"We understand that the company needs to rebuild credibility within the marketplace," says Gary Holloway Sr., president, chairman and CEO, in a statement. The initiatives, outlined briefly in the statement, will be detailed in a conference call on Dec. 20.
They focus on the student housing division and include a de-emphasis on acquisitions short-term and the exploration of selling, refinancing or joint-venturing some currently owned properties in the portfolio. The sales or joint ventures will allow the division to maintain management of the assets. Under a JV, GMH says it would obtain cash equity from the partner and maintain an income stream from management fees.
The refinancing will "secure lower interest rates with longer fixed-rate terms, and derive additional cash proceeds… that will be used to pay down the existing line of credit," according to the statement. In addition, GMH is in discussions to replace its current, short-term line of credit with Wachovia Bank and is targeting a three-year line of credit in the range of between $75 million and $125 million. As GlobeSt.com previously reported, on Nov. 5, the company obtained a $250-million credit facility from Wachovia for a six-month term.
GMH also cut its quarterly dividend from $0.23 a share to $0.17 cents a share. GCT stock opened at $11.87 a share on Dec. 18, down 1.3% from the Dec. 15 high. The 52-week high of $17.10 a share on March 1, 2006, dove to a 52-week low of $10.75 a share on April 13, this year, following formation of the special committee, prompted by an allegation of "tone at the top" problems and "material weaknesses" in controls over financial reporting. The allegation and subsequent drop in stock has resulted in class action lawsuits.
The REIT's decision not to enter the private sphere flies in the face of many recent mergers, including today's Trammell Crow Co.'s shareholder approval of its merger with CB Richard Ellis.
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