Trammell Crow Company Announces 2005 Results; Full Year EPS Increase of 55%; Global Services Pre-Tax Profits up 79%

Business Wire, Feb 21, 2006

DALLAS -- Trammell Crow Company (NYSE:TCC), one of the world's largest diversified commercial real estate services companies, today announced its financial results for the quarter and year ended December 31, 2005. Diluted earnings per share for the full year 2005 were $1.63, up 55% from the $1.05 reported for the full year 2004.

Consolidated Results

For the full year 2005, the company's revenues totaled $896.0 million, an increase of 16% from revenues of $773.9 million for 2004. Net income for 2005 was $59.4 million, compared with net income of $39.1 million for 2004.

Diluted earnings per share for the fourth quarter of 2005 were $0.94, compared with $0.77 for the fourth quarter of 2004. Revenues for the fourth quarter of 2005 totaled $278.6 million; revenues for the corresponding quarter of 2004 were $245.3 million. Net income for the fourth quarter of 2005 was $34.6 million, compared with net income of $28.0 million for the fourth quarter of 2004.

Commenting on the results, Robert E. Sulentic, Chairman and Chief Executive Officer of Trammell Crow Company, stated, "Our Global Services segment fueled the excellent growth we experienced in 2005, in particular our outsourcing business with user clients, where we continued to experience great momentum, and our investor client brokerage business. User client revenues, including outsourcing, were up 22% for the year, while investor client brokerage grew 21%. Our Development and Investment segment met expectations, posting profits up slightly for the year, and positioned itself to achieve very strong earnings growth in 2006. While investment in commercial real estate has been strong for several years, we still appear to be fairly early in the demand cycle for new development."

Segment Results -- Global Services

Income before income taxes for the company's Global Services segment was $68.4 million for 2005, up 79% from income before income taxes of $38.3 million for 2004. Global Services segment revenues increased 17% from $710.8 million for the full year 2004 to $831.7 million for the full year 2005.

With regard to the Global Services results, Mr. Sulentic noted, "The strong revenue increase for this segment, coupled with ongoing attentiveness to costs, drove continued improvement in Global Services margins. Pre-tax income margins for this segment increased from 5.4% in 2004 to 8.2% in 2005. Our Global Services operating income margins (which exclude income from unconsolidated subsidiaries) improved from 4.0% to 6.4%.

"Operationally, during 2005 we made significant strides in our ability to serve customers internationally. The investments we made, and new outsourcing business landed during the year, resulted in our establishing operations in 11 new countries. We now provide solutions for our customers in approximately 60 countries, which enables us to compete very effectively for new outsourcing business both domestically and internationally. In addition, our increased investment in Savills plc, our strategic alliance partner in Europe and Asia, provides us with significant participation in international markets from a financial perspective."

Segment Results -- Development and Investment

For the full year 2005, the Development and Investment segment posted income before income taxes of $25.9 million, up 4% from income before income taxes of $24.8 million for 2004. Segment revenues were up slightly for the year. Segment income from unconsolidated subsidiaries and income from discontinued operations, which are both excluded from segment revenues but consistently have a meaningful impact on segment results, were -- on a combined basis -- also up slightly from 2004.

Commenting on the Development and Investment results, Mr. Sulentic said, "We had two goals for the Development and Investment segment coming into 2005. First, we wanted this business to post profits for 2005 at least equal to those achieved in 2004, following a tripling of segment profit from 2003 to 2004. Second, and perhaps more importantly, we wanted this business to finish 2005 positioned to deliver strong profit growth in future years. Both goals were achieved. Our inventory of opportunities, coupled with our network of geographic and product specialists backed by very strong capital programs, has positioned our Development and Investment business well for growth."

Balance Sheet

Cash and cash equivalents at December 31, 2005, increased to $76.9 million from $66.0 million at September 30, 2005. Borrowings under the company's $175 million line of credit decreased from $51.0 million at September 30, 2005, to $35.0 million at December 31, 2005. Cash and cash equivalents are down, and line of credit borrowings are up, from their levels at year-end 2004 in large part due to the company's $91.3 million increase in its investment in Savills made in April 2005. The company also increased its investment in real estate during 2005, consistent with expected growth in the Development and Investment business.

At December 31, 2005, $256.2 million of the debt included in the company's balance sheet was consolidated real estate debt. The overwhelming majority of this debt is single asset, non-recourse project financing, of which only $11.6 million counted against the company's primary (recourse) debt limitation in its line of credit covenants at December 31, 2005.