Trammell Crow due for stock release

Some employees have expressed cynicism about the deal's timing. The University's recent decision to outsource management of all its buildings to the Trammell Crow Co. happens to coincide with the company's initial public stock offering. That's caused some of the 175 University facilities managers and other employees affected by the deal to accuse the Dallas-based company of being more concerned with its public image than with the livelihood of the people it plans to hire -- or not hire -- in a couple of months. The Trammell Crow deal has garnered attention from national media. A recent Wall Street Journal article that said the "landmark" agreement could lead to a multitude of such arrangements in higher education. Some University employees say Trammell Crow, which manages the nation's largest real estate block, timed the agreement to increase the company's appeal to potential investors. But Trammell Crow officials, stressing that federal securities regulations prevent them from discussing the stock offering, said they didn't understand how the employees saw a connection between the agreement and the stock offering. "I don't see the correlation," said John Maher, executive vice president of Trammell Crow Corporate Services. "The spirit of our agreement is to improve the services?, raise customer service levels [and] provide better training and skills for the employees." University Trustees are expected to approve a final version of the agreement at their November 7 meeting. Trammell Crow would then take over management of all on- and off-campus University properties on March 18. Trammell Crow's IPO is due the second or third week of November, according to Leigh Pierce, a spokesperson for New York-based Morgan Stanley, Dean Witter, Discover & Co., the offering's chief underwriter. Several employees voiced concerns about the IPO at a town meeting Monday. Trammell Crow and the University kept employees in the dark about the agreement so the company could sign a letter of intent before employees got a chance to protest, said John Hogan, an officer of the University's support-staff organization, the A-3 Assembly. "[Employees] shouldn't be concerned about [the IPO] directly," Hogan said. But the company seemed "hurried to get this deal done? and that's part of the reason for this secrecy," he added. In documents filed with the federal Securities and Exchange Commission September 3, Trammell Crow doesn't give a date for the offering or the number of shares that will be offered. That information, along with the initial share price, has not yet been determined, said Trammell Crow Senior Vice President Barbara Bower. A-3 Assembly Chairperson Donna Arthur admitted that "none of us have the facts to prove" a connection between the IPO and the company's agreement with the University, but many employees believe the offering has compromised their chances of keeping their jobs. Trammell Crow expects to use part of the estimated $67.8 million in proceeds from the offering to repay about $37 million of its debt, according to the filing. The company's revenue hit $255.5 million in 1996, a 12 percent increase from the $227.2 million revenue in 1995. Revenue for the first six months of 1997 was $130.3 million. As part of the outsourcing deal, the company will have to pay Penn $26 million nearly immediately and another $6 million later. University employees would get first crack at the jobs with Trammell Crow, officials have said. The company expects to hire between 110 and 150 of the 175 University employees affected by the deal.

Please note All comments are eligible for publication in The Daily Pennsylvanian.