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Ready money puts BioMed Realty well ahead of projected acquisition pace

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With this week's announcement of the planned acquisition of a medical building under construction in Boston, BioMed Realty Trust's (NYSE: BMR) portfolio will exceed 8.4 million square feet of biomedical buildings around the country.

The Rancho Bernardo-based real estate investment trust, which was formed in April 2004 solely to acquire biomedical assets, signed a definitive purchase-and-sale agreement to acquire the Center for Life Science Boston. The life science and research building, slated for completion in 2008, is 702,940 square feet and 18 stories.

Including the initial purchase price of more than $507 million, the company expects to invest more than $700 million to acquire and complete the project; the acquisition is expected to close in the fourth quarter.

BioMed intends to finance the acquisition through a combination of borrowings under its $500 million revolving credit facility managed by KeyBank National Association, debt secured by the project and/or other debt financing.

KeyBank National Association served as the credit facility's administrative agent, and 17 other entities, ranging from Wells Fargo National Association to the International Commerce Bank of China, participated as well.

BioMed's credit facility doubled from $250 million to $500 million in late June. The amount of this line is expected to increase again to $700 million in the near future. The REIT's credit facility may be extended from June 2009 to June 2010, assuming certain financial targets are met.

BioMed CFO Ken Griffin said his firm is not highly leveraged, and along with the credit facility and mortgage and bank financing, additional funds for acquisitions will come from exchangeable notes and public markets.

Griffin said his company hasn't issued any guidance for its acquisitions for the coming year; however, the firm will continue to focus on acquiring, developing and redeveloping in the biotechnology hot spots of San Diego, San Francisco, Seattle, Colorado, Boston, New York, New Jersey, Pennsylvania and Maryland.

"The markets that are going to succeed are markets where biotech is already present," he said, adding that San Diego will always be a favored market for BioMed because of its proximity to the University of California, San Diego, the Burnham Institute for Medical Research and an array of institutions and companies that will continue to provide new opportunities here.

Although financing has slowed to a trickle for residential projects, Griffin said funding for commercial projects, particularly biotechnology developments, has continued unabated.

"All trends suggest the capital will continue to be available...," Griffin said. "We think all the demographic, social and technological changes will lead to increased spending in the life sciences arena."

Griffin, whose company includes approximately 80 employees, expects this figure to grow significantly as new properties are added to BioMed's portfolio.

"We're obviously pretty excited and we have progressed (in our acquisitions) well ahead of our own projections," he added.

In August, the company announced it closed on three properties in Pennsylvania Colorado and San Diego, totaling 224,358 rentable square feet of laboratory and office space for an aggregate purchase price of approximately $53.3 million.

In July, BioMed acquired Sun Microsystems Inc.'s (Nasdaq: SUNW) campus in Newark, Calif., comprising approximately 1.4 million square feet of office space as well as undeveloped land, for approximately $214 million, and renamed it the Pacific Research Center.

In May, the company acquired Human Genome Sciences Inc.'s (Nasdaq: HGSI) three-building, approximately 925,000-square-foot manufacturing and headquarters office and laboratory facilities in Rockville, Md., for approximately $425 million.

BioMed's third-quarter numbers are not yet available. The REIT posted $11.63 million in net income on $93.25 million in revenues for the first six months of the year, compared with $7.27 million in net income on $53.03 million during the like period a year earlier.

BioMed's tenants primarily include biotechnology and pharmaceutical companies, scientific research institutions, government agencies and other entities involved in the life science industry. Excluding the Boston transaction, BioMed's real estate portfolio consists of 52 properties, representing 89 buildings with approximately 7.7 million rentable square feet.

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