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BioMed Realty Sells Rockville, Maryland Asset For $322.5 Million, Resulting In $136.0 Million Net Gain On Sale
Date:12/11/2014

SAN DIEGO, Dec. 11, 2014 /PRNewswire/ -- BioMed Realty Trust, Inc. (NYSE: BMR) today announced that it has closed on the sale of its 9911 Belward Campus Drive property for approximately $322.5 million in gross proceeds, with a gain on sale of approximately $136.0 million, net of closing costs. The sale proceeds reflect a purchase price of $1,112 per square foot for the 289,900 square foot biological manufacturing facility located in Rockville, Maryland.

Also, the company's board of directors declared a special dividend of $0.30 per share of common stock, reflecting a return to stockholders of a portion (approximately $61.0 million) of the sale proceeds.  The special dividend is payable on December 29, 2014 to stockholders of record at the close of business on December 22, 2014.  Initially, the company expects to utilize the remaining proceeds to pay down the balance of the company's unsecured revolving credit facility.  Ultimately, the company anticipates reinvesting these proceeds in world-class laboratory and office facilities in the core centers of life science innovation, including, among other locations, Boston/Cambridge, the San Francisco Bay Area and San Diego, consistent with the company's long-term investment strategy.

"The sale of the manufacturing facility represents yet another example of our proven ability to create value at the asset level," according to Alan Gold, BioMed Realty's Chairman and Chief Executive Officer. "Our team's underwriting and investment expertise allowed our company to acquire this facility at an attractive cost basis in 2006, collect significant annual cash flows and ultimately harvest value with a very substantial gain.  We are proud of the significant value creation this investment has generated for our stockholders, and we believe that the resulting special dividend provides a small portion of the tangible benefit our team is delivering for our investors.  Over time, we expect to reinvest these proceeds into higher growth investment opportunities, like our recent development projects in Cambridge, Seattle and elsewhere."

The 289,900 square foot manufacturing facility is currently 100% leased until June 2026 to Human Genome Sciences, Inc. (HGSI), a wholly-owned subsidiary of GlaxoSmithKline (GSK), the global healthcare company.  The purchaser of the facility is a subsidiary of GI Partners, a leading private equity firm.

The building was acquired by BioMed Realty in May 2006 as part of a sale-leaseback transaction with HGSI, which also included the 635,000 square foot Shady Grove Road property and an adjoining land parcel with capacity for an estimated 500,000 rentable square feet of future development potential. HGSI became a wholly-owned subsidiary of GSK in 2012. BioMed Realty will retain ownership of the Shady Grove Road property, which is currently 100% leased to HGSI through June 2026, as well as the adjacent land parcel for future development.

As a result of the transaction, the company's tenant concentration with HGSI, now a subsidiary of GSK, which was once more than 20% of the company's annualized base rents, is further reduced – now down to 4.3% of annualized base rents on a pro-forma basis.  In addition, as a result of the sale, along with other leasing and investment transactions over the last 24 months, the company's three largest markets now include Boston/Cambridge, the San Francisco Bay Area and San Diego.

The company has revised earnings guidance for 2014 and 2015 previously included in its third quarter 2014 earnings press release issued on October 29, 2014 to reflect the following events: 1) the effect of the sale of the 9911 Belward Campus Drive property and the immediate use of net proceeds, after payment of the special dividend, to repay amounts outstanding on the company's unsecured revolving credit facility; and 2) the recently announced development of the Wake Forest School of Medicine property.  Previously issued guidance for 2015 had included annual cash and GAAP revenues associated with the building of $23.4 and $24.0 million, respectively, in 2015.  Updated guidance for net income per diluted share, funds from operations (FFO) per diluted share and core funds from operations (CFFO) per diluted share are set forth and reconciled below.2014

2015(Low-High)Projected net income per diluted shareavailable to common stockholders

$0.97

$0.14 - $0.24Add:Real estate depreciation and amortization1.28

1.21Non-controlling interests in operating partnership0.03

0.01Less:Net effect of assumed conversion ofexchangeable senior notes due 203(0.03)

--Gain on sale of assets(0.69)

--Projected FFO per diluted share$1.56

$1.36 - $1.46Add: Acquisition costs0.01

--Projected CFFO per share$1.57

$1.36 - $1.46Estimated, weighted-average diluted commonshares outstanding (in millions):Net income198.6

207.7FFO and CFFO208.7

209.2The company continues to target new investment opportunities, including acquisitions and new development projects; however, the company's 2014 FFO and CFFO and 2015 FFO and CFFO estimates do not reflect the impact of any future new investments (acquisitions or development), other than the development of the Wake Forest School of Medicine property, or related financing activity, as the impact of such investments may vary significantly based on the nature of these investments, timing and other factors.

The foregoing estimates are forward-looking and reflect management's view of current and future market conditions, including certain assumptions with respect to leasing activity, rental rates, occupancy levels, interest rates, financings, acquisitions, development and redevelopment and the amount and timing of acquisitions, development and redevelopment activities.  The company's actual results may differ materially from these estimates.

BioMed Realty will conduct a conference call and webcast to discuss the transaction and updated guidance at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Thursday, December 11, 2014.  The call will be open to all interested investors either through a live audio web cast at the Investor Relations section of the company's web site at www.biomedrealty.com, which will include an online slide presentation to accompany the call, or live by calling (800) 708-4539 (domestic) or (847) 619-6396 (international) with call ID number 38646450. The complete webcast will be archived for 30 days on the company's web site. A telephone playback of the conference call will also be available from 5:00 p.m. Pacific Time on Thursday, December 11, 2014 until midnight Pacific Time on Thursday, December 18, 2014 by calling (888) 843-7419 (domestic) or (630) 652-3042 (international) and using access code 38646450#.

About BioMed Realty TrustBioMed Realty, with its trusted expertise and valuable relationships, delivers optimal real estate solutions for biotechnology and pharmaceutical companies, scientific research institutions, government agencies and other entities involved in the life science industry. BioMed Realty owns or has interests in properties comprising approximately 17.2 million rentable square feet.  Additional information is available at www.biomedrealty.com. Follow us on Twitter @biomedrealty.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, without limitation: general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on tenants' financial condition, and competition from other developers, owners and operators of real estate); adverse economic or real estate developments in the life science industry or the company's target markets; risks associated with the availability and terms of financing, the use of debt to fund acquisitions, developments and other investments, and the ability to refinance indebtedness as it comes due; failure to maintain the company's investment grade credit ratings with the ratings agencies; failure to manage effectively the company's growth and expansion into new markets, or to complete or integrate acquisitions and developments successfully; reductions in asset valuations and related impairment charges; risks and uncertainties affecting property development and construction; risks associated with tax credits, grants and other subsidies to fund development activities; risks associated with downturns in foreign, domestic and local economies, changes in interest rates and foreign currency exchange rates, and volatility in the securities markets; ownership of properties outside of the United States that subject the company to different and potentially greater risks than those associated with the company's domestic operations; risks associated with the company's investments in loans, including borrower defaults and potential principal losses; potential liability for uninsured losses and environmental contamination; risks associated with security breaches and other disruptions to the company's information technology networks and related systems; risks associated with the company's potential failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended, and possible adverse changes in tax and environmental laws; and risks associated with the company's dependence on key personnel whose continued service is not guaranteed. For a further list and description of such risks and uncertainties, see the reports filed by the company with the Securities and Exchange Commission, including the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 


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SOURCE BioMed Realty Trust, Inc.
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