Blackstone to Buy BioMed Realty in $8 Billion Transaction

BioMed Realty Trust, Inc. (NYSE: BMR) said Oct. 8 that private equity firm Blackstone Group L.P. has agreed to acquire the life sciences office and lab space REIT in an all-cash transaction valued at $8 billion.

Blackstone’s real estate arm, Blackstone Real Estate Partners VIII, will pay $23.75 for each outstanding BioMed common share. This represents a premium of about 24 percent above the closing stock price on Sept. 22, the last date before speculation began about a potential sale of the company.

Alan Gold, chairman, president and CEO of BioMed, said the company believes that the public markets have not adequately valued its assets and business model, prompting the decision to sell the firm.

“Demand for high-quality, institutional real estate to support the unprecedented growth of the life science industry is at historic levels as demand is outpacing supply in all of our core innovation districts,” Gold said.

Nadeem Meghji, co-head of United States real estate acquisitions for Blackstone, said Blackstone believes in the long-term fundamentals of the life sciences sector, particularly in locations with top-tier educational and research institutions.

“We are excited to acquire this best-in-class company, which owns an exceptional collection of office buildings catering to life science tenants in gateway markets including Boston-Cambridge, San Francisco, San Diego and Seattle,” he said. 

The transaction is expected to be completed in the first quarter of 2016.

Market watchers reacted favorably to the deal. Green Street Advisors analyst Kevin Tyler said BioMed is set to exit the public market with a "shareholder curtain call."

"Manangement and the board deserve praise for closing the long-standing discount to net asset value by privatizing the company and generating peer-beating total returns through the sale," he said.