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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|(Mark One)                                        |                                                                                         
|------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                 | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|For the Quarterly Period Ended September 30, 2002
|or                                               
|o                                                 | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period from
 to               

Commission file number 1-13531

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Trammell Crow Company(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
Incorporation or organization)            |  | 75-2721454(IRS Employer Identification Number)
|--------------------------------------------------------------------------------- |  | ----------------------------------------------
|2001 Ross Avenue
Suite 3400
Dallas, Texas(Address of principal executive offices) |  | 75201(Zip Code)                               
|(214) 863-3000(Registrant's telephone number, including area code)               

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

At
November 6, 2002 there were 36,147,508 shares of Common Stock outstanding.

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TRAMMELL CROW COMPANY AND SUBSIDIARIES
INDEX



|         |  |                                                                                                                                                             |  | Page
Number
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|PART I.  |  | Financial Information                                                                                                                                       |  |            
|Item 1.  |  | Financial Statements                                                                                                                                        |  |            
|         |  | Condensed Consolidated Balance Sheets as of September 30, 2002 (unaudited)
    and December 31, 2001                                                        |  | 3          
|         |  | Condensed Consolidated Statements of Income for the three and nine months
    ended September 30, 2002 and 2001 (unaudited)                                 |  | 4          
|         |  | Condensed Consolidated Statements of Stockholders' Equity for the nine months
    ended September 30, 2002 (unaudited) and the year ended December 31, 2001 |  | 5          
|         |  | Condensed Consolidated Statements of Cash Flows for the nine months ended
    September 30, 2002 and 2001 (unaudited)                                       |  | 6          
|         |  | Condensed Consolidated Statements of Comprehensive Income for the three and
    nine months ended September 30, 2002 and 2001 (unaudited)                   |  | 7          
|         |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                            |  | 8          
|Item 2.  |  | Management's Discussion and Analysis of Financial Condition and Results of
    Operations                                                                   |  | 20         
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                  |  | 29         
|Item 4.  |  | Controls and Procedures                                                                                                                                     |  | 29         
|PART II. |  | Other Information                                                                                                                                           |  |            
|Item 1.  |  | Legal Proceedings                                                                                                                                           |  | 30         
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                                                                            |  | 30         

2

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PART IFINANCIAL INFORMATION

ITEM 1.Financial Statements

TRAMMELL CROW COMPANY AND SUBSIDIARIES        CONDENSED CONSOLIDATED BALANCE SHEETS        (in thousands, except share and per share data)

|                                                |                                                                                                                                                                                                          | September 30,
2002        |         | December 31,
2001 |        
|----------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ------- | ----------------- | -------
|
|ASSETS                                          |                                                                                                                                                                                                         
|Current assets                                  |                                                                                                                                                                                                          |                           |         |                   |        
|                                                | Cash and cash equivalents                                                                                                                                                                                |                           | $       | 50,910            |        
|                                                | Accounts receivable, net of allowance for doubtful accounts of $4,473 in 2002 and $5,123 in 2001                                                                                                         |                           |         | 111,234           |        
|                                                | Receivables from affiliates                                                                                                                                                                              |                           |         | 5,153             |        
|                                                | Notes and other receivables                                                                                                                                                                              |                           |         | 11,892            |        
|                                                | Income taxes recoverable                                                                                                                                                                                 |                           |         | 2,277             |        
|                                                | Deferred income taxes                                                                                                                                                                                    |                           |         | 2,650             |        
|                                                | Real estate held for sale                                                                                                                                                                                |                           |         | 168,942           |        
|                                                | Other current assets                                                                                                                                                                                     |                           |         | 18,836            |        
|                                                |                                                                                                                                                                                                          |                           |         |                   |        
|                                                |                                                                                                                                                                                                          | Total current assets      |         |                   | 371,894
|Furniture and equipment, net                    |                                                                                                                                                                                                          |                           | 25,331  |                   |        
|Deferred income taxes                           |                                                                                                                                                                                                          |                           | 25,059  |                   |        
|Investments in unconsolidated subsidiaries      |                                                                                                                                                                                                          |                           | 77,478  |                   |        
|Goodwill, net                                   |                                                                                                                                                                                                          |                           | 74,196  |                   |        
|Other assets                                    |                                                                                                                                                                                                          |                           | 23,529  |                   |        
|                                                |                                                                                                                                                                                                          |                           |         |                   |        
|                                                |                                                                                                                                                                                                          | $                         | 597,487 |                   | $      
|                                                |                                                                                                                                                                                                          |                           |         |                   |        
|LIABILITIES AND STOCKHOLDERS' EQUITY            |                                                                                                                                                                                                         
|Current liabilities                             |                                                                                                                                                                                                          |                           |         |                   |        
|                                                | Accounts payable                                                                                                                                                                                         |                           | $       | 22,295            |        
|                                                | Accrued expenses                                                                                                                                                                                         |                           |         | 95,087            |        
|                                                | Payables to affiliates                                                                                                                                                                                   |                           |         | 47                |        
|                                                | Income taxes payable                                                                                                                                                                                     |                           |         |                  |        
|                                                | Current portion of long-term debt                                                                                                                                                                        |                           |         | 70                |        
|                                                | Current portion of capital lease obligations                                                                                                                                                             |                           |         | 3,711             |        
|                                                | Notes payable on real estate held for sale                                                                                                                                                               |                           |         | 115,999           |        
|                                                | Other current liabilities                                                                                                                                                                                |                           |         | 9,519             |        
|                                                |                                                                                                                                                                                                          |                           |         |                   |        
|                                                |                                                                                                                                                                                                          | Total current liabilities |         |                   | 246,728
|Long-term debt, less current portion            |                                                                                                                                                                                                          |                           | 24,000  |                   |        
|Capital lease obligations, less current portion |                                                                                                                                                                                                          |                           | 930     |                   |        
|Other liabilities                               |                                                                                                                                                                                                          |                           | 85      |                   |        
|                                                |                                                                                                                                                                                                          |                           |         |                   |        
|                                                |                                                                                                                                                                                                          | Total liabilities         |         |                   | 271,743
|Minority interest                               |                                                                                                                                                                                                          |                           | 27,497  |                   |        
|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; 36,131,674 shares issued and 36,111,425 shares outstanding in 2002, and 35,879,515 shares issued and 35,584,423 shares outstanding in
2001 |                           |         | 361               |        
|                                                | Paid-in capital                                                                                                                                                                                          |                           |         | 178,665           |        
|                                                | Retained earnings                                                                                                                                                                                        |                           |         | 121,892           |        
|                                                | Accumulated other comprehensive loss                                                                                                                                                                     |                           |         | (1,345            | )      
|                                                | Less: Treasury stock                                                                                                                                                                                     |                           |         | (208              | )      
|                                                | Unearned stock compensation, net                                                                                                                                                                         |                           |         | (1,118            | )      
|                                                |                                                                                                                                                                                                          |                           |         |                   |        
|Total stockholders' equity                      |                                                                                                                                                                                                          |                           | 298,247 |                   |        
|                                                |                                                                                                                                                                                                          |                           |         |                   |        
|                                                |                                                                                                                                                                                                          | $                         | 597,487 |                   | $      
|                                                |                                                                                                                                                                                                          |                           |         |                   |        

See accompanying notes.

3

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TRAMMELL CROW COMPANY AND SUBSIDIARIES        CONDENSED CONSOLIDATED STATEMENTS OF INCOME        (Unaudited)

|                                            |                                                        | Three Months
Ended September 30 |         | Nine Months
Ended September 30
|------------------------------------------- | ------------------------------------------------------ | ------------------------------- | ------- | ------------------------------
|
|
|REVENUES                                    |                                                        |                                 |         |                               
|                                            | Global Services:                                       |                                 |         |                               
|                                            | Corporate:                                             |                                 |         |                               
|                                            | Facilities management                                  |                                 | $       | 53,296                        
|                                            | Corporate advisory services                            |                                 |         | 27,829                        
|                                            | Project management services                            |                                 |         | 13,124                        
|                                            |                                                        |                                 |         |                               
|                                            |                                                        |                                 | 94,249  |                               
|                                            | Institutional:                                         |                                 |         |                               
|                                            | Property management                                    |                                 |         | 35,570                        
|                                            | Brokerage                                              |                                 |         | 23,618                        
|                                            | Construction management                                |                                 |         | 2,091                         
|                                            |                                                        |                                 |         |                               
|                                            |                                                        |                                 | 61,279  |                               
|                                            | Income from investments in unconsolidated subsidiaries |                                 |         | 111                           
|                                            | Other                                                  |                                 |         | 29                            
|                                            |                                                        |                                 |         |                               
|                                            |                                                        |                                 | 155,668 |                               
|                                            | Development and Investment:                            |                                 |         |                               
|                                            | Development and construction fees                      |                                 |         | 11,076                        
|                                            | Income from investments in unconsolidated subsidiaries |                                 |         | 27                            
|                                            | Gain on disposition of real estate                     |                                 |         | 6,803                         
|                                            | Other                                                  |                                 |         | 183                           
|                                            |                                                        |                                 |         |                               
|                                            |                                                        |                                 | 18,089  |                               
|                                            |                                                        |                                 |         |                               
|                                            |                                                        |                                 | 173,757 |                               
|COSTS AND EXPENSES                          |                                                        |                                 |         |                               
|                                            | Salaries, wages and benefits                           |                                 |         | 110,961                       
|                                            | Commissions                                            |                                 |         | 22,320                        
|                                            | General and administrative                             |                                 |         | 25,292                        
|                                            | Depreciation                                           |                                 |         | 3,748                         
|                                            | Amortization                                           |                                 |         | 1,370                         
|                                            | Interest                                               |                                 |         | 2,568                         
|                                            | Minority interest                                      |                                 |         | 528                           
|                                            | Writedowns due to impairment of intangibles            |                                 |         |                              
|                                            | Change in fair value of interest rate swap agreement   |                                 |         | 45                            
|                                            | Restructuring charges                                  |                                 |         |                              
|                                            |                                                        |                                 |         |                               
|                                            |                                                        |                                 | 166,832 |                               
|                                            |                                                        |                                 |         |                               
|Income before income taxes                  |                                                        |                                 | 6,925   |                               
|Income tax expense                          |                                                        |                                 | 3,194   |                               
|                                            |                                                        |                                 |         |                               
|Net income                                  |                                                        | $                               | 3,731   |                               
|                                            |                                                        |                                 |         |                               
|Earnings per share:                         |                                                        |                                 |         |                               
|                                            | Basic                                                  |                                 | $       | 0.10                          
|                                            |                                                        |                                 |         |                               
|                                            | Diluted                                                |                                 | $       | 0.10                          
|                                            |                                                        |                                 |         |                               
|Weighted average common shares outstanding: |                                                        |                                 |         |                               
|                                            | Basic                                                  |                                 |         | 35,885,365                    
|                                            | Diluted                                                |                                 |         | 36,812,311                    

See accompanying notes.

4

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TRAMMELL CROW COMPANY AND SUBSIDIARIES        CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY        Nine Months Ended September 30, 2002 (Unaudited) and Year Ended December 31,
2002  (in thousands, except share data)

|                              |                                                                  | Common Shares |         |         |          |   |     |   |   | Accumulated
Other
Comprehensive
Loss |       |   |         |        |   |        |       
|----------------------------- | ---------------------------------------------------------------- | ------------- | ------- | ------- | -------- | - | --- | - | - | ------------------------------------ | ----- | - | ------- | ------ | - | ------ | ------
|
|
|Balance at January 1, 2001    |                                                                  | 35,850,308    |         | 500,736 |          | $ | 358 |   | $ | 176,374                              |       | $ | 123,207 |        | $ | (366   | )     
|                              | Net loss                                                         |               |        |         |         |   |     |  |   |                                      |      |   |         | (5,211 | ) |        |      
|                              | Issuance of restricted stock                                     |               |        |         | (7,562   | ) |     |  |   |                                      |      |   |         | (2     | ) |        |      
|                              | Forfeiture of restricted stock                                   |               |        |         | 39,992   |   |     |  |   |                                      | (132  | ) |         |       |   |        |      
|                              | Amortization of unearned stock compensation                      |               |        |         |         |   |     |  |   |                                      |      |   |         |       |   |        |      
|                              | Issuance of common stock                                         |               | 29,207  |         | (697,574 | ) |     | 1 |   |                                      | 112   |   |         | (2,910 | ) |        |      
|                              | Stock repurchase                                                 |               |        |         | 459,500  |   |     |  |   |                                      |      |   |         |       |   |        |      
|                              | Foreign currency translation adjustment, net of tax              |               |        |         |         |   |     |  |   |                                      |      |   |         |       |   |        | (1,094
|                              | Change in fair value of interest rate swap agreement, net of tax |               |        |         |         |   |     |  |   |                                      |      |   |         |       |   |        | 129   
|                              |                                                                  |               |         |         |          |   |     |   |   |                                      |       |   |         |        |   |        |       
|Balance at December 31, 2001  |                                                                  | 35,879,515    |         | 295,092 |          |   | 359 |   |   | 176,354                              |       |   | 115,084 |        |   | (1,331 | )     
|                              | Net income                                                       |               |        |         |         |   |     |  |   |                                      |      |   |         | 7,671  |   |        |      
|                              | Issuance of restricted stock                                     |               | 30,000  |         |         |   |     |  |   |                                      | 416   |   |         |       |   |        |      
|                              | Forfeiture of restricted stock                                   |               |        |         | 13,216   |   |     |  |   |                                      | (37   | ) |         |       |   |        |      
|                              | Amortization of unearned stock compensation                      |               |        |         |         |   |     |  |   |                                      |      |   |         |       |   |        |      
|                              | Issuance of common stock                                         |               | 222,159 |         | (288,059 | ) |     | 2 |   |                                      | 1,932 |   |         | (863   | ) |        |      
|                              | Foreign currency translation adjustment, net of tax              |               |        |         |         |   |     |  |   |                                      |      |   |         |       |   |        | 658   
|                              | Change in fair value of interest rate swap agreement, net of tax |               |        |         |         |   |     |  |   |                                      |      |   |         |       |   |        | (672  
|                              |                                                                  |               |         |         |          |   |     |   |   |                                      |       |   |         |        |   |        |       
|Balance at September 30, 2002 |                                                                  | 36,131,674    |         | 20,249  |          | $ | 361 |   | $ | 178,665                              |       | $ | 121,892 |        | $ | (1,345 | )     
|                              |                                                                  |               |         |         |          |   |     |   |   |                                      |       |   |         |        |   |        |       

See accompanying notes.

5

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TRAMMELL CROW COMPANY AND SUBSIDIARIES        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        (Unaudited)

|                                                                   |                                                                | Nine Months
Ended September 30                                 |                                               
|------------------------------------------------------------------ | -------------------------------------------------------------- | -------------------------------------------------------------- | ----------------------------------------------
|
|
|Operating activities                                               |                                                                |                                                                |                                               
|Cash flows from earnings:                                          |                                                                |                                                                |                                               
|                                                                   | Net income                                                     |                                                                | $                                             
|                                                                   | Reconciliation of net income to net cash provided by earnings: |                                                                |                                               
|                                                                   |                                                                | Depreciation                                                   |                                               
|                                                                   |                                                                | Amortization                                                   |                                               
|                                                                   |                                                                | Amortization of employment contracts and unearned compensation |                                               
|                                                                   |                                                                | Bad debt expense                                               |                                               
|                                                                   |                                                                | Writedowns due to impairment of intangibles                    |                                               
|                                                                   |                                                                | Minority interest                                              |                                               
|                                                                   |                                                                | Deferred income tax provision                                  |                                               
|                                                                   |                                                                | Change in fair value of interest rate swap agreement           |                                               
|                                                                   |                                                                | Income from investments in unconsolidated subsidiaries         |                                               
|                                                                   |                                                                |                                                                |                                               
|                                                                   |                                                                |                                                                | Net cash provided by earnings                 
|Changes in operating assets and liabilities:                       |                                                                |                                                                |                                               
|                                                                   | Accounts receivable                                            |                                                                |                                               
|                                                                   | Receivables from affiliates                                    |                                                                |                                               
|                                                                   | Notes receivable and other assets                              |                                                                |                                               
|                                                                   | Real estate held for sale                                      |                                                                |                                               
|                                                                   | Notes payable on real estate held for sale                     |                                                                |                                               
|                                                                   | Accounts payable and accrued expenses                          |                                                                |                                               
|                                                                   | Payables to affiliates                                         |                                                                |                                               
|                                                                   | Income taxes payable/recoverable                               |                                                                |                                               
|                                                                   | Other liabilities                                              |                                                                |                                               
|                                                                   |                                                                |                                                                |                                               
|                                                                   |                                                                |                                                                | Net cash flows from changes in working capital
|                                                                   |                                                                |                                                                |                                               
|Net cash provided by operating activities                          |                                                                |                                                                | 41,854                                        
|                                                                   |                                                                |                                                                |                                               
|Investing activities                                               |                                                                |                                                                |                                               
|Expenditures for furniture and equipment                           |                                                                |                                                                | (3,125                                        
|Acquisitions of real estate service companies                      |                                                                |                                                                |                                              
|Investments in unconsolidated subsidiaries                         |                                                                |                                                                | (7,467                                        
|Distributions from unconsolidated subsidiaries                     |                                                                |                                                                | 13,106                                        
|                                                                   |                                                                |                                                                |                                               
|Net cash provided by (used in) investing activities                |                                                                |                                                                | 2,514                                         
|                                                                   |                                                                |                                                                |                                               
|Financing activities                                               |                                                                |                                                                |                                               
|Principal payments on long-term debt and capital lease obligations |                                                                |                                                                | (197,799                                      
|Proceeds from long-term debt                                       |                                                                |                                                                | 166,115                                       
|Contributions from minority interest                               |                                                                |                                                                | 3,891                                         
|Distributions to minority interest                                 |                                                                |                                                                | (7,681                                        
|Purchase of common stock                                           |                                                                |                                                                |                                              
|Proceeds from exercise of stock options                            |                                                                |                                                                | 1,393                                         
|Proceeds from issuance of common stock                             |                                                                |                                                                | 2,564                                         
|                                                                   |                                                                |                                                                |                                               
|Net cash used in financing activities                              |                                                                |                                                                | (31,517                                       
|                                                                   |                                                                |                                                                |                                               
|Net increase (decrease) in cash and cash equivalents               |                                                                |                                                                | 12,851                                        
|Cash and cash equivalents, beginning of period                     |                                                                |                                                                | 38,059                                        
|                                                                   |                                                                |                                                                |                                               
|Cash and cash equivalents, end of period                           |                                                                | $                                                              | 50,910                                        
|                                                                   |                                                                |                                                                |                                               

See accompanying notes.

6

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TRAMMELL CROW COMPANY AND SUBSIDIARIES        CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME        (Unaudited)

|                     |                                                                                                                                                                                                                                                                         | Three Months
Ended September 30 |       | Nine Months
Ended September 30 |  
|-------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ----- | ------------------------------ | -
|
|
|Net income           |                                                                                                                                                                                                                                                                         | $                               | 3,731 |                                | $
|                     | Other comprehensive income (loss):                                                                                                                                                                                                                                      |                                 |       |                                |  
|                     | Foreign currency translation adjustments, net of tax expense of $(429) and $(488) in the three and nine months ended September 30, 2002, respectively, and tax benefit (expense) of $(160) and $683 in the three and nine
months ended September 30, 2001, respectively |                                 |       | 574                            |  
|                     | Change in fair value of interest rate swap agreement, net of tax benefit of $58 and $457 in the three and nine months ended September 30, 2002, respectively                                                                                                            |                                 |       | (86                            | )
|                     |                                                                                                                                                                                                                                                                         |                                 |       |                                |  
|Comprehensive income |                                                                                                                                                                                                                                                                         | $                               | 4,219 |                                | $
|                     |                                                                                                                                                                                                                                                                         |                                 |       |                                |  

See
accompanying notes.

7

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TRAMMELL CROW COMPANY AND SUBSIDIARIES        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        September 30, 2002        (in thousands, except share and per share data)
    (Unaudited)

1. General

The condensed 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 accounting principles generally accepted in the United States ("GAAP") for complete financial
statements. These financial statements should be read in conjunction with the consolidated financial statements included in the Company's annual report on Form 10-K for the year
ended December 31, 2001. 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. The Company's quarterly revenues tend to
increase throughout the year, particularly in the last quarter of the year, because its clients have demonstrated a tendency to close transactions toward the end of the year. The timing and
introduction of new contracts, the disposition of investments in real estate assets and other factors may also cause quarterly fluctuations in the Company's results of operations.

Use of Estimates

The preparation of the financial statements in accordance with GAAP 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.

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 and state income tax purposes, and are measured using the enacted tax rates and laws that will be in effect when the
differences reverse.

Earnings Per Share

The weighted-average common shares outstanding used to calculate diluted earnings per share for the three and nine months ended September 30, 2002, include
926,946 and 1,165,082 shares, respectively, to reflect the dilutive effect of options to purchase shares of common stock. The weighted-average common shares outstanding used to calculate diluted
earnings per share for the three and nine months ended September 30, 2001, include 898,072 and 1,087,789 shares, respectively, to reflect the dilutive effect of options to purchase shares of
common stock.

New Accounting Pronouncements

Effective January 1, 2002, the Company adopted Statements of Financial Accounting Standards No. 141,Business
Combinations, and No. 142,Goodwill and Other Intangibles("FAS 141/142"). In accordance with these statements,
goodwill and intangible assets deemed to have indefinite lives are no

8

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longer amortized but are subject to annual impairment tests. These impairment tests are based on the comparison of the fair value of each of the Company's reporting units to the carrying value of
such unit. If the fair value of the reporting unit falls below its carrying value, goodwill is deemed to be impaired and a writedown of goodwill is to be recognized. The Company identified its
reporting units to mirror its two segments, Global Services and Development and Investment, as each segment's underlying business units have similar long-term economic characteristics and
service deliveries.

The
Company has performed the required impairment test as of January 1, 2002, and has determined that no impairment of its goodwill exists. Income before income taxes and net
income would have increased $1,186 and $692 ($0.02 per share), respectively, for the three months ended September 30, 2001, and $3,496 and $2,040 ($0.06 per share), respectively, for the nine
months ended September 30, 2001, had goodwill not been amortized in such periods.

In
addition, the Company also adopted Statement of Financial Accounting Standards No. 144,Accounting for the Impairment or Disposal of
Long-Lived Assets("FAS 144"), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. There was
no significant impact on the Company's financial position and results of operations as a result of the adoption.

Reclassifications

Effective January 1, 2002, the Company transferred operational responsibility for its e-commerce initiatives to management of the Global
Services group, as it views these initiatives as integral parts of its service platform, not as separate businesses. Consequently, the E-Commerce segment reported in 2001 has been included
with the Global Services segment in 2002. Amounts related to e-commerce activities for the three and nine months ended September 30, 2002, have been presented under this segment
format, and such amounts for the three and nine months ended September 30, 2001, have been reclassified to conform to this presentation. These reclassifications did not impact net income (see
Note 9).

Certain
revenues and expenses for the three and nine months ended September 30, 2001, have been reclassified to conform to the presentation for the three and nine months ended
September 30, 2002. As a result, certain revenue and expense items differ from the amounts reported in previously filed documents. These reclassifications do not impact net income.

2. Real Estate Held for Sale

During the nine months ended September 30, 2002, the Company sold 16 real estate projects for an aggregate net sales price of $62,164 resulting in an
aggregate gain on disposition of $10,312. In two other transactions, the Company recognized an aggregate of $1,256 of deferred gain resulting from dispositions in prior periods. During the nine months
ended September 30, 2001, the Company sold 26 real estate projects for an aggregate net sales price of $95,108, resulting in an aggregate gain on disposition of $14,957. In four other
transactions, the Company recognized an aggregate of $697 of deferred gain resulting from dispositions in prior periods.

9

---

During
the nine months ended September 30, 2002, upon substantial completion of two real estate projects under development, the Company and outside partners contributed a total of
$2,703 and $30,398, respectively, to the Company's consolidated real estate subsidiaries owning such projects. The funds were used to pay off debt totaling $33,101, and the Company was released from
its guarantees of such debt. As it no longer exercised control over the entities, during the nine months ended September 30, 2002, the Company began using the equity method of accounting for
these two real estate subsidiaries, resulting in a non-cash reduction of real estate held for sale totaling $33,776 and a non-cash increase in investments in unconsolidated
subsidiaries totaling $675. Also during the nine months ended September 30, 2002, in connection with a recapitalization of the underlying project, the Company contributed its interest in a real
estate project to a new partnership owned 48% by the Company, 32% by a non-wholly-owned partnership controlled and consolidated by the Company and 20% by partners unrelated to the Company.
Because the outside partners control the new partnership, the Company accounts for its interest in this partnership as an equity method investment. The transaction resulted in a non-cash
reduction in real estate held for sale totaling $23,711, a non-cash reduction in notes payable on real estate held for sale totaling $9,400, a non-cash reduction in accrued
interest totaling $795, a non-cash increase in investment in unconsolidated subsidiaries totaling $18,310, and a non-cash increase in minority interest totaling $4,000.
Additionally, in another transaction during the nine months ended September 30, 2002, the partnership agreement of a real estate partnership that was consolidated by the Company was amended,
eliminating the Company's control of the partnership. As it no longer exercised control over the partnership, the Company began using the equity method of accounting for this real estate subsidiary,
resulting in a non-cash reduction in real estate held for sale of $15,931, a non-cash reduction in notes payable on real estate held for sale of $10,821, a non-cash
increase in investments in unconsolidated subsidiaries of $1,591, and a non-cash reduction in minority interest of $3,710. No gains or losses were recognized on these transactions.

During
the nine months ended September 30, 2001, the Company sold 75% of its interest in a partnership that owned real estate at a sales price equal to $2,238 (75% of the
partnership's net book value) and provided partial financing of the purchase in the amount of $186. No gain or loss was recognized on this transaction.

3. Investments in Unconsolidated Subsidiaries

Investments in unconsolidated subsidiaries consist of the following:

September 30,
2002

December 31,
2001Real estate development

$
52,429

$
32,918Other


25,049


22,166$
77,478

$
55,084


The
Company owns approximately 10.0% of the outstanding stock of Savills plc ("Savills"), a property services firm headquartered in the United Kingdom and a leading provider of real
estate

10

---

services in Europe, Asia-Pacific and Australia. The investment is accounted for on the equity method and is classified as an "other" investment in the table above.

Summarized
operating results for unconsolidated subsidiaries accounted for on the equity method are as follows:

|                         |  | Three Months
Ended September 30, |         | Nine Months
Ended September 30,
|------------------------ |  | -------------------------------- | ------- | -------------------------------
|
|Real Estate Development: |  |                                  |         |                                
|Total revenues           |  | $                                | 10,526  |                                
|Total expenses           |  |                                  | 6,976   |                                
|                         |  |                                  |         |                                
|Net income               |  | $                                | 3,550   |                                
|                         |  |                                  |         |                                
|Other:                   |  |                                  |         |                                
|Total revenues           |  | $                                | 99,453  |                                
|Total expenses           |  |                                  | 94,026  |                                
|                         |  |                                  |         |                                
|Net income               |  | $                                | 5,427   |                                
|                         |  |                                  |         |                                
|Total:                   |  |                                  |         |                                
|Total revenues           |  | $                                | 109,979 |                                
|Total expenses           |  |                                  | 101,002 |                                
|                         |  |                                  |         |                                
|Net income               |  | $                                | 8,977   |                                
|                         |  |                                  |         |                                

4. Accrued Expenses

Accrued expenses consist of the following:

September 30,
2002

December 31,
2001Payroll and bonuses

$
39,832

$
37,175Commissions


28,666


34,260Deferred income


11,329


10,706Development costs


1,060


4,570Interest


521


1,998Restructuring charges (See Note 10)


3,285


6,826Insurance


2,020


1,943Other


8,374


11,138$
95,087

$
108,616


11

---

5. Long-Term Debt

Long-term debt consists of the following:

September 30,
2002

December 31,
2001Borrowings under the existing $150,000 line of credit with a bank (the "New $150,000 Line")

$
24,000

$
Borrowings under the former $150,000 line of credit with a bank (the "Old $150,000 Line")





43,000Borrowings under a $25,000 discretionary line of credit with a bank





6,500Borrowings under a £3,900 short-term borrowing facility with a bank (the "European Facility")





2,317Other


70


2,350Total long-term debt


24,070


54,167Less current portion of long-term debt


70


11,167$
24,000

$
43,000


During
June 2002, the Company entered into the New $150,000 Line, and the Old $150,000 Line was terminated. Borrowings under the New $150,000 Line are due in June 2005, and
bear interest at 1) the greater of prime or the Federal Funds Effective Rate plus 0.5%, plus a margin up to 0.75%, or 2) the Eurocurrency rate, plus a margin ranging from 1.75% to 2.5%,
payable monthly. The interest rate for borrowings under the New $150,000 Line was 3.7% at September 30, 2002.

The
shares of certain subsidiaries of the Company, accounting for at least 80% of Adjusted Gross EBITDA, as defined in the New $150,000 Line agreement, are pledged as security for the
New $150,000 Line.

The
Company is subject to various covenants associated with the New $150,000 Line, such as maintenance of minimum equity and liquidity and certain key financial data. In addition, the
Company may not pay dividends or make other distributions on account of its common stock 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.

The
covenants associated with the New $150,000 Line 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 New $150,000 Line to an amount less than the $150,000 commitment. At September 30, 2002, the Company has unused borrowing capacity of $82,715 (taking in account letters of
credit outstanding and limitations from certain financial covenants) under its New $150,000 Line.

Under
the New $150,000 Line, the Company pays a quarterly fee equal to 0.25% of the unused commitments under the line. In addition, the New $150,000 Line requires the Company to enter
into one or more interest rate swap agreements for the Company's indebtedness in excess of $30,000 ensuring the net interest is fixed.

12

---

Borrowings
under the Company's $25,000 discretionary line of credit reduce the borrowing capacity under the New $150,000 Line dollar for dollar.

The
European Facility is held by Trammell Crow Savills Limited, the European outsourcing company jointly owned with Savills. Borrowings under the European Facility are payable on demand
and bear interest at the bank's base rate plus 2.75%, payable quarterly, and are guaranteed 50% by the Company and 50% by Savills. In addition, the Company and Savills have an agreement under which
the Company and Savills would be responsible for 51% and 49%, respectively, of any payments made under such guarantees.

6. Stockholders' Equity

A summary of the Company's stock option activity for the nine months ended September 30, 2002, is as follows:

|                                          |  | Exercise
Price
of $3.85
(below
market
price at
grant date) |   | Exercise
Price
of $10.00
to $14.50
(at market
price at
grant date) |   | Exercise
Price
of $14.51
to $22.75
(at market
price at
grant date) |   | Exercise
Price
of $22.76
to $36.00
(at market
price at
grant date) |   | Total      |  
|----------------------------------------- |  | ---------------------------------------------------------- | - | ------------------------------------------------------------------ | - | ------------------------------------------------------------------ | - | ------------------------------------------------------------------ | - | ---------- | -
|Options outstanding:                      |  |                                                            |   |                                                                    |   |                                                                    |   |                                                                    |   |            |  
|December 31, 2001                         |  | 1,288,179                                                  |   | 2,863,453                                                          |   | 2,979,552                                                          |   | 217,298                                                            |   | 7,348,482  |  
|Granted                                   |  |                                                           |   | 1,191,333                                                          |   |                                                                   |   |                                                                   |   | 1,191,333  |  
|Exercised                                 |  | (174,638                                                   | ) | (65,000                                                            | ) |                                                                   |   |                                                                   |   | (239,638   | )
|Forfeited                                 |  |                                                           |   | (666,500                                                           | ) | (676,685                                                           | ) | (43,699                                                            | ) | (1,386,884 | )
|                                          |  |                                                            |   |                                                                    |   |                                                                    |   |                                                                    |   |            |  
|September 30, 2002                        |  | 1,113,541                                                  |   | 3,323,286                                                          |   | 2,302,867                                                          |   | 173,599                                                            |   | 6,913,293  |  
|                                          |  |                                                            |   |                                                                    |   |                                                                    |   |                                                                    |   |            |  
|Options exercisable at September 30, 2002 |  | 1,113,541                                                  |   | 896,578                                                            |   | 2,097,198                                                          |   | 160,255                                                            |   | 4,267,572  |  
|                                          |  |                                                            |   |                                                                    |   |                                                                    |   |                                                                    |   |            |  

7. Financial Instruments

As required under the Company's New $150,000 Line and Old $150,000 Line, the Company entered into an interest rate swap agreement to manage market risks related
to changes in interest rates. The Company's participation in derivative transactions has been limited to hedging purposes. Derivative instruments are not held or issued for trading purposes. On
March 24, 2000, the Company renewed an existing interest rate swap agreement for a 12-month period ending March 24, 2001, with a notional amount of $100,000. This swap
agreement established a fixed interest pay rate of 6.65% on a portion of the Company's variable rate debt. On March 24, 2001, the interest rate swap agreement was renewed for a
24-month period ending March 24, 2003, with a notional amount of $150,000. This swap agreement established a fixed interest pay rate of 4.68% on a portion of the Company's variable
rate debt. Under these swap agreements, if the actual LIBOR-based rate is less than the specified fixed

13

---

interest rate, the Company is obligated to pay the differential interest amount, such amount being recorded as incremental interest expense. Conversely, if the LIBOR-based rate is greater than the
specified fixed interest rate, the differential interest amount is paid to the Company and recorded as a reduction of interest expense. The weighted average receive rates under these swap agreements
for the three and nine months ended September 30, 2002 were 1.83% and 1.84%, respectively, and 3.65% and 4.66% for the three and nine months ended September 30, 2001, respectively. In
connection with these agreements, the Company recorded incremental interest expense of $209 and $373 for the three and nine months ended September 30, 2002, respectively, excluding the
liability reduction described below, and incremental interest expense of $395 and $630 for the three and nine months ended September 30, 2001.

Prior
to November 1, 2001, the interest rate swap agreement was not effectively designated as a hedge (although it was entered into for hedging purposes), and the Company
recognized changes in fair value in current period earnings. For the three and nine months ended September 30, 2001, $3,536 and $3,938, respectively, was charged to expense related to the
change in fair value of the interest rate swap agreement. As of November 1, 2001, the Company effectively elected hedge accounting treatment as defined by Statement of Financial Accounting
Standards No. 133,Accounting for Derivative Instruments and Hedging Activities,for its interest rate swap agreement. Provided that a specified
range of effectiveness is maintained, the effective portion of changes in fair value of the interest rate swap agreement is reported as a separate component of other comprehensive income. Any
remaining changes in fair value of the interest rate swap agreement are recognized in current period earnings. Payments under the interest rate swap agreement are charged to the liability recorded
prior to the hedge designation, therefore benefiting net income. During the three and nine months ended September 30, 2002, the Company recorded $883 and $2,853, respectively, of payments
against its liability that would have been recorded to interest expense, had the interest rate swap agreement been designated as a hedge since its inception. The liability balance related to the
interest rate swap agreement was $2,236 at September 30, 2002.

On
September 1, 2002, as a result of a decrease in the Company's floating interest rate debt, the Company dedesignated $50,000 of the interest rate swap agreement previously
designated as a hedge in order to maintain the relationship between the notional amount of the designated portion of the interest rate swap agreement and the amount of the Company's floating rate
debt. By dedesignating a portion of the interest rate swap agreement as a hedge, the remaining designated portion is still deemed an effective hedge. As a result of this change, during the three and
nine months ended September 30, 2002, the Company recognized $45 of expense related to the change in fair value of the portion of the interest rate swap agreement that is not designated as a
hedge.

8. Commitments and Contingencies

At September 30, 2002, the Company has guaranteed $63,276 of real estate notes payable of its unconsolidated subsidiaries. These notes are secured by the
underlying real estate and have maturity dates through February 2007. With respect to two of the projects to which these guarantees relate, the Company either has agreements with institutional
or investment grade investors to purchase the project

14

---

and repay the related debt upon completion of the project or has long-term leases with, or guaranteed by, investment grade companies, which management believes mitigates its risk of
incurring any future liability under such guarantees. The aggregate amount the Company has guaranteed with respect to these two projects totals $44,840 at September 30, 2002.

At
September 30, 2002, the Company has outstanding letters of credit totaling $18,600, of which $5,044 is recorded in other current liabilities and $2,953 collateralizes a portion
of the Company's guarantee of real estate notes payable of an unconsolidated subsidiary, included in guarantees described above. The letters of credit expire at varying dates through
September 2004.

In
addition, at September 30, 2002, the Company has numerous completion and budget guarantees relating to development projects. Each of these guarantees requires the Company to
complete construction of the relevant project within a specified time frame and/or within a specified budget, with the Company being liable for costs to complete in excess of such budget. However, the
Company generally has "guaranteed maximum price" contracts with reputable general contractors, which are intended to pass the budget risk to such contractors. Management does not expect the Company to
incur any material losses under these guarantees, nor has the Company historically incurred material losses under similar guarantees.

The
Company has a commitment to fund its share of additional capital requirements of Trammell Crow Investment Fund IV, L.P., an unconsolidated discretionary development and investment
fund in which the Company holds a 37% limited partnership interest, upon request of its general partner, Realty Holdings, Inc., up to a maximum of $14,800. Through September 30, 2002,
the Company has funded $8,325 of this commitment, which represents all the additional capital contributions requested through
such date. The Company also has a commitment to fund its share of additional capital requirements of an unconsolidated subsidiary upon request of the general partner up to a maximum of $2,400.
Subsequent to September 30, 2002, the Company funded $2,400 pursuant to the request of the general partner.

The
Company and its subsidiaries are defendants in lawsuits that arise 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 results of operations or financial position.

9. Segment Information

Description of Services by Segment

The Global Services segment includes property and facilities management, brokerage and corporate advisory, and project and construction management services
delivered to both corporate and institutional customers. During the first quarter of 2002, the Company transferred operational responsibility for its e-commerce initiatives to management
of the Global Services group, as it views these initiatives as integral parts of its services platform, not as separate businesses. Accordingly, the Company's reportable segments have changed in 2002
to report e-commerce initiatives, including related overhead, within its Global Services segment.

15

---

The
Development and Investment segment includes development activities performed on behalf of institutional and corporate customers on a fee basis, as well as development activity
pursuant to which the Company takes an ownership position.

Measurement of Segment Profit or Loss and Segment Assets

The Company evaluates performance and allocates resources among its two reportable segments based on income before income taxes and EBITDA (as defined in footnote
3 to the table below). The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

Factors Management Used to Identify the Company's Reportable Segments

The Company's reportable segments are defined by the nature of the service provided and activities conducted. Because development services require specialized
knowledge, the Company's organizational structure allows the group of individuals with specialized knowledge and experience in development activities to perform these services with greater focus
through the Company's Development and Investment segment. The organizational structure of the Global Services segment allows the Company to leverage resources in specific geographic areas, as
non-development services provided to corporate and institutional customers often require similar expertise.

Substantially
all of the Company's revenues are from customers located in the United States. No individual customer accounts for more than 10% of the Company's revenues.

Summarized
financial information for the Company's two reportable segments follows:

|                              |  | Three Months Ended
September 30, |         | Nine Months Ended
September 30,
|----------------------------- |  | -------------------------------- | ------- | -------------------------------
|
|Global Services:              |  |                                  |         |                                
|Total revenues                |  | $                                | 155,668 |                                
|Costs and expenses(2)         |  |                                  | 149,959 |                                
|                              |  |                                  |         |                                
|Income before income taxes    |  |                                  | 5,709   |                                
|Depreciation and amortization |  |                                  | 4,846   |                                
|Interest expense              |  |                                  | 484     |                                
|                              |  |                                  |         |                                
|EBITDA(3)                     |  | $                                | 11,039  |                                
|                              |  |                                  |         |                                
|Development and Investment:   |  |                                  |         |                                
|Total revenues                |  | $                                | 18,089  |                                
|Costs and expenses(2)         |  |                                  | 16,873  |                                
|                              |  |                                  |         |                                
|Income before income taxes    |  |                                  | 1,216   |                                
|Depreciation and amortization |  |                                  | 272     |                                
|Interest expense              |  |                                  | 2,084   |                                
|                              |  |                                  |         |                                
|EBITDA(3)                     |  | $                                | 3,572   |                                
|                              |  |                                  |         |                                

16

---

|Total:                        |  |   |         |  |   |         |  |   |         |  |   |        
|----------------------------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | -------
|Total revenues                |  | $ | 173,757 |  | $ | 188,925 |  | $ | 521,162 |  | $ | 552,032
|Costs and expenses(2)         |  |   | 166,832 |  |   | 182,553 |  |   | 507,205 |  |   | 538,455
|                              |  |   |         |  |   |         |  |  
|Income before income taxes    |  |   | 6,925   |  |   | 6,372   |  |   | 13,957  |  |   | 13,577 
|Depreciation and amortization |  |   | 5,118   |  |   | 6,820   |  |   | 15,826  |  |   | 20,711 
|Interest expense              |  |   | 2,568   |  |   | 3,750   |  |   | 7,853   |  |   | 11,971 
|                              |  |   |         |  |   |         |  |  
|EBITDA(3)                     |  | $ | 14,611  |  | $ | 16,942  |  | $ | 37,636  |  | $ | 46,259 
|                              |  |   |         |  |   |         |  |  

September 30,
2002

December 31,
2001(1)Total Assets:Global Services

$
312,949

$
331,322Development and Investment


284,538


367,823Total consolidated assets

$
597,487

$
699,145


---

17

---

10. Restructuring Charges

During 2001, the Company announced an internal reorganization of its business designed to consolidate all of the property and facilities management, brokerage and
corporate advisory, and construction and project management services delivered to both corporate and institutional customers under a single leadership structure. As part of the reorganization, the
Company advised approximately 300 employees across all functions and levels that their jobs were being eliminated as part of a cost-cutting effort focusing on inefficiencies and
redundancies. As of September 30, 2002, substantially all of such employees had been terminated under the restructuring plan. In addition, also in 2001, the Company formalized and communicated
its previously announced internal reorganization designed to centralize and improve the efficiency of its accounting operations. The accounting restructuring plan contemplated the termination of
approximately 200 accounting personnel, 80 of which became ineligible for severance subsequent to the original communication of the plan because the employees resigned or were placed into open
positions or onto new customer accounts. As of September 30, 2002, substantially all of such employees had been terminated pursuant to the accounting restructuring plan.

As
part of its restructuring plans, primarily during the fourth quarter of 2001, the Company closed several offices and identified offices with excess space that it intends to sublease
to third parties. The Company recorded restructuring charges primarily comprised of lease obligations, costs to sublease excess space (offset by estimated future sublease income) and miscellaneous
furniture and equipment writeoffs. These accruals will be relieved over the remaining terms of the underlying leases through March 2012.

No
restructuring charges were incurred or recorded in the three and nine months ended September 30, 2002. Activity related to the Company's restructuring accruals for the nine
months ended September 30, 2002, was as follows:

Severance and
related costs

Lease obligations and
related costs

TotalBalance at December 31, 2001

$
1,849

$
4,977

$
6,826Cash payments


1,635


1,906


3,541Balance at September 30, 2002

$
214

$
3,071

$
3,285


11. Sale of a Business

Effective March 1, 2002, the Company sold two retail-related businesses to an affiliate of Faison Enterprises, Inc. (the "Faison Sale"). These
businesses were engaged primarily in the development of retail centers and the management and leasing of regional malls and were acquired in 1998 as part of the Company's acquisition of the business
of Faison & Associates and Faison Enterprises, Inc. (the "Faison Acquisition"). The Company continues to provide leasing and management services of non-retail assets and
certain retail projects under contracts acquired in connection with the Faison Acquisition. The Company retained most of the net working capital in the disposed businesses and carried interests in
certain development projects and received approximately $1,825 in exchange for such businesses and related assets upon completion of the transaction. The Faison Sale was motivated

18

---

by changes in the Company's overall retail strategy, operating losses incurred in these businesses, and declining forecasts for future operations of these businesses (primarily due to the downturn in
the real estate investment market and continuing consolidation of regional mall ownership into REIT's, which tend to self-manage their properties). Henry J. Faison, Chairman of the Board
of Faison Enterprises, served on the Company's Board of Directors from the time of the Faison Acquisition until May 24, 2002, the day of the Company's 2002 annual meeting of stockholders.

12. Supplemental Cash Flow Information

Supplemental cash flow information is summarized below:

Nine Months Ended
September 30,2002

2001Non-cash activities:Issuance of restricted stock, net of forfeitures

$
236

$
(130
)Capital lease obligations


947


2,187Recognition of deferred gains related to dispositions of real estate in previous periods


1,256


697Writeoff of furniture and equipment against prior year restructuring reserve


876


Conversion to equity of note payable to minority shareholder of consolidated joint venture


2,406





19

---



ITEM 2.Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Company's unaudited Consolidated Financial Statements and the notes thereto included in Item 1 of
this Quarterly Report on Form 10-Q.

Overview

Trammell Crow Company (the "Company") is one of the largest diversified commercial real estate service firms in North America. The Company's business is organized
under two separate national leadership structures. The Global Services Group includes substantially all of the property and facilities management, brokerage and corporate advisory, and project and
construction management services delivered to both corporate and institutional customers. The Development and Investment Group is a national organization through which substantially all of the
Company's development, real estate capital markets and real estate investment activities are conducted.

Within
the Global Services segment, with approximately 6,200 full-time equivalent ("FTE") employees, the Company provides services to institutional customers (investors that
are not typically the primary occupants of the commercial properties with respect to which services are performed) and corporate customers (users of space who are typically the primary occupants of
commercial properties, including multinational corporations, hospitals and universities). Management services provided to institutional customers include property management services relating to all
aspects of building operations, tenant relations and oversight of building improvement processes. Transaction services provided to institutional customers include brokerage services such as project
leasing and investment sales whereby the Company advises buyers, sellers and landlords in connection with the leasing and sale of office, industrial and retail space and land. The management services
provided to corporate customers consist primarily of facilities management, which entails providing comprehensive day-to-day occupancy related services, principally to large
corporations that occupy commercial facilities in multiple locations. These services include administration and day-to-day maintenance and repair of client-occupied facilities.
Transaction services provided to corporate customers include corporate advisory services such as portfolio management and tenant representation. Project management services provided to corporate
customers include facility planning and project management, such as construction oversight, space planning, site consolidations, facilities design and workspace moves, adds and changes. Through the
Global Services segment, the Company is continuing to focus on opportunities for long-term growth in the service business and is focusing on opportunities to achieve operating efficiencies
associated with the delivery of similar services (for example, property management for institutional customers and facilities management for corporate customers) through a consolidated services
organization.
Domestically, the Global Services Group is organized into 14 different geographic "mega-markets," many of which are multi-city.

Effective
January 1, 2002, the Company transferred operational responsibility for its e-commerce related activities to management of the Global Services Group, and,
accordingly, the Company now reports these activities in the Global Services segment. E-commerce activities for 2001 have been reclassified to conform to this presentation and, as a
result, amounts reported for 2001 differ from amounts previously reported.

Within
the Development and Investment segment, with approximately 175 FTE employees, the Company provides development services to both institutional and corporate
customersboth those pursuant to which the Company takes an ownership position and those pursuant to which the Company provides development services for others on a base fee and sometimes
incentive fee basis. The Company provides comprehensive project development and construction services and acquires and disposes of commercial real estate projects. The development services provided
include financial planning, site acquisition, procurement of approvals and permits, design and engineering coordination,

20

---

construction bidding and management, tenant finish coordination, project closeout and project finance coordination. The Company will continue to focus its efforts in this area on
risk-mitigated opportunities for institutional customers and fee development and build-to-suit projects for corporate customers, including those in higher education
and healthcare. With an organization comprised of professionals dedicated fully to development and investment activities, the Company is better positioned to pursue and execute new development
business, particularly programmatic business with the Company's large customers, and exploit niche market opportunities.

Results of OperationsThree and Nine Months Ended September 30, 2002 Compared to Three and Nine Months Ended September 30, 2001

Revenues.The Company's total revenues decreased $15.1 million, or 8.0%, to
$173.8 million for the three months ended September 30, 2002, and decreased $30.8 million, or 5.6%, to $521.2 million for the nine months ended September 30, 2002,
from the comparable periods in the prior year.

Global Services Revenue

Corporate Revenues

Facilities management revenue, which represented 30.7% and 30.8% of the Company's total revenue for the three and nine months ended September 30, 2002,
respectively, increased $5.8 million, or 12.2%, to $53.3 million for the three months ended September 30, 2002, and increased $28.1 million, or 21.3%, to
$160.3 million for the nine months ended September 30, 2002, from the comparable periods in the prior year. This revenue growth primarily resulted from the addition of several new
customers and the expansion of services provided to existing customers, offset partially by customer losses. Reimbursement of salaries, wages and benefits, a component of facilities management
revenue, increased $8.8 million and $30.4 million in the three and nine months ended September 30, 2002, respectively, compared to the same periods in 2001. The composition of
facilities management revenue, including management fees and reimbursements, can vary significantly from period to period based on the structure of the underlying management agreements in effect in
each period.

Corporate
advisory services revenue, which represented 16.0% and 14.3% of the Company's total revenue for the three and nine months ended September 30, 2002, respectively,
increased $1.4 million, or 5.3%, to $27.8 million for the three months ended September 30, 2002, and decreased $4.7 million, or 5.9%, to $74.4 million for the nine
months ended September 30, 2002, from the comparable periods in the prior year. Although corporate advisory services revenue increased slightly for the quarter as compared to the prior year
third quarter, the year to date decrease is more reflective of the reduction in transaction volume and value as a result of continuing reluctance on the part of customers and others to make new real
estate commitments due to the downturn in the economy and uncertain economic outlook, which have resulted in decreased demand for commercial space.

Revenues
from project management services totaled $13.1 million and $40.0 million and represented 7.5% and 7.7% of the Company's total revenue for the three and nine months
ended September 30, 2002, respectively. These revenues decreased $0.7 million, or 5.1%, for the three months ended September 30, 2002, and increased $2.1 million, or 5.5%,
for the nine months ended September 30, 2002, from comparable periods in the prior year. Revenue growth year to date resulting from the addition of several new customers and the expansion of
services provided to existing customers was partially offset by a reduction in project spending by certain corporate customers as a result of the deterioration in the economy, in addition to customer
losses. These customer losses more than offset customer additions and service expansions for the three months ended September 30, 2002, as compared to the prior year third quarter.

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Institutional Revenues

Property management revenue, which represented 20.5% and 21.5% of the Company's total revenue for the three and nine months ended September 30, 2002,
respectively, decreased $7.1 million, or 16.6%, to $35.6 million for the three months ended September 30, 2002, and decreased $17.1 million, or 13.3%,
to $111.8 million for the nine months ended September 30, 2002, from the comparable prior year periods. The decrease is primarily the result of the Company's sale of its mall management
business to an affiliate of Faison Enterprises, Inc. (the "Faison Sale") in the first quarter of 2002. Revenue also decreased due to an overall reduction in average square footage under
management, as compared to the prior year, as a result of customer losses and the Company's exit from certain unprofitable markets. A reduction in reimbursement for salaries, wages and benefits
comprised $3.3 million and $8.5 million of the decrease for the three and nine months ended September 30, 2002, respectively, of the overall reduction in property management
revenue.

Brokerage
revenue, which represented 13.6% and 13.5% of the Company's total revenue for the three and nine months ended September 30, 2002, respectively, decreased
$1.2 million, or 4.8%, to $23.6 million for the three months ended September 30, 2002, and decreased $15.9 million, or 18.4%, to $70.6 million for the nine months
ended September 30, 2002, from the comparable periods in the prior year. The decrease is primarily due to a reduction in transaction volume and value as a result of continuing reluctance on the
part of customers and others to make new real estate commitments due to the downturn in the economy and uncertain economic outlook. The economic downturn has resulted in decreased demand for
commercial space, which, in turn, has driven a decrease in the average number of brokers employed by the Company during 2002, as compared to the prior year. The continuing reluctance of customers to
make new real estate commitments has also impacted the Company's development and investment revenues and profits and its new construction starts. As the Company's development and investment activity
is one significant source of Company brokerage opportunities, particularly in investment sales and project leasing, the decline in this activity could have a negative impact on the Company's future
brokerage revenues.

Construction
management revenues totaled $2.1 million and $6.8 million and represented 1.2% and 1.3% of the Company's total revenue for the three and nine months ended
September 30, 2002, respectively. These revenues decreased $0.6 million, or 22.2%, for the three months ended September 30, 2002, and decreased $3.9 million, or 36.4%, for
the nine months ended September 30, 2002, from the comparable prior year periods. Construction management revenues are generated from services including space planning and tenant finish
coordination for institutional customers in conjunction with property management and leasing assignments, and are directly related to the customer's real estate demands. The decrease is primarily
attributable to a reduction in transaction volume due to continuing reluctance on the part of customers and others to make new real estate commitments due to the downturn in the economy, in addition
to a decrease in the average square footage managed by the Company. Also, a portion of the decrease in construction management revenues was driven by the Company's disposition of several construction
businesses in 2002.

Development and Investment Revenue

Revenues from development and construction fees totaled $11.1 million and $39.1 million and represented 6.4% and 7.5% of the Company's total revenue
for the three and nine months ended September 30, 2002, respectively. These revenues decreased $7.3 million, or 39.7%, for the three months ended September 30, 2002, and decreased
$13.7 million, or 25.9%, for the nine months ended September 30, 2002, from the comparable periods in the prior year. The decrease is primarily the result of a reduction in transaction
volume due to continuing reluctance on the part of customers and others to make new real estate commitments due to the downturn in the economy and uncertain economic
outlook, which impacted development fees and incentive development fees, as well as revenues generated from services including construction bidding and management, project closeout and general

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contracting. This reluctance to make new real estate commitments has also negatively impacted the Company's new construction starts, which could have a negative impact on the Company's future
development revenues.

Income
from investments in unconsolidated subsidiaries, which represented 0.0% and 0.8% of the Company's total revenue for the three and nine months ended September 30, 2002,
respectively, decreased $0.8 million, or 100.0%, to less than $0.1 million for the three months ended September 30, 2002, and decreased $1.2 million, or 21.4%, to
$4.4 million for the nine months ended September 30, 2002, from the comparable periods in the prior year. Income from unconsolidated subsidiaries fluctuates from period to period, based
on the volume and profitability of transactions completed by the underlying unconsolidated subsidiaries. The Company's share of income from such transactions is typically driven by its ownership
percentages in the unconsolidated subsidiaries.

Gain
on disposition of real estate totaled $6.8 million and $11.6 million and represented 3.9% and 2.2% of the Company's total revenue for the three and nine months ended
September 30, 2002, respectively. These gains decreased $4.3 million, or 38.7%, for the three months ended September 30, 2002, and decreased $4.0 million, or 25.6%, for the
nine months ended September 30, 2002, from the comparable periods in the prior year. During the three months ended September 30, 2002, the Company sold seven real estate projects for an
aggregate net sales price of $37.8 million, resulting in an aggregate gain on disposition of $5.8 million, and recognized deferred gain of $1.0 million relating to a disposition
in a previous period. For the three months ended September 30, 2001, the Company sold ten real estate projects for an aggregate net sales price of $54.2 million, resulting in an
aggregate gain on disposition of $11.1 million. For the nine months ended September 30, 2002, the Company sold 16 real estate projects for an aggregate net sales price of
$62.2 million, resulting in an aggregate gain on disposition of $10.3 million, and recognized deferred gain of $1.3 million relating to dispositions in previous periods. For the
nine months ended September 30, 2001, the Company sold 26 real estate projects for an aggregate net sales price of $95.1 million, resulting in an aggregate gain on disposition of
$15.0 million, and recognized deferred gain of $0.7 million relating to dispositions in previous periods.

The
Company's thematic development activity has remained stable with an increase since 2001 in development and construction activity related to higher education and healthcare customers,
offset by declines in development activity, including corporate build-to-suits, for other customers. Some of the Company's development resources focus on providing development
services to institutional clients that invest in speculative commercial real estate projects. Since the latter part of 1999, speculative real estate development has declined significantly. The decline
reflects the fact that demand for new product in most of the markets in which the Company operates has declined with the overall downturn in the economy.

Costs and Expenses.The Company's costs and expenses decreased $15.8 million, or 8.7%, to
$166.8 million for the three months ended September 30, 2002, and decreased $31.3 million, or 5.8%, to $507.2 million for the nine months ended September 30, 2002,
from the comparable periods in the prior year.

Salaries,
wages and benefits expense includes all compensation paid to Company employees other than brokerage commissions. As such, it includes salaries, benefits and annual incentive
bonuses for employees whose compensation is reimbursed by customers ("reimbursed employees"); salaries, benefits and annual incentive bonuses for employees whose compensation is not so reimbursed
("unreimbursed employees"); and transaction-related incentive compensation other than brokerage commissions, primarily paid in connection with development and investment transactions. Salaries, wages
and benefits decreased $6.4 million, or 5.5%, to $111.0 million for the three months ended September 30, 2002, and decreased $1.1 million, or 0.3%, to $345.7 million
for the nine months ended September 30, 2002. The decrease was driven by a $4.5 million increase in salaries, wages and benefits

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for reimbursed employees associated with growth in reimbursed employee headcount (resulting primarily from growth in the Company's outsourcing business, which was partially offset by a reduction in
headcount resulting from the Faison Sale), offset by a $10.9 million decrease in salaries, wages and benefits for unreimbursed employees for the three months ended September 30, 2002, as
a result of the Company's cost-reduction efforts undertaken beginning in the second quarter of 2001 and headcount reduction resulting from the Faison Sale. For the nine months ended
September 30, 2002, salaries, wages and benefits for reimbursed employees increased $20.8 million, offset by a $21.9 million decrease in salaries, wages and benefits for
unreimbursed employees.

Commissions
increased $3.1 million, or 16.1%, to $22.3 million, for the three months ended September 30, 2002, and decreased $5.1 million, or 7.8%, to
$60.6 million for the nine months ended September 30, 2002, from the comparable periods in the prior year. While commission revenues earned by the Company for the three months ended
September 30, 2002, remained relatively flat, commission expense for such period increased due to a change in the mix of transaction types quarter over quarter. During the three months ended
September 30, 2002, as compared to the prior year third quarter, a greater proportion of brokerage revenue resulted from investment sales transactions and broker-sourced tenant representation
assignments, on which the commission payout to brokers is higher than on tenant representation assignments for national corporate customers or project leasing transactions. The decrease in commission
expense for the nine months ended September 30, 2002, was primarily driven by the overall decrease in the Company's corporate advisory services and brokerage revenue, due to a reduction in
transaction volume and value as a result of continuing reluctance on the part of customers and others to make new real estate commitments due to the downturn in the economy and uncertain economic
outlook, which have resulted in decreased demand for commercial space. The percentage decrease in commission expense does not correspond directly to the percentage decrease in corporate advisory
services and brokerage revenue due to changes made to compensation structures for various project leasing and investment sales brokers subsequent to the first nine months of 2001. The compensation
structures in 2002 include less fixed compensation and more variable compensation at higher commission rates.

General
and administrative expenses increased $0.1 million, or 0.4%, to $25.3 million for the three months ended September 30, 2002, and decreased
$4.7 million, or 5.7%, to $77.4 million for the nine months ended September 30, 2002, from the comparable periods in the prior year. The Company has experienced a decrease in
general and administrative expenses related to company-wide cost reduction efforts undertaken beginning in the second quarter of 2001. During the three months ended September 30,
2002, these cost savings were more than offset by an increase in operating expenses related to operational real estate properties held for sale and an increase in the Company's liability
insurance expense. During the nine months ended September 30, 2002, cost savings were partially offset by an increase in pursuit costs expense of $1.3 million, primarily driven by the
writeoff of capitalized pursuit costs in the second quarter of 2002 because negotiations on an international venture concluded unsuccessfully. In addition, the Company's cost reductions were partially
offset by costs associated with the Company's efforts to restructure or exit under-performing operations and/or outsourcing contracts that were unprofitable or otherwise judged likely to be
unsuccessful in the long run.

Depreciation
and amortization decreased $1.7 million, or 25.0%, to $5.1 million, for the three months ended September 30, 2002, and decreased $4.8 million, or
23.2%, to $15.9 million for the nine months ended September 30, 2002, from comparable periods in the prior year. This decrease is primarily comprised of a decrease in amortization
expense of $1.5 million and $4.7 million for the three and nine months ended September 30, 2002, respectively, of which $1.2 million and $3.5 million of the decrease
for such periods was due to the Company's adoption of Statement of Financial Accounting Standards No. 142,Goodwill and Other Intangible Assets,
which provides that goodwill and intangible assets deemed to have indefinite lives are no longer amortized, effective January 1, 2002. In addition,

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the Company also incurred less amortization expense as a result of intangible asset writedowns recorded in the fourth quarter of 2001.

Interest
expense decreased $1.2 million, or 31.6%, to $2.6 million for the three months ended September 30, 2002, and decreased $4.1 million, or 34.2%, to
$7.9 million for the nine months ended September 30, 2002, from the comparable prior year periods. The decrease in interest expense is a result of lower interest rates related to the
Company's revolving line of credit and lower average outstanding balances during the nine months ended September 30, 2002, as compared to the same period in the prior year. In addition, during
the three and nine months ended September 30, 2002, the Company recorded $0.9 million and $2.9 million, respectively, of payments against its interest rate swap agreement
liability. These payments would have been recorded to interest expense had the interest rate swap agreement been designated as a hedge since its inception.

Minority
interest decreased $2.6 million, or 83.9%, to $0.5 million for the three months ended September 30, 2002, and decreased $4.3 million, or 148.3%, to
$(1.4) million for the nine months ended September 30, 2002, from the comparable periods in the prior year. The decrease is primarily a result of lower 2002 income in consolidated entities in
which outside parties have an interest, compared with higher income in these same entities in the prior year. During the nine months ended September 30, 2002, the minority interest benefit
resulted from losses generated by a consolidated entity with substantial outside ownership. These losses were primarily due to the writeoff of pursuit costs in the second quarter of 2002 because
negotiations on an international venture concluded unsuccessfully.

The
Company recorded a writedown of $1.1 million in the second quarter of 2002 due to impairment in the value of an intangible asset. The intangible asset written down relates to
an outsourcing contract that, in August 2002, the Company and the customer mutually agreed to terminate and subsequently terminated in September 2002. The estimated future cash flows
related to the underlying outsourcing contract did not support the value of the intangible asset, and accordingly, the value was written down to zero. No such writedown was recorded in the comparable
prior year period.

On
September 1, 2002, the Company dedesignated $50.0 million of its interest rate swap agreement previously designated as a hedge. As a result of this change, during the
three and nine months ended September 30, 2002, the Company recognized $45,000 of expense related to the change in fair value of the portion of the interest rate swap agreement that is not
designated as a hedge. Prior to November 1, 2001, the interest rate swap agreement was not effectively designated as a hedge (although it was entered into for hedging purposes), and the Company
recognized changes in fair value in current period earnings. For the three and nine months ended September 30, 2001, $3.5 million and $3.9 million, respectively, was charged to
expense related to the change in fair value of the interest rate swap agreement.

During
the three and nine months ended September 30, 2001, the Company recorded $3.5 million and $4.4 million, respectively, of restructuring charges due to its
internal reorganization, which was designed to eliminate inefficiencies and redundancies, and its internal accounting reorganization. No such charges were recorded in 2002.

Income Before Income Taxes.The Company's income before income taxes increased $0.5 million,
or 7.8%, to $6.9 million for the three months ended September 30, 2002, and increased $0.4 million, or 2.9%, to $14.0 million for the nine months ended September 30,
2002, from the comparable prior year periods due to the fluctuations in revenues and expenses described above.

Net Income.Net income decreased $0.1 million, or 2.6%, to $3.7 million for the three
months ended September 30, 2002, as compared to the same period in the prior year, and decreased $0.4 million, or 4.9%, to $7.7 million for the nine months ended
September 30, 2002, for the same period in the prior year, due to the fluctuations in revenues and expenses described above, in addition

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to an increase in the Company's effective tax rate. The increased effective tax rate is the result of a valuation allowance taken in the second quarter of 2002 against international loss
carryforwards for which the Company believes recoverability is uncertain.

Quarterly Results of Operations and Seasonality

The results of operations for any quarter are not necessarily indicative of results for any future period. The Company's revenues and net income during the fourth
fiscal quarter historically have been greater than in each of the first three fiscal quarters, primarily because its clients have demonstrated a tendency to close transactions toward the end of the
fiscal year. The timing and introduction of new contracts, the disposition of investments in real estate assets, the recognition of incentive fees towards the latter part of the fiscal year as
contractual targets are met and other factors may also cause quarterly fluctuations in the Company's results of operations.

Liquidity and Capital Resources

The Company's liquidity and capital resources requirements include the funding of working capital needs, primarily accounts receivable from its clients; the
funding of capital investments, including the acquisition of or investments in other real estate service companies; the repurchase of its shares if authorized by the Board of Directors; expenditures
for real estate held for sale and payments on notes payable associated with the Company's development and investment activities; and expenditures related to upgrading the Company's management
information systems and other elements of its technology platform. The Company finances its operations with internally generated funds and borrowings under the Credit Facility (described below). The
portion of the Company's development and investment business that includes the acquisition and development of real estate is financed with loans (both recourse and non-recourse) secured by
underlying real estate, external equity, internal sources of funds, or a combination thereof.

Net
cash provided by operating activities totaled $41.9 million for the nine months ended September 30, 2002, compared to $9.2 million for the same period in 2001.
Cash provided by operating activities, excluding the change in real estate held for sale and related borrowings, increased to $40.5 million in 2002, as compared to $24.1 million in 2001,
primarily due to improved collections of accounts receivable. The increase in cash provided by operating activities is also due to an increase in cash provided by development activity (real estate
held for sale, net of related borrowings) to $1.4 million for the nine months ended September 30, 2002, compared to net cash used by development activity of $14.9 million for the
same period in 2001.

Net
cash provided by investing activities totaled $2.5 million for the nine months ended September 30, 2002, compared to net cash used in investing activities of
$15.6 million for the same period in 2001. This change is due to a decrease in cash used for furniture and equipment expenditures, primarily computer equipment under capital leases, to
$3.1 million in 2002, compared to $9.5 million in 2001. In addition, the Company had no expenditures in 2002 related to acquisitions of real estate service companies, compared to
$1.4 million of cash used in 2001 for earn out payments relating to acquisitions made in prior years. In addition, distributions from investments in unconsolidated subsidiaries, net of
contributions, were $5.6 million in 2002, compared to contributions, net of distributions, of $4.7 million in 2001.

Net
cash used in financing activities totaled $31.5 million for the nine months ended September 30, 2002, compared to $21.0 million for the same period in 2001. This
change is attributable to payments, net of additional borrowings, in 2002, of $31.7 million, primarily under the Credit Facility (described below), compared to $14.0 million in 2001. In
addition, the Company made distributions, net of contributions, to minority interest holders of $3.8 million in 2002, compared to $8.0 million in 2001.

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The Company also received $4.0 million in 2002 from the exercise of stock options and issuance of common stock, net of purchases of common stock, compared to $1.0 million in 2001.

In
June 2002, the Company obtained a $150.0 million revolving line of credit (the "Credit Facility") arranged by Bank of America, N.A., as the administrative agent (the
"Administrative Agent"), which replaced the Company's previous $150.0 million revolving line of credit. Under the terms of the 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 plus a margin up to 0.75% depending on the Company's leverage ratio. The base rate 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 the Eurocurrency rate plus a margin, which ranges from 1.75%
to 2.5%, depending upon the Company's leverage ratio. The Credit Facility contains various covenants such as the maintenance of minimum equity, liquidity, revenues, interest coverage ratios and fixed
charge ratios. The Credit Facility also includes limitations on payment of cash dividends or other distributions of assets, restrictions on recourse indebtedness and total indebtedness, restrictions
on liens and certain restrictions on investments and acquisitions that can be made by the Company. The Credit Facility is guaranteed by certain significant subsidiaries of the Company and is secured
by a pledge of a stock of such significant subsidiaries and a pledge of certain intercompany indebtedness.

The
Credit Facility requires the Company to enter into one or more interest rate swap agreements for the Company's indebtedness in excess of $30.0 million ensuring the net
interest on such excess is fixed, capped or hedged. In March 2001, the Company renewed an existing interest rate swap agreement for a two-year period ending March 24, 2003,
with a fixed interest pay rate of 4.68% and a notional amount of $150.0 million. The weighted average receive rate for the interest rate swap agreement was 1.83% and 1.84% for the three and
nine months ended September 30, 2002, respectively. The Company's participation in derivative transactions has been limited to hedging purposes, and derivative instruments are not held for
trading purposes.

The
Company also has a $25.0 million discretionary line of credit (the "Discretionary Line") with Bank of America, N.A. Each loan obtained by the Company under the Discretionary
Line matures in five business days, but no later than December 15, 2002, and bears interest at a rate agreed upon between the Company and the bank. Borrowings under the Discretionary Line are
unsecured and limit borrowings under the Credit Facility.

At
September 30, 2002, the Company had outstanding borrowings of $24.0 million under the Credit Facility and no outstanding borrowings under the Discretionary Line. The
covenants contained in the 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
Credit Facility to an amount less than the $150.0 million commitment. As it takes longer for the Company to dispose of real estate investments in a weaker economy, the current economic slow
down could adversely impact the Company's ability to comply with certain of the real estate-related financial covenants in the Company's Credit Facility, which could negatively impact the Company's
borrowing capacity. Also, since many of the financial covenants in the Credit Facility are dependent on the Company's EBITDA, as defined in the Credit Agreement and calculated on a trailing four
quarter basis, a decline in the Company's overall operations could adversely impact the Company's ability to comply with these financial covenants and, in turn, the Company's borrowing capacity. The
Company's unused borrowing capacity (taking into account letters of credit outstanding and limitations from certain financial covenants) under the Credit Facility was $82.7 million at
September 30, 2002. The Company expects to continue to borrow under the Credit Facility to finance future strategic acquisitions, fund its co-investment activities and provide the
Company with an additional source of working capital.

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The
Company has various commitments that could impact its liquidity as summarized below (in millions):

|                          |  |   |      | Amount of Commitments by Time of Expiration
|------------------------- |  | - | ---- | -------------------------------------------
|
|Standby letters of credit |  | $ | 10.6 |                                            
|Guarantees(1)             |  |   | 63.3 |                                            
|Capital commitments       |  |   | 8.9  |                                            
|                          |  |   |      |                                            
|Total Commitments         |  | $ | 82.8 |                                            
|                          |  |   |      |                                            

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The
Company 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 Credit Facility and loans secured by underlying real estate will be sufficient to finance its current operations, planned capital expenditure requirements, payment obligations for
development purchases, acquisitions of service companies 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 considers capital raising alternatives to be able to
take advantage of available avenues to supplement its working capital, including strategic corporate partnerships or other alliances, bank borrowings and the sale of equity and/or debt securities.

In
May 2001, the Company announced that its Board of Directors had approved a stock repurchase program. The repurchase program authorized the repurchase of up to
$15.0 million of the Company's common stock from time to time in open market purchases or through privately negotiated transactions. Through September 30, 2002, the Company has
repurchased 459,500 shares at an average cost of $10.11 per share with funds generated from operations and existing cash.

Forward-Looking Statements

Certain statements contained or incorporated by reference in this Quarterly Report on Form 10-Q, including without limitation statements
containing the words "believe," "anticipate," "expect," "envision," "project," "budget," "target," "estimate," "should," "foresee," and words of similar import, are forward-looking statements within
the meaning of the federal securities laws. 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, performance or achievements expressed or implied by such forward-looking statements. Such risks,
uncertainties and other matters include, but are not limited to (i) the timing of individual transactions, (ii) the ability of the Company to identify and implement cost reduction
measures (including those undertaken in connection with the previously announced internal reorganization) and achieve economies of scale, (iii) the ability of the Company to compete effectively
in the international arena, (iv) the ability of the Company to attract new corporate and institutional customers, (v) the ability of the Company to predict fluctuations in net earnings
and cash flow which could result from the Company's participation as a principal in real estate investments, (vi) the Company's ability to continue to pursue its growth strategy,
(vii) the Company's ability to compete in highly competitive national and local business lines and (viii) the Company's ability to attract and retain

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qualified personnel in all areas of its business (particularly management). In addition, the Company's ability to achieve certain anticipated results will be subject to other factors affecting the
Company's business that are beyond the Company's control, including but not limited to general economic conditions (including the cost and availability of capital for investment in real estate and
customers' willingness to make real estate commitments) and the effect of government regulation on the conduct
of the Company's business. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such
statements or 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. Reference is hereby made to the disclosures contained under the heading "Risk Factors" in "Item 1. Business" of the
Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2002.

ITEM 3.Quantitative and Qualitative Disclosures About Market Risk

The Company's primary market risk exposure, as defined in Item 305 of Regulation S-K promulgated under the Securities Exchange Act of 1934, is
to changes in interest rates. The Company is exposed to market risk related to its Credit Facility and loans secured by real estate properties as discussed in "Management's Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and Capital Resources." The Credit Facility and the majority of the loans secured by real estate bear interest at variable rates and
are subject to fluctuations in the market. However, due to its purchase of an interest rate swap agreement, which the Company uses to hedge a portion, but not all, of its exposure to fluctuations in
interest rate, the effects of interest rate changes are limited. The Company's earnings are also somewhat affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies as
a result of its operations in Europe, Asia and Australia. Changes in interest rate and foreign currency market risks since December 31, 2001, have not had a significant impact to the Company.

ITEM 4.Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of management,
including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.
Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material
information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic filings with the Securities and Exchange Commission. There have been no
significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of the Company's most recent evaluation.

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PART IIOTHER INFORMATION

ITEM 1.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 is likely to have a material adverse effect on the Company's results of operations, cash flows or financial condition.

ITEM 6.Exhibits and Reports on Form 8-K



3.1(1)

Certificate of Incorporation of the Company3.2(1)

Bylaws of the Company3.2.1(2)

First Amendment to the Bylaws of the Company4.1(1)

Form of Certificate for Shares of Common Stock of the Company10.1

Form of Indemnification Agreement, with schedule of signatories




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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                        |  | TRAMMELL CROW COMPANY
|----------------------- |  | ---------------------
|                        |  | By:                  
|Date: November 14, 2002 |  |                      

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CERTIFICATION

I,
Robert E. Sulentic, certify that:



|Date: November 14, 2002 |  | /s/ROBERT E. SULENTICRobert E. Sulentic Chief Executive
Officer
|----------------------- |  | ---------------------------------------------------------------

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CERTIFICATION

I,
Derek R. McClain, certify that:



|Date: November 14, 2002 |  | /s/DEREK R. MCCLAINDerek R. McClain Chief Financial
Officer
|----------------------- |  | -----------------------------------------------------------

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