Locally based GMH has used $23.2 million of its $27.8 million in net proceeds to repay debt under its note facility with Merrill Lynch. The remaining $4.6 million is being held in escrow for up to 180 days pending GMH's completion of a 1031 exchange transaction. A company spokeswoman declined to elaborate on the nature of that pending transaction.
The three properties are among five that SCI has agreed to acquire. The remaining two are expected to close by the end of second quarter at an as-yet undisclosed price. Proceeds from that sale will also be used to repay debt on the note facility or for general working capital. GMH will continue to manage all five communities.
The properties in this initial transaction are Campus Club, a 924-bed, garden-style community in Gainesville, FL; University Glades, a 432-bed property, also in Gainesville, FL, and University Edge, a 552-bed, garden-style community in Hattiesburg, MS. The additional two properties are Seminole Suites, a 924-bed asset in Tallahassee, FL, and University Crossing, a 700-bed community in Manhattan, KS.
The sale is part of GMH's ongoing initiative to strengthen its balance sheet by selling some student housing properties and entering into JV-partnerships on others. "We are making excellent progress with our strategic plan, with the timing and pricing of these sales transactions in line with our expectations," says John DeRiggi, chief investment officer of GMH and president of its student housing division.
In a statement he refers to a joint-venture with Boston-based Fidelity Real Estate Group, which was formed in April, as GlobeSt.com previously reported. That partnership encompasses six properties in which GMH sold its 100% interest to Fidelity. The sales to SCI combine with the Fidelity JV, DeRiggi says, "to enhance the company's efforts to strengthen our balance sheet and improve our core asset value."
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