Blackstone Group LP agreed to buy BioMed Realty Trust Inc, a supplier of office space to health care companies, in a deal valued at $8 billion, adding to the private equity firm’s huge real estate portfolio.
BioMed’s shares were up 8.6 per cent at $23.45 in premarket trading, just shy of the offer price of $23.75.
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Real estate has become Blackstone’s most high-profile and lucrative business, and the company has been snapping up commercial properties across the United States and Europe.
The all-cash offer, by Blackstone’s real estate arm, of $23.75 per share represents a premium of 10 per cent to BioMed’s close of $21.59 on Wednesday.
The offer represents a premium of 24 per cent to BioMed’s closing price on Sept. 22, when Bloomberg first reported of Blackstone’s interest.
LAB, OFFICE SPACE DEMAND The biotech and pharma industry has experienced robust growth in recent years due to an ageing population and faster FDA approvals.
Analysts say this in turn has driven demand for additional lab and office space for such companies.
BioMed, which owns office buildings catering to health care companies, has interests in properties comprising about 18.8 million rentable square feet.
The company’s shares have been trading at a discount, affected by volatile earnings and a lower-quality portfolio than its closest peer Alexandria Real Estate Equities Inc, BMO Capital Market analysts said in a note in September.
Demand for high-quality, institutional real estate to support the unprecedented growth of the life science industry is at historic levels, BioMed Chief Executive Alan Gold said.
The deal is expected to close in the first quarter of 2016.
Morgan Stanley & Co is lead financial adviser to BioMed Realty. Citigroup Global Markets Inc, J.P. Morgan Securities and Bank of America Merrill Lynch are advising Blackstone.