10K Humor from GCT
In the course of reviewing the merger between American Campus Communities (ACC) and GMH Communities Trust (GCT) I found some interesting information.
The notes to GCT’s last 10K had some disclosures regarding related party transactions. (Note that these transactions took place before the merger with ACC.) In particular, they disclosed, “…on-going business relationships with Gary M. Holloway, Sr., entities affiliated with Mr. Holloway, and entities in which Mr. Holloway or the Company has an equity investment.”
All told, the company disclosed more than half a dozen transactions with Mr. Holloway. While I’m sure the company would defend each of these transactions as being on the up and up, I have my doubts. I know why disclosures are made in 10K’s. I know how to read-em and I know I’d to bleed-em.
Here is one very interesting disclosure taken directly from the 10K:
“In February 2005, the Company transferred its interest in Corporate Flight Services, LLC, including the corporate aircraft and associated debt initially contributed to the Operating Partnership at the time of the initial public offering, to Mr. Holloway. Corporate Flight Services, LLC had a net deficit of $171,000, net of $180,000 tax expense related to the taxable gain upon the transfer to Mr. Holloway, on the date it was transferred to Mr. Holloway. This transfer was accounted for as a capital contribution to additional paid-in capital. During the year ended December 31, 2007, 2006 and 2005, the Company paid Corporate Flight Services, LLC $1.2 million, $993,000 and $290,000, respectively for use of an aircraft owned by Corporate Flight Services, LLC.”
Enlightening, huh? Maybe it’s just business as usual? Maybe it means nothing? I’ll leave that to someone else to follow-up on. They can adjudicate the transactions for themselves.