One day prior to release of its third-quarter financial results, GMH announced that it had settled a class-action shareholders lawsuit and related litigation. Without disclosing the amount of the settlement, GMH said a "substantial portion" was covered by insurance and its net charges, including a portion of the settlement and legal fees, would total $2.2 million in this year's first nine months.
During the third-quarter conference call, Gary Holloway Sr., president, chairman and CEO, said, "we were prepared to vigorously defend ourselves," but felt the settlement would have minimum impact to FFO. All claims have been dismissed without admission or presumption of liability or wrongdoing.
While the company continues to revamp its student housing portfolio through dispositions, joint-venture partnerships and intensified management, the net loss in that division for the quarter fell to $7.4 million, based on revenue of $45.8 million. That compares with a net loss of $6.9 million on revenue of $41.3 million in the same quarter a year ago.
Net income in the military housing division rose to $6.6 million on total revenue of $10 million for the quarter ended Sept. 30. This compares with a third-quarter 2006 net revenue of $5.1 million on revenue of $7.7 million. In addition to projects previously obtained, the division has four potential additional military housing privatization project opportunities under review, including opportunities to acquire some from competitors.
During a conference call, without identifying those opportunities, Bruce Robinson, president of the division, said, "certain competitors are experiencing some operational challenges." The company now has housing initiatives underway at 37 bases for an aggregate of more than 25,000 units.
"Military exceeded our expectations," Holloway said. "It continued to hit the ball out of the park. The investor community fails to recognize the value of this sector," he added. He later reiterated his contention that "military housing is a stabilizing force," and, pointing to the trading level of the company's common stock, again said, "we need to stress how valuable it is."
On the day of the conference call, however, GCT common stock fell to a new 52-week low of $6.81 a share and hovered within pennies of that low during Nov. 6 trading. It compares with a 52-week high of $13.96 a share on Nov. 7, 2006.
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