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SAN DIEGO-BioMed Realty Trust, reporting a solid first quarter, is keeping its eyes on the capital markets and is “very cautious about the outlook for the overall economy,” according to its president and CEO during the REIT’s earnings call.

BioMed, which specializes in laboratory and office space for the life sciences industry, is “cautiously optimistic that the limited correlation between the currently volatile credit markets and the long-term demand for research in the life science industry will allow us to continue our stable growth through 2008 and beyond,” BioMed’s Alan D. Gold had told analysts. As he points out, BioMed focuses its attention not only on the debt and equity issues that apply to all of commercial real estate, but also to the venture capital market, which provides the funding for so many life sciences firms that are existing or potential BioMed tenants.

Despite the turmoil in the credit markets, Gold says venture capital funding remained firm in the first quarter although the funding levels have drifted down from the peak numbers of last year. “Venture capital funding overall in the quarter was a solid $7.1 billion, generally consistent with where it has been, although down some from its peak,” he explains. But venture capital funding for life sciences companies held firm with $2.3 billion raised, representing more than 30% of all venture capital funding for the quarter.

Despite its cautious outlook about the overall economy, BioMed is confident that “the fundamental long-term factors that drive demand for the life sciences research industry remain unchanged,” Gold says. “Despite the volatile financial markets, biotech companies are continuing their research programs on a wide variety of treatments and programs,” which bodes well for the long-term future of companies like BioMed Realty.

In much the same way that property owners specializing in medical office space count on the nation’s growing healthcare demands for stability and future growth, BioMed Realty is relying on “continued growth in the life science industry” from the some of the same forces that are driving the medical office sector. Its recent public filings, for example, cite the aging of the US population resulting from the transition of baby boomers to senior citizens, which has increased the demand for new drugs and healthcare treatment alternatives. The REIT also cites the existing high level of and continuing increase in drug research and development spending.

In summarizing BioMed’s first-quarter results, Gold cites “sustained tenant interest in all of our core markets,” which included the REIT’s largest lease in the first quarter: a 90,000-sf deal with Revance Therapeutics Inc. at BioMed’s Pacific Research Center in Newark, CA, near San Francisco. The company’s other first-quarter deals included the acquisition of a 22,000-sf property at 500 Fairview Ave. in Seattle that is fully leased to the State of Washington and targeted for future redevelopment as laboratory/office space. BioMed also secured construction financing for up to $245 million from Wachovia Bank in a joint venture with Parsippany, NJ-based Prudential Real Estate Investors to fund the remaining cost of a 280,000-sf office and laboratory project at 650 E. Kendall St. in Cambridge, MA.

As of March 31, BioMed owned or had interests in 69 properties, comprised of 112 buildings with about 8.5 million rentable sf of laboratory and office space. It also has about 1.9 million sf of development in progress. The buildings are located predominantly in the major US life science markets of Boston, San Diego, San Francisco, Seattle, Maryland, Pennsylvania and New York/New Jersey. The company’s portfolio was 93.2% leased to 113 tenants at the end of the first quarter.

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