Document:

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                                                                     EXHIBIT 4.1

                            STATEMENT OF DESIGNATION
                                       OF
             6-3/4% SERIES A CONVERTIBLE CUMULATIVE PREFERRED SHARES
                                       OF
                      CRESCENT REAL ESTATE EQUITIES COMPANY

         The undersigned, the Chief Executive Officer of Crescent Real Estate
Equities Company, a real estate investment trust organized and existing under
the Texas Real Estate Investment Trust Act, as amended (the "Company"),
certifies that pursuant to the authority granted to and vested in the Board of
Trust Managers of the Company by the provisions of the Restated Declaration of
Trust of the Company, the Board of Trust Managers, acting through an authorized
committee thereof, has adopted the following resolution increasing the number of
securities of the Company designated as Series A preferred shares.

         WHEREAS, in February 1998 the Company designated and authorized the
issuance of 9,200,000 6-3/4% Series A Convertible Cumulative Preferred Shares of
beneficial interest, $.01 par value per share (Liquidation Preference $25.00 Per
Share) (the "Series A Preferred Shares").

         RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Trust Managers of the Company by the provisions of the
Restated Declaration of Trust of the Company, the Board of Trust Managers,
acting through an authorized committee thereof, hereby designates an additional
2,800,000 Series A Preferred Shares, and authorizes the issuance thereof, and
hereby fixes the designation and number thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
such shares, and the qualifications, limitations or restrictions thereto as
follows:

         A. Certain Definitions.

                  Unless the context otherwise requires, the terms defined in
this Paragraph A shall have, for all purposes of this Statement of Designation,
the meanings herein specified (with terms defined in the singular having
comparable meanings when used in the plural).

                  "Board of Trust Managers" shall mean the Board of Trust
Managers of the Company or any committee authorized by such Board of Trust
Managers to perform any of its responsibilities with respect to the Series A
Preferred Shares.

                  "Business Day" shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
in New York City, New York or Dallas, Texas are authorized or required by law,
regulation or executive order to close.

                  "Code" shall mean the Internal Revenue Code of 1986, as
amended, from time to time.

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                  "Common Shares" shall mean the common shares of beneficial
interest, $.01 par value per share, of the Company.

                  "Constituent Person" shall have the meaning set forth in
subsection (e) of subparagraph (7) of paragraph B.

                  "Conversion Price" shall mean the conversion price per Common
Share for which the Series A Preferred Shares are convertible, as such
Conversion Price may be adjusted pursuant to subsection (d) of subparagraph (7)
hereof. The initial conversion price per Common Share shall be $40.86
(equivalent to a conversion rate of .6119 Common Shares for each Series A
Preferred Share).

                  "Current Market Price" of publicly traded common shares or any
other class of shares of beneficial interest or other security of the Company or
any other issuer for any day shall mean the last reported sales price, regular
way, on such day or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on the New York Stock Exchange ("NYSE") or, if such security is not
listed or admitted for trading on the NYSE, on the principal national securities
exchange on which such security is listed or admitted for trading or, if not
listed or admitted for trading on any national securities exchange, on the
Nasdaq National Market or, if such security is not quoted on such Nasdaq
National Market, the average of the closing bid and asked prices on such day in
the over-the-counter market as reported by Nasdaq or, if bid and asked prices
for such security on such day shall not have been reported through Nasdaq, the
average of the bid and asked prices on such day as furnished by any NYSE member
firm regularly making a market in such security and selected for such purpose by
the Chief Executive Officer of the Company or the Board of Trust Managers.

                  "Declaration of Trust" shall mean the Company's Restated
Declaration of Trust, as the same may be amended from time to time.

                  "Distribution Payment Date" shall have the meaning set forth
in subparagraph (3) of paragraph B.

                  "Distribution Period" shall have the meaning set forth in
subparagraph (3) of paragraph B.

                  "Fair Market Value" shall mean the average of the daily
Current Market Prices of a Common Share during the five (5) consecutive Trading
Days selected by the Company commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in question and the day before
the "ex date" with respect to the issuance or distribution requiring such
computation. The term "ex date" when used with respect to any issuance or
distribution, means the first day on which the Common Shares trade regular way,
without the right to receive such issuance or distribution, on the exchange or
in the market, as the case may be, used to determine that day's Current Market
Price.

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                  "Issue Date" shall mean the first date on which Series A
Preferred Shares are issued and sold.

                  "Junior Shares" shall have the meaning set forth in
subparagraph (2) of paragraph B.

                  "Non-Electing Share" shall have the meaning set forth in
subsection (e) of subparagraph (7) of paragraph B.

                  "Parity Shares" shall have the meaning set forth in
subparagraph (2) of paragraph B.

                  "Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity, and also includes a group as that
term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended; but does not include an underwriter which participates in a
public offering of the Series A Preferred Shares provided that the ownership of
Series A Preferred Shares by such Underwriter would not result in the Company
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Company failing to qualify as a REIT.

                  "Preferred Shares" shall mean preferred shares of beneficial
interest, $.01 par value per share, of the Company.

                  "Record Date" shall have the meaning set forth in subparagraph
(3) of paragraph B.

                  "REIT" shall mean a real estate investment trust under Section
856 of the Code.

                  "Securities" shall have the meaning set forth in subsection
(d)(iii) of subparagraph (7) of paragraph B.

                  "Series A Preferred Shares" shall mean the Company's 6-3/4%
Series A Convertible Cumulative Preferred Shares of beneficial interest, $.01
par value per share, liquidation value $25.00 per share.

                  "Series A Preferred Shares Redemption Date" shall have the
meaning set forth in subsection (d) of subparagraph (5) of paragraph B hereof.

                  "set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Company in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of distributions by the Board of Trust Managers, the
allocation of funds to be so paid on any series or class of shares of beneficial
interest; provided, however, that if any funds for any class or series of Junior
Shares or any class

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or series of shares of beneficial interest ranking on a parity with the Series A
Preferred Shares as to the payment of distributions are placed in a separate
account of the Company or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Series A Preferred
Shares shall mean placing such funds in a separate account or delivering such
funds to a disbursing, paying or other similar agent.

                  "Trading Day" shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not listed or
admitted for trading on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted, or if not listed or admitted
for trading on any national securities exchange, on the Nasdaq National Market,
or if such securities are not quoted on such Nasdaq National Market, in the
applicable securities market in which the securities are traded.

                  "Transaction" shall have the meaning set forth in subsection
(e) of subparagraph (7) of paragraph B hereof.

                  "Transfer Agent" means EquiServe Trust Company, N.A. or such
other agent or agents of the Company as may be designated by the Board of Trust
Managers or their designee as the transfer agent for the Series A Preferred
Shares.

         B. Series A Preferred Shares.

                  (1) Number. The maximum additional number of Series A
Preferred Shares shall be 2,800,000.

                  (2) Relative Seniority. In respect of rights to receive
distributions and to participate in distributions or payments in the event of
any liquidation, dissolution or winding up of the Company, the Series A
Preferred Shares shall rank pari passu with any other preferred shares of
beneficial interest of the Company (the "Parity Shares"), and will rank senior
to the Common Shares and any other class or series of shares of beneficial
interest of the Company ranking, as to distributions and upon liquidation,
junior (collectively, the "Junior Shares") to the Parity Shares.

                  (3) Distributions. The holders of the then outstanding Series
A Preferred Shares shall be entitled to receive, when and as declared by the
Board of Trust Managers out of any funds legally available therefor, cumulative
cash distributions at the rate of $1.6875 per share per year, payable in equal
amounts of $.421875 per share quarterly in cash on the 15th day, or if not a
Business Day, the next succeeding Business Day, of February, May, August and
November in each year, beginning May 15, 1998 (each such day being hereinafter
called a "Distribution Payment Date" and each period ending on a Distribution
Payment Date being hereinafter called a "Distribution Period"), with respect to
each Distribution Period, to shareholders of record at the close of business on
such date as shall be fixed by the Board of Trust Managers at the time of
declaration of the distribution (the "Record Date"), which shall not be less
than 10 nor more than 30 days preceding the Distribution Payment Date. The
amount of any distribution payable for the initial Distribution Period and for
any other Distribution Period shorter than a full Distribution Period shall be
prorated and computed on the basis of a 360-day year of twelve 30-day months.

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Distributions on each Series A Preferred Share issued hereunder shall accrue and
be cumulative from and including the first day of the Distribution Period in
which such share was issued, whether or not (i) distributions on such shares are
earned or declared or (ii) on any Distribution Payment Date there shall be funds
legally available for the payment of distributions. Distributions paid on the
Series A Preferred Shares in an amount less than the total amount of such
distributions at the time accrued and payable on such shares shall be allocated
pro rata on a per share basis among all such shares at the time outstanding.
Distributions on account of arrears for any past distribution periods may be
declared and paid at such time, if any, as may be fixed by the Board of Trust
Managers, and shall first be credited against the earliest accrued but unpaid
distributions due and payable with respect to such Series A Preferred Shares.

                  The amount of any distributions accrued on any Series A
Preferred Shares at any Distribution Payment Date shall be the amount of any
unpaid distributions accumulated thereon through and during such Distribution
Period, to and including such Distribution Payment Date, whether or not earned
or declared, and the amount of distributions accrued on any Series A Preferred
Shares at any date other than a Distribution Payment Date shall be equal to the
sum of the amount of any unpaid distributions accumulated thereon, to and
including the last preceding Distribution Payment Date, whether or not earned or
declared, plus an amount calculated on the basis of the annual distribution rate
of $1.6875 for the period after such last preceding Distribution Payment Date to
and including the date as of which the calculation is made, based on a 360-day
year of twelve 30-day months.

                  If any Series A Preferred Shares are outstanding, no full
distributions shall be declared or paid or set apart for payment on any other
series of Parity Shares or any other class or series of Junior Shares for any
period unless full cumulative distributions have been declared and paid or
declared and a sum sufficient for the payment thereof has been set apart for
such payment on the Series A Preferred Shares for all past distribution periods
and the then current distribution period. If distributions are not paid in full,
or not declared in full and a sum sufficient for such full payment is not set
apart for the payment thereof, upon the Series A Preferred Shares and any class
or series of Parity Shares, all distributions declared upon Series A Preferred
Shares and upon any other class or series of Parity Shares shall be paid or
declared pro rata so that in all cases the amount of distributions paid or
declared per share on the Series A Preferred Shares and Parity Shares shall bear
to each other the same ratio that accumulated distributions per share, including
distributions accrued or in arrears, if any, on the Series A Preferred Shares
and Parity Shares bear to each other. Except as provided in the preceding
sentence, unless full cumulative distributions on the Series A Preferred Shares
have been paid or declared and a sum sufficient for such full payment set apart
for payment for all past Distribution Periods and the then current Distribution
Period, no distributions (other than distributions in shares of Common Shares or
in any other Junior Shares) shall be declared or paid or set apart for payment
or other distribution upon the Company's Common Shares, or, except as provided
above, on any other Junior Shares or Parity Shares, nor shall any Common Shares
or any other Junior Shares or Parity Shares be redeemed, purchased or otherwise
acquired for any consideration (or any payment made to or available for a
sinking fund for the redemption of any such shares) by the Company or any
subsidiary of the Company (except by conversion into or exchange for Junior
Shares). Holders of the Series A Preferred Shares shall not be entitled to any
distributions, whether payable in cash,

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property or shares of beneficial interest, in excess of full accrued and
cumulative distributions as herein provided. No interest or sum of money in lieu
of interest shall be payable in respect of any distribution payment or payments
on the Series A Preferred Shares that may be in arrears.

                  Except as provided in this Statement of Designation, the
Series A Preferred Shares shall not be entitled to participate in the earnings
or assets of the Company.

                  (4) Liquidation Preference.

                           (a)      Upon the voluntary or involuntary
                                    dissolution, liquidation or winding up of
                                    the Company, the holders of the Series A
                                    Preferred Shares then outstanding shall be
                                    entitled to receive and to be paid out of
                                    the assets of the Company legally available
                                    for distribution to its shareholders, before
                                    any payment or distribution shall be made on
                                    any Junior Shares, the amount of $25.00 per
                                    Series A Preferred Share, plus an amount
                                    equal to distributions accrued and unpaid
                                    thereon to the date fixed for such
                                    dissolution, liquidation or winding up of
                                    the Company.

                           (b)      After the payment to the holders of the
                                    Series A Preferred Shares of the full
                                    preferential amounts provided for in this
                                    subparagraph (4), the holders of the Series
                                    A Preferred Shares as such shall have no
                                    right or claim to any of the remaining
                                    assets of the Company.

                           (c)      If, upon any voluntary or involuntary
                                    dissolution, liquidation, or winding up of
                                    the Company, the amounts payable with
                                    respect to the preference value of the
                                    Series A Preferred Shares and any Parity
                                    Shares are not paid in full, the holders of
                                    the Series A Preferred Shares and of such
                                    Parity Shares will share ratably in any such
                                    distribution of assets of the Company in
                                    proportion to the full respective
                                    preferential amounts provided for in this
                                    subparagraph (4) to which they are entitled.

                           (d)      Neither the sale of all or substantially all
                                    the property or business of the Company, nor
                                    the merger or consolidation of the Company
                                    into or with any other entity or the merger
                                    or consolidation of any other entity into or
                                    with the Company, shall be deemed to be a
                                    dissolution, liquidation or winding up,
                                    voluntary or involuntary, of the Company for
                                    the purposes of this subparagraph (4).

                  (5) Redemption at the Option of the Company.

                           (a)      Subject to subsections (b) and (h) of this
                                    subparagraph (5), the Series A Preferred
                                    Shares shall not be redeemable by the
                                    Company

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                                    prior to February 18, 2003. On and after
                                    February 18, 2003, the Company, at its
                                    option, may redeem the Series A Preferred
                                    Shares, in whole or from time to time in
                                    part, as set forth herein, at a redemption
                                    price of $25.00 per Series A Preferred
                                    Share, subject to the provisions below.

                           (b)      Prior to February 18, 2003, the Series A
                                    Preferred Shares may be redeemed at the
                                    option of the Company, in whole or from time
                                    to time in part, at a redemption price of
                                    $25.00 per Series A Preferred Share, if the
                                    Board of Trust Managers determines that such
                                    a redemption is necessary or advisable to
                                    preserve the status of the Company as a REIT
                                    for federal income tax purposes, subject to
                                    the provisions below.

                           (c)      If fewer than all of the outstanding Series
                                    A Preferred Shares are to be redeemed, the
                                    shares to be redeemed will be determined pro
                                    rata or by lot as may be determined by the
                                    Board of Trust Managers or in such other
                                    manner as prescribed by the Company's Board
                                    of Trust Managers in its sole discretion to
                                    be equitable, provided that such method
                                    satisfies any applicable requirements of any
                                    securities exchange on which the Series A
                                    Preferred Shares are listed. In the event
                                    that such redemption is to be by lot, if as
                                    a result of such redemption any holder of
                                    Series A Preferred Shares would own, or be
                                    deemed to own by virtue of certain
                                    attribution provisions of the Code, as
                                    specified in the Declaration of Trust, in
                                    excess of 9.9% of the Series A Preferred
                                    Shares issued and outstanding because such
                                    holder's Series A Preferred Shares were not
                                    redeemed, or were only redeemed in part,
                                    then the Company will redeem the requisite
                                    number of Series A Preferred Shares of such
                                    shareholder such that he will not own, or be
                                    deemed to own by virtue of certain
                                    attribution provisions of the Code, as
                                    specified in the Declaration of Trust in
                                    excess of 9.9% of Series A Preferred Shares
                                    issued and outstanding subsequent to such
                                    redemption. A new certificate shall be
                                    issued representing any unredeemed Series A
                                    Preferred Shares without cost to the holder
                                    thereof.

                           (d)      Notice of redemption will be mailed, not
                                    less than 30 nor more than 60 days prior to
                                    the date fixed for redemption, to each
                                    holder of record of Series A Preferred
                                    Shares to be redeemed, notifying such holder
                                    of the Company's election to redeem such
                                    shares, stating the date fixed for
                                    redemption thereof (the "Series A Preferred
                                    Shares Redemption Date"), the redemption
                                    price, the number of shares to be redeemed
                                    (and, if fewer than all the Series A
                                    Preferred Shares are to be redeemed, the
                                    number of shares to be redeemed from such
                                    holder), the place(s) where the Series A
                                    Preferred Share

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                                    certificates are to be surrendered for
                                    payment, the date on which such holder's
                                    conversion rights as to the Series A
                                    Preferred Shares shall terminate, and that
                                    distributions on the Series A Preferred
                                    Shares will cease to accrue on the specified
                                    redemption date.

                           (e)      On or after the Series A Preferred Shares
                                    Redemption Date, each holder of Series A
                                    Preferred Shares to be redeemed must present
                                    and surrender his Series A Preferred Share
                                    certificates to the Company at the place
                                    designated in such notice and thereupon the
                                    redemption price of such shares will be paid
                                    to or on the order of the Person whose name
                                    appears on such Series A Preferred Share
                                    certificates as the owner thereof and each
                                    such Series A Preferred Share certificate
                                    surrendered will be canceled. From and after
                                    the Series A Preferred Shares Redemption
                                    Date (unless the Company defaults in payment
                                    of the redemption price), all distributions
                                    on the Series A Preferred Shares designated
                                    for redemption in such notice will cease to
                                    accrue and all rights of the holders thereof
                                    (including conversion rights), except the
                                    right to receive the redemption price
                                    thereof (including all accrued and unpaid
                                    distributions up to the Series A Preferred
                                    Shares Redemption Date), will cease and
                                    terminate and such shares will not
                                    thereafter be transferred (except with the
                                    consent of the Company) on the Company's
                                    books, and such shares shall not be deemed
                                    to be outstanding for any purpose
                                    whatsoever. At its election, the Company,
                                    prior to the Series A Preferred Shares
                                    Redemption Date, may irrevocably deposit the
                                    redemption price (including accrued and
                                    unpaid distributions) of the Series A
                                    Preferred Shares so called for redemption in
                                    trust for the holders thereof with a bank or
                                    trust company, in which case such notice to
                                    holders of the Series A Preferred Shares to
                                    be redeemed will (i) state the date of such
                                    deposit, (ii) specify the office of such
                                    bank or trust company as the place of
                                    payment of the redemption price and (iii)
                                    call upon such holders to surrender the
                                    Series A Preferred Share certificates
                                    representing such shares at such place on or
                                    about the date fixed in such redemption
                                    notice (which may not be later than the
                                    Series A Preferred Shares Redemption Date)
                                    against payment of the redemption price
                                    (including all accrued and unpaid
                                    distributions up to the Series A Preferred
                                    Shares Redemption Date). Any moneys so
                                    deposited which remain unclaimed by the
                                    holders of the Series A Preferred Shares at
                                    the end of two years after the Series A
                                    Preferred Shares Redemption Date will be
                                    returned by such bank or trust company to
                                    the Company.

                           (f)      Notwithstanding the foregoing, unless full
                                    cumulative distributions on all outstanding
                                    Series A Preferred Shares for all past
                                    Distribution Periods and the then current
                                    Distribution Period have been

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                                    paid, or declared and a sum sufficient for
                                    the payment thereof set apart for payment,
                                    no Series A Preferred Shares shall be
                                    redeemed unless (i) all outstanding Series A
                                    Preferred Shares are simultaneously redeemed
                                    or (ii) the Board of Trust Managers
                                    determines that such redemption is necessary
                                    or advisable to preserve the status of the
                                    Company as a REIT for federal income tax
                                    purposes; provided, however, that the
                                    foregoing shall not prevent the purchase or
                                    acquisition of Series A Preferred Shares
                                    pursuant to a purchase or exchange offer
                                    made on the same terms to holders of all
                                    outstanding Series A Preferred Shares.

                           (g)      The holders of Series A Preferred Shares at
                                    the close of business on a Distribution
                                    Record Date will be entitled to receive the
                                    distribution payable with respect to such
                                    Series A Preferred Shares on the
                                    corresponding Distribution Payment Date
                                    notwithstanding the redemption thereof
                                    between such Distribution Record Date and
                                    the corresponding Distribution Payment Date
                                    or the Company's default in the payment of
                                    the distribution due. Except as provided
                                    above, the Company will make no payment or
                                    allowance for unpaid distributions, whether
                                    or not in arrears, on Series A Preferred
                                    Shares which have been called for
                                    redemption.

                           (h)      If at any time, whether or not prior to
                                    February 18, 2003, the Company is subject to
                                    the jurisdiction of an agency or other
                                    authority of any state, county, city or
                                    other political subdivision with respect to
                                    any activities of the Company or any of its
                                    subsidiaries related to gaming (a "Gaming
                                    Authority"), and such Gaming Authority
                                    requires a record or beneficial owner to be
                                    found suitable, then notwithstanding any
                                    other provision of this Statement of
                                    Designation, the Company shall have the
                                    right, by written notice to such record or
                                    beneficial owner, (i) to require such record
                                    or beneficial owner of Series A Preferred
                                    Shares to apply, at such owner's sole cost
                                    and expense as to the application and
                                    related investigation, for a finding of
                                    suitability by such Gaming Authority and
                                    (ii) as to any record or beneficial owner
                                    that is required to be, but is not, found
                                    suitable by such Gaming Authority, (A) to
                                    require such record or beneficial owner to
                                    dispose of such owner's Series A Preferred
                                    Shares within 30 days or within the time
                                    prescribed by such Gaming Authority,
                                    whichever is earlier, and (B) if such
                                    disposition is not made in accordance with
                                    clause (A), to redeem each Series A
                                    Preferred Share of such owner at a
                                    redemption price of $25.00 per Series A
                                    Preferred Share, on the terms set forth
                                    above (other than subsection (f) of this
                                    subparagraph (5), which subsection shall not
                                    apply to any such redemption).

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                           (i)      The Series A Preferred Shares have no stated
                                    maturity date and will not be subject to any
                                    sinking fund or mandatory redemption.

                  (6) Shares to be Retired.

                  All Series A Preferred Shares which shall have been issued and
reacquired in any manner by the Company shall be restored to the status of
authorized but unissued Preferred Shares, without designation as to series.

                  (7) Conversion.

                  Holders of Series A Preferred Shares shall have the right to
convert all or a portion of such shares into Common Shares, as follows:

                           (a)      Subject to and upon compliance with the
                                    provisions of this subparagraph (7), a
                                    holder of Series A Preferred Shares shall
                                    have the right, at his option, at any time
                                    to convert such shares into the number of
                                    fully paid and nonassessable Common Shares
                                    obtained by dividing the aggregate
                                    liquidation preference of such shares by the
                                    Conversion Price (as in effect at the time
                                    and on the date provided for in the last
                                    paragraph of subsection (b) of this
                                    subparagraph (7)) by surrendering such
                                    shares to be converted, such surrender to be
                                    made in the manner provided in subsection
                                    (b) of this subparagraph (7); provided,
                                    however, that the right to convert shares
                                    called for redemption pursuant to
                                    subparagraph (5) hereof shall terminate at
                                    the close of business on the Series A
                                    Preferred Shares Redemption Date fixed for
                                    such redemption, unless the Company shall
                                    default in making payment of any amounts
                                    payable upon such redemption under
                                    subparagraph (5).

                           (b)      In order to exercise the conversion right,
                                    the holder of each Series A Preferred Share
                                    to be converted shall surrender the
                                    certificate representing such share, duly
                                    endorsed or assigned to the Company or in
                                    blank, at the office of the Transfer Agent,
                                    accompanied by written notice to the Company
                                    that the holder thereof elects to convert
                                    such Series A Preferred Share. Unless the
                                    share issuable on conversion is to be issued
                                    in the same name as the name in which such
                                    Series A Preferred Share is registered, each
                                    share surrendered for conversion shall be
                                    accompanied by instruments of transfer, in
                                    form satisfactory to the Company, duly
                                    executed by the holder or such holder's duly
                                    authorized attorney and an amount sufficient
                                    to pay any transfer or similar tax (or
                                    evidence reasonably satisfactory to the
                                    Company demonstrating that such taxes have
                                    been paid).

                                    Holders of Series A Preferred Shares at the
                                    close of business on a distribution payment
                                    Record Date shall be entitled to receive the

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                                    distribution payable on such shares on the
                                    corresponding Distribution Payment Date
                                    notwithstanding the conversion thereof
                                    following such distribution payment Record
                                    Date and prior to such Distribution Payment
                                    Date. However, Series A Preferred Shares
                                    surrendered for conversion during the period
                                    between the close of business on any
                                    distribution payment Record Date and the
                                    opening of business on the corresponding
                                    Distribution Payment Date (except shares
                                    converted after the issuance of notice of
                                    redemption with respect to a Series A
                                    Preferred Shares Redemption Date during such
                                    period or coinciding with such Distribution
                                    Payment Date, such Series A Preferred Shares
                                    being entitled to such distribution on the
                                    Distribution Payment Date) must be
                                    accompanied by payment of an amount equal to
                                    the distribution payable on such shares on
                                    such Distribution Payment Date. A holder of
                                    Series A Preferred Shares on a distribution
                                    payment Record Date who (or whose
                                    transferee) tenders any such shares for
                                    conversion into Common Shares on such
                                    Distribution Payment Date will receive the
                                    distribution payable by the Company on such
                                    Series A Preferred Shares on such date, and
                                    the converting holder need not include
                                    payment of the amount of such distribution
                                    upon surrender of Series A Preferred Shares
                                    for conversion. Except as provided above,
                                    the Company shall make no payment or
                                    allowance for unpaid distributions, whether
                                    or not in arrears, on converted shares or
                                    for distributions on the Common Shares
                                    issued upon such conversion.

                                    As promptly as practicable after the
                                    surrender of certificates for Series A
                                    Preferred Shares as aforesaid, the Company
                                    shall issue and shall deliver at the office
                                    of the Transfer Agent to such holder, or on
                                    his written order, a certificate or
                                    certificates for the number of full Common
                                    Shares issuable upon the conversion of such
                                    shares in accordance with the provisions of
                                    this subparagraph (7), and any fractional
                                    interest in respect of a Common Share
                                    arising upon such conversion shall be
                                    settled as provided in subsection (c) of
                                    this subparagraph (7).

                                    Each conversion shall be deemed to have been
                                    effected immediately prior to the close of
                                    business on the date on which the
                                    certificates for Series A Preferred Shares
                                    shall have been surrendered and such notice
                                    (and if applicable, payment of an amount
                                    equal to the distribution payable on such
                                    shares) received by the Company as
                                    aforesaid, and the Person or Persons in
                                    whose name or names any certificate or
                                    certificates for Common Shares shall be
                                    issuable upon such conversion shall be
                                    deemed to have become the holder or holders
                                    of record of the shares represented thereby
                                    at such time on such date, and such
                                    conversion shall be at the Conversion Price

                                      -11-
<PAGE>

                                    in effect at such time and on such date
                                    unless the share transfer books of the
                                    Company shall be closed on that date, in
                                    which event such Person or Persons shall be
                                    deemed to have become such holder or holders
                                    of record at the close of business on the
                                    next succeeding day on which such share
                                    transfer books are open, but such conversion
                                    shall be at the Conversion Price in effect
                                    on the date on which such shares have been
                                    surrendered and such notice received by the
                                    Company.

                           (c)      No fractional shares of scrip representing
                                    fractions of Common Shares shall be issued
                                    upon conversion of Series A Preferred
                                    Shares. Instead of any fractional interest
                                    in a Common Share that would otherwise be
                                    deliverable upon the conversion of a Series
                                    A Preferred Share, the Company shall pay to
                                    the holder of such share an amount in cash
                                    based upon the Current Market Price of
                                    Common Shares on the Trading Day immediately
                                    preceding the date of conversion. If more
                                    than one Series A Preferred Share shall be
                                    surrendered for conversion at one time by
                                    the same holder, the number of full Common
                                    Shares issuable upon conversion thereof
                                    shall be computed on the basis of the
                                    aggregate number of Series A Preferred
                                    Shares so surrendered.

                           (d)      The Conversion Price shall be adjusted from
                                    time to time as follows:

                                    (i)      If the Company shall after the
                                             Issue Date (A) pay or make a
                                             distribution on its Common Shares
                                             in Common Shares, (B) subdivide its
                                             outstanding Common Shares into a
                                             greater number of shares, (C)
                                             combine its outstanding Common
                                             Shares into a smaller number of
                                             shares or (D) issue any shares of
                                             beneficial interest by
                                             reclassification of its Common
                                             Shares, then in each such case the
                                             Conversion Price in effect at the
                                             opening of business on the day
                                             following the date fixed for the
                                             determination of shareholders
                                             entitled to receive such
                                             distribution or at the opening of
                                             business on the day following the
                                             day on which such subdivision,
                                             combination or reclassification
                                             becomes effective, as the case may
                                             be, shall be adjusted so that the
                                             holder of any Series A Preferred
                                             Shares thereafter surrendered for
                                             conversion shall be entitled to
                                             receive the number of Common Shares
                                             that such holder would have owned
                                             or have been entitled to receive
                                             after the happening of any of the
                                             events described above had such
                                             shares been converted immediately
                                             prior to the record date in the
                                             case of a distribution or the
                                             effective date in the case of a
                                             subdivision, combination or
                                             reclassification.

                                      -12-
<PAGE>

                                             An adjustment made pursuant to this
                                             subsection (i) shall become
                                             effective immediately after the
                                             opening of business on the day next
                                             following the record date (except
                                             as provided in paragraph (h) below)
                                             in the case of a distribution and
                                             shall become effective immediately
                                             after the opening of business on
                                             the day next following the
                                             effective date in the case of a
                                             subdivision, combination or
                                             reclassification. Such
                                             adjustment(s) shall be made
                                             successively whenever any of the
                                             events listed above shall occur.

                                    (ii)     If the Company shall issue after
                                             the Issue Date rights, options or
                                             warrants to all holders of Common
                                             Shares entitling them (for a period
                                             expiring within 45 days after the
                                             record date mentioned below) to
                                             subscribe for or purchase Common
                                             Shares at a price per share less
                                             than the Fair Market Value per
                                             Common Share on the record date for
                                             the determination of shareholders
                                             entitled to receive such rights,
                                             options or warrants, then the
                                             Conversion Price in effect at the
                                             opening of business on the day next
                                             following such record date shall be
                                             adjusted to equal the price
                                             determined by multiplying (I) the
                                             Conversion Price in effect
                                             immediately prior to the opening of
                                             business on the day following the
                                             date fixed for such determination
                                             by (II) a fraction, the numerator
                                             of which shall be the sum of (A)
                                             the number of Common Shares
                                             outstanding on the close of
                                             business on the date fixed for such
                                             determination and (B) the number of
                                             Common Shares that the aggregate
                                             proceeds to the Company from the
                                             exercise of such rights, options or
                                             warrants for Common Shares would
                                             purchase at such Fair Market Value,
                                             and the denominator of which shall
                                             be the sum of (A) the number of
                                             Common Shares outstanding on the
                                             close of business on the date fixed
                                             for such determination and (B) the
                                             number of additional Common Shares
                                             offered for subscription or
                                             purchase pursuant to such rights,
                                             options or warrants. Such
                                             adjustments shall be made
                                             successively whenever any such
                                             rights, options or warrants are
                                             issued, and shall become effective
                                             immediately after the opening of
                                             business on the day next following
                                             such record date (except as
                                             provided in subsection (h) below).
                                             In determining whether any rights,
                                             options or warrants entitle the
                                             holders of Common Shares to
                                             subscribe for or purchase Common
                                             Shares at less than the Fair Market
                                             Value, there shall be taken into
                                             account any consideration received
                                             by the Company upon issuance and
                                             upon exercise of such rights,
                                             options or warrants, the value of
                                             such consideration, if other

                                      -13-
<PAGE>

                                             than cash, to be determined by the
                                             Chief Executive Officer of the
                                             Company or the Board of Trust
                                             Managers.

                                    (iii)    If the Company shall distribute to
                                             all holders of its Common Shares
                                             any shares of beneficial interest
                                             of the Company (other than Common
                                             Shares) or evidence of its
                                             indebtedness or assets (excluding
                                             cash distributions paid out of the
                                             total equity applicable to Common
                                             Shares, including revaluation
                                             equity, less the amount of stated
                                             capital attributable to Common
                                             Shares, determined on the basis of
                                             the most recent annual consolidated
                                             cost basis and current value basis
                                             and quarterly consolidated balance
                                             sheets of the Company and its
                                             consolidated subsidiaries available
                                             at the time of the declaration of
                                             the distribution) or rights,
                                             options or warrants to subscribe
                                             for or purchase any of its
                                             securities (excluding those rights,
                                             options and warrants issued to all
                                             holders of Common Shares entitling
                                             them for a period expiring within
                                             45 days after the record date
                                             referred to in subsection (ii)
                                             above to subscribe for or purchase
                                             Common Shares, which rights,
                                             options and warrants are referred
                                             to in and treated under subsection
                                             (ii) above) (any of the foregoing
                                             being hereinafter in this
                                             subsection (iii) called the
                                             "Securities"), then in each case
                                             the Conversion Price shall be
                                             adjusted so that it shall equal the
                                             price determined by multiplying (I)
                                             the Conversion Price in effect
                                             immediately prior to the close of
                                             business on the date fixed for the
                                             determination of shareholders
                                             entitled to receive such
                                             distribution by (II) a fraction,
                                             the numerator of which shall be the
                                             Fair Market Value per Common Share
                                             on the record date mentioned below
                                             less the then fair market value (as
                                             determined by the Chief Executive
                                             Officer of the Company or the Board
                                             of Trust Managers, whose
                                             determination shall be conclusive)
                                             of the portion of the shares of
                                             beneficial interest or assets or
                                             evidences of indebtedness so
                                             distributed or of such rights,
                                             options or warrants applicable to
                                             one Common Share, and the
                                             denominator of which shall be the
                                             Fair Market Value per Common Share
                                             on the record date mentioned below.
                                             Such adjustment shall become
                                             effective immediately at the
                                             opening of business on the Business
                                             Day next following (except as
                                             provided in subsection (h) below)
                                             the record date for the
                                             determination of shareholders
                                             entitled to receive such
                                             distribution. For the purposes of
                                             this subsection (iii), the
                                             distribution of a Security, which
                                             is distributed not only to the
                                             holders of the Common Shares on the
                                             date fixed for the determination of
                                             shareholders entitled

                                      -14-
<PAGE>

                                             to such distribution of such
                                             Security, but also is distributed
                                             with each Common Share delivered to
                                             a Person converting a Series A
                                             Preferred Share after such
                                             determination date, shall not
                                             require an adjustment of the
                                             Conversion Price pursuant to this
                                             subsection (iii); provided that on
                                             the date, if any, on which a Person
                                             converting a Series A Preferred
                                             Share would no longer be entitled
                                             to receive such Security with a
                                             Common Share (other than as a
                                             result of the termination of all
                                             such Securities), a distribution of
                                             such Securities shall be deemed to
                                             have occurred, and the Conversion
                                             Price shall be adjusted as provided
                                             in this subsection (iii) (and such
                                             day shall be deemed to be "the date
                                             fixed for the determination of the
                                             shareholders entitled to receive
                                             such distribution" and "the record
                                             date" within the meaning of the two
                                             preceding sentences).

                                    (iv)     No adjustment in the Conversion
                                             Price shall be required unless such
                                             adjustment would require a
                                             cumulative increase or decrease of
                                             at least 1% in such price;
                                             provided, however, that any
                                             adjustments that by reason of this
                                             subsection (iv) are not required to
                                             be made shall be carried forward
                                             and taken into account in any
                                             subsequent adjustment until made;
                                             and provided, further, that any
                                             adjustment shall be required and
                                             made in accordance with the
                                             provisions of this subparagraph (7)
                                             (other than this subsection (iv))
                                             not later than such time as may be
                                             required in order to preserve the
                                             tax-free nature of a distribution
                                             to the holders of Common Shares.
                                             Notwithstanding any other
                                             provisions of this subparagraph
                                             (7), the Company shall not be
                                             required to make any adjustment of
                                             the Conversion Price for the
                                             issuance of any Common Shares
                                             pursuant to any plan providing for
                                             the reinvestment of distributions
                                             or interest payable on securities
                                             of the Company and the investment
                                             of additional optional amounts in
                                             Common Shares under such plan. All
                                             calculations under this
                                             subparagraph (7) shall be made to
                                             the nearest cent (with $.005 being
                                             rounded upward) or to the nearest
                                             one-ten-thousandth of a share (with
                                             .0005 of a share being rounded
                                             upward), as the case may be.
                                             Anything in this subsection (d) to
                                             the contrary notwithstanding, the
                                             Company shall be entitled, to the
                                             extent permitted by law, to make
                                             such reductions in the Conversion
                                             Price, in addition to those
                                             required by this subsection (d), as
                                             it in its sole discretion shall
                                             determine to be advisable in order
                                             that any share distributions,
                                             subdivision of shares,
                                             reclassification or combination of
                                             shares, distribution of rights,
                                             options

                                      -15-
<PAGE>

                                             or warrants to purchase shares or
                                             securities, or distribution of
                                             other assets (other than cash
                                             distributions) hereafter made by
                                             the Company to its shareholders
                                             shall not be taxable.

                           (e)      If the Company shall be a party to any
                                    transaction (including without limitation a
                                    merger, consolidation, statutory share
                                    exchange, self tender offer for all or
                                    substantially all of the Common Shares, sale
                                    of all or substantially all of the Company's
                                    assets or recapitalization of the Common
                                    Shares and excluding any transaction as to
                                    which subsection (d)(i) of this subparagraph
                                    (7) applied) (each of the foregoing being
                                    referred to herein as a "Transaction"), in
                                    each case as a result of which Common Shares
                                    shall be converted into the right to receive
                                    shares, stock, securities or other property
                                    (including cash or any combination thereof),
                                    each Series A Preferred Share which is not
                                    converted into the right to receive shares,
                                    stock, securities or other property in
                                    connection with such Transaction shall
                                    thereafter be convertible into the kind and
                                    amount of shares, stock, securities and
                                    other property (including cash or any
                                    combination thereof) receivable upon the
                                    consummation of such Transaction by a holder
                                    of that number of Common Shares into which
                                    one Series A Preferred Share was convertible
                                    immediately prior to such Transaction,
                                    assuming such holder of Common Shares (i) is
                                    not a Person with which the Company
                                    consolidated or into which the Company
                                    merged or which merged into the Company or
                                    to which such sale or transfer was made, as
                                    the case may be (a "Constituent Person"), or
                                    an affiliate of a Constituent Person and
                                    (ii) failed to exercise his rights of the
                                    election, if any, as to the kind or amount
                                    of shares, stock, securities and other
                                    property (including cash) receivable upon
                                    such Transaction (each a "Non-Electing
                                    Share") (provided that if the kind or amount
                                    of shares, stock, securities and other
                                    property (including cash) receivable upon
                                    such Transaction by each Non-Electing Share
                                    is not the same for each Non-Electing Share,
                                    then the kind and amount of shares, stock,
                                    securities and other property (including
                                    cash) receivable upon such Transaction for
                                    each Non-Electing Share shall be deemed to
                                    be the kind and amount so receivable per
                                    share by a plurality of the Non-Electing
                                    Shares). The Company shall not be a party to
                                    any Transaction unless the terms of such
                                    Transaction are consistent with the
                                    provisions of this subsection (e), and it
                                    shall not consent or agree to the occurrence
                                    of any Transaction until the Company has
                                    entered into an agreement with the successor
                                    or purchasing entity, as the case may be,
                                    for the benefit of the holders of the Series
                                    A Preferred Shares that will require such
                                    successor or purchasing entity, as the case
                                    may be, to make provision in its certificate
                                    or articles of

                                      -16-
<PAGE>

                                    incorporation or other constituent documents
                                    to the end that the provisions of this
                                    subsection (e) shall thereafter
                                    correspondingly be made applicable as nearly
                                    as may reasonably be, in relation to any
                                    shares of stock or other securities or
                                    property thereafter deliverable upon
                                    conversion of the Series A Preferred Shares.
                                    The provisions of this subsection (e) shall
                                    similarly apply to successive Transactions.

                           (f)      If:

                                    (i)      the Company shall declare a
                                             distribution on the Common Shares
                                             (other than in cash out of the
                                             total equity applicable to Common
                                             Shares, including revaluation
                                             equity, less the amount of stated
                                             capital attributable to Common
                                             Shares, determined on the basis of
                                             the most recent annual consolidated
                                             cost basis and current value basis
                                             and quarterly consolidated balance
                                             sheets of the Company and its
                                             consolidated subsidiaries available
                                             at the time of the declaration of
                                             the distribution); or

                                    (ii)     the Company shall authorize the
                                             granting to all holders of the
                                             Common Shares of rights, options or
                                             warrants to subscribe for or
                                             purchase any shares of any class or
                                             any other rights, options or
                                             warrants; or

                                    (iii)    there shall be any
                                             reclassifications of the Common
                                             Shares (other than an event to
                                             which subsection (d)(i) of this
                                             subparagraph (7) applied) or any
                                             consolidation or merger to which
                                             the Company is a party and for
                                             which approval of any shareholders
                                             of the Company is required, or a
                                             statutory share exchange involving
                                             the conversion or exchange of
                                             Common Shares into securities or
                                             other property, or a self tender
                                             offer by the Company for all or
                                             substantially all of its
                                             outstanding Common Shares, or the
                                             sale or transfer of all or
                                             substantially all of the assets of
                                             the Company and for which approval
                                             of any stockholder of the Company
                                             is required; or

                                    (iv)     there shall occur the voluntary or
                                             involuntary liquidation,
                                             dissolution or winding up of the
                                             Company,

                                    then the Company shall cause to be filed
                                    with the Transfer Agent and shall cause to
                                    be mailed to the holders of the Series A
                                    Preferred Shares at their addresses as shown
                                    on the share records of the Company, as
                                    promptly as possible, but at least 15 days
                                    prior to the applicable date hereinafter
                                    specified, a notice stating (A) the

                                      -17-
<PAGE>

                                    date on which a record is to be taken for
                                    the purpose of such distribution or grant of
                                    rights, options or warrants, or, if a record
                                    is not to be taken, the date as of which the
                                    holders of Common Shares of record to be
                                    entitled to such distribution or grant of
                                    rights, options or warrants are to be
                                    determined, provided, however, that no such
                                    notification need be made in respect of a
                                    record or determination date for a
                                    distribution or grant of rights unless the
                                    corresponding adjustment in the Conversion
                                    Price would be an increase or decrease of at
                                    least 1% or (B) the date on which such
                                    reclassification, consolidation, merger,
                                    statutory share exchange, self tender offer,
                                    sale, transfer, liquidation, dissolution or
                                    winding up is expected to become effective,
                                    and the date as of which it is expected that
                                    holders of Common Shares of record shall be
                                    entitled to exchange their Common Shares for
                                    securities or other property, if any,
                                    deliverable upon such reclassification,
                                    consolidation, merger, statutory share
                                    exchange, self tender offer, sale, transfer,
                                    liquidation, dissolution or winding up.
                                    Failure to give or receive such notice or
                                    any defect therein shall not affect the
                                    legality or validity of the proceedings
                                    described in this subparagraph (7).

                           (g)      Whenever the Conversion Price is adjusted as
                                    herein provided, the Company shall promptly
                                    file with the Transfer Agent an officer's
                                    certificate setting forth the Conversion
                                    Price after such adjustment and setting
                                    forth a brief statement of the facts
                                    requiring such adjustment, which certificate
                                    shall be conclusive evidence of the
                                    correctness of such adjustment absent
                                    manifest error. Promptly after delivery of
                                    such certificate, the Company shall prepare
                                    a notice of such adjustment of the
                                    Conversion Price setting forth the adjusted
                                    Conversion Price and the effective date of
                                    such adjustment and shall mail such notice
                                    of such adjustment of the Conversion Price
                                    to the holder of each Series A Preferred
                                    Share at such holder's last address as shown
                                    on the share records of the Company.

                           (h)      In any case in which subsection (d) of this
                                    subparagraph (7) provides that an adjustment
                                    shall become effective on the date next
                                    following the record date for an event, the
                                    Company may defer until the occurrence of
                                    such event (A) issuing to the holder of any
                                    Series A Preferred Shares converted after
                                    such record date and before the occurrence
                                    of such event the additional Common Shares
                                    issuable upon such conversion by reason of
                                    the adjustment required by such event over
                                    and above the Common Shares issuable upon
                                    such conversion before giving effect to such
                                    adjustment and (B) fractionalizing any
                                    Series A Preferred Share and/or paying to
                                    such holder any amount of cash in lieu of
                                    any fraction pursuant to subsection (c) of
                                    this subparagraph (7).

                                      -18-
<PAGE>

                           (i)      There shall be no adjustment of the
                                    Conversion Price in case of the issuance of
                                    any shares of beneficial interest of the
                                    Company in a reorganization, acquisition or
                                    other similar transaction except as
                                    specifically set forth in this subparagraph
                                    (7). If any action or transaction would
                                    require adjustment of the Conversion Price
                                    pursuant to more than one subsection of this
                                    subparagraph (7), only one adjustment shall
                                    be made, and such adjustment shall be the
                                    amount of adjustment that has the highest
                                    absolute value.

                           (j)      If the Company shall take any action
                                    affecting the Common Shares, other than
                                    action described in this subparagraph (7),
                                    that in the opinion of the Board of Trust
                                    Managers would materially adversely affect
                                    the conversion rights of the holders of the
                                    Series A Preferred Shares, the Conversion
                                    Price for the Series A Preferred Shares may
                                    be adjusted, to the extent permitted by law,
                                    in such manner, if any, and at such time, as
                                    the Board of Trust Managers, in its sole
                                    discretion, may determine to be equitable in
                                    the circumstances.

                           (k)      The Company covenants that it will at all
                                    times reserve and keep available, free from
                                    preemptive rights, out of the aggregate of
                                    its authorized but unissued Common Shares,
                                    for the purpose of effecting conversion of
                                    the Series A Preferred Shares, the full
                                    number of Common Shares deliverable upon the
                                    conversion of all outstanding Series A
                                    Preferred Shares not theretofore converted.
                                    For purposes of this subsection (k), the
                                    number of Common Shares that shall be
                                    deliverable upon the conversion of all
                                    outstanding Series A Preferred Shares shall
                                    be computed as if at the time of computation
                                    all such outstanding shares were held by a
                                    single holder.

                                    The Company covenants that any Common Shares
                                    issued upon conversion of the Series A
                                    Preferred Shares shall be validly issued,
                                    fully paid and nonassessable. Before taking
                                    any action that would cause an adjustment
                                    reducing the Conversion Price below the then
                                    par value of the Common Shares deliverable
                                    upon conversion of the Series A Preferred
                                    Shares, the Company will take any action
                                    that, in the opinion of its counsel, may be
                                    necessary in order that the Company may
                                    validly and legally issue fully paid and
                                    nonassessable Common Shares at such adjusted
                                    Conversion Price.

                                    The Company shall endeavor to list the
                                    Common Shares required to be delivered upon
                                    conversion of the Series A Preferred Shares,
                                    prior to such delivery, upon each national
                                    securities exchange, if any, upon which the
                                    outstanding Common Shares are listed at the
                                    time of such delivery.

                                      -19-
<PAGE>

                                    Prior to the delivery of any securities that
                                    the Company shall be obligated to deliver
                                    upon conversion of the Series A Preferred
                                    Shares, the Company shall endeavor to comply
                                    with all federal and state laws and
                                    regulations thereunder requiring the
                                    registration of such securities, or any
                                    approval of or consent to the delivery
                                    thereof by any governmental authority.

                           (l)      The Company will pay any and all documentary
                                    stamp or similar issue or transfer taxes
                                    payable in respect of the issue or delivery
                                    of Common Shares or other securities or
                                    property on conversion of the Series A
                                    Preferred Shares pursuant hereto; provided,
                                    however, that the Company shall not be
                                    required to pay any tax that may be payable
                                    in respect of any transfer involved in the
                                    issue or delivery of Common Shares or other
                                    securities or property in a name other than
                                    that of the holder of the Series A Preferred
                                    Shares to be converted, and no such issue or
                                    delivery shall be made unless and until the
                                    Person requesting such issue or delivery has
                                    paid to the Company the amount of any such
                                    tax or has established, to the reasonable
                                    satisfaction of the Company, that such tax
                                    has been paid.

                           (m)      In addition to the foregoing adjustments,
                                    the Company will be permitted to make such
                                    reductions in the Conversion Price as it
                                    considers to be advisable in order that any
                                    event treated for federal income tax
                                    purposes as a dividend of stock or stock
                                    rights will not be taxable to the holders of
                                    the Common Shares.

                           (n)      Whenever reference is made in this
                                    subparagraph (7) to the issuance or sale of
                                    Common Shares, the term "Common Shares"
                                    shall include any shares of beneficial
                                    interest of any class of the Company other
                                    than preferred shares of any class with a
                                    fixed (absolutely or by reference to an
                                    adjustment formula) limit on dividends and a
                                    fixed amount payable in the event of any
                                    voluntary or involuntary liquidation,
                                    dissolution or winding up of the Company.

                  (8) Voting Rights. Except as required by law or as provided
below, the holders of the Series A Preferred Shares shall not be entitled to
vote at any meeting of the shareholders for election of Trust Managers or for
any other purposes or otherwise to participate in any action taken by the
Company or the shareholders thereof, or to receive notice of any meeting of
shareholders.

                           (a)      In any matter in which the Series A
                                    Preferred Shares are entitled to vote (as
                                    expressly provided herein or as may be
                                    required by law), including any action by
                                    written consent, each Series A Preferred
                                    Share shall be entitled to one vote.

                                      -20-
<PAGE>

                           (b)      Whenever distributions on any Series A
                                    Preferred Shares shall be in arrears for six
                                    or more Distribution Periods, whether or not
                                    such Distribution Periods are consecutive,
                                    the holders of the Series A Preferred
                                    Shares, voting separately as a class with
                                    all other series of Preferred Shares upon
                                    which like voting rights have been conferred
                                    and are exercisable, will be entitled to
                                    vote for the election of two additional
                                    Trust Managers of the Company at a special
                                    meeting called by the holders of record of
                                    at least ten percent (10%) of any series of
                                    Preferred Shares so in arrears (unless such
                                    request is received less than 90 days before
                                    the date fixed for the next annual or
                                    special meeting of the shareholders) or at
                                    the next annual meeting of shareholders, and
                                    all other Trust Managers of the Company
                                    shall be elected by the holders of the
                                    Company's Common Shares. In such case, the
                                    entire Board of Trust Managers of the
                                    Company will be increased by two Trust
                                    Managers. Voting rights of the holders of
                                    the Series A Preferred Shares shall continue
                                    at each subsequent annual meeting until all
                                    distributions accumulated on such Series A
                                    Preferred Shares for the past Distribution
                                    Periods and the then current Distribution
                                    Period shall have been fully paid or
                                    declared and a sum sufficient for the
                                    payment thereof set aside for payment.

                           (c)      As long as any Series A Preferred Shares
                                    remain outstanding, the Company will not,
                                    without the affirmative vote or consent of
                                    the holders of at least two-thirds of the
                                    Series A Preferred Shares outstanding at the
                                    time, given in person or by proxy, either in
                                    writing or at a meeting (such series voting
                                    separately as a class) (i) authorize or
                                    create, or increase the authorized or issued
                                    amount of, any class or series of shares of
                                    beneficial interest ranking prior to the
                                    Series A Preferred Shares with respect to
                                    the payment of distributions or the
                                    distribution of assets upon liquidation,
                                    dissolution or winding up or reclassify any
                                    authorized shares of beneficial interest of
                                    the Company into such shares, or create,
                                    authorize or issue any obligation or
                                    security convertible into or evidencing the
                                    right to purchase any such shares; or (ii)
                                    amend, alter or repeal the provisions of the
                                    Declaration of Trust or this Statement of
                                    Designation, whether by merger,
                                    consolidation or otherwise (an "Event"), so
                                    as to materially and adversely affect any
                                    right, preference, privilege or voting power
                                    of the Series A Preferred Shares or the
                                    holders thereof; provided, however, with
                                    respect to the occurrence of any of the
                                    Events set forth in (ii) above, so long as
                                    the Series A Preferred Shares (or shares
                                    into which the Series A Preferred Shares
                                    have been converted in any successor entity
                                    to the Company) remain outstanding with the
                                    terms thereof materially

                                      -21-
<PAGE>

                                    unchanged, taking into account that upon the
                                    occurrence of an Event, the Company may not
                                    be the surviving entity, the occurrence of
                                    any such Event shall not be deemed to
                                    materially and adversely affect such rights,
                                    preferences, privileges or voting power of
                                    holders of Series A Preferred Shares and
                                    provided further that (x) any increase in
                                    the amount of the authorized Preferred
                                    Shares or the creation or issuance of any
                                    other Series A Preferred Shares, or (y) any
                                    increase in the amount of authorized Series
                                    A Preferred Shares, in each case ranking on
                                    a parity with or junior to the Series A
                                    Preferred Shares with respect to payment of
                                    distributions or the distribution of assets
                                    upon liquidation, dissolution or winding up,
                                    shall not be deemed to materially and
                                    adversely affect such rights, preferences,
                                    privileges or voting power.

                                    The foregoing voting provisions will not
                                    apply if, at or prior to the time when the
                                    act with respect to which such vote would
                                    otherwise be required shall be effected, all
                                    outstanding Series A Preferred Shares shall
                                    have been redeemed or called for redemption
                                    and sufficient funds shall have been
                                    deposited in trust to effect such
                                    redemption.

         C. Exclusion of Other Rights.

                  Except as may otherwise be required by law, the Series A
Preferred Shares shall not have any voting powers, preferences and relative,
participating, optional or other special rights, other than those specifically
set forth in this Statement of Designation (as such Statement of Designation may
be amended from time to time) and in the Declaration of Trust. The Series A
Preferred Shares shall have no preemptive or subscription rights.

         D. Headings of Subdivisions.

                  The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.

                                      -22-
<PAGE>

         E. Severability of Provisions.

                  If any voting powers, preferences and relative, participating,
optional and other special rights of the Series A Preferred Shares and
qualifications, limitations and restrictions thereof set forth in this Statement
of Designation (as such Statement of Designation may be amended from time to
time) is invalid, unlawful or incapable of being enforced by reason of any rule
of law or public policy, all other voting powers, preferences and relative,
participating, optional and other special rights of Series A Preferred Shares
and qualifications, limitations and restrictions thereof set forth in this
Statement of Designation (as so amended) which can be given effect without the
invalid, unlawful or unenforceable voting powers, preferences and relative,
participating, optional or other special rights of Series A Preferred Shares and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special right of Series A Preferred Shares and
qualifications, limitations and restrictions thereof unless so expressed herein.

         F. Adoption.

                  This Statement of Designation was duly adopted by the Board of
Trust Managers of the Company. Shareholder action was not required.

                                      * * *

                                      -23-
<PAGE>

         IN WITNESS WHEREOF, I hereby certify that I, John C. Goff, am the Chief
Executive Officer of Crescent Real Estates Equities Company (the "Company") and
that as such, I am authorized to execute and file with the County Clerk of
Tarrant County, Texas this Statement of Designation (the "Statement of
Designation") on behalf of the Company and I further certify on behalf of the
Company that this Statement of Designation was authorized by the Board of Trust
Managers by unanimous written consent dated as of April 22, 2002 and is still in
full force and effect as of the date hereof. I further certify that my signature
to this document is my free act and deed, that to the best of my knowledge,
information and belief, the matters and facts set forth herein are true in all
material respects and that this statement is made under penalty of perjury.

                                       CRESCENT REAL ESTATE EQUITIES COMPANY

                                       /s/ John C. Goff
                                       -----------------------------------------
                                       Name: John C. Goff
                                       Title: Chief Executive Officer

         The undersigned, Jerry R. Crenshaw, Jr., the Senior Vice President and
Chief Financial Officer of the Company, hereby certifies that John C. Goff is
the Chief Executive Officer of the Company and that the signature set forth
above is his genuine signature.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th
day of April, 2002.

                                       /s/ Jerry R. Crenshaw, Jr.
                                       -----------------------------------------
                                       Name: Jerry R. Crenshaw, Jr.
                                       Title: Senior Vice President and Chief
                                              Financial Officer

                                      -24-
<PAGE>

STATE OF TEXAS
COUNTY OF TARRANT

         This instrument was acknowledged before me on April 25, 2002, by John
C. Goff, Chief Executive Officer of Crescent Real Estate Equities Company, a
Texas real estate investment trust, on behalf of said real estate investment
trust.

                                       /s/ Elizabeth A. Hays
                                       -----------------------------------------
                                       Notary Public - State of Texas

                                       Elizabeth A. Hays
                                       -----------------------------------------
                                       Printed Name of Notary Public

My commission expires:

August 11, 2004
---------------

STATE OF TEXAS
COUNTY OF TARRANT

         This instrument was acknowledged before me on April 25, 2002, by Jerry
R. Crenshaw, Jr.

                                       /s/ Elizabeth A. Hays
                                       -----------------------------------------
                                       Notary Public - State of Texas

                                       Elizabeth A. Hays
                                       -----------------------------------------
                                       Printed Name of Notary Public

My commission expires:

August 11, 2004
---------------

                                      -25-<PAGE>
                                                                    EXHIBIT 10.1

                      CRESCENT REAL ESTATE EQUITIES COMPANY

                     (a Texas real estate investment trust)

                           PLACEMENT AGENCY AGREEMENT

Dated:  April 22, 2002

<PAGE>

                      CRESCENT REAL ESTATE EQUITIES COMPANY

                     (a Texas real estate investment trust)

                           PLACEMENT AGENCY AGREEMENT

                                                                  April 22, 2002

Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
4 World Financial Center, 26th Floor
New York, New York  10080

Ladies and Gentlemen:

         Crescent Real Estate Equities Company, a Texas statutory real estate
investment trust (the "Company"), confirms its agreement with Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch" or the
"Placement Agent"), to act as placement agent for the Company, as set forth in
this agreement (the "Agreement") with respect to the issue and sale by the
Company and the purchase by Cohen & Steers Capital Management, Inc., a New York
corporation, on behalf of the client accounts set forth on Schedule A to the
Purchase Agreement (the "Purchase Agreement") between them and the Company dated
as of April 22, 2002 (each a "Purchaser" and collectively the "Purchasers"), of
an aggregate of 2,800,000 shares of the Company's 6 3/4% Series A Convertible
Cumulative Preferred Shares of Beneficial Interest, $.01 par value per share of
the Company (the "Securities").

         It is contemplated that the Securities will be issued by the Company
with a purchase price of $18.00 per share and an aggregate purchase price of
$50,400,000. In acting as the Placement Agent, Merrill Lynch will seek to place
the securities with the Purchasers on a reasonable best efforts basis, acting as
the Company's agent and not as a principal in the placement of the Securities.
Merrill Lynch may separately engage, at its own expense and with the prior
approval of the Company, sub-agents as it may deem necessary or appropriate.

         The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-38071) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), which registration statement was declared effective by the
Commission in October 1997. Promptly after execution and delivery of this
Agreement, the Company will prepare and file a prospectus supplement in
accordance with the provisions of paragraph (b) of Rule 424 ("Rule 424(b)") of
the rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). Such registration statement, including the exhibits thereto,
schedules thereto, if any, and the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, as of the date of this
Agreement, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the
form first furnished to the Placement Agent for use in connection with the
offering is herein called the "Prospectus." For purposes of this Agreement, all
references to the Registration Statement, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").

<PAGE>

         All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (or other references of like import)
shall be deemed to mean and include all such financial statements and schedules
and other information which is incorporated by reference in the Registration
Statement or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be.

         As used herein, (i) the term "Subsidiary" means a corporation, limited
liability company, partnership or other entity a majority of the outstanding
voting stock, partnership or membership interests or other similar interests, as
the case may be, of which is owned or controlled, directly or indirectly, by the
Company, Crescent Real Estate Equities Limited Partnership, a Delaware limited
partnership (the "Operating Partnership"), or by one or more other Subsidiaries
of the Company or the Operating Partnership, and (ii) the term "Significant
Subsidiary" means any Subsidiary meeting the conditions of Rule 1-02(w) of
Regulation S-X under the 1934 Act (excluding CRE Management XI, LLC and Crescent
Real Estate Funding XI, L.P., as a result of the sale of all property owned by
Crescent Real Estate Funding XI, L.P. in late 2001, which are as of the date
hereof no longer significant subsidiaries).

         (a) Representations and Warranties by the Company and the Operating
Partnership. Each of the Company and the Operating Partnership represents and
warrants to the Placement Agent as of the date hereof, and as of the Closing
Time referred to in Section 2(b) hereof, and agrees with the Placement Agent, as
follows:

                  (i) The Registration Statement and the Prospectus, at the time
         the Registration Statement became effective and as of the date hereof,
         complied, and at the Closing Time will comply, in all material
         respects, with the requirements of the 1933 Act and the 1933 Act
         Regulations; the Registration Statement, at the time the Registration
         Statement became effective and as of the date hereof, did not contain
         an untrue statement of a material fact or omit to state a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading. The Prospectus, as of the date hereof, does
         comply, and at the Closing Time will comply, in all material respects
         with the requirements of the 1933 Act and the 1933 Act Regulations, and
         as of the date hereof does not, and as of the Closing Date will not,
         contain an untrue statement of a material fact or omit to state a
         material fact necessary in order to make the statements therein, in the
         light of the circumstances under which they were made, not misleading;
         provided, however, that the representations and warranties in this
         paragraph shall not apply to statements in or omissions from the
         Registration Statement or the Prospectus made in reliance upon and in
         conformity with written information furnished to the Company through
         you specifically for inclusion in the Registration Statement or the
         Prospectus.

                  (ii) No stop order suspending the effectiveness of the
         Registration Statement or any part thereof has been issued, and no
         proceeding for that purpose has been instituted or, to the knowledge of
         the Company or the Operating Partnership, threatened by the Commission
         or by the state securities authority of any jurisdiction. No order
         preventing or suspending the use of the Prospectus has been issued, and
         no proceeding for that purpose has been instituted or, to the knowledge
         of the Company or the Operating Partnership, threatened by the
         Commission or by the state securities authority of any jurisdiction.

                  (iii) To the knowledge of the Company and the Operating
         Partnership, Arthur Andersen LLP, who has certified certain financial
         statements of the Company and its

                                       2
<PAGE>
         consolidated subsidiaries, are independent public accountants with
         respect to the Company and its consolidated subsidiaries within the
         meaning of Rule 101 of the Code of Professional Conduct of the American
         Institute of Certified Public Accountants and its interpretations and
         rulings thereunder.

                  (iv) The financial statements and the related notes thereto
         included or incorporated by reference in the Prospectus present fairly
         the financial position of the Company and its consolidated subsidiaries
         as of the dates indicated and the results of their operations and the
         changes in their cash flows for the periods specified; such financial
         statements have been prepared in conformity with generally accepted
         accounting principles applied on a consistent basis throughout the
         periods covered thereby; the other financial information included or
         incorporated by reference in the Prospectus has been derived from the
         accounting records of the Company and its consolidated subsidiaries and
         presents fairly the information shown thereby except as otherwise noted
         therein or in the Prospectus; and the pro forma financial information
         and the related notes thereto incorporated by reference in the
         Prospectus has been prepared in a manner consistent with generally
         accepted accounting principles, and the principal assumptions
         underlying such pro forma financial information are reasonable and are
         incorporated by reference in the Prospectus.

                  (v) Since the respective dates as of which information is
         given in the Registration Statement and the Prospectus, except as
         otherwise stated therein, (A) there has been no material adverse change
         in the condition, financial or otherwise, or in the earnings, assets,
         business affairs or business prospects of the Company, the Operating
         Partnership and the Subsidiaries, considered as one enterprise (a
         "Material Adverse Effect"), whether or not arising in the ordinary
         course of business, (B) no material casualty loss or material
         condemnation or other material adverse event with respect to any real
         property or improvements thereon owned or leased by any of the Company,
         the Operating Partnership or any of their Subsidiaries, including any
         property underlying indebtedness held by the Company (each individually
         a "Property" and collectively, the "Properties"), the Operating
         Partnership or any of their Subsidiaries, has occurred that is material
         to the Company, the Operating Partnership and the Subsidiaries
         considered as one enterprise, (C) there have been no acquisitions or
         other transactions entered into by the Company, the Operating
         Partnership or any Subsidiary other than those in the ordinary course
         of business that are material with respect to such entities, considered
         as one enterprise, or would result in any inaccuracy in the
         representations contained in Section 1(a)(iv) above, (D) except for
         regular quarterly dividends or distributions on the common shares of
         beneficial interest, $0.01 par value per share of the Company ("Common
         Shares"), the preferred shares of beneficial interest, $0.01 par value
         per share of the Company ("Preferred Shares"), units of limited
         partnership interest of the Operating Partnership ("Units") and
         preferred units of limited partnership interest of the Operating
         Partnership ("Preferred Units"), there has been no dividend or
         distribution of any kind declared, paid or made by the Company, or by
         the Operating Partnership with respect to its partnership interests,
         and (E) there has been no change in the capital stock of the Company or
         its Subsidiaries or the partnership interests of the Operating
         Partnership, or any increase in the indebtedness of the Company, the
         Operating Partnership or the Subsidiaries that is material to such
         entities, considered as one enterprise.

                  (vi) The Company has been duly formed as a real estate
         investment trust under the laws of the State of Texas, is duly
         qualified to do business and is in good standing in each jurisdiction
         in which its ownership or lease of property or the conduct of its
         business requires such qualification, and has all power and authority
         necessary to own or hold its properties and to conduct the business in
         which it is engaged, except where the failure to be so qualified or
         have such power or authority would not, individually or in the
         aggregate, have a Material Adverse

                                       3
<PAGE>
         Effect. According to the County Clerk of Tarrant County, Texas, the
         Restated Declaration of Trust of the Company is recorded in Volume
         12645, beginning at Page 1811, in the records of the County Clerk, and
         the Articles of Amendment to the Restated Declaration of Trust, as
         amended, is recorded in Volume 15194, beginning at Page 311, in the
         records of the County Clerk (together, the "Declaration of Trust").

                  (vii) The Subsidiaries, including the Operating Partnership,
         have been duly organized and are validly existing and in good standing
         under the laws of their respective jurisdictions of organization, are
         duly qualified to do business and are in good standing in each
         jurisdiction in which their respective ownership or lease of property
         or the conduct of their respective businesses requires such
         qualification, and have all power and authority necessary to own or
         hold their respective properties and to conduct the businesses in which
         they are engaged, except where the failure to be so qualified or have
         such power or authority would not, individually or in the aggregate,
         have a Material Adverse Effect. Except for subsidiaries omitted from
         Exhibit 21.01 to the Company's annual report on Form 10-K for the
         fiscal year ended December 31, 2001 (including any amendments thereto,
         the "Form 10-K") as permitted by the Exchange Act and the rules and
         regulations of the Commission thereunder, rules, the only subsidiaries
         of the Company are those listed on such Schedule 21.01 and Crescent
         Finance Company. The Subsidiaries listed in Schedule 1 to this
         Agreement are the only Significant Subsidiaries of the Company and the
         Operating Partnership. The Company and the Operating Partnership have
         full right, power and authority to execute and deliver this Agreement
         and, with respect to the Company only, the Securities, the Statement of
         Designation for the 2,800,000 Securities (the "Statement of
         Designation") and the Purchase Agreement (collectively, the
         "Transaction Documents") and to perform their obligations hereunder and
         thereunder.

                  (viii) The Second Amended and Restated Agreement of Limited
         Partnership of the Operating Partnership, as amended (the "Partnership
         Agreement"), is a valid and binding agreement enforceable in accordance
         with its terms. At Closing Time (as hereinafter defined), Crescent Real
         Estate Equities, Ltd., a Delaware corporation ("CGP, Inc."), a wholly
         owned subsidiary of the Company, will be the sole general partner of
         the Operating Partnership and will be the holder of one percent (1%) of
         the interests in the Operating Partnership.

                  (ix) Each of the partnership agreements, limited liability
         company agreements, or other, similar instruments to which the Company
         or any of its Subsidiaries is a party has been duly authorized,
         executed and delivered by the parties thereto and constitutes the valid
         agreement thereof, enforceable in accordance with its terms. All of the
         issued and outstanding shares of capital stock of each of the corporate
         Subsidiaries have been duly authorized and validly issued and are fully
         paid and non-assessable. All of the shares of capital stock or limited
         partnership or equity interests, as the case may be, of each of the
         Subsidiaries owned by the Company, the Operating Partnership or the
         Subsidiaries are free and clear of all liens, charges and encumbrances,
         except that (i) the partnership interests in Crescent Real Estate
         Funding I, L.P. and Crescent Real Estate Funding II, L.P. are pledged
         as collateral under the Fleet I and II Term Loan (as described in the
         Form 10-K), and (ii) the partnership interests in Crescent Spectrum
         Center, L.P. and the equity interests in its general partners are
         pledged as collateral under the Mezzanine portion of the Deutsche Bank
         - CMBS Loan (as described in the Form 10-K).

                  (x) The authorized, issued and outstanding beneficial
         interests in the Company are as set forth in the Prospectus (except for
         subsequent issuances, if any, pursuant to clauses (A) and (B) below);
         and all of such beneficial interests have been duly authorized, are
         validly issued, fully paid and non-assessable and have been offered and
         sold in compliance with all applicable laws (including, without
         limitation, federal securities laws). No shares of capital stock of the

                                       4
<PAGE>

         Company are reserved for any purpose except in connection with: (A) the
         incentive compensation plans of the Company as described in the
         Registration Statement, (B) the possible issuance of Common Shares upon
         the exchange of Units, including Units to be issued upon exercise of
         existing options to acquire Units, pursuant to the Partnership
         Agreement, (C) the possible issuance of Common Shares upon exercise of
         an existing option to acquire up to 217,530 Common Shares, (D) the
         possible issuance of up to 664,294 Common Shares upon the exchange of a
         portion of a partnership interest in Desert Mountain Properties Limited
         Partnership, for which sufficient Common Shares have been reserved for
         possible future issuance, and (E) the possible issuance of Common
         Shares upon conversion of the outstanding 6 3/4% Series A Cumulative
         Convertible Preferred Shares. Except for (A) Units, (B) Common Shares
         issuable upon the exercise of options for Common Shares, (C) Units
         issuable upon the exercise of options for Units and Common Shares
         issuable upon exchange of Units for Common Shares, (D) Common Shares
         issuable upon conversion of the outstanding 6 3/4% Series A Cumulative
         Convertible Preferred Shares and (E) up to 664,294 Common Shares upon
         the exchange of a portion of a partnership interest in Desert Mountain
         Properties Limited Partnership, there are no outstanding securities
         convertible into or exchangeable for any beneficial interests in the
         Company and no outstanding options, rights (preemptive or otherwise) or
         warrants to purchase or to subscribe for such interests or any other
         securities of the Company.

                  (xi) The Securities have been duly authorized for issuance and
         sale to the Purchasers and, when issued and delivered by the Company
         pursuant to the Purchase Agreement, following filing with the County
         Clerk of Tarrant County, Texas of the Statement of Designation and
         against payment of the consideration set forth herein, will be validly
         issued, fully paid and non-assessable. The Securities will be offered
         and sold at Closing Time in compliance with all applicable laws
         (including, without limitation, federal securities laws). The terms of
         the Securities conform to all statements and descriptions related
         thereto contained in the Prospectus. The form of the certificates used
         to evidence the Securities are due and proper form and comply with all
         applicable legal requirements. The issuance of the Securities is not
         subject to any preemptive or other similar rights and, except as
         summarized in the Prospectus and set forth in the Declaration of Trust,
         the Statement of Designation or the Company's Amended and Restated
         Bylaws, as amended (the "Bylaws"), there are no restrictions on the
         voting or transfer of the Securities pursuant to the Company's
         Declaration of Trust, Statement of Designation or Bylaws or any
         agreement or other instrument.

                  (xii) The Common Shares issuable upon conversion of the
         Securities will have been duly authorized and reserved for issuance
         upon such conversion and such shares, when issued upon such conversion
         or exercise, will be duly authorized, validly issued, fully paid and
         non-assessable. The terms of the Common Shares issuable upon conversion
         of the Securities conform to all statements and descriptions related
         thereto contained in the Prospectus. The form of the certificates used
         to evidence the Common Shares issuable upon conversion of the
         Securities are due and proper form and comply with all applicable legal
         requirements. The issuance of the Common Shares issuable upon
         conversion of the Securities is not subject to any preemptive or other
         similar rights and, except as summarized in the Prospectus and set
         forth in the Declaration of Trust, the Statement of Designation or the
         Bylaws, there are no restrictions on the voting or transfer of the
         Common Shares issuable upon conversion of the Securities pursuant to
         the Company's Declaration of Trust, Statement of Designation or Bylaws
         or any agreement or other instrument.

                  (xiii) The authorized, issued and outstanding Units are as set
         forth in the Registration Statement and Prospectus except to the extent
         of changes due to the conversion of Units to Common Shares or the
         exercise of existing options to acquire Units. All of the Units
         outstanding

                                       5
<PAGE>
         at Closing Time were duly authorized for issuance by the Operating
         Partnership and are validly issued and fully paid. The Units were
         offered and sold in compliance with all applicable laws (including,
         without limitation, federal and state securities laws). Except as
         summarized in the Prospectus or set forth in the Partnership Agreement,
         there are no preemptive or other rights to subscribe for or to
         purchase, nor any restriction upon the voting or transfer of, any Units
         pursuant to the Partnership Agreement or any other instrument. The
         terms of the Units conform to all statements and descriptions related
         thereto contained in the Prospectus.

                  (xiv) None of the Company, the Operating Partnership or any of
         the Subsidiaries is (i) in violation of its charter, by-laws,
         partnership agreements, declarations of trust or similar organizational
         documents; (ii) in default in any material respect, and no event has
         occurred that, with notice or lapse of time or both, would constitute
         such a default, in the due performance or observance of any term,
         covenant or condition contained in any indenture, mortgage, deed of
         trust, loan agreement or other agreement or instrument to which the
         Company, the Operating Partnership or any of the Subsidiaries is a
         party or by which the Company, the Operating Partnership or any of the
         Subsidiaries is bound or to which any of the property or assets of the
         Company, the Operating Partnership or any of the Subsidiaries is
         subject; or (iii) in violation of any law or statute or any judgment,
         order or regulation of any court or arbitrator or governmental or
         regulatory authority, except, in the case of clauses (ii) and (iii)
         above, for any such default or violation that would not, individually
         or in the aggregate, have a Material Adverse Effect.

                  (xv) The execution, delivery and performance by the Company or
         the Operating Partnership of each of the Transaction Documents to which
         each is a party, the issuance and sale of the Securities and compliance
         by the Company and the Operating Partnership with the terms thereof and
         the consummation of the transactions contemplated by the Transaction
         Documents will not (i) conflict with or result in a breach or violation
         of any of the terms or provisions of, or constitute a default under, or
         result in the creation or imposition of any lien, charge or encumbrance
         upon any property or assets of the Company, the Operating Partnership
         or any of the Subsidiaries pursuant to, any indenture, mortgage, deed
         of trust, loan agreement or other agreement or instrument to which the
         Company, the Operating Partnership or any of the Subsidiaries is a
         party or by which the Company, the Operating Partnership or any of the
         Subsidiaries is bound or to which any of the property or assets of the
         Company, the Operating Partnership or any of the Subsidiaries is
         subject, (ii) result in any violation of the provisions of the charter,
         by-laws, partnership agreements, declarations of trust or similar
         organizational documents of the Company, the Operating Partnership or
         any of the Subsidiaries, except that any violation of the Preferred
         Shares Ownership Limit or Common Shares Ownership Limit (as such terms
         are defined in the Declaration of Trust) because of the issuance of the
         Securities to any Purchaser, has been waived, or will be waived prior
         to the Closing Time, by the Company's Board of Trust Managers as
         permitted by the Declaration of Trust, or (iii) result in the violation
         of any law or statute or any judgment, order or regulation of any court
         or arbitrator or governmental or regulatory authority, except, in the
         case of clauses (i) and (iii) above, for any such conflict, breach or
         violation that would not, individually or in the aggregate, have a
         Material Adverse Effect.

                  (xvi) Except as described in the Prospectus, there are no
         legal, governmental or regulatory investigations, actions, suits or
         proceedings pending to which the Company, the Operating Partnership or
         any of the Subsidiaries is or may be a party or to which any property
         of the Company, the Operating Partnership or any of the Subsidiaries is
         or may be the subject that, individually or in the aggregate, if
         determined adversely to the Company or any of its subsidiaries, could
         reasonably be expected to have a Material Adverse Effect; and to the
         knowledge of the Company and the Operating Partnership, no such
         investigations, actions, suits

                                       6
<PAGE>
         or proceedings are threatened or contemplated by any governmental or
         regulatory authority or threatened by others.

                  (xvii) The Company qualified as a real estate investment trust
         under the Internal Revenue Code of 1986, as amended (the "Code"), with
         respect to all of its taxable years commencing with the taxable years
         ended December 31, 1994 and is organized in conformity with the
         requirements for qualification as a real estate investment trust, and
         its manner of operation has enabled it to meet the requirements for
         qualification as a real estate investment trust as of the date of the
         Prospectus, and its current and proposed manner of operation will
         enable it to meet the requirements for qualification and taxation as a
         real estate investment trust for its current and future taxable years.

                  (xviii) None of the Company, the Operating Partnership nor any
         of the Subsidiaries is, and after giving effect to the offering and
         sale of the Securities and the application of the proceeds thereof as
         described in Prospectus none of them will be, an "investment company"
         or an entity "controlled" by an "investment company" within the meaning
         of the Investment Company Act of 1940, as amended, and the rules and
         regulations of the Commission thereunder (collectively, the "1940
         Act").

                  (xix) The Company, the Operating Partnership and each of the
         Subsidiaries own or possess adequate rights to use all material
         patents, patent applications, trademarks, service marks, trade names,
         trademark registrations, service mark registrations, copyrights,
         licenses and know-how (including trade secrets and other unpatented
         and/or unpatentable proprietary or confidential information, systems or
         procedures) necessary for the conduct of their respective businesses;
         and the conduct of their respective businesses will not conflict in any
         material respect with any such rights of others, and the Company, the
         Operating Partnership and the Subsidiaries have not received any notice
         of any claim of infringement of or conflict with any such rights of
         others.

                  (xx) No consent, approval, authorization, order, registration
         or qualification of or with any court or arbitrator or governmental or
         regulatory authority is required for the execution, delivery and
         performance by the Company and the Operating Partnership of each of the
         Transaction Documents to which each is a party, the issuance and sale
         of the Securities and compliance by the Company and the Operating
         Partnership with the terms thereof and the consummation of the
         transactions contemplated by the Transaction Documents, except as may
         be required under the laws of the 1933 Act, the 1933 Act Regulations or
         state securities and real estate syndication laws.

                  (xxi) The Company, the Operating Partnership and each of the
         Subsidiaries possess all licenses, certificates, permits and other
         authorizations issued by, and have made all declarations and filings
         with, the appropriate federal, state, local or foreign governmental or
         regulatory authorities that are necessary for the ownership or lease of
         their respective properties or the conduct of their respective
         businesses as described in the Prospectus, except where the failure to
         possess or make the same would not, individually or in the aggregate,
         have a Material Adverse Effect; and except as described in the
         Prospectus, none of the Company, the Operating Partnership nor any of
         the Subsidiaries has received notice of any revocation or modification
         of any such license, certificate, permit or authorization or has any
         reason to believe that any such license, certificate, permit or
         authorization will not be renewed in the ordinary course, except where
         such revocation or modification could not reasonably be expected to
         have a Material Adverse Effect.

                                       7
<PAGE>

                  (xxii) The documents incorporated or deemed to be incorporated
         by reference in the Prospectus, at the time it was or hereafter is
         filed with the Commission, complied and will comply in all material
         respects with the requirements of the 1934 Act and the rules and
         regulations of the Commission under the 1934 Act (the "1934 Act
         Regulations"), and, when read together with the other information in
         the Prospectus, at the time the Registration Statement became
         effective, as of the date hereof or during the period specified in
         Section 3(f) hereof, did not and will not include an untrue statement
         of a material fact or omit to state a material fact required to be
         stated therein or necessary to make the statements therein, in the
         light of the circumstances under which they were made, not misleading.

                  (xxiii) No labor disturbance by or dispute with employees of
         the Company, the Operating Partnership or any of the Subsidiaries
         exists or, to the knowledge of the Company, is contemplated or
         threatened.

                  (xxiv) Except as otherwise disclosed in the Prospectus, (i)
         the Company, the operating Partnership and each of the Subsidiaries
         have good and marketable title in fee simple to, or have valid rights
         to lease or otherwise use, all Properties that are material to the
         respective businesses of the Company, the Operating Partnership and the
         Subsidiaries, except those that (a) do not materially and adversely
         affect the value of such property and do not materially interfere with
         the use made and proposed to be made of such Property by the Company,
         the Operating Partnership and the Subsidiaries or (b) could not
         reasonably be expected, individually or in the aggregate, to have a
         Material Adverse Effect, (ii) all liens, pledges, security interests,
         claims, defects, imperfections of title or any other encumbrances of
         any kind or nature (collectively, "Liens") that are required to be
         disclosed in the Form 10-K are disclosed therein, (iii) neither the
         Company nor, to the knowledge of the Company, any other party to any
         lease relating to any Property is in default under any such lease and
         the Company is not aware of any event that, with the giving of notice
         or the passage of time, or both, would constitute a default under any
         such lease, except in each case such defaults that would not,
         individually or in the aggregate, have a Material Adverse Effect; (iv)
         each of the leases pursuant to which all or any portion of the
         Properties are demised is in full force and effect and, except as set
         forth in the Form 10-K, no tenant thereunder has a right of first
         refusal to purchase the premises demised thereunder, except in each
         case with such exceptions as would not, individually or in the
         aggregate, have a Material Adverse Effect, (v) each of the Properties
         is in compliance with all applicable codes, laws and regulations
         (including, without limitation, building and zoning codes, laws and
         regulations), except for such failures to comply that would not,
         individually or in the aggregate, have a Material Adverse Effect, (vii)
         the Company does not have any knowledge of any pending or threatened
         condemnation, zoning change or other proceeding or action that will in
         any manner affect the size of, use of, improvements on, construction on
         or access to the real properties, except such proceedings or actions
         that would not, individually or in the aggregate, have a Material
         Adverse Effect, (viii) all Properties and buildings held under lease by
         the Company, the Operating Partnership or any of the Subsidiaries and
         described in the Form 10-K are held by them under valid, subsisting and
         enforceable leases with such exceptions as are not material and do not
         interfere in any material respect with the use made and proposed to be
         made of such Property and buildings by the Company, the Operating
         Partnership or the Subsidiaries, as the case may be; (ix) all real
         property is free of material structural defects and all material
         building systems contained therein are in good working order subject to
         ordinary wear and tear, except in each case as could not reasonably be
         expected to have a Material Adverse Effect.

                  (xxv) Except as disclosed in the Prospectus, (A) each
         Property, including, without limitation, the Environment (as defined
         below) associated with such Property, is free of any Hazardous
         Substance (as defined below), except for Hazardous Substances that
         would not have a

                                       8
<PAGE>
         Material Adverse Effect; (B) none of the Company, the Operating
         Partnership or any Subsidiary has caused or suffered to occur any
         Release (as defined below) of any Hazardous Substance into the
         Environment on, in, under or from any Property, and no condition exists
         on, in, under or, to the knowledge of the Company and the Operating
         Partnership, adjacent to any Property that is reasonably likely to
         result in the incurrence of material liabilities or any material
         violations of any Environmental Law (as defined below), give rise to
         the imposition of any Lien (as defined below) under any Environmental
         Law, or cause or constitute a health, safety or environmental hazard to
         any property, person or entity; (C) none of the Company, the Operating
         Partnership or any Subsidiary intends to use the properties or assets
         described in the Prospectus or any other real property for the purpose
         of handling, burying, storing, retaining, refining, transporting,
         processing, manufacturing, generating, producing, spilling, seeping,
         leaking, escaping, leaching, pumping, pouring, emitting, emptying,
         discharging, injecting, dumping, transferring or otherwise disposing of
         or dealing with a Hazardous Substance, except for materials utilized in
         the ordinary course of business of the properties, provided such use
         would not, in the ordinary course of business, give rise to liability
         under any Environmental Law; (D) none of the Company, the Operating
         Partnership or any Subsidiary has received any notice of a claim under
         or pursuant to any Environmental Law or under common law pertaining to
         Hazardous Substances on or originating from any Property; (E) none of
         the Company, the Operating Partnership or any Subsidiary has received
         any notice from any Governmental Authority (as defined below) claiming
         any violation of any Environmental Law; (F) no Property is included or,
         to the knowledge of the Company and the Operating Partnership, proposed
         for inclusion on the National Priorities List issued pursuant to CERCLA
         (as defined below) by the United States Environmental Protection Agency
         (the "EPA") or on the Comprehensive Environmental Response,
         Compensation, and Liability Information System database maintained by
         the EPA, and has not otherwise been identified by the EPA as a
         potential CERCLA removal, remedial or response site or included or, to
         the knowledge of the Company and the Operating Partnership, proposed
         for inclusion on, any similar list of potentially contaminated sites
         pursuant to any other Environmental Law and (G) there are no
         underground storage tanks located on or in any Property except where
         the presence thereof would not have a Material Adverse Effect.

                  As used herein, "Hazardous Substance" shall include, without
         limitation, any hazardous substance, hazardous waste, toxic substance,
         pollutant, solid waste or similarly designated materials, including,
         without limitation, oil, petroleum or any petroleum-derived substance
         or waste, asbestos or asbestos-containing materials, PCBs, pesticides,
         explosives, radioactive materials, dioxins, urea formaldehyde
         insulation or any constituent of any such substance, pollutant or
         waste, including any such substance, pollutant or waste identified or
         regulated under any Environmental Law (including, without limitation,
         materials listed in the United States Department of Transportation
         Optional Hazardous Material Table, 49 C.F.R. Section 172.101, as the
         same may now or hereafter be amended, or in the EPA's List of Hazardous
         Substances and Reportable Quantities, 40 C.F.R. Part 302, as the same
         may now or hereafter be amended); "Environment" shall mean any surface
         water, drinking water, ground water, land surface, subsurface strata,
         river sediment, buildings, structures, and ambient, workplace and
         indoor air; "Environmental Law" shall mean the Comprehensive
         Environmental Response, Compensation and Liability Act of 1980, as
         amended (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Resource
         Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section
         6901 et seq.), the Clean Air Act, as amended (42 U.S.C. Section 7401 et
         seq.), the Clean Water Act, as amended (33 U.S.C. Section 1251 et
         seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section
         2601 et seq.), the Occupational Safety and Health Act of 1970, as
         amended (29 U.S.C. Section 651 et seq.), the Hazardous Materials
         Transportation Act, as amended (49 U.S.C. Section 1801 et seq.), and
         all other federal, state and local laws, ordinances, regulations,
         rules, orders, decisions and permits relating to the protection of the
         environment or of human health from environmental effects;

                                       9
<PAGE>

         "Governmental Authority" shall mean any federal, state or local
         governmental office, agency or authority having the duty or authority
         to promulgate, implement or enforce any Environmental Law; "Lien" shall
         mean, with respect to any Property, any mortgage, deed of trust,
         pledge, security interest, lien, encumbrance, penalty, fine, charge,
         assessment, judgment or other liability in, on or affecting such
         Property; and "Release" shall mean any spilling, leaking, pumping,
         pouring, emitting, emptying, discharging, injecting, escaping,
         leaching, dumping, emanating or disposing of any Hazardous Substance
         into the Environment, including, without limitation, the abandonment or
         discard of barrels, containers, tanks (including, without limitation,
         underground storage tanks) or other receptacles containing or
         previously containing any Hazardous Substance or any release, emission,
         discharge or similar term, as those terms are defined or used in any
         Environmental Law.

                  (xxvi) The Company, the Operating Partnership and each of the
         Subsidiaries have timely paid all federal, state, local and foreign
         taxes and timely filed all tax returns required to be paid or filed
         through the date hereof (except (i) for taxes being contested in good
         faith and reserved against to the extent required by generally accepted
         accounting principles and (ii) in any case in which the failure to so
         file would not, individually or in the aggregate, have a Material
         Adverse Effect); and except as otherwise disclosed in the Prospectus,
         there is no tax deficiency that has been, or could reasonably be
         expected to be, asserted against the Company, the Operating Partnership
         or any of the Subsidiaries or any of their respective properties or
         assets.

                  (xxvii) None of the Company, the Subsidiaries, the Residential
         Development Corporations or the Operating Partnership, nor any of their
         trust managers, directors, officers or controlling persons, has taken
         or will take, directly or indirectly, any action resulting in a
         violation of Regulation M under the 1934 Act, or designed to cause or
         result under the 1934 Act or otherwise in, or which has constituted or
         which reasonably might be expected to constitute, the unlawful
         stabilization or manipulation of the price of any security of the
         Company or facilitation of the sale or resale of the Securities.

                  (xxviii) Title insurance in favor of the Company, the
         Operating Partnership or any of the Subsidiaries is maintained with
         respect to each of the Properties owned by the Company, the Operating
         Partnership or such Subsidiary in an amount at least equal to the cost
         of acquisition of such Property, except, in each case where the failure
         to maintain such title insurance would not have a Material Adverse
         Effect. Title insurance in favor of the mortgagee is maintained in an
         amount equal to the maximum commitment of the related loan.

                  (xxix) The Company, the Operating Partnership and each of the
         Subsidiaries have insurance covering their respective properties,
         operations, personnel and businesses, including business interruption,
         covering risks and in amounts that are commercially reasonable for the
         assets and properties owned by them and that are consistent with the
         types and amounts of insurance typically maintained by present owners
         of similar types of properties; and none of the Company, the Operating
         Partnership nor any of the Subsidiaries has (i) received notice from
         any insurer or agent of such insurer that capital improvements or other
         expenditures are required or necessary to be made in order to continue
         such insurance or (ii) any reason to believe that it will not be able
         to renew its existing insurance coverage as and when such coverage
         expires or to obtain similar coverage at reasonable cost from similar
         insurers as may be necessary to continue its business.

                  (xxx) The Company, the Operating Partnership and each of the
         Subsidiaries maintain systems of internal accounting controls
         sufficient to provide reasonable assurance that (i) transactions are
         executed in accordance with management's general or specific
         authorizations; (ii)

                                       10
<PAGE>
         transactions are recorded as necessary to permit preparation of
         financial statements in conformity with generally accepted accounting
         principles and to maintain asset accountability; (iii) access to books
         and records is permitted only in accordance with management's general
         or specific authorization; and (iv) the recorded accountability for
         assets is compared with the existing assets at reasonable intervals and
         appropriate action is taken with respect to any differences.

                  (xxxi) None of the Company, the Operating Partnership nor any
         of the Subsidiaries nor, to the knowledge of the Company, any trust
         manager, director, officer, agent, employee or other person associated
         with or acting on behalf of the Company, the Operating Partnership or
         any of the Subsidiaries has (i) used any corporate funds for any
         unlawful contribution, gift, entertainment or other unlawful expense
         relating to political activity; (ii) made any direct or indirect
         unlawful payment to any foreign or domestic government official or
         employee from corporate funds; (iii) violated or is in violation of any
         provision of the Foreign Corrupt Practices Act of 1977; or (iv) made
         any bribe, rebate, payoff, influence payment, kickback or other
         unlawful payment.

                  (xxxii) On and immediately after the Closing Date, the Company
         (after giving effect to the issuance of the Securities and the other
         transactions related thereto as described in the Prospectus) will be
         Solvent. As used in this paragraph, the term "Solvent" means, with
         respect to a particular date, that on such date (i) the present fair
         market value (or present fair saleable value) of the assets of the
         Company, and its consolidated Subsidiaries is not less than the total
         amount required to pay the liabilities of the Company and its
         consolidated subsidiaries on its total existing debts and liabilities
         (including contingent liabilities) as they become absolute and matured;
         (ii) the Company is able to realize upon its assets and pay its debts
         and other liabilities, contingent obligations and commitments as they
         mature and become due in the normal course of business; (iii) assuming
         consummation of the issuance of the Securities as contemplated by this
         Agreement and the Prospectus, the Company is not incurring debts or
         liabilities beyond its ability to pay as such debts and liabilities
         mature; (iv) the Company is not engaged in any business or transaction,
         and does not propose to engage in any business or transaction, for
         which its property would constitute unreasonably small capital after
         giving due consideration to the prevailing practice in the industry in
         which the Company is engaged; and (v) none of the Company, the
         Operating Partnership nor any of the Subsidiaries is a defendant in any
         civil action that would result in a judgment that the Company is or
         would become unable to satisfy.

                  (xxxiii) No forward-looking statement (within the meaning of
         Section 27A of the Securities Act and Section 21E of the Exchange Act)
         contained in the Prospectus has been made or reaffirmed without a
         reasonable basis or has been disclosed other than in good faith.

                  (xxxiv) Nothing has come to the attention of the Company that
         has caused the Company to believe that the statistical and
         market-related data included or incorporated by reference in the
         Prospectus is not based on or derived from sources that are reliable
         and accurate in all material respects.

                  (xxxv) The Operating Partnership has received from Arthur
         Andersen LLP on March 19, 2002 a letter concerning its audit quality
         controls in connection with its audits of the financial statements of
         the Operating Partnership and its consolidated Subsidiaries, including
         representations regarding the continuity of Arthur Andersen LLP's
         personnel working on the audit, the availability of national office
         consultation and the availability of personnel at foreign affiliates of
         Arthur Andersen LLP to conduct relevant portions of the audit (the
         "Representation Letter") and such letter has not been rescinded and the
         Company and the Operating Partnership

                                       11
<PAGE>
         have no reason to believe that the representations in such letter are
         not true and correct in all respects.

         (b) Officer's Certificates. Any certificate signed by any officer of
the Company, or any authorized representative of the Operating Partnership or
any of their Subsidiaries delivered to the Placement Agent or to counsel for the
Placement Agent shall be deemed a representation and warranty by such person or
entity, as the case may be, to the Placement Agent as to the matters covered
thereby.

         SECTION 2. Placement Agent Fees.

         (a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
pay Merrill Lynch a fee (the "Fee"), based upon the aggregate amount of
Securities sold, as calculated in accordance with the provisions of this Section
for its services pursuant to this Agreement. The Fee will equal to 2.00% of the
purchase price of all Securities sold to the Purchaser.

         (b) On the date in which the Purchaser purchases the Securities from
the Company in accordance with this Agreement (the "Closing Time"), the Company
shall pay the Fee to the Placement Agent in cash by wire transfer of immediately
available funds to a bank account designated by the Placement Agent.

         SECTION 3. Covenants of the Company. Each of the Company and the
Operating Partnership covenants with the Placement Agent as follows:

         (a) Compliance with Securities Regulations and Commission Requests. The
Company will notify the Placement Agent immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.

         (b) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Placement Agent or for
the Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the

                                       12
<PAGE>
1933 Act Regulations, the Company will promptly prepare and file with the
Commission such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the Prospectus
comply with such requirements, and the Company will furnish to the Placement
Agent such number of copies of such amendment or supplement as the Placement
Agent may reasonably request.

         (c) Blue Sky Qualifications. The Company will use its commercially
reasonable efforts, in cooperation with the Placement Agent, to qualify the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions (domestic or foreign) as the Placement Agent may
designate and to maintain such qualifications in effect for a period of not less
than one year from the later of the effective date of the Registration Statement
and any Rule 462(b) Registration Statement; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Securities have been so qualified,
the Company will file such statements and reports as may be required by the laws
of such jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration Statement and
any Rule 462(b) Registration Statement.

         (d) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.

         (e) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.

         (f) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."

         (g) REIT Qualification. The Company will use its best efforts to
continue to meet the requirements to qualify as a "real estate investment trust"
under the Code for each of its taxable years for so long as the Board of Trust
Managers deems it in the best interests of the Company's shareholders to remain
so qualified.

         (h) Listing. The Company will use its best efforts to effect the
listing of the Securities and the Common Shares issuable on conversion of the
Securities on the New York Stock Exchange.

         (i) Reservation of Common Shares. The Company will reserve and keep
available at all times, free of preemptive or other similar rights, a sufficient
number of Common Shares for the purpose of enabling the Company to satisfy any
obligations to issue such shares upon conversion of the Securities.

         (j) No Manipulation of Market for Securities. Except for the
authorization of actions permitted to be taken by the Placement Agent as
contemplated herein or in the Prospectus, neither the Company nor the Operating
Partnership will (a) take, directly or indirectly, any action designed to cause
or to result in, or that might reasonably be expected to constitute, the
unlawful stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities, and (b) until the
Closing Time, (i) sell, bid for or purchase the Securities or pay any person any

                                       13
<PAGE>

compensation for soliciting purchases of the Securities or (ii) pay or agree to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.

         SECTION 4. Payment of Expenses.

         (a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) and each amendment thereto, (ii)
the preparation and delivery to the Placement Agent of this Agreement and such
other documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the Securities, (iii) the fees and disbursements
of the Company's counsel, accountants and other advisors, (iv) the qualification
of the Securities under securities laws in accordance with the provisions of
Section 3(c) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Placement Agent in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (v) the printing and delivery to the Placement Agent of copies of the
Prospectus and any amendments or supplements thereto, (vi) the fees and expenses
of any transfer agent or registrar for the Securities and (vii) the fees and
expenses incurred in connection with the listing of the Securities on the New
York Stock Exchange. It is understood, however, that the Placement Agent will
pay all fees and disbursements of their counsel in connection with this
Agreement.

         (b) Termination of Agreement. If this Agreement is terminated by the
Placement Agent in accordance with the provisions of Section 5 or Section 9(a),
the Company shall reimburse the Placement Agent for all of its out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Placement Agent.

         SECTION 5. Conditions of Placement Agent's Obligations. The obligations
of the Placement Agent hereunder are subject to the accuracy of the
representations and warranties of the Company and the Operating Partnership
contained in Section 1 hereof or in certificates of any officer or authorized
representative of the Company or the Operating Partnership delivered pursuant to
the provisions hereof, to the performance by the Company or the Operating
Partnership of its covenants and other obligations hereunder, and to the
following further conditions:

         (a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, is effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Placement Agent. A prospectus
supplement shall have been filed with the Commission in accordance with Rule
424(b).

         (b) Legal Opinions. At Closing Time, you shall have received:

                  (i) The favorable opinion, dated as of Closing Time, of Shaw
         Pittman LLP, counsel for each of the Company, the Operating Partnership
         and the Significant Subsidiaries in form and substance reasonably
         satisfactory to your counsel, substantially in the form attached hereto
         as Annex A.

                  (ii) The favorable opinion, dated as of Closing Time, of Shaw
         Pittman LLP, counsel for the Company, regarding REIT qualification, in
         form and substance reasonably satisfactory to your counsel,
         substantially in the form attached hereto as Annex B.

                                       14
<PAGE>

                  (iii) The favorable opinion, dated as of Closing Time, of
         Hogan & Hartson L.L.P., and the favorable 10b-5 letter of Cahill Gordon
         & Reindel, your counsel, with respect to such matters as you may
         reasonably request, and such counsel shall have received such documents
         and information as they may reasonably request to enable them to pass
         upon such matters.

         (c) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company, the Operating Partnership and the Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Placement Agent shall have received a certificate of the Chief Executive
Officer, President and Chief Operating Officer, President, Investments and Chief
Investment Officer or a Executive or Senior Vice President and the chief
financial or accounting officer of each of the Company and CGP, Inc., dated as
of Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing Time and (iii) each of the Company and the Operating Partnership has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.

         (d) Accountant's Comfort Letter. At the Closing Time, the Placement
Agent shall have received from Arthur Andersen LLP a letter dated such date, in
form and substance satisfactory to the Placement Agent, containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and certain
financial information contained or incorporated by reference in the Registration
Statement and the Prospectus.

         (e) Representation Letter. On the Closing Date, the Representation
Letter of Arthur Andersen LLP shall not have been rescinded and the Company and
the Operating Partnership shall have no reason to believe that the
representations in such letter are not true and correct in all respects.

         (f) Approval of Listing. At Closing Time, the Securities and the Common
Shares issuable upon conversion of the Securities shall have been approved for
listing on the New York Stock Exchange, subject only to official notice of
issuance.

         (g) Filing of Statement of Designation. At or before the Closing Time,
the Company shall have filed the Statement of Designations with the County Clerk
of Tarrant County, Texas.

         (h) Waiver of Preferred Shares Ownership Limit and Common Shares
Ownership Limit. At or before the Closing Time, the Board of Trust Managers of
the Company shall have approved a resolution waiving any violation of the
Preferred Shares Ownership Limit and Common Shares Ownership Limit because of
the issuance of the Securities.

         (i) Additional Documents. At Closing Time counsel for the Placement
Agent shall have been furnished with such documents as they may reasonably
require for the purpose of enabling them to pass upon the issuance and sale of
the Securities as herein contemplated, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to the Placement Agent
and counsel for the Placement Agent.

                                       15
<PAGE>

         (j) Termination of Agreement. If any condition specified in this
Section 5 shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Placement Agent by notice to the Company
at any time at or prior to Closing Time and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7, 8 and 12 shall survive any such termination and
remain in full force and effect.

         SECTION 6. Indemnification.

         (a) Indemnification of Placement Agent. Each of the Company and the
Operating Partnership agrees, jointly and severally, to indemnify and hold
harmless the Placement Agent and each person, if any, who controls the Placement
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act, and any director, officer, employee or affiliate thereof as follows:

                  (i) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in the
         Registration Statement (or any amendment thereto), or the omission or
         alleged omission therefrom of a material fact required to be stated
         therein or necessary to make the statements therein not misleading or
         arising out of any untrue statement or alleged untrue statement of a
         material fact included in any preliminary prospectus or the Prospectus
         (or any amendment or supplement thereto), or the omission or alleged
         omission therefrom of a material fact necessary in order to make the
         statements therein, in the light of the circumstances under which they
         were made, not misleading.

                  (ii) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, to the extent of the aggregate amount
         paid in settlement of any litigation, or any investigation or
         proceeding by any governmental agency or body, commenced or threatened,
         or of any claim whatsoever based upon any such untrue statement or
         omission, or any such alleged untrue statement or omission; provided
         any such settlement is effected with the written consent of the Company
         and the Operating Partnership; and

                  (iii) against any and all expense whatsoever, as incurred
         (including the fees and disbursements of counsel chosen by the
         Placement Agent), reasonably incurred in investigating, preparing or
         defending against any litigation, or any investigation or proceeding by
         any governmental agency or body, commenced or threatened, or any claim
         whatsoever based upon any such untrue statement or omission, or any
         such alleged untrue statement or omission, to the extent that any such
         expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Placement Agent expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto).

         (b) Indemnification of Company, Operating Partnership, Trust Managers,
Directors and Officers. The Placement Agent severally agrees to indemnify and
hold harmless the Company and the Operating Partnership, each person, if any,
who controls the Company and the Operating Partnership within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, and any officer,
director, trust manager, employee or affiliate thereof, against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) in

                                       16
<PAGE>
reliance upon and in conformity with written information furnished to the
Company by the Placement Agent expressly for use in the Registration Statement
(or any amendment thereto) or the Prospectus (or any amendment or supplement
thereto).

         (c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by the Placement Agent,
and, in the case of parties indemnified pursuant to Section 6(b) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

         SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Operating Partnership on the one hand and the Placement Agent on the other hand
from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Operating Partnership on the one hand and of the Placement Agent on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

         The relative benefits received by the Company and the Operating
Partnership on the one hand and the Placement Agent on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Fee received by the Placement Agent.

         The relative fault of the Company and the Operating Partnership on the
one hand and the Placement Agent on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Operating Partnership
or by the

                                       17
<PAGE>
Placement Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

         The Company, the Operating Partnership and the Placement Agent agree
that it would not be just and equitable if contribution pursuant to this Section
7 were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 7, the Placement Agent
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities placed by it exceeds the amount of any
damages which the Placement Agent has otherwise been required to pay by reason
of any such untrue or alleged untrue statement or omission or alleged omission.

         No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

         For purposes of this Section 7, each person, if any, who controls the
Placement Agent within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Placement
Agent, and each trust manager of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. For purposes
of this Section 7, the Company and the Operating Partnership shall be deemed one
party, jointly and severally liable for any obligations hereunder.

         SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or CGP, Inc., as general
partner of the Operating Partnership submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the Placement Agent or controlling person, or by or on behalf of
the Company or the Operating Partnership, and shall survive delivery of the
Securities to the Purchasers.

         SECTION 9. Termination of Agreement.

         (a) Termination; General. The Placement Agent may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, the Operating
Partnership and any of the Subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business, or (ii) if there has occurred
any material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Placement Agent,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the New
York

                                       18
<PAGE>
Stock Exchange, or if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.

         (b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, 8 and 12 shall survive such termination and remain in full force and
effect.

         SECTION 10. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Placement
Agent shall be directed to Merrill Lynch & Co. at 4 World Financial Center, 26th
Floor, New York, New York 10080, attention of John Case; notices to the Company
and the Operating Partnership shall be directed to it at 777 Main Street, Suite
2100, Forth Worth, Texas, 76102, attention of John C. Goff, Chief Executive
Officer.

         SECTION 11. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Placement Agent, the Company and the Operating
Partnership and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Placement Agent, the Company and the Operating
Partnership and their respective successors and the controlling persons and
officers, trust managers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Placement Agent, the Company, the Operating
Partnership and their respective successors, and said controlling persons and
officers, trust managers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Placement Agent shall be deemed to be a
successor by reason merely of such purchase.

         SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. UNLESS OTHERWISE EXPLICITLY
PROVIDED, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

         SECTION 13. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

                                       19
<PAGE>

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Placement Agent, the Company and the Operating Partnership in
accordance with its terms.

                                   Very truly yours,

                                   CRESCENT REAL ESTATE EQUITIES COMPANY

                                   By:   /s/ Jerry R. Crenshaw, Jr.
                                         ---------------------------------------
                                         Name: Jerry R. Crenshaw, Jr.
                                         Title: Senior Vice President and Chief
                                                Financial Officer

                                   CRESCENT REAL ESTATE EQUITIES LIMITED
                                   PARTNERSHIP

                                   By:  Crescent Real Estate Equities, Ltd.,
                                        its General Partner

                                   By:   /s/ Jerry R. Crenshaw, Jr.
                                         ---------------------------------------
                                         Name: Jerry R. Crenshaw, Jr.
                                         Title: Senior Vice President and Chief
                                                Financial Officer

CONFIRMED AND ACCEPTED,
         as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
            INCORPORATED

By: /s/ John Case
    ---------------------------------------
        Authorized Signatory

                                       20
<PAGE>

                                   SCHEDULE 1

                            SIGNIFICANT SUBSIDIARIES

<Table>
<Caption>
Name                                                Jurisdiction of Organization
----                                                ----------------------------
<S>                                                 <C>
CRE Management I Corp.                              Delaware
CRE Management II Corp.                             Delaware
CRE Management III Corp.                            Delaware
CRE Management VIII, LLC                            Delaware
CRE Management IX, LLC                              Delaware
Crescent Real Estate Equities Limited Partnership   Delaware
Crescent Real Estate Equities, Ltd.                 Delaware
Crescent Real Estate Funding I, L.P.                Delaware
Crescent Real Estate Funding II, L.P.               Delaware
Crescent Real Estate Funding III, L.P.              Delaware
Crescent Real Estate Funding VIII, L.P.             Delaware
Crescent Real Estate Funding IX, L.P.               Delaware
</Table>

                                       21

                        [Annexes Intentionally Omitted]

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