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NEWTOWN SQUARE, PA-GMH Communities Trust's student housing division has acquired two additional properties with an aggregate of 203 student housing units for a total of $41.3 million. They are College Manor, a 179-unit class A facility serving San Diego State University, and Jacob Heights III, a 24-unit townhouse-style property near the Minnesota State University campus in Mankato, MN. Both are 100% preleased for the 2006/2007 academic year.
GMH paid approximately $37.5 million, which translates to $209,497 a unit and $62,500 a bed, for the 600-bed College Manor. A portion of the acquisition price was funded with a $28.6-million, 10-year, interest-only mortgage with a fixed-interest rate of 5.97%. GMH took over management and pre-leasing of the asset prior to buying it.
This acquisition, says John DeRiggi, president of the GMH housing division, is part of the company's strategy "of identifying the best-located and highest-quality assets in underserved markets and converting them from the traditional rent-by-the-unit basis to our all-inclusive rent-by-the-bed concept." That approach, plus "the class A asset in a class A location, allowed us to completely change the leasing structure for this property and achieve a 100% lease-up in less than three months."
In a separate transaction, GMH paid $3.8 million, which represents $158,333 per unit or $39,583 a bed, for the 96-bed Jacob Heights III property. To help fund this buy, GMH placed a $3-million, 10-year, interest-only mortgage on the asset at a fixed rate of 6.19%.
This acquisition significantly expands GMH's services to Minnesota State University, DeRiggi says. "It adds to the growth of our already successful properties in that market." It is adjacent to the 24-unit, 162-bed Jacob Heights facility GMH acquired this January and across the street from the Summit, a 192-unit, 672-bed property it acquired in 2004.
College Park Management, locally based GMH's student housing management division, also headquartered here, will manage the new assets. The two properties take GMH's student housing portfolio to 63 properties with an aggregate of 11,697 units encompassing 37,710 beds. Year-to-date, GMH has acquired nine student housing properties for an aggregate of approximately $160.8 million.
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