Strategy

Blackstone Buys BioMed REIT for $4.9B

The $23.75-per-share deal gives Blackstone access to office buildings that cater to life science tenants in major markets.
Katie Kuehner-HebertOctober 9, 2015

Blackstone Real Estate Partners is buying BioMed Realty Trust in a $4.9 billion deal that will add a stable of office buildings catering to life science tenants to its portfolio.

Blackstone’s $23.75 per share offer represents a 24% premium over BioMed’s share price in late September, when Bloomberg reported that the REIT was up for sale. BioMed closed slightly below the offer price, at $23.40, in trading Friday.

“We are excited to acquire this best-in-class company which owns an exceptional collection of office buildings catering to life science tenants in gateway markets including Boston-Cambridge, San Francisco, San Diego and Seattle,” Nadeem Meghji, Blackstone’s co-head of U.S. real estate acquisitions, said in a news release.

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“We believe in the long-term fundamentals of this sector, particularly in locations with top-tier educational and research institutions,” he added.

While BioMed Realty has grown its property portfolio over the years, the company has faced earnings headwinds and management changes in the short term, which contributed to keeping its share price from rising, according to the San Diego Union-Tribune.

Through the first six months of this year, revenue fell 1% to $336 million. Earnings per share came in at 20 cents, slightly ahead of the 19 cents per share for the same period last year.

BioMed “was trading at a discounted price because the public market perception of the company was relatively poor,” BMO Capital Markets analysts John Kim told Bloomberg. “Even though it’s a somewhat specialized asset class, the location of the assets is very attractive and the biotech industry is flourishing.”

“We believe that the public markets are not adequately valuing our assets and proven business model,” BioMed Realty’s CEO Alan D. Gold said.. “Entering into this transaction with Blackstone fulfills our board of directors’ mission to maximize stockholder value.”

The deal is expected to be completed in the first quarter of 2016.

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