Dissolving the Trammell Crow Arrangement

Penn and Trammell Crow Company have mutually agreed to terminate the business arrangement entered into in 1998 and anticipated to end in 2002 whereby Trammell Crow Company’s Higher Education Services group (TCHES) provided the University with project management services for capital construction projects. Omar Blaik, vice president for facilities services, announced that the parties have also agreed to end the exclusive business arrangement between TCHES and University City Associates (UCA), a wholly owned subsidiary of Penn, whereby TCHES provided property management and transaction services for off campus properties managed by UCA, as well as for the Neighborhood Preservation and Development Fund, an investment partnership in which Penn serves as General Partner. Mr. Blaik described the conclusion of the arrangement as "an economically sound business decision for both parties."

Effective August 13, 2002, the University assumes responsibility for project management of its capital projects, and transaction services previously provided by TCHES. Penn will offer term appointments through January 31, 2003 to substantially all impacted Trammell Crow Company employees, and will retain a majority of these positions after the transition has been completed. Mr. Blaik said he does not expect any delays in completion of capital projects already underway.

Effective October 1, 2002, property management for UCA will be provided by multiple external providers. Penn has issued requests for proposals for residential property management and commercial property management and anticipates awarding service contracts by the end of August. Substantially all Trammell Crow Company property management employees dedicated to the UCA account will be offered term appointments through December 31, 2002 with the awarded service provider(s). During this period, the service provider(s) will evaluate staffing needs. Mr. Blaik expects that this process will be completed by November, and a majority of current Trammell Crow Company employees will then be offered regular on-going positions.

Both parties have acknowledged the benefits of their relationship such as the implementation of the Neighborhood Preservation and Development Fund in West Philadelphia, the expansion of University City Associates to include 750,000 square feet of commercial space and over 1,000 housing units, cooperative administration of the Design and Construction function of Penn’s capital construction program, as well as the technical and strategic support for real estate acquisition, disposition, development, leasing and operations. Other accomplishments have included the work on Huntsman Hall, preservation work at The Quadrangle and Perelman Quad, the introduction of the Left Bank, and TCC’s strategic planning, marketing and development work that initiated Penn’s revitalization of University City’s "40th Street."