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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, 2003            
|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(I.R.S. Employer Identification No.)
|------------------------------------------------------------------------------------------------ |  | ----------------------------------------------
|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)                              
|Not applicable(Former name, former address and former
fiscal year, if changed since last report)

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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

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act). Yes ý    No o

There
were 36,817,533 shares of the registrant's common stock outstanding as of November 7, 2003.

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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, 2003 (unaudited) and December 31, 2002                                                        |  | 3          
|         |  | Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2003 and 2002 (unaudited)                                 |  | 4          
|         |  | Condensed Consolidated Statements of Stockholders' Equity for the nine months ended September 30, 2003 (unaudited) and the year ended December 31, 2002 |  | 5          
|         |  | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002 (unaudited)                                       |  | 6          
|         |  | Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2003 and 2002 (unaudited)                   |  | 7          
|         |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                        |  | 8          
|Item 2.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                   |  | 26         
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                              |  | 35         
|Item 4.  |  | Controls and Procedures                                                                                                                                 |  | 35         
|PART II. |  | Other Information                                                                                                                                       |  |            
|Item 1.  |  | Legal Proceedings                                                                                                                                       |  | 36         
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                                                                        |  | 36         

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,
2003        |                                  | December 31,
2002 |        
|-------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | -------------------------------- | ----------------- | -------
|
|ASSETS                                             |                                                                                                                                                                                                         
|Current assets                                     |                                                                                                                                                                                                          |                           |                                  |                   |        
|                                                   | Cash and cash equivalents                                                                                                                                                                                |                           | $                                | 66,912            |        
|                                                   | Restricted cash                                                                                                                                                                                          |                           |                                  | 7,971             |        
|                                                   | Accounts receivable, net of allowance for doubtful accounts of $3,254 in 2003 and $4,663 in 2002                                                                                                         |                           |                                  | 85,682            |        
|                                                   | Receivables from affiliates                                                                                                                                                                              |                           |                                  | 16,354            |        
|                                                   | Notes and other receivables                                                                                                                                                                              |                           |                                  | 11,269            |        
|                                                   | Income taxes recoverable                                                                                                                                                                                 |                           |                                  | 1,143             |        
|                                                   | Deferred income taxes                                                                                                                                                                                    |                           |                                  | 3,097             |        
|                                                   | Real estate under development                                                                                                                                                                            |                           |                                  | 16,610            |        
|                                                   | Real estate and other assets held for sale                                                                                                                                                               |                           |                                  | 37,395            |        
|                                                   | Other current assets                                                                                                                                                                                     |                           |                                  | 17,856            |        
|                                                   |                                                                                                                                                                                                          |                           |                                  |                   |        
|                                                   |                                                                                                                                                                                                          | Total current assets      |                                  |                   | 264,289
|Furniture and equipment, net                       |                                                                                                                                                                                                          |                           | 18,858                           |                   |        
|Deferred income taxes                              |                                                                                                                                                                                                          |                           | 20,524                           |                   |        
|Real estate under development                      |                                                                                                                                                                                                          |                           | 39,811                           |                   |        
|Real estate held for investment                    |                                                                                                                                                                                                          |                           | 92,210                           |                   |        
|Investments in unconsolidated subsidiaries         |                                                                                                                                                                                                          |                           | 64,113                           |                   |        
|Goodwill, net                                      |                                                                                                                                                                                                          |                           | 74,340                           |                   |        
|Other assets                                       |                                                                                                                                                                                                          |                           | 19,964                           |                   |        
|                                                   |                                                                                                                                                                                                          |                           |                                  |                   |        
|                                                   |                                                                                                                                                                                                          | $                         | 594,109                          |                   | $      
|                                                   |                                                                                                                                                                                                          |                           |                                  |                   |        
|LIABILITIES AND STOCKHOLDERS' EQUITY               |                                                                                                                                                                                                          |                           |                                  |                  
|Current liabilities                                |                                                                                                                                                                                                          |                           |                                  |                   |        
|                                                   | Accounts payable                                                                                                                                                                                         |                           | $                                | 17,260            |        
|                                                   | Accrued expenses                                                                                                                                                                                         |                           |                                  | 91,567            |        
|                                                   | Payables to affiliates                                                                                                                                                                                   |                           |                                  | 19                |        
|                                                   | Income taxes payable                                                                                                                                                                                     |                           |                                  |                  |        
|                                                   | Current portion of long-term debt                                                                                                                                                                        |                           |                                  | 1,081             |        
|                                                   | Current portion of capital lease obligations                                                                                                                                                             |                           |                                  | 1,554             |        
|                                                   | Current portion of notes payable on real estate                                                                                                                                                          |                           |                                  | 68,203            |        
|                                                   | Liabilities related to real estate and other assets held for sale                                                                                                                                        |                           |                                  | 26,509            |        
|                                                   | Other current liabilities                                                                                                                                                                                |                           |                                  | 8,935             |        
|                                                   |                                                                                                                                                                                                          |                           |                                  |                   |        
|                                                   |                                                                                                                                                                                                          | Total current liabilities |                                  |                   | 215,128
|Long-term debt, less current portion               |                                                                                                                                                                                                          |                           | 10,016                           |                   |        
|Capital lease obligations, less current portion    |                                                                                                                                                                                                          |                           | 191                              |                   |        
|Notes payable on real estate, less current portion |                                                                                                                                                                                                          |                           | 22,731                           |                   |        
|Other liabilities                                  |                                                                                                                                                                                                          |                           | 5,908                            |                   |        
|                                                   |                                                                                                                                                                                                          |                           |                                  |                   |        
|                                                   |                                                                                                                                                                                                          | Total liabilities         |                                  |                   | 253,974
|Minority interest                                  |                                                                                                                                                                                                          |                           | 29,897                           |                   |        
|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; 37,783,595 shares issued and 36,762,533 shares outstanding in 2003, and 36,227,820 shares issued and 36,179,173 shares outstanding in 2002 |                           |                                  | 377               |        
|                                                   | Paid-in capital                                                                                                                                                                                          |                           |                                  | 192,074           |        
|                                                   | Retained earnings                                                                                                                                                                                        |                           |                                  | 136,432           |        
|                                                   | Accumulated other comprehensive income (loss)                                                                                                                                                            |                           |                                  | 354               |        
|                                                   | Less: Treasury stock                                                                                                                                                                                     |                           |                                  | (9,265            | )      
|                                                   |                                                                                                                                                                                                          |                           | Unearned stock compensation, net |                   |        
|                                                   |                                                                                                                                                                                                          |                           |                                  |                   |        
|Total stockholders' equity                         |                                                                                                                                                                                                          |                           | 310,238                          |                   |        
|                                                   |                                                                                                                                                                                                          |                           |                                  |                   |        
|                                                   |                                                                                                                                                                                                          | $                         | 594,109                          |                   | $      
|                                                   |                                                                                                                                                                                                          |                           |                                  |                   |        

See accompanying notes.

3

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TRAMMELL CROW COMPANY AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (in thousands, except share and per share data)  (Unaudited)

|                                                                                                                                           |                                    | For the Three Months
Ended September 30, |         | For the Nine Months
Ended September 30, |  
|------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------- | ---------------------------------------- | ------- | --------------------------------------- | -
|
|
|REVENUES                                                                                                                                   |                                    |                                          |         |                                         |  
|                                                                                                                                           | Corporate Services:                |                                          |         |                                         |  
|                                                                                                                                           | Facilities management              |                                          | $       | 50,155                                  |  
|                                                                                                                                           | Corporate advisory services        |                                          |         | 30,948                                  |  
|                                                                                                                                           | Project management services        |                                          |         | 16,111                                  |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|                                                                                                                                           |                                    |                                          | 97,214  |                                         |  
|                                                                                                                                           | Institutional Services:            |                                          |         |                                         |  
|                                                                                                                                           | Property management                |                                          |         | 36,120                                  |  
|                                                                                                                                           | Brokerage                          |                                          |         | 20,609                                  |  
|                                                                                                                                           | Construction management            |                                          |         | 2,508                                   |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|                                                                                                                                           |                                    |                                          | 59,237  |                                         |  
|                                                                                                                                           | Development and construction       |                                          |         | 10,234                                  |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|                                                                                                                                           |                                    |                                          | 166,685 |                                         |  
|                                                                                                                                           | Gain on disposition of real estate |                                          |         | 358                                     |  
|                                                                                                                                           | Other                              |                                          |         | 229                                     |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|                                                                                                                                           |                                    |                                          | 167,272 |                                         |  
|COSTS AND EXPENSES                                                                                                                         |                                    |                                          |         |                                         |  
|                                                                                                                                           | Salaries, wages and benefits       |                                          |         | 110,020                                 |  
|                                                                                                                                           | Commissions                        |                                          |         | 23,826                                  |  
|                                                                                                                                           | General and administrative         |                                          |         | 26,525                                  |  
|                                                                                                                                           | Depreciation and amortization      |                                          |         | 3,934                                   |  
|                                                                                                                                           | Interest                           |                                          |         | 1,558                                   |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|                                                                                                                                           |                                    |                                          | 165,863 |                                         |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|Income (loss) from continuing operations before income taxes, minority interest and income from investments in unconsolidated subsidiaries |                                    |                                          | 1,409   |                                         |  
|Income tax (expense) benefit                                                                                                               |                                    |                                          | (624    | )                                       |  
|Minority interest, net of income tax (expense) benefit of $(453), $219, $(1,484) and $(720)                                                |                                    |                                          | 598     |                                         |  
|Income from investments in unconsolidated subsidiaries, net of income tax (expense) of $(410), $(398), $(3,804) and $(3,691)               |                                    |                                          | 567     |                                         |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|Income from continuing operations                                                                                                          |                                    |                                          | 1,950   |                                         |  
|Income (loss) from discontinued operations, net of income tax (expense) benefit of $135, $(706), $(561) and $(677)                         |                                    |                                          | (167    | )                                       |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|Net income                                                                                                                                 |                                    | $                                        | 1,783   |                                         | $
|                                                                                                                                           |                                    |                                          |         |                                         |  
|Income per share from continuing operations:                                                                                               |                                    |                                          |         |                                         |  
|                                                                                                                                           | Basic                              |                                          | $       | 0.05                                    |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|                                                                                                                                           | Diluted                            |                                          | $       | 0.05                                    |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|Income per share from discontinued operations, net of income taxes:                                                                        |                                    |                                          |         |                                         |  
|                                                                                                                                           | Basic                              |                                          | $       |                                        |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|                                                                                                                                           | Diluted                            |                                          | $       |                                        |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|Net income per share:                                                                                                                      |                                    |                                          |         |                                         |  
|                                                                                                                                           | Basic                              |                                          | $       | 0.05                                    |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|                                                                                                                                           | Diluted                            |                                          | $       | 0.05                                    |  
|                                                                                                                                           |                                    |                                          |         |                                         |  
|Weighted average common shares outstanding:                                                                                                |                                    |                                          |         |                                         |  
|                                                                                                                                           | Basic                              |                                          |         | 35,265,354                              |  
|                                                                                                                                           | Diluted                            |                                          |         | 36,681,330                              |  

See accompanying notes.

4

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TRAMMELL CROW COMPANY AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY  Nine Months ended September 30, 2003 (Unaudited) and Year ended December 31, 2002  (in thousands,
except share data)

|                              |                                                                  | Common Shares |           |           |           |   |     |    |   | Accumulated
Other
Comprehensive
Income (Loss) |        |   |         |        |   |        |      
|----------------------------- | ---------------------------------------------------------------- | ------------- | --------- | --------- | --------- | - | --- | -- | - | --------------------------------------------- | ------ | - | ------- | ------ | - | ------ | -----
|
|
|Balance at January 1, 2002    |                                                                  | 35,879,515    |           | 295,092   |           | $ | 359 |    | $ | 176,354                                       |        | $ | 115,084 |        | $ | (1,331 | )    
|                              | Net income                                                       |               |          |           |          |   |     |   |   |                                               |       |   |         | 16,653 |   |        |     
|                              | Issuance of restricted stock                                     |               | 30,000    |           |          |   |     |   |   |                                               | 417    |   |         |       |   |        |     
|                              | Forfeiture of restricted stock                                   |               |          |           | 41,614    |   |     |   |   |                                               | (96    | ) |         |       |   |        |     
|                              | Amortization of unearned stock compensation                      |               |          |           |          |   |     |   |   |                                               |       |   |         |       |   |        |     
|                              | Issuance of common stock                                         |               | 318,305   |           | (288,059  | ) |     | 3  |   |                                               | 2,302  |   |         | (863   | ) |        |     
|                              | Foreign currency translation adjustment, net of tax              |               |          |           |          |   |     |   |   |                                               |       |   |         |       |   |        | 1,208
|                              | Change in fair value of interest rate swap agreement, net of tax |               |          |           |          |   |     |   |   |                                               |       |   |         |       |   |        | (466 
|                              |                                                                  |               |           |           |           |   |     |    |   |                                               |        |   |         |        |   |        |      
|Balance at December 31, 2002  |                                                                  | 36,227,820    |           | 48,647    |           |   | 362 |    |   | 178,977                                       |        |   | 130,874 |        |   | (589   | )    
|                              | Net income                                                       |               |          |           |          |   |     |   |   |                                               |       |   |         | 5,999  |   |        |     
|                              | Issuance of restricted stock                                     |               | 1,413,000 |           | (162,000  | ) |     | 14 |   |                                               | 12,004 |   |         |       |   |        |     
|                              | Forfeiture of restricted stock                                   |               |          |           | 236,779   |   |     |   |   |                                               | (23    | ) |         |       |   |        |     
|                              | Amortization of unearned stock compensation                      |               |          |           |          |   |     |   |   |                                               |       |   |         |       |   |        |     
|                              | Issuance of common stock                                         |               | 142,775   |           | (236,764  | ) |     | 1  |   |                                               | 1,116  |   |         | (441   | ) |        |     
|                              | Stock repurchase                                                 |               |          |           | 1,134,400 |   |     |   |   |                                               |       |   |         |       |   |        |     
|                              | Foreign currency translation adjustment, net of tax              |               |          |           |          |   |     |   |   |                                               |       |   |         |       |   |        | 606  
|                              | Change in fair value of interest rate swap agreement, net of tax |               |          |           |          |   |     |   |   |                                               |       |   |         |       |   |        | 337  
|                              |                                                                  |               |           |           |           |   |     |    |   |                                               |        |   |         |        |   |        |      
|Balance at September 30, 2003 |                                                                  | 37,783,595    |           | 1,021,062 |           | $ | 377 |    | $ | 192,074                                       |        | $ | 136,432 |        | $ | 354    |      
|                              |                                                                  |               |           |           |           |   |     |    |   |                                               |        |   |         |        |   |        |      

See accompanying notes.

5

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

|                                                                   |                                                          | For the Nine Months
Ended September 30,                        |                                                                     
|------------------------------------------------------------------ | -------------------------------------------------------- | -------------------------------------------------------------- | --------------------------------------------------------------------
|
|
|Operating activities                                               |                                                          |                                                                |                                                                     
|Cash flows from earnings:                                          |                                                          |                                                                |                                                                     
|                                                                   | Net income                                               |                                                                | $                                                                   
|                                                                   |                                                          | Reconciliation of net income to net cash provided by earnings: |                                                                     
|                                                                   |                                                          |                                                                | Depreciation and amortization                                       
|                                                                   |                                                          |                                                                | Amortization of employment contracts and unearned stock compensation
|                                                                   |                                                          |                                                                | Amortization of contract intangibles                                
|                                                                   |                                                          |                                                                | Bad debt expense                                                    
|                                                                   |                                                          |                                                                | Writedowns due to impairment of intangibles                         
|                                                                   |                                                          |                                                                | Provision for losses and writedowns for impairment on real estate   
|                                                                   |                                                          |                                                                | Minority interest                                                   
|                                                                   |                                                          |                                                                | Deferred income tax benefit                                         
|                                                                   |                                                          |                                                                | 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:                   |                                                                     
|                                                                   |                                                          |                                                                | Restricted cash                                                     
|                                                                   |                                                          |                                                                | Accounts receivable                                                 
|                                                                   |                                                          |                                                                | Receivables from affiliates                                         
|                                                                   |                                                          |                                                                | Notes receivable and other assets                                   
|                                                                   |                                                          |                                                                | Real estate held for sale and under development                     
|                                                                   |                                                          |                                                                | Notes payable on real estate held for sale and under development    
|                                                                   |                                                          |                                                                | Accounts payable and accrued expenses                               
|                                                                   |                                                          |                                                                | Payables to affiliates                                              
|                                                                   |                                                          |                                                                | Income taxes payable/recoverable                                    
|                                                                   |                                                          |                                                                | Other liabilities                                                   
|                                                                   |                                                          |                                                                |                                                                     
|                                                                   | Net cash flows (outlays) from changes in working capital |                                                                |                                                                     
|                                                                   |                                                          |                                                                |                                                                     
|Net cash provided by operating activities                          |                                                          |                                                                | 11,539                                                              
|                                                                   |                                                          |                                                                |                                                                     
|Investing activities                                               |                                                          |                                                                |                                                                     
|Expenditures for furniture and equipment                           |                                                          |                                                                | (5,874                                                              
|Additions to real estate held for investment                       |                                                          |                                                                | (10,034                                                             
|Investments in unconsolidated subsidiaries                         |                                                          |                                                                | (1,040                                                              
|Distributions from unconsolidated subsidiaries                     |                                                          |                                                                | 17,294                                                              
|                                                                   |                                                          |                                                                |                                                                     
|Net cash provided by investing activities                          |                                                          |                                                                | 346                                                                 
|                                                                   |                                                          |                                                                |                                                                     
|Financing activities                                               |                                                          |                                                                |                                                                     
|Principal payments on long-term debt and capital lease obligations |                                                          |                                                                | (83,580                                                             
|Proceeds from long-term debt                                       |                                                          |                                                                | 72,823                                                              
|Contributions from minority interest                               |                                                          |                                                                | 2,644                                                               
|Distributions to minority interest                                 |                                                          |                                                                | (8,958                                                              
|Proceeds from notes payable on real estate held for investment     |                                                          |                                                                | 4,977                                                               
|Payments on notes payable on real estate held for investment       |                                                          |                                                                | (3,275                                                              
|Proceeds from exercise of stock options                            |                                                          |                                                                | 463                                                                 
|Proceeds from issuance of common stock                             |                                                          |                                                                | 2,363                                                               
|Purchase of common stock                                           |                                                          |                                                                | (10,435                                                             
|                                                                   |                                                          |                                                                |                                                                     
|Net cash used in financing activities                              |                                                          |                                                                | (22,978                                                             
|                                                                   |                                                          |                                                                |                                                                     
|Net (decrease) increase in cash and cash equivalents               |                                                          |                                                                | (11,093                                                             
|Cash and cash equivalents, beginning of period                     |                                                          |                                                                | 78,005                                                              
|                                                                   |                                                          |                                                                |                                                                     
|Cash and cash equivalents, end of period                           |                                                          | $                                                              | 66,912                                                              
|                                                                   |                                                          |                                                                |                                                                     

See accompanying notes.

6

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

|                     |                                    | For the Three
Months
Ended September 30,                                                                                                                                                                                                                        |       | For the Nine
Months
Ended September 30, |   
|-------------------- | ---------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | --------------------------------------- | --
|
|Net income           |                                    | $                                                                                                                                                                                                                                                               | 1,783 |                                         | $ 
|                     | Other comprehensive income (loss): |                                                                                                                                                                                                                                                                 |       |                                         |   
|                     |                                    | Foreign currency translation adjustments, net of tax expense of $29 and $451 in the three and nine months ended September 30, 2003, respectively, and $429 and $488 in the three and nine months ended
September 30, 2002, respectively                         |       |                                         | 37
|                     |                                    | Change in fair value of interest rate swap agreement, net of tax expense (benefit) of $0 and $229 in the three and nine months ended September 30, 2003, respectively, and $(58) and $(457) in the three
and nine months ended September 30, 2002, respectively |       |                                         |  
|                     |                                    |                                                                                                                                                                                                                                                                 |       |                                         |   
|Comprehensive income |                                    | $                                                                                                                                                                                                                                                               | 1,820 |                                         | $ 
|                     |                                    |                                                                                                                                                                                                                                                                 |       |                                         |   

See
accompanying notes.

7

---



TRAMMELL CROW COMPANY AND SUBSIDIARIES        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        September 30, 2003  (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, 2002. 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.

Restatement

The Company has restated its condensed consolidated financial statements for the three and nine months ended September 30, 2002, to conform to the
presentation for the three months and year ended December 31, 2002, as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2002,
filed with the Securities and Exchange Commission on March 31, 2003. The reclassifications and adjustments noted in the Form 10-K had no impact on net income, earnings per
share or stockholders' equity in any period. These reclassifications and adjustments included the elimination of intercompany transactions and a change in the financial statement presentation of
income from investments in unconsolidated subsidiaries and minority interest from components of revenue and costs and expenses, respectively, to single line items, net of income taxes. In addition,
the Company reclassified certain revenues and expenses as a result of the application of the provisions of EITF 01-14,Income Statement Characterization of
Reimbursements Received for "Out-of-Pocket" Expenses Incurred,and EITF 01-09,Accounting for Consideration Given by
a Vendor to a Customer or a Reseller of the Vendor's Products.

Reclassifications

In accordance with Statement of Financial Accounting Standards No. 144,Accounting for the Impairment or Disposal of
Long-Lived Assets("FAS 144"), certain assets and liabilities at December 31, 2002, and certain revenues and expenses for the six months ended
June 30, 2003, and the three and nine months ended September 30, 2002, have been reclassified to conform to the presentation at and for the three months ended September 30, 2003
(see Notes 7 and 9). As a result, certain balances differ from the amounts reported in previously filed documents.

8

---

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, 2003, include
1,415,976 and 1,013,411 shares, respectively, to reflect the dilutive effect of unvested restricted stock and 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, 2002, include 926,946 and 1,165,082 shares, respectively, to reflect the dilutive effect of
unvested restricted stock and options to purchase shares of common stock.

Stock-Based Compensation

The Company has elected to use the intrinsic method under Accounting Principles Board Opinion No. 25,Accounting for Stock Issued
to Employees, to account for its stock-based compensation arrangements. Compensation expense for stock options is recognized to the extent the market price of the underlying
stock on the date of grant exceeds the exercise price of the option. The Company recognizes compensation expense related to restricted stock awards over the vesting period of the underlying award in
an amount equal to the fair market value of the Company's stock on the date of grant.

9

---

Pro
forma information regarding net income and net income per share, shown in the table below, has been determined as if the Company had applied the fair value recognition provisions of
Statement of Financial Accounting Standards No. 123,Accounting for Stock-Based Compensation.

Three Months
Ended
September 30,

Nine Months
Ended
September 30,2003

2002

2003

2002Net income, as reported

$
1,783

$
3,731

$
5,999

$
7,671Add: Stock-based employee compensation expense included in net income, net of related tax effects


607


64


1,449


285Deduct: Stock-based employee compensation expense (income) determined under fair value based method for all awards, net of related tax effects


941


(1,926
)

3,062


(1,254
)Pro forma net income

$
1,449

$
5,721

$
4,386

$
9,210Net income per share:Basicas reported

$
0.05

$
0.10

$
0.17

$
0.22Basicpro forma

$
0.04

$
0.16

$
0.12

$
0.26Net income per share:Dilutedas reported

$
0.05

$
0.10

$
0.16

$
0.21Dilutedpro forma

$
0.04

$
0.16

$
0.12

$
0.25


New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46,Consolidation of Variable
Interest Entities("FIN 46"). FIN 46 addresses consolidation by business enterprises of variable interest entities. As required, the Company has applied the provisions of FIN
46 to entities formed after January 31, 2003. In October 2003, the FASB deferred application of FIN 46 to entities formed prior to February 1, 2003, until the three months ended
December 31, 2003. Therefore, the Company will apply the provisions of FIN 46 to such entities in the three months ending December 31, 2003. The Company is in process of evaluating its
interests in entities formed prior to February 1, 2003, under the current provisions of FIN 46. The Company believes that although it does have interests in "variable interest entities," it
will not be required to change its accounting method for such interests assuming the provisions of FIN 46 are not further amended prior to implementation (see Note 3).

10

---

In
May 2003, the FASB issued Statement of Financial Accounting Standards No. 150,Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity("FAS 150"). Certain provisions of FAS 150 would have required the Company to classify non-controlling interests in
consolidated limited life subsidiaries as liabilities adjusted to their settlement values in the Company's financial statements for the three months ended September 30, 2003. In
November 2003, the FASB indefinitely deferred application of the measurement and recognition provisions (but not the disclosure requirements) of FAS 150 with respect to these
non-controlling interests. Due to the complexities involved, the Company is still in the process of completing its calculations of the settlement value of these non-controlling
interests. As such, the Company cannot yet estimate or disclose the estimate of such settlement value. The Company believes that the settlement values of these non-controlling interests
are likely to be greater than their related book values (included in minority interest) at September 30, 2003, because the estimated fair values of the assets of the underlying entities are
likely to be greater than their book values. The ultimate settlement value will be dependent upon the fair value of the assets upon liquidation of the underlying entity, and ultimately the
non-controlling interests will be settled with the proceeds from such liquidation rather than from other assets of the Company.

2. Real Estate

All real estate is included in the Company's Development and Investment segment (see Note 12). At September 30, 2003, and December 31, 2002,
real estate owned by the Company consists of the following:

September 30,
2003

December 31,
2002Real estate under development (current)

$
16,610

$
2,299Real estate included in assets held for sale (see Note 7)(1)


36,854


54,516Real estate under development (non-current)


39,811


50,466Real estate held for investment(2)


92,210


66,892$
185,485

$
174,173


---

In
the nine months ended September 30, 2003, the Company recorded provisions for losses on real estate (included in general and administrative expenses in the consolidated
statement of income) of $1,650 to increase the allowances on real estate held for sale to reflect assets at fair value less cost to sell. There were no such provisions recorded in the nine months
ended September 30, 2002. In addition, during the nine months ended September 30, 2003, the Company recorded writedowns for impairment of real estate (not classified as held for sale at
the time of such writedowns) totaling $1,402, which is included in general and administrative expenses in the consolidated statement of

11

---

income.
The provisions primarily reflect a writedown for impairment related to a single tenant office/industrial real estate project. The non-recourse note payable relating to the real
estate project has matured and subsequent to September 30, 2003, the Company conveyed the underlying property to the lender to satisfy the note. The fair value of the asset was determined based
on a discounted cash flow projection. There were no such writedowns recorded in the nine months ended September 30, 2002.

In
the nine months ended September 30, 2003, the Company sold its 50% partnership interest in a consolidated subsidiary to the other partner in the partnership for a net sales
price of $1,032. The transaction resulted in a non-cash decrease in real estate and other assets held for sale of $11,004 (accounts receivable of $4 and real estate of $11,000), a decrease
in cash (included in real estate and other assets held for sale) of $92, and a non-cash reduction in liabilities related to real estate and other assets held for sale of $11,804 (decrease
in accounts payable of $61, increase in accrued expenses of $164 and a decrease in notes payable on real estate of $11,907), and a non-cash increase in minority interest of $210. The
Company recognized a gain on disposition of $1,530 as a result of this transaction.

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, 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 unrelated 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, 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.

12

---

3. Investments in Unconsolidated Subsidiaries

Investments in unconsolidated subsidiaries consist of the following:

September 30,
2003

December 31,
2002Real estate

$
38,094

$
45,433Other


26,019


26,030$
64,113

$
71,463


The
Company owns approximately 10% of the outstanding stock of Savills plc ("Savills"), a property services firm headquartered in the United Kingdom and a leading provider of real estate
services in Europe, Asia-Pacific and Australia. The investment is classified as an "other" investment in the table above.

Because
the Company has not yet completed its analysis of its investments in entities formed prior to February 1, 2003, under the provisions of FIN 46, it cannot reasonably
estimate its maximum exposure to loss with respect to its involvement with variable interest entities. Under the current provisions of FIN 46, the Company believes that its maximum exposure to loss as
a result of its involvement with variable interest entities would be limited to the amount of its investments in such entities plus any commitments to contribute additional capital, plus the amount of
any guarantees of debt of the underlying investments. Variable interest entities for which the Company is not the primary beneficiary would be accounted for on the equity or cost method. The Company's
maximum exposure to loss with respect toallof its investments accounted for on the equity or cost method is the amount of its investments (as noted in
the table above), plus commitments to contribute additional capital and the amount of any guarantees of debt of the underlying investments, both of which are disclosed in Note 11.

13

---

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

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,2003

2002

2003

2002Real Estate:Total revenues

$
13,272

$
11,194

$
59,399

$
46,367Total expenses


9,236


7,541


29,899


28,367Net income

$
4,036

$
3,653

$
29,500

$
18,000Other:Total revenues

$
119,023

$
99,453

$
309,543

$
289,532Total expenses


110,354


94,040


291,698


278,290Net income

$
8,669

$
5,413

$
17,845

$
11,242Total:Total revenues

$
132,295

$
110,647

$
368,942

$
335,899Total expenses


119,590


101,581


321,597


306,657Net income

$
12,705

$
9,066

$
47,345

$
29,242


4. Accrued Expenses

Accrued expenses consist of the following:

September 30,
2003

December 31,
2002Payroll and bonuses

$
36,692

$
43,180Commissions


25,590


33,260Development costs


13,168


12,262Deferred income


4,443


3,294Interest


1,610


911Restructuring charges (see Note 13)


1,978


2,609Other


9,082


10,15592,563


105,671Less: Accrued expenses included in liabilities related to real estate and other assets held for sale (see Note 7)


(996
)

(576
)$
91,567

$
105,095


14

---

5. Long-Term Debt

Long-term debt consists of the following:

September 30,
2003

December 31,
2002Borrowings under $150,000 line of credit with a bank (the "Credit Facility")

$
10,000

$
19,000Borrowings under a £3,900 short-term borrowing facility with a bank (the "European Facility")





Other


1,097


70Total long-term debt


11,097


19,070Less current portion of long-term debt


1,081


70$
10,016

$
19,000


The
Company is subject to various covenants associated with the Credit Facility, such as maintenance of minimum equity and liquidity and certain key financial data. In addition, the
Company may not pay
dividends, repurchase common shares, 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. At September 30, 2003, the Company is in compliance with all covenants of the Credit Facility.

The
covenants associated with the Credit Facility and the amount of the Company's other borrowings and contingent liabilities may have the effect of limiting the borrowing capacity
available to the Company under the Credit Facility to an amount less than the $150,000 commitment. At September 30, 2003, the Company has unused borrowing capacity of $104,503 (taking into
account letters of credit and borrowings outstanding and limitations from certain financial covenants) under its Credit Facility.

6. Notes Payable on Real Estate

The Company has loans secured by real estate (the majority of which are construction loans) consisting of the following:

September 30,
2003

December 31,
2002Current portion of notes payable on real estate

$
68,203

$
28,854Notes payable on real estate included in liabilities related to real estate and other assets held for sale (see Note 7)


25,437


39,551Total notes payable on real estate, current portion


93,640


68,405Notes payable on real estate, non-current portion


22,731


45,402Total notes payable on real estate

$
116,371

$
113,807


15

---

Notes
payable on real estate held for sale are included in liabilities related to real estate and other assets held for sale. Notes payable on real estate under development (current) are
included in current portion of notes payable on real estate. Notes payable on real estate under development (non-current) and real estate held for investment are classified according to
payment terms and maturity date.

At
September 30, 2003, $2,875 of the current portion and $6,326 of the non-current portion of notes payable on real estate are recourse to the Company. With respect to
a project to which $2,413 of the non-current recourse obligation relates, the Company has an agreement with an institutional investor to purchase the project upon completion, the proceeds
of which will be used to repay the related note payable.

7. Real Estate and Other Assets Held for Sale and Related Liabilities

Real estate and other assets held for sale include completed real estate projects or land for sale in their present condition that have met all of the "held for
sale" criteria of FAS 144 and other assets directly related to such projects. Liabilities related to real estate and other assets held for sale have been included as a single line item in the
Company's balance sheet. In accordance with FAS 144, balances related to assets classified as held for sale at September 30, 2003, that were not classified as such at December 31,
2002, have been reclassified to real estate and other assets held for sale in the Company's balance sheet as of December 31, 2002.

Real
estate and other assets held for sale and related liabilities are as follows:

September 30,
2003

December 31,
2002Assets:Cash and cash equivalents

$


$
92Accounts receivable, net of allowance for doubtful accounts





143Notes and other receivables


23


267Real estate held for sale (see Note 2)


36,854


54,516Other current assets


354


400Other assets


164


264Total real estate and other assets held for sale


37,395


55,682Liabilities:Accounts payable





59Accrued expenses (see Note 4)


996


576Notes payable on real estate held for sale (see Note 6)


25,437


39,551Other current liabilities


76


81Total liabilities related to real estate and other assets held for sale


26,509


40,267Net real estate and other assets held for sale

$
10,886

$
15,415


16

---

8. Stockholders' Equity

A summary of the Company's stock option activity for the nine months ended September 30, 2003, is as follows:

Exercise Price
of $3.85 (below
market price
at grant date)

Exercise Price
of $9.74 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)

TotalOptions outstanding:December 31, 2002

1,017,395

3,295,486

2,285,885

165,447

6,764,213Granted



153,314





153,314Exercised

(60,746
)
(20,000
)




(80,746
)Forfeited



(181,875
)
(167,930
)
(13,708
)
(363,513
)September 30, 2003

956,649

3,246,925

2,117,955

151,739

6,473,268Options exercisable at September 30, 2003

956,649

1,675,383

2,081,288

151,739

4,865,059


9. Gain on Disposition of Real Estate and Discontinued Operations

During the nine months ended September 30, 2003, the Company sold six real estate projects for an aggregate sales price of $7,240 (including a note
receivable of $230 from a buyer of one project), resulting in an aggregate gain on disposition of $4,860. In one other transaction, the Company recognized $339 of deferred gain from a disposition in a
prior period. During the nine months ended September 30, 2002, the Company sold 15 real estate projects for an aggregate net sales price of $58,389, resulting in an aggregate gain on
disposition of $9,422. In two other transactions, the Company recognized an aggregate of $1,256 of deferred gain resulting from dispositions in prior periods.

The
Company's discontinued operations include the operations and gains on disposition of real estate projects held for sale or sold subsequent to the adoption of FAS 144 effective
January 1, 2001, that are considered "components of an entity" as defined by FAS 144 and for which the Company does not have or expect to have any significant involvement in the
operations of the project after the disposal. As required by FAS 144, certain revenues and expenses for the six months ended June 30, 2003 and the three and nine months ended
September 30, 2002, have been reclassified to conform to the presentation for the three months ended September 30, 2003.

In
the nine months ended September 30, 2003, the Company sold two real estate projects that were considered discontinued operations under FAS 144. The aggregate sales price
for these two projects was $12,380, and the Company recognized an aggregate gain on disposition of $1,747. In the nine months ended September 30, 2002, the Company sold one real estate project
that was considered a discontinued operation under FAS 144. The aggregate sales price for this project was $3,774, and the Company recognized an aggregate gain on disposition of $1,517. The
aggregate gain on disposition related to these projects has been separately reported as discontinued operations, net of applicable income taxes.

17

---

The
components of discontinued operations for the three and nine months ended September 30, 2003 and 2002, are as follows:

For the Three
Months Ended
September 30,

For the Nine
Months Ended
September 30,2003

2002

2003

2002Revenues:Development and construction

$
9

$
168

$
131

$
168Gain on disposition of real estate





1,517


1,747


1,517Other








24


9


1,685


1,902


1,685Expenses:Salaries, wages and benefits








55


Commissions








197


General and administrative


100


87


136


152Depreciation and amortization








4


Interest


211


30


225


30311


117


617


182Income (loss) from discontinued operations, before income taxes


(302
)

1,568


1,285


1,503Income tax benefit (expense)


135


(706
)

(561
)

(677
)Income (loss) from discontinued operations, net of income taxes

$
(167
)
$
862

$
724

$
826


10. Financial Instruments

As required under the Company's Credit Facility, the Company has entered into various interest rate agreements 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, 2001, an existing interest rate swap agreement was renewed for a 24-month period ending March 24, 2003, with a notional amount of $150,000. This
interest rate swap agreement established a fixed interest pay rate of 4.68% on a portion of the Company's variable rate debt. Under the interest rate swap agreement, if the actual LIBOR-based rate was
less than the specified fixed interest rate, the Company was obligated to pay the differential interest amount, such amount being recorded as incremental interest expense. Conversely, if the
LIBOR-based rate was greater than the specified fixed interest rate, the differential interest amount was paid to the Company and recorded as a reduction of interest expense. The weighted average
receive rate under the interest rate swap agreement for the three months ended March 31, 2003, was 1.37%. The weighted average receive rates

18

---

for
the three and nine months ended September 30, 2002, were 1.83% and 1.84%, respectively. In connection with this agreement, the Company recorded incremental interest expense, excluding the
liability reduction described below, of $567 for the three months ended March 31, 2003 and $209 and $373 for the three and nine months ended September 30, 2002, respectively. Since the
interest rate swap agreement expired on March 24, 2003, there was no interest expense recorded in the six months ended September 30, 2003.

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 period from January 1, 2001 through October 31, 2001, $4,809 was charged to expense due to a change in fair value of
the interest rate swap agreement. As of November 1, 2001, in accordance with Statement of Financial Accounting Standards No. 133,Accounting for Derivative
Instruments and Hedging Activities("FAS 133"), the Company designated the interest rate swap agreement as a cash flow hedge of the Company's variable interest flow
exposure, and began assessing effectiveness of the cash flow hedge in accordance with the hypothetical derivative method of FAS 133 Implementation Issue G7. The hypothetical derivative method
captured the impact of the $4,809 swap liability already existing at November 1, 2001, as future hedge ineffectiveness of the newly designated hedge relationship because the liability
originated from interest rate movements prior to the application of hedge accounting. Accordingly, changes in fair value of the interest rate swap agreement attributable solely to the passage of time
and payments made to settle the liability serve to reduce the liability, therefore benefiting net income in future periods. During the three months ended March 31, 2003, the Company recorded
$588 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. 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. Changes in the fair
value of the interest rate swap agreement attributable to changes in benchmark market interest rates represented the effective portion of the hedge relationship and were recorded in other
comprehensive income in accordance with FAS 133. Any hedge ineffectiveness was recorded in current period earnings. The interest rate swap agreement expired on March 24, 2003, therefore
the liability balance is zero at September 30, 2003.

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. On November 30,
2002, an additional $25,000 was dedesignated. By dedesignating a portion of the interest rate swap agreement as a hedge, the remaining designated portion was still deemed an effective hedge. As a
result of these changes, the Company recognized $4 of expense in the three months ended March 31, 2003, related to the change in fair value of the portion of the interest rate swap agreement
that was not designated as a hedge.

In
September 2003, the Company entered into an interest rate cap agreement in order to fulfill the interest rate agreement requirement under the Company's Credit Facility. The
notional amount of the

19

---

interest
rate cap agreement is $10,000 and the Company will receive payments if the 30-day LIBOR-based interest rate exceeds 1.3%. The interest rate cap agreement has been designated as an
effective hedge and, to the extent the hedging relationship remains effective, changes in the fair value of the interest cap agreement will be recorded in other comprehensive income. The interest rate
cap agreement expires on December 24, 2003, and has no fair market value at September 30, 2003.

In
March 2003, the Company entered into an interest rate cap agreement in order to limit its interest expense on a construction loan with a 30-day LIBOR-based floating
interest rate related to a consolidated real estate project. The interest rate cap agreement has a notional amount of $11,400 and the Company will receive payments if the LIBOR-based interest rate
exceeds 3.5%. The interest rate cap agreement has not been designated as an effective hedge, and therefore the interest rate cap agreement will be marked to market each period with the change in fair
market value recognized in current period earnings. The interest rate cap agreement expires on March 1, 2005. As of September 30, 2003, amounts recorded by the Company related to this
interest rate cap agreement were not material.

Accounts
receivable, accounts payable and accrued expenses and other liabilities are carried at amounts that reasonably approximate their fair values. The fair values of the Company's
long-term debt and notes payable on real estate reasonably approximate their fair values based on the Company's incremental borrowing rates for similar types of borrowing arrangements.

11. Commitments and Contingencies

In the first quarter of 2003, the Company adopted FASB Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Direct Guarantees of Indebtedness of Others("FIN 45"). The initial recognition and measurement provisions of FIN 45 are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. The Company did not issue or modify any guarantees in the first nine months of 2003 that were required to be recorded at fair
value in the Company's financial statements.

At
September 30, 2003, the Company has guaranteed repayment of a maximum of $66,845 of real estate notes payable of its unconsolidated subsidiaries of which $47,752 of the
underlying notes payable is outstanding as of September 30, 2003. These notes are secured by the underlying real estate and have maturity dates through March 2006. With respect to two of
the projects to which these guarantees relate, the Company either has agreements with institutional or investment grade investors to contribute capital to the project upon completion, the proceeds of
which will be used to repay the related note payable, or has leases with or guaranteed by investment grade companies, which management believes mitigates its risk of incurring any future liability
under the guarantees. The aggregate outstanding amount the Company has guaranteed with respect to these two projects totals $40,402 at September 30, 2003.

With
respect to a note payable of an unconsolidated subsidiary, the Company has a guaranty related to funds disbursed to such subsidiary out of an escrow account established upon the
inception of the underlying note in 2002. The escrow was established to fund costs related to tenant

20

---

improvements
and leasing commissions for the underlying real estate project. As funds are disbursed to the project, the Company guarantees to the lender the amount of the disbursement until
certificates of occupancy evidencing completion of tenant improvements or evidence of completion of leasing transactions are received by the lender, at which time the Company is released from its
guaranty. The maximum amount of the guaranty is $9,604, of which $2,794 is outstanding at September 30, 2003. The Company does not expect to make any payments under this guaranty.

The
Company has a commitment to loan up to $4,500 to an unconsolidated subsidiary, of which $1,500 was funded in the first quarter of 2003. The remaining commitment of $3,000 is required
to be funded on or before January 9, 2004. Loans made under the commitment accrue interest from the date advanced until the date repaid at an annual rate of 18% through June 30, 2004,
and thereafter at an annual rate of 25%. The loans are due and payable on June 16, 2006, but may be repaid prior to such date should the unconsolidated subsidiary obtain alternate financing
from a third party lender. Repayment of the loans is subordinate to other debt and the unconsolidated subsidiary's obligations to pay certain preferred returns.

At
September 30, 2003, the Company has outstanding letters of credit totaling $19,271, of which $5,044 collateralizes amounts 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 January 2005.

In
addition, at September 30, 2003, 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 potentially 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 to incur any material losses under these guarantees.

From
time to time, the Company is involved in litigation matters that arise in the ordinary course of its business, some of which involve claims for damages which are substantial in
amount. The ultimate liability for these matters cannot be determined. However, based on the information currently available, the Company does not believe that the resolution of any such matters to
which it is currently a party will have a material adverse effect on the Company's results of operations, financial condition or liquidity.

12. 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. Management of the Global Services group also has operational responsibility for the Company's e-commerce initiatives, as the
Company views these initiatives as integral parts of its services platform.

21

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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. The Development and Investment segment also includes activities related to the Company's operating real estate projects prior to disposition.

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. 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.

Virtually
all of the Company's revenues are from customers located in the United States. For the three and nine months ended September 30, 2003, one individual customer accounts
for $17,897, or 11%, and $54,319, or 11%, respectively, of the Company's consolidated revenues. Revenues from this customer are included primarily in the Company's Global Services segment. No
individual customer accounted for more than 10% of the Company's consolidated revenues in 2002.

Summarized
financial information for reportable segments is as follows:

|                                                                                                                                    |  | Three Months Ended
September 30, |         | Nine Months Ended
September 30,
|----------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | -------------------------------
|
|
|Global Services:                                                                                                                    |  |                                  |         |                                
|Total revenues                                                                                                                      |  | $                                | 156,448 |                                
|Costs and expenses(1)                                                                                                               |  |                                  | 151,786 |                                
|                                                                                                                                    |  |                                  |         |                                
|Income from continuing operations before income taxes, minority interest and income from investments in unconsolidated subsidiaries |  |                                  | 4,662   |                                
|Minority interest, before income taxes                                                                                              |  |                                  | 226     |                                
|Income from investments in unconsolidated subsidiaries, before income taxes                                                         |  |                                  | 875     |                                
|                                                                                                                                    |  |                                  |         |                                
|Income from continuing operations, before income taxes                                                                              |  |                                  | 5,763   |                                
|Income from discontinued operations, before income
taxes                                                                            |  |                                  |        |                                
|                                                                                                                                    |  |                                  |         |                                
|Income before income taxes                                                                                                          |  | $                                | 5,763   |                                
|                                                                                                                                    |  |                                  |         |                                

22

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|                                                                                                                                           |  | Three Months Ended
September 30, |         | Nine Months Ended
September 30, |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------- | ------- | ------------------------------- | -
|
|
|Development and Investment:                                                                                                                |  |                                  |         |                                 |  
|Total revenues                                                                                                                             |  | $                                | 10,824  |                                 | $
|Costs and expenses(1)                                                                                                                      |  |                                  | 14,077  |                                 |  
|                                                                                                                                           |  |                                  |         |                                 |  
|Loss from continuing operations before income taxes, minority interest and income from investments in unconsolidated subsidiaries          |  |                                  | (3,253  | )                               |  
|Minority interest income (expense), before income taxes                                                                                    |  |                                  | 825     |                                 |  
|Income from investments in unconsolidated subsidiaries, before income taxes                                                                |  |                                  | 102     |                                 |  
|                                                                                                                                           |  |                                  |         |                                 |  
|Income (loss) from continuing operations, before income taxes                                                                              |  |                                  | (2,326  | )                               |  
|Income (loss) from discontinued operations, before income taxes                                                                            |  |                                  | (302    | )                               |  
|                                                                                                                                           |  |                                  |         |                                 |  
|Income (loss) before income taxes                                                                                                          |  | $                                | (2,628  | )                               | $
|                                                                                                                                           |  |                                  |         |                                 |  
|Total:                                                                                                                                     |  |                                  |         |                                 |  
|Total revenues                                                                                                                             |  | $                                | 167,272 |                                 | $
|Costs and expenses(1)                                                                                                                      |  |                                  | 165,863 |                                 |  
|                                                                                                                                           |  |                                  |         |                                 |  
|Income (loss) from continuing operations before income taxes, minority interest and income from investments in unconsolidated subsidiaries |  |                                  | 1,409   |                                 |  
|Minority interest income (expense), before income taxes                                                                                    |  |                                  | 1,051   |                                 |  
|Income from investments in unconsolidated subsidiaries, before income taxes                                                                |  |                                  | 977     |                                 |  
|                                                                                                                                           |  |                                  |         |                                 |  
|Income from continuing operations, before income taxes                                                                                     |  |                                  | 3,437   |                                 |  
|Income (loss) from discontinued operations, before income taxes                                                                            |  |                                  | (302    | )                               |  
|                                                                                                                                           |  |                                  |         |                                 |  
|Income before income taxes                                                                                                                 |  | $                                | 3,135   |                                 | $
|                                                                                                                                           |  |                                  |         |                                 |  

23

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|                           |  | September 30,
2003 |         | December 31,
2002
|-------------------------- |  | ------------------ | ------- | -----------------
|Total Assets:              |  |                    |         |                  
|Global Services            |  | $                  | 255,431 |                  
|Development and Investment |  |                    | 338,678 |                  
|                           |  |                    |         |                  
|Total consolidated assets  |  | $                  | 594,109 |                  
|                           |  |                    |         |                  

---

13. 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 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 nine months ended September 30, 2003 or 2002. Activity related to the Company's lease obligations and related costs
included in restructuring accruals for the nine months ended September 30, 2003, is as follows:

Balance at December 31, 2002

$
2,609Cash payments


631Balance at September 30, 2003

$
1,978


14. Dispositions of Businesses

Effective
March 1, 2002, the Company sold its retail center development and mall management businesses to an affiliate of Faison Enterprises Inc. (the "Faison Sale"). These
businesses were acquired in 1998 as part of the Company's acquisition of portions of the businesses 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

24

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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. Because the Company has continuing involvement in the disposed businesses, the operations have not been
reported as discontinued operations. The Company recorded a gain of $79 upon disposition of the businesses in the first quarter of 2002. The Faison Sale was motivated 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 REITs, 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.

15. Supplemental Cash Flow Information

Supplemental cash flow information is summarized below:

Nine Months
Ended
September 30,2003

2002Non-cash activities:Issuance of restricted stock, net of forfeitures

$
11,479

$
236Capital lease obligations


882


947Recognition of deferred gains related to dispositions of real estate in previous periods


339


1,256Writeoff of fixed assets against prior year reserve





876Conversion to equity of note payable to minority shareholder of consolidated joint venture





2,406


25

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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 Condensed 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 delivers four core
servicesbuilding management services, brokerage services, project management services and development servicesto both corporate and institutional customers. 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. Substantially all of the Company's real estate development, capital markets and
investment activities are conducted through the Company's Development and Investment Group.

Within
the Global Services segment, with approximately 5,600 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). Building 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. Brokerage services provided to institutional customers include project leasing and investment
sales whereby the Company advises buyers, sellers and landlords in connection with the leasing, purchase and sale of office, industrial and retail space and land. Project management services provided
to institutional customers include construction management services such as space planning and tenant finish and coordination. The building 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. Brokerage 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 workplace 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. In North America, the Global Services Group is organized into 15 different geographic
"mega-markets," many of which are multi-city.

Within
the Development and Investment segment, encompassing approximately 170 FTE employees, the Company provides development services to both institutional and corporate customers and
performs other development activitiesboth those pursuant to which the Company takes an ownership position in a project and those pursuant to which the Company provides development
services to others in exchange for fees. The Company provides comprehensive project development 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, 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

26

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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 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, 2003 Compared to Three and Nine Months Ended September 30, 2002

In accordance with Statement of Financial Accounting Standards No. 144,Accounting for the Impairment or Disposal of
Long-Lived Assets("FAS 144"), certain revenues and expenses for the six months ended June 30, 2003 and the three and nine months ended
September 30, 2002, have been reclassified to conform to the presentation for the three months ended September 30, 2003. As a result, certain balances differ from the amounts reported in
previously filed documents. SeeIncome (Loss) from Discontinued Operations, Net of Income Taxes, below, for additional information.

Revenues.The Company's total revenues decreased $10.2 million, or 5.7%, to
$167.3 million for the three months ended September 30, 2003, and decreased $31.2 million, or 5.9%, to $497.4 million for the nine months ended September 30, 2003,
from comparable periods in the prior year.

Facilities
management revenue, which represented 30.0% and 31.2% of the Company's total revenue for the three and nine months ended September 30, 2003, respectively, decreased
$7.9 million, or 13.6%, to $50.2 million for the three months ended September 30, 2003, and decreased $19.1 million, or 11.0%, to $155.1 million for the nine months
ended September 30, 2003, from comparable periods in the prior year. The decrease was primarily due to the Company's exit from certain unprofitable contracts and the loss of other customers
during 2002 and the first half of 2003, including certain customer relationships terminated as part of the Company's wind-down of its centralized call center operations. Reimbursement of
salaries, wages, benefits, and out-of-pocket general and administrative costs, a component of facilities management revenue, decreased $3.8 million and
$8.4 million in the three and nine months ended September 30, 2003, respectively, compared to the comparable periods in 2002. The composition of facilities management revenue, including
management fees and reimbursements, can vary significantly from period to period based on the terms of the underlying management agreements in effect each period.

Corporate
advisory services revenue, which represented 18.5% and 16.7% of the Company's total revenue for the three and nine months ended September 30, 2003, respectively,
increased $3.0 million, or 10.8%, to $30.9 million for the three months ended September 30, 2003, and increased $8.8 million, or 11.8%, to $83.3 million for the nine
months ended September 30, 2003, from comparable periods in the prior year. In general, transaction volume and transaction values have remained at depressed levels from historical peak activity
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. However, in the second and third quarters of 2003, the
Company was successful in closing several significant tenant representation transactions and other transactions on behalf of its corporate customers, which contributed to its improved 2003 revenues.

Revenue
from project management services totaled $16.1 million and $46.4 million and represented 9.6% and 9.3%, respectively, of the Company's total revenue for the three
and nine months ended September 30, 2003, respectively. These revenues increased $1.8 million, or 12.6%, for the three months ended September 30, 2003, and increased
$3.1 million, or 7.2%, for the nine months ended September 30, 2003, from comparable periods in the prior year. The revenue growth was primarily due to the addition of new customers and
the expansion of services provided to existing customers. The growth was partially offset by the sale of a majority of the operations of Trammell Crow Savills Asia-Pacific in the fourth
quarter of 2002.

27

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Property
management revenue, which represented 21.6% and 22.0% of the Company's total revenue for the three and nine months ended September 30, 2003, respectively, increased
$0.3 million, or 0.8%, to $36.1 million for the three months ended September 30, 2003, and decreased $2.7 million, or 2.4%, to $109.6 million for the nine months
ended September 30, 2003, from comparable periods in the prior year. While revenue remained relatively flat for the quarter, the decrease for the nine months ended September 30, 2003,
was 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.

Brokerage
revenue, which represented 12.3% and 12.4% of the Company's total revenue for the three and nine months ended September 30, 2003, respectively, decreased
$2.7 million, or 11.6%, to $20.6 million for the three months ended September 30, 2003, and decreased $7.7 million, or 11.1%, to $61.7 million for the nine months
ended September 30, 2003, from comparable periods in the prior year. The decrease is primarily due to a reduction in project leasing transaction volume and transaction values as a result of
continuing reluctance on the part of tenants to make new real estate commitments due to the downturn in the economy and uncertain economic outlook. The economic downturn has resulted in a decreased
demand for commercial space.

Construction
management revenues totaled $2.5 million and $7.3 million for the three and nine months ended September 30, 2003, respectively, and represented 1.5% of
the Company's total revenue in both periods. These revenues increased $0.4 million, or 19.0%, for the three months ended September 30, 2003, and increased $0.5 million, or 7.4%,
for the nine months ended September 30, 2003, from comparable periods in the prior year. Construction management revenue is generated from services including space planning and tenant finish
coordination for institutional customers in conjunction with property management and leasing assignments, and is directly related to tenants' real estate demands. Revenues remained relatively flat due
to continuing reluctance on the part of tenants to make new real estate commitments due to the downturn in the economy.

Revenues
from development and construction totaled $10.2 million and $27.8 million and represented 6.1% and 5.6% of the Company's total revenue for the three and nine
months ended September 30, 2003, respectively. These revenues decreased $0.1 million, or 1.0%, for the three months ended September 30, 2003, and decreased $8.8 million, or
24.0%, for the nine months ended September 30, 2003, from comparable periods in the prior year. While revenue remained relatively flat for the quarter, the decrease for the nine months ended
September 30, 2003, was primarily due to a $5.2 million decrease in rental revenue from operating real estate properties, resulting from the sale of various operating properties that
generated rental revenue in the first nine months of 2002. Also, development fees decreased $2.6 million for the nine months ended September 30, 2003. The decreases in fees are a 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, resulting high vacancy
rates and the uncertain economic outlook.

Gain
on disposition of real estate totaled $0.4 million and $5.2 million and represented 0.2% and 1.0% of the Company's total revenue for the three and nine months ended
September 30, 2003, respectively. These gains decreased $5.2 million, or 92.9%, for the three months ended September 30, 2003, and decreased $5.5 million, or 51.4%, for the
nine months ended September 30, 2003, from comparable periods in the prior year. During the three months ended September 30, 2003, the Company sold one real estate project for an
aggregate net sales price of $1.1 million, resulting in an aggregate gain on disposition of $0.4 million. For the three months ended September 30, 2002, the Company sold six real
estate projects for an aggregate net sales price of $33.9 million, resulting in an aggregate gain on disposition of $4.6 million, and recognized deferred gain of $1.0 million
relating to a disposition in a previous period. For the nine months ended September 30, 2003, the Company sold six real estate projects for an aggregate net sales price of $7.2 million,
resulting in an aggregate gain on disposition of $4.9 million, and recognized deferred gain of $0.3 million relating to a disposition in a previous period. For the nine months ended
September 30, 2002, the Company sold 15 real estate

28

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projects
for an aggregate net sales price of $58.4 million, resulting in an aggregate gain on disposition of $9.4 million, and recognized deferred gain of $1.3 million relating to
dispositions in previous periods.

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 many of the markets in which the Company operates has
declined and vacancy rates have risen with the overall downturn in the economy. As a result, the Company has responded by shifting focus and resources to user-driven development areas such
as development and construction activities for higher education and healthcare customers and fee development for corporate customers.

Costs and Expenses.The Company's costs and expenses decreased $6.5 million, or 3.8% to
$165.9 million for the three months ended September 30, 2003, and decreased $25.9 million, or 4.9%, to $500.1 million for the nine months ended September 30, 2003,
from 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 $1.9 million, or 1.7%, to $110.0 million for the three months ended September 30, 2003, and decreased $17.0 million, or 4.9%, to
$332.0 million for the nine months ended September 30, 2003. The decrease for the three months ended September 30, 2003 was driven by a $3.1 million decrease in salaries
and benefits for unreimbursed employees offset by a $1.2 million increase in salaries, wages and benefits for reimbursed employees. For the nine months ended September 30, 2003,
salaries, wages and benefits for unreimbursed employees decreased $19.9 million, offset by a $2.9 million increase in salaries, wages and benefits for reimbursed employees. The decrease
in unreimbursed salaries, wages and benefits is a result of the Company's continued cost reduction
efforts undertaken beginning in the second quarter of 2001, partially offset by new hiring in 2003. In addition, both reimbursed and unreimbursed salaries, wages and benefits decreased due to a
reduction in headcount resulting from the Faison Sale.

Commissions
increased $1.5 million, or 6.7%, to $23.8 million for the three months ended September 30, 2003, and increased $3.4 million, or 5.6%, to
$64.0 million for the nine months ended September 30, 2003, from comparable periods in the prior year. The increase in commission expense was primarily driven by the increase in the
Company's corporate advisory services revenue, which was the result of the closing of several significant transactions during 2003. This increase in corporate advisory services commissions was offset
by a decrease in commission expense resulting from a decrease in brokerage revenue in 2003. In general, the Company continues to experience a reduction in transaction volume and transaction values (a
function of rental rates) from historical peak activity levels and values. This reduction is 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, which has resulted in decreased demand for commercial space and consequent lower rental rates.

General
and administrative expenses decreased $4.7 million, or 15.1%, to $26.5 million for the three months ended September 30, 2003, and decreased
$9.9 million, or 10.4%, to $85.0 million for the nine months ended September 30, 2003, from comparable periods in the prior year. The overall decrease in general and
administrative expenses was comprised of a $5.7 million and $12.3 million decrease in costs that are not reimbursed by customers for the three and nine months ended September 30,
2003, respectively, offset by increases in out-of-pocket general and administrative

29

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expenses
that are reimbursed by customers of $1.0 million and $2.4 million for the three and nine months ended September 30, 2003, respectively. The decrease in unreimbursed
general and administrative expenses for the three months ended September 30, 2003, is primarily the result of continuing efforts by the Company to control costs company-wide. The
decrease in unreimbursed general and administrative expenses for the nine months ended September 30, 2003, is the result of a $3.6 million decrease in pursuit costs, mainly due to
capitalized pursuit costs that were written off in the second quarter of 2002, when negotiations on an international venture concluded unsuccessfully upon the other party's withdrawal from the
transaction, as well as continuing efforts by the Company to control costs company-wide. In addition, costs were incurred in 2002 to restructure or exit outsourcing contracts that were
unprofitable or otherwise judged likely to be unsuccessful in the long run. The overall decrease in general and administrative expenses for the nine months ended September 30, 2003, was
partially offset by $3.1 million of provisions for losses or writedowns on real estate due to impairment recorded in nine months ended September 30, 2003. There were no such provisions
for losses or writedowns on real estate in the first nine months of 2002.

Depreciation
and amortization decreased $0.5 million, or 11.4%, to $3.9 million, for the three months ended September 30, 2003, and decreased $0.2 million, or
1.5%, to $13.4 million for the nine months ended September 30, 2003, from comparable periods in the prior year. The decrease is a result of a decrease in amortization expense as
non-compete agreements related to an acquisition became fully amortized in 2002. This is offset by an increase in depreciation expense related to real
estate assets classified as held for investment, in accordance with FAS 144. There was no such depreciation in 2002 as all real estate was classified as "held for sale" prior to
December 31, 2002.

Interest
expense decreased $0.9 million, or 36.0%, to $1.6 million for the three months ended September 30, 2003, and decreased $2.0 million, or 25.6%, to
$5.8 million for the nine months ended September 30, 2003, from comparable periods in the prior year. The decrease in interest expense is primarily the result of the dispositions in late
2002 of several operational real estate projects that incurred interest expense in the first nine months of 2002. Also, during 2003, the Company had lower average outstanding balances on its revolving
line of credit, which also contributed to the decrease in interest expense.

Income (Loss) From Continuing Operations Before Income Taxes, Minority Interest and Income From Investments in Unconsolidated
Subsidiaries.The Company's income (loss) from continuing operations before income taxes, minority interest and income from investments in unconsolidated
subsidiaries decreased $3.7 million, or 72.5%, to income of $1.4 million in the three months ended September 30, 2003, and decreased $5.4 million, or 207.7%, to a loss of
$2.8 million in the nine months ended September 30, 2003, from comparable periods in the prior year due to the fluctuations in revenues and expenses described above.

Minority
interest, net of income taxes, increased $0.9 million, or 300.0%, to income of $0.6 million in the three months ended September 30, 2003, and increased
$1.0 million, or 111.1%, to income of $1.9 million in the nine months ended September 30, 2003, from comparable periods in the prior year. The increase is primarily a result of
larger 2003 losses in consolidated entities in which outside parties have an interest, compared with smaller losses in these entities in 2002.

Income
from investments in unconsolidated subsidiaries, net of income taxes, increased $0.2 million, or 50.0%, to $0.6 million in the three months ended
September 30, 2003, and increased $0.3 million, or 6.5%, to $4.9 million in the nine months ended September 30, 2003, from comparable periods in the prior year. Income from
unconsolidated subsidiaries fluctuates from period to period based on the volume and profitability of transactions in the underlying unconsolidated subsidiaries. The Company's share of income from
such transactions is typically driven by its ownership percentage in the unconsolidated subsidiaries.

30

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Income From Continuing Operations.The Company's income from continuing operations in the three
months ended September 30, 2003, decreased $0.9 million, or 31.0%, to $2.0 million and decreased $1.5 million, or 22.1%, to $5.3 million in the nine months ended
September 30, 2003, from comparable periods in the prior year, due to the fluctuations in revenues and expenses described above.

Income (Loss) from Discontinued Operations, Net of Income Taxes.The Company's income (loss) from
discontinued operations, net of income taxes, decreased $1.1 million, or 122.2%, to $(0.2) million in the three months ended September 30, 2003, and decreased $0.1 million, or
12.5%, to $0.7 million for the nine months ended September 30, 2003. Income (loss) from discontinued operations includes the operations of real estate properties and gain on disposition
of real estate properties held for sale or sold subsequent to the adoption of FAS 144 effective January 1, 2001, that were considered components of an entity under FAS 144 and in
which the Company retained or expects to retain no continuing involvement. Dispositions of real estate assets have been and will continue to be a significant part of the Company's activities and, as a
result of applying the provisions of FAS 144, the Company expects a greater amount of these activities to be classified as discontinued operations in future periods as fewer asset dispositions
will qualify for grandfathered treatment under FAS 144.

Net Income.Net income decreased $1.9 million, or 51.4%, to $1.8 million in the three
months ended September 30, 2003, as compared to the same period in the prior year, and decreased $1.7 million, or 22.1%, to $6.0 million for the nine months ended
September 30, 2003, from the same period in the prior year, due to the fluctuations in revenues and expenses described above.

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 somewhat 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 costs incurred in providing services to its
clients before collection of related billings; 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; investments in, or expenditures for, real estate and payments on notes payable associated with its development and investment activities; and expenditures related
to upgrading the Company's management information systems. 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 secured by underlying real estate, external equity, internal
sources of funds, or a combination thereof.

Net
cash provided by operating activities totaled $11.5 million for the first nine months of 2003, as compared to $39.4 million for the same period in 2002. Cash provided
by operating activities, excluding the change in real estate and related borrowings, decreased to $15.9 million in the first nine months of 2003, as compared to $37.9 million for the
same period in 2002, primarily due to greater collections of accounts receivable in 2002, due to higher average receivable balances in 2002. In addition, cash used in real estate activities (exclusive
of real estate held for investment), net of related borrowings, was $4.4 million in the first nine months of 2003, compared to $1.5 million of net cash provided by real estate
activities, net of related borrowings, for the same period in 2002.

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Net
cash provided by investing activities totaled $0.3 million for the first nine months of 2003, as compared to $4.2 million for the same period in 2002. This change is
primarily due to expenditures related to real estate held for investment of $10.0 million and capital expenditures for furniture and equipment of $5.9 million in 2003, as compared to
capital expenditures of $3.1 million in 2002. This decrease in cash was offset by distributions from investments in unconsolidated subsidiaries, net of contributions, of $16.2 million in
2003, compared to $7.3 million in 2002.

Net
cash used in financing activities totaled $23.0 million for the first nine months of 2003, compared to $30.8 million for the same period in 2002. This change is
primarily attributable to the Company's repurchases of common stock in 2003 of $10.4 million and principal payments, net of additional borrowings, in 2003 of $10.8 million, primarily
under the Credit Facility (described below), compared to principal payments, net of additional borrowings, of $31.7 million in 2002. In addition, the Company made distributions, net of
contributions, to minority interest holders of $6.3 million in 2003, compared to $3.1 million in 2002. The Company also received $2.8 million in 2003 from the exercise of stock
options and issuance of common stock, compared to $4.0 million in proceeds from the exercise of stock options and issuance of common stock in 2002. Also, in 2003, the Company received proceeds
from borrowings, net of payments, of $1.7 million under notes payable on real estate held for investment.

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 stock of such significant subsidiaries and a pledge of certain intercompany indebtedness.

The
Company's participation in derivative transactions has been limited to hedging purposes, and derivative instruments are not held for trading purposes. The Credit Facility requires
the Company to enter into one or more interest rate agreements for the Company's floating rate indebtedness in excess of $30.0 million (other than construction loans under which interest is
capitalized in accordance with accounting principles generally accepted in the United States ("GAAP")) 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 interest rate swap agreement expired on March 24, 2003, and the related weighted average receive rate was 1.37% for the three months ended March 31, 2003.
Subsequent to the expiration of the interest rate swap agreement, the Company has entered into various short-term interest rate agreements to comply with the requirements of the Credit
Facility. In September 2003, the Company entered into an agreement to lock the LIBOR-based interest rate on its $10.0 million of borrowings outstanding under the Credit Facility for
90 days. Seeking to mitigate the impact of interest rate fluctuations on its other floating rate debt, in September 2003, the Company also entered into an interest rate cap agreement
with a notional amount of $10.0 million expiring December 24, 2003, under which the Company will receive payments if the 30-day LIBOR-based interest rate exceeds 1.3%. The
interest rate cap agreement has been designated an effective hedge,

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and,
to the extent the hedging relationship remains effective, changes in fair value of the interest rate cap agreement will be recorded in other comprehensive income.

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, 2003, and bears interest at a rate agreed upon between the Company and the bank. Borrowings under the Discretionary Line are
unsecured and reduce borrowing capacity under the Credit Facility.

At
September 30, 2003, the Company had outstanding borrowings of $10.0 million under the Credit Facility and no borrowings outstanding 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 borrowing capacity available to the Company
under the Credit Facility to an amount less than the $150.0 million commitment. Because 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 Facility 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. At September 30, 2003, the Company was in compliance with all covenants of the Credit Facility. The Company's unused borrowing capacity (taking into account letters of
credit and borrowings outstanding and limitations from certain financial covenants) under the Credit Facility was $104.5 million at September 30, 2003. The Company expects to continue to
borrow under the Credit Facility to finance future strategic acquisitions, fund its
real estate investment and co-investment activities and provide the Company with an additional source of working capital.

In
March 2003, the Company entered into an interest rate cap agreement in order to limit its interest expense on a construction loan with a 30-day LIBOR-based floating
interest rate related to a consolidated real estate project. The interest rate cap agreement has a notional amount of $11.4 million and the Company will receive payments if the LIBOR-based
interest rate exceeds 3.5%. The interest rate cap agreement has not been designated as a hedge, and therefore the interest rate cap agreement will be marked to market each period with the change in
fair market value recognized in current period earnings. The interest rate cap agreement expires on March 1, 2005. As of September 30, 2003, amounts recorded by the Company related to
this interest rate cap agreement were not material.

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                    |  | $ | 11.3 |                                            
|Guarantees                                   |  |   | 50.6 |                                            
|Loan commitment to unconsolidated subsidiary |  |   | 3.0  |                                            
|                                             |  |   |      |                                            
|Total Commitments                            |  | $ | 64.9 |                                            
|                                             |  |   |      |                                            

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The
Company does not anticipate paying any dividends in the foreseeable future. The Company believes that funds generated from operations, existing cash, 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. When and as appropriate, the Company 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 approved a stock repurchase program. The repurchase program contemplated 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. The repurchase program was completed during the second
quarter of 2003 and resulted in the repurchase of 1,593,900 shares at an average cost of $9.41 per share. The purchases were made with funds generated from operations and existing cash. The Company
placed the repurchased shares in treasury. The Company intends to reissue such shares in connection with the Company's employee stock purchase plan and option exercises or restricted stock grants
under the Company's long-term incentive plan and other equity-based incentive plans, as well as for other corporate purposes.

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," "forecast," "will," "expect," "envision," "project," "budget," "target," "estimate," "should," "intend," "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, implement and maintain the benefit of cost reduction measures 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 manage 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 qualified personnel in all areas of its business (particularly senior
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 31, 2003.

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ITEM 3.Quantitative and Qualitative Disclosures About Market Risk

The Company's primary market risk exposure 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" and in Notes 5 and 6 to
the Company's Condensed Consolidated Financial Statements. 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. From time to time, the Company purchases interest rate agreements used to hedge, cap or lock a portion, but not all, of its exposure to fluctuations in interest rates, and, as such, the
effects of interest rate changes are expected to be 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. There have been no significant changes in the interest rate or foreign
currency market risks since December 31, 2002.

ITEM 4.Controls and Procedures

As
of the end of the period covered by 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 (as defined in 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange
Act")). 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 were
no changes in the Company's internal control over financial reporting that occurred during the quarter ended September 30, 2003 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.

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PART IIOTHER INFORMATION

ITEM 1.Legal Proceedings

From time to time, the Company is involved in litigation matters that arise in the ordinary course of its business, some of which involve claims for damages which
are substantial in amount. The ultimate liability for these matters cannot be determined. However, based on the information currently available, the Company does not believe that the resolution of any
such matters to which it is currently a party will have a material adverse effect on the Company's results of operations, financial condition or liquidity.

ITEM 6.Exhibits and Reports on Form 8-K

3.1(1)

Certificate of Incorporation of the Company3.2.1(2)

Bylaws of the Company3.2.2(3)

First Amendment to the Bylaws of the Company3.2.3(4)

Second Amendment to the Bylaws of the Company4.1(5)

Form of Certificate for Shares of Common Stock of the Company10.1.1

Fourth Amendment to the Company's Employee Stock Purchase Plan10.1.2

Fifth Amendment to the Company's Employee Stock Purchase Plan10.2

Employment Agreement dated as of October 17, 2003 between the Company and Robert E. Sulentic10.3

Employment Agreement dated as of October 17, 2003 between the Company and Derek R. McClain10.4

Employment Agreement dated as of October 17, 2003 between the Company and James R. Groch10.5

Employment Agreement dated as of November 13, 2003 between the Company and William F. Concannon31.1

Certification by the Chief Executive Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

Certification by the Chief Financial Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1

Certification by the Chief Executive Officer of the Company Pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2

Certification by the Chief Financial Officer of the Company Pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


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On August 5, 2003, the Company filed a Current Report on Form 8-K furnishing the Company's press release announcing its
financial results for the second quarter and first half of 2003 and furnishing the following financial statements: (i) Statements of Income for the Three and Six Months Ended June 30,
2003 and 2002; (ii) Balance Sheet as of June 30, 2003 and December 31, 2002; (iii) Summarized Operating Data by Segment for the Three and Six Months Ended June 30,
2003 and 2002; and (iv) Other Data as of June 30, 2003 and December 31, 2002.

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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, 2003 |  |                      

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Exhibit Index

|Exhibit
Number |  | Description                                                                                                                                                
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(1)         |  | Certificate of Incorporation of the Company                                                                                                                
|3.2.1(2)       |  | Bylaws of the Company                                                                                                                                      
|3.2.2(3)       |  | First Amendment to the Bylaws of the Company                                                                                                               
|3.2.3(4)       |  | Second Amendment to the Bylaws of the Company                                                                                                              
|4.1(5)         |  | Form of Certificate for Shares of Common Stock of the Company                                                                                              
|10.1.1         |  | Fourth Amendment to the Company's Employee Stock Purchase Plan                                                                                             
|10.1.2         |  | Fifth Amendment to the Company's Employee Stock Purchase Plan                                                                                              
|10.2           |  | Employment Agreement dated as of October 17, 2003 between the Company and Robert E. Sulentic                                                               
|10.3           |  | Employment Agreement dated as of October 17, 2003 between the Company and Derek R. McClain                                                                 
|10.4           |  | Employment Agreement dated as of October 17, 2003 between the Company and James R. Groch                                                                   
|10.5           |  | Employment Agreement dated as of November 13, 2003 between the Company and William F. Concannon                                                            
|31.1           |  | Certification by the Chief Executive Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                      
|31.2           |  | Certification by the Chief Financial Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                      
|32.1           |  | Certification by the Chief Executive Officer of the Company Pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|32.2           |  | Certification by the Chief Financial Officer of the Company Pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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