918958--3/13/2006--CRESCENT_REAL_ESTATE_EQUITIES

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{investment, property, distribution}

{loan, real, estate}

{stock, price, share}

{debt, indebtedness, cash}

{acquisition, growth, future}

{provision, law, control}

{loss, insurance, financial}

{personnel, key, retain}

{regulation, change, law}

{tax, income, asset}

{cost, regulation, environmental}

{cost, contract, operation}

We depend on leasing office space to tenants on economically favorable terms and collecting rent from our tenants, who may not be able to pay. Our results of operations depends on the ability of El Paso Energy to meet its obligations pursuant to its lease termination agreement with us. We may experience difficulty or delay in renewing leases or re-leasing space. Many real estate costs are fixed, even if income from our properties decreases. We may be unable to sell properties when appropriate because real estate investments are illiquid. The revenues from our eight Resort/Hotel properties are subject to risks associated with the hospitality industry. The revenues from our eight Resort/Hotel properties depend on third-party operators that we do not control. The performance of our Resort Residential Development properties is affected by national, regional and local economic conditions. The amount of debt that we have and the restrictions imposed by that debt could adversely affect our business and our financial condition. We are obligated to comply with financial and other covenants in our debt that could restrict our operating activities, and the failure to comply could result in defaults that accelerate the payment under our debt. Many factors affect the trading price of our shares. Rising interest rates could adversely affect our cash flow and the market price of our outstanding debt securities and preferred shares. In order to pay distributions to our common shareholders at current levels, we may be required to use proceeds from a combination of asset sales and joint ventures, additional leverage on assets and borrowings under our credit facility. The terms of some of our debt may prevent us from paying distributions on our shares. Payment of distributions on any class of our shares may be adversely affected by the level of our debt and the terms and number of our other shares that rank on an equal basis with or senior to that class of shares. We may have limited flexibility in dealing with our jointly owned investments. The management and leasing agreements under which we operate our office properties owned through joint ventures may be terminated after an initial period. Mezzanine loans involve greater risks of loss than senior loans secured by income producing properties. In many cases, we do not develop our Resort Residential Development Properties and are dependent on the developer of these properties. Development and construction risks could adversely affect our profitability. Environmental problems are possible and may be costly. Compliance with the Americans with Disabilities Act could be costly. Our insurance coverage on our properties may be inadequate. Competition for acquisitions and dispositions could adversely affect us. Acquisitions may fail to perform as expected. We are dependent on our key personnel whose continued service is not guaranteed. Provisions of our declaration of trust and bylaws could inhibit changes in control or discourage takeover attempts beneficial to our shareholders. Your ownership of our shares is subject to limitation for REIT tax purposes. The number of shares available for future sale could adversely affect the market price of our publicly traded securities.

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918958--3/13/2006--CRESCENT_REAL_ESTATE_EQUITIES_CO