Blackstone today announced that Blackstone Real Estate Partners VIII L.P. and co-investors have agreed to sell BioMed Realty for $14.6 billion to a group led by existing BioMed investors.
This is part of a new long-term, perpetual capital, core+ return strategy managed by Blackstone.
BioMed is the largest private owner of life science office buildings in the United States with an 11.3 million square foot portfolio concentrated in the leading innovation markets including Boston/Cambridge, San Francisco, San Diego, Seattle and Cambridge U.K.
In connection with the recapitalization, existing BioMed investors were offered the option to exit for cash or reinvest their proceeds from the sale.
The investment will generate $6.5 billion of cumulative profits for BREP VIII and BioMed co-investors.
BREP VIII, an opportunistic Real Estate investment fund, and co-investors acquired BioMed in January 2016. Since that time, Blackstone has transformed the company into a premier life science office company by concentrating the portfolio in core life science markets with strong growth potential, building a best-in-class management team, developing assets for investment grade tenants and stabilizing operations by increasing occupancy.
Kathleen McCarthy, Global Co-Head of Blackstone Real Estate, said, “Life science is one of Blackstone’s highest conviction themes, and we have made a number of important investments in this space across the firm.
“In real estate, many of our investors are eager to maintain or increase their exposure to life science office, and this recapitalization enables them to do that with an extraordinarily high-quality company as well as a trusted partner in Blackstone.”
Nadeem Meghji, Head of Real Estate Americas for Blackstone, said, “We have worked hand in hand with the world-class BioMed team to build the largest private life science office portfolio in the U.S. located in the best markets. During our ownership, we have completed and commenced $3.3 billion of best-in-class new developments and continue to cultivate an attractive future development pipeline. We are big believers in the life science sector broadly and BioMed in particular, and we look forward to continuing to grow the business over the long-term.”
Tim Schoen, President and CEO of BioMed Realty, said, “Together with Blackstone, we have created a coveted portfolio in one of the most sought-after real estate asset classes. Our sector continues to prove its resiliency, and now is the logical time to seek long-term capital. This partnership structure and Blackstone’s ongoing support enable us to advance our mission, which is to make concentrated investments in core markets to support the growth of the life science and technology industries.”
Morgan Stanley & Co. LLC has provided a fairness opinion to BREP VIII with respect to the consideration to be received in connection with the announced transaction.
To confirm this transaction represents the best available outcome for the existing investors, Blackstone is commencing a “go-shop” process on behalf of BioMed’s current investors, which will be led by Morgan Stanley & Co. LLC who will solicit superior proposals.
The recapitalization is expected to close within five business days of the conclusion of the “go-shop” process.
Morgan Stanley & Co. LLC is serving as financial advisor to BREP VIII, and Eastdil Secured is serving as financial advisor to the purchasers. Simpson Thacher & Bartlett LLP is serving as legal advisor to Blackstone. Leading the Simpson Thacher team are New York-based Partners Brian Stadler, Sas Mehrara and Krista Miniutti.
Pictured top: One Research Way, Princeton, NJ.