BioMed Raises $212M Despite Turmoil

Last week's stock offering marked the second time this year that BioMed has raised funds in a difficult capital markets environment. In April, the San Diego-based REIT raised $149.7 million. In both offerings, BioMed said the funds would be used to pay down its line of credit and cover general corporate uses.

One of the chief factors in BioMed's capacity to raise capital in these uncertain times--and one of the reasons for its continued strong performance generally--was explained by Alan D. Gold, the REIT's president and CEO, during its latest conference call with financial analysts. "Despite a very turbulent macro-economic environment, the demand for life science real estate remains relatively strong," Gold said in the conference call.

BioMed has not yet reported results for the third quarter, which ended Sept. 30, but its results for the second quarter showed funds from operations rising to $34.5 million from about $33 million in second quarter 2007. Leasing volume grew to 327,000 sf from 127,000 sf in the previous quarter. In reporting the results, Gold noted "our long-term, triple-net leased structures provide us with a relatively stable, steady and predictable cash flow stream."

Despite BioMed's stable performance in the uncertain economic times, Gold also pointed out "the impact of the broader economy is causing leasing transactions, particularly for large leases, to take more time." He said that has prompted the company to start early in negotiations for lease renewals, a strategy that produced 103,000 sf of early renewals in the second quarter.

Among the factors driving the leasing of life sciences space, Gold explained are "the limited availability of class A lab space and the demand for research space." The factors are producing a "sustained general volume of property tours, letters of intent and lease negotiations" from tenants and prospective tenants, the BioMed president said.

BioMed owns or has interests in 69 properties, representing 112 buildings with about 10.4 million rentable sf, including approximately 1.9 million sf of development in progress. The company describes its properties as "well-located" in parts of the country where the life sciences industry is strongest. For example, the REIT owns a number of properties in Northern California, including a facility at 34175 Ardenwood Blvd. in the Ardenwood Business Park in Fremont, CA. The Ardenwood location is close to major freeways in the San Francisco Bay area and life sciences centers like Palo Alto, Mountain View and Stanford University.

The company's other concentrations of property are in markets like Boston, San Diego, San Francisco, Seattle, Maryland, Pennsylvania and New York/New Jersey. In addition to the properties it operates or has under development, BioMed owns undeveloped land parcels adjacent to existing properties that it estimates can support up to 1.4 million rentable sf.