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$1.4B Takes GMH as Sector Consolidates

NEWTOWN SQUARE, PA-GMH is also selling its military housing portfolio to UK firm Balfour Beatty for $350 million.

By Erika Morphy | Updated on February 12, 2008

NEWTOWN SQUARE, PA-American Campus Communities Inc., an Austin-based developer, owner and manager of student housing properties, has entered into an agreement to acquire GMH Communities Trust’s student housing portfolio in a cash-and-stock deal for approximately $1.4 billion. That sum includes the firm’s outstanding debt, which totals approximately $963 million. In a separate transaction, GMH’s military housing portfolio is being sold to a US subsidiary of Balfour Beatty Plc for $350 million. The two transactions total up to a sale of $9.61 per share, or a 72% premium to Monday’s close.

While the deal is not a pure student housing play, it does illustrate the rapid maturation of this specialty niche in the real estate industry. Robin Kennedy, real estate and land use partner at Manatt, Phelps & Phillips, tells GlobeSt.com that student housing has changed almost beyond recognition over the last five to 10 years. Consolidation and its inevitable result–ever more competitive private sector companies–will usher in a new era of management and asset development, she says.

Yaacov Gross, head of Morrison & Foerster’s real estate securities group, also agrees the consolidation this deal represents will aid the larger sector. “It will deliver greater operating efficiencies in what is a management-intensive niche,” he tells GlobeSt.com.

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