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NEWTOWN SQUARE, PA-College Park Communities, the student housing division of locally based GMH Communities Trust, has signed an agreement to acquire a regional portfolio of four student-housing properties near university campuses in Virginia and Tennessee in a transaction valued at approximately $76.8 million. The portfolio aggregates 2,680 beds in 670 units and also includes vacant land adjacent one of the properties that is slated for development of up to an additional 112 units containing 448 beds.

GMH has completed the acquisition of two of the properties in Harrisonburg, VA, which serve James Madison University, and the single property and land parcel in Johnson City, TN, which serves East Tennessee State University. These have an aggregate of 2,152 beds in 538 units.

In addition, the company is under contract to buy a fourth property in the portfolio. It is also located in Harrisonburg, VA, and this acquisition will close as soon as the lender approves GMH’s assumption of existing mortgage debt on the property. Approval is expected this month.

The total purchase price includes three non-cash components, which together aggregate approximately $74.1 million. The buyer is issuing just over 1.9 million units of limited partnership interest in GMH’s operating partnership to the seller. The issuance is valued at approximately $27.5 million. Kathleen Grim, a GMH principal, tells GlobeSt.com this was at the election of the seller. “The units are redeemable for cash or shares after a one-year holding period,” she says, “and whether cash or shares are issued is at the discretion of GMH.” Grim identified the portfolio’s seller only as “a local entrepreneurial investor.”In addition to the transfer of partnership units, GMH is placing approximately $40.6 million of new mortgage debt on three of the properties and assuming approximately $6 million of existing mortgage indebtedness on the remaining Harrisonburg, VA property. “We believe the large component of operating partnership units…is a testament to the company’s potential future growth and profitability,” says Joseph M. Coyle, president of GMH’s student-housing division, in a statement. He also says GMH was able to obtain favorable financing based on the physical quality and demographics of the assets and “the soundness of our underwriting capabilities.”

All of the properties are class A and were originally built for the purpose of housing students. Collectively, they are more than 90% leased for the fall 2005 semester. Effective June 30, College Park Communities assumed management of all four properties.

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