FOR IMMEDIATE RELEASE
                                Investor Contact:          Kevin Helmintoller
                                                           (404) 814-5742
                                Media Contact:             Robert Mead
                                                           (212) 445-8208


                 MAGELLAN ANNOUNCES THE CLOSING OF THE CRESCENT
            TRANSACTIONS, AN AMENDED BANK FACILITY, BOND REPURCHASE
                      OFFER AND EXPIRATION OF EUROPEAN SALE

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ATLANTA,  GA,  June  17,  1997 --  Magellan  Health  Services,  Inc.  (NYSE:MGL)
announced  that  the  transactions   with  Crescent  Real  Estate  Equities  Co.
(NYSE:CEI) and its affiliates  closed today.  Charter  Behavioral Health Systems
began  operations  as a  privately  held joint  venture  owned by  Magellan  and
Crescent Operating Inc. Magellan will now focus on the higher growth segments of
behavioral and other specialty  managed care,  public sector  privatization  and
franchise operations. Simultaneously with this closing, Magellan entered into an
amended $200 million credit facility with a group of commercial  banks to assist
the Company in its acquisition and product expansion strategy.
         As a result of the Crescent  transactions  the Company is also offering
to repurchase the 11.25% Senior Subordinated Notes at 101% of face value per the
terms  of  the  indenture.   Notices  are  being  distributed   immediately  and
bondholders will have until July 17 to respond.
         Separately, Magellan announced that the sale of the European operations
to Priory  Hospitals  Limited has been  referred to the  Monopolies  and Mergers
Commission  (MMC) by the Office of Fair Trade under the  provisions  of the Fair
Trading Act. The MMC is required to make

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their  report by  September  15, 1997.  However,  the time period for  receiving
regulatory  approval per the  agreement  with Priory has expired and Magellan is
exploring other alternatives.
         Mac Crawford,  chairman,  president,  and CEO said, "The closing of the
Crescent transactions marks a significant step in the continuing  development of
Magellan's  strategy.  Management  has  concentrated  heavily on  closing  these
transactions  and can now  focus on the  growth  of the  other  segments  of our
business.  Proceeds from the Crescent  transactions will immediately  strengthen
Magellan's  balance  sheet.  Nearly  $200  million  will be used to pay down the
Company's current bank credit facility and outstanding  industrial revenue bonds
and the Company will have over $500 million in cash and available credit."
         Crawford  continued,  "Though I am disappointed that the sale to Priory
has not closed,  it is important to remember  that the European  facilities  are
some of our most profitable operations and contribute  significantly to earnings
per share on a quarterly  basis.  We also  believe  there are  opportunities  to
pursue franchise expansion in Europe."
         Magellan  Health  Services,  Inc.  is  one  of  the  country's  largest
integrated  behavioral  health  care  companies.  Its  business  units  include:
Majority owned Green Spring Health Services, a leader in behavioral managed care
services;  Magellan  Public  Solutions,  serving  public  sector  agencies  with
privatized   behavioral  health  services;   Charter  Franchise   Services,   an
international  franchisor of behavioral health care systems; and 50% interest in
Charter  Behavioral  Health  Systems,  the  largest  operator  of  free-standing
behavioral facilities in the U.S.

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