The portfolio deal includes 925,000 sf of existing laboratory, office and manufacturing space. BioMed will also gain HGS' newly constructed corporate headquarters and additional land that is entitled for over 500,000 sf of office and laboratory space. HGS completed construction on its 290,00-sf manufacturing plant in 2005. The headquarters space counts 635,000 sf.

BioMed officials expect the deal to close in the second quarter of 2006 with the "initial capitalization rate for the acquired portfolio to be in excess of 9%." As part of the negotiation, HGS will lease the buildings as 20-year, triple net leases. Terms of the lease deals were not disclosed. However, HGSS entered an option to renew those deals and the right to repurchase the facilities.

For HGS, the sale was a play to strengthen the balance sheet, according to company officials, with the deal bringing an estimated $380 million in net cash for the biotech firm's operations. "This agreement is the latest in a series of steps that HGS has taken to strengthen our balance sheet and provide increased flexibility in the management of our cash resources," says H. Thomas Watkins, president and CEO of HGS.