TRAMMELL CROW CO, S-1, 1998-07-17

TRAMMELL CROW CO
S-1, 1998-07-17
REAL ESTATE OPERATORS (NO DEVELOPERS) & LESSORS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 1998
REGISTRATION NO. 333-[ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933
--------------------------

TRAMMELL CROW COMPANY

(Exact name of Registrant as specified in its charter)

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<S> <C> <C>
DELAWARE 6510 75-2721454
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>

2001 ROSS AVENUE, SUITE 3400
DALLAS, TEXAS 75201
(214) 863-3000

(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
--------------------------

GEORGE L. LIPPE
CHIEF EXECUTIVE OFFICER
TRAMMELL CROW COMPANY
2001 ROSS AVENUE, SUITE 3400
DALLAS, TEXAS 75201
(214) 863-3000

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------

COPIES TO:

JEFFREY E. ELDREDGE JI HOON HONG
VINSON & ELKINS L.L.P. SHEARMAN & STERLING
3700 TRAMMELL CROW CENTER 599 LEXINGTON AVENUE
2001 ROSS AVENUE NEW YORK, NEW YORK 10022
DALLAS, TEXAS 75201

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after this Registration Statement becomes effective.
--------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
--------------------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
--------------------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /

CALCULATION OF REGISTRATION FEE

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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 5,750,000 Shares $30.9375 $177,890,625 $52,477.74
</TABLE>

(1) Includes 750,000 shares that may be sold pursuant to an over-allotment
option granted to the Underwriters.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, based upon the
average of the high and low prices of the Common Stock on July 15, 1998, as
reported on the New York Stock Exchange.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>
EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus"), and the other to be used in connection with a concurrent offering
outside the United States and Canada (the "International Prospectus"). The U.S.
Prospectus and the International Prospectus are identical in all respects except
that they contain different front cover pages.

The form of the U.S. Prospectus is included herein and is followed by the
front cover page to be used in the International Prospectus that differs from
the front cover page in the U.S. Prospectus. The front cover page for the
International Prospectus included herein is labeled "Alternative Front Cover
Page for International Prospectus."
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
, 1998

5,000,000 SHARES
TRAMMELL CROW COMPANY

COMMON STOCK
--------------
OF THE 5,000,000 SHARES OF COMMON STOCK (THE "SHARES") BEING OFFERED ,
SHARES ARE BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S.
UNDERWRITERS AND SHARES ARE BEING OFFERED INITIALLY OUTSIDE THE
UNITED STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS. SEE
"UNDERWRITING." ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY (THE
"OFFERING") ARE BEING SOLD BY CERTAIN STOCKHOLDERS (THE "SELLING
STOCKHOLDERS") OF TRAMMELL CROW COMPANY (THE "COMPANY"). SEE
"PRINCIPAL AND SELLING STOCKHOLDERS." THE COMPANY WILL NOT RECEIVE
ANY PROCEEDS FROM THE SALE OF SHARES BY THE SELLING
STOCKHOLDERS. THE COMMON STOCK IS LISTED ON THE NEW YORK STOCK
EXCHANGE UNDER THE SYMBOL "TCC." ON JULY 16, 1998, THE LAST
REPORTED SALE PRICE OF THE COMMON STOCK ON THE NEW YORK
STOCK EXCHANGE COMPOSITE TRANSACTIONS TAPE WAS $31.125
PER SHARE. IN 1991, THE COMPANY'S REAL ESTATE
SERVICES BUSINESS WAS SEPARATED FROM THE COMMERCIAL
REAL ESTATE ASSET BASE OWNED BY THE COMPANY'S
PREDECESSOR. THE COMPANY CONTINUED TO OPERATE
THE REAL ESTATE SERVICES BUSINESS WHILE
OWNERSHIP OF THE COMMERCIAL REAL ESTATE
ASSET BASE WAS SEGREGATED INTO A NUMBER
OF SEPARATE ENTITIES DISTINCT FROM THE
COMPANY, WITH INDEPENDENT MANAGEMENT
AND OPERATIONS.
------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------

PRICE $ A SHARE
-------------------

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDERS(2)
------------------ ------------------ ------------------
<S> <C> <C> <C>
PER SHARE.......................................... $ $ $
TOTAL(3)........................................... $ $ $
</TABLE>

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(1) THE COMPANY AND THE SELLING STOCKHOLDERS HAVE AGREED TO INDEMNIFY THE
UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SEE "UNDERWRITING."

(2) BEFORE DEDUCTING EXPENSES OF THE OFFERING PAYABLE BY THE SELLING
STOCKHOLDERS AND THE COMPANY, ESTIMATED AT $ .

(3) THE SELLING STOCKHOLDERS HAVE GRANTED TO THE U.S. UNDERWRITERS AN OPTION,
EXERCISABLE WITHIN 30 DAYS OF THE DATE HEREOF, TO PURCHASE UP TO AN
AGGREGATE OF 750,000 ADDITIONAL SHARES OF COMMON STOCK AT THE PRICE TO
PUBLIC, LESS UNDERWRITING DISCOUNTS AND COMMISSIONS, FOR THE PURPOSE OF
COVERING OVER-ALLOTMENTS, IF ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH
OPTION IN FULL, THE TOTAL PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND
COMMISSIONS, AND PROCEEDS TO THE SELLING STOCKHOLDERS WILL BE $ ,
$ AND $ , RESPECTIVELY. SEE "UNDERWRITING."
------------------------

THE SHARES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY SHEARMAN & STERLING, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT THE
DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT , 1998 AT THE
OFFICES OF MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT
THEREFOR IN IMMEDIATELY AVAILABLE FUNDS.
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MORGAN STANLEY DEAN WITTER
BANCAMERICA ROBERTSON STEPHENS
BT ALEXQ BROWN
DONALDSON, LUFKIN & JENRETTE

, 1998.
<PAGE>
[ARTWORK TO COME]

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Certain persons participating in this Offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Specifically, the Underwriters may over-allot in connection with the Offering,
and may bid for, and purchase shares of Common Stock in the open market. For a
description of these activities, see "Underwriting."

2
<PAGE>
No person is authorized in connection with any offering made hereby to give
any information or to make any representation other than as contained in this
Prospectus, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company or by any Underwriter.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby by any person in any
jurisdiction in which it is unlawful to make such an offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder shall under
any circumstances create any implication that the information contained herein
is correct as of any date subsequent to the date hereof.

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For investors outside of the United States: No action has been or will be
taken in any jurisdiction by the Company or any Underwriter that would permit a
public offering of the Common Stock or possession or distribution of this
Prospectus in any jurisdiction where action for that purpose is required, other
than in the United States. Persons into whose possession this Prospectus comes
are required by the Company and the Underwriters to inform themselves about and
to observe any restrictions as to the offering of the Common Stock and the
distribution of this Prospectus.

------------------------

In this Prospectus references to "dollar" and "$" are to United States
dollars, and the term "United States" or "U.S." means the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction.

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TABLE OF CONTENTS

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PAGE
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Prospectus Summary......................................................................................... 4
Risk Factors............................................................................................... 13
The Company................................................................................................ 20
Use of Proceeds............................................................................................ 24
Dividend Policy............................................................................................ 24
Market for Common Stock.................................................................................... 24
Selected Consolidated Financial Data....................................................................... 25
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 28
Business................................................................................................... 38
Management................................................................................................. 55
Certain Transactions....................................................................................... 68
Principal and Selling Stockholders......................................................................... 74
Description of Capital Stock............................................................................... 77
Shares Eligible for Future Sale............................................................................ 82
Certain U.S. Federal Tax Considerations for Non-U.S. Holders of Common Stock............................... 83
Underwriting............................................................................................... 86
Legal Matters.............................................................................................. 89
Experts.................................................................................................... 89
Additional Information..................................................................................... 89
Index to Financial Statements.............................................................................. F-1
</TABLE>

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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE A NUMBER OF
RISKS AND UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO, THOSE DISCUSSED IN THIS
PROSPECTUS UNDER THE CAPTIONS "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS."
PROSPECTIVE INVESTORS IN THE COMMON STOCK SHOULD CAREFULLY CONSIDER THE SPECIFIC
MATTERS SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE 12 AS WELL AS THE OTHER
INFORMATION AND DATA CONTAINED IN THIS PROSPECTUS. THE COMPANY IS A DELAWARE
CORPORATION THAT WAS FORMED IN AUGUST 1997 TO BECOME THE SUCCESSOR TO TRAMMELL
CROW COMPANY, A TEXAS CLOSE CORPORATION (THE "PREDECESSOR COMPANY"). PRIOR TO
THE COMPANY'S INITIAL PUBLIC OFFERING IN DECEMBER, 1997 (THE "INITIAL PUBLIC
OFFERING"), A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY WAS MERGED WITH AND INTO
THE PREDECESSOR COMPANY (THE "REINCORPORATION MERGER"), WITH THE PREDECESSOR
COMPANY SURVIVING THE MERGER AS A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY. UNLESS
THE CONTEXT OTHERWISE REQUIRES, ALL REFERENCES TO THE "COMPANY" IN THIS
PROSPECTUS ARE TO THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AS THEY EXIST
FOLLOWING THE REINCORPORATION MERGER AND CERTAIN OTHER TRANSACTIONS EFFECTED
SIMULTANEOUSLY WITH THE REINCORPORATION MERGER (COLLECTIVELY, THE
"REINCORPORATION TRANSACTIONS"). SEE "THE COMPANY--REINCORPORATION
TRANSACTIONS." ALL REFERENCES TO "EBITDA, AS ADJUSTED" IN THIS PROSPECTUS ARE TO
EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND AMORTIZATION, ROYALTY
AND CONSULTING FEES AND PROFIT SHARING. MANAGEMENT BELIEVES THAT EBITDA, AS
ADJUSTED, CAN BE A MEANINGFUL MEASURE OF THE COMPANY'S OPERATING PERFORMANCE,
CASH GENERATION AND ABILITY TO SERVICE DEBT. HOWEVER, EBITDA, AS ADJUSTED,
SHOULD NOT BE CONSIDERED AS AN ALTERNATIVE TO: (I) NET EARNINGS (DETERMINED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP")); (II)
OPERATING CASH FLOW (DETERMINED IN ACCORDANCE WITH GAAP); OR (III) LIQUIDITY.
THERE CAN BE NO ASSURANCE THAT THE COMPANY'S CALCULATION OF EBITDA, AS ADJUSTED,
IS COMPARABLE TO SIMILARLY TITLED ITEMS REPORTED BY OTHER COMPANIES. UNLESS
OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS ASSUMES THAT THE
OVER-ALLOTMENT OPTION GRANTED TO THE UNDERWRITERS IS NOT EXERCISED.

THE COMPANY

COMPANY OVERVIEW

Trammell Crow Company is one of the largest diversified commercial real
estate services companies in the United States. Through the Company's 150
offices in the United States and Canada, the Company is organized to deliver a
comprehensive range of service offerings to clients which include leading
multinational corporations, institutional investors and other users of real
estate services. In addition, the Company has a strategic alliance with Trammell
Crow International, which has eight offices in Europe, Asia and South America.
The Company has established itself as a market leader in each of its primary
businesses. The Company is the largest commercial property manager in the United
States and has held that position for the past nine years. In 1996 the Company
was one of the top five brokerage firms in the United States, measured in terms
of the number of transactions facilitated, and was the largest provider of
facilities management services (the Company's primary infrastructure management
product), measured in terms of square feet of property managed. In 1996 the
Company was also the fourth largest commercial property developer in the United
States, measured in terms of square feet under construction. The Company, which
is headquartered in Dallas, Texas, was founded in 1948 by Mr. Trammell Crow.
From its founding through the 1980's, the Company's primary business was the
development and management of industrial, office and retail projects. In 1991,
the Company was reconstituted as a real estate services company. This
reconstitution entailed the separation of the Company's commercial real estate
asset base and related operations from its real estate services business. The
Company continued to operate the real estate services business while ownership
of the commercial real estate asset base was segregated into a large number of
separate entities distinct from the Company, with independent management and
operations. Many of these entities are managed by subsidiaries of Crow Realty
Investors, L.P., which is wholly owned by certain affiliates and descendants of
Mr. Trammell Crow. See "Risk Factors--Dealings with and Reliance on Affiliates;

4
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Potential Conflicts of Interest." For the year ended December 31, 1997, the
Company's total revenues were $313.6 million (an increase of 22.7% over the
prior year), and its EBITDA, as adjusted, was $59.5 million (an increase of
21.7% over the prior year). The Company incurred a net loss of $14.0 million for
the year ended December 31, 1997, compared to net income of $12.1 million for
the year ended December 31, 1996. The net loss in 1997 was primarily due to the
non-cash, non-recurring charge to income of $33.1 million related to options
granted under the Assumed Option Plan and a $4.4 million non-recurring charge to
income resulting from the settlement of claims by certain former employees
arising out of a terminated stock appreciation rights plan. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

As a means of addressing the comprehensive real estate service requirements
of its diverse group of clients, the Company is organized into five principal
lines of business. The Company's property management services business provides
services relating to all aspects of building operations, tenant relations and
oversight of building improvement processes, primarily for building owners who
do not occupy the properties managed by the Company. The brokerage services
business advises buyers, sellers, landlords and tenants in connection with the
sale and leasing of office, industrial and retail space and land. The
infrastructure management business entails providing comprehensive day-to-day
occupancy related services, principally to large corporations which occupy
commercial facilities in multiple locations. These services include
administration, day-to-day maintenance and repair of client occupied facilities
and strategic functions such as space planning, relocation coordination,
facilities management and portfolio management. The development and construction
services business includes financial planning, site acquisition, procurement of
approvals and permits, design and engineering coordination, construction bidding
and management and tenant finish coordination, project close-out and user move
coordination, general contracting and project finance advisory services. The
Company's retail services business provides tenant representation, disposition,
development and financial services to national and global retail customers.

COMPETITIVE ADVANTAGES

The Company believes that it holds several important competitive advantages
in the real estate services industry.

COMPREHENSIVE SERVICE OFFERINGS. The Company offers a comprehensive menu of
services designed to provide its clients with single-point solutions to all of
their commercial real estate services needs. The Company believes that its broad
service offerings give it a critical advantage in an industry where many
competitors offer fewer services. By offering a full array of services, the
Company is able to maximize the effect it has on its clients' businesses while
becoming highly integrated into its clients' operations. Further, the Company's
comprehensive service offerings decrease the Company's economic exposure to a
downturn in any one of its primary businesses.

CLIENT FOCUS. The Company is organized to meet all of its clients' real
estate services needs. This orientation has commonly allowed the Company to
commence client relationships by offering a single service and later expand
these relationships through an understanding of the client's business and its
highly specific service requirements. Moreover, the Company has carefully
selected the criteria--such as industry, geographic location and property
type--which it applies in actively seeking new client engagements in each of its
core businesses, thereby concentrating its efforts in areas where it can provide
maximum value-added services.

5
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source, full service provider to multinational corporations and institutional
investors with real estate interests that span regional and national boundaries.
The broad geographic service area covered by the Company also tends to limit its
exposure to an economic downturn in any single market, which provides it with a
competitive advantage over regional firms that operate in a more limited number
of geographic areas.

TECHNOLOGY. The Company is developing extensive technology applications to
better meet customer needs, principally through enhanced sharing of vital market
information and through proprietary applications designed to provide
significantly enhanced control over clients' real estate related expenses. In
addition, the Company has developed a centralized call center strategy designed
to provide responses to customer needs 24 hours a day. This service leverages
human assets and technology to deliver required support and coverage to
properties that were previously managed from several distinct service locations.
The Company began call center operations on May 1, 1998. The Company has also
developed the architecture for a proprietary total occupancy cost management
system using applications that are connected and distributed across the
Company's local area and wide area networks. This system is designed to provide
centralized and comprehensive cost studies and analyses on building portfolios
to customers.

MANAGEMENT/PERSONNEL. The Company believes that a key component of its
success is the experience and quality of its management team and the employees
that comprise the network through which the Company serves its clients. The
Company's 7 member executive committee has an average of approximately 15 years
of experience with the Company. Moreover, the Company has experienced very low
turnover among this senior management group. The Company believes this low
turnover is linked to its collegial internal culture and a long-standing effort
to promote talented individuals from within the organization. The Company also
believes that its growth strategy, incentive-based compensation and the high
level of ownership by Company insiders provides further motivation to achieve a
high level of performance. Immediately following the Offering, total employee
ownership of outstanding Common Stock will be in excess of 43%. See "Risk
Factors--Recruiting and Retention of Qualified Personnel" and "--Control by
Existing Stockholders."

BUSINESS

PROPERTY MANAGEMENT SERVICES

The Company is the largest commercial property manager in the United States
and has held that position for the past nine years (based upon information
contained in NATIONAL REAL ESTATE INVESTOR'S annual "Top Property Manager
Survey"). The Company's property management service business currently serves
approximately 540 clients and 16,200 tenants nationwide through its locally
based property management teams present in 70 markets. The Company managed 204
million square feet of commercial property at the end of 1997, and its 1997
property management revenues were $87.8 million, down from $91.0 million in
1993. This decline in revenues over the past five years has been outpaced by the
increase in revenues from the Company's other primary businesses. In 1993,
revenues from property management constituted 52% of the Company's total
revenue, but by 1997 they represented just 28% of the Company's total revenues.
As part of its growth strategy, in 1998 the Company acquired: (i) James Norman &
Company, a real estate services firm with operations concentrated in Seattle's
central business district office and retail markets; (ii) Tooley & Company,
Inc., a California real estate services company primarily engaged in office
management and leasing; and (iii) a portion of the businesses of Faison &
Associates and Faison Enterprises, Inc. (the "Faison Acquisition"), which are
engaged in the development, leasing and management of office and retail
properties in the Midatlantic and Southeast regions of the United States. As a
result of these acquisitions, the Company added approximately 52.1 million
square feet to its property management portfolio. Included in the managed
property portfolio acquired in the Faison Acquisition was approximately 31.2
million square feet of retail space, making the Company one of the largest
non-REIT managers of retail property in the United States.

6
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BROKERAGE SERVICES

The Company has historically been an active provider of commercial brokerage
services, and in recent years its brokerage business has expanded significantly
from an already substantial base. Over the past five years the Company's
revenues from brokerage services have increased by 92.6%, from $47.3 million in
1993 to $91.1 million in 1997, representing 29.0% of the Company's total 1997
revenues. In 1996, the Company was ranked as one of five top brokerage firms
nationally by COMMERCIAL PROPERTY NEWS, measured in terms of the number of
transactions facilitated. In 1997, the Company facilitated approximately 6,000
sales and lease transactions. The Company currently employs 414 brokers, having
added 179 brokerage professionals with an average of approximately 10 years of
experience since the beginning of 1996. In order to enhance its brokerage
business, in May 1998 the Company acquired Fallon, Hines & O'Connor, Inc., a
Boston-based commercial real estate brokerage, consulting and advisory firm with
30 brokerage professionals.

INFRASTRUCTURE MANAGEMENT SERVICES

Through its wholly-owned subsidiary Trammell Crow Corporate Services, Inc.,
the Company is a leading provider of infrastructure management services to major
corporations in the United States and Canada. According to COMMERCIAL PROPERTY
NEWS, in 1995 the Company was the largest provider of facilities management
services (the Company's primary infrastructure management product) in terms of
square feet of property managed. The Company has established multi-year
relationships with its infrastructure management services clients, often
providing dedicated personnel on-site and integrating its accounting and
management information systems with those of its clients. The Company's
infrastructure management revenues have grown from $16.4 million in 1993 to
$68.7 million in 1997, representing 21.9% of the Company's total 1997 revenues.
As of June 30, 1998, the Company had approximately 1,200 employees who serviced
61 infrastructure management clients in approximately 16,000 properties
encompassing over 119 million square feet. The Company has developed expertise
in providing infrastructure management services to clients in the financial
services, healthcare, oil and gas and technology/communications industries. In
an effort to expand its services to the higher education industry, in February
1998 the Company formed Trammell Crow Higher Education Services, Inc. ("TCHES"),
a wholly-owned subsidiary of the Company. Thereafter, TCHES entered into an
agreement (the "UPenn Contract") with the University of Pennsylvania ("UPenn"),
pursuant to which TCHES became the exclusive provider of certain infrastructure
management services with respect to designated properties and grounds of UPenn.
In addition, in June 1998, the Company acquired substantially all of the assets
of CORE Resource, Inc., a Detroit-based real estate services company. The
Company's goal in effecting this acquisition was to combine its resources and
management experience with the expertise of the former Core employees to become
a leading provider of infrastructure management services in the automotive
industry.

DEVELOPMENT AND CONSTRUCTION SERVICES

Since 1991, the Company has focused its efforts in the commercial real
estate development business on providing development and construction services
to third party build-to-suit customers and investors in office, industrial and
retail projects. While the Company has decreased its economic exposure to the
cyclical nature of the real estate investment markets by shifting to a service
oriented approach, it has retained the capability to implement active and
sizeable development programs, primarily on behalf of its clients, but also for
its own account. Based upon information contained in the NATIONAL REAL ESTATE
INVESTOR'S 1997 Development Survey, in 1996 the Company was the fourth largest
commercial property developer in the United States, measured by square feet
under construction. In 1997, revenues from the Company's development and
construction business were $50.8 million (consisting of $40.1 million in service
revenues, $0.5 million in income from investments in unconsolidated subsidiaries
and $10.2 million in gain on disposition of real estate), representing 16.2% of
the total revenues for the Company. Since 1993, the Company has developed and
redeveloped approximately 45.9 million square feet of projects with

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aggregate project costs of approximately $2.6 billion. In 1997, the Company
started approximately 12.3 million square feet of development projects with an
estimated aggregate cost of $858.4 million. In connection with the Faison
Acquisition, the Company entered into a development program with Faison
Enterprises, Inc. which the Company believes will strengthen its position in the
regional mall construction and development business.

RETAIL SERVICES

The Company's retail services business focuses on providing comprehensive
real estate services to major retailers and retail real estate owners. In 1996,
the Company formed a subsidiary, Trammell Crow Retail Services, Inc. ("TCRS"),
to consolidate the focus of the Company's retail services management group and
to take better advantage of market growth opportunities. The Company believes
that by providing its full array of real estate services through TCRS, it is
able to better serve its national retail customers (who demand specialized
property and market knowledge) and compete with other service providers whose
sole focus is a retail customer base. In furtherance of its goal to be the
leading national retail real estate company, in August 1997 the Company acquired
Doppelt & Company (the "Doppelt Acquisition"), which specializes in
supplementing or, in some cases, replacing the real estate departments of retail
company clients such as OfficeMax, TJX and General Nutrition Centers, by
providing tenant representation and lease disposition services. The Company's
revenues from retail services in 1997 were $5.3 million, representing 1.7% of
the Company's total revenues for 1997. After giving pro forma effect to the
Doppelt Acquisition as of January 1, 1997, the Company's revenues from its
retail service business in 1997 would have been $10.3 million. In addition, the
Company believes that the Faison Acquisition will establish the Company as one
of the leading providers of retail services in the Southeastern United States
and will provide the Company with a platform and expertise for expansion of its
retail services business.

GROWTH STRATEGY

The Company intends to continue to pursue growth opportunities by
capitalizing upon its existing areas of expertise, its long-standing client
relationships and the broad industry trends now affecting the market. Key
elements of its growth strategy are as follows:

EXPAND CLIENT RELATIONSHIPS. Since the Company's existing clients have
substantial real estate and occupancy costs in numerous locations, the Company
believes that they represent the most immediate opportunity to increase revenues
and earnings through cross-selling the services offered by the Company. The
Company has made numerous successful efforts to capitalize on this opportunity,
including the establishment of a national client initiative which targets
potential client engagements based upon a customer profile that considers
criteria such as the industry, geographic location and type of property used by
the client. Based on a review conducted in late 1995, the Company focused its
efforts on expanding the base of business generated from its most strategically
significant customers. Of the 152 discrete assignments secured from the
Company's 15 most strategically significant customers in 1997, 21 were awarded
in cities where the Company previously did not serve the client making the
assignment. Through June 30, 1998, these 15 customers have awarded 45 new
business assignments to the Company in 1998.

EXPAND THE BREADTH OF SERVICE OFFERINGS. Since its reconstitution as a real
estate services company in 1991, the Company has continuously sought to expand
and enhance its breadth of service offerings, principally through internal
measures such as the creation of new service businesses. For example, based on
its long-standing position as a premier property management company, the Company
was well positioned to take advantage of the trend toward outsourcing of real
estate services. This led to creation of the Company's infrastructure management
business, which provided 21.9% of the Company's total revenues in 1997, up from
9.4% in 1993.

8
<PAGE>
its relationships with these clients and uses its extensive knowledge of the
real estate industry to create new opportunities to invest capital. The Company
believes that its knowledge of local real estate markets and its experience in
each of its primary service businesses provide it with an advantage in
identifying and evaluating investment opportunities. The Company seeks
co-investments that generate investment returns while still allowing the Company
to earn fees in exchange for services provided in the development, operation and
management of the project.

ACQUISITIONS AND JOINT VENTURES. In addition to pursuing internal growth,
the Company is committed to a strategy of selective acquisitions of
complementary businesses. The Company bases this strategy on its belief that the
traditionally fragmented real estate services industry is experiencing rapid
consolidation as customers' seek service providers who can meet their broad
range of real estate needs. The Company believes that few real estate service
providers can meet the demands of large corporate and institutional customers,
and that many smaller companies are facing pressure to combine with other
service providers to remain competitive. Seeking to capitalize on this
consolidation trend, since August, 1997 the Company has completed the
acquisition of six businesses based in Seattle, Los Angeles, Cleveland, Detroit,
Boston and Charlotte for an aggregate consideration of approximately $127.2
million plus certain contingent payments and Common Stock options. In addition,
since October 1997, the Company has entered into several joint venture
development programs with investors in commercial real estate. See "The
Company--Recent Developments" and "Business--Development and Construction
Services" and "--Retail Services." The Company continuously surveys the
marketplace for other potential acquisitions which might further enhance the
quality or the breadth of services it can offer clients.

RECENT DEVELOPMENTS

An important component of the Company's growth strategy is the selective
acquisition of complementary real estate services businesses. In 1998, the
Company has actively pursued this part of its growth strategy and has
consummated the following acquisitions:

In March 1998, the Company purchased all of the issued and outstanding
capital stock of Tooley & Company, Inc., a California real estate services
company primarily engaged in office management and leasing (the "Tooley
Acquisition"), adding an office property management portfolio of approximately
9.7 million square feet and approximately 190 employees located in Los Angeles,
Orange County, San Diego and San Francisco.

In March 1998, the Company also acquired substantially all of the assets of
James Norman & Company, a 30 employee property management and brokerage firm
with operations concentrated in Seattle's central business district office and
retail markets (the "Norman Acquisition").

In May 1998, the Company acquired substantially all of the assets of Fallon,
Hines & O'Connor, Inc., a Boston-based commercial real estate brokerage,
consulting and advisory firm with 52 employees (the "FHO Acquisition").

In June 1998, the Company acquired substantially all of the assets of CORE
Resources, Inc., a provider of infrastructure management services to the
automotive industry located in Detroit, Michigan (the "Core Acquisition").

In July 1998, the Company acquired certain of the assets of Faison &
Associates and Faison Enterprises, Inc., which are engaged in the development,
leasing and management of office and retail properties in the Midatlantic and
Southeast regions of the United States. As a result of the Faison Acquisition,
the Company added over 1,200 employees and approximately 40.0 million square
feet to its property management portfolio, including approximately 31.2 million
of retail space, making the Company one of the largest non-REIT managers of
retail property in the United States. The Company believes the Faison
Acquisition will strengthen its position in the regional mall construction and
development business, will establish the Company as one of the leading providers
of retail property management services in the

9
<PAGE>
Southeast and will provide the Company with a platform and expertise for
expansion of its retail services business.

The Tooley Acquisition, the Norman Acquisition, the FHO Acquisition, the
Core Acquisition and the Faison Acquisition are collectively referred to in this
Prospectus as the "Recent Acquisitions." See "The Company--Recent Developments."

THE OFFERING

All of the shares of Common Stock offered hereby are being sold by the
Selling Stockholders. Of the 5,000,000 shares being offered hereby, 3,677,077
are being offered by current and former employees of the Company and 1,322,923
shares are being offered by Crow Family Partnership, L.P. See "Principal and
Selling Stockholders."

<TABLE>
<S> <C>
Common Stock offered(1)...................... 5,000,000 shares
Common Stock to be outstanding after the
Offering(2)................................ 34,141,414 shares
Use of Proceeds.............................. No proceeds will be received by the Company.
New York Stock Exchange Symbol............... TCC
</TABLE>

- ------------------------

(1) Excludes up to 750,000 shares subject to an over-allotment option granted by
the Selling Stockholders to the Underwriters.

(2) Based upon the number of shares outstanding on July 9, 1998. Excludes an
aggregate of: (i) 2,376,069 shares issuable upon exercise of options with an
exercise price of $3.85 per share granted by the Predecessor Company
pursuant to its 1997 Stock Option Plan (the "Assumed Option Plan" or the
"1997 Option Plan") and assumed by the Company in connection with the
Reincorporation Transactions, all of which vested upon the closing of the
Initial Public Offering and became exercisable 30 days thereafter; (ii)
2,515,622 shares issuable upon exercise of options with a weighted average
exercise price of $18.65 per share granted under the Company's 1997
Long-Term Incentive Plan (the "Long-Term Incentive Plan"); (iii) 2,819,256
shares reserved for future grants or awards under the Long-Term Incentive
Plan and (iv) 926,152 shares reserved for issuance under the Company's
Employee Stock Purchase Plan. See "Management--Long-Term Incentive Plan" and
"--Assumed Option Plan," "--Employee Stock Purchase Plan").

RISK FACTORS

Prospective investors should consider the factors discussed in detail
elsewhere in this Prospectus under the caption "Risk Factors."

10
<PAGE>
SUMMARY FINANCIAL INFORMATION

The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical and pro forma financial statements and notes
thereto of the Company included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------------------------------------------------ ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 PRO 1998 PRO
1993 1994 1995 1996 1997 FORMA(1) 1997 1998 FORMA(1)
--------- --------- --------- --------- ---------- ---------- --------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Property management
services.................. $ 90,954 $ 99,609 $ 92,970 $ 90,179 $ 87,756 $ 153,942 $ 22,024 $ 24,887 $ 39,418
Brokerage services.......... 47,299 48,652 61,960 72,095 91,053 132,884 16,935 25,533 31,749
Infrastructure management
services.................. 16,401 27,063 38,681 50,836 68,719 74,851 14,569 22,890 24,487
Development and construction
services.................. 14,377 12,792 20,382 22,732 40,054 49,220 5,206 8,891 12,835
Retail services............. 1,306 1,966 1,510 2,393 5,318 10,293 325 2,727 2,727
Income from unconsolidated
subsidiaries.............. 465 3,141 114 594 512 512 58 2,415 2,415
Gain on disposition of real
estate.................... -- 4,646 5,026 6,630 10,241 10,241 1,124 866 866
Other....................... 3,759 3,039 6,559 9,996 9,986 12,802 1,857 2,042 2,477
--------- --------- --------- --------- ---------- ---------- --------- ---------- ----------
Total revenues.............. 174,561 200,908 227,202 255,455 313,639 444,745 62,098 90,251 116,974
Salaries, wages and
benefits.................. 106,606 115,330 130,248 137,794 161,425 258,730 37,339 50,516 67,708
Non-recurring compensation
costs..................... -- -- -- -- 33,085 -- -- -- --
Commissions................. 15,856 20,788 23,730 27,119 39,121 40,702 7,003 10,953 12,282
General and
administrative............ 35,365 35,282 40,671 41,421 55,884 73,434 10,303 15,097 20,648
Profit sharing.............. 8,292 16,562 15,893 20,094 23,514 597 2,570 -- --
Other....................... 4,255 7,284 8,526 9,087 17,997 23,448 2,259 3,117 6,284
--------- --------- --------- --------- ---------- ---------- --------- ---------- ----------
Operating costs and
expenses.................. 170,374 195,246 219,068 235,515 331,026 396,911 59,474 79,683 106,922
--------- --------- --------- --------- ---------- ---------- --------- ---------- ----------
Income (loss) before income
taxes..................... 4,187 5,662 8,134 19,940 (17,387) 47,834 2,624 10,568 10,052
Income tax expense
(benefit)................. 1,854 2,636 3,793 7,826 (3,367) 18,847 1,023 4,239 4,033
--------- --------- --------- --------- ---------- ---------- --------- ---------- ----------
Income (loss) before
extraordinary gain........ 2,333 3,026 4,341 12,114 (14,020) 28,987 1,601 6,329 6,019
Extraordinary gain.......... 188 782 -- -- -- -- -- -- --
--------- --------- --------- --------- ---------- ---------- --------- ---------- ----------
Net income (loss)........... $ 2,521 $ 3,808 $ 4,341 $ 12,114 $ (14,020) $ 28,987 $ 1,601 $ 6,329 $ 6,019
--------- --------- --------- --------- ---------- ---------- --------- ---------- ----------
--------- --------- --------- --------- ---------- ---------- --------- ---------- ----------
EARNINGS (LOSS) PER
SHARE(2):
Basic....................... $ (.42) $ .86 $ .19 $ .18
Diluted..................... $ (.42) $ .81 $ .18 $ .17

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING(2):
Basic....................... 33,583,467 33,711,295 33,899,574 34,027,402
Diluted..................... 33,583,467 35,845,808 36,115,203 36,252,806

OTHER DATA:
EBITDA, as adjusted(3)...... $ 16,969 $ 29,686 $ 32,033 $ 48,915 $ 59,522 $ 69,837 $ 7,172 $ 13,648 $ 16,299
Cash provided by (used in)
operating activities...... 7,556 15,907 10,648 25,148 (4,978) 18,714 (15,819) (41,577) (42,624)
Cash provided by (used in)
investing activities...... (1,974) (2,748) (646) (5,019) (21,322) (114,168) (1,266) (22,395) (1,341)
Cash provided by (used in)
financing activities...... (4,412) 93 (5,457) (1,779) 64,542 157,328 487 32,390 9,323
</TABLE>

11
<PAGE>

<TABLE>
<CAPTION>
MARCH 31,
1998
DECEMBER 31, ----------------------
----------------------------------------------------- PRO
1993 1994 1995 1996 1997 ACTUAL FORMA(4)
--------- --------- --------- --------- --------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................... $ 22,358 $ 35,610 $ 40,155 $ 58,505 $ 96,747 $ 65,165 $ 63,163
Total assets................................ 55,774 99,867 114,315 194,314 326,236 360,519 436,488
Long-term debt.............................. 8,425 9,762 7,065 12,361 2,430 34,655 105,720
Notes payable on real estate held for
sale...................................... -- 22,914 13,182 67,810 76,623 93,039 93,039
Deferred compensation....................... 14,661 21,468 25,883 20,963 8,391 3,809 3,809
Total liabilities........................... 43,767 85,516 95,090 160,018 169,305 198,880 270,849
Minority interest........................... 27 278 3,932 3,294 19,859 18,073 18,073
Stockholders' equity........................ 11,980 14,074 15,293 31,002 137,072 143,566 147,566
</TABLE>

- ------------------------------

(1) Gives effect to the Doppelt Acquisition, the Tooley Acquisition, the Norman
Acquisition, the FHO Acquisition, the Core Acquisition, the Faison
Acquisition, the Reincorporation Transactions and the sale of 5,750,000
shares of Common Stock by the Company in the Initial Public Offering and the
receipt and application of the net proceeds therefrom, as though they had
occurred on January 1, 1997, but excludes the non-cash, non-recurring charge
to income of $33.1 million related to options granted under the Assumed
Option Plan, and a $4.4 million, non-recurring charge to income resulting
from the settlement of claims by certain former employees arising out of a
terminated stock appreciation rights plan. See "The Company--Initial Public
Offering," "--Recent Developments" "--Reincorporation Transactions",
"Business--Retail Services" and "Pro Forma Consolidated Financial
Statements."

(2) Earnings per share and weighted average common shares outstanding for the
years prior to 1997 and for the three months ended March 31, 1997 are not
relevant due to the change in capital structure effected in connection with
the Reincorporation Transactions in 1997. See "The Company--Reincorporation
Transactions."

(3) EBITDA, as adjusted, represents earnings before interest, income taxes,
depreciation and amortization, royalty and consulting fees, profit sharing,
the non-cash, non-recurring charge to income related to the stock option
granted under the Assumed Option Plan and the non-recurring charge to income
resulting from the settlement of claims by certain former employees arising
out of a terminated stock appreciation rights plan. Management believes that
EBITDA, as adjusted, can be a meaningful measure of the Company's operating
performance, cash generation and ability to service debt. However, EBITDA,
as adjusted, should not be considered as an alternative either to: (i) net
earnings (determined in accordance with GAAP); (ii) operating cash flow
(determined in accordance with GAAP); or (iii) liquidity. There can be no
assurance that the Company's calculation of EBITDA, as adjusted, is
comparable to similarly titled items reported by other companies.

(4) As adjusted to give effect to the FHO Acquisition, the Core Acquisition and
the Faison Acquisition as though they had occurred on March 31, 1998. See
"The Company--Recent Developments" and "Pro Forma Consolidated Financial
Statements."

12
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. PROSPECTIVE INVESTORS SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY AND
SHOULD CONSIDER, AMONG OTHER THINGS, THE RISKS INHERENT IN AND AFFECTING THE
COMPANY'S BUSINESS DESCRIBED BELOW AND THROUGHOUT THIS PROSPECTUS. THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISK AND
UNCERTAINTY. ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS COULD DIFFER
MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF
THE RISK FACTORS SET FORTH BELOW AND OTHER FACTORS DISCUSSED ELSEWHERE IN THIS
PROSPECTUS. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" BELOW.

DEALINGS WITH AND RELIANCE ON AFFILIATES; POTENTIAL CONFLICTS OF INTEREST

For the year ended December 31, 1997, the Company's largest customer in
terms of revenues was Crow Realty Investors, L.P. d/b/a Crow Investment Trust,
which is wholly owned by certain affiliates and descendants of Mr. Trammell
Crow. Crow Investment Trust accounted for approximately 6.8% of the Company's
revenues for such period. Although the Company believes that its transactions
with Crow Investment Trust and related parties are on terms no less favorable to
the Company than those that could have been obtained from third parties, there
can be no assurance that these parties will continue to transact business with
the Company or that their ownership positions with the Company will not
influence the terms on which they transact business with the Company in the
future. This relationship, coupled with the significant ownership of Common
Stock and the conduct of other significant real estate-related activities by
Crow Investment Trust and other affiliates and descendants of Mr. Trammell Crow
outside the Company, could give rise to conflicts of interest.

Among other investment or development activities, Crow Investment Trust and
its affiliates engage in the business of acquiring and developing office,
industrial and retail facilities, whether as single projects or through multiple
project investment fund vehicles, and perform asset or portfolio management
services for these projects. In some instances these activities are directly
competitive with the Company's activities. There can be no assurance that the
respective activities of the Company and Crow Investment Trust will not cause a
conflict with a major customer of the Company or create confusion in the various
real estate or capital markets in which they both do business.

The Company has implemented a policy requiring any material transaction (or
series of related transactions) between the Company and related parties to be
approved by a majority of the directors who have no beneficial or economic
interest in such related party ("disinterested directors"), upon such directors'
determination that the terms of the transaction are no less favorable to the
Company than those that could have been obtained from unrelated third parties.
The policy defines a material related party transaction (or series of related
transactions) as one involving a purchase, sale, lease or exchange of property
or assets or the making of any investment with a value to the Company in excess
of $1 million or a service agreement (or series of related agreements) with an
annual value in any fiscal year in excess of $1 million. There can be no
assurance that this policy will insure that all transactions between the Company
and related parties are on terms that are no less favorable to the Company than
those that could have been obtained from unrelated third parties. See "Certain
Transactions."

TRADE NAME LICENSE

As part of the Reincorporation Transactions, the Company and CFH
Trade-Names, L.P. ("CFH"), an affiliate of Crow Investment Trust, entered into a
License Agreement (the "License Agreement"), pursuant to which, subject to
certain quality standards and other limitations summarized below, the Company
was granted the perpetual right to use the name "Trammell Crow" throughout the
world in all areas of business except the residential real estate business. In
conjunction therewith, CFH agreed to cause Trammell Crow International (a real
estate services company with eight offices in Europe, Asia and South America) to
cease using the name "Trammell Crow" within three years after the date of the
License

13
<PAGE>
Agreement, and also to cease using that name in any market within 12 months
after the Company or any of its subsidiaries opens an office in that market.
This perpetual license may be revoked if (a) the Company fails to maintain the
type and quality of performance of services and the type and quality of goods
and products that meet the standards of services and goods and products
historically set by the licensor or the Predecessor Company for their affiliated
entities; or (b) infringes or attempts to infringe any of the licensor's
intellectual property rights that are the subject of the License Agreement. A
loss of the right to use the Trammell Crow name would have a material adverse
effect on the Company's business, financial condition and results of operations.
Certain existing uses of this name by affiliates of CFH will continue to be
permitted under the terms of the License Agreement. Although the License
Agreement contains provisions which are designed to limit the possible confusion
that may be caused in the marketplace by affiliates of CFH conducting business
activities under such names or other names similar to "Trammell Crow," there can
be no assurance that such activities will not create such confusion or reduce
the value associated with the Trammell Crow name. See "Business--Trademarks" and
"Certain Transactions-- Royalty Agreement and License Agreement."

CONTROL BY EXISTING STOCKHOLDERS

Immediately after the Offering, directors, officers and other employees of
the Company and its affiliates will own in excess of 62% of the Common Stock
outstanding and, thus, will be able to control the affairs and policies of the
Company and be able to approve or disapprove any matters submitted to a vote of
the stockholders, including the election of directors. Such concentration of
ownership could have the effect of delaying or preventing a change in control of
the Company. See "Description of Capital Stock" and "Principal and Selling
Stockholders."

RAPID GROWTH

The Company intends to continue to pursue an aggressive growth strategy by
increasing revenues from existing clients, expanding the breadth of its service
offerings, seeking selective co-investment opportunities and pursuing strategic
acquisitions. The Company expects that any significant growth will continue to
place demands on its managerial, administrative, operational and financial
resources. The Company's future success and profitability will depend, in part,
on its ability to attract and retain qualified managers and other personnel,
successfully implement enhancements to its management and operating systems and
secure adequate financing for capital expenditures. There can be no assurance
that the Company will be able to successfully manage any significant expansion
of its operations or secure adequate financing on terms favorable to the
Company, if at all. See "Business."

ACQUISITIONS

The Company has consummated five acquisitions in 1998. See "The
Company--Recent Developments." As part of its overall strategy, the Company
intends to pursue other strategic acquisitions. There can be no assurance that
the Company will be able to identify and acquire businesses on terms favorable
to the Company. A substantial portion of the Company's capital resources could
be used for such acquisitions. Moreover, the Company may require additional debt
or equity financing for such acquisitions, which may not be available on terms
favorable to the Company, if at all. Any such acquisitions are accompanied by
the risks commonly encountered in such transactions, including the diversion of
management attention to the assimilation of the operations and personnel of the
acquired businesses, difficulties in maintaining employment relationships with
the employees of an acquired business, potential adverse short-term effects on
the Company's operating results, integration of financial and other
administrative systems, amortization of any acquired intangible assets and the
maintenance of uniform standards, controls, procedures and policies. In
addition, the acquired businesses' customers could cease to do business with the
Company. Potential conflicts between the Company's preexisting customers and
those of an acquired business could threaten the Company's relationship with
such customers and impair its ability to realize the intended

14
<PAGE>
benefits of an acquisition. There can be no assurance that the Company will be
successful in overcoming these risks or any other problems encountered in
connection with such acquisitions or that carrying out such acquisitions will
not have a material adverse effect on the Company's business, financial
condition or results of operations. See "Business."

REAL ESTATE INVESTMENT AND CO-INVESTMENT ACTIVITIES

As of June 30, 1998, the Company was involved as a principal in 75 real
estate investments with an aggregate estimated transaction value of
approximately $851.1 million and in which the Company had invested approximately
$47.8 million. The Company's participation as a principal in real estate
investments could increase fluctuations in the Company's net earnings and cash
flow. The Company's investments and co-investments also inherently involve the
risk of loss of the Company's investment. Moreover, in certain of these
investments, the Company will not have complete discretion to control the timing
of the disposition of such investments and, as a result, the recognition of any
related gain or loss. In the ordinary course of the Company's development and
construction business, the Company also assumes recourse obligations for
construction financing. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

COMPETITION

The Company competes in several market segments within the commercial real
estate industry, each of which is highly competitive on a national and a local
level. Depending on the market segment, the Company faces competition from other
real estate services providers, consulting firms and in-house corporate real
estate and infrastructure management departments. Some of the Company's
principal competitors in certain of these market segments have capabilities and
financial resources equal to or greater than those of the Company and a broader
global presence. Many of the Company's competitors are local or regional firms
which are smaller than the Company on an overall basis, but may be substantially
larger than the Company on a local or regional basis. While the Company does not
believe that any of its competitors is dominant in the market segments in which
the Company operates, the providers of real estate services that compete with
the Company on a national level include LaSalle Partners Incorporated, CB
Commercial/Koll Management Services, Cushman & Wakefield, Inc. and Insignia
Financial Group. The Company has faced increased competition in recent years
which has, in some cases, resulted in lower service fees, or compensation
arrangements more closely aligned with the Company's performance in rendering
services to its clients. In recent years, there has also been a significant
increase in the number of REITs which self-manage their real estate assets.
Continuation of this trend could decrease the demand for services offered by the
Company, and thereby increase competition. In general, the Company expects the
industry to become increasingly competitive in the future. There can be no
assurance that such competition will not have a material adverse effect on the
Company's business, financial condition or results of operations. See
"Business--Competitive Environment."

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Upon completion of the Offering, the Company will have 34,141,414 shares of
Common Stock outstanding. The 5,000,000 shares sold in the Offering (5,750,000
if the U.S. Underwriters exercise in full the over-allotment option) will be
freely tradeable without restriction or further registration under the
Securities Act of 1933, as amended (the "Securities Act"), except for shares
held by "affiliates" of the Company. Of the shares issued to certain
stockholders of the Company upon consummation of the Reincorporation
Transactions, 23,142,038 which will continue to be held by such stockholders (or
their transferees) immediately following the Offering are deemed to be
"restricted securities," as that term is defined in Rule 144 under the
Securities Act ("Rule 144"). Restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rule 144 promulgated under the Securities Act. Substantially all of such
shares will be eligible for sale under Rule 144 on

15
<PAGE>
December 1, 1998. Holders of approximately of such shares have entered into
lock-up agreements for the benefit of the Company and the Underwriters, which
are effective for the period beginning on July 17, 1998 and ending 120 days from
the date of this Prospectus.

The Company filed registration statements on Form S-8 with respect to
2,423,769 shares of Common Stock which underlie options granted under the
Assumed Option Plan, all of which became exercisable 30 days following the
closing of the Initial Public Offering, and 5,334,878 shares of Common Stock
reserved for issuance under the Long-Term Incentive Plan, including 2,515,622
shares underlying options which were outstanding as of July 9, 1998. Shares so
registered could be sold in the public market by such holders at any time on or
after the date such options become exercisable. All holders of options issued
under the Assumed Option Plan have executed lock-up agreements for the benefit
of the Company and the Underwriters which are effective for the period beginning
on July 17, 1998 and ending 120 days from the date of this Prospectus. See
"Shares Eligible for Future Sale--Lock-up Arrangement."

Certain stockholders of the Company have the right to request the Company to
file, beginning November 24, 1998, one or more registration statements under the
Securities Act with respect to the resale by such stockholders of all shares of
Common Stock owned at that time by such stockholders. Shares so registered could
be sold in the public market by such stockholders at any time on or after the
date such registration statement is declared effective. These stockholders have
agreed for the benefit of the Company and the Underwriters that they will not
exercise such registration rights for a period beginning on July 17, 1998 and
ending 120 days from the date of this Prospectus. See "Description of Capital
Stock-- Registration Rights of Certain Holders."

No prediction can be made as to the effect, if any, that future sale of such
shares, or the availability of such shares for future sale, will have on the
market price for the Common Stock. See "Shares Eligible for Future Sale."

RECRUITING AND RETENTION OF QUALIFIED PERSONNEL

The Company's continued success is dependent to a significant degree upon
the efforts of all of its executive officers and key employees. The loss or
unavailability of the services of any of its key personnel could have a material
adverse effect on the Company. As the Company continues to grow, its success
will be largely dependent upon its ability to attract and retain qualified
personnel in all areas of its business, particularly management. There can be no
assurance that the Company will be able to continue to hire and retain a
sufficient number of qualified personnel to support its planned growth. If the
Company is unable to attract and retain such qualified personnel, it may be
forced to limit its growth, and its business and operating results could be
adversely affected. See "Management."

RELIANCE ON MAJOR CLIENTS AND CONTRACT RETENTION

A significant portion of the Company's revenues are derived from relatively
few clients. The Company's ten largest clients accounted for approximately 21.9%
of the Company's total revenues during 1997, with the five largest clients
accounting for 6.8%, 3.2%, 2.8%, 2.4% and 1.5%, respectively. The loss of one or
more of the Company's major clients could have a material adverse effect on the
Company.

The Company is substantially dependent on revenue received for services
performed under property management and infrastructure management contracts. For
the year ended December 31, 1997, revenue from property management and
infrastructure management contracts constituted approximately 28.0% and 21.9%,
respectively, of the Company's total revenue. Most of the Company's property
management contracts are cancelable for any reason upon 30 days notice by either
party. The Company's infrastructure management service contracts are typically
for initial terms of three to five years with options to renew. Accordingly,
contracts representing a significant percentage of the Company's revenues are
terminable on short notice or may be scheduled to expire in any one year. While
the Company has been successful in retaining and renewing a significant portion
of its contracts, there can be no assurance that the Company

16
<PAGE>
will continue to be successful. Moreover, increased competition could cause the
Company's contracts to be renewed on less favorable terms. Failure of the
Company to continue to retain and renew its contracts on favorable terms could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business."

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company has experienced and expects to continue to experience quarterly
variations in revenues and net income as a result of many factors, including the
timing of transactions, the commencement of new contracts, revenue mix and the
timing of additional selling, general and administrative expenses to support new
business activities. While the effects of seasonality on the Company's business
may be obscured by the addition of new clients or new programs for existing
clients, the Company's revenues tend to be lower in the first three quarters of
the fiscal year because its clients have demonstrated a tendency to close
transactions toward the end of their fiscal years (typically the calendar year),
which causes the Company to earn a significant portion of its revenues under
transaction-oriented service contracts in the last quarter of the fiscal year.
In addition, an increasing percentage of the Company's property management and
infrastructure management contracts provide for bonus payments if the Company
achieves certain performance targets. Such incentive payments are generally
earned in the fourth quarter. Over the last two years, the percentage of the
Company's annual revenues earned in the first, second, third and fourth quarters
were, respectively, 20%, 22%, 26% and 32% in 1997 and 22%, 21%, 26% and 31% in
1996. The Company plans its capital and operating expenditures based on its
expectations of future revenues and, if revenues are below expectations in any
given quarter, the Company may be unable to adjust capital or operating
expenditures in a timely manner to compensate for any unexpected revenue
shortfall, which could have an immediate material adverse effect on the
Company's business, financial condition and operating results. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Quarterly Results of Operations and Seasonality."

ECONOMIC CONDITIONS

Periods of economic slowdown or recession, rising interest rates or
declining demand for real estate could adversely affect certain portions of the
Company's business. Such economic conditions could result in a general decline
in rents which in turn would adversely affect revenue from property management
fees (which in most cases are calculated as a percentage of the revenue
generated by the property under management) and commissions or fees derived from
property sales and leases (which are typically based on the sale price or lease
revenue commitment, respectively). Such conditions could also lead to a decline
in sale prices as well as a decline in availability of and demand for capital
invested in commercial real estate and related assets. A decline in the
availability of capital for real estate-related investment would reduce
development activity, thereby potentially reducing the Company's development
revenues and other revenues that are derived in part from development activity
(for example, project leasing and property management revenues).

The condition of the real estate market tends to be cyclical and related to
the condition of the economy as a whole or, at least, to the perceptions of
investors and users as to the economic outlook. The sharp downturn in the
commercial real estate market in the early 1990s has caused and may continue to
cause some property owners to dispose of their properties or to lose them
through foreclosures. A change in the ownership of properties, including
acquisition of properties by self-managed REITs, may be accompanied by a change
in property and investment management firms and could cause the Company to lose
property and investment management agreements or make the agreements retained
less profitable. See "Business."

17
<PAGE>
YEAR 2000 COMPLIANCE

Many currently installed computer systems are not capable of distinguishing
dates occurring during and after the year 2000 from those occurring in earlier
years. As a result, in less than two years, computer systems and/or software
used by many companies in a very wide variety of applications will experience
operating difficulties unless they are modified or upgraded to adequately
process information involving, related to or dependent upon the century change.
Significant uncertainty exists concerning the scope and magnitude of problems
associated with the century change. The Company recognizes the need to ensure
its operations will not be adversely impacted by Year 2000 software failures and
has established a project team to assess Year 2000 risks. The project team is
coordinating the identification and implementation of changes to computer
hardware and software applications that will attempt to ensure availability and
integrity of the Company's information systems and the reliability of its
operational systems. The Company is also assessing the potential overall impact
of the impending century change on its business, results of operations and
financial position.

The Company is currently reviewing its information and operational systems
and manufacturing processes in order to identify and modify those products,
services or systems that are not Year 2000 compliant. However, there can be no
assurance that the Company will timely identify and remediate all significant
Year 2000 problems, that remedial efforts will not involve significant time and
expense, or that such problems will not have a material adverse effect on the
Company's business, results of operations or financial position.

The Company also faces risk to the extent that suppliers of products,
services and systems purchased by the Company and others with whom the Company
transacts business do not comply with Year 2000 requirements. If any such third
parties cannot provide the Company with products, services or systems that meet
the Year 2000 requirements on a timely basis, or if Year 2000 issues prevent
such third parties from timely delivering products or services required by the
Company, the Company's results of operations could be materially adversely
affected. To the extent Year 2000 issues cause significant delays in, or
cancellation of, decisions to purchase the Company's products or services, the
Company's business, results of operations and financial position would be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Impact of Year 2000."

ENVIRONMENTAL LIABILITY

Various federal, state and local laws and regulations impose liability on
current or previous real property owners or operators for the cost of
investigating, cleaning up or removing contamination caused by hazardous or
toxic substances at the property. In the Company's role as a property manager,
it could be held liable as an operator for such costs. Such liability may be
imposed without regard to the legality of the original actions and without
regard to whether the Company knew of, or was responsible for, the presence of
such hazardous or toxic substances, and such liability may be joint and several
with other parties. If the liability is joint and several, the Company could be
responsible for payment of the full amount of the liability, whether or not any
other responsible party is also liable. Further, any failure by the Company to
disclose environmental issues could subject the Company to liability to a buyer
or lessee of the property. In addition, some environmental laws create a lien on
the contaminated site in favor of the government for damages and costs it incurs
in connection with the contamination. The operator of a site also may be liable
under common law to third parties for damages and injuries resulting from
hazardous substances or environmental contamination at a site, including
liabilities related to the presence of asbestos-containing materials. There can
be no assurance that any of such liabilities to which the Company or any of its
affiliates may become subject will not have a material adverse effect on the
Company's business and results of operations. See "Business--Environmental
Liability."

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<PAGE>
ANTI-TAKEOVER CONSIDERATIONS

STAGGERED BOARD OF DIRECTORS. The Board of Directors is divided into three
classes serving staggered terms currently expiring in 1999, 2000 and 2001. The
staggered terms of directors may limit the ability of holders of Common Stock to
change control of the Company even if a change of control were in such
stockholders' best interests. This limitation may discourage offers or other
bids for the Common Stock at a premium over the market price thereof. See
"Description of Capital Stock--Anti-takeover Provisions."

CERTIFICATE OF INCORPORATION. The anti-takeover effect of certain
provisions of the Company's Certificate of Incorporation (the "Certificate of
Incorporation") may have the effect of delaying, deterring or preventing a
takeover of the Company that stockholders purchasing shares in the Offering may
consider to be in their best interest. The Company's Certificate of
Incorporation requires that stockholders follow an advance notification
procedure for certain stockholder nominations of candidates for the Board of
Directors and for certain other business to be conducted at any stockholders'
meeting. In addition, the Certificate of Incorporation authorizes the Board of
Directors to issue up to 30,000,000 shares of preferred stock of the Company,
par value $0.01 per share ("Preferred Stock"), having such rights, preferences
and privileges as designated by the Board of Directors, without stockholder
approval. The issuance of such Preferred Stock could inhibit a change of
control. See "Description of Capital Stock--Preferred Stock."

DELAWARE ANTI-TAKEOVER STATUTE. Section 203 of the Delaware General
Corporation Law (the "DGCL"), which is applicable to the Company, restricts
certain business combinations with interested stockholders upon their acquiring
15% or more of the Common Stock. This statute may have the effect of inhibiting
a non-negotiated merger or other business combination involving the Company,
even if such event would be beneficial to the Company's stockholders. See
"Description of Capital Stock--Anti-takeover Provisions." This statute would not
prohibit the Company from entering into a business combination with any
stockholder who would otherwise have been deemed to become an "Interested
Stockholder" as a result of the Reincorporation Transactions. See "Description
of Capital Stock-- Section 203 of the Delaware General Corporation Law."

GOVERNMENT REGULATION

The Company and its brokers, salespersons and, in some instances, property
managers are regulated by the states in which they do business. These
regulations include licensing procedures, prescribed fiduciary responsibilities
and anti-fraud provisions. The Company's activities are also subject to various
federal and state fair advertising, trade, housing and real estate settlement
laws and regulations and are affected by laws and regulations relating to real
estate and real estate finance and development. In particular, a number of
states and localities have imposed environmental controls and zoning
restrictions on the development of real estate. The Company is also subject to
laws governing its relationship with employees, including minimum wage
requirements, overtime, working conditions and work permit requirements. Under
the Americans with Disabilities Act of 1990 (the "ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. While the Company believes that the
properties in which it holds an equity interest are substantially in compliance
with these requirements, a determination that the Company is not in compliance
with the ADA could result in the imposition of fines or an award of damages to
private litigants.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Prospectus, including without
limitation statements containing the words "believes," "anticipates," "expects"
and words of similar import, are forward-looking statements within the meaning
of Section 27A of the Securities Act, and Section 21E of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking
statements involve known and unknown risks, uncertainties and other matters
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,

19
<PAGE>
performance or achievements expressed or implied by such forward-looking
statements. Such matters include, among others, those set forth in this
Prospectus under the captions "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business." In addition, the Company's ability to achieve
certain results is subject to other factors affecting the Company's business
that are beyond the Company's control, including but not limited to general
economic conditions and the effect of government regulation on the conduct of
the Company's business. Given these uncertainties, prospective investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such statements or to publicly
announce any updates or revisions to any of the forward-looking statements
contained herein to reflect any change in the Company's expectation with regard
thereto or any change in events, conditions, circumstances or assumptions
underlying such statements.

THE COMPANY

BACKGROUND

The Company is a Delaware corporation that was formed in August 1997 to
become the successor to Trammell Crow Company, a Texas close corporation. In
1948 Mr. Trammell Crow founded the Predecessor Company which consisted of a
collection of affiliated partnerships and corporations doing business as
"Trammell Crow Company" until 1991. From the Predecessor Company's founding
through the 1970s, the Predecessor Company's primary business consisted of the
development and management of industrial warehouses. In the 1980s, the
Predecessor Company broadened its commercial property asset base by expanding
into retail and office projects, while continuing to develop its industrial
property business. By 1989, the Predecessor Company had evolved into the largest
commercial real estate developer in the United States, with industrial, office
and retail projects that were valued at more than $11 billion.

Following a severe recession in the United States commercial real estate
industry in the late 1980s, the Predecessor Company determined that a
restructuring was necessary to continue the historic growth of its business
despite the adverse changes in the industry. This restructuring, completed in
1991, entailed the separation of the Predecessor Company's commercial real
estate asset base and related operations from its real estate services business.
The Predecessor Company, existing as a Texas close corporation with a total
capitalization of $18 million following the restructuring, continued to operate
the real estate services business while ownership of the commercial real estate
asset base was segregated into a large number of separate entities distinct from
the Predecessor Company, with independent management and operations. While the
Company no longer has an ownership interest in the commercial real estate asset
base, the entities owning such assets are collectively one of the Company's
largest post-restructuring service customers. See "Risk Factors--Dealings with
and Reliance on Affiliates; Potential Conflicts of Interest."

RECENT DEVELOPMENTS

In March, 1998, the Company purchased Tooley & Company, Inc., a California
real estate services company primarily engaged in office management and leasing.
In exchange for the stock of Tooley, the Company paid a cash purchase price of
approximately $23.4 million to BCB Holdings, LLC ("BCB"), a Delaware limited
liability company whose members are William L. Tooley, Craig Ruth and Robert N.
Ruth. The Company has also agreed to pay to BCB up to an additional $3.0 million
if Tooley achieves certain performance targets in the future and to make certain
payments to BCB based upon the future performance of certain of Tooley's
projects. In connection with the acquisition, each of Messrs. Tooley, Ruth and
Ruth entered into employment agreements with the Company. Pursuant to the terms
of their respective employment agreements, the Company paid to William L. Tooley
and Craig Ruth an aggregate

20
<PAGE>
of $1.0 million at closing in exchange for certain covenants not to compete. At
the closing of the Tooley Acquisition, a former employee of Tooley received
options to purchase 31,858 shares of Common Stock at an exercise price of $28.25
per share (the fair market value of the Common Stock on the date of grant),
which vest ratably over a five-year term, and options to purchase an additional
8,437 shares of Common Stock at an exercise price of $28.25 per share, which
vest ratably over a three-year term.

In May, 1998, the Company acquired the business of Fallon, Hines & O'Connor,
Inc., a Boston, Massachusetts-based commercial real estate brokerage, consulting
and advisory firm ("Fallon, Hines & O'Connor"). In exchange for substantially
all of the assets of Fallon, Hines & O'Connor, the Company paid approximately
$30.6 million in cash and agreed to pay up to an additional $6.0 million in cash
and grant certain stock options if the acquired business meets certain
performance thresholds. The Company also paid an aggregate of $2.0 million to
the principals of Fallon, Hines & O'Connor in exchange for certain covenants not
to compete. The Company considers Fallon, Hines & O'Connor to be one of the
premier brokerage firms in the Northeast and believes that the addition of 30
brokerage professionals through this acquisition, including the principals of
Fallon, Hines & O'Connor, enhances its existing brokerage business.

In July, 1998, the Company acquired a portion of the businesses of Faison &
Associates ("Faison") and Faison Enterprises, Inc. ("Faison Enterprises"), which
are engaged in the development, leasing and management of office and retail
properties in the Midatlantic and Southeast regions of the United States. In
exchange for the acquired business, the Company paid $36.1 million in cash and
delivered a $2.0 million promissory note that bears interest at an annual rate
of 6.0%. The note matures on April 30, 2000 and is payable in eight equal
quarterly installments. In connection with the closing, Mr. Faison and Faison
Enterprises purchased an aggregate of 127,828 shares of Common Stock for $4.0
million. In addition, the Company entered into a development program with Faison
Enterprises pursuant to which the Company has agreed to grant Faison Enterprises
the right to develop certain retail development projects identified through the
Company's operations purchased in the Faison Acquisition. If any of such
projects are accepted by Faison Enterprises, the Company will be entitled to
receive up to a 40% interest in the distributions that Faison Enterprises
receives from such projects. If the Company receives any such interests in 1999,
it is required to award 50% of such interests to certain key Faison employees
other than Mr. Faison. The Company is obligated to pay Faison Enterprises an
additional $1.0 million if retail development construction starts funded through
the development program exceed certain levels in 1999 and 2000. Faison
Enterprises also entered into a long-term management contract with the Company
with respect to the properties developed under this program and certain other
properties controlled by Mr. Faison. In connection with the Faison Acquisition,
the Company entered into employment agreements with four key employees,
including Mr. Faison, and in connection with such employment agreements the
Company paid an aggregate of $1.0 million in exchange for certain covenants not
to compete. The Company granted options to purchase an aggregate of 69,963
shares of Common Stock at an exercise price of $32.875 per share (the fair
market value of the Common Stock on the date of grant) to employees of the
acquired business who were retained after the closing. At the closing, Mr.
Faison was elected to serve as a Class III Director on the Company's Board of
Directors with a term expiring at the Company's annual meeting of stockholders
in 2000.

In March 1998, the Company acquired substantially all of the assets of James
Norman & Company, a real estate services firm with operations concentrated in
Seattle's central business district office and retail markets ("Norman"). In
addition, in June 1998 the Company acquired substantially all of the assets of
Core, a Detroit-based real estate services company that focuses on providing
infrastructure management services to the automotive industry.

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<PAGE>
INITIAL PUBLIC OFFERING

On December 1, 1997, the Company closed its Initial Public Offering of
5,750,000 shares of Common Stock. Of the approximately $90.2 million in net
proceeds which the Company raised from the Initial Public Offering: (i)
approximately $31.0 million was used to repay all outstanding indebtedness under
a credit facility that was terminated upon the closing of the Initial Public
Offering; (ii) approximately $26.3 million was used for development purposes;
(iii) approximately $8.4 million was used to repay other indebtedness of the
Company (including approximately $4.7 million owed to retired Profit Sharing
Plan participants); and (iv) approximately $1.6 million was paid to J. McDonald
Williams, Chairman of the Company's Board of Directors, in connection with the
termination of the Company's consulting arrangements with Mr. Williams (see
"--Reincorporation Transactions"). The remaining proceeds were used for working
capital.

REINCORPORATION TRANSACTIONS

In connection with the Initial Public Offering, the Company and TCC Merger
Sub, Inc., a wholly owned subsidiary of the Company ("Merger Sub"), entered into
a series of transactions to convert the legal form in which the Predecessor
Company's business and operations were held from a Texas close corporation to a
Delaware corporation. As part of these transactions, Merger Sub was merged (the
"Reincorporation Merger") with and into the Predecessor Company. As a result of
the Reincorporation Merger, the Predecessor Company survived as a wholly-owned
subsidiary of the Company and the Predecessor Company's shareholders immediately
prior to the effective time of the Reincorporation Merger (the "Effective Time")
received, in the aggregate, 25,502,964 shares of Common Stock. Contemporaneously
with the consummation of the Reincorporation Merger, the Company, Crow Family
Partnership, L.P. ("Crow Family"), CFH and J. McDonald Williams entered into a
Stockholders Agreement. See "Description of Capital Stock--Stockholders'
Agreement."

The Company and CFH entered into a License Agreement (the "License
Agreement") immediately prior to the closing of the Initial Public Offering.
Pursuant to the terms of the License Agreement, and subject to certain quality
standards, the Company was granted the right to use the name "Trammell Crow" in
any business in any region around the world except for the residential real
estate business. The license granted pursuant to the License Agreement (the
"Trade Name License") is perpetual, subject to the Company's continued use and
compliance with certain quality standards and CFH's right to terminate upon the
occurrence of certain bankruptcy events. The Company is not obligated to pay any
fees under the License Agreement. However, in exchange for the grant of the
Trade Name License, the Company issued 2,295,217 shares of Common Stock to CFH
immediately prior to the closing of the Initial Public Offering. See "Certain
Transactions--Royalty Agreement and License Agreement."

Following the initial capitalization of the Company, the issuance of shares
of Common Stock in the Reincorporation Merger and the issuance of shares of
Common Stock in exchange for the Trade Name License, the Predecessor Company's
shareholders immediately prior to the Effective Time received, in the aggregate
27,799,181 shares of Common Stock, constituting approximately 82.02% of the
outstanding Common Stock after giving effect to the Initial Public Offering.

On August 1, 1997, the Predecessor Company granted to certain of its
employees options to acquire an aggregate of 1,626 shares of its common stock,
which constituted all shares authorized under the Assumed Option Plan. At the
Effective Time, the Company assumed the Predecessor Company's obligations with
respect to all such options, thereby becoming obligated to issue 2,423,769
shares of Common Stock at an exercise price per share of $3.85. All of such
options vested upon the closing of the Initial Public Offering and became
exercisable 30 days thereafter. No additional options will be granted under the
Assumed Option Plan. Because the exercise price established for each assumed
option at the time it was granted was less than the initial price to the public
in Initial Public Offering, the Company recognized a

22
<PAGE>
non-cash, non-recurring charge to earnings of $33.1 million in the fourth
quarter of its 1997 fiscal year. As of July 9, 1998, 47,700 shares of Common
Stock had been issued upon exercise of such options, and the Company was
obligated to issue up to an aggregate of 2,376,069 shares of Common Stock upon
the exercise of the remainder of such options. See "Management--Assumed Option
Plan."

Concurrent with the closing of the Initial Public Offering, the Company
granted options under the Long-Term Incentive Plan to acquire an aggregate of
2,348,455 shares of Common Stock to certain employees. The exercise price for
such stock options was $17.50 per share, the initial price to the public in the
Initial Public Offering. The stock option grants include grants to each of the
executive officers of the Company to acquire 58,529 shares and a grant to Mr.
Williams to acquire 40,965 shares. The options vest ratably over a three-year
period. "See Management--Long-Term Incentive Plan."

At the Effective Time, the Royalty Agreement (the "Royalty Agreement")
between CFH (as assignee of Crow Family) and the Predecessor Company and all
consulting arrangements entered into between the Predecessor Company and each of
Crow Family and J. McDonald Williams were terminated. In September, 1997, prior
to the assignment of the Royalty Agreement to CFH, the Predecessor Company made
a cash payment in an aggregate amount of approximately $1,405,000 to Crow Family
in partial satisfaction of accrued royalty and consulting expenses. The Royalty
Agreement was terminated immediately prior to the closing of the Initial Public
Offering. On April 1, 1998, the Predecessor Company paid CFH and Crow Family an
amount equal to $2,712,775 in the aggregate, representing all amounts owed by
the Company to CFH and Crow Family under the Royalty Agreement and such
consulting arrangements. In connection with the Initial Public Offering, the
Predecessor Company paid Mr. Williams approximately $1.6 million in satisfaction
of all of its obligations to Mr. Williams under his consulting arrangements with
the Company. See "Certain Transactions--Royalty Agreement and License Agreement"
and "--Consulting Arrangements."

In connection with the Initial Public Offering, the Company determined to no
longer grant to any past, present or future employees any profit participation
interests under its 1995 Profit Sharing Plan, as amended (the "Profit Sharing
Plan"). In September and October 1997, the Predecessor Company made cash
payments in an aggregate amount of approximately $11.3 million to Profit Sharing
Plan participants in reduction of deferred compensation payables. The payment of
these deferred compensation amounts triggered an obligation on the part of
certain Profit Sharing Plan participants to repay certain loans owed to the
Predecessor Company in an aggregate amount of approximately $0.7 million. At the
closing of the Initial Public Offering, the Predecessor Company had accrued
deferred compensation balances under the Profit Sharing Plan of approximately
$33.6 million, which included approximately $4.7 million (including $0.3 million
of interest) owed to retired Profit Sharing Plan participants that was paid with
a portion of the proceeds from the Initial Public Offering. Since the Initial
Public Offering, the Company has paid approximately $6.4 million of such
remaining balances and has offset another $12.5 million against amounts owed to
the Company by participants in the Profit Sharing Plan. The Company anticipates
that it will pay the remaining balances of approximately $10.0 million in
roughly equal quarterly installments in 1998 and 1999. The Company maintains its
obligation to pay to certain participants amounts relating to their interests in
certain of the Company's projects. See "Management--Profit Sharing Plan."

In October 1997, the Predecessor Company declared and paid dividends to its
stockholders in an aggregate amount of approximately $6.8 million.

Immediately following the Effective Time, the Company issued to Doppelt &
Company ("Doppelt") 342,857 shares of Common Stock (the "Doppelt Shares"). The
Doppelt Shares were issued in payment of the $6,000,000 promissory note issued
by the Predecessor Company to Doppelt in connection with the Doppelt
Acquisition. See "Business--Retail Services."

The transactions described above are collectively referred to in this
Prospectus as the "Reincorporation Transactions." The Company undertook these
transactions and the Initial Public Offering to facilitate

23
<PAGE>
access to capital markets, provide greater flexibility for acquisitions and
create long-term liquidity for its stockholders.

USE OF PROCEEDS

All of the shares being offered hereby are being offered by the Selling
Stockholders. Consequently, the Company will receive no proceeds from the
Offering.

DIVIDEND POLICY

The Board of Directors intends to retain earnings to finance its growth and
for general corporate purposes and, therefore, does not anticipate paying any
dividends in the foreseeable future. Any future payment of dividends will be at
the discretion of the Board of Directors and will depend upon the Company's
results of operations, financial condition, cash requirements and other factors
deemed relevant by the Board of Directors, including the terms of the Company's
indebtedness. Provisions in agreements governing the Company's long-term
indebtedness limit the amount of dividends that the Company may pay to its
stockholders. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."

Since 1994, the Predecessor Company has declared annual cash dividends which
were paid during the first six months of each year and were based upon the
Predecessor Company's earnings in the prior year. The aggregate amount of
dividends paid to the Predecessor Company's shareholders during the years ended
December 31, 1994, 1995 and 1996 were $1,672,000, $2,475,000 and $2,890,000,
respectively. In April 1997, the Predecessor Company paid dividends based on
1996 earnings in the aggregate amount of approximately $8,200,000. In October
1997, the Predecessor Company declared and paid dividends in an aggregate amount
of approximately $6,826,000 based on earnings through September 30, 1997. See
"The Company--Reincorporation Transactions."

MARKET FOR COMMON STOCK

The Common Stock was listed on the New York Stock Exchange ("NYSE") on
November 25, 1997 under the symbol "TCW." On June 3, 1998, the Common Stock
began trading under the symbol "TCC." At July 9, 1998, 34,141,414 shares were
held by 234 stockholders of record. The following table sets forth the high and
low sales prices per share of Common Stock as reported on the NYSE Composite
Transaction Tape on a quarterly basis for the periods indicated.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1997
Fourth Quarter........................................................ $ 25.750 $ 20.250

1998
First Quarter......................................................... $ 30.875 $ 22.688
Second Quarter........................................................ $ 37.563 $ 25.500
Third Quarter (through July 16)....................................... $ 33.500 $ 30.375
</TABLE>

A recently reported sale price of the Company's common stock on the NYSE is
set forth on the cover page of this Prospectus.

24
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The selected financial data set forth below have been derived from the pro
forma consolidated financial statements of the Company and from the historical
consolidated financial statements of the Company included elsewhere in this
Prospectus. The historical consolidated financial statements of the Company as
of December 31, 1997 and 1996 and for each of the three years in the period
ended December 31, 1997 have been audited by Ernst & Young LLP, independent
auditors, whose reports thereon appear elsewhere in this Prospectus. The pro
forma data is unaudited but, in the opinion of management, all pro forma
adjustments necessary to reflect the effects of the Acquisitions, the
Reincorporation Transactions and the Initial Public Offering have been made. The
selected financial data at March 31, 1998, and for the three months ended March
31, 1997 and 1998 have been derived from the unaudited consolidated financial
statements of the Company and reflect all adjustments, consisting of normal
recurring accruals, which management considers necessary for a fair presentation
of the financial position and results of operations for these periods.

The selected financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the historical and pro forma financial statements and notes thereto of the
Company contained elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------
1997 PRO
1993 1994 1995 1996 1997 FORMA(1)
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Property management services...... $ 90,954 $ 99,609 $ 92,970 $ 90,179 $ 87,756 $ 153,942
Brokerage services................ 47,299 48,652 61,960 72,095 91,053 132,884
Infrastructure management
services........................ 16,401 27,063 38,681 50,836 68,719 74,851
Development and construction
services........................ 14,377 12,792 20,382 22,732 40,054 49,220
Retail services................... 1,306 1,966 1,510 2,393 5,318 10,293
Income from unconsolidated
subsidiaries.................... 465 3,141 114 594 512 512
Gain on disposition of real
estate.......................... -- 4,646 5,026 6,630 10,241 10,241
Other............................. 3,759 3,039 6,559 9,996 9,986 12,802
----------- ----------- ----------- ----------- ----------- -----------
Total revenues.................... 174,561 200,908 227,202 255,455 313,639 444,745
Salaries, wages and benefits...... 106,606 115,330 130,248 137,794 161,425 258,730
Non-recurring compensation
costs........................... -- -- -- -- 33,085 --
Commissions....................... 15,856 20,788 23,730 27,119 39,121 40,702
General and administrative........ 35,365 35,282 40,671 41,421 55,884 73,434
Profit sharing.................... 8,292 16,562 15,893 20,094 23,514 597
Other............................. 4,255 7,284 8,526 9,087 17,997 23,448
----------- ----------- ----------- ----------- ----------- -----------
Operating costs and expenses...... 170,374 195,246 219,068 235,515 331,026 396,911
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income
taxes........................... 4,187 5,662 8,134 19,940 (17,387) 47,834
Income tax expense (benefit)...... 1,854 2,636 3,793 7,826 (3,367) 18,847
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary
gain............................ 2,333 3,026 4,341 12,114 (14,020) 28,987
Extraordinary gain................ 188 782 -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)................. $ 2,521 $ 3,808 $ 4,341 $ 12,114 $ (14,020) $ 28,987
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------

EARNINGS (LOSS) PER SHARE(2):
Basic............................. $ (.42) $ .86
Diluted........................... $ (.42) $ .81

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING(2):
Basic............................. 33,583,467 33,711,295
Diluted........................... 33,583,467 35,845,808

OTHER DATA:
EBITDA, as adjusted(3)............ $ 16,969 $ 29,686 $ 32,033 $ 48,915 $ 59,522 $ 69,837
Cash provided by (used in)
operating activities............ 7,556 15,907 10,648 25,148 (4,978) 18,714
Cash provided by (used in)
investing activities............ (1,974) (2,748) (646) (5,019) (21,322) (114,168)
Cash provided by (used in)
financing activities............ (4,412) 93 (5,457) (1,779) 64,542 157,328

<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------
1998 PRO
1997 1998 FORMA(1)
----------- ----------- -----------

<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Property management services...... $ 22,024 $ 24,887 $ 39,418
Brokerage services................ 16,935 25,533 31,749
Infrastructure management
services........................ 14,569 22,890 24,487
Development and construction
services........................ 5,206 8,891 12,835
Retail services................... 325 2,727 2,727
Income from unconsolidated
subsidiaries.................... 58 2,415 2,415
Gain on disposition of real
estate.......................... 1,124 866 866
Other............................. 1,857 2,042 2,477
----------- ----------- -----------
Total revenues.................... 62,098 90,251 116,974
Salaries, wages and benefits...... 37,339 50,516 67,708
Non-recurring compensation
costs........................... -- -- --
Commissions....................... 7,003 10,953 12,282
General and administrative........ 10,303 15,097 20,648
Profit sharing.................... 2,570 -- --
Other............................. 2,259 3,117 6,284
----------- ----------- -----------
Operating costs and expenses...... 59,474 79,683 106,922
----------- ----------- -----------
Income (loss) before income
taxes........................... 2,624 10,568 10,052
Income tax expense (benefit)...... 1,023 4,239 4,033
----------- ----------- -----------
Income (loss) before extraordinary
gain............................ 1,601 6,329 6,019
Extraordinary gain................ -- -- --
----------- ----------- -----------
Net income (loss)................. $ 1,601 $ 6,329 $ 6,019
----------- ----------- -----------
----------- ----------- -----------
EARNINGS (LOSS) PER SHARE(2):
Basic............................. $ .19 $ .18
Diluted........................... $ .18 $ .17
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING(2):
Basic............................. 33,899,574 34,027,402
Diluted........................... 36,115,203 36,252,806
OTHER DATA:
EBITDA, as adjusted(3)............ $ 7,172 $ 13,648 $ 16,299
Cash provided by (used in)
operating activities............ (15,819) (41,577) (42,624)
Cash provided by (used in)
investing activities............ (1,266) (22,395) (1,341)
Cash provided by (used in)
financing activities............ 487 32,390 9,323
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
MARCH 31, 1998
DECEMBER 31, -----------------------
-------------------------------------------------------------- PRO
1993 1994 1995 1996 1997 ACTUAL FORMA(4)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............... $ 22,358 $ 35,610 $ 40,155 $ 58,505 $ 96,747 $ 65,165 $ 63,163
Total assets............................ 55,774 99,867 114,315 194,314 326,236 360,519 436,488
Long-term debt.......................... 8,425 9,762 7,065 12,361 2,430 34,655 105,720
Notes payable on real estate held for
sale.................................. -- 22,914 13,182 67,810 76,623 93,039 93,039
Deferred compensation................... 14,661 21,468 25,883 20,963 8,391 3,809 3,809
Total liabilities....................... 43,767 85,516 95,090 160,018 169,305 198,880 270,849
Minority interest....................... 27 278 3,932 3,294 19,859 18,073 18,073
Stockholders' equity.................... 11,980 14,074 15,293 31,002 137,072 143,566 147,566
</TABLE>

- ------------------------------

Summarized operating data by business line for the year ended December 31,
1997 (in thousands):

<TABLE>
<CAPTION>
DEVELOPMENT
PROPERTY INFRASTRUCTURE AND
MANAGEMENT BROKERAGE MANAGEMENT CONSTRUCTION RETAIL TOTAL
----------- ----------- ---------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Service revenues................... $ 87,756 $ 91,053 $ 68,719 $ 40,054 $ 5,318 $ 292,900
Income from unconsolidated
subsidiaries..................... -- -- -- 512 -- 512
Gain on disposition of real
estate........................... -- -- -- 10,241 -- 10,241
Other.............................. 6,678 189 193 1,678 1,248 9,986
----------- ----------- ------- ----------- ----------- -----------
Total revenues..................... 94,434 91,242 68,912 52,485 6,566 313,639
Operating costs and expenses(5).... 104,070 100,041 70,800 48,797 7,318 331,026
----------- ----------- ------- ----------- ----------- -----------
Income (loss) before income
taxes............................ $ (9,636) $ (8,799) $ (1,888) $ 3,688 $ (752) $ (17,387)
----------- ----------- ------- ----------- ----------- -----------
----------- ----------- ------- ----------- ----------- -----------
EBITDA, as adjusted(3)............. $ 16,421 $ 10,639 $ 8,471 $ 22,520 $ 1,471 $ 59,522
</TABLE>

Summarized operating data by business line for the quarters ended March 31,
1997 and 1998 (in thousands):

<TABLE>
<CAPTION>
PROPERTY MANAGEMENT INFRASTRUCTURE MANAGEMENT
BROKERAGE
------------------------- ------------------------- -------------------------
1997 1998 1997 1998 1997 1998
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Service revenues........................ $ 22,024 $ 24,887 $ 16,935 $ 25,533 $ 14,569 $ 22,890
Income from unconsolidated
subsidiaries.......................... -- -- -- -- -- --
Gain on disposition of real estate...... -- -- -- -- -- --
Other................................... 1,407 1,487 144 68 150 34
----------- ----------- ----------- ----------- ----------- -----------
Total revenues.......................... 23,431 26,374 17,079 25,601 14,719 22,924
Operating costs and expenses............ 19,971 21,546 17,472 23,240 14,085 20,858
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes....... $ 3,460 $ 4,828 $ (393) $ 2,361 $ 634 $ 2,066
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
EBITDA, as adjusted(3).................. $ 4,872 $ 5,342 $ 1,049 $ 2,798 $ 1,396 $ 2,387
</TABLE>

<TABLE>
<CAPTION>
DEVELOPMENT AND
CONSTRUCTION RETAIL TOTAL
------------------------- ------------------------- -------------------------
1997 1998 1997 1998 1997 1998
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Service revenues........................ $ 5,206 $ 8,891 $ 325 $ 2,727 $ 59,059 $ 84,928
Income from unconsolidated
subsidiaries.......................... 58 2,415 -- -- 58 2,415
Gain on disposition of real estate...... 158 581 966 285 1,124 866
Other................................... 152 425 4 28 1,857 2,042
----------- ----------- ----------- ----------- ----------- -----------
Total revenues.......................... 5,574 12,312 1,295 3,040 62,098 90,251
Operating costs and expenses............ 6,807 11,411 1,139 2,628 59,474 79,683
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes....... $ (1,233) $ 901 $ 156 $ 412 $ 2,624 $ 10,568
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
EBITDA, as adjusted(3).................. $ (485) $ 2,350 $ 340 $ 771 $ 7,172 $ 13,648
</TABLE>

26
<PAGE>
- ------------------------------

(1) Gives effect to the Doppelt Acquisition, the Tooley Acquisition, the Norman
Acquisition, the FHO Acquisition, the Core Acquisition, the Faison
Acquisition, the Reincorporation Transactions and the sale of 5,750,000
shares of Common Stock by the Company in the Initial Public Offering and the
receipt and application of the net proceeds therefrom, as though they had
occurred on January 1, 1997, but excludes the non-cash, non-recurring charge
to income of $33.1 million related to options granted under the Assumed
Option Plan, and a $4.4 million non-recurring charge to income resulting
from the settlement of claims by certain former employees arising out of a
terminated stock appreciation rights plan. See "The Company--Initial Public
Offering," "--Recent Developments" and "--Reincorporation Transactions" and
"Business-- Retail Services," and "Pro Forma Consolidated Financial
Statements."

(5) Includes a non-cash, non-recurring charge to compensation expense of
$33,085,000 related to options granted under the Assumed Option Plan as
follows: Property Management--$13,554,000; Brokerage--$10,431,000;
Infrastructure Management--$4,095,000; Development and
Construction--$3,815,000; and Retail--$1,190,000.

27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated
Financial Statements of the Company and the notes thereto, the Summary Financial
Data and the other information included elsewhere in this Prospectus.

OVERVIEW

Trammell Crow Company is one of the largest diversified commercial real
estate service firms in the United States. As a means of addressing the
comprehensive real estate service requirements of its diverse group of clients,
the Company is organized into five principal lines of business. The Company's
property management services business includes serving the clients' needs with
respect to all aspects of building operations, tenant relations and oversight of
building improvement processes, primarily for building owners who do not occupy
the properties managed by the Company. The brokerage services business includes
advising buyers, sellers, landlords and tenants in connection with the sale and
leasing of office, industrial and retail space and land. The infrastructure
management business entails providing comprehensive day-to-day occupancy related
services, principally to large corporations which occupy commercial facilities
in multiple locations. These services include administration, day-to-day
maintenance and repair of client occupied facilities and strategic functions
such as space planning, relocation coordination, facilities management and
portfolio management. The development and construction services business
includes financial planning, site acquisition, procurement of approvals and
permits, design and engineering coordination, construction bidding and
management and tenant finish coordination, project close-out and user move
coordination, general contracting and project finance advisory services. The
retail services business includes tenant representation, disposition,
development and financial services to national and global retail customers.

The Company has benefited from the recovery of the real estate market in the
early 1990's. The Company's annual revenues increased to $313.6 million in 1997
from $227.2 million in 1995. This revenue growth was achieved during a period
when the composition of the Company's revenues shifted significantly as the
Company increased the role which brokerage, infrastructure management,
development and construction and retail services play in its overall strategy.
From 1995 to 1997, revenues from property management services decreased by
approximately 5.6%, and as a percentage of the Company's total revenues, they
declined from 40.9% to 28.0%. Over this same period, revenues from brokerage,
infrastructure management, development and construction (including gain on
disposition of real estate and income from unconsolidated subsidiaries) and
retail services increased from a combined 56.2% of total revenues to 68.8% of
total revenues.

The Company's revenue streams consist primarily of recurring payments made
pursuant to service contracts and variable transaction-oriented payments. The
Company typically receives base monthly fees from clients for services provided
in its property management business. A majority of the fees generated by the
Company's infrastructure management business are contractual and recurring in
nature. The fees generated in the Company's brokerage and retail service
businesses are typically paid in connection with the consummation of a
transaction such as the purchase or sale of commercial property or the execution
of a lease. The Company typically earns fees for development and construction
services which are based upon a negotiated percentage of a project's cost, and
the Company may receive incentive bonuses for completing a development project
under budget and within certain critical time deadlines. Although the fees
generated by the Company's brokerage service and development and construction
service businesses are not typically recurring in nature, a majority of the
aggregate revenues generated by these businesses in 1997 was earned in the
performance of services relating to properties included in the Company's
approximately 240 million square foot property management and leasing portfolio.
In 1997, the percentage of the Company's total revenues generated by each of its
property management, brokerage, infrastructure management, development and
construction and retail service businesses was 28.0%, 29.0%, 21.9%, 16.2% and
1.7%, respectively.

28
<PAGE>
A majority of the Company's revenues that are not generated by its primary
businesses are generated by an insurance agency subsidiary and are based upon
commissions on insurance written on properties included in the Company's
property management and leasing portfolio and on workmen's compensation
insurance for the Company's employees. In 1997, this subsidiary generated
revenues of $4.2 million.

The Company's operating expenses consist of salaries, wages and benefits,
commissions, general and administrative expenses, rent, depreciation and
amortization expense, interest, profit sharing, royalty and consulting fees and
minority interest. Salaries, wages and benefits and commissions constitute a
majority of the Company's total operating costs and expenses.

Since 1991 the Company has maintained a profit sharing plan for key
employees (the "Profit Sharing Plan"). Each participant in the Profit Sharing
Plan has an account that is adjusted annually to reflect the participant's
percentage of the earnings of a profit sharing unit or a designated project,
cash distributions and other matters. Distributions to participants may only be
made from available cash (as defined in the Profit Sharing Plan), and any
difference between the amount expensed and the amount paid to the participants
is recorded as deferred compensation. The Company's Board of Directors approves
the amount of earnings before profit sharing which will be available to profit
sharing participants. In September and October 1997, the Company made
distributions of approximately $11.3 million in the aggregate in partial payment
of deferred compensation balances. In connection with the Initial Public
Offering, the Company terminated any future profits participation under the
Profit Sharing Plan and partially terminated ongoing participation in existing
projects. Of the approximately $33.6 million deferred compensation balance under
the Profit Sharing Plan as of the time of the Initial Public Offering,
approximately $4.7 million (including interest of $0.3 million) was paid in
January 1998 to retired Profit Sharing Plan participants from the proceeds of
the Initial Public Offering. Since the Initial Public Offering, the Company has
paid approximately $6.4 million of such remaining balances and has offset
another $12.5 million against amounts owed to the Company by participants in the
Profit Sharing Plan. The Company anticipates that it will pay the remaining
balances of approximately $10.0 million in roughly equal quarterly installments
in 1998 and 1999. Profit sharing expense attributable to projects, to the extent
profit participation in projects was not terminated prior to the closing of the
Initial Public Offering, will continue to accrue until the projects are sold by
the Company. Management believes that the termination of any future profits
participation under the Profit Sharing Plan should have a positive effect on the
Company's net income. Payment of deferred compensation balances during 1998 and
1999 should decrease the Company's net cash flow.

Prior to consummation of the Reincorporation Transactions, two significant
stockholders of the Company received royalty and consulting fees under certain
agreements totaling approximately 12.0% of earnings before profit sharing.
Expense under these arrangements aggregated $6.2 million, $4.0 million and $2.4
million in 1997, 1996 and 1995, respectively. The royalty agreement and
consulting arrangements were terminated in connection with the Initial Public
Offering. In January 1998, the Company paid approximately $1.6 million to J.
McDonald Williams as a result of the termination of the consulting arrangements.
Management expects that the termination of the royalty agreement and consulting
arrangements should have a positive effect on the Company's net income. See
"Certain Relationships and Related Transactions."

Over the last three years, an average of 32.6% of the Company's income
before income taxes (adjusted in 1997 to add back the non-cash charge related to
the options granted under the Assumed Option Plan and the expense related to the
settlement of claims by certain former employees arising out of the termination
of a Stock Appreciation Rights Plan) has been generated in the fourth quarter,
due primarily to a calendar year-end focus by the commercial real estate
industry on the completion of transactions. In addition, an increasing
percentage of the Company's property management and infrastructure management
contracts provide for bonus payments if the Company achieves certain performance
targets. Such incentive payments are generally earned in the fourth quarter. In
contrast, the Company's non-variable operating expenses, which are treated as
expenses when incurred during the year, are relatively constant on a quarterly
basis. See "--Quarterly Results of Operations and Seasonality."

29
<PAGE>
The Company's revenues and net income (adjusted in 1997 to add back the
non-cash charge related to the options granted under the Assumed Option Plan,
the expense related to the settlement of claims by certain former employees
arising out of the termination of a Stock Appreciation Rights Plan and the
related tax effects) have each grown at a compound annual rate of 17% and 67%,
respectively, over the past three years. While the Company has primarily used
internally generated funds to achieve this growth, it intends to continue to
pursue an aggressive growth strategy by expanding client relationships,
expanding the breadth of its service offerings, making selective co-investments
with its clients and pursuing selective strategic acquisitions. The Company
believes that its ability to pursue acquisitions will be greatly enhanced by its
ability to use external sources of capital, including the public capital markets
and the commercial banking industry, to finance such acquisitions. As part of
its strategy to pursue selective strategic acquisitions, the Company has
consummated the Recent Acquisitions. See "The Company--Recent Developments."

RESULTS OF OPERATIONS

The following table sets forth items from the Company's Consolidated
Statements of Operations for each of the three years in the period ended
December 31, 1997, and for each of the three month periods ended March 31, 1997
and 1998, as a percent of revenue for the periods indicated.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Property management services..................................... 40.9% 35.3% 28.0% 35.4% 27.6%
Brokerage services............................................... 27.3 28.2 29.0 27.2 28.2
Infrastructure management services............................... 17.0 19.9 21.9 23.5 25.4
Development and construction services............................ 9.0 8.9 12.8 8.4 9.9
Retail services.................................................. 0.7 0.9 1.7 0.5 3.0
Income from unconsolidated subsidiaries.......................... 0.1 0.2 0.2 0.2 2.7
Gain on sale of real estate...................................... 2.2 2.6 3.3 1.8 1.0
Other............................................................ 2.8 4.0 3.1 3.0 2.2
--------- --------- --------- --------- ---------
Total revenues............................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Expenses:
Salaries, wages & benefits....................................... 57.3% 53.9% 62.0% 60.1% 55.9%
Commissions...................................................... 10.4 10.6 12.5 11.3 12.2
General and administrative....................................... 17.9 16.2 17.8 16.6 16.7
Profit sharing................................................... 7.0 7.9 7.5 4.2 0.0
Other............................................................ 3.8 3.6 5.7 3.6 3.5
--------- --------- --------- --------- ---------
Total operating costs and expenses........................... 96.4% 92.2% 105.5% 95.8% 88.3%
--------- --------- --------- --------- ---------
Income (loss) before income taxes.................................. 3.6% 7.8% (5.5)% 4.2% 11.7%
Income tax expense (benefit)....................................... 1.7 3.1 (1.1) 1.6 4.7
--------- --------- --------- --------- ---------
Net income (loss).................................................. 1.9% 4.7% (4.4)% 2.6% 7.0%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

REVENUES. The Company's total revenues grew $28.2 million, or 45.4%, to
$90.3 million in the first quarter of 1998 from $62.1 million in the first
quarter of 1997.

Property management services revenue, which represented 27.6% of the
Company's total revenue in the first quarter of 1998, increased $2.9 million, or
13.2%, to $24.9 million in the first quarter of 1998 from $22.0 million in the
first quarter of 1997. This increase was primarily due to a general increase in
market rents and a decrease in vacancies, resulting in higher revenues for
properties managed, which led to higher

30
<PAGE>
management fees to the Company since fees are generally based on a percentage of
property revenues. In addition, square feet under management increased over the
prior period primarily due to the Tooley Acquisition.

Brokerage services revenue, which represented 28.2% of the Company's first
quarter 1998 total revenue, increased $8.6 million, or 50.9%, to $25.5 million
in the first quarter of 1998 from $16.9 million in the first quarter of 1997.
The revenue growth resulted from an increase in the number of brokerage
transactions fueled by an increase of 48% in the average number of brokers
employed during the first quarter of 1998, as compared to the first quarter of
1997, coupled with a general increase in market rents.

Infrastructure management services revenues, which represented 25.4% of the
Company's first quarter 1998 total revenue, increased $8.3 million, or 56.8%, to
$22.9 million in the first quarter of 1998 from $14.6 million in the first
quarter of 1997. The revenue growth resulted primarily from the addition of two
significant new customers in the financial services industry, and expansion of
services provided to two other major customers.

Revenues from development and investment activities (comprised of
development and construction service fees, gain on disposition of real estate
and income from unconsolidated subsidiaries) totaled $12.2 million in the first
quarter of 1998, which represented 13.5% of the Company's first quarter 1998
total revenue. These revenues increased $5.8 million, or 90.6%, from $6.4
million in the first quarter of 1997. This revenue growth was primarily due to
an increase in incentive development fees earned on significant transactions in
the first quarter of 1998, and income from unconsolidated subsidiaries resulting
from sale of the underlying real estate.

Retail services revenue, which represented 3.0% of the Company's first
quarter 1998 total revenue, increased $2.4 million, or 800%, to $2.7 million in
the first quarter of 1998 from $0.3 million in the first quarter of 1997,
primarily as a result of the acquisition of Doppelt in August 1997.

OPERATING COSTS AND EXPENSES. The Company's operating costs and expenses
increased by $20.2 million, or 33.9%, to $79.7 million in the first quarter of
1998 from $59.5 million in the first quarter of 1997. A 35.4% increase in
salaries, wages, and benefits is primarily due to the increased staffing
required for the infrastructure management services business, as well as
increases in staffing in other parts of the Company to support growth.
Additionally, compensation increased in the first quarter of 1998 from the
comparable period in 1997 due to the impact of the new compensation structure
adopted in connection with the Initial Public Offering. The increase in
commissions of 57.1% corresponds to the growth in the Company's brokerage
services revenues. The increase in general and administrative expenses is
primarily due to a $2.0 million increase in rent, travel and overhead costs of
the infrastructure management services business to accommodate the growth in the
number of employees, coupled with a company-wide increase in administrative
costs resulting from the overall increase in number of employees. The Company
had no profit sharing expense in the first quarter of 1998 as compared to $2.6
million in the first quarter of 1997, as the future profits participation under
the Company's Profit Sharing Plan were terminated in connection with the Initial
Public Offering. Additionally, the Company had no royalty or consulting expenses
in the first quarter of 1998 as compared to $0.5 million in the first quarter of
1997, because certain royalty and consulting arrangements to which the Company
was a party were terminated in connection with the Initial Public Offering.
Interest expense increased in the first quarter of 1998 as a result of interest
expensed on real estate development projects that were completed and operated in
1998.

INCOME BEFORE INCOME TAXES. The Company's income before income taxes
increased $8.0 million, to $10.6 million in the first quarter of 1998 from $2.6
million in the first quarter of 1997 due to the factors described above.

NET INCOME. Net income increased $4.7 million, to $6.3 million in the first
quarter of 1998 from $1.6 million in the first quarter of 1997.

31
<PAGE>
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

REVENUES. The Company's total revenues grew $58.1 million, or 22.7%, to
$313.6 million in 1997 from $255.5 million in 1996.

Property management services revenue, which represented 28.0% of the
Company's total revenue in 1997, decreased $2.4 million, or 2.7%, to $87.8
million in 1997 from $90.2 million in 1996. This decrease was primarily due to
an overall decrease in the number of square feet under management, and a
relative increase in the number of square feet under management constituted by
industrial properties, which typically generate lower property management
revenues per square foot than office, retail and other commercial property
types.

Brokerage services revenue, which represented 29.0% of the Company's 1997
total revenue, increased $19.0 million, or 26.4%, to $91.1 million in 1997 from
$72.1 million in 1996. The revenue growth resulted from the increase in tenant
representation fees and in investment sales revenue resulting from
implementation of the Company's strategy to aggressively pursue these business
lines. The Company added approximately 100 brokers in 1997 to support this
growth.

Infrastructure management services revenues, which represented 21.9% of the
Company's 1997 total revenues, increased $17.9 million, or 35.2%, to $68.7
million in 1997 from $50.8 million in 1996. The revenue growth resulted
primarily from the addition of new customers. Additionally, the Company was able
to expand project management and facility management services provided to
existing customers.

Revenues from development and investment activities (comprised of
development and construction service fees, gain on disposition of real estate
and income from unconsolidated subsidiaries) totalled $50.8 million in 1997,
which represented 16.2% of the Company's 1997 total revenue. These revenues
increased $20.8 million, or 69.3%, from $30.0 million in 1996. This revenue
growth was primarily due to a $7.4 million increase in development fees from
$9.3 million in 1996 to $16.7 million in 1997 and an increase in construction
management services fees of $2.5 million to $11.0 million in 1997 from $8.5
million in 1996. Additionally, gain on sale of real estate increased $3.6
million, or 54.5%, from $6.6 million in 1996 to $10.2 million in 1997.

Retail services revenue, which represented 1.7% of the Company's 1997 total
revenue, increased $2.9 million, or 121%, to $5.3 million in 1997 from $2.4
million in 1996, primarily as a result of the acquisition of Doppelt in August
1997.

OPERATING COSTS AND EXPENSES. The Company's operating costs and expenses
increased by $95.5 million, or 40.6%, to $331.0 million in 1997 from $235.5
million in 1996. The increase in operating costs is primarily due to
non-recurring charges resulting from the completion of the Initial Public
Offering in December 1997. The 41.1% increase in salaries and benefits is
primarily due to the $33.1 million non-cash charge related to the options
granted under the Assumed Option Plan. The remaining increase in salaries is due
to the increased staffing required for the infrastructure management services
business. The increase in commissions is due to the growth in the Company's
brokerage services and retail services businesses resulting from an increase in
the number of brokers. Approximately $4.4 million of the increase in general and
administrative expense relates to the non-recurring charge to income resulting
from the settlement of claims by certain former employees arising out of a
terminated Stock Appreciation Rights Plan. The remaining increase in general and
administrative expenses represents approximately $2.3 million in operating
expenses relating to rental properties which were not operational in 1996 and
the increased expenditures associated with the Company's technological support
systems. The Company's profit sharing expense increased by $3.4 million, or
16.9%, to $23.5 million in 1997 from $20.1 million in 1996 due to the increase
in earnings available for profit sharing. Other operating costs increased due to
$3.1 million of interest expense on real estate held for sale that became
operational in 1997, a $1.6 million expense accrued in connection with the
termination of the consulting arrangement with Mr. Williams and increased
amortization as a result of the Doppelt Acquisition.

32
<PAGE>
In 1998, the Company anticipates that the decrease in operating expenses
attributable to the termination of future profits participation under the Profit
Sharing Plan and royalty and consulting agreements will be partially offset by
an increase in compensation expense due to the impact of the new compensation
structure adopted in connection with the Initial Public Offering.

INCOME (LOSS) BEFORE INCOME TAXES. The Company's income before income taxes
decreased $37.3 million, to a loss of $17.4 million in 1997 from a profit of
$19.9 million in 1996 due to the factors described above.

NET INCOME (LOSS). Net income decreased $26.1 million, to a loss of $14.0
million in 1997 from a profit of $12.1 million in 1996.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

REVENUES. The Company's total revenue grew $28.3 million, or 12.4%, to
$255.5 million in 1996 from $227.2 million in 1995.

Property management services revenue, which represented 35.3% of the
Company's total revenue in 1996, decreased $2.8 million, or 3.0%, to $90.2
million in 1996 from $93.0 million in 1995. This decrease was primarily due to
the net reduction in square footage of property management assignments and a
relative increase in the number of square feet under management constituted by
industrial properties, which typically generate lower property management
revenues per square foot than office, retail and other commercial property
types. Recognizing a trend toward a consolidation of service providers utilized
by large institutional owners and investors, the Company implemented a national
marketing program focused on its large customers. The Company believes the
implementation of this strategic initiative increased square footage under
management for these customers by 11.3 million square feet, or 12.9%, to 99.1
million square feet in 1996 from 87.8 million square feet in 1995.

Brokerage services revenue, which represented 28.2% of 1996 total revenues,
increased $10.1 million, or 16.4%, to $72.1 million in 1996 from $62.0 million
in 1995. This revenue growth resulted primarily from an increase in tenant
representation fees of $3.6 million, or 29.0%, to $16.0 million in 1996 from
$12.4 million in 1995 and the increase in investment sales revenue of $4.0
million, or 56.5%, to $11.1 million in 1996 from $7.1 million in 1995. The
Company believes that this revenue growth is attributable to the continuation of
a strategic initiative to expand its marketing services beyond project leasing
to include tenant representation, investment sales and land sales. This strategy
resulted in an increase in the aggregate number of brokers by 40, or 20.5%, to
235 in 1996 from 195 in 1995.

Infrastructure management services revenue, which represented 19.9% of the
Company's total revenues in 1996 increased $12.1 million, or 31.4%, to $50.8
million in 1996 from $38.7 million in 1995. The revenue growth resulted
primarily from the addition of new customers and expansion of services provided
to existing customers. In addition, in September 1996, the Company acquired the
remaining outstanding stock of Primaris Corporate Services, Ltd., a Canadian
provider of infrastructure management services. This acquisition, accounted for
under the purchase method, increased revenues by approximately $0.9 million in
1996.

Revenues from development and investment activities (comprised of
development and construction service fees, gain on disposition of real estate
and income from unconsolidated subsidiaries), which represented 11.7% of 1996
total revenue, increased $4.5 million or 17.4%, to $30.0 million in 1996 from
$25.5 million in 1995. The revenue growth was primarily due to increases in
gross profit on general contracting services of $1.0 million, or 34.8%, to $3.9
million in 1996 from $2.9 million in 1995, a decrease in development fees of
$0.5 million, or 5.8%, to $8.5 million in 1996 from $9.0 million in 1995 and an
increase in gain on sale of real estate of $1.6 million, or 31.9%, to $6.6
million in 1996 from $5.0 million in 1995. Income from unconsolidated
subsidiaries increased $0.5 million or 421%, to $0.6 million in 1996

33
<PAGE>
from $0.1 million in 1995. In general, these service revenues are affected by
the timing of development transactions.

OPERATING COSTS AND EXPENSES. The Company's operating costs and expenses
increased by $16.4 million, or 7.5%, to $235.5 million in 1996 from $219.1
million in 1995. The increase in operating costs and expenses is primarily due
to increased salaries, wages and benefits (associated with the increased
staffing required for the infrastructure management service business) and
increased commissions (associated with increased brokerage services revenues).
The Company's profit sharing increased by $4.2 million, or 26.4%, to $20.1
million in 1996 from $15.9 million in 1995 due to the increase in profitability.
As a percentage of total revenue, operating costs and expenses declined to 92.2%
in 1996 from 96.4% in 1995, primarily as a result of the Company's ability to
spread its fixed costs over a greater revenue base.

INCOME BEFORE INCOME TAXES. The Company's income before income taxes
increased $11.8 million, or 145.1%, to $19.9 million in 1996 from $8.1 million
in 1995 due to the factors described above.

NET INCOME. Net income increased $7.8 million, or 179.1%, to $12.1 million
in 1996 from $4.3 million in 1995. As a percent of total revenue, net income
increased to 4.7% in 1996 from 1.9% in 1995.

QUARTERLY RESULTS OF OPERATIONS AND SEASONALITY

The following table presents unaudited quarterly results of operations data
for the Company for each of the four quarters of 1997, 1996 and 1995. This
quarterly information is unaudited but, in the opinion of management, reflects
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the information for the periods presented. The results of
operations for any quarter are not necessarily indicative of results for any
future period. Revenues and income before income taxes during the fourth fiscal
quarter historically have been somewhat greater than in the first three fiscal
quarters, primarily because the Company's clients have a demonstrated tendency
to close transactions toward the end of the fiscal year. The timing and
introduction of new contracts and other factors may also cause quarterly
fluctuations in the Company's results of operations. The fourth quarter of 1997
includes a non-cash, non-recurring charge to income of $33.1 million related to
options granted under the Assumed Option Plan and a $4.4 million non-recurring
charge to income resulting from the settlement of claims by certain former
employees arising out of a terminated Stock Appreciation Rights Plan.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
----------- --------- ------------ ------------
<S> <C> <C> <C> <C>
1997:
Revenues....................................................... $ 62,098 $ 69,344 $ 81,797 $ 100,400
Income (loss) before income taxes.............................. 2,624 4,402 7,575 (31,988)
Net income (loss).............................................. 1,601 2,685 4,568 (22,874)
1996:
Revenues....................................................... $ 56,397 $ 54,299 $ 65,515 $ 79,244
Income before income taxes..................................... 3,025 3,507 5,934 7,474
Net income..................................................... 1,876 2,093 3,673 4,472
1995:
Revenues....................................................... $ 47,415 $ 53,692 $ 54,530 $ 71,565
Income before income taxes..................................... 663 2,693 2,028 2,750
Net income..................................................... 420 1,371 1,082 1,468
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity and capital resources requirements include
expenditures for real estate held for sale and payments on notes payable
associated with its development and construction activities; the funding of
working capital needs, primarily accounts receivable from its clients and
affiliates; and the

34
<PAGE>
funding of capital investments. Historically, the Company has financed its
operations, investments and acquisitions with internally generated funds, and
additional liquidity has been available to the Company through deferred
compensation arrangements under its Profit Sharing Plan. The Company terminated
future profits participation under the Profit Sharing Plan in connection with
the Initial Public Offering, and the Company expects that its cash flow from
operations in future periods will be greater as a result of this change. In
addition, the Company has historically financed its development and construction
services activities with construction loans secured by underlying real estate.

Net cash flow used in operating activities totaled $41.6 million for the
three months ended March 31, 1998, compared to $15.8 million in the same period
in 1997. This increased use of cash in operating activities is primarily due to
a significant increase in development activity and related expenditures for real
estate held for sale, and payment in 1998 of profit sharing distributions
totaling $8.9 million. Net cash flow used in operating activities totaled $5.0
million for the year ended December 31, 1997, compared to net cash provided by
operating activities of $25.1 million in 1996. The primary reasons for this
change are a decrease in debt proceeds for real estate held for sale as the
Company used internal sources for funding these transactions. In addition, the
Company made mid-year royalty, consulting and profit sharing cash distributions
for 1997 activity which are typically paid during the first quarter of the
following year. The Company also paid more federal taxes during the year due to
a higher net income (before the effect of the non-cash charge related to the
options granted under the Assumed Option Plan). Net cash flow provided by
operating activities totaled $25.1 million and $10.6 million for the years ended
December 31, 1996 and 1995, respectively. The changes in these cash flows for
these periods can be attributed primarily to increases in net income,
fluctuations in the net proceeds from real estate development and construction
and variations in accounts receivable, accounts payable and accrued expenses.

Net cash flow used in investing activities totaled $22.4 million for the
three months ended March 31, 1998, compared to $1.3 million for the same period
in 1997. This change is primarily attributable to the use of cash for the Tooley
Acquisition in March 1998. Net cash flow used in investing activities totaled
$21.3 million for the year ended December 31, 1997 compared to $5.0 million for
the same period in 1996. This change is primarily attributable to the
acquisition of Doppelt in August 1997, investments in unconsolidated
subsidiaries and distributions to minority interest. These decreases were offset
by distributions from unconsolidated subsidiaries and contributions from
minority interest. Net cash flow used in investing activities totaled $5.0
million and $0.6 million for the years ended December 31, 1996 and 1995,
respectively. The changes in these cash flows for these periods can be
attributed primarily to an increase in technology related fixed asset
expenditures and a decrease in contributions from minority interest.

Net cash flow provided by financing activities totaled $32.4 million for the
three months ended March 31, 1998, compared to $.5 million for the same period
in 1997. This increase in cash provided by financing activities is primarily due
to borrowings of $33 million under the Existing Credit Facility as described
below. Net cash flow provided by financing activities totaled $64.5 million for
the year ended December 31, 1997 compared to net cash flow used in financing
activities of $1.8 million for the same period in 1996. The reasons for this
change are an increase of debt proceeds, the repayment of stock loans and the
net proceeds from the Initial Public Offering of $90.2 million. These increases
were offset by increased debt repayments and dividends paid during the year. Net
cash flow used in financing activities totaled $1.8 million and $5.5 million for
the years ended December 31, 1996 and 1995, respectively. The changes in these
cash flows for these periods can be attributed primarily to an increase in debt
proceeds offset by repurchasing common stock into treasury.

In August 1996, the Company offered stock to certain employees and directors
in a private offering. In connection with the private offering, the Company
utilized a credit facility in the amount of $7.75 million from First Tennessee
Bank, N.A. A portion of the funds borrowed under this credit facility were used
to finance the repurchase of common stock and the remainder was loaned to
certain stockholders to allow such stockholders to pay certain tax liabilities.
This credit facility was a fully amortizing 5-year obligation

35
<PAGE>
which bore interest at the base rate as announced by First Tennessee Bank, N.A.
from time to time plus 0.5% per annum. All amounts outstanding under this credit
facility were repaid at August 22, 1997.

On August 22, 1997, the Predecessor Company established a $35 million credit
facility with Bankers Trust Company and certain other lenders (the "Pre IPO
Credit Facility"). Under the terms of the Pre IPO Credit Facility, the Company
was able to obtain loans which were Base Rate Loans or Eurodollar Rate Loans.
Base Rate Loans bore interest at a base rate (which was the higher of the prime
rate announced from time to time by Bankers Trust Company or an average federal
funds rate plus 0.5%) plus a margin which ranged from 0.0% to 0.75% depending
upon the Predecessor Company's leverage ratio at the date the margin was
determined. Eurodollar Rate Loans bore interest at an adjusted Eurodollar rate
plus a margin which ranged from 0.625% to 1.75% depending upon the Predecessor
Company's leverage ratio at the date the margin was determined. During 1997, the
Company borrowed $31.0 million under the Pre IPO Credit Facility. Approximately
$7.0 million of this amount was used to refinance the debt incurred with First
Tennessee in connection with the private placement in 1996, approximately $22.7
million was used to make certain cash payments in connection with the Doppelt
Acquisition and approximately $1.0 million was used for working capital
purposes. The Company used approximately $31.0 million of the net proceeds from
the Offering to repay all amounts outstanding under the Pre IPO Credit Facility.

On December 1, 1997, the Company obtained a $150 million revolving line of
credit (the "Existing Credit Facility") arranged by NationsBank of Texas, N.A.
as the administrative agent (the "Administrative Agent"). Under the terms of the
Existing Credit Facility, the Company can obtain loans which are Base Rate Loans
or Eurodollar Rate Loans. Base Rate Loans bear interest at a base rate, which is
the higher of the prime lending rate announced from time-to-time by the
Administrative Agent or an average federal funds rate plus 0.5%. Eurodollar Rate
Loans bear interest at an adjusted Eurodollar rate plus a margin which ranges
from 1.25% to 1.75%, depending upon the Company's leverage ratio at the date the
margin is determined. The shares of certain wholly-owned subsidiaries having 5%
or more of the consolidated assets, revenues or earnings of the Company, and
subsidiaries which are engaged primarily in the business of real estate
development and ownership, whose assets are not subject to any financing, having
more than 5% of the consolidated assets, revenues or earnings of the Company,
are pledged as security for this credit facility. The Existing Credit Facility
contains various covenants such as the maintenance of minimum equity and
liquidity and covenants relating to certain key financial data. The Existing
Credit Facility also includes limitations on payment of cash dividends or other
distributions of assets and certain restrictions on investments and acquisitions
that can be made by the Company. The covenants contained in the Existing Credit
Facility and the amount of the Company's other borrowings and contingent
liabilities may have the effect of limiting the credit available to the Company
under the Existing Credit Facility to an amount less than the $150 million
commitment. Through July 9, 1998, the Company had borrowed approximately $102.1
million under the Existing Credit Facility, including $10.0 million to fund its
co-investment activities and $92.1 million for the Recent Acquisitions, and
repaid $10.0 million of these amounts. At July 9, 1998, the Company had an
unused borrowing capacity (taking into account letters of credit outstanding)
under the Existing Credit Facility of approximately $54.7 million. The Company
expects to continue to borrow under the Existing Credit Facility to finance
future strategic acquisitions, fund its co-investment activities and provide the
Company with an additional source of working capital.

The Company intends to retain earnings to finance its growth and, therefore,
does not anticipate paying any dividends in the foreseeable future. The Company
believes that funds generated from operations, together with existing cash and
available credit under the Existing Credit Facility will be sufficient to
finance its current operations, planned capital expenditure requirements,
payment obligations for development purchases and internal growth for the
foreseeable future. The Company's need, if any, to raise additional funds to
meet its working capital and capital requirements will depend upon numerous
factors, including the success and pace of its implementation of its growth
strategy. The Company regularly monitors capital raising alternatives to be able
to take advantage of available avenues to supplement its

36
<PAGE>
working capital, including strategic corporate partnerships or other alliances,
bank borrowings and the sale of equity and/or debt securities.

IMPACT OF YEAR 2000

Many currently installed computer systems are not capable of distinguishing
dates occurring during and after the year 2000 from those occurring in earlier
years. As a result, in less than two years, computer systems and/or software
used by many companies in a very wide variety of applications will experience
operating difficulties unless they are modified or upgraded to adequately
process information involving, related to or dependent upon the century change.
Significant uncertainty exists concerning the scope and magnitude of problems
associated with the century change. The Company recognizes the need to ensure
its operations will not be adversely impacted by Year 2000 software failures and
has established a project team to assess Year 2000 risks. The project team
coordinates the identification and implementation of changes to computer
hardware and software applications that will attempt to ensure availability and
integrity of the Company's information systems and the reliability of its
operational systems. The Company is also assessing the potential overall impact
of the impending century change on its business, results of operations and
financial position.

Based on preliminary assessments, commenced in 1997, of the systems and
software used to process its own transactions, the Company believes that such
systems and software are Year 2000 compliant, or can be modified or replaced on
a timely basis to be compliant, without material cost to the Company. The
Company has recently begun assessments of the systems and software used to
process certain of its customers' transactions. Until the Company completes a
thorough assessment of its systems and software (including systems and software
used to process its customers' transactions), the Company cannot estimate the
costs and time period that will be required for any indicated modifications or
replacements of such systems and software. The Company expects to finish such
assessment, design an action plan (which will include specific remediation steps
and timetables, expected costs and identification of the resources required for
implementation) and begin implementation of such action plan during 1998.

The Company also recognizes that Year 2000 issues could have an extensive
impact on the physical operation of buildings managed by the Company, such as
operation of elevators and energy management and security access systems.
Included in the Company's plans for addressing Year 2000 issues is a program to
assist the Company's customers with the identification and remediation of Year
2000 issues associated with critical systems at the customers' properties.

The Company also faces risk to the extent that suppliers of products,
services and systems purchased by the Company and others with whom the Company
transacts business do not comply with Year 2000 requirements. If any such third
parties cannot provide the Company with products, services or systems that meet
the Year 2000 requirements on a timely basis, or if Year 2000 issues prevent
such third parties from timely delivering products or services required by the
Company, the Company's results of operations could be materially adversely
affected. The Company has begun discussions with its vendors regarding the need
to be Year 2000 compliant. Although the Company has no reason to believe that
its vendors are not Year 2000 compliant (or will not be compliant on a timely
basis), the Company is unable to determine at this time the effect that
non-compliance by vendors would have on the Company's operations.

EFFECTS OF INFLATION

The Company does not believe that inflation has had a significant impact on
its results of operations in recent years. However, there can be no assurance
that the Company's business will not be affected by inflation in the future.

37
<PAGE>
BUSINESS

COMPANY OVERVIEW

38
<PAGE>
COMPETITIVE ADVANTAGES

The Company believes that it holds several important competitive advantages
in the real estate services industry.

GEOGRAPHIC SCOPE. The Company's 150 offices in the United States and Canada
have allowed the Company to develop and maintain extensive knowledge of local
real estate markets across the United States and Canada. Approximately 89% of
the Company's employees are based in markets other than Dallas, Texas, where the
Company's executive offices are located. In addition, the Company has a
strategic alliance with Trammell Crow International, which has eight offices in
Europe, Asia and South America. The broad geographic scope provided by this
local office network allows the Company to serve as a single-source, full
service provider to multinational corporations and institutional investors with
real estate interests that span regional and national boundaries. The broad
geographic service area covered by the Company also tends to limit its exposure
to an economic downturn in any single market, which provides it with a
competitive advantage over regional firms that operate in a more limited number
of geographic areas.

39
<PAGE>
performance. Immediately following the Offering, the total employee ownership of
outstanding Common Stock will be in excess of 43%. See "Risk Factors--Recruiting
and Retention of Qualified Personnel" and "--Control by Existing Stockholders."

COMPETITIVE ENVIRONMENT

In recent years, the real estate industry has experienced a steady recovery
from the severe downturn of the early 1990's which had caused a sharp reduction
in commercial and industrial property values, the withdrawal of credit, a
related reduction in new development and pressure on fee income derived from
servicing and maintaining all classes of property. The Company believes that the
recovery now underway has provided the industry with improved prospects for
growth across all of the Company's traditional service lines. Moreover,
important new trends in the real estate services business--especially among
corporations and institutional investors affected by consolidation within their
own industries--now present the Company with new opportunities to capitalize
upon the recovery in these markets.

GROWTH IN THE MARKET FOR REAL ESTATE SERVICES. The commercial real estate
services industry is large and growing. According to the U.S. Statistical
Abstract for 1996, the total US commercial real estate asset base is
approximately 68 billion square feet, with 33 billion square feet representing
industrial, office and retail properties which serve as the target market for
commercial real estate service providers. In 1996, THE OUTSOURCING INSTITUTE
estimated that this asset base produced roughly $15 billion annually in
service-related revenues which, since 1993, had grown at 260% of the rate of
growth for the overall economy. Despite this size and growth, the commercial
real estate services industry remains a highly fragmented sector. For example,
less than 20% of the market for property management services is now served by
outside firms, and the Company believes that other market segments are also
significantly underserved and represent a sizeable growth opportunity.

The ongoing recovery in the real estate industry has also stimulated a
revival of activity in the more traditional development and construction
business. This sector was relatively inactive in recent years, principally due
to the sharp decline in property values and the overabundant supply of new
product in the market. As property values have rebounded in many of the nation's
principal markets, new construction starts have increased. This trend provides
an opportunity for the Company to earn fees associated with new development and
to participate in development projects as both an advisor and as principal.

OUTSOURCING. Outsourcing is a rapidly growing trend in the United States.
Through outsourcing, organizations seek to reduce costs, improve profitability
and refocus management and other resources on core competencies. This trend has
resulted in the development of well established providers offering an expanding
range of outsourced services, including information processing, teleservicing
and flexible staffing. Increasingly, organizations are also seeking outside
providers for efficient and expert delivery of real estate management services.
For example, the Company believes that the total potential revenues associated
with outsourcing of infrastructure management services may be in excess of $50
billion per year. In addition to corporations and institutional investors,
potential new clients include governmental entities, which now collectively own
in excess of 15 billion square feet of commercial real estate in the United
States.

CONSOLIDATION. The traditionally fragmented real estate services industry
is witnessing rapid consolidation in customers' selection of service providers
and in alliances and combinations among providers themselves. When outsourcing
real estate services, corporations and institutions have increasingly sought to
consolidate the number of providers used and engage firms that can offer a full
range of services across a wide geographic area. As the industry becomes more
sophisticated, customers require the flexibility, multi-market perspective and
technological and physical resources that large firms possess.

As the real estate services industry has grown, it has been accompanied by
downward pressure on fees and the increased use of fee structures which reflect
shared risk and emphasize the achievement of

40
<PAGE>
performance targets. These trends benefit firms with significant scale and the
ability to spread fixed costs over a larger revenue base, and have accelerated
consolidation among real estate service providers.

The Company believes that few real estate service providers can meet the
demands of large corporate and institutional customers and that many companies
are facing pressure to combine with others to remain competitive. According to
industry sources, mergers and acquisitions among traditional real estate
companies has grown from 5 transactions with an aggregate purchase price of less
than $50 million in 1991 to 46 transactions with an aggregate purchase price of
approximately $1.9 billion in 1996. In the Company's view, the competitive
imperatives presented by this consolidation trend include the need to maintain
comprehensive service offerings, serve an expansive geographic area and operate
the business with sufficient scale to achieve significant cost efficiencies.

GROWTH STRATEGY

CO-INVESTMENT. The Company also focuses on expansion of its efforts to make
selective co-investments of capital alongside corporate and institutional
clients. Through this effort, the Company leverages its relationships with these
clients and uses its extensive knowledge of the real estate industry to create
new opportunities to invest capital. The Company believes that its knowledge of
local real estate markets and its experience in each of its primary service
businesses provide it with an advantage in identifying and evaluating investment
opportunities. The Company seeks co-investments that generate investment returns
while still allowing the Company to earn fees in exchange for services provided
in the development, operation and management of the project.

41
<PAGE>
remain competitive. Seeking to capitalize on this consolidation trend, since
August, 1997 the Company has completed the acquisition of six businesses based
in Seattle, Los Angeles, Cleveland, Detroit, Boston and Charlotte. In addition,
since October 1997, the Company has entered into several joint venture
development programs with investors in commercial real estate. See "The
Company--Recent Developments" and "Business--Development and Construction
Services" and "--Retail Services." The Company continuously surveys the
marketplace for other potential acquisitions which might further enhance the
quality or the breadth of services it can offer clients.

PROPERTY MANAGEMENT SERVICES

The Company is the largest commercial property manager in the United States
and has held that position for the past nine years (based upon information
contained in NATIONAL REAL ESTATE INVESTOR'S annual "Top Property Manager
Survey"). The Company's property management service business currently serves
approximately 540 clients and 16,200 tenants nationwide through its locally
based property management teams present in 70 markets. The Company managed 204
million square feet of commercial property at the end of 1997, and its 1997
property management revenues were $87.8 million, down from $91.0 million in
1993. This decline in revenues over the past five years has been outpaced by the
increase in revenues from the Company's other primary businesses. In 1993,
revenues from property management constituted 52% of the Company's total
revenue, but by 1997 they represented just 28% of the Company's total revenues.
As part of its growth strategy, in 1998 the Company acquired: (i) Norman, a real
estate services firm with operations concentrated in Seattle's central business
district office and retail markets; (ii) Tooley, a California real estate
services company primarily engaged in office management and leasing; and (iii) a
portion of the businesses of Faison and Faison Enterprises, which are engaged in
the development, leasing and management of office and retail properties in the
Midatlantic and Southeast regions of the United States. As a result of these
acquisitions, the Company added approximately 52.1 million square feet to its
property management portfolio. Included in the managed property portfolio
acquired in the Faison Acquisition was approximately 31.2 million square feet of
retail space, making the Company one of the largest non-REIT managers of retail
property in the United States.

The following charts and table show the total square feet managed by the
Company at year end and the Company's revenues from its property management
business for each of the last five years:

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
SQUARE FEET REVENUES (1)

<S> <C> <C>
(in thousands) (in thousands)
1993 215,025 $ 90,954
1994 207,020 $ 99,609
1995 212,499 $ 92,970
1996 210,102 $ 90,179
</TABLE>

42
<PAGE>
<TABLE>
<S> <C> <C>
1997 204,428 $ 87,756
</TABLE>

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Square Feet...................................... 215,025 207,020 212,499 210,102 204,428
Revenues(1)...................................... $ 90,954 $ 99,609 $ 92,970 $ 90,179 $ 87,756
</TABLE>

- ------------------------

(1) Revenue is not a measure of profitability. Except with respect to
infrastructure management services (which were conducted through a separate
subsidiary), the Company did not accumulate costs by revenue type for years
prior to 1997. Accordingly, a measure of profitability for property
management services cannot be shown for such periods. For summarized
operating data by business line in 1997, see "Selected Consolidated
Financial Data."

The objective of the Company's property management business is to enhance
its clients' investment values by maintaining high levels of occupancy and
lowering property operating costs by offering a wide range of property
management services. The property management services offered by the Company
consist of (i) building management services such as maintenance, landscaping,
security, energy management, owner's insurance, life safety, environmental risk
management and capital repairs; (ii) tenant relations services such as
promotional activities, processing tenant work orders and lease administration
services; (iii) interfacing with the Company's development and construction
services personnel in coordinating tenant finish; and (iv) financial management
services including financial reporting and analysis utilizing software systems
supported by the Company's in-house design and development capability for
customized requirements.

The Company expects that most of its new property management engagements
will result from property transfers, projects that the Company develops for
institutional investors and property management assignments added through
strategic acquisitions. To the extent that institutional investors continue to
make direct investments in real estate, the Company believes that it will be in
an advantageous position to win new property management engagements due to its
existing relationships with large institutional investors and its ability to
provide single-source solutions for their multi-market and multi-functional
requirements.

The properties managed by the Company are typically served by locally based
teams of property managers and maintenance personnel supported by various
corporate level service functions, including technology support and purchasing.
Client accounts are typically managed at the Company's national office to assure
consistency of quality and to promote greater cross-selling of the Company's
services.

The Company typically receives monthly management fees for the property
management services it provides, based upon a specified percentage of the
monthly gross income generated from the property under management. In certain
cases, the Company's property management agreements entitle it to receive a
certain minimum fee based on the net rentable square footage or a percentage of
the expected full occupancy fee of the property. The amount of the management
fee varies depending upon local market conditions, the leasing engagement,
arrangements for expense reimbursements and specific services required.
Incentive fees are sometimes negotiated in turnaround or other unusual
circumstances. The Company also may be reimbursed for a portion of its
administrative and payroll costs directly attributed to the properties under
management.

A typical property management agreement of the Company provides for an
indefinite term, but permits the property owner or the Company to terminate the
agreement upon thirty days prior written notice. The Company believes that these
are customary termination provisions in the industry. The Company historically
has been successful in retaining property management agreements, but has lost
agreements in circumstances where a property has been sold and the new property
owner assumes direct responsibility for managing the property or retains one of
the Company's competitors to manage the

43
<PAGE>
property. On a portfolio basis, excluding new assignments obtained within the
last 12 months, the Company's current average length per property management
assignment is approximately six years.

As part of its strategic alliance with AMB, the Company expects (subject to
the negotiation of mutually satisfactory definitive documentation regarding the
alliance) to convert all of its property management contracts with AMB from
industry standard contracts terminable upon 30 days notice to contracts with
five year terms terminable only for cause. See "--Development and Construction
Services."

BROKERAGE SERVICES

The Company has historically been an active provider of commercial brokerage
services, and in recent years its brokerage business has expanded significantly
from an already substantial base. Over the past five years the Company's
revenues from brokerage services have increased by over 90%, and in 1997
totalled $91.1 million, or 29.0% of the Company's total revenues. In 1996, the
Company was ranked as one of five top brokerage firms nationally by COMMERCIAL
PROPERTY NEWS, measured in terms of the number of transactions facilitated. In
1997, the Company facilitated more than 6,000 sales and lease transactions. The
Company currently employs 414 brokers, having added 179 brokerage professionals
with an average of approximately 10 years of experience since the beginning of
1996. In order to enhance its existing brokerage business, in May 1998 the
Company acquired Fallon, Hines & O'Connor, a Boston-based commercial real estate
brokerage, consulting and advisory firm with 30 brokerage professionals.

The following charts and table show the number of brokers employed by the
Company at year end and the Company's revenues from its brokerage services
business for each of the last five years:

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BROKERS REVENUES (1)

<S> <C> <C>
(revenues in thousands)
1993 150 $ 47,299
1994 146 $ 48,652
1995 195 $ 61,960
1996 235 $ 72,095
1997 335 $ 91,053
</TABLE>

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
(REVENUES IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Brokers.......................................... 150 146 195 235 335
Revenues(1)...................................... $ 47,299 $ 48,652 $ 61,960 $ 72,095 $ 91,053
</TABLE>

- ------------------------

(1) Revenue is not a measure of profitability. Except with respect to
infrastructure management services (which were conducted through a separate
subsidiary), the Company did not accumulate costs by revenue type for years
prior to 1997. Accordingly, a measure of profitability for brokerage
services cannot be shown for such periods. For summarized operating data by
business line in 1997, see "Selected Consolidated Financial Data."

The Company has historically provided project leasing services (leasing
space in real estate owned by clients and managed by the Company) for the
properties in its property management portfolio. In 1993 the

44
<PAGE>
Company began to expand its brokerage services beyond project leasing to include
tenant representation (representing clients seeking to acquire real estate
through lease or purchase), investment sales (representing clients buying or
selling income producing real estate), listings (representing clients disposing
of surplus space) and land sales (representing clients buying or selling
unimproved land).

The Company typically receives fees for brokerage services based on a
percentage of the value of the lease or sale transaction. Some transactions may
stipulate a fixed fee or include an incentive bonus component based on the
performance of the brokerage professional or client satisfaction. Although
transaction volume can be subject to economic conditions, brokerage fee
structures remain relatively constant through both economic upswings and
downturns.

Project leasing revenues are derived from the steady turnover of tenants in
the Company's property management and leasing portfolio of approximately 268
million square feet at June 30, 1998. Lease terms for these properties average
four years, resulting in approximately 67 million square feet of space "rolling"
each year, providing the Company a commission paid by the owner of the property
for renewing the existing tenant's lease or releasing the space to a new tenant.
The Company's tenant representation revenues are derived from the other side of
the transaction, representing the tenants whose leases are expiring. Listing
revenues generally increase in economic downswings as companies dispose of
surplus space, while investment sales and land revenues generally increase in
economic upswings as available capital drives the trading of income producing
properties and corporate demand for additional space drives the purchase of land
for new development.

The Company regards its brokerage force as an integral part of its delivery
system for the broad services the Company provides to its client base. Access to
a large network of experienced brokers is often a valuable asset when seeking
new property management, infrastructure management, development and construction
and retail services business. The presence of its brokers in on-site project
leasing offices can provide the Company with insights into its customers'
non-brokerage real estate needs and early opportunities to capture the client's
real estate services business. The sheer number of transactions in which its
brokers are involved can also be a source of information from which the Company
can seek to identify business opportunities in specific local or regional
markets.

The Company actively engages its brokerage force in the execution of its
marketing strategy. Brokerage personnel often work in close concert with the
Company's "city leaders," who are the professionals with overall responsibility
for operations in all major national markets. Through this arrangement, key
personnel are kept abreast of national trends and of the full range of services
provided to customers in other areas in the United States and around the world.
The ongoing dialogue among these professionals serves to increase their level of
expertise, and is supplemented by other more formal education such as that
provided at "Trammell Crow University," which offers sales and motivational
training as well as direct exposure to personnel from the Company's other lines
of business. Moreover, the brokerage force is financially rewarded for
cross-selling efforts which result in new engagements for the Company, such as a
development project, the acquisition of a new infrastructure management account,
or assistance across geographic service lines which enables the Company to
acquire additional brokerage business. Brokerage personnel also earn commissions
and are eligible for profit sharing programs, participations and other forms of
incentive compensation. These incentives are designed to underscore the
Company's belief that the brokerage business is often a key point of entry for
new clients, and is thus integral to firmwide efforts to cross-sell a full range
of services.

The Company intends to more aggressively recruit and hire (either
individually or through acquisitions) additional brokerage professionals
experienced primarily in the areas of investment sales and tenant
representation. The Company believes that the quality brand identification of
its name, the platform of a full range of services to offer clients, the ability
to learn and execute additional real estate services and the Company's
incentive-based compensation system which encourages ownership by Company
personnel create an environment conducive to attracting the most experienced and
capable brokerage professionals.

45
<PAGE>
INFRASTRUCTURE MANAGEMENT SERVICES

Through its wholly-owned subsidiary Trammell Crow Corporate Services, Inc.,
the Company is a leading provider of infrastructure management services to major
corporations in the United States and Canada. According to COMMERCIAL PROPERTY
NEWS, in 1995 the Company was the largest provider of facilities management
services (the Company's primary infrastructure management product) in terms of
square feet of property managed. The Company has established multi-year
relationships with its infrastructure management services clients, often
providing dedicated personnel on-site and integrating its accounting and
management information systems with those of its clients. The Company's
infrastructure management revenues have grown from $16.4 million in 1993 to
$68.7 million in 1997, representing 21.9% of the Company's total 1997 revenues.
As of June 30, 1998, the Company had approximately 1,200 employees who serviced
61 infrastructure management clients in approximately 16,000 properties
encompassing over 119 million square feet. The Company has developed expertise
in providing infrastructure management services to clients in the financial
services, healthcare, oil and gas and technology/communications industries. In
an effort to expand its services to the higher education industry, in February
1998 the Company formed TCHES, an indirect wholly-owned subsidiary of the
Company. In February 1998, TCHES entered into the UPenn Contract, pursuant to
which TCHES became the exclusive provider of certain infrastructure management
services with respect to designated properties and grounds of UPenn. In
addition, in June 1998, the Company acquired substantially all of the assets of
Core. The Company's goal in effecting this acquisition was to combine its
resources and management experience with the expertise of the former Core
employees to become a leading provider of infrastructure management services in
the automotive industry.

The following charts and table show the growth of the Company's
infrastructure management services business over the last five years in terms of
revenues and net income:

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
REVENUES NET INCOME

<S> <C> <C>
(in thousands) (in thousands)
1993 $ 16,401 $ 342
1994 $ 27,063 $ 391
1995 $ 38,681 $ 441
1996 $ 50,836 $ 1,620
1997 $ 68,719 $ 1,664
</TABLE>

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues......................................... $ 16,401 $ 27,063 $ 38,681 $ 50,836 $ 68,719
Net Income....................................... 342 391 441 1,620 1,664(1)
</TABLE>

- ------------------------

(1) Excludes the after-tax effect of the following in 1997: (1) $4,095,000,
representing infrastructure management services' allocation of the Company's
$33,085,000 non-cash, non-recurring charge to compensation expense and (2)
$539,000, representing infrastructure management services' allocation of the
Company's $4,355,000 non-recurring charge to income resulting from the
settlement of claims by certain former employees arising out of a terminated
stock appreciation rights plan.

46
<PAGE>
The goal of the Company's infrastructure management services business is to
align the facilities and support services of its clients with their operational
and strategic business objectives. Occupancy-related costs frequently represent
the largest corporate expense item after compensation and benefits. The Company
believes that organizations are increasingly outsourcing their infrastructure
management functions to reduce costs, improve profitability, and refocus
management and other resources on core competencies.

The Company administers infrastructure management services through its
wholly-owned subsidiary, Trammell Crow Corporate Services, Inc., which combines
a centralized administrative, marketing and leadership organization with
client-based delivery systems. The infrastructure management services offered by
the Company consist of (i) strategic services, such as consulting, development,
properties portfolio management, real estate asset management, management of
accounting and information systems, and organizational and process strategies;
(ii) facility management (the day-to-day maintenance and repair of facilities);
(iii) facility planning and project management (such as construction, space
planning, site consolidations, facilities design, moves, adds, and changes, and
furniture, signage, and cabling); (iv) transaction services (such as
acquisitions, dispositions, project leasing, and subleasing, where, rather than
providing services on a transaction-by-transaction basis according to the
industry's traditional model, the Company seeks to manage a client's entire
firm-wide property acquisition and divestiture program); and (v) office services
(such as security, reprographics, mail, cafeteria, shipping and receiving, and
reception services, most often provided through a subcontractor).

47
<PAGE>
The Company offers the following infrastructure management service delivery
options: (i) dedicated Company employees located at a client site; (ii) a team
of Company employees dedicated to a client but located off the client's site at
Company offices; and (iii) a flexible, nationwide network of Company personnel
providing the full menu of the Company's real estate services from the Company's
city offices. Most of the Company's infrastructure management engagements
provide for on-site presence of Company employees, which the Company believes
enhances client communication, provides focused personal service, protects the
proprietary information of the client and enables the Company to monitor client
satisfaction on an ongoing basis.

The Company has developed expertise in providing infrastructure management
services to clients in the financial services, healthcare, oil and gas and
technology/communications industries. The growth, consolidation and regulatory
changes taking place in these industries have increased the importance of
infrastructure management to these corporations and have caused them to seek to
improve productivity by rationalizing facilities organization and eliminating
redundant assets. The Company believes that there is opportunity to grow by
targeting clients within these industries. For example, within the financial
services industry, the Company has grown from one client in 1993 to 16 clients
as of June 30, 1998, and from 3 million square feet under management in 1993 to
approximately 60 million square feet as of June 30, 1998.

The Company also believes that it has an opportunity to achieve growth in
its infrastructure management services business by developing expertise in
additional industries. In an effort to expand into the higher education
industry, the Company formed TCHES, an indirect wholly-owned subsidiary, which,
in February 1998, entered into the UPenn Contract with UPenn, pursuant to which
TCHES became the exclusive provider of certain infrastructure management
services with respect to designated properties and grounds of UPenn. TCHES
provides management of operations, maintenance, utilities, facilities planning
and design, small renovation work, grounds-keeping, owner representation for
construction, and accounting and financial reporting services to UPenn. TCHES
also provides real estate portfolio and transaction management services, such as
property acquisitions and dispositions and construction management services. The
UPenn Contract has a one-year term with an automatic nine-year extension subject
to UPenn's receipt of a favorable tax ruling from the Internal Revenue Service.
In conjunction with the extension, TCHES will make a payment to UPenn of $26.0
million and, subject to certain conditions, six additional payments of $1.0
million per year beginning in June 2002.

The five largest customers for the Company's infrastructure management
services business, measured in 1997 revenues from such customers, collectively
represented 8.4% of the Company's total revenues in 1997. The Company believes
that significant growth opportunity exists within its existing customer base, as
only 24 out of 61 existing customers receive three or more types of services
from the Company out of the five types of infrastructure management services
offered.

The Company seeks to enter into multi-year infrastructure management
contracts with its clients. Most contracts are structured so the Company
receives a monthly base fee and annual incentives if certain agreed-upon
performance targets are satisfied. Most contracts also provide for the
reimbursement of client-related personnel costs and associated overhead
expenses. In many cases, these revenue sources are augmented by variable
commission-based revenues from brokerage, facility planning and project
management activities.

DEVELOPMENT AND CONSTRUCTION SERVICES

48
<PAGE>
clients, but also for its own account. Based upon information contained in the
NATIONAL REAL ESTATE INVESTOR'S 1997 Development Survey, in 1996 the Company was
the fourth largest commercial property developer in the United States, measured
by square feet under construction. In 1997, revenues from the Company's
development and construction business were $50.8 million (consisting of $40.1
million in service revenues, $0.5 million in income from investments in
unconsolidated subsidiaries and $10.2 million in gain on disposition of real
estate), representing 16.2% of the total revenues for the Company. Since 1993,
the Company has developed and redeveloped approximately 45.9 million square feet
of projects with aggregate project costs of approximately $2.6 billion. In 1997,
the Company started approximately 12.3 million square feet of development
projects with an estimated aggregate cost of $858.4 million. In connection with
the Faison Acquisition, the Company entered into a development program with
Faison Enterprises which the Company believes will strengthen its position in
the retail construction and development business.

The following charts and table show the Company's square feet of development
projects started and revenues from its development and construction services
business for each of the past five years:

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
SQUARE FEET OF DEVELOPMENT PROJECT
STARTS REVENUES (1)

<S> <C> <C>
(in thousands) (in thousands)
1993 2,829 $ 14,842
1994 5,124 $ 20,579
1995 10,083 $ 25,522
1996 12,408 $ 29,956
1997 12,273 $ 50,807
</TABLE>

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Square Feet of Project Starts.................... 2,829 5,124 10,083 12,408 12,273
Revenues(1)...................................... $ 14,842 $ 20,579 $ 25,522 $ 29,956 $ 50,807
</TABLE>

- ------------------------

(1) Revenue is not a measure of profitability. Except with respect to
infrastructure management services (which were conducted through a separate
subsidiary), the Company did not accumulate costs by revenue type for years
prior to 1997. Accordingly, a measure of profitability for development and
construction services cannot be shown for such periods. For summarized
operating data by business line in 1997, see "Selected Consolidated
Financial Data."

The Company provides its clients with services that are vital in all stages
of the development and construction process, including: (i) evaluating project
feasibility, budgeting, scheduling and cash flow analysis; (ii) site
identification, due diligence and acquisition; (iii) procurement of approvals
and permits, including zoning and other entitlements; (iv) coordination of
project design and engineering; (v) construction bidding and management and
tenant finish coordination; (vi) project close-out and user move coordination;
(vii) general contracting; and (viii) project finance advisory services.

The Company's development and construction services engagements are
typically staffed with a local/ regional team which includes a senior company
executive in the role of project general manager and one or more specialists in
the areas of physical project development and construction. The Company
currently

49
<PAGE>
employs approximately 28 senior executives with an average of thirteen years
experience in all aspects of sourcing development projects and providing general
management and project finance advisory capabilities for those projects. The
Company also employs approximately 74 other individuals with an average of more
than 10 years experience who are responsible for various aspects of the
development process, including the execution of physical development and
construction management responsibilities. The Company has dedicated 7 full-time
employees to promote and oversee its development and construction services
business on a national basis while continuing to leverage the expertise and
contacts of the Company's local and regional development professionals. This
national team will focus on enhancing the value of large scale development
projects, mitigating development and construction risk in the Company's
portfolio of business and accessing the capital markets to arrange for
development programs/funds with institutional investors.

The Company typically receives a fee for its development services that is
based on a negotiated percentage of a project's cost. Incentive bonuses may be
received for completing a project under budget and within certain critical time
deadlines. The Company has also been flexible in negotiating other incentive
compensation arrangements that allow the Company to participate in the
investment returns on projects it develops for its clients. The Company may make
a co-investment with its clients (typically no more than 5% of a project's full
construction and development cost), receive its pro rata return on its
investment in the project and also receive an incentive participation in the
project because of the Company's role in sourcing the development project and/or
executing a variety of services in the development process. The Company's
investments or co-investments in real estate projects typically result in an
ownership interest substantially greater than the co-investment percentage. To
facilitate development activity and to further mitigate risk, the Company
established two discretionary development and investment funds which, as of June
30, 1998, had raised $24.0 million, of which $21.8 million had been invested in
projects with an aggregate construction cost of approximately $221.2 million.
The Company formed a third discretionary development and investment fund, which
has raised $40.0 million as of July 9, 1998.

Prior to the IPO, the Company entered into a development program pursuant to
non-binding memoranda of understanding with each of Kennedy Associates Real
Estate Counsel, Inc. ("Kennedy") and TriNet Corporate Realty Trust, Inc.
("TriNet"). The development program with Kennedy focuses on multi-tenant office
and business park development projects. The development program with TriNet
focuses on office, research and development and industrial pre-sale
build-to-suit projects.

Subsequent to the IPO, the Company has entered into a strategic alliance
with AMB Property L.P. ("AMB"). As part of the strategic alliance with AMB, the
Company has entered into two development programs pursuant to non-binding
memoranda of understandings one of which focuses on developing and managing
industrial properties in targeted distribution markets, with particular emphasis
placed on multi-tenant freight forwarding facilities adjacent to major airports
and industrial submarkets of targeted metropolitan areas, while the other
development program focuses on multi-tenant retail redevelopment. In connection
with the Faison Acquisition, the Company also entered into a development program
with Faison Enterprises focusing on strip center, power center and regional mall
construction and development.

The following table identifies the number of projects which have been
targeted for inclusion, but are pending approval, in these development programs,
are under a letter of intent with a development program partner or are in
development. To date, no projects have been completed in these development
programs, and there can be no assurance that the projects targeted for inclusion
in the programs will be

50
<PAGE>
accepted by the program partners or that such projects or those under letters of
intent will in fact be developed.
<TABLE>
<CAPTION>
PROJECTS
PROJECTS UNDER LETTER OF INTENT UNDER
PROJECTS PENDING APPROVAL WITH DEVELOPMENT PROGRAM PARTNER DEVELOPMENT
-------------------------------- -------------------------------- -------------
NUMBER BUDGETED NUMBER NUMBER
OF DEVELOPMENT AND OF BUDGETED OF
DEVELOPMENT PROGRAM PROJECTS CONSTRUCTION PROJECTS DEVELOPMENT AND PROJECTS
- ---------------------------------- ------------- COSTS ------------- CONSTRUCTION -------------
----------------- COSTS
(IN MILLIONS) -----------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Kennedy........................... 9 $ 282.0 7 $ 117.4 1
TriNet............................ 1 6.0 1 19.1 2
AMB Industrial.................... 7 57.0 1 10.0 3
AMB Retail........................ 2 54.0 -- -- --
Faison............................ 22 195.9 -- -- --

BUDGETED
DEVELOPMENT AND
DEVELOPMENT PROGRAM CONSTRUCTION
- ---------------------------------- COSTS
-----------------

<S> <C>
Kennedy........................... $ 17.7
TriNet............................ 13.4
AMB Industrial.................... 42.5
AMB Retail........................ --
Faison............................ --
</TABLE>

The market for development and construction services is cyclical and is
driven by various economic conditions. The Company believes that current market
conditions should increase the short and medium term demand for development
services offered by the Company due to the decrease in national vacancy rates
for suburban office, downtown office and industrial properties in recent years.
In addition, the demand for commercial real estate properties in these markets
has increased over the last several years, driven mainly by the acquisition
activities of buyers, including real estate investment trusts and other
investors. Finally, the current values of development properties are often
meeting and exceeding the replacement costs for those properties, while
construction costs remain relatively stable.

The Company's development activities generate business opportunities for the
Company's other service lines which will support the Company's earnings when
development and construction revenues decrease as a result of market conditions.
Because the Company provides development and construction services primarily to
third parties, including clients who invest in build-to-suit projects, the
Company believes that the adverse effect on its revenues when speculative
development activities are curtailed in a market down cycle should be mitigated.
In addition, because the Company's operating costs and expenses for this
business line are relatively small (representing only 14.7% of the Company's
total operating costs and expenses in 1997), the Company believes that the
adverse effect of a market down cycle on its earnings should not be as material
as it would be for other firms whose development overhead expenses constitute a
greater portion of their cost structure. When development activity reaches a
down cycle in the future, the Company intends to use professionals from its
development and construction services business to pursue opportunistic property
acquisitions with its established capital partners.

RETAIL SERVICES

The Company's retail services business focuses on providing comprehensive
real estate services to major retailers and retail real estate owners. In 1996,
the Company formed a subsidiary, TCRS, to consolidate the focus of the Company's
retail services management group and to take better advantage of market growth
opportunities. The Company believes that by providing its full array of real
estate services through TCRS, it is able to better serve its national retail
customers (who demand specialized property and market knowledge) and compete
with other service providers whose sole focus is a retail customer base. In
furtherance of its goal to be the leading national retail real estate company,
in August 1997 the Company acquired Doppelt, which specializes in supplementing
or, in some cases, replacing the real estate departments of retail companies by
providing tenant representation and lease disposition services to clients such
as OfficeMax, TJX and General Nutrition Centers. The Company's revenues from
retail services in 1997 were $5.3 million, representing 1.7% of the Company's
total revenues for 1997. After giving pro forma effect to the Doppelt
Acquisition as of January 1, 1997, the Company's revenues from its retail
service business in 1997 would have been $10.3 million. In addition, Company
believes that the Faison Acquisition will establish the Company as one of the
leading providers of retail property management services in the

51
<PAGE>
Southeast and will provide the Company with a platform and expertise for
expansion of its retail services business.

The primary services provided to the Company's retail clients include
brokerage services, such as tenant representation for site acquisition and
surplus space dispositions, and development services, such as predevelopment
activities, project finance advisory services and construction oversight. The
Company also acquires, rehabilitates and sells certain retail properties which
the Company believes to be undervalued. In the future, the Company will seek to
combine the expertise of its retail business leaders with that of its
development services personnel to formulate programs for developing retail
assets, both for the Company's account and for the account of third parties,
including third parties in which the Company may own an equity interest.

As of June 30, 1998, the Company provided retail services to over 40 retail
customers and has developed more than 26 build-to-suit projects through TCRS and
its subsidiaries. The 10 largest customers for the Company's retail services
business in terms of 1997 revenues collectively generated $5.1 million of the
Company's 1997 revenues. Although the Company is specifically focused on
expanding its retail client base, the Company also believes that there are
significant opportunities to provide additional services to its existing retail
clients. Of the 52 major national retail clients that have engaged the Company's
retail services business since 1993, 40 clients continue to use the Company for
the same services on additional retail projects. Another nine of these major
clients have added new services.

The Company delivers tenant representation services and disposition services
through TCRS utilizing a network of the Company's local brokers (including those
formerly employed by Doppelt & Company) and third-party providers. The Company
generates commission revenue from these services which are shared with brokers
in the local markets. The Company believes that the Doppelt Acquisition has
enhanced its ability to recruit brokerage professionals, build its local retail
brokerage capabilities and capture a greater portion of these commission
revenues.

Development services are delivered through BTS, Inc., the Company's national
retail build-to-suit subsidiary. BTS, Inc. specializes in predevelopment
activities, including land acquisition and procurement of entitlements. For its
development services to third parties, the Company typically earns a base fee
plus an incentive fee that is paid out of the sale proceeds upon project
completion.

The Company intends to establish a fund to acquire freestanding retail
properties and resell those properties within an anticipated hold period of no
more than six months after their acquisition. The Company's goal will be to
generate revenue through this activity by collecting rental income during the
period that the asset is owned and by capturing a spread on the purchase and
sale of the properties. The Company also intends to make selective investments
in retail real estate projects for its own account. The Company believes that,
by providing real estate services to its national retail customers, it has
developed a proficiency in identifying retail investment opportunities and
formulating and implementing retail development programs.

In connection with the Doppelt Acquisition, TCRS delivered to Doppelt (i)
approximately $20.7 million in cash, (ii) a subordinated promissory note of the
Predecessor Company, payable to Doppelt in the principal amount of $6.0 million,
and (iii) the right to receive up to $2.0 million of additional purchase price
if future commissions collected by TCRS from any source exceed $7.0 million,
subject to reduction based on the amount of certain of Doppelt's uncollected
accounts receivable and certain leases executed by Doppelt as of August 22,
1997, for which a commission is not collected by TCRS prior to August 22, 1999.
The Predecessor Company also paid Mr. Doppelt $2.0 million upon the execution of
an employment agreement. In November 1997, the Company issued to Doppelt 342,857
shares of Common Stock in payment of the $6.0 million promissory note.

52
<PAGE>
EMPLOYEES

As of June 30, 1998, the Company had approximately 5,100 employees.
Employees of the Company at certain properties located in San Francisco,
California; Reno, Nevada; and Chicago, Illinois are currently represented by a
labor union. Management believes that its ongoing labor relations are good. The
unions represented at the respective locations are: International Union of
Operating Engineers, Stationary Engineers, Local No. 39 (San Francisco,
California); Nevada Chapter Associated General Contractors of America, Inc. and
Laborers' International Union of North America-AFL-CIO local No. 169 (Reno,
Nevada); and Itasca Center III, Limited Partnership; Two Pierce Place, Itasca,
Il and International Union of Operating Engineers of Chicago, Illinois and
Vicinity Local No. 399.

INSURANCE

The Company has the types of insurance coverage, including comprehensive
general liability and excess umbrella liability insurance, that it believes are
appropriate for a company in the lines of business in which it operates. The
Company's management will use its discretion in determining the amounts,
coverage limits and deductibility provisions of appropriate insurance coverage
on the Company's properties and operations at a reasonable cost and on suitable
terms. This might result in insurance coverage that, in the event of a
substantial loss, would not be sufficient to pay the full value of the damages
suffered by the Company.

FACILITIES

The Company's executive offices are located at 2001 Ross Avenue, 3400
Trammell Crow Center, Dallas, Texas 75201 and consist of approximately 25,000
square feet of leased office space. The Company's telephone number at such
address is (214) 863-3000. The Company's lease at its executive offices will
expire on December 31, 1999.

TRADEMARKS

The trade name "Trammell Crow" is material to the Company's business. The
Company has entered into a License Agreement with CFH, an affiliate of Crow
Family, with respect to such business and trade names. See "Certain
Transactions--Royalty Agreement and License Agreement."

LEGAL PROCEEDINGS

From time to time, the Company is involved in litigation incidental to its
business. In the Company's opinion, no litigation to which the Company is
currently a party, if decided adversely to the Company, is likely to have a
materially adverse effect on the Company's results of operation or financial
condition.

ENVIRONMENTAL LIABILITY

53
<PAGE>
environmental contamination at a site, including liabilities relating to the
presence of asbestos-containing materials. There can be no assurance that any of
such liabilities to which the Company or any of its affiliates may become
subject will not have a material adverse effect on the Company's business and
results of operations.

Some of the properties owned, operated, or managed by the Company are on,
adjacent to or near properties that have contained in the past, or currently
contain, underground and/or above-ground storage tanks used to store regulated
substances such as petroleum products or other hazardous or toxic substances.
Some of the properties owned, operated or managed by the Company are in the
vicinity of properties which are currently, or have been, subject to releases of
regulated substances and remediation activity, and the Company is currently
aware of several properties owned, operated or managed by the Company which may
be impacted by regulated substances which may have migrated from adjacent or
nearby properties or which may be within the borders of areas suspected to be
impacted by regional groundwater contamination. In addition, the Company is
aware of the presence or the potential presence of regulated substances at
several properties owned, operated or managed by it which may have resulted from
historical or ongoing soil or groundwater activities on those properties. Based
on the information available to date, the Company believes that the
environmental issues described above are being or have been appropriately
managed and will not have a material adverse effect on the Company.

There can be no assurance that environmental liabilities or claims will not
adversely affect the Company in the future.

GOVERNMENT REGULATION

The Company is subject to laws governing its relationship with employees,
including minimum wage requirements, overtime, working conditions and work
permit requirements. The Company believes that it has the necessary permits and
approvals to operate each of its properties and their respective businesses.

Under the Americans with Disabilities Act of 1990, all public accommodations
are required to meet certain federal requirements related to access and use by
disabled persons. While the Company believes that its properties in which it
holds an equity interest are substantially in compliance with these
requirements, a determination that the Company is not in compliance with the ADA
could result in the imposition of fines or an award of damages to private
litigants.

54
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the Board of
Directors and executive officers of the Company including their respective ages
as of June 30, 1998:

<TABLE>
<CAPTION>
DIRECTOR'S TERM
NAME AGE TITLE ENDING
- ------------------------------------ --- ------------------------------------------------------- ---------------
<S> <C> <C> <C>
George L. Lippe..................... 43 Chief Executive Officer, President and Director 2001
H. Pryor Blackwell.................. 37 Executive Vice President and Chief Operating Officer of --
Western Operations
William F. Concannon................ 42 President and Chief Executive Officer of Trammell Crow 2000
Corporate Services, Inc. and Director
Henry J. Faison..................... 64 Executive Vice President and Director 2000
William C. Maddux................... 43 Executive Vice President and Chief Operating Officer of --
Eastern Operations
Asuka Nakahara...................... 42 Executive Vice President and Chief Financial Officer --
Philip W. Norwood................... 50 Vice Chairman --
William Rothacker................... 47 President and Chief Executive Officer of Trammell Crow --
Retail Services, Inc.
Robert E. Sulentic.................. 41 Executive Vice President, National Director of 2001
Development and Investment and Director
James D. Carreker................... 51 Director 1999
Harlan R. Crow...................... 48 Director 1999
James R. Erwin...................... 54 Director 2000
Jeffrey M. Heller................... 58 Director 1999
Rowland T. Moriarty................. 51 Director 2001
J. McDonald Williams................ 56 Chairman of the Board of Directors 2000
</TABLE>

GEORGE L. LIPPE has been the President, Chief Executive Officer and a
director of the Company since its inception and has served as President and
Chief Executive Officer of the Predecessor Company since January 1996. From 1995
to 1996, Mr. Lippe served as Executive Vice President of Operations of the
Predecessor Company. From 1990 to date, Mr. Lippe has served as President and
Chief Executive Officer of the Company's Midwest Region. Mr. Lippe has served in
various other capacities with the Company since 1978.

H. PRYOR BLACKWELL has served as Executive Vice President and Chief
Operating Officer of the Company's Western Operations since July 1997 and
President and Chief Executive Officer of Trammell Crow Dallas/Fort Worth, Inc.
and Trammell Crow Dallas Industrial, Inc. since 1993. Mr. Blackwell has served
on the Board of Directors of the Predecessor Company since 1993 and as a member
of the Board of Directors served on the Operating Committee, Investment
Committee and Audit Committee of the Predecessor Company. From 1991 to 1993, Mr.
Blackwell served as President and Chief Executive Officer of Trammell Crow
Central Office Group, Inc. From 1987 to 1990, Mr. Blackwell served as the
Partner in charge of the Company's Downtown (Dallas) Office Division. Mr.
Blackwell served as the Company's Marketing Principal from 1986 to 1987 and
Leasing Agent from 1984 to 1986.

55
<PAGE>
HENRY J. FAISON has served as Executive Vice President and a director of the
Company since July 1998. From 1994 to 1998, Mr. Faison served as Chairman of
Faison Enterprises. From 1988 to 1994, he served as the Chief Executive Officer
of Faison Enterprises.

WILLIAM F. CONCANNON has been a director of the Company since December 1997
and has served as President and Chief Executive Officer of Trammell Crow
Corporate Services since July 1991. Mr. Concannon has served as a Member of the
Board of Directors of the Predecessor Company since 1991. He joined the
Predecessor Company as Vice President of National Marketing in 1986 and in 1990
became Director and Partner in charge of Trammell Crow Corporate Services. In
1994, Mr. Concannon established the Company's Canadian Corporate Services
business under the name Primaris Corporate Services, Ltd.

WILLIAM C. MADDUX has served as Executive Vice President and Chief Operating
Officer of the Company's Eastern Operations since July 1997. Since 1992, Mr.
Maddux has served as the President of Trammell Crow MW, Inc., and has had
responsibility for overseeing the Company's operations in Illinois, Indiana,
Michigan and Wisconsin since that time. Mr. Maddux served the Predecessor
Company in various other capacities from 1985 to 1992, including as Partner in
charge of the Predecessor Company's Carolina division from 1988 to 1992,
Marketing Principal in charge of the Company's Oklahoma City operations from
1987 to 1988 and Leasing Agent in the Company's Oklahoma City office from 1985
to 1987.

ASUKA NAKAHARA has served as Executive Vice President and Chief Financial
Officer of the Company since July 1997 and the Predecessor Company since January
1996. During 1995, Mr. Nakahara served as the Predecessor Company's Executive
Vice President in charge of National Programs. Mr. Nakahara served as President
and Chief Executive Officer of Trammell Crow Northeast, Inc. from 1991 to 1995
and as the Northeast Regional Partner for the Predecessor Company from 1987 to
1991. Mr. Nakahara served the Predecessor Company in various other capacities
from 1980 to 1987, including as the Operating Partner in charge of the
Predecessor Company's Philadelphia division from 1985 to 1987, Finance Associate
and Partner in Houston from 1983 to 1984, and leasing agent in Houston from 1980
to 1983.

PHILIP W. NORWOOD has served as Vice Chairman of the Company since July
1998. From 1994 until July 1998, Mr. Norwood served as the President and Chief
Executive Officer of Faison. From 1980 until 1993, Mr. Norwood held various
positions with affiliates of the Predecessor Company, including chairman of
Trammell Crow Realty Advisors in 1993 and its president and Chief Executive
Officer in 1992 and 1993.

WILLIAM ROTHACKER has been President and Chief Executive Officer of Trammell
Crow Retail Services since its formation in December 1996. Since 1994, Mr.
Rothacker has been President of Trammell Crow Denver and has had responsibility
for overseeing the Company's operations in New Mexico and Arizona. Mr. Rothacker
has served on the Predecessor Company's Operating Committee and as Chairman of
its Retail Committee since 1994. Mr. Rothacker served as Managing Director in
charge of the Predecessor Company's Denver operations from 1991 to 1994. From
1987 to 1991, Mr. Rothacker served as Partner in charge of the Denver Division.
Mr. Rothacker served as Partner in charge of the Denver Retail division from
1983 to 1986 and as a Leasing Agent in Denver from 1980 to 1983.

ROBERT E. SULENTIC has been a director of the Company since December 1997
and has served as the Company's Executive Vice President and National Director
of Development and Investment since July 1997 and President of Trammell Crow NE,
Inc. since 1995. Mr. Sulentic has served on the Predecessor Company's Operating
Committee and as Chairman of its Development Committee since 1994. From 1991 to
1994, Mr. Sulentic served as Managing Director in charge of the Predecessor
Company's Philadelphia Division. From 1987 to 1990, Mr. Sulentic served as the
Partner in charge of the Predecessor Company's New Jersey Division. Mr. Sulentic
served in Houston as a Marketing Director for the Predecessor Company in 1986
and 1987 and as a Leasing Agent in 1984 and 1985.

JAMES D. CARREKER has been a director of the Company since December 1997.
Mr. Carreker has served as Chairman of the Board and Chief Executive Officer of
Wyndham International, Inc. and a director of

56
<PAGE>
Patriot American Hospitality, Inc. since January 1998. Mr. Carreker assumed
these positions in connection with the merger with and into Patriot Hospitality,
Inc. of Wyndham Hotel Corporation, for which he has served as President and
Chief Executive Officer since May 1988. He also served as Chief Executive
Officer of the Predecessor Company from August 1994 to December 1995.

HARLAN R. CROW has been a director of the Company since its inception. Mr.
Crow is the Chief Executive Officer of Trammell Crow Interests Company, d/b/a
Crow Family Holdings, a private investment company managing investments in a
variety of real estate-related and other businesses, a position he has held
since 1986. Mr. Crow currently serves as a Director of Patriot American
Hospitality, Inc. In any given year within the past five years, Mr. Crow has
indirectly owned interests in over 1,000 partnerships (or affiliates of
partnerships) or corporations. In the past five years, Mr. Crow was a general
partner in approximately 13, and an officer or director in approximately 65,
partnerships or corporations, or affiliates of such partnerships or
corporations, that filed for protection under federal bankruptcy laws. In
addition, in the past five years, Mr. Crow was an executive officer or director
in approximately 15 partnerships or corporations, or affiliates of such
partnerships or corporations, that were placed in receivership. Pursuant to a
Stockholders Agreement to which the Company is a party, Crow Family Partnership,
L.P. has been granted the right to nominate a member of the Board of Directors
and each executive officer of the Company has agreed to vote his shares of
Common Stock in favor of such nominee. Mr. Crow is the initial such nominee. See
"Certain Relationships and Related Transactions--Stockholders' Agreement."

JAMES R. ERWIN has been a director of the Company since December 1997. Mr.
Erwin has served as Vice Chairman and Corporate Finance Executive-West of
NationsBank Corp. since January 1994, and was Executive Vice President, Manager
of Operations and Technology for NationsBank Corp. from October 1991 to January
1994.

JEFFREY M. HELLER has been a director of the Company since December 1997.
Mr. Heller has served as President and Chief Operating Officer of Electronic
Data Systems Corporation ("EDS") since June 1996. From 1987 to June 1996, Mr.
Heller served as Senior Vice President of EDS with responsibilities for
Technical Operations and Asia-Pacific. Mr. Heller is a member of the Board of
Directors of Hitachi Data Systems.

ROWLAND T. MORIARTY has been a director of the Company since December 1997.
Mr. Moriarty has served as Chairman and Chief Executive Officer of Cubex
Corporation, a consulting firm, since 1992. From 1981 to 1992, Mr. Moriarty
served as a professor at the Harvard Business School. Mr. Moriarty is a member
of the Board of Directors of Staples Inc., an office supply retailer, and
Charles River Associates, an economic research firm based in Boston.

J. MCDONALD WILLIAMS has been the Chairman of the Board of Directors of the
Company since its inception and served as Chairman of the Board of Directors of
the Predecessor Company from August 1994 to December 1997. Mr. Williams served
as President and Chief Executive Officer of the Predecessor Company from 1991 to
1994. From 1977 to 1991, Mr. Williams served as Managing Partner of the
Predecessor Company and from 1973 to 1977 Mr. Williams was Partner, Overseas
Projects for the Predecessor Company. Mr. Williams is a member of the Board of
Directors of A.H. Belo Corporation, Mitchell Energy & Development Corporation
and Blanks Color Imaging, Inc. In any given year within the past five years, Mr.
Williams has indirectly owned interests in over 1,000 partnerships (or
affiliates of partnerships) or corporations. In the past five years, Mr.
Williams was a general partner in approximately 54, and an officer or director
in approximately 16, partnerships or corporations, or affiliates of such
partnerships or corporations, that filed for protection under federal bankruptcy
laws. In addition, in the past five years, Mr. Williams was a general partner in
approximately 14 partnerships or corporations, or affiliates of such
partnerships or corporations, that were placed in receivership.

57
<PAGE>
DIRECTORS

TERM. The Certificate of Incorporation currently in effect provides, among
other things, for a Board of Directors divided into three classes, designated
Class I, Class II and Class III. Directors serve for staggered terms of three
years each, with the Class I Directors serving until the Company's 2001 annual
meeting of stockholders, the Class II Directors until the 1999 annual meeting
and the Class III Directors until the 2000 annual meeting. The Class I Directors
are George L. Lippe, Rowland T. Moriarty, and Robert E. Sulentic; the Class II
Directors are James D. Carreker, Harlan R. Crow, and Jeffrey M. Heller; and the
Class III Directors are William F. Concannon, James R. Erwin, J. McDonald
Williams and Henry Faison.

COMMITTEES. The Board of Directors of the Company has established an
Executive Committee, an Audit Committee and a Compensation Committee.

The Executive Committee may, to the maximum extent permitted by the Delaware
General Corporation Law, have and exercise all of the powers of the Board of
Directors. The current members of the Executive Committee are Messrs. Williams,
Lippe and Erwin. Mr. Williams serves as Chairman of the Executive Committee.

The Audit Committee's functions include recommending to the Board of
Directors the engagement of the Company's independent public accountants,
reviewing with such accountants the plans for and the results and scope of their
auditing engagement and certain other matters relating to their services
provided to the Company, including the independence of such accountants. The
current members of the Audit Committee are Messrs. Erwin, Heller and Moriarty.
Mr. Heller serves as Chairman of the Audit Committee.

The Compensation Committee, on behalf of the Board of Directors, reviews the
compensation of executive officers and administers the Company's incentive and
stock option plans. The current members of the Compensation Committee are
Messrs. Erwin, Heller and Moriarty. Mr. Erwin serves as Chairman of the
Compensation Committee.

DIRECTOR COMPENSATION. The Company's employee directors do not receive
compensation solely in their capacity as directors of the Company. The Company's
non-employee directors are paid a retainer of $30,000 for their service on the
Board of Directors. In addition to the retainer, non-employee directors are
eligible to receive annual stock option grants under the Long-Term Incentive
Plan. See "--Long-Term Incentive Plan." In addition, all directors are
reimbursed for expenses incurred in connection with their attendance at Board of
Directors and committee meetings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Company was formed in December 1997 and
consists of Messrs. James R. Erwin, Jeffery M. Heller and Rowland T. Moriarty.
Prior to the creation of the Compensation Committee, the Predecessor Company's
Board of Directors approved the terms of compensation for the Company's
executive officers.

In 1997, Mr. Moriarty or affiliates of Mr. Moriarty received an aggregate of
$98,000 for services rendered as a consultant to the Company. Mr. Erwin serves
as Vice-Chairman and Corporate Finance Executive-West of NationsBank Corp. The
Company and an affiliate of NationsBank Corp. are parties to certain
transactions described under "Certain Transactions--Other Relationships With
Directors."

Certain other directors are parties to transactions with the Company, as
described under the caption "Certain Relationships and Related Transactions."

58
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth certain information for the fiscal years
ended December 31, 1996 and 1997, concerning the cash and non-cash compensation
earned by, or awarded to, the Chief Executive Officer of the Company and each of
the other four most highly compensated executive officers of the Company whose
aggregate remuneration for services rendered to the Company during the year
ended December 31, 1997 exceeded $100,000 (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
AWARDS
---------------
SHARES OF
ANNUAL COMPENSATION COMMON STOCK PAYOUTS
UNDERLYING ------------
------------------------ OPTIONS GRANTED PAYOUTS LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) IN FISCAL YEAR PAYOUTS($)(1) COMPENSATION($)(2)
- ---------------------------------- --------- ----------- ----------- --------------- ------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
George L. Lippe ..................
Chief Executive Officer, 1997 350,000 175,000 58,529 1,510,838 (112,810)
Trammell Crow Company 1996 350,000 175,000 -- 1,323,669 99,036
H. Pryor Blackwell ...............
Executive Vice President and
Chief Operating Officer of
Western Operations, Trammell 1997 210,000 180,000 58,529 749,043 8,627
Crow Company 1996 210,000 99,750 -- 924,553 (182,503)
Asuka Nakahara ...................
Executive Vice President and
Chief Financial Officer, 1997 250,000 125,000 58,529 637,778 930,647
Trammell Crow Company 1996 250,000 125,000 -- 742,580 (11,787)
William F. Concannon .............
Chief Executive Officer of
Trammell Corporate Services, 1997 210,000 180,000 88,342 1,007,526 (354,607)
Inc. 1996 210,000 105,000 -- 673,597 42,224
William C. Maddux ................
Executive Vice President and
Chief Operating Officer of
Eastern Operations, Trammell 1997 200,000 175,000 58,529 293,685 (68,401)
Crow Company 1996 200,000 113,000 -- 441,904 (78,682)
</TABLE>

- ------------------------------

(1) Reflects distributions made from the 1995 Profit Sharing Plan in the year
indicated for amounts earned in the year indicated and prior years.

(2) The amounts shown are the dollar amounts of increases (decreases) to the
Profit Sharing Account (as hereinafter defined) for each of the Named
Executive Officers under the 1995 Profit Sharing Plan (as hereinafter
defined) for the years indicated. Payouts of awards under the 1995 Profit
Sharing Plan are subject to certain restrictions.

59
<PAGE>
The following table provides information concerning Common Stock options
granted to the Named Executive Officers in the fiscal year ended December 31,
1997. In addition, the present value of the options on the dates of grant
(computed using a variation of the Black-Scholes option pricing model) are
shown.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
NUMBER OF
SHARES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR GRANT DATE
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL 1997 ($/SH)(2) DATE VALUE($)(3)
- ------------------------------------------------- ----------- ----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
George L. Lippe.................................. 58,529 1.2 17.50 11/24/07 513,299
H. Pryor Blackwell............................... 58,529 1.2 17.50 11/24/07 513,299
Asuka Nakahara................................... 58,529 1.2 17.50 11/24/07 513,299
William F. Concannon............................. 29,813 0.6 3.85 08/01/07 452,561
58,529 1.2 17.50 11/24/07 513,299
William C. Maddox................................ 58,529 1.2 17.50 11/24/07 513,299
</TABLE>

- ------------------------

(1) The options listed in this table other than those granted to Mr. Concannon
in August 1997 are subject to a three-year vesting schedule, subject to
certain exceptions, with 33% becoming exercisable on each of November 24,
1998, 1999 and 2000. The options granted to Mr. Concannon in August 1997 are
currently fully vested and exercisable.

(2) On August 1, 1997, there was no public market for the Company's securities,
and consequently there is no way to quantify a market value for Common Stock
underlying the option granted to Mr. Concannon on August 1, 1997. However,
the Company believes the market value of the stock underlying such option on
the date of grant was $17.50 per share. Each of the other options listed in
the table was granted at an exercise price of $17.50, the price per share of
Common Stock received by the Company in its initial public offering, which
was consummated on December 1, 1997.

(3) Present value is based on the Black-Scholes option pricing model adapted for
use in valuing executive stock options. The estimated values under the
Black-Scholes model are based on arbitrary assumptions as to certain
variables. Expected stock price volatility is assumed to be 31.8% and the
risk-free rate of return is assumed to be 6.40% for the options granted to
Mr. Concannon in August 1997 and 5.93% for all other options shown in the
table. The exercise date for the options is assumed to be the eighth
anniversary of the date of grant, and dividend yield is assumed to be 0%.
The actual value, if any, an Executive may realize will depend on the excess
of the stock price over the exercise price on the date the option is
exercised, so there is no assurance the value realized by an Executive will
be at or near the value estimated by the Black-Scholes model and reflected
in the table.

60
<PAGE>
The following table sets forth, as of December 31, 1997, the number of
Common Stock options and the value of unexercised options held by the Named
Executive Officers. As of December 31, 1997, there had been no stock options
exercised by any Named Executive Officer.

AGGREGATED FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997($)(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
George L. Lippe........................................... -- 58,529 -- 482,864
H. Pryor Blackwell........................................ -- 58,529 -- 482,864
Asuka Nakahara............................................ -- 58,529 -- 482,864
William F. Concannon...................................... 29,813 58,529 652,905 482,864
William C. Maddox......................................... -- 58,529 -- 482,864
</TABLE>

- ------------------------

(1) The price per share of Common Stock for the last trade reported by the New
York Stock Exchange on December 31, 1997 was $25.75.

LONG-TERM INCENTIVE PLAN

The description set forth below is a summary of the principal terms and
conditions of the Trammell Crow Company Long-Term Incentive Plan (the "Long-Term
Incentive Plan") and does not purport to be complete. The description is
qualified in its entirety by reference to the Long-Term Incentive Plan, which
has been filed as an exhibit to the Registration Statement.

OVERVIEW. The purpose of the Long-Term Incentive Plan is to provide an
incentive for employees, directors and certain consultants and advisors of the
Company to remain in the service of the Company, to extend to those persons the
opportunity to acquire a proprietary interest in the Company so that they will
apply their best efforts for the benefit of the Company and to aid the Company
in attracting able persons to enter the service of the Company. The Company may
grant awards under the Long-Term Incentive Plan to officers, directors,
employees and certain consultants and advisors of the Company or any subsidiary
of the Company (as used for the Long-Term Incentive Plan, a "Participant"). The
awards under the Long-Term Incentive Plan include (i) incentive stock options
("ISOs") qualified as such under the Internal Revenue Code of 1986, as amended
(the "Code"), (ii) stock options that do not qualify as incentive stock options,
(iii) stock appreciation rights ("SARs"), (iv) restricted stock awards, and (v)
performance units.

SHARE AUTHORIZATION. The number of shares of Common Stock that may be
subject to outstanding awards under the Long-Term Incentive Plan is equal to
5,334,878 shares of Common Stock. The number of shares of Common Stock
authorized under the Long-Term Incentive Plan and the number of shares subject
to an award under the Long-Term Incentive Plan will be adjusted for stock
splits, stock dividends, recapitalizations, mergers and other changes affecting
the capital stock of the Company, which included the Reincorporation Merger.

INITIAL AWARDS. Concurrent with the closing of the Initial Public Offering,
the Company granted options to acquire an aggregate of 2,348,455 shares of
Common Stock to certain employees. The exercise price for such stock options was
$17.50 per share. The stock option grants include grants to each of the
executive officers of the Company of the right to acquire 58,529 shares and a
grant to Mr. Williams of the right to acquire 40,965 shares. Subject to certain
exceptions, these options will vest ratably over a three-year period. See
"Certain Relationships and Related Transactions--Reincorporation Transactions."

ADMINISTRATION. As permitted by the terms of the Long-Term Incentive Plan,
the Board of Directors has delegated all of its duties under the Long-Term
Incentive Plan to the Compensation Committee (as used in this description of the
Long-Term Incentive Plan, the "Committee"). The Committee has broad

61
<PAGE>
discretion to administer the Long-Term Incentive Plan, interpret its provisions,
and adopt policies for implementing the Long-Term Incentive Plan. This
discretion includes the ability to select the recipient of an award, determine
the type and amount of each award, establish the terms of each award, accelerate
vesting or exercisability of an award, extend the exercise period for an award,
determine whether performance conditions have been satisfied, permit the
transfer of an award to family trusts and other persons and otherwise modify or
amend any award under the Long-Term Incentive Plan.

STOCK OPTIONS. The Committee determines the exercise price of each option
granted under the Long-Term Incentive Plan. The exercise price for an ISO must
not be less than the fair market value of the Common Stock on the date of grant,
and the exercise price of non-qualified stock options must not be less than 85%
of the fair market value of the Common Stock on the date of grant. Stock options
may be exercised as the Committee determines, but not later than ten years from
the date of grant in the case of ISOs. At the discretion of the Committee,
holders may use shares of Common Stock to pay the exercise price, including
shares issuable upon exercise of the option.

SARS. A SAR may be awarded in connection with or separate from a stock
option. A SAR is the right to receive an amount in cash or Common Stock (or a
combination of cash and Common Stock) equal to the excess of the fair market
value of a share of the Common Stock on the date of exercise over the exercise
price specified in the agreement governing the SAR (for SARs not granted in
connection with a stock option) or the exercise price of the related stock
option (for SARs granted in connection with a stock option). A SAR granted in
connection with a stock option will require the holder, upon exercise, to
surrender the related stock option or portion thereof relating to the number of
shares for which the SAR is exercised. The surrendered stock option or portion
will then cease to be exercisable. Such a SAR is exercisable or transferable
only to the extent that the related stock option is exercisable or transferable.
A SAR granted independently of a stock option will be exercisable as the
Committee determines. The Committee may limit the amount payable upon exercise
of any SAR. SARs may be paid in cash or stock, as the Committee provides in the
agreement governing the SAR.

RESTRICTED STOCK AWARDS. A restricted stock award is a grant of shares of
Common Stock that are nontransferable or subject to risk of forfeiture until
specific conditions are met. The restrictions will lapse in accordance with a
schedule or other conditions as the Committee determines. During the restriction
period, the holder of a restricted stock award may, in the Committee's
discretion, have certain rights as a stockholder, including the right to vote
the stock and receive dividends and other distributions paid on that stock.

PERFORMANCE UNITS. Performance units are performance-based awards payable
in cash, Common Stock, or a combination of both. The Committee may select any
performance measure or combination of measures as conditions for cash payments
or stock issuances under the Long-Term Incentive Plan.

ASSUMED OPTION PLAN

In connection with the Reincorporation Transactions, the Company agreed to
assume the Trammell Crow Company 1997 Stock Option Plan (the "Assumed Option
Plan" or the "1997 Plan") which had been adopted by the Predecessor Company. The
description set forth below is a summary of the principal terms and conditions
of the Assumed Option Plan. The description is qualified in its entirety by
reference to the Assumed Option Plan, which has been filed as an exhibit to the
Registration Statement. See "Certain Relationships and Related
Transactions--Reincorporation Transactions."

ADMINISTRATION. As permitted by the terms of the Assumed Option Plan, the
Board of Directors has delegated all of its duties under the Assumed Option Plan
to a committee of officers of the Company.

ELIGIBILITY. Each employee of the Company or a subsidiary of the Company is
eligible to participate in the Assumed Option Plan. Prior to the Consummation of
the Reincorporation Transactions, the Predecessor Company selected the persons
to be granted awards or options pursuant to the Assumed Option Plan (as used for
the Assumed Option Plan, the "Participants").

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SHARE AUTHORIZATION. The maximum number of shares of the Predecessor
Company's common stock that may be subject to outstanding awards under the
Assumed Option Plan is 1,626. The Assumed Option Plan provides that this number
of shares and the number of shares subject to an award under the Assumed Option
Plan will be adjusted for stock splits, stock dividends, recapitalizations,
mergers and other changes affecting the capital stock of the Predecessor
Company, which included the Reincorporation Merger.

STOCK OPTIONS. Options granted under the Assumed Option Plan are
nonqualified stock options. A stock option entitles the Participant to purchase
shares of Common Stock from the Company at the exercise price. The exercise
price may be paid in cash, with shares of Common Stock or with a combination of
cash and Common Stock. The options will expire within ten years from the date of
grant. In addition, the committee administering the plan may specify that an
option will terminate prior to the end of its stated term upon termination of
employment, disability or death. If the employment relationship is terminated
for any reason, any options that are not then vested will be forfeited.

INITIAL AWARDS AND ASSUMPTION OF AWARDS. On August 1, 1997, the Predecessor
Company granted to certain of its employees options to acquire an aggregate of
1,626 shares of its common stock, which constitutes all shares authorized under
the Assumed Option Plan. The Company assumed the Predecessor Company's
obligations with respect to all such options, and became obligated to issue up
to an aggregate of 2,423,769 shares of Common Stock at a price of $3.85 per
share upon the exercise of such options. All of such options vested upon the
closing of the Initial Public Offering and became exercisable 30 days
thereafter. Because the exercise price established for each assumed option at
the time it was granted was less than the initial price to the public in the
Initial Public Offering, the Company recognized a non-cash, non-recurring charge
to earnings of approximately $33.1 million in the fourth quarter of its 1997
fiscal year. The Predecessor Company granted an option to Mr. Concannon, a Named
Executive Officer, which represents the right to acquire 29,813 shares of Common
Stock. No additional options will be granted under the Assumed Option Plan.

PROFIT SHARING PLAN

In connection with the consummation of the Initial Public Offering, the
Company determined to no longer grant any future awards under its 1995 Profit
Sharing Plan (the "Profit Sharing Plan"). Set forth below is a general
discussion of the terms of the Profit Sharing Plan. The description set forth
below is qualified in its entirety by reference to the Profit Sharing Plan,
which has been filed as an exhibit to the Registration Statement.

GENERAL. The basic accounting units for purposes of the Profit Sharing Plan
are Business Units and Projects. Business Units are designated based upon
recommendations by profit sharing unit leaders to the Chief Executive Officer
and are generally determined by geography or line-of-business. Similarly, a
Project represents a particular real estate project in which the Company owns an
equity interest. A Profit Sharing Unit generally consists of multiple Business
Units and Projects.

A profit sharing account ("Profit Sharing Account") is maintained for each
participant (for the purposes of this section, a "Participant") within a Profit
Sharing Unit. Each Participant's Profit Sharing Account is adjusted to reflect
the operational results of each constituent Business Unit in which the
Participant has been allocated a percentage economic interest (a "Business Unit
Percentage") and each constituent Project in which the Participant has been
allocated a percentage economic interest (a "Project Percentage"). The Profit
Sharing Accounts do not represent any current right to assets of the Company. In
a profitable year, each of a Participant's Profit Sharing Accounts is increased
by a fraction of the Earnings Before Profit Sharing ("EBPS") of the appropriate
Business Units and Projects. In an unprofitable year, EBPS of a given Business
Unit or Project may be negative, in which case each Participant's Profit Sharing
Account will decrease. In addition, various adjustments to Profit Sharing
Accounts may be made to reflect the profits intended to be shared with the
Participant. Prior to retirement, a Participant may receive distributions which
are deducted from his Profit Sharing Account balances. Distributions will
generally be limited to a portion of the current year's EBPS. Payment of these
distributions may also be limited by

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liquidity concerns of the Company, potential negative Profit Sharing Accounts
for individuals, and obligations to pay retired Participants or former
stockholders.

DISTRIBUTIONS BEFORE RETIREMENT. Participants have generally received two
kinds of distributions: (i) for each Project, distributions in proportion to
their Project Percentages ("Project Distributions"); and (ii) for each Profit
Sharing Unit, distributions in proportion to their Profit Sharing Account
balances ("Current Distributions"). Current Distributions may not exceed the
available cash of a Profit Sharing Unit after certain priority payments have
been made. Thus, a Participant in a profitable Business Unit may have limited
Current Distributions if current earnings or available cash is reduced by the
results of an unprofitable Business Unit in the same Profit Sharing Unit.
Similarly, Project Distributions generally may not exceed a set percentage of
the current earnings of the Project. Current Distributions or Project
Distributions will be made to a Participant only to the extent that the
Participant's Profit Sharing Account balance is positive after aggregating all
individual Business Units and Projects. Thus, all distributions made from a
positive Profit Sharing Unit will be offset against any Profit Sharing Unit in
which the Participant has a negative account balance if the Participant does not
have a positive net Profit Sharing Account balance. Finally, both Current
Distributions and Project Distributions may be limited by other factors,
including the overall solvency of the applicable Profit Sharing Unit.

RETIRED PARTICIPANTS. Upon termination of employment, death or disability,
a Participant, subject to certain vesting requirements, is entitled to receive
the amounts, subject to the payment restrictions under the Profit Sharing Plan,
then held in such Participant's Profit Sharing Account, which account is
converted into a retirement account (a "Retirement Account"). If a Retirement
Account is established, following the last day of the profit sharing period in
which a Participant's retirement occurs, the Participant will no longer have any
interest in any Business Unit but will continue to have existing Project
interests. A retired Participant may, subject to limitations, receive two types
of payments from his/her Retirement Account, (i) Basic Distributions and (ii)
Project Distributions, if retired before January 1, 1995. The Profit Sharing
Plan vests over a graduated period such that if a Participant retires before the
fifth anniversary of the December 31st first following the date on which he
first becomes a Participant, his/her Retirement Account and Project Percentage
will be reduced as follows: to 1% if he/she retires before the first
anniversary, to 20% if he/she retires before the second anniversary, to 40% if
he/she retires before the third anniversary, to 60% if he/she retires before the
fourth anniversary; and to 80% if he/she retires before the fifth anniversary.

Retired Participants will receive Basic Distributions equal to (a) the
amount of such Basic Distribution partially accelerated to 10% of such
participant's Retirement Balance as of his/her Retirement Date or (b) the Basic
Distribution otherwise distributable to such participant by reason of a
distribution by the applicable Profit Sharing Unit, whichever is greater,
subject to certain limitations. For participants who retire on or after January
1, 1996 (a "Post '95 Retired Participant"), upon the occurrence of the fifth
anniversary of the Retirement Date, no distributions will be made to other
Participants, except Retired Participants, in that Profit Sharing Unit until
such Retired Participant's Retirement Account is reduced to zero. If more than
one Post '95 Retired Participant has reached the fifth anniversary of his/her
Retirement Date, all such Post '95 Retired Participants will share
proportionately based upon their respective Retirement Account balances. With
respect to any participant who retired prior to January 1, 1996 (a "Pre '96
Retired Participant"), upon the seventh anniversary of his/her Retirement Date,
no Post '95 Retired Participant will receive any Basic Distribution until the
Pre '96 Retired Participant has received his/her balance in full or until the
Post '95 Retired Participant has reached the seventh anniversary of his
Retirement Date (whereupon such Post '95 Retired Participant shall be treated
the same as a Pre '96 Retired Participant), whichever shall first occur.

The accelerated Basic Distributions will be limited to the Available Cash of
the applicable Profit Sharing Unit and other limitations contained in the Profit
Sharing Plan, including a limit on Basic Distributions to Retired Participants
of 24% of Available Cash of the applicable Profit Sharing Unit. In

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computing Available Cash, reserves must include anticipated royalty payments
under the Royalty Agreement and anticipated common dividends based on the most
current dividend policy of the Company. In the absence of such policy, reserves
for common dividends are established by the Chief Executive Officer in his sole
discretion. Further, the Chief Executive Officer may, in his sole discretion,
adjust the working capital reserves established by each Profit Sharing Unit in
the manner he deems appropriate.

TERMINATION OF FUTURE AWARDS. The Company will not grant any future awards
under the Profit Sharing Plan. All deferred and accrued earnings associated with
the Profit Sharing Units and Business Units under the Profit Sharing Plan will
be paid to the current Participants during 1998 and 1999, and when all such
amounts have been paid, the Company will have no further obligation to
Participants. With respect to Retired Participants, the Company will continue to
make Project Distributions until the completion of the particular Project.

EMPLOYEE STOCK PURCHASE PLAN

On December 22, 1997, the Company's Board of Directors adopted and approved
The Trammell Crow Company Employee Stock Purchase Plan (the "Stock Purchase
Plan"). The Stock Purchase Plan received stockholder approval at the May 1998
Annual Meeting of Stockholders. The description set forth below is qualified in
its entirety by reference to the Stock Purchase Plan, which has been filed as an
exhibit to the Registration Statement.

GENERAL. A total of 1,000,000 shares of Common Stock are reserved for
issuance under the Stock Purchase Plan. The purpose of the Stock Purchase Plan
is to provide employees with an opportunity to purchase Common Stock of the
Company through payroll deductions. The Stock Purchase Plan, and the right of
participants to make purchases thereunder, is intended to qualify under the
provisions of Sections 421 and 423 of the Internal Revenue Code of 1986, as
amended.

ADMINISTRATION. The Stock Purchase Plan will be administered by a committee
of the Company's executive officers (the "Benefits Committee") appointed by the
Company's Board of Directors. All questions of interpretation of the Stock
Purchase Plan will be determined by the Benefits Committee, whose decisions will
be final and binding upon all participants.

ELIGIBILITY. All employees of the Company (or any of its parent or
subsidiary corporations within the meaning of sections 424(e) and (f) of the
Code) who have been continually employed for at least ninety (90) days and who
are customarily employed at least 20 hours per week and at least 5 months per
year shall be eligible to participate in the Stock Purchase Plan, subject to
certain limitations imposed by Section 423(b) of the Code. For the initial
option period commencing March 1, 1998, an employee need not have been employed
for ninety (90) days to be eligible to participate, provided the employee meets
the other eligibility requirements and was employed by January 31, 1998. At
March 31, 1998, approximately 3,330 employees of the Company and its
subsidiaries were eligible to participate in the Stock Purchase Plan.

OFFERING DATES. Under the Stock Purchase Plan, the Company will offer to
all eligible employees the option to purchase shares of Common Stock. Except as
otherwise determined by the Benefits Committee, these options will be granted on
the first day of the first payroll period beginning on or after March 1, 1998
and July 1, 1998, and, thereafter, on the first day of the first payroll period
beginning on or after the first day of January and July of each subsequent year
(each of which dates is herein referred to as a "date of grant"). The term of
each option granted on the first day of the first payroll period beginning on or
after March 1, 1998 shall be for a period of approximately four (4) months,
ending on the last day of the last payroll period ending on or immediately after
June 30, 1998 and the term of each option granted thereafter shall be for a
period of approximately six (6) months, ending on the last day of the last
payroll period ending on or immediately after June 30 or December 31, as the
case may be (each such four (4)-month and six (6)-month period is herein
referred to as an "option period"), which shall begin on a date of grant.

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PURCHASE PRICE. The purchase price per share at which shares of Common
Stock will be sold under the Stock Purchase Plan will be an amount equal to the
lower of 85% of the market value of Common Stock on the date of exercise or the
date of grant. The market value of a share of Common Stock on a given date will
be the closing sales price of the Common Stock on the New York Stock Exchange on
such date. The price per share of Common Stock for the last trade reported by
the New York Stock Exchange on July 9, 1998 was $31.875.

The purchase price of the shares of Common Stock to be purchased under the
Stock Purchase Plan will be accumulated by payroll deductions during each
offering period. The deductions may not exceed: (i) 10% of the participant's
eligible compensation during the offering period (which is defined in the Stock
Purchase Plan to include all wages, salary, commissions, overtime and bonuses)
from which the deduction is made; or (ii) an amount which will result in
noncompliance with the limitations described below under "Purchase of Stock;
Exercise of Options." Such payroll deductions will be credited to a book entry
account for each participant. An employee may discontinue participation in the
Stock Purchase Plan, but may not otherwise increase or decrease the rate of
payroll deductions at any time during the option period.

PURCHASE OF STOCK; EXERCISE OF OPTION. The maximum number of shares placed
under option to a participant in the Stock Purchase Plan in any option period
will be the lesser of 700 or that number determined by dividing the amount of
the participant's total payroll deductions during the option period (and any
carryover amounts from the preceding offering period) by the purchase price per
share under the Stock Purchase Plan. Unless a participant withdraws from the
Stock Purchase Plan, the participant's option for the purchase of shares will be
exercised automatically at the end of each offering period for the maximum
number of whole shares at the applicable price. As soon as practicable following
the end of each offering period, the Company will cause a certificate to be
issued in each participant's name representing the total number of whole shares
of Common Stock acquired by the participant through the exercise of the option.
Any balance remaining in a participant's account following the exercise of the
participant's option in an offering period will be carried over to the next
offering period.

Notwithstanding the foregoing, no Eligible Employee will be permitted to
subscribe for shares of Common Stock under the Stock Purchase Plan if,
immediately after the grant of the option, the employee would own five percent
or more of the voting power or value of all classes of stock of the Company or
its subsidiaries, nor will any Eligible Employee be granted an option which
would permit the employee to buy pursuant to the Stock Purchase Plan more than
$25,000 worth of stock (determined at the fair market value of the shares at the
time the option is granted) in any calendar year.

WITHDRAWAL. Any participant may withdraw in whole from the Stock Purchase
Plan at any time prior to thirty (30) days before the exercise date relating to
a particular option period. Partial withdrawals shall not be permitted. A
participant who wishes to withdraw from the Stock Purchase Plan must timely
deliver to the Company a notice of withdrawal on a form prepared by the Benefits
Committee. The Company, promptly following the time when the notice of
withdrawal is delivered, shall refund to the participant the amount of the cash
balance in his account under the Stock Purchase Plan; and thereupon,
automatically and without any further act on his part, his payroll deduction
authorization and his interest in unexercised options under the Stock Purchase
Plan shall terminate.

CAPITAL CHANGES. Whenever any change is made in the Stock, by reason of a
stock dividend or by reason of subdivision, stock split, reverse stock split,
recapitalization, reorganization, combinations, reclassification of shares, or
other similar change, appropriate action will be taken by the Benefits Committee
to adjust accordingly the number of shares subject to the Stock Purchase Plan,
the maximum number of shares that may be subject to any option, and the number
and purchase price of shares subject to options outstanding under the Stock
Purchase Plan.

NONASSIGNABILITY. Each option will be assignable or transferable only by
will or by the laws of descent and distribution and will be exercisable during
the optionee's lifetime only by the optionee. The Company shall not recognize
and shall be under no duty to recognize any assignment or purported assignment
by an

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employee of his option or of any rights under his option, and any such attempt
may be treated by the Company as an election to withdraw from the Stock Purchase
Plan.

AMENDMENT AND TERMINATION OF THE STOCK PURCHASE PLAN. The Board of
Directors, in its discretion, may terminate the Stock Purchase Plan at any time
with respect to any shares for which options have not theretofore been granted.
The Benefits Committee shall have the right to alter or amend the Stock Purchase
Plan or any part thereof from time to time without the approval of the
stockholders of the Company; provided, that no change in any option theretofore
granted may be made which would impair the rights of the participant without the
consent of such participant; and provided, further, that the Benefits Committee
may not make any alteration or amendment which would increase the aggregate
number of shares which may be issued pursuant to the provisions of the Stock
Purchase Plan (other than as a result of the anti-dilution provisions of the
Stock Purchase Plan), change the class of individuals eligible to receive
options under the Stock Purchase Plan, or cause options issued under the Stock
Purchase Plan to fail to meet the requirements for employee stock purchase plans
as defined in Section 423 of the Code without the approval of the stockholders
of the Company.

AWARDS. As of July 9, 1998, 1,177 eligible employees of the Company and its
subsidiaries had elected to participate in the Stock Purchase Plan. As of July
9, 1998, such participants had purchased an aggregate of 73,848 shares of Common
Stock under the Stock Purchase Plan at a weighted average purchase price of
$26.24 per share.

401(K) PLAN

The Company sponsors a retirement plan called the Trammell Crow Company
Retirement Savings Plan (the "401(k) Plan"). The total assets as of June 30,
1998 held by the 401(k) Plan were valued at approximately $81.0 million. The
trustees for the 401(k) Plan are Vince George and Asuka Nakahara. Employees
(including members of management) are eligible to make voluntary contributions
under the 401(k) Plan of up to 15% of their annual compensation, subject to the
applicable limitations of the Internal Revenue Code of 1986. The Company is
permitted to make a discretionary contribution to the 401(k) Plan each fiscal
quarter which will be allocated among participants as a matching contribution
based on their contributions under the 401(k) Plan. The Company's policy is to
match the lesser of (i) 50% of all contributions up to 6% of an employee's
contribution and (ii) $5,000 per year. The 401(k) Plan permits employees to
direct investments of their accounts in Common Stock and among a selection of
mutual funds. The 401(k) Plan is intended to qualify as a profit sharing plan
under 401(a) and 401(k) of the Code.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Certificate of Incorporation provides that no director of the
Company shall be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases; or (iv)
for any transaction from which the director derived an improper personal
benefit. The effect of these provisions is to eliminate the rights of the
Company and its stockholders (through stockholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from grossly
negligent behavior), except in the situations described above.

The Company has entered into indemnification agreements with each of its
executive officers and directors. Pursuant to such agreements, the Company will,
to the extent permitted by applicable law, indemnify such persons against all
expenses, judgments, fines and penalties incurred in connection with the defense
or settlement of any actions brought against them by reason of the fact that
they were directors or officers of the Company or assumed certain
responsibilities at the direction of the Company.

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CERTAIN TRANSACTIONS

REINCORPORATION TRANSACTIONS

In connection with the Reincorporation Transactions, the stockholders of the
Predecessor Company received, in the aggregate, 27,799,181 shares of Common
Stock, constituting approximately 82.02% of the outstanding Common Stock after
giving effect to the Initial Public Offering. See "Principal and Selling
Shareholders."

On August 1, 1997, the Predecessor Company granted to certain of its
employees options to acquire an aggregate of 1,626 shares of its common stock,
which constitutes all shares authorized under the Assumed Option Plan. At the
Effective Time, the Company assumed the Predecessor Company's obligations with
respect to all such options, and became obligated to issue up to an aggregate of
2,423,769 shares of Common Stock at a price of $3.85 per share upon the exercise
of such options. All of such options vested upon the closing of the Initial
Public Offering and became exercisable 30 days thereafter. Under the Assumed
Option Plan, the Predecessor Company granted an option to Mr. Concannon, a Named
Executive Officer, which represents the right to acquire 29,813 shares of Common
Stock. No additional options will be granted under the Assumed Option Plan.

In connection with the Initial Public Offering, the Company granted options
under the Long-Term Incentive Plan to acquire an aggregate of 2,348,455 shares
of Common Stock to certain employees. The exercise price for such stock options
was $17.50 per share. The stock option grants include grants to each of the
executive officers of the Company to acquire 58,529 shares and a grant to Mr.
Williams to acquire 40,965 shares. The options will vest ratably over a
three-year period.

ROYALTY AGREEMENT AND LICENSE AGREEMENT

Pursuant to a Royalty Agreement entered into between Mr. Trammell Crow, as
an individual, and the Company on January 1, 1991, as ultimately assigned to
CFH, an affiliate of Crow Family Partnership, L.P., Mr. Trammell Crow granted to
the Company the exclusive right and license to use any of the Trammell Crow
Company business or trade names, or any acronym or abbreviation thereof, in any
business developing, acquiring, managing, financing, owning or investing in real
estate for office, industrial or retail use in the United States or Canada. In
September, 1997, prior to the assignment of the Royalty Agreement to CFH, the
Predecessor Company made a cash payment in an aggregate amount of approximately
$1,405,000 to Crow Family in partial satisfaction of accrued royalty and
consulting expenses. The Royalty Agreement was terminated immediately prior to
the closing of the Initial Public Offering. On April 21, 1998, the Company paid
$2,712,775 in the aggregate to CFH and Crow Family in payment of all unpaid
amounts owed by the Company to CFH and Crow Family under the Royalty Agreement.

The Company and CFH entered into the License Agreement immediately prior to
the closing of the Initial Public Offering and upon termination of the Royalty
Agreement. Pursuant to the terms of the License Agreement, and subject to
certain quality standards, the Company was granted the right to use the name
"Trammell Crow" in any business in any region around the world; provided,
however, that the Company has agreed that it will not engage in the residential
real estate business under the name "Trammell Crow." The license granted
pursuant to the License Agreement is perpetual, subject to the Company's
continued use and compliance with certain quality standards and termination as a
result of certain bankruptcy events. The Company is not obligated to pay any
fees under the License Agreement. However, in exchange for the grant of the
Trade Name License, the Company issued 2,295,217 shares of Common Stock to CFH
immediately prior to the closing of the Initial Public Offering.

Under the terms of the License Agreement, CFH has reserved the right to use
the names "Crow Family Holdings" and "Crow Investment Trust" (and one approved
substitute for either of such names) and derivations thereof in any business
except the real estate services business. CFH is not required to change the name
of certain of its existing affiliates which currently use names that would
otherwise be

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prohibited under the License Agreement. However, CFH has agreed to use its
reasonable efforts to prevent any entities from engaging in any new business
activities without the entity changing its name to a permitted name under the
License Agreement. CFH has also agreed not to use the name "Crow" in combination
with the word "Company" or in combination with any word that connotes a real
estate service business, including "Development," "Brokerage," "Management,"
"Property Management," "Services," "Corporate Services," "Infrastructure
Management," "Leasing" or "Tenant Representation." In addition, CFH will not use
"Crow" in the name of any entity that has securities registered under the
Securities Act or the Exchange Act; provided, however, that the names "Trammell
Crow Residential Company," "Trammell Crow Residential" and "TCR" may be used for
any public entity pursuant to the terms of applicable agreements among Trammell
Crow Residential Company, CFH or its affiliates and, if applicable, the Company.
CFH can use the name "Crow" in the name of any privately held entity that is not
engaged in the real estate business if the name also includes a descriptive word
(E.G., "Crow Publishing"). CFH has agreed to use its reasonable efforts to
assure that other family members of Mr. Trammell Crow will comply with the
License Agreement as if they were parties to the agreement. In addition, CFH has
agreed to cause Trammell Crow International to cease using the name "Trammell
Crow" within three years after the date of the License Agreement, and also to
cease to use that name in any market within 12 months after the Company or any
of its subsidiaries opens an office in that market.

CONSULTING ARRANGEMENTS

In January 1991, the Company entered into consulting arrangements (the
"Consulting Arrangements") with Mr. Williams and an affiliate of Mr. Harlan
Crow. Mr. Crow's interest was subsequently assigned to Crow Family. Pursuant to
the Consulting Arrangements, Mr. Williams and Crow Family received payments
computed by paying them a fixed percentage of earnings of each Project and
Business Unit. The Consulting Arrangements were terminated as of the closing of
the Initial Public Offering. In connection with the termination of the
Consulting Arrangements, Mr. Williams received a payment of $1,555,918. On April
21, 1998, the Company paid to Crow Family $331,419 in satisfaction of all
amounts owed to Crow Family under the Consulting Arrangements. See "The
Company--Reincorporation Transactions."

CROW INVESTMENT TRUST AND CERTAIN INVESTMENT FUNDS

Crow Realty Investors, L.P. d/b/a Crow Investment Trust is wholly owned by
Crow Family. Mr. Harlan Crow, a director of the Company, is the chief executive
officer of Crow Family, Inc., the general partner of Crow Family. Since its
inception in 1994, Crow Investment Trust has co-invested with the Company and
various of its subsidiaries in 16 projects in the areas of industrial
development, build-to-suit arrangements, land acquisitions and other real-estate
related projects.

Beginning in 1995, the Company, directly and through its subsidiary Trammell
Crow Capital Company, and certain senior employees of the Company and its
affiliates, through Trammell Crow Investment Fund 1995 L.P., a Delaware limited
partnership ("Fund I"), have co-invested on a side-by-side basis with Crow
Investment Trust and Mr. Williams in six and four real-estate related projects,
respectively. Trammell Crow Investments, Inc., the general partner of Fund I, is
a subsidiary of Trammell Crow Capital Company. No contributions to or
distributions from these projects were made in 1997. The senior employees of the
Company invest in the projects indirectly as limited partners in Fund I. The
following reflects total investments and distributions related to Fund I through
June 30, 1998, for the executive officers of the Company: Mr. Lippe, $150,000
and $168,411; Mr. Nakahara, $25,000 and $28,068; Mr. Maddux, $50,000 and
$56,137; Mr. Sulentic, $25,000 and $28,068; and Mr. Blackwell, $100,000 and
$112,274.

Beginning in February 1996, the Company, through its subsidiary Trammell
Crow Capital Company II, Inc., and certain directors and senior employees of the
Company and its affiliates have collectively invested in Trammell Crow
Investment Fund II, L.P., a Delaware limited partnership which makes investments
that emphasize real-estate related projects ("Fund II"). Trammell Crow
Investments II, Inc.,

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the general partner of Fund II, is a subsidiary of Trammell Crow Capital Company
II, Inc. The senior employees of the Company invest as limited partners through
Trammell Crow Individual Investment Fund 1996, L.P. in Fund II. Through December
31, 1997, the Company made contributions to Fund II of approximately $1,707,000
and received distributions from Fund II of approximately $419,000. The following
reflects total investments and distributions related to Fund II through June 30,
1998, for the executive officers of the Company: Mr. Lippe, $184,000 and
$46,906; Mr. Nakahara, $92,000 and $23,453; Mr. Maddux, $46,000 and $11,727; Mr.
Concannon, $46,000 and $11,727; Mr. Rothacker, $46,000 and $11,727; Mr.
Sulentic, $23,000 and $5,863; and Mr. Blackwell, $230,000 and $58,633. In
addition, an affiliate of Mr. Williams, a director of the Company, made
investments in Fund II of $690,000 and received distributions of $175,898
through June 30, 1998.

Fund II currently invests in several related limited partnerships that are
all affiliates of Crow Family and are collectively referred to as "DFW Fund."
The aggregate amount invested in and distributions received from DFW Fund by
Fund II through June 30, 1998, is $482,702 and $191,614, respectively. Through
June 30, 1998, the Company (through direct investment outside of Fund II) and
Crow Investment Trust have invested an aggregate of approximately $482,702 and
$3,282,378, respectively, in DFW Fund and have received distributions totaling
$191,618 and $1,302,976, respectively. As of June 30, 1998, an affiliate of Mr.
Williams has invested $470,683 in DFW Fund and received distributions of
$191,618. Through June 30, 1998, an affiliate of Mr. Williams contributed
approximately $1,450,158 to projects in which DFW Fund has an interest. At June
30, 1998, the Company and Crow Investment Trust had contributed approximately
$998,731 and $7,649,703, respectively, to projects in which DFW Fund had an
interest, and the Company received distributions of approximately $1,012,151.
The aggregate amount contributed by Fund II to projects in which DFW Fund had an
interest is $2,350,158 through June 30, 1998. The Company has also agreed not to
invest in certain investment opportunities in the Dallas/Fort Worth metropolitan
area without first offering the investment opportunity to DFW Fund.

Prior to January 1, 1998, Crow Investment Trust had a substantial ownership
interest in TCC Retail BTS Limited Partnership ("Retail BTS"), a Texas limited
partnership which has a wholly owned subsidiary of the Company as its general
partner. Retail BTS develops, owns and operates real estate projects leased to
national retail chains. Through December 31, 1997, Crow Investment Trust had
invested an aggregate of $374,000 in Retail BTS, and Crow Investment Trust
received approximately $294,000 in payments in 1997. Effective January 1, 1998,
Crow Investment Trust sold its interest in Retail BTS to the Company in exchange
for a cash payment of $275,000.

CROW FAMILY

During 1997, the Company received 6.8% of its total revenue from a
commercial real estate asset base principally owned by parties related to the
partnerships, corporations and other entities or individuals doing business as
Trammell Crow Company prior to 1991. Crow Family 1991 Limited Partnership (an
affiliate of Crow Family and Mr. Harlan Crow) and Mr. Williams, a director of
the Company, own significant interests in this commercial asset base.

CAPITALIZATION DEBT

In connection with its initial capitalization, the Predecessor Company
borrowed $9,020,000 from Mr. Williams and an affiliate of Crow Family. The notes
representing such indebtedness (the "Capitalization Notes") were unsecured and
bore interest at 10.5% per annum, and required principal payments equal to the
amount of cash available for debt repayment under a prescribed formula. In 1993,
Mr. Williams sold a portion of his interest in the Capitalization Notes to a
former shareholder. In 1994, Mr. Williams acquired all of the interests held by
the affiliate of Crow Family in the Capitalization Notes. Aggregate principal
and interest payments of approximately $1,212,000 were made to Mr. Williams
during 1997 in full settlement of the Capitalization Notes.

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<PAGE>
PURCHASE NOTES

In connection with the private placement of common stock of the Predecessor
Company in August 1996, the Company financed a portion of the purchase price for
the common stock purchased by the Named Executive Officers along with certain
other employees. The individual notes evidencing the amount borrowed from the
Company to pay a portion of the purchase price for the acquired shares (the
"Purchase Notes"), bear interest at the prime rate of interest announced from
time to time by First Tennessee Bank, N.A., plus 0.5% per annum. Each Purchase
Note is payable in five annual installments of principal, plus accrued interest,
due on March 1 of each year. Each Purchase Note is secured by a pledge agreement
(the "Pledge Agreement") between the employee and the Company, granting a
security interest in all Common Stock owned or acquired, directly or indirectly,
by the employee. The aggregate amount financed under the Purchase Notes was
$9,394,040. The aggregate amount of principal and interest outstanding as of
June 30, 1998, was approximately $1,027,773. Set forth below is the amount
initially borrowed for each of the Company's executive officers. Mr. Blackwell,
$283,407; Mr. Concannon, $295,314; Mr. Lippe, $329,511; Mr. Maddux, $68,986; Mr.
Nakahara, $132,842; Mr. Rothacker, $203,765; and Mr. Sulentic, $179,430. Prior
to December 31, 1997, all of such executive officers repaid in full all amounts
owed under their respective Purchase Notes.

TAX NOTES

In connection with the private placement of common stock of the Predecessor
Company in August 1996, the Company financed certain income tax liabilities of
the Named Executive Officers and other employees resulting from the application
of the employee's deferred compensation in his/her Profit Sharing Account to
purchase the common stock issued in the private placement. The notes
representing the resulting indebtedness bear interest at 5.88% (the "Tax
Notes"), but if the loan is not repaid by August 26, 1998, the interest rate
will increase to the prime rate of interest announced from time to time by Chase
Bank of Texas, N.A., formerly Texas Commerce Bank, N.A., plus 0.5% per annum
until paid. The term of the Tax Notes is three years and 100% of the after-tax
cash distributions to the debtor under the 1995 Profit Sharing Plan must be
applied in payment of such notes until they are paid in full, first to interest
and then to principal. Each loan is fully recourse to the employee and secured
by the remaining deferred compensation balance in his/her Profit Sharing
Account. The aggregate amount financed under the Tax Notes was $4,734,000. Mr.
Blackwell, $184,831; Mr. Concannon, $78,084; Mr. Lippe, $263,821; Mr. Maddux,
$143,631; Mr. Nakahara, $136,438; Mr. Rothacker, $188,529; and Mr. Sulentic,
$99,354. Prior to December 31, 1997, all of such executive officers repaid in
full all amounts owed under their respective Tax Notes.

STOCKHOLDERS' AGREEMENT

Contemporaneously with the Reincorporation Transactions, the Company, Crow
Family, CFH and Mr. Williams entered into a Stockholders Agreement pursuant to
which, among other things, (i) the Company granted certain registration rights
to Crow Family, CFH and Mr. Williams with respect to the shares of Common Stock
to be issued to them in the Reincorporation Transactions, (ii) each of Crow
Family, CFH and the Company agreed not to solicit for employment, without prior
written notice to the chief executive officer of the other company, the
officer-level employees of the other for a period of five years, (iii) Crow
Family and CFH agreed to give the Company 15 days prior notice before effecting
any private sale of shares of Common Stock owned by it and (iv) the Company
agreed to nominate for election to its Board of Directors a designee of Crow
Family until such time as Crow Family's beneficial ownership of shares of Common
Stock declines below a certain threshold. The executive officers of the Company
are also parties to the Stockholders' Agreement solely for the purpose of
agreeing to vote in favor of the Crow Family designee. See "Description of
Capital Stock--Stockholders' Agreement."

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THE KINETIC GROUP

On January 1, 1997, the Company invested in The Kinetic Group Limited
Partnership (the "Kinetic Group"), a Texas limited partnership in which senior
executives of Wyndham International, Inc. and affiliates of Crow Family
(collectively, the "Wyndham Investors") own a substantial interest. The Kinetic
Group operates as an independent third-party contractor to provide certain
management information services, telecommunications, and computer hardware and
software management and maintenance services. The Wyndham Investors and the
Company share equally in all profit distributions of the Kinetic Group. Each of
the Company and a subsidiary of Wyndham International, Inc. has entered into a
management information system agreement for an initial term of five years with
the Kinetic Group to provide these services. The Company paid no services fees
in 1996. The Company paid service fees to the Kinetic Group of approximately
$4,135,000 and $2,334,000 for the year ended December 31, 1997 and the six month
period ended June 30, 1998, respectively.

FAISON ACQUISITION

In July 1998, the Company acquired a portion of the business conducted by
Faison and Faison Enterprises, which are engaged in the development, leasing and
management of office and retail properties in the Midatlantic and Southeast
regions of the United States. In exchange for the acquired business, the Company
paid $36.1 million in cash and delivered a $2.0 million promissory note that
bears interest at an annual rate of 6.0%. The note matures on April 30, 2000 and
is payable in eight equal quarterly installments. In connection with the
closing, Mr. Faison and Faison Enterprises purchased an aggregate of 127,828
shares of Common Stock for $4.0 million. The share purchase price was based on
the average price of Common Stock during a specified trading period preceeding
the date of closing of the Faison Acquisition. The Company is obligated to pay
Faison Enterprises an additional $1.0 million if retail development construction
starts funded under the Merchant Build/Right of First Refusal Agreement
described below exceed certain levels in 1999 and 2000. In connection with the
Faison Acquisition, the Company entered into employment agreements with four key
employees, including Mr. Faison, and in connection with such employment
agreements the Company paid an aggregate of $1.0 million in exchange for certain
covenants not to compete. The Company granted options to purchase an aggregate
of 69,963 shares of Common Stock at an exercise price of $32.875 per share (the
fair market value of the Common Stock on the date of grant) to Faison employees
of the acquired business who where retained after the closing. At the closing of
the Faison Acquisition, Mr. Faison was elected to serve as a Class III Director
on the Company's Board of Directors with a term expiring at the Company's annual
meeting of stockholders in 2000.

In connection with the Faison Acquisition, the Company, Faison Enterprises
and another affiliate of Faison Enterprises entered into a Merchant Build/Right
of First Refusal Agreement pursuant to which Faison Enterprises has acquired a
right of first refusal to invest in, and provide the financing for, certain new
commercial real estate projects that are initiated by the Company out of certain
offices formerly maintained by Faison Enterprises or with the assistance of
certain former Faison employees prior to January 1, 2001. If Faison elects to
exercise its right of first refusal with respect to such a retail project, the
Company is obligated to transfer its rights with respect to such project to
Faison Enterprises. Faison Enterprises will be obligated to use reasonable
commercial efforts to develop, and arrange for the financing of the development
of, such retail project. Subject to the right of Faison Enterprises to withhold
amounts to provide for the payment of operating deficits incurred on other
retail projects, the Company will be entitled to receive 40% of the
distributions that Faison Enterprises or its affiliates receive from each retail
project developed pursuant to the Merchant Build/First Refusal Agreement after
Faison Enterprises has recovered the initial capital it invests in the project
and received a specified rate of return on such investment. If the Company
receives any such interests in 1999, it is required to award 50% of such
interests to certain key Faison employees other than Mr. Faison. Certain matters
that are to be determined under the Merchant Build/First Refusal Agreement, such
as whether a particular expense is to be

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considered capital that would be the responsibility of Faison Enterprises or an
operating expense shared by the Company and the amounts that are to be withheld
from distributions, may involve an inherent conflict between the interests of
the Company and the interests of Faison Enterprises.

The Company and Faison Enterprises have also entered into a Real Estate
Services Agreement, dated July 2, 1998, which contemplates that the retail
projects developed pursuant to the Merchant Build/Right of First Refusal
Agreement, as well as certain other properties controlled by Faison Enterprises,
will be managed by the Company. In exchange for such management services, the
Company will be entitled to receive a fee that was determined as the result of
arms length negotiations. The term of the Real Estate Services Agreement is five
years, but the agreement may be terminated earlier in the event of a default.

OTHER RELATIONSHIPS WITH DIRECTORS

On December 1, 1997, the Company obtained a $150 million line of credit
arranged by NationsBank of Texas, N.A. as administrative agent. The Company has
borrowed and expects to borrow under the Existing Credit Facility to finance
acquisitions, to fund its co-investment activities and to provide the Company
with an additional source of working capital. James R. Erwin, a Director, is
Vice Chairman and Corporate Finance Executive-West for NationsBank Corp. and
Vice Chairman and a director of NationsBank of Texas, N.A. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources.

From time to time the Company has engaged Mr. Moriarty or entities
affiliated with Mr. Moriarty to provide certain management consulting services
to the Company and its subsidiaries. The aggregate amount of such payments to
Mr. Moriarty or his affiliates in 1997 was $98,000.

POLICY WITH RESPECT TO RELATED PARTY TRANSACTIONS

The Company has implemented a policy requiring any material transaction (or
series of related transactions) between the Company and related parties to be
approved by a majority of the disinterested directors, upon such Directors'
determination that the terms of the transaction are no less favorable to the
Company than those that could have been obtained from unrelated third parties.
The policy defines a material related party transaction (or series of related
transactions) as one involving a purchase, sale, lease or exchange of property
or assets or the making of any investment with a value to the Company in excess
of $1.0 million or a service agreement (or series of related agreements) with a
value in excess of $1.0 million in any fiscal year. There can be no assurance
that this policy will insure that all transactions between the Company and
related parties are on terms that are no less favorable to the Company than
those that could have been obtained from unrelated third parties. See
"Management--Directors."

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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table provides certain information with respect to the
beneficial ownership as of July 9, 1998, of the Common Stock as adjusted to
reflect the sale of Common Stock by the Selling Stockholders pursuant to the
Offering. The table sets forth the beneficial ownership by (i) each person known
to the Company to be the beneficial owner of 5% or more of the shares of Common
Stock outstanding; (ii) each director; (iii) each Named Executive Officer; (iv)
each Selling Stockholder; and (v) directors and executive officers of the
Company as a group. Unless otherwise indicated, each person has sole voting
(subject to the terms of the Stockholders' Agreement) and dispositive power over
the shares indicated as owned by such person. Unless otherwise indicated, all
stockholders set forth below have the same principal business address as the
Company, and all Selling Stockholders are Company employees. See "Management"
for a description of the positions the directors and executive officers hold
with the Company.

<TABLE>
<CAPTION>
BEFORE THE OFFERING AFTER THE OFFERING
---------------------------- ----------------------------
NUMBER OF PERCENT OF SHARES NUMBER OF PERCENT OF
SHARES SHARES BEING SHARES SHARES
NAME OWNED(1) OUTSTANDING OFFERED OWNED(1) OUTSTANDING
- ----------------------------------------------------- ----------- --------------- --------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
DIRECTORS, EXECUTIVE OFFICERS AND RELATED ENTITIES
Crow Family Partnership, L.P. ....................... 4,846,830 14.3% 1,322,923
3200 Trammell Crow Ctr.
2001 Ross Avenue
Dallas, Texas 75201
CFH Trade Names, L.P. ............................... 2,295,217 6.8
3200 Trammell Crow Ctr.
2001 Ross Avenue
Dallas, Texas 75201
CFH Capital Resources, L.P........................... 717,489 2.1
J. McDonald Williams................................. 1,509,499 4.5
George L. Lippe...................................... 858,592 2.52
H. Pryor Blackwell................................... 670,010 1.97
William Concannon.................................... 385,939 1.13
William C. Maddux.................................... 357,903 1.05
Asuka Nakahara....................................... 454,636 1.34
Robert E. Sulentic................................... 270,105 *
Harlan R. Crow ...................................... 7,864,810(2) 23.2 1,322,923
3200 Trammell Crow Ctr.
2001 Ross Avenue
Dallas, Texas 75201
James D. Carreker.................................... 298,117(3) *
James R. Erwin....................................... 7,274(3) *
Henry J. Faison...................................... 127,828(4) *
Rowland T. Moriarty.................................. 7,274(3) *
Jeffrey M. Heller.................................... 7,274(3) *
Bill Rothacker.......................................
Bob Sulentic.........................................

DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (13
PERSONS)

OTHER SELLING STOCKHOLDERS
Abshier, Dorcey B....................................
Anderson, Chuck......................................
Apple, J.W...........................................
Baer, Kenneth........................................
Bak, Thomas A........................................
Barnes, Robert W.....................................
Belcher, E. Steve....................................
Bower, Barbara.......................................
Branch, Alfred C.....................................
Briggs, T.D..........................................
Brindell Jr., Charles R.(5)..........................
Brown, Chuck.........................................
Casey, Jim...........................................
Cataldo, Steve.......................................
Chagares, Robert Louis...............................
Clayton, Mark........................................
Click, Tony..........................................
Coe, Richard.........................................
Coley, Elwood B......................................
</TABLE>

74
<PAGE>
<TABLE>
<CAPTION>
BEFORE THE OFFERING AFTER THE OFFERING
---------------------------- ----------------------------
NUMBER OF PERCENT OF SHARES NUMBER OF PERCENT OF
SHARES SHARES BEING SHARES SHARES
NAME OWNED(1) OUTSTANDING OFFERED OWNED(1) OUTSTANDING
- ----------------------------------------------------- ----------- --------------- --------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Cooper, Tom..........................................
Copeland, Brad(5)....................................
Daniel, Thomas D.....................................
Day, Michael.........................................
Deutsch, Don.........................................
Didion, Jim..........................................
Dineen, Lucy.........................................
Dona, Anthony(5).....................................
Doppelt, Jeffrey.....................................
Dunavent, Vince......................................
Elam, Pryse..........................................
Eliot, John..........................................
Erwin, Stan..........................................
Fawcett, Phil........................................
Francis, Mary Jo.....................................
Funck, Bernard.......................................
Gaffner, Arlin.......................................
Galvin, Dick.........................................
Genova, Drew.........................................
Gillespie, Samuel....................................
Glimp, Ted...........................................
Grantham, Curt.......................................
Griffith, Glen.......................................
Grisham, Jimmy(5)....................................
Groch, Jim...........................................
Hager, Mary M.(5)....................................
Ham, Greg............................................
Hamilton, Philip.....................................
Hassenflo, Alan......................................
Hayden, James L......................................
Haynes, Jeff.........................................
Henry, Pat...........................................
Holcomb, Jeff........................................
Holland, John........................................
Hubbard, Mike........................................
Hudson, Dan..........................................
Johanns, Chuck.......................................
Johnson, Henry.......................................
Johnson, Kirk........................................
Khourie, Matthew S...................................
Kittleson, Terry.....................................
Klein, Steven........................................
Koop, Bryan..........................................
Kreditor, Carol(5)...................................
Laigaie, George......................................
Latran, Gregory S....................................
Leiser, Thomas.......................................
Leiser, William P....................................
Leonard, Mark........................................
Leonard, Trask.......................................
Lindquist, Thomas M..................................
Long, Tony...........................................
Maher, John..........................................
Matoushek, Jim.......................................
McNearney, Tom.......................................
Meaden, David H......................................
Miller, A. Bryce.....................................
Moyski, Steven.......................................
Murphy, Robert.......................................
Nave, Bret...........................................
Nelson, Christopher..................................
Newberg, Jeffery.....................................
Newman, Linda........................................
Nickels III, Matthew J...............................
Niles, Tom...........................................
Noble, Dave..........................................
O'Brien, D. Patrick..................................
</TABLE>

75
<PAGE>
<TABLE>
<CAPTION>
BEFORE THE OFFERING AFTER THE OFFERING
---------------------------- ----------------------------
NUMBER OF PERCENT OF SHARES NUMBER OF PERCENT OF
SHARES SHARES BEING SHARES SHARES
NAME OWNED(1) OUTSTANDING OFFERED OWNED(1) OUTSTANDING
- ----------------------------------------------------- ----------- --------------- --------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
O'Neil, Kevin........................................
Pastor, Andy.........................................
Paul, David..........................................
Peck, Martin.........................................
Perot, Patrick T.....................................
Postmueller, Joel....................................
Roche, David.........................................
Rodenstein, Barry....................................
Roth, T. Christopher.................................
Rudy, Kirk...........................................
Ryan, William........................................
Sandell, Albert W....................................
Santry, Art..........................................
Schoenheider, Don....................................
Seiz, John T.........................................
Sidell, Mark.........................................
Sklow, Robert........................................
Smith, Trey..........................................
Spaulding, Charles A.................................
Sperling, Ann........................................
Stirek, John A.......................................
Swain, Mike..........................................
Tatsch, Dan..........................................
Tecimer, Timur.......................................
Thiemann, David J....................................
Thomas, Don..........................................
Thomas, John(5)......................................
Thompson, Donald.....................................
Timberlake, Todd.....................................
Tucker, Diane........................................
Valliere, Ralph......................................
Walker, Denton.......................................
Wells, Steve.........................................
Williams, George.....................................
Woodworth, Tom.......................................
Woolstenhulme, Roger B...............................
Young, Linda.........................................
Zaharchuk, John......................................
</TABLE>

- ------------------------

* Less than 1 %.

(1) Includes shares beneficially owned and shares in the aggregate which
can be acquired upon the exercise of options within the next 60 days.

(2) Consists of 5,274 shares which may be acquired upon the exercise of options,
4,846,830 shares held by Crow Family Partnership, L.P., 2,295,217 shares
held by CFH Trade-Names, L.P., and 717,489 shares held by CFH Capital
Resources, L.P. Crow Family, Inc. is an affiliate of all such partnerships.
Mr. Crow is a director of Crow Family, Inc. and trustee of certain family
trusts which hold a significant equity interest in each such partnership.
Mr. Crow disclaims beneficial ownership of all such shares held by such
partnerships.

(3) Includes 5,274 shares of Common Stock which may be acquired upon the
exercise of options.

(4) Includes 63,914 shares held of record by Faison Enterprises, a non-profit
corporation of which Mr. Faison is the sole member. Although Mr. Faison
currently has the right to designate all of the members of the board of
directors of Faison Enterprises, he has no pecuniary interest in such shares
of Common Stock. Mr. Faison disclaims ownership of all shares of Common
Stock held by Faison Enterprises.

(5) Former employee of the Company.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

GENERAL

The following summary description is qualified in its entirety by reference
to the Company's Certificate of Incorporation, which is filed as an exhibit to
the Registration Statement. The authorized capital stock of the Company consists
of 100,000,000 shares of Common Stock, par value $0.01 per share, and 30,000,000
shares of Preferred Stock, par value $0.01 per share.

The authorized and unissued shares of Common Stock and Preferred Stock may
be used by the Company for various purposes, including possible future
acquisitions. The Company currently does not have any specific plans or
obligations to issue shares of Common Stock or Preferred Stock, other than (i)
the shares of Common Stock to be issued in connection with the Faison
Acquisition; and (ii) the issuance of shares of Common Stock under the Company's
benefit plans. See "Management--Long-Term Incentive Plan," "--Assumed Option
Plan" and "Certain Transactions."

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote for each
share held on all matters
submitted to a vote of common stockholders. There is no provision in the
Company's Certificate of Incorporation for cumulative voting with respect to the
election of directors. Accordingly, the holders of more than 50% of the total
voting power of the Common Stock can, if they choose to do so, elect all of the
directors of the Company. Each share of Common Stock is entitled to participate
equally in dividends, when, as and if declared by the Board of Directors, and in
the distribution of assets in the event of liquidation, dissolution or winding
up of the Company, subject in all cases to any prior rights of outstanding
shares of Preferred Stock. The shares of Common Stock have no preemptive or
conversion rights, redemption rights or sinking fund provisions and are not
subject to calls, assessments or rights of redemption by the Company. All shares
of Common Stock outstanding are duly authorized, validly issued, fully paid and
nonassessable.

PREFERRED STOCK

The Board of Directors is authorized, without further action by the
Company's stockholders, to issue Preferred Stock from time to time in one or
more series and to fix, as to any such series, the voting rights, if any,
applicable to such series and such other designations, preferences and special
rights as the Board of Directors may determine, including dividend, conversion,
redemption and liquidation rights and preferences. Upon the closing of this
Offering, there will be no shares of Preferred Stock outstanding. The issuance
of shares of Preferred Stock under certain circumstances could have the effect
of delaying or preventing a change in control of the Company or other corporate
actions. See "--Anti-takeover Provisions."

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to the provisions of Section 203 of the DGCL which
provides, with certain exceptions, that a Delaware corporation may not engage in
any of a broad range of business combinations, such as mergers, consolidations
and sales of assets, with a person or an affiliate or associate of such person
who is an "Interested Stockholder" (as defined below) for a period of three
years from the date that such person became an Interested Stockholder unless:
(i) the business combination or the transaction resulting in a person's becoming
an Interested Stockholder is approved by the Board of Directors of the Company
before the person becomes an Interested Stockholder, (ii) upon consummation of
the transaction which results in the person becoming an Interested Stockholder,
the Interested Stockholder owned 85% or more of the voting stock of the Company
outstanding at the time the transaction commenced (excluding shares owned by
persons who are both officers and directors of the Company and shares held by
certain employee stock ownership plans), or (iii) on or after the date the
person became an Interested Stockholder, the

77
<PAGE>
business combination is approved by the Company's Board of Directors and by the
holders of at least 66 2/3% of the Company's outstanding voting stock, excluding
shares owned by the Interested Stockholder, at an annual or special meeting. An
"Interested Stockholder" is defined as any person, other than the Company and
any direct or indirect majority-owned subsidiaries of the Company, that is (i)
the owner of 15% or more of the outstanding voting stock of the Company or (ii)
an affiliate or associate of the Company and was the owner of 15% or more of the
outstanding voting stock of the Company at any time within the three-year period
immediately prior to the date on which it is sought to be determined whether
such person is an Interested Stockholder. This statute would not prohibit the
Company from entering into a business combination with any stockholder who would
otherwise have been deemed to become an "Interested Stockholder" as a result of
the Reincorporation Transactions.

LIMITATIONS ON DIRECTORS' LIABILITY

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Certificate of Incorporation, Delaware
law, the Assumed Option Plan and the Stockholders' Agreement summarized in the
following paragraphs may have an anti-takeover effect and may delay, defer or
prevent a tender offer or takeover attempt that a stockholder might consider to
be in that stockholder's best interests, including attempts that might result in
a premium over the market price to be paid for the shares held by stockholders.

CERTIFICATE OF INCORPORATION

Pursuant to the Certificate of Incorporation, the Board of Directors by
resolution may issue, subject to certain limitations, additional shares of
Common Stock or establish one or more classes or series of Preferred Stock
having the number of shares, designations, relative voting rights, dividend
rates, liquidation and other rights, preferences and limitations that the Board
of Directors fixes without stockholder approval. Any additional issuance of
Common Stock or designation of rights, preferences, privileges and limitations
with respect to Preferred Stock could have the effect of impeding or
discouraging the acquisition of control of the Company by means of a merger,
tender offer, proxy contest or otherwise, and thereby protect the continuity of
the Company's management. Specifically, if, in the due exercise of its fiduciary
obligations, the Board of Directors were to determine that a takeover proposal
was not in the Company's best interest, such shares could be issued by the Board
of Directors without stockholder approval in one or more transactions that might
prevent or render more difficult or costly the completion of the proposed
takeover transaction by diluting the voting or other rights of the proposed
acquiror or insurgent stockholder group, by putting a substantial voting block
in institutional or other hands that might

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<PAGE>
undertake to support the position of the incumbent Board of Directors, by
effecting an acquisition that might complicate or preclude the takeover, or
otherwise.

CLASSIFIED BOARD OF DIRECTORS

The Certificate of Incorporation provides for the Board of Directors to be
divided into three classes of directors serving staggered three-year terms. As a
result, approximately one-third of the Board of Directors will be elected each
year.

The Board of Directors believes that a classified Board of Directors will
help to assure the continuity and stability of the Board of Directors and the
business strategies and policies of the Company as determined by the Board of
Directors, because the likelihood of continuity and stability in the composition
of the Company's Board of Directors and in the policies formulated by the Board
of Directors will be enhanced by staggered three-year terms.

The classified board provision could have the effect of discouraging a third
party from making a tender offer or otherwise attempting to obtain control of
the Company, even though such an attempt might be beneficial to the Company and
its stockholders. In addition, the classified board provision could delay
stockholders who do not agree with the policies of the Board of Directors from
removing a majority of the Board for two years. See "--Number of Directors;
Removal; Filling Vacancies."

NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES

The Certificate of Incorporation provides that the number of members of the
Board of Directors shall be fixed from time to time by resolution adopted by a
majority of the Directors then in office. Further, subject to the rights of the
holders of any series of Preferred Stock then outstanding, the Certificate of
Incorporation authorizes only a majority of the directors then in office to fill
vacancies, including newly created directorships. Accordingly, the Board of
Directors could prevent a stockholder from obtaining majority representation on
the Board of Directors by enlarging the Board of Directors and filling the new
directorships with its own nominees. The Certificate of Incorporation also
provides that directors of the Company may be removed only for cause and, even
then, only by the affirmative vote of holders of a majority of the outstanding
shares of stock eligible to vote in such matters.

ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS

The Certificate of Incorporation establishes an advance notice procedure for
the nomination, other than by or at the discretion of the Board of Directors or
a committee thereof, of candidates for election as director, as well as for
other stockholder proposals to be considered at an annual stockholders' meeting.

Notice of stockholder proposals and director nominations must be timely
given in writing to the secretary of the Company prior to the meeting at which
the matters are to be acted upon or the directors are to be elected. To be
timely, notice must be received at the principal offices of the Company not less
than 60, nor more than 90, days prior to the meeting of stockholders; provided,
that if less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made, notice by the stockholder to be timely must be so
received not later than the close of business on the 10th day following the
earlier of (i) the day on which notice of the date of the meeting was mailed or
(ii) the day on which public disclosure was made.

The purpose of requiring advance notice is to afford the Board of Directors
an opportunity to consider the qualifications of the proposed nominees or the
merits of other stockholder proposals and, to the extent deemed necessary or
desirable by the Board of Directors, to inform stockholders about those matters.

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SPECIAL MEETINGS OF STOCKHOLDERS

The Certificate of Incorporation provides that special meetings of the
stockholders of the Company may be called only by the Chairman of the Board of
Directors or a majority of the members of the Board of Directors. This provision
will make it more difficult for stockholders to take action opposed by the Board
of Directors.

STOCKHOLDERS' AGREEMENT

Contemporaneously with the Reincorporation Transaction (see "Reincorporation
Transactions"), the Company, Crow Family, CFH and Mr. Williams entered into a
Stockholders' Agreement, pursuant to which the Company agreed, subject to
certain limitations and under certain circumstances, to register for sale shares
of Common Stock that are held by the parties thereto (collectively, the
"Registrable Securities"). Of the 28,142,038 shares issued in the
Reincorporation Transactions, 9,369,035 were Registrable Securities. The
Stockholders' Agreement provides that Crow Family and Mr. Williams may, from and
after the first anniversary of the Initial Public Offering, require the Company
upon written notice to register for sale such Registrable Securities (a "Demand
Registration"), provided that the Company has no obligation to effect more than
six underwritten Demand Registrations and shall only be obligated to effect the
sixth underwritten Demand Registration if all remaining Registrable Securities
of Crow Family are to be registered and the total amount of Registrable
Securities to be included in any underwritten Demand Registration has a market
value of at least $25 million. The Company has no obligation to (i) effect an
underwritten Demand Registration within nine months (or file such Registration
Statement within seven months) after the effective date of the immediately
preceding Demand Registration or (ii) effect a shelf Demand Registration within
12 months (or file such Registration Statement within ten months) after such
effective date. In addition, the Company is only required to register a number
of shares of Common Stock for sale pursuant to a shelf Demand Registration that
is less than or equal to five times the amount limitation prescribed by Rule
144. The holders of Registrable Securities may request an unlimited number of
shelf Demand Registrations.

The Stockholders' Agreement also provides that, subject to certain
exceptions, in the event the Company proposes to file a registration statement
with respect to an offering of any class of equity securities, other than
certain types of registrations, the Company will offer the holders of
Registrable Securities the opportunity to register the number of Registrable
Securities they request to include (a "Piggyback Registration"), provided that
the amount of Registrable Securities requested to be registered may be limited
by the underwriters in an underwritten offering based on such underwriters'
determination that inclusion of the total amount of Registrable Securities
requested for registration exceeds the maximum amount that can be marketed at a
price reasonably related to the current market price of the Common Stock or
without materially and adversely affect the offering. The Company will generally
be required to pay all of the expenses of Demand Registrations and Piggyback
Registrations, other than underwriting discounts and commissions; provided,
however, that only 50% of the expenses of underwritten Demand Registrations will
be borne by the Company after the first three such Demand Registrations and all
road show expenses in connection with any Demand Registration will be borne by
the holders of Registrable Securities.

Under the terms of the Stockholders' Agreement, the Company has granted Crow
Family the right to nominate a member of the Board of Directors. Mr. Harlan Crow
is Crow Family's initial nominee. Each executive officer of the Company will
agree to vote his shares of Common Stock in favor of the nominee of Crow Family.
Crow Family's right to nominate a director will terminate on the first date Crow
Family's beneficial ownership of Common Stock represents the lesser of (i) less
than 12.5% of the then outstanding Common Stock or (ii) less than 50% of the
shares of Common Stock owned on the date of execution of the agreement;
provided, however, that in no event will the Company be obligated to nominate a
Crow Family designee beyond the first date on which the beneficial ownership of
shares of Common Stock held by Crow Family represents less than 5% of all then
outstanding shares of such class. For purposes of the

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Stockholders' Agreement, Crow Family's beneficial ownership of Common Stock is
defined as both shares of Common Stock owned by Crow Family and those owned by
CFH. In connection with any private sale of Common Stock by Crow Family, other
than to an affiliate, Crow Family will agree to give the Company 15 days notice
prior to effecting such sale.

Each of Crow Family and the Company has agreed, prior to the fifth
anniversary of the Stockholders' Agreement, not to solicit the other's
officer-level employees concerning potential employment without prior notice to
the other party. In addition, each of Crow Family and the Company has agreed not
to hire any employee that was improperly solicited until the earlier of (i) the
involuntary termination of such officer-level employee by his/her employer and
(ii) the first anniversary of the last incident of solicitation of such employee
in violation of the agreement.

DOPPELT STOCKHOLDERS AGREEMENT

Pursuant to a stockholders agreement entered into among TCRS, the
Predecessor Company, Doppelt & Company and Jeffrey Doppelt (the "Doppelt
Stockholders Agreement"), Doppelt (or permitted transferees of Doppelt) may not,
with the exception of certain permitted transfers, sell, pledge or otherwise
dispose of Common Stock of the Company. As long as Mr. Doppelt remains employed
with the Company, these transfer restrictions will lapse (i) with respect to 30%
of these shares on each of August 15, 1998, and August 15, 1999, (ii) with
respect to 20% of these shares on August 15, 2000, and (ii) with respect to 10%
of these shares on each of August 15, 2001, and August 15, 2002. The shares with
respect to which the transfer restrictions lapse on August 15, 1998 are being
sold by Doppelt in the Offering. These transfer restrictions will lapse in full
if (i) the Company terminates Mr. Doppelt's employment without cause, (ii) the
Company is sold or (iii) Mr. Doppelt's employment is terminated as a result of
his forced resignation, death or permanent disability. Regardless of these
transfer restrictions, Doppelt is entitled to receive all dividend payments and
to exercise all voting and other ownership rights with respect to this stock. In
addition, Mr. Doppelt may not, with the exception of permitted transfers, sell,
pledge or otherwise dispose of his shares of Doppelt & Company before August 15,
2001. The Doppelt Stockholders Agreement permits certain transfers to members of
Mr. Doppelt's family and limited transfers to employees of Doppelt pursuant to a
trust arrangement. The Doppelt Stockholders Agreement also provides that, in the
event the Company proposes to register any shares of Common Stock under the
Securities Act, Doppelt (or permitted transferees of Doppelt) will be entitled
to include its (or their) shares of Common Stock in the registration, subject to
certain limitations.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.

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SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of the Offering, the Company will have an aggregate of
34,141,414 shares of Common Stock outstanding. Of these shares, 5,750,000 shares
sold in the Initial Public Offering and the 5,000,000 shares sold in the
Offering (assuming no exercise of the Underwriter's over-allotment option) will
be freely transferable without restriction or further registration under the
Securities Act, except for shares held by affiliates of the Company.

SALES OF RESTRICTED SHARES

Of the shares of Common Stock issued to certain stockholders of the Company
upon consummation of the Reincorporation Transactions, 23,142,038 which will
continue to be held by such stockholders (or their transferees) immediately
following the Offering were issued in reliance upon exemptions from the
registration requirements of the Securities Act and are thus treated as
"restricted" securities under Rule 144. In general, under Rule 144 as currently
in effect, a person (or persons whose shares are aggregated), including an
affiliate of the Company, who has beneficially owned restricted securities,
within the meaning of Rule 144, for at least one year is entitled to sell within
any three-month period a number of shares that does not exceed the greater of
(i) 1% of the then outstanding shares of the Company's Common Stock
(approximately 339,114 shares immediately after the Offering) or (ii) the
average weekly trading volume of the Common Stock on the New York Stock Exchange
during the four calendar weeks preceding the date on which notice of the sale is
filed with the Securities and Exchange Commission (the "Commission"). Sales
under Rule 144 are also subject to manner of sale provisions, notice
requirements and the availability of current public information about the
Company. A person (or persons whose shares are aggregated) who is not deemed to
have been an affiliate of the Company at any time during the three months
immediately preceding the sale is entitled to sell restricted shares pursuant to
Rule 144(k) without regard to the limitations described above, provided that two
years have expired since the later of the date on which such restricted shares
were acquired from the Company or the date they were acquired from an affiliate
of the Company. Substantially all of such 23,142,038 shares will be eligible for
sale under Rule 144 on December 1, 1998.

SHARES ISSUED UNDER ASSUMED OPTION PLAN

LOCK-UP ARRANGEMENTS

The Selling Stockholders, certain of the Company's other stockholders, the
holders of options issued under the Assumed Option Plan and the Company's
directors and executive officers have entered into lock-up agreements for the
benefit of the Company and the Underwriters which are effective for the period
beginning on July 17, 1998, and ending 120 days from the date of this
Prospectus. Concurrent with the execution of the Underwriting Agreement, the
Company will enter into a lock-up agreement for the benefit of the Underwriters
which is effective for the period beginning on the date of the Underwriting
Agreement and ending 120 days from the date of this Prospectus. Under the
lock-up agreements, the Company and such stockholders will not offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock (subject to
certain exceptions) without the prior written consent of the Company and Morgan
Stanley & Co., Incorporated, except for sales made pursuant to this Offering.
Upon the expiration of the lock-up agreements, those shares subject to Lock-up
Agreements will not, absent registration, be

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freely tradeable, but will become eligible for sale under Rule 144 on various
dates in the future. See "Underwriting."

CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK

The following is a summary of the material United States federal income and
estate tax consequences of the ownership and disposition of Common Stock
generally applicable to "Non-United States Holders." The Company has received an
opinion from Vinson & Elkins L.L.P., that the legal conclusions set forth below
are accurate in all material respects. Subject to the discussion below under
"Estate Tax," a "Non-United States Holder" is any beneficial owner of Common
Stock that, for United States federal income tax purposes, is a non-resident
alien individual, a foreign corporation, a foreign partnership or a foreign
estate or trust as such terms are defined in the Internal Revenue Code of 1986,
as amended (the "Code"). This discussion is based on the Code, existing,
proposed and temporary regulations promulgated thereunder, and administrative
and judicial interpretations, all as of the date hereof, and all of which are
subject to change either retroactively or prospectively. This discussion does
not address all aspects of United States federal income and estate taxation that
may be relevant to Non-United States Holders in light of their particular
circumstances and does not address any tax consequences arising under the laws
of any state, local or foreign taxing jurisdiction or the application of any
particular tax treaty. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX
ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL INCOME AND OTHER
TAX CONSEQUENCES, AND THE NON-UNITED STATES TAX CONSEQUENCES, OF OWNING AND
DISPOSING OF COMMON STOCK.

DIVIDENDS

Subject to the discussion below (including the discussion of backup
withholding), any dividend paid to a Non-United States Holder generally will be
subject to United States withholding tax either at a rate of 30% of the gross
amount of the dividend or such lower rate as may be specified by any applicable
tax treaty. For purposes of determining whether tax is to be withheld at a 30%
rate or at a reduced rate as specified by an applicable tax treaty, under
current United States Treasury Regulations the Company ordinarily will presume
that dividends paid to a holder with an address in a foreign country are paid to
a resident of such country absent knowledge that such presumption is not
warranted. Under such Regulations, dividends paid to a holder with an address
within the United States generally will be presumed to be paid to a holder who
is not a Non-United States Holder and will not be subject to the 30% withholding
tax, unless the Company has actual knowledge that the holder is a Non-United
States Holder. Under final United States Treasury Regulations, effective January
1, 2000, however, a Non-United States Holder who wishes to claim the benefit of
an applicable treaty rate would be required to satisfy applicable certification
and other requirements, which would include the requirement that the Non-United
States Holder file with the Company a United States Internal Revenue Service
("IRS") Form W-8 which provides the holder's name and address.

Dividends received by a Non-United States Holder that are effectively
connected with a United States trade or business conducted by such Non-United
States Holder (or, if a tax treaty applies attributable to a permanent
establishment in the United States maintained by such Non-United States Holder)
are exempt from withholding tax if the Non-United States Holder files an IRS
Form 4224 (and, generally for payments made after December 31, 1999, a Form W-8)
with the payor. However, such effectively connected dividends are subject to
regular United States federal income tax in the same manner as if the Non-United
States Holder were a United States person for United States federal income tax
purposes. Effectively connected dividends received by a corporate Non-United
States Holder may be subject to an additional "branch profits tax" at a rate of
30% (or such lower rate as may be specified by an applicable tax treaty) of such
corporate Non-United States Holder's effectively connected earnings and profits
for the taxable year, subject to certain adjustments.

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A Non-United States Holder eligible for a reduced rate of United States
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the IRS.

GAIN ON DISPOSITION OF COMMON STOCK

A Non-United States Holder generally will not be subject to United States
federal income tax with respect to gain realized upon the sale or other
disposition of Common Stock unless (i) such gain is effectively connected with a
United States trade or business of the Non-United States Holder (or, if a tax
treaty applies, attributable to a permanent establishment in the United States
maintained by such Non-United States Holder); (ii) the Non-United States Holder
is an individual who holds the Common Stock as a capital asset, is present in
the United States for a period or periods aggregating 183 days or more during
the taxable year in which such sale or disposition occurs, and certain other
conditions are met; or (iii) the Company is or has been a "United States real
property holding corporation" for United States federal income tax purposes at
any time within the shorter of the five-year period preceding such disposition
or such holder's holding period and certain other conditions are met. The
Company has determined that it is not and has never been, and the Company does
not believe that it will become, a "United States real property holding
corporation" for United States federal income tax purposes.

BACKUP WITHHOLDING AND INFORMATION REPORTING

Generally, the Company must report to the IRS the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax withheld.
A similar report is sent to the recipient. Pursuant to tax treaties or other
agreements, the IRS may make its reports available to tax authorities in the
recipient's country of residence.

For payments made before January 1, 2000, backup withholding generally will
not apply to dividends paid to holders at an address outside the United States
(unless the Company has knowledge that the holder is a United States person).
Unless the Company has actual knowledge that a holder is a Non-United States
Holder, dividends paid during such period to a holder at an address within the
United States may be subject to backup withholding at a rate of 31% if the
holder (i) is not a corporation or other "exempt recipient" as defined in
Treasury Regulations and (ii) fails to provide a correct taxpayer identification
number and other information to the Company. For payments made after December
31, 1999, a Non-United States Holder that is not an "exempt recipient" generally
will be subject to backup withholding at a rate of 31%, rather than the
withholding at a 30% rate or lower treaty rate discussed above, unless such
Non-U.S. Holder certifies as to its foreign status (which certification may be
made on IRS Form W-8).

Proceeds from the disposition of Common Stock by a Non-United States Holder
effected by or through a United States office of a broker will be subject to
information reporting and to backup withholding at a rate of 31% of the gross
proceeds unless such Non-United States Holder certifies under penalties of
perjury as to, among other things, its address and status as a Non-United States
Holder or otherwise establishes an exemption. Generally, United States
information reporting and backup withholding will not apply to a payment of
disposition proceeds if the transaction is effected outside the United States by
or through a non-United States office of a broker. However, if such broker is,
for United States federal income tax purposes, a United States person, a
"controlled foreign corporation," a foreign person which derives 50% or more of
its gross income for certain periods from the conduct of a United States trade
or business, or, for payments after December 31, 1999, a partnership with
certain connections to the United States, information reporting (but not backup
withholding) will apply unless (i) such broker has documentary evidence in its
files that the holder is a Non-United States Holder and certain other conditions
are met, or (ii) the holder otherwise establishes an exemption. Under final
Treasury Regulations, effective January 1, 2000, a Non-United States Holder
generally would not be subject to backup withholding if the beneficial owner
certifies to such owner's foreign status on a valid Form W-8 filed with the
Company.

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Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of United States
income taxes, a refund may be obtained, provided the required documents are
filed with the IRS.

ESTATE TAX

An individual Non-United States Holder who is treated as the owner of Common
Stock at the time of such individual's death or has made certain lifetime
transfers of an interest in Common Stock will be required to include the value
of such Common Stock in such individual's gross estate for United States federal
estate tax purposes and may be subject to United States federal estate tax,
unless an applicable tax treaty provides otherwise. For United States federal
estate tax purposes, a "Non-United States Holder" is an individual who is
neither a citizen nor a domiciliary of the United States. Whether an individual
is considered a "domiciliary" of the United States for estate tax purposes is
generally determined on the basis of all of the facts and circumstances.

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UNDERWRITING

Under the terms and subject to conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the U.S.
Underwriters named below, for whom Morgan Stanley & Co. Incorporated,
BancAmerica Robertson Stephens, BT Alex. Brown Incorporated and Donaldson,
Lufkin & Jenrette Securities Corporation are acting as U.S. Representatives, and
the International Underwriters named below, for whom Morgan Stanley & Co.
International Limited, BancAmerica Robertson Stephens, BT Alex. Brown
International, a division of Bankers Trust International PLC and Donaldson,
Lufkin & Jenrette International are acting as International Representatives,
have severally agreed to purchase, and the Selling Stockholders have agreed to
sell to them, severally, the respective number of shares of Common Stock set
forth opposite the names of such Underwriters below:

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- --------------------------------------------------------------------------- -----------------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated........................................
BancAmerica Robertson Stephens...........................................
BT Alex. Brown Incorporated..............................................
Donaldson, Lufkin & Jenrette Securities Corporation......................
Subtotal...............................................................
-----------------
International Underwriters:
Morgan Stanley & Co. International Limited...............................
BancAmerica Robertson Stephens...........................................
BT Alex. Brown International, a division of Bankers Trust International
PLC....................................................................
Donaldson, Lufkin & Jenrette International...............................
Subtotal...............................................................
-----------------
Total................................................................
-----------------
-----------------
</TABLE>

The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives, are collectively referred
to as the "Underwriters" and the "Representatives," respectively. The
Underwriting Agreement provides that the obligations of the several Underwriters
to pay for and accept delivery of the shares of Common Stock offered hereby are
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all of the
shares of Common Stock offered hereby (other than those covered by the U.S.
Underwriter's over-allotment option described below), if any such shares are
taken.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any Shares (as defined herein) for the account of anyone
other than a United States or Canadian Person (as defined herein) and (ii) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
Shares or distribute any prospectus relating to the Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions: (i) it is not purchasing any Shares for the account of any United
States or Canadian Person and (ii) it has not offered or sold, and will not
offer to sell, directly or indirectly, any Shares or distribute any prospectus
relating to the Shares in the United States or Canada or to any United States or
Canadian Person. With respect to any Underwriter that is a U.S. Underwriter and
an International Underwriter, the foregoing representations and agreements (i)
made by it in its capacity as a U.S. Underwriter apply only to it in its
capacity as a U.S. Underwriter and (ii) made by it in its capacity as an
International Underwriter apply only to it in its capacity as an International
Underwriter. As used herein, "United States or Canadian Person" means any
national or resident of the United States or Canada, or any corporation,
pension, profit-sharing or other

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<PAGE>
trust or other entity organized under the laws of the United States or Canada or
of any political subdivision thereof (other than a branch located outside the
United States and Canada of any United States or Canadian Person), and includes
any United States or Canadian branch of a person who is otherwise not a United
States or Canadian Person. All shares of Common Stock to be purchased by the
Underwriters under the Underwriting Agreement are referred to herein as the
"Shares."

Pursuant to the Agreement between U.S. and International Underwriters, sales
may be made between the U.S. Underwriters and International Underwriters of any
number of Shares as may be mutually agreed. The per share price of any Shares so
sold shall be the public offering price set forth on the cover page hereof, in
United States dollars, less an amount not greater than the per share amount of
the concession to dealers set forth below.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any Shares, directly or indirectly, in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and has
represented that any offer or sale of Shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer or sale is made. Each U.S.
Underwriter has further agreed to send to any dealer who purchases from it any
of the Shares a notice stating in substance that, by purchasing such Shares,
such dealer represents and agrees that it has not offered or sold, and will not
offer or sell, directly or indirectly, any of such Shares in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and that
any offer or sale of Shares in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of Canada
in which such offer or sale is made, and that such dealer will deliver to any
other dealer to whom it sells any of such Shares a notice containing
substantially the same statement as is contained in this sentence.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not offered
or sold and, prior to the date six months after the closing date for the sale of
the Shares to the International Underwriters, will not offer or sell, any Shares
to persons in the United Kingdom except to persons whose ordinary activities
involve acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
in 1995; (ii) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by it in relation
to the Shares in, from or otherwise involving the United Kingdom; and (iii) it
has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the offering of the
Shares to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a
person to whom such document may otherwise lawfully be issued or passed on.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has further represented that it has not offered or
sold, and has agreed not to offer or sell, directly or indirectly, in Japan or
to or for the account of any resident thereof, any of the Shares acquired in
connection with the distribution contemplated hereby, except for offers or sales
of Japanese International Underwriters or dealers except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law. Each
International Underwriter has further agreed to send to any dealer who purchases
from it any of the Shares a notice stating in substance that by purchasing such
Shares, such dealer represents and agrees that it has not offered or sold, and
will not offer or sell, any of such Shares, directly or indirectly, in Japan or
to or for the account of any resident thereof except for offers or sales to
Japanese International Underwriters or dealers and except pursuant to any
exemption from the registration requirements of the Securities and

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<PAGE>
Exchange Law and otherwise in compliance with applicable provisions of Japanese
law, and that such dealer will send to any other dealer to whom it sells any of
such Shares a notice containing substantially the same statement as is contained
in this sentence.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price that represents a concession
not in excess of $ a share under the public offering price. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ a share to other Underwriters or to certain dealers. After the
Offering, the public offering price, concession and discount may be changed.

Pursuant to the Underwriting Agreement, the Selling Stockholders have
granted to the U.S. Underwriters an option, exercisable for 30 days from the
date of this Prospectus, to purchase up to an aggregate of 750,000 additional
shares of Common Stock at the public offering price set forth on the cover page
hereof, less underwriting discounts and commissions. The U.S. Underwriters may
exercise such option solely for the purpose of covering over-allotments, if any,
made in connection with the offering of the shares of Common Stock offered
hereby. To the extent such option is exercised, each U.S. Underwriter will
become obligated, subject to certain conditions, to purchase approximately the
same percentage of such additional shares of Common Stock as the number set
forth next to such U.S. Underwriter's name in the preceding table bears to the
total number of shares of Common Stock set forth next to the names of all U.S.
Underwriters in the preceding table.

The Common Stock is listed on The New York Stock Exchange under the symbol
"TCC."

The Company (with respect to the period beginning on the date of the
Underwriting Agreement and ending 120 days after the date of this Prospectus)
and each of the Selling Stockholders, certain of the Company's other
stockholders, the holders of options issued under the Assumed Option Plan and
the Company's directors and executive officers (with respect to the period
beginning on July 17, 1998 and ending 120 days after the date of this
Prospectus) have agreed that, without the prior written consent of the Company
and Morgan Stanley & Co. Incorporated on behalf of the Underwriters, they will
not, (i) offer, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The restrictions described in this
paragraph do not apply to: (a) the sale of shares to the Underwriters; (b) the
issuance by the Company of shares of Common Stock upon the exercise of an option
or a warrant or the conversion of a security outstanding on the date of this
Prospectus of which the Underwriters have been advised in writing; (c)
transactions by any person relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
offering of the Shares; (d) the bona fide pledge of shares of Common Stock to
secure loans; (e) the contribution of Common Stock to an exchange fund, capital
fund or similar fund in exchange for securities of such fund; or (f) the
transfer of shares of Common Stock by any stockholder to: (i) if the transferor
is an individual, a member of the immediate family of the transferor, if any, or
a trust whose sole beneficiaries are members of the immediate family of the
transferor, or a partnership whose sole partners are members of the immediate
family of the transferor; and (ii) if the transferor is a trust, any member of
the immediate family of the transferor that is the grantor or trustee of the
trust; provided, however, that the transferor shall first require any transferee
described in clause (f)(i) or (f)(ii) to execute a copy of a "lock-up" letter
agreeing to similar restrictions on transfer.

In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the Offering, creating a short position in the Common Stock for
their

88
<PAGE>
own account. In addition, to cover over-allotments or stabilize the price of the
Common Stock, the Underwriters may bid for, and purchase, shares of Common Stock
in the open market. Finally, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing the Common
Stock in the Offering, if the syndicate repurchases previously distributed
Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities and may
end any of these activities at any time.

The Company, the Selling Stockholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Vinson & Elkins L.L.P., Dallas, Texas. Certain legal
matters related to the offering will be passed upon for the Underwriters by
Shearman & Sterling, New York, New York.

EXPERTS

The consolidated financial statements and schedule of the Company at
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997 appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein and are included in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C., and at the Commission's regional
offices at 75 Park Place, New York, New York and at Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois, and copies may be obtained
at prescribed rates from the Public Reference Section of the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Such reports, proxy statements and other information may
also be inspected and copied at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York. The Commission also maintains a site on the
World Wide Web at "http://www.sec.gov" that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act of 1933 (the "Securities Act"),with respect to the
shares of Common Stock offered hereby. This Prospectus, which constitutes part
of the Registration Statement, omits certain of the information contained in the
Registration Statement and the exhibits and schedules thereto on file with the
Commission pursuant to the Securities Act and the rules and regulations of the
Commission thereunder. The Registration Statement, including exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at its principal office in Washington,
D.C. or at its regional offices. Statements contained in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.

89
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Pro Forma Consolidated Financial Statements of Trammell Crow Company (Unaudited):
Pro Forma Consolidated Balance Sheet as of March 31, 1998................................................ F-3
Pro Forma Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and for the
Year Ended December 31, 1997........................................................................... F-5

Consolidated Financial Statements of Trammell Crow Company (Audited):
Report of Independent Auditors........................................................................... F-8
Consolidated Balance Sheets as of December 31, 1997 and 1996............................................. F-9
Consolidated Statements of Operations for the Years Ended December 31, 1997, 1996 and 1995............... F-10
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1997, 1996 and 1995..... F-11
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995............... F-12
Notes to Consolidated Financial Statements............................................................... F-13

Condensed Consolidated Financial Statements of Trammell Crow Company (Unaudited):
Condensed Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997......................... F-27
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and 1997....... F-28
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997....... F-29
Notes to Condensed Consolidated Financial Statements..................................................... F-30
</TABLE>

F-1
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated financial statements are
derived from the Company's historical financial statements. The unaudited pro
forma balance sheet is presented as if the FHO Acquisition, the Core Acquisition
and the Faison Acquisition had occurred on March 31, 1998, and reflects the
Company at historical values, which includes the Tooley Acquisition and the
Norman Acquisition. The unaudited pro forma consolidated statements of
operations are presented as if the FHO Acquisition, the Core Acquisition, the
Faison Acquisition, the Tooley Acquisition, the Norman Acquisition, the Doppelt
Acquisition, the Reincorporation Transactions and the Initial Public Offering
had occurred on January 1, 1997, and reflect the Company at historical values.
See "The Company--Recent Developments," "--Initial Public Offering,"
"--Reincorporation Transactions," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business--Retail Services."
The unaudited pro forma consolidated financial statements should be read in
conjunction with the historical financial statements of the Company and the
notes thereto. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and other financial information, all included
elsewhere in this Prospectus.

The unaudited pro forma consolidated financial statements have been prepared
using the purchase method of accounting whereby the assets and liabilities
acquired and assumed in the acquisitions are adjusted to estimated fair value,
based upon preliminary estimates which are subject to change as additional
information is obtained. The allocations of purchase costs are subject to final
determination based upon estimates and other evaluations of fair value.
Therefore, the allocations reflected in the following unaudited pro forma
consolidated financial statements may differ from the amounts ultimately
determined.

The unaudited pro forma consolidated financial statements are presented for
informational purposes only and are not necessarily indicative of what the
Company's actual results of operations and financial position would have been as
of March 31, 1998, and for the year ended December 31, 1997 and the three months
ended March 31, 1998, had the Company completed the FHO Acquisition, the Core
Acquisition, the Faison Acquisition, the Tooley Acquisition, the Norman
Acquisition, the Doppelt Acquisition, the Reincorporation Transactions and the
Initial Public offering as of the dates indicated, nor does it purport to
represent the future financial position or results of operations of the Company.
In the opinion of the Company's management, all material adjustments necessary
to reflect the effects of these transactions have been made.

F-2
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------------------
HISTORICAL
---------------------------- PRO FORMA
COMPANY ACQUISITIONS(A) ADJUSTMENTS
----------- --------------- ------------
<S> <C> <C> <C>
(IN THOUSANDS)
ASSETS

Current assets
Cash and cash equivalents............................................... $ 65,165 $ 4,028 $ (10,021)(B)
4,000(C)
(9)(D)
Accounts receivable, net................................................ 45,871 6,995 (4,764)(B)
(503)(D)
Receivables from affiliates............................................. 1,021 -- --
Notes and other receivables............................................. 4,291 6 (5)(B)
Income taxes recoverable................................................ 1,596 -- --
Deferred income taxes................................................... 3,698 -- --
Real estate held for sale............................................... 134,982 -- --
Other current assets.................................................... 11,329 372 (282)(B)
(9)(D)
----------- ------- ------------
Total current assets................................................ 267,953 11,401 (11,593)
Furniture and equipment, net.............................................. 7,693 2,346 (377)(B)
(78)(D)
Deferred income taxes..................................................... 14,027 2,470 (2,470)(B)
Investments in unconsolidated subsidiaries................................ 11,279 -- --
Goodwill, net............................................................. 44,792 -- 64,645(B)
Other assets.............................................................. 14,775 3,714 (3,895)(B)
9,623(B)
183(D)
----------- ------- ------------
Total assets........................................................ $ 360,519 $ 19,931 $ 56,038
----------- ------- ------------
----------- ------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable........................................................ $ 20,047 $ 547 $ (474)(B)
4(D)
Accrued expenses........................................................ 40,594 2,271 (1,043)(B)
(401)(D)
Payables to affiliates.................................................. 4,003 -- --
Current portion of long-term debt....................................... 826 143 (143)(B)
1,000(B)
Notes payable on real estate held for sale.............................. 93,039 -- --
Other current liabilities............................................... 2,060 542 (542)(B)
----------- ------- ------------
Total current liabilities........................................... 160,569 3,503 (1,599)
Long-term debt, less current portion...................................... 33,829 892 (827)(B)
70,000(B)
Deferred compensation..................................................... 3,809 -- --
Other liabilities......................................................... 673 5,903 (7,859)(B)
1,956(D)
----------- ------- ------------
Total liabilities................................................... 198,880 10,298 61,671
Minority interest......................................................... 18,073 -- --
Stockholders' equity
Common stock............................................................ 339 -- 1(C)
Paid-in capital......................................................... 150,721 2,744 (2,744)(B)
3,999(C)
Retained earnings (deficit)............................................. (6,405) 6,889 (4,914)(B)
(1,975)(D)
Less: Stockholder loans................................................. (1,089) -- --
----------- ------- ------------
Total stockholders' equity.......................................... 143,566 9,633 (5,633)
----------- ------- ------------
Total liabilities and stockholders' equity.......................... $ 360,519 $ 19,931 $ 56,038
----------- ------- ------------
----------- ------- ------------

COMPANY PRO
FORMA
--------------
<S> <C>

ASSETS
Current assets
Cash and cash equivalents............................................... $ 63,163

Accounts receivable, net................................................ 47,599

Receivables from affiliates............................................. 1,021
Notes and other receivables............................................. 4,292
Income taxes recoverable................................................ 1,596
Deferred income taxes................................................... 3,698
Real estate held for sale............................................... 134,982
Other current assets.................................................... 11,410

--------------
Total current assets................................................ 267,761
Furniture and equipment, net.............................................. 9,584

Deferred income taxes..................................................... 14,027
Investments in unconsolidated subsidiaries................................ 11,279
Goodwill, net............................................................. 109,437
Other assets.............................................................. 24,400

--------------
Total assets........................................................ $ 436,488
--------------
--------------
LIABILITIES AND STOCKHOLDERS' EQU
Current liabilities
Accounts payable........................................................ $ 20,124

Accrued expenses........................................................ 41,421

Payables to affiliates.................................................. 4,003
Current portion of long-term debt....................................... 1,826

Notes payable on real estate held for sale.............................. 93,039
Other current liabilities............................................... 2,060
--------------
Total current liabilities........................................... 162,473
Long-term debt, less current portion...................................... 103,894

Deferred compensation..................................................... 3,809
Other liabilities......................................................... 673

--------------
Total liabilities................................................... 270,849
Minority interest......................................................... 18,073
Stockholders' equity
Common stock............................................................ 340
Paid-in capital......................................................... 154,720

Retained earnings (deficit)............................................. (6,405)

Less: Stockholder loans................................................. (1,089)
--------------
Total stockholders' equity.......................................... 147,566
--------------
Total liabilities and stockholders' equity.......................... $ 436,488
--------------
--------------
</TABLE>

F-3
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (CONTINUED)

- ------------------------
(A) Reflects the combined balance sheets as of March 31, 1998 of Fallon, Hines &
O'Connor, Core and Faison, which were acquired by the Company subsequent to
March 31, 1998, but prior to the date of the Offering.

(B) Subsequent to March 31, 1998, the Company has completed three acquisitions.
The aggregate purchase price for the acquisitions was as follows:

<TABLE>
<CAPTION>
<S> <C>
Cash................................................................................................... $ 6,002
Debt incurred.......................................................................................... 71,000
---------
Total purchase consideration......................................................................... 77,002
Historical basis of acquired entities.................................................................. 7,658
Less: net assets not acquired(1)....................................................................... (5,338)
---------
2,320
---------
$ 74,682
---------
---------
Purchase price was allocated as follows:
Furniture and fixtures (adjust to fair value)........................................................ $ (377)
Accounts receivable and other current assets......................................................... 1,686
Accounts payable and accrued expenses................................................................ (895)
Other assets--intangibles............................................................................ 9,623
Goodwill............................................................................................. 64,645
---------
$ 74,682
---------
---------
(1) Detail of net assets not acquired:
Cash............................................................................................... $ 4,019
Accounts receivable................................................................................ 6,369
Notes and other receivables........................................................................ 5
Other current assets............................................................................... 363
Other assets....................................................................................... 3,895
Deferred tax asset................................................................................. 2,470
Accounts payable................................................................................... (543)
Accrued expenses................................................................................... (1,869)
Current portion of long-term debt.................................................................. (143)
Other current liabilities.......................................................................... (542)
Other liabilities.................................................................................. (7,859)
Long-term debt..................................................................................... (827)
---------
$ 5,338
---------
---------
</TABLE>

The purchase agreements provide for contingent consideration based on future
operating results of the acquired companies and/or of specific contracts of
the acquired companies.

(C) Reflects the sale of 127,828 shares of Common Stock of the Company to
principals of Faison in connection with the Faison Acquisition.

(D) Adjustments to eliminate balances of a subsidiary of Faison that was not
acquired by the Company.

F-4
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------------------
HISTORICAL
-------------------------
ACQUISITIONS PRO FORMA COMPANY PRO
COMPANY (A) ADJUSTMENTS FORMA
------------ ----------- ----------- -------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUES:
Property management services............................ $ 24,887 $ 15,186 $ (655)(B) $ 39,418
Brokerage services...................................... 25,533 6,399 (183)(B) 31,749
Infrastructure management services...................... 22,890 1,597 -- 24,487
Development and construction services................... 8,891 3,747 509(C) 12,835
(312)(B)
Retail services......................................... 2,727 -- -- 2,727
------------ ----------- ----------- -------------
84,928 26,929 (641) 111,216
Income from investments in unconsolidated
subsidiaries.......................................... 2,415 -- -- 2,415
Gain on disposition of real estate...................... 866 -- -- 866
Other income............................................ 2,042 839 (404)(D) 2,477
------------ ----------- ----------- -------------
90,251 27,768 (1,045) 116,974
EXPENSES:
Salaries, wages and benefits............................ 50,516 22,822 (293)(B) 67,708
100(E)
(5,437)(F)
Commissions............................................. 10,953 1,689 (360)(B) 12,282
General and administrative.............................. 15,097 5,683 (132)(B) 20,648
Depreciation............................................ 1,085 198 6(G) 1,281
(8)(B)
Amortization............................................ 329 -- 1,330(G) 1,659
Interest................................................ 1,666 138 1,503(H) 3,307
Minority interest....................................... 37 -- -- 37
------------ ----------- ----------- -------------
79,683 30,530 (3,291) 106,922
------------ ----------- ----------- -------------
Income before income taxes.............................. 10,568 (2,762) 2,246 10,052
Income taxes............................................ 4,239 (1,239) 1,033(I) 4,033
------------ ----------- ----------- -------------
Net income.............................................. $ 6,329 $ (1,523) $ 1,213 $ 6,019
------------ ----------- ----------- -------------
------------ ----------- ----------- -------------
EARNINGS PER SHARE:
Basic................................................... $ 0.19 $ 0.18
------------ -------------
------------ -------------
Diluted................................................. $ 0.18 $ 0.17
------------ -------------
------------ -------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic................................................... 33,899,574 34,027,402
------------ -------------
------------ -------------
Diluted................................................. 36,115,203 36,252,806
------------ -------------
------------ -------------
</TABLE>

F-5
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------------------------
HISTORICAL
------------------------------------- PRO FORMA REINCORPORATION
ACQUISITIONS ADJUSTMENTS FOR AND IPO COMPANY PRO
COMPANY DOPPELT (U) (A) ACQUISITIONS ADJUSTMENTS FORMA
--------- ------------- ----------- --------------- --------------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Property management services..... $ 87,756 $ -- $ 68,260 $ (2,074)(B) $ -- $ 153,942
Brokerage services............... 91,053 -- 43,673 (1,842)(B) -- 132,884
Infrastructure management
services....................... 68,719 -- 6,132 -- -- 74,851
Development and construction
services....................... 40,054 -- 6,758 3,098(C) -- 49,220
(690)(B)
Retail services.................. 5,318 4,975 -- -- -- 10,293
--------- ------ ----------- --------------- --------------- -----------
292,900 4,975 124,823 (1,508) -- 421,190
Income from investments in
unconsolidated subsidiaries.... 512 -- -- -- -- 512
Gain on disposition of real
estate......................... 10,241 -- -- -- -- 10,241
Other income..................... 9,986 30 2,957 (24)(J) (147)(M) 12,802
--------- ------ ----------- --------------- --------------- -----------
313,639 5,005 127,780 (1,532) (147) 444,745
EXPENSES:
Salaries, wages and benefits..... 161,425 4,281 97,060 (2,925)(B) -- 258,730
400(E)
(1,511)(K)
Non-recurring compensation
costs.......................... 33,085 -- -- -- (33,085)(N) --
Commissions...................... 39,121 -- 1,581 -- -- 40,702
General and administrative....... 55,884 1,232 20,729 (504)(B) 642(O) 73,434
(194)(L) (4,355)(N)
Profit sharing................... 23,514 -- -- -- (22,917)(P) 597
Depreciation..................... 3,514 19 1,841 (1,013)(G) -- 4,325
(36)(B)
Amortization..................... 714 -- -- 5,870(G) -- 6,584
Interest......................... 5,515 -- 652 5,913(H) (343)(P) 10,497
(419)(Q)
(593)(R)
(228)(S)
Royalty and consulting fees...... 6,212 -- -- -- (6,212)(P) --
Minority interest................ 2,042 -- -- -- -- 2,042
--------- ------ ----------- --------------- --------------- -----------
331,026 5,532 121,863 6,000 (67,510) 396,911
--------- ------ ----------- --------------- --------------- -----------
Income (loss) before income
taxes.......................... (17,387) (527) 5,917 (7,532) 67,363 47,834
Income taxes (benefit)........... (3,367) -- 1,913 (2,770)(I) 23,071(T) 18,847
--------- ------ ----------- --------------- --------------- -----------
Net income (loss)................ $ (14,020) $ (527) $ 4,004 $ (4,762) $ 44,292 $ 28,987
--------- ------ ----------- --------------- --------------- -----------
--------- ------ ----------- --------------- --------------- -----------
EARNINGS (LOSS) PER SHARE:
Basic............................ $ (0.42) $ 0.86
--------- -----------
--------- -----------
Diluted.......................... $ (0.42) $ 0.81
--------- -----------
--------- -----------
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic............................ 33,583,467 33,711,295
--------- -----------
--------- -----------
Diluted.......................... 33,583,467 35,845,808
--------- -----------
--------- -----------
</TABLE>

F-6
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

- ------------------------------

(A) Reflects the historical operations for the periods from January 1, 1998
through the earlier of the date acquired by the Company or March 31, 1998,
and for the year ended December 31, 1997, of Tooley, Norman, Fallon, Hines &
O'Connor, Core and Faison, which were acquired by the Company in 1998.

(B) Adjustments to eliminate operations of a subsidiary of Faison that was not
acquired by the Company.

(D) Reflects the elimination of gain on sale of limited partnership interests by
Tooley in connection with the acquisition.

(E) Reflects amortization of payments to certain employees of Faison in
conjunction with their employment agreements.

(F) Adjustment to eliminate non-recurring bonuses paid to employees of Tooley in
conjunction with the acquisition.

(G) Reflects the additional depreciation and amortization resulting from the
allocation of purchase price of the acquired companies, including a decrease
in furniture and equipment and an increase in intangible assets to their
fair value and the recording of goodwill associated with the acquisitions.
Furniture and equipment are being depreciated over the estimated useful
lives (three to five years). The intangible assets are being amortized over
the lives of the related agreements (one to seven years). Goodwill is being
amortized over 30 years.

(H) Adjustments to record interest expense resulting from borrowings under the
Existing Credit Facility associated with the acquisitions, net of interest
expense of the acquired companies on debt not assumed.

(I) Adjustment reflects the increase/decrease in taxes due to the pro forma
adjustments for acquisitions.

(J) Reflects the decrease in interest income related to the Doppelt stockholder
loans which were not included in the acquisition.

(K) Reflects the reduction of historical salaries to the amounts payable under
an employment agreement entered into in connection with the Doppelt
Acquisition and the amortization of the $2.0 million payment to Mr. Doppelt
in conjunction with his employment agreement.

(L) Adjustment to eliminate non-recurring consulting fees paid by Tooley in
conjunction with the acquisition.

(M) Reflects the decrease in interest income resulting from the repayment of
loans owed to the Company by certain Profit Sharing participants.

(N) Adjustment to eliminate non-recurring charges to: (1) compensation expense
for the difference between the IPO price and the exercise price of options
granted in conjunction with the Reincorporation Transactions and (2) general
and administrative expenses for payment obligations incurred in connection
with settlement of claims made pursuant to a terminated stock appreciation
rights plan.

(O) Reflects the additional costs of being a public company.

(P) Reflects the termination of the Company's policy of granting profit sharing
interest under the 1995 Profit Sharing Plan for key employees, including the
related interest expense on the retired 1995 Profit Sharing Plan
participants' balances, and the termination of royalty and consulting
agreements with affiliates of the Company. The profit sharing expense not
eliminated relates to Project Distributions for retired Profit Sharing Plan
participants which were not terminated.

(Q) Reflects the reduction in interest expense related to the First Tennessee
credit facility repaid with proceeds from the Pre IPO Credit Facility.

(R) Reflects the decrease in interest expense due to the repayment of the Pre
IPO Credit Facility.

(S) Reflects the decrease in interest expense related to the repayment of
capitalization notes, lines of credits and other notes payable.

(T) Reflects the increase in taxes due to the pro forma adjustments to reflect
the Reincorporation Transactions and the IPO.

(U) Reflects the historical operations from January 1, 1997 through August 22,
1997, the date acquired by the Company.

F-7
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders

Trammell Crow Company

We have audited the accompanying consolidated balance sheets of Trammell
Crow Company (a Delaware corporation; formerly a Texas close corporation) and
Subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Trammell Crow Company and Subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.

ERNST & YOUNG LLP

Dallas, Texas
March 4, 1998

F-8
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
---------- ----------
(IN THOUSANDS,
EXCEPT SHARE AND PER
SHARE DATA)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................................................... $ 96,747 $ 58,505
Accounts receivable, net of allowance for doubtful accounts of $955 in 1997 and $947 in
1996.................................................................................. 40,602 32,980
Receivables from affiliates............................................................. 926 2,275
Notes and other receivables............................................................. 4,007 4,936
Income taxes recoverable................................................................ 4,939 --
Deferred income taxes................................................................... 3,870 88
Real estate held for sale............................................................... 98,567 71,122
Other current assets.................................................................... 9,220 2,932
---------- ----------
Total current assets.................................................................. 258,878 172,838
Furniture and equipment, net.............................................................. 6,309 6,323
Deferred income taxes..................................................................... 14,397 7,796
Investments in unconsolidated subsidiaries................................................ 11,244 3,831
Goodwill, net............................................................................. 27,111 --
Other assets.............................................................................. 8,297 3,526
---------- ----------
$ 326,236 $ 194,314
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable........................................................................ $ 18,523 $ 12,426
Accrued expenses........................................................................ 56,270 36,128
Payables to affiliates.................................................................. 4,466 5,649
Income taxes payable.................................................................... -- 3,253
Current portion of long-term debt....................................................... 875 3,409
Notes payable on real estate held for sale.............................................. 76,623 67,810
Other current liabilities............................................................... 2,185 1,023
---------- ----------
Total current liabilities............................................................. 158,942 129,698
Long-term debt, less current portion...................................................... 1,555 8,952
Deferred compensation..................................................................... 8,391 20,963
Other liabilities......................................................................... 417 405
---------- ----------
Total liabilities..................................................................... 169,305 160,018
Minority interest......................................................................... 19,859 3,294
Stockholders' equity
Preferred stock; $0.01 par value; 30,000,000 shares authorized; none issued or
outstanding........................................................................... -- --
Common stock; $0.01 par value; 100,000,000 shares authorized; 33,892,038 shares issued
and outstanding in 1997............................................................... 339 --
Paid-in capital......................................................................... 150,647 24,084
Retained earnings (deficit)............................................................. (12,734) 16,312
Less: Stockholder loans................................................................. (1,180) (9,394)
---------- ----------
Total stockholders' equity................................................................ 137,072 31,002
---------- ----------
$ 326,236 $ 194,314
---------- ----------
---------- ----------
</TABLE>

See accompanying notes.

F-9
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
------------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE DATA)
<S> <C> <C> <C>
REVENUES:
Property management services............................................ $ 87,756 $ 90,179 $ 92,970
Brokerage services...................................................... 91,053 72,095 61,960
Infrastructure management services...................................... 68,719 50,836 38,681
Development and construction services................................... 40,054 22,732 20,382
Retail services......................................................... 5,318 2,393 1,510
------------- ---------- ----------
292,900 238,235 215,503
Income from investments in unconsolidated subsidiaries.................. 512 594 114
Gain on disposition of real estate...................................... 10,241 6,630 5,026
Other income............................................................ 9,986 9,996 6,559
------------- ---------- ----------
313,639 255,455 227,202
COSTS AND EXPENSES:
Salaries, wages and benefits............................................ 161,425 137,794 130,248
Non-recurring compensation costs........................................ 33,085 -- --
Commissions............................................................. 39,121 27,119 23,730
General and administrative.............................................. 55,884 41,421 40,671
Profit sharing.......................................................... 23,514 20,094 15,893
Depreciation............................................................ 3,514 3,196 3,841
Amortization............................................................ 714 -- --
Interest................................................................ 5,515 1,726 1,722
Royalty and consulting fees............................................. 6,212 3,959 2,443
Minority interest....................................................... 2,042 206 520
------------- ---------- ----------
331,026 235,515 219,068
------------- ---------- ----------
Income (loss) before income taxes......................................... (17,387) 19,940 8,134
Income tax expense (benefit).............................................. (3,367) 7,826 3,793
------------- ---------- ----------
Net income (loss)......................................................... $ (14,020) $ 12,114 $ 4,341
------------- ---------- ----------
------------- ---------- ----------
Pro forma loss per share (basic and diluted).............................. $ .42 * *
------------- ---------- ----------
------------- ---------- ----------
Pro forma weighted average common shares outstanding...................... 33,583,467
-------------
-------------
</TABLE>

- ------------------------

* Information is not relevant due to change in capital structure.

See accompanying notes.

F-10
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON SHARES COMMON COMMON RETAINED
---------------------- STOCK STOCK PAR PAID-IN EARNINGS TREASURY
ISSUED TREASURY SUBSCRIBED VALUE(1) CAPITAL (DEFICIT) STOCK
--------- ----------- ------------- ------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995...... 9,350 675 $ 361 $ -- $ 9,293 $ 5,333 $ (914)
Net income.................... -- -- -- -- -- 4,341 --
Dividends..................... -- -- -- -- -- (2,475) --
Sale of common stock
previously subscribed....... 390 -- (361) -- 361 -- --
Purchase of common stock...... -- 774 -- -- -- -- (1,337)
Sale of common stock.......... -- (400) -- -- -- -- 691
--------- ----------- ----- ----- --------- ----------- -----------
Balance at December 31, 1995.... 9,740 1,049 -- -- 9,654 7,199 (1,560)
Net income.................... -- -- -- -- -- 12,144 --
Dividends..................... -- -- -- -- -- (2,890) --
Purchase of common stock...... -- 2,481 -- -- -- -- (3,943)
Sale of common stock.......... 9,634 (3,530) -- -- 14,430 (111) 5,503
--------- ----------- ----- ----- --------- ----------- -----------
Balance at December 31, 1996.... 19,374 -- -- -- 24,084 16,312 --
Net loss...................... -- -- -- -- -- (14,020) --
Dividends..................... -- -- -- -- -- (15,026) --
Purchase of stock............. -- 963 -- -- -- -- (2,388)
Repayment of stockholder
loans....................... -- -- -- -- -- -- --
Sale of stock in public
offering.................... 5,750,000 -- -- 58 100,567 -- --
Offering costs................ -- -- -- -- (10,420) -- --
Non-cash charge for August
1997 options................ -- -- -- -- 33,085 -- --
Issuance and exchange of
shares in reincorporation
transactions................ 27,779,807 -- -- 278 (278) -- --
Conversion of note payable
into common stock........... 342,857 -- -- 3 5,997 -- --
Retirement of treasury
shares...................... -- (963) -- -- (2,388) -- 2,388
--------- ----------- ----- ----- --------- ----------- -----------
Balance at December 31, 1997.... 33,892,038 -- $ -- $ 339 $ 150,647 $ (12,734) $ --
--------- ----------- ----- ----- --------- ----------- -----------
--------- ----------- ----- ----- --------- ----------- -----------

STOCKHOLDER
LOANS TOTAL
------------- ---------
<S> <C> <C>
Balance at January 1, 1995...... $ -- $ 14,073
Net income.................... -- 4,341
Dividends..................... -- (2,475)
Sale of common stock
previously subscribed....... -- --
Purchase of common stock...... -- (1,337)
Sale of common stock.......... -- 691
------------- ---------
Balance at December 31, 1995.... -- 15,293
Net income.................... -- 12,114
Dividends..................... -- (2,890)
Purchase of common stock...... -- (3,943)
Sale of common stock.......... (9,394) 10,428
------------- ---------
Balance at December 31, 1996.... (9,394) 31,002
Net loss...................... -- (14,020)
Dividends..................... -- (15,026)
Purchase of stock............. -- (2,388)
Repayment of stockholder
loans....................... 8,214 8,214
Sale of stock in public
offering.................... -- 100,625
Offering costs................ -- (10,420)
Non-cash charge for August
1997 options................ -- 33,085
Issuance and exchange of
shares in reincorporation
transactions................ -- --
Conversion of note payable
into common stock........... -- 6,000
Retirement of treasury
shares...................... -- --
------------- ---------
Balance at December 31, 1997.... $ (1,180) $ 137,072
------------- ---------
------------- ---------
</TABLE>

- ------------------------------

(1) Common stock par value for 1995 and 1996 rounds to less than $1.

See accompanying notes.

F-11
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).................................................................. $ (14,020) $ 12,114 $ 4,341
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities
Depreciation..................................................................... 3,514 3,196 3,841
Amortization..................................................................... 714 -- --
Minority interest................................................................ 2,042 206 520
Deferred income tax provision (benefit).......................................... (5,462) 1,602 (2,040)
Income from investments in unconsolidated subsidiaries........................... (512) (594) (114)
Gain on disposition of real estate............................................... (10,241) (6,630) (5,026)
Non-cash charge for August 1997 options.......................................... 33,085 -- --
Changes in operating assets and liabilities
Accounts receivable............................................................ (6,007) (6,757) (8,214)
Receivables from affiliates.................................................... 3,083 (1,585) 1,466
Notes and other assets......................................................... (7,509) (2,286) (2,228)
Expenditures for real estate held for sale..................................... (109,068) (92,975) (37,641)
Proceeds from sale of real estate.............................................. 51,542 48,555 43,472
Proceeds from real estate notes payable........................................ 89,763 91,428 21,705
Payments on real estate notes payable.......................................... (45,550) (36,800) (31,438)
Accounts payable and accrued expenses.......................................... 20,159 4,558 17,277
Payables to affiliates......................................................... (1,275) 1,850 1,203
Income taxes recoverable/payable............................................... (8,192) 2,775 (454)
Deferred compensation.......................................................... (234) 5,750 4,416
Other liabilities.............................................................. (810) 741 (438)
--------- --------- ---------
Net cash provided by (used in) operating activities................................ (4,978) 25,148 10,648
--------- --------- ---------
INVESTING ACTIVITIES
Expenditures for furniture and equipment........................................... (3,469) (3,277) (2,077)
Acquisition of Doppelt and Company................................................. (22,658) -- --
Investments in unconsolidated subsidiaries......................................... (7,404) (2,305) (1,873)
Distributions from unconsolidated subsidiaries..................................... 6,912 1,408 170
Contributions from minority interest............................................... 10,350 11 3,631
Distributions to minority interest................................................. (5,053) (856) (497)
--------- --------- ---------
Net cash used in investing activities.............................................. (21,322) (5,019) (646)
--------- --------- ---------
FINANCING ACTIVITIES
Principal payments on debt......................................................... (47,467) (4,538) (5,688)
Proceeds from debt................................................................. 36,146 9,834 2,664
Payment on deferred financing fees................................................. (1,031) -- --
Purchase of common stock........................................................... (730) (3,943) (1,010)
Proceeds from sale of common stock................................................. 100,625 15 1,052
Stock offering costs............................................................... (10,420) (257) --
Collections of stockholder loans................................................... 2,445 -- --
Dividends paid..................................................................... (15,026) (2,890) (2,475)
--------- --------- ---------
Net cash provided by (used in) financing activities................................ 64,542 (1,779) (5,457)
--------- --------- ---------
Net increase in cash and cash equivalents.......................................... 38,242 18,350 4,545
Cash and cash equivalents, beginning of year....................................... 58,505 40,155 35,610
--------- --------- ---------
Cash and cash equivalents, end of year............................................. $ 96,747 $ 58,505 $ 40,155
--------- --------- ---------
--------- --------- ---------
</TABLE>

See accompanying notes.

F-12
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Trammell Crow Company, a Delaware corporation (the Company), was
incorporated on August 21, 1997 to become the successor to Trammell Crow
Company, a Texas close corporation (the Predecessor Company). In connection with
the Company's initial public offering, a wholly-owned subsidiary of the Company
was merged with and into the Predecessor Company (the Reincorporation Merger)
with the Predecessor Company surviving the merger as a wholly-owned subsidiary
of the Company. The Company provides commercial real estate services primarily
in the United States. Its principal lines of business include property
management, brokerage, infrastructure management, development and construction,
and retail services.

USE OF ESTIMATES

The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
the Company, its wholly-owned subsidiaries, and other subsidiaries over which
the Company has control. Intercompany accounts and transactions have been
eliminated. The Company's investments in subsidiaries in which it has the
ability to exercise significant influence over operating and financial policies,
but does not have control, are accounted for on the equity method. Accordingly,
the Company's share of the earnings of these subsidiaries is included in
consolidated net income. Investments in other subsidiaries are carried at cost.
These unconsolidated subsidiaries primarily own real estate development
projects.

REVENUE RECOGNITION

The Company recognizes fees from property management services and
infrastructure management services over the terms of the respective management
contracts. Most of the property management contracts are cancelable at will or
with 30 days' notice. The infrastructure management contracts generally range
from three to five years. Brokerage service revenue relating to leasing services
and the related expense are generally recognized half upon the execution of a
lease contract and the remainder upon tenant occupancy. Sales brokerage revenue
is recognized upon closing. Development and construction services includes fees
from development and construction management projects and net construction
revenues, which are gross construction revenues net of subcontract costs. For
projects exceeding three months, fees are recognized using the
percentage-of-completion method. For contracts under three months, fees are
recognized upon completion of the contract. Gross construction revenues totaled
$61,837, $46,034 and $22,335 and subcontract costs totaled $52,853, $41,123 and
$19,397 in 1997, 1996 and 1995, respectively.

F-13
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and short-term, highly liquid
investments with maturities of 90 days or less when purchased.

FURNITURE AND EQUIPMENT

Furniture and equipment are stated at cost. Depreciation is computed using
the straight-line method over useful lives ranging from three to 10 years.

INCOME TAXES

The Company accounts for income taxes using the liability method. Deferred
income taxes result from temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
federal income tax purposes, and are measured using the enacted tax rates and
laws that will be in effect when the differences reverse.

PRO FORMA EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share. SFAS 128 replaced
primary and fully diluted earnings per share with basic and diluted earnings per
share.

In accordance with the requirements of the Securities and Exchange
Commission, the weighted average shares outstanding used to calculate basic and
diluted earnings per share included the shares issued in connection with the
Company's initial public offering and related transactions for the full year.
Options to purchase 4,788,046 shares of common stock were outstanding during a
portion of 1997 (see Note 8) but were not included in the computation of diluted
earnings per share because the Company incurred a net loss for the year and
therefore, the effect would be antidilutive.

CONCENTRATION OF CREDIT RISK

The Company provides services to owners of real estate assets primarily in
the United States. The Company performs credit evaluations of its customers and
generally does not require collateral. The risk associated with this
concentration is limited because of the large number of customers and their
geographic dispersion.

LONG-LIVED ASSETS

Long-lived assets, including goodwill, are evaluated when indicators of
impairment are present and provisions for possible losses are recorded when
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount.

F-14
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GOODWILL

Goodwill reflects the excess of purchase price over the fair value of net
assets purchased. Goodwill is amortized on a straight-line basis over 30 years.
Accumulated amortization of goodwill was $384 and $23 at December 31, 1997 and
1996, respectively.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information" ("SFAS
131"), which establishes standards for the way in which public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosure about products and services, and
major customers. This statement is effective for financial statements for
periods beginning after December 15, 1997. The Company is currently evaluating
the impact SFAS 131 will have on its financial statement disclosures.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior years' financial
statements to conform to the current year presentation.

2. REAL ESTATE HELD FOR SALE

The Company provides build-to-suit services for its customers and also
develops or purchases projects for investment purposes. Therefore, the Company
has ownership of real estate until such projects are sold. Real estate held for
sale is carried at the lower of cost or fair value less selling expenses. At
December 31, real estate held for sale consists of the following:

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Land.................................................................... $ 40,269 $ 26,635
Buildings and improvements.............................................. 58,298 44,487
--------- ---------
$ 98,567 $ 71,122
--------- ---------
--------- ---------
</TABLE>

The estimated costs to complete the 17 projects under construction at
December 31, 1997, total $54,837. Projects are expected to be sold within one
year of completion. At December 31, 1997, the Company had commitments for the
sale of ten of the projects. Gains are recognized upon sale of the project.

In 1997, rental revenues, which are included in development and construction
services revenue, and net income relating to real estate held for sale was
$6,086 and $658, respectively. Operations from real estate held for sale were
insignificant in 1996 and 1995.

F-15
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

3. FURNITURE AND EQUIPMENT

Furniture and equipment consist of the following at December 31:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Furniture and equipment, at cost...................................... $ 19,875 $ 18,097
Less: Accumulated depreciation........................................ (13,566) (11,774)
---------- ----------
Furniture and equipment, net $ 6,309 $ 6,323
---------- ----------
---------- ----------
</TABLE>

4. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

Summarized financial information for unconsolidated subsidiaries in which
the Company has an investment is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------
<S> <C>
BALANCE SHEET:
Real estate held for sale.................................................. $ 179,973
Other assets............................................................... 52,687
--------
Total assets............................................................. $ 232,660
--------
--------
Notes payable on real estate held for sale................................. $ 122,267
Other liabilities.......................................................... 28,573
Equity..................................................................... 81,820
--------
Total liabilities and equity............................................. $ 232,660
--------
--------
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
STATEMENT OF OPERATIONS:
Total revenues............................................................. $ 47,277
Total expenses............................................................. (44,154)
--------
Net income............................................................... $ 3,123
--------
--------
</TABLE>

F-16
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

5. ACCRUED EXPENSES

Accrued expenses consist of the following at December 31:

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Profit sharing distributions............................................ $ 12,752 $ 10,931
Payroll and bonuses..................................................... 14,825 10,191
Commissions............................................................. 11,132 7,808
Stock Appreciation Rights Plan settlement............................... 4,228 --
Deferred income......................................................... 3,288 --
Insurance accrual....................................................... 1,128 901
Interest................................................................ 55 473
Other................................................................... 8,862 5,824
--------- ---------
$ 56,270 $ 36,128
--------- ---------
--------- ---------
</TABLE>

6. LONG-TERM DEBT

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Long-term debt consists of the following at December 31:

Borrowings under a $150,000 line of credit with a bank; due December 1999, with
two 1-year extension options; bearing interest at (1) the greater of prime or
the Federal Funds Effective Rate plus 1/2% or (2) the Eurocurrency rate plus a
margin ranging from 1 1/4 to 1 3/4%; interest payable monthly.................. $ -- $ --
Borrowings under a $7,750 line of credit with a bank; bearing interest at 8.75%;
terminated in 1997............................................................. -- 7,750
Borrowings under revolving lines of credit with banks; totaling $3,300 and $2,800
in 1997 and 1996, respectively; expiring in 1998; bearing interest at rates
ranging from prime plus .5% to prime plus 1%; secured by certain assets........ -- 514
Note payable under a loan agreement with the majority stockholders; bearing
interest at 10.5%; paid in full in December 1997............................... -- 1,378
Capital lease obligations primarily for furniture and equipment; with maturity
dates ranging from 1998 to 2002; bearing interest at various rates ranging from
3.3% to 14% per annum in 1997; secured by the underlying assets and certain
accounts receivable............................................................ 1,579 2,719
Notes payable to former stockholders; due in 2000; bearing interest at 6.1%;
principal and interest payable upon maturity................................... 851 --
--------- ---------
Total long-term debt............................................................. 2,430 12,361
Less current portion of long-term debt........................................... 875 3,409
--------- ---------
$ 1,555 $ 8,952
--------- ---------
--------- ---------
</TABLE>

F-17
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

6. LONG-TERM DEBT (CONTINUED)

The shares of certain wholly-owned subsidiaries having 5% or more of the
consolidated assets, revenues or earnings of the Company, and subsidiaries which
are engaged primarily in the business of real estate development and ownership,
whose assets are not subject to any financing, having more than 5% of the
consolidated assets, revenues or earnings of the Company, are pledged as
security for the $150,000 line of credit.

The Company is subject to various covenants associated with the $150,000
line of credit such as maintenance of minimum equity and liquidity and certain
key financial data. In addition, the Company may not pay dividends exceeding 50%
of the previous year's net income before depreciation and amortization, and
there are certain restrictions on investments and acquisitions that can be made
by the Company. If certain financial ratios fall below a specified level, the
Company will be required to make payments equal to cash flow until such time as
the ratios reach the pre-established levels. At December 31, 1997, the Company
is in compliance with all debt covenants.

The covenants associated with the $150,000 line of credit and the amount of
the Company's other borrowings and contingent liabilities may have the effect of
limiting the credit available to the Company under the line of credit to an
amount less than the $150,000 commitment. At December 31, 1997, the Company has
$92,461 available under its $150,000 line of credit. Beginning March 1998, the
Company must pay a quarterly fee equal to .25% of the unused commitments under
the line.

The Company also has other revolving lines of credits with banks totaling
$3,300 at December 31, 1997, of which $2,876 is available.

Principal maturities of long-term debt are as follows:

Based on current rates available to the Company for debt with similar terms,
there is not a significant difference between the carrying amounts of the long-
term debt and their fair values.

7. NOTES PAYABLE ON REAL ESTATE HELD FOR SALE

The Company has loans secured by real estate held for sale (the majority of
which are construction loans) totaling $76,623 and $67,810 as of December 31,
1997 and 1996, respectively. Interest rates range from 8.25% to 12.0%.
Generally, interest only is payable on the real estate loans, with all unpaid
principal and interest due at maturity. The unused commitments on real estate
loans total $33,684 at December 31, 1997. All real estate loans have been
classified as current liabilities on the balance sheet since the loans are
expected to be repaid as the related projects are sold (see Note 2).

Capitalized interest in 1997 and 1996 totaled $1,642 and $539, respectively.
At December 31, 1997, $18,000 of the $76,623 real estate loans are recourse to
the Company.

F-18
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

7. NOTES PAYABLE ON REAL ESTATE HELD FOR SALE (CONTINUED)
Based on current rates available to the Company for debt with similar terms,
there is not a significant difference between the carrying amounts of the notes
payable on real estate held for sale and their fair values.

8. STOCKHOLDERS' EQUITY

Prior to the reincorporation transactions, the Predecessor Company had five
classes of common stock, all of which held the same voting rights, except for
voting rights with respect to certain specific actions.

In August 1996, the Predecessor Company completed a private offering to
Company employees and directors of 9,634 shares of Class E Common Stock. In
connection with the offering, the Company provided financing of $9,394 to
stockholders, which is reflected as a reduction of stockholders' equity. These
stockholder loans are to be repaid at prime plus .5% interest (9.0% at December
31, 1997). Principal and interest are payable annually and the notes mature in
March 2001. Principal and interest payments of $8,214 and $649, respectively,
were received in 1997.

The Company was capitalized with the issuance of 1,000 common shares to a
Predecessor Company stockholder. As a result of the Reincorporation Merger, the
outstanding shares of common stock of the Predecessor Company were exchanged for
25,502,964 shares of common stock of the Company. The Company also issued
2,295,217 shares of common stock to a Predecessor Company stockholder in
exchange for a trade name license.

On November 24, 1997, the Company's registration statement was declared
effective for its initial public offering of 5,750,000 shares of its common
stock (including exercise of the over-allotment option of 750,000 shares) at a
public offering price of $17.50 per share (the Offering). The proceeds to the
Company from the Offering were $90,205, net of offering expenses.

The holders of shares of the Company's common stock are entitled to one vote
for each share held on all matters submitted to a vote of common stockholders.
Each share of common stock is entitled to participate equally in dividends, when
and if declared, and in the distribution of assets in the event of liquidation,
dissolution or winding up of the Company, subject in all cases to any rights of
outstanding shares of preferred stock.

The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock-Based Compensation" (FAS No. 123),
requires the use of option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, compensation expense is recognized
to the extent the market price of the underlying stock on the date of grant
exceeds the exercise price of the option.

In connection with the reincorporation transactions, the Company assumed the
Trammell Crow Company 1997 Option Plan (the Assumed Option Plan), which provided
for the issuance of up to 1,626 shares of the Predecessor Company's Class E
common stock. On August 1, 1997, the Predecessor Company granted to certain
employees options to acquire 1,626 shares of Class E common stock. In connection
with the reincorporation transactions, these options were converted into options
to purchase 2,423,769 shares of the Company's common stock at an exercise price
of $3.85 per share. The options

F-19
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

8. STOCKHOLDERS' EQUITY (CONTINUED)
vested at the closing of the Offering and became exercisable 30 days after that
date. The options expire 10 years from the date of grant. The Company recognized
a non-cash, non-recurring charge to compensation of $33,085 for these options.

In connection with the Offering, the Company established the Trammell Crow
Company Long-Term Incentive Plan (the Long-Term Plan). The Long-Term Plan
provides for the issuance of up to 5,334,878 shares of common stock. In
connection with the Offering, the Company granted to certain employees options
to acquire 2,348,455 shares of common stock at an exercise price of $17.50 per
share. The options vest over a three-year period, with one-third vesting on each
of the three anniversaries of the grant date, and expire 10 years from the date
of grant. In December 1997, the Company granted to non-employee directors of the
Company options to acquire 15,822 shares of common stock at an exercise price of
$22.75 per share. The options vested immediately upon granting and expire 10
years from the date of grant.

The Long-Term Plan also provides for the awards of Stock Appreciation
Rights, Restricted Stock and Performance Units. No such awards have been made as
of December 31, 1997.

At December 31, 1997, common shares reserved for future issuance under the
Assumed Option Plan and the Long-Term Plan total 7,758,647 shares.

Pro forma information regarding net income and earnings per share is
required by FAS No. 123, and has been determined as if the Company had accounted
for its employee stock options under the fair value method. The fair value for
these options was estimated at the date of grant using a Black-Scholes option
pricing model with the following assumptions: risk-free interest rates ranging
from 5.76% to 6.40%; a dividend yield of 0%; volatility factors of the expected
market price of the Company's common stock of 0.318; and a weighted-average
expected life of the options of 8 years.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
differently than those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For the purpose of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. For the year
ended December 31, 1997, the Company's pro forma net loss is $18,473 and pro
forma loss per share (basic and diluted) is $.55. These pro forma disclosures
are not likely to be representative of the effects on reported net income for
future years since few options have vested at December 31, 1997.

F-20
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

8. STOCKHOLDERS' EQUITY (CONTINUED)
A summary of the Company's stock option activity, and related information,
for the year ended December 31, 1997 is as follows:

<TABLE>
<CAPTION>
EXERCISE PRICE OF EXERCISE PRICE OF
$3.85 (BELOW $17.50 TO $22.75 (AT
MARKET PRICE AT MARKET
GRANT DATE) PRICE AT GRANT DATE) TOTAL
------------------ ------------------------- ----------
<S> <C> <C> <C>
OPTIONS OUTSTANDING:
Number of options at January 1, 1997.................. -- -- --
Granted............................................... 2,423,769 2,364,277 4,788,046
Exercised............................................. -- -- --
Forfeited............................................. -- -- --
Expired............................................... -- -- --
------------------ ----------- ----------
Number of options at December 31, 1997................ 2,423,769 2,364,277 4,788,046
------------------ ----------- ----------
------------------ ----------- ----------
Weighted-average exercise price....................... $ 3.85 $ 17.54
Weighted-average fair value of options granted........ $ 15.18 $ 8.79
Weighted-average remaining contractual life........... 9.6 years 9.9 years

OPTIONS EXERCISABLE:
Number of options..................................... 2,423,769 15,822 2,439,591
Weighted-average exercise price....................... $ 3.85 $ 22.75
</TABLE>

9. INCOME TAXES

Components of deferred income taxes are as follows at December 31:

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Assets................................................................... $ 18,946 $ 8,047
Liabilities.............................................................. (679) (163)
--------- ---------
$ 18,267 $ 7,884
--------- ---------
--------- ---------
Current.................................................................. $ 3,870 $ 88
Noncurrent............................................................... 14,397 7,796
--------- ---------
$ 18,267 $ 7,884
--------- ---------
--------- ---------
</TABLE>

F-21
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

9. INCOME TAXES (CONTINUED)
The components of the net deferred tax asset are summarized below as of
December 31:

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Deferred tax assets
Deferred compensation.................................................. $ 4,395 $ 6,856
Bad debts.............................................................. 316 313
Depreciation........................................................... 507 546
Basis difference on real estate held for sale.......................... 2,012 --
Compensation expense relating to stock options......................... 12,559 --
Stock Appreciation Rights Plan Settlement.............................. 1,605 --
Other.................................................................. 64 332
--------- ---------
21,458 8,047
Less: Valuation allowance.............................................. (2,512) --
--------- ---------
Total deferred tax assets.............................................. 18,946 8,047
Deferred tax liabilities
State taxes............................................................ (523) --
Goodwill amortization.................................................. (115) --
Other.................................................................. (41) (163)
--------- ---------
Total deferred tax liabilities......................................... (679) (163)
--------- ---------
Net deferred tax asset................................................... $ 18,267 $ 7,884
--------- ---------
--------- ---------
</TABLE>

The provision (benefit) for income taxes consists of the following for the
years ended December 31:

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Current
Federal...................................................... $ 1,646 $ 5,202 $ 4,893
State........................................................ 449 1,022 940
--------- --------- ---------
2,095 6,224 5,833
Deferred
Federal...................................................... (4,862) 1,602 (2,040)
State........................................................ (600) -- --
--------- --------- ---------
(5,462) 1,602 (2,040)
--------- --------- ---------
$ (3,367) $ 7,826 $ 3,793
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-22
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

9. INCOME TAXES (CONTINUED)

The differences between the provisions for income taxes and the amounts
computed by applying the statutory federal income tax rates to income (loss)
before income taxes for the years ended December 31 are:

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Tax at statutory rate applied to income (loss) before income
taxes......................................................... $ (5,912) $ 6,780 $ 2,766
State income taxes, net of federal tax benefit.................. (611) 674 589
Increase in taxes resulting from non-deductible meals,
entertainment and other....................................... 644 372 438
Valuation allowance............................................. 2,512 -- --
--------- --------- ---------
$ (3,367) $ 7,826 $ 3,793
--------- --------- ---------
--------- --------- ---------
</TABLE>

10. OPERATING LEASES

The Company has commitments under operating leases for office space and
office equipment. During the years ended December 31, 1997, 1996 and 1995, rent
expense was $6,906, $7,814 and $7,255, including $1,770, $3,037 and $2,987,
respectively, paid to affiliates of the Company.

Minimum future rentals under noncancelable operating lease commitments in
effect at December 31, 1997, are as follows:

<TABLE>
<CAPTION>
AFFILIATE NONAFFILIATE TOTAL
----------- ----------- ---------
<S> <C> <C> <C>
1998........................................................ $ 936 $ 4,494 $ 5,430
1999........................................................ 935 2,971 3,906
2000........................................................ 882 1,994 2,876
2001........................................................ 759 1,401 2,160
2002........................................................ 696 1,145 1,841
Thereafter.................................................. -- 236 236
----------- ----------- ---------
$ 4,208 $ 12,241 $ 16,449
----------- ----------- ---------
----------- ----------- ---------
</TABLE>

Rental amounts include fixed operating expense payments but do not include
increases for rate escalations.

11. EMPLOYEE BENEFIT PLANS

The Company's employees participate in a defined contribution savings plan,
which provides the opportunity for pretax contributions by employees. The
Company matches 50% of the employee's contributions up to 6% of the employee's
annual earnings or a maximum of $4.5 per annum. The Company's contribution
expense for 1997, 1996, and 1995 was $2,122, $1,741, and $2,154, respectively.

The Company has a profit sharing plan for key employees (the Profit Sharing
Plan). Each participant has a profit sharing account that is adjusted annually
for the participant's percentage of the earnings for a profit sharing unit, cash
distributions, tax rate changes, and other adjustments. Distributions to
participants

F-23
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

11. EMPLOYEE BENEFIT PLANS (CONTINUED)
are limited to Available Cash, as defined. Any difference between the amount
expensed and the amount paid to the participants is recorded as deferred
compensation. The Company's management board approved the percentage of earnings
available to profit sharing participants. Such percentages were approximately
58%, 58% and 73% of earnings before profit sharing, as defined, in 1997, 1996,
and 1995, respectively. In connection with the Offering, the Company terminated
any future awards under the Profit Sharing Plan.

Effective January 1, 1993, the Company initiated the All Employee Cash
Profit Sharing Program whereby 3% of earnings, as defined, was paid as bonuses
to employees not participating in the key employee profit sharing plan. Expense
related to the program, which is included in salaries, wages and benefits, was
$1,577, $1,205, and $818 in 1997, 1996, and 1995, respectively. In connection
with the Offering, the Company terminated this program.

Effective March 1, 1998, the Company established the Trammell Crow Company
Employee Stock Purchase Plan (the ESPP), subject to stockholder approval.
Employees may elect to have monthly payroll deductions of 1% to 10%, which is
used to purchase, on a semi-annual basis, stock of the Company at a 15% discount
from market value. The ESPP is available to all employees. The Company has
reserved 1,000,000 shares of common stock for issuance under the ESPP. Shares
may also be issued from treasury, if available.

12. GAIN ON DISPOSITION OF REAL ESTATE

During 1997, the Company sold thirteen real estate projects for an aggregate
sale price of $51,542, resulting in a gain on sale of $10,241. During 1996, the
Company sold sixteen real estate projects for an aggregate sale price of
$48,555, resulting in a gain on sale of $6,630. During 1995, the Company sold
nine real estate projects for an aggregate sale price of $43,472, resulting in a
gain on sale of $5,026.

In March 1997, the Company contributed real estate held for sale of $35,400
and the related $35,400 note payable to a partnership and received a 16% limited
partner interest. No gain was recognized.

13. ACQUISITIONS

In August 1997, the Company acquired substantially all of the assets of
Doppelt & Company (Doppelt), a Cleveland, Ohio-based company that specializes in
new store roll out strategies and problem real estate disposition services. The
Company paid $20,658 in cash, issued a promissory note of $6,000, which was
prepaid by the Company in November 1997 with 342,857 shares of common stock, and
granted the seller the right to receive an additional $2,000 of purchase price
if future commissions collected by the Company exceed $7,000, subject to certain
reductions. The Company also paid Mr. Doppelt $2,000 as consideration for an
employment agreement, which includes non-compete provisions. In connection with
the acquisition, which was accounted for using the purchase method of
accounting, the Company recorded goodwill of $27,416. The operations of Doppelt
are included in the Company's operations from the date of acquisition.

F-24
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

14. RELATED PARTY TRANSACTIONS

In 1997, 1996 and 1995, the Company derived 7%, 9%, and 11%, respectively,
of its total revenues from services provided principally to the stockholders of
the Company. The fees received are comparable to those charged to unaffiliated
customers.

Under certain agreements, two significant stockholders were entitled to
receive royalty and consulting fees totaling approximately 12% of Earnings
Before Profit Sharing, as defined. Accrued royalties and consulting fees at
December 31, 1997 and 1996, are included in payables to affiliates. These
agreements were terminated in connection with the Offering. The Company paid
$1,556 to one of the stockholders in January 1998 and has agreed to pay all
remaining unpaid amounts by April 15, 1998.

In conjunction with the issuance of stock in 1996, the Company issued tax
loans to the stockholders totaling $4,734 in order for the stockholders to pay
the incremental taxes related to the stock purchased. As of December 31, 1997
and 1996, $43 and $1,620, respectively, is outstanding and included in notes and
other receivables. These notes bear interest at 5.9% and are due in August 1999;
however, these loans may be repaid earlier based on cash available for profit
sharing distributions.

In January 1997, the Company formed a joint venture with an affiliate of one
of the stockholders to provide management information services. Both parties
share equally in any distributions from the joint venture (none through December
31, 1997). The Company entered into a 5-year management information system
agreement with the joint venture for related services and, in 1997, paid fees
totaling $4,135 for such services.

15. COMMITMENTS AND CONTINGENCIES

At December 31, 1997, the Company has guaranteed $37,250 of real estate
notes payable of others. These notes are collateralized by the underlying real
estate. The Company has outstanding letters of credit totaling $13,163 at
December 31, 1997, of which $4,663 was released through February 1998. The
remaining letter of credit expires in July 1999.

In addition, at December 31, 1997, the Company has several completion and
budget guarantees relating to development projects. Management does not expect
to incur any material losses under these guarantees.

On November 2, 1997 the Company settled claims asserted by certain former
employees arising out of the termination of the Company's Stock Appreciation
Rights Plan. In connection with the settlement, the Company paid $127 in 1997
and accrued $4,228 for additional payments which are due by May 1998.

The Company and its subsidiaries are defendants in other lawsuits that arose
in the normal course of business. In management's judgment, the ultimate
liability, if any, from such legal proceedings will not have a material effect
on the Company's financial position.

F-25
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

16. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is summarized below for the three years
ended December 31:

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Interest paid................................................. $ 7,575 $ 1,520 $ 2,833
Income taxes paid............................................. 10,454 3,288 6,320
Profit sharing distributions paid............................. 21,927 12,021 7,722
Non cash activities for the three years ended December 31:
Assumption of stockholder loan............................ -- -- 327
Write-off of pursuit costs and intangibles................ -- -- 361
Conversion of deferred compensationbalances to stock...... -- 10,670 --
Stockholder loans......................................... -- 9,394 --
Payment of stockholder and tax loans with deferred
compensation balances................................... 12,338 -- --
Conversion of Doppelt note payable to stock............... $ 6,000 $ -- $ --
</TABLE>

17. UNAUDITED INTERIM FINANCIAL INFORMATION

Unaudited summarized financial information by quarter is as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
----------- --------- ------------ ------------
<S> <C> <C> <C> <C>
1997:
Total revenues............................. $ 62,098 $ 69,344 $ 81,797 $ 100,400
Net income (loss).......................... 1,601 2,685 4,568 (22,874)

1996:
Total revenues............................. $ 56,397 $ 54,299 $ 65,515 $ 79,244
Net income................................. 1,876 2,093 3,673 4,472
</TABLE>

Quarterly net income (loss) per share is not relevant due to the change in
capital structure during the quarter ended December 31, 1997.

In the fourth quarter of 1997, the Company recognized a non-cash,
non-recurring charge to compensation of $33,085 for options granted prior to the
Offering at an exercise price substantially less than the fair value (see Note
8). The Company also expensed $4,355 in the fourth quarter relating to
settlement of litigation with participants under the Stock Appreciation Rights
Plan (see Note 15).

F-26
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
MARCH 31,
1998
-----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents........................................................... $ 65,165 $ 96,747
Accounts receivable, net of allowance for doubtful accounts of
$838 in 1998 and $955 in 1997..................................................... 45,871 40,602
Receivables from affiliates......................................................... 1,021 926
Notes and other receivables......................................................... 4,291 4,007
Income taxes recoverable............................................................ 1,596 4,939
Deferred income taxes............................................................... 3,698 3,870
Real estate held for sale........................................................... 134,982 98,567
Other current assets................................................................ 11,329 9,220
----------- ------------
Total current assets.............................................................. 267,953 258,878
Furniture and equipment, net.......................................................... 7,693 6,309
Deferred income taxes................................................................. 14,027 14,397
Investments in unconsolidated subsidiaries............................................ 11,279 11,244
Goodwill, net......................................................................... 44,792 27,111
Other assets.......................................................................... 14,775 8,297
----------- ------------
$ 360,519 $ 326,236
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.................................................................... $ 20,047 $ 18,523
Accrued expenses.................................................................... 40,594 56,270
Payables to affiliates.............................................................. 4,003 4,466
Current portion of long-term debt................................................... 826 875
Notes payable on real estate held for sale.......................................... 93,039 76,623
Other current liabilities........................................................... 2,060 2,185
----------- ------------
Total current liabilities......................................................... 160,569 158,942
Long-term debt, less current portion.................................................. 33,829 1,555
Deferred compensation................................................................. 3,809 8,391
Other liabilities..................................................................... 673 417
----------- ------------
Total liabilities................................................................. 198,880 169,305
Minority interest..................................................................... 18,073 19,859
Stockholders' equity
Preferred stock; $0.01 par value; 30,000,000 shares authorized;
none issued or outstanding........................................................ -- --
Common stock; $0.01 par value; 100,000,000 shares authorized;
33,911,416 and 33,892,038 shares issued and outstanding
in 1998 and 1997, respectively.................................................... 339 339
Paid-in capital..................................................................... 150,721 150,647
Retained earnings (deficit)......................................................... (6,405) (12,734)
Less: Stockholder loans............................................................. (1,089) (1,180)
----------- ------------
Total stockholders' equity........................................................ 143,566 137,072
----------- ------------
$ 360,519 $ 326,236
----------- ------------
----------- ------------
</TABLE>

See accompanying notes.

F-27
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1998 1997
--------- ---------
(IN THOUSANDS,
EXCEPT
PER SHARE DATA)
<S> <C> <C>
REVENUES
Property management services........................................................ $ 24,887 $ 22,024
Brokerage services.................................................................. 25,533 16,935
Infrastructure management services.................................................. 22,890 14,569
Development and construction services............................................... 8,891 5,206
Retail services..................................................................... 2,727 325
--------- ---------
84,928 59,059
Income from investments in unconsolidated subsidiaries.............................. 2,415 58
Gain on disposition of real estate.................................................. 866 1,124
Other income........................................................................ 2,042 1,857
--------- ---------
90,251 62,098
COSTS AND EXPENSES
Salaries, wages and benefits........................................................ 50,516 37,339
Commissions......................................................................... 10,953 7,003
General and administrative.......................................................... 15,097 10,303
Profit sharing...................................................................... -- 2,570
Depreciation........................................................................ 1,085 898
Amortization........................................................................ 329 --
Interest............................................................................ 1,666 552
Royalty and consulting fees......................................................... -- 528
Minority interest................................................................... 37 281
--------- ---------
79,683 59,474
--------- ---------
Income before income taxes............................................................ 10,568 2,624
Income tax expense.................................................................... 4,239 1,023
--------- ---------
Net income............................................................................ $ 6,329 $ 1,601
--------- ---------
--------- ---------
Earnings per share:
Basic............................................................................... $ .19 *
---------
---------
Diluted............................................................................. $ .18 *
---------
---------
</TABLE>

- ------------------------
* Information is not relevant due to change in capital structure.

See accompanying notes.

F-28
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------
1998 1997
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income.............................................................................. $ 6,329 $ 1,601
Adjustments to reconcile net income to net cash used in operating activities
Depreciation.......................................................................... 1,085 898
Amortization.......................................................................... 329 --
Minority interest..................................................................... 37 281
Deferred income tax provision......................................................... 865 10
Income from investments in unconsolidated subsidiaries................................ (2,415) (58)
Gain on disposition of real estate.................................................... (866) (1,124)
Changes in operating assets and liabilities
Accounts receivable................................................................. (3,976) 5,526
Receivables from affiliates......................................................... (95) 1,226
Notes and other assets.............................................................. (5,048) (3,140)
Expenditures for real estate held for sale.......................................... (45,758) (11,045)
Proceeds from sale of real estate................................................... 10,209 13,864
Proceeds from real estate notes payable............................................. 20,815 8,809
Payments on real estate notes payable............................................... (4,399) (11,761)
Accounts payable and accrued expenses............................................... (16,609) (19,081)
Payables to affiliates.............................................................. (463) (1,007)
Income taxes recoverable/payable.................................................... 3,343 (2,767)
Deferred compensation............................................................... (4,582) 2,501
Other liabilities................................................................... (378) (552)
---------- ----------
Net cash used in operating activities..................................................... (41,577) (15,819)
---------- ----------
INVESTING ACTIVITIES
Expenditures for furniture and equipment.................................................. (2,089) (605)
Acquisitions of real estate service companies............................................. (20,863) --
Investments in unconsolidated subsidiaries................................................ (597) (1,537)
Distributions from unconsolidated subsidiaries............................................ 2,977 564
Contributions from minority interest...................................................... 171 457
Distributions to minority interest........................................................ (1,994) (145)
---------- ----------
Net cash used in investing activities..................................................... (22,395) (1,266)
---------- ----------
FINANCING ACTIVITIES
Principal payments on debt................................................................ (1,390) (1,819)
Proceeds from debt........................................................................ 33,615 2,306
Proceeds from exercise of stock options................................................... 74 --
Collections of stockholder loans.......................................................... 91 --
---------- ----------
Net cash provided by financing activities................................................. 32,390 487
---------- ----------
Net decrease in cash and cash equivalents................................................. (31,582) (16,598)
Cash and cash equivalents, beginning of period............................................ 96,747 58,505
---------- ----------
Cash and cash equivalents, end of period.................................................. $ 65,165 $ 41,907
---------- ----------
---------- ----------
</TABLE>

See accompanying notes.

F-29
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)

1. GENERAL

The consolidated interim financial statements of Trammell Crow Company (the
Company) included herein have been prepared in accordance with the requirements
for interim financial statements and do not include all disclosures required
under generally accepted accounting principles for complete financial
statements. These financial statements should be read in conjunction with the
consolidated financial statements for the year ended December 31, 1997 included
herein. In the opinion of management, all adjustments and eliminations,
consisting only of recurring adjustments, necessary for a fair presentation of
the financial statements for the interim periods have been made. Interim results
of operations are not necessarily indicative of the results to be expected for
the full year.

The Company has experienced and expects to continue to experience quarterly
variations in revenues and net income as a result of several factors, including
the timing of transactions, the commencement of new contracts, revenue mix and
the timing of additional selling, general and administrative expenses to support
new business activities. The Company's revenues tend to be higher in the last
quarter of the year than in the first three quarters because its clients have
demonstrated a tendency to close transactions toward the end of the year, which
causes the Company to earn more of its revenue under transaction-oriented
service contracts in the last quarter of the year. In addition, an increasing
percentage of the Company's property management and infrastructure management
contracts provide for incentive payments if the Company achieves certain
performance targets. Such incentive payments are generally earned in the fourth
quarter.

USE OF ESTIMATES

INCOME TAXES

The provision for income taxes has been included in the accompanying
financial statements based on an estimated annual effective tax rate. The
differences between the provisions for income taxes and amounts computed by
applying the statutory federal income tax rates to income are primarily a result
of amortization of goodwill, state income taxes and non-deductible meals and
entertainment expenditures.

EARNINGS PER SHARE

Weighted average shares outstanding used to calculate basic earnings per
share were 33,899,574. Weighted average shares outstanding of 36,115,203 used to
calculate diluted earnings per share includes employee stock options to purchase
2,215,629 shares of common stock as these options are dilutive.

2. REAL ESTATE HELD FOR SALE

During the three months ended March 31, 1998, the Company sold three real
estate projects for an aggregate sales price of $10,209, resulting in a gain on
disposition of $866. During the three months ended March 31, 1997, the Company
sold six real estate projects for an aggregate sales price of $13,864, resulting
in a gain on disposition of $1,124.

F-30
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)

2. REAL ESTATE HELD FOR SALE (CONTINUED)
In March 1997, the Company contributed real estate held for sale of $35,400
and the related $35,400 note payable to a partnership and received a 16% limited
partner interest. No gain was recognized.

3. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

Operating results for unconsolidated subsidiaries in which the Company has
an investment were as follows:

<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31, 1998
--------------
<S> <C>
Total revenues................................................................ $ 13,682
Total expenses................................................................ (8,128)
-------
Net income.................................................................. $ 5,554
-------
-------
</TABLE>

4. STOCKHOLDERS' EQUITY

A summary of the Company's stock option activity for the three months ended
March 31, 1998 is as follows:

<TABLE>
<CAPTION>
EXERCISE PRICE OF EXERCISE PRICE OF
$3.85 (BELOW MARKET $17.50 TO $29.44 (AT
PRICE MARKET PRICE
AT GRANT DATE) AT GRANT DATE) TOTAL
--------------------- ----------------------- ----------
<S> <C> <C> <C>
OPTIONS OUTSTANDING:
December 31, 1997............... 2,423,769 2,364,277 4,788,046
Granted......................... -- 118,943 118,943
Exercised....................... (19,378) -- (19,378)
Forfeited....................... (38,866) (38,866)
Expired......................... -- -- --
---------- ---------- ----------
March 31, 1998.................. 2,404,391 2,444,354 4,848,745
---------- ---------- ----------
---------- ---------- ----------
OPTIONS EXERCISABLE AT MARCH 31,
1998.......................... 2,404,391 15,822 2,381,347
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

5. ACQUISITION OF TOOLEY & COMPANY

On March 16, 1998, the Company purchased all of the issued and outstanding
capital stock of Tooley & Company, Inc. (Tooley), a California real estate
services company primarily engaged in office management and leasing. The Company
paid cash of $23,100 for the capital stock, and paid an additional $1,000 to two
of the principals of Tooley as consideration for non-compete agreements. The
Company also agreed to pay the seller an additional $3,000 of purchase price if
Tooley achieves certain performance standards in the future, as well as certain
payments based upon the future performance of certain of Tooley's projects. In
connection with the acquisition, which was accounted for using the purchase
method of accounting, the Company recorded goodwill of $17,375. The operations
of Tooley are included in the

F-31
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)

5. ACQUISITION OF TOOLEY & COMPANY (CONTINUED)
Company's operations from the date of acquisition. The Company borrowed $23,000
under its credit facility to fund the purchase.

6. CONTINGENCIES

At March 31, 1998, the Company has guaranteed $3,775 of real estate notes
payable of others. These notes are collateralized by the underlying real estate.
The Company has outstanding letters of credit totaling $12,165 at March 31,
1998, which expire at varying dates through July 1999.

In addition, at March 31, 1998, the Company has several completion and
budget guarantees relating to development projects. Management does not expect
to incur any material losses under these guarantees.

The Company and its subsidiaries are defendants in lawsuits that arose in
the normal course of business. In management's judgment, the ultimate liability,
if any, from such legal proceedings will not have a material effect on the
Company's financial position.

F-32
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
, 1998

5,000,000 SHARES
TRAMMELL CROW COMPANY

COMMON STOCK
--------------
OF THE 5,000,000 SHARES OF COMMON STOCK (THE "SHARES") BEING OFFERED,
SHARES ARE BEING OFFERED INITIALLY OUTSIDE THE UNITED STATES AND CANADA BY THE
INTERNATIONAL UNDERWRITERS AND SHARES ARE BEING OFFERED INITIALLY
INSIDE THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS. SEE
"UNDERWRITING." ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY (THE
"OFFERING") ARE BEING SOLD BY CERTAIN STOCKHOLDERS (THE "SELLING
STOCKHOLDERS") OF TRAMMELL CROW COMPANY (THE "COMPANY"). SEE
"PRINCIPAL AND SELLING STOCKHOLDERS." THE COMPANY WILL NOT RECEIVE
ANY PROCEEDS FROM THE SALE OF SHARES BY THE SELLING STOCKHOLDERS.
THE COMMON STOCK IS LISTED ON THE NEW YORK STOCK EXCHANGE
UNDER THE SYMBOL "TCC." ON JULY 16, 1998, THE LAST REPORTED
SALE PRICE OF THE COMMON STOCK ON THE NEW YORK STOCK
EXCHANGE COMPOSITE TRANSACTIONS TAPE WAS $31.125 PER
SHARE. IN 1991, THE COMPANY'S REAL ESTATE SERVICES
BUSINESS WAS SEPARATED FROM THE COMMERCIAL REAL
ESTATE ASSET BASE OWNED BY THE COMPANY'S
PREDECESSOR. THE COMPANY CONTINUED TO OPERATE
THE REAL ESTATE SERVICES BUSINESS WHILE
OWNERSHIP OF THE COMMERCIAL REAL ESTATE
ASSET BASE WAS SEGREGATED INTO A NUMBER
OF SEPARATE ENTITIES DISTINCT FROM THE
COMPANY, WITH INDEPENDENT
MANAGEMENT AND OPERATIONS.
------------------------

PRICE $ A SHARE
-------------------

(2) BEFORE DEDUCTING EXPENSES OF THE OFFERING PAYABLE BY THE SELLING
STOCKHOLDERS AND THE COMPANY, ESTIMATED AT $ .

MORGAN STANLEY DEAN WITTER
BANCAMERICA ROBERTSON STEPHENS
BT ALEXQ BROWN INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE

, 1998.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table itemizes the various expenses payable by the Company in
connection with the sale and distribution of the securities offered hereby,
other than underwriting discounts and commissions. ALL of the various expenses
shall be payable by the Selling Stockholders. All of the amounts shown are
estimated except the Commission filing fee:

<TABLE>
<S> <C>
Securities and Exchange Commission filing fee..................... $ 52,475
NASD filing fee................................................... 18,290
New York Stock Exchange listing fee...............................
Printing expenses.................................................
Legal fees and expenses...........................................
Consulting fees...................................................
Accounting fees and expenses......................................
Blue Sky fees and expenses........................................
Transfer agent's and registrar's fees.............................
Miscellaneous expenses............................................
---------
Total......................................................... $
---------
---------
</TABLE>

14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the DGCL ("Section 145") permits indemnification of
directors, officers, agents and controlling persons of a corporation under
certain conditions and subject to certain limitations. Article Twelfth of the
Certificate of Incorporation of the Company provides that the Company shall
indemnify its officers and directors to the maximum extent allowed by the DGCL.
Pursuant to Section 145, the Company generally has the power to indemnify its
present and former directors and officers against expenses and liabilities
incurred by them in connection with any suit to which they are, or are
threatened to be made, a party by reason of their serving in those positions so
long as they acted in good faith and in a manner they reasonably believed to be
in, or not opposed to, the best interests of the registrant, and with respect to
any criminal action, so long as they had no reasonable cause to believe their
conduct was unlawful. With respect to suits by or in the right of the
registrant, however, indemnification is generally limited to attorneys' fees and
other expenses and is not available if the person is adjudged to be liable to
the registrant, unless the court determines that indemnification is appropriate.
The statute expressly provides that the power to indemnify authorized thereby is
not exclusive of any rights granted under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The registrant also has
the power to purchase and maintain insurance for its directors and officers. The
Company maintains officers' and directors' liability insurance which insures
against liabilities that officers and directors of the Company may incur in such
capacities. Additionally, Article Twelfth of the Certificate of Incorporation
provides that, in the event that an officer or director files suit against the
registrant seeking indemnification of liabilities or expenses incurred, the
burden will be on the registrant to prove that the indemnification would not be
permitted under the DGCL. The preceding discussion of the registrant's
Certificate of Incorporation and Section 145 of the DGCL is not intended to be
exhaustive and is qualified in its entirety by the Certificate of Incorporation
and Section 145 of the DGCL.

The Company has entered into indemnification agreements with the Company's
directors and officers. Pursuant to such agreements, the Company will, to the
extent permitted by applicable law, indemnify such persons against all expenses,
judgments, fines and penalties incurred in connection with the defense or
settlement of any actions brought against them by reason of the fact that they
were directors or officers of the Company or assumed certain responsibilities at
the direction of the Company.

II-1
<PAGE>
At present, there is no pending litigation or proceeding involving a
director or officer of the Company for which indemnification is being sought nor
is the Company aware of any threatened litigation that may result in claims for
indemnification by any officer or director.

The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Company and
its directors and officers, and by the Company and the Selling Stockholders of
the Underwriters, for certain liabilities arising under the Securities Act or
otherwise.

15. RECENT SALES OF UNREGISTERED SECURITIES

On August 21, 1997, the Company was incorporated in Delaware and 1,000
shares of Common Stock were issued to Crow Family Partnership, L.P. ("Crow
Family") for $1,000 in cash. Such shares were issued without registration under
the Securities Act, in reliance on Section 4(2) of the Securities Act.

On August 22, 1997, TCRS acquired the business of Doppelt and the Company
issued a convertible subordinated note to Doppelt which was converted
immediately prior to the consummation of the Initial Public Offering into
342,857 shares of Common Stock. The note represents a portion of the
consideration paid in connection with the Doppelt Acquisition. The shares of
Common Stock issued to Doppelt upon conversion of the note were issued without
registration under the Securities Act, in reliance on Section 4(2) of the
Securities Act.

Immediately prior to the closing of the Initial Public Offering, in
connection with the Reincorporation Merger, the Company issued to the
shareholders of the Predecessor Company 25,502,964 shares of Common Stock. Such
shares were issued without registration under the Securities Act, in reliance on
Section 4(2) of the Securities Act and Rule 506 promulgated thereunder.

Immediately prior to the closing of the Initial Public Offering, the Company
issued to CFH 2,295,217 shares of Common Stock. The shares were issued in
consideration of the execution of the License Agreement. Such shares were issued
without registration under the Securities Act, in reliance on Section 4(2) of
the Securities Act and Rule 506 promulgated thereunder.

In connection with the Faison Acquisition, the Company issued to each of Mr.
Henry J. Faison and Faison Enterprises, Inc., 63,914 shares of Common Stock for
$2,000,000 in cash from each purchaser. Such shares were issued without
registration under the Securities Act, in reliance on Section 4(2) of the
Securities Act and Rule 506 promulgated thereunder.

16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(A) EXHIBITS

<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement

2.1** Agreement and Plan of Merger dated August 22, 1997, among the Company, the
Predecessor Company, TCC Merger Sub, Inc. and certain other parties
thereto.

2.2** First Amendment to Agreement and Plan of Merger dated as of November 22, 1997

2.3* Asset Purchase Agreement among Faison & Associates, Inc., Faison
Enterprises., Media Advertising & Design, Inc., Henry J. Faison, TCSE
Realty Services, Inc. and Trammell Crow Company dated as of June 29, 1998.+

3.1** Certificate of Incorporation of the Company

3.2** Bylaws of the Company

4.1** Form of certificate for shares of Common Stock of the Company

5.1* Opinion of Vinson & Elkins L.L.P. relating to the Common Stock
</TABLE>

II-2
<PAGE>
<TABLE>
<C> <S>
8.1* Opinion of Vinson & Elkins L.L.P. relating to Certain U.S. Federal Tax
Considerations for Non-U.S. Holders of Common Stock

10.1***** Credit Agreement dated as of December 1, 1997, among the Company, NationsBank
of Texas, N.A. and Bankers Trust Company

10.2*** First Amendment of Credit Agreement dated as of December 1, 1997 among the
Company, NationsBank of Texas, N.A. and Bankers Trust Company--January 29,
1998.

10.3*** Second Amendment of Credit Agreement dated as of December 1, 1997 among the
Company, NationsBank of Texas, N.A. and Bankers Trust Company--April 27,
1998.

10.4** Form of License Agreement among the Company and CFH Trade-Names, L.P.

10.5** Form of Indemnification Agreement, with schedule of signatures

10.6** Predecessor Company's 1997 Stock Option Plan

10.7** Company's Long-Term Incentive Plan

10.8** Company's 1995 Profit Sharing Plan

10.9**** Company's Employee Stock Purchase Plan

10.10** Acquisition Agreement dated August 15, 1997, among the Company, TCRS, Doppelt
and Jeffrey J. Doppelt

10.11** Subordinated Promissory Note dated August 22, 1997, between the Company and
Doppelt

10.12** Form of Stockholders' Agreement among the Company, Crow Family Partnership
L.P., CFH Trade-Names, L.P., J. McDonald Williams and certain other
signatories thereto

10.13* Merchant Build/Right of First Refusal Agreement entered into July 2, 1998 by
and between Faison Enterprises, Inc., Faison ICP, Inc., and TCSE Realty
Services, Inc.

10.14* Real Estate Services Agreement entered into July 2, 1998 by and between
Faison & Associates, Inc., Faison Enterprises, Inc., and TCSE Realty
Services, Inc.

10.15* Employment Agreement for Henry J. Faison dated July 2, 1998

21.1* Subsidiaries of the Company

23.1 Consent of Ernst & Young LLP

23.2* Consent of Vinson & Elkins L.L.P. (included as part of Exhibit 5.1)

24.1 Power of Attorney (included on signature pages of this Registration
Statement)
</TABLE>

- ------------------------

* To be filed by Amendment.

** Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (File Number 333-34859) initially filed with the Securities and
Exchange Commission on September 3, 1997 and incorporated herein by
reference.

*** Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1998 and incorporated
herein by reference.

**** Previously filed as an exhibit to the Company's Registration Statement on
Form S-8 (File Number 333-50578) filed with the Securities and Exchange
Commission on April 21, 1998 and incorporated herein by reference.

II-3
<PAGE>
<TABLE>
<S> <C>
***** Previously filed as an exhibit to the Company's Annual Report on Form
10-K/A for the fiscal year ended December 31, 1997 and incorporated
herein by reference.

+ Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to
furnish supplementally a copy of any omitted schedule to the Securities
and Exchange Commission on request.
</TABLE>

(B) SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULE

Report of Independent Auditors

Schedule III--Real Estate Investments and Accumulated Depreciation--Trammell
Crow Company and Subsidiaries.

All other schedules have been intentionally omitted because they are either
not required or the information has been included in the Notes to the
Consolidated Financial Statements included as part of this Registration
Statement.

17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

The undersigned registrant hereby further undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on
the 17th day of July, 1998.

<TABLE>
<S> <C> <C>
TRAMMELL CROW COMPANY

By: /s/ GEORGE L. LIPPE
-----------------------------------
George L. Lippe
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
</TABLE>

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George L. Lippe, Asuka Nakahara, Derek R. McClain
and William P. Leiser and each of them, his true and lawful attorneys-in-fact
and agents, each with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments, including pre-and post-effective amendments, to this Registration
Statement, and any registration statement relating to the offering covered by
this Registration Statement and filed pursuant to Rule 462(b) under the
Securities Act, and to file the same, with exhibits thereto and other documents
in connection therewith, with the Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each of said attorneys-in-fact and agents or
their substitute may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
------------------------------ ------------------------------ ---------------

<C> <S> <C>
President, Chief Executive
/s/ GEORGE L. LIPPE Officer and Director
------------------------------ (Principal Executive July 17, 1998
George L. Lippe Officer)

Executive Vice President and
/s/ ASUKA NAKAHARA Chief Financial Officer
------------------------------ (Principal Financial July 17, 1998
Asuka Nakahara Officer)

/s/ WILLIAM P. LEISER Executive Vice President and
------------------------------ Treasurer (Principal July 17, 1998
William P. Leiser Accounting Officer)

/s/ HARLAN R. CROW
------------------------------ Director July 17, 1998
Harlan R. Crow

/s/ J. MCDONALD WILLIAMS
------------------------------ Director July 17, 1998
J. McDonald Williams
</TABLE>

II-5
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
------------------------------ ------------------------------ ---------------

<C> <S> <C>
/s/ JAMES D. CARREKER
------------------------------ Director July 17, 1998
James D. Carreker

/s/ WILLIAM F. CONCANNON
------------------------------ Director July 17, 1998
William F. Concannon

/s/ JAMES R. ERWIN
------------------------------ Director July 17, 1998
James R. Erwin

/s/ JEFFREY M. HELLER
------------------------------ Director July 17, 1998
Jeffrey M. Heller

/s/ ROWLAND T. MORIARTY
------------------------------ Director July 17, 1998
Rowland T. Moriarty

/s/ ROBERT E. SULENTIC
------------------------------ Director July 17, 1998
Robert E. Sulentic

/s/ HENRY J. FAISON Executive Vice President and
------------------------------ Director July 17, 1998
Henry J. Faison
</TABLE>

II-6
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Trammell Crow Company

We have audited the consolidated financial statements of Trammell Crow
Company (a Delaware corporation; formerly a Texas close corporation) and
Subsidiaries as of December 31, 1997 and 1996, and for each of the three years
in the period ended December 31, 1997, and have issued our report thereon dated
March 4, 1998 (included elsewhere in this Registration Statement). Our audits
also included the financial statement schedule listed in Item 16(b) of this
Registration Statement. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

ERNST & YOUNG LLP

Dallas, Texas
March 4, 1998

II-7
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
INITIAL COST
--------------------------------------- COSTS
BUILDINGS FURNITURE SUBSEQUENT
RELATED AND FIXTURES & TO
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS EQUIPMENT ACQUISITION
- ------------------------------ ------------- -------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
RETAIL:
Diamond Bar--Diamond Bar,
CA.......................... $ 5,650 $ 21,475 $ 4,290 $-- $ --
Dry-Wadsworth--Arvada, CO..... -- 473 495 -- 76
Petsmart--Edmond, OK.......... 1,434 900 -- -- 587
Fairbanks--Fairbanks, AK...... 2,136 -- (A) -- -- 2,557
Gateway Plaza--Aurora, CO..... 6,574 1,018 5,793 -- 62
Lost Pines--Bastrop, TX....... 1,407 521 40 -- 1,214
Village Green--Yorba Linda,
CA.......................... 2,750 1,890 2,316 -- --
Walgreen's--Houston, TX....... 2,440 2,525 35 -- --
OFFICE:
Bowie--Austin, TX............. 1,785 442 1,767 -- 78
Kelley Clarke--Portland, OR... 1,955 530 -- -- 1,501
INDUSTRIAL:
349 Oyster Point--San
Francisco, CA............... 3,806 1,577 -- -- 2,670
Bolingbrook--Bolingbrook,
IL.......................... 6,239 1,406 -- -- 7,061
Centrepoint--Chino, CA........ 5,313 4,588 -- -- 692
CH-NW Place II--Houston, TX... 5,174 698 176 -- 4,292
Cooper--Reno, NV.............. 4,074 1,513 2,537 -- 23
Dunsirn BTS--Reno, NV......... 451 401 -- -- 38
McCormick--Irving, TX......... -- 496 -- -- 445
OCP II--Orlando, FL........... 2,478 499 1,751 -- 1,444
Peerless--Allen, TX........... 2,424 1,496 102 -- 1,761
TC Longmont--Longmont, CO..... 8,300 1,155 6,708 -- 136
Wooddale--Wooddale, IL........ 11,694 4,034 301 -- 7,804
LAND:
56th & Warner--Phoenix, AZ.... -- 1,578 -- -- 76
AEW #10--Mt. Laurel Township,
MJ.......................... -- 327 -- -- --
Andover--Andover, MA.......... -- 291 -- -- 291
Chapel Hills--Colorado
Springs, CO................. 430 770 -- -- 35
Cleveland--Cleveland, OH...... -- 260 -- -- --
Freeport I--Irving, TX........ -- 2,746 -- -- --
Oxnard--Oxnard, CA............ -- 280 -- -- --
Quarry Crossing--San Antonio,
TX.......................... -- 2,557 -- -- --
Sadler--Memphis, TN........... -- 123 -- -- --
Silver Lake Pond--Charlotte,
NC.......................... 109 109 -- -- --
Summit Plaza--Orlando, FL..... -- 572 -- -- --
TC Riverside--Belcamp, MD..... -- 919 -- -- --
Westridge at Gateway-Dallas,
TX.......................... -- 1,535 -- -- --
------------- -------- ------------- ----- ----------
Total....................... $76,623 $ 39,704 $26,311 $-- $ 32,552
------------- -------- ------------- ----- ----------
------------- -------- ------------- ----- ----------

<CAPTION>
12/31/97 BALANCE
----------------------------------------------------
BUILDINGS FURNITURE
AND FIXTURES & DATE OF DATE DEPRECIABLE

DESCRIPTION LAND IMPROVEMENTS EQUIPMENT TOTAL(B) CONSTRUCTION ACQUIRED LIVES(C)

- ------------------------------ --------- ------------- ------------ --------- ----------- --------- ----------

<S> <C> <C> <C> <C> <C> <C> <C>
RETAIL:
Diamond Bar--Diamond Bar,
CA.......................... $ 1,475 $ 4,290 $-- $ 5,765 1981 1997
Dry-Wadsworth--Arvada, CO..... 473 571 -- 1,044 1995 1995
Petsmart--Edmond, OK.......... 900 587 -- 1,487 1997 1997
Fairbanks--Fairbanks, AK...... -- 2,557 -- 2,557 1997 n/a
Gateway Plaza--Aurora, CO..... 1,018 5,855 -- 6,873 1984 1996
Lost Pines--Bastrop, TX....... 521 1,254 -- 1,775 1997 1997
Village Green--Yorba Linda,
CA.......................... 1,890 2,316 -- 4,206 1986 1997
Walgreen's--Houston, TX....... 2,525 35 -- 2,560 1997 1997
OFFICE:
Bowie--Austin, TX............. 442 1,845 -- 2,287 1986 1997
Kelley Clarke--Portland, OR... 530 1,501 -- 2,031 1997 1997
INDUSTRIAL:
349 Oyster Point--San
Francisco, CA............... 1,754 2,493 -- 4,247 1997 1997
Bolingbrook--Bolingbrook,
IL.......................... 1,406 7,061 -- 8,467 1995 1995
Centrepoint--Chino, CA........ 4,588 692 -- 5,280 1997/1998 1997
CH-NW Place II--Houston, TX... 698 4,468 -- 5,166 1997 1997
Cooper--Reno, NV.............. 1,513 2,560 -- 4,073 1992 1997
Dunsirn BTS--Reno, NV......... 401 38 -- 439 1997 1997
McCormick--Irving, TX......... 761 180 -- 941 1997 1997
OCP II--Orlando, FL........... 499 3,195 -- 3,694 1982 1997
Peerless--Allen, TX........... 1,508 1,851 -- 3,359 1997 1997
TC Longmont--Longmont, CO..... 1,155 6,844 -- 7,999 1979/1988 1997
Wooddale--Wooddale, IL........ 4,034 8,105 -- 12,139 1996/1997 1996
LAND:
56th & Warner--Phoenix, AZ.... 1,654 -- -- 1,654 n/a 1997
AEW #10--Mt. Laurel Township,
MJ.......................... 327 -- -- 327 n/a 1997
Andover--Andover, MA.......... -- -- -- 291 n/a 1995
Chapel Hills--Colorado
Springs, CO................. 805 -- -- 805 n/a 1997
Cleveland--Cleveland, OH...... 260 -- -- 260 n/a 1996
Freeport I--Irving, TX........ 2,746 -- -- 2,746 n/a 1997
Oxnard--Oxnard, CA............ 280 -- -- 280 n/a 1996
Quarry Crossing--San Antonio,
TX.......................... 2,557 -- -- 2,557 n/a 1997
Sadler--Memphis, TN........... 123 -- -- 123 n/a 1997
Silver Lake Pond--Charlotte,
NC.......................... 109 -- -- 109 n/a 1997
Summit Plaza--Orlando, FL..... 572 -- -- 572 n/a 1997
TC Riverside--Belcamp, MD..... 919 -- -- 919 n/a 1997
Westridge at Gateway-Dallas,
TX.......................... 1,535 -- -- 1,535 n/a 1997
--------- ------------- ----- ---------
Total....................... $ 40,269 $58,298 $-- $ 98,567
--------- ------------- ----- ---------
--------- ------------- ----- ---------
</TABLE>

- ----------------------------------
(A) Property is subject to a ground lease.
(B) The aggregate cost for Federal income tax purposes is approximately $103
million.
(C) All real estate investments have been held for sale since acquisition and
are therefore not depreciated.

II-8
<PAGE>
TRAMMELL CROW COMPANY AND SUBSIDIARIES

NOTES TO SCHEDULE III--REAL ESTATE INVESTMENTS AND
ACCUMULATED DEPRECIATION

Changes in real estate investments and accumulated depreciation for the three
years ended December 31, 1997 are as follows (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Real estate investments:
Balance at beginning of year........................................................ $ 71,122 $ 20,274 $ 20,215
Additions and improvements........................................................ 104,147 92,975 38,549
Sales and transfers............................................................... (76,702 (A) (42,127) (38,490)
---------- ---------- ----------
Balance at end of year.............................................................. $ 98,567 $ 71,122 $ 20,274
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

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(A) Includes $35,400 contributed to a partnership in March 1997.

II-9
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<S> <C> <C>
1.1* Form of Underwriting Agreement

2.1** Agreement and Plan of Merger dated August 22, 1997, among the Company, the
Predecessor Company, TCC Merger Sub, Inc. and certain other parties
thereto.

2.2** First Amendment to Agreement and Plan of Merger dated as of November 22,
1997

2.3* Asset Purchase Agreement among Faison Associates, Inc., Faison
Enterprises, Inc., Media Advertising & Design, Inc., Harry J. Faison,
TCSE Realty Services, Inc. and Trammell Crow Company dated as of June
29, 1998

3.1** Certificate of Incorporation of the Company

3.2** Bylaws of the Company

4.1** Form of certificate for shares of Common Stock of the Company

5.1* Opinion of Vinson & Elkins L.L.P. relating to the Common Stock

8.1* Opinion of Vinson & Elkins L.L.P. relating to Certain U.S. Federal Tax
Considerations for Non-U.S. Holders of Common Stock

10.1***** Credit Agreement dated as of December 1, 1997, among the Company,
NationsBank of Texas, N.A. and Bankers Trust Company

10.2*** First Amendment of Credit Agreement dated as of December 1, 1997 among the
Company, NationsBank of Texas, N.A. and Bankers Trust Company--January
29, 1998.

10.3*** Second Amendment of Credit Agreement dated as of December 1, 1997 among
the Company, NationsBank of Texas, N.A. and Bankers Trust Company--
April 27, 1998.

10.4** Form of License Agreement among the Company and CFH Trade-Names, L.P.

10.5** Form of Indemnification Agreement, with schedule of signatures

10.6** Predecessor Company's 1997 Stock Option Plan

10.7** Company's Long-Term Incentive Plan

10.8** Company's 1995 Profit Sharing Plan

10.9**** Company's Employee Stock Purchase Plan

10.10** Acquisition Agreement dated August 15, 1997, among the Company, TCRS,
Doppelt and Jeffrey J. Doppelt

10.11** Subordinated Promissory Note dated August 22, 1997, between the Company
and Doppelt

10.12** Form of Stockholders' Agreement among the Company, Crow Family Partnership
L.P., CFH Trade-Names, L.P., J. McDonald Williams and certain other
signatories thereto

10.13* Merchant Build/Right of First Refusal Agreement entered into July 2, 1998
by and between Faison Enterprises, Inc., Faison ICP, Inc., and TCSE
Realty Services, Inc.

10.14* Real Estate Services Agreement entered into July 2, 1998 by and between
Faison & Associates, Inc., Faison Enterprises, Inc. and TCSE Realty
Services, Inc.

10.15* Employment Agreement for Henry J. Faison dated July 2, 1998

21.1* Subsidiaries of the Company

23.1 Consent of Ernst & Young LLP
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
23.2 Consent of Vinson & Elkins L.L.P. (included as part of Exhibit 5.1)

24.1 Power of Attorney (included on signature pages of this Registration
Statement)
</TABLE>

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* To be filed by Amendment.

*** Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1998 and incorporated herein
by reference.

***** Previously filed as an exhibit to the Company's Annual Report on Form
10-K/A for the fiscal year ended December 31, 1997 and incorporated herein
by reference.

+ Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to
furnish supplementally a copy of any omitted schedule to the Securities
and Exchange Commission on request.

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Experts" and
"Selected Consolidated Financial Data," and to the use of our reports dated
March 4, 1998, in the Registration Statement on Form S-1 and related Prospectus
of Trammell Crow Company for the registration of 5,750,000 shares of its common
stock.

ERNST & YOUNG LLP

Dallas, Texas
July 16, 1998