News Column

BioMed Realty Trust Reports 1Q Financial Results

May 5, 2014

BioMed Realty Trust, a real estate company focusing on life sciences, announced financial results for the first quarter ended March 31.

In a release on April 30, the Company said that highlights include:

-Executed 59 leasing transactions during the quarter representing approximately 480,400 square feet, including 96,100 square feet of positive net absorption and 126,200 square feet of pre-leasing, contributing to an operating portfolio leased percentage on a weighted-average basis of 91.5 percent and a development portfolio leased percentage of 81.7 percent at quarter end;

-Increased same property net operating income on a cash basis by 6.8 percent year-over-year and set new company records for total and rental revenues of approximately $168.9 million and $120.0 million, respectively;

-Generated core funds from operations of $0.41 per diluted share and adjusted funds from operations of $0.38 per diluted share, and reported net income available to common stockholders for the quarter of approximately $18.8 million, or $0.10 per diluted share; and

-Continued to enhance the breadth and depth of the company's organization with the promotion of David Hsiao to Vice President, Information Technology.

Subsequent to the end of the first quarter, the company:

-Added approximately one million square feet to the company's portfolio through its investment in the 300 George St. and 100 College St. properties adjacent to the Yale School of Medicine in New Haven, Connecticut, and as a result added Alexion Pharmaceuticals, Inc. to the company's top-ten tenant roster;

-Repaid in full the $333.4 million principal amount outstanding on its mortgage loan secured by the Center for Life Science | Boston, which bore interest at 7.75 percent per annum;

-Received an upgrade on the company's investment grade corporate credit rating from Standard & Poor's Ratings Services to BBB, after receiving a positive outlook from Moody's Investors Service in March 2014;

-Completed a public offering of $400 million aggregate principal amount of 2.625 percent Senior Notes due 2019, priced at 99.408 percent of the principal amount to yield 2.752 percent to maturity; and

-Appointed Janice Sears, former executive at Bank of America, to the company's Board of Directors.

BioMed Realty's Chairman and Chief Executive Officer Alan Gold said, "We remain focused on providing real estate solutions that serve as the connection point for the academic, medical research and commercial biotech communities. Our recent accomplishments clearly demonstrate our continued strong execution on this strategy as illustrated by the significant leasing in Philadelphia and San Diego and our recently announced acquisition in New Haven, on the front doorsteps of Yale University. We recognize and are leveraging the critical nature of proximity and the growing desire of commercial pharmaceutical companies and life science research organizations to be located together in collaborative communities adjacent to the important centers of academic research, including Yale University, University of Pennsylvania, Harvard University and University of California, San Diego."

Portfolio Update

During the quarter ended March 31, the company executed 59 leasing transactions representing approximately 480,400 square feet, contributing to an operating portfolio leased percentage on a weighted-average basis of 91.5 percent and a development portfolio leased percentage of 81.7 percent at quarter end, and comprised of:

-49 new leases totaling approximately 307,300 square feet, highlighted by:

-Leases with Synthetic Genomics Inc. and Human Longevity Inc., two genomic research organizations co-founded by genomics researcher Craig Venter, totaling approximately 125,200 square feet at the company's 4570 Executive Dr. property in San Diego, Calif. Concurrent with these transactions, BioMed Realty terminated its leases at 4570 Executive Dr. with Bristol-Myers Squibb Company and another tenant, which were previously scheduled to expire in phases from 2015 to 2018.

-A lease expansion with the University of Pennsylvania Health System for approximately 55,900 square feet at the company's 3737 Market St. building on the University City Science Center's campus in Philadelphia, Pa., bringing UPHS's total leased space at the property to approximately 211,600 square feet.

-A new lease with a life science company developing gene therapies for approximately 28,100 square feet at the company's 3737 Market St. building in Philadelphia.

-Ten lease renewals totaling approximately 173,100 square feet, highlighted by a lease extension with Revance Therapeutics, Inc. for approximately 90,400 square feet at the company's Pacific Research Center in Newark, Calif.

At March 31, the company's total portfolio comprised approximately 16.3 million rentable square feet, with land supporting an additional 4.9 million square feet of development potential. First quarter same property net operating income on a cash basis increased 6.8 percent year-over-year, primarily as a result of sustained leasing success and contractual rent escalations.

Following the end of the first quarter, the company invested in two properties, 300 George St. and 100 College St., adjacent to the Yale School of Medicine in New Haven, Conn. The 300 George St. property is a 519,000 square foot laboratory and office building, which is 99 percent leased and anchored by long-term leases to Yale University and the Yale-New Haven Hospital, with a weighted-average remaining lease term of over 11 years. The 100 College St. property, currently under construction, is expected to be a fully leased, 508,000 square foot laboratory and office building anchored by Alexion Pharmaceuticals, which plans to use the space as its new global headquarters, with a weighted-average remaining lease term of over 13 years. The total project investment, upon completion, is expected to be approximately $308 million, including a continuing partnership interest of Winstanley Enterprises, which will also continue to provide construction and property management services for the project.

"The tremendous results in the first quarter, and continuing into the second quarter, encompass every aspect of our proven business model," said Kent Griffin, President of BioMed Realty. "We focus on building strong, valued relationships with existing and new tenants. During the quarter, we expanded our existing relationship with J. Craig Venter, entering into ten-year leases for approximately 125,000 square feet at our 4570 Executive Dr. property with two companies he co-founded. With our investment acumen, we were able to leverage our expertise and relationships in the university marketplace to acquire the 100 College St. and 300 George St. properties in New Haven, Conn. This transaction highlights the importance of being at the intersection of academia and the commercial world, with over one million square feet of state-of-the- art laboratory and office space fully leased to top-tier tenants including Yale University, Yale-New Haven Hospital and Alexion Pharmaceuticals."

First Quarter 2014 Financial Results

Rental revenues for the first quarter were approximately $120.0 million, compared to approximately $103.0 million for the same period in 2013, an increase of 16.6 percent and the highest in the company's history. Total revenues for the first quarter were approximately $168.9 million, compared to approximately $160.5 million for the same period in 2013, an increase of 5.3 percent, also the highest in the company's history. Total revenues for the first quarter 2014 include other revenues of approximately $5.3 million associated with the termination of leases at the company's 4570 Executive Dr. property in San Diego, Calif., (which was immediately leased to two tenants). Total revenues for the first quarter 2013 include other revenue of approximately $24.0 million associated with the termination of leases at the company's Science Center at Oyster Point in South San Francisco, Calif., (which was immediate leased to Life Technologies Corp.). Excluding termination revenue, total revenues grew 19.9 percent year-over-year. In addition, during the first quarter, the company realized net gains of approximately $6.5 million primarily from the sale of certain investments in publicly-traded life science companies, of which approximately $8.0 million is reflected in other income and is offset by approximately $1.5 million related to a minority interest.

CFFO for the first quarter was $0.41 per diluted share and FFO per share, calculated in accordance with standards established by NAREIT, was $0.40 per diluted share for the quarter. AFFO for the quarter was $0.38 per diluted share. The company reported net income available to common stockholders for the quarter of approximately $18.8 million, or $0.10 per diluted share.

Financing Activity

Subsequent to the end of the first quarter of 2014, the company:

-Repaid in full the $333.4 million principal amount outstanding on its mortgage loan secured by the Center for Life Science | Boston, which bore interest at 7.75 percent per annum;

-Received an upgrade of its investment grade corporate credit rating from Standard & Poor's Ratings Services from BBB- to BBB, after receiving a positive outlook from Moody's Investors Service in March 2014; and

-Completed a public offering of $400 million aggregate principal amount of 2.625 percent Senior Notes due 2019, which were priced at 99.408 percent of the principal amount to yield 2.752 percent to maturity. Proceeds were used to repay amounts outstanding under the company's revolving credit facility.

Greg Lubushkin, BioMed Realty's Chief Financial Officer, said, "Our growth is amply supported by our sound capital strategy, which has been one of our hallmarks throughout our history and continues to be validated by our sustained, prudent growth. Our strong liquidity position enabled us to prepay the 7.75 percent mortgage secured by the Center for Life Science | Boston on April 1. Shortly thereafter we received an upgrade to our investment grade corporate credit rating by S&P to BBB, which was followed almost immediately by our very successful $400 million offering of 2.625 percent unsecured senior notes in April."

Quarterly and Annual Distributions

BioMed Realty Trust's board of directors previously declared a first quarter 2014 dividend of $0.25 per share of common stock. The first quarter common share dividend is equivalent to an annualized dividend of $1.00 per common share.

Earnings Guidance

The company's updated 2014 guidance for net income per diluted share, FFO per diluted share and CFFO per diluted share are set forth and reconciled below. Projected net income per diluted share and FFO per diluted share (and CFFO per diluted share) are based upon estimated, weighted-average diluted common shares outstanding of approximately 197.7 million and 208.6 million, respectively.

The company's 2014 FFO and CFFO estimates reflect the company's strong operating results, recent investments and capital transactions, including the effect of the investment in the 300 George St. and 100 College St. properties, the prepayment of the Center for Life Science | Boston mortgage and the issuance of $400 million 2.625 percent Senior Notes due 2019. The company continues to target new investment opportunities, including acquisitions and new development projects; however, the company's 2014 FFO and CFFO estimates do not reflect the impact of any future new investments (acquisitions or development) 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.

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