Small cap Biomed Realty Trust Inc (NYSE: BMR) is a real estate investment trust (REIT) offering an alternative way to gain exposure to the biotech or life sciences sector, meaning it might be worth taking a closer look at it along with a few benchmarks like the Vanguard REIT ETF (NYSEARCA: VNQ), iShares NASDAQ Biotechnology Index ETF (NASDAQ: IBB) and SPDR S&P Biotech ETF (NYSEARCA: XBI). Of course, it should be mentioned that REITs have had a rough ride lately given all the “tapering” talk, but there is still a place for them in your portfolio with Biomed Realty Trust being one of the more unique offerings.
What is Biomed Realty Trust Inc?
Small cap Biomed Realty Trust is a fully integrated, self-administered and self-managed REIT focused on providing real estate to the life science industry. Biomed Realty Trust has over $5.0 billion invested in state-of-the-art research facilities and a world-class portfolio of life science buildings concentrated in the seven core US life science markets of Boston, San Francisco, San Diego, Maryland, New York/New Jersey, Pennsylvania and Seattle.
For benchmarking purposes:
- The Vanguard REIT ETF tracks the return of the MSCI US REIT Index by investing in REITs that purchase office buildings, hotels, and other real property.
- The iShares NASDAQ Biotechnology Index ETF tracks the Nasdaq Biotechnology Index and has a 77.58% weight in "biotechnology" and a 22.31% weight in Pharma.
- The SPDR S&P Biotech ETF tracks the S&P Biotechnology Select Industry Index with a 100% allocation in biotechnology stocks.
What You Need to Know About Biomed Realty Trust
It should be mentioned that leases for a life sciences REIT will tend to be more stable than the leases for other businesses because lab space is scarce. Moreover, properties would be near big pharmaceutical companies that are also close to major universities – meaning they are in areas of the country where there are strong pockets of economic strength.
Back in June, the Biomed Realty Trust completed a merger with the Wexford Science & Technology, LLC, which will operate as a subsidiary developing institutional quality life science real estate for academic and medical research organizations with specialty expertise in urban development and redevelopment of life science real estate.
In early August, Biomed Realty Trust reported earnings and noted that during the second quarter, the company executed 20 leasing transactions representing approximately 898,000 square feet which consisted of eight new leases totaling approximately 422,800 square feet (e.g. Regeneron Pharmaceuticals, Pacific Research Center and Inovio Pharmaceuticals etc) and twelve lease renewals totaling approximately 475,300 square feet (Regeneron Pharmaceuticals and MedImmune, a subsidiary of AstraZeneca). The Chairman and CEO noted:
"Our exceptional leasing performance in the second quarter of 898,000 square feet pushed our leasing volume well ahead of our full year target. Our sustained leasing success continues to provide the catalyst that drives our operating and financial results, with robust year-over-year increases in revenues and cash flows for the second quarter.”
The the earnings call (the transcript is available on Seeking Alpha here), the CEO noted:
“Today, we are enjoying what is the strongest IPO market for life science companies in more than a decade.”
Otherwise, it should be noted that Biomed Realty Trust’s operating portfolio leased percentage on a weighted-average basis stood at approximately 90.8% at quarter end.
Share Performance: Biomed Realty Trust Inc vs. VNQ, IBB & XBI
On Tuesday, small cap Biomed Realty Trust closed at $18.95 (BMR has a 52 week trading range of $17.90 to $23.13 a share) for a market cap of $3.64 billion plus the REIT is down 1.4% since the start of the year, down 4.2% over the past year and down 32.4% over the past five years:
As you can see from the above chart, Biomed Realty Trust and Vanguard REIT ETF to some degree have underperformed both the iShares NASDAQ Biotechnology Index ETF and the SPDR S&P Biotech ETF.
Here is a look at the technical charts for all four investments:
Finally, it should be mentioned that Biomed Realty Trust has a trailing P/E of 108.29 and a forward P/E of 12.98 along with a forward dividend of $0.94 for a market cap of 5%.
The Bottom Line. Obviously the Biomed Realty Trust and its performance is no substitute for an investment in the iShares NASDAQ Biotechnology Index ETF and the SPDR S&P Biotech ETF. Nevertheless, the Biomed Realty Trust might make sense if you don’t have much exposure to the REIT sector.