BioMed Realty first quarter total revenues increase 14.1% to $120.0M

BioMed Realty Trust, Inc. (NYSE: BMR), a real estate investment trust focused on Providing Real Estate to the Life Science Industry®, today announced financial results for the first quarter ended March 31, 2012.

First Quarter 2012 Highlights

• Generated total revenues for the quarter of $120.0 million, up 14.1% from $105.2 million in the same period in 2011 and the highest in the company's history. Rental revenues for the quarter increased by 14.5% to $91.5 million from $79.9 million in the same period in 2011, the highest in the company's history for the ninth consecutive quarter.
• Increased the current operating portfolio to approximately 90.7% leased at quarter end, on a weighted-average basis, as the result of executing 22 leasing transactions representing approximately 466,300 square feet, including:
  • 16 new leases totaling approximately 395,400 square feet, including:
    • a new 219,255 square foot lease with a private biotech company at the company's multi-tenant Pacific Research Center campus in Newark, California;
    • a new 64,483 square foot lease with Omeros Corporation at the company's 201 Elliott Avenue property in Seattle, Washington; and
    • three new leases with life science tenants totaling 30,232 square feet at Fresh Pond Research Park in Cambridge, Massachusetts.
  • Six lease renewals totaling approximately 70,900 square feet.
• Increased consolidated net operating income on a cash basis for the quarter by 15.6%, to $83.4 million from $72.1 million in the same period in 2011.  Same property net operating income on a cash basis increased for the period by 4.3% and the same property leased percentage by 430 basis points as compared to the same period in 2011.
• Acquired Cambridge Place, comprising three buildings and a total of approximately 286,900 square feet of space in Cambridge, Massachusetts for $119.0 million, excluding closing costs. In aggregate, the property was approximately 80% leased at acquisition on a weighted-average basis.
• Closed a new $400.0 million senior unsecured term loan facility which matures on March 30, 2017.
• Increased funds from operations (FFO) for the quarter to $50.2 million ($0.30 per diluted share), as compared to $42.1 million ($0.29 per diluted share) in the first quarter of 2011.
• Increased adjusted funds from operations (AFFO) for the quarter to $50.0 million ($0.30 per diluted share), as compared to $43.0 million ($0.30 per diluted share) in the first quarter of 2011.
• Reported a net loss available to common stockholders for the first quarter of $1.3 million, or $0.01 per diluted share, which includes a $4.6 million non-cash impairment charge ($0.03 per diluted share).  
• Increased dividend to $0.215 per share, or an annualized rate of $0.86 per share, a 7.5% increase over the fourth quarter 2011 dividend.

Commenting on the first quarter results, Alan D. Gold, Chairman and Chief Executive Officer of BioMed Realty, said, "Our team delivered another quarter of tremendous operating and financial performance driving continued growth in cash flow through impressive leasing activity, with 430 basis points of positive net absorption in our same property portfolio.  We continued to grow our portfolio with the completion of another opportunistic investment in Cambridge, Massachusetts, while maintaining our balance sheet liquidity with a new, very attractively priced $400 million senior unsecured term loan. The growth in our cash flow enabled us to increase our common stock dividend 7.5% to $0.215 per share during the first quarter while maintaining conservative payout ratios. This exceptional start to 2012 provides further validation of our proven and pioneering business model of exclusively focusing on providing mission-critical laboratory and office space for leading life science organizations to create attractive growth opportunities and produce strong, risk-adjusted total returns for the benefit of our stockholders."

Portfolio Update

During the quarter ended March 31, 2012, the company executed 22 leasing transactions representing approximately 466,300 square feet comprised of:

• 16 new leases totaling approximately 395,400 square feet, including:
  • a new 219,255 square foot lease with a private biotech company at the company's multi-tenant Pacific Research Center campus in Newark, California;
  • a new 64,483 square foot lease with Omeros Corporation at the company's 201 Elliott Avenue property in Seattle, Washington; and
  • three new leases with life science tenants totaling 30,232 square feet at Fresh Pond Research Park in Cambridge, Massachusetts.
• Six leases amended to extend their terms, totaling approximately 70,900 square feet, including a 34,820 square foot lease extension with Suneva Medical, Inc. at the company's Pacific Center property in San Diego, California. 

During the quarter ended March 31, 2012, the company purchased the Cambridge Place property in Cambridge, Massachusetts for $119.0 million. The property is comprised of three buildings aggregating approximately 286,900 square feet, which was approximately 80% leased at acquisition on a weighted-average basis.

Subsequent to the end of the quarter, the company acquired a property located at 6122-6126 Nancy Ridge Drive in the Sorrento Valley submarket of San Diego, California for approximately $20.0 million, with $7.9 million paid at closing and a $12.1 million deposit paid in 2007. Comprised of 68,000 square feet, the property is 100% leased to Arena Pharmaceuticals, Inc. and is adjacent to the company's 6114-6154 Nancy Ridge Drive property, which is also fully leased to Arena.  This transaction was completed pursuant to a purchase option resulting from the acquisition of the 6114-6154 Nancy Ridge Drive property in 2007.

After the quarter end, the company completed the exchange of its Forbes Boulevard property in South San Francisco, California for 550 Broadway Street, a property located adjacent to the Stanford Medicine Outpatient Center in Redwood City, California and owned and occupied by a life sciences company.  In connection with the exchange, BioMed Realty leased back 100% of the newly acquired property to the life sciences company.  The 550 Broadway property was valued at $28.0 million and, as a result, the company recognized a non-cash impairment charge of approximately $4.6 million on the disposition of the Forbes Boulevard property in the first quarter of 2012, which reduced net income for the quarter by the same amount.  The non-cash impairment charge had no impact on the company's FFO or AFFO results.

Also subsequent to quarter end, the company executed a contract to purchase the 9900/9901 Belward Drive property in Rockville, Maryland for approximately $26.2 million. The company expects the two building property comprising 106,500 square feet of laboratory and office space to be approximately 93% leased at closing. The company will also assume loans secured by mortgages on the two buildings with an aggregate principal balance of approximately $24.1 million, a weighted-average interest rate of approximately 5.64% and maturity dates in June 2017. The acquisition is currently scheduled to close in the second quarter, and is subject to customary closing conditions.

At March 31, 2012, the company's total portfolio comprised approximately 12.4 million rentable square feet, with an additional 3.7 million square feet of development potential.

First Quarter 2012 Financial Results

Total revenues for the first quarter were $120.0 million, compared to $105.2 million for the same period in 2011, an increase of 14.1% and the highest in the company's history. Rental revenues for the first quarter were $91.5 million, compared to $79.9 million for the same period in 2011, an increase of 14.5% and the highest in the company's history for the ninth consecutive quarter.

The current operating portfolio was 90.7% leased on a weighted-average basis as of March 31, 2012.  Same property net operating income on a cash basis increased 430 basis points for the quarter compared to the same period in 2011, primarily as a result of sustained leasing success and contractual rent escalations.

The company reported a net loss available to common stockholders for the first quarter of $1.3 million, or $0.01 per diluted share, which includes the non-cash impairment charge resulting from the Forbes Boulevard property exchange.   Excluding the impairment charge, net income available to common stockholders would have been $3.2 million, or $0.02 per diluted share.

FFO for the quarter was $50.2 million, or $0.30 per diluted share, compared to $42.1 million, or $0.29 per diluted share, for the same period in 2011.  AFFO for the quarter was $50.0 million, or $0.30 per diluted share, compared to $43.0 million, or $0.30 per diluted share, for the same period in 2011.  FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies.  A complete reconciliation containing adjustments from GAAP net income available to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release. 

Financing Activity

During the first quarter, the company completed the following debt-related transactions:

• Closed a new $400.0 million senior unsecured term loan facility. The new facility matures on March 30, 2017. The interest rate paid on drawings under the new facility is currently set to LIBOR plus 1.65%, subject to adjustments based on the company's credit ratings. The proceeds were used primarily to pay down a portion of the company's senior unsecured line of credit.
• Concurrent with the closing of the senior unsecured term loan, the company entered into interest rate swap agreements that effectively fix the interest rate on $200.0 million of variable rate indebtedness at 2.81% for five years, subject to adjustments based on the company's credit ratings.
• Repaid approximately $26.2 million of previously outstanding mortgages.

Greg Lubushkin, BioMed Realty's Chief Financial Officer, remarked, "During the first quarter, we continued to proactively manage our balance sheet to enhance our overall liquidity to support continued growth. The execution of our new $400 million senior unsecured term loan facility demonstrates, once again, our ability to consistently access capital from a wide variety of sources and our dedication to steady, measured actions to maintain a strong credit profile and advance our goal to prudently manage our leverage as we grow our portfolio."

Quarterly and Annual Distributions

BioMed Realty Trust's board of directors previously declared a first quarter 2012 dividend of $0.215 per share of common stock, and a dividend of $0.46094 per share of the company's 7.375% Series A Cumulative Redeemable Preferred Stock for the period from January 16, 2012 through April 15, 2012.  The first quarter common share dividend represented a 7.5% increase over the fourth quarter 2011 dividend, and is equivalent to an annualized dividend of $0.86 per common share.

Earnings Guidance

The company's revised 2012 guidance for net income per diluted share and FFO per diluted share is set forth and reconciled below. Projected FFO per diluted share is based upon estimated, weighted-average diluted common shares outstanding of approximately 167 million for the full year, including the impact of the assumed conversion of the company's exchangeable senior notes due 2030.