BioMed Realty Trust's total revenues up by 18.4% in third quarter 2013

BioMed Realty Trust, Inc. (NYSE: BMR), the leading provider of real estate to the life science industry, today announced financial results for the third quarter ended September 30, 2013.

Third Quarter 2013 Highlights

• Executed 37 leasing transactions during the quarter representing approximately 340,100 square feet, contributing to an operating portfolio leased percentage on a weighted-average basis of approximately 90.7% at quarter end, and comprised of:
  • 24 new leases totaling approximately 229,500 square feet, highlighted by:
    • a new lease with Ipsen for approximately 62,600 square feet at 650 East Kendall Street in Cambridge, Massachusetts which BioMed Realty owns through a joint venture with Prudential Real Estate Investors on behalf of institutional investors; and
    • a new lease with Cambridge Innovation Center for approximately 32,400 square feet at Wexford Science & Technology's Heritage @ 4240 property in St. Louis, Missouri, which is currently under development, and a new lease with Forsyth Technical Community College for approximately 23,900 square feet at Wexford Science & Technology's Piedmont Triad Research – Wake 90 property in Winston-Salem, North Carolina, which is currently under development.
  • 13 lease renewals totaling approximately 110,600 square feet, highlighted by lease extensions with Washington University in St. Louis totaling approximately 58,000 square feet at Wexford Science & Technology's 4320 Forest Park Avenue property in St. Louis, Missouri.
  • Approximately 111,300 square feet of positive net absorption during the third quarter.
• The Wexford Science & Technology operating portfolio reached stabilization, and is now approximately 90.0% leased, up over 350 basis points since the acquisition was announced at the end of the first quarter. 
• Same property net operating income on a cash basis for the third quarter increased 5.7% versus the same period in 2012 and increased 7.0% excluding the Oyster Point properties in South San Francisco, which were leased to Life Technologies after the company received a $46.5 million lease termination payment from Elan Corporation in the second quarter. 
• Core funds from operations (CFFO) was $0.33 per diluted share. Funds from operations (FFO) calculated in accordance with standards established by NAREIT was also $0.33 per diluted share. Adjusted funds from operations (AFFO) for the quarter was $0.29 per diluted share.
• Generated total revenues for the third quarter of approximately $159.2 million, up from approximately $134.5 million in the third quarter of 2012. Rental revenues for the quarter increased to approximately $116.9 million from approximately $101.5 million in the same period in 2012 and were the highest in the company's and the industry's history.
• Reported net income available to common stockholders for the quarter of approximately $4.2 million, or $0.02 per diluted share.
• Amended and restated the company's senior unsecured credit facility to increase the revolving capacity under the credit facility to $900 million, add a $350 million term loan, reduce the fully-drawn borrowing cost by 35 basis points and extend the maturity date to March 24, 2018. At quarter end, the company had $880 million available under the $900 million revolver.

Alan D. Gold, Chairman and Chief Executive Officer of BioMed Realty, said, "We are very pleased with the operating and financial results of the third quarter, highlighted by our gross leasing of over 2.4 million square feet during the past four quarters, including significant contributions from our Wexford team. In addition, we further strengthened our already strong liquidity position by expanding our unsecured credit and term loan facility to $1.25 billion.  Our investment acumen, which has produced the industry's highest-quality portfolio, combined with our operating and leasing success and our disciplined capital strategy, continues to drive our success."

Portfolio Update

The company executed 37 leasing transactions in the quarter ended September 30, 2013, representing approximately 340,100 square feet, comprised of 24 new leases totaling approximately 229,500 square feet and 13 lease renewals totaling approximately 110,600 square feet.

Third quarter same property net operating income on a cash basis increased 5.7% year-over-year, primarily as a result of sustained leasing success and contractual rent escalations.  Excluding the two Oyster Point properties in South San Francisco which were leased to Life Technologies after the company received a $46.5 million lease termination payment from Elan in the second quarter, same property cash NOI increased 7.0% year-over-year.

The total operating portfolio was approximately 90.7% leased on a weighted-average basis as of September 30, 2013. At September 30, 2013, the company's total portfolio comprised approximately 16.3 million rentable square feet, with an additional 4.3 million square feet of development potential.  

During the quarter, the company received gross proceeds of $8.0 million and recognized a gain on sale of approximately $230,000 associated with the disposition of two properties totaling 49,250 square feet.

Kent Griffin, BioMed Realty's President and Chief Operating Officer, noted, "The Wexford team contributed significantly to our continued strong leasing results during their first full quarter as part of the company.  The Wexford operating portfolio reached stabilization ahead of plan with over 350 basis points of positive net absorption since the acquisition was announced.  The integration program has worked very effectively and we remain on schedule to deliver the additional 994,000 square feet in 2014 from the three in-process developments."

Third Quarter 2013 Financial Results

Total revenues for the third quarter were approximately $159.2 million, compared to approximately $134.5 million for the same period in 2012, an increase of 18.4%.  Rental revenues for the third quarter were approximately $116.9 million, compared to approximately $101.5 million for the same period in 2012, an increase of 15.2%, and the highest in the company's history. 

CFFO for the third quarter was $0.33 per diluted share, compared to $0.34 per diluted share for the same period in 2012. FFO per share, calculated in accordance with standards established by NAREIT, was also $0.33 per diluted share for the quarter, as compared to $0.34 per diluted share in the third quarter of 2012.  AFFO for the quarter was $0.29 per diluted share, as compared to $0.33 per diluted share in the third quarter of 2012. The company reported net income available to common stockholders for the quarter of approximately $4.2 million, or $0.02 per diluted share.  FFO, CFFO 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, CFFO and AFFO and definitions of terms are included at the end of this release. 

Financing Activity

During the third quarter, the company amended and restated its senior unsecured credit facility, increasing the revolving capacity under the credit facility to $900 million and adding a $350 million term loan.  The maturity date of the amended credit facility was extended to March 24, 2018, but can be extended for six months to September 24, 2018 at the company's option.  In addition, the terms of the amended and restated facility permit BioMed Realty to increase the amount available under the credit facility by an additional $550 million to $1.8 billion after satisfying certain conditions.  The company used the proceeds from the term loan portion of the facility to repay the outstanding indebtedness under the revolving portion of its existing credit facility and for other general corporate and working capital purposes.

The interest rate paid on amounts drawn under the amended revolver is initially set at LIBOR plus 130 basis points, plus a facility fee of 25 basis points, for a fully drawn rate of LIBOR plus 155 basis points. This represents a 25 basis point reduction in the margin from the previously existing credit facility and a 35 basis point reduction in the fully drawn rate. The interest rate on the new term loan is LIBOR plus 150 basis points. The company also entered into interest rate swap agreements, which are intended to have the effect of fixing interest payments associated with $200 million of the term loan at approximately 2.2% for a three-year term. These rates are subject to adjustment based on changes to the company's credit ratings.

Quarterly and Annual Distributions

BioMed Realty Trust's board of directors previously declared a third quarter 2013 dividend of $0.235 per share of common stock, which is equivalent to an annualized dividend of $0.94 per common share.

Earnings Guidance

The company's updated 2013 guidance for net income per diluted share, FFO per diluted share and CFFO per diluted share are set forth and reconciled below. Projected net income per diluted share, FFO per diluted share and CFFO per diluted share are based upon estimated, weighted-average diluted common shares outstanding of approximately 198.0 million.

The company's full-year 2013 CFFO guidance implies approximately $0.32 of CFFO per diluted share in the fourth quarter, considering the company's previously reported CFFO per diluted share of $0.42, $0.41 and $0.33 for the first, second and third quarters, respectively.

The company's initial 2014 guidance for net income per diluted share and FFO per diluted share are set forth and reconciled below. Projected net income per diluted share and FFO per diluted share are based upon estimated, weighted-average diluted common shares outstanding of approximately 208.5 million.

Key assumptions underlying the company's projections of 2014 net income per diluted share and FFO per diluted share are as follows (dollars in thousands):

The company expects to repay the 7.75% mortgage secured by the Center for Life Science | Boston early in the second quarter of 2014, potentially with secured or unsecured fixed-rate borrowings.

The company continues to target new investment opportunities, including acquisitions and new development projects; however, the company's 2013 CFFO and FFO and 2014 FFO estimates do not reflect the impact of any future new investments (acquisitions or development), or related financing activity, as the CFFO and FFO impact of such investments may vary significantly based on the nature of these investments, timing and other factors.  

The foregoing estimates are forward-looking and reflect management's view of current and future market conditions, including certain assumptions with respect to leasing activity, rental rates, occupancy levels, interest rates, financings, acquisitions, development and redevelopment and the amount and timing of acquisitions, development and redevelopment activities.  The company's actual results may differ materially from these estimates.