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    2300 N Street, N.W.
Washington, D.C. 20037-1128

    Tel 202.663.8000
Fax 202.663.8007
www.pillsburylaw.com

August 16, 2005

Sylvia M. Mahaffey

202.663.8027

    Division of Corporation Finance

    Securities and Exchange Commission

    100 F Street, N.E.

    Washington, D.C. 20549

    Attention:

    Linda Van Doorn

    Senior Assistant Chief Accountant

    Re:

    Crescent Real Estate Equities Limited Partnership

    Form 10-K (File No. 333-42293) for Year Ended December 31, 2004

    Response to Staff Comments of July 26, 2005

Ladies and Gentlemen:

     On behalf of Crescent Real Estate Equities Limited Partnership (the “Partnership”), we are
submitting this letter in response to the comments contained in the Staff’s letter of July 26,
2005, regarding the Partnership’s Form 10-K for the year ended December 31, 2004. Please note
that, although the Staff’s letter makes reference to the Partnership’s Form 10-KSB, the Partnership
makes its periodic filings on Forms 10-K and 10-Q.

     In order to facilitate the Staff’s review of this letter, we have included the text of the
Staff’s comments, and the order of the responses corresponds to the order of the Staff’s comments
and follows the same numbering.

In addition, a written statement of the Partnership containing the
acknowledgments specified in the Staff’s letter accompanies this
letter.

Form 10-K

Selected Financial Data, page 25

    1.

    Reference is made to your discussion of FFO and Adjusted FFO. Explain to us how this
non-GAAP measure enhances investors’ understanding of your operating performance and how
management uses this measure to evaluate the performance of your business.

     As indicated in Note 3. of the Notes to Consolidated Financial Statements on page 78 of
the Partnership’s Form 10-K, the Partnership has four major investment segments. Management
uses the segment structure for making operating decisions (including decisions about allocating
resources to a particular segment) and assessing the

Division of Corporation Finance

August 16, 2005

Page 2

operating performance of its segments. In
making these decisions and assessments, management uses FFO as the measure of segment profit or
loss. In order to comply with SFAS No. 131, the Partnership therefore reports FFO for each of
its investment segments and, by combining FFO for each segment, also reports FFO for the
Partnership.

     The Partnership believes that FFO is an appropriate measure of performance for the
Partnership and for its investment segments. Although the Partnership does not believe that
FFO should be considered an alternative to net income determined in accordance with GAAP, the
Partnership believes that it facilitates an investor’s clear understanding of the Partnership’s
consolidated historical operating results when investors consider the Partnership’s FFO in
conjunction with its net income and cash flows, as reported in the Partnership’s consolidated
GAAP financial statements.

     The Partnership’s Form 10-K includes these explanations of how FFO enhances investors’
understanding of the Partnership’s operating performance (in “Management’s Discussion and
Analysis of Financial Results and Results of Operations – Funds from Operations” on page 58)
and how management uses this measure to evaluate the operating performance of the Partnership’s
business (in Note 3 to the Notes to Consolidated Financial Statements on page 78). In
addition, Note 2 to the Selected Financial Data table (page 25) (i) discusses the fact that FFO
is a non-GAAP measure, (ii) describes the manner in which NAREIT and the Partnership calculate
FFO and (iii) refers investors to the more complete discussion and reconciliation to net income
contained in “Management’s Discussion and Analysis of Financial Results and Results of
Operations – Funds from Operations.”

     The Partnership has determined that it will no longer report “Adjusted FFO” in its Forms
10-K or 10-Q. In evaluating the performance of the segments that comprise the Partnership’s
business, management of the Partnership continues to believe that both (i) FFO and (ii) FFO
adjusted to exclude impairment charges related to real estate assets and debt extinguishment
charges related to sales of real estate assets, are important in evaluating operating
performance. Thus, the Partnership believes that it should
provide information about these charges for the relevant periods and the calculation of FFO if
these charges had been excluded. Accordingly, the Partnership will include a footnote to the
selected financial data table in order to provide this information.

    2.

    Tell us how you considered the guidance in questions 7, 8 and 15 of the Frequently Asked
Questions Regarding the Use of Non-GAAP Financial Measures when determining the
appropriateness of excluding impairment charges and the loss on extinguishment of debt from
Adjusted FFO.

Division of Corporation Finance

August 16, 2005

Page 3

     Question 7 of the Frequently Asked Questions Regarding the Use of Non-GAAP Financial
Measures provides that modifications from “funds from operations,” as that term is defined and
clarified by NAREIT, are subject to the provisions of Item 10(e) of Regulation S-K. Item 10(e)
of Regulation S-K prohibits adjusting a non-GAAP financial performance measure to eliminate or
smooth items identified as “non-recurring, infrequent or unusual, when the nature of the charge
or gain is such that it is reasonably likely to recur within two years or there was a similar
charge or gain within the prior two years.” Question 8 of the Frequently Asked Questions
Regarding the Use of Non-GAAP Financial Measures clarifies two aspects of this prohibition.
First, Question 8 states that companies should never use a non-GAAP financial measure in an
attempt to smooth earnings. Second, Question 8 specifies that there is no per se prohibition
against removing a recurring item. Question 15 addresses the use of EBIT and EBITDA and refers
to the portions of Question 8 relating to the elimination of recurring charges. The
Partnership considered the guidance contained in Question 15 only as to its references to
Question 8.

     As discussed in the response to Item 1 and in the Partnership’s Form 10-K, the Partnership
believes that FFO is an appropriate measure of performance for the Partnership and for its
investment segments. Also as discussed in the response to Item 1 and in the Partnership’s Form
10-K, management uses FFO as the measure of segment operating profit or loss. The Partnership
does not use FFO or “Adjusted FFO” (which the Partnership defined as FFO, adjusted to exclude
impairment charges related to real estate assets and debt extinguishment charges related to the
sale of real estate assets) in an attempt to smooth earnings, nor does the Partnership attempt
to characterize these impairment or debt extinguishment charges as non-recurring items.
Accordingly, the
Partnership believes that its use of these terms complies fully with the requirements of Item
10(e) of Regulation S-K.

     Although Question 8 states that there is no per se prohibition against removing a
recurring item, it also states that a company must demonstrate the usefulness of any measure
that excludes recurring items, “especially if the non-GAAP financial measure is used to
evaluate performance.” Question 8 also lists five additional disclosures that may be necessary
in order to prevent a non-GAAP measure that has been adjusted from being misleading.

     The Partnership considered this additional guidance in connection with its use of FFO and
“Adjusted FFO.” The Partnership acknowledges that, under the definition of “recurring charges”
contained in Item 10(e) of Regulation S-K, both impairment charges related to real estate
assets and debt extinguishment charges related to sale of real estate assets are recurring
charges for the Partnership. The Partnership, however, believes that FFO and “Adjusted FFO”
are useful to investors in assessing the Partnership’s operating

Division of Corporation Finance

August 16, 2005

Page 4

performance and, in accordance
with the guidance in Question 8, states this in its Form 10-K (for example, on page 58). In
addition, the Partnership addresses what it believes are the most significant additional
disclosures suggested by Question 8 its Form 10-K. As discussed in Item 1, the Partnership
identifies the manner in which management uses the non-GAAP measure to conduct or evaluate its
business and the substantive reasons why management believes that the non-GAAP financial
measure provides useful information to investors. Further, in describing the manner in which
management uses the non-GAAP measure to conduct or evaluate its business (which is as the
measure of segment profit or loss), the Partnership addresses the economic substance behind
management’s decision to use the non-GAAP measure. The Partnership also identifies the
material limitations associated with use of the non-GAAP financial measure as compared to the
use of the most directly comparable GAAP measure in each of its discussions of FFO, stating
that its calculation of FFO should not be considered an alternative to net income, determined
in accordance with GAAP, as an indication its operating performance and that the Partnership’s
calculation of FFO may differ from that used by other real estate companies.

     In addition to its consideration of Questions 7 and 8 of the Frequently Asked Questions
Regarding the Use of Non-GAAP Financial Measures, the Partnership considered Question 18.
Question 18 states that non-GAAP financial measures do not include financial measures that are
required to be disclosed by GAAP. Accordingly, as stated in Question 18, segment information
presented in conformity with SFAS No. 131 is not a non-GAAP financial measure under Regulation
G. Because both FFO and “Adjusted FFO” are the measures reported to the chief operating
decision maker for the Partnership for purposes of making decisions about allocating resources
to the segment and assessing performance, the Partnership is required by SFAS No. 131 to
utilize these measures in its Form 10-K.

     As discussed in Item 1, the Partnership has determined that it will no longer include
“Adjusted FFO” in its Forms 10-K or 10-Q. Instead, in each of the two tables that reconcile
the Partnership’s net income as determined in accordance with GAAP to FFO (set forth in
“Management’s Discussion and Analysis of Financial Results and Results of Operations – Funds
from Operations” on page 58 and in Note 3 to the notes to the Partnership’s consolidated
financial statements ), the Partnership will include a footnote in order to (i) provide
information about impairment charges related to real estate assets and debt extinguishment
charges related to real estate asset sales for the relevant periods, and (ii) include the
calculation of FFO, adjusted to exclude these charges. The footnote also will explain the
purpose for which management uses this measure and the reason the Partnership believes that it
is useful to investors.

Division of Corporation Finance

August 16, 2005

Page 5

Management’s Discussion and Analysis

Funds from Operations, page 59

    3.

    Refer to the fourth paragraph under this heading. Tell us what consideration you gave to
discussing your distributions in comparison to cash flow from operating activities for the
three years presented and in the periods in which the distributions exceeded cash flow from
operating activities, identifying the
alternative source of the distributions. Similar considerations should be made to the
presentation on page 43.

     As requested, the Partnership has reviewed the disclosure in the fourth paragraph under
this heading relating to cash distributions, Adjusted FFO, and FFO, and believes that all of
this information should be removed in all future filings. The Partnership uses FFO as the
measure of segment profit or loss and as a measure of operating performance, and not as a cash
flow measure. Accordingly, the Partnership believes that it is inappropriate to include the
discussion contained in the fourth and fifth paragraphs under this heading in this section and
will remove them from its future filings on Form 10-K. The Partnership has removed both of
these paragraphs from its Form 10-Q for the quarter ended June 30, 2005.

     In reviewing the disclosure contained in the fourth paragraph under “Management’s
Discussion and Analysis of Financial Results and Results of Operations – Funds from Operations”
and the presentation under “Management’s Discussion and Analysis of Financial Results and
Results of Operations – Liquidity and Capital Resources” (pages 43 and 44), the Partnership
also has determined that, in its future filings, it will expand its disclosure relating to the
release of its distributions and its cash flow from operations in two parts of that section.
If the Partnership’s cash flows from operating activities are insufficient to cover
distributions on its units for 2005, the Partnership will include a statement to that effect in
“Management’s Discussion and Analysis of Financial Results and Results of Operations –
Liquidity and Capital Resources – Cash Flows” in its Form 10-K for the year ended December 31,
2005. In addition, in the section “Management’s Discussion and Analysis of Financial Results
and Results of Operations – Liquidity and Capital Resources – Short-Term Liquidity” in the
Partnership’s Form 10-K for 2005, the Partnership will indicate whether or not it expects that
its cash flow from operations will be sufficient to permit it to make planned distributions on
its units during 2006 and 2007 after paying its normal operating expenses, interest payments on
its debt, distributions on its preferred units, non-revenue enhancing capital expenditures and
revenue enhancing capital expenditures. In the “Short-Term Liquidity” section of its 2004 Form
10-K, the Partnership included a similar statement (indicating that its cash flow from
operations was not expected to fully cover distributions on its units during 2005 and 2006).

Division of Corporation Finance

August 16, 2005

Page 6

     In its Form 10-Q for the quarter ended June 30, 2005, the Partnership included a statement
in the “Cash Flows” portion of its “Management’s Discussion and Analysis of Financial Results
and Results of Operations” stating that the Partnership’s cash flows from operating activities
were insufficient to fully cover distributions on its units for the six months ended June 30,
2005. In the Form 10-Q, the Partnership also included a statement in the “Short-Term
Liquidity” portion of its “Management’s Discussion and Analysis of Financial Results and
Results of Operations” stating that, after paying its normal operating expenses, interest
payments on its debt, distributions on its preferred units, non-revenue enhancing capital
expenditures and revenue enhancing capital expenditures, the Partnership did not expect its
cash flow from operations to fully cover planned distributions on its units during 2005 and
2006.

Quantitative and Qualitative Disclosures about Market Risk, page 60

    4.

    Clarify what consideration you gave to providing the information related to your hedged
variable rate debt. We note the information included in Management’s Discussion and Analysis
related to the derivative instruments used to hedge the related risk.

     The Partnership’s Form 10-K sets forth information relating to its hedged variable rate
debt in two separate locations. First, the table contained in “Management’s Discussion and
Analysis of Financial Results and Results of Operations – Liquidity Requirements – Debt
Financing Summary” on page 47 sets forth, separately for fixed rate debt and for variable rate
debt, (i) the dollar amount of the Partnership’s total debt (including, in a footnote to the
table, the dolla