No market will be vacated by Dallas-based Trammell Crow, but there will be geographical realignments of 31 local operating units into 14 mega-markets, Bob Sulentic, president and CEO, tells GlobeSt.com. Trammell Crow intends to keep growing on domestic and international fronts, but to stay the course of a depressed market in a "slow, steady" manner. Development projects also will not be scaled back, he says.
The employee cuts will begin within the next 60 to 90 days and continue through year's end. A national tetail tenant rep platform will be eliminated, but some individual markets will remain, including Dallas-Ft. Worth, Denver, Washington, DC, Boston and Austin. And, even those markets won't escape the heavy hand of what is considered a necessary retreat in a widespread cost-cutting initiative. Of the firm's 7,300 employees, only 30 to 40 brokers are in the retail segment, none of which are solely dedicated to the component, says Sulentic. He emphasizes "the least likely" to be affected by the employee reduction is the 2,500-employee core that's dedicated to specific customers.
"Aside from retail tenant representation, the company enjoyed an outstanding year in corporate advisory services, as total revenues in this area grew approximately 37%," emphasizes Sulentic.
The decision comes three years after Trammell Crow had bought essentially all of the assets of Doppelt & Co. About $25.3 million of one-time charges have been incurred to "write off all amortized goodwill and related intangibles" with the takeover. Another $15 million of one-time charges are write-downs resulting from e-commerce investments in late 1999 and 2000. All 15 employees that came with the Doppelt buyout have since left Trammell Crow, he says.
Trammell Crow is evaluating the extent of the cost-cutting measures, but anticipates a workforce reduction of less than 5% as it eliminates redundant offices and jobs from its hierarchy, Derek McClain, CFO, tells GlobeSt.com. The number of offices to be consolidated in the 700-office organization remains undetermined. What is known is that revenue growth has come in at 18% while expenditure growth is riding at 19%, says McClain.
"That's not a statistic we're proud of," Sulentic adds. The nationwide slowdown has been a precipitating factor, but not the sole cause of the company's action although it has speeded up the process, he says.
In the end, Trammell Crow hopes to add 10 cents to 15 cents in additional earnings per share for its stockholders, possibly through a stock repurchase. McClain expects one-third of the added gain will be realized this year by implementing the cutbacks. "We're looking for efficient ways to eliminate redundancies in all areas of our business," he says.
William Concannon, previous president and CEO of Trammell Crow Corporate Services, is the new president of Global Services. He will be leading a new consolidated services division with about 7,000 employees who are focused on property and facility management and brokerage.The firm's COO Pryor Blackwell will be the new president of development and investment services, a 260-employee division.
Nonetheless, Trammell Crow has reported diluted earning per share, excluding one-time charges, of 85 cents for the fourth quarter and $1.65 for the year or increases of 39% and 10%, respectively, over the prior year. The 2000 EBITDA has totaled $140.6 million in comparison to $116.6 million in 1999 while net income is riding at $59.6 million, excluding one-time charges, versus 1999's $54.4 million.
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