Crescent and Capstead to Co-Invest in Mezzanine Loan Opportunities

Business Wire, May 10, 2005

FORT WORTH, Texas -- Crescent Real Estate Equities Company (NYSE:CEI), together with Capstead Mortgage Corporation (NYSE:CMO), announced today that they have committed up to $200 million in capital to form up to two partnerships to invest in select mezzanine loans on commercial real estate over a four-year period. The partnerships will target investments generating leveraged returns on equity in excess of 15%. Capstead is committed to 75% of the capital, or up to $150 million, while Crescent is committed to the remaining 25%, or up to $50 million. Total investments in mezzanine loans, assuming leverage, could exceed $600 million. Crescent will be responsible for identifying investment opportunities and for managing the mezzanine loan portfolio and, as a result, will earn a management fee and incentives based on portfolio performance.

John C. Goff, Crescent's Vice Chairman and Chief Executive Officer, commented, "Part of Crescent's investment strategy is to invest in mezzanine debt backed by high-quality real estate. This partnership with Capstead will complement our on-going mezzanine program, and we look forward to working with them in this endeavor."

Andrew F. Jacobs, Capstead's President and Chief Executive Officer, commented, "This venture is built around Crescent's proven real estate expertise, and we are pleased to participate alongside them. The types of assets targeted should allow Capstead to further its strategy of investing a portion of its equity capital into real estate-related assets that can provide attractive risk-adjusted returns with less sensitivity to changes in interest rates."

About Crescent

Crescent Real Estate Equities Company is a real estate investment trust headquartered in Fort Worth, Texas. Through its subsidiaries and joint ventures, Crescent owns and manages a portfolio of more than 75 premier office buildings totaling more than 30 million square feet primarily located in the Southwestern United States, with major concentrations in Dallas, Houston, Austin, Denver, Miami and Las Vegas. In addition, Crescent has investments in world-class resorts and spas and upscale residential developments. For more information, visit Crescent's website at http://www.crescent.com.

About Capstead

Capstead Mortgage Corporation is a real estate investment trust headquartered in Dallas. Capstead earns income from investing in real estate-related assets on a leveraged basis and from other investment strategies. These investments primarily consist of, but are not limited to, residential adjustable-rate mortgage ("ARM") securities issued and guaranteed by government-sponsored entities, either Fannie Mae or Freddie Mac, or by an agency of the federal government, Ginnie Mae. While managing a large portfolio of ARM securities remains Capstead's core investment strategy, Capstead also seeks to invest a portion of its equity in credit-sensitive commercial real estate-related assets that can provide attractive risk-adjusted returns with less sensitivity to changes in interest rates over the long term. For more information, visit Capstead's website at http://www.capstead.com.

Crescent's Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally characterized by terms such as "believe," "expect," "anticipate," "target" and "may." Although Crescent believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual results of the partnership to be formed by Crescent could differ materially from those described in the forward-looking statements.

The following factors might cause such a difference:

--The credit risk associated with the subordinate position of mezzanine loans, including the inability of the borrower under a mezzanine loan to make all payments of principal and interest to the partnership when due;

--The partnership's decision in the event of a default under more senior financing to invest additional amounts in order to prevent foreclosure by the senior lender;

--The inability of the partnership to recover the amount it loans under a mezzanine loan if the borrower defaults under the mezzanine loan or under more senior financing because the lenders under more senior financing generally have priority on proceeds of a foreclosure;

--The inability of the partnership to invest in mezzanine loans in amounts or on terms that will allow them to generate the targeted returns.