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January 30 & 31, 2002

January 22, 2002

Kvaerner to build Canyon Ranch ships
Kvaerner says it has signed a Memorandum of Understanding with the health resort company Canyon Ranch, of Tucson, Arizona, to build two luxury spa/health resort cruise ships, for a total value of EUR 450 million. The two passenger vessels, each of about, 37,000 gross tons, are to be built by Kvaerner Masa-Yards in Finland, and are due for delivery in 2004 and 2005, respectively.

A final contract is subject to the satisfactory completion of certain conditions, including financing by Canyon Ranch.

In 1996, Crescent Real Estate Equities Company (NYSE:CEI) acquired the real estate and other fixed assets of Canyon Ranch Health Resorts in Tucson and Lenox. Crescent also owns 30 percent of Canyon Ranch's management company, CR License LLC, which develops and manages new Canyon Ranch properties globally, including Canyon Ranch SpaClub and Canyon Ranch at Sea, a division formed in 2000 to operate a line of luxury spa cruise vessels. At that time, agreements were signed with Societa Esercizio Cantieri shipyard in Viareggio, Italy, for construction of the first two vessels, Quest I and Quest II.

These plans called for two 25,000 grt ships. Each was to carry only 320 guests in 180 cabins. The ships to be built at Masa-yards will be significantly larger at 37,000 grt each.

Canyon Ranch at Sea is to design and operate the spa, beauty salon, wellness and fitness facilities on board the Queen Mary 2, the new flagship of Carnival's Cunard Line, the largest passenger vessel ever constructed. The 150,000-ton ocean liner is expected to enter into service in late 2003. The Canyon Ranch SpaClub aboard Queen Mary 2 will feature 20,000 square feet of state-of-the-art spa, wellness and fitness facilities located on two decks of the ship, plus a luxurious full-service beauty salon.