BioMed Realty Trust, Inc.
Table of Contents

 
 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 24, 2006
BioMed Realty Trust, Inc.
(Exact name of registrant as specified in its charter)
         
Maryland   1-32261   20-1142292
         
(State or Other Jurisdiction of
Incorporation) 		  (Commission File No.)   (I.R.S. Employer
Identification No.)
17140 Bernardo Center Drive, Suite 222
San Diego, California 92128
(Address of principal executive offices, including zip code)
 
Registrant’s telephone number, including area code: (858) 485-9840
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

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Item 1.01 Entry into a Material Definitive Agreement
Item 2.01 Completion of Acquisition or Disposition of Assets
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 99.1

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Item 1.01 Entry into a Material Definitive Agreement.
KeyBank Secured Bridge Loan
     In connection with the acquisition of the properties from Human Genome Sciences, Inc. (“HGSI”) described below in Item 2.01, on May 24, 2006, BioMed Realty, L.P. (the “Operating Partnership”), the operating partnership subsidiary of BioMed Realty Trust, Inc. (“BioMed”), entered into a secured bridge loan with KeyBank National Association (“KeyBank”), as administrative agent, and certain other lenders, under which it borrowed $150.0 million.
     The bridge loan has a term of three months and bears interest at a floating rate equal to, at BioMed’s option, either (1) LIBOR plus 140 basis points or (2) the higher of (a) the prime rate then in effect and (b) the federal funds rate then in effect plus a spread of 50 basis points. The bridge loan is secured by the HGSI headquarters facility and any related collateral. BioMed, at its sole discretion, may extend the maturity date of the bridge loan for an additional three months after satisfying certain conditions.
     The terms of the bridge loan include certain restrictions and covenants, which limit, among other things, the incurrence of additional indebtedness and liens. The terms also require compliance with financial covenants relating to the minimum amounts of net worth, fixed charge coverage, leverage ratio, interest coverage, the maximum amount of variable-rate, secured and recourse indebtedness, and certain investment limitations. The bridge loan specifies a number of events of default (some of which are subject to applicable cure periods), including, among others, the failure to make payments when due, noncompliance with covenants and defaults under other agreements or instruments of indebtedness. Upon the occurrence of an event of default, the lenders may terminate the bridge loan and declare all amounts outstanding to be immediately due and payable.
     The foregoing description of the KeyBank secured bridge loan does not purport to be complete and is qualified in its entirety by reference to the complete text of the secured bridge loan agreement and the related note, which are filed as exhibits to this report and incorporated herein by reference.
Human Genome Sciences Leases
     In connection with the acquisition of the HGSI properties, BioMed entered into two 20-year triple-net leases with HGSI with respect to the headquarters facility and the large-scale manufacturing facility. The leases provide HGSI with the right to extend each lease for two 10-year terms and require HGSI to provide a security deposit of $19.75 million under each lease, which is equal to one-year’s rent.
     HGSI has the right to repurchase the large-scale manufacturing facility from BioMed within the first four years after lease commencement, upon giving one year’s prior written notice, at a purchase price that provides BioMed with a 15% unleveraged internal rate of return on the original purchase price of the property (net of all base rent received). HGSI has the right to repurchase the headquarters facility from BioMed approximately 10 years after lease commencement, upon giving at least one year’s prior written notice, at a purchase price of approximately $300.0 million in cash.

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     The foregoing description of the HGSI leases does not purport to be complete and is qualified in its entirety by reference to the complete text of the leases, which are filed as exhibits to this report and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
     On May 24, 2006, BioMed, through its Operating Partnership, completed the acquisition of HGSI’s large-scale manufacturing and headquarters office and laboratory facilities located in Rockville, Maryland. The portfolio includes a total of approximately 925,000 rentable square feet of existing laboratory, office and manufacturing space, with the headquarters facility consisting of three recently constructed buildings and a parking structure, as well as undeveloped land that BioMed’s management estimates can support over 500,000 rentable square feet of additional laboratory and office space. The purchase price, which was determined through negotiations between the Operating Partnership and HGSI, was $425.0 million, excluding closing costs. The Operating Partnership funded the purchase price using the proceeds of BioMed’s recently completed common stock offering, which generated net proceeds of approximately $249.1 million, and borrowings under its existing $250.0 million revolving credit facility and the secured bridge loan with KeyBank described above in Item 1.01.
     In connection with the closing of the acquisition, BioMed issued a press release, which is attached as Exhibit 99.1 hereto.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
     The information set forth under Item 1.01 above is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(b) Unaudited Pro Forma Consolidated Financial Statements.
Pro Forma Consolidated Balance Sheet as of March 31, 2006
Pro Forma Consolidated Statement of Income for the three months ended March 31, 2006
Pro Forma Consolidated Statement of Income for the year ended December 31, 2005
Notes to Pro Forma Consolidated Balance Sheet and Statements of Income
(d) The following exhibits are filed herewith:
     
Exhibit    
Number   Description of Exhibit
10.1
  Secured Bridge Loan Agreement, dated as of May 24, 2006, by and among BioMed Realty, L.P., KeyBank National Association, as Administrative Agent, and certain lenders party thereto.
 
    
10.2
  Form of Note under Secured Bridge Loan Agreement.
 
    
10.3
  Lease Agreement, dated as of May 24, 2006, between BMR-Belward Campus Drive LSM LLC and Human Genome Sciences, Inc.
 
    
10.4
  Lease Agreement, dated as of May 24, 2006, between BMR-Shady Grove Road HQ LLC and Human Genome Sciences, Inc.
 
    
99.1
  Press release issued by BioMed Realty Trust, Inc. on May 24, 2006.
 
SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
             
 
           
Date: May 26, 2006   BIOMED REALTY TRUST, INC.    
 
            
 
  By:   /s/ GARY A. KREITZER    
 
           
    Name: Gary A. Kreitzer    
    Title: Executive Vice President    

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
      The unaudited pro forma consolidated financial statements of BioMed Realty Trust, Inc., as of March 31, 2006, and for the three months ended March 31, 2006 and the year ended December 31, 2005, are presented as if BioMed’s common stock offering, the HGSI properties acquisition and related transactions had occurred on March 31, 2006 for the unaudited pro forma consolidated balance sheet, and on the first day of the period presented for the unaudited pro forma consolidated statements of income.
      The unaudited pro forma consolidated financial statements should be read in conjunction with BioMed’s consolidated historical financial statements and the notes thereto, included in its Annual Report on Form 10-K for the year ended December 31, 2005, and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006 filed with the Securities and Exchange Commission. Certain adjustments have been made to give effect to the operating properties acquired or that are probable to be acquired subsequent to March 31, 2006.
      The unaudited pro forma consolidated financial statements do not purport to represent BioMed’s financial position or the results of operations that would actually have occurred assuming the completion of the common stock offering and other transactions, nor do they purport to project BioMed’s financial position or results of operations as of any future date or any future period.

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BIOMED REALTY TRUST, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2006
(Unaudited)
(In thousands)
                                                     
    Historical                    
    BioMed   HGSI   Other   Other   Common   Pro Forma
    Realty   Properties   Subsequent   Financing   Stock   BioMed Realty
    Trust, Inc.   Acquisition   Acquisitions   Transactions   Offering   Trust, Inc.
                         
        (A)   (B)   (C)   (D)    
ASSETS
                                                
Investment in real estate, net
   $ 1,131,917     $ 428,000     $ 41,744     $ —     $ —     $ 1,601,661  
Investment in unconsolidated partnership
     2,476       —       —       —       —       2,476  
Cash and cash equivalents
     30,365       (428,000 )     (16,003 )     164,539       249,099       —  
Restricted cash
     5,844       —       —       —       —       5,844  
Accounts receivable, net
     5,625       —       —       —       —       5,625  
Accrued straight-line rents, net
     10,472       —       —       —       —       10,472  
Acquired above market leases, net
     8,925       —       164       —       —       9,089  
Deferred leasing costs, net
     130,593       —       3,745       —       —       134,338  
Deferred loan costs, net
     4,507       —       —       150       —       4,657  
Prepaid expenses
     2,840       —       —       —       —       2,840  
Other assets
     13,333       —       —       —       —       13,333  
                                     
   
Total assets
   $ 1,346,897     $ —     $ 29,650     $ 164,689     $ 249,099     $ 1,790,335  
                                     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net
   $ 246,377     $ —     $ 16,222     $ —     $ —     $ 262,599  
Secured term loan
     250,000       —       —       —       —       250,000  
Unsecured line of credit
     30,700       —       12,906       14,689       —       58,295  
Secured bridge loan
     —       —       —       150,000       —       150,000  
Security deposits
     6,883       —       —       —       —       6,883  
Dividends and distributions payable
     14,397       —       —       —       —       14,397  
Accounts payable, accrued expenses, and other liabilities
     24,196       —       —       —       —       24,196  
Acquired below market leases, net
     28,477       —       522       —       —       28,999  
                                     
 
Total liabilities
     601,030       —       29,650       164,689       —       795,369  
                                     
Minority interests
     20,367       —       —       —       —       20,367  
Stockholders’ equity:
                                                
 
Common stock
     466       —       —       —       91       557  
 
Additional paid-in capital
     758,375       —       —       —       249,008       1,007,383  
 
Accumulated other comprehensive income
     9,256       —       —       —       —       9,256  
 
Dividends in excess of earnings
     (42,597 )     —       —       —       —       (42,597 )
                                     
   
Total stockholders’ equity
     725,500       —       —       —       249,099       974,599  
                                     
   
Total liabilities and stockholders’ equity
   $ 1,346,897     $ —     $ 29,650     $ 164,689     $ 249,099     $ 1,790,335  
                                     
See accompanying notes to pro forma consolidated balance sheet and statements of income.

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BIOMED REALTY TRUST, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Three Months Ended March 31, 2006
(Unaudited)
(In thousands, except per share data)
                                                               
    Historical   First                   Pro Forma
    BioMed   Quarter   HGSI   Other   Other   Common   BioMed
    Realty   2006   Properties   Subsequent   Financing   Stock   Realty
    Trust, Inc.   Acquisitions   Acquisition   Acquisitions   Transactions   Offering   Trust, Inc.
                             
        (AA)   (BB)   (CC)   (DD)        
Revenues:
                                                        
 
Rental
   $ 31,178     $ 13     $ 11,998     $ 1,044     $ —     $ —     $ 44,233  
 
Tenant recoveries
     12,609       1       439       272       —       —       13,321  
 
Other income
     6       —       —       —       —       —       6  
                                           
     
Total revenues
     43,793       14       12,437       1,316       —       —       57,560  
                                           
Expenses:
                                                        
 
Rental operations
     9,543       1       37       86       —       —       9,667  
 
Real estate taxes
     4,242       —       432       194       —       —       4,868  
 
Depreciation and amortization
     13,361       5       2,379       693       —       —       16,438  
 
General and administrative
     4,347       —       50       —       —       —       4,397  
                                           
     
Total expenses
     31,493       6       2,898       973       —       —       35,370  
                                           
   
Income from operations
     12,300       8       9,539       343       —       —       22,190  
 
Equity in net income of unconsolidated partnership
     20       —       —       —       —       —       20  
 
Interest income
     160       —       —       —       —       —       160  
 
Interest expense
     (7,784 )     (5 )     —       (249 )     (3,048 )     —       (11,086 )
                                           
     
Income (loss) before minority interests
     4,696       3       9,539       94       (3,048 )     —       11,284  
     
Minority interest in consolidated partnership
     54       —       —       —       —       —       54  
     
Minority interests in operating partnership
     (276 )     —       —       —       —       (280 )     (556 )(EE)
                                           
 
Net income (loss)
   $ 4,474     $ 3     $ 9,539     $ 94   $ (3,048 )   $ (280 )   $ 10,782  
                                           
Pro forma earnings per share  — basic(GG)
   $ 0.10                                             $ 0.19  
                                           
Pro forma earnings per share  — diluted(GG)
   $ 0.10                                             $ 0.19  
                                           
Pro forma weighted average common shares outstanding — basic(GG)
     46,369,605                                               55,444,605  
                                           
Pro forma weighted average common shares outstanding — diluted(GG)
     49,518,010                                               58,593,010  
                                           
See accompanying notes to pro forma consolidated balance sheet and statements of income.

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BIOMED REALTY TRUST, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2005
(Unaudited)
(In thousands, except per share data)
                                                                     
    Historical   First                       Pro Forma
    BioMed   Quarter   HGSI   Other   Other   Common       BioMed
    Realty   2006   Properties   Subsequent   Financing   Stock   2005   Realty
    Trust, Inc.   Acquisitions   Acquisition   Acquisitions   Transactions   Offering   Acquisitions   Trust, Inc.
                                 
        (AA)   (BB)   (CC)   (DD)       (FF)    
Revenues:
                                                                
 
Rental
   $ 92,650     $ 322     $ 47,991     $ 4,175     $ —     $ —     $ 18,873     $ 164,011  
 
Tenant recoveries
     42,232       29       1,757       1,088       —       —       5,555       50,661  
 
Other income
     3,974       —       —       —       —       —       485       4,459  
                                                 
   
Total revenues
     138,856       351       49,748       5,263       —       —       24,913       219,131  
                                                 
Expenses:
                                                                
 
Rental operations
     34,505       19       149       342       —       —       2,478       37,493  
 
Real estate taxes
     11,868       11       1,727       777       —       —       3,500       17,883  
 
Depreciation and amortization
     39,378       120       9,516       2,771       —       —       7,627       59,412  
 
General and administrative
     13,278       —       200       —       —       —       22       13,500  
                                                 
   
Total expenses
     99,029       150       11,592       3,890       —       —       13,627       128,288  
                                                 
   
Income from
                                                                
   
operations
     39,827       201       38,156       1,373       —       —       11,286       90,843  
 
Equity in net income of unconsolidated partnership
     119       —       —       —       —       —       —       119  
 
Interest income
     1,333       —       —       —       —       —       —       1,333  
 
Interest expense
     (23,226 )     (126 )     —       (996 )     (11,744 )     —       (2,141 )     (38,233 )
                                                 
   
Income (loss) before minority interests
     18,053       75       38,156       377     (11,744 )     —       9,145       54,062  
   
Minority interest in consolidated partnerships
     267       —       —       —       —       —       —       267  
 
Minority interests operating partnerships
     (1,274 )     —       —       —       —       (1,388 )     —       (2,662 )(EE)
                                                 
 
Net income (loss)
   $ 17,046     $ 75     $ 38,156     $ 377   $ (11,744 )   $ (1,388 )   $ 9,145     $ 51,667  
                                                 
Pro forma earnings per share — basic(GG)
   $ 0.44                                                     $ 1.08  
                                                 
Pro forma earnings per share — diluted(GG)
   $ 0.44                                                     $ 1.06  
                                                 
Pro forma weighted average common shares outstanding — basic(GG)
     38,913,103                                                       47,988,103  
                                                 
Pro forma weighted average common shares outstanding — diluted(GG)
     42,091,195                                                       51,166,195  
                                                 
See accompanying notes to pro forma consolidated balance sheet and statements of income.

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME
(Unaudited)
(Tabular amounts in thousands)
1. Adjustments to the Pro Forma Consolidated Balance Sheet
Presentation
      The accompanying unaudited pro forma consolidated balance sheet of BioMed Realty Trust, Inc. (the “Company”) reflects adjustments for completed and probable acquisitions, the Company’s public offering of common shares, which was completed on May 16, 2006, and related transactions as if all of the following occurred on March 31, 2006:
  •  The acquisition of the 58 Charles Street property for approximately $13,175,000, which occurred on April 7, 2006;
 
  •  The acquisition of the HGSI properties for approximately $428,000,000, including closing costs and an advisory fee to Raymond James & Associates, Inc. of $1,000,000, which occurred on May 24, 2006;
 
  •  The probable acquisition of the Road to the Cure property for approximately $23,328,000. In addition to cash paid, consideration also includes the estimated assumption of $15,800,000 of mortgage notes payable;
 
  •  The probable acquisition of the One Research Way property for approximately $8,206,000;
 
  •  Borrowings of $150,000,000 on a secured bridge loan facility and approximately $27,595,000 on the Company’s unsecured line of credit. This debt was incurred to partially fund the acquisition of the HGSI properties; and
 
  •  Public offering of 9,075,000 common shares at $28.65 per share, with net proceeds of approximately $249,099,000.
      In the opinion of the Company’s management, all material adjustments necessary to reflect the effects of the preceding transactions have been made. The unaudited pro forma consolidated balance sheet is presented for illustrative purposes only and is not necessarily indicative of what the actual financial position would have been had the common share offering and other transactions described above occurred on March 31, 2006, nor does it purport to represent the future financial position of the Company.
Adjustments
      The adjustments to the pro forma consolidated balance sheet as of March 31, 2006 are as follows:
        (A) Reflects the acquisition of the HGSI properties from HGSI, a third party, which occurred on May 24, 2006, for approximately $428,000,000, including closing costs, consisting of cash payments of $428,000,000 (see Note C for discussion of funding):
        The Company closed on its acquisition of the HGSI properties on May 24, 2006, and used the net proceeds from the offering of its common stock and borrowings on a secured bridge loan facility and its unsecured line of credit to fund the purchase price of this acquisition. The HGSI properties were acquired through a sale leaseback transaction whereby the HGSI properties have been leased on a long-term basis immediately after acquisition to a single tenant (HGSI, the seller lessee) under net leases that

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
  transfer all of the properties’ nonfinancial operating and holding costs to HGSI. The purchase price for this acquisition exceeded 20% of the Company’s total assets at December 31, 2005.
 
        Set forth below is certain condensed financial information of HGSI which is taken from its Annual Report on Form 10-K for the year ended December 31, 2005, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, as filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the “Exchange Act”). The information and financial data contained herein concerning HGSI was obtained and has been condensed from its public filings under the Exchange Act. The Company can make no representation as to the accuracy and completeness of the public filings of HGSI. It should be noted that HGSI has no duty, contractual or otherwise, to advise us of any events which might have occurred subsequent to the date of such publicly available information which could affect the significance or accuracy of such information.
 
        HGSI is subject to the information filing requirements of the Exchange Act, and, in accordance herewith, is obligated to file periodic reports, proxy statements and other information with the Securities and Exchange Commission relating to its business, financial condition and other matters. Such reports, proxy statements and other information may be inspected at the offices of the Securities and Exchange Commission at 100 F Street, N.E., Washington, D.C. 20549.
 
        The following table summarizes the cash, cash equivalents, short-term investments, marketable securities and restricted investments, total assets, total debt and capital lease, less current portion, revenue — research and development contracts, total costs and expenses, income (loss) from operations and net income(loss) for HGSI as of or for the most recent fiscal year end and quarter end (dollars in thousands):
                 
    As of or for   As of or for
    the fiscal year   the quarter
    ended   ended
    December 31, 2005   March 31, 2006
         
Cash, cash equivalents, short-term investments,
marketable securities and restricted investments
   $ 646,220     $ 580,397  
Total assets
     997,046       933,675  
Total debt and capital lease, less current portion
     510,000       510,000  
Revenue — research and development contracts
     19,113       6,840  
Total costs and expenses
     270,783       71,798  
Income (loss) from operations
     (251,670 )     (64,958 )
Net income (loss)
     (239,439 )     (62,139 )
        (B) Reflects the acquisition of three other properties from third parties subsequent to March 31, 2006 (including the acquisition of the 58 Charles Street property on April 7, 2006 and the probable acquisitions of the Road to the Cure and One Research Way properties for which purchase and sale agreements have been entered into). Consideration paid or to be paid consists of cash payments of $44,709,000 (financed by borrowings on the existing unsecured line of credit of $12,906,000 and cash on hand of $16,003,000) and includes the assumption of mortgage notes

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
  payable in the amount of $15,800,000 (excluding $422,000 of debt premium) for the Road to the Cure acquisition:
                                 
    58 Charles Street   Road to the Cure   One Research Way   Total  
                 
Investment in real estate, net
   $ 11,823     $ 21,715       8,206     $ 41,744  
Intangible assets(1)
     1,352       2,557       —       3,909  
Acquired debt premium(2)
     —       (422 )   —       (422 )
Acquired below market leases(3)
     —       (522 )   —       (522 )
                         
Net assets acquired
   $ 13,175     $ 23,328     8,206   $ 44,709
                       
          
 
  (1)  A portion of the purchase price has been allocated to identified intangible assets for an above-market lease in the amount of $164,000, which is amortized to rental income over the remaining non-cancelable term of the lease, and the value of in-place leases and management fees in the amount of $3,745,000 which are amortized to depreciation and amortization expense over the remaining initial lease term and any fixed rate renewal periods of the respective leases.
 
  (2)  Debt premiums are recorded upon assumption of mortgages at the time of acquisition to account for above-market interest rates. Amortization of this premium is recorded as a reduction to interest expense over the remaining term of the respective mortgage.
 
  (3)  A portion of the purchase price has been allocated to an identified intangible liability for a below-market lease in the amount of $522,000, which is amortized to rental income over the remaining initial lease term and any fixed rate renewal periods of the lease.
        (C) To fund the acquisition of the HGSI properties, the Company incurred the following indebtedness:
                 
    Principal   Loan
    Amount   Fees
         
Unsecured line of credit
   $ 14,689     $ —  
Secured bridge loan
     150,000       150  
             
Total
   $ 164,689     $ 150  
             
        (D) Sale of 9,075,000 shares of common stock for $28.65 per share in the offering:
           
Proceeds from the offering
   $ 259,999  
Less costs associated with the offering (including underwriters’ discount of $10,400)
     (10,900 )
       
 
Net cash proceeds
   $ 249,099  
       

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
2. Pro Forma Consolidated Statements of Income
      The adjustments to the pro forma consolidated statements of income for the three months ended March 31, 2006 and for the year ended December 31, 2005 are as follows:
      Adjustments (AA) through (GG) inclusive relate to the pro forma adjustments made to give effect to the acquired properties in accordance with Regulation S-X Rule 11-02. Specifically the financial statements of properties acquired should exclude items not comparable to the proposed future operations of the properties including corporate expenses. Prior to the acquisition, the properties were either self-managed or managed by third party management companies. Following the acquisitions, the properties will continue to be managed internally by us or managed by third-party managers under new management contracts. The related management fee revenues and expenses have either been included or excluded from the historical financial statements. For properties that will be managed internally by us, the property management revenues and costs are excluded in the historical financial statements of the acquired properties. For properties that will be managed by third-parties, property management revenues and expenses are included in the historical financial statements of the acquired properties. Pro forma revenue and expense adjustments were made for properties that will be managed internally by us.
      (AA) Reflects the acquisitions of the Fairview Avenue property for approximately $2,700,000, which occurred on January 12, 2006, and the 900 Uniqema Boulevard property for approximately $4,800,000, which occurred on January 13, 2006:
                                     
    For the Three Months Ended March 31, 2006
     
        Adjustments    
        Resulting from    
    Fairview       Purchasing   Pro Forma
    Avenue   900 Uniqema   the Properties   Adjustment
                 
    (4)            
Revenues:
                                
 
Rental(1)
   $ —     $ 17     $ (4 )   $ 13  
 
Tenant recoveries
     —       1       —       1  
 
Other income
     —       —       —       —  
                         
   
Total revenues
     —       18       (4 )     14  
                         
Expenses:
                                
 
Rental operations
     —       1       —       1  
 
Real estate taxes
     —       —       —       —  
 
Depreciation and amortization(2)
     —       —       5       5  
                         
   
Total expenses
     —       1       5       6  
                         
   
Income from operations
     —       17       (9 )     8  
   
Interest expense(3)
     —       (7 )     2       (5 )
                         
   
Net income (loss) before minority interest
   $ —     $ 10     $ (7 )   $ 3  
                         

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
                                     
    For the Year Ended December 31, 2005
     
        Adjustments    
        Resulting from    
    Fairview       Purchasing   Pro Forma
    Avenue   900 Uniqema   the Properties   Adjustment
                 
    (4)            
Revenues:
                                
 
Rental(1)
   $ —     $ 411     $ (89 )   $ 322  
 
Tenant recoveries
     —       29       —       29  
 
Other income
     —       —       —       —  
                         
   
Total revenues
     —       440       (89 )     351  
                         
Expenses:
                                
 
Rental operations
     —       19       —       19  
 
Real estate taxes
     —       11       —       11  
 
Depreciation and amortization(2)
     —       —       120       120  
                         
   
Total expenses
     —       30       120       150  
                         
   
Income from operations
     —       410       (209 )     201  
   
Interest expense(3)
     —       (159 )     33       (126 )
                         
   
Net income (loss) before minority interest
   $ —     $ 251     $ (176 )   $ 75  
                         
 
(1)  The pro forma adjustment to rental revenue is directly attributable to the acquisition of the operating property and consists of amounts related to above market leases, which are being amortized over the remaining initial lease term and any fixed rate renewal periods of the respective leases in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations (“SFAS 141”).
 
(2)  The pro forma adjustment to depreciation and amortization is due to depreciation of the acquired buildings and improvements using the straight-line method and an estimated life of 40 years. In addition, the value of in-place leases (exclusive of the value of above and below market leases) and the value of management agreements are amortized to depreciation and amortization expense over the remaining initial lease term and any fixed rate renewal periods of the respective leases and management agreements.
 
(3)  The pro forma adjustment to interest expense is due to the amortization of debt premiums that were recorded upon assumption of the mortgage notes to account for above-market interest rates. This adjustment reduces interest expense over the remaining terms of the respective mortgages using the effective interest method.
 
(4)  The Fairview Avenue property acquisition consists of land under development, which was nonoperating on the date of acquisition.

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
  (BB)  Reflects the acquisition of the HGSI properties, which occurred on May 24, 2006:
                             
    For the Three Months Ended March 31, 2006
     
    Historical   Adjustments    
    Revenue and   Resulting from    
    Certain   Purchasing   Pro Forma
    Expenses   the Properties   Adjustment
             
Revenues:
                        
 
Rental(1)
   $ —     $ 11,998     $ 11,998  
 
Tenant recoveries(1)
     —       439       439  
                   
   
Total revenues
     —       12,437       12,437  
                   
Expenses:
                        
 
Rental operations(1)
     —       37       37  
 
Real estate taxes
     432       —       432  
 
Depreciation and amortization(1)
     —       2,379       2,379  
 
General and administrative(1)
     —       50       50  
                   
   
Total expenses
     432       2,466       2,898  
                   
   
Net income (loss) before minority interest
   $ (432 )   $ 9,971     $ 9,539  
                   
                             
    For the Year Ended December 31, 2005
     
    Historical   Adjustments    
    Revenue and   Resulting from    
    Certain   Purchasing   Pro Forma
    Expenses   the Properties   Adjustment
             
Revenues:
                        
 
Rental(1)
   $ —     $ 47,991     $ 47,991  
 
Tenant recoveries(1)
     —       1,757       1,757  
                   
   
Total revenues
     —       49,748       49,748  
                   
Expenses:
                        
 
Rental operations(1)
     —       149       149  
 
Real estate taxes
     1,727       —       1,727  
 
Depreciation and amortization(1)
     —       9,516       9,516  
 
General and administrative(1)
     —       200       200  
                   
   
Total expenses
     1,727       9,865       11,592  
                   
   
Net income (loss) before minority interest
   $ (1,727 )   $ 39,883     $ 38,156  
                   
 
(1)  The pro forma adjustment to rental revenue, tenant recoveries, rental operations, depreciation and amortization, and general and administrative expense are directly attributable to the sale leaseback of the owner occupied property. The adjustments are based upon terms of the leases entered into on May 24, 2006.

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
      (CC) Reflects the other subsequent acquisition of the 58 Charles Street property, which occurred on April 7, 2006, and the probable acquisition of the Road to the Cure and One Research Way properties:
                                         
    For the Three Months Ended March 31, 2006
     
              Adjustments    
              Resulting from    
              Purchasing   Pro Forma
    58 Charles Street   Road to the Cure   One Research Way the Properties   Adjustment
                   
Revenues:
                                      
 
Rental(1)
   $ 257     $ 556     $ 173   $ 58     $ 1,044  
 
Tenant recoveries(2)
     107       9       92     64       272  
 
Other income
     —       —       —     —       —  
                             
   
Total revenues
     364       565       265     122       1,316  
                             
Expenses:
                                      
 
Rental operations
     72       9       5     —       86  
 
Real estate taxes(3)
     43       —       87     64       194  
 
Depreciation and amortization(4)
     —       —       —     693       693  
                             
   
Total expenses
     115       9       92     757       973  
                             
   
Income from operations
     249       556       173     (635 )     343  
 
Interest expense(5)
     —       (263 )     —     14       (249 )
                             
   
Net income (loss) before minority interest
   $ 249     $ 293     $ 173   $ (621 )   $ 94
                             

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
                                         
    For the Year Ended December 31, 2005
     
              Adjustments    
              Resulting from    
              Purchasing   Pro Forma
    58 Charles Street   Road to the Cure   One Research Way   the Properties   Adjustment
                   
Revenues:
                                      
 
Rental(1)
   $ 1,031     $ 2,222     $ 692   $ 230     $ 4,175  
 
Tenant recoveries(2)
     430       34       367     257       1,088  
 
Other income
     —       —       —     —       —  
                             
   
Total revenues
     1,461       2,256       1,059     487       5,263  
                             
Expenses:
                                      
 
Rental operations
     288       34       20     —       342  
 
Real estate taxes(3)
     173       —       347     257       777  
 
Depreciation and amortization(4)
     —       —       —     2,771       2,771  
                             
   
Total expenses
     461       34       367     3,028       3,890  
                             
   
Income from operations
     1,000       2,222       692     (2,541 )     1,373  
Interest expense(5)
     —       (1,052 )     —     56       (996 )
                             
   
Net income (loss) before minority interest
   $ 1,000     $ 1,170     $ 692   $ (2,485 )   $ 377  
                             
 
(1)  The pro forma adjustment to rental revenue is directly attributable to the acquisition of the property and consists of amounts related to above and below market leases, which are being amortized over the remaining initial lease term and any fixed rate renewal periods of the respective leases in accordance with SFAS 141.
 
(2)  The pro forma tenant recovery revenue adjustment is based upon amounts to be received from tenants related to the pro forma adjustment to real estate taxes expense.
 
(3)  The pro forma adjustment to real estate taxes expense relates to the increase in property taxes due to the Company’s acquisition of the properties by the Company that may result in a reassessment by the taxing authorities based on the purchase price of the properties.
 
(4)  The pro forma adjustment to depreciation and amortization is due to depreciation of the acquired buildings and improvements using the straight-line method and an estimated life of 40 years. In addition, the value of in-place leases (exclusive of the value of above and below market leases) and the value of management agreements are amortized to depreciation and amortization expense over the remaining initial lease term and any fixed rate renewal periods of the respective leases and management agreements.
 
(5)  The pro forma adjustment to interest expense is due to the amortization of debt premiums that were recorded upon assumption of the mortgage notes to account for above-market interest rates. This adjustment reduces interest expense over the remaining terms of the respective mortgages using the effective interest method. Also includes amortization of deferred loan fees, including loan assumption fees, incurred in obtaining long-term financing, which are capitalized and amortized to interest expense over the terms of the related loans using the effective-interest method.

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
      (DD)Reflects the interest expense as a result of debt incurred in connection with the acquisitions:
                                 
            Interest Expense
             
            For the Three    
    Principal       Months Ended   For the Year Ended
    Amount   Interest Rate   March 31, 2006   December 31, 2005
                 
Unsecured line of credit(1)
   $ 27,595       6.41 %   $ 442     $ 1,769  
Secured bridge loan(2)
     150,000       6.55 %     2,456       9,825  
Amortization of loan fees
     —               150       150  
                         
    $ 177,595             $ 3,048     $ 11,744  
                         
 
(1)  Borrowings consist of $14,689,000 for the acquisition of the HGSI properties and $12,906,000 for the acquisition of the 58 Charles Street and One Research Way properties. Borrowings under the unsecured line of credit bear interest at a rate of LIBOR (assumed one month LIBOR on May 3, 2006) plus a margin, which can vary between 120 basis points and 200 basis points depending on the overall leverage of the Company. A margin of 135 basis points was assumed based upon the pro forma leverage of the Company. If LIBOR increased or decreased by 0.125%, the estimated interest expense could increase or decrease by approximately $34,000 annually.
 
(2)  Borrowings under the secured bridge loan bear interest at a rate of LIBOR (assumed three month LIBOR on May 3, 2006) plus 140 basis points. If LIBOR increased or decreased by 0.125%, the estimated interest expense could increase or decrease by approximately $187,500 annually.
      (EE) Allocate minority interest in net income:
                   
    For the Three    
    Months Ended   For the Year Ended
    March 31, 2006   December 31, 2005
         
Total income before allocation to minority interest
   $ 11,284     $ 54,062  
 
Minority interest in loss of King of Prussia
     54       267  
             
Adjusted income before allocation to minority interest of operating partnership
   $ 11,338     $ 54,329  
Weighted average percentage allocable to minority interest of operating partnership
     4.90 %     4.90 %
             
    $ (556 )   $ (2,662 )
             
      (FF) Reflects the 2005 acquisitions from January 1, 2005 through the respective date of acquisition as follows: Waples for approximately $5,377,000, which occurred on March 1, 2005; Bridgeview II for approximately $16,218,000, which occurred on March 16, 2005; Graphics Drive for approximately $7,787,000, which occurred on March 17, 2005; Coolidge Avenue for approximately $10,839,000, which occurred on April 5, 2005; Fresh Pond Research Park for approximately $20,802,000, which occurred on April 5, 2005; Phoenixville for approximately $13,247,000, which occurred on April 5, 2005; and Nancy Ridge for approximately 12,892,000, which occurred on April 21, 2005. Consideration paid for the Nancy Ridge acquisition also included the assumption of $7,769,000 of a mortgage note payable (including premium of $768,000) and a $1,177,000 deposit for loan impounds was made by the Company. Also included is the acquisition of Dumbarton Circle for approximately $6,318,000, excluding $2,640,000 paid into escrow for tenant construction

15

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
allowance, which occurred on May 27, 2005; and the Lyme Portfolio for approximately $525,658,000, including closing costs and an advisory fee to Raymond James & Associates, Inc. of $1,375,000, which occurred on May 31, 2005. In addition to cash paid and financed by borrowings discussed below, consideration also included the assumption of approximately $141,748,000 of mortgage notes payable (including premium of approximately $10,544,000); the acquisition of the Kaiser Drive property for approximately $9,523,000, which occurred on August 25, 2005; the acquisition of Faraday Avenue for approximately $8,560,000, which occurred on September 19, 2005; the acquisition of 1000 Uniqema Boulevard for approximately $16,303,000, which occurred on September 30, 2005; the acquisition of George Patterson Boulevard for approximately $15,188,000, which occurred on October 28, 2005; the acquisition of Eccles Avenue for approximately $26,032,000, which occurred on December 1, 2005; and the acquisition of Colorow Drive for approximately $19,369,000, which occurred on December 22, 2005:
                             
    For the Year Ended December 31, 2005
     
    Historical    
    Revenue and   Adjustments    
    Certain Expenses   Resulting from    
    through the Date   Purchasing   Pro Forma
    of Acquisition   the Properties   Adjustment
             
Revenues:
                        
 
Rental(1)
   $ 18,031     $ 842     $ 18,873  
 
Tenant recoveries(2)
     4,245       1,310       5,555  
 
Other income
     485       —       485  
                   
   
Total revenues
     22,761       2,152       24,913  
                   
Expenses:
                        
 
Rental operations(3)
     2,329       149       2,478  
 
Real estate taxes(4)
     2,246       1,254       3,500  
 
Depreciation and amortization(5)
     —       7,627       7,627  
 
General and administrative
     22       —       22  
                   
   
Total expenses
     4,597       9,030       13,627  
                   
   
Income from operations
     18,164       (6,878 )     11,286  
 
Interest expense(6)
     (2,333 )     192       (2,141 )
                   
   
Net income (loss) before minority interest
   $ 15,831     $ (6,686 )   $ 9,145  
                   
 
(1)  The pro forma adjustment to rental revenue is directly attributable to the acquisition of the property and consists of amounts related to above and below market leases, which are being amortized over the remaining initial lease term and any fixed rate renewal periods of the respective leases in accordance with SFAS 141.
 
(2)  The pro forma tenant recovery revenue adjustment is based upon an assignment of pre-existing management agreements with certain tenants, as contractually entered into with the execution of the purchase and sale agreement. Also includes amounts to be received from tenants related to the pro forma adjustment to real estate taxes expense.

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BIOMED REALTY TRUST, INC.
NOTES TO PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME — (Continued)
(3)  The pro forma adjustment to rental operations expense includes amounts related to expenses associated with self-managed properties.
 
(4)  The pro forma adjustment to real estate taxes expense relates to the increase in property taxes due to the acquisition of the properties by the Company that may result in a reassessment by the taxing authorities based on the purchase price of the properties.
 
(5)  The pro forma adjustment to depreciation and amortization is due to depreciation of the acquired buildings and improvements using the straight-line method and an estimated life of 40 years. In addition, the value of in-place leases (exclusive of the value of above and below market leases) and the value of management agreements are amortized to depreciation and amortization expense over the remaining initial lease term and any fixed rate renewal periods of the respective leases and management agreements.
 
(6)  The pro forma adjustment to interest expense is due to the amortization of debt premiums that were recorded upon assumption of the mortgage notes to account for above-market interest rates. This adjustment reduces interest expense over the remaining terms of the respective mortgages using the effective interest method. Also includes amortization of deferred loan fees, including loan assumption fees, incurred in obtaining long-term financing, which are capitalized and amortized to interest expense over the terms of the related loans using the effective-interest method.
      (GG) The following is a reconciliation to net income:
                                   
    For the Three Months Ended   For the Year Ended
    March 31, 2006   December 31, 2005
         
    Historical   Pro Forma   Historical   Pro Forma
                 
Net income attributable to common shares
   $ 4,474     $ 10,782     $ 17,046     $ 51,667  
 
Minority interests in operating partnership(1)
     276       556       1,274       2,662  
                         
Adjusted net income attributable to common shares
   $ 4,750     $ 11,338     $ 18,320     $ 54,329  
                         
Weighted-average common shares outstanding:
                                
 
Basic(2)
     46,369,605       55,444,605       38,913,103       47,988,103  
 
Diluted(2)
     49,518,010       58,593,010       42,091,195       51,166,195  
Pro forma earnings per share — basic
   $ 0.10     $ 0.19     $ 0.44     $ 1.08  
                         
Pro forma earnings per share — diluted
   $ 0.10     $ 0.19     $ 0.44     $ 1.06  
                         
 
(1)  Does not include minority interest in the loss for the limited partner’s interest in the King of Prussia property of $54,000, $54,000, $267,000 and $267,000, respectively.
 
(2)  Pro forma shares include 9,075,000 shares outstanding due to the Company’s offering of common stock.

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