Blackstone (NYSE:BX) announced Thursday that Blackstone Real Estate Partners VIII L.P. and co-investors have agreed to sell BioMed Realty for $14.6bn 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 $6.5bn 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 worked on concentrating the portfolio on core life science markets, where the company sees strong growth potential, building up a strong management team, developing the 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 $3.3bn 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, “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.”
To confirm that the 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.
Blackstone’s real estate business was founded in 1991 and has $167bn of investor capital under management. Blackstone is one of the largest property owners in the world, owning and operating assets across every major geography and sector, including logistics, multifamily and single-family housing, office, hospitality and retail.