<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K
  (Mark One)
      [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001.
                                       OR
      [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                        FOR THE TRANSITION PERIOD FROM ______ TO

                        COMMISSION FILE NUMBER 333-42293
                                               ---------

                CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         DELAWARE                                               75-2531304
------------------------------                           ----------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                           Identification Number)

              777 Main Street, Suite 2100, Fort Worth, Texas 76102
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip code)

        Registrant's telephone number, including area code (817) 321-2100
                                                           --------------

Securities registered pursuant to Section 12(b) of the Act:                None
Securities registered pursuant to Section 12(g) of the Act:                None


--------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve (12) months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past ninety (90) days.

                         YES   X          NO
                             -----          -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of March 11, 2002, the aggregate market value of the 2,883,863 units of
limited partnership interest held by non-affiliates of the registrant was
approximately $106.8 million, based upon the closing price on the New York Stock
Exchange of $18.51 for common shares of beneficial interest of Crescent Real
Estate Equities Company. Each unit is exchangeable for two common shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement to be filed with the Securities and Exchange
Commission for Crescent Real Estate Equities Company's 2002 Annual Meeting of
Shareholders to be held in June 2002 are incorporated by reference into Part
III.


<PAGE>
                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                                        PAGE
                                               PART I.
<S>        <C>                                                                          <C>
Item 1.    Business...................................................................    2
Item 2.    Properties.................................................................   14
Item 3.    Legal Proceedings..........................................................   26
Item 4.    Submission of Matters to a Vote of Security Holders........................   26


                                              PART II.

Item 5.    Market for Registrant's Common Equity and Related Unitholder Matters.......   27
Item 6.    Selected Financial Data....................................................   28
Item 7.    Management's Discussion and Analysis of Financial Condition and Results
           of Operations..............................................................   29
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.................   59
Item 8.    Financial Statements and Supplementary Data................................   60
Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure.......................................................  105


                                              PART III.

Item 10.   Directors and Executive Officers of the Registrant.........................  105
Item 11.   Executive Compensation.....................................................  106
Item 12.   Security Ownership of Certain Beneficial Owners and Management.............  106
Item 13.   Certain Relationships and Related Transactions.............................  106


                                               PART IV.

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K...........  106
</Table>


                                       1
<PAGE>


                                     PART I

ITEM 1.  BUSINESS

                                   THE COMPANY

         Crescent Real Estate Equities Limited Partnership, a Delaware limited
partnership ("CREELP" and, together with its direct and indirect ownership
interests in limited partnerships, corporations and limited liability companies,
the "Operating Partnership"), was formed under the terms of a limited
partnership agreement dated February 9, 1994. The Operating Partnership is
controlled by Crescent Real Estate Equities Company, a Texas real estate
investment trust (the "Company"), through the Company's ownership of all of the
outstanding stock of Crescent Real Estate Equities, Ltd., a Delaware corporation
(the "General Partner"), which owns an approximately 1% general partner interest
in the Operating Partnership. In addition, the Company owns an approximately 89%
limited partner interest in the Operating Partnership, with the remaining
approximately 10% limited partner interest held by other limited partners.

         All of the limited partners of the Operating Partnership, other than
the Company, own, in addition to limited partner interests, units. Each unit
entitles the holder to exchange the unit (and the related limited partner
interest) for two common shares of the Company or, at the Company's option, an
equivalent amount of cash. For purposes of this report, the term "unit" or "unit
of partnership interest" refers to the limited partner interest and, if
applicable, related units held by a limited partner. Accordingly, the Company's
approximately 89% limited partner interest has been treated as equivalent, for
purposes of this report, to 58,892,623 units, and the remaining approximately
10% limited partner interest has been treated as equivalent, for purposes of
this report, to 6,594,521 units. In addition, the Company's 1% general partner
interest has been treated as equivalent, for purposes of this report, to 661,486
units.

         The Company owns its assets and carries on its operations and other
activities through the Operating Partnership and its other subsidiaries. The
limited partnership agreement of the Operating Partnership acknowledges that all
of the Company's operating expenses are incurred for the benefit of the
Operating Partnership and provides that the Operating Partnership will reimburse
the Company for all such expenses. Accordingly, expenses of the Company are
reimbursed by the Operating Partnership.

         As of December 31, 2001, the Operating Partnership's assets and
operations were composed of four investment segments:

         o        Office Segment;

         o        Resort/Hotel Segment;

         o        Residential Development Segment; and

         o        Temperature-Controlled Logistics Segment.

         Within these segments, the Operating Partnership owned or had an
interest in the following real estate assets (the "Properties") as of December
31, 2001:

         o        OFFICE SEGMENT consisted of 74 office properties (collectively
                  referred to as the "Office Properties"), located in 26
                  metropolitan submarkets in six states, with an aggregate of
                  approximately 28.0 million net rentable square feet.

         o        RESORT/HOTEL SEGMENT consisted of five luxury and destination
                  fitness resorts and spas with a total of 1,028 rooms/guest
                  nights and four upscale business-class hotel properties with a
                  total of 1,769 rooms (collectively referred to as the
                  "Resort/Hotel Properties").

         o        RESIDENTIAL DEVELOPMENT SEGMENT consisted of the Operating
                  Partnership's ownership of real estate mortgages and
                  non-voting common stock representing interests ranging from
                  90% to 95% in five unconsolidated residential development
                  corporations (collectively referred to as the "Residential
                  Development Corporations"),





                                       2
<PAGE>

                  which in turn, through joint venture or partnership
                  arrangements, owned 21 upscale residential development
                  properties (collectively referred to as the "Residential
                  Development Properties").

         o        TEMPERATURE-CONTROLLED LOGISTICS SEGMENT consisted of the
                  Operating Partnership's 40% interest in a general partnership
                  (the "Temperature-Controlled Logistics Partnership"), which
                  owns all of the common stock, representing substantially all
                  of the economic interest, of AmeriCold Corporation (the
                  "Temperature-Controlled Logistics Corporation"), a REIT,
                  which, as of December 31, 2001, directly or indirectly owned
                  89 temperature-controlled logistics properties (collectively
                  referred to as the "Temperature-Controlled Logistics
                  Properties") with an aggregate of approximately 445.2 million
                  cubic feet (17.7 million square feet) of warehouse space.

         See "Note 1. Organization and Basis of Presentation" included in "Item
8. Financial Statements and Supplementary Data" for a table that lists the
principal subsidiaries of the Operating Partnership and the Properties owned by
such subsidiaries.

         See "Note 4. Investments in Real Estate Mortgages and Equity of
Unconsolidated Companies" included in "Item 8. Financial Statements and
Supplementary Data" for a table that lists the Operating Partnership's ownership
in significant unconsolidated companies or equity investments and the four
Office Properties in which the Operating Partnership owned an interest through
these unconsolidated companies or equity investments and the Operating
Partnership's ownership interests in the Residential Development Segment and the
Temperature-Controlled Logistics Segment.

         On February 14, 2002, the Operating Partnership executed an agreement
with Crescent Operating, Inc. ("COPI"), pursuant to which COPI transferred to
the Operating Partnership, in lieu of foreclosure, COPI's lessee interests in
the eight Resort/Hotel Properties leased to subsidiaries of COPI and the voting
common stock in three of the Operating Partnership's Residential Development
Corporations. The Operating Partnership will fully consolidate the operations of
the eight Resort/Hotel Properties and the three Residential Development
Corporations, beginning on the date of the transfers of these assets. See "Note
20. Subsequent Events" included in "Item 8. Financial Statements and
Supplementary Data" for additional information regarding the Operating
Partnership's Agreement with COPI.

         For purposes of investor communications, the Operating Partnership
classifies its luxury and destination fitness resorts and spas and upscale
Residential Development Properties as a single group referred to as the "Resort
and Residential Development Sector" due to their similar targeted customer
characteristics. This group does not contain the four upscale business-class
hotel properties. Additionally, for investor communications, the Operating
Partnership classifies its Temperature-Controlled Logistics Properties and its
upscale business-class hotel properties as the "Investment Sector." However, for
purposes of segment reporting as defined in Statement of Financial Accounting
Standard ("SFAS") No. 131, "Disclosures About Segments of an Enterprise and
Related Information" and this Annual Report on Form 10-K, the Resort/Hotel
Properties, including the upscale business-class hotel properties, the
Residential Development Properties and the Temperature-Controlled Logistics
Properties are considered three separate reportable segments.

         See "Note 3. Segment Reporting" included in "Item 8. Financial
Statements and Supplementary Data" for a table showing total revenues, funds
from operations, and equity in net income of unconsolidated companies for each
of these investment segments for the years ended December 31, 2001, 2000 and
1999 and identifiable assets for each of these investment segments at December
31, 2001 and 2000.




                                       3
<PAGE>
                       BUSINESS OBJECTIVES AND STRATEGIES

BUSINESS OBJECTIVES

         The Operating Partnership's primary business objective is to provide
its unitholders with an attractive yet predictable growth in cash flow and
underlying asset value. Additionally, the Operating Partnership is focused on
increasing funds from operations and cash available for distribution, while
optimizing the corresponding growth rates. The Operating Partnership also
strives to attract and retain the best talent available and to empower
management through the development and implementation of a cohesive set of
operating, investing and financing strategies that will align their interests
with the interests of the Operating Partnership's unitholders.

OPERATING STRATEGIES

         The Operating Partnership seeks to enhance its operating performance by
distinguishing itself as the leader in its core investment segments through
customer service and asset quality.

         The Operating Partnership's operating strategies include:

         o        operating the Office Properties as long-term investments;

         o        providing exceptional customer service;

         o        increasing occupancies, rental rates and same-store net
                  operating income; and

         o        emphasizing brand recognition of the Operating Partnership's
                  premier Class A Office Properties and luxury and destination
                  fitness resorts and spas.

INVESTING STRATEGIES

         The Operating Partnership focuses on assessing investment opportunities
and markets considered "demand-driven," or to have high levels of in-migration
by corporations, affordable housing costs, moderate costs of living, and the
presence of centrally located travel hubs, primarily within the Office Segment.
These investment opportunities are evaluated in light of the Operating
Partnership's long-term investment strategy of acquiring properties at a
significant discount to replacement cost in an environment in which the
Operating Partnership believes values will appreciate and equal or exceed
replacement costs. Investment opportunities are expected to provide growth in
cash flow after applying management skills, renovation and expansion capital and
strategic vision.

         The Operating Partnership's investment strategies include:

         o        capitalizing on strategic acquisition opportunities, primarily
                  within the Operating Partnership's Office Segment;

         o        evaluating the expected returns on acquisition opportunities
                  in relation to the Operating Partnership's cost of capital;

         o        selectively developing the Operating Partnership's commercial
                  land inventory, primarily in its Office and Resort/Hotel
                  Segments in order to meet the needs of customers;

         o        selectively developing luxury and destination fitness resorts
                  and spas;

         o        monetizing the current investments of the Operating
                  Partnership in the five Residential Development Corporations
                  and reinvesting returned capital from the Residential
                  Development Segment primarily into the Office Segment where
                  the Operating Partnership expects to achieve favorable rates
                  of return; and



                                       4
<PAGE>

         o        evaluating future repurchases of the Company's common shares,
                  considering stock price, cost of capital, alternative
                  investment options and growth implications.

FINANCING STRATEGIES

         The Operating Partnership implements a disciplined set of financing
strategies in order to fund its operating and investing activities.

         The Operating Partnership's financing strategies include:

         o        funding operating expenses, debt service payments and
                  distributions to unitholders primarily through cash flow from
                  operations;

         o        taking advantage of market opportunities to refinance existing
                  debt and reduce interest cost, replace secured debt with
                  unsecured debt, manage the Operating Partnership's debt
                  maturity schedule and expand the Operating Partnership's
                  lending group;

         o        actively managing the Operating Partnership's exposure to
                  variable-rate debt;

         o        utilizing a combination of the debt, equity, joint venture
                  capital and selected asset disposition alternatives available
                  to the Operating Partnership to finance acquisition and
                  development opportunities; and

         o        recycling capital within the Operating Partnership through
                  strategic sales of non-core assets and through joint ventures
                  of selected Office Properties within the Operating
                  Partnership's portfolio while maintaining a minority interest
                  and continuing to lease and manage the Properties.

                                    EMPLOYEES

         As of February 25, 2002, the Operating Partnership had 794 employees.
None of these employees are covered by collective bargaining agreements. The
Operating Partnership considers its employee relations to be good.


                              ENVIRONMENTAL MATTERS

         The Operating Partnership and its Properties are subject to a variety
of federal, state and local environmental, health and safety laws, including:

         o        Comprehensive Environmental Response, Compensation, and
                  Liability Act of 1980, as amended ("CERCLA");

         o        Resource Conservation & Recovery Act;

         o        Federal Clean Water Act;

         o        Federal Clean Air Act;

         o        Toxic Substances Control Act; and

         o        Occupational Safety & Health Act.

         The application of these laws to a specific property that the Operating
Partnership owns will be dependent on a variety of property-specific
circumstances, including the former uses of the property and the building
materials used at each property. Under certain environmental laws, principally
CERCLA, a current or previous owner or operator of real estate may be required
to investigate and clean up certain hazardous or toxic substances,
asbestos-containing materials, or petroleum product releases at the property.
They may also be held liable to a governmental entity or third parties for
property damage and for investigation and clean up costs such parties incur in
connection with the contamination, whether or not the owner or operator knew of,
or was responsible for, the contamination. In addition, some environmental laws
create a lien on the contaminated site in favor of the government for damages
and costs it incurs in connection with the contamination. The owner or operator
of a site also may be liable under common law to third parties for damages and
injuries resulting from environmental contamination emanating from the site.
Such costs or liabilities could exceed the value of the affected real




                                       5
<PAGE>

estate. The presence of contamination or the failure to remediate contamination
may adversely affect the owner's ability to sell or lease real estate or to
borrow using the real estate as collateral.

         Compliance by the Operating Partnership with existing environmental,
health and safety laws has not had a material adverse effect on the Operating
Partnership's financial condition and results of operations, and management does
not believe it will have such an impact in the future. In addition, the
Operating Partnership has not incurred, and does not expect to incur any
material costs or liabilities due to environmental contamination at Properties
it currently owns or has owned in the past. However, the Operating Partnership
cannot predict the impact of new or changed laws or regulations on its current
Properties or on properties that it may acquire in the future. The Operating
Partnership has no current plans for substantial capital expenditures with
respect to compliance with environmental, health and safety laws.

                                INDUSTRY SEGMENTS

                                 OFFICE SEGMENT

OWNERSHIP STRUCTURE

         As of December 31, 2001, the Operating Partnership owned or had an
interest in 74 Office Properties located in 26 metropolitan submarkets in six
states, with an aggregate of approximately 28.0 million net rentable square
feet. The Operating Partnership, as lessor, has retained substantially all of
the risks and benefits of ownership of the Office Properties and accounts for
its leases as operating leases. Additionally, the Operating Partnership provides
management and leasing services for some of its Office Properties.

         See "Item 2. Properties" for more information about the Operating
Partnership's Office Properties. In addition, see "Note 1. Organization and
Basis of Presentation" included in "Item 8. Financial Statements and
Supplementary Data" for a table that lists the principal subsidiaries of the
Operating Partnership and the Properties owned by such subsidiaries and "Note 4.
Investments in Real Estate Mortgages and Equity of Unconsolidated Companies"
included in "Item 8. Financial Statements and Supplementary Data" for a table
that lists the Operating Partnership's ownership in significant unconsolidated
companies or equity investments and the four Office Properties in which the
Operating Partnership owned an interest through these unconsolidated companies
or equity investments.

JOINT VENTURE ARRANGEMENTS

5 Houston Center

         On June 4, 2001, the Operating Partnership entered into a joint venture
arrangement with a pension fund advised by JP Morgan Investment Management, Inc.
("JPM") to construct the 5 Houston Center Office Property within the Operating
Partnership's Houston Center mixed-use Office Property complex in Houston,
Texas. The Class A Office Property will consist of 577,000 net rentable square
feet. The joint venture is structured such that the fund holds a 75% equity
interest, and the Operating Partnership holds a 25% equity interest. In
addition, the Operating Partnership is developing, and will manage and lease the
Property on a fee basis.




                                       6
<PAGE>


Four Westlake Park and Bank One Tower

         On July 30, 2001, the Operating Partnership entered into joint venture
arrangements with an affiliate of General Electric Pension Fund ("GE") for two
Office Properties, Four Westlake Park in Houston, Texas, and Bank One Tower in
Austin, Texas. The joint ventures are structured such that GE holds an 80%
equity interest in each of the Office Properties, Four Westlake Park, a 560,000
square foot Class A Office Property located in the Katy Freeway submarket of
Houston, and Bank One Tower, a 390,000 square foot Class A Office Property
located in downtown Austin. The Operating Partnership continues to hold the
remaining 20% equity interests in each Office Property. In addition, the
Operating Partnership manages and leases the Office Properties on a fee basis.

MARKET INFORMATION

         The Office Properties reflect the Operating Partnership's strategy of
investing in premier assets within markets that have significant potential for
rental growth. Within its selected submarkets, the Operating Partnership has
focused on premier locations that management believes are able to attract and
retain the highest quality customers and command premium rents. Consistent with
its long-term investment strategies, the Operating Partnership has sought
transactions where it was able to acquire properties that have strong economic
returns based on in-place tenancy and also have a dominant position within the
submarket due to quality and/or location. Accordingly, management's long-term
investment strategy not only demands acceptable current cash flow return on
invested capital, but also considers long-term cash flow growth prospects. In
selecting the Office Properties, the Operating Partnership analyzed demographic
and economic data to focus on markets expected to benefit from significant
long-term employment growth as well as corporate relocations.

         The Operating Partnership's Office Properties are located primarily in
the Dallas/Fort Worth and Houston, Texas, metropolitan areas, both of which are
projected to benefit from strong population and employment growth over the next
10 years. As indicated in the table below entitled "Projected Population Growth
and Employment Growth for all Operating Partnership Markets," these core
Operating Partnership markets are projected to outperform the 10-year averages
for the United States. In addition, the Operating Partnership considers these
markets "demand-driven" markets due to high levels of in-migration by
corporations, affordable housing costs, moderate cost of living, and the
presence of centrally located travel hubs, making all areas of the country
easily accessible.

Texas

         As of December 2001, the Texas unemployment rate was 5.7%, slightly
better than the national unemployment rate of 5.8%. According to the Texas
Economic Update, Texas weathered the 2001 economic slowdown better than the
nation as a whole.

Dallas/Fort Worth ("DFW")

     As of December 2001, the DFW unemployment rate was 5.6%, compared with the
Texas unemployment rate of 5.7% and the national unemployment rate of 5.8%. As
for DFW's 2001 commercial office market, according to CoStar data, citywide net
economic absorption, excluding space available for sublease, was approximately
1.0 million square feet, primarily represented by a positive 1.0 million square
feet of absorption in Class A space. The city's total net absorption, including
space available for sublease, was approximately (3.0) million square feet for
2001; however, Class A space represented only approximately (700,000) square
feet of the (3.0) million total square feet.



                                       7
<PAGE>
Houston

         Houston's employment data held steady through much of 2001, despite the
slowdown in the economy. Approximately 23,000 jobs were created in 2001, an
increase of approximately 1.1% over 2000. As of December 2001, the Houston
unemployment rate was 4.4%, compared with the Texas unemployment rate of 5.7%
and the national unemployment rate of 5.8%. As for Houston's 2001 commercial
office market, according to CoStar data, citywide net economic absorption,
excluding space available for sublease, was 2.0 million square feet, with 2.75
million square feet in Class A space. The city's total net absorption, including
space available for sublease, was a (200,000) square feet for 2001; however,
Class A space had a positive total net absorption of 1.4 million square feet.

         The demographic conditions, economic conditions and trends (population
growth and employment growth) favoring the markets in which the Operating
Partnership has invested are projected to continue to exceed the national
averages, as illustrated in the following table.

           PROJECTED POPULATION GROWTH AND EMPLOYMENT GROWTH FOR ALL
                         OPERATING PARTNERSHIP MARKETS

<Table>
<Caption>
                                         Population    Employment
                                           Growth        Growth
     Metropolitan Statistical Area        2002-2011     2002-2011
----------------------------------      ------------  ------------
<S>                                     <C>            <C>
     Albuquerque, NM                        22.05%         14.15%
     Austin, TX                             26.02          36.61
     Colorado Springs, CO                   27.48          15.83
     Dallas, TX                             15.89          20.92
     Denver, CO                             11.34          19.76
     Fort Worth, TX                         19.03          22.31
     Houston, TX                            15.61          22.43
     Miami, FL                               9.03          15.90
     Phoenix, AZ                            27.24          33.41
     San Diego, CA                          17.35          17.29
     UNITED STATES                           8.49          12.01
</Table>

----------

Source:  Compiled from information published by Economy.com, Inc.

         The Operating Partnership does not depend on a single customer or a few
major customers within the Office Segment, the loss of which would have a
material adverse effect on the Operating Partnership's financial condition or
results of operations. Based on rental revenues from office leases in effect as
of December 31, 2001, no single customer accounted for more than 5% of the
Operating Partnership's total Office Segment rental revenues for 2001.

         The Operating Partnership applies a well-defined leasing strategy in
order to capture the potential rental growth in the Operating Partnership's
portfolio of Office Properties as occupancy and rental rates increase within the
markets and the submarkets in which the Operating Partnership has invested. The
Operating Partnership's strategy is based, in part, on identifying and focusing
on investments in submarkets in which weighted average full-service rental rates
(representing base rent after giving effect to free rent and scheduled rent
increases that would be taken into account under generally accepted accounting
principles ("GAAP") and including adjustments for expenses payable by or
reimbursed from tenants) are significantly less than weighted average
full-service replacement cost rental rates (the rate management estimates to be
necessary to provide a return to a developer of a comparable, multi-tenant
building sufficient to justify construction of new buildings) in that submarket.
In calculating replacement cost rental rates, management relies on available
third-party data and its own estimates of construction costs (including
materials and labor in a particular market) and assumes replacement cost rental
rates are achieved at a 95% occupancy level. The Operating Partnership believes
that the difference between the two rates is a useful measure of the additional
revenue that the Operating Partnership may be able to obtain from a property,
because the difference should represent the amount by which rental rates would
be required to increase in order to justify construction of new properties. For
the Operating Partnership's Office Properties, the weighted average full-service
rental rate as of December 31, 2001 was $22.42 per square foot, compared to an
estimated weighted average full-service replacement cost rental rate of $30.23
per square foot.


                                       8
<PAGE>
COMPETITION

         The Operating Partnership's Office Properties, primarily Class A
properties located within the southwest, individually compete against a wide
range of property owners and developers, including property management companies
and other REITs, that offer space in similar classes of office properties (for
example, Class A and Class B properties.) A number of these owners and
developers may own more than one property. The number and type of competing
properties in a particular market or submarket could have a material effect on
the Operating Partnership's ability to lease space and maintain or increase
occupancy or rents in its existing Office Properties. Management believes,
however, that the quality services and individualized attention that the
Operating Partnership offers its customers, together with its active preventive
maintenance program and superior building locations within markets, enhance the
Operating Partnership's ability to attract and retain customers for its Office
Properties. In addition, as of December 31, 2001, on a weighted average basis,
the Operating Partnership owned 16% of the Class A office space in the 26
submarkets in which the Operating Partnership owned Class A office properties,
and 24% of the Class B office space in the two submarkets in which the Operating
Partnership owned Class B office properties. Management believes that ownership
of a significant percentage of office space in a particular market reduces
property operating expenses, enhances the Operating Partnership's ability to
attract and retain customers and potentially results in increases in Operating
Partnership operating income.

DISPOSITIONS

         During the year ended December 31, 2001, five of the Operating
Partnership's fully consolidated Office Properties were disposed of. On
September 18, 2001, the Operating Partnership completed the sale of the two
Washington Harbour Office Properties. The Washington Harbour Office Properties
were the Operating Partnership's only Office Properties in Washington, D.C. On
September 28, 2001, the Woodlands Office Equities - '95 Limited ("WOE"), owned
by the Operating Partnership and the Woodlands Commercial Properties Company,
L.P. ("Woodlands CPC"), sold two Office Properties located within The Woodlands,
Texas. On December 20, 2001, WOE sold another Office Property located within The
Woodlands, Texas.

         During the year ended December 31, 2001, two of the unconsolidated
companies in which the Operating Partnership has an equity interest, sold three
office properties and one retail property. On September 27, 2001, the Woodlands
CPC, owned by the Operating Partnership and an affiliate of Morgan Stanley, sold
one office/venture tech property located within The Woodlands, Texas. On
November 9, 2001, The Woodlands Land Development Company, L.P., owned by The
Woodlands Land Company, Inc. and an affiliate of Morgan Stanley, sold two office
properties and one retail property located within The Woodlands, Texas.

DEVELOPMENT

Avallon IV Office Property

         In May 2001, the Operating Partnership completed the construction of
the Avallon IV Office Property in Austin, Texas. The property is a Class A
Office Property with 86,315 net rentable square feet. Construction of this
property commenced in September 2000.

5 Houston Center Office Property

         The Operating Partnership is currently developing the 5 Houston Center
Office Property in Houston, Texas. Construction of the planned 27-story, Class A
Office Property consisting of 577,000 net rentable square feet commenced in
November 2000, and is expected to be completed in the fourth quarter of 2002. In
June 2001, the Operating Partnership entered into a joint venture arrangement
with a pension fund advised by JPM to construct this Office Property. The joint
venture is structured such that the fund holds a 75% equity interest, and the
Operating Partnership holds a 25% equity interest.



                                       9
<PAGE>

                              RESORT/HOTEL SEGMENT

OWNERSHIP STRUCTURE

         Prior to the enactment of REIT Modernization Act, the Company's status
as a REIT for federal income tax purposes prohibited the Operating Partnership
from operating the Resort/Hotel Properties. As of December 31, 2001, the
Operating Partnership owned nine Resort/Hotel Properties, all of which, other
than the Omni Austin Hotel, were leased to subsidiaries of COPI pursuant to
eight separate leases. The Omni Austin Hotel was leased, under a separate lease,
to HCD Austin Corporation.

         Under the leases, each having a term of 10 years, the Resort/Hotel
Property lessees assumed the rights and obligations of the property owner under
the respective management agreements with the hotel operators, as well as the
obligation to pay all property taxes and other costs related to the Properties.

         The leases provided for the payment by the Resort/Hotel Property
lessees of all or a combination of the following:

         o        base rent, with periodic rent increases if applicable;

         o        percentage rent based on a percentage of gross hotel receipts
                  or gross room revenues, as applicable, above a specified
                  amount; and

         o        a percentage of gross food and beverage revenues above a
                  specified amount.

         On February 14, 2002, the Operating Partnership executed an agreement
with COPI, pursuant to which COPI transferred to subsidiaries of the Operating
Partnership, in lieu of foreclosure, COPI's lessee interests in the eight
Resort/Hotel Properties leased to subsidiaries of COPI. As a result, these
subsidiaries of the Operating Partnership became the lessees of the eight
Resort/Hotel Properties.

         See "Note 20. Subsequent Events" included in "Item 8. Financial
Statements and Supplemental Data" for additional information regarding the
Operating Partnership's agreement with COPI.

CR LICENSE, LLC AND CRL INVESTMENTS, INC.

         As of December 31, 2001, the Operating Partnership had a 28.5% interest
in CR License, LLC, the entity which owns the right to the future use of the
"Canyon Ranch" name. The Operating Partnership also had a 95% economic interest,
representing all of the non-voting common stock, in CRL Investments, Inc., which
has an approximately 65% economic interest in the Canyon Ranch Spa Club in the
Venetian Hotel in Las Vegas, Nevada.

         On February 14, 2002, the Operating Partnership executed an agreement
with COPI, pursuant to which the Operating Partnership acquired, in lieu of
foreclosure, COPI's 1.5% interest in CR License, LLC and 5.0% interest,
representing all of the voting stock, in CRL Investments, Inc.

MARKET INFORMATION

         Lodging demand is highly dependent upon the global economy and volume
of business travel. The uncertainty surrounding the weak global economy and the
costs and fear resulting from the events of September 11, 2001 are expected to
result in weak performance for much of 2002. This is evidenced by declines in
both business and leisure travel in the United States. Although the hospitality
industry will be negatively impacted to the extent demand is less than expected
for much of 2002, management expects a recovery in 2003.

COMPETITION

         Most of the Operating Partnership's upscale business class Resort/Hotel
Properties in Denver, Albuquerque, Austin and Houston are business and
convention center hotels that compete against other business and convention
center hotels. The Operating Partnership believes, however, that its luxury and
destination fitness resorts and spas are unique properties that have no
significant direct competitors due either to their high replacement cost or
unique concept and location. However, the luxury and destination fitness resorts
and spas do compete against business-class hotels or middle-market resorts in
their geographic areas, as well as against luxury resorts nationwide and around
the world.



                                       10
<PAGE>

                         RESIDENTIAL DEVELOPMENT SEGMENT

OWNERSHIP STRUCTURE

         As of December 31, 2001, the Operating Partnership owned economic
interests in five Residential Development Corporations through the Residential
Development Property mortgages and the non-voting common stock of these
Residential Development Corporations. The Residential Development Corporations
in turn, through joint ventures or partnership arrangements, own interests in 21
Residential Development Properties. The Residential Development Corporations are
responsible for the continued development and the day-to-day operations of the
Residential Development Properties.

         On February 14, 2002, the Operating Partnership executed an agreement
with COPI, pursuant to which COPI transferred to subsidiaries of the Operating
Partnership, in lieu of foreclosure, COPI's voting interests in three of the
Residential Development Corporations. These three Residential Development
Corporations, (Desert Mountain Development Corporation ("Desert Mountain"), The
Woodlands Land Company, Inc., ("The Woodlands") and Crescent Resort Development,
Inc. ("CRD")) own interests in 16 Residential Development Properties.

         See "Note 20. Subsequent Events" included in "Item 8. Financial
Statements and Supplemental Data" for additional information regarding the
Operating Partnership's agreement with COPI.

MARKET INFORMATION

         A slowing economy, combined with the events of September 11, 2001
contributed to the reduction in lot absorption, primarily at Desert Mountain.
CRD (formerly "Crescent Development Management Corp.") was not significantly
impacted because most of its products were pre-sold. However, CRD did change its
strategy by delaying the commencement of certain projects, which will impact its
performance in 2002. In addition, The Woodlands experienced a reduction in lot
absorption of its higher priced lots, including Carlton Woods, The Woodlands'
new upscale gated residential development. However, The Woodlands was not
significantly impacted due to the higher prices of the lots sold offsetting
lower lot sales.

COMPETITION

         The Operating Partnership's Residential Development Properties compete
against a variety of other housing alternatives in each of their respective
areas. These alternatives include other planned developments, pre-existing
single-family homes, condominiums, townhouses and non-owner occupied housing,
such as luxury apartments. Management believes that the Properties owned by The
Woodlands, CRD and Desert Mountain, representing the Operating Partnership's
most significant investments in Residential Development Properties, contain
certain features that provide competitive advantages to these developments.

         The Woodlands, which is an approximately 27,000-acre, master-planned
residential and commercial community north of Houston, Texas, is unique among
developments in the Houston area, because it functions as a self-contained
community. Amenities contained in the development, which are not contained
within most other local developments, include a shopping mall, retail centers,
office buildings, a hospital, a community college, places of worship, a
conference center, 85 parks, 117 holes of golf, including a Tournament Players
Course and signature courses by Jack Nicklaus, Arnold Palmer, and Gary Player,
two man-made lakes and a performing arts pavilion. The Woodlands competes with
other master planned communities in the surrounding Houston market.

         Desert Mountain, a luxury residential and recreational community in
Scottsdale, Arizona, which also offers five 18-hole Jack Nicklaus signature golf
courses and tennis courts, has few direct competitors due in part to the
superior environmental attributes and the types of amenities that it offers.

         CRD invests primarily in mountain resort residential real estate in
Colorado and California, and residential real estate in downtown Denver,
Colorado. Management believes CRD does not have any direct competitors because
the projects and project locations are unique and the land is limited in most of
these locations.



                                       11
<PAGE>
                    TEMPERATURE-CONTROLLED LOGISTICS SEGMENT

OWNERSHIP STRUCTURE

         Effective March 12, 1999, the Operating Partnership, Vornado Realty
Trust, COPI, the Temperature-Controlled Logistics Partnership and the
Temperature-Controlled Logistics Corporation (including all affiliated entities
that owned any portion of the business operations of the Temperature-Controlled
Logistics Properties at that time) sold all of the non-real estate assets,
encompassing the business operations, for approximately $48.7 million to a
subsidiary of a newly formed partnership ("AmeriCold Logistics"), owned 60% by
Vornado Operating L.P. and 40% by a subsidiary of COPI. The Operating
Partnership has no interest in AmeriCold Logistics.

         As of December 31, 2001, the Operating Partnership held a 40% interest
in the Temperature-Controlled Logistics Partnership, which owns the
Temperature-Controlled Logistics Corporation, which directly or indirectly owns
the 89 Temperature-Controlled Logistics Properties, with an aggregate of
approximately 445.2 million cubic feet (17.7 million square feet) of warehouse
space.

         AmeriCold Logistics, as sole lessee of the Temperature-Controlled
Logistics Properties, leases the Temperature-Controlled Logistics Properties
from the Temperature-Controlled Logistics Corporation under three triple-net
master leases, as amended on January 23, 2002. On February 22, 2001, the
Temperature-Controlled Logistics Corporation and AmeriCold Logistics agreed to
restructure certain financial terms of the leases, including the adjustment of
the rental obligation for 2001 to $146.0 million, the adjustment of the rental
obligation for 2002 to $150.0 million (plus contingent rent in certain
circumstances), the increase of the Temperature-Controlled Logistics
Corporation's share of capital expenditures for the maintenance of the
properties from $5.0 million to $9.5 million (effective January 1, 2000) and the
extension of the date on which deferred rent was required to be paid to December
31, 2003.

     AmeriCold Logistics' same-store earnings before interest, taxes,
depreciation and amortization, and rent declined 11% for the year ended December
31, 2001, compared to the same period in 2000. These declines are attributable
to a reduction in total customer inventory stored at the warehouses and a
reduction in the frequency of customer inventory turnover. AmeriCold Logistics
deferred $25.5 million of rent for the year ended December 31, 2001, of which
the Operating Partnership's share was $10.2 million. AmeriCold Logistics also
deferred $19.0 million and $5.4 million of rent for the years ended December 31,
2000 and 1999, respectively, of which the Operating Partnership's share was $7.5
million and $2.1 million, respectively. In December 2001, the
Temperature-Controlled Logistics Corporation waived its rights to collect
cumulative $39.8 million of the total $49.9 million of deferred rent, of which
the Operating Partnership's share was $15.9 million. The Temperature-Controlled
Logistics Corporation and the Operating Partnership had recorded adequate
valuation allowances related to their portions of the waived deferred rental
revenue during the years ended December 31, 2000, and 2001; therefore, there was
no financial statement impact to the Temperature-Controlled Logistics
Corporation or to the Operating Partnership related to the
Temperature-Controlled Logistics Corporation's decision to waive collection of
the deferred rent.



                                       12
<PAGE>
BUSINESS AND INDUSTRY INFORMATION

         AmeriCold Logistics provides frozen food manufacturers with
refrigerated warehousing and transportation management services. The
Temperature-Controlled Logistics Properties consist of production and
distribution facilities. Production facilities differ from distribution
facilities in that they typically serve one or a small number of customers
located nearby. These customers store large quantities of processed or partially
processed products in the facility until they are further processed or shipped
to the next stage of production or distribution. Distribution facilities
primarily serve customers who store a wide variety of finished products to
support shipment to end-users, such as food retailers and food service
companies, in a specific geographic market.

         AmeriCold Logistics' transportation management services include freight
routing, dispatching, freight rate negotiation, backhaul coordination, freight
bill auditing, network flow management, order consolidation and distribution
channel assessment. AmeriCold Logistics' temperature-controlled logistics
expertise and access to both the frozen food warehouses and distribution
channels enable the customers of AmeriCold Logistics to respond quickly and
efficiently to time-sensitive orders from distributors and retailers.

         AmeriCold Logistics' customers consist primarily of national, regional
and local frozen food manufacturers, distributors, retailers and food service
organizations. A breakdown of AmeriCold Logistics' largest customers include:

<Table>
<Caption>
                                                                             PERCENTAGE OF
                                                                             2001 REVENUE
                                                                            --------------
<S>                                                                         <C>
                H.J. Heinz & Co. ........................................               16%
                Con-Agra, Inc. ..........................................                8
                Sara Lee Corp. ..........................................                5
                McCain Foods, Inc. ......................................                5
                Tyson Foods, Inc. .......................................                4
                General Mills ...........................................                4
                J.R. Simplot ............................................                3
                Flowers Food, Inc. ......................................                3
                Pro-Fac Cooperative, Inc. ...............................                2
                Farmland Industries, Inc. ...............................                2
                Other ...................................................               48
                                                                            --------------
                Total ...................................................              100%
                                                                            ==============
</Table>

         Consolidation among retail and food service channels has limited the
ability of manufacturers to pass along cost increases by raising prices. Because
of this, manufacturers have been forced in the recent past to focus more
intensely on supply chain cost (such as inventory management, transportation and
distribution) reduction initiatives in an effort to improve operating
performance. As the economy continues to recover from the current recession and
stabilize, AmeriCold Logistics will continue to examine key areas of its
operations to maximize long-term growth potential. These initiatives include
customer profitability, reductions of energy and labor costs and providing
complete supply chain solutions complemented by information systems to its
customers. In addition, to the extent that socioeconomic events create spikes in
demand and upset the planning balance between manufacturers and retailers,
AmeriCold Logistics will experience variability in its short-term revenues.
However, as AmeriCold Logistics focuses on its key initiatives, it intends to
forge alliances with existing and new customers that will encourage movement of
product into its facilities and strengthen long-term revenues.

COMPETITION

         AmeriCold Logistics is the largest operator of public refrigerated
warehouse space in North America and has more than twice the cubic feet of the
second largest operator. AmeriCold Logistics operated an aggregate of
approximately 18% of total cubic feet of public refrigerated warehouse space as
of December 31, 2001. No other person or entity operated more than 8% of total
public refrigerated warehouse space as of December 31, 2001. As a result,
AmeriCold Logistics does not have any competitors of comparable size. AmeriCold
Logistics operates in an environment in which competition is national,



                                       13
<PAGE>

regional and local in nature and in which the range of service,
temperature-controlled logistics facilities, customer mix, service performance
and price are the principal competitive factors.

DEVELOPMENT

         The Temperature-Controlled Logistics Corporation completed the
acquisition of one facility in the first quarter of 2001 for $10.0 million and
completed the construction of one facility in the third quarter of 2001 for
$15.8 million, representing in aggregate approximately 8.5 million cubic feet
(0.2 million square feet) of additional warehouse space.

ITEM 2.  PROPERTIES

         The Operating Partnership considers all of its Properties to be in good
condition, well-maintained and suitable and adequate to carry on the Operating
Partnership's business.

                                OFFICE PROPERTIES

         As of December 31, 2001, the Operating Partnership owned or had an
interest in 74 Office Properties located in 26 metropolitan submarkets in six
states with an aggregate of approximately 28.0 million net rentable square feet.
The Operating Partnership's Office Properties are located primarily in the
Dallas/Fort Worth and Houston, Texas, metropolitan areas. As of December 31,
2001, the Operating Partnership's Office Properties in Dallas/Fort Worth and
Houston represented an aggregate of approximately 77% of its office portfolio
based on total net rentable square feet (41% for Dallas/Fort Worth and 36% for
Houston).

         In pursuit of management's objective to dispose of non-strategic and
non-core assets, five of the Operating Partnership's fully consolidated Office
Properties were disposed of during the year ended December 31, 2001. The
Operating Partnership completed the sale of the two Washington Harbour Office
Properties located in Washington, D.C., and the Woodlands Office Equities - '95
Limited, owned by the Operating Partnership and the Woodlands Commercial
Properties Company, L. P., sold three Office Properties located within The
Woodlands, Texas.



                                       14
<PAGE>
OFFICE PROPERTIES TABLES

         The following table shows, as of December 31, 2001, certain information
about the Operating Partnership's Office Properties. In the table below "CBD"
means central business district. Based on rental revenues from office leases in
effect as of December 31, 2001, no single customer accounted for more than 5% of
the Operating Partnership's total Office Segment rental revenues for 2001.

<Table>
<Caption>
                                                                                                                      WEIGHTED
                                                                                                                       AVERAGE
                                                                                             NET                    FULL-SERVICE
                                                                                           RENTABLE                  RENTAL RATE
                                        NO. OF                                   YEAR        AREA        PERCENT     PER LEASED
         STATE, CITY, PROPERTY       PROPERTIES          SUBMARKET            COMPLETED    (SQ. FT.)      LEASED      SQ. FT.(1)
     ------------------------------  ------------  -----------------------    ----------  -----------    --------   ------------
<S>                                  <C>           <C>                        <C>         <C>            <C>        <C>
TEXAS
   DALLAS
    Bank One Center(2)                         1   CBD                             1987    1,530,957          88%       $ 23.11
    The Crescent Office Towers                 1   Uptown/Turtle Creek             1985    1,204,670         100          32.81
    Fountain Place                             1   CBD                             1986    1,200,266          97          20.28
    Trammell Crow Center(3)                    1   CBD                             1984    1,128,331          85          25.09
    Stemmons Place                             1   Stemmons Freeway                1983      634,381          87          17.67
    Spectrum Center(4)                         1   Far North Dallas                1983      598,250          88          24.05
    Waterside Commons                          1   Las Colinas                     1986      458,739         100          20.84
    125 E. John Carpenter Freeway              1   Las Colinas                     1982      445,993          80          28.92
    Reverchon Plaza                            1   Uptown/Turtle Creek             1985      374,165          52          21.62
    The Aberdeen                               1   Far North Dallas                1986      320,629         100          19.42
    MacArthur Center I & II                    1   Las Colinas                1982/1986      294,069          92          23.89
    Stanford Corporate Centre                  1   Far North Dallas                1985      265,507          72          23.85
    12404 Park Central                         1   LBJ Freeway                     1987      239,103         100          22.75
    Palisades Central II                       1   Richardson/Plano                1985      237,731          99(10)      22.50
    3333 Lee Parkway                           1   Uptown/Turtle Creek             1983      233,769          92          22.71
    Liberty Plaza I & II                       1   Far North Dallas           1981/1986      218,813         100          16.16
    The Addison                                1   Far North Dallas                1981      215,016         100          19.85
    Palisades Central I                        1   Richardson/Plano                1980      180,503          95          21.39
    Greenway II                                1   Richardson/Plano                1985      154,329         100          23.86
    Greenway I & IA                            2   Richardson/Plano                1983      146,704         100          24.22
    Addison Tower                              1   Far North Dallas                1987      145,886          95          20.61
    5050 Quorum                                1   Far North Dallas                1981      133,594          87          20.63
    Cedar Springs Plaza(5)                     1   Uptown/Turtle Creek             1982      110,923          92          19.63
                                     ------------                                         -----------    -------     -----------
     Subtotal/Weighted Average                24                                          10,472,328          91%       $ 23.54
                                     ------------                                         -----------    -------     -----------

   FORT WORTH
    Carter Burgess Plaza                       1   CBD                             1982      954,895          90%(10)   $ 17.16
                                     ------------                                         -----------    -------     -----------

   HOUSTON
    Greenway Plaza Office Portfolio           10   Richmond-Buffalo           1969-1982    4,285,906          93%       $ 20.30
                                                   Speedway
    Houston Center                             3   CBD                        1974-1983    2,764,418          95          21.83
    Post Oak Central                           3   West Loop/Galleria         1974-1981    1,277,516          89          19.68
    The Woodlands Office Properties(6)         8   The Woodlands              1980-1996      561,989          89          17.62
    Four Westlake Park(7)                      1   Katy Freeway                    1992      561,065         100          21.06
    Three Westlake Park                        1   Katy Freeway                    1983      414,206          94          22.45
    1800 West Loop South                       1   West Loop/Galleria              1982      399,777          69          19.53
                                     ------------                                         -----------    -------     -----------
     Subtotal/Weighted Average                27                                          10,264,877          92%       $ 20.62
                                     ------------                                         -----------    -------     -----------
</Table>



                                       15
<PAGE>
<Table>
<Caption>
                                                                                                                        WEIGHTED
                                                                                                                         AVERAGE
                                                                                               NET                    FULL-SERVICE
                                                                                            RENTABLE                   RENTAL RATE
                                      NO. OF                                   YEAR        AREA        PERCENT         PER LEASED
      STATE, CITY, PROPERTY         PROPERTIES          SUBMARKET            COMPLETED    (SQ. FT.)      LEASED        SQ. FT.(1)
     -----------------------        ------------  -----------------------    ----------  -----------    --------     ------------
<S>                                 <C>           <C>                        <C>         <C>            <C>          <C>
   AUSTIN
    Frost Bank Plaza                          1   CBD                             1984      433,024          97%         $ 25.12
    301 Congress Avenue(8)                    1   CBD                             1986      418,338          80            26.30
    Bank One Tower(7)                         1   CBD                             1974      389,503          96            24.67
    Austin Centre                             1   CBD                             1986      343,664          93            27.82
    The Avallon I, II, III, IV, V             3   Northwest             1993/1997/2001      318,217          87(10)        23.74
    Barton Oaks Plaza One                     1   Southwest                       1986       99,895         100            27.11
                                    ------------                                         -----------    -------       -----------
     Subtotal/Weighted Average                8                                           2,002,641          91%         $ 25.57
                                    ------------                                         -----------    -------       -----------

COLORADO
   DENVER
    MCI Tower                                 1   CBD                             1982      550,807          99%         $ 19.47
    Ptarmigan Place                           1   Cherry Creek                    1984      418,630         100            19.36
    Regency Plaza One                         1   Denver Technology Center        1985      309,862          95            24.14
    55 Madison                                1   Cherry Creek                    1982      137,176          97            20.79
    The Citadel                               1   Cherry Creek                    1987      130,652          97            23.35
    44 Cook                                   1   Cherry Creek                    1984      124,174          91            20.71
                                    ------------                                         -----------    -------       -----------
     Subtotal/Weighted Average                6                                           1,671,301          98%         $ 20.80
                                    ------------                                         -----------    -------       -----------

   COLORADO SPRINGS
    Briargate Office and
     Research Center                          1   Colorado Springs                1988      252,857          64%(10)     $ 19.72
                                    ------------                                         -----------    -------       -----------

FLORIDA
   MIAMI
    Miami Center                              1   CBD                             1983      782,686          95%         $ 26.60
    Datran Center                             2   South Dade/Kendall         1986/1988      472,236          94            23.23
                                    ------------                                         -----------    -------       -----------
     Subtotal/Weighted Average                3                                           1,254,922          95%         $ 25.34
                                    ------------                                         -----------    -------       -----------

ARIZONA
   PHOENIX
    Two Renaissance Square                    1   Downtown/CBD                    1990      476,373          97%         $ 25.43
    6225 North 24th Street                    1   Camelback Corridor              1981       86,451          34            21.98
                                    ------------                                         -----------    -------       -----------
     Subtotal/Weighted Average                2                                             562,824          87%         $ 25.23
                                    ------------                                         -----------    -------       -----------

NEW MEXICO
   ALBUQUERQUE
    Albuquerque Plaza                         1   CBD                             1990      366,236          87%         $ 19.35
                                    ------------                                         -----------    -------       -----------

CALIFORNIA
   SAN DIEGO
    Chancellor Park(9)                        1   University Town Center          1988      195,733          84%         $ 26.94
                                    ------------                                         -----------    -------       -----------


     Total/Weighted Average                  74                                          27,998,614         92%(10)      $ 22.28(11)
                                   ============                                         ===========    =======       ===========
</Table>

----------

(1)      Calculated based on base rent payable as of December 31, 2001, without
         giving effect to free rent or scheduled rent increases that would be
         taken into account under GAAP and including adjustments for expenses
         payable by or reimbursable from customers.

(2)      The Operating Partnership has a 49.5% limited partner interest and a
         0.5% general partner interest in the partnership that owns Bank One
         Center.

(3)      The Operating Partnership owns the principal economic interest in
         Trammell Crow Center through its ownership of fee simple title to the
         Property (subject to a ground lease and a leasehold estate regarding
         the building) and two mortgage notes encumbering the leasehold
         interests in the land and building.

(4)      The Operating Partnership owns the principal economic interest in
         Spectrum Center through an interest in Crescent Spectrum Center, L.P.
         which owns both the mortgage notes secured by Spectrum Center and the
         ground lessor's interest in the land underlying the office building.

(5)      This Office Property was sold subsequent to December 31, 2001.

(6)      The Operating Partnership has a 75% limited partner interest and an
         approximate 10% indirect general partner interest in the partnership
         that owns the eight Office Properties that comprise The Woodlands
         Office Properties.

(7)      The Operating Partnership has a 0.1% general partner interest and a
         19.9% limited partner interest in the partnerships that own Four
         Westlake Park and Bank One Tower.

(8)      The Operating Partnership has a 1% general partner interest and a 49%
         limited partner interest in the partnership that owns 301 Congress
         Avenue.




                                       16
<PAGE>

(9)      The Operating Partnership owns Chancellor Park through its ownership of
         a mortgage note secured by the building and through its direct and
         indirect interests in the partnership, which owns the building.

(10)     Leases have been executed at certain Office Properties but had not
         commenced as of December 31, 2001. If such leases had commenced as of
         December 31, 2001, the percent leased for all Office Properties would
         have been 93%. The total percent leased for these Properties would have
         been as follows: Palisades Central II - 100%; Carter Burgess Plaza -
         95%; The Avallon - 100%; and Briargate Office and Research Center -
         67%.

(11)     The weighted average full-service rental rate per square foot
         calculated based on base rent payable for Operating Partnership Office
         Properties as of December 31, 2001, giving effect to free rent and
         scheduled rent increases that would be taken into consideration under
         GAAP and including adjustments for expenses payable by or reimbursed
         from customers is $22.42.



                                       17
<PAGE>
         The following table provides information, as of December 31, 2001, for
the Operating Partnership's Office Properties by state, city and submarket.

<Table>
<Caption>
                                                                        PERCENT                      OPERATING
                                                         PERCENT OF    LEASED AT      OFFICE        PARTNERSHIP
                                               TOTAL        TOTAL      OPERATING     SUBMARKET       SHARE OF
                                             OPERATING    OPERATING   PARTNERSHIP     PERCENT         OFFICE
                                 NUMBER OF  PARTNERSHIP  PARTNERSHIP    OFFICE        LEASED/        SUBMARKET
     STATE, CITY, SUBMARKET      PROPERTIES    NRA(1)      NRA(1)     PROPERTIES     OCCUPIED(2)     NRA(1)(2)
-------------------------------- ---------- ------------ -----------  -----------    ----------     -----------
<S>                              <C>        <C>          <C>          <C>            <C>            <C>
CLASS A OFFICE PROPERTIES
TEXAS
 DALLAS
   CBD                                    3   3,859,554         13%           90%           86%            21%
   Uptown/Turtle Creek(6)                 4   1,923,527          7            89            87             33
   Far North Dallas                       7   1,897,695          7            91            84             15
   Las Colinas                            3   1,198,801          4            91            86              9
   Richardson/Plano                       5     719,267          3            99(7)         93             13
   Stemmons Freeway                       1     634,381          2            87            90             26
   LBJ Freeway                            1     239,103          1           100            75              3
                                 ---------- -----------  ---------    ----------     ---------      ---------
     Subtotal/Weighted Average           24  10,472,328         37%           91%           85%            16%
                                 ---------- -----------  ---------    ----------     ---------      ---------

 FORT WORTH
   CBD                                    1     954,895          3%           90%(7)        96%            26%
                                 ---------- -----------  ---------    ----------     ---------      ---------

 HOUSTON
   CBD                                    3   2,764,418         10%           95%           95%            12%
   Richmond-Buffalo Speedway              7   3,613,903         13            95            94             71
   West Loop/Galleria                     4   1,677,293          6            85            86             11
   Katy Freeway                           2     975,271          4            98            92             15
   The Woodlands                          6     427,364          1            86            87             88
                                 ---------- -----------  ---------    ----------     ---------      ---------
     Subtotal/Weighted Average           22   9,458,249         34%           93%           92%            19%
                                 ---------- -----------  ---------    ----------     ---------      ---------

AUSTIN
   CBD                                    4   1,584,529          6%           91%           90%            33%
   Northwest                              3     318,217          1            87(7)         83              5
   Southwest                              1      99,895          0           100            90              3
                                 ---------- -----------  ---------    ----------     ---------      ---------
     Subtotal/Weighted Average            8   2,002,641          7%           91%           87%            14%
                                 ---------- -----------  ---------    ----------     ---------      ---------

COLORADO
 DENVER
   Cherry Creek                           4     810,632          3%           98%           97%            45%
   CBD                                    1     550,807          2            99            94              5
   Denver Technology Center               1     309,862          1            95            81              6
                                 ---------- -----------  ---------    ----------     ---------      ---------
     Subtotal/Weighted Average            6   1,671,301          6%           98%           90%             9%
                                 ---------- -----------  ---------    ----------     ---------      ---------

 COLORADO SPRINGS
   Colorado Springs                       1     252,857          1%           64%(7)        86%             5%
                                 ---------- -----------  ---------    ----------     ---------      ---------

FLORIDA
 MIAMI
   CBD                                    1     782,686          3%           95%           95%            25%
   South Dade/Kendall                     2     472,236          2            94            81             78
                                 ---------- -----------  ---------    ----------     ---------      ---------
     Subtotal/Weighted Average            3   1,254,922          5%           95%           93%            34%
                                 ---------- -----------  ---------    ----------     ---------      ---------

ARIZONA
 PHOENIX
   Downtown/CBD                           1     476,373          2%           97%           87%            18%
   Camelback Corridor                     1      86,451          0            34            81              2
                                 ---------- -----------  ---------    ----------     ---------      ---------
     Subtotal/Weighted Average            2     562,824          2%           87%           83%             8%
                                 ---------- -----------  ---------    ----------     ---------      ---------

NEW MEXICO
 ALBUQUERQUE
   CBD                                    1     366,236          1%           87%           89%            64%
                                 ---------- -----------  ---------    ----------     ---------      ---------

CALIFORNIA
 SAN DIEGO
   University Town Center                 1     195,733          1%           84%           83%             6%
                                 ---------- -----------  ---------    ----------     ---------      ---------

<Caption>
                                                              WEIGHTED
                                                              AVERAGE
                                                             OPERATING
                                  WEIGHTED     OPERATING    PARTNERSHIP
                                   AVERAGE    PARTNERSHIP      FULL-
                                   QUOTED       QUOTED        SERVICE
                                   MARKET       RENTAL         RENTAL
                                 RENTAL RATE   RATE PER       RATE PER
                                 PER SQUARE     SQUARE         SQUARE
     STATE, CITY, SUBMARKET      FOOT(2)(3)     FOOT(4)       FOOT(5)
-------------------------------- -----------  -----------   ------------
<S>                              <C>          <C>          <C>
CLASS A OFFICE PROPERTIES
TEXAS
 DALLAS
   CBD                           $     20.66   $   25.32      $22.70
   Uptown/Turtle Creek(6)              24.28       31.85       29.51
   Far North Dallas                    24.48       24.26       21.12
   Las Colinas                         22.85       23.90       24.25
   Richardson/Plano                    20.64       24.61       22.88
   Stemmons Freeway                    23.75       19.30       17.67
   LBJ Freeway                         22.77       23.00       22.75
                                 -----------   ---------      ------
     Subtotal/Weighted Average   $     22.50   $   25.70      $23.54
                                 -----------   ---------      ------

 FORT WORTH
   CBD                           $     22.59   $   21.80      $17.16
                                 -----------   ---------      ------

 HOUSTON
   CBD                           $     24.05   $   27.01      $21.83
   Richmond-Buffalo Speedway           20.83       21.64       20.94
   West Loop/Galleria                  21.75       21.28       19.65
   Katy Freeway                        20.00       24.86       21.63
   The Woodlands                       18.34       18.28       17.87
                                 -----------   ---------      ------
     Subtotal/Weighted Average   $     21.74   $   23.33      $20.95
                                 -----------   ---------      ------

 AUSTIN
   CBD                           $     28.34   $   32.04      $25.83
   Northwest                           24.86       30.12       23.74
   Southwest                           24.93       29.59       27.11
                                 -----------   ---------      ------
     Subtotal/Weighted Average   $     27.62   $   31.61      $25.57
                                 -----------   ---------      ------

COLORADO
 DENVER
   Cherry Creek                  $     23.31   $   23.48      $20.43
   CBD                                 24.25       25.00       19.47
   Denver Technology Center            20.00       26.00       24.14
                                 -----------   ---------      ------
     Subtotal/Weighted Average   $     23.01   $   24.45      $20.80
                                 -----------   ---------      ------

 COLORADO SPRINGS
   Colorado Springs              $     20.60   $   20.85      $19.72
                                 -----------   ---------      ------

FLORIDA
 MIAMI
   CBD                           $     31.46   $   30.70      $26.60
   South Dade/Kendall                  24.97       23.96       23.23
                                 -----------   ---------      ------
     Subtotal/Weighted Average   $     29.02   $   28.16      $25.34
                                 -----------   ---------      ------

ARIZONA
 PHOENIX
   Downtown/CBD                  $     25.73   $   24.50      $25.43
   Camelback Corridor                  25.88       21.50       21.98
                                 -----------   ---------      ------
     Subtotal/Weighted Average   $     25.75   $   24.04      $25.23
                                 -----------   ---------      ------

NEW MEXICO
 ALBUQUERQUE
   CBD                           $     18.15   $   18.00      $19.35
                                 -----------   ---------      ------

CALIFORNIA
 SAN DIEGO
   University Town Center        $     37.80   $   35.50      $26.94
                                 -----------   ---------      ------
</Table>

                                       18
<PAGE>
<Table>
                                                                        PERCENT                      OPERATING
                                                         PERCENT OF    LEASED AT       OFFICE       PARTNERSHIP
                                               TOTAL        TOTAL      OPERATING     SUBMARKET       SHARE OF
                                             OPERATING    OPERATING   PARTNERSHIP     PERCENT         OFFICE
                                 NUMBER OF  PARTNERSHIP  PARTNERSHIP    OFFICE        LEASED/        SUBMARKET
     STATE, CITY, SUBMARKET      PROPERTIES   NRA(1)       NRA(1)     PROPERTIES     OCCUPIED(2)     NRA(1)(2)
-------------------------------- ---------- -----------  -----------  -----------    -----------    ----------
<S>                              <C>        <C>          <C>          <C>            <C>            <C>
     CLASS A OFFICE PROPERTIES
       SUBTOTAL/WEIGHTED
       AVERAGE                           69  27,191,986         97%           92%           88%            16%
                                 ========== ===========  =========    ==========     =========      =========

CLASS B OFFICE PROPERTIES
TEXAS
 HOUSTON
   Richmond-Buffalo Speedway              3     672,003          2%           81%           84%            22%
   The Woodlands                          2     134,625          1            98            47             47
                                 ---------- -----------  ---------    ----------     ---------      ---------
     Subtotal/Weighted Average            5     806,628          3%           84%           81%            24%
                                 ---------- -----------  ---------    ----------     ---------      ---------

     CLASS B OFFICE PROPERTIES
       SUBTOTAL/WEIGHTED
       AVERAGE                            5     806,628          3%           84%           81%            24%
                                 ========== ===========  =========    ==========     =========      =========
     CLASS A AND CLASS B
       OFFICE PROPERTIES
       TOTAL/WEIGHTED AVERAGE            74  27,998,614        100%           92%(7)        88%            16%
                                 ========== ===========  =========    ==========     =========      =========

<Caption>
                                                             WEIGHTED
                                                              AVERAGE
                                                             OPERATING
                                  WEIGHTED     OPERATING    PARTNERSHIP
                                   AVERAGE    PARTNERSHIP      FULL-
                                   QUOTED       QUOTED        SERVICE
                                   MARKET       RENTAL        RENTAL
                                 RENTAL RATE   RATE PER      RATE PER
                                 PER SQUARE     SQUARE        SQUARE
     STATE, CITY, SUBMARKET      FOOT(2)(3)     FOOT(4)       FOOT(5)
-------------------------------- -----------  -----------   -----------
<S>                              <C>          <C>          <C>
     CLASS A OFFICE PROPERTIES
       SUBTOTAL/WEIGHTED
       AVERAGE                   $     23.05   $   25.10      $22.44
                                 ===========   =========      ======

CLASS B OFFICE PROPERTIES
TEXAS
 HOUSTON
   Richmond-Buffalo Speedway     $     17.69   $   16.80      $16.15
   The Woodlands                       16.60       16.60       16.92
                                 -----------   ---------      ------
     Subtotal/Weighted Average   $     17.51   $   16.77      $16.30
                                 -----------   ---------      ------

     CLASS B OFFICE PROPERTIES
       SUBTOTAL/WEIGHTED
       AVERAGE                   $     17.51   $   16.77      $16.30
                                 ===========   =========      ======
     CLASS A AND CLASS B
       OFFICE PROPERTIES
       TOTAL/WEIGHTED AVERAGE    $     22.89   $   24.86      $22.28(8)
                                 ===========   =========      ======
</Table>

----------

(1)  NRA means net rentable area in square feet.

(2)  Market information is for Class A office space under the caption "Class A
     Office Properties" and for Class B office space under the caption "Class B
     Office Properties." Sources are CoStar Group (for the Dallas CBD,
     Uptown/Turtle Creek, Far North Dallas, Las Colinas, Richardson/Plano,
     Stemmons Freeway, LBJ Freeway, Fort Worth CBD, Houston Richmond-Buffalo
     Speedway, Houston CBD, West Loop/Galleria, and Katy Freeway submarkets),
     The Woodlands Operating Company, L.P. (for The Woodlands submarket), Costar
     (for the Austin CBD, Northwest and Southwest submarkets), Cushman &
     Wakefield of Colorado, Inc. (for the Denver Cherry Creek, CBD and Denver
     Technology Center submarkets), Turner Commercial Research (for the Colorado
     Springs market), Grubb and Ellis Company (for the Phoenix Downtown/CBD and
     Cammelback Corridor submarkets), Building Interests, Inc. (for the
     Albuquerque CBD submarket), RealData Information Systems, Inc. (for the
     Miami CBD and South Dade/Kendall submarkets) and Costar/John Burnham & Co.
     (for the San Diego University Town Center submarket).

(3)  Represents full-service quoted market rental rates. These rates do not
     necessarily represent the amounts at which available space at the Office
     Properties will be leased. The weighted average subtotals and total are
     based on total net rentable square feet of Operating Partnership Office
     Properties in the submarket.

(4)  For Office Properties, represents weighted average rental rates per square
     foot quoted by the Operating Partnership, based on total net rentable
     square feet of Operating Partnership Office Properties in the submarket,
     adjusted, if necessary, based on management estimates, to equivalent
     full-service quoted rental rates to facilitate comparison to weighted
     average Class A or Class B, as the case may be, quoted submarket rental
     rates per square foot. These rates do not necessarily represent the amounts
     at which available space at the Operating Partnership's Office Properties
     will be leased.

(5)  Calculated based on base rent payable for Operating Partnership Office
     Properties in the submarket, without giving effect to free rent or
     scheduled rent increases that would be taken into account under GAAP and
     including adjustments for expenses payable by or reimbursed from tenants,
     divided by total net rentable square feet of Operating Partnership Office
     Properties in the submarket.

(6)  One Office Property in this submarket was sold subsequent to December 31,
     2001.

(7)  Leases have been executed at certain Office Properties in these submarkets
     but had not commenced as of December 31, 2001. If such leases had commenced
     as of December 31, 2001, the percent leased for all Office Properties in
     the Operating Partnership's submarkets would have been 93%. The total
     percent leased for these Class A Operating Partnership submarkets would
     have been as follows: Richardson/Plano - 99%; Fort Worth CBD - 95%;
     Austin-Northwest - 100%; and Colorado Springs - 67%.

(8)  The weighted average full-service rental rate per square foot calculated
     based on base rent payable for Operating Partnership Office Properties,
     giving effect to free rent and scheduled rent increases that would be taken
     into consideration under GAAP and including adjustments for expenses
     payable by or reimbursed from tenants is $22.42.


                                       19
<PAGE>
 The following table shows, as of December 31, 2001, the principal business
conducted by the customers at the Operating Partnership's Office Properties,
based on information supplied to the Operating Partnership from the tenants.

<Table>
<Caption>
                                 Percent of
    Industry Sector             Leased Sq. Ft.
------------------------        --------------
<S>                             <C>
Professional Services(1)                 27%
Energy(2)                                21
Financial Services(3)                    19
Telecommunications                        8
Technology                                7
Manufacturing                             3
Food Service                              3
Government                                3
Retail                                    2
Medical                                   2
Other (4)                                 5
                                    -------
TOTAL LEASED                            100%
                                    =======
</Table>

----------

(1)      Includes legal, accounting, engineering, architectural and advertising
         services.

(2)      Includes oil and gas and utility companies.

(3)      Includes banking, title and insurance and investment services.

(4)      Includes construction, real estate, transportation and other
         industries.

AGGREGATE LEASE EXPIRATIONS OF OFFICE PROPERTIES

         The following tables show schedules of lease expirations for leases in
place as of December 31, 2001, for the Operating Partnership's total Office
Properties and for Dallas, Houston and Austin, Texas, and Denver, Colorado,
individually, for each of the 10 years beginning with 2002, assuming that none
of the customers exercises or has exercised renewal options.

TOTAL OFFICE PROPERTIES

<Table>
<Caption>
                                                                                                       PERCENTAGE
                                             NET RENTABLE        PERCENTAGE OF                          TOTAL OF      ANNUAL FULL-
                                                 AREA             LEASED NET           ANNUAL          ANNUAL FULL-   SERVICE RENT
                             NUMBER OF        REPRESENTED        RENTABLE AREA      FULL-SERVICE       SERVICE RENT    PER SQUARE
                           TENANTS WITH       BY EXPIRING         REPRESENTED        RENT UNDER        REPRESENTED     FOOT OF NET
     YEAR OF LEASE           EXPIRING            LEASES           BY EXPIRING         EXPIRING         BY EXPIRING    RENTABLE AREA
      EXPIRATION              LEASES         (SQUARE FEET)          LEASES            LEASES(1)           LEASES      EXPIRING(1)
     -------------         ------------      -------------       -------------      ------------       ------------   -------------
<S>                        <C>               <C>                 <C>                <C>                <C>            <C>
2002                                468         3,869,011(2)           15.3%        $ 85,393,837            14.4%        $ 22.07
2003                                339         3,534,746(3)           14.0           76,445,243            12.9           21.63
2004                                276         4,327,226              17.1           99,509,168            16.8           23.00
2005                                237         3,385,760              13.4           79,321,957            13.4           23.43
2006                                177         2,574,065              10.2           62,564,254            10.6           24.31
2007                                 71         2,066,023               8.2           48,576,388             8.2           23.51
2008                                 32           983,109               3.9           24,066,598             4.1           24.48
2009                                 19           676,981               2.7           17,305,474             2.9           25.56
2010                                 27         1,504,156               6.0           40,528,244             6.8           26.94
2011                                 26           723,362               2.9           19,573,471             3.3           27.06
2012 and thereafter                  19         1,587,599               6.3           39,124,239             6.6           24.64
                           ------------      ------------           -------         ------------         -------         -------
                                  1,691        25,232,038(4)          100.0%        $592,408,873           100.0%        $ 23.48
                           ============      ============           =======         ============         =======         =======
</Table>

----------

(1)      Calculated based on base rent payable under the lease for net rentable
         square feet expiring, without giving effect to free rent or scheduled
         rent increases that would be taken into account under GAAP and
         including adjustments for expenses payable by or reimbursable from
         tenants based on current expense levels.

(2)      As of December 31, 2001, leases have been signed for approximately
         1,471,592 net rentable square feet (representing approximately 38% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2002.

(3)      As of December 31, 2001, leases have been signed for approximately
         460,353 net rentable square feet (representing approximately 13% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2003.


                                       20
<PAGE>

(4)      Reconciliation to the Operating Partnership's total Office Property net
         rentable area is as follows:

<Table>
<Caption>
                                               SQUARE       PERCENTAGE
                                                FEET         OF TOTAL
                                             ----------     ----------
<S>                                          <C>            <C>
Square footage occupied by tenants           25,232,038       90.1%
Square footage reflecting
    management offices, building use,
    and remeasurement adjustments               387,158        1.4
Square footage vacant                         2,379,418        8.5
                                             ----------      -----
Total net rentable square footage            27,998,614      100.0%
                                             ==========      =====
</Table>

DALLAS OFFICE PROPERTIES

<Table>
<Caption>
                                                                                                 PERCENTAGE
                                     NET RENTABLE      PERCENTAGE OF                              TOTAL OF         ANNUAL FULL-
                                         AREA           LEASED NET              ANNUAL          ANNUAL FULL-        SERVICE RENT
                     NUMBER OF       REPRESENTED       RENTABLE AREA         FULL-SERVICE       SERVICE RENT         PER SQUARE
                    TENANTS WITH     BY EXPIRING        REPRESENTED           RENT UNDER         REPRESENTED        FOOT OF NET
   YEAR OF LEASE      EXPIRING          LEASES          BY EXPIRING            EXPIRING          BY EXPIRING       RENTABLE AREA
     EXPIRATION        LEASES       (SQUARE FEET)         LEASES               LEASES(1)           LEASES           EXPIRING(1)
   -------------    ------------    --------------     -------------         -------------      ------------       -------------
<S>                 <C>             <C>                <C>                   <C>                <C>                <C>
2002                         130         1,202,785(2)         12.8%          $ 30,170,470             13.1%           $ 25.08
2003                          94         1,342,618(3)         14.3             29,997,695             13.0              22.34
2004                          84         1,150,737            12.2             30,276,805             13.1              26.31
2005                          91         1,795,101            19.1             41,139,066             17.8              22.92
2006                          43           702,018             7.5             17,875,245              7.8              25.46
2007                          26         1,048,063            11.2             25,470,093             11.1              24.30
2008                          11           590,319             6.3             15,449,754              6.7              26.17
2009                           6           376,473             4.0              9,744,552              4.2              25.88
2010                          13           733,171             7.8             21,211,321              9.2              28.93
2011                           7           198,876             2.1              5,684,743              2.5              28.58
2012 and thereafter            2           254,018             2.7              3,455,038              1.5              13.60
                        --------       -----------       ----------         -------------       -----------           -------
                             507         9,394,179           100.0%         $ 230,474,782            100.0%           $ 24.53
                        ========       ===========       ==========         =============       ===========           =======
</Table>

----------

(1)      Calculated based on base rent payable under the lease for net rentable
         square feet expiring, without giving effect to free rent or scheduled
         rent increases that would be taken into account under GAAP and
         including adjustments for expenses payable by or reimbursable from
         tenants based on current expense levels.

(2)      As of December 31, 2001, leases have been signed for approximately
         277,925 net rentable square feet (representing approximately 23% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2002.

(3)      As of December 31, 2001, leases have been signed for approximately
         84,062 net rentable square feet (representing approximately 6% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2003.


                                       21
<PAGE>

HOUSTON OFFICE PROPERTIES

<Table>
<Caption>
                                                                                                PERCENTAGE
                                      NET RENTABLE       PERCENTAGE OF                            TOTAL OF       ANNUAL FULL-
                                          AREA            LEASED NET            ANNUAL          ANNUAL FULL-     SERVICE RENT
                       NUMBER OF       REPRESENTED       RENTABLE AREA       FULL-SERVICE       SERVICE RENT      PER SQUARE
                     TENANTS WITH     BY EXPIRING        REPRESENTED          RENT UNDER         REPRESENTED     FOOT OF NET
   YEAR OF LEASE        EXPIRING         LEASES           BY EXPIRING           EXPIRING          BY EXPIRING    RENTABLE AREA
    EXPIRATION           LEASES       (SQUARE FEET)         LEASES             LEASES(1)            LEASES        EXPIRING(1)
   -------------     ------------     -------------      -------------       -------------      -------------    -------------
<S>                  <C>              <C>                <C>                 <C>                <C>              <C>
2002                          182         1,499,472(2)            15.9%       $ 30,138,158             14.5%        $ 20.10
2003                          128         1,243,846(3)            13.2          25,424,330             12.2           20.44
2004                          107         2,121,173               22.5          43,386,335             20.9           20.45
2005                           71           576,838                6.1          12,801,669              6.2           22.19
2006                           60         1,152,161               12.2          25,946,294             12.5           22.52
2007                           22           754,456                8.0          16,571,175              8.0           21.96
2008                           10           293,235                3.1           5,996,878              2.9           20.45
2009                            3            74,984                0.8           1,729,655              0.8           23.07
2010                            7           582,997                6.2          13,872,390              6.7           23.79
2011                           10           416,487                4.4          10,130,045              4.9           24.32
2012 and thereafter             4           693,726                7.6          21,924,512             10.4           31.60
                          -------      ------------          ---------       -------------         --------         -------
                              604         9,409,375              100.0%      $ 207,921,441            100.0%        $ 22.10
                          =======      ============          =========       =============         ========         =======
</Table>

----------

(1)      Calculated based on base rent payable under the lease for net rentable
         square feet expiring, without giving effect to free rent or scheduled
         rent increases that would be taken into account under GAAP and
         including adjustments for expenses payable by or reimbursable from
         tenants based on current expense levels.

(2)      As of December 31, 2001, leases have been signed for approximately
         650,146 net rentable square feet (representing approximately 43% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2002.

(3)      As of December 31, 2001, leases have been signed for approximately
         269,229 net rentable square feet (representing approximately 22% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2003.

AUSTIN OFFICE PROPERTIES

<Table>
<Caption>
                                                                                                     PERCENTAGE
                                     NET RENTABLE       PERCENTAGE OF                                TOTAL OF          ANNUAL FULL-
                                         AREA            LEASED NET               ANNUAL            ANNUAL FULL-      SERVICE RENT
                      NUMBER OF       REPRESENTED       RENTABLE AREA           FULL-SERVICE        SERVICE RENT       PER SQUARE
                    TENANTS WITH     BY EXPIRING         REPRESENTED             RENT UNDER         REPRESENTED        FOOT OF NET
   YEAR OF LEASE      EXPIRING          LEASES           BY EXPIRING             EXPIRING           BY EXPIRING       RENTABLE AREA
    EXPIRATION         LEASES        (SQUARE FEET)         LEASES                LEASES(1)             LEASES          EXPIRING(1)
   -------------    ------------    --------------      -------------           ------------      ---------------     -------------
<S>                 <C>             <C>                 <C>                     <C>               <C>                 <C>
2002                          35           197,617(2)            11.3%          $  5,332,326             11.6%          $  26.98
2003                          31           207,735(3)            11.9              5,223,132             11.4              25.14
2004                          17           347,369               19.8              8,460,804             18.5              24.36
2005                          25           531,494               30.3             13,832,510             30.2              26.03
2006                          16           318,543               18.2              9,102,744             19.8              28.58
2007                           5            42,266                2.4              1,142,580              2.5              27.03
2008                           3            49,094                2.8              1,253,991              2.7              25.54
2009                           1            21,447                1.2                541,751              1.2              25.26
2010                          --                --                 --                     --               --                 --
2011                           2             3,773                0.2                145,987              0.3              38.69
2012 and thereafter            1            33,315                1.9                828,777              1.8              24.88
                         -------       -----------         ----------           ------------        ---------           --------
                             136         1,752,653              100.0%          $ 45,864,602            100.0%          $  26.17
                         =======       ===========         ==========           ============        =========           ========
</Table>

----------

(1)      Calculated based on base rent payable under the lease for net rentable
         square feet expiring, without giving effect to free rent or scheduled
         rent increases that would be taken into account under GAAP and
         including adjustments for expenses payable by or reimbursable from
         tenants based on current expense levels.

(2)      As of December 31, 2001, leases have been signed for approximately
         103,637 net rentable square feet (representing approximately 52% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2002.

(3)      As of December 31, 2001, leases have been signed for approximately
         31,762 net rentable square feet (representing approximately 15% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2003.


                                       22
<PAGE>

DENVER OFFICE PROPERTIES

<Table>
<Caption>
                                                                                                  PERCENTAGE
                                             NET RENTABLE      PERCENTAGE OF                        TOTAL OF       ANNUAL FULL-
                                                 AREA            LEASED NET        ANNUAL         ANNUAL FULL-     SERVICE RENT
                            NUMBER OF        REPRESENTED       RENTABLE AREA     FULL-SERVICE     SERVICE RENT      PER SQUARE
                          TENANTS WITH       BY EXPIRING        REPRESENTED      RENT UNDER       REPRESENTED      FOOT OF NET
      YEAR OF LEASE         EXPIRING            LEASES          BY EXPIRING       EXPIRING        BY EXPIRING      RENTABLE AREA
        EXPIRATION           LEASES          (SQUARE FEET)         LEASES         LEASES(1)          LEASES        EXPIRING(1)
      -------------       ------------       -------------      -------------    ------------     ------------     -------------
<S>                       <C>                <C>                <C>              <C>              <C>              <C>
2002                                41            604,619(2)            38.2%     $12,076,836             35.9%     $     19.97
2003                                36            469,416(3)            29.7        9,788,225             29.1            20.85
2004                                17            198,332               12.5        4,308,220             12.8            21.72
2005                                15            171,349               10.8        4,002,821             11.9            23.36
2006                                10             71,586                4.5        1,781,483              5.3            24.89
2007                                 2             15,988                1.0          378,437              1.1            23.67
2008                                 1             21,351                1.4          603,806              1.8            28.28
2009                                 4             19,602                1.2          445,447              1.3            22.72
2010                                 2              7,611                0.5          183,357              0.6            24.09
2011                                 1              2,478                0.2           52,038              0.2            21.00
2012 and thereafter                 --                 --                0.0               --              0.0               --
                           -----------        -----------        -----------      -----------      -----------      -----------
                                   129          1,582,332              100.0%     $33,620,670            100.0%     $     21.25
                           ===========        ===========        ===========      ===========      ===========      ===========
</Table>

----------

(1)      Calculated based on base rent payable under the lease for net rentable
         square feet expiring, without giving effect to free rent or scheduled
         rent increases that would be taken into account under GAAP and
         including adjustments for expenses payable by or reimbursable from
         tenants based on current expense levels.

(2)      As of December 31, 2001, leases have been signed for approximately
         343,913 net rentable square feet (representing approximately 57% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2002.

(3)      As of December 31, 2001, leases have been signed for approximately
         22,397 net rentable square feet (representing approximately 5% of
         expiring square footage and including renewed leases and leases of
         previously unleased space) commencing in 2003.


                                       23
<PAGE>

                             RESORT/HOTEL PROPERTIES


         The following table shows certain information for the years ended
December 31, 2001, and 2000, with respect to the Operating Partnership's
Resort/Hotel Properties. The information for the Resort/Hotel Properties is
based on available rooms, except for Canyon Ranch-Tucson and Canyon Ranch-Lenox,
which measure their performance based on available guest nights.

<Table>
<Caption>
                                                                                                 FOR THE YEAR ENDED DECEMBER 31,
                                                                                            ----------------------------------------
                                                                                                                          REVENUE
                                                                                              AVERAGE      AVERAGE          PER
                                                                                             OCCUPANCY      DAILY        AVAILABLE
                                                                      YEAR                      RATE         RATE         ROOM/GUEST
                                                                   COMPLETED/               -----------  ------------   -----------
RESORT/HOTEL PROPERTY(1)                          LOCATION         RENOVATED      ROOMS      2001   2000  2001    2000   2001   2000
------------------------                          --------         ----------    -------     ----   ----  -----   ----   ----   ----
<S>                                             <C>              <C>             <C>         <C>    <C>   <C>     <C>    <C>    <C>
   UPSCALE BUSINESS CLASS HOTELS:
     Denver Marriott City Center                Denver, CO         1982/1994         613       77%    84%  $123   $120   $ 95   $101
     Hyatt Regency Albuquerque                  Albuquerque, NM       1990           395       69     69    108    106     74     73
     Omni Austin Hotel                          Austin, TX            1986           372       68     81    124    133     84    108
     Renaissance Houston Hotel                  Houston, TX        1975/2000         389       64     59    113     95     73     56
                                                                                 -------     ----   ----   ----   ----   ----   ----
          TOTAL/WEIGHTED AVERAGE                                                   1,769       71%    75%  $118   $116   $ 83   $ 86
                                                                                 =======     ====   ====   ====   ====   ====   ====

   LUXURY RESORTS AND SPAS:
     Park Hyatt Beaver Creek Resort and Spa(2)  Avon, CO              1989           276       57%    69%  $278   $254   $159   $176
     Sonoma Mission Inn & Spa                   Sonoma, CA       1927/1987/1997      228       59     75    299    302    176    226
     Ventana Inn & Spa                          Big Sur, CA      1975/1982/1988       62       73     78    420    458    304    358
                                                                                 -------     ----   ----   ----   ----   ----   ----
          TOTAL/WEIGHTED AVERAGE                                                     566       60%    72%  $305   $298   $182   $216
                                                                                 =======     ====   ====   ====   ====   ====   ====
<Caption>
                                                                                  GUEST
                                                                                  NIGHTS
                                                                                 -------
<S>                                             <C>                   <C>        <C>         <C>    <C>    <C>    <C>    <C>    <C>
   DESTINATION FITNESS RESORTS AND SPAS:
     Canyon Ranch-Tucson                        Tucson, AZ            1980           250(3)
     Canyon Ranch-Lenox                         Lenox, MA             1989           212(3)
                                                                                 -------     ----   ----   ----   ----   ----   ----
          TOTAL/WEIGHTED AVERAGE                                                     462       81%   86%   $622   $593   $482   $487
                                                                                 =======     ====   ====   ====   ====   ====   ====

          GRAND TOTAL/WEIGHTED AVERAGE FOR RESORT/HOTEL PROPERTIES                             70%   76%   $245   $238   $170   $180
                                                                                             ====   ====   ====   ====   ====   ====
</Table>

----------

(1)      As of December 31, 2001, the Operating Partnership had leased all of
         the Resort/Hotel Properties, except the Omni Austin Hotel, to
         subsidiaries of COPI. As of December 31, 2001, the Omni Austin Hotel
         was leased pursuant to a separate lease to HCD Austin Corporation. On
         February 14, 2002, the Operating Partnership executed an agreement with
         COPI, pursuant to which COPI transferred to subsidiaries of the
         Operating Partnership, in lieu of foreclosure, COPI's lessee interests
         in the eight Resort/Hotel Properties.

(2)      The hotel is undergoing a $6.9 million renovation of all guestrooms.
         The project is scheduled to be completed by the second quarter of 2002.

(3)      Represents available guest nights, which is the maximum number of
         guests that the resort can accommodate per night.


                                       24
<PAGE>

                       RESIDENTIAL DEVELOPMENT PROPERTIES

         The following table shows certain information as of December 31, 2001,
relating to the Residential Development Properties.

<Table>
<Caption>
                                                                                                                       TOTAL
                               RESIDENTIAL                                               RESIDENTIAL      TOTAL     LOTS/UNITS
      RESIDENTIAL              DEVELOPMENT                                               DEVELOPMENT      LOTS/      DEVELOPED
      DEVELOPMENT              PROPERTIES            TYPE OF                            CORPORATION'S     UNITS       SINCE
    CORPORATION(1)                (RDP)               RDP(2)           LOCATION          OWNERSHIP %     PLANNED     INCEPTION
    ---------------            -----------           -------           --------         -------------    -------     ----------
<S>                      <C>                         <C>           <C>                  <C>              <C>         <C>
Desert Mountain          Desert Mountain               SF          Scottsdale,  AZ              93.0%      2,665       2,338
    Development                                                                                          -------     -------
    Corporation


The Woodlands            The Woodlands                 SF          The Woodlands,  TX           42.5%     37,554      26,027
    Land Company,                                                                                        -------     -------
    Inc.


Crescent                 Bear Paw Lodge                CO          Avon, CO                     60.0%         53(6)       53
    Resort               Eagle Ranch                   SF          Eagle, CO                    60.0%      1,100(6)      405
    Development,         Main Street
    Inc.                   Junction                    CO          Breckenridge, CO             30.0%         36(6)       36
                         Main Street
                           Station                     CO          Breckenridge, CO             30.0%         82(6)       82
                         Main Street Station
                           Vacation Club               TS          Breckenridge, CO             30.0%         42          42
                         Riverbend                     SF          Charlotte, NC                60.0%        650         161
                         Three Peaks
                           (Eagle's Nest)              SF          Silverthorne, CO             30.0%        391(6)      253
                         Park Place at
                           Riverfront                  CO          Denver, CO                   64.0%         70(6)       70
                         Park Tower at
                           Riverfront                  CO          Denver, CO                   64.0%         61(6)       61
                         Promenade Lofts
                           at Riverfront               CO          Denver, CO                   64.0%         66(6)       66
                         Cresta                      TH/SFH        Edwards, CO                  60.0%         25          19
                         Snow Cloud                    CO          Avon, CO                     64.0%         54(6)       26
                         One Vendue Range              CO          Charleston, SC               62.0%         49(6)       --
                         Tahoe Mountain Resorts    TH/SF/CO/TS     Tahoe, CA                                  --(7)       --(7)
                                                                                                         -------     -------
          TOTAL CRESCENT RESORT DEVELOPMENT, INC.                                                          2,679       1,274
                                                                                                         -------     -------

Mira Vista               Mira Vista                    SF          Fort Worth, TX              100.0%        740         740
    Development          The Highlands                 SF          Breckenridge, CO             12.3%        750         480
    Corp.                                                                                                -------     -------

          TOTAL MIRA VISTA DEVELOPMENT CORP.                                                               1,490       1,220
                                                                                                         -------     -------

Houston Area             Falcon Point                  SF          Houston, TX                 100.0%        510         364
    Development          Falcon Landing                SF          Houston, TX                 100.0%        623         566
    Corp.                Spring Lakes                  SF          Houston, TX                 100.0%        520         266
                                                                                                         -------     -------

          TOTAL HOUSTON AREA DEVELOPMENT CORP.                                                             1,653       1,196
                                                                                                         -------     -------

              TOTAL                                                                                       46,041      32,055
                                                                                                         =======     =======

<Caption>

                                                        TOTAL      AVERAGE
                               RESIDENTIAL            LOTS/UNITS    CLOSED              RANGE OF
      RESIDENTIAL              DEVELOPMENT             CLOSED     SALE PRICE            PROPOSED
      DEVELOPMENT              PROPERTIES               SINCE      PER LOT/            SALE PRICES
    CORPORATION(1)                (RDP)               INCEPTION   UNIT ($)(3)      PER LOT/UNIT ($)(4)
    ---------------            -----------            ---------   -----------   ------------------------
<S>                      <C>                          <C>         <C>           <C>
Desert Mountain          Desert Mountain                  2,195      515,000      400,000 --   3,050,000(5)
    Development                                        --------
    Corporation


The Woodlands            The Woodlands                   24,472       57,000       16,000 --   1,035,000
    Land Company,                                      --------
    Inc.


Crescent                 Bear Paw Lodge                      51    1,455,000      665,000 --   2,025,000
    Resort               Eagle Ranch                        347      106,000       80,000 --     150,000
    Development,         Main Street
    Inc.                   Junction                          26      473,000      300,000 --     580,000
                         Main Street
                           Station                            8      801,000      215,000 --   1,065,000
                         Main Street Station
                           Vacation Club                     11    1,028,000      380,000 --   4,600,000
                         Riverbend                          161       30,000       25,000 --      38,000
                         Three Peaks
                           (Eagle's Nest)                   176      253,000      135,000 --     425,000
                         Park Place at
                           Riverfront                        53      372,000      195,000 --   1,445,000
                         Park Tower at
                           Riverfront                        --          N/A      180,000 --   2,100,000
                         Promenade Lofts
                           at Riverfront                     --          N/A      180,000 --   2,100,000
                         Cresta                              15    1,847,000    1,900,000 --   2,600,000
                         Snow Cloud                          21    1,760,000      840,000 --   4,545,000
                         One Vendue Range                    --          N/A      450,000 --   3,100,000
                         Tahoe Mountain Resorts              --(7)       N/A          N/A            N/A
                                                       --------
          TOTAL CRESCENT RESORT DEVELOPMENT, INC.           869
                                                       --------

Mira Vista               Mira Vista                         693      100,000       50,000 --     265,000
    Development          The Highlands                      433      192,000       55,000 --     625,000
    Corp.                                              --------

          TOTAL MIRA VISTA DEVELOPMENT CORP.              1,126
                                                       --------

Houston Area             Falcon Point                       304       42,000       28,000 --      56,000
    Development          Falcon Landing                     488       20,000       19,000 --      26,000
    Corp.                Spring Lakes                       261       30,000       24,000 --      44,000
                                                       --------

          TOTAL HOUSTON AREA DEVELOPMENT CORP.            1,053
                                                       --------

              TOTAL                                      29,715
                                                       ========
</Table>

----------

(1)      As of December 31, 2001, the Operating Partnership had an approximately
         95%, 95%, 90%, 94% and 94%, ownership interest in Desert Mountain
         Development Corporation, The Woodlands Land Company, Inc., Crescent
         Resort Development, Inc., Mira Vista Development Corp., and Houston
         Area Development Corp., respectively, through ownership of non-voting
         common stock in each of these Residential Development Corporations. On
         February 14, 2002, the Operating Partnership executed an agreement with
         COPI, pursuant to which COPI transferred to subsidiaries of the
         Operating Partnership, in lieu of foreclosure, COPI's ownership
         interests, representing substantially all of the voting stock, in
         Desert Mountain Development Corporation, The Woodlands Land Company,
         Inc. and Crescent Resort Development, Inc.

(2)      SF (Single-Family Lots); CO (Condominium); TH (Townhome); SFH (Single
         Family Homes) and TS (Timeshare Equivalent Units).

(3)      Based on lots/units closed during the Operating Partnership's ownership
         period.

(4)      Based on existing inventory of developed lots and lots to be developed.

(5)      Includes golf membership, which as of December 31, 2001, is $225,000.

(6)      As of December 31, 2001, one unit was under contract at Bear Paw Lodge
         representing $1.6 million in sales; two lots were under contract at
         Eagle Ranch representing $0.3 million in sales; one unit was under
         contract at Main Street Junction representing $0.4 million in sales; 73
         units were under contract at Main Street Station representing $34.2
         million in sales; two lots were under contract at Three Peaks
         representing $0.6 million in sales; 10 units were under contract at
         Park Place at Riverfront representing $6.8 million in sales; 43 units
         were under contract at Park Tower at Riverfront representing $27.6
         million in sales; 52 units were under contract at the Promenade Lofts
         at Riverfront representing $20.9 million in sales; 20 units were under
         contract at Snow Cloud representing $33.7 million in sales and 41 units
         were under contract at One Vendue Range representing $47.9 million in
         sales.

(7)      This project is in the early stages of development, and this
         information is not available as of December 31, 2001.


                                       25
<PAGE>

                   TEMPERATURE-CONTROLLED LOGISTICS PROPERTIES

         The following table shows the number and aggregate size of
Temperature-Controlled Logistics Properties by state as of December 31, 2001:

<Table>
<Caption>
                                   TOTAL CUBIC       TOTAL                                          TOTAL CUBIC         TOTAL
                   NUMBER OF         FOOTAGE      SQUARE FEET                       NUMBER OF         FOOTAGE        SQUARE FEET
     STATE       PROPERTIES(1)    (IN MILLIONS)  (IN MILLIONS)        STATE       PROPERTIES(1)    (IN MILLIONS)    (IN MILLIONS)
     -----       -------------    -------------  -------------        -----       -------------    -------------    -------------
<S>              <C>              <C>            <C>             <C>              <C>              <C>              <C>
Alabama                      4            10.7            0.3    Missouri(2)                  2            46.8              2.8
Arizona                      1             2.9            0.1    Nebraska                     2             4.4              0.2
Arkansas                     6            33.1            1.0    New York                     1            11.8              0.4
California                   9            28.6            1.1    North Carolina               3            10.0              0.4
Colorado                     1             2.8            0.1    Ohio                         1             5.5              0.2
Florida                      5             7.5            0.3    Oklahoma                     2             2.1              0.1
Georgia                      8            49.5            1.7    Oregon                       6            40.4              1.7
Idaho                        2            18.7            0.8    Pennsylvania                 2            27.4              0.9
Illinois                     2            11.6            0.4    South Carolina               1             1.6              0.1
Indiana                      1             9.1            0.3    South Dakota                 1             2.9              0.1
Iowa                         2            12.5            0.5    Tennessee                    3            10.6              0.4
Kansas                       2             5.0            0.2    Texas                        2             6.6              0.2
Kentucky                     1             2.7            0.1    Utah                         1             8.6              0.4
Maine                        1             1.8            0.2    Virginia                     2             8.7              0.3
Massachusetts                5            10.5            0.5    Washington                   6            28.7              1.1
Mississippi                  1             4.7            0.2    Wisconsin                    3            17.4              0.6
                                                                                  -------------     -----------      -----------

                                                                 TOTAL                       89(3)        445.2(3)           17.7(3)
                                                                                  =============     ===========      ===========
</Table>

----------

(1)      As of December 31, 2001, the Operating Partnership held a 40% interest
         in the Temperature-Controlled Logistics Partnership, which owns the
         Temperature-Controlled Logistics Corporation, which directly or
         indirectly owns the 89 Temperature-Controlled Logistics Properties. The
         business operations associated with the Temperature-Controlled
         Logistics Properties are owned by AmeriCold Logistics, in which the
         Operating Partnership has no interest. The Temperature-Controlled
         Logistics Corporation is entitled to receive lease payments from
         AmeriCold Logistics.

(2)      Includes an underground storage facility, with approximately 33.1
         million cubic feet.

(3)      As of December 31, 2001, AmeriCold Logistics operated 100
         temperature-controlled logistics properties with an aggregate of
         approximately 524.6 million cubic feet (20.2 million square feet) of
         warehouse space.

ITEM 3. LEGAL PROCEEDINGS

         None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of security holders during the fourth
quarter of the Registrant's fiscal year ended December 31, 2001.


                                       26
<PAGE>
                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED UNITHOLDER MATTERS

MARKET INFORMATION AND DISTRIBUTIONS

         The actual results of operations of the Operating Partnership and the
amounts actually available for distribution will be affected by a number of
factors, including:

         o  the operating and interest expenses of the Operating Partnership;
         o  the ability of customers to meet their rent obligations;
         o  general leasing activity in the markets in which the Office
            Properties are located;
         o  consumer preferences relating to the Resort/Hotel Properties;
         o  cash flows from unconsolidated entities;
         o  the general condition of the United States economy;
         o  federal, state and local taxes payable by the Operating
            Partnership;
         o  capital expenditure requirements; and
         o  the adequacy of cash reserves.

         There is no established public trading market for the Registrant's
limited partner interests, including the associated units for limited partners
other than the Company and the General Partner ("Units"). The following table
sets forth the cash distributions paid per Unit during each quarter of fiscal
years 2000 and 2001. As of March 11, 2002, there were 43 record holders of
Units.

<Table>
<Caption>
Quarter Ended:             2001 Distributions             2000 Distributions
<S>                        <C>                            <C>
March 31                   $1.10                          $1.10
June 30                    $1.10                          $1.10
September 30               $0.75(1)                       $1.10
December 31                $0.75(1)                       $1.10
</Table>

----------

(1)      Beginning with the third quarter of 2001, the Operating Partnership
         reduced its quarterly distribution from $1.10 per Unit, or an
         annualized distribution of 4.40 per Unit, to $0.75 per Unit, or an
         annualized distribution of $3.00 per Unit. Comparable cash
         distributions are expected in the future.

         Beginning with the third quarter of 2001 the Operating Partnership, due
to its revised cash flow expectations in the uncertain economic environment and
measuring its payout ratios to those of the Operating Partnership's peer group,
reduced its quarterly distribution from $1.10 per unit, or an annualized
distribution of $4.40 per unit, to $0.75 per unit, or an annualized distribution
of $3.00 per unit.

         Distributions by the Operating Partnership to the extent of its current
and accumulated earnings and profits for federal income tax purposes generally
will be taxable to a partner as ordinary dividend income.  Distributions in
excess of current and accumulated earnings and profits will be treated as a
nontaxable reduction of the partner's basis in such partner's units, to the
extent thereof, and thereafter as taxable gain.  Distributions that are treated
as a reduction of the partner's basis in its units will have the effect of
deferring taxation until the sale of the partner's units.  No assurances can be
given regarding what portion, if any, of distributions in 2002 or subsequent
years will constitute a return of capital for federal income tax purposes.

         Distributions on the Operating Partnership's units are payable at the
rate of $3.00 per annum per unit.

         Following is the income tax status of distributions paid during the
years ended December 31, 2001 and 2000 to unitholders:

<Table>
<Caption>
                                                   2001         2000
                                                ----------   ------------
<S>                                            <C>            <C>
Ordinary dividend/distribution                      50.3%        51.5%
Capital gain                                          --          6.4
Return of capital                                   49.7         35.9
Unrecaptured Section 1250 Gain                        --          6.2
</Table>


         Distributions on the 8,000,000 6 3/4% Series A Convertible Cumulative
Preferred Units issued by the Company in February 1998 are payable at the rate
of $1.6875 per annum per Series A Convertible Cumulative Preferred Units, prior
to distributions on the units

         Following is the income tax status of distributions paid during the
years ended December 31, 2001 and 2000 to preferred unitholders:

<Table>
<Caption>
                                                   2001         2000
                                                ----------   -----------
<S>                                            <C>            <C>
Ordinary dividend                                  100.0%        83.7%
Capital gain                                          --          8.2
Unrecaptured Section 1250 Gain                        --          8.1
</Table>


ISSUANCES OF UNREGISTERED SECURITIES

         None.


                                       27
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

         The following table includes certain financial information for the
Operating Partnership on a consolidated historical basis. You should read this
section in conjunction with "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Item 8. Financial Statements
and Supplementary Data."

                CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
                     CONSOLIDATED HISTORICAL FINANCIAL DATA
                  (DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)


<Table>
<Caption>
                                                                                YEAR ENDED DECEMBER 31,
                                                     ----------------------------------------------------------------------------
                                                         2001            2000            1999            1998            1997
                                                     ------------    ------------    ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>             <C>             <C>
OPERATING DATA(1):
Total revenue ....................................   $    725,326    $    739,697    $    746,279    $    698,343    $    447,373
Operating income (loss) ..........................          1,188         119,701         (54,954)        143,893         111,281
Income before minority
    interests and extraordinary
    item .........................................         56,844         324,344          13,343         183,210         135,024
Basic earnings per unit of partnership interest:
   Income (loss) before extraordinary
    item .........................................   $       0.33    $       4.24    $      (0.09)   $       2.52    $       2.50
   Net income (loss) .............................           0.15            4.18           (0.09)           2.52            2.50
Diluted earnings per unit of partnership interest:
   Income (loss) before extraordinary
    item .........................................   $       0.33    $       4.21    $      (0.09)   $       2.42    $       2.41
   Net income (loss) .............................           0.15            4.15           (0.09)           2.42            2.41
BALANCE SHEET DATA
(AT PERIOD END):
Total assets(1) .................................    $  4,422,826    $  4,827,999    $  4,951,420    $  5,045,949    $  4,182,875
Total debt .......................................      2,214,094       2,271,895       2,598,929       2,318,156       1,710,125
Total partners' capital ..........................      1,759,190       2,116,594       2,156,863       2,551,624       2,317,353
OTHER DATA:
Funds from Operations(2) .........................   $    206,389    $    348,189    $    340,777    $    341,713    $    214,396
Earnings before interest, taxes,
    depreciation and amortization(1)(3)...........   $    488,427    $    541,294    $    526,154    $    459,992    $    299,390
Cash distribution declared per
    unit of partnership interest .................   $       3.70    $       4.40    $       4.40    $       3.72    $       2.74
Weighted average
   units outstanding - basic .....................     67,814,802      67,859,823      67,977,021      66,214,702      53,417,789
Weighted average
    units outstanding - diluted ..................     68,578,210      68,458,230      68,945,780      70,194,031      55,486,729
Cash flow provided by
    (used in):
    Operating activities .........................   $    238,621    $    297,227    $    335,829    $    299,514    $    211,550
    Investing activities .........................        210,356         144,843        (204,345)       (820,429)     (2,294,766)
    Financing activities .........................       (455,976)       (475,529)       (169,210)        564,680       2,123,744
</Table>


----------
(1)  The selected consolidated historical financial data, including the
     operating data and total assets, have been prepared in accordance with
     GAAP.  Because of the manner in which certain subsidiaries of the Company
     and the Operating Partnership are consolidated for purposes of GAAP, an
     intracompany loan is reflected as an asset, and the associated interest
     income is included in the operating data, in the Operating Partnership's
     financial statements for the years ended December 31, 2001 and 2000.  If
     this intracompany loan and the associated interest income were eliminated,
     all items under "Operating Data," and total assets would be reduced, as
     shown in "Note 12. Sale of Preferred Equity Interests in Subsidiary and
     Intracompany Loan" included in "Item 8. Financial Statements and
     Supplementary Data."  In addition, earnings before interest, taxes,
     depreciation and amortization would be reduced to $459,155 for the year
     ended December 31, 2001 and $520,002 for the year ended December 31, 2000.

(2)  Funds from Operations ("FFO"), based on the revised definition adopted by
     the Board of Governors of the National Association of Real Estate
     Investment Trusts ("NAREIT"), effective January 1, 2000, and as used
     herein, means net income (loss) (determined in accordance with GAAP),
     excluding gains (or losses) from sales of depreciable operating property,
     excluding extraordinary items (as defined by GAAP), plus depreciation and
     amortization of real estate assets, and after adjustments for
     unconsolidated partnerships and joint ventures. For a more detailed
     definition and description of FFO and the reduction in FFO that would
     result for the years ended December 31, 2001 and 2000 if the intracompany
     loan and the resulting interest income were eliminated, see "Item 7.
     Management's Discussion and Analysis of Financial Condition and Results of
     Operations."

(3)  Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA"),
     is computed as the sum of (i) net income before minority interests and
     extraordinary item, interest expense, depreciation and amortization,
     amortization of deferred financing costs, impairment and other charges
     related to COPI and impairment and other charges related to the real estate
     assets (ii) less gain on property sales, net. EBITDA is presented because
     it provides useful information regarding the Operating Partnership's
     ability to service debt. EBITDA should not be considered as an alternative
     measure of operating results or cash flow from operations as determined in
     accordance with GAAP. EBITDA as presented may not be comparable to other
     similarly titled measures used by other companies.



                                       28
<PAGE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         You should read this section in conjunction with the selected financial
data and the consolidated financial statements and the accompanying notes in
"Item 6. Selected Financial Data" and "Item 8. Financial Statements and
Supplementary Data," respectively, of this report. Historical results and
percentage relationships set forth in these Items and this section should not be
taken as indicative of future operations of the Operating Partnership.
Capitalized terms used but not otherwise defined in this section have the
meanings given to them in Items 1 - 6 of this Form 10-K.

         The limited partnership agreement of the Operating Partnership
acknowledges that all of the Company's operating expenses are incurred for the
benefit of the Operating Partnership and provides that the Operating Partnership
will reimburse the Company for all such expenses. Accordingly, expenses of the
Company are reimbursed by the Operating Partnership.

         This Form 10-K contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements are generally
characterized by terms such as "believe," "expect" and "may."

         Although the Operating Partnership believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, the Operating Partnership's actual results could differ materially
from those described in the forward-looking statements.

         The following factors might cause such a difference:

    o    The Operating Partnership's inability to obtain the confirmation of a
         prepackaged bankruptcy plan of COPI binding all creditors and COPI
         stockholders;

    o    The inability of the Operating Partnership to successfully integrate
         the lessee interests in the Resort/Hotel Properties and the voting
         interests in the Residential Development Corporations and related
         entities into its current business and operations;

    o    The inability of the Operating Partnership and the Company to complete
         the distribution to unitholders of the Operating Partnership and
         shareholders of the Company of the shares of a new entity to purchase
         COPI's interest in AmeriCold Logistics;

    o    Further deterioration in the resort/business-class hotel markets or in
         the market for residential land or luxury residences, including
         single-family homes, townhomes and condominiums, or in the economy
         generally;

    o    The Operating Partnership's ability, at its Office Properties, to
         timely lease unoccupied square footage and timely re-lease occupied
         square footage upon expiration on favorable terms, which may be
         adversely affected by changes in real estate conditions (including
         rental rates and competition from other properties and new development
         of competing properties or a general downturn in the economy);

    o    Financing risks, such as the ability to generate revenue sufficient to
         service and repay existing or additional debt, the ability to meet
         applicable debt covenants, the Operating Partnership's ability to fund
         the share repurchase program, increases in debt service associated with
         increased debt and with variable-rate debt, and the ability to
         consummate financings and refinancings on favorable terms and within
         any applicable time frames;

    o    Further adverse conditions in the temperature-controlled logistics
         business (including both industry-specific conditions and a general
         downturn in the economy) which may further jeopardize the ability of
         AmeriCold Logistics to pay rent;

    o    Adverse changes in the financial condition of existing tenants;

    o    The concentration of a significant percentage of the Operating
         Partnership's assets in Texas;




                                       29
<PAGE>



    o    The Operating Partnership's ability to find acquisition and development
         opportunities which meet the Operating Partnership's investment
         strategy;

    o    The existence of complex regulations relating to the Company's status
         as a REIT, the effect of future changes in REIT requirements as a
         result of new legislation and the adverse consequences of the failure
         to qualify as a REIT; and

    o    Other risks detailed from time to time in the Operating Partnership's
         filings with the SEC.

         Given these uncertainties, readers are cautioned not to place undue
reliance on such statements. The Operating Partnership is not obligated to
update these forward-looking statements to reflect any future events or
circumstances.

         The following sections include information for each of the Operating
Partnership's investment segments for the year ended December 31, 2001.

         The economic slowdown in the third quarter of 2001 combined with the
events of September 11, 2001 have had an adverse impact on Resort/Hotel
operations and lot sales primarily at the Desert Mountain Residential
Development Property. However, the Office Property portfolio, which represents
approximately 66% of total assets, continues to be stable with same-store
weighted average occupancy in excess of 92% and average remaining lease term of
approximately five years at December 31, 2001. Although management does not
expect full recovery of these investment segments in the near-term, the
Operating Partnership remains committed to its fundamental investment segments.

OFFICE SEGMENT

         As of December 31, 2001, the Operating Partnership owned or had an
interest in 74 Office Properties.

         The following table shows the same-store net operating income growth
for the approximately 25.4 million square feet of Office Property space owned as
of December 31, 2001, which excludes approximately 1.5 million square feet of
Office Property space at Bank One Center, in which the Operating Partnership
owns a 50% equity interest, approximately 1.0 million square feet of Office
Property space at Four Westlake Park and Bank One Tower, in each of which the
Operating Partnership has a 20% equity interest, and 0.1 million square feet of
Office Property space at Avallon IV, which was completed during the year ended
December 31, 2001.

<Table>
<Caption>
                                             FOR THE YEAR ENDED DECEMBER 31,
                                      -------------------------------------------
                                                                    PERCENTAGE/
                                       2001            2000        POINT INCREASE
                                      ----------    ----------    ---------------
(IN MILLIONS)
<S>                                   <C>            <C>              <C>
Same-store Revenues                   $    552.5     $    519.9        6.3 %
Same-store Expenses                       (250.1)        (229.3)       9.1 %
                                      ----------     ----------
Net Operating Income                  $    302.4     $    290.6        4.1 %
                                      ==========     ==========
Weighted Average Occupancy                  92.3%          91.8%       0.5 pt
</Table>


         The following table shows renewed or re-leased leasing activity and the
percentage increase of leasing rates for signed leases compared to expiring
leases at the Operating Partnership's Office Properties owned as of December 31,
2001.

<Table>
<Caption>
                                        FOR THE YEAR ENDED DECEMBER 31, 2001
                              ----------------------------------------------------------
                                    SIGNED               EXPIRING           PERCENTAGE
                                    LEASES                LEASES             INCREASE
                              -------------------   --------------------   -------------
<S>                           <C>                   <C>                    <C>
Renewed or re-leased (1)      1,890,000 sq. ft.       N/A                       N/A
Weighted average full-
     service rental rate (2)  $23.67 per sq. ft.      $20.21 per sq. ft.        17%
FFO annual net effective
     rental rate (3)          $14.70 per sq. ft.      $11.21 per sq. ft.        31%
</Table>




                                       30
<PAGE>



----------
(1)      All of which have commenced or will commence during the next 12 months.

(2)      Including free rent, scheduled rent increases taken into account under
         GAAP and expense recoveries.

(3)      Calculated as weighted average full-service rental rate minus operating
         expenses.

o        For 2002, the Operating Partnership projects same-store net operating
         income for its Office Properties to increase between 0% and 4% over
         2001, based on an average occupancy range of 90% to 93%.

RESORT/HOTEL SEGMENT

         As of December 31, 2001, the Operating Partnership owned nine
Resort/Hotel Properties.

         The following table shows weighted average occupancy, average daily
rate and revenue per available room/guest for the Resort/Hotel Properties for
the years ended December 31, 2001 and 2000.

<Table>
<Caption>
                                                  FOR THE YEAR ENDED DECEMBER 31,
                                           -------------------------------------------
                                                                          PERCENTAGE/
                                                                        POINT INCREASE
                                               2001           2000        (DECREASE)
                                           ------------   ------------  --------------
<S>                                        <C>            <C>              <C>
Weighted average occupancy(1)                    70%            76%         (6) pts
Average daily rate(1)                       $   245         $  238           3%
Revenue per available room/guest(1)         $   170         $  180          (6)%
</Table>

----------
(1)      Excludes the Four Seasons Hotel - Houston, which was sold on November
         3, 2000.

         On February 14, 2002, the Operating Partnership executed an agreement
with COPI, pursuant to which COPI transferred to subsidiaries of the Operating
Partnership, in lieu of foreclosure, COPI's lessee interests in the eight
Resort/Hotel Properties leased to subsidiaries of COPI. As a result, the
subsidiaries of the Operating Partnership became the lessees of these
Resort/Hotel Properties. The Operating Partnership will fully consolidate the
operations of the eight Resort/Hotel Properties beginning on the date of the
asset transfers. See "Note 20. Subsequent Events" included in "Item 8. Financial
Statements and Supplemental Data" for additional information regarding the
Operating Partnership's agreement with COPI.

         The following table shows the Resort/Hotel Property same-store net
operating income for the years ended December 31, 2001 and 2000, for the nine
Resort/Hotel Properties owned during both of these periods.


<Table>
<Caption>
                                                                  FOR THE YEAR
                                                               ENDED DECEMBER 31,
                                                     ------------------------------------
                                                                               PERCENTAGE
                                                        2001         2000       DECREASE
                                                     ----------   ----------   ----------
(IN THOUSANDS)
<S>                                                  <C>          <C>          <C>
Upscale Business-Class Hotels (1)                    $   20,165   $   22,157           (9)%
Luxury and Destination Fitness Resorts and Spas          29,451       36,837          (20)
                                                     ----------   ----------   ----------
All Resort/Hotel Properties (1)                      $   49,616   $   58,994          (16)%
                                                     ==========   ==========   ==========
</Table>


----------
(1)      Excludes the Four Seasons Hotel - Houston, which was sold on November
         3, 2000.

o        For 2002, the Operating Partnership projects same-store net operating
         income will increase between 0% and 3% over 2001. Also, the average
         daily rate is expected to increase between 0% and 2% over 2001, and
         revenue per available room is expected to increase between 0% and 3%
         over 2001.



                                       31
<PAGE>


CR License, LLC and CRL Investments, Inc.

         As of December 31, 2001, the Operating Partnership had a 28.5% interest
in CR License, LLC, the entity which owns the right to the future use of the
"Canyon Ranch" name. The Operating Partnership also had a 95% economic interest,
representing all of the non-voting common stock, in CRL Investments, Inc., which
has an approximately 65% economic interest in the Canyon Ranch Spa Club in the
Venetian Hotel in Las Vegas, Nevada.

         On February 14, 2002, the Operating Partnership executed an agreement
with COPI, pursuant to which COPI transferred to subsidiaries of the Operating
Partnership, in lieu of foreclosure, COPI's 1.5% interest in CR License, LLC and
5.0% interest, representing all of the voting stock, in CRL Investments, Inc.

RESIDENTIAL DEVELOPMENT SEGMENT

         As of December 31, 2001, the Operating Partnership owned economic
interests in five Residential Development Corporations through the Residential
Development Property mortgages and the non-voting common stock of these
Residential Development Corporations. The Residential Development Corporations
in turn, through joint ventures or partnership arrangements, currently own
interests in 21 Residential Development Properties. The Residential Development
Corporations are responsible for the continued development and the day-to-day
operations of the Residential Development Properties.

         On February 14, 2002, the Operating Partnership executed an agreement
with COPI, pursuant to which COPI transferred to subsidiaries of the Operating
Partnership, in lieu of foreclosure, COPI's voting interests in three of the
Residential Development Corporations (The Woodlands Land Company, Inc., Desert
Mountain Development Corporation and Crescent Resort Development, Inc.). The
Operating Partnership will fully consolidate the operations of the three
Residential Development Corporations beginning on the date of the asset
transfers.

         Management plans to monetize the Operating Partnership's current
investments in the five Residential Development Corporations and reinvest
returned capital from the Residential Development Segment primarily into the
Office Segment where the Operating Partnership expects to achieve favorable
rates of return.

The Woodlands Land Development Company, L.P. and The Woodlands Commercial
Properties Company, L.P. (collectively "The Woodlands"), The Woodlands, Texas:

         The following table shows residential lot sales at an average price per
lot and commercial land sales at an average price per acre.

<Table>
<Caption>
                                                  FOR THE YEAR
                                                ENDED DECEMBER 31,
                                         ------------------------------
                                              2001             2000
                                         ------------      ------------
<S>                                      <C>               <C>
Residential lot sales                         1,718             2,033
Average sales price per lot              $   72,000        $   62,000
Commercial land sales                            94 acres         124 acres
Average sales price per acre             $  337,000        $  308,000
</Table>

o    Average sales price per lot increased by $10,000, or 16%, due to a product
     mix of higher priced lots from the Carlton Woods development in the year
     ended December 31, 2001, compared to the same period in 2000.

o    Carlton Woods is The Woodlands' new upscale residential development. It is
     a gated community consisting of 491 lots located around a Jack Nicklaus
     signature golf course. As of December 31, 2001, 213 lots have been sold at
     prices ranging from $0.1 million to $1.0 million per lot, or an average
     price of $343,000 per lot. Additional phases within Carlton Woods are
     expected to be marketed to the public over the next two years.

o    Future buildout of The Woodlands is estimated at approximately 13,100
     residential lots and approximately 1,700 acres of commercial land, of which
     approximately 1,555 residential lots and 1,075 acres are currently in
     inventory.

o    The Operating Partnership projects residential lot sales at The Woodlands
     to range between 1,550 lots and 1,800 lots at an average sales price per
     lot ranging between $70,000 and $80,000 for 2002.




                                       32
<PAGE>



Desert Mountain Properties Limited Partnership ("Desert Mountain"), Scottsdale,
Arizona:

         The following table shows residential lot sales at an average price per
lot.

<Table>
<Caption>
                                                  FOR THE YEAR
                                                ENDED DECEMBER 31,
                                         ------------------------------
                                             2001              2000
                                         ------------      ------------
<S>                                      <C>               <C>
Residential lot sales                              86               178
Average sales price per lot(1)           $    688,000      $    619,000
</Table>

----------
(1)  Including equity golf memberships.

o    With the higher priced residential lots being completed during the latter
     phases of development at Desert Mountain, the average sales price per lot
     increased by $69,000, or 11%, for the year ended December 31, 2001, as
     compared to the same period in 2000. As a result of product mix and a
     decline in the economy combined with the events of September 11, 2001, the
     number of lot sales decreased to 86 lots for the year ended December 31,
     2001, as compared to 178 lots for the same period in 2000.

o    Approved future buildout is estimated to be approximately 300 residential
     lots, of which approximately 140 are currently in inventory.

o    As a result of product mix and a decline in the economy, the Operating
     Partnership projects residential lot sales in 2002 to range between 50 lots
     and 75 lots at an average sales price per lot ranging between $700,000 and
     $800,000.

Crescent Resort Development, Inc. ("CRD"), (formerly Crescent Development
Management Corp.), Beaver Creek, Colorado:

         The following table shows total active projects, residential lot and
residential unit sales, commercial land sales and average sales price per lot
and unit.

<Table>
<Caption>
                                                        FOR THE YEAR
                                                     ENDED DECEMBER 31,
                                              ----------------------------------
                                                  2001                  2000
                                              -------------        -------------
<S>                                           <C>                  <C>
Active projects                                          14                   12
Residential lot sales                                   181                  343
Residential unit sales:
   Townhome sales                                        11                   19
   Single-family home sales                              --                    5
   Equivalent timeshare unit sales                       11                   --
   Condominium sales                                    109                   26
Commercial land sales                                    -- acres              9 acres
Average sale price per residential lot        $      73,000        $     136,000
Average sale price per residential unit       $ 1.0 million        $ 1.6 million
</Table>

o    Average sales price per lot decreased by $63,000, or 46%, and average sales
     price per unit decreased $0.6 million, or 38%, due to lower priced product
     mix sold in the year ended December 31, 2001, as compared to the same
     period in 2000.

o    For 2002, the Operating Partnership projects that residential lot sales
     will range between 325 lots and 375 lots at an average sales price per lot
     ranging between $110,000 and $130,000. In addition, the Operating
     Partnership expects between 280 and 310 residential unit sales, including
     single family homes, townhomes and condominiums to be sold at an average
     sales price per residential unit ranging between $750,000 and $850,000.

TEMPERATURE-CONTROLLED LOGISTICS SEGMENT

         As of December 31, 2001, the Operating Partnership held a 40% interest
in the Temperature-Controlled Logistics Partnership, which owns the
Temperature-Controlled Logistics Corporation, which directly or indirectly owns
the 89



                                       33
<PAGE>


Temperature-Controlled Logistics Properties. The business operations associated
with the Temperature-Controlled Logistics Properties are owned by AmeriCold
Logistics, which is owned 60% by Vornado Operating, L.P. and 40% by a subsidiary
of COPI. The Operating Partnership has no interest in AmeriCold Logistics.

         AmeriCold Logistics, as sole lessee of the Temperature-Controlled
Logistics Properties, leases the Temperature-Controlled Logistics Properties
from the Temperature-Controlled Logistics Corporation under three triple-net
master leases, as amended on January 23, 2002. On February 22, 2001, the
Temperature-Controlled Logistics Corporation and AmeriCold Logistics agreed to
restructure certain financial terms of the leases, including the adjustment of
the rental obligation for 2001 to $146.0 million, the adjustment of the rental
obligation for 2002 to $150.0 million (plus contingent rent in certain
circumstances), the increase of the Temperature-Controlled Logistics
Corporation's share of capital expenditures for the maintenance of the
properties from $5.0 million to $9.5 million (effective January 1, 2000) and the
extension of the date on which deferred rent was required to be paid to December
31, 2003.

         AmeriCold Logistics' same-store earnings before interest, taxes,
depreciation and amortization, and rent ("EBITDAR") declined 11% for the year
ended December 31, 2001, compared to the same period in 2000. These declines are
attributable to a reduction in total customer inventory stored at the warehouses
and a reduction in the frequency of customer inventory turnover. AmeriCold
Logistics deferred $25.5 million of rent for the year ended December 31, 2001,
of which the Operating Partnership's share was $10.2 million. AmeriCold
Logistics also deferred $19.0 million and $5.4 million of rent for the years
ended December 31, 2000 and 1999, respectively, of which the Operating
Partnership's share was $7.5 million and $2.1 million, respectively. In December
2001, the Temperature-Controlled Logistics Corporation waived its rights to
collect $39.8 million of the total $49.9 million of deferred rent, of which the
Operating Partnership's share was $15.9 million. The Temperature-Controlled
Logistics Corporation and the Operating Partnership had recorded adequate
valuation allowances related to their portions of the waived deferred rental
revenue during the years ended December 31, 2000 and 2001; therefore, there was
no financial statement impact to the Temperature-Controlled Logistics
Corporation or to the Operating Partnership related to the
Temperature-Controlled Logistics Corporation's decision to waive collection of
the deferred rent.

         Management believes that EBITDAR is a useful financial performance
measure for assessing the relative stability of the financial condition of
AmeriCold Logistics. The following table shows EBITDAR and lease payment for
AmeriCold Logistics for the year ended December 31, 2001 and 2000.

<Table>
<Caption>
                                            FOR THE YEAR ENDED
                                               DECEMBER 31,
                                   --------------------------------------
(in millions)                          2001                     2000
                                   -------------             ------------
<S>                                <C>                       <C>
EBITDAR(1)                         $       135.8             $      162.1
Lease Payment (2)                  $       146.0             $      160.5
</Table>

----------
(1)  EBITDAR does not represent net income or cash flows from operating,
     financing or investing activities as defined by GAAP.

(2)  Represents the rental obligation (excluding the effect of straight-lining
     rents and deferred rent) of AmeriCold Logistics.

o    During 2001, the Temperature-Controlled Logistics Corporation completed the
     acquisition of one facility in the first quarter of 2001 for $10.0 million
     and completed the construction of one facility in the third quarter of 2001
     for $15.8 million, representing approximately 8.5 million cubic feet (0.2
     million square feet.)



                                       34
<PAGE>



                              RESULTS OF OPERATIONS

         The following table shows the Operating Partnership's financial data as
a percentage of total revenues for the three years ended December 31, 2001, 2000
and 1999 and the variance in dollars between the years ended December 31, 2001
and 2000 and the years ended December 31, 2000 and 1999. See "Note 3. Segment
Reporting" included in "Item 8. Financial Statements and Supplementary Data" for
financial information about investment segments.

<Table>
<Caption>
                                                    FINANCIAL DATA AS A PERCENTAGE OF TOTAL      TOTAL VARIANCE IN DOLLARS BETWEEN
                                                    REVENUES FOR THE YEAR ENDED DECEMBER 31,        THE YEARS ENDED DECEMBER 31,
                                                ----------------------------------------------   ---------------------------------
                                                                                                            (IN MILLIONS)
                                                    2001              2000            1999        2001 AND 2000    2000 AND 1999
                                                ------------     ------------     ------------    -------------    -------------
<S>                                             <C>              <C>               <C>            <C>              <C>
REVENUES
   Office properties                                    84.1%             81.9%            82.3%   $        4.1    $       (8.5)
   Resort/Hotel properties                               6.3               9.8              8.8           (26.4)            6.9
   Interest and other income(1)                          9.6               8.3              8.9             7.9            (5.0)
                                                ------------      ------------     ------------    ------------    ------------
     TOTAL REVENUES                                    100.0%            100.0%           100.0%   $      (14.4)   $       (6.6)
                                                ------------      ------------     ------------    ------------    ------------

EXPENSES
   Operating expenses                                   36.5%             33.8%            34.4%   $       13.9    $       (7.1)
   Corporate general and administrative                  3.3               3.3              2.2             0.1             7.8
   Interest expense                                     25.1              27.5             25.7           (20.8)           11.2
   Amortization of deferred financing costs              1.3               1.3              1.4            (0.2)           (0.7)
   Depreciation and amortization                        17.4              16.7             17.6             2.4            (7.9)
   Settlement of merger dispute                           --                --              2.0              --           (15.0)
   Impairment and other charges related
     to real estate assets                               3.5               1.2             24.0            16.0          (169.5)
   Impairment and other charges related
     to COPI                                            12.8                --               --            92.8              --
                                                ------------      ------------     ------------    ------------    ------------
     TOTAL EXPENSES                                     99.9%             83.8%           107.3%          104.2          (181.2)
                                                ------------      ------------     ------------    ------------    ------------
OPERATING INCOME (LOSS)                                  0.1%             16.2%           (7.3)%   $     (118.6)   $      174.6

OTHER INCOME
   Equity in net income of unconsolidated
     companies:
     Office properties                                   0.8               0.4              0.7             2.9            (2.1)
     Residential development properties                  5.7               7.2              5.7           (12.5)           10.6
     Temperature-controlled logistics properties         0.2               1.0              2.0            (6.3)           (7.6)
     Other                                               0.4               1.6              0.7            (8.6)            6.5
                                                ------------      ------------     ------------    ------------    ------------
     TOTAL EQUITY IN NET INCOME FROM
     UNCONSOLIDATED COMPANIES                            7.1%             10.2%             9.1%   $      (24.5)   $        7.4

   Gain on property sales, net                           0.6              17.4               --          (124.5)          128.9

                                                ------------      ------------     ------------    ------------    ------------
     TOTAL OTHER INCOME AND EXPENSE                      7.7%             27.6%             9.1%   $     (149.0)   $      136.3
                                                ------------      ------------     ------------    ------------    ------------

INCOME (LOSS) BEFORE MINORITY INTERESTS
     AND EXTRAORDINARY ITEM                              7.8%             43.8%             1.8%   $     (267.6)   $      310.9

   Minority interests                                   (2.9)             (2.7)            (0.1)           (0.8)          (18.6)
                                                ------------      ------------     ------------    ------------    ------------

NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM              4.9%             41.1%             1.7%   $     (268.4)   $      292.3

     Extraordinary item - extinguishment
     of debt                                            (1.7)             (0.6)              --            (7.8)           (4.4)
                                                ------------      ------------     ------------    ------------    ------------

NET INCOME (LOSS)                                        3.2%             40.5%             1.7%   $     (276.2)   $      287.9

   6 3/4% Series A Preferred Unit distributions         (1.9)             (1.8)            (1.8)             --              --
   Share repurchase agreement return                      --              (0.4)            (0.1)            2.9            (2.3)
   Forward share purchase
        agreement return                                  --                --             (0.6)             --             4.3
                                                ------------      ------------     ------------    ------------    ------------

NET INCOME (LOSS) AVAILABLE TO
   PARTNERS                                              1.3%             38.3%           (0.8)%   $     (273.3)   $      289.9
                                                ============      ============     ============    ============    ============
</Table>

(1) Includes interest income from an intracompany loan for the years ended
December 31, 2001 and 2000. See "Sale of Preferred Equity Interests in
Subsidiary and Intracompany Loan" below for a description of this intracompany
loan and its effects on certain items in the Operating Partnership's financial
statements.


                                       35
<PAGE>



COMPARISON OF THE YEAR ENDED DECEMBER 31, 2001 TO THE YEAR ENDED DECEMBER 31,
2000

REVENUES

         Total revenues decreased $14.4 million, or 1.9%, to $725.3 million for
the year ended December 31, 2001, as compared to $739.7 million for the year
ended December 31, 2000. The primary components of the decrease in total
revenues are discussed below.

         The increase in Office Property revenues of $4.1 million, or 0.7%, for
the year ended December 31, 2001, as compared to the year ended December 31,
2000, is attributable to:

               o    increased revenues of $31.3 million from the 74 consolidated
                    Office Properties that the Operating Partnership owned or
                    had an interest in as of December 31, 2001, primarily as a
                    result of increased full-service weighted average rental
                    rates (reflecting increases in both rental revenue and
                    operating expense recoveries), and increased occupancy;

               o    increased other income of $4.1 million, primarily due to
                    parking revenue; partially offset by

               o    decreased revenues of $27.3 million due to the disposition
                    of 11 Office Properties and four retail properties during
                    2000, compared to the disposition of five Office Properties
                    and the joint ventures of two Office Properties during 2001;
                    and

               o    decreased lease termination fees (net of the write-off of
                    deferred rent receivables) of $4.0 million, from $12.0
                    million for the year ended December 31, 2000, to $8.0
                    million for the year ended December 31, 2001.

         The decrease in Resort/Hotel Property revenues of $26.4 million, or
36.6%, for the year ended December 31, 2001, as compared to the year ended
December 31, 2000, is attributable to:

               o    decreased revenues from the upscale business-class hotels of
                    $8.1 million, due to the disposition of the Four Seasons
                    Hotel - Houston in November 2000;

               o    decreased revenues of $6.3 million due to a decrease in
                    rental income attributed to the softening of the economy and
                    the events of September 11, 2001; and

               o    decreased revenues of $12.0 million due to not recognizing
                    revenue during the fourth quarter of 2001 under the leases
                    with COPI.

         Interest and other income increased $7.9 million, or 13.0%, primarily
due to increased interest income of $8.0 million, as a result of interest earned
on a loan which originated in March 2000 from the Operating Partnership to
Crescent SH IX, Inc. ("SH IX") in connection with the repurchase of 14,468,623
common shares of the Company.

EXPENSES

         Total expenses increased $104.2 million, or 16.8%, to $724.2 million
for the year ended December 31, 2001, as compared to $620.0 million for the year
ended December 31, 2000. The primary components of the increase in total
expenses are discussed below.

         The increase in Office Property operating expenses of $13.9 million, or
0.6%, for the year ended December 31, 2001, as compared to the year ended
December 31, 2000, is attributable to:

               o    increased expenses of $24.7 million from the 74 consolidated
                    Office Properties that the Operating Partnership owned or
                    had an interest in as of December 31, 2001, primarily as a
                    result of increased operating expenses for utilities of $7.8
                    million, taxes of $3.6 million and other increased operating
                    expenses such as insurance, security, and technology
                    initiatives of $13.3 million during the year ended December
                    31, 2001, as compared to the same period in 2000; partially
                    offset by

               o    decreased expenses of $10.8 million due to the disposition
                    of 11 Office Properties and four retail properties during
                    2000, compared to the disposition of five Office Properties
                    and the joint ventures of two Office Properties during 2001.



                                       36
<PAGE>


         The decrease in interest expense of $20.8 million, or 10.2%, for the
year ended December 31, 2001, as compared to the same period in 2000, is
primarily attributable to a decrease in the weighted average interest rate of
0.61%, or $14.0 million of interest expense, combined with a decrease in the
average debt balance of $104.0 million, or $8.0 million of interest expense.

         The increase in impairment and other charges related to real estate
assets of $16.0 million is due to:

               o    the conversion of the Operating Partnership's preferred
                    member interest in Metropolitan Partners, LLC
                    ("Metropolitan") into common stock of Reckson Associates
                    Realty Corp. ("Reckson"), which resulted in an impairment
                    charge of $11.9 million; and

               o    an impairment loss of $5.0 million recognized on a real
                    estate investment fund in which the Operating Partnership
                    has an interest; partially offset by

               o    a decrease in the impairment of the behavioral healthcare
                    properties of $0.9 million.

         The increase in impairment and other charges related to COPI of $92.8
million is due to the reduction in net assets of $74.8 million, primarily
attributable to the write-down of debt and rental obligations of COPI to the
estimated underlying collateral value of assets to be received from COPI, and
estimated COPI bankruptcy costs to be funded by the Operating Partnership of
$18.0 million.

OTHER INCOME

         Other income decreased $149.0 million, or 72.8%, to $55.7 million for
the year ended December 31, 2001, as compared to $204.6 million for the year
ended December 31, 2000. This decrease is due to:

         The decrease in equity in net income of unconsolidated companies of
$24.5 million, or 32.4%, for the year ended December 31, 2001, as compared to
the same period in 2000, is primarily attributable to:

               o    a decrease in equity in net income of unconsolidated
                    Residential Development Properties of $12.5 million, or 24%,
                    primarily attributable to lower lot sales at Desert Mountain
                    during the year ended December 31, 2001, resulting in a
                    decrease of $16.3 million; partially offset by higher unit
                    sales at CRD, resulting in an increase of $4.5 million; and

               o    a decrease in equity in net income of the
                    Temperature-Controlled Logistics Properties of $6.3 million,
                    or 85%, due to the lease restructuring in 2001 and an
                    increase in deferred rent of $9.2 million; and

               o    a decrease in equity in net income of other unconsolidated
                    Properties of $8.6 million, or 75.0%, primarily attributable
                    to lower earnings of $3.8 million from Metropolitan due to
                    the conversion of the Operating Partnership's preferred
                    member interest into common stock of Reckson in May 2001,
                    the $1.0 million write-off of the Operating Partnership's
                    investment in a retail distribution company and lower
                    earnings from DBL Holdings, Inc. ("DBL") of $1.7 million,
                    due to an approximate $12.2 million return of investment
                    received in March 2001; partially offset by

               o    an increase in equity in net income of the unconsolidated
                    Office Properties of $2.9 million, or 94.0%, primarily
                    attributable to lower interest expense at one unconsolidated
                    office property.

         The net decrease in gain on property sales of $124.5 million for the
year ended December 31, 2001, as compared to the same period in 2000, is
attributable to a decrease in net gains recognized primarily on Office,
Resort/Hotel and behavioral healthcare property sales for the year ended
December 31, 2001, as compared with the same period in 2000.

EXTRAORDINARY ITEMS

         The increase in extraordinary items of $7.8 million, or 177.3%, is
attributable to the write-off of deferred financing costs related to the early
extinguishment of the UBS Facility in May 2001 of $12.2 million, compared with
the write-off of deferred financing costs related to the early extinguishment of
the BankBoston Facility in February 2000 of $4.4 million.



                                       37
<PAGE>



COMPARISON OF THE YEAR ENDED DECEMBER 31, 2000 TO THE YEAR ENDED DECEMBER 31,
1999

REVENUES

         Total revenues decreased $6.6 million, or 0.9%, to $739.7 million for
the year ended December 31, 2000, as compared to $746.3 million for the year
ended December 31, 1999.

         The decrease in Office Property revenues of $8.5 million, or 1.4%, for
the year ended December 31, 2000, as compared to the same period in 1999, is
attributable to:

               o    decreased revenues of $38.0 million due to the disposition
                    of 11 Office Properties and four retail properties during
                    2000, which contributed revenues during the full year of
                    1999, as compared to a partial year in 2000; partially
                    offset by

               o    increased revenues of $24.4 million from the 78 Office
                    Properties owned as of December 31, 2000, primarily as a
                    result of increased weighted average full-service rental
                    rates at these Properties; and

               o    increased revenues of $5.1 million from lease termination
                    fees.

         The increase in Resort/Hotel Property revenues of $6.9 million, or
10.6%, for the year ended December 31, 2000, as compared to the same period in
1999, is attributable to:

               o    increased revenues of $3.1 million at the luxury resorts and
                    spas primarily due to an increase in percentage rents
                    resulting from increased room revenue due to the 30-room
                    expansion at the Sonoma Mission Inn & Spa that opened in
                    April 2000; and

               o    increased revenues of $2.6 million at the business class
                    hotels primarily due to (i) the reclassification of the
                    Renaissance Houston Hotel from the Office segment to the
                    Resort/Hotel segment as a result of the restructuring of its
                    lease on July 1, 1999, which resulted in $2.4 million of
                    incremental revenues under the new lease and (ii) increased
                    percentage rents due to higher room and occupancy rates at
                    the Omni Austin Hotel, partially offset by (iii) decreased
                    revenues of $1.2 million due to the disposition of one
                    Resort/Hotel Property during the fourth quarter of 2000,
                    which contributed revenues during the full year of 1999, as
                    compared to a partial year in 2000; and

               o    increased revenues of $1.2 million at the destination
                    fitness resorts and spas primarily due to an increase in
                    percentage rents at the Canyon Ranch Properties as a result
                    of higher room rates.

         The decrease in interest and other income of $5.0 million, or 7.5%, for
the year ended December 31, 2000, as compared to the same period in 1999, is
primarily attributable to:

         o  the recognition of rent from Charter Behavioral Health Systems, LLC
            ("CBHS") on a cash basis beginning in the third quarter of 1999, the
            filing of voluntary bankruptcy petitions by CBHS and its
            subsidiaries on February 16, 2000, and a rent stipulation agreed to
            by certain parties to the bankruptcy proceedings, which resulted in
            a reduction in behavioral healthcare property revenues, which are
            included in interest and other income, of $25.7 million, to $15.4
            million for the year ended December 31, 2000 as compared to $41.1
            million for the same period in 1999; and

         o  decreased interest income earned on interest bearing accounts due to
            lower cash balances as a result of debt pay-downs; partially offset
            by

         o  an increase of $21.3 million as a result of interest earned on a
            loan which originated in March 2000 from the Operating Partnership
            to SH IX in connection with the repurchase of 14,468,623 common
            shares of the Company.

EXPENSES

         Total expenses decreased $181.2 million, or 22.6%, to $620.0 million
for the year ended December 31, 2000, as compared to $801.2 million for the year
ended December 31, 1999.

         The decrease in Office Property operating expenses of $7.1 million, or
2.8%, for the year ended December 31, 2000, as compared to the same period in
1999, is attributable to:




                                       38
<PAGE>



               o    decreased expenses of $17.2 million due to the disposition
                    of 11 Office Properties and four retail properties during
                    2000, which incurred expenses during the full year of 1999,
                    as compared to a partial year in 2000; partially offset by

               o    increased expenses of $10.1 million from the 78 Office
                    Properties owned as of December 31, 2000, as a result of (i)
                    increased general repair and maintenance expenses at these
                    Properties of $5.6 million and (ii) an increase in real
                    estate taxes of $4.5 million.

         The increase in corporate general and administrative expense of $7.8
million, or 47.9%, for the year ended December 31, 2000, as compared to the same
period in 1999, is primarily attributable to technology initiatives, employee
retention programs, incentive compensation, and additional personnel.

         The increase in interest expense of $11.2 million, or 5.8%, for the
year ended December 31, 2000, as compared to the same period in 1999, is
primarily attributable to an increase in the weighted-average interest rate from
7.4% in 1999 to 8.4% in 2000, partially offset by a decrease in average debt
balance outstanding from $2.6 billion in 1999 to $2.4 billion in 2000.

         The decrease in depreciation and amortization expense of $7.9 million,
or 6.0%, for the year ended December 31, 2000, as compared to the same period in
1999, is primarily attributable to the cessation of the recognition of
depreciation expense on Office Properties and behavioral healthcare properties
from the dates they were classified as held for disposition.

         An additional decrease in expenses of $184.5 million is attributable
to:

               o    non-recurring costs of $15.0 million in connection with the
                    settlement of litigation relating to the merger agreement
                    entered into in January 1998 between the Company and Station
                    Casinos, Inc. in the first quarter of 1999; and

               o    a decrease of $169.5 million due to the impairment and other
                    charges related to the behavioral healthcare properties in
                    the third quarter of 1999 and the impairment charge in the
                    fourth quarter of 1999 on one of the Office Properties held
                    for disposition as compared to the year ended December 31,
                    2000.

OTHER INCOME

         Other income increased $136.3 million, or 199.6%, to $204.6 million for
the year ended December 31, 2000, as compared to $68.3 million for the year
ended December 31, 1999. The components of the increase in other income are
discussed below.

         The increase in equity in unconsolidated companies of $7.4 million, or
10.8%, for the year ended December 31, 2000, as compared to the same period in
1999 is attributable to:

               o    an increase in equity in net income of the Residential
                    Development Corporations of $10.6 million, or 24.7%,
                    attributable to (i) an increase in average sales price per
                    lot and an increase in membership conversion revenue at
                    Desert Mountain, partially offset by a decrease in lot
                    absorption, which resulted in an increase of $6.0 million in
                    equity in net income to the Operating Partnership; (ii) an
                    increase in residential lot and commercial land sales and an
                    increase in average sales price per lot at The Woodlands
                    Land Development Company, L.P., partially offset by a
                    decrease in average sales price per acre from commercial
                    land sales, which resulted in an increase of $5.9 million in
                    equity in net income to the Operating Partnership; and (iii)
                    an increase in commercial acreage sales at CRD, partially
                    offset by a decrease in single-family home sales, which
                    resulted in an increase of $0.8 million in equity in net
                    income to the Operating Partnership; partially offset by
                    (iv) a decrease in commercial land sales at Houston Area
                    Development Corp., which resulted in a decrease of $2.1
                    million in equity in net income to the Operating
                    Partnership;

               o    an increase in equity in net income of the other
                    unconsolidated companies of $6.5 million, or 127.5%,
                    primarily as a result of (i) the dividend income
                    attributable to the 7.5% per annum cash flow preference of
                    the Operating Partnership's $85.0 million preferred member
                    interest in Metropolitan, which the Operating Partnership
                    purchased in May 1999; and (ii) an increase in the equity in
                    earnings from DBL as a result of its



                                       39
<PAGE>


                    investment in G2 Opportunity Fund, L.P. ("G2"), which was
                    made in the third quarter of 1999; partially offset by

               o    a decrease in equity in net income of the
                    Temperature-Controlled Logistics Partnership of $7.6
                    million, or 50.7%, resulting primarily from the recognition
                    of a rent receivable valuation allowance for the year ended
                    December 31, 2000 of $6.5 million; and

               o    a decrease in equity in net income of the unconsolidated
                    office properties of $2.1 million, or 39.6%, primarily
                    attributable to an increase in interest expense as a result
                    of additional financing obtained in July 2000 and an
                    increase in the average rate of debt at The Woodlands
                    Commercial Properties Company, L.P.

         The increase in net gain on property sales of $128.9 million for the
year ended December 31, 2000, as compared to the same period in 1999, is
attributable to:

               o    a net gain of $137.4 million primarily recognized on Office,
                    Resort/Hotel and behavioral healthcare property sales;
                    partially offset by

               o    an impairment loss of $8.5 million recognized on a real
                    estate investment fund in which the Operating Partnership
                    has an interest.



                                       40
<PAGE>


                         LIQUIDITY AND CAPITAL RESOURCES

           Cash and cash equivalents were $31.6 million and $38.6 million at
December 31, 2001, and December 31, 2000, respectively. This 18.1% decrease is
attributable to $456.0 million used in financing activities, partially offset by
$210.4 million and $238.6 million provided by investing and operating
activities, respectively.

<Table>
<Caption>
                                                    DECEMBER 31,
                                                       2001
                                                   -------------
                                                   (in millions)
<S>                                                <C>
Cash Provided by Operating Activities                $ 238.6
Cash Provided by Investing Activities                  210.4
Cash Used in Financing Activities                     (456.0)
                                                     -------
Decrease in Cash and Cash Equivalents                $  (7.0)
Cash and Cash Equivalents, Beginning of Period          38.6
                                                     -------
Cash and Cash Equivalents, End of Period             $  31.6
                                                     =======
</Table>

OPERATING ACTIVITIES

           The Operating Partnership's cash provided by operating activities of
$238.6 million is attributable to:

                  o        $225.2 million from Property operations; and

                  o        $13.4 million representing distributions received in
                           excess of equity in earnings from unconsolidated
                           companies.

INVESTING ACTIVITIES

           The Operating Partnership's cash provided by investing activities of
$210.4 million is attributable to:

                  o        $200.4 million of net sales proceeds primarily
                           attributable to the disposition of the two Washington
                           Harbour Office Properties, three Woodlands Office
                           Properties and 18 behavioral healthcare properties;

                  o        $129.7 million of proceeds from joint venture
                           partners, primarily as a result of the proceeds of
                           $116.7 million from the joint ventures of two
                           existing Office Properties, Bank One Tower in Austin,
                           Texas and Four Westlake Park in Houston, Texas and
                           $12.9 million from the joint venture of 5 Houston
                           Center Office Property, which is currently being
                           developed;

                  o        $107.9 million of proceeds from the sale of
                           marketable securities; and

                  o        $32.0 million from return of investment in
                           unconsolidated Office Properties, Residential
                           Development Properties and other unconsolidated
                           companies.

           The Operating Partnership's cash provided by investing activities is
partially offset by:

                  o        $124.6 million of additional investment in
                           unconsolidated companies, consisting of investments
                           in (i) the upscale Residential Development Properties
                           of $89.0 million, primarily as a result of CRD's
                           investment in Tahoe Mountain Resorts, (ii)
                           Temperature-Controlled Logistics Properties of $10.8
                           million, (iii) Office Properties of $16.4 million and
                           (iv) other unconsolidated companies of $8.4 million;

                  o        $51.8 million for recurring and non-recurring tenant
                           improvement and leasing costs for the Office
                           Properties;

                  o        $46.4 million for capital expenditures for rental
                           properties, primarily attributable to non-recoverable
                           building improvements for the Office Properties and
                           replacement of furniture, fixtures and equipment for
                           the Resort/Hotel Properties;

                  o        $23.7 million for the development of investment
                           properties, including $12.3 million for development
                           of the 5 Houston Center Office Property and
                           expansions and renovations at the Resort/Hotel
                           Properties; and



                                       41
<PAGE>


                  o        a $10.9 million increase in notes receivable,
                           primarily as a result of approximately $10.0 million
                           related to secured loans to AmeriCold Logistics;

                  o        a $2.2 million increase in restricted cash and cash
                           equivalents, primarily related to the escrow of funds
                           to purchase a parking garage in Denver, Colorado,
                           which was purchased during the first quarter of 2002,
                           partially offset by escrow reimbursements for capital
                           expenditures at the Resort/Hotel Properties and the
                           Office Properties.

FINANCING ACTIVITIES

           The Operating Partnership's use of cash for financing activities of
$456.0 million is primarily attributable to:

                  o        net repayment of the UBS Facility of $553.5 million;

                  o        distributions to unitholders of $352.9 million;

                  o        repayment and retirement of the iStar Financial Note
                           of $97.1 million;

                  o        repayment and retirement of the Deutsche Bank
                           Short-term Loan of $75.0 million;

                  o        net capital distributions to joint venture partners
                           of $25.4 million, primarily due to distributions to
                           joint venture preferred equity partners;

                  o        debt financing costs of $16.0 million; and

                  o        distributions to the holder of preferred units of
                           $13.5 million.

           The use of cash for financing activities is partially offset by:

                  o        net borrowings under the Fleet Facility of $283.0
                           million; and

                  o        proceeds from notes payable of $393.3 million,
                           primarily attributable to the May 2001 debt
                           refinancing.
COPI

           In April 1997, the Operating Partnership established a new Delaware
corporation, COPI. All of the outstanding common stock of COPI, valued at $0.99
per share, was distributed, effective June 12, 1997, to those persons who were
limited partners of the Operating Partnership or shareholders of the Company on
May 30, 1997, in a spin-off.

           COPI was formed to become a lessee and operator of various assets to
be acquired by the Operating Partnership and to perform the intercompany
agreement between COPI and the Operating Partnership, pursuant to which each
agreed to provide the other with rights to participate in certain transactions.
In connection with the formation and capitalization of COPI, and the subsequent
operations and investments of COPI since 1997, the Operating Partnership made
loans to COPI under a line of credit and various term loans.

           On January 1, 2001, The REIT Modernization Act became effective. This
legislation allows the Operating Partnership, through its subsidiaries, to
operate or lease certain of its investments that had been previously operated or
leased by COPI.

           COPI and the Operating Partnership entered into an asset and stock
purchase agreement on June 28, 2001, in which the Operating Partnership agreed
to acquire the lessee interests in the eight Resort/Hotel Properties leased to
subsidiaries of COPI, the voting interests held by subsidiaries of COPI in three
of the Operating Partnership's Residential Development Corporations and other
assets in exchange for $78.4 million. In connection with that agreement, the
Operating Partnership agreed that it would not charge interest on its loans to
COPI from May 1, 2001 and that it would allow COPI to defer all principal and
interest payments due under the loans until December 31, 2001.

           Also on June 28, 2001, the Operating Partnership entered into an
agreement to make a $10.0 million investment in Crescent Machinery Company
("Crescent Machinery"), a wholly owned subsidiary of COPI. This investment,
together with capital from a third-party investment firm, was expected to put
Crescent Machinery on solid financial footing.

           Following the date of the agreements relating to the acquisition of
COPI assets and stock and the investment in Crescent Machinery, the results of
operations for the COPI hotel operations and the COPI land development interests
declined, due in part to the slowdown in the economy after September 11. In
addition, Crescent Machinery's results of


                                       42
<PAGE>

operations suffered because of the economic environment and the overall
reduction in national construction levels that has affected the equipment rental
and sale business, particularly post September 11. As a result, the Operating
Partnership believes that a significant additional investment would have been
necessary to adequately capitalize Crescent Machinery and satisfy concerns of
Crescent Machinery's lenders.

           The Operating Partnership stopped recording rent from the leases of
the eight Resort/Hotel Properties leased to subsidiaries of COPI on October 1,
2001, and recorded impairment and other adjustments related to COPI in the
fourth quarter of 2001, based on the estimated fair value of the underlying
collateral. See "Note 16. COPI" included in "Item 8. Financial Statements and
Supplementary Data" for a description of these charges.

           On January 22, 2002, the Operating Partnership terminated the
purchase agreement pursuant to which the Operating Partnership would have
acquired the lessee interests in the eight Resort/Hotel Properties leased to
subsidiaries of COPI, the voting interests held by subsidiaries of COPI in three
of the Residential Development Corporations and other assets. On February 4,
2002, the Operating Partnership terminated the agreement relating to its planned
investment in Crescent Machinery.

           On February 6, 2002, Crescent Machinery filed for protection under
the federal bankruptcy laws.

           On February 12, 2002, the Operating Partnership delivered default
notices to COPI relating to approximately $49.0 million of unpaid rent and
approximately $76.2 million of principal and accrued interest due to the
Operating Partnership under certain secured loans.

           On February 14, 2002, the Operating Partnership executed an agreement
(the "Agreement") with COPI, pursuant to which COPI transferred to subsidiaries
of the Operating Partnership, in lieu of foreclosure, COPI's lessee interests in
the eight Resort/Hotel Properties leased to subsidiaries of COPI and COPI's
voting interests in three of the Operating Partnership's Residential Development
Corporations and other assets and the Operating Partnership agreed to assist and
provide funding to COPI for the implementation of a prepackaged bankruptcy of
COPI. In connection with the transfer, COPI's rent obligations to the Operating
Partnership were reduced by $23.6 million, and its debt obligations were reduced
by $40.1 million. These amounts include $18.3 million of value attributed to the
lessee interests transferred by COPI to the Operating Partnership, however, in
accordance with GAAP, the Operating Partnership assigned no value to these
interests for financial reporting purposes.

           The Operating Partnership holds the lessee interests in the eight
Resort/Hotel Properties and the voting interests in the three Residential
Development Corporations through three newly organized entities that are wholly
owned taxable REIT subsidiaries of the Operating Partnership. The Operating
Partnership will include these assets in its Resort/Hotel Segment and its
Residential Development Segment, and will fully consolidate the operations of
the eight Resort/Hotel Properties and the three Residential Development
Corporations, beginning on the dates of the transfers of these assets.

           Under the Agreement, the Operating Partnership will provide
approximately $14.0 million to COPI in the form of cash and common shares of the
Company to fund costs, claims and expenses relating to the bankruptcy and
related transactions, and to provide for the distribution of the Company's
common shares to the COPI stockholders. The Operating Partnership estimates that
the value of the common shares of the Company that will be issued to the COPI
stockholders will be between approximately $5.0 million and $8.0 million. The
Agreement provides that COPI and the Operating Partnership will seek to have a
plan of reorganization for COPI, reflecting the terms of the Agreement and a
draft plan of reorganization, approved by the bankruptcy court. The actual value
of the common shares of the Company issued to the COPI stockholders will not be
determined until the confirmation of COPI's bankruptcy plan and could vary
substantially from the estimated amount.

           In addition, the Operating Partnership has agreed to use commercially
reasonable efforts to assist COPI in arranging COPI's repayment of its $15.0
million obligation to Bank of America, together with any accrued interest. COPI
obtained the loan primarily to participate in investments with the Operating
Partnership. At the time COPI obtained the loan, Bank of America required, as a
condition to making the loan, that Richard E. Rainwater, the Chairman of the
Board of Trust Managers of the Company and member of the Strategic Planning
Committee of CREE, Ltd., and John C. Goff, the Vice-Chairman of the Board of
Trust Managers and Chief Executive Officer of the Company and sole director,
Chief Executive Officer and President of the General Partner, enter into a
support agreement with COPI and Bank of America, pursuant to which they agreed
to make additional equity investments in COPI if COPI defaulted on payment
obligations under its line of credit with Bank of America and the net proceeds
of an offering of COPI securities were



                                       43
<PAGE>


insufficient to allow COPI to pay Bank of America in full. The Operating
Partnership believes, based on advice of counsel, that the support agreement
should be unenforceable in a COPI bankruptcy. Effective December 31, 2001, the
parties executed an amendment to the line of credit providing that any defaults
existing under the line of credit on or before March 8, 2002 are temporarily
cured unless and until a new default shall occur.

           The Operating Partnership holds a first lien security interest in
COPI's entire membership interest in AmeriCold Logistics. REIT rules prohibit
the Operating Partnership from acquiring or owning the membership interest that
COPI owns in AmeriCold Logistics. Under the Agreement, the Operating Partnership
agreed to allow COPI to grant Bank of America a first priority security interest
in the membership interest and to subordinate its own security interest to Bank
of America. In addition, the Operating Partnership and the Company have agreed
to form and capitalize a separate entity to be owned by the Operating
Partnership's unitholders and the Company's shareholders, and to cause the new
entity to commit to acquire COPI's entire membership interest in the tenant, for
approximately $15.5 million. Under the Agreement, COPI has agreed that it will
use the proceeds of the sale of the membership interest to repay Bank of America
in full.

           Completion and effectiveness of the plan of reorganization for COPI
is contingent upon a number of conditions, including the vote of COPI's
stockholders, the approval of the plan by certain of COPI's creditors and the
approval of the bankruptcy court.

INVESTMENTS IN REAL ESTATE MORTGAGES AND EQUITY OF UNCONSOLIDATED COMPANIES

           Investments in which the Operating Partnership does not have a
controlling interest are accounted for under the equity method. The following is
a summary of the Operating Partnership's ownership in significant unconsolidated
companies or equity investments:

<Table>
<Caption>
                                                                                                   OPERATING PARTNERSHIP'S OWNERSHIP
                    ENTITY                                          CLASSIFICATION                      AS OF DECEMBER 31, 2001
                    ------                                          --------------                 ---------------------------------
<S>                                                      <C>                                       <C>
Desert Mountain Development Corporation(1)               Residential Development Corporation                  95.0%(2)(3)
The Woodlands Land Company, Inc.(1)                      Residential Development Corporation                  95.0%(2)(4)
Crescent Resort Development, Inc.(1)                     Residential Development Corporation                  90.0%(2)(5)
Mira Vista Development Corp.                             Residential Development Corporation                  94.0%(2)(6)
Houston Area Development Corp.                           Residential Development Corporation                  94.0%(2)(7)
Temperature-Controlled Logistics Partnership               Temperature-Controlled Logistics                   40.0%(8)
The Woodlands Commercial
    Properties Company, L.P.                                            Office                                42.5%(9)(10)
Main Street Partners, L.P.                                     Office (Bank One Center)                       50.0%(11)
Crescent 5 Houston Center, L.P.                               Office (5 Houston Center)                       25.0%(12)
Austin PT BK One Tower Office Limited Partnership              Office (Bank One Tower)                        20.0%(13)
Houston PT Four Westlake Office Limited Partnership          Office (Four Westlake Park)                      20.0%(13)
DBL Holdings, Inc.                                                      Other                                 97.4%(14)
CRL Investments, Inc.(1)                                                Other                                 95.0%(15)
CR License, LLC(1)                                                      Other                                 28.5%(16)
</Table>

----------

(1)      On February 14, 2002, the Operating Partnership executed an agreement
         with COPI, pursuant to which COPI transferred to subsidiaries of the
         Operating Partnership, in lieu of foreclosure, COPI's interest in these
         entities. The Operating Partnership will fully consolidate the
         operations of these entities, other than CR License, LLC, beginning on
         the date of the asset transfers.

(2)      See the Residential Development Properties Table included in "Item 2.
         Properties" for the Residential Development Corporation's ownership
         interest in the Residential Development Properties.

(3)      The remaining 5.0% interest in Desert Mountain Development Corporation,
         representing 100% of the voting stock, was owned by COPI as of December
         31, 2001.

(4)      The remaining 5.0% interest in The Woodlands Land Company, Inc.,
         representing 100% of the voting stock, was owned by COPI as of December
         31, 2001.

(5)      The remaining 10.0% interest in Crescent Resort Development, Inc.,
         representing 100% of the voting stock, is owned by COPI Colorado, L.
         P., of which 60.0% was owned by COPI as of December 31, 2001, with 20%
         owned by John Goff, Vice-Chairman of the Board of Trust Managers and
         Chief Executive Officer of the Company and sole director, Chief
         Executive Officer and President of the General Partner, and 20% owned
         by a third party.

(6)      The remaining 6.0% interest in Mira Vista Development Corp. ("MVDC"),
         representing 100% of the voting stock, is owned 4.0% by DBL and 2.0% by
         third parties.

(7)      The remaining 6.0% interest in Houston Area Development Corp. ("HADC"),
         representing 100% of the voting stock, is owned 4.0% by DBL Holdings,
         Inc. ("DBL") and 2.0% by a third party.

(8)      The remaining 60.0% interest in the Temperature-Controlled Logistics
         Partnership is owned by Vornado Realty Trust, L.P.


                                       44
<PAGE>


(9)      The remaining 57.5% interest in The Woodlands Commercial Properties
         Company, L. P. ("Woodlands CPC") is owned by Morgan Stanley Real Estate
         Fund II, L. P. ("Morgan Stanley").

(10)     Distributions are made to partners based on specified payout
         percentages. During the year ended December 31, 2001, the payout
         percentage to the Operating Partnership was 49.5%.

(11)     The remaining 50.0% interest in Main Street Partners, L.P. is owned by
         TrizecHahn Corporation.

(12)     See "5 Houston Center" below.

(13)     See "Four Westlake Park and Bank One Tower" below.

(14)     John Goff, Vice-Chairman of the Board of Trust Managers
         and Chief Executive Officer of the Company and sole director, Chief
         Executive Officer and President of the General Partner, obtained the
         remaining 2.6% economic interest in DBL (including 100% of the voting
         interest in DBL) in exchange for his voting interests in MVDC and
         HADC, originally valued at approximately $0.4 million, and
         approximately $0.06 million in cash, or total consideration valued at
         $0.4 million. At December 31, 2001, Mr. Goff's interest in DBL was
         approximately $0.6 million.

(15)     The remaining 5.0% interest in CRL Investments, Inc. was owned by COPI
         as of December 31, 2001.

(16)     Of the remaining 71.5% interest in CR License, LLC, 70.0% is owned by a
         group of individuals unrelated to the Operating Partnership, and 1.5%
         was owned by COPI, as of December 31, 2001.

JOINT VENTURE ARRANGEMENTS

5 Houston Center

           On June 4, 2001, the Operating Partnership entered into a joint
venture arrangement with a pension fund advised by JP Morgan Investment
Management, Inc. ("JPM") to construct the 5 Houston Center Office Property
within the Operating Partnership's Houston Center mixed-use Office Property
complex in Houston, Texas. The Class A Office Property will consist of 577,000
net rentable square feet. The joint venture is structured such that the fund
holds a 75% equity interest, and the Operating Partnership holds a 25% equity
interest, which is accounted for under the equity method. The Operating
Partnership contributed approximately $8.5 million of land and $12.3 million of
development costs to the joint venture entity and received $14.8 million in net
proceeds. No gain or loss was recognized by the Operating Partnership on this
transaction. In addition, the Operating Partnership is developing, and will
manage and lease the Property on a fee basis. During the year ended December 31,
2001, the Operating Partnership recognized $2.3 million for these services.

           During the second quarter of 2001, the joint venture entity obtained
an $82.5 million construction loan guaranteed by the Operating Partnership, due
May 2004, that bears interest at Prime (as defined in the loan agreement) plus
100 basis points or LIBOR plus 225 basis points, at the discretion of the
borrower. The interest rate on the loan at December 31, 2001 was 4.12%. The
balance outstanding on this construction loan at December 31, 2001 was $10.4
million.

Four Westlake Park and Bank One Tower

           On July 30, 2001, the Operating Partnership entered into joint
venture arrangements with an affiliate of General Electric Pension Fund ("GE")
for two Office Properties, Four Westlake Park in Houston, Texas, and Bank One
Tower in Austin, Texas. The joint ventures are structured such that GE holds an
80% equity interest in each of Four Westlake Park, a 560,000 square foot Class A
Office Property located in the Katy Freeway submarket of Houston, and Bank One
Tower, a 390,000 square foot Class A Office Property located in downtown Austin.
The Operating Partnership continues to hold the remaining 20% equity interests
in each Property, which are accounted for under the equity method. The joint
ventures generated approximately $120.0 million in net proceeds to the Operating
Partnership, including distributions to the Operating Partnership resulting from
mortgage financing at the joint venture level. None of the mortgage financing at
the joint venture level is guaranteed by the Operating Partnership. The joint
ventures were accounted for as partial sales of these Office Properties,
resulting in a gain of approximately $7.6 million, net of a deferred gain of
approximately $1.9 million. In addition, the Operating Partnership manages and
leases the Office Properties on a fee basis. During the year ended December 31,
2001, the Operating Partnership recognized $0.2 million for these services.

METROPOLITAN

         On May 24, 2001, the Operating Partnership converted its $85.0 million
preferred member interest in Metropolitan and $1.9 million of deferred
acquisition costs, into approximately $75.0 million of common stock of Reckson,
resulting in an impairment charge of approximately $11.9 million. The Operating
Partnership subsequently sold the Reckson common stock on August 17, 2001, for
approximately $78.6 million, resulting in a gain of approximately $3.6 million.
The proceeds were used to pay down the Fleet Facility.

UNCONSOLIDATED PROPERTY DISPOSITIONS

           On September 27, 2001, the Woodlands CPC, owned by the Operating
Partnership and an affiliate of Morgan Stanley, sold one office/venture tech
property located within The Woodlands, Texas. The sale generated net proceeds,
after the repayment of debt, of approximately $2.7 million, of which the
Operating Partnership's portion was approximately $1.3 million. The sale
generated a net gain of approximately $3.5 million, of which the Operating
Partnership's portion was approximately $1.7 million. The net proceeds received
by the Operating Partnership were used primarily to pay down variable-rate debt.


                                       45
<PAGE>


         On November 9, 2001, The Woodlands Land Development Company, L.P.,
owned by the Woodlands Land Company, Inc. and an affiliate of Morgan Stanley,
sold two office properties and one retail property located within The Woodlands,
Texas. The sales generated net proceeds, after the repayment of debt, of
approximately $41.8 million, of which the Operating Partnership's portion was
approximately $19.7 million. The sales generated a net gain of approximately
$8.0 million, of which the Operating Partnership's portion was approximately
$3.8 million. The net proceeds received by the Operating Partnership were used
primarily to pay down variable-rate debt.

DISPOSITIONS

         During the year ended December 31, 2001, the Operating Partnership sold
five Office Properties, 18 behavioral healthcare properties and other assets.
The sales generated net proceeds of approximately $200.4 million and a net gain
of approximately $4.4 million.

Office Segment

         On July 30, 2001, the GE joint ventures were accounted for as partial
sales of two Office Properties, Four Westlake Park in Houston, Texas, and Bank
One Tower in Austin, Texas, resulting in a net gain of approximately $7.6
million, net of a deferred gain of $1.9 million.

         On September 18, 2001, the Operating Partnership completed the sale of
the two Washington Harbour Office Properties. The sale generated net proceeds of
approximately $153.0 million and a net loss of approximately $9.8 million. The
proceeds from the sale of the Washington Harbour Office Properties were used
primarily to pay down variable-rate debt and pay for the repurchase by the
Company of approximately 4.3 million of the Company's common shares. The
Washington Harbour Office Properties were the Operating Partnership's only
Office Properties in Washington, D.C.

         On September 28, 2001, The Woodlands Office Equities - '95 Limited
("WOE"), owned by the Operating Partnership and the Woodlands CPC, sold two
Office Properties located within The Woodlands. The sale generated net proceeds
of approximately $11.3 million, of which the Operating Partnership's portion was
approximately $9.9 million. The sale generated a net gain of approximately $3.4
million, of which the Operating Partnership's portion was approximately $3.0
million. The proceeds received by the Operating Partnership were used primarily
to pay down variable-rate debt.


         On December 20, 2001, WOE sold one Office Property located within The
Woodlands. The sale generated net proceeds of approximately $2.0 million, of
which the Operating Partnership's portion was approximately $1.8 million. The
sale generated a net gain of approximately $1.7 million, of which the Operating
Partnership's portion was approximately $1.5 million. The proceeds received by
the Operating Partnership were used primarily to pay down variable-rate debt.

Behavioral Healthcare Properties

         During the year ended December 31, 2001, the Operating Partnership
completed the sale of 18 behavioral healthcare properties. The sales generated
approximately $34.7 million in net proceeds and a net gain of approximately $1.6
million for the year ended December 31, 2001. The net proceeds from the sale of
the 18 behavioral healthcare properties sold during the year ended December 31,
2001 were used primarily to pay down variable-rate debt. As of December 31,
2001, the Operating Partnership owned 10 behavioral healthcare properties. The
Operating Partnership is actively marketing these 10 behavioral healthcare
properties for sale.



                                       46
<PAGE>



         During the year ended December 31, 2001, the Operating Partnership
recognized an impairment loss of $8.5 million on seven of the behavioral
healthcare properties held for disposition. This amount represents the
difference between the carrying values and the estimated sales prices less costs
of the sales for these seven properties.

RELATED PARTY DISCLOSURES

DBL

         As of December 31, 2001, the Operating Partnership owned 97.44% of DBL
with the remaining 2.56% economic interest in DBL (including 100% of the voting
interest in DBL) held by John Goff, Vice-Chairman of the Board of Trust Managers
and Chief Executive Officer of the Company and sole director, Chief Executive
Officer and President of the General Partner. Originally, Mr. Goff contributed
his voting interests in MVDC and HADC originally valued at approximately $0.4
million, and approximately $0.06 million in cash, or total consideration valued
at approximately $0.4 million for his interest in DBL.

         DBL has two wholly owned subsidiaries, DBL-ABC, Inc., and DBL-CBO,
Inc., the assets of which are described in the following paragraphs, and DBL
directly holds 66% of the voting stock in MVDC and HADC. At December 31, 2001,
Mr. Goff's interest in DBL was approximately $0.6 million.

         Since June 1999, the Operating Partnership has contributed
approximately $23.8 million to DBL. The contribution was used by DBL to make an
equity contribution to DBL-ABC, Inc., which committed to purchase a limited
partnership interest representing a 12.5% interest in G2 Opportunity Fund, LP
("G2"). G2 was formed for the purpose of investing in commercial mortgage backed
securities and other commercial real estate investments and is managed and
controlled by an entity that is owned equally by Goff-Moore Strategic Partners,
LP ("GMSP") and GMAC Commercial Mortgage Corporation ("GMACCM"). The ownership
structure of GMSP consists of 50% ownership by Darla Moore, who is married to
Richard Rainwater, Chairman of the Board of Trust Managers of the Company and
member of the Strategic Planning Committee of CREE, Ltd., and 50% by Mr. Goff.
Mr. Rainwater is also a limited partner of GMSP. At December 31, 2001, DBL has
an approximately $14.1 million investment in G2.

         In March 1999, DBL-CBO, Inc. acquired $6.0 million aggregate principal
amount of Class C-1 Notes issued by Juniper CBO 1999-1 Ltd., a Cayman Island
limited liability company. At December 31, 2001 this investment was valued at
approximately $5.4 million.

COPI Colorado, L. P.

         As of December 31, 2001, CRD was owned 90% by the Operating Partnership
and the remaining 10%, representing 100% of the voting stock, was owned by COPI
Colorado, L.P. ("COPI Colorado"), of which 60% was owned by COPI, with 20% owned
by John Goff, Vice-Chairman of the Board of Trust Managers and Chief
Executive Officer of the Company and sole director, Chief Executive Officer and
President of the General Partner, and 20% owned by a third party.

         On February 14, 2002, the Operating Partnership executed an agreement
with COPI, pursuant to which COPI transferred to the Operating Partnership, in
lieu of foreclosure, COPI's 60% general partner interest in COPI Colorado. As a
result, the Operating Partnership indirectly owns a 96% interest in CRD, John
Goff owns a 2.0% interest in CRD and the remaining 2.0% interest is owned by a
third party. The Operating Partnership will fully consolidate the operations of
CRD beginning on the date of the asset transfer.

Loans to Employees of the Operating Partnership and Trust Managers of the
Company for Exercise of Stock Options and Unit Options

         As of December 31, 2001, the Operating Partnership had approximately
$32.9 million of loans outstanding (including approximately $3.9 million loaned
during the year ended December 31, 2001) to certain employees of the Operating
Partnership and trust managers of the Company on a recourse basis pursuant to
the Company's stock incentive plans and the Operating Partnership's unit
incentive plans pursuant to an agreement approved by the Board of Trust Managers
and the Executive Compensation Committee of the Company. The proceeds of these
loans were used by the employees and the trust managers to acquire common shares
of the Company and units of the Operating Partnership pursuant to the exercise
of vested stock and unit options. Pursuant to the loan agreements, these loans
may be repaid in full or in part at any time


                                       47
<PAGE>
without premium or penalty. John Goff, Vice-Chairman of the Board of Trust
Managers and Chief Executive Officer of the Company and sole director, Chief
Executive Officer and President of the General Partner had a loan representing
$26.3 million of the $32.9 million total outstanding loans at December 31, 2001.

         Every month, federal short-term, mid-term and long-term rates
(Applicable Federal Rates) are determined and published by the IRS based upon
average market yields of specified maturities. Effective November 1, 2001, these
loans were amended to reduce the interest rates for their remaining terms to the
Applicable Federal Rates. As a result, the interest rates on loans with
remaining terms of three years or less at November 1, 2001 were reduced to
approximately 2.7% per year and the interest rates on loans with remaining terms
greater than three years as of November 1, 2001 were reduced to approximately
4.07% per year. These amended interest rates reflect below prevailing market
interest rates; therefore, the Operating Partnership recorded $0.8 million of
compensation expense for the year ended December 31, 2001. Approximately $0.5
million of interest was outstanding related to these loans as of December 31,
2001.

SHELF REGISTRATION STATEMENT

         On October 29, 1997, the Company filed a shelf registration statement
(the "Shelf Registration Statement") with the SEC relating to the future
offering of up to an aggregate of $1.5 billion of common shares, preferred
shares and warrants exercisable for common shares. Management believes the Shelf
Registration Statement will provide the Company with more efficient and
immediate access to capital markets when considered appropriate. As of December
31, 2001, approximately $782.7 million was available under the Shelf
Registration Statement for the issuance of securities.

SALE OF PREFERRED EQUITY INTERESTS IN SUBSIDIARY AND INTRACOMPANY LOAN

SALE OF CLASS A UNITS IN CRESCENT REAL ESTATE FUNDING IX, LTD. ("FUNDING IX")

         During the year ended December 31, 2000, the Operating Partnership
formed Funding IX and contributed seven Office Properties and two Resort/Hotel
Properties to Funding IX. As of December 31, 2001, Funding IX held seven Office
Properties and one Resort/Hotel Property. The Operating Partnership owns 100% of
the common voting interests in Funding IX, 0.1% in the form of a general partner
interest and 99.9% in the form of a limited partner interest.

         As of December 31, 2001, GMAC Commercial Mortgage Corporation
("GMACCM") held $218.4 million of non-voting, redeemable preferred Class A Units
in Funding IX (the "Class A Units"). The Class A Units receive a preferred
variable-rate dividend currently calculated at LIBOR plus 450 basis points, or
approximately 6.6% per annum as of December 31, 2001, and increasing to LIBOR
plus 550 basis points beginning March 15, 2002. The Class A Units are redeemable
at the option of the Operating Partnership at the original purchase price.

IMPACT ON FINANCIAL STATEMENTS OF INTRACOMPANY LOAN

         As of December 31, 2001, Funding IX had loaned a total of approximately
$281.1 million from the net proceeds from the sale of the Class A Units and a
portion of the net proceeds of the sale of one of the Properties held by Funding
IX to Crescent SH IX, Inc. ("SH IX"), for the purchase of common shares of the
Company. The note, which is included in Notes Receivable, Net, bears interest
based on the dividends paid on the common shares held by SH IX, a wholly-owned
subsidiary of the Company, and matures on March 15, 2003. SH IX is required to
repay the loan, plus any accrued and unpaid interest, at that time. SH IX will
receive the funds to repay the loan from the Company, pursuant to an agreement
that requires the Company to repurchase, on or before March 15, 2003, the common
shares of the Company held by SH IX. The Company will receive the funds to
repurchase the common shares from SH IX from the Operating Partnership, pursuant
to the limited partnership agreement of the Operating Partnership, which
requires the Operating Partnership to repurchase from the Company a
corresponding portion of the Company's limited partnership interest at such time
as the Company repurchases shares. The proceeds received by Funding IX for the
repayment of the principal amount of the note will be used to redeem Class A
Units.

         As of December 31, 2001, the annual interest rate on the note was
approximately 8.56%. For the year ended December 31, 2001, the Operating
Partnership recognized interest income of $29.3 million on the note. See "Note
13. Partners' Capital" included in "Item 8. Financial Statements and
Supplementary Data." The repurchased common shares will be held in SH IX until
all the Class A Units are redeemed. The Company, as a partner of the Operating
Partnership, receives quarterly distributions from the Operating Partnership,
which it then uses to make distributions to its shareholders. Distributions on
these repurchased common shares will continue to be paid by the Company to SH
IX, as a shareholder of the Company, and will be used by SH IX to make payments
of interest due to Funding IX on the loan. Funding IX in turn will use these
funds to pay dividends on the Class A Units.

         In accordance with GAAP, the operations, assets and liabilities of
Funding IX and SH IX are consolidated with those of the Company in the Company's
consolidated financial statements. In accordance with GAAP, the operations,
assets and liabilities of Funding IX (but not those of SH IX) are consolidated
with those of the Operating Partnership in the consolidated financial statements
of the Operating Partnership. As a result, the note and the payments on the note
by SH IX to Funding IX are eliminated in the Company's financial statements but
are not eliminated in the financial statements of the Operating Partnership.
These items therefore are included in Notes Receivable, Net and in Interest and
Other Income in the Operating Partnership's financial statements.

         The following table compares the current financial statements of the
Operating Partnership prepared in accordance with GAAP and the adjusted
Operating Partnership financial statements, adjusted for the elimination of the
intracompany loan and associated interest income. This table provides certain
components of the financial statements which would be affected by the
elimination of the intracompany loan and associated interest income.



<Table>
<Caption>
(dollars in thousands, except per unit
data)                                                                   After Elimination of
                                          GAAP Presentation               Intracompany Loan

                                       Year Ended December 31,         Year Ended December 31,
                                        2001           2000            2001            2000
                                     ------------   ------------    ------------    ------------
<S>                                  <C>            <C>             <C>             <C>
BALANCE SHEET DATA
(AT PERIOD END):
  Total assets                       $  4,422,826   $  4,827,999    $  4,138,102    $  4,542,913
                                     ------------   ------------    ------------    ------------
OPERATING DATA:
  Total revenues                          725,326        739,697         696,054         718,405
                                     ------------   ------------    ------------    ------------
  Operating income (loss)                   1,188        119,701         (28,084)         98,409
                                     ------------   ------------    ------------    ------------
  Income before minority interests
    and extraordinary item                 56,844        324,344          27,572         303,052
                                     ------------   ------------    ------------    ------------
  Net income (loss)                        24,006        300,084          (5,266)        278,792
                                     ------------   ------------    ------------    ------------
 Basic earnings per unit(1):
     Income (loss) before
     extraordinary item              $       0.33   $       4.24    $      (0.11)   $       4.23
                                     ------------   ------------    ------------    ------------
  Diluted earnings per unit(1):
     Income (loss) before
     extraordinary item              $       0.33   $       4.21    $      (0.11)   $       4.19
                                     ------------   ------------    ------------    ------------
</Table>

------------
(1)  The weighted average units used to calculate basic and diluted earnings per
     unit in accordance with GAAP include the common shares of the Company held
     in SH IX of 14,468,623 (7,234,312 equivalent units) and 8,184,578
     (4,092,289 equivalent units) for the years ended December 31, 2001 and
     2000, respectively. The adjusted basic and diluted earnings per unit after
     the elimination of the intracompany loan exclude the common shares of the
     Company held in SH IX.

         The Operating Partnership's FFO for the years ended December 31, 2001
and 2000 would have been $177.1 million and $326.9 million, respectively, if the
interest income from the intracompany loan were eliminated.

EMPLOYEE STOCK PURCHASE PLAN

         On June 25, 2001, the shareholders of the Company approved a new
Employee Stock Purchase Plan (the "ESPP"), that is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code
("IRC") of 1986, as amended. The ESPP is regarded as a noncompensatory plan
under APB No. 25, because it meets the qualifications under IRC 423. Under the
terms of the ESPP, eligible employees may purchase common shares of the Company
at a price that is equal to 90% of the lower of the common shares' fair market
value at the beginning or the end of a quarterly period. The fair market value
of a common share is equal to the last sale price of the common shares on the
New York Stock Exchange. Eligible employees may purchase the common shares
through payroll deductions of up to 10% of eligible



                                       48
<PAGE>



compensation. The ESPP is not subject to the provisions of ERISA. The ESPP was
effective October 1, 2001, and will terminate on May 14, 2011.

         The 1,000,000 common shares that may be issued pursuant to the purchase
of common shares under the ESPP represent less than 0.96% of the Company's
outstanding common shares at December 31, 2001.

SHARE REPURCHASE PROGRAM

         On October 15, 2001, the Company's Board of Trust Managers authorized
an increase in the amount of outstanding common shares that can be repurchased
from time to time in the open market or through privately negotiated
transactions (the "Share Repurchase Program") from $500.0 million to $800.0
million. The repurchase of common shares by the Company will decrease the
Company's limited partner interest, which will result in an increase in net
income per unit.

         The Company commenced its Share Repurchase Program in March 2000. As of
December 31, 2001, the Company had repurchased 18,756,423 common shares, 20,286
of which have been retired, at an average price of $19.09 per common share for
an aggregate of approximately $358.1 million. As of December 31, 2001, the
Company held 14,468,623 of the repurchased common shares in SH IX. The
14,468,623 common shares were repurchased with the net proceeds of the sale of
Class A Units in Funding IX and a portion of the net proceeds from the sale of
one of the Properties held by Funding IX. See "Sale of Preferred Equity
Interests in Subsidiary and Intracompany Loan" above. These common shares are
consolidated as treasury shares in accordance with GAAP in the Company's
financial statements. However, these shares are held in SH IX until all of the
Class A Units are redeemed, and are considered outstanding for the Operating
Partnership's financial statements. Distributions will continue to be paid on
these repurchased common shares and will be used to pay dividends on the Class A
Units.

         The Company expects the Share Repurchase Program to continue to be
funded through a combination of debt, equity, joint venture capital and selected
asset disposition alternatives available to the Company, which in some cases,
may be secured by the repurchased common shares. The amount of common shares
that the Company will actually purchase will be determined from time to time, in
its reasonable judgment, based on market conditions and the availability of
funds, among other factors. There can be no assurance that any number of common
shares will actually be purchased within any particular time period.

SHARE REPURCHASE AGREEMENT

         On November 19, 1999, the Company entered into an agreement (the "Share
Repurchase Agreement") with UBS to purchase a portion of its common shares from
UBS. The Company had the option to settle the Share Repurchase Agreement in cash
or common shares. During the year ended December 31, 2000, the Company purchased
the 5,809,180 common shares from UBS at an average cost of $17.62 per common
share for an aggregate of approximately $102.3 million under the Share
Repurchase Agreement with UBS. The Company has no further obligation under the
Share Repurchase Agreement. The purchases were funded primarily through the sale
of Class A Units in Funding IX. See "Sale of Preferred Equity Interests in
Subsidiary and Intracompany Loan" above.

ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations," which provides that all business
combinations in the scope of the statement are to be accounted for under the
purchase method. This statement is effective for all business combinations
initiated after June 30, 2001, as well as all business combinations accounted
for using the purchase method for which the date of acquisition is July 1, 2001,
or later. Since the Operating Partnership currently accounts for its
acquisitions under the purchase method, management does not believe that the
adoption of this statement will have a material effect on its interim or annual
financial statements.

         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets," which addresses financial accounting and reporting for
acquired goodwill and other intangible assets. This statement requires that
goodwill and some other intangible assets will no longer be amortized, and
provides specific guidance for testing goodwill for impairment. This statement
is effective for fiscal years beginning after December 15, 2001. The Operating
Partnership expects its impairment losses to range between $14.0 million and
$18.3 million due to the initial application of this statement. These charges
relate to unconsolidated companies in which the Operating Partnership had an
interest as of December 31, 2001. These charges will be reported as resulting
from a change in accounting principle.


                                       49
<PAGE>


         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This statement is effective for fiscal years
beginning after June 15, 2002. The Operating Partnership has determined that
SFAS No. 143 will have no material effect on its interim and annual financial
statements.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
The statement is effective for financial statements issued for fiscal years
beginning after December 15, 2001, and interim periods within those fiscal
years. Management does not believe that adoption of this statement will have a
material effect on its interim or annual financial statements; however,
financial statement presentation will be modified to report the results of
operations and financial position of a component of an entity that either has
been disposed of or is classified as held for sale as discontinued operations.
The Operating Partnership will reclassify certain amounts in prior period
financial statements to conform with the new presentation requirements.

LIQUIDITY REQUIREMENTS

         As of December 31, 2001, the Operating Partnership had unfunded capital
requirements of approximately $40.4 million relating to capital investments. The
table below specifies the Operating Partnership's total capital requirements
relating to these projects, amounts funded as of December 31, 2001, amounts
remaining to be funded, and short-term and long-term capital requirements.


<Table>
<Caption>
                                                                                                 CAPITAL REQUIREMENTS
                                                                  AMOUNT                      ---------------------------
(in millions)                                                  FUNDED AS OF      AMOUNT        SHORT-TERM     LONG-TERM
                                                    TOTAL      DECEMBER 31,     REMAINING       (NEXT 12        (12+
         Project                                   Cost(1)         2001          To Fund       Months)(2)     Months)(2)
         -------                                ------------   ------------    ------------   ------------   ------------
<S>                                             <C>            <C>             <C>            <C>            <C>
RESIDENTIAL DEVELOPMENT SEGMENT
      Tahoe Mountain Resorts                    $      100.0   $      (71.2)   $       28.8   $       28.8   $         --
                                                ------------   ------------    ------------   ------------   ------------

OTHER
      SunTx(3)                                  $       19.0   $       (7.4)   $       11.6   $        4.0   $        7.6
                                                ------------   ------------    ------------   ------------   ------------

TOTAL                                           $      119.0   $      (78.6)   $       40.4   $       32.8   $        7.6
                                                ============   ============    ============   ============   ============
</Table>



----------

(1)  All amounts are approximate.

(2)  Reflects the Operating Partnership's estimate of the breakdown between
     short-term and long-term capital expenditures.

(3)  This commitment is related to the Operating Partnership's investment in a
     private equity fund.

         The Operating Partnership expects to fund its short-term capital
requirements of approximately $32.8 million through a combination of cash, net
cash flow from operations, return of capital (investment) from the Residential
Development Corporations and borrowings under the Fleet Facility. The Operating
Partnership plans to meet its maturing debt obligations during 2002 of
approximately $245.2 million, primarily through additional or replacement debt
financing or equity transactions.

         The Operating Partnership expects to meet its other short-term capital
requirements, consisting of normal recurring operating expenses, regular debt
service requirements (including debt service relating to additional and
replacement debt), additional interest expense related to the cash flow hedge
agreements, recurring capital expenditures, non-recurring capital expenditures,
such as tenant improvement and leasing costs, and distributions to shareholders
and unitholders, primarily through cash flow provided by operating activities.
To the extent that the Operating Partnership's cash flow from operating
activities is not sufficient to finance such short-term liquidity requirements,
the Operating Partnership expects to finance such requirements with available
cash proceeds received from joint ventures and select property sales, and
borrowings under the Fleet Facility or additional debt financing.

         The Operating Partnership expects to fund its long-term capital
requirements of approximately $7.6 million with available cash proceeds received
from joint ventures and select property sales, borrowings under the Fleet
Facility or additional debt financing and return of capital (investment) from
the Residential Development Corporations. The Operating


                                       50
<PAGE>


Partnership's other long-term liquidity requirements as of December 31, 2001,
consist primarily of maturities after December 31, 2002, under the Operating
Partnership's fixed and variable-rate debt, which totaled approximately $2.0
billion as of December 31, 2001. The Company also intends to repay the
intracompany loan of approximately $285.0 million, including accrued interest,
from Funding IX to SH IX at maturity on March 15, 2003, and to redeem
approximately $218.4 million of Class A Units in Funding IX with the proceeds
received by Funding IX. The Operating Partnership expects to meet these
long-term liquidity requirements primarily through long-term secured and
unsecured borrowings and other debt and equity financing alternatives as well as
cash proceeds received from joint ventures and select property sales.

         Debt and equity financing alternatives currently available to the
Operating Partnership to satisfy its liquidity requirements and commitments for
material capital expenditures include:

   o     Additional proceeds from the refinancing of existing secured and
         unsecured debt;

   o     Additional debt secured by existing underleveraged properties,
         investment properties, or by investment property acquisitions or
         developments;

   o     Issuance of additional unsecured debt;

   o     Equity offerings including preferred and/or convertible securities; and

   o     Proceeds from joint ventures and property sales.

   The following factors could limit the Operating Partnership's ability to
   utilize these financing alternatives:

   o     The Operating Partnership may be unable to obtain debt or equity
         financing on favorable terms, or at all, as a result of the financial
         condition of the Operating Partnership or market conditions at the time
         the Operating Partnership seeks additional financing;

   o     Restrictions on the Operating Partnership's debt instruments or
         outstanding equity may prohibit it from incurring debt or issuing
         equity at all, or on terms available under then-prevailing market
         conditions; and

   o     The Operating Partnership may be unable to service additional or
         replacement debt due to increases in interest rates or a decline in the
         Operating Partnership's operating performance.

         In addition to the Operating Partnership's liquidity requirements
stated above, as of December 31, 2001, the Operating Partnership also has
guarantees or letters of credit related to approximately $89.3 million, or 17%
of its maximum borrowings available under its unconsolidated debt. At December
31, 2001, the Operating Partnership had guarantees or letters of credit related
to approximately $17.2 million, or 4% of its total outstanding unconsolidated
debt. See "Note 4. Investments in Real Estate Mortgages and Equity of
Unconsolidated Companies" included in "Item 8. Financial Statements and
Supplementary Data" for more information about the Operating Partnership's
unconsolidated investments and the underlying debt related to these investments.

REIT QUALIFICATION

         The Company intends to maintain its qualification as a REIT under
Section 856(c) of the Code. As a REIT, the Company generally will not be subject
to corporate federal income taxes as long as it satisfies certain technical
requirements of the Code, including the requirement to distribute 90% of its
REIT taxable income to its shareholders.


                                       51
<PAGE>


DEBT FINANCING ARRANGEMENTS

         The significant terms of the Operating Partnership's primary debt
financing arrangements existing as of December 31, 2001, are shown below
(dollars in thousands):

<Table>
<Caption>
                                                               INTEREST                                                BALANCE
                                                                RATE AT                            EXPECTED        OUTSTANDING AT
                                             MAXIMUM         DECEMBER 31,     MATURITY              PAYOFF          DECEMBER 31,
       DESCRIPTION                          BORROWINGS           2001           DATE                 DATE               2001
       -----------                          ----------       ------------     --------           ------------      --------------
<S>                                        <C>              <C>             <C>                 <C>               <C>
SECURED FIXED RATE DEBT:
   JP Morgan Mortgage Note(1)              $   199,386            8.31%      October 2016         October 2006      $   199,386
   AEGON Partnership Note(2)                   269,930            7.53        July 2009            July 2009            269,930
   LaSalle Note I(3)                           239,000            7.83       August 2027          August 2007           239,000
   LaSalle Note II(4)                          161,000            7.79        March 2028           March 2006           161,000
   CIGNA Note(5)                                63,500            7.47      December 2002        December 2002           63,500
   Metropolitan Life Note V(6)                  38,696            8.49      December 2005        December 2005           38,696
   Northwestern Life Note(7)                    26,000            7.66       January 2004         January 2004           26,000
   Mitchell Mortgage Note(8)                     6,244            7.00       August 2002          August 2002             6,244
   Nomura Funding VI Note(9)                     8,187           10.07        July 2020            July 2010              8,187
   Woodmen of the World Note(10)                 8,500            8.20        April 2009           April 2009             8,500
   Rigney Promissory Note(11)                      651            8.50      November 2012          June 2012                651
                                           -----------      ----------                                              -----------
    Subtotal/Weighted Average              $ 1,021,094            7.85%                                             $ 1,021,094
                                           -----------      ----------                                              -----------

UNSECURED FIXED RATE DEBT:
   Notes due 2007(12)                      $   250,000            7.50%     September 2007       September 2007     $   250,000
   Notes due 2002(12)                          150,000            7.00      September 2002       September 2002         150,000
                                           -----------      ----------                                              -----------
    Subtotal/Weighted Average              $   400,000            7.31%                                             $   400,000
                                           -----------      ----------                                              -----------

SECURED VARIABLE RATE DEBT(13):
   Fleet Fund I and II Term Loan(14)       $   275,000            5.39%        May 2005             May 2005        $   275,000
   Deutsche Bank - CMBS Loan(15)               220,000            5.84         May 2004             May 2006            220,000
                                           -----------      ----------                                              -----------
    Subtotal/Weighted Average              $   495,000            5.59%                                             $   495,000
                                           -----------      ----------                                              -----------

UNSECURED VARIABLE RATE DEBT:
   JPMorgan Loan Sales Facility(16)        $    50,000            3.25%                           January 2002      $    10,000
   Fleet Bridge Loan(17)                        50,000            5.71       August 2002          August 2002             5,000
   Fleet Facility(14)                          400,000            3.92         May 2004             May 2005            283,000
                                           -----------      ----------                                              -----------
                                           $   500,000            3.93%                                             $   298,000
                                           -----------      ----------                                              -----------

    TOTAL/WEIGHTED AVERAGE                 $ 2,416,094            6.72%(18)                                         $ 2,214,094
                                           ===========      ===========                                             ===========

    AVERAGE REMAINING TERM                                                      8.4 years            4.3 years
</Table>

----------
(1)  At the end of seven years (October 2006), the interest rate will adjust
     based on current interest rates at that time. It is the Operating
     Partnership's intention to repay the note in full at such time (October
     2006) by making a final payment of approximately $177.8 million.

(2)  The outstanding principal balance of this note at maturity will be
     approximately $224.1 million. This note is secured by the Greenway Plaza
     Office Properties. The note agreement requires the Operating Partnership to
     maintain compliance with a number of customary covenants, including
     maintaining the Properties that secure the note and not creating any lien
     with respect to or otherwise encumbering such Properties.

(3)  The note has a seven-year period during which only interest is payable
     (through August 2002), followed by principal amortization based on a
     25-year amortization schedule through maturity. In August 2007, the
     interest rate will increase, and the Operating Partnership is required to
     remit, in addition to the monthly debt service payment, excess property
     cash flow, as defined, to be applied first against principal until the note
     is paid in full and thereafter, against accrued excess interest, as
     defined. It is the Operating Partnership's intention to repay the note in
     full at such time (August 2007) by making a final payment of approximately
     $220.5 million. LaSalle Note I is secured by Properties owned by Crescent
     Real Estate Funding I, L.P. ("Funding I") (See "Note 1. Organization and
     Basis of Presentation" included in "Item 8. Financial Statements and
     Supplementary Data"). The note agreement restricts Funding I from engaging
     in certain activities, including incurring liens on the Properties securing
     the note, pledging the Properties securing the note, incurring certain
     other indebtedness, canceling a material claim or debt owed to it, entering
     into certain transactions, distributing funds derived from operation of the
     Properties securing the note (except as specifically permitted in the note
     agreement), or creating easements with respect to the Properties securing
     the note.

(4)  The note has a seven-year period during which only interest is payable
     (through March 2003), followed by principal amortization based on a 25-year
     amortization schedule through maturity. In March 2006, the interest rate
     will increase, and the Operating Partnership is required to remit, in
     addition to the monthly debt service payment, excess property cash flow, as
     defined, to be applied first against principal until the note is paid in
     full and thereafter, against accrued excess interest, as defined. It is the
     Operating Partnership's intention to repay the note in full at such time
     (March 2006) by making a final payment of approximately $154.1 million.
     LaSalle Note II is secured by Properties owned by Crescent Real Estate
     Funding II, L.P. ("Funding II") (See "Note 1. Organization and Basis of
     Presentation" included in "Item 8. Financial Statements and Supplementary
     Data"). The note agreement restricts Funding II from engaging in certain
     activities, including incurring liens on the Properties securing the note,
     pledging the Properties securing the note, incurring certain other
     indebtedness, canceling a material claim or debt owed to it, entering into
     certain affiliate transactions, distributing


                                       52
<PAGE>


     funds derived from operation of the Properties securing the note (except as
     specifically permitted in the note agreement), or creating easements with
     respect to the Properties securing the note.

(5)  The note requires payments of interest only during its term. The CIGNA Note
     is secured by the MCI Tower and Denver Marriott City Center Resort/Hotel
     Property. The note agreement has no negative covenants. The deed of trust
     requires the Operating Partnership to maintain the Properties that secure
     the note, and requires approval to grant liens, transfer the Properties, or
     issue new leases.

(6)  The Metropolitan Life Note V requires monthly principal and interest
     payments based on a 25-year amortization schedule through maturity, at
     which time the outstanding principal balance is due and payable. The note
     is secured by the Datran Center Office Property. The note agreement
     requires the Operating Partnership to maintain compliance with a number of
     customary covenants, including maintaining the Property that secures the
     note and not creating any lien with respect to or otherwise encumbering
     such Property.

(7)  The note requires payments of interest only during its term. The
     Northwestern Life Note is secured by the 301 Congress Avenue Office
     Property. The note agreement requires the Operating Partnership to maintain
     compliance with a number of customary covenants, including maintaining the
     Property that secures the note and not creating any lien with respect to or
     otherwise encumbering such Property.

(8)  The note requires payments of interest only during its term. The Mitchell
     Mortgage Note is secured by three of The Woodlands Office Properties. The
     note agreement has no negative covenants.

(9)  The note was assumed in connection with an acquisition and was not
     subsequently retired by the Operating Partnership because of prepayment
     penalties. Under the terms of the note, principal and interest are payable
     based on a 25-year amortization schedule. The Operating Partnership has the
     option to defease the note by purchasing Treasury obligations in an amount
     sufficient to pay the note without penalty. The Nomura Funding VI Note is
     secured by Canyon Ranch-Lenox, the Property owned by Crescent Real Estate
     Funding VI, L.P. ("Funding VI") (see "Note 1. Organization and Basis of
     Presentation" included in "Item 8. Financial Statements and Supplementary
     Data"). In July 2010, the interest rate due under the note will change to a
     10-year Treasury yield plus 500 basis points or, if the Operating
     Partnership so elects, it may repay the note without penalty at that date.
     The note agreement requires Funding VI to maintain compliance with a number
     of customary covenants, including a debt service coverage ratio for the
     Property that secures the note, a restriction on the ability to transfer or
     encumber the Property that secures the note, and covenants related to
     maintaining its single purpose nature, including restrictions on ownership
     by Funding VI of assets other than the Property that secures the note,
     restrictions on the ability to incur indebtedness and make loans, and
     restrictions on operations.

(10) The outstanding principal balance on this note at maturity will be
     approximately $8.5 million. This note is secured by the Avallon IV Office
     Property. The note agreement requires that the Operating Partnership
     maintains compliance with a number of customary covenants, including,
     maintaining the Property that secures the note and not creating any lien
     with respect to or otherwise encumbering such Property.

(11) The note requires quarterly payments of principal and interest based on a
     15-year amortization schedule through maturity, at which time the
     outstanding principal balance is due and payable. The Rigney Promissory
     Note is secured by a parcel of land owned by the Operating Partnership and
     located across from an Office Property. The note agreement has no negative
     covenants.

(12) The notes are unsecured and require payments of interest only during their
     terms. The indenture requires the Operating Partnership to maintain
     compliance with a number of customary financial and other covenants on an
     ongoing basis, including leverage ratios and debt service coverage ratios,
     limitations on the incurrence of additional indebtedness and maintaining
     the Operating Partnership's Properties. The notes were issued in an
     offering registered with the SEC.

(13) For the method of calculation of the interest rate for the Operating
     Partnership's variable-rate debt, see "Note 6. Notes Payable and Borrowings
     under the Fleet Facility" included in "Item 8. Financial Statements and
     Supplementary Data."

(14) For a description of the Fleet Fund I and II Term Loan and the Fleet
     Facility, see "Note 6. Notes Payable and Borrowings under the Fleet
     Facility" included in "Item 8. Financial Statements and Supplementary
     Data." The note requires payments of interest only during the first four
     years with a one-year extension option. The note, due May 2004, bears
     interest at LIBOR plus 325 basis points (at December 31, 2001, the interest
     rate was 5.39%). The Fleet Term Loan note is secured by eight Office
     Properties in Funding I, and 12 Office Properties in Funding II. The Term
     Loan requires the Operating Partnership maintain compliance with a number
     of customary financial and other covenants on an on going basis, including
     leverage ratios based on book value and debt service coverage ratios,
     limitations on additional secured and total indebtedness, limitations on
     distributions, and a minimum net worth requirement and with respect solely
     to Funding I and Funding II adjusted net operating income to actual debt
     service and adjusted net operating income to pro forma debt service.

(15) This note requires payment of interest only during its term. The notes, due
     May 2004, bear interest at the 30-day LIBOR rate plus a spread of 164.7
     basis points (at December 31, 2001, the interest rate was 5.15%) for the
     Deutsche Bank-CMBS and a spread of 600 basis points (at December 31, 2001,
     the interest rate was 9.50%) for the Mezzanine note. The blended rate at
     December 31, 2001, was 5.84%. The notes have three-year interest only terms
     and two one-year extension options, and are secured by the Crescent Real
     Estate Funding X, L.P. ("Funding X") Office Properties and Spectrum Center,
     L. P. (See "Note 1. Organization and Basis of Presentation" included in
     "Item 8. Financial Statements and Supplementary Data"). The notes require
     the Operating Partnership to maintain compliance with a minimum debt
     service coverage ratio.

(16) The JP Morgan Loan Sales Facility is a $50.0 million credit facility. The
     lender is not obligated to fund draws under this loan unless certain
     conditions not within the control of the Operating Partnership are
     satisfied at the time of the draw request. As a result, the Operating
     Partnership maintains sufficient availability under the Fleet Facility to
     repay the JP Morgan Loan Sales Facility at any time.

(17) The Fleet Bridge Loan is a $50.0 million unsecured credit facility.

(18) The overall weighted average interest rate does not include the effect of
     the Operating Partnership's cash flow hedge agreements. Including the
     effect of these agreements, the overall weighted average interest rate
     would have been 7.58%.



                                       53
<PAGE>



     Below are the aggregate principal payments required as of December 31, 2001
under indebtedness of the Operating Partnership by year. Scheduled principal
installments and amounts due at maturity are included.


<Table>
<Caption>
                                  SECURED          UNSECURED            TOTAL
                                ------------      ------------      ------------
    (in thousands)
<S>                             <C>               <C>               <C>
2002                            $     80,157      $    165,000      $    245,157
2003                                  15,060                --            15,060
2004                                 262,857(1)        283,000(1)        545,857
2005                                 329,339                --           329,339
2006                                 347,207                --           347,207
Thereafter                           481,474           250,000           731,474
                                ------------      ------------      ------------
                                $  1,516,094      $    698,000      $  2,214,094
                                ============      ============      ============
</Table>


----------
(1)  These amounts do not represent the effect of a one-year extension option of
     the Fleet Facility and two one-year extension options on the Deutsche
     Bank - CMBS Loan.

         The Operating Partnership has approximately $245.2 million of secured
and unsecured debt due during 2002, consisting primarily of the Cigna Note, the
Mitchell Mortgage Note and the 2002 Notes which are expected to be funded
through replacement debt financing.

         The Operating Partnership's policy with regard to the incurrence and
maintenance of debt is based on a review and analysis of:

         o        investment opportunities for which capital is required and the
                  cost of debt in relation to such investment opportunities;

         o        the type of debt available (secured or unsecured);

         o        the effect of additional debt on existing coverage ratios;

         o        the maturity of the proposed debt in relation to maturities of
                  existing debt; and

         o        exposure to variable-rate debt and alternatives such as
                  interest-rate swaps and cash flow hedges to reduce this
                  exposure.

         Debt service coverage ratios for a particular period are generally
calculated as net income plus depreciation and amortization, plus interest
expense, plus extraordinary or non-recurring losses, minus extraordinary or
non-recurring gains, divided by debt service (including principal and interest
payable during the period of calculation). The calculation of the debt service
coverage ratio for the Fleet Facility is calculated using the method described
above, including certain pro forma adjustments.

         Any uncured or unwaived events of default on the Operating
Partnership's loans can trigger an acceleration of payment on the loan in
default. In addition, a default by the Operating Partnership or any of its
subsidiaries with respect to any indebtedness in excess of $5.0 million
generally will result in a default under the Fleet Facility and the Fleet I and
II Term Loan after the notice and cure periods for the other indebtedness have
passed. As of December 31, 2001, the Operating Partnership was in compliance
with all of its debt service coverage ratios and other covenants related to its
outstanding debt. The Operating Partnership's debt facilities generally prohibit
loan pre-payment for an initial period, allow pre-payment with a penalty during
a following specified period and allow pre-payment without penalty after the
expiration of that period. During the year ended December 31, 2001, there were
no circumstances that would require pre-payment penalties or increased
collateral related to the Operating Partnership's existing debt.

DEBT REFINANCING AND FLEET FACILITY

         In May 2001, the Operating Partnership (i) repaid and retired the UBS
Facility which consisted of the UBS Line of Credit, the UBS Term Loan I and the
UBS Term Loan II; (ii) repaid and retired the iStar Financial Note; and (iii)
modified and replaced the Fleet Term Note II with proceeds from a $970.0 million
debt refinancing. In May 2001, the Operating Partnership wrote off $12.2 million
of deferred financing costs related to the early extinguishment of the UBS
Facility which is included in Extraordinary Item - Extinguishment of Debt.



                                       54
<PAGE>



New Debt Resulting from Refinancing


<Table>
<Caption>
                                                   MAXIMUM             INTEREST                   MATURITY
    DESCRIPTION                                   BORROWING              RATE                       DATE
    -----------                                 -------------   --------------------------        --------
(dollars in millions)
<S>                                             <C>             <C>                               <C>
Fleet Facility                                  $    400.0(1)   LIBOR + 187.5 basis points         2004(2)
Fleet Fund I and II Term Loan                   $    275.0      LIBOR + 325 basis points           2005
Deutsche Bank - CMBS Loan                       $    220.0      LIBOR + 234 basis points           2004(3)
Deutsche Bank Short-Term Loan                   $     75.0      LIBOR + 300 basis points           2001(4)
</Table>

----------
(1)      The $400.0 million Fleet Facility is an unsecured revolving line of
         credit. The weighted average interest rate from the origination of the
         loan in May 2001 through December 31, 2001 is 5.38%.

(2)      One-year extension option.

(3)      Two one-year extension options.

(4)      Repaid September 19, 2001.


Debt Repaid or Modified by Refinancing


<Table>
<Caption>
                                         MAXIMUM                  INTEREST                 MATURITY           BALANCE
        DESCRIPTION                     BORROWING                   RATE                     DATE        REPAID/MODIFIED(1)
        -----------                     ---------                 -------                  --------      ------------------
  (dollars in millions)
<S>                                   <C>                  <C>                             <C>               <C>
UBS Line of Credit                    $      300.0         LIBOR + 250 basis points           2003         $      165.0
UBS Term Loan I                       $      146.8         LIBOR + 250 basis points           2003         $      146.8
UBS Term Loan II                      $      326.7         LIBOR + 275 basis points           2004         $      326.7
Fleet Term Note II                    $      200.0         LIBOR + 400 basis points           2003         $      200.0
iStar Financial Note                  $       97.1         LIBOR + 175 basis points           2001         $       97.1
</Table>

----------

(1)      All the amounts listed, other than the Fleet Term Note II, were repaid.
         In May 2001, the Fleet Term Note II was modified and replaced by the
         Fleet Fund I and II Term Loan.

CASH FLOW HEDGES

         The Operating Partnership uses derivative financial instruments to
convert a portion of its variable-rate debt to fixed-rate debt and to manage its
fixed to variable-rate debt ratio. As of December 31, 2001, the Operating
Partnership had entered into three cash flow hedge agreements which are
accounted for under SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended by SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - an Amendment of FASB
Statement No. 133".

         The following table shows information regarding the Operating
Partnership's cash flow hedge agreements as of December 31, 2001 and interest
expense for the year ended December 31, 2001 (dollars in millions):

<Table>
<Caption>
                                                                                                          ADDITIONAL
                                                                                                        INTEREST EXPENSE
         ISSUE             NOTIONAL              MATURITY       REFERENCE            FAIR                 FOR THE YEAR
          DATE              AMOUNT                 DATE            RATE           MARKET VALUE        ENDED DECEMBER 31, 2001
         -----             --------              --------       ---------         ------------        -----------------------
<S>                        <C>                 <C>              <C>               <C>                 <C>
        9/1/1999           $ 200.0               9/2/2003         6.183%          $      (10.8)              $     3.5
        2/4/2000           $ 200.0               2/3/2003          7.11%          $      (10.8)              $     6.0
       4/18/2000           $ 100.0              4/18/2004          6.76%          $       (7.2)              $     2.7
</Table>


         The Operating Partnership has designated its three cash flow hedge
agreements as cash flow hedges of LIBOR-based monthly interest payments on a
designated pool of variable-rate LIBOR indexed debt that reprices closest to the
reset dates of each cash flow hedge agreement. For retrospective effectiveness
testing, the Operating Partnership uses the cumulative dollar offset approach as
described in Derivatives Implementation Group ("DIG") Issue E8. The DIG is a
task force designed to assist the FASB in answering questions that companies
have resulting from implementation of SFAS No. 133 and 138. The Operating
Partnership uses the change in variable cash flows method as described in DIG
Issue G7 for



                                       55
<PAGE>


prospective testing as well as for the actual recording of ineffectiveness, if
any. Under this method, the Operating Partnership will compare the changes in
the floating rate portion of each cash flow hedge to the floating rate of the
hedged items. The cash flow hedges have been and are expected to remain highly
effective. Changes in the fair value of these highly effective hedging
instruments are recorded in accumulated other comprehensive income. The
effective portion that has been deferred in accumulated other comprehensive
income will be reclassified to earnings as interest expense when the hedged
items impact earnings. If a cash flow hedge falls outside 80%-125% effectiveness
for a quarter, all changes in the fair value of the cash flow hedge for the
quarter will be recognized in earnings during the current period. If it is
determined based on prospective testing that it is no longer likely a hedge will
be highly effective on a prospective basis, the hedge will no longer be
designated as a cash flow hedge and no longer qualify for accounting in
accordance with SFAS Nos. 133 and 138.

         Over the next twelve months, an estimated $16.4 million to $18.4
million related to the effective portions of the cash flow hedge agreements will
be reclassified from accumulated other comprehensive income to interest expense
and charged against earnings.

INTEREST RATE CAPS

         In connection with the closing of the Deutsche Bank-CMBS Loan in May
2001, the Operating Partnership entered into a LIBOR interest rate cap struck at
7.16% for a notional amount of $220.0 million, and simultaneously sold a LIBOR
interest rate cap with the same terms. Since these instruments do not reduce the
Operating Partnership's net interest rate risk exposure, they do not qualify as
hedges and changes to their respective fair values are charged to earnings. As
the significant terms of these arrangements are substantially the same, the
effects of a revaluation of these instruments are expected to substantially
offset each other.

FUNDS FROM OPERATIONS

         FFO, based on the revised definition adopted by the Board of Governors
of the NAREIT, effective January 1, 2000, and as used in this document, means:

o        Net Income (Loss) - determined in accordance with GAAP;

         o        excluding gains (or losses) from sales of depreciable
                  operating property;

         o        excluding extraordinary items (as defined by GAAP);

         o        plus depreciation and amortization of real estate assets; and

         o        after adjustments for unconsolidated partnerships and joint
                  ventures.

         NAREIT developed FFO as a relative measure of performance and liquidity
of an equity REIT to recognize that income-producing real estate historically
has not depreciated on the basis determined under GAAP. The Operating
Partnership considers FFO an appropriate measure of performance for an operating
partnership of an equity REIT, and for its investment segments. However, FFO:

         o        does not represent cash generated from operating activities
                  determined in accordance with GAAP (which, unlike FFO,
                  generally reflects all cash effects of transactions and other
                  events that enter into the determination of net income);

         o        is not necessarily indicative of cash flow available to fund
                  cash needs; and

         o        should not be considered as an alternative to net income
                  determined in accordance with GAAP as an indication of the
                  Operating Partnership's operating performance, or to cash flow
                  from operating activities determined in accordance with GAAP
                  as a measure of either liquidity or the Operating
                  Partnership's ability to make distributions.

         The Operating Partnership has historically distributed an amount less
than FFO, primarily due to reserves required for capital expenditures, including
leasing costs. The aggregate cash distributions paid to shareholders and
unitholders for the year ended December 31, 2001, and 2000, were $275.6 and
$300.0 million, respectively. The Operating Partnership reported FFO of $206.4
million and $348.2 million for the years ended December 31, 2001 and 2000,
respectively. Excluding the impairment and other changes related to COPI of
$92.8 million, the Operating Partnership's FFO for the year ended December 31,
2001, would have been $299.2 million. Excluding the interest income from the
intracompany loan from Funding IX to SH IX, the Operating Partnership's FFO for
the years ended December 31, 2001 and 2000 would have been $177.1 million and
$326.9 million, respectively. Excluding both the interest income from the
intracompany loan and the impairment and other charges related to COPI of $92.8
million, the Operating Partnership's FFO for the year ended December 31, 2001
would have been $269.9 million.


                                       56
<PAGE>



         An increase or decrease in FFO does not necessarily result in an
increase or decrease in aggregate distributions because the Company's Board of
Trust Managers is not required to increase distributions on a quarterly basis
unless necessary for the Company to maintain REIT status. However, the Company
must distribute 90% of its REIT taxable income (as defined in the Code).
Therefore, a significant increase in FFO will generally require an increase in
distributions to shareholders and unitholders although not necessarily on a
proportionate basis.

         Accordingly, the Operating Partnership believes that to facilitate a
clear understanding of the consolidated historical operating results of the
Operating Partnership, FFO should be considered in conjunction with the
Operating Partnership's net income (loss) and cash flows reported in the
consolidated financial statements and notes to the financial statements.
However, the Operating Partnership's measure of FFO may not be comparable to
similarly titled measures of operating partnerships of REITs (other than the
Company) because these REITs may apply the definition of FFO in a different
manner than the Operating Partnership.

STATEMENTS OF FUNDS FROM OPERATIONS
(DOLLARS AND UNITS IN THOUSANDS)


<Table>
<Caption>
                                                                      FOR THE YEAR
                                                                    ENDED DECEMBER 31,
                                                               ----------------------------
                                                                   2001            2000
                                                               ------------    ------------
<S>                                                            <C>             <C>
Net (loss) income                                              $     24,006    $    300,084
Adjustments to reconcile net (loss) income to
  funds from operations:
      Depreciation and amortization of real estate assets           122,033         119,999
      Gain on rental property sales, net                             (2,835)       (128,355)
      Impairment and other charges related to
            real estate assets                                       21,705           9,349
      Extraordinary item - extinguishment of debt                    12,174           4,378
      Adjustment for investments in real estate mortgages
        and equity of unconsolidated companies:
           Office Properties                                          6,955           4,973
           Residential Development Properties                        13,037          25,130
           Temperature-Controlled Logistics Properties               22,671          26,131
           Other                                                        144              --
      6 3/4% Series A Preferred Share distributions                 (13,501)        (13,500)
                                                               ------------    ------------
Funds from operations                                          $    206,389    $    348,189

Investment Segments:
      Office Segment                                           $    358,348    $    361,574
      Resort/Hotel Segment                                           45,282          71,446
      Residential Development Segment                                54,051          78,600
      Temperature-Controlled Logistics Segment                       23,806          33,563
      Coporate and other adjustments:
           Interest expense                                        (182,410)       (203,197)
           6 3/4% Series A Preferred Share distributions            (13,501)        (13,500)
           Other(1)(2)                                               37,844          43,776
           Corporate general & administrative                       (24,249)        (24,073)
           Impairment and other charges related to COPI             (92,782)             --
                                                               ------------    ------------
Funds from operations                                          $    206,389    $    348,189
                                                               ============    ============

Basic weighted average units                                         67,815          67,860
                                                               ============    ============
Diluted weighted average units(3)                                    68,578          68,458
                                                               ============    ============
</Table>


----------
(1)      Includes interest and other income, preferred return paid to GMACCM,
         other unconsolidated companies, less depreciation and amortization of
         non-real estate assets and amortization of deferred financing costs.

(2)      For purposes of this schedule, the behavioral healthcare properties'
         financial information has been included in this line item.

(3)      See calculations for the amounts presented in the reconciliation
         following this table.


                                       57
<PAGE>


         The following schedule reconciles the Operating Partnership's basic
weighted average units to the diluted weighted average units presented above:


<Table>
<Caption>
                                                                   FOR THE YEAR
                                                                ENDED DECEMBER 31,
                                                           ---------------------------
(UNITS IN THOUSANDS)                                           2001           2000
                                                           ------------   ------------
<S>                                                        <C>            <C>
Basic weighted average units:                                    67,815         67,860
          Unit options                                              763            598
                                                           ------------   ------------
Diluted weighted average units                                   68,578         68,458
                                                           ============   ============
</Table>


RECONCILIATION OF FUNDS FROM OPERATIONS TO NET CASH PROVIDED
 BY OPERATING ACTIVITIES
 (DOLLARS IN THOUSANDS)


<Table>
<Caption>
                                                                        FOR THE YEAR ENDED DECEMBER 31
                                                                        ------------------------------
                                                                             2001            2000
                                                                         ------------    ------------
<S>                                                                      <C>             <C>
Funds from operations                                                    $    206,389    $    348,189
Adjustments:
    Depreciation and amortization of non-real estate assets                     2,934           2,646
    Impairment and other charges related to real estate assets                 96,409              --
    Amortization of deferred financing costs                                    9,327           9,497
    Gain on undeveloped land                                                   (1,590)           (577)
    Increase in Receivables from COPI                                         (20,458)             --
    Minority interest in joint ventures profit and depreciation
      and amortization                                                         21,854          21,076
    Adjustment for investments in real estate mortgages
      and equity of unconsolidated companies                                  (42,807)        (56,234)
    Change in deferred rent receivable                                          3,744          (8,504)
    Change in current assets and liabilities                                  (64,229)        (25,736)
    Distributions received in excess of earnings from
      unconsolidated companies                                                 13,874           3,897
    Equity in earnings in excess of distributions received from
      unconsolidated companies                                                   (476)        (10,641)
    6 3/4% Series A Preferred Share distributions                              13,501          13,500
    Non cash compensation                                                         149             114
                                                                         ------------    ------------
Net cash provided by operating activities                                $    238,621    $    297,227
                                                                         ============    ============
</Table>



HISTORICAL RECURRING OFFICE PROPERTY CAPITAL EXPENDITURES,
TENANT IMPROVEMENT AND LEASING COSTS

         The following table sets forth annual and per square foot recurring
capital expenditures (excluding those expenditures which are recoverable from
tenants) and tenant improvement and leasing costs for the years ended December
31, 2001, 2000 and 1999, attributable to signed leases, all of which have
commenced or will commence during the next 12 months (i.e., the renewal or
replacement tenant began or will begin to pay rent) for the Office Properties
consolidated in the Operating Partnership's financial statements during each of
the periods presented. Tenant improvement and leasing costs for signed leases
during a particular period do not necessarily equal the cash paid for tenant
improvement and leasing costs during such period due to timing of payments.


                                       58
<PAGE>


<Table>
<Caption>
                                                                2001            2000            1999
                                                           -------------   -------------   -------------
<S>                                                        <C>             <C>             <C>
Capital Expenditures:
     Capital Expenditures (in thousands)                   $      15,672   $       9,199   $       6,048
     Per square foot                                       $        0.58   $        0.33   $        0.19
TENANT IMPROVEMENT AND LEASING COSTS:(1)
     Replacement Tenant Square Feet                            1,099,868       1,126,394       1,259,660
     Renewal Tenant Square Feet                                  790,203       1,490,930       1,385,911
     Tenant Improvement Costs (in thousands)               $      12,154   $      16,541   $      14,339
     Per square foot leased                                $        6.43   $        6.32   $        5.42
     Tenant Leasing Costs (in thousands)                   $       7,238   $      11,621   $       7,804
     Per square foot leased                                $        3.83   $        4.44   $        2.95
     Total (in thousands)                                  $      19,392   $      28,162   $      22,143
           Total per square foot                           $       10.26   $       10.76   $        8.37
           Average lease term                                  5.2 years       5.1 years       4.5 years
           Total per square foot per year                  $        1.97   $        2.10   $        1.87
</Table>




----------
(1)      Excludes leasing activity for leases that have less than a one-year
         term (i.e., storage and temporary space).

         Capital expenditures may fluctuate in any given period subject to the
nature, extent and timing of improvements required to be made in the Operating
Partnership's Office Property portfolio. The Operating Partnership maintains an
active preventive maintenance program in order to minimize required capital
improvements. In addition, certain capital improvement costs are recoverable
from tenants.

         Tenant improvement and leasing costs also may fluctuate in any given
year depending upon factors such as the property, the term of the lease, the
type of lease (renewal or replacement tenant), the involvement of external
leasing agents and overall competitive market conditions. Management believes
that future recurring tenant improvements and leasing costs for the Operating
Partnership's existing Office Properties will approximate on average for
"renewal tenants", $6.00 to $10.00 per square foot, or $1.20 to $2.00 per square
foot per year based on an average five-year lease term, and, on average for
"replacement tenants," $12.00 to $16.00 per square foot, or $2.40 to $3.20 per
square foot per year based on an average five-year lease term.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Operating Partnership's use of financial instruments, such as debt
instruments, subject the Operating Partnership to market risk which may affect
the Operating Partnership's future earnings and cash flows as well as the fair
value of its assets. Market risk generally refers to the risk of loss from
changes in interest rates and market prices. The Operating Partnership manages
its market risk by attempting to match anticipated inflow of cash from its
operating, investment and financing activities with anticipated outflow of cash
to fund debt payments, distributions to shareholders, investments, capital
expenditures and other cash requirements. The Operating Partnership also enters
into derivative financial instruments such as interest rate swaps to mitigate
its interest rate risk on a related financial instrument or to effectively lock
the interest rate on a portion of its variable-rate debt.

         The following discussion of market risk is based solely on hypothetical
changes in interest rates related to the Operating Partnership's variable-rate
debt. This discussion does not purport to take into account all of the factors
that may affect the financial instruments discussed in this section.

INTEREST RATE RISK

         The Operating Partnership's interest rate risk is most sensitive to
fluctuations in interest rates on its short-term variable-rate debt. The
Operating Partnership had total outstanding debt of approximately $2.2 billion
at December 31, 2001, of which approximately $0.3 billion, or approximately 14%,
was unhedged variable-rate debt. The weighted average interest rate on such
variable-rate debt was 3.90% as of December 31, 2001. A 10% (39.0 basis point)
increase in the weighted average interest rate on such variable-rate debt would
result in an annual decrease in net income and cash flows of approximately $1.0
million based on the unhedged variable-rate debt outstanding as of December 31,
2001, as a result of the increased interest expense associated with the change
in rate. Conversely, a 10% (39.0 basis point) decrease in the weighted average
interest rate on such unhedged variable-rate debt would result in an annual
increase in net income and cash flows of approximately $1.0 million based on the
unhedged variable rate debt outstanding as of December 31, 2001, as a result of
the decreased interest expense associated with the change in rate.


                                       59
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEX TO FINANCIAL STATEMENTS



<Table>
<Caption>
                                                                                                            PAGE
                                                                                                            ----

<S>                                                                                                          <C>
Report of Independent Public Accountants............................................................         61

Consolidated Balance Sheets at December 31, 2001 and 2000...........................................         62

Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999..........         63

Consolidated Statements of Partners' Capital for the years ended December 31, 2001, 2000 and 1999...         64

Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999..........         65

Notes to Consolidated Financial Statements..........................................................         66

Schedule III Consolidated Real Estate Investments and Accumulated Depreciation .....................        103
</Table>




                                       60
<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Sole Director of Crescent Real Estate Equities Ltd.:

We have audited the accompanying consolidated balance sheets of Crescent Real
Estate Equities Limited Partnership and subsidiaries as of December 31, 2001 and
2000, and the related consolidated statements of operations, partners' capital
and cash flows for each of the three years in the period ended December 31,
2001. These financial statements and the schedule referred to below are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements and the schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Crescent Real Estate Equities
Limited Partnership and subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.


                                               ARTHUR ANDERSEN LLP

Dallas, Texas,
February 21, 2002



                                       61
<PAGE>


               CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
                          CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                                                       DECEMBER 31,             DECEMBER 31,
                                                                                           2001                     2000
                                                                                      --------------           --------------
<S>                                                                                   <C>                      <C>
ASSETS:
Investments in real estate:
   Land                                                                               $      265,594           $      310,301
   Land held for investment or development                                                   108,274                  116,480
   Building and improvements                                                               2,980,116                3,201,332
   Furniture, fixtures and equipment                                                          74,773                   62,802
   Less -  accumulated depreciation                                                         (648,834)                (564,805)
                                                                                      --------------           --------------
               Net investment in real estate                                          $    2,779,923           $    3,126,110

   Cash and cash equivalents                                                          $       31,644           $       38,643
   Restricted cash and cash equivalents                                                      115,531                   94,568
   Accounts receivable, net                                                                   28,610                   42,140
   Deferred rent receivable                                                                   66,362                   82,775
   Investments in real estate mortgages and
       equity of unconsolidated companies                                                    838,317                  845,317
   Notes receivable, net                                                                     416,789                  426,493
   Other assets, net                                                                         145,650                  171,953
                                                                                      --------------           --------------
               Total assets                                                           $    4,422,826           $    4,827,999
                                                                                      ==============           ==============


LIABILITIES:
   Borrowings under credit facility                                                   $      283,000           $      553,452
   Notes payable                                                                           1,931,094                1,718,443
   Accounts payable, accrued expenses and other liabilities                                  217,405                  202,591
                                                                                      --------------           --------------
              Total liabilities                                                       $    2,431,499           $    2,474,486
                                                                                      --------------           --------------


COMMITMENTS AND CONTINGENCIES:

MINORITY INTERESTS:                                                                   $      232,137           $      236,919

PARTNERS' CAPITAL:
   6 3/4% Series A Convertible Cumulative Preferred Units, liquidation
       preference $25.00 per unit, 8,000,000 units issued and outstanding at
       December 31, 2001 and December 31, 2000                                        $      200,000           $      200,000
   Units of Partnership Interests, 66,148,630 and 67,905,150 issued
     and outstanding at December 31, 2001 and December 31, 2000,
      respectively:
     General partner -- outstanding 661,486 and 679,051                                       16,179                   19,886
     Limited partners -- outstanding 65,487,144 and 67,226,099                             1,574,495                1,903,442
   Accumulated other comprehensive income                                                    (31,484)                  (6,734)
                                                                                      --------------           --------------
              Total partners' capital                                                 $    1,759,190           $    2,116,594
                                                                                      --------------           --------------
              Total liabilities and partners' capital                                 $    4,422,826           $    4,827,999
                                                                                      ==============           ==============
</Table>



   The accompanying notes are an integral part of these financial statements.



                                       62
<PAGE>


               CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)


<Table>
<Caption>
                                                                                  FOR THE YEAR
                                                                               ENDED DECEMBER 31,
                                                                ------------------------------------------------
                                                                    2001              2000              1999
                                                                ------------      ------------      ------------

<S>                                                             <C>               <C>               <C>
REVENUES:
   Office properties                                            $    610,116      $    606,040      $    614,493
   Resort/Hotel properties                                            45,748            72,114            65,237
   Interest and other income                                          69,462            61,543            66,549
                                                                ------------      ------------      ------------
          Total revenues                                        $    725,326      $    739,697      $    746,279
                                                                ------------      ------------      ------------

EXPENSES:
   Real estate taxes                                                  84,488            83,939            84,401
   Repairs and maintenance                                            39,247            39,024            44,024
   Other rental property operating                                   140,146           127,078           128,723
   Corporate general and administrative                               24,249            24,073            16,274
   Interest expense                                                  182,410           203,197           192,033
   Amortization of deferred financing costs                            9,327             9,497            10,283
   Depreciation and amortization                                     126,157           123,839           131,657
   Settlement of merger dispute                                           --                --            15,000
   Impairment and other charges related to the
          real estate assets                                          25,332             9,349           178,838
   Impairment and other charges related to COPI                       92,782                --                --
                                                                ------------      ------------      ------------
          Total expenses                                        $    724,138      $    619,996      $    801,233
                                                                ------------      ------------      ------------

         Operating income (loss)                                       1,188           119,701           (54,954)

OTHER INCOME AND EXPENSE:
   Equity in net income of unconsolidated companies:
         Office properties                                             6,124             3,164             5,265
         Residential development properties                           41,014            53,470            42,871
         Temperature-controlled logistics properties                   1,136             7,432            15,039
         Other                                                         2,957            11,645             5,122
                                                                ------------      ------------      ------------
     Total equity in net income of unconsolidated companies     $     51,231      $     75,711      $     68,297

   Gain on property sales, net                                         4,425           128,932                --
                                                                ------------      ------------      ------------
         Total other income and expense                         $     55,656      $    204,643      $     68,297
                                                                ------------      ------------      ------------

INCOME BEFORE MINORITY INTERESTS
  AND EXTRAORDINARY ITEM                                        $     56,844      $    324,344      $     13,343
   Minority interests                                                (20,664)          (19,882)           (1,111)
                                                                ------------      ------------      ------------

NET INCOME BEFORE EXTRAORDINARY ITEM                                  36,180           304,462            12,232
   Extraordinary item - extinguishment of debt                       (12,174)           (4,378)               --
                                                                ------------      ------------      ------------

NET INCOME                                                      $     24,006      $    300,084      $     12,232

Preferred unit distributions                                         (13,501)          (13,500)          (13,500)
Share repurchase agreement return                                         --            (2,906)             (583)
Forward share purchase agreement return                                   --                --            (4,317)
                                                                ------------      ------------      ------------

NET INCOME (LOSS) AVAILABLE TO PARTNERS                         $     10,505      $    283,678      $     (6,168)
                                                                ============      ============      ============



BASIC EARNINGS PER UNIT DATA:
   Net income (loss) before extraordinary item                  $       0.33      $       4.24      $      (0.09)
   Extraordinary item - extinguishment of debt                         (0.18)            (0.06)               --
                                                                ------------      ------------      ------------
   Net income (loss)                                            $       0.15      $       4.18      $      (0.09)
                                                                ============      ============      ============

DILUTED EARNINGS PER UNIT DATA:
   Net income (loss) before extraordinary item                  $       0.33      $       4.21      $      (0.09)
   Extraordinary item - extinguishment of debt                         (0.18)            (0.06)               --
                                                                ------------      ------------      ------------
   Net income (loss)                                            $       0.15      $       4.15      $      (0.09)
                                                                ============      ============      ============
</Table>


   The accompanying notes are an integral part of these financial statements.



                                       63
<PAGE>



                CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
                  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
                             (DOLLARS IN THOUSANDS)


<Table>
<Caption>
                                                                                                   ACCUMULATED
                                                  PREFERRED        GENERAL          LIMITED           OTHER             TOTAL
                                                   PARTNERS'      PARTNER'S        PARTNERS'       COMPREHENSIVE      PARTNERS'
                                                   CAPITAL         CAPITAL          CAPITAL           INCOME           CAPITAL
                                                 ------------    ------------     ------------     ------------     ------------


<S>                                              <C>             <C>              <C>              <C>              <C>
Partners' capital, December 31, 1998             $    200,000    $     25,220     $  2,331,441     $     (5,037)    $  2,551,624

Contributions                                              --             383           37,890               --           38,273
Settlement of Forward Share Purchase Agreement             --          (1,494)        (147,890)                         (149,384)
Distributions                                              --          (2,999)        (296,879)              --         (299,878)
Net Income                                                 --             (13)          (1,255)              --           (1,268)
Unrealized Net Gain on
  Available-for-Sale Securities                            --              --               --           17,216           17,216
Unrealized Net Gain on Cash Flow Hedges                    --              --               --              280              280
                                                 ------------    ------------     ------------     ------------     ------------

Partners' capital, December 31, 1999             $    200,000    $     21,097     $  1,923,307     $     12,459     $  2,156,863

Contributions                                              --              26            2,564               --            2,590
Preferred Equity Issuance Cost                             --            (100)          (9,906)              --          (10,006)
Unit Repurchases                                           --              (4)            (351)              --             (355)
Distributions                                              --          (3,999)        (295,890)              --         (299,889)
Net Income                                                 --           2,866          283,718               --          286,584
Unrealized Net Loss on
  Available-for-Sale Securities                            --              --               --           (7,584)          (7,584)

Unrealized Net Loss on Cash Flow Hedges                    --              --               --          (11,609)         (11,609)
                                                 ------------    ------------     ------------     ------------     ------------

PARTNERS' CAPITAL, December 31, 2000             $    200,000    $     19,886     $  1,903,442     $     (6,734)    $  2,116,594

Contributions                                              --            (121)           9,888               --            9,767
Distributions                                              --          (3,691)        (349,235)              --         (352,926)
Net Income                                                 --             105           10,400               --           10,505
Sale of/Unrealized Loss Marketable Securities              --              --               --           (7,522)          (7,522)
Unrealized Net Loss on Cash Flow Hedges                    --              --               --          (17,228)         (17,228)
                                                 ------------    ------------     ------------     ------------     ------------

PARTNERS' CAPITAL, December 31, 2001             $    200,000    $     16,179     $  1,574,495     $    (31,484)    $  1,759,190
                                                 ============    ============     ============     ============     ============
</Table>




   The accompanying notes are an integral part of these financial statements.



                                       64
<PAGE>



                CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)


<Table>
<Caption>
                                                                           FOR THE YEAR ENDED DECEMBER 31,
                                                                   ----------------------------------------------
                                                                       2001             2000             1999
                                                                   ------------     ------------     ------------

<S>                                                                <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                         $     24,006     $    300,084     $     12,232
Adjustments to reconcile net income to
  net cash provided by operating activities:
    Depreciation and amortization                                       135,484          133,336          141,940
    Extraordinary item - extinguishment of debt                          12,174            4,378               --
    Gain on property sales, net                                          (4,425)        (128,932)              --
    Impairment and other charges related to
      real estate assets                                                 25,332            9,349          120,573
    Impairment charge related to
      COPI                                                               92,782
    Increase in COPI hotel accounts receivable                          (20,458)              --               --
    Minority interests                                                   20,664           19,882            1,111
    Non-cash compensation                                                   149              114              118
    Distributions received in excess of earnings
      from unconsolidated companies:
       Office and retail                                                     --            1,589            3,757
       Residential development properties                                 3,392               --               --
       Temperature-controlled logistics                                  10,392            2,308           25,404
       Other                                                                 90               --            1,128
    Equity in earnings net of distributions received from
      unconsolidated companies:
       Office properties                                                   (476)              --               --
       Residential development properties                                    --           (6,878)          (7,808)
       Other                                                                 --           (3,763)              --
    Decrease (increase) in accounts receivable                              829           (5,042)          (4,513)
    Decrease (increase) in deferred rent receivable                       3,744           (8,504)            (636)
    (Increase) decrease in other assets                                 (23,086)         (19,411)          30,667
    Increase in restricted cash and cash equivalents                    (18,759)         (12,570)          (9,682)
    (Decrease) increase in accounts payable, accrued
      expenses and other liabilities                                    (23,213)          11,287           21,538
                                                                   ------------     ------------     ------------
       Net cash provided by operating activities                        238,621          297,227          335,829
                                                                   ------------     ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of land held for development or sale                         --          (22,021)            (500)
    Proceeds from property sales                                        200,389          627,775               --
    Proceeds from joint venture partners                                129,651               --               --
    Proceeds from sale of marketable securities                         107,940               --               --
    Development of investment properties                                (23,723)         (41,938)         (27,781)
    Capital expenditures - rental properties                            (46,427)         (26,559)         (20,254)
    Tenant improvement and leasing costs - rental properties            (51,810)         (68,461)         (58,462)
    Increase (decrease) in restricted cash and cash equivalents          (2,204)           5,941          (31,416)
    Return of investment in unconsolidated companies:
       Office properties                                                    349           12,359               --
       Residential development properties                                19,251           61,641           78,542
       Other                                                             12,359            1,858               --
    Investment in unconsolidated companies:
       Office properties                                                (16,360)              --             (262)
       Residential development properties                               (89,000)         (91,377)         (52,514)
       Temperature-controlled logistics                                 (10,784)         (17,100)         (40,791)
       Other                                                             (8,418)          (3,947)        (104,805)
    (Increase) decrease in notes receivable                             (10,857)        (293,328)          53,898

                                                                   ------------     ------------     ------------
       Net cash provided by (used in) investing activities              210,356          144,843         (204,345)
                                                                   ------------     ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Debt financing costs                                                (16,061)         (18,628)         (16,665)
    Settlement of Forward Share Purchase Agreement                           --               --         (149,384)
    Borrowings under Fleet Boston Credit Facility                            --               --           51,920
    Payments under Fleet Boston Credit Facility                              --         (510,000)        (201,920)
    Borrowings under UBS Facility                                       105,000        1,017,819               --
    Payments under UBS Facility                                        (658,452)        (464,367)              --
    Borrowings under Fleet Facility                                     618,000               --               --
    Payments under Fleet Facility                                      (335,000)              --               --
    Notes payable proceeds                                              393,336               --          929,700
    Notes payable payments                                             (180,685)        (370,486)        (498,927)
    Capital proceeds - joint venture preferred equity partner                --          275,000               --
    Capital distribution - joint venture preferred equity partner       (19,897)         (72,297)
    Preferred Equity Issuance Costs                                          --          (10,006)              --
    Capital distributions - joint venture partner                        (5,557)         (10,312)          (3,190)
    Capital contributions to the Operating Partnership                    9,767            1,492           32,634
    Unit repurchases                                                         --             (355)              --
    Treasury share repurchases                                               --               --               --
    Preferred unit distributions                                        (13,501)         (13,500)         (13,500)
    Distributions from the Operating Partnership                       (352,926)        (299,889)        (299,878)
                                                                   ------------     ------------     ------------
       Net cash used in financing activities                           (455,976)        (475,529)        (169,210)
                                                                   ------------     ------------     ------------



(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                         (6,999)         (33,459)         (37,726)
CASH AND CASH EQUIVALENTS,
    Beginning of period                                                  38,643           72,102          109,828
                                                                   ------------     ------------     ------------
CASH AND CASH EQUIVALENTS,
    End of period                                                  $     31,644     $     38,643     $     72,102
                                                                   ============     ============     ============
</Table>



   The accompanying notes are an integral part of these financial statements.


                                       65
<PAGE>



                CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

1. ORGANIZATION AND BASIS OF PRESENTATION:

ORGANIZATION

         Crescent Real Estate Equities Limited Partnership, a Delaware limited
partnership ("CREELP" and, together with its direct and indirect ownership
interests in limited partnerships, corporations and limited liability companies,
the "Operating Partnership"), was formed under the terms of a limited
partnership agreement dated February 9, 1994. The Operating Partnership is
controlled by Crescent Real Estate Equities Company, a Texas real estate
investment trust (the "Company"), through the Company's ownership of all of the
outstanding stock of Crescent Real Estate Equities, Ltd., a Delaware corporation
(the "General Partner"), which owns an approximately 1% general partner interest
in the Operating Partnership. In addition, the Company owns an approximately 89%
limited partner interest in the Operating Partnership, with the remaining
approximately 10% limited partner interest held by other limited partners.

         All of the limited partners of the Operating Partnership, other than
the Company, own, in addition to limited partner interests, units. Each unit
entitles the holder to exchange the unit (and the related limited partner
interest) for two common shares of the Company or, at the Company's option, an
equivalent amount of cash. For purposes of this report, the term "unit" or "unit
of partnership interest" refers to the limited partner interest and, if
applicable, related units held by a limited partner. Accordingly, the Company's
approximately 89% limited partner interest has been treated as equivalent, for
purposes of this report, to 58,892,623 units, and the remaining approximately
10% limited partner interest has been treated as equivalent, for purposes of
this report, to 6,594,521 units. In addition, the Company's 1% general partner
interest has been treated as equivalent, for purposes of this report, to 661,486
units.

         The Company owns its assets and carries on its operations and other
activities through the Operating Partnership and its other subsidiaries. The
limited partnership agreement of the Operating Partnership acknowledges that all
of the Company's operating expenses are incurred for the benefit of the
Operating Partnership and provides that the Operating Partnership will reimburse
the Company for all such expenses. Accordingly, expenses of the Company are
reimbursed by the Operating Partnership.

         The following table shows the subsidiaries of the Operating Partnership
that owned or had an interest in Properties (as defined below) as of December
31, 2001:

<Table>
<S>                          <C>
Operating Partnership:(1)    The Avallon IV, Bank One Center, Bank One Tower, Datran Center (two Office Properties),
                             Four Westlake Park, Houston Center (three Office Properties), The Park Shops at Houston
                             Center, The Woodlands Office Properties (eight Office Properties) and 301 Congress
                             Avenue

Crescent Real Estate         The Aberdeen, The Avallon I, II & III, Carter Burgess Plaza, The Citadel, The Crescent
Funding I, L.P.:             Atrium, The Crescent Office Towers, Regency Plaza One, Waterside Commons and 125 E.
("Funding I")                John Carpenter Freeway

Crescent Real Estate         Albuquerque Plaza, Barton Oaks Plaza One, Briargate Office and Research Center, Hyatt
Funding II, L.P.:            Regency Albuquerque, Las Colinas Plaza, Liberty Plaza I & II, MacArthur Center I & II,
("Funding II")               Park Hyatt Beaver Creek Resort and Spa, Ptarmigan Place, Stanford Corporate Centre, Two
                             Renaissance Square and 12404 Park Central

Crescent Real Estate         Greenway Plaza Office Properties (ten Office Properties) and Renaissance Houston Hotel
Funding III, IV and V,
L.P.: ("Funding III,
IV and V")(2)

Crescent Real Estate         Canyon Ranch - Lenox
Funding VI, L.P.:
("Funding VI")

Crescent Real Estate         10 behavioral healthcare properties
Funding VII, L.P.:
("Funding VII")
</Table>




                                       66
<PAGE>



<Table>
<S>                          <C>
Crescent Real Estate         The Addison, Addison Tower, Austin Centre, The Avallon V, Canyon Ranch - Tucson, Cedar Springs Plaza,
Funding VIII, L.P.:          Frost Bank Plaza, Greenway I & IA (two Office Properties), Greenway II, Omni Austin Hotel, Palisades
("Funding VIII")             Central I, Palisades Central II, Sonoma Mission Inn & Spa, Stemmons Place, Three Westlake Park,
                             Trammell Crow Center, 3333 Lee Parkway, Ventana Inn & Spa, 1800 West Loop South and 5050 Quorum

Crescent Real Estate         Chancellor Park, Denver Marriott City Center, MCI Tower, Miami Center, Reverchon Plaza,
Funding IX, L.P.:            44 Cook Street, 55 Madison and 6225 N. 24th Street
("Funding IX")(3)

Crescent Real Estate         Fountain Place and Post Oak Central (three Office Properties)
Funding X, L.P.
("Funding X")

Crescent Spectrum            Spectrum Center
Center, L.P.(4):
</Table>

----------
(1)  The Operating Partnership has a 50% interest in Bank One Center, a 20%
     interest in Bank One Tower and a 20% interest in Four Westlake Park. See
     "Note 4. Investments in Real Estate Mortgages and Equity of Unconsolidated
     Companies" for a description of the ownership structure of these
     Properties.

(2)  Funding III owns nine of the 10 Office Properties in the Greenway Plaza
     Office portfolio and the Renaissance Houston Hotel; Funding IV owns the
     central heated and chilled water plant building located at Greenway Plaza;
     and Funding V owns Coastal Tower, the remaining Office Property in the
     Greenway Plaza Office portfolio.

(3)  Funding IX holds its interests in Chancellor Park and Miami Center through
     its 100% membership interests in the owners of the Properties, Crescent
     Chancellor Park, LLC and Crescent Miami Center, LLC.

(4)  Crescent Spectrum Center, L.P. holds its interest in Spectrum Center
     through its ownership of the underlying land and notes and a mortgage on
     the Property.

         See "Note 6. Notes Payable and Borrowings under Fleet Facility" for a
list of certain other subsidiaries of the Operating Partnership, all of which
are consolidated in the Operating Partnership's financial statements and were
formed primarily for the purpose of obtaining secured debt or joint venture
financing.

         See "Note 4. Investments in Real Estate Mortgages and Equity of
Unconsolidated Companies" for a table that lists the Operating Partnership's
ownership in significant unconsolidated companies and equity investments as of
December 31, 2001, including the four Office Properties in which the Operating
Partnership owned an interest through unconsolidated companies and equity
investments and the Operating Partnership's ownership interests in the
Residential Development Segment and the Temperature-Controlled Logistics
Segment.

SEGMENTS

         As of December 31, 2001, the Operating Partnership's assets and
operations were composed of four major investment segments:

         o        Office Segment;

         o        Resort/Hotel Segment;

         o        Residential Development Segment; and

         o        Temperature-Controlled Logistics Segment.

         Within these segments, the Operating Partnership owned or had an
interest in the following real estate assets (the "Properties") as of December
31, 2001:

         o        OFFICE SEGMENT consisted of 74 office properties (collectively
                  referred to as the "Office Properties") located in 26
                  metropolitan submarkets in six states, with an aggregate of
                  approximately 28.0 million net rentable square feet.

         o        RESORT/HOTEL SEGMENT consisted of five luxury and destination
                  fitness resorts and spas with a total of 1,028 rooms/guest
                  nights and four upscale business-class hotel properties with a
                  total of 1,769 rooms (collectively referred to as the
                  "Resort/Hotel Properties").



                                       67
<PAGE>



         o        RESIDENTIAL DEVELOPMENT SEGMENT consisted of the Operating
                  Partnership's ownership of real estate mortgages and
                  non-voting common stock representing interests ranging from
                  90% to 95% in five unconsolidated residential development
                  corporations (collectively referred to as the "Residential
                  Development Corporations"), which in turn, through joint
                  venture or partnership arrangements, owned 21 upscale
                  residential development properties (collectively referred to
                  as the "Residential Development Properties").

         o        TEMPERATURE-CONTROLLED LOGISTICS SEGMENT consisted of the
                  Operating Partnership's 40% interest in a general partnership
                  (the "Temperature-Controlled Logistics Partnership"), which
                  owns all of the common stock, representing substantially all
                  of the economic interest, of AmeriCold Corporation (the
                  "Temperature-Controlled Logistics Corporation"), a REIT,
                  which, as of December 31, 2001, directly or indirectly owned
                  89 temperature-controlled logistics properties (collectively
                  referred to as the "Temperature-Controlled Logistics
                  Properties") with an aggregate of approximately 445.2 million
                  cubic feet (17.7 million square feet) of warehouse space.

         On February 14, 2002, the Operating Partnership executed an agreement
with Crescent Operating, Inc. ("COPI"), pursuant to which COPI transferred to
subsidiaries of the Operating Partnership, in lieu of foreclosure, COPI's lessee
interests in the eight Resort/Hotel Properties leased to subsidiaries of COPI
and COPI's voting common stock in three of the Operating Partnership's
Residential Development Corporations. See "Note 20. Subsequent Events" for
additional information regarding the Operating Partnership's agreement with
COPI.

         For purposes of investor communications, the Operating Partnership
classifies its luxury and destination fitness resorts and spas and upscale
Residential Development Properties as a single group referred to as the "Resort
and Residential Development Sector" due to their similar targeted customer
characteristics. This group does not contain the four upscale business-class
hotel properties. Additionally, for investor communications, the Operating
Partnership classifies its Temperature-Controlled Logistics Properties and its
upscale business-class hotel properties as the "Investment Sector." However, for
purposes of segment reporting as defined in Statement of Financial Accounting
Standard ("SFAS") No. 131, "Disclosures About Segments of an Enterprise and
Related Information" and this Annual Report on Form 10-K, the Resort/Hotel
Properties, including the upscale business-class hotel properties, the
Residential Development Properties and the Temperature-Controlled Logistics
Properties are considered three separate reportable segments.

         See "Note 3. Segment Reporting" for a table showing total revenues,
funds from operations, and equity in net income of unconsolidated companies for
each of these investment segments for the years ended December 31, 2001, 2000
and 1999 and identifiable assets for each of these investment segments at
December 31, 2001 and 2000.

BASIS OF PRESENTATION

         The accompanying consolidated financial statements of the Operating
Partnership include all direct and indirect subsidiary entities. The equity
interests in those direct and indirect subsidiaries the Operating Partnership
does not own are reflected as minority interests. All significant intercompany
balances and transactions have been eliminated.

         Certain amounts in prior year financial statements have been
reclassified to conform with current year presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

NET INVESTMENTS IN REAL ESTATE

         Real estate is carried at cost, net of accumulated depreciation.
Betterments, major renovations, and certain costs directly related to the
acquisition, improvements and leasing of real estate are capitalized.
Expenditures for maintenance and repairs are charged to operations as incurred.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, as follows:

     Buildings and Improvements                    5 to 40 years
     Tenant Improvements                           Terms of leases
     Furniture, Fixtures and Equipment             3 to 5 years



                                       68
<PAGE>


         An impairment loss is recognized on a property by property basis on
Properties classified as held for use, or when expected undiscounted cash flows
are less than the carrying value of the Property. In cases where the Operating
Partnership does not expect to recover its carrying costs on a Property, the
Operating Partnership reduces its carrying costs to fair value, and for
Properties held for disposition, the Operating Partnership reduces its carrying
costs to the fair value less costs to sell. See "Note 17. Dispositions" for a
description of impairment losses recognized during 2001, 2000 and 1999.

         Depreciation expense is not recognized on Properties classified as held
for disposition.

CONCENTRATION OF REAL ESTATE INVESTMENTS

         The Operating Partnership's Office Properties are located primarily in
the Dallas/Fort Worth and Houston, Texas metropolitan areas. As of December 31,
2001, the Operating Partnership's Office Properties in Dallas/Fort Worth and
Houston represented an aggregate of approximately 77% of its office portfolio
based on total net rentable square feet. The Dallas/Fort Worth Office Properties
accounted for approximately 41% of that amount and the Houston Office Properties
accounted for the remaining 36%. As a result of the geographic concentration,
the operations of the Operating Partnership could be adversely affected by a
recession or general economic downturn in the areas where these Properties are
located.

CASH AND CASH EQUIVALENTS

         The Operating Partnership considers all highly liquid investments
purchased with an original maturity of 90 days or less to be cash and cash
equivalents.

RESTRICTED CASH AND CASH EQUIVALENTS

         Restricted cash includes escrows established pursuant to certain
mortgage financing arrangements for real estate taxes, insurance, security
deposits, ground lease expenditures, capital expenditures and monthly interest
carrying costs paid in arrears and capital requirements related to cash flow
hedges.

OTHER ASSETS

         Other assets consist principally of leasing costs, deferred financing
costs and marketable securities. Leasing costs are amortized on a straight-line
basis during the terms of the respective leases, and unamortized leasing costs
are written off upon early termination of lease agreements. Deferred financing
costs are amortized on a straight-line basis (when it approximates the effective
interest method) over the terms of the respective loans. The effective interest
method is used to amortize deferred financing costs on loans where the
straight-line basis does not approximate the effective interest method, over the
terms of the respective loans. Marketable securities are considered
available-for-sale and are marked to market value on a monthly basis. The
corresponding unrealized gains and losses are included in accumulated other
comprehensive income. When a decline in the fair value of marketable securities
is determined to be other than temporary, the cost basis is written down to fair
value and the amount of the write-down is included in earnings for the
applicable period. A decline in the fair value of a marketable security is
deemed nontemporary if its cost basis has exceeded its fair value for a period
of six to nine months.

DERIVATIVE FINANCIAL INSTRUMENTS

         The Operating Partnership uses derivative financial instruments to
convert a portion of its variable-rate debt to fixed-rate debt and to manage its
fixed to variable-rate debt ratio. As of December 31, 2001, the Operating
Partnership has entered into three cash flow hedge agreements which are
accounted for under SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities."

         Under SFAS No. 133, the Operating Partnership's cash flow hedges are
used to mitigate the variability of cash flows. On a monthly basis, the cash
flow hedge is marked to fair value through comprehensive income and the cash
flow hedge's gain or loss is reported in earnings when the interest on the
underlying debt affects earnings. Any ineffective portion of the hedges is
reported in earnings immediately.



                                       69
<PAGE>


         In connection with the debt refinancing in May 2001, the Operating
Partnership entered into a LIBOR interest rate cap, and simultaneously sold a
LIBOR interest rate cap with the same terms. These instruments do not qualify as
hedges and changes to their respective fair values are charged to earnings
monthly.

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying values of cash and cash equivalents and short-term
investments are reasonable estimates of their fair values because of the short
maturities of these instruments. The fair value of notes receivable, which
approximates carrying value, is estimated based on year-end interest rates for
receivables of comparable maturity. Notes payable and borrowings under the
Operating Partnership's prior line of credit with UBS (the "UBS Facility") and
the Operating Partnership's line of credit (the "Fleet Facility") have aggregate
carrying values which approximate their estimated fair values based upon the
current interest rates for debt with similar terms and remaining maturities,
without considering the adequacy of the underlying collateral. Disclosure about
fair value of financial instruments is based on pertinent information available
to management as of December 31, 2001 and 2000.

REVENUE RECOGNITION

         OFFICE PROPERTIES The Operating Partnership, as a lessor, has retained
substantially all of the risks and benefits of ownership of the Office
Properties and accounts for its leases as operating leases. Income on leases,
which includes scheduled increases in rental rates during the lease term and/or
abated rent payments for various periods following the tenant's lease
commencement date, is recognized on a straight-line basis. Deferred rent
receivable represents the excess of rental revenue recognized on a straight-line
basis over cash received pursuant to the applicable lease provisions.

         RESORT/HOTEL PROPERTIES Prior to the enactment of the REIT
Modernization Act, the Company's status as a REIT for federal income tax
purposes prohibited the Operating Partnership from operating the Resort/Hotel
Properties. As of December 31, 2001, the Operating Partnership had leased all of
the Resort/Hotel Properties, except the Omni Austin Hotel, to subsidiaries of
COPI pursuant to eight separate leases. The Omni Austin Hotel had been leased
under a separate lease to HCD Austin Corporation. During 2001 and 2000, the
leases provided for the payment by the lessee of the Resort/Hotel Property of
(i) base rent, with periodic rent increases if applicable, (ii) percentage rent
based on a percentage of gross receipts or gross room revenues, as applicable,
above a specified amount, and (iii) a percentage of gross food and beverage
revenues above a specified amount for certain Resort/Hotel Properties. Base
rental income under these leases was recognized on a straight-line basis over
the terms of the respective leases. Contingent revenue was recognized when the
thresholds upon which it is based had been met. On February 14, 2002, the
Operating Partnership executed an agreement with COPI, pursuant to which COPI
transferred to subsidiaries of the Operating Partnership, in lieu of
foreclosure, COPI's lessee interests in the eight Resort/Hotel Properties
previously leased to COPI.

         INVESTMENTS IN REAL ESTATE MORTGAGES AND EQUITY OF UNCONSOLIDATED
COMPANIES Investments in which the Operating Partnership does not have a
controlling interest are accounted for under the equity method. See "Note 4.
Investments in Real Estate Mortgages and Equity in Unconsolidated Companies" for
a list of the unconsolidated entities and the Operating Partnership's ownership
of each.

INCOME TAXES

         No provision has been made for federal or state income taxes, because
each partner's proportionate share of income or loss from the Operating
Partnership will be passed through on such partner's tax return.

USE OF ESTIMATES

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.



                                       70
<PAGE>


EARNINGS PER UNIT OF PARTNERSHIP INTEREST

         SFAS No.128 "Earnings Per Share" ("EPS") specifies the computation,
presentation and disclosure requirements for earnings per share. Basic EPS
excludes all dilution while Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common shares were
exercised or converted into common shares.

<Table>
<Caption>
                                                               FOR THE YEAR ENDED DECEMBER 31,
                              ----------------------------------------------------------------------------------------------------
                                            2001                              2000                              1999
                              --------------------------------  --------------------------------  --------------------------------
                                Income    Wtd. Avg.   Per Unit              Wtd. Avg.  Per Unit    Income     Wtd. Avg.  Per Unit
                                (Loss)      Units      Amount    Income       Units     Amount     (Loss)       Units     Amount
                              ---------   ---------  ---------  ---------   ---------  ---------  ---------   ---------  ---------

<S>                           <C>         <C>        <C>        <C>         <C>        <C>        <C>         <C>        <C>
BASIC EPS -
Net income
   before extraordinary item  $  36,180      67,815             $ 304,462      67,860             $  12,232      67,977
6 3/4% Series A Preferred
   Unit distributions           (13,501)                          (13,500)                          (13,500)
Share repurchase agreement
   return                            --                            (2,906)                             (583)
Forward share purchase
   agreement return                  --                                --                            (4,317)
                              ---------   ---------  ---------  ---------   ---------  ---------  ---------   ---------  ---------
Net income (loss) available
   to partners before
   extraordinary item         $  22,679      67,815  $    0.33  $ 288,056      67,860  $    4.24  $  (6,168)     67,977  $   (0.09)
Extraordinary item -
   extinguishment of debt       (12,174)                 (0.18)    (4,378)                 (0.06)        --                     --
                              ---------   ---------  ---------  ---------   ---------  ---------  ---------   ---------  ---------
Net income (loss) available
   to partners                $  10,505      67,815  $    0.15  $ 283,678      67,860  $    4.18  $  (6,168)     67,977  $   (0.09)
                              =========   =========  =========  =========   =========  =========  =========   =========  =========

DILUTED EPS -
Net income (loss) available
   to partners before
   extraordinary item         $  22,679      67,815             $ 288,056      67,860             $  (6,168)     67,977
Effect of dilutive
   securities:
   Additional common shares
     obligation relating to:
     Unit options                    --         763                    --         598                    --         837
     Forward share purchase
       agreement                     --          --                    --          --                    --         132
                              ---------   ---------  ---------  ---------   ---------  ---------  ---------   ---------  ---------
Net income (loss) available
   to partners before
   extraordinary item         $  22,679      68,578  $    0.33  $ 288,056      68,458  $    4.21  $  (6,168)     68,946  $   (0.09)
Extraordinary item -
   extinguishment of debt       (12,174)                 (0.18)    (4,378)                 (0.06)        --                     --
                              ---------   ---------  ---------  ---------   ---------  ---------  ---------   ---------  ---------

Net income (loss) available
   to partners                $  10,505      68,578  $    0.15  $ 283,678      68,458  $    4.15  $  (6,168)     68,946  $   (0.09)
                              =========   =========  =========  =========   =========  =========  =========   =========  =========
</Table>


         The effect of the conversion of the 6 3/4% Series A Convertible
Cumulative Preferred Units is not included in the computation of Diluted EPS for
the years ended December 31, 2001, 2000 and 1999, since the effect of their
conversion is antidilutive.



                                       71
<PAGE>



SUPPLEMENTAL DISCLOSURE TO STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                            FOR THE YEAR ENDED DECEMBER 31,
                                                                   ------------------------------------------------
                                                                       2001              2000              1999
                                                                   ------------      ------------      ------------

<S>                                                                <C>               <C>               <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Interest paid on debt ...........................................  $    174,584      $    202,478      $    188,475
Additional interest paid in conjunction with cash flow
   hedges .......................................................        11,036             1,042               344
                                                                   ------------      ------------      ------------
Total Interest Paid .............................................  $    185,620      $    203,520      $    188,819
                                                                   ============      ============      ============


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
   FINANCING ACTIVITIES:
Issuance of Operating Partnership units in conjunction
   with settlement of an obligation .............................  $         --      $      2,125      $      1,786
Acquisition of partnership interests ............................            --                --             3,774
Sale of marketable securities ...................................        (8,118)               --                --
Unrealized gain (loss) on available-for-sale securities .........           596            (7,584)           17,216
Forward Share Purchase Agreement Return .........................            --                --             4,317
Share Repurchase Agreement Return ...............................            --             2,906               583
Impairment and other charges related to real estate
   assets .......................................................        25,332             9,349           178,838
Adjustment of cash flow hedge to fair value .....................       (17,228)          (11,609)              280
Equity investment in a tenant in exchange
   for office space/other investment ventures ...................            --             4,485                --
Impairment related to a real estate investment in which the
   Operating Partnership has an interest ........................            --             8,525                --
Acquisition of ownership of certain assets previously owned by
   Broadband Office, Inc. .......................................         7,200                --                --
Impairment and other charges related to COPI ....................        92,782                --                --
Additional compensation expense related to employee notes
   receivable ...................................................           750                --                --
</Table>


NEW ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations," which provides that all business
combinations in the scope of the statement are to be accounted for under the
purchase method. This statement is effective for all business combinations
initiated after June 30, 2001, as well as all business combinations accounted
for using the purchase method for which the date of acquisition is July 1, 2001,
or later. Since the Operating Partnership currently accounts for its
acquisitions under the purchase method, management does not believe that the
adoption of this statement will have a material effect on its interim or annual
financial statements.

         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets," which addresses financial accounting and reporting for
acquired goodwill and other intangible assets. This statement requires that
goodwill and some other intangible assets will no longer be amortized, and
provides specific guidance for testing goodwill for impairment. This statement
is effective for fiscal years beginning after December 15, 2001. The Operating
Partnership expects its impairment losses to range between $14,000 and $18,300
due to the initial application of this statement. These charges relate to
unconsolidated companies in which the Operating Partnership had an interest as
of December 31, 2001. These charges will be reported as resulting from a change
in accounting principle.



                                       72
<PAGE>


         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This statement is effective for fiscal years
beginning after June 15, 2002. The Operating Partnership has determined that
SFAS No. 143 will have no material effect on its interim and annual financial
statements.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
The statement is effective for financial statements issued for fiscal years
beginning after December 15, 2001, and interim periods within those fiscal
years. Management does not believe that adoption of this statement will have a
material effect on its interim or annual financial statements; however,
financial statement presentation will be modified to report the results of
operations and financial position of a component of an entity that either has
been disposed of or is classified as held for sale as discontinued operations.
As a result, the Operating Partnership will reclassify certain amounts in prior
period financial statements to conform with the new presentation requirements.

3.   SEGMENT REPORTING:

         The Operating Partnership currently has four major investment segments:
the Office Segment; the Resort/Hotel Segment; the Residential Development
Segment; and the Temperature-Controlled Logistics Segment. Management organizes
the segments within the Operating Partnership based on property type for making
operating decisions and assessing performance. Investment segments for SFAS No.
131 are determined on the same basis.

         The Operating Partnership uses funds from operations ("FFO") as the
measure of segment profit or loss. FFO, based on the revised definition adopted
by the Board of Governors of the National Association of Real Estate Investment
Trusts ("NAREIT"), effective January 1, 2000, and as used in this document,
means:

         o        Net Income (Loss) - determined in accordance with generally
                  accepted accounting principles ("GAAP");

                  o        excluding gains (or losses) from sales of depreciable
                           operating property;

                  o        excluding extraordinary items (as defined by GAAP);

                  o        plus depreciation and amortization of real estate
                           assets; and

                  o        after adjustments for unconsolidated partnerships and
                           joint ventures.

         NAREIT developed FFO as a relative measure of performance and liquidity
of an equity REIT to recognize that income-producing real estate historically
has not depreciated on the basis determined under GAAP. The Operating
Partnership considers FFO an appropriate measure of performance for an operating
partnership of an equity REIT, and for its investment segments. However, the
Operating Partnership's measure of FFO may not be comparable to similarly titled
measures of operating partnerships of REITs (other than the Company) because
these REITs may apply the definition of FFO in a different manner than the
Operating Partnership.



                                       73
<PAGE>



         Selected financial information related to each segment for the years
ended December 31, 2001, 2000 and 1999 is presented below.


<Table>
<Caption>
                                                                    FOR THE YEAR ENDED DECEMBER 31,
                                                            ------------------------------------------------
                                                                    2001              2000              1999
                                                            ------------      ------------      ------------
REVENUES:
<S>                                                         <C>               <C>               <C>
    Office Segment(1)                                       $    610,116      $    606,040      $    614,493
    Resort/Hotel Segment                                          45,748            72,114            65,237
    Residential Development Segment                                   --                --                --
    Temperature-Controlled Logistics Segment                          --                --                --
    Corporate and Other(2)                                        69,462            61,543            66,549
                                                            ------------      ------------      ------------
TOTAL REVENUE                                               $    725,326      $    739,697      $    746,279
                                                            ============      ============      ============

FUNDS FROM OPERATIONS:
    Office Segment                                          $    358,348      $    361,574      $    367,830
    Resort/Hotel Segment                                          45,282            71,446            64,079
    Residential Development Segment                               54,051            78,600            74,597
    Temperature-Controlled Logistics Segment                      23,806            33,563            37,439
    Corporate and other adjustments:
      Interest expense                                          (182,410)         (203,197)         (192,033)
      6 3/4% Series A Preferred Unit distributions               (13,501)          (13,500)          (13,500)
      Other(3)                                                    37,844            43,776            33,639
      Corporate general & administrative                         (24,249)          (24,073)          (16,274)
      Impairment and other charges related to COPI               (92,782)               --                --
      Settlement of merger dispute                                    --                --           (15,000)
                                                            ------------      ------------      ------------
    TOTAL FUNDS FROM OPERATIONS                             $    206,389      $    348,189      $    340,777

ADJUSTMENTS TO RECONCILE FUNDS FROM OPERATIONS
    TO NET INCOME:
    Depreciation and amortization of real estate assets         (122,033)         (119,999)         (128,403)
    Gain on rental property sales, net                             2,835           128,355           (16,361)
    Impairment and other charges related to
      real estate assets                                         (21,705)           (9,349)         (136,435)
    Extraordinary item - extinquishment of debt                  (12,174)           (4,378)               --
    Adjustment for investments in real estate mortgages
      and equity of unconsolidated companies:
        Office Properties                                         (6,955)           (4,973)           (6,110)
        Residential Development Properties                       (13,037)          (25,130)          (31,725)
        Temperature-Controlled Logistics Properties              (22,671)          (26,131)          (22,400)
        Other                                                       (144)               --              (611)
    6 3/4% Series A Preferred Unit distributions                  13,501            13,500            13,500
                                                            ------------      ------------      ------------
NET INCOME                                                  $     24,006      $    300,084      $     12,232
                                                            ============      ============      ============

EQUITY IN NET INCOME OF UNCONSOLIDATED
    COMPANIES:
      Office Properties                                     $      6,124      $      3,164      $      5,265
      Resort/Hotel Properties                                         --                --                --
      Residential Development Properties                          41,014            53,470            42,871
      Temperature-Controlled Logistics Properties                  1,136             7,432            15,039
      Other(2)                                                     2,957            11,645             5,122
                                                            ------------      ------------      ------------
TOTAL EQUITY IN NET INCOME OF
    UNCONSOLIDATED COMPANIES                                $     51,231      $     75,711      $     68,297
                                                            ============      ============      ============
</Table>

<Table>
<Caption>
                                                               BALANCE AT DECEMBER 31,
                                                            ------------------------------
                                                                2001              2000
                                                            ------------      ------------
IDENTIFIABLE ASSETS:
<S>                                                         <C>               <C>
    Office Segment                                          $  2,727,939      $  3,088,653
    Resort/Hotel Segment                                         442,724           468,286
    Residential Development Segment                              371,535           305,187
    Temperature-Controlled Logistics Segment                     308,427           308,035
    Other(2)                                                     572,201           657,838
                                                            ------------      ------------
TOTAL IDENTIFIABLE ASSETS                                   $  4,422,826      $  4,827,999
                                                            ============      ============
</Table>


----------

(1)  Excludes financial information for the four office properties included in
     "Equity of Net Income of Unconsolidated Companies."

(2)  For purposes of this Note, the behavioral healthcare properties' financial
     information has been included in this line item.



                                       74
<PAGE>
(3)  Includes interest and other income, behavioral healthcare property income,
     preferred return paid to GMAC Commercial Mortgage Corporation ("GMACCM"),
     other unconsolidated companies, less depreciation and amortization of
     non-real estate assets and amortization of deferred financing costs.

         At December 31, 2001, COPI was the Operating Partnership's largest
lessee in terms of total revenues. COPI was the lessee of eight of the
Resort/Hotel Properties for the year ended December 31, 2001. Total revenues
recognized from COPI for the year ended December 31, 2001 were approximately 6%
of the Operating Partnership's total revenues. On February 14, 2002, the
Operating Partnership executed an agreement with COPI, pursuant to which COPI
transferred to subsidiaries of the Operating Partnership, in lieu of
foreclosure, COPI's lessee interests in the eight Resort/Hotel Properties
previously leased to COPI.

         See "Note 4. Investments in Real Estate Mortgages and Equity of
Unconsolidated Companies - Temperature-Controlled Logistics Properties" for a
description of the sole lessee of the Temperature-Controlled Logistics
Properties.

4. INVESTMENTS IN REAL ESTATE MORTGAGES AND EQUITY OF UNCONSOLIDATED COMPANIES:

         Investments in which the Operating Partnership does not have a
controlling interest are accounted for under the equity method. The following is
a summary of the Operating Partnership's ownership in significant unconsolidated
companies or equity investments:

<Table>
<Caption>
                                                                                          OPERATING PARTNERSHIP'S OWNERSHIP
                     ENTITY                                  CLASSIFICATION                    AS OF DECEMBER 31, 2001
-------------------------------------------------- ------------------------------------   ----------------------------------
<S>                                                <C>                                    <C>
Desert Mountain Development Corporation(1)         Residential Development Corporation               95.0%(2)(3)
The Woodlands Land Company, Inc.(1)                Residential Development Corporation               95.0%(2)(4)
Crescent Resort Development, Inc.(1)               Residential Development Corporation               90.0%(2)(5)
Mira Vista Development Corp.                       Residential Development Corporation               94.0%(2)(6)
Houston Area Development Corp.                     Residential Development Corporation               94.0%(2)(7)
Temperature-Controlled Logistics Partnership        Temperature-Controlled Logistics                 40.0%(8)
The Woodlands Commercial
    Properties Company, L.P.                                     Office                              42.5%(9)(10)
Main Street Partners, L.P.                              Office (Bank One Center)                     50.0%(11)
Crescent 5 Houston Center, L.P.                         Office (5 Houston Center)                    25.0%(12)
Austin PT BK One Tower Office Limited Partnership        Office (Bank One Tower)                     20.0%(13)
Houston PT Four Westlake Office Limited Partnership    Office (Four Westlake Park)                   20.0%(13)
DBL Holdings, Inc.                                                Other                              97.4%(14)
CRL Investments, Inc.(1)                                          Other                              95.0%(15)
CR License, LLC(1)                                                Other                              28.5%(16)
</Table>

----------
(1)  On February 14, 2002, the Operating Partnership executed an agreement with
     COPI, pursuant to which COPI transferred to subsidiaries of the Operating
     Partnership, in lieu of foreclosure, COPI's interest in these entities. The
     Operating Partnership will fully consolidate the operations of these
     entities, other than CR License, LLC, beginning on the date of the asset
     transfers.

(2)  See the Residential Development Properties Table included in "Item 2.
     Properties" for the Residential Development Corporation's ownership
     interest in the Residential Development Properties.

(3)  The remaining 5.0% interest in Desert Mountain Development Corporation,
     which represents 100% of the voting stock, was owned by COPI as of December
     31, 2001.

(4)  The remaining 5.0% interest in The Woodlands Land Company, Inc., which
     represents 100% of the voting stock, was owned by COPI as of December 31,
     2001.

(5)  The remaining 10.0% interest in Crescent Resort Development, Inc., which
     represents 100% of the voting stock, was owned by COPI Colorado, L. P., of
     which 60.0% was owned by COPI as of December 31, 2001, with 20% owned by
     John Goff, Vice-Chairman of the Board of Trust Managers and Chief Executive
     Officer of the Company and sole director, Chief Executive Officer and
     President of the General Partner, and 20% owned by a third party.

(6)  The remaining 6.0% interest in Mira Vista Development, Inc. ("MVDC"), which
     represents 100% of the voting stock, is owned 4.0% by DBL Holdings, Inc.
     ("DBL") and 2.0% by third parties.

(7)  The remaining 6.0% interest in Houston Area Development Corp. ("HADC"),
     which represents 100% of the voting stock, is owned 4.0% by DBL Holdings,
     Inc. ("DBL") and 2.0% by a third party.

(8)  The remaining 60.0% interest in the Temperature-Controlled Logistics
     Partnership is owned by Vornado Realty Trust, L.P.

(9)  The remaining 57.5% interest in The Woodlands Commercial Properties
     Company, L. P. ("Woodlands CPC") is owned by Morgan Stanley Real Estate
     Fund II, L. P. ("Morgan Stanley").

(10) Distributions are made to partners based on specified payout percentages.
     During the year ended December 31, 2001, the payout percentage to the
     Operating Partnership was 49.5%.

(11) The remaining 50.0% interest in Main Street Partners, L.P. is owned by
     TrizecHahn Corporation.


                                       75
<PAGE>


(12) See "5 Houston Center" below.

(13) See "Four Westlake Park and Bank One Tower" below.

(14) John Goff, Vice-Chairman of the Board of Trust Managers and Chief Executive
     Officer of the Company and sole director, Chief Executive Officer and
     President of the General Partner, obtained the remaining 2.6% economic
     interest in DBL (including 100% of the voting interest in DBL) in exchange
     for his voting interests in MVDC and HADC, originally valued at
     approximately $380, and approximately $63 in cash, or total consideration
     valued at approximately $443. At December 31, 2001, Mr. Goff's interest in
     DBL was approximately $554.

(15) The remaining 5.0% interest in CRL Investments, Inc., which represents 100%
     of the voting stock, was owned by COPI as of December 31, 2001.

(16) Of the remaining 71.5% interest in CR License, LLC, 70.0% is owned by a
     group of individuals unrelated to the Operating Partnership, and 1.5% was
     owned by COPI, as of December 31, 2001.

JOINT VENTURE ARRANGEMENTS

5 Houston Center

         On June 4, 2001, the Operating Partnership entered into a joint venture
arrangement with a pension fund advised by JP Morgan Investment Management, Inc.
("JPM") to construct the 5 Houston Center Office Property within the Operating
Partnership's Houston Center mixed-use Office Property complex in Houston,
Texas. The Class A Office Property will consist of 577,000 net rentable square
feet. The joint venture is structured such that the fund holds a 75% equity
interest, and the Operating Partnership holds a 25% equity interest in the
Property, which is accounted for under the equity method. The Operating
Partnership contributed approximately $8,500 of land and $12,300 of development
costs to the joint venture entity and received a distribution of $14,800 of net
proceeds. No gain or loss was recognized by the Operating Partnership on this
transaction. In addition, the Operating Partnership is developing, and will
manage and lease the Property on a fee basis. During the year ended December 31,
2001, the Operating Partnership recognized $2,300 for these services.

         During the second quarter of 2001, the joint venture entity obtained an
$82,500 construction loan guaranteed by the Operating Partnership, due May 2004,
that bears interest at Prime (as defined in the loan agreement) plus 100 basis
points or LIBOR plus 225 basis points, at the discretion of the borrower. The
interest rate on the loan at December 31, 2001 was 4.12%. The balance
outstanding on this construction loan at December 31, 2001 was $10,429.

Four Westlake Park and Bank One Tower

         On July 30, 2001, the Operating Partnership entered into joint venture
arrangements with an affiliate of General Electric Pension Fund ("GE") for two
Office Properties, Four Westlake Park in Houston, Texas, and Bank One Tower in
Austin, Texas. The joint ventures are structured such that GE holds an 80%
equity interest in each of Four Westlake Park, a 560,000 square foot Class A
Office Property located in the Katy Freeway submarket of Houston, and Bank One
Tower, a 390,000 square foot Class A Office Property located in downtown Austin.
The Operating Partnership continues to hold the remaining 20% equity interests
in each Property, which are accounted for under the equity method. The joint
ventures generated approximately $120,000 in net proceeds to the Operating
Partnership, including distributions to the Operating Partnership resulting from
mortgage financing at the joint venture level. None of the mortgage financing at
the joint venture level is guaranteed by the Operating Partnership. The joint
ventures were accounted for as partial sales of these Office Properties,
resulting in a gain of approximately $7,577, net of a deferred gain of
approximately $1,894. In addition, the Operating Partnership manages and leases
the Office Properties on a fee basis. During the year ended December 31, 2001,
the Operating Partnership recognized $227 for these services.

METROPOLITAN

         On May 24, 2001, the Operating Partnership converted its $85,000
preferred member interest in Metropolitan Partners, LLC ("Metropolitan") and
$1,900 of deferred acquisition costs, into approximately $75,000 of common stock
of Reckson Associates Realty Corp. ("Reckson"), resulting in an impairment
charge of approximately $11,900. The Operating Partnership subsequently sold the
Reckson common stock on August 17, 2001 for approximately $78,600, resulting in
a gain of approximately $3,600. The proceeds were used to pay down the Fleet
Facility.

DISPOSITIONS

         On September 27, 2001, the Woodlands CPC, owned by the Operating
Partnership and an affiliate of Morgan Stanley, sold one office/venture tech
property located within The Woodlands,



                                       76
<PAGE>



Texas. The sale generated net proceeds, after the repayment of debt, of
approximately $2,700, of which the Operating Partnership's portion was
approximately $1,300. The sale generated a net gain of approximately $3,500, of
which the Operating Partnership's portion was approximately $1,700. The net
proceeds received by the Operating Partnership were used primarily to pay down
variable-rate debt.

         On November 9, 2001, The Woodlands Land Development Company, L.P.,
owned by the The Woodlands Land Company, Inc. and an affiliate of Morgan
Stanley, sold two office properties and one retail property located within The
Woodlands, Texas. The sales generated net proceeds, after the repayment of debt,
of approximately $41,800, of which the Operating Partnership's portion was
approximately $19,700. The sale generated a net gain of approximately $8,000, of
which the Operating Partnership's portion was approximately $3,800. The net
proceeds received by the Operating Partnership were used primarily to pay down
variable-rate debt.

         During the year ended December 31, 2000, the Woodlands CPC also sold
four office/venture tech properties located within The Woodlands, Texas. The
sale generated net proceeds of approximately $51,800, of which the Operating
Partnership's portion was approximately $22,000. The sale generated a net gain
of approximately $11,800, of which the Operating Partnership's portion was
approximately $5,000. The proceeds received by the Operating Partnership were
used primarily for working capital purposes.

TEMPERATURE-CONTROLLED LOGISTICS PROPERTIES

         Effective March 12, 1999, the Operating Partnership, Vornado Realty
Trust, COPI, the Temperature-Controlled Logistics Partnership and the
Temperature-Controlled Logistics Corporation (including all affiliated entities
that owned any portion of the business operations of the Temperature-Controlled
Logistics Properties at that time) sold all of the non-real estate assets,
encompassing the business operations, for approximately $48.7 million to a newly
formed partnership ("AmeriCold Logistics") owned 60% by Vornado Operating L.P.
and 40% by a newly formed subsidiary of COPI. The Operating Partnership has no
interest in AmeriCold Logistics.

         As of December 31, 2001, the Operating Partnership held a 40% interest
in the Temperature-Controlled Logistics Partnership, which owns the
Temperature-Controlled Logistics Corporation, which directly or indirectly owns
the 89 Temperature-Controlled Logistics Properties, with an aggregate of
approximately 445.2 million cubic feet (17.7 million square feet) of warehouse
space.

         AmeriCold Logistics, as sole lessee of the Temperature-Controlled
Logistics Properties, leases the Temperature-Controlled Logistics Properties
from the Temperature-Controlled Logistics Corporation under three triple-net
master leases, as amended on January 23, 2002. On February 22, 2001, the
Temperature-Controlled Logistics Corporation and AmeriCold Logistics agreed to
restructure certain financial terms of the leases, including the adjustment of
the rental obligation for 2001 to $146,000, the adjustment of the rental
obligation for 2002 to $150,000 (plus contingent rent in certain circumstances),
the increase of the Temperature-Controlled Logistics Corporation's share of
capital expenditures for the maintenance of the properties from $5,000 to $9,500
(effective January 1, 2000) and the extension of the date on which deferred rent
was required to be paid to December 31, 2003.

         AmeriCold Logistics' same-store earnings before interest, taxes,
depreciation and amortization, and rent declined 11% for the year ended December
31, 2001, compared to 2000. These declines are attributable to a reduction in
total customer inventory stored at the warehouses and a reduction in the
frequency of customer inventory turnover. As a result, AmeriCold Logistics
elected to defer $25,500 of rent for the year ended December 31, 2001, of which
the Operating Partnership's share was $10,200. AmeriCold Logistics also deferred
$19,000 and $5,400 of rent for the years ended December 31, 2000 and 1999,
respectively, of which the Operating Partnership's share was $7,500 and $2,100,
respectively. In December 2001, the Temperature-Controlled Logistics Corporation
waived its rights to collect $39,800 of the total $49,900 of deferred rent, of
which the Operating Partnership's share was $15,900. The Temperature-Controlled
Logistics Corporation and the Operating Partnership had recorded adequate
valuation allowances related to their portions of the waived deferred rental
revenue during the years ended December 31, 2000 and 2001; therefore, there was
no financial statement impact to the Temperature-Controlled Logistics
Corporation or to the Operating Partnership related to the
Temperature-Controlled Logistics Corporation's decision to waive collection of
deferred rent.



                                       77
<PAGE>



OTHER

         During the year ended December 31, 2001, the Operating Partnership
recognized an impairment loss of $5,000, which is included in Impairment and
Other Charges Related to Real Estate Assets, on a real estate investment fund
that holds marketable securities, in which the Operating Partnership has an
interest.

         During the year ended December 31, 2000, the Operating Partnership
recognized an impairment loss of $8,525, which is included in Gain on Property
Sales, net, on a real estate investment fund that holds marketable securities,
in which the Operating Partnership has an interest.



                                       78
<PAGE>



         The Operating Partnership reports its share of income and losses based
on its ownership interest in its respective equity investments, adjusted for any
preference payments. The following summarized information for all unconsolidated
companies is presented on an aggregate basis and classified under the captions
"Residential Development Corporations," "Temperature-Controlled Logistics,"
"Office" and "Other," as applicable, as of December 31, 2001, 2000 and 1999.

BALANCE SHEETS:

<Table>
<Caption>
                                                                                BALANCE AT DECEMBER 31, 2001
                                                             ---------------------------------------------------------------
                                                             RESIDENTIAL      TEMPERATURE-
                                                             DEVELOPMENT      CONTROLLED
                                                             CORPORATIONS      LOGISTICS         OFFICE            OTHER
                                                             ------------     ------------     ------------     ------------

<S>                                                          <C>              <C>              <C>              <C>
Real estate, net                                             $    933,411     $  1,272,784     $    553,147
Cash                                                               28,231           23,412           28,224
Other assets                                                      158,385           82,967           31,654
                                                             ------------     ------------     ------------
     Total assets                                            $  1,120,027     $  1,379,163     $    613,025
                                                             ============     ============     ============

Notes payable                                                $    225,263     $    558,949     $    324,718
Notes payable to the Operating Partnership                        240,827            4,833               --
Other liabilities                                                 475,709           46,395           29,394
Equity                                                            178,228          768,986          258,913
                                                             ------------     ------------     ------------
      Total liabilities and equity                           $  1,120,027     $  1,379,163     $    613,025
                                                             ============     ============     ============

Operating Partnership's share of unconsolidated debt(1)      $     90,949     $    223,580     $    126,580
                                                             ============     ============     ============

Operating Partnership's investments in real estate
  mortgages and equity of uncon-
  solidated companies                                        $    371,535     $    308,427     $    121,423     $     36,932
                                                             ============     ============     ============     ============
</Table>


SUMMARY STATEMENTS OF OPERATIONS:

<Table>
<Caption>
                                                                FOR THE YEAR ENDED DECEMBER 31, 2001
                                                 ------------------------------------------------------------------
                                                 RESIDENTIAL       TEMPERATURE-
                                                 DEVELOPMENT       CONTROLLED
                                                 CORPORATIONS       LOGISTICS           OFFICE(2)         OTHER
                                                 ------------     ------------        ------------     ------------

<S>                                              <C>              <C>                 <C>              <C>
Total revenues                                   $    476,803     $    120,531        $     88,835
Expenses:
   Operating expense                                  362,984           13,349(3)           37,128
   Interest expense                                     7,981           44,988              19,184
   Depreciation and amortization                       14,510           58,855              19,387
   Taxes                                               11,095               --                  --
                                                 ------------     ------------        ------------
Total expenses                                        396,570          117,192              75,699
                                                 ------------     ------------        ------------

Net income                                       $     80,233     $      3,339(3)     $     13,136
                                                 ============     ============        ============

Operating Partnership's equity in net income
  of unconsolidated companies                    $     41,014     $      1,136        $      6,124     $      2,957
                                                 ============     ============        ============     ============
</Table>

----------
(1)  The Operating Partnership has guarantees or letters of credit related to
     approximately $89,300, or 17% of its maximum borrowings available under its
     unconsolidated debt. At December 31, 2001, the Operating Partnership had
     guarantees or letters of credit related to approximately $17,000, or 4% of
     its total outstanding unconsolidated debt.

(2)  This column includes information for Four Westlake Park and Bank One Tower.
     These Office Properties were contributed by the Operating Partnership to
     joint ventures on July 30, 2001. Therefore, net income for 2001 includes
     only the months of August through December for these Properties.

(3)  Inclusive of the preferred return paid to Vornado Realty Trust (1% per
     annum of the Total Combined Assets).



                                       79
<PAGE>



BALANCE SHEETS:

<Table>
<Caption>
                                                                             BALANCE AT DECEMBER 31, 2000
                                                         ---------------------------------------------------------------
                                                         RESIDENTIAL      TEMPERATURE-
                                                         DEVELOPMENT      CONTROLLED
                                                         CORPORATIONS      LOGISTICS         OFFICE            OTHER
                                                         ------------     ------------     ------------     ------------

<S>                                                      <C>              <C>              <C>              <C>
Real estate, net                                         $    798,312     $  1,303,810     $    394,724
Cash                                                           59,639           19,606           34,599
Other assets                                                  196,547           82,883           34,897
                                                         ------------     ------------     ------------
     Total assets                                        $  1,054,498     $  1,406,299     $    464,220
                                                         ============     ============     ============

Notes payable                                            $    255,356     $    561,321     $    251,785
Notes payable to the Operating Partnership                    189,932           11,333               --
Other liabilities                                             388,980           78,042           46,054
Equity                                                        220,230          755,603          166,381
                                                         ------------     ------------     ------------
      Total liabilities and equity                       $  1,054,498     $  1,406,299     $    464,220
                                                         ============     ============     ============

Operating Partnership's share of unconsolidated debt     $    103,100     $    224,528     $    118,485
                                                         ============     ============     ============

Operating Partnership's investments in real estate
  mortgages and equity of uncon-
  solidated companies                                    $    305,187     $    308,035     $     98,308     $    133,787
                                                         ============     ============     ============     ============
</Table>


SUMMARY STATEMENTS OF OPERATIONS:


<Table>
<Caption>
                                                                  FOR THE YEAR ENDED DECEMBER 31, 2000
                                                 -------------------------------------------------------------------
                                                 RESIDENTIAL      TEMPERATURE-
                                                 DEVELOPMENT       CONTROLLED
                                                 CORPORATIONS       LOGISTICS             OFFICE           OTHER
                                                 ------------     ------------         ------------     ------------

<S>                                              <C>              <C>                  <C>              <C>
Total revenues                                   $    544,792     $    154,341         $     89,841
Expenses:
   Operating expense                                  402,577           21,982(1)            34,261
   Interest expense                                     7,223           46,637               25,359
   Depreciation and amortization                       16,311           57,848               20,673
   Taxes                                               33,214            7,311                   --
   Other (income) expense                                  --           (2,886)                  --
                                                 ------------     ------------         ------------
Total expenses                                   $    459,325     $    130,892         $     80,293
                                                 ------------     ------------         ------------

Net income                                       $     85,467     $     23,449(1)      $      9,548
                                                 ============     ============         ============


Operating Partnership's equity in net income
  of unconsolidated companies                    $     53,470     $      7,432         $      3,164     $     11,645
                                                 ============     ============         ============     ============
</Table>



----------
(1)  Inclusive of the preferred return paid to Vornado Realty Trust (1% per
     annum of the Total Combined Assets).



                                       80
<PAGE>



SUMMARY STATEMENTS OF OPERATIONS:

<Table>
<Caption>
                                                                 FOR THE YEAR ENDED DECEMBER 31, 1999
                                                 -------------------------------------------------------------------
                                                 RESIDENTIAL      TEMPERATURE-
                                                 DEVELOPMENT      CONTROLLED
                                                 CORPORATIONS      LOGISTICS             OFFICE            OTHER
                                                 ------------     ------------         ------------     ------------

<S>                                              <C>              <C>                  <C>              <C>
Total revenues                                   $    502,583     $    264,266         $     78,534
Expenses:
   Operating expense                                  394,858          127,516(1)            27,008
   Interest expense                                     4,920           47,273               19,321
   Depreciation and amortization                       14,295           54,574               19,273
   Taxes                                               22,549           (6,084)                  --
                                                 ------------     ------------         ------------
Total expenses                                   $    436,622     $    223,279         $     65,602
                                                 ------------     ------------         ------------

Net income                                       $     65,961     $     40,987(1)      $     12,932
                                                 ============     ============         ============


Operating Partnership's equity in net income
  of unconsolidated companies                    $     42,871     $     15,039         $      5,265     $      5,122
                                                 ============     ============         ============     ============
</Table>

----------
(1)  Inclusive of the preferred return paid to Vornado Realty Trust (1% per
     annum of the Total Combined Assets).

5. OTHER ASSETS, NET:

<Table>
<Caption>
                                        BALANCE AT DECEMBER 31,
                                    ------------------------------
                                        2001              2000
                                    ------------      ------------

<S>                                 <C>               <C>
Leasing costs                       $    142,440      $    123,036
Deferred financing costs                  46,305            48,645
Prepaid expenses                           9,444             3,690
Marketable securities                     10,832            50,321
Other                                     33,910            23,905
                                    ------------      ------------
                                    $    242,931      $    249,597
Less - Accumulated amortization          (97,281)          (77,644)
                                    ------------      ------------
                                    $    145,650      $    171,953
                                    ============      ============
</Table>



                                       81
<PAGE>



6. NOTES PAYABLE AND BORROWINGS UNDER FLEET FACILITY:

The following is a summary of the Operating Partnership's debt financing at
December 31, 2001 and 2000:

<Table>
<Caption>
                                                                                          BALANCE AT DECEMBER 31,
                                                                                        ---------------------------
SECURED DEBT                                                                                2001           2000
                                                                                        ------------   ------------

<S>                                                                                     <C>            <C>
UBS Term Loan II,(1) secured by the Funding VIII Properties and the Washington
Harbour Office Properties ...........................................................   $         --   $    326,677

Fleet Fund I and II Term Loan(2)(5) due May 2005, bears interest at LIBOR plus
325 basis points (at December 31, 2001, the interest rate was 5.39%), with a
four-year interest-only term, secured by equity interests in Funding I and II
with a combined book value of $275,000 at December 31, 2001 .........................        275,000        200,000

AEGON Note(3) due July 2009, bears interest at 7.53% with monthly principal
and interest payments based on a 25-year amortization schedule, secured by the
Funding III, IV and V Properties with a combined book value of $263,456 at
December 31, 2001 ...................................................................        269,930        274,320

LaSalle Note I(4) bears interest at 7.83% with an initial seven-year
interest-only term (through August 2002), followed by principal amortization
based on a 25-year amortization schedule through maturity in August 2027,
secured by the Funding I Properties with a combined book value of $262,672 at
December 31, 2001 ...................................................................        239,000        239,000

Deutsche Bank-CMBS Loan due May 2004, bears interest at the 30-day LIBOR rate
plus 234 basis points (at December 31, 2001, the interest rate was 5.84%),
with a three-year interest-only term and two one-year extension options,
secured by the Funding X Properties and Spectrum Center with a combined book
value of $304,699 ...................................................................        220,000             --

JP Morgan Mortgage Note(6) due October 2016, bears interest at a fixed rate of
8.31% with a two-year interest-only term (through October 2001), followed by
principal amortization based on a 15-year amortization schedule through
maturity in October 2016, secured by the Houston Center mixed-use Office
Property complex with a combined book value of $268,978 at December 31, 2001 ........        199,386        200,000

LaSalle Note II(7) bears interest at 7.79% with an initial seven-year
interest-only term (through March 2003), followed by principal amortization
based on a 25-year amortization schedule through maturity in March 2028,
secured by the Funding II Properties with a combined book value of $308,145 at
December 31, 2001 ...................................................................        161,000        161,000

UBS Term Loan I,(1) secured by the Funding VIII Properties and the Washington
Harbour Office Properties ...........................................................             --        146,775

iStar Financial Note due September 2001, bears interest at 30-day LIBOR plus
1.75% (at December 31, 2000, the rate was 8.57%) with an interest-only term,
secured by the Fountain Place Office Property with a book value of $112,332 at
December 31, 2000 ...................................................................             --         97,123

UBS Line of Credit,(1) secured by the Funding VIII Properties and the Washington
Harbour Properties ..................................................................             --         80,000

CIGNA Note due December 2002, bears interest at 7.47% with an interest-only
term, secured by the MCI Tower Office Property and Denver Marriott City Center
Resort/Hotel Property with a combined book value of $103,773 at December 31, 2001 ...         63,500         63,500
</Table>




                                       82
<PAGE>




<Table>
<Caption>
                                                                                                BALANCE AT DECEMBER 31,
                                                                                             ---------------------------
SECURED DEBT - CONTINUED                                                                         2001           2000
                                                                                             ------------   ------------
<S>                                                                                          <C>            <C>
    Metropolitan Life Note V due December 2005, bears interest at 8.49% with
    monthly principal and interest payments based on a 25-year amortization
    schedule, secured by the Datran Center Office Properties with a combined
    book value of $68,653 at December 31, 2001 ...........................................   $     38,696   $     39,219

    Northwestern Life Note due January 2004, bears interest at 7.66% with an
    interest-only term, secured by the 301 Congress Avenue Office Property with
    a book value of $36,234 at December 31, 2001 .........................................         26,000         26,000

    Metropolitan Life Note I due September 2001, bears interest at 8 88% with
    monthly principal and interest payments based on a 20-year amortization
    schedule, secured by five of The Woodlands Office Properties with a combined
    book value of $12,464 at December 31, 2000 ...........................................             --          9,263

    Nomura Funding VI Note(8) bears interest at 10.07% with monthly principal
    and interest payments based on a 25-year amortization schedule through
    maturity in July 2020, secured by the Funding VI Property with a book value
    of $35,043 at December 31, 2001 ......................................................          8,187          8,330

    Woodmen of the World Note(9) due April 2009, bears interest at 8.20% with
    an initial five-year interest-only term (through April 2006), followed by
    principal amortization based on a 25-year amortization schedule, secured by
    the Avallon IV Office Property with a book value of $12,858 ..........................          8,500             --

    Mitchell Mortgage Note due August 2002, bears interest at 7.00% with an
    interest-only term, secured by three of The Woodlands Office Properties
    with a combined book value of $9,167 .................................................          6,244             --

    Rigney Promissory Note due November 2012, bears interest at 8 50% with
    quarterly principal and interest payments based on a 15-year amortization
    schedule, secured by a parcel of land with a book value of $17,123 at
    December 31, 2001 ....................................................................            651            688

UNSECURED DEBT
    Fleet Facility(2) due May 2004, bears interest at LIBOR plus 187 5 basis
    points (at December 31, 2001, the interest rate was 3.92%), with a
    three-year interest-only term and a one year extension option ........................        283,000             --

    2007 Notes(10) bear interest at a fixed rate of 7.50% with a ten-year
    interest-only term, due September 2007 ...............................................        250,000        250,000

    2002 Notes(10) bear interest at a fixed rate of 7.00% with a five-year
    interest-only term, due September 2002 ...............................................        150,000        150,000

    SHORT-TERM BORROWINGS

    Short-term borrowings(11); variable interest rates ranging from the Fed
    Funds rate plus 150 points to LIBOR plus 375 basis points, with maturities
    up to August 2002 ....................................................................         15,000             --
                                                                                             ------------   ------------

         Total Notes Payable .............................................................   $  2,214,094   $  2,271,895
                                                                                             ============   ============
</Table>



----------
(1)  The UBS Facility was entered into effective January 31, 2000 and amended on
     May 10, 2000 and May 18, 2000. As amended, the UBS Facility consisted of
     three tranches: the UBS Line of Credit, the UBS Term Loan I and the UBS
     Term Loan II. In May 2001, the Operating Partnership repaid and retired the
     UBS Facility with proceeds from a $970,000 debt refinancing. The interest
     rate on the UBS Line of Credit and the UBS Term Loan I was equal to LIBOR
     plus 250 basis points. The interest rate on the UBS Term Loan II was equal
     to LIBOR plus 275 basis points. As of December 31, 2000, the interest rate
     on the UBS Line of Credit and UBS Term Loan I was 9.20%, and the interest
     rate on the UBS Term Loan II was 9.46%. The weighted average interest rate
     on the UBS Line of Credit for the year ended December 31, 2000 was 8.91%.
     As of December 31, 2000, the UBS Facility was secured by 25 Office
     Properties and four Resort/Hotel Properties with a combined book value of
     $1,042,207.

(2)  For a description of the Fleet Fund I and II Term Loan and the Fleet
     Facility, see "Debt Refinancing and Fleet Facility" section below.

(3)  The outstanding principal balance of this note at maturity will be
     approximately $224,100.

(4)  In August 2007, the interest rate will increase, and the Operating
     Partnership is required to remit, in addition to the monthly debt service
     payment, excess property cash flow, as defined, to be applied first against
     principal until the note is paid in full and thereafter, against accrued
     excess interest, as defined. It is the Operating Partnership's intention to
     repay the note in full at such time (August 2007) by making a final payment
     of approximately $220,500.

(5)  The Fleet Fund I and II Term Loan, entered into in May 2001, modified and
     replaced the previously outstanding Fleet Term Note II. Prior to the
     modification and replacement, the Fleet Term Note II was due August 31,
     2003, bore interest at the 30-Day LIBOR rate plus 234 basis points (at
     December 31, 2000, the interest rate was 10.63%) with a four-year
     interest-only term, and was secured by equity interests in Funding I and II
     with a combined value of $200,000 at December 31, 2000.



                                       83
<PAGE>


(6)  At the end of seven years (October 2006), the interest rate will adjust
     based on current interest rates at that time. It is the Operating
     Partnership's intention to repay the note in full at such time (October
     2006) by making a final payment of approximately $177,800.

(7)  In March 2006, the interest rate will increase, and the Operating
     Partnership is required to remit, in addition to the monthly debt service
     payment, excess property cash flow, as defined, to be applied first against
     principal until the note is paid in full, and thereafter, against accrued
     excess interest, as defined. It is the Operating Partnership's intention to
     repay the note in full at such time (March 2006) by making a final payment
     of approximately $154,100.

(8)  In July 2010, the interest rate due under the note will change to a 10-year
     Treasury yield plus 500 basis points or, if the Operating Partnership so
     elects, it may repay the note without penalty at that date.

(9)  The outstanding principal balance of this loan at maturity will be
     approximately $8,200.

(10) The notes were issued in an offering registered with the SEC.

(11) Short-term borrowings include the unsecured JP Morgan Loan Sales Facility,
     a $50,000 credit facility, and the $50,000 unsecured Fleet Bridge Loan. The
     lender under the JP Morgan Loan is not required to fund draws under the
     loan unless certain conditions not within the control of the Operating
     Partnership are met. As a result, the Operating Partnership maintains
     sufficient availability under the Fleet Facility to repay the JP Morgan
     Loan Sales Facility at any time. At December 31, 2001, $10,000 was
     outstanding on the JP Morgan Loan Sales Facility and $5,000 was outstanding
     on the Fleet Bridge Loan.

         Below are the aggregate principal payments required as of December 31,
2001 under indebtedness of the Operating Partnership by year. Scheduled
principal installments and amounts due at maturity are included.


<Table>
<Caption>
               SECURED          UNSECURED           TOTAL
             ------------      ------------      ------------

<S>          <C>               <C>               <C>
2002         $     80,157      $    165,000      $    245,157
2003               15,060                --            15,060
2004              262,857(1)        283,000(1)        545,857
2005              329,339                --           329,339
2006              347,207                --           347,207
Thereafter        481,474           250,000           731,474
             ------------      ------------      ------------
             $  1,516,094      $    698,000      $  2,214,094
             ============      ============      ============
</Table>




----------
(1)  These amounts do not represent the effect of a one-year extension option on
     the Fleet Facility and two one-year extension options on the Deutsche Bank
     - CMBS Loan.

         The Operating Partnership has approximately $245,157 of secured and
unsecured debt due during 2002, consisting primarily of the Cigna Note, the
Mitchell Mortgage Note, and the 2002 Notes, which are expected to be funded
through replacement debt financing.

         Any uncured or unwaived events of default on the Operating Partnership
loans can trigger an acceleration of payment on the loan in default. In
addition, a default by the Operating Partnership or any of its subsidiaries with
respect to any indebtedness in excess of $5,000 generally will result in a
default under the Fleet Facility and the Fleet I and II Term Loan after the
notice and cure periods for the other indebtedness have passed. As of December
31, 2001, the Operating Partnership was in compliance with all of its debt
service coverage ratios and other covenants related to its outstanding debt. The
Operating Partnership's debt facilities generally prohibit loan pre-payment for
an initial period, allow pre-payment with a penalty during a following specified
period and allow pre-payment without penalty after the expiration of that
period. During the year ended December 31, 2001, there were no circumstances
that would require pre-payment penalties or increased collateral related to the
Operating Partnership's existing debt.

         In addition to the subsidiaries listed in "Note 1. Organization and
Basis of Presentation," certain other subsidiaries of the Operating Partnership
were formed primarily for the purpose of obtaining secured and unsecured debt or
joint venture financings. The following lists these entities, all of which are
consolidated and are grouped based on the Properties to which they relate:
Funding I and Funding II Properties (CREM Holdings, LLC, Crescent Capital
Funding, LLC, Crescent Funding Interest, LLC, CRE Management I Corp., CRE
Management II Corp.); Funding III Properties (CRE Management III Corp.); Funding
IV Properties (CRE Management IV Corp.); Funding V Properties (CRE Management V
Corp.); Funding VI Properties (CRE Management VI Corp.); Funding VIII Properties
(CRE Management VIII, LLC); Funding IX Properties (CRE Management IX, LLC);
Funding C Properties (CREF X Holdings Management, LLC, CREF X Holdings, L. P.,
CRE Management X, LLC); Spectrum Center Partners, L.P., Spectrum Mortgage
Associates, L. P., CSC Holdings Management, LLC, Crescent SC Holdings, L. P.,
CSC Management, LLC); and 5 Houston Center (Development Property) (C5HC
Management, LLC, Crescent 5 Houston Center, L. P.).




                                       84
<PAGE>



DEBT REFINANCING AND FLEET FACILITY

         In May 2001, the Operating Partnership (i) repaid and retired the UBS
Facility which consisted of the UBS Line of Credit, the UBS Term Loan I and the
UBS Term Loan II; (ii) repaid and retired the iStar Financial Note; and (iii)
modified and replaced the Fleet Term Note II with proceeds from a $970,000 debt
refinancing. In May 2001, the Operating Partnership wrote off $12,200 of
deferred financing costs related to the early extinguishment of the UBS Facility
which is included in Extraordinary Item - Extinguishment of Debt.


New Debt Resulting from Refinancing


<Table>
<Caption>
                                        MAXIMUM              INTEREST                  MATURITY
           DESCRIPTION                 BORROWING               RATE                      DATE
-----------------------------------   -------------    ----------------------          --------

<S>                                    <C>             <C>                             <C>
Fleet Facility                         $ 400,000(1)    LIBOR + 187.5 basis points        2004(2)
Fleet Fund I and II Term Loan          $ 275,000       LIBOR + 325 basis points          2005
Deutsche Bank - CMBS Loan              $ 220,000       LIBOR + 234 basis points          2004(3)
Deutsche Bank Short-Term Loan          $  75,000       LIBOR + 300 basis points          2001(4)
</Table>







----------
(1)  The $400,000 Fleet Facility is an unsecured revolving line of credit. The
     weighted average interest rate from the origination of the note in May 2001
     through December 31, 2001 is 5.38%.

(2)  One-year extension option.

(3)  Two one-year extension options.

(4)  Repaid September 19, 2001.

Debt Repaid or Modified and Replaced by Refinancing


<Table>
<Caption>
                                         MAXIMUM               INTEREST             MATURITY           BALANCE
           DESCRIPTION                  BORROWING                RATE                 DATE        REPAID/MODIFIED(1)
-----------------------------------   --------------    ------------------------    ---------    --------------------

<S>                                   <C>               <C>                         <C>          <C>
UBS Line of Credit                        $ 300,000      LIBOR + 250 basis points        2003           $ 165,000
UBS Term Loan I                           $ 146,775      LIBOR + 250 basis points        2003           $ 146,775
UBS Term Loan II                          $ 326,677      LIBOR + 275 basis points        2004           $ 326,677
Fleet Term Note II                        $ 200,000      LIBOR + 400 basis points        2003           $ 200,000
iStar Financial Note                      $  97,123      LIBOR + 175 basis points        2001           $  97,123
</Table>






----------
(1)  All the amounts listed, other than the Fleet Term Note II, were repaid. In
     May 2001, the Fleet Term Note II was modified and replaced by the Fleet
     Fund I and II Term Loan.

7. INTEREST RATE CAPS:

         In connection with the closing of the Deutsche Bank - CMBS Loan in May
2001, the Operating Partnership entered into a LIBOR interest rate cap struck at
7.16% for a notional amount of $220,000, and simultaneously sold a LIBOR
interest rate cap with the same terms. Since these instruments do not reduce the
Operating Partnership's net interest rate risk exposure, they do not qualify as
hedges and changes to their respective fair values are charged to earnings. As
the significant terms of these arrangements are substantially the same, the
effects of a revaluation of these instruments are expected to substantially
offset each other.



                                       85
<PAGE>


8. CASH FLOW HEDGES:


         The Operating Partnership uses derivative financial instruments to
convert a portion of its variable-rate debt to fixed-rate debt and to manage its
fixed to variable-rate debt ratio. As of December 31, 2001, the Operating
Partnership had entered into three cash flow hedge agreements which are
accounted for under SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended by SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - an Amendment of FASB
Statement No. 133."

         The following table shows information regarding the Operating
Partnership's cash flow hedge agreements as of December 31, 2001, and interest
expense for the year ended December 31, 2001:


<Table>
<Caption>
                                                                                               INTEREST EXPENSE
                                                                                                  FOR THE YEAR
    ISSUE             NOTIONAL          MATURITY         REFERENCE             FAIR            ENDED DECEMBER 31,
    DATE               AMOUNT             DATE             RATE            MARKET VALUE               2001
-------------        ----------        ----------        ----------        ------------        ------------------

<S>                  <C>               <C>               <C>                <C>                <C>
     9/1/1999        $  200,000          9/2/2003             6.183%        $  (10,800)        $          3,500
     2/4/2000        $  200,000          2/3/2003              7.11%        $  (10,800)        $          6,000
    4/18/2000        $  100,000         4/18/2004              6.76%        $   (7,200)        $          2,700
</Table>




         The Operating Partnership has designated its three cash flow hedge
agreements as cash flow hedges of LIBOR-based monthly interest payments on a
designated pool of variable-rate LIBOR indexed debt that reprices closest to the
reset dates of each cash flow hedge agreement. For retrospective effectiveness
testing, the Operating Partnership uses the cumulative dollar offset approach as
described in Derivatives Implementation Group ("DIG") Issue E8. The DIG is a
task force designed to assist the FASB in answering questions that companies
have resulting from implementation of SFAS No. 133 and 138. The Operating
Partnership uses the change in variable cash flows method as described in DIG
Issue G7 for prospective testing as well as for the actual recording of
ineffectiveness, if any. Under this method, the Operating Partnership will
compare the changes in the floating rate portion of each cash flow hedge to the
floating rate of the hedged items. The cash flow hedges have been and are
expected to remain highly effective. Changes in the fair value of these highly
effective hedging instruments are recorded in accumulated other comprehensive
income. The effective portion that has been deferred in accumulated other
comprehensive income will be reclassified to earnings as interest expense when
the hedged items impact earnings. If a cash flow hedge falls outside 80%-125%
effectiveness for a quarter, all changes in the fair value of the cash flow
hedge for the quarter will be recognized in earnings during the current period.
If it is determined based on prospective testing that it is no longer likely a
hedge will be highly effective on a prospective basis, the hedge will no longer
be designated as a cash flow hedge and no longer qualify for accounting in
accordance with SFAS Nos. 133 and 138.

         Over the next twelve months, an estimated $16,400 to $18,400 related to
the effective portions of the cash flow hedge agreements will be reclassified
from accumulated other comprehensive income to interest expense and charged
against earnings.

9. RENTALS UNDER OPERATING LEASES:

         During 2001, the Operating Partnership received rental income from the
lessees of Office Property and Resort/Hotel Property space under operating
leases. On February 14, 2002, the Operating Partnership executed an agreement
with COPI, pursuant to which subsidiaries of the Operating Partnership acquired,
in lieu of foreclosure, COPI's lessee interests in the eight Resort/Hotel
Properties previously leased to COPI. Therefore, no future rental income from
the operating lessee will be recognized for these Resort/Hotel Properties. The
Operating Partnership recognized percentage rental income from the Resort/Hotel
Properties of approximately $14,665, $24,622 and $19,648 for the years ended
December 31, 2001, 2000 and 1999, respectively.



                                       86
<PAGE>




         For noncancelable operating leases for consolidated Office Properties
owned as of December 31, 2001, future minimum rentals (base rents) during the
next five years and thereafter (excluding tenant reimbursements of operating
expenses for Office Properties) are as follows:


<Table>
<Caption>
                     OFFICE
                   PROPERTIES
                ----------------
<S>             <C>
2002            $        410,459
2003                     350,022
2004                     268,891
2005                     213,334
2006                     165,175
Thereafter               482,383
                ----------------
                $      1,890,264
                ================
</Table>




         Generally, the Office Property leases also require that each customer
reimburse the Operating Partnership for increases in operating expenses above
operating expenses during the base year of the customer's lease. These amounts
totaled $98,816, $91,735 and $92,865, for the years ended December 31, 2001,
2000 and 1999, respectively. These increases are generally payable in equal
installments throughout the year, based on estimated increases, with any
differences adjusted at year end based upon actual expenses.

         See "Note 2. Summary of Significant Accounting Policies," for further
discussion of revenue recognition, and "Note 3. Segment Reporting," for further
discussion of significant tenants.

10. COMMITMENTS AND CONTINGENCIES:

LEASE COMMITMENTS

         The Operating Partnership has 12 Properties located on land that is
subject to long-term ground leases, which expire between 2015 and 2080. The
Operating Partnership also leases parking spaces in a parking garage adjacent to
one of its Properties pursuant to a lease expiring in 2021. Lease expense
associated with these leases during each of the three years ended December 31,
2001, 2000, and 1999 was $2,766, $2,869 and $2,642, respectively. Future minimum
lease payments due under such leases as of December 31, 2001, are as follows:


<Table>
<Caption>
                        LEASES
                     COMMITMENTS
                 -------------------
<S>              <C>
2002             $             2,121
2003                           2,129
2004                           2,136
2005                           2,143
2006                           2,155
Thereafter                   107,219
                 -------------------
                 $           117,903
                 ===================
</Table>




COPI COMMITMENTS

         See "Note 20. Subsequent Events," for a description of the Operating
Partnership's commitments related to the agreement with COPI, executed on
February 14, 2002.

CONTINGENCIES

Environmental Matters

         All of the Properties have been subjected to Phase I environmental
assessments, and some Properties have been subjected to Phase II soil and ground
water sampling as part of the Phase I assessments. Such assessments have not
revealed,





                                       87
<PAGE>

nor is management aware of, any environmental liabilities that management
believes would have a material adverse effect on the financial position or
results of operations of the Operating Partnership.

11. STOCK AND UNIT BASED COMPENSATION:

STOCK OPTION PLANS

         The Company has two stock incentive plans, the 1995 Stock Incentive
Plan (the "1995 Plan") and the 1994 Stock Incentive Plan (the "1994 Plan"). Due
to the approval of the 1995 Plan, additional options and restricted shares will
no longer be granted under the 1994 Plan. Under the 1994 Plan, the Company had
granted, net of forfeitures, 2,509,800 options and no restricted shares. The
maximum number of options and/or restricted shares that the Company was able to
initially grant at inception under the 1995 Plan was 2,850,000 shares. The
maximum aggregate number of shares available for grant under the 1995 Plan
increases automatically on January 1 of each year by an amount equal to 8.5% of
the increase in the number of common shares and units outstanding since January
1 of the preceding year, subject to certain adjustment provisions. As of January
1, 2001, the number of shares the Company may grant under the 1995 Plan is
9,677,794. Under the 1995 Plan, the Company had granted, net of forfeitures,
options and restricted shares of 8,546,700 and 23,715 respectively, through
December 31, 2001. Under both Plans, options are granted at a price not less
than the market value of the shares on the date of grant and expire ten years
from the date of grant. The options that have been granted under the 1995 Plan
vest over five years, with the exception of 500,000 options that vest over two
years, 250,000 options that vest over three and a half years and 60,000 options
that vest six months from the initial date of grant. The options that have been
granted under the 1994 Plan vest over periods ranging from one to five years.

                               STOCK OPTIONS PLANS

         A summary of the status of the Company's 1994 and 1995 Plans as of
December 31, 2001, 2000 and 1999 and changes during the years then ended is
presented in the table below:


<Table>
<Caption>
                                                       2001                        2000                         1999
                                            -------------------------    -------------------------    -------------------------
                                            OPTIONS TO      WTD. AVG.    OPTIONS TO     WTD. AVG.     OPTIONS TO     WTD. AVG.
                                             ACQUIRE        EXERCISE      ACQUIRE       EXERCISE       ACQUIRE       EXERCISE
                                              SHARES         PRICE         SHARES         PRICE         SHARES         PRICE
                                            ----------     ----------    ----------     ----------    ----------     ----------
<S>                                         <C>            <C>           <C>            <C>           <C>            <C>
Outstanding as of January 1,                     7,966     $       21         6,661     $       21         6,967     $       21
Granted                                            559             22         1,665             20         3,489             16
Exercised                                         (747)            17          (209)            15        (2,900)            13
Forfeited                                         (803)            20          (151)            20          (895)            30
Expired                                             --             --            --             --            --             --
                                            ----------     ----------    ----------     ----------    ----------     ----------
Outstanding/Wtd. Avg. as of December 31,         6,975     $       21         7,966     $       21         6,661     $       21
                                            ----------     ----------    ----------     ----------    ----------     ----------
Exercisable/Wtd. Avg. as of December 31,         3,127     $       24         2,630     $       23         1,721     $       24
</Table>



         The following table summarizes information about the options
outstanding and exercisable at December 31, 2001:

<Table>
<Caption>
                                        OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                            -----------------------------------------------      -------------------------
                                              WTD. AVG.
                                                YEARS
 RANGE OF                      NUMBER         REMAINING           WTD. AVG.         NUMBER      WTD. AVG.
 EXERCISE                   OUTSTANDING        BEFORE             EXERCISE       EXERCISABLE    EXERCISE
  PRICES                    AT 12/31/01      EXPIRATION            PRICE         AT 12/31/01      PRICE
---------                   -----------      ----------         -----------      -----------   -----------
<S>                         <C>              <C>                <C>              <C>           <C>
$11 to 19                         3,258      7.4 years          $        16            1,252   $        16
$19 to 27                         2,221      8.3                         22              599            22
$27 to 39                         1,496      6.1                         32            1,276            32
                            -----------      ----------         -----------      -----------   -----------
$11 to 39                         6,975      7.4 years          $        21            3,127   $        24
                            ===========      ==========         ===========      ===========   ===========
</Table>



                                       88
<PAGE>

UNIT PLANS

         The Operating Partnership has two unit incentive plans, the 1995 Unit
Incentive Plan (the "1995 Unit Plan") and the 1996 Unit Incentive Plan (the
"1996 Unit Plan"). The 1995 Unit Plan is designed to reward persons who are not
trust managers, officers or 10% shareholders of the Company. An aggregate of
100,000 common shares are reserved for issuance upon the exchange of 50,000
units available for issuance to employees and advisors under the 1995 Unit Plan.
As of December 31, 2001, an aggregate of 7,012 units had been distributed under
the 1995 Unit Plan. The 1995 Unit Plan does not provide for the grant of
options. There was no activity in the 1995 Unit Plan in 2001, 2000 or 1999. The
1996 Unit Plan provides for the grant of options to acquire up to 2,000,000
units. Through December 31, 2001, the Operating Partnership had granted, net of
forfeitures, options to acquire 1,778,571 units. Forfeited options are available
for grant. The unit options granted under the 1996 Unit Plan were priced at fair
market value on the date of grant, generally vest over seven years, and expire
ten years from the date of grant. Pursuant to the terms of the unit options
granted under the 1996 Unit Plan, because the fair market value of the Company's
common shares equaled or exceeded $25 for each of ten consecutive trading days,
the vesting of an aggregate of 500,000 units was accelerated and such units
became immediately exercisable in 1996. In addition, 100,000 unit options vest
50% after three years and 50% after five years. Under the 1996 Unit Plan, each
unit that may be purchased is exchangeable, as a result of shareholder approval
in June 1997, for two common shares or, at the option of the Company, an
equivalent amount of cash.

         A summary of the status of the Operating Partnership's 1996 Unit Plan
as of December 31, 2001, 2000 and 1999, and changes during the years then ended
is presented in the table below (assumes each unit is exchanged for two common
shares):

                         1996 UNIT INCENTIVE OPTION PLAN


<Table>
<Caption>
                                                  2001                         2000                              1999
                                    ------------------------------  --------------------------       ---------------------------
                                       SHARES         WTD. AVG.         SHARES       WTD. AVG.          SHARES          WTD. AVG.
                                     UNDERLYING       EXERCISE        UNDERLYING     EXERCISE         UNDERLYING        EXERCISE
                                    UNIT OPTIONS   PRICE PER SHARE  UNIT OPTIONS  PRICE PER SHARE    UNIT OPTIONS   PRICE PER SHARE
                                    ------------   ---------------  ------------  ----------------   ------------   ------------
<S>                                 <C>            <C>               <C>           <C>                <C>            <C>
Outstanding as of January 1,               2,414   $         17            2,414  $         17              4,000   $         18
Granted                                       --             --               --            --                200             16
Exercised                                    (20)            18               --            --             (1,143)            18
Forfeited                                     --             --               --            --               (643)            18
Expired                                       --             --               --            --                 --             --
                                    ------------   ------------     ------------  ------------       ------------   ------------
Outstanding/Wtd. Avg. as
  of December 31,                          2,394   $         17            2,414  $         17              2,414   $         17
                                    ------------   ------------     ------------  ------------       ------------   ------------
Exercisable/Wtd. Avg. as
  of December 31,                          1,766   $         18            1,571  $         18              1,143   $         18
</Table>


         Effective March 5, 2001, the Operating Partnership granted options to
acquire 150,000 units (each Unit is exchangeable for two common shares) to
Dennis H. Alberts, in connection with his employment as the Chief Operating
Officer of the General Partner and the Company. The 300,000 common share
equivalents were priced at $21.84 per share which equals the fair market value
of the Company's common shares at the date of grant.





                                       89
<PAGE>



STOCK OPTION AND UNIT PLANS

       The Company and the Operating Partnership apply APB No. 25 in accounting
for options granted pursuant to the 1995 Plan, the 1994 Plan and the 1996 Unit
Plan (collectively, the "Plans"). Accordingly, no compensation cost has been
recognized for the Plans. Had compensation cost for the Plans been determined
based on the fair value at the grant dates for awards under the Plans,
consistent with SFAS No. 123, the Operating Partnership's net income and
earnings per unit would have been reduced to the following pro forma amounts:

<Table>
<Caption>
                                                             FOR THE YEAR ENDED DECEMBER 31,
                                  -----------------------------------------------------------------------------------
                                             2001                       2000                         1999
                                  --------------------------  --------------------------  ---------------------------
                                  As reported     Pro forma   As reported     Pro forma    As reported    Pro forma
                                  ------------  ------------  ------------  ------------  ------------   ------------
<S>                               <C>           <C>           <C>           <C>           <C>            <C>
Basic EPS:
  Net Income (Loss) available to
    partners                      $     10,505  $      5,364  $    283,678  $    278,074  $     (6,168)  $    (11,725)
Diluted EPS:
  Net Income (Loss) available to
    partners                            10,505         5,364       283,678       278,074        (6,168)       (11,725)
Basic Earnings (Loss) per Unit            0.15          0.08          4.18          4.10         (0.09)         (0.17)
Diluted Earnings (Loss) per Unit          0.15          0.08          4.15          4.06         (0.09)         (0.17)
</Table>



         At December 31, 2001, 2000 and 1999, the weighted average fair value of
options granted (assumes each unit option was two common share
options) was $2.73, $2.46 and $2.80, respectively. The fair value of each option
is estimated at the date of grant using the Black-Scholes option-pricing model
using the following expected weighted average assumptions in the calculation.

<Table>
<Caption>
                                              2001            2000            1999
                                          ------------    ------------    ------------
<S>                                       <C>             <C>             <C>
Life of options                              10 years        10 years        10 years
Risk-free interest rates                         4.4%            8.0%            8.0%
Dividend yields                                  8.3%           10.0%           12.0%
Stock price volatility                          25.7%           26.0%           27.0%
</Table>


12. SALE OF PREFERRED EQUITY INTERESTS IN SUBSIDIARY AND INTRACOMPANY LOAN:

SALE OF CLASS A UNITS IN FUNDING IX

         During the year ended December 31, 2000, the Operating Partnership
formed Funding IX and contributed seven Office Properties and two Resort/Hotel
Properties to Funding IX. As of December 31, 2001, Funding IX held seven Office
Properties and one Resort/Hotel Property. The Operating Partnership owns 100% of
the common voting interests in Funding IX, 0.1% in the form of a general partner
interest and 99.9% in the form of a limited partner interest.

         As of December 31, 2001, GMAC Commercial Mortgage Corporation
("GMACCM") held $218,400 of non-voting, redeemable preferred Class A Units in
Funding IX (the "Class A Units"). The Class A Units receive a preferred
variable-rate dividend currently calculated at LIBOR plus 450 basis points, or
approximately 6.6% per annum as of December 31, 2001, and increasing to LIBOR
plus 550 basis points beginning March 15, 2002. The Class A Units are redeemable
at the option of the Operating Partnership at the original purchase price.

IMPACT ON FINANCIAL STATEMENTS OF INTRACOMPANY LOAN

         As of December 31, 2001, Funding IX had loaned a total of approximately
$281,107 from the net proceeds from the sale of the Class A Units and a portion
of the net proceeds of the sale of one of the Properties held by Funding IX to
Crescent SH IX, Inc. ("SH IX"), for the purchase of common shares of the
Company. The note, which is included in Notes Receivable, Net, bears interest
based on the dividends paid on the common shares held by SH IX, a wholly-owned
subsidiary of the Company, and matures on March 15, 2003. SH IX is required to
repay the loan, plus any accrued and unpaid interest, at that time. SH IX will
receive the funds to repay the loan from the Company, pursuant to an agreement
that requires the Company to repurchase, on or before March 15, 2003, the common
shares of the Company held by SH IX. The Company will receive the funds to
repurchase the common shares from SH IX from the Operating Partnership, pursuant
to the limited partnership agreement of the Operating Partnership, which
requires the Operating Partnership to repurchase from the Company a
corresponding portion of the Company's limited partnership interest at such time
as the Company repurchases shares. The proceeds received by Funding IX for the
repayment of the principal amount of the note will be used to redeem Class A
Units.

         As of December 31, the annual interest rate on the note was
approximately 8.56%. For the year ended December 31, 2001, the Operating
Partnership recognized interest income of $29,272 on the note. See "Note 13.
Partners' Capital." The repurchased common shares will be held in SH IX until
all the Class A Units are redeemed. The Company, as a partner of the Operating
Partnership, receives quarterly distributions from the Operating Partnership,
which it then uses to make distributions to its shareholders. Distributions on
these repurchased common shares will continue to be paid by the Company to SH
IX, as a shareholder of the Company, and will be used by SH IX to make payments
of interest due to Funding IX on the loan. Funding IX in turn will use these
funds to pay dividends on the Class A Units.

         In accordance with GAAP, the operations, assets and liabilities of
Funding IX and SH IX are consolidated with those of the Company in the Company's
consolidated financial statements. In accordance with GAAP, the operations,
assets and liabilities of Funding IX (but not those of SH IX) are consolidated
with those of the Operating Partnership in the consolidated financial statements
of the Operating Partnership. As a result, the note and the payments on the note
by SH IX to Funding IX are eliminated in the Company's financial statements but
are not eliminated in the financial statements of the Operating Partnership.
These items therefore are included in Notes Receivable, Net and in Interest and
Other Income in the Operating Partnership's financial statements.

         The following table compares the current financial statements of the
Operating Partnership prepared in accordance with GAAP and the adjusted
Operating Partnership financial statements, adjusted for the elimination of the
intracompany loan and associated interest income. This table provides certain
components of the financial statements which would be affected by the
elimination of the intracompany loan and associated interest income.


<Table>
<Caption>
                                          GAAP Presentation           After Elimination of
                                                                        Intracompany Loan

                                       Year Ended December 31,       Year Ended December 31,
                                         2001           2000           2001            2000
                                     ------------   ------------   ------------    ------------
<S>                                  <C>            <C>            <C>             <C>
BALANCE SHEET DATA
(AT PERIOD END):
  Total assets                       $  4,422,826   $  4,827,999   $  4,138,102    $  4,542,913

OPERATING DATA:
  Total revenues                          725,326        739,697        696,054         718,405
  Operating income (loss)                   1,188        119,701        (28,084)         98,409
  Income before minority interests
    and extraordinary item                 56,844        324,344         27,572         303,052
  Net income (loss)                        24,006        300,084         (5,266)        278,792
  Basic earnings per unit(1):
     Income (loss) before
     extraordinary item              $       0.33   $       4.24   $      (0.11)   $       4.23
  Diluted earnings per unit(1):
     Income (loss) before
     extraordinary item              $       0.33   $       4.21   $      (0.11)   $       4.19
</Table>

----------

(1)  The weighted average units used to calculate basic and diluted earnings per
     unit in accordance with GAAP include the common shares of the Company held
     in SH IX of 14,468,623 (7,234,312 equivalent units) and 8,184,578
     (4,092,289 equivalent units) for the years ended December 31, 2001 and
     2000, respectively. The adjusted basic and diluted earnings per unit after
     the elimination of the intracompany loan exclude the SH IX shares.





                                       90
<PAGE>

13. PARTNERS' CAPITAL:

         Each unit may be exchanged for either two common shares or, at the
election of the Company, cash equal to the fair market value of two common
shares at the time of the exchange. When a unitholder exchanges a unit, the
Company's percentage interest in the Operating Partnership increases. During the
year ended December 31, 2001, there were 401,302 units exchanged for 802,604
common shares of the Company.

EMPLOYEE STOCK PURCHASE PLAN

         On June 25, 2001, the shareholders of the Company approved a new
Employee Stock Purchase Plan (the "ESPP") that is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code
("IRC") of 1986, as amended. The ESPP is regarded as a noncompensatory plan
under APB No. 25, because it meets the qualifications under IRC 423. Under the
terms of the ESPP, eligible employees may purchase common shares of the Company
at a price that is equal to 90% of the lower of the common shares' fair market
value at the beginning or the end of a quarterly period. The fair market value
of a common share is equal to the last sale price of the common shares on the
New York Stock Exchange. Eligible employees may purchase the common shares
through payroll deductions of up to 10% of eligible compensation. The ESPP is
not subject to the provisions of ERISA. The ESPP was effective October 1, 2001,
and will terminate on May 14, 2011.

         The 1,000,000 common shares of the Company that may be issued pursuant
to the purchase of common shares of the Company under the ESPP represent less
than 0.96% of the Company's outstanding common shares at December 31, 2001.

FORWARD SHARE PURCHASE AGREEMENT

         On June 30, 1999, the Company settled the forward share purchase
agreement (the "Forward Share Purchase Agreement") with affiliates of the
predecessor of UBS. As settlement of the Forward Share Purchase Agreement, the
Company made a cash payment of approximately $149,000 to UBS in exchange for the
return by UBS to the Company of 7,299,760 common shares.

         The number of common shares returned to the Company is equal to the
4,700,000 common shares originally issued to UBS plus 2,599,760 common shares
subsequently issued by the Company, because of a decline in its stock price. In
connection with the issuance of additional common shares, the Company received
an additional limited partner interest, which resulted in a reduction of the
Operating Partnership's net income per unit and net book value per unit. The
additional shares were issued as collateral for the Company's obligation to
purchase 4,700,000 common shares from UBS by August 12, 1999. The settlement
price was calculated based on the gross proceeds the Company received from the
original issuance of 4,700,000 common shares to UBS, plus a forward accretion
component equal to 90-day LIBOR plus 75 basis points, minus an adjustment for
the Company's distributions paid to UBS. The forward accretion component
represented a guaranteed rate of return to UBS. The return of common shares to
the Company in settlement of the Forward Share Purchase Agreement resulted in a
decrease in the Company's limited partner interest, which resulted in an
increase of net income per unit and net book value per unit.

SHARE REPURCHASE PROGRAM

         On October 15, 2001, the Company's Board of Trust Managers authorized
an increase in the amount of outstanding common shares that can be repurchased
from time to time in the open market or through privately negotiated
transactions (the "Share Repurchase Program") from $500,000 to $800,000. The
repurchase of common shares by the Company will decrease the Company's limited
partner interest, which will result in an increase in net income per unit.

         The Company commenced its Share Repurchase Program in March 2000. As of
December 31, 2001, the Company had repurchased 18,756,423 common shares, 20,286
of which have been retired, at an average price of $19.09 per common share for
an aggregate of approximately $358,115. As of December 31, 2001, the Company
held 14,468,623 of the repurchased common shares in SH IX. The 14,468,623 common
shares were repurchased with the net proceeds of the sale of Class A Units in
Funding IX and a portion of the net proceeds from the sale of one of the
Properties held by Funding IX. See "Note 12. Sale of Preferred Equity Interests
in Subsidiary and Intracompany Loan." These common shares are consolidated as
treasury shares in accordance with GAAP in the Company's financial statements.
However, these shares are held in SH IX until all of the Class A Units are
redeemed, and are considered outstanding for the Operating Partnership's
financial statements. Distributions will continue to be paid on these
repurchased common shares and will be used to pay dividends on the Class A
Units.




                                       91
<PAGE>

         The Company expects the Share Repurchase Program to continue to be
funded through a combination of debt, equity, joint venture capital and selected
asset disposition alternatives available to the Company, which, in some cases,
may be secured by the repurchased common shares. The amount of common shares
that the Company will actually purchase will be determined from time to time, in
its reasonable judgment, based on market conditions and the availability of
funds, among other factors. There can be no assurance that any number of common
shares will actually be purchased within any particular time period.

SHARE REPURCHASE AGREEMENT

         On November 19, 1999, the Company entered into an agreement (the "Share
Repurchase Agreement") with UBS to purchase a portion of its common shares from
UBS. The Company had the option to settle the Share Repurchase Agreement in cash
or common shares. During the year ended December 31, 2000, the Company purchased
the 5,809,180 common shares from UBS at an average cost of $17.62 per common
share for an aggregate of approximately $102,333 under the Share Repurchase
Agreement with UBS. The Company has no further obligation under the Share
Repurchase Agreement. The purchases were funded primarily through the sale of
Class A Units in Funding IX. See "Note 12. Sale of Preferred Equity Interests in
Subsidiary and Intracompany Loan."

DISTRIBUTIONS

         Beginning with the third quarter of 2001 the Operating Partnership, due
to its revised cash flow expectations in the uncertain economic environment and
measuring its payout ratios to those of the Operating Partnership's peer group,
reduced its quarterly distribution from $1.10 per unit, or an annualized
distribution of $4.40 per unit, to $0.75 per unit, or an annualized distribution
of $3.00 per unit.

         The following table summarizes the distributions paid or declared by
the Operating Partnership to unitholders during the year ended December 31,
2001.


<Table>
<Caption>
                                                                                                       ANNUAL
                                  DIVIDEND/         TOTAL              RECORD         PAYMENT         DIVIDEND/
         SECURITY               DISTRIBUTION        AMOUNT              DATE            DATE        DISTRIBUTION
---------------------------     -------------   --------------      -------------   ------------    ------------

<S>                             <C>             <C>                 <C>             <C>             <C>
 Units                               $ 1.100         $ 74,697(2)       1/31/01        2/15/01            $ 4.40
 Units                               $ 1.100         $ 74,789(2)       4/30/01        5/15/01            $ 4.40
 Units                               $ 1.100         $ 74,986(2)       7/31/01        8/15/01            $ 4.40
 Units                               $ 0.750(1)      $ 49,937(2)      10/31/01       11/15/01            $ 3.00(1)
 Units                               $ 0.750(1)      $ 49,706(2)       1/31/02        2/15/02            $ 3.00(1)
 6 3/4% Series A Preferred
    Units                            $ 0.422          $ 3,375          1/31/01        2/15/01            $ 1.69
 6 3/4% Series A Preferred
    Units                            $ 0.422          $ 3,375          4/30/01        5/15/01            $ 1.69
 6 3/4% Series A Preferred
    Units                            $ 0.422          $ 3,375          7/31/01        8/15/01            $ 1.69
 6 3/4% Series A Preferred
    Units                            $ 0.422          $ 3,375         10/31/01       11/15/01            $ 1.69
 6 3/4% Series A Preferred
    Units                            $ 0.422          $ 3,375          1/31/02        2/15/02            $ 1.69
</Table>




----------
(1)  Beginning with the third quarter of 2001, the Operating Partnership reduced
     its quarterly distribution from $1.10 per unit, or an annualized
     distribution of 4.40 per unit, to $0.75 per unit, or an annualized
     distribution of $3.00 per unit.

(2)  These distribution amounts include $7,958 for each of the distributions
     paid on February 15, 2001, May 15, 2001 and August 15, 2001, and $5,426 for
     each of the distributions paid on November 15, 2001 and February 15, 2002,
     which relate to distributions paid on common shares of the Company held in
     SH IX.

       The distributions paid to unitholders during the year ended December 31,
2000 were $299,889. As of December 31, 2000, SH IX was holding 14,468,623 common
shares of the Company. The distribution amount of $299,889 includes $17,313 for
the year ended December 31, 2000, related to these common shares.

       The distributions to preferred unitholders during the year ended December
31, 2000, were $13,500, or $1.6875 per preferred unit.



                                       92
<PAGE>

Units

         Following is the income tax status of distributions paid by the
Operating Partnership on units during the years ended December 31, 2001, and
2000 to unitholders:


<Table>
<Caption>
                                        2001            2000
                                    -------------   -------------
<S>                                 <C>             <C>
Ordinary dividend/distribution             50.3%           51.5%
Capital gain                                  --            6.4%
Return of capital                          49.7%           35.9%
Unrecaptured Section 1250 gain                --            6.2%
</Table>



Preferred Units


         Following is the income tax status of dividends paid by the Company and
distributions paid by the Operating Partnership during the years ended December
31, 2001 and 2000 to preferred unitholders:


<Table>
<Caption>
                                          2001          2000
                                       ----------   -----------
<S>                                    <C>          <C>
Ordinary dividend/distribution            100.0%         83.7%
Capital gain                                  --          8.2%
Unrecaptured Section 1250 gain                --          8.1%
</Table>



14. MINORITY INTEREST:

         Minority interest represents joint venture and preferred equity
interests held by third parties in other consolidated subsidiaries.

15. RELATED PARTY DISCLOSURES:

DBL HOLDINGS, INC. ("DBL")

         As of December 31, 2001, the Operating Partnership owned 97.44% of DBL
with the remaining 2.56% economic interest in DBL (including 100% of the voting
interest in DBL) held by John Goff, Vice-Chairman of the Board of Trust Managers
and Chief Executive Officer of the Company and sole director, Chief Executive
Officer and President of the General Partner. Originally, Mr. Goff contributed
his voting interests in MVDC and HADC, originally valued at approximately $380,
and approximately $63 in cash, or total consideration valued at approximately
$443 for his interest in DBL.

         DBL has two wholly owned subsidiaries, DBL-ABC, Inc. and DBL-CBO, Inc.,
the assets of which are described in the following paragraphs, and DBL directly
holds 66% of the voting stock in MVDC and HADC. At December 31, 2001, Mr. Goff's
interest in DBL was approximately $554.

         Since June 1999, the Operating Partnership has contributed
approximately $23,800 to DBL. The contribution was used by DBL to make an equity
contribution to DBL-ABC, Inc., which committed to purchase a limited partnership
interest representing a 12.5% interest in G2 Opportunity Fund, LP ("G2"). G2 was
formed for the purpose of investing in commercial mortgage backed securities and
other commercial real estate investments and is managed and controlled by an
entity that is owned equally by Goff-Moore Strategic Partners, LP ("GMSP") and
GMACCM. The ownership structure of GMSP consists of 50% ownership by Darla
Moore, who is married to Richard Rainwater, Chairman of the Board of Trust
Managers of the Company and member of the Strategic Planning Committee of CREE,
Ltd., and 50% by Mr. Goff. Mr. Rainwater is also a limited partner of GMSP. At
December 31, 2001, DBL has an approximately $14,100 investment in G2.

         In March 1999, DBL-CBO, Inc. acquired $6,000 aggregate principal amount
of Class C-1 Notes issued by Juniper CBO 1999-1 Ltd., a Cayman Island limited
liability company. At December 31, 2001 this investment was valued at
approximately $5,400.



                                       93
<PAGE>
COPI Colorado, L. P.

         As of December 31, 2001, CRD was owned 90% by the Operating Partnership
and the remaining 10%, representing 100% of the voting stock, was owned by COPI
Colorado, L.P. ("COPI Colorado"), of which 60% was owned by COPI, with 20% owned
by John Goff, Vice Chairman of the Board of Trust Managers and Chief Executive
Officer of the Company and sole director, Chief Executive Officer and President
of the General Partner, and 20% owned by a third party.

         On February 14, 2002, the Operating Partnership executed an agreement
with COPI, pursuant to which COPI transferred to the Operating Partnership, in
lieu of foreclosure, COPI's 60% general partner interest in COPI Colorado. As a
result, the Operating Partnership indirectly owns a 96% interest in CRD, Mr.
Goff, owns a 2.0% interest in CRD and the remaining 2.0% interest is owned by a
third party. The Operating Partnership will fully consolidate the operations of
CRD beginning on the date of the asset transfer.

LOANS TO EMPLOYEES OF THE OPERATING PARTNERSHIP AND TRUST MANAGERS OF THE
COMPANY FOR EXERCISE OF STOCK OPTIONS AND UNIT OPTIONS

         As of December 31, 2001, the Operating Partnership had approximately
$32,900 of loans outstanding (including approximately $3,855 loaned during the
year ended December 31, 2001) to certain employees of the Operating Partnership
and trust managers of the Company on a recourse basis pursuant to the Company's
stock incentive plans and the Operating Partnership's unit incentive plans
pursuant to an agreement approved by the Board of Trust Managers and the
Executive Compensation Committee of the Company. The proceeds of these loans
were used by the employees and the trust managers to acquire common shares of
the Company and units of the Operating Partnership pursuant to the exercise of
vested stock and unit options. Pursuant to the loan agreements, these loans may
be repaid in full or in part at any time without premium or penalty. John Goff,
Vice-Chairman of the Board of Trust Managers and Chief Executive Officer of the
Company and sole director, Chief Executive Officer and President of the General
Partner, had a loan representing $26,300 of the $32,900 total outstanding loans
at December 31, 2001.

         Every month, federal short-term, mid-term and long-term rates
(Applicable Federal Rates) are determined and published by the IRS based upon
average market yields of specified maturities. Effective November 1, 2001, these
loans were amended to reduce the interest rates for their remaining terms to the
Applicable Federal Rates. As a result, the interest rates on loans with
remaining terms of three years or less at November 1, 2001 were reduced to
approximately 2.7% per year and the interest rates on loans with remaining terms
greater than three years as of November 1, 2001 were reduced to approximately
4.07% per year. These amended interest rates reflect below prevailing market
interest rates; therefore, the Operating Partnership recorded $750 of
compensation expense for the year ended December 31, 2001. Approximately $466 of
interest was outstanding related to these loans as of December 31, 2001.

16. COPI:

         In April 1997, the Operating Partnership established a new Delaware
corporation, COPI. All of the outstanding common stock of COPI, valued at $0.99
per share, was distributed, effective June 12, 1997, to those persons who were
limited partners of the Operating Partnership or shareholders of the Company on
May 30, 1997, in a spin-off.

         COPI was formed to become a lessee and operator of various assets to be
acquired by the Operating Partnership and to perform the intercompany agreement
between COPI and the Operating Partnership, pursuant to which each agreed to
provide the other with rights to participate in certain transactions. In
connection with the formation and capitalization of COPI, and the subsequent
operations and investments of COPI since 1997, the Operating Partnership made
loans to COPI under a line of credit and various term loans.

         On January 1, 2001, The REIT Modernization Act became effective. This
legislation allows the Operating Partnership, through its subsidiaries, to
operate or lease certain of its investments that had been previously operated or
leased by COPI.

         COPI and the Operating Partnership entered into an asset and stock
purchase agreement on June 28, 2001, in which the Operating Partnership agreed
to acquire the lessee interests in the eight Resort/Hotel Properties leased to
subsidiaries of COPI, the voting interests held by subsidiaries of COPI in three
of the Operating Partnership's Residential Development Corporations and other
assets in exchange for $78,400. In connection with that agreement, the Operating
Partnership agreed that it would not charge interest on its loans to COPI from
May 1, 2001 and that it would allow COPI to defer all principal and interest
payments due under the loans until December 31, 2001.





                                       94
<PAGE>

         Also on June 28, 2001, the Operating Partnership entered into an
agreement to make a $10,000 investment in Crescent Machinery Company ("Crescent
Machinery"), a wholly owned subsidiary of COPI. This investment, together with
capital from a third-party investment firm, was expected to put Crescent
Machinery on solid financial footing.

         Following the date of the agreements relating to the acquisition of
COPI assets and stock and the investment in Crescent Machinery, the results of
operations for the COPI hotel operations and the COPI land development interests
declined, due in part to the slowdown in the economy after September 11. In
addition, Crescent Machinery's results of operations suffered because of the
economic environment and the overall reduction in national construction levels
that has affected the equipment rental and sale business, particularly post
September 11. As a result, the Operating Partnership believes that a significant
additional investment would have been necessary to adequately capitalize
Crescent Machinery and satisfy concerns of Crescent Machinery's lenders.

         The Operating Partnership stopped recording rent from the leases of the
eight Resort/Hotel Properties leased to subsidiaries of COPI on October 1, 2001,
and recorded the following impairment and other adjustments related to COPI in
the fourth quarter of 2001, based on the estimated fair value of the underlying
collateral.



IMPAIRMENT AND OTHER ADJUSTMENTS RELATED TO COPI

<Table>
<S>                                                                <C>
Resort/Hotel Accounts Receivable, net of allowance                 $     33,200
Resort/Hotel Deferred Rent Receivable                                    12,700
Notes Receivable and Accrued Interest                                    71,500
Asset transaction costs                                                   2,800
                                                                   ------------
                                                                   $    120,200
Less estimated collateral value to be received from COPI:
Estimated Fair Value of Resort/Hotel FF&E                          $      6,900
Estimated Fair Value of Voting Stock of
  Residential Development Corporations                                   38,500
                                                                   ------------
                                                                   $     45,400
                                                                   ------------
Impairment of assets                                               $     74,800

Plus Estimated Costs Related to a COPI Bankruptcy                        18,000
                                                                   ------------
Impairment and other charges related to COPI                       $     92,800
                                                                   ============
</Table>




         For a description of the COPI assets transferred to subsidiaries of the
Operating Partnership, in lieu of foreclosure, of certain COPI assets, see "Note
20. Subsequent Events."

17.  DISPOSITIONS:

OFFICE SEGMENT

         On September 18, 2001, the Operating Partnership completed the sale of
the two Washington Harbour Office Properties. The sale generated net proceeds of
approximately $153,000 and a net loss of approximately $9,800. The proceeds from
the sale of the Washington Harbour Office Properties were used primarily to pay
down variable-rate debt and pay for the repurchase by the Company of
approximately 4.3 million of the Company's common shares. The Washington Harbour
Office Properties were the Operating Partnership's only Office Properties in
Washington, D.C.

         On September 28, 2001, the Woodlands Office Equities - '95 Limited
("WOE"), owned by the Operating Partnership and the Woodlands CPC, sold two
Office Properties located within The Woodlands, Texas. The sale generated net
proceeds of approximately $11,281, of which the Operating Partnership's portion
was approximately $9,857. The sale generated a net gain of approximately $3,418,
of which the Operating Partnership's portion was approximately $2,987. The
proceeds received by the Operating Partnership were used primarily to pay down
variable-rate debt.

         On December 20, 2001, WOE sold one Office Property located within The
Woodlands, Texas. The sale generated net proceeds of approximately $2,016, of
which the Operating Partnership's portion was approximately $1,761. The sale




                                       95
<PAGE>

generated a net gain of approximately $1,688, of which the Operating
Partnership's portion was approximately $1,475. The proceeds received by the
Operating Partnership were used primarily to pay down variable-rate debt.

         The following table summarizes the condensed results of operations for
the years ended December 31, 2001, 2000 and 1999 for the five Office Properties
sold during 2001.

<Table>
<Caption>
                                                    FOR THE YEAR
                                                  ENDED DECEMBER 31,
                              -----------------------------------------------------------
                                  2001                     2000                  1999
                              ------------             ------------          ------------

<S>                           <C>                      <C>                   <C>
Revenue                       $     16,673             $     22,751          $     20,683
Operating Expenses                   5,998                    7,460                 6,588
                              ------------             ------------          ------------
Net Operating Income          $     10,675(1)          $     15,291          $     14,095
                              ============             ============          ============
</Table>




----------
(1)  Net operating income for 2001 only includes the period for which the
     disposition Properties were held during the year.

         During the year ended December 31, 2000, the Operating Partnership
completed the sale of 11 wholly-owned Office Properties. The sale of the 11
Office Properties generated approximately $268,233 of net proceeds. The proceeds
were used primarily to pay down variable-rate debt. The Operating Partnership
recognized a net gain, which is included in Gain on Property Sales, net, of
approximately $35,841 related to the sale of the 11 Office Properties during the
year ended December 31, 2000. During the year ended December 31, 1999, the
Operating Partnership recognized an impairment loss of approximately $16,800 on
one of the 11 Office Properties sold during the year ended December 31, 2000.
The Operating Partnership also recognized a loss of approximately $5,000, which
is included in Gain on Property Sales, net, during the year ended December 31,
2000 on one of the 11 Office Properties sold. The losses represented the
differences between the carrying values of the Office Properties and the sales
prices less costs of the sales.

     During the year ended December 31, 2000, the Woodlands Retail Equities -
'96 Limited, owned by the Operating Partnership and Woodlands CPC, completed the
sale of its retail portfolio, consisting of the Operating Partnership's four
retail properties located in The Woodlands, Texas. The sale generated
approximately $42,700 of net proceeds, of which the Operating Partnership's
portion was approximately $32,000. The sale generated a net gain of
approximately $6,500, of which the Operating Partnership's portion was
approximately $4,900. The proceeds received by the Operating Partnership were
used primarily to pay down variable-rate debt. The net operating income for the
years ended December 31, 2000 and 1999 for the four retail properties was $15
and $3,792, respectively. Net operating income for the year ended 2000 only
includes the periods for which these properties were held during the year.

RESORT/HOTEL SEGMENT

         On November 3, 2000, the Operating Partnership completed the sale of
the Four Seasons Hotel - Houston for a sales price of approximately $105,000.
The Operating Partnership used approximately $19,700 of the proceeds to buy out
the Property lease with COPI and the asset management contract, and for other
transaction costs. The sale generated net proceeds of approximately $85,300. The
Operating Partnership also used approximately $56,600 of the net proceeds to
redeem Class A Units in Funding IX, through which the Operating Partnership
owned the Property, from GMACCM. See "Note 12. Sale of Preferred Equity
Interests in Subsidiary and Intracompany Loan" for a description of the
ownership structure of Funding IX. The sale generated a net gain, which is
included in Gain on Property Sales, net, of approximately $28,715. The Operating
Partnership's net operating income for the years ended December 31, 2000 and
1999 for the Four Seasons Hotel - Houston was $7,591 and $9,237, respectively.
The operating results of this property are included in operating income for 2000
only for the periods for which this Property was held during the year.




                                       96
<PAGE>





18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):


<Table>
<Caption>
                                                                                         2001
                                                           ---------------------------------------------------------------
                                                             MARCH 31,        JUNE 30,       SEPTEMBER 30,    DECEMBER 31,
                                                           ------------     ------------     ------------     ------------
<S>                                                        <C>              <C>              <C>              <C>
Revenues                                                   $    185,791     $    198,175     $    183,932     $    157,428
Income before minority interests and extraordinary item          48,945           42,060           38,458          (72,619)
Minority interests                                               (5,683)          (5,215)          (5,337)          (4,429)
Extraordinary Item                                                   --          (12,174)              --               --
Net income available to partners
   - basic                                                       39,887           21,296           29,746          (80,424)
   - diluted                                                     39,887           21,296           29,746          (80,425)
Per share data:
   Basic Earnings Per Unit
    - Income before extraordinary item                             0.59             0.49             0.44            (1.20)
    - Net income                                                   0.59             0.31             0.44            (1.20)
   Diluted Earnings Per Unit
    - Income before extraordinary item                             0.58             0.48             0.43            (1.20)
    - Net income                                                   0.58             0.30             0.43            (1.20)
</Table>

<Table>
<Caption>
                                                                                       2000
                                                           ---------------------------------------------------------------
                                                             MARCH 31,        JUNE 30,       SEPTEMBER 30,    DECEMBER 31,
                                                           ------------     ------------     ------------     ------------
<S>                                                        <C>              <C>              <C>              <C>
Revenues                                                   $    175,788     $    175,229     $    190,677     $    198,003
Income before minority interests and extraordinary item          62,082           44,737          114,407          103,118
Minority interests                                                 (650)          (3,964)          (7,643)          (7,625)
Extraordinary Item                                               (4,378)              --               --               --
Net income available to partners
   - basic                                                       51,603           36,680          101,742           93,653
   - diluted                                                     51,603           36,680          101,742           93,653
Per share data:
   Basic Earnings Per Unit
    - Income before extraordinary item                             0.83             0.57             1.50             1.54
    - Net income                                                   0.83             0.57             1.50             1.54
   Diluted Earnings Per Unit
    - Income before extraordinary item                             0.82             0.56             1.48             1.52
    - Net income                                                   0.82             0.56             1.48             1.52
</Table>


19. BEHAVIORAL HEALTHCARE PROPERTIES:

         During the years ended December 31, 2001 and 2000, payment and
treatment of rent for the behavioral healthcare properties was subject to a rent
stipulation agreed to by certain of the parties involved in the Charter
Behavioral Health Systems, LLC ("CBHS") bankruptcy proceeding. The Operating
Partnership received approximately $6,000 and $15,400, which is included in
Interest and Other Income, in repayments of a working capital loan, rent and
interest from CBHS during the years ended December 31, 2001 and 2000,
respectively. The Operating Partnership did not incur any expense related to the
behavioral healthcare properties recognized for the years ended December 31,
2001, 2000 or 1999.

         During the year ended December 31, 2001, the Operating Partnership
completed the sale of 18 behavioral healthcare properties. The sales generated
approximately $34,700 in net proceeds and a net gain of approximately $1,600 for
the year ended December 31, 2001. The net proceeds from the sale of the 18
behavioral healthcare properties sold during the year ended December 31, 2001
were used primarily to pay down variable-rate debt.

         As of December 31, 2001, the Operating Partnership owned 10 behavioral
healthcare properties, all of which were classified as held for disposition. The
carrying value of the behavioral healthcare properties at December 31, 2001, was
approximately $27,937. Depreciation expense has not been recognized since the
dates the behavioral healthcare properties were classified as held for sale. The
Operating Partnership is actively marketing for sale these behavioral healthcare
properties.




                                       97
<PAGE>

         During the year ended December 31, 2001, the Operating Partnership
recognized an impairment loss of approximately $8,500 on the behavioral
healthcare properties held for disposition, which is included in Impairment and
Other Charges Related to Real Estate Assets. This amount represents the
difference between the carrying values and the estimated sales prices less costs
of the sales for seven of the behavioral healthcare properties.

         During the year ended December 31, 2000, the Operating Partnership
completed the sale of 60 behavioral healthcare properties previously classified
as held for disposition. The sales generated approximately $233,700 in net
proceeds and a net gain of approximately $58,600 for the year ended December 31,
2000. During the year ended December 31, 2000, the Operating Partnership
recognized an impairment loss of $9,300 on the behavioral healthcare properties
held for disposition. This amount represents the difference between the carrying
values and the estimated sales prices less costs of the sales for 13 of the 28
behavioral healthcare properties. The net proceeds from the sale of the 60
behavioral healthcare properties sold during the year ended December 31, 2000
were used primarily to pay down variable-rate debt.

         As of December 31, 1999, the Operating Partnership owned 88 behavioral
healthcare properties.

20. SUBSEQUENT EVENTS:

     OFFICE SEGMENT

         On January 18, 2002, the Operating Partnership completed the sale of
the Cedar Springs Office Property located in Dallas, Texas. The sale generated
net proceeds of approximately $12,000 and a net gain of approximately $4,500.
The proceeds from the sale of Cedar Springs were used primarily to pay down
variable-rate debt.

     COPI

         On January 22, 2002, the Operating Partnership terminated the purchase
agreement pursuant to which the Operating Partnership would have acquired the
lessee interests in the eight Resort/Hotel Properties leased to subsidiaries of
COPI, the voting interests held by subsidiaries of COPI in three of the
Residential Development Corporations and other assets. On February 4, 2002, the
Operating Partnership terminated the agreement relating to its planned
investment in Crescent Machinery.

         On February 6, 2002, Crescent Machinery filed for protection under the
federal bankruptcy laws.

         On February 12, 2002, the Operating Partnership delivered default
notices to COPI relating to approximately $49,000 of unpaid rent and
approximately $76,200 of principal and accrued interest due to the Operating
Partnership under certain secured loans.

         On February 14, 2002, the Operating Partnership executed an agreement
(the "Agreement") with COPI, pursuant to which COPI transferred to subsidiaries
of the Operating Partnership, in lieu of foreclosure, COPI's lessee interests in
the eight Resort/Hotel Properties leased to subsidiaries of COPI, COPI's voting
interests in three of the Operating Partnership's Residential Development
Corporations and other assets and the Operating Partnership agreed to assist and
provide funding to COPI for the implementation of a prepackaged bankruptcy of
COPI. In connection with the transfer, COPI's rent obligations to the Operating
Partnership were reduced by $23,600, and its debt obligations were reduced by
$40,100. These amounts include $18,300 of value attributed to the lessee
interests transferred by COPI to the Operating Partnership, however, in
accordance with GAAP, the Operating Partnership assigned no value to these
interests for financial reporting purposes.

         The Operating Partnership holds the lessee interests in the eight
Resort/Hotel Properties and the voting interests in the three Residential
Development Corporations through three newly organized entities that are wholly
owned taxable REIT subsidiaries of the Operating Partnership. The Operating
Partnership will include these assets in its Resort/Hotel Segment and its
Residential Development Segment, and will fully consolidate the operations of
the eight Resort/Hotel Properties and the three Residential Development
Corporations, beginning on the dates of the transfers of these assets.

         Under the Agreement, the Operating Partnership has agreed to provide
approximately $14,000 to COPI in the form of cash and common shares of the
Company to fund costs, claims and expenses relating to the bankruptcy and
related transactions, and to provide for the distribution of the Company's
common shares to the COPI stockholders. The Operating Partnership estimates that
the value of the common shares of the Company that will be issued to the COPI
stockholders will





                                       98
<PAGE>

be approximately $5,000 to $8,000. The Agreement provides that COPI and the
Operating Partnership will seek to have a plan of reorganization for COPI,
reflecting the terms of the Agreement and a draft plan of reorganization,
approved by the bankruptcy court. The actual value of the common shares of the
Company issued to the COPI stockholders will not be determined until the
confirmation of COPI's bankruptcy plan and could vary substantially from the
estimated amount.

         In addition, the Operating Partnership has agreed to use commercially
reasonable efforts to assist COPI in arranging COPI's repayment of its $15,000
obligation to Bank of America, together with any accrued interest. COPI obtained
the loan primarily to participate in investments with the Operating Partnership.
At the time COPI obtained the loan, Bank of America required, as a condition to
making the loan, that Richard E. Rainwater, the Chairman of the Board of Trust
Managers of the Company and member of the Strategic Planning Committee of CREE,
Ltd., and John C. Goff, the Vice-Chairman of the Board of Trust Managers and
Chief Executive Officer of the Company and sole director, Chief Executive
Officer and President of the General Partners, enter into a support agreement
with COPI and Bank of America, pursuant to which they agreed to make additional
equity investments in COPI if COPI defaulted on payment obligations under its
line of credit with Bank of America and the net proceeds of an offering of COPI
securities were insufficient to allow COPI to pay Bank of America in full. The
Operating Partnership believes, based on advice of counsel, that the support
agreement should be unenforceable in a COPI bankruptcy. Effective December 31,
2001, the parties executed an amendment to the line of credit providing that any
defaults existing under the line of credit on or before March 8, 2002 are
temporarily cured unless and until a new default shall occur.

         The Operating Partnership holds a first lien security interest in
COPI's entire membership interest in AmeriCold Logistics. REIT rules prohibit
the Operating Partnership from acquiring or owning the membership interest that
COPI owns in AmeriCold Logistics. Under the Agreement, the Operating Partnership
agreed to allow COPI to grant Bank of America a first priority security interest
in the membership interest and to subordinate its own security interest to Bank
of America. In addition, the Company has agreed to form and capitalize a
separate entity to be owned by the Operating Partnership's unitholders and the
Company's shareholders, and to cause the new entity to commit to acquire COPI's
entire membership interest in the tenant for approximately $15,500. Under the
Agreement, COPI has agreed that it will use the proceeds of the sale of the
membership interest to repay Bank of America in full.

         Completion and effectiveness of the plan of reorganization for COPI is
contingent upon a number of conditions, including the vote of COPI's
stockholders, the approval of the plan by certain of COPI's creditors and the
approval of the bankruptcy court.

         The following Unaudited Condensed Consolidated Pro Forma Financial
Statements are based upon the historical financial statements of the Operating
Partnership and of the assets being transferred to the Operating Partnership
from COPI under the Agreement. The Unaudited Condensed Consolidated Pro Forma
Balance Sheet as of December 31, 2001 is presented as if the principal
transactions contemplated by the Agreement had been completed on December 31,
2001. The Unaudited Condensed Consolidated Pro Forma Statements of Operations
for the years ended December 31, 2001 and 2000 are presented as if these
transactions had occurred as of the beginning of the respective periods.

         The Unaudited Condensed Consolidated Pro Forma Financial Statements
have been prepared based on a number of assumptions, estimates and uncertainties
including, but not limited to, estimates of the fair values of assets received
and liabilities assumed and estimated transaction costs. As a result of these
assumptions, estimates and uncertainties, the accompanying Unaudited Condensed
Consolidated Pro Forma Financial Statements do not purport to predict the actual
financial condition as of December 31, 2001 or results of operations that would
have been achieved had the principal transactions contemplated by the Agreement
been completed as of January 1, 2001 or 2000.




                                       99
<PAGE>



UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET

<Table>
<Caption>
                                                   AS OF DECEMBER 31,
                                                         2001
                                                   -----------------

<S>                                                <C>
Real estate, net                                    $     3,361,929
Cash                                                        186,487
Other assets                                              1,297,059
                                                    ---------------
     Total assets                                   $     4,845,475
                                                    ===============

Notes payable                                       $     2,396,290
Other liabilities                                           439,804
Minority interests                                          283,102
Total partners' capital                                   1,726,279
                                                    ---------------
      Total liabilities and partners' capital       $     4,845,475
                                                    ===============
</Table>


UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                  FOR THE YEAR ENDED
                                                                     DECEMBER 31,
                                                                2001               2000
                                                            ------------       ------------

<S>                                                         <C>                <C>
Total revenues                                              $  1,178,100       $  1,231,173
Total expenses                                                 1,069,608          1,084,201
                                                            ------------       ------------

Operating Income                                                 108,492            146,972
                                                            ------------       ------------
Total other income and expense                                    53,161            195,349

Income before minority interests, income taxes
  and extraordinary item                                         161,653            342,321

Income before extraordinary item and
  cumulative effect of change in accounting principle       $    124,966       $    302,283
                                                            ============       ============

Basic Earnings per unit(1)                                  $       1.84       $       4.45
Diluted Earnings per unit(1)                                $       1.82       $       4.41
</Table>




----------
(1)  Respresents earnings per unit for income before extraordinary item and
     cumulative effect of change in accounting principle.

         The Unaudited Condensed Consolidated Pro Forma Balance Sheet combines
the Operating Partnership's consolidated historical balance sheet for the year
ended December 31, 2001 with the following adjustments:

         o        Reflects the inclusion of the assets and liabilities of the
                  eight Hotel/Resort Properties as of December 31, 2001;

         o        Eliminates the eight Resort/Hotel Properties' initial working
                  capital receivable on the Operating Partnership's balance
                  sheet with the offsetting net working capital payable;

         o        Adjusts the historical balance sheet to consolidate the
                  balance sheets of Desert Mountain Development Corporation
                  ("DMDC"), The Woodlands Land Company ("TWLC"),other entities,
                  and COPI Colorado (which, as the owner of 100% of the voting
                  stock of CRD, consolidates the balance sheet of CRD) as a
                  result of the Operating





                                      100
<PAGE>

                  Partnership's retention of voting stock in DMDC, TWLC and
                  other entities, and the Operating Partnership's retention of
                  the 60% general partnership interest in COPI Colorado;

         o        Eliminates the Operating Partnership's equity investment in
                  the historical December 31, 2001 balance sheet for DMDC, TWLC,
                  CRD and other entities;

         o        Eliminates the intercompany loans and associated accrued
                  interest and capitalized interest between the Operating
                  Partnership and DMDC, CRD and other entities;

         o        Reflects the Operating Partnership's capitalization of a new
                  entity to be owned by the Company's shareholders that will be
                  committed to acquire COPI's membership interest in AmeriCold
                  Logistics; and

         o        Reflects the issuance of $5,000 of the Company's shares to
                  COPI stockholders.

         The Unaudited Condensed Consolidated Pro Forma Statements of Operations
combine the Operating Partnership's consolidated historical statements of
operations for the years ended December 31, 2001 and 2000 with the following
adjustments:

         o        Excludes the $92,782 impairment and other charges related to
                  COPI as contained in the Operating Partnership's historical
                  2001 Consolidated Statement of Operations, as it is deemed
                  non-recurring;

         o        Includes the operating results for the eight Hotel/Resort
                  Properties after deducting the amount of the lessee rent
                  payments due under the respective leases;

         o        Eliminates hotel lessees' rent expense to the Operating
                  Partnership and the Operating Partnership's rental revenue
                  from the hotel leases;

         o        Reflects the consolidation of the operations of DMDC, TWLC,
                  other entities and COPI Colorado with the Operating
                  Partnership's historical Statement of Operations, as a result
                  of the Operating Partnership's retention of voting stock in
                  DMDC, TWLC and other entities, and the Operating Partnership's
                  retention of the 60% general partnership interest in COPI
                  Colorado;

         o        Eliminates the Operating Partnership's historical equity in
                  net income for DMDC, TWLC, CRD and other entities;

         o        Eliminates intercompany interest expense on the loans from the
                  Operating Partnership to DMDC and CRD;

         o        Reflects income tax benefit for the hotel business, calculated
                  as 40% of the net loss for the hotel lessees; and

         o        Reflects the additional shares issued to COPI shareholders,
                  valued at $5,000, using the Company's current share price of
                  $17.91.




                                      101

<PAGE>
                                                                    SCHEDULE III



                CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
        CONSOLIDATED REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 2001
                             (dollars in thousands)


<Table>
<Caption>
                                                                                           Costs
                                                                                        Capitalized       Impairment
                                                                                       Subsequent to      to Carrying
                                                            Initial Costs               Acquisition          Value
                                                  ---------------------------------   ---------------    ---------------
                                                                                      Land, Buildings,     Buildings,
                                                                                      Improvements,       Improvements,
                                                                                        Furniture,         Furniture,
                                                                     Buildings and     Fixtures and       Fixtures and
                Description                             Land          Improvements       Equipment          Equipment
-----------------------------------------------   ---------------   ---------------   ---------------    ---------------

<S>                                               <C>               <C>               <C>                <C>
The Citadel, Denver, CO                           $         1,803   $        17,259   $         4,782    $            --
Las Colinas Plaza, Irving, TX                               2,576             7,125             1,965                 --
Carter Burgess Plaza, Fort Worth, TX                        1,375            66,649            39,131                 --
The Crescent Office Towers, Dallas, TX                      6,723           153,383            83,870                 --
MacArthur Center I & II, Irving, TX                           704            17,247             5,007                 --
125. E. John Carpenter Freeway, Irving, TX                  2,200            48,744             2,903                 --
Regency Plaza One, Denver, CO                                 950            31,797             2,664                 --
The Avallon, Austin, TX                                       475            11,207               723                 --
Waterside Commons, Irving, TX                               3,650            20,135             7,445                 --
Two Renaissance Square, Phoenix, AZ                            --            54,412            10,290                 --
Liberty Plaza I & II, Dallas, TX                            1,650            15,956               538                 --
6225 North 24th Street, Phoenix, AZ                           719             6,566             3,433                 --
Denver Marriott City Center, Denver, CO                        --            50,364             6,981                 --
MCI Tower, Denver, CO                                          --            56,593             3,267                 --
Spectrum Center, Dallas, TX                                 2,000            41,096             8,009                 --
Ptarmigan Place, Denver, CO                                 3,145            28,815             5,437                 --
Stanford Corporate Centre, Dallas, TX                          --            16,493             6,507                 --
Barton Oaks Plaza One, Austin, TX                             900             8,207             2,032                 --
The Aberdeen, Dallas, TX                                      850            25,895               409                 --
12404 Park Central, Dallas, TX                              1,604            14,504             4,933                 --
Briargate Office and
   Research Center, Colorado Springs, CO                    2,000            18,044             1,603                 --
Hyatt Regency Beaver Creek, Avon, CO                       10,882            40,789            19,698                 --
Albuquerque Plaza, Albuquerque, NM                             --            36,667             2,689                 --
Hyatt Regency Albuquerque, Albuquerque, NM                     --            32,241             4,840                 --
The Woodlands Office Properties, Houston, TX(2)            12,007            35,865           (12,417)                --
Sonoma Mission Inn & Spa, Sonoma, CA              $        10,000   $        44,922   $        36,444    $            --
Bank One Tower, Austin, TX(3)                               3,879            35,431           (39,310)                --



<Caption>
                                                                     Buildings,
                                                                    Improvements,
                                                                     Furniture,
                                                                    Fixtures and                        Accumulated
                Description                           Land            Equipment          Total          Depreciation
-----------------------------------------------  ---------------   ---------------   ---------------   ---------------

<S>                                              <C>               <C>               <C>               <C>
The Citadel, Denver, CO                          $         1,803   $        22,041   $        23,844   $       (15,092)
Las Colinas Plaza, Irving, TX                              2,581             9,085            11,666            (4,739)
Carter Burgess Plaza, Fort Worth, TX                       1,375           105,780           107,155           (47,594)
The Crescent Office Towers, Dallas, TX                     6,723           237,253           243,976          (159,434)
MacArthur Center I & II, Irving, TX                          880            22,078            22,958            (8,354)
125. E. John Carpenter Freeway, Irving, TX                 2,200            51,647            53,847           (10,614)
Regency Plaza One, Denver, CO                                950            34,461            35,411            (7,139)
The Avallon, Austin, TX                                      475            11,930            12,405            (2,125)
Waterside Commons, Irving, TX                              3,650            27,580            31,230            (5,193)
Two Renaissance Square, Phoenix, AZ                           --            64,702            64,702           (14,627)
Liberty Plaza I & II, Dallas, TX                           1,650            16,494            18,144            (3,173)
6225 North 24th Street, Phoenix, AZ                          719             9,999            10,718            (2,891)
Denver Marriott City Center, Denver, CO                       --            57,345            57,345           (13,117)
MCI Tower, Denver, CO                                         --            59,860            59,860            (9,457)
Spectrum Center, Dallas, TX                                2,000            49,105            51,105           (11,103)
Ptarmigan Place, Denver, CO                                3,145            34,252            37,397            (8,294)
Stanford Corporate Centre, Dallas, TX                         --            23,000            23,000            (4,807)
Barton Oaks Plaza One, Austin, TX                            900            10,239            11,139            (2,343)
The Aberdeen, Dallas, TX                                     850            26,304            27,154            (6,357)
12404 Park Central, Dallas, TX                             1,604            19,437            21,041            (4,043)
Briargate Office and
   Research Center, Colorado Springs, CO                   2,000            19,647            21,647            (3,655)
Hyatt Regency Beaver Creek, Avon, CO                      10,882            60,487            71,369           (10,104)
Albuquerque Plaza, Albuquerque, NM                           101            39,255            39,356            (6,271)
Hyatt Regency Albuquerque, Albuquerque, NM                    --            37,081            37,081            (8,041)
The Woodlands Office Properties, Houston, TX(2)            8,735            26,720            35,455            (8,813)
Sonoma Mission Inn & Spa, Sonoma, CA             $        10,000   $        81,366   $        91,366   $       (10,734)
Bank One Tower, Austin, TX(3)                                 --                --                --                --






<Caption>
                                                                                    Life on Which
                                                                                   Depreciation in
                                                                                    Latest Income
                                                   Date of         Acquisition       Statement Is
                Description                      Construction          Date            Computed
----------------------------------------------- ---------------   ---------------   ---------------

<S>                                             <C>               <C>               <C>
The Citadel, Denver, CO                                    1987              1987          (1)
Las Colinas Plaza, Irving, TX                              1989              1989          (1)
Carter Burgess Plaza, Fort Worth, TX                       1982              1990          (1)
The Crescent Office Towers, Dallas, TX                     1985              1993          (1)
MacArthur Center I & II, Irving, TX                   1982/1986              1993          (1)
125. E. John Carpenter Freeway, Irving, TX                 1982              1994          (1)
Regency Plaza One, Denver, CO                              1985              1994          (1)
The Avallon, Austin, TX                                    1986              1994          (1)
Waterside Commons, Irving, TX                              1986              1994          (1)
Two Renaissance Square, Phoenix, AZ                        1990              1994          (1)
Liberty Plaza I & II, Dallas, TX                      1981/1986              1994          (1)
6225 North 24th Street, Phoenix, AZ                        1981              1995          (1)
Denver Marriott City Center, Denver, CO                    1982              1995          (1)
MCI Tower, Denver, CO                                      1982              1995          (1)
Spectrum Center, Dallas, TX                                1983              1995          (1)
Ptarmigan Place, Denver, CO                                1984              1995          (1)
Stanford Corporate Centre, Dallas, TX                      1985              1995          (1)
Barton Oaks Plaza One, Austin, TX                          1986              1995          (1)
The Aberdeen, Dallas, TX                                   1986              1995          (1)
12404 Park Central, Dallas, TX                             1987              1995          (1)
Briargate Office and
   Research Center, Colorado Springs, CO                   1988              1995          (1)
Hyatt Regency Beaver Creek, Avon, CO                       1989              1995          (1)
Albuquerque Plaza, Albuquerque, NM                         1990              1995          (1)
Hyatt Regency Albuquerque, Albuquerque, NM                 1990              1995          (1)
The Woodlands Office Properties, Houston, TX(2)       1980-1993              1995          (1)
Sonoma Mission Inn & Spa, Sonoma, CA                       1927              1996          (1)
Bank One Tower, Austin, TX(3)                              1974              1996          (1)
</Table>









                                      102

<PAGE>



<Table>
<Caption>
                                                                                           Costs
                                                                                        Capitalized       Impairment
                                                                                       Subsequent to      to Carrying
                                                            Initial Costs               Acquisition          Value
                                                  ---------------------------------   ---------------    ---------------
                                                                                      Land, Buildings,     Buildings,
                                                                                      Improvements,       Improvements,
                                                                                        Furniture,         Furniture,
                                                                     Buildings and     Fixtures and       Fixtures and
                Description                             Land          Improvements       Equipment          Equipment
-----------------------------------------------   ---------------   ---------------   ---------------    ---------------

<S>                                               <C>               <C>               <C>                <C>
Canyon Ranch, Tucson, AZ                                   14,500            43,038             5,842                 --
3333 Lee Parkway, Dallas, TX                                1,450            13,177             3,881                 --
Greenway I & IA, Richardson, TX                             1,701            15,312               523                 --
Three Westlake Park, Houston, TX                            2,920            26,512             3,114                 --
Frost Bank Plaza, Austin, TX                                   --            36,019             5,427                 --
301 Congress Avenue, Austin, TX                             2,000            41,735             7,716                 --
Chancellor Park, San Diego, CA                              8,028            23,430            (5,202)                --
Canyon Ranch, Lenox, MA                                     4,200            25,218            12,941                 --
Greenway Plaza Office Portfolio, Houston, TX               27,204           184,765           105,498                 --
The Woodlands Office Properties, Houston, TX                2,393             8,523                --                 --
1800 West Loop South, Houston, TX                           4,165            40,857             2,945                 --
55 Madison, Denver, CO                                      1,451            13,253             1,325                 --
Miami Center, Miami, FL                                    13,145           118,763             7,726                 --
44 Cook, Denver, CO                                         1,451            13,253             2,516                 --
Trammell Crow Center, Dallas, TX                           25,029           137,320            13,596                 --
Greenway II, Richardson, TX                                 1,823            16,421             1,105                 --
Fountain Place, Dallas, TX                                 10,364           103,212             8,825                 --
Behavioral Healthcare Facilities(4)                        89,000           301,269          (235,137)          (122,202)
Houston Center, Houston, TX                                52,504           224,041            15,366                 --
Ventana Country Inn, Big Sur, CA                            2,782            26,744             3,941                 --
5050 Quorum, Dallas, TX                                       898             8,243               846                 --
Addison Tower, Dallas, TX                                     830             7,701               663                 --
Cedar Springs Plaza, Dallas, TX                               700             6,549             1,281                 --
Palisades Central I, Dallas, TX                             1,300            11,797             1,513                 --
Palisades Central II, Dallas, TX                            2,100            19,176             5,803                 --
Reverchon Plaza, Dallas, TX                                 2,850            26,302             2,198                 --
Stemmons Place, Dallas, TX                                     --            37,537             3,686                 --
The Addison, Dallas, TX                                     1,990            17,998               790                 --
Sonoma Golf Course, Sonoma, CA                             14,956                --             2,139                 --
Austin Centre,  Austin, TX                                  1,494            36,475             2,675                 --
Omni Austin Hotel,  Austin, TX                              2,409            56,670             3,280                 --
Washington Harbour, Washington, D.C.(5)           $        16,100   $       146,438   $      (162,538)   $            --
Four Westlake Park,  Houston, TX(3)                         3,910            79,190           (79,190)                --
Post Oak Central, Houston, TX                              15,525           139,777             8,492                 --
Datran Center, Miami, FL                                       --            71,091             3,528                 --











<Caption>
                                                                       Buildings,
                                                                      Improvements,
                                                                       Furniture,
                                                                      Fixtures and                        Accumulated
                Description                             Land            Equipment          Total          Depreciation
-----------------------------------------------    ---------------   ---------------   ---------------   ---------------

<S>                                                <C>               <C>               <C>               <C>
Canyon Ranch, Tucson, AZ                                    17,846            45,534            63,380            (6,626)
3333 Lee Parkway, Dallas, TX                                 1,468            17,040            18,508            (3,330)
Greenway I & IA, Richardson, TX                              1,701            15,835            17,536            (2,045)
Three Westlake Park, Houston, TX                             2,920            29,626            32,546            (3,765)
Frost Bank Plaza, Austin, TX                                    --            41,446            41,446            (6,590)
301 Congress Avenue, Austin, TX                              2,000            49,451            51,451            (8,701)
Chancellor Park, San Diego, CA                               2,328            23,928            26,256            (3,542)
Canyon Ranch, Lenox, MA                                      4,200            38,159            42,359            (7,317)
Greenway Plaza Office Portfolio, Houston, TX                27,204           290,263           317,467           (52,175)
The Woodlands Office Properties, Houston, TX                 2,393             8,523            10,916            (1,805)
1800 West Loop South, Houston, TX                            4,165            43,802            47,967            (4,966)
55 Madison, Denver, CO                                       1,451            14,578            16,029            (2,229)
Miami Center, Miami, FL                                     13,145           126,489           139,634           (13,615)
44 Cook, Denver, CO                                          1,451            15,769            17,220            (2,723)
Trammell Crow Center, Dallas, TX                            25,029           150,916           175,945           (20,323)
Greenway II, Richardson, TX                                  1,823            17,526            19,349            (2,074)
Fountain Place, Dallas, TX                                  10,364           112,037           122,401           (12,580)
Behavioral Healthcare Facilities(4)                         12,785            20,145            32,930            (4,995)
Houston Center, Houston, TX                                 47,406           244,505           291,911           (28,034)
Ventana Country Inn, Big Sur, CA                             2,782            30,685            33,467            (4,270)
5050 Quorum, Dallas, TX                                        898             9,089             9,987            (1,202)
Addison Tower, Dallas, TX                                      830             8,364             9,194            (1,184)
Cedar Springs Plaza, Dallas, TX                                700             7,830             8,530            (1,309)
Palisades Central I, Dallas, TX                              1,300            13,310            14,610            (1,916)
Palisades Central II, Dallas, TX                             2,100            24,979            27,079            (3,532)
Reverchon Plaza, Dallas, TX                                  2,850            28,500            31,350            (3,760)
Stemmons Place, Dallas, TX                                      --            41,223            41,223            (5,486)
The Addison, Dallas, TX                                      1,990            18,788            20,778            (2,215)
Sonoma Golf Course, Sonoma, CA                              11,795             5,300            17,095            (1,063)
Austin Centre,  Austin, TX                                   1,494            39,150            40,644            (4,195)
Omni Austin Hotel,  Austin, TX                               2,409            59,950            62,359            (8,618)
Washington Harbour, Washington, D.C.(5)            $            --   $            --   $            --   $            --
Four Westlake Park,  Houston, TX(3)                          3,910                --             3,910                --
Post Oak Central, Houston, TX                               15,525           148,269           163,794           (14,478)
Datran Center, Miami, FL                                        --            74,619            74,619            (6,940)








<Caption>
                                                                                   Life on Which
                                                                                  Depreciation in
                                                                                   Latest Income
                                                  Date of         Acquisition       Statement Is
                Description                     Construction          Date            Computed
----------------------------------------------- --------------   ---------------   ---------------

<S>                                             <C>              <C>               <C>
Canyon Ranch, Tucson, AZ                             1980                   1996          (1)
3333 Lee Parkway, Dallas, TX                         1983                   1996          (1)
Greenway I & IA, Richardson, TX                      1983                   1996          (1)
Three Westlake Park, Houston, TX                     1983                   1996          (1)
Frost Bank Plaza, Austin, TX                         1984                   1996          (1)
301 Congress Avenue, Austin, TX                      1986                   1996          (1)
Chancellor Park, San Diego, CA                       1988                   1996          (1)
Canyon Ranch, Lenox, MA                              1989                   1996          (1)
Greenway Plaza Office Portfolio, Houston, TX       1969-1982                1996          (1)
The Woodlands Office Properties, Houston, TX       1995-1996                1996          (1)
1800 West Loop South, Houston, TX                    1982                   1997          (1)
55 Madison, Denver, CO                               1982                   1997          (1)
Miami Center, Miami, FL                              1983                   1997          (1)
44 Cook, Denver, CO                                  1984                   1997          (1)
Trammell Crow Center, Dallas, TX                     1984                   1997          (1)
Greenway II, Richardson, TX                          1985                   1997          (1)
Fountain Place, Dallas, TX                           1986                   1997          (1)
Behavioral Healthcare Facilities(4)                1850-1992                1997          (1)
Houston Center, Houston, TX                        1974-1983                1997          (1)
Ventana Country Inn, Big Sur, CA                   1975-1988                1997          (1)
5050 Quorum, Dallas, TX                            1980/1986                1997          (1)
Addison Tower, Dallas, TX                          1980/1986                1997          (1)
Cedar Springs Plaza, Dallas, TX                    1980/1986                1997          (1)
Palisades Central I, Dallas, TX                    1980/1986                1997          (1)
Palisades Central II, Dallas, TX                   1980/1986                1997          (1)
Reverchon Plaza, Dallas, TX                        1980/1986                1997          (1)
Stemmons Place, Dallas, TX                         1980/1986                1997          (1)
The Addison, Dallas, TX                            1980/1986                1997          (1)
Sonoma Golf Course, Sonoma, CA                       1929                   1998          (1)
Austin Centre,  Austin, TX                           1986                   1998          (1)
Omni Austin Hotel,  Austin, TX                       1986                   1998          (1)
Washington Harbour, Washington, D.C.(5)              1986                   1998          (1)
Four Westlake Park,  Houston, TX(3)                  1992                   1998          (1)
Post Oak Central, Houston, TX                      1974-1981                1998          (1)
Datran Center, Miami, FL                           1986-1992                1998          (1)
</Table>










                                      103
<PAGE>






<Table>
<Caption>
                                                                                           Costs
                                                                                        Capitalized       Impairment
                                                                                       Subsequent to      to Carrying
                                                            Initial Costs               Acquisition          Value
                                                  ---------------------------------   ---------------    ---------------
                                                                                      Land, Buildings,     Buildings,
                                                                                      Improvements,       Improvements,
                                                                                        Furniture,         Furniture,
                                                                     Buildings and     Fixtures and       Fixtures and
                Description                             Land          Improvements       Equipment          Equipment
-----------------------------------------------   ---------------   ---------------   ---------------    ---------------

<S>                                               <C>               <C>               <C>                <C>
Avallon Phase II,  Austin, TX                               1,102                --            23,365                 --
Plaza Park Garage                                           2,032            14,125               570                 --
Washington Harbour Phase II, Washington, D.C               15,279               411               283                 --
5 Houston Center, Houston, TX                               7,598                --            (7,598)                --
Houston Center Land, Houston, TX                           14,642                --                22                 --
Crescent Real Estate Equities L.P.                             --                --            29,648                 --
Other                                                      23,270             2,874            17,059                 --
Land held for development or sale, Dallas, TX              27,288                --            (7,474)                --

                                                  ---------------   ---------------   ---------------    ---------------
Total                                             $       492,475   $     3,031,622   $        26,862    $      (122,202)
                                                  ===============   ===============   ===============    ===============





<Caption>
                                                                     Buildings,
                                                                    Improvements,
                                                                     Furniture,
                                                                    Fixtures and                        Accumulated
                Description                           Land            Equipment          Total          Depreciation
-----------------------------------------------  ---------------   ---------------   ---------------   ---------------

<S>                                              <C>               <C>               <C>               <C>
Avallon Phase II,  Austin, TX                              1,236            23,231            24,467            (2,055)
Plaza Park Garage                                          2,032            14,695            16,727            (1,020)
Washington Harbour Phase II, Washington, D.C              15,322               651            15,973                --
5 Houston Center, Houston, TX                                 --                --                --                --
Houston Center Land, Houston, TX                          14,515               149            14,664               (18)
Crescent Real Estate Equities L.P.                            --            29,648            29,648            (9,202)
Other                                                     29,608            13,595            43,203              (822)
Land held for development or sale, Dallas, TX             19,670               144            19,814                --

                                                 ---------------   ---------------   ---------------   ---------------
Total                                            $       373,868   $     3,054,889   $     3,428,757   $      (648,834)
                                                 ===============   ===============   ===============   ===============







<Caption>
                                                                                      Life on Which
                                                                                     Depreciation in
                                                                                      Latest Income
                                                     Date of         Acquisition       Statement Is
                Description                        Construction          Date            Computed
-----------------------------------------------   ---------------   ---------------   ---------------

<S>                                               <C>               <C>               <C>
Avallon Phase II,  Austin, TX                                1997                --          (1)
Plaza Park Garage                                            1998                --          (1)
Washington Harbour Phase II, Washington, D.C                 1998                --          (1)
5 Houston Center, Houston, TX                                  --                --          (1)
Houston Center Land, Houston, TX                               --                --          (1)
Crescent Real Estate Equities L.P.                             --                --          (1)
Other                                                          --                --          (1)
Land held for development or sale, Dallas, TX                  --                --          --


Total
</Table>


----------
(1)  Depreciation of the real estate assets is calculated over the following
     estimated useful lives using the straight-line method:

     Building and improvements            5 to 40 years
     Tenant improvements                  Terms of leases
     Furniture, fixtures, and equipment   3 to 5 years


(2)  During the year ended December 31, 2001, The Woodlands Office Equities -
     '95 Limited, owned by the Operating Partnership and the Woodlands
     Commercial Properties Company, L.P., sold three of The Woodlands Office
     Properties.

(3)  On July 30, 2001, the Company entered into joint venture arrangements with
     GE for these Office Properties. The gross amount at which land is carried
     for Four Westlake Park includes $3,910 of land, which was not joint
     ventured.

(4)  Depreciation on behavioral healthcare properties held for sale ceased from
     11/11/99 through 12/31/01 (the period over which these properties were held
     for sale).

(5)  These Office Properties were sold on September 18, 2001.


                                      104
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

Not Applicable.

                                    PART III

         Certain information Part III requires is omitted from the Report. The
Registrant will file a definitive proxy statement with the SEC pursuant to
Regulation 14A (the "Proxy Statement") not later than 120 days after the end of
the fiscal year covered by this Report, and certain information to be included
therein is incorporated herein by reference. Only those sections of the Proxy
Statement which specifically address the items set forth herein are incorporated
by reference. Such incorporation does not include the Compensation Committee
Report or the Performance Graph included in the Proxy Statement.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER OF THE
         REGISTRANT

         The information this Item requires is incorporated by reference to the
Company's Proxy Statement to be filed with the SEC for its annual shareholders'
meeting to be held in June 2002.


                                      105
<PAGE>


ITEM 11. EXECUTIVE COMPENSATION

         The information this Item requires is incorporated by reference to the
Company's Proxy Statement to be filed with the SEC for its annual shareholders'
meeting to be held in June 2002.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information this Item requires is incorporated by reference to the
Company's Proxy Statement to be filed with the SEC for its annual shareholders'
meeting to be held in June 2002.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information this Item requires is incorporated by reference to the
Company's Proxy Statement to be filed with the SEC for its annual shareholders'
meeting to be held in June 2002.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1)   Financial Statements

         Report of Independent Public Accountants

         Crescent Real Estate Equities Limited Partnership Consolidated Balance
         Sheets at December 31, 2001 and 2000.

         Crescent Real Estate Equities Limited Partnership Consolidated
         Statements of Operations for the years ended December 31, 2001, 2000
         and 1999.

         Crescent Real Estate Equities Limited Partnership Consolidated
         Statements of Partners' Capital for the years ended December 31, 2001,
         2000 and 1999.

         Crescent Real Estate Equities Limited Partnership Consolidated
         Statements of Cash Flows for the years ended December 31, 2001, 2000
         and 1999.

         Crescent Real Estate Equities Limited Partnership Notes to Financial
         Statements.

(a)(2)   Financial Statement Schedules

         Schedule III - Crescent Real Estate Equities Limited Partnership
Consolidated Real Estate Investments and Accumulated Depreciation at December
31, 2001.

         All other schedules have been omitted either because they are not
         applicable or because the required information has been disclosed in
         the Financial Statements and related notes included in the consolidated
         and combined statements.



                                      106
<PAGE>


<Table>
<Caption>
       EXHIBIT
        NUMBER    DESCRIPTION OF EXHIBIT
       -------    ----------------------
<S>               <C>
         3.01     Second Amended and Restated Agreement of Limited Partnership
                  of the Registrant dated November 1, 1997, as amended (filed as
                  Exhibit No. 10.01 to the Annual Report on Form 10-K for the
                  fiscal year ended December 31, 2001 (the "Company 2001 10-K")
                  of Crescent Real Estate Equities Company (the "Company") and
                  incorporated herein by reference)

         4.01     Indenture, dated as of September 22, 1997, between the
                  Registrant and State Street Bank and Trust Company of
                  Missouri, N.A. (filed as Exhibit No. 4.01 to the Registration
                  Statement on Form S-4 (File No. 333-42293) of the Registrant
                  (the "Form S-4") and incorporated herein by reference)

         4.02     Restated Declaration of Trust of the Company, as amended
                  (filed as Exhibit No. 3.01 to the Quarterly Report on Form
                  10-Q for the quarter ended September 30, 2001 of the Company
                  and incorporated herein by reference)

         4.03     Amended and Restated Bylaws of the Company, as amended (filed
                  as Exhibit No. 3.02 to the Quarterly Report on Form 10-Q for
                  the quarter ended September 30, 1998 of the Company and
                  incorporated herein by reference)

         4.04     6-5/8% Note due 2002 (filed as Exhibit No. 4.07 to the
                  Quarterly Report on Form 10-Q for the quarter ended June
                  30, 1998 (the "Company 1998 2Q 10-Q") of the Company and
                  incorporated herein by reference)

         4.05     7-1/8% Note due 2007 (filed as Exhibit No. 4.08 to the Company
                  1998 2Q 10-Q and incorporated herein by reference)

         4*       Pursuant to Regulation S-K Item 601 (b) (4) (iii), the
                  Registrant by this filing agrees, upon request, to furnish to
                  the SEC a copy of other instruments defining the rights of
                  holders of long-term debt of the Registrant

         10.01    Noncompetition Agreement of Richard E. Rainwater, as assigned
                  to the Registrant on May 5, 1994 (filed as Exhibit No. 10.02
                  to the Annual Report on Form 10-K for the fiscal year ended
                  December 31, 1997 (the "Company 1997 10-K") of the Company and
                  incorporated herein by reference)

         10.02    Noncompetition Agreement of John C. Goff, as assigned to the
                  Registrant on May 5, 1994 (filed as Exhibit No. 10.03 to
                  Company 1997 10-K and incorporated herein by reference)

         10.03    Employment Agreement with John C. Goff, as assigned to the
                  Registrant on May 5, 1994, and as further amended (filed as
                  Exhibit No. 10.04 to the Annual Report on Form 10-K for the
                  fiscal year ended December 31, 1999 (the "Company 1999 10-K")
                  of the Company and incorporated herein by reference)
</Table>



                                      107
<PAGE>



<Table>
<Caption>
       EXHIBIT
        NUMBER    DESCRIPTION OF EXHIBIT
       -------    ----------------------
<S>               <C>

         10.04    Eighth Amendment to the Employment Agreement of John C. Goff,
                  dated as of April 10, 2001, effective as of January 1, 2001
                  (filed as Exhibit No. 10.03 to the Quarterly Report on Form
                  10-Q for the quarter ended June 30, 2001 (the "Company 2001 2Q
                  10-Q") of the Company and incorporated herein by reference)

         10.05    Employment Agreement of Jerry R. Crenshaw, Jr., dated as of
                  December 14, 1998 (filed as Exhibit No. 10.08 to the Company
                  1999 10-K and incorporated herein by reference)

         10.06    Form of Officers' and Trust Managers' Indemnification
                  Agreement as entered into between the Company and each of its
                  executive officers and trust managers (filed as Exhibit No.
                  10.07 to the Form S-4 and incorporated herein by reference)

         10.07    Crescent Real Estate Equities Company 1994 Stock Incentive
                  Plan (filed as Exhibit No. 10.07 to the Registration Statement
                  on Form S-11 (File No. 33-75188) (the "Form S-11") of the
                  Company and incorporated herein by reference)

         10.08    Third Amended and Restated 1995 Crescent Real Estate Equities
                  Company Stock Incentive Plan (filed as Exhibit No. 10.01 to
                  the Company 2001 2Q 10-Q and incorporated herein by reference)

         10.09    Amendment dated as of November 4, 1999 to the Crescent Real
                  Estate Equities Company 1994 Stock Incentive Plan and the
                  Second Amended and Restated 1995 Crescent Real Estate Equities
                  Company Stock Incentive Plan (filed as Exhibit No. 10.10 to
                  the Annual Report on Form 10-K for the fiscal year ended
                  December 31, 2000 (the "Company 2000 10-K") of the Company and
                  incorporated herein by reference)

         10.10    Amendment dated as of November 1, 2001 to the Crescent Real
                  Estate Equities Company 1994 Stock Incentive Plan and the
                  Third Amended and Restated 1995 Crescent Real Estate Equities
                  Company Stock Incentive Plan (filed as Exhibit No. 10.11 to
                  the Company 2001 10-K and incorporated herein by reference)

         10.11    Amended and Restated 1995 Crescent Real Estate Equities
                  Limited Partnership Unit Incentive Plan (filed as Exhibit No.
                  99.01 to the Registration Statement on Form S-8 (File No.
                  333-3452) of the Company and incorporated herein by reference)

         10.12    1996 Crescent Real Estate Equities Limited Partnership Unit
                  Incentive Plan, as amended (filed as Exhibit No. 10.14 to the
                  Company 1999 10-K and incorporated herein by reference)

         10.13    Amended dated as of November 5, 1999 to the 1996 Crescent Real
                  Estate Equities Limited Partnership Unit Incentive Plan (filed
                  as Exhibit No. 10.13 to the Company 2000 10-K and incorporated
                  herein by reference)

         10.14    Crescent Real Estate Equities, Ltd. Dividend Incentive Unit
                  Plan (filed as Exhibit No. 10.14 to the Company 2000 10-K and
                  incorporated herein by reference)

         10.15    Annual Incentive Compensation Plan for select Employees of
                  Crescent Real Estate Equities, Ltd. (filed as Exhibit No.
                  10.15 to the Company 2000 10-K and incorporated herein by
                  reference)
</Table>



                                      108
<PAGE>



<Table>
<Caption>
       EXHIBIT
        NUMBER    DESCRIPTION OF EXHIBIT
       -------    ----------------------
<S>               <C>
         10.16    Crescent Real Estate Equities, Ltd. First Amended and Restated
                  401(k) Plan, as amended (filed as Exhibit No. 10.12 to the
                  Annual Report on Form 10-K for the fiscal year ended December
                  31, 1998 of the Company and incorporated herein by reference)

         10.17    Form of Registration Rights, Look-up and Pledge Agreement
                  (filed as Exhibit No. 10.05 to the Form S-11 and incorporated
                  herein by reference)

         21.01    List of Subsidiaries (filed herewith)
</Table>

(b)      Reports on Form 8-K

         None

(c)      Exhibits

         See Item 14(a)(3) above.


                                      109
<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 15th day of
March, 2002.

                              CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
                                               (Registrant)

                              By:  CRESCENT REAL ESTATE EQUITIES, LTD.
                                      its General Partner

                              By   /s/   John C. Goff
                                   ---------------------------------------------
                                         John C. Goff
                                         Chief Executive Officer and President


                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacity and on the dates indicated.


<Table>
<Caption>
                SIGNATURE                                       TITLE                               DATE
                ---------                                       -----                               ----
<S>                                     <C>                                                       <C>
     /s/   John C. Goff                 Sole Director, Chief Executive Officer and                3/15/02
     -------------------------------    President of Crescent Real Estate Equities,
           John C. Goff                 Ltd. (Principal Executive Officer)

     /s/   Jerry R. Crenshaw Jr.        Senior Vice President and Chief Financial                 3/15/02
     -------------------------------    Officer  of Crescent Real Estate Equities, Ltd.
           Jerry R. Crenshaw Jr.        (Principal Accounting and Financial Officer)
</Table>

              SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
             FILED PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT BY
                REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
                   PURSUANT TO SECTION 12 OF THE EXCHANGE ACT

         No annual report to security holders covering the Registrant's last
fiscal year or proxy statement, form of proxy or other proxy soliciting material
with respect to any annual or other meeting of security holders has been sent to
security holders or is to be furnished to security holders subsequent to the
filing of this annual report on Form 10-K.



                                      110
<PAGE>

                                INDEX TO EXHIBIT

<Table>
<Caption>
       EXHIBIT
        NUMBER    DESCRIPTION OF EXHIBIT
       -------    ----------------------
<S>               <C>
         3.01     Second Amended and Restated Agreement of Limited Partnership
                  of the Registrant dated November 1, 1997, as amended (filed as
                  Exhibit No. 10.01 to the Annual Report on Form 10-K for the
                  fiscal year ended December 31, 2001 (the "Company 2001 10-K")
                  of Crescent Real Estate Equities Company (the "Company") and
                  incorporated herein by reference)

         4.01     Indenture, dated as of September 22, 1997, between the
                  Registrant and State Street Bank and Trust Company of
                  Missouri, N.A. (filed as Exhibit No. 4.01 to the Registration
                  Statement on Form S-4 (File No. 333-42293) of the Registrant
                  (the "Form S-4") and incorporated herein by reference)

         4.02     Restated Declaration of Trust of the Company, as amended
                  (filed as Exhibit No. 3.01 to the Quarterly Report on Form
                  10-Q for the quarter ended September 30, 2001 of the Company
                  and incorporated herein by reference)

         4.03     Amended and Restated Bylaws of the Company, as amended (filed
                  as Exhibit No. 3.02 to the Quarterly Report on Form 10-Q for
                  the quarter ended September 30, 1998 of the Company and
                  incorporated herein by reference)

         4.04     6-5/8% Note due 2002 (filed as Exhibit No. 4.07 to the
                  Quarterly Report on Form 10-Q for the quarter ended June
                  30, 1998 (the "Company 1998 2Q 10-Q") of the Company and
                  incorporated herein by reference)

         4.05     7-1/8% Note due 2007 (filed as Exhibit No. 4.08 to the Company
                  1998 2Q 10- Q and incorporated herein by reference)

         4*       Pursuant to Regulation S-K Item 601 (b) (4) (iii), the
                  Registrant by this filing agrees, upon request, to furnish to
                  the SEC a copy of other instruments defining the rights of
                  holders of long-term debt of the Registrant

         10.01    Noncompetition Agreement of Richard E. Rainwater, as assigned
                  to the Registrant on May 5, 1994 (filed as Exhibit No. 10.02
                  to the Annual Report on Form 10-K for the fiscal year ended
                  December 31, 1997 (the "Company 1997 10-K") of the Company and
                  incorporated herein by reference)

         10.02    Noncompetition Agreement of John C. Goff, as assigned to the
                  Registrant on May 5, 1994 (filed as Exhibit No. 10.03 to
                  Company 1997 10-K and incorporated herein by reference)

         10.03    Employment Agreement with John C. Goff, as assigned to the
                  Registrant on May 5, 1994, and as further amended (filed as
                  Exhibit No. 10.04 to the Annual Report on Form 10-K for the
                  fiscal year ended December 31, 1999 (the "Company 1999 10-K")
                  of the Company and incorporated herein by reference)
</Table>

<PAGE>



<Table>
<Caption>
       EXHIBIT
        NUMBER    DESCRIPTION OF EXHIBIT
       -------    ----------------------
<S>               <C>

         10.04    Eighth Amendment to the Employment Agreement of John C. Goff,
                  dated as of April 10, 2001, effective as of January 1, 2001
                  (filed as Exhibit No. 10.03 to the Quarterly Report on Form
                  10-Q for the quarter ended June 30, 2001 (the "Company 2001
                  2Q 10-Q") of the Company and incorporated herein by reference)

         10.05    Employment Agreement of Jerry R. Crenshaw, Jr., dated as of
                  December 14, 1998 (filed as Exhibit No. 10.08 to the Company
                  1999 10-K and incorporated herein by reference)

         10.06    Form of Officers' and Trust Managers' Indemnification
                  Agreement as entered into between the Company and each of its
                  executive officers and trust managers (filed as Exhibit No.
                  10.07 to the Form S-4 and incorporated herein by reference)

         10.07    Crescent Real Estate Equities Company 1994 Stock Incentive
                  Plan (filed as Exhibit No. 10.07 to the Registration Statement
                  on Form S-11 (File No. 33-75188) (the "Form S-11") of the
                  Company and incorporated herein by reference)

         10.08    Third Amended and Restated 1995 Crescent Real Estate Equities
                  Company Stock Incentive Plan (filed as Exhibit No. 10.01 to
                  the Company 2001 2Q 10-Q and incorporated herein by reference)

         10.09    Amendment dated as of November 4, 1999 to the Crescent Real
                  Estate Equities Company 1994 Stock Incentive Plan and the
                  Second Amended and Restated 1995 Crescent Real Estate Equities
                  Company Stock Incentive Plan (filed as Exhibit No. 10.10 to
                  the Annual Report on Form 10-K for the fiscal year ended
                  December 31, 2000 (the "Company 2000 10-K") of the Company and
                  incorporated herein by reference)

         10.10    Amendment dated as of November 1, 2001 to the Crescent Real
                  Estate Equities Company 1994 Stock Incentive Plan and the
                  Third Amended and Restated 1995 Crescent Real Estate Equities
                  Company Stock Incentive Plan (filed as Exhibit No. 10.11 to
                  the Company 2001 10-K and incorporated herein by reference)

         10.11    Amended and Restated 1995 Crescent Real Estate Equities
                  Limited Partnership Unit Incentive Plan (filed as Exhibit No.
                  99.01 to the Registration Statement on Form S-8 (File No.
                  333-3452) of the Company and incorporated herein by reference)

         10.12    1996 Crescent Real Estate Equities Limited Partnership Unit
                  Incentive Plan, as amended (filed as Exhibit No. 10.14 to the
                  Company 1999 10-K and incorporated herein by reference)

         10.13    Amended dated as of November 5, 1999 to the 1996 Crescent Real
                  Estate Equities Limited Partnership Unit Incentive Plan (filed
                  as Exhibit No. 10.13 to the Company 2000 10-K and incorporated
                  herein by reference)

         10.14    Crescent Real Estate Equities, Ltd. Dividend Incentive Unit
                  Plan (filed as Exhibit No. 10.14 to the Company 2000 10-K and
                  incorporated herein by reference)

         10.15    Annual Incentive Compensation Plan for select Employees of
                  Crescent Real Estate Equities, Ltd. (filed as Exhibit No.
                  10.15 to the Company 2000 10-K and incorporated herein by
                  reference)
</Table>

<PAGE>



<Table>
<Caption>
       EXHIBIT
        NUMBER    DESCRIPTION OF EXHIBIT
       -------    ----------------------
<S>               <C>
         10.16    Crescent Real Estate Equities, Ltd. First Amended and Restated
                  401(k) Plan, as amended (filed as Exhibit No. 10.12 to the
                  Annual Report on Form 10-K for the fiscal year ended December
                  31, 1998 of the Company and incorporated herein by reference)

         10.17    Form of Registration Rights, Look-up and Pledge Agreement
                  (filed as Exhibit No. 10.05 to the Form S-11 and incorporated
                  herein by reference)

         21.01    List of Subsidiaries (filed herewith)
</Table>