NEWTOWN SQUARE, PA-GMH Communities Trust appointed Michael D. Fascitelli, president of Vornado Realty Trust, to its board of trustees, extending the board of the locally based specialty REIT from eight members to nine. The appointment is related to the terms of a warrant that GMH and its operating partnership, GMH Communities LP, issued to Vornado in connection with GMH's IPO on Oct. 28, 2004.
Bradley Harris, SVP and CFO of the REIT, tells GlobeSt.com the warrant, which "gave Vornado the right to designate a board member to our company, was no different from a stock option. Vornado was a partner in lending us money prior to our IPO," he explains, and GMH used the funding "to buy student assets we'd identified." The loan was then converted into "a certain number of shares of stock, following the IPO," Harris says, adding that the warrant gave Vornado up to 18 months to exercise its right to obtain the shares.
According to GMH's SEC filing at the time of the IPO, Vornado contributed $113.8 million in cash to GMH Communities LP, which was used to fund the cash portion of acquiring 17 properties, plus an undeveloped parcel and also repay $20 million of indebtedness under the line of credit of Gary M. Holloway, GMH chairman, president and CEO.
In connection with Vornado's investment in the GMH operating partnership, it also paid $1 million to purchase the warrant. The warrant entitles Vornado, at its option, to acquire either a number of units in GMH Communities LP, common shares of the newly formed public REIT, or a combination of both.
Regarding Fascitelli's addition to the board, in a statement Holloway says the new member has "extensive industry knowledge," adding that it would be "of great value" to the company. Vornado owns and manages approximately 87 million sf of commercial real estate, primarily in the metropolitan areas of New York and Washington, DC.
On the day it went public, GCT common stock opened at $12 a share. Shares closed on Aug. 12 at $14.25. The 52-week low of $11.30 a share occurred on March 29 and the stock hit is 52-week high of $15.65 a share on Aug. 4 this year.
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