SAN DIEGO—Shareholders in BioMed Realty Trust on Thursday the Blackstone Group's $8-billion privatization of the life sciences REIT. BMR expects the deal to close this coming Tuesday, after which its shares will cease trading on the New York Stock Exchange.
When the deal with affiliates of Blackstone Real Estate Partners VIII was announced this past October, BMR's chairman, president and CEO, Alan Gold, commented that although "demand for high-quality, institutional real estate to support the unprecedented growth of the life science industry is at historic levels," the company believed "the public markets are not adequately valuing our assets and proven business model. Entering into this transaction with Blackstone fulfills our Board of Directors' mission to maximize stockholder value."
News of the Blackstone deal came just two weeks after Bloomberg Business reported that BMR was exploring a sale. The all-cash Blackstone acquisition at $23.75 per share represents a 24% premium on the REIT's price the day before the Bloomberg story was published.
Nadeem Meghji, co-head of US real estate acquisitions for Blackstone, in October cited BMR's "exceptional collection of office buildings catering to life science tenants in gateway markets including Boston-Cambridge, San Francisco, San Diego and Seattle. We believe in the long-term fundamentals of this sector, particularly in locations with top-tier educational and research institutions."
Bearing out Blackstone's confidence, BMR reported strong third-quarter results a few weeks after the pending acquisition was announced. Funds from operations reached 44 cents per share in the three months ended Sept. 30, and the company executed 61 leases totaling 1.3 million square feet.
Although the company has a strong presence in the biotech market of its native San Diego as well as the Bay Area, BMR's biggest market by far is Boston, which accounts for nearly one-third of its base rent, according to a recent investor presentation. With a portfolio of 18.4 million square feet and a market capitalization of slightly under $4 billion, BMR also owns the 1.5-nillion-square-foot Landmark at Eastview in Tarrytown, NY, along with properties in Maryland, North Carolina, Pennsylvania, Seattle and Cambridge, UK.
Morgan Stanley & Co. LLC is acting as lead financial advisor to BioMed Realty, with Raymond James & Associates, Inc. also acting as a financial advisor in connection with this transaction. Latham & Watkins LLP is acting as BioMed Realty's legal advisor. Eastdil Secured Group of Wells Fargo Securities LLC, Citigroup Global Markets Inc., JP Morgan Securities LLC and Bank of America Merrill Lynch are acting as Blackstone's financial advisors in connection with the transaction. Simpson Thacher & Bartlett LLP is acting as legal advisor to Blackstone.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
