GMH To Raise $109M-Plus in Common Stock Offer

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NEWTOWN SQUARE, PA-GMH Communities Trust priced a public offering of 8.1 million shares of common stock at $14.25 a share. The offering is expected to close Oct. 4. The underwriters have been granted a 30-day option to purchase up to just over 1.2 million additional shares to cover any over-allotments.

The initial SEC registration filing for the offering was for almost 6.8 million shares, but the number of shares was increased 20% in a subsequent filing on the same day, Sept. 29. Net proceeds from the offering, after expenses and underwriting discounts, is expected to be approximately $108.6 million, not counting over-allotments, which could add just over $17.3 million, excluding expenses.

Use of the proceeds is delineated in the initial filing, but not the additional one. The earlier filing anticipated net proceeds of up to $107.7 million, including an over-allotment. It states the locally based specialty REIT plans to "repay an equal amount of outstanding debt" under its credit facility, which matures on Nov. 4, 2007, and, as of Sept. 19, 2005, bore an interest rate of between 5.57% and 5.91%.

The debt, according to the statement, was used to pay shareholder dividends and cover a portion of the purchase price of "certain student-housing properties." The filing also said the company could re-borrow amounts repaid under the credit facility for the acquisition of additional student housing properties, military housing privatization projects and for dividend payments and general corporate purposes.

Banc of America Securities LLC and Merrill Lynch & Co. are joint book-running managers for the offering. Morgan Stanley, Wachovia Securities and Raymond James are co-managers. The SEC filing notes that affiliates of Banc of America Securities, Merrill Lynch and Morgan Stanley are not only underwriters for the offering but also participating lenders under the credit facility. At midday, Sept. 29, the day the offering was announced, shares of GCT were trading on the NYSE at $14.47 a share.