SCI Real Estate Investments Fidelity Real Estate Group
GMH received net proceeds of approximately $29.6 million from Los Angeles-based SCI from the sale of Seminole Suites in Tallahassee, FL and University Crossing in Manhattan, KS. SCI also assumed $31.8 million of existing mortgage debt on the properties.
GMH has used $16.8 million of the proceeds to repay indebtedness on its revolving note facility with Merrill Lynch. The remaining $12.8 million in proceeds may be used for general working capital or to repay additional debt under the Merrill Lynch note facility during this year's third quarter.
On June 4, GMH netted $27.8 million in proceeds from the sale to SCI of an initial three student housing properties. They are Campus Club and University Glades in Gainesville, FL, and University Edge in Hattiesburg, MS. College Park Communities will continue to manage all five properties.
In addition, GMH netted $5.2 million in proceeds from the transfer of its 100% interest in The Edge—Phase II in Charlotte, NC to the Boston-based Fidelity JV entity, which is a unit of Pyramis Global Advisors, a Fidelity investments company. The JV assumed $4.5 million in debt on that property. This is the sixth property GMH has contributed to the JV.
It realized proceeds of $56.1 million from the April 2006 transfer of five properties to the JV. They are: Uptown in Denton, TX; University Heights in Knoxville, TN; University Walk and the Edge—Phase I in Charlotte, NC, and the Ridge in Morgantown, WV. GMH will continue to manage all six assets, and, as with the initial five transfers, GMH is using the proceeds of this final one to repay debt.
With completion of these previously struck deals, GMH's current balance under the $100-million Merrill Lynch revolving note facility is $38.2 million. Both the sale to SCI and formation of the Fidelity joint venture are part of the company's ongoing initiative to "enhance the company's efforts to strengthen our balance sheet and improve our core asset value," according to John DeRiggi, GMH's chief investment officer and president of the student housing division.
In December 2006, when the company determined it would not be sold, Gary Holloway, Sr., president and CEO, said it would turn its attention to selling or joint venturing some of its student housing properties. The objective was to obtain cash and also maintain management of the assets, which provide an income stream from management fees.
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