SAN DIEGO-Despite their similarities, healthcare and bioscience real estate are distinct segments. Fundamentally, both markets owe their existence to healthcare. But they tend to include very different, highly specialized property types: mostly medical office buildings and senior living facilities in the healthcare sector, and primarily biotechnology, medical devices and pharmaceuticals office, research and manufacturing space in the bioscience realm.

They also serve different clients and tenants. Healthcare tenants are usually hospitals, health systems and physician practice groups, whereas bioscience tenants are typically biotech, medical devices and pharma firms, as well as universities and other research institutions.

But the boundaries between the sectors sometimes blur. MOBs and research facilities are often adjacent on the campuses of academic medical centers, and those functions can even share buildings. Many architects, engineers and contractors actively practice in both sectors; a few healthcare real estate developers have completed bioscience projects; and at least two major healthcare REITs have diversified into bioscience properties, including HCP Inc. and Health Care REIT.

So it caught our attention recently when we learned that one of the largest bioscience REITs, San Diego-headquartered BioMed Realty Trust Inc. agreed to merge with one of the largest bioscience real estate developers, Wexford Science & Technology LLC (a wholly owned company of Wexford Equities, located in Baltimore).

BioMed owns or has interests in about 13.2 million square feet of bio space; Wexford has about 2.5 million square feet. BioMed agreed to pay about $640 million for Wexford, according to a Biomed news release. Wexford will operate as a wholly owned subsidiary of BioMed.

“The combination of BioMed Realty and Wexford Science & Technology further expands our footprint into the university markets with high-quality assets, credit tenants and long-term leases,” BioMed Chairman and CEO Alan D. Gold said in the news release. “In addition, it accelerates our growth as the leading provider of real estate to the life science industry.”

Some of Wexford's top tenants include the University of Pennsylvania Health System, Washington University in St. Louis, Wake Forest University, the University of Maryland, the University of Miami, Old Dominion University, the Illinois Institute of Technology and Penn State University.

In that same release, BioMed's president and chief operating officer, Kent Griffin, added: “Beyond the opportunity to add the high-quality assets of the operating portfolio and the attractive development pipeline, we are particularly excited about the strategic opportunity to further penetrate the university segment with the addition of the team from Wexford Science & Technology. This group ... includes seasoned life science real estate experts with a successful track record of serving the specialized needs of universities, university-related institutions and healthcare systems...”

While there would appear to be no immediate implications for the healthcare real estate sector, the BioMed-Wexford combination creates a firm that could become an even more dominant player in the bioscience space. And that could make it more difficult for HCP, HCN and other investors to compete for bioscience development and investment opportunities in the future.

Murray W. Wolf is Publisher and Founder of Healthcare Real Estate Insights, the nation's first and only publication totally dedicated to covering news and trends in healthcare real estate development, financing and investment. For more information, please visit www.HREInsights.com.