Annual Meeting of Shareholders. June 13, :00am (CDST)

Transcription

1 Annual Meeting of Shareholders June 13, :00am (CDST) 1

2 Forward - Looking Statements Certain matters that will be discussed during the Annual Shareholders Presentation for Crescent Real Estate Equities Company and in the associated materials are forward-looking statements within the meaning of the federal securities laws. Although Crescent believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, Crescent s actual results could differ materially from those described in the forward-looking statements. Factors that could cause actual results to differ materially from Crescent s expectations include the Company s ability, in its office properties, to timely lease unoccupied square footage and timely re-lease occupied square footage upon expiration on favorable terms, which continue to be adversely affected by existing real estate conditions (including the vacancy levels in particular markets, decreased rental rates and competition from other properties) and may also be adversely affected by general economic downturns; the continuation of relatively high vacancy rates, reduced rental rates and relatively high tenant concessions in the Company s office portfolio as a result of conditions within the Company s principal markets; the ability of the Company to reinvest available funds at anticipated returns and consummate anticipated office acquisitions on favorable terms and within anticipated time frames; adverse changes in the financial condition of existing tenants, in particular El Paso Energy and its affiliates which provide 5.7% of the Company s annualized office revenues; deterioration in the Company s resort/businessclass hotel markets or in the economy generally; deterioration in the market or in the economy generally and increases in construction costs associated with development of residential land or luxury residences, including single-family homes, town homes and condominiums; financing risks, such as the Company s ability to generate revenue sufficient to service and repay existing or additional debt, increases in debt service associated with increased debt and with variable-rate debt, the Company s ability to meet financial and other covenants and the Company s ability to consummate financings and refinancings on favorable terms and within any applicable time frames; the ability of the Company to dispose of its investment land, and other non-core assets, on favorable terms and within anticipated time frames; the concentration of a significant percentage of the Company s assets in Texas; the existence of complex regulations relating to the Company s status as a REIT, the effect of future changes in REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT; other risks detailed from time to time in the Company s filings with the SEC. 2

3 Introduction» Welcoming Remarks» Introduction of the Board of Trust Managers» Business Meeting» Management Presentation The Crescent 3

4 Crescent s Strategic Growth Platforms #1 Office Strategic Investments» Modernized strategy - manage institutional capital» Selectively develop #2 Resort Residential #3 Canyon Ranch» Selectively finance - mezzanine» Develop high-end second homes in resort locations» Resort investments» Enhance existing resorts» Canyon Ranch Living and additional brand opportunities Lifestyle Investments 4

5 2007 FFO Target 2007 FFO Target = $2.00 Growth from Existing Investments Growth from New Investments Office 78 Office Buildings 31.6M Square Feet 43% of SF in Joint Venture Strategic Investments Resort Residential Canyon Ranch Resorts / Hotels AmeriCold Office Direct / Joint Venture Development (Office / Canyon Ranch) Mezzanine Investments Share Repurchase 2005 Base FFO $210M To $215M 2005 Base FFO $80M to $87M Stabilized FFO ROE 15% to 18% 2007 Target FFO $225M to $235M 2007 Target FFO $145M to $155M 2007 Target FFO $78M to $95M 5

6 Growth Platform #1 - Office» Operating Growth Occupancy / Rate» Modernized Strategy = Increased ROE» Manage institutional capital» Partnering increases ROE 300 to 500 bps» 43% total square feet in joint venture = $15 million in annual gross fees Fountain Place» $1.4 billion equity value in remaining portfolio Houston Center 6

7 Crescent Lifestyle Investments» Primary Thesis = Target the most powerful economic segment of our population» Baby Boomers = 79 million Americans, or 28% of the population» Inheritance = $7.2 trillion+/-» Peak income earning years» Seeking a gathering spot for the family, often a second home, in a resort location Source: U.S. Census Bureau 7

8 Growth Platform #2 - Resort Residential» Ten Year Track Record of Success» 35 projects» $475 million+ of FFO» FFO averaged $57 million in last 3 years» IRR s typically in excess of 20% net Desert Mountain» Every project profitable» Projected Residential FFO and Cash Flow» Existing projects create $82 million FFO in 2007» $400 million net cash to be generated (in addition to $300 million to be reinvested) Crescent Resort Development 8

9 Growth Platform #2 - Resort Residential 9

10 Growth Platform #3 CANYON RANCH» Canyon Ranch Resorts» ROE currently 17.9%» Contributed $120 million since 1996, valued at $209 million» $90 million in cash distributed» $50 million capital raised for expansion/improvements» Canyon Ranch Living» Initial fee income = $30 to $50 million per project Canyon Ranch Las Vegas» Recurring fee income = $3 to $5 million per project» No capital required» Additional brand opportunities Canyon Ranch Queen Mary 2 10

11 Growth Platform #3 - Model of Success» Canyon Ranch Living Miami South Beach» $30 million - $35 million initial fee income» $2.5 million recurring fee income 586 Condominium Units 70,000 square-foot spa and wellness center Phase I 223 units hotel rooms (96% pre-sold) Phase II 213 units (57% under reservation) Initial delivery 2007 Canyon Ranch Living Miami South Beach Rendering 11

12 Executive Management John Goff Chief Executive Officer (28) Denny Alberts President & COO (33) Ken Moczulski Managing Director Investments (29) Tom Miller Managing Director Investments (28) Jane Mody Managing Director Capital Markets (28) Jerry Crenshaw Managing Director CFO (19) David Dean Managing Director Legal (19) Jane Page Managing Director Asset Mgt. & Leasing (22) John Zogg Managing Director Asset Mgt. & Leasing (22) Paul Smith Managing Director Fund Management (21) (#) Years of Experience 12

13 Financial Results» Net Income Available to Common Shareholders diluted» 2004 $141.1M or $1.42 per share» 1Q 2005 ($9.3M) or ($0.09) per share» Adjusted Funds from Operations Available to Common Shareholders diluted ( FFO ) (1)» 2004 $143.2M or $1.22 per share» 1Q 2005 $28.9M or $0.25 per share (1) Funds from operations is a supplemental non-gaap financial measurement used in the real estate industry to measure and compare the operating performanceof real estate companies, although these companies may calculate funds from operations in different ways. 13

14 Investment Scorecard $ in millions Crescent's Crescent's Projected SF/ rooms/ Stabilized Stabilized Stabilized Market units Investment Equity NOI Equity Return Status Office Acquisitions: One Buckhead Plaza Atlanta 461,000 $137.3 $48.3/$ %/14.1% Closed The Exchange Seattle 296, % Closed Peakview Tower Denver 264, % Closed One Live Oak Atlanta 201, % Closed Fulbright Tower (JV 23.85%) Houston 1,247, % Closed Office Developments: Hughes Center Las Vegas 255, %-22% Committed Additional Developments I & II S. California 491, %-20% Pending Hotel /Condo Developments Ritz Carlton Dallas 217 Rooms %-17% hotel Committed 70 Condos $23M FFO in 2007 Condos New Residential 50.0 Committed Mezzanine Office California NA LIBOR Closed Office New York NA LIBOR Closed Resort Florida NA % Closed Total $

15 Acquired One Buckhead Plaza in 2 nd Quarter 2005» 20-story, 461,669 square-foot Class A office property» Buckhead submarket» One of the most prominent business addresses in Atlanta» 89% leased at purchase» 14.1% stabilized ROE in JV structure» $130.5M purchase price» Expected close of JV in mid to late June One Buckhead Plaza 15

16 Hughes Center Office Development» Phase I Hughes Center» 255,000 square-foot Class A office property» July 2005 ground-breaking» Spring 2007 expected completion» Development costs projected at $62.0M» 20% to 22% stabilized ROE expected» Phase II» 175,000 square-foot Class A office property» Timing dependent on market conditions 3883 Hughes Center Rendering 16

17 Office Markets Class A Houston Dallas Denver Austin Miami Las Vegas CEI Leased Occupancy 3/31/05 (1) 92.1% 87.1% 91.1% 81.3% 93.2% 97.1% Market Economic Occupancy 3/31/ % 79.5% 83.6% 82.9% 85.2% 90.9% CEI Quoted Rental Rate 3/31/05 (1) $21.23 $24.64 $19.54 $20.84 $30.79 $32.40 Market Rental Rate 3/31/05 $20.17 $20.37 $19.32 $21.04 $29.15 $27.70 Market Absorption 1 st Qtr (53,000) 196, , , , ,000 Deliveries 1 st Qtr 0 125, ,000 Under Construction 3/31/05 multi-tenant 192, ,000 (2) 15, , ,000 Employment Growth Mar 04 Mar % 1.8% 2.3% 2.6% 2.3% 7.7% (1) Excludes unstabilized office properties (2) Excludes Citicorp single-tenant buildings of 860,000 SF Sources: CoStar Group (Dallas, Houston, Austin, Denver, Miami); Las Vegas Grubb & Ellis 17

18 Resort Results Three Months ended March 31, Same-Store NOI (in thousands) $10,550 $8,957 Weighted Average Occupancy Average Daily Rate 72.8% $ % $553 Sonoma Mission Inn & Spa Revenue Per Available Room $410 $371 Canyon Ranch - Lenox 18

19 The Residences at Ritz-Carlton, Dallas» Ground-breaking ceremony on May 25, 2005» 21 stories Ritz hotel on first 8 floors and residences on upper 13 floors» Residences to range from $800,000 to $6+ million, substantially pre-sold» Development costs projected at $196M» Projected FFO from residences of $23M in 2007» 15% to 17% stabilized ROE expected from hotel operations The Residences at Ritz-Carlton Rendering 19

20 Tahoe Development 20

21 Old Greenwood» 600 acres» 100 home sites» 165 fractional cabins and townhomes» Jack Nicklaus Signature golf course» Swim, tennis and fitness pavilion Jack Nicklaus Signature Golf Course» Status:» 96 home sites sold at $330,000 average price» 19.2 fractional cabins and townhomes (326.4 shares) sold / pre-sold at $2.0M average price Old Greenwood Swim, Tennis, & Fitness Pavilion 21

22 Gray s Crossing» 800 acres» 445 homesites» 89 condominiums» Signature golf course with private access» Status» 101 homesites sold at $270,000 average sales price Gray s Crossing Concept» Plan to sell an additional 120 homesites at $375,000 average sales price in

23 The Village at Northstar» 350 condominium units» Located at the base of the Northstar ski mountain» Surrounding a vibrant ski village providing shops, dining and entertainment» Exclusive Alpine Club» Status:» 1 st phase:» First 100 units to be delivered in late 2005 Great Bear Rendering» 99 units pre-sold to date at $1.4M average sales price ($825 psf)» 2nd phase:» 113 units to be delivered in late 2006» 79 units pre-sold to date at $1.2M average sales price ($1,024 psf) Northstar Village Rendering 23

24 The Highlands at Tahoe» 1,450 residential units» Unique ski in/ski out opportunity on Northstar ski mountain» Status:» First units expected to be delivered in 2007 Shaffer s Camp at Northstar Rendering» Luxury five-star hotel planned to be delivered in 2008 The Highlands at Tahoe Rendering 24

25 2007 FFO Target 2007 FFO Target = $2.00 Growth from Existing Investments Growth from New Investments Office 78 Office Buildings 31.6M Square Feet 43% of SF in Joint Venture Strategic Investments Resort Residential Canyon Ranch Resorts / Hotels AmeriCold Office Direct / Joint Venture Development (Office/Canyon Ranch) Mezzanine Investments Share Repurchase 2005 Base FFO $210M To $215M 2005 Base FFO $80M to $87M Stabilized FFO ROE 15% to 18% 2007 Target FFO $225M to $235M 2007 Target FFO $145M to $155M 2007 Target FFO $78M to $95M 25

26 Crescent in the Community» Signature Program FACES of Change» 61 partnerships between Crescent properties and elementary schools since 1997» Organized contributions of more than $1.25 million in funding, services and supplies» Volunteer donations of more than 35,000 hours of service» Touched the lives of more than 25,000 children 26