DALLAS-Securing the takeover with an exclusive property management contract, two COOs for Trammell Crow Residential Services will buy the operation from their Atlanta-based boss, who is financing the deal with a 10-year loan for the purchase price and working capital. The transaction is expected to close by year's end.
"I don't know if this was in anyone's crystal ball," says Terry Danner, who will co-own the operation with Christy Freeland. "It really came about because Trammell Crow Residential made the decision that their core business was going to be multifamily for sale and development." Danner oversees the South Central regional office and Freeland has the Mid-Atlantic/Northeast/South Florida territory. The new company will be based in Dallas.
Danner tells GlobeSt.com that the amicable split was mortared by seller financing and the exclusive management contract, good through 2006, for 56,000 apartments in 200 US properties. He estimates the pipeline holds another 4,000 to 5,000 of Trammell Crow-developed rental units for the property management company.
The decision is still so fresh that the Danner-Freeland operation won't be getting its new name until the end of the month. Danner says a PR firm will hand over a list of suggestions by Oct. 15.
About 1,200 of the 1,500 employees will be folded into the new company, Danner says, adding the others are mostly in shared services like accounting and will stay with the parent. Danner, with the firm for 9.5 years, and Freeland, an eight-year employee, began the takeover talks in July.
Danner says the parent company explored several options, but the COO buyout "was the best play for them to keep the organization intact." He says Trammell Crow Residential has spent nearly two years laying the groundwork for the strategy shift by selling most of its rental product.
Trammell Crow Residential-owned properties make up one-third of the new company's portfolio. Danner says all third-party owners were contacted last week about the buyout. "It was a wonderful reception," he says. "Some had viewed us as having a conflict, favoring the Trammell Crow assets because we owned them. They feel this puts them on an even playing field." The new company will continue to man 13 regional offices across the US.
In a press release, the co-owners say the deal opens the door for other related business ventures. Danner isn't ruling out acquisitions of Trammell Crow Residential product, but says it's not part of the immediate plan and they aren't holding any first rights of refusal.
The 28-year-old Trammell Crow Residential has seeded similar ventures in the past. In 1993, Avalon Properties Inc., predecessor to the Washington, DC-headquartered AvalonBay Communities Inc., was formed from Trammell Crow Residential's Northeast region and a year later the Miami-based Gables Residential Trust surfaced as a public company from a marriage of the Southeast and South Central regions.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.