Thank you for sharing!

Your article was successfully shared with the contacts you provided.

(To read more on the debt and equity markets, click here.)

NEWTOWN SQUARE, PA-As GMH Communities Trust filed its long-delayed second-quarter 2006 financial report, a special committee continues to evaluate alternative strategies for the company.

During a conference call, Gary M. Holloway Sr., president, chairman and CEO, declined to take questions regarding the committee’s progress, but said it “is evaluating indications of interest by several parties regarding a sale of the company or its assets.” As GlobeSt.com previously reported, the special committee was formed in March in response to an audit committee investigation, prompted by an allegation of “tone at the top” problems with management and “material weaknesses” in controls over financial reporting, submitted by the then-CFO Bradley Harris. At the same time, Ernst & Young was hired to conduct an independent audit.

On Sept. 1, E&Y resigned as GMH auditor. No explanation was provided in GMH’s SEC filing, except to say there were no disagreements with E&Y on any matter of accounting principles or practices or scope of the audit that were not “resolved to E&Y’s satisfaction.” A letter from E&Y, included in the SEC document, confirmed that assessment.

GMH’s audit committee currently is identifying an independent accounting firm to replace E&Y. Holloway says the search could, but is not expected to delay its third-quarter filing.

Second-quarter expenses related to the audit committee investigation and special committee were $2.3 million, raising the overall first-half cost of the process to $4.9 million. Associated costs will continue to accrue for the remaining half of the year, Holloway says.

Although revenue for the quarter reached $71.5 million, up from $49.7 million in the same quarter a year ago, the investigation and special committee expense put a dent in second-quarter net income, which was a loss of $541,000 versus a gain of $826,000 in second-quarter 2005. Despite the loss, Holloway says “our underlying operating fundamentals remain strong.”

In August, the student housing division acquired two 100%-leased properties and acquired 26 developable acres near Sam Houston State University in Huntsville, TX. Existing student housing properties are 94% leased for the 2006-2007 academic season. The portfolio’s occupancy is expected to rise in California, where the academic year begins late.

The military housing division plans to submit bids for additional base-housing projects valued at $1.1 billion. It also intends to pursue single-soldier housing in addition to its ongoing military family housing projects.

GCT stock was trading at $12.90 per share at yesterday’s NYSE closing, unchanged from the previous day. The 52-week high of $17.10 per share occurred March 1 before the audit investigation began; its 52-week low of $10.75 per share was April 13.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


GlobeSt. Multifamily Spring 2022 (Formerly APTS)Event

Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt
Live Chat

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.