BioMed Realty’s property acquisitions
BioMed Realty Trust (BMR) believes that the property acquisition market has become very active over the past few quarters due to a number of attractive opportunities in the market. Many companies are looking to acquire properties in BioMed Realty’s core markets, thus enhancing competition for strategic properties.
Despite rising competition, BioMed Realty has acquired numerous quality properties during recent quarters, including the following:
- In San Diego, the company acquired properties comprising 183,000 square feet and development rights in the University Towne Centre Innovation District for $84 million. The company expects to generate a stabilized yield of 7% from these properties.
- The company acquired property in Westlake comprising a rentable area of 116,214 square feet for $89.7 million.
The company disposes of properties that are not fit to its strategic goals or if they are not considered core assets due to a number of reasons. The disposition of non-core properties is a significant source of capital to fund the property acquisitions and development projects. The company has sold a number of properties during the last five years to improve its portfolio quality. Some recent dispositions are enumerated below:
- In 2014, the company sold 9911 Belward Campus Drive property for $322.5 million, resulting in a gain of $136.6 million.
- In 2Q15, the company sold “King of Prussia” property in Pennsylvania for $35.2 million.
Shoring up net operating income
The company expects acquired properties to provide higher occupancy level and rental rates, which would contribute substantially to the net operating income. The company is likely to fund these acquisitions through higher leverage.
Other major office REITs (real estate investment trusts) including Kilroy Realty Corporation (KRC), SL Green Realty Corporation (SLG), and Boston Properties (BXP) are also active in the property acquisitions and dispositions. The SPDR Dow Jones Wilshire Global Real Estate ETF (RWO) invests approximately 0.5% of its total portfolio in BioMed Realty.
Continue to the next part of this series for a discussion on BioMed Realty’s strategy.