Revenue from its student housing division for the quarter was $32.2 million, and income for the division was $4.4 million. Student housing operating margins were 58.2%, according to Brad Harris, CFO. The current student-housing portfolio is 93.1% leased. For the 2005-2006 academic year, preleasing is 70%, up from 66% in 2004, and there is an increase of 2.7% in the average annual rent rate.

Revenue from the military housing division was $5.4 million in first quarter, and income was $3.8 million. Operating margins on the military side averaged 71%, "a figure that will fluctuate from quarter to quarter," Harris said.

Pipelines for both divisions are strong, Holloway reported. Earlier this year, GMH announced plans for student-housing acquisitions in excess of $400 million for the year. Of that, $201 million has been spent, $152 million is under contract, and letters of intent are out for $270 million.

While prospects for the military division are positive, the Department of Defense will identify an initial list of base closings in the middle of this month. At present, Holloway expressed confidence of an award of three military contracts within 35 days that will aggregate 5,800 housing units at a value in excess of $700 million. "We're anticipating bids on eight more contracts for an aggregate of 9,300 units at a value in excess of $1 billion."

Regarding base closings, he noted, "it takes several years for a base closure, and as this happens, other bases may benefit as personnel relocates. We're monitoring the impact of base closings."

"Right now, what bases are at risk is a guarded secret," added Bruce Robinson, president of military housing. "Our feeling is that the impact of base realignment might put some of our bases at risk, but the timeframe is long, and we don't have much capital invested. A good share of that capital could come back, if any of those bases appear on the list."

Instant Insights /

GMH Anticipates $700M in Military Contracts in Q2

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