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FORT WORTH-With three sales of partnership interests set to be inked in the coming weeks, Crescent Real Estate Equities Co. will close the book on JV offerings for the time being as it maps out where to place $500 million that it’s amassed to date. The REIT is under no time constraint to place the capital.

“We have no immediate plans to JV any other assets at this time,” John C. Goff, vice chairman and CEO for the Fort Worth-based REIT, tells GlobeSt.com. But, that doesn’t mean the strategy has come to a close; it’s just a hiatus while the team decides the best placement for what will soon be realized from ongoing sales of wholly owned assets and partnership sales. “Clearly our intent is to do more joint ventures,” he says.

“Theoretically, we’re willing to do the entire portfolio, but, we don’t have use for all that capital. …As we have good uses for the money, we will acquire assets, put them on the balance sheet and subsequently joint venture.”

The REIT will reel in a $240-million gain just from pending fourth-quarter deals, of which $211 million will be derived from a JPMorgan Investment Management double buy-in. When the deals are put to bed, Crescent will have secured joint venture partners for 44% or $2.1 billion of its office trophy portfolio, Goff says.

The first leg, totaling $898.5 million, by the New York City-based JPMorgan will close this week and the second trade will be completed in the next seven days, according to the Crescent team, which teamed an earnings call with yesterday’s in-depth discussion about the $1.2-billion deal for a 60% stake in 7.9 million sf of trophy assets in Dallas and Houston. For yesterday’s story, click here. Still to come with be a closing with a new US institutional partner for a 16% stake from Crescent’s 40% balance in part of the packaged play with JPMorgan and a $145-million closing with Yucaipa Cos., which has “rolled up its shirt sleeves” to take over day-to-day operations of the Atlanta-based AmeriCold Realty Trust as announced last week. For that story, click here.

Goff told analysts, stockholders and media that the series of deals “represent a face value of $3.2 billion.” The end result will be a $710-million reduction in debt while making strong headway to segue into an investment manager of premier real estate assets in core US markets.

With $500 million now waiting for a place to land, Goff says options, running the gamut from acquisitions to stock buybacks, are being stacked up against each other to ascertain the smartest and most expedient payback for shareholders. Instead of one lump-sum special dividend, shareholders will get an extra return for the next two years, at which time the REIT estimates it will be able to meet its goal of $1.50 per share dividend from the adjusted FFO till.

There is no plan to place any of the $500 million outside US bounds, according to Goff. “We have plenty of opportunities in our own backyard,” he says.

The REIT’s partnership with Harry Frampton also is on track to pick up $140 million from residential lot sales before the quarter ends. Closings are under way for Beaver Creek condos in Avon, CO and will be ramping up for 80 of the 100 sold lots at Gray’s Crossing in Lake Tahoe, CA.

Meanwhile, Crescent’s team is planning to simplify the Canyon Ranch health resort and SpaClub operation much like it did AmeriCold, but it’s not tipping its hand as to whether the going-forward growth strategy is going to be REIT related as well. A new company, though, will evolve with the founders Mel and Enid Zuckerman and Jerry Cohen staying at the helm to steer the brand’s expansion, using $110 million of private equity and $95 million of new debt to advance the plan.

“We feel like the stars are aligned for Crescent,” Goff says. And, he stresses there’s no rush to reinvest the gain. “We’re going to be disciplined. We’re going to be opportunistic and we’re going to be patient.” The pipeline so far has $240 million committed, with $100 million of equity and an expected return of 14% to 17%, according to Goff.

“As with any plan there are risk factors,” Goff explains. “We’re in an environment where we’re counting on the economy to continue going forward…that’s a key part.”

Crescent has had all assets under the magnifying glass to determine when, or if, the time is right to shop them, using several barometers to gage the push to market as a one-off or JV sale. “We have a number of aces in the hole,” Goff says. “Greenway Plaza [Houston] has enormous built-in gain. …We think we have a number of assets left with upside. This [the JPMorgan package] is really just a sampling.”

The prized possession–Hughes Center–isn’t quite ready to harvest, with some strides to be made from tactics like additional build-out of the Las Vegas treasure. The crux of the REIT’s strategy, as it’s doing with Hughes Center and a $72.3-million purchase of the Alhambra in Coral Gables, FL is to acquire, add value and at some point in time go to market for a JV partner.

All the while, debt will be kept at the 40% level. “It will go up to the low to mid-40%, but you won’t see us going back up to 50%,” vows Dennis Alberts, Crescent’s president and COO.

Before impairment charges, Crescent’s third-quarter FFO was $31.3 million or 27 cents per share versus the 2003 level of $43.5 million or 37 cents per share. Year to date, FFO is $89.9 million in comparison to $121.3 million in the first nine months of 2003.

Third quarter results exceeded the REIT’s expectations, Goff says, crediting the uptick to the $7.6-million gain from an $11.3-million sale of 2.5 acres in Houston. Another 5.3 acres will close this quarter to generate a gain of about $8.9 million and net proceeds of $22.9 million. The deal will include a note of nearly $9.2 million.

On the Q3 office front, occupancy rose just a shade to 85.9% in the 26.4-million-sf portfolio. Some 1.9 million sf were leased, of which 1.1 million sf were renewed or re-leased in the third quarter to take the year-to-date tally to 4.1 million sf, with 2.2 million in the renewable category. Of the 6.3 million sf of expiring leases, 97% are now signed deals and another 2% are under negotiation.

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