property interest if (i) we are a “domestically controlled qualified investment entity” at the effective time of the merger, or (ii) the non-U.S. Holder holds, directly and by attribution, 5% or less of the total fair market value of our common shares at all times during the shorter of (a) the five-year period ending with the effective date of the company merger and (b) the non-U.S. Holder’s holding period for the shares. A “qualified investment entity” includes a REIT. Assuming we qualify as a REIT, we will be a “domestically controlled qualified investment entity” at the effective time of the company merger if non-U.S. Holders held directly or indirectly less than 50% in value of our shares (including our Series A and Series B preferred shares while they are outstanding) at all times during the five-year period ending with the effective time of the merger. No assurances can be given that the actual ownership of our shares has been or will be sufficient for us to qualify as a “domestically controlled qualified investment entity” at the effective time of the merger.

     In addition, our common shares will not constitute a U.S. real property interest if (i) as of the effective date of the merger, we did not hold any U.S. real property interests, and (ii) all of the U.S. real property interests held by us during the five-year period ending with the effective date of the company merger were disposed of in transactions in which the full amount of the gain (if any) was recognized. The application of this rule in a transaction such as the company merger is not entirely clear. You should consult your tax advisor regarding the possible FIRPTA tax consequences to you of the merger.

     Income Tax Treaties. If a non-U.S. Holder is eligible for treaty benefits under an income tax treaty with the United States, the non-U.S. Holder may be able to reduce or eliminate certain of the United States federal income tax consequences discussed above, such as the branch profits tax. Non-U.S. Holders should consult their tax advisor regarding possible relief under an applicable income tax treaty.

     U.S. Withholding Tax Under FIRPTA. As described above, IRS Notice 2007-55 takes the position that the receipt of the common share merger consideration by a non-U.S. Holder not qualifying for the 5% Exception will be treated as a distribution from us to the extent it is attributable to gain from the deemed sale of our U.S. real estate assets in the merger. Accordingly, we intend to withhold U.S. federal income tax at a rate of 35% from the portion of the common share merger consideration that is, or is treated as, attributable to gain from the sale of U.S. real property interests and paid to a non-U.S. Holder unless such holder qualifies for the 5% Exception.

     A non-U.S. Holder may be entitled to a refund or credit against the holder’s United States tax liability, if any, with respect to any amount withheld pursuant to FIRPTA, provided that the required information is furnished to the IRS on a timely basis. Non-U.S. Holders should consult their tax advisor regarding withholding tax considerations.

     Information Reporting and Backup Withholding

     Under the Code, a U.S. Holder of our shares may be subject to information reporting on the cash received for the shares, unless an exemption applies. Backup withholding, currently at a rate of 28%, may also apply to payments made in connection with the merger. Backup withholding will not apply, however, to a holder who (a) in the case of a U.S. Holder, furnishes a correct taxpayer identification number and certifies that the holder is not subject to backup withholding on the substitute IRS Form W-9 or successor form, (b) in the case of a non-U.S. Holder, furnishes an applicable IRS Form W-8 or successor form, or (c) is otherwise exempt from backup withholding and complies with other applicable rules and certification requirements. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against such holder’s United States federal income tax liability provided the required information is timely furnished to the IRS.

     THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF THE POTENTIAL TAX CONSIDERATIONS RELATING TO THE COMPANY MERGER AND IS NOT TAX ADVICE. THEREFORE, HOLDERS OF OUR COMMON SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE COMPANY MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF UNITED STATES FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.

Delisting and Deregistration of Our Common Shares and Our Series A and Series B Preferred Shares; Deregistration of Partnership Units

     If the company merger is completed, our common shares and our Series A and Series B preferred shares will no longer be traded on the New York Stock Exchange and will be deregistered under the Exchange Act. In addition, the operating partnership’s partnership units will be deregistered under the Exchange Act.

THE MERGER AGREEMENT

     The summary of the material terms of the merger agreement below and elsewhere in this proxy statement is qualified in its entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Exhibit A and which we incorporate by reference into this document. This summary may not contain all of the information about the merger agreement that is important to you.

     The merger agreement has been included to provide you with information regarding its terms, and we recommend that you read carefully the merger agreement in its entirety. The rights and obligations of the parties are governed by the express terms of the merger agreement and not by this summary or any other information contained in this proxy statement. Except for its status as a contractual document that establishes and governs the legal relations among the parties thereto with respect to the mergers, we do not intend for its text to be a source of factual, business or operational information about Crescent. The merger agreement contains representations, warranties and covenants that are qualified and limited, including by information in the schedules referenced in the merger agreement that the parties delivered in connection with the execution of the merger agreement. Representations and warranties may be used as a tool to allocate risks between the respective parties to the merger agreement, including where the parties do not have complete knowledge of all facts, instead of establishing such matters as facts. Furthermore, the representations and warranties may be subject to different standards of materiality applicable to the contracting parties, which may differ from what may be viewed as material to shareholders. Certain of these representations were accurate as of a specific date and do not purport to be accurate as of the date of this proxy statement. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the merger agreement and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement. Except for the parties themselves, under the terms of the merger agreement only certain other specifically identified persons are

third party beneficiaries of the merger agreement who may enforce it and rely on its terms. As a shareholder, you are not a third party beneficiary of the merger agreement and therefore may not directly enforce or rely upon its terms and conditions and you should not rely on its representations, warranties or covenants as characterizations of the actual state of facts or condition of Crescent or any of its affiliates.

     As used in the summary of the material terms of the merger agreement below and elsewhere in this proxy statement, unless the context requires otherwise, references to our “subsidiaries” do not include certain joint venture entities in which we, directly or indirectly, through our subsidiaries own interests.

Structure

     The Company Merger

     At the merger effective time, we will merge with and into REIT Merger Sub, our separate corporate existence will cease, and REIT Merger Sub will survive the merger and continue to exist as a wholly owned subsidiary of Moon Parent. All of our and REIT Merger Sub’s properties, assets, rights, privileges, immunities, powers and purposes, and all of our and REIT Merger Sub’s liabilities, will become those of REIT Merger Sub. Following the completion of the company merger, our common shares will be de-listed from the New York Stock Exchange and deregistered under the Exchange Act and will no longer be publicly traded.

     The Operating Partnership Merger

     At the operating partnership merger effective time, Partnership Merger Sub, which was formed in connection with the mergers and has no assets or liabilities, will merge with and into the operating partnership, Partnership Merger Sub’s separate existence will cease, and the operating partnership will survive the operating partnership merger. At the operating partnership merger effective time, all of the operating partnership’s and Partnership Merger Sub’s property, whether real, personal or mixed, will be vested in the surviving partnership and all of the operating partnership’s and Partnership Merger Sub’s liabilities will attach to the surviving partnership.

Effective Times

     The company merger effective time will occur under all applicable laws upon the later of (1) the acceptance for record of the articles of merger with respect to the company merger by the county clerk of Tarrant County, Texas, in accordance with the Texas REIT Act, (2) the time the certificate of merger in respect of the company merger is filed with the Secretary of State of the State of Delaware and (3) such later time agreed by the parties to the merger agreement and designated in the articles of merger and certificate of merger.

     The operating partnership merger effective time will occur at (1) the time that the operating partnership files a certificate of merger with respect to the operating partnership merger with the Secretary of State of the State of Delaware or (2) a later time agreed to by the parties and designated in such filing in accordance with the Delaware Revised Uniform Limited Partnership Act.

     The closing will occur as promptly as practicable, but in no event later than the second business day after all of the conditions set forth in the merger agreement have been satisfied or waived (other than those conditions which by their terms are required to be satisfied or waived at the closing), unless the parties otherwise agree. Moon Parent, REIT Merger Sub and Partnership Merger Sub may, by giving written notice to us and the operating partnership at least three business days prior to the date specified by the parties to the merger agreement for the closing of the mergers, delay the closing to a date no later than the earlier of (x) the last business day of the month in which all of the conditions set forth in the merger agreement have been satisfied or waived and (y) October 31, 2007.

Organizational Documents

     The operating agreement of REIT Merger Sub in effect immediately prior to the company merger effective time will be the operating agreement of the surviving entity until amended after the merger effective time in accordance with applicable law. The certificate of limited partnership of the operating partnership will be the certificate of limited partnership of the surviving partnership until amended following the effective time of the operating partnership merger as provided in the merger agreement and in accordance with applicable law. The limited partnership agreement of Partnership Merger Sub, as in effect immediately prior to the effective time of the operating partnership merger, will be the limited partnership agreement of the surviving partnership until further amended in accordance with its terms or by applicable law.

Management

     The managing member of REIT Merger Sub, if any, immediately prior to the merger effective time will be the initial managing member of the surviving entity. Moon Parent will be the general partner of the operating partnership after the operating partnership merger effective time.

Treatment of Shares, Options to Purchase Common Shares, Options to Purchase Partnership Units and Restricted Unit Awards

     Common Shares

     At the company merger effective time, each of our common shares issued and outstanding immediately prior to the merger effective time and not subject to dissenter’s rights (other than shares held by us or our subsidiaries or REIT Merger Sub, which will be automatically canceled and retired and cease to exist with no payment being made) will automatically be canceled and converted into the right to receive cash, without interest, equal to $22.80 per common share, reduced by the per share amount, if any, distributed to holders of our common shares relating to distributions we make that are necessary for us either to maintain our status as a real estate investment trust or to avoid the imposition of corporate level tax or excise tax under the U.S. Internal Revenue Code of 1986, as amended.

     Preferred Shares

     Prior to the company merger effective time, each of the Series A and Series B preferred shares issued and outstanding will be redeemed by us for cash pursuant to the terms of such securities; to the extent such redemptions do not occur, the Series A preferred shares issued and outstanding immediately prior to the company merger effective time will automatically be converted into, and canceled in exchange for, the right to receive the greater of (A) the redemption price per share specified in our charter documents and (B) the common share merger consideration on an as-converted basis pursuant to the terms of our charter documents, and the Series B preferred shares issued and outstanding immediately prior to the company merger effective time will automatically be converted into, and canceled in exchange for, the right to receive the redemption price per share specified in our charter documents.

     Options to Purchase Common Shares and Partnership Units; Restricted Unit Awards

     In connection with the company merger:

     Options to Purchase Common Shares

     Any unexercised and unexpired option to purchase common shares issued under our equity incentive plans held immediately prior to the company merger effective time (regardless of whether it is vested or exercisable at that time) will, at the company merger effective time, be canceled upon the surrender and cancellation of the option agreement representing the option, together with the delivery of a written instrument executed by the holder thereof, and, in exchange therefor, REIT Merger Sub will pay to the holder thereof cash in an amount equal to the product of (A) the number of common shares issuable upon exercise of such option (assuming full vesting) and (B) the excess,

if any, of the common share merger consideration over the exercise price per common share, which cash payment will be treated as compensation and will be net of any applicable federal or state withholding tax.

     In connection with the operating partnership merger:

     Options to Purchase Partnership Units

     Any unexercised and unexpired option to purchase partnership units issued under our equity incentive plans held immediately prior to the company merger effective time (regardless of whether it is vested or exercisable at that time) will, at the company merger effective time, be canceled upon the surrender and cancellation of the option agreement representing the option, together with the delivery of a written instrument executed by the holder thereof, and, in exchange therefor, Partnership Merger Sub will pay to the holder thereof cash in an amount equal to the product of (A) the number of partnership units issuable upon exercise of such option (assuming full vesting) and (B) the excess, if any, of the operating partnership merger consideration over the exercise price per partnership unit, which cash payment will be treated as compensation and will be net of any applicable federal or state withholding tax.

     Restricted Unit Awards

     Other than certain restricted unit awards forfeited prior to the company merger effective time, any unpaid and unexpired restricted unit award held immediately prior to the company merger effective time (regardless of whether it is vested at that time) will, at the operating partnership merger effective time, be canceled upon the surrender of the agreement representing the restricted unit award (or a reasonably satisfactory affidavit of lost agreement), together with the delivery of a written instrument executed by the holder thereof, and, in exchange therefor, Partnership Merger Sub will pay to the holder thereof cash in an amount, without interest, per restricted unit equal to the operating partnership merger consideration, plus accrued and unpaid dividends.

Treatment of Partnership Units in Crescent Real Estate Equities Limited Partnership

     In connection with the operating partnership merger, at the operating partnership merger effective time, each limited partnership unit in the operating partnership issued and outstanding immediately prior to such time (other than units held by us, the general partner of the operating partnership or any of our subsidiaries, and restricted units) will automatically be canceled and converted into the right to receive cash, without interest, equal to $45.60 per unit (assuming we do not make any distributions that are necessary for us either to maintain our status as a real estate investment trust or to avoid the imposition certain U.S. federal tax), which is the product of (A) the common share merger consideration multiplied by (B) two.

     This proxy statement does not constitute a solicitation of consents in respect of the operating partnership merger and does not constitute an offer to exchange or convert any partnership units in the operating partnership that you may own for or into newly issued preferred units or common units in the surviving operating partnership.

No Further Ownership Rights

     At the company merger effective time, holders of our common shares, restricted units, options to purchase our common shares, partnership units and options to purchase partnership units will cease to be, and have no rights as, our shareholders or limited partners of the operating partnership other than the right to receive the applicable merger consideration. Upon the redemption of our Series A and Series B preferred shares immediately prior to the company merger effective time, holders will cease to be, and have no rights as, our shareholders other than the right to receive the redemption price to be paid to the holders of our Series A and Series B preferred shares. The merger consideration paid to our shareholders and holders of restricted units, options to purchase our common shares, partnership units and options to purchase partnership units in accordance with the exchange and payment procedures contained in the merger agreement will be deemed to have been paid in full satisfaction of all rights and privileges pertaining to our common shares, our Series A and Series B preferred shares, the restricted units, the options to purchase our common shares, the partnership units and the options to purchase partnership units.

Payment Procedures

     On or before the merger effective time, REIT Merger Sub and Partnership Merger Sub will deposit the merger consideration for the benefit of the holders of our common shares, Series A and Series B preferred shares, options to purchase common shares, options to purchase operating partnership units, restricted unit awards, and operating partnership units, respectively, with a paying agent reasonably satisfactory to us. Promptly after the merger effective time (but in any event within five business days), the surviving entity will cause the paying agent to mail a letter of transmittal and, if applicable, instructions for surrendering certificates for our common shares, Series A and Series B preferred shares, options to purchase common shares, options to purchase operating partnership units, restricted unit awards, and operating partnership units to each holder thereof. The letter of transmittal and instructions or notice of redemption will tell you how to surrender your common share certificates, Series A and Series B preferred share certificates, options to purchase common shares, options to purchase operating partnership units, restricted unit awards, and any interest in operating partnership units, as applicable, in exchange for the applicable merger consideration, cash payment or redemption price.

You should not return your share certificates with the enclosed proxy card, and you should not forward your share certificates to the paying agent without a letter of transmittal.

     You will not be entitled to receive the merger consideration until you surrender your share certificate or certificates to the paying agent, together with a duly completed and executed letter of transmittal and any other documents as the paying agent may reasonably require. The merger consideration may be paid to a person other than the person in whose name the corresponding certificate is registered if the certificate is properly endorsed or is otherwise in the proper form for transfer. In addition, the person requesting payment must either pay any applicable stock transfer taxes or establish to the satisfaction of Moon Parent that such stock transfer taxes have been paid or are not applicable.

     No interest will be paid or will accrue on the cash payable upon surrender of the certificates. Each of the paying agent, REIT Merger Sub and Moon Parent will be entitled to deduct and withhold any applicable taxes from the merger consideration. At the merger effective time or redemption effective time, our share transfer books will be closed, and there will be no further registration of transfers of our common shares or Series A and Series B preferred shares.

     None of the paying agent, Moon Parent, REIT Merger Sub, Partnership Merger Sub, the operating partnership or any of their respective employees, officers, trust managers, agents or affiliates will be liable to any person for any (i) common share merger consideration, (ii) operating partnership merger consideration, (iii) any cash payments in exchange for restricted unit awards, (iv) any cash payments in exchange for options to purchase common shares or operating partnership units, or (v) any cash payments to redeem the Series A and Series B preferred shares pursuant to the terms of such securities delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. Any portion of (i) common share merger consideration, (ii) operating partnership merger consideration, (iii) any cash payments in exchange for restricted unit awards, (iv) any cash payments in exchange for options to purchase common shares or operating partnership units, or (v) any cash payments to redeem the Series A and Series B preferred shares pursuant to the terms of such securities deposited with the paying agent that remains undistributed to the holders of our common shares for 12 months after the merger effective time will be delivered to REIT Merger Sub. Holders of our common shares prior to the applicable merger who have not complied with the exchange and payment procedures contained in the merger agreement within twelve months after the merger effective time may only look to REIT Merger Sub for the payment of the company share merger consideration or any cash payments to redeem the Series A and Series B preferred shares pursuant to the terms of such securities.

     If you have lost a certificate, or if it has been stolen or destroyed, then before you are entitled to receive the merger consideration, you will be required to deliver an affidavit stating that fact and, if required by REIT Merger Sub or paying agent, to post a bond in the form and amount reasonably required by REIT Merger Sub or the paying agent as indemnity against any claim that may be made against REIT Merger Sub and the paying agent on account of the alleged loss, theft or destruction of such certificate.

Representations and Warranties

     We and the operating partnership made customary representations and warranties in the merger agreement that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement or in the disclosure letter delivered in connection therewith. These representations and warranties relate to, among other things:

	•		due organization, valid existence, good standing and power and authority to carry on the businesses of each of us, the operating partnership, our other subsidiaries and certain other entities in which we own equity interests (which we refer to as our joint ventures);
	•		our charter and bylaws and the similar organizational documents of the operating partnership, our other subsidiaries and certain of our joint ventures;
	•		our capital structure and the capital structure of the operating partnership and our ownership in our other subsidiaries and joint ventures and the absence of any encumbrances on our ownership of the equity interests of our subsidiaries and our joint ventures;
	•		our and the operating partnership’s power and authority to execute and deliver, and to perform our and the operating partnership’s obligations under, the merger agreement and to consummate the transactions contemplated by the merger agreement;
	•		the enforceability of the merger agreement against us;
	•		the vote of our shareholders required in connection with the approval of the company merger and the merger agreement, the approval of the merger agreement and the transactions contemplated by the merger agreement by us as a limited partner in the operating partnership of the operating partnership merger;
	•		the absence of conflicts with, or breaches or violations of, our, the operating partnership’s, our other subsidiaries’ or joint ventures’ organizational documents, and laws, permits and certain contracts applicable to us, the operating partnership, our other subsidiaries and our joint ventures as a result of entering into the merger agreement or performing our or the operating partnership’s obligations under the merger agreement;
	•		consents and approvals of governmental entities required as a result of executing and delivering the merger agreement and performing our and the operating partnership’s obligations under the merger agreement;
	•		our SEC filings since January 1, 2004 and the financial statements contained therein;
	•		the absence of any material adverse effect and certain other changes and events since December 31, 2006;
	•		the accuracy and completeness of information we and the operating partnership, our other subsidiaries and our joint ventures have supplied for inclusion in this proxy statement or any other document to be filed with the SEC or provided to holders of operating partnership units in connection with the transactions contemplated by the merger agreement;
	•		possession of all permits necessary to operate our and our subsidiaries’ properties and carry on our and our subsidiaries’ business and the absence of any conflict with, or default, breach or violation of, applicable laws or such permits;
	•		tax matters affecting us, the operating partnership, our other subsidiaries and our joint ventures;

	•		the nature, extent and scope of our and our subsidiaries’ employee benefit plans;
	•		the absence of material litigation or orders against us, the operating partnership, our other subsidiaries or our joint ventures;
	•		actions taken by us and the operating partnership to exempt the merger agreement, the mergers and the other transactions contemplated thereby from the requirements of any antitakeover statute or regulation enacted under state or federal laws in the United States or any takeover provision in our charter and bylaws and the similar organizational documents of the operating partnership, our other subsidiaries, our joint ventures and other entities that would otherwise prohibit, hinder or delay such transactions;
	•		intellectual property used by, owned by or licensed by us, our subsidiaries, our joint ventures and certain affiliated entities;
	•		real property owned and leased by us, our subsidiaries and our joint ventures; our and our subsidiaries’ and our joint ventures’ leases, ground leases, loan documents, franchise and license agreements, title insurance policies, construction projects, contracts to sell or purchase property and management agreements;
	•		personal property owned by us, our subsidiaries and our joint ventures;
	•		environmental matters affecting us, our subsidiaries and our joint ventures;
	•		labor matters affecting us, our subsidiaries and our joint ventures;
	•		our, our subsidiaries’ and our joint ventures’ material contracts, the enforceability of those contracts and the absence of any breach or violation of, or default under, any material contract;
	•		our, our subsidiaries’ and our joint ventures’ insurance policies;
	•		the absence of any undisclosed material related-party transactions among us, our subsidiaries or our joint ventures;
	•		the receipt by us of a fairness opinion from Greenhill to the effect that, as of the date of the merger agreement, the common share merger consideration to be received by holders of our common shares and the operating partnership merger consideration to be received by the operating partnership’s limited partners in the operating partnership merger is fair from a financial point of view to such holders;
	•		the absence of any undisclosed broker’s or finder’s fees; and
	•		our board of trust managers’ determination that the company merger is fair and in our and our shareholders’ best interests, approval of the company merger and merger agreement and direction that the company merger and merger agreement be submitted for shareholder approval.

     For the purposes of the merger agreement, “material adverse effect” means any event, circumstance, change or effect that, individually or in the aggregate, is materially adverse to our, our subsidiaries’ and our joint ventures’ business, properties, financial condition or results of operations taken as a whole. Certain of our representations in the merger agreement are qualified by the failure of any representation to be true to the extent that such failure does not result in a material adverse effect.

     A “material adverse effect” will not have occurred, however, as a result of any such event, circumstance, change or effect arising out of or resulting from:

	•		any change in the market price or trading volume of our common shares or our Series A and Series B preferred shares;
	•		any change in general economic or business conditions except to the extent that such changes have a materially disproportionate adverse effect on one or more of our businesses relative to other similarly situated participants in the business or industry in which our business or businesses operate;
	•		any change in financial or securities market conditions generally, except to the extent that such changes have a materially disproportionate adverse effect on one or more of our businesses relative to other similarly situated participants in the business or industry in which our business or businesses operate;
	•		any events, circumstances, changes or effects generally affecting the United States commercial real estate industry except to the extent that such changes have a materially disproportionate adverse effect on one or more of our businesses relative to other similarly situated participants in the business or industry and in the geographic region in which our business or businesses operate;
	•		any change in legal, political or regulatory conditions generally or in any geographic region in which we or any of our subsidiaries or joint ventures operate;
	•		the announcement of the execution of the merger agreement or anticipation of the mergers or the pendency thereof;
	•		any events, circumstances, changes or effects arising from the taking of any action required or expressly contemplated by the merger agreement or the failure to take any action prohibited by the merger agreement;
	•		acts of war, armed hostilities, sabotage or terrorism, or any escalation of any such acts of war, armed hostilities, sabotage or terrorism threatened or underway as of the date of the merger agreement, except to the extent that such changes have a materially disproportionate adverse effect on one or more of our businesses relative to other similarly situated participants in the business or industry and in the geographic region in which our business or businesses operate;
	•		changes in law or United States generally accepted accounting principles and practices as in effect from time to time consistently applied; or
	•		any failure to meet any internal or published projections, forecasts or revenue or earnings predictions for any period.

     The merger agreement also contains customary representations and warranties made by Moon Parent, REIT Merger Sub and Partnership Merger Sub that are subject, in some cases, to specified exceptions and qualifications. The representations and warranties relate to, among other things:

	•		their due organization, valid existence, good standing and power and authority to carry on their businesses;
	•		the ownership of REIT Merger Sub and Partnership Merger Sub and absence of prior conduct of activities or business of REIT Merger Sub and Partnership Merger Sub;
	•		their power and authority to execute and deliver, and to perform their obligations under, the merger agreement and to consummate the transactions contemplated by the merger agreement;
	•		the enforceability of the merger agreement against them;

	•		the absence of conflicts with, or breaches or violations of, their organizational documents, laws, or certain contracts as a result of entering into the merger agreement or consummating the company merger;
	•		consents and approvals of governmental entities required as a result of executing and delivering the merger agreement and performing their obligations under the merger agreement;
	•		the accuracy and completeness of information they have supplied for inclusion in this proxy statement or any other document to be filed with the SEC or provided to holders of operating partnership units in connection with the transactions contemplated by the merger agreement;
	•		the absence of material litigation or orders against them;
	•		their capital resources, including in particular the equity funding and the debt financing which will provide Moon Parent with acquisition financing at the merger effective time sufficient to consummate the mergers;
	•		the guarantees executed by affiliates of Morgan Stanley Real Estate;
	•		their ownership of our common shares or any other securities of ours and of our subsidiaries; and
	•		clarification that neither of we nor the operating partnership will pay for any broker’s or finder’s fees based upon arrangements made by or on behalf of Moon Parent, REIT Merger Sub or Partnership Merger Sub.

     The representations and warranties of each of the parties to the merger agreement will expire upon the closing of the company merger.

Covenants Relating to Conduct of Our Business

     Under the merger agreement, we have agreed that, subject to certain exceptions in the merger agreement and the disclosure letter delivered in connection therewith, between May 22, 2007 and the merger effective time, we, the operating partnership, our other subsidiaries and our joint ventures will:

	•		conduct our business only in the ordinary course of business consistent with past practice; and
	•		use commercially reasonable efforts (A) to preserve substantially intact our business organizations, (B) to keep available the services of our present officers, managers and employees, and (C) to maintain the current, existing relations and goodwill with tenants, joint venture partners, management companies, lenders, franchisors, customers, suppliers and others having business dealings with us.

     We have also agreed that during the same time period, subject to certain exceptions set forth in the merger agreement or unless Moon Parent gives its prior written consent, we, the operating partnership, our other subsidiaries and our joint ventures will not, among other things:

•

subject to certain exceptions, (i) authorize for issuance, issue or sell, or agree or commit to issue or sell (A) any shares of any class of our beneficial interests, capital stock or other equity interests or any of the operating partnership’s, our other subsidiaries’ and our joint ventures’ beneficial interests, capital stock or other equity interests, or (B) any options, warrants, convertible securities or other rights of any kind to acquire any shares of such beneficial interests, capital stock or other equity interests, or any other ownership interest, of us, the operating partnership, our other subsidiaries or our joint ventures or (ii) repurchase, redeem or otherwise acquire any securities or equity equivalents;

	•		reclassify, combine, split or subdivide any of our shares of beneficial interest, any partnership interests in the operating partnership or other equity interest of any of our subsidiaries and certain of our joint ventures;
	•		declare, set aside, make or pay dividends or other distributions with respect to our shares of beneficial interest, any partnership interests in the operating partnership or other equity securities of any of our subsidiaries and certain of our joint ventures, other than (a) dividends or distributions by any of our subsidiaries and our joint ventures paid solely to us or any of our subsidiaries or joint ventures , (b) dividends on our Series A preferred shares declared and paid in accordance with the terms thereof and corresponding distributions on Series A preferred partnership units consistent with past practice, (c) dividends on our Series B preferred shares declared and paid in accordance with the terms thereof and corresponding distributions on Series B preferred partnership units consistent with past practice, and (d) dividends on our trust preferred securities declared and paid in accordance with the terms thereof. and corresponding to payments of interest on our junior subordinated notes;
	•		adopt or propose any amendment to our, the operating partnership’s, our other subsidiaries’ or certain of our joint ventures’ organizational documents, other than amendments to the operating partnership’s partnership agreement necessary to reflect certain transfers or exchanges of partnership interests by limited partners in the operating partnership;
	•		acquire (by merger, consolidation, purchase of stock or assets or otherwise), or agree or enter into an option to so acquire, in a single transaction or in a series of related transactions, any person, entity or division thereof, or otherwise acquire or agree to acquire any real property or material assets or (ii) subject to certain exceptions, merge, consolidate or enter into any other business combination transaction with any person;
	•		other than pursuant to certain disclosed contracts in effect or previously disclosed to Moon Parent, make or agree to make any capital expenditure other than expenditures in the ordinary course of business;
	•		subject to certain conditions, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of (by merger, consolidation, sale of stock or assets or otherwise), or agree to transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of, any entity, business or assets, except (i) for any such action by our resort residential business with respect to residential lots and condominium units and land and retail projects in the ordinary course of business consistent with past practice or (ii) as reasonably required, in the opinion of our tax counsel following consultation with Moon Parent and its counsel, to maintain our status as a REIT;
	•		incur any indebtedness at the Crescent-level, any subsidiary-level and, with respect to certain of our joint ventures, at the joint-venture level for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any “person” for borrowed money, except for (i) indebtedness for borrowed money incurred in the ordinary course of business, which shall be deemed to include, without limitation, draws under the Company’s revolving credit facilities in existence as of May 22, 2007 in the ordinary course of business and refinancing of mortgage indebtedness secured by one or more of certain of our properties as such loans become due and payable in accordance with their terms or (ii) renewals of maturing indebtedness on terms disclosed to Moon Parent;
	•		make any loans, advances or capital contributions to, or investments in, any other “person” (other than us, our subsidiaries and certain of our joint ventures), except certain loans, advances or investments disclosed to Moon Parent on May 22, 2007 and loans, advances or investments made to certain of our joint ventures in the resort residential business in the ordinary course of business consistent with past practice and consistent with the budgets provided to Moon Parent prior to May 22, 2007;

	•		increase the salary, wages or other compensation payable or to become payable to or the fringe benefits of our, the operating partnership’s, our other subsidiaries’ and our joint ventures’ trust managers, directors, officers or employees or (ii) enter into any employment, change in control, consulting or severance agreement with, or establish, adopt, enter into or amend any benefit plan, incentive plan, bonus, profit-sharing, thrift, stock option, restricted stock, pension, retirement, deferred compensation, employment, change in control, termination, or severance plan, agreement, policy or arrangement for the benefit of, any director, trust manager, officer or employee of ours, except, in each case, as may be required by the terms of any such plan, agreement, policy or arrangement existing and disclosed to Moon Parent on May 22, 2007 or to comply with applicable law, or in accordance with our Change in Control Separation Plan;
	•		subject to certain exceptions, take any material action with respect to our accounting policies or procedures;
	•		subject to certain exceptions, make any material tax election or settle or compromise any material tax liability;
	•		enter into a new lease, sublease or license agreement or terminate, materially modify or amend any lease that relates to in excess of 25,000 square feet of net rentable area at any of our, our subsidiaries’ and our joint ventures’ properties, provided that any failure by Moon Parent to object to a new lease, sublease or license agreement in writing within three business days of being provided with same shall constitute written consent of such lease, sublease or license agreement;
	•		subject to certain exceptions, waive, release, settle or compromise any pending or threatened material legal actions against us, the operating partnership, any our other subsidiaries, and certain of our joint ventures;
	•		adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring or recapitalization of us, the operating partnership or any of our other subsidiaries;
	•		subject to certain exceptions, modify, amend or terminate, or grant any material consent under, any material contract or ground leases, third party franchise agreement, joint venture agreement or management agreement or enter into any new contract or enter into any new ground leases, third party franchise agreement, or management agreement or document pertaining to a management agreement;
	•		subject to certain exceptions, prepay any of our long-term indebtedness or pay, discharge or satisfy any material claims, liabilities or obligations;
	•		take any action with respect to certain portfolio sales that is not expressly required by the related portfolio purchase and sale agreements or take any action that could reasonably be expected to frustrate or delay the consummation of such portfolio sales;
	•		amend, modify or terminate, or grant any material consent or waiver under, any agreement or arrangement relating to any proposed disposition disclosed to Moon Parent other than closing conditions to the buyer’s obligation to close the disposition under the related purchase and sale agreement;
	•		fail to maintain in full force and effect the existing insurance policies covering us, our subsidiaries, certain of our joint ventures, and our and their respective properties, assets and businesses;

	•		modify, amend or terminate, or grant any material consent under, any contract with any of our affiliates or modify any material relationship between us and our affiliates, including the manner in which we and our affiliates own or hold our respective assets;
	•		enter into, modify, amend or breach any tax protection agreement;
	•		subject to certain exceptions, sell, transfer or otherwise dispose of any ownership interest in any of our subsidiaries or joint ventures, or create, establish, form or invest in any new subsidiary or acquire any interests in any new joint venture;
	•		grant any consent or waiver to any matter for which consent or waiver is requested with respect to certain of our affiliates or exercise any rights in connection with or with respect to our interests in certain of our affiliates;
	•		take any action, make any filing or material election with respect to, or appeal or fail to appeal any real property tax relating to any real property owned by us, any our subsidiaries or any of our joint ventures; or
	•		announce an intention, enter into an agreement or otherwise make a commitment to do any of the foregoing.

No Solicitation of Transactions

     We have agreed that, from May 22, 2007 to the merger effective time and subject to specified exceptions described below, neither we, the operating partnership nor any of our other subsidiaries or our or their officers, managers, directors, employees, agents, investment bankers, financial advisors, attorneys, accountants or other representatives will, directly or indirectly:

	•		initiate, solicit, knowingly encourage or knowingly facilitate any inquiries or offers with respect to, or may reasonably be expected to lead to the submission of, any acquisition proposal; or
	•		participate in any discussions or negotiations regarding, or that reasonably may be expected to lead to, or furnish to any person any non-public information with respect to, or otherwise cooperate with respect to, any acquisition proposal.

     For purposes of the merger agreement, “acquisition proposal” means any proposal or offer (other than the mergers or any of the other transactions contemplated by the merger agreement) for any:

	•		direct or indirect acquisition of more than 25% of our and our subsidiaries assets, taken as a whole, or more than 25% of our or the operating partnership’s outstanding equity securities;
	•		any tender offer or exchange offer that would result in any person or “group” beneficially owning 25% or more of our or the operating partnership’s outstanding equity securities;
	•		any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving us pursuant to which our shareholders prior to consummation of such transaction would hold less than 75% of the outstanding shares or equity interests of the surviving or resulting person or parent thereof; or
	•		any transaction which is similar in form, substance or purpose to any of the foregoing transactions.

     Prior to the approval of the company merger by our shareholders, following the receipt of an unsolicited written acquisition proposal, we may contact such person and its advisors, to determine whether such acquisition proposal is reasonably likely to result in a superior proposal and, if our board of trust managers determines in good

faith, after consultation with its legal and financial advisors, that such acquisition proposal is reasonably likely to result in a superior proposal, our board of trust managers may:

	•		furnish non-public information with respect to us and our subsidiaries to such person who made such proposal, provided that we have caused such person to enter into a confidentiality agreement with us containing terms that are at least as favorable to us as those contained in the confidentiality agreement we signed with an affiliate of Moon Parent and we previously disclose the same non-public information to Moon Parent if not previously disclosed;
	•		participate in negotiations regarding such proposal;
	•		following receipt of a written acquisition proposal that constitutes a superior proposal, recommend to our shareholders that they approve such superior proposal and, in connection therewith, withdraw or modify in a manner adverse to Moon Parent, or fail to make, our board of trust managers’ recommendation that our shareholders approve the merger agreement and the company merger; or
	•		other than in connection with an acquisition proposal, if our board of trust managers determines, in good faith, that the failure to do so would be inconsistent with its duties under applicable law, withdraw or modify in a manner adverse to Moon Parent, or fail to make, our board of trust managers’ recommendation that our shareholders approve the merger agreement and the company merger.

     For purposes of the merger agreement, “superior proposal” means a written acquisition proposal made by a third party:

	•		that relates to at least 50% of the voting power of our capital stock or all or at least 50% of our assets; and
	•		which our board of trust managers determines in its good faith judgment, after consultation with its financial advisor and after taking into account all the terms and conditions of the acquisition proposal, to be more favorable to our shareholders from a financial point of view than the company merger (including any alterations to the merger agreement agreed to in writing by Moon Parent in response to such an acquisition proposal and taking into account any termination fee and expense reimbursement under the merger agreement).

     We have agreed to promptly notify Moon Parent (but no less than 24 hours after initial receipt) of our, the operating partnership’s, our other subsidiaries’ or our representative’s receipt of any acquisition proposal, or any material modification or amendment to any acquisition proposal. In our notice to Moon Parent, we have agreed to provide a copy of any documents or agreements provided in contemplation of an acquisition proposal, the identity of the Person making such acquisition proposal and our intentions, if any, to furnish information or enter into discussions with such Person. We have also agreed to keep Moon Parent reasonably informed on a prompt basis of the status of and any material developments regarding any such acquisition proposal.

Employee Benefits

     For a period of twelve (12) months following the closing date, Moon Parent has agreed that it will cause REIT Merger Sub to provide all employees employed by us or our subsidiaries as of the merger effective time and who continue to be employed by REIT Merger Sub or its successors or assigns or any of their subsidiaries with cash compensation (including base compensation and annual bonus) and benefits (including group health, life, disability, and severance and retention plans, but excluding personal perquisites, equity compensation or profits or promoted interests or comparable forms of compensation) that are not less favorable in the aggregate to such employee or employee’s dependents or beneficiaries as provided prior to the merger effective time.

     Moon Parent has agreed to honor, and to cause REIT Merger Sub to honor, all severance, change of control and similar plans and agreements in accordance with their terms as in effect immediately prior to the merger effective time.

     In addition, Moon Parent has agreed to:

	•		provide each of our active employees with credit for service with us and our subsidiaries for purposes of vesting and eligibility (but not accrual of benefits) with respect to any employee benefit plans maintained by Moon Parent or its subsidiaries under which our active employees may be eligible to participate after the merger effective time, to the same extent as such active employee was entitled to credit for such service under the respective Crescent benefit plans, provided that such crediting of service shall not operate to duplicate any benefits; and
	•		for purposes of each Moon Parent or subsidiary plan providing health benefits to any active employee, cause such active employee to receive credit for all amounts paid by such active employee for purposes of satisfying all deductible, co-payments and out-of-pocket maximums as though such amounts had been paid in accordance with the terms and conditions of the parallel plan, program or arrangement of Moon Parent or its subsidiaries.

Agreement to Take Further Action

     Subject to the terms and conditions of the merger agreement and in accordance with applicable laws, each party to the merger agreement has agreed to use its reasonable efforts to take, or to cause to be taken, all appropriate actions and to do, or to cause to be done, all things necessary, proper or advisable under applicable laws to consummate the mergers, including using its commercially reasonable efforts to obtain all permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with us, our subsidiaries and our joint ventures as (i) are necessary, proper or advisable for the consummation of the mergers and the other transactions contemplated by the merger agreement and to fulfill the conditions to the mergers (ii) disclosed to Moon Parent on May 22, 2007 or (iii) required to prevent a material adverse effect on us.

     Each party to the merger agreement has agreed to cooperate and use its reasonable best efforts to defend through litigation on the merits any legal action, including administrative or judicial action, asserted by any party in order to avoid the entry of, or to have vacated, lifted, reversed, terminated or overturned any decree, judgment, injunction or other order that in whole or in part restricts, delays, prevents or prohibits consummation of the mergers and the other transactions contemplated thereby, including by vigorously pursuing all available avenues of administrative and judicial appeal.

     Furthermore, the parties have agreed to use their respective commercially reasonable efforts to obtain any third-party consents:

	•		necessary, proper or advisable to consummate the transactions contemplated by the merger agreement;
	•		disclosed in the disclosure letter delivered in connection with the merger agreement; or
	•		required to prevent a material adverse effect on us.

     In addition, we and the operating partnership have agreed that, in the event that we, the operating partnership, any of our other subsidiaries or our joint ventures fail to obtain any of the third-party consents mentioned above, we will use our commercially reasonable efforts and take all such actions reasonably requested by Moon Parent to minimize any adverse effect on us, the operating partnership, any of our other subsidiaries or our joint ventures, Moon Parent and its affiliates and their respective businesses as a result of the failure to obtain such consent.

     Neither we, the operating partnership, any of our other subsidiaries nor our joint ventures will be permitted to pay or commit to pay any consideration, make any commitment or incur any liability or other obligation in

connection with obtaining any approval or consent from any non-governmental third party unless Moon Parent has provided its prior written consent, which Moon Parent cannot unreasonably withhold. In addition, neither Moon Parent nor its affiliates will be required to pay any consideration, make any commitment or incur any liability or other obligation in connection with obtaining any approval or consent from any non-governmental third party.

     We have agreed to use commercially reasonable efforts to cooperate with Moon Parent in obtaining estoppel certificates and subordination and nondisturbance agreements from certain tenants prior to the closing of the mergers.

     We have agreed to notify Moon Parent promptly if any of our or our subsidiaries’ tenants provide us with notice of their intent to terminate any lease with us in accordance with its terms.

     Each party to the merger agreement has agreed to cooperate, promptly following May 22, 2007, in the preparation and establishment of mutually acceptable guidelines with respect to us or any of our subsidiaries entering into any new lease, sublease or license agreement (including renewals) at a Crescent property.

Restructuring Transactions

     Subject to certain conditions, we will use commercially reasonable efforts to, and will use commercially reasonable efforts to cause each of our subsidiaries and our joint ventures to, take any such actions as are reasonably requested by Moon Parent in connection with structuring the transactions contemplated by the merger agreement, including, without limitation:

	•		creating one or more legal entities in the form requested by Moon Parent;
	•		converting the legal form or tax classification of one or more of our subsidiaries or our joint ventures;
	•		transferring ownership of one or more properties or entities among us and/or any of our subsidiaries, joint ventures or affiliates;
	•		selling or causing to be sold one or more designated properties or all of the stock, partnership interests or limited liability interests owned, directly or indirectly, by us in one or more designated properties, provided that the timing and terms of any such sale shall be consented to by Moon Parent and us; and
	•		reasonably assisting Moon Parent in preparing for the post-closing sale of our assets by Moon Parent.

     Moon Parent, REIT Merger Sub and Partnership Merger Sub will, on a joint and several basis, indemnify and hold harmless us, our subsidiaries, our joint ventures and our and their representatives from and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by us or them in connection with or as a result of the activities described directly above.

WARN Act Notices

     Following such time as Moon Parent, REIT Merger Sub and Partnership Merger Sub have communicated to any of our current or former employees or any current or former employee of our subsidiaries or any third party manager of any property owned by us who Moon Parent, in its discretion, believes should receive a notice pursuant to the Worker Adjustment and Retraining Notification Act (and any similar state or local “mass layoff” or “plant closing” law) (“WARN”) their intent to terminate such employee’s employment after the company merger effective time and whether such employee will receive severance payments, we have agreed that we will, at the written request of Moon Parent, cause to be delivered to (i) such employee, and (ii) any governmental official(s) designated by Moon Parent, a notice pursuant to WARN, including any supplemental notices thereunder. We will deliver such notice(s) in a form requested by Moon Parent within two (2) business days of Moon Parent’s request. We have agreed to reasonably cooperate with Moon Parent as necessary to ensure compliance with WARN.

Conditions to the Mergers

     The obligations of the parties to complete the mergers are subject to the following mutual conditions:

	•		approval of the proposal to approve the merger agreement and the company merger by the requisite shareholder vote;
	•		approval of the proposal to approve the merger agreement and the operating partnership merger by the requisite affirmative consent of the limited partners of the operating partnership in accordance with the Delaware Revised Uniform Limited Partnership Act, as amended, and the operating partnership agreement;
	•		expiration or termination of any waiting period relating to and acquisition of any material governmental approval, authorization and consents applicable to the consummation of the mergers or the redemptions of our preferred shares; and
	•		no governmental authority in the United States shall have enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling (whether temporary, preliminary or permanent) which is then in effect and makes consummation of the redemptions of our preferred shares or the mergers illegal or prohibits consummation of the redemptions of our preferred shares or the mergers.

     The obligations of Moon Parent, REIT Merger Sub and Partnership Merger Sub to complete the mergers are subject to the following additional conditions:

	•		our and the operating partnership’s representations and warranties that (a) are not made as of a specific date shall be true and correct as of the date of the merger agreement and as of the closing, as though made on and as of the date of closing, and (b) are made as of a specific date shall be true and correct as of such date, except where the failure of our representations and warranties to be true and correct in all respects without regard to any materiality or material adverse effect qualifications would not in the aggregate have a material adverse effect, provided that certain representations and warranties pertaining to our capitalization and severance arrangements must be true and correct in all material respects as of the closing
	•		the performance, in all material respects, by us and the operating partnership of all our respective material obligations under the merger agreement and compliance, in all material respects, with the material agreements and covenants to be performed or complied with by us and the operating partnership under the merger agreement;
	•		the receipt by Moon Parent of a certificate signed on behalf of each of us and the operating partnership by one of our officers and an officer of the operating partnership , as applicable, with respect to the truth and correctness of our representations and warranties, the performance of our obligations under the merger agreement and compliance, in all material respects, with the material agreements and covenants to be performed or complied with under the merger agreement;
	•		the receipt of a tax opinion of our counsel, Pillsbury Winthrop Shaw Pittman LLP, opining that (a) we have been organized and have operated in conformity with the requirements for qualification as a REIT under the Code, commencing with our taxable year ended December 31, 1994 and (b) beginning with our first taxable year ending on December 31, 1994 through the closing date, neither we nor any of our subsidiaries has held any assets the disposition of which would be subject to rules similar to Section 1374 of the Code as a result of (A) an election under IRS Notice 88-19 or Treasury Regulations Section 1.337(d)-5 or Section 1.337(d)-6 or (B) the application of Treasury Regulations Section 1.337(d)-7;

	•		on the closing date, there shall not exist an event, change or occurrence arising after May 22, 2007 that, individually or in the aggregate, has had, or could reasonably be expected to have, a material adverse effect on us;
	•		since May 22, 2007, there shall not have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the NYSE for a period in excess of 10 hours, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (iii) a commencement or escalation of a war, armed hostilities or other international or national calamity resulting in a major dislocation of financial markets that materially and adversely affects the ability of financial institutions in the United States to extend credit or syndicate loans, or (iv) in the case of any of the foregoing existing as of May 22, 2007, a material acceleration or worsening thereof; provided, however, that (x) the failure of this condition may be invoked by Moon Parent, REIT Merger Sub and Partnership Merger Sub only one time, (y) upon the expiration of 10 business days following the date this condition is invoked by Moon Parent, REIT Merger Sub and Partnership Merger Sub, this condition shall be deemed satisfied and (z) all of the mutual conditions to the closing of the mergers (other than the condition regarding the approval of the operating partnership merger (but only to the extent the failure to satisfy such condition resulted from an intentional breach by Moon Parent, REIT Merger Sub and Partnership Merger Sub of their covenants and agreements required to be performed by them under the merger agreement at or prior to the effective time of the mergers)) shall from the date this condition was invoked by Moon Parent, REIT Merger Sub and Partnership Merger Sub be deemed to have been satisfied or waived by Moon Parent, REIT Merger Sub and Partnership Merger Sub. We refer to this condition as the “market disruption condition”;
	•		the consent regarding the exemption from the share ownership limitations contained in the AmeriCold Realty Trust Declaration of Trust, dated December 24, 2002, as amended, in form and substance acceptable to Moon Parent shall have been obtained;
	•		we and the operating partnership shall have repaid or obtained payoff (or unwinding or termination) letters in form and substance reasonably satisfactory to Moon Parent to permit with respect to certain indebtedness the repayment, defeasance and/or refinancing of such indebtedness, together with any other consents or approvals required in order to allow Moon Parent to repay all such indebtedness on the closing date by the delivery of funds to the holders of such indebtedness; and
	•		all loans made by us and the operating partnership to our respective employees shall have been satisfied and paid in full or the respective borrower shall have delivered such documents and instruments reasonably satisfactory to Moon Parent evidencing an irrevocable commitment to repay in full such loan as of the closing date.

     Our obligation to complete the mergers is subject to the following additional conditions:

	•		the representations and warranties of Moon Parent, REIT Merger Sub and Partnership Merger Sub that (a) are not made as of a specific date shall be true and correct as of the date of the merger agreement and as of the date of the closing, as though made on and as of the closing, and (b) are made as of a specific date shall be true and correct as of such date, except where the failure of their representations and warranties to be true and correct in all respects without regard to any materiality or Moon Parent material adverse effect qualifications would not have a Moon Parent material adverse effect;
	•		the performance, in all material respects, by Moon Parent of all its obligations under the merger agreement and compliance, in all material respects, with the material agreements and covenants to be performed or complied with under the merger agreement; and

•

the receipt by us of a certificate signed by an officer of Moon Parent with respect to the truth and correctness of the representations and warranties of Moon Parent and the performance of its obligations under the merger agreement and compliance, in all material respects, with the material agreements and covenants to be performed or complied with under the merger agreement.

     For the purposes of the merger agreement, “Moon Parent material adverse effect” means any event, circumstance, change or effect that would reasonably be expected to prevent, hinder or materially delay Moon Parent, REIT Merger Sub or Partnership Merger Sub from consummating the mergers or any other transactions contemplated by the merger agreement.

Termination

     The merger agreement may be terminated and the company merger may be abandoned at any time prior to the effective time of the company merger, as follows:

•

by mutual written consent of Moon Parent and us;

     by either Moon Parent or us if:

	•		the company merger has not occurred on or before October 31, 2007, which we refer to as the “drop dead date,” provided that (i) this right will not be available to a party whose failure to fulfill any obligation under the merger agreement materially contributed to the failure of the company merger to occur on or before October 31, 2007 and (ii) if Moon Parent, REIT Merger Sub and Partnership Merger Sub have invoked the market disruption condition and the 10 business-day period contemplated therein would expire on or after October 31, 2007, then the drop dead date shall be the date of the third business day following expiration of such 10 business day period;
	•		any governmental authority in the United States shall have enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling or taken any other action which makes consummation of the redemptions of the Series A and Series B preferred shares or the mergers illegal or otherwise prohibits consummation of such redemptions of the Series A and Series B preferred shares or mergers and is final and non-appealable; or
	•		the requisite vote of our common shareholders to approve the company merger and the other transactions contemplated by the merger agreement upon a vote being taken at a duly convened stockholders meeting is not obtained.

     by Moon Parent if:

	•		each of Moon Parent, REIT Merger Sub and Partnership Merger Sub is not in material breach of its obligations under the merger agreement, and (a) any of our or the operating partnership’s representations and warranties are or become untrue or incorrect such that the closing condition pertaining to our representations and warranties would be incapable of being satisfied by October 31, 2007, or (b) there has been a breach of our or the operating partnership’s covenants or agreements under the merger agreement such that the closing condition pertaining to our performance and compliance with covenants or agreements would be incapable of being satisfied by October 31, 2007;
	•		our board of trust managers withdraws, modifies or changes its recommendation that shareholders vote to approve the merger agreement and the company merger in any manner adverse to Moon Parent;
	•		we enter into an agreement with respect to an acquisition proposal (other than a confidentiality agreement permitted by the merger agreement);

	•		a tender offer or exchange offer for any of our outstanding stock that constitutes an acquisition proposal is commenced by a third party before the requisite shareholder vote is obtained and our board of trust managers does not recommend against acceptance of such tender offer or exchange offer within 10 business days after it is commenced, or in the event of a change in terms of the tender offer, within 10 business days after the announcement of such changes;
	•		we intentionally breach our obligation to call or hold the shareholders’ meeting or cause this proxy statement to be mailed to our shareholders or the operating partnership intentionally breaches its obligation to cause the partnership information statement to be mailed to its limited partners; or
	•		we or our board of trust managers publicly announces the intention to do any of the foregoing.

     by us if:

	•		we are not in material breach of our obligations under the merger agreement, and (a) any of Moon Parent’s, REIT Merger Sub’s or Partnership Merger Sub’s representations and warranties are or become untrue or incorrect such that the closing condition pertaining to their representations and warranties would be incapable of being satisfied by October 31, 2007, or (b) there has been a breach of any of Moon Parent’s, REIT Merger Sub’s or Partnership Merger Sub’s covenants and agreements under the merger agreement such that the closing condition pertaining to their performance and compliance with covenants and agreements would be incapable of being satisfied by October 31, 2007; or
	•		our board of trust managers approves an acquisition proposal so long as:

	o		the requisite shareholder vote for the company merger has not been obtained;
	o		we are not in or have not been in breach of our obligations under the merger agreement with regard to prohibitions on soliciting acquisition proposals or providing information regarding an acquisition proposal to Moon Parent in any material respects;
	o		our board of trust managers has determined in good faith, after consulting with its financial advisor, that such definitive agreement constitutes a superior proposal and has determined in good faith, after consulting with its outside legal counsel, that the failure to take such actions would be inconsistent with trust managers’ duties to our shareholders under applicable laws;
	o		we have notified Moon Parent in writing that we intend to enter into such agreement;
	o		during the three business days following the receipt by Moon Parent of our notice, we have offered to negotiate with, and if accepted, have negotiated in good faith with, Moon Parent to make adjustments to the terms and conditions of the merger agreement to enable us to proceed with the company merger;
	o		our board of trust managers has determined in good faith, after the end of such three business day period, after considering the results of such negotiations and any revised proposals made by Moon Parent, that the superior proposal giving rise to such notice continues to be a superior proposal; and
	o		we pay to Moon Parent the termination fee in accordance with the merger agreement simultaneously with the termination of the merger agreement.

Termination Fee and Expenses

     We have agreed to pay to Moon Parent a termination fee of $64.2 million, less any transaction expenses previously paid by us to Moon Parent in the event that:

•

we or Moon Parent terminate the merger agreement because the requisite shareholder approval is not obtained, and

	•		at or prior to such termination, an acquisition proposal has been publicly announced that is not subsequently withdrawn prior to such termination, and
	•		concurrently with such termination or within twelve (12) months following the date of such termination, we enter into an agreement with respect to any acquisition proposal that is ultimately consummated, or any acquisition proposal is consummated (with references to “25%” and “75%” in the definition of acquisition proposal being deemed to be “50%”);

•

the merger agreement is terminated by Moon Parent because:

	•		our board of trust managers has withdrawn, or modified or changed in a manner adverse to Moon Parent, its recommendation that the shareholders approve the merger agreement and the company merger,
	•		we enter into an agreement with respect to an acquisition proposal (other than a confidentiality agreement),
	•		a tender offer or exchange offer for any of our outstanding stock that constitutes an acquisition proposal is commenced by a third party before the requisite shareholder vote is obtained and our board of trust managers does not recommend against acceptance of such tender offer or exchange offer within 10 business days after it is commenced, or in the event of a change in terms of the tender offer, within 10 business days after the announcement of such changes, or
	•		we intentionally breach our obligation to call or hold the shareholders’ meeting or cause this proxy statement to be mailed to our shareholders or the operating partnership intentionally breaches its obligation to cause the partnership information statement to be mailed to its limited partners, or
	•		we publicly announce our intention to do any of the foregoing; or

•

the merger agreement is terminated by us because prior to obtaining the shareholder approval, our board of trust managers has approved an acquisition proposal.

     The merger agreement also provides that if either party terminates the merger agreement because of the other party’s material breach of the merger agreement which would result in the failure of a condition being satisfied by October 31, 2007, the breaching party is required to reimburse the non-breaching party for its reasonable transaction expenses up to a limit of $10 million. If Moon Parent terminates the merger agreement because our common shareholders do not approve the company merger by the requisite vote, we are required to reimburse Moon Parent for its reasonable transaction expenses up to a limit of $10 million.

     We have agreed that in the event that we fail to pay the termination fee or any termination expenses when due, or Moon Parent fails to pay any termination expenses when due, we or Moon Parent, as the case may be, will reimburse the other party for all reasonable costs and expenses actually incurred or accrued by such party in connection with the collection under and enforcement of relevant provisions of the merger agreement.

Amendment

     The merger agreement may be amended by mutual agreement of the parties in writing, whether before or after our shareholders have approved the merger agreement, provided that after any such shareholder approval, no amendment shall be made which, by law or the rules of the New York Stock Exchange, requires further shareholder approval without first obtaining such shareholder approval.

MARKET PRICE OF OUR COMMON SHARES

     Our common shares trade on the New York Stock Exchange under the symbol “CEI.” As of                     , 2007, there were                      shareholders of record. The following table sets forth the high and low sale prices of our common shares as reported on the New York Stock Exchange Composite Tape (rounded to the nearest cent), and the dividends paid per share of our common shares, for each quarterly period for the past two years and for the first and second quarterly periods (through                     , 2007) of the fiscal year ending December 31, 2007.

		Market Price
		Range
		High				Low				Dividend
Fiscal Year Ending December 31, 2007:
Second Quarter through _______, 2007
First Quarter		$	21.22			$	18.67			$	.375
Fiscal Year Ended December 31, 2006:
Fourth Quarter		$	22.43			$	19.00			$	.375
Third Quarter		$	23.92			$	18.54			$	.375
Second Quarter		$	21.00			$	17.54			$	.375
First Quarter		$	21.75			$	19.83			$	.375
Fiscal Year Ended December 31, 2005:
Fourth Quarter		$	21.16			$	18.90			$	.375
Third Quarter		$	20.77			$	17.69			$	.375
Second Quarter		$	19.07			$	15.97			$	.375
First Quarter		$	18.51			$	16.00			$	.375

     Our common shares traded below management’s net asset value estimates until August 2006, when market rumors of our possible sale apparently began to circulate. On May 22, 2007, the last trading day prior to the date of the public announcement of the merger agreement, the closing price of our common shares on the New York Stock Exchange was $21.62 per share. On                     , 2007, the last trading day before the date of this proxy statement, the closing price of our common shares on the New York Stock Exchange was $                     per share. You are encouraged to obtain current market quotations for our common shares.

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, EXECUTIVE OFFICERS AND
TRUST MANAGERS

     This table indicates how many Crescent common shares and limited partnership units in the operating partnership were beneficially owned as of April 25, 2007 by:

	•		each current trust manager;
	•		each executive officer named in the Summary Compensation Table included in the Crescent Form 10-K/A filed with the SEC on April 30, 2007 not also listed as a trust manager; and
	•		trust managers and executive officers as a group.

     In general, “beneficial ownership” includes those common shares and partnership units a trust manager or executive officer has the power to vote or the power to dispose and share options and partnership unit options that are exercisable currently or become exercisable or redeemable within 60 days. Except as otherwise noted, the persons named in the table below have sole voting and investment power with respect to all securities shown as beneficially owned by them. As of April 25, 2007, we had 102,826,011 common shares issued and outstanding, and there were 11,151,423 partnership units outstanding.

						Common				Percentage								Partnership
						Share				of Common								Unit								Total
						Options				Shares								Options				Percentage				Common				Percentage of
Name and Address		Number of				Exercisab				(excluding								Exercisable				of All				Shares and				Common
of Beneficial		Common				le Within				partnership				Partnership				Within 60				Partnership				Partnership				Shares
Owner(1)		Shares(2) (3)				60 Days				units)(4)				Units(5)				Days(5)				Units(6)				Units(7)				Outstanding(14)
John C. Goff			1,986,271				400,000				2.3	%			1,812,970				642,858				10.7	%			4,842,099	(8)			4.6	%
Jerry R. Crenshaw, Jr.			135,166				165,000				*				—				—				—				300,166	(9)			*
Dennis H. Alberts			146,870				203,400				*				—				—				—				350,270				*
Jane E. Mody			9,532				—				*				—				—				—				9,532	(10)			*
John L. Zogg, Jr.			145,635				75,000				*				—				—				—				220,635				*
Richard E. Rainwater			5,173,949				—				5.0	%			11,447,334				—				51.3	%			16,621,283	(11)			14.5	%
Anthony M. Frank			39,427				106,400				*				—				—				—				145,827				*
William F. Quinn			53,819				109,200				*				—				—				—				163,019				*
Paul E. Rowsey, III			32,227				109,200				*				—				—				—				141,427				*
Robert W. Stallings			57,300				39,200				*				—				—				—				96,500	(12)			*
Terry N. Worrell			50,000				39,200				*				—				—				—				89,200	(13)			*
Trust Managers and Executive Officers as a Group (19 individuals)			8,041,814				1,812,490				9.4	%			13,260,304				642,858				60.6	%			23,757,466				21.2	%

     The following table provides information about the only known beneficial owners of more than five percent of our outstanding common shares, based solely on our records and the most recent Schedule 13G filings with the Securities and Exchange Commission. The number of common shares owned and the percentage of common shares with respect to the number of common shares beneficially owned are as of April 25, 2007.

		Number of		Percentage of
		Common		Common Shares
Name and Address of Beneficial Owner		Shares Owned		Outstanding(5)
Richard E. Rainwater 777 Main Street Suite 2100 Fort Worth, Texas 76102		16,621,283(1)			14.5	%
BlackRock, Inc. 40 East 52nd Street New York, NY 10022		6,324,758(2)			6.2	%
Capital Research and Management Company 333 South Hope Street Los Angeles, CA 90071		6,320,360(3)			6.1	%
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355		5,754,747(4)			5.6	%