Trammell Crow flies into education role

For Trammell Crow Co., taking over management of all Penn facilities will be its first foray into a higher-education business it expects to increase tenfold over the next five years. And since yesterday's agreement with the University will add at least $5.25 million to the Trammell Crow's annual revenue -- which hit $255.5 million in 1996 -- company officials are excited about their ability to compete in the new market. The company's net income was $12.1 million last year. "There's no one really offering the full range of services in the higher-education market that we know of," Trammell Crow Executive Vice President John Maher said, noting that "there's an incredible opportunity" in that market. Maher added that higher education will "absolutely" become more competitive as more companies strive to grab a share of the lucrative business. But the Dallas-based company, which manages the largest real-estate block in the country, is targeting more than just higher education. The total market for outsourced facilities management -- from private and governmental institutions -- is estimated at $50 billion per year, according to a recent filing with the federal Securities and Exchange Commission. "Outsourcing is a rapidly growing trend in the United States," the filing states. "Through outsourcing, organizations seek to reduce costs, improve profitability and refocus management and other resources on core competencies." Trammell Crow is a company in transition, however, having recently filed for an initial public stock offering. It will repay some of its debt with the proceeds from the offering, according to the filing. But Maher declined to give a date or any other details about the offering. The University is putting its buildings in good hands, according to Sean Hockens, a real-estate analyst with M/PF Research Inc. in Dallas who is familiar with the company. Trammell Crow is a "very well-known and well-respected developer and real-estate services provider" who will "bring a lot of expertise to that area," he said. Hockens added that this was the first time he heard of a "big company" managing a private or public college's or university's buildings. Trammell Crow -- a percentage of which is owned by the family of former Penn Trustee Michael Crow -- already manages University City Associates, Penn's for-profit real-estate arm, under an August 1996 agreement. The company is one of the five largest U.S. real-estate brokers. And in 1995, it was the fourth-largest commercial property developer.

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