Edgar Filing: BioMed Realty Trust Inc

Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

(Do not check if a smaller

reporting company)

BMR-2013.3.31-10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

Form 10-Q

QUARTERLY REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

Commission File Number: 1-32261 (BioMed Realty Trust, Inc.)

000-54089 (BioMed Realty, L.P.)

BIOMED REALTY TRUST, INC.

BIOMED REALTY, L.P.

(Exact name of registrant as specified in its charter)



Maryland	20-1142292 (BioMed Realty Trust, Inc.)
(State or other jurisdiction of	20-1320636 (BioMed Realty, L.P.)
incorporation or organization)	(I.R.S. Employer Identification No.)

17190 Bernardo Center Drive
San Diego, California	92128
(Address of Principal Executive Offices)	(Zip Code)

(858) 485-9840

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



BioMed Realty Trust, Inc.	Yes þ No o
BioMed Realty, L.P.	Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



BioMed Realty Trust, Inc.	Yes þ No o
BioMed Realty, L.P.	Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

BioMed Realty Trust, Inc.:

BioMed Realty, L.P.:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



BioMed Realty Trust, Inc.	Yes o No þ
BioMed Realty, L.P.	Yes o No þ

The number of outstanding shares of BioMed Realty Trust, Inc.’s common stock, par value $0.01 per share, as of May 2, 2013 was 186,311,657.

Table of Contents

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended March 31, 2013 of BioMed Realty Trust, Inc., a Maryland corporation, and BioMed Realty, L.P., a Maryland limited partnership of which BioMed Realty Trust, Inc. is the parent company and general partner. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our” or “our company” refer to BioMed Realty Trust, Inc. together with its consolidated subsidiaries, including BioMed Realty, L.P. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “our operating partnership” or “the operating partnership” refer to BioMed Realty, L.P. together with its consolidated subsidiaries.

BioMed Realty Trust, Inc. operates as a real estate investment trust, or REIT, and is the general partner of BioMed Realty, L.P. As of March 31, 2013, BioMed Realty Trust, Inc. owned an approximate 98.3% partnership interest and other limited partners, including some of our directors, executive officers and their affiliates, owned the remaining 1.7% partnership interest (including long term incentive plan units) in BioMed Realty, L.P. As the sole general partner of BioMed Realty, L.P., BioMed Realty Trust, Inc. has the full, exclusive and complete responsibility for the operating partnership’s day-to-day management and control.

There are a few differences between our company and our operating partnership, which are reflected in the disclosure in this report. We believe it is important to understand the differences between our company and our operating partnership in the context of how BioMed Realty Trust, Inc. and BioMed Realty, L.P. operate as an interrelated consolidated company. BioMed Realty Trust, Inc. is a REIT, whose only material asset is its ownership of partnership interests of BioMed Realty, L.P. As a result, BioMed Realty Trust, Inc. does not conduct business itself, other than acting as the sole general partner of BioMed Realty, L.P., issuing public equity from time to time and guaranteeing certain debt of BioMed Realty, L.P. BioMed Realty Trust, Inc. itself does not hold any indebtedness but guarantees some of the secured and unsecured debt of BioMed Realty, L.P. BioMed Realty, L.P. holds substantially all the assets of the company and holds the ownership interests in the company’s joint ventures. BioMed Realty, L.P. conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from public equity issuances by BioMed Realty Trust, Inc., which are generally contributed to BioMed Realty, L.P. in exchange for partnership units, BioMed Realty, L.P. generates the capital required by the company’s business through BioMed Realty, L.P.’s operations, by BioMed Realty, L.P.’s direct or indirect incurrence of indebtedness or through the issuance of partnership units.

Noncontrolling interests and stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of BioMed Realty Trust, Inc. and those of BioMed Realty, L.P. The operating partnership and long term incentive plan units in BioMed Realty, L.P. that are not owned by BioMed Realty Trust, Inc. are accounted for as partners’ capital in BioMed Realty, L.P.’s financial statements and as noncontrolling interests in BioMed Realty Trust, Inc.’s financial statements. The noncontrolling interests in BioMed Realty, L.P.’s financial statements include the interests of joint venture partners. The noncontrolling interests in BioMed Realty Trust, Inc.’s financial statements include the same noncontrolling interests at the BioMed Realty, L.P. level as well as the limited partnership unitholders of BioMed Realty, L.P., not including BioMed Realty Trust, Inc. The differences between stockholders’ equity and partners’ capital result from the differences in the equity issued at the BioMed Realty Trust, Inc. and BioMed Realty, L.P. levels.

We believe combining the quarterly reports on Form 10-Q of BioMed Realty Trust, Inc. and BioMed Realty, L.P. into this single report:


•	better reflects how management and the analyst community view the business as a single operating unit,


•	enhances investor understanding of our company by enabling them to view the business as a whole and in the same manner as management,


•	is more efficient for our company and results in savings in time, effort and expense, and


•	is more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between our company and our operating partnership, this report presents the following separate sections for each of BioMed Realty Trust, Inc. and BioMed Realty, L.P.:


•	consolidated financial statements,


•	the following notes to the consolidated financial statements:


•	Equity / Partners’ Capital,


•	Debt, and

Table of Contents


•	Earnings Per Share / Unit,


•	Liquidity and Capital Resources in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and


•	Unregistered Sales of Equity Securities and Use of Proceeds.

This report also includes separate Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of BioMed Realty Trust, Inc. and BioMed Realty, L.P. in order to establish that the Chief Executive Officer and the Chief Financial Officer of BioMed Realty Trust, Inc. have made the requisite certifications and BioMed Realty Trust, Inc. and BioMed Realty, L.P. are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

BIOMED REALTY TRUST, INC. AND BIOMED REALTY, L.P.

FORM 10-Q - QUARTERLY REPORT

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013

TABLE OF CONTENTS



		Page
PART I - FINANCIAL INFORMATION

Item 1 Consolidated Financial Statements

Consolidated Financial Statements of BioMed Realty Trust, Inc.:

	Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012	7

	Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012 (Unaudited)	8

	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2013 and 2012 (Unaudited)	9

	Consolidated Statement of Equity for the three months ended March 31, 2013 (Unaudited)	10

	Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012 (Unaudited)	11

Consolidated Financial Statements of BioMed Realty, L.P.:

	Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012	13

	Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012 (Unaudited)	14

	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2013 and 2012 (Unaudited)	15

	Consolidated Statement of Capital for the three months ended March 31, 2013 (Unaudited)	16

	Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012 (Unaudited)	17

Notes to Consolidated Financial Statements of BioMed Realty Trust, Inc. and BioMed Realty, L.P.		19

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations		33

Item 3 Quantitative and Qualitative Disclosures About Market Risk		49

Item 4 Controls and Procedures		52

PART II - OTHER INFORMATION

Item 1 Legal Proceedings		53

Item 1A Risk Factors		53

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		53

Item 3 Defaults Upon Senior Securities		54

Item 4 Mine Safety Disclosures		54




Item 5 Other Information		54

Item 6 Exhibits		55

SIGNATURES		56

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

BIOMED REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



	March 31, 2013			December 31, 2012
	(Unaudited)
ASSETS
Investments in real estate, net	$	4,424,867		$	4,319,716
Investments in unconsolidated partnerships	32,118			32,367
Cash and cash equivalents	18,552			19,976
Accounts receivable, net	35,888			4,507
Accrued straight-line rents, net	155,591			152,096
Deferred leasing costs, net	167,648			172,363
Other assets	164,968			133,454
Total assets	$	4,999,632		$	4,834,479
LIABILITIES AND EQUITY
Mortgage notes payable, net	$	569,390		$	571,652
Exchangeable senior notes	180,000			180,000
Unsecured senior notes, net	894,397			894,177
Unsecured senior term loan	395,486			405,456
Unsecured line of credit	215,000			118,000
Accounts payable, accrued expenses and other liabilities	199,731			180,653
Total liabilities	2,454,004			2,349,938
Equity:
Stockholders’ equity:
Preferred stock, $.01 par value, 15,000,000 shares authorized: 7.375% Series A cumulative redeemable preferred stock, no shares issued and outstanding as of March 31, 2013; and 7,920,000 shares issued and outstanding as of December 31, 2012, $198,000 liquidation preference ($25.00 per share)	—			191,469
Common stock, $.01 par value, 250,000,000 shares authorized, 169,054,707 shares issued and outstanding at March 31, 2013; and 200,000,000 shares authorized, 154,327,818 shares issued and outstanding at December 31, 2012	1,691			1,543
Additional paid-in capital	3,065,589			2,781,849
Accumulated other comprehensive loss, net	(55,480		)	(54,725		)
Dividends in excess of earnings	(474,619		)	(443,280		)
Total stockholders’ equity	2,537,181			2,476,856
Noncontrolling interests	8,447			7,685
Total equity	2,545,628			2,484,541
Total liabilities and equity	$	4,999,632		$	4,834,479

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)



	For the Three Months Ended
	March 31,
	2013			2012
Revenues:
Rental	$	102,956		$	91,475
Tenant recoveries	32,637			28,453
Other revenue	24,857			84
Total revenues	160,450			120,012
Expenses:
Rental operations	40,553			36,729
Depreciation and amortization	60,764			44,934
General and administrative	10,028			8,614
Acquisition-related expenses	2,236			633
Total expenses	113,581			90,910
Income from operations	46,869			29,102
Equity in net loss of unconsolidated partnerships	(319		)	(355		)
Interest expense, net	(25,902		)	(22,219		)
Other (expense) / income	(3,190		)	174
Income from continuing operations	17,458			6,702
Loss from discontinued operations	—			(4,420		)
Net income	17,458			2,282
Net (income) / loss attributable to noncontrolling interests	(146		)	30
Net income attributable to the Company	17,312			2,312
Preferred stock dividends	(2,393		)	(3,651		)
Cost on redemption of preferred stock	(6,531		)	—
Net income / (loss) available to common stockholders	$	8,388		$	(1,339	)
Income from continuing operations per share available to common stockholders:
Basic and diluted earnings per share	$	0.05		$	0.02
Loss from discontinued operations per share available to common stockholders:
Basic and diluted earnings per share	$	—		$	(0.03	)
Net income / (loss) per share available to common stockholders:
Basic and diluted earnings per share	$	0.05		$	(0.01	)
Weighted-average common shares outstanding:
Basic	159,692,470			152,659,258
Diluted	162,713,677			155,625,204

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)



	Three Months Ended
	March 31,
	2013			2012
Net income	$	17,458		$	2,282
Other comprehensive income:
Foreign currency translation adjustments	(2,182		)	—
Unrealized loss from derivative instruments, net	(137		)	(225		)
Amortization of deferred interest costs	1,718			1,743
Reclassification on sale of equity securities	—			28
Unrealized loss on equity securities	(168		)	(265		)
Total other comprehensive (loss) / income	(769		)	1,281
Comprehensive income	16,689			3,563
Comprehensive (income) / loss attributable to noncontrolling interests	(132		)	5
Comprehensive income attributable to the Company	$	16,557		$	3,568

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY TRUST, INC.

CONSOLIDATED STATEMENT OF EQUITY

(In thousands, except share data)

(Unaudited)



	Series A Preferred Stock			Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Loss, net			Dividends in Excess of Earnings			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Series A Preferred Stock			Shares	Amount		Additional Paid-In Capital			Accumulated Other Comprehensive Loss, net			Dividends in Excess of Earnings			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2012	$	191,469		154,327,818	$	1,543	$	2,781,849		$	(54,725	)	$	(443,280	)	$	2,476,856		$	7,685		$	2,484,541
Net proceeds from sale of common stock	—			14,605,000	147		286,845			—			—			286,992			—			286,992
Net issuances of unvested restricted common stock	—			108,493	1		(4,800		)	—			—			(4,799		)	—			(4,799		)
Conversion of OP units to common stock	—			13,396	—		(58		)	—			—			(58		)	58			—
Redemption of Series A Preferred Stock	(191,469		)	—	—		—			—			(6,531		)	(198,000		)	—			(198,000		)
Vesting of share-based awards	—			—	—		3,011			—			—			3,011			—			3,011
Reallocation of equity to noncontrolling interests	—			—	—		(1,258		)	—			—			(1,258		)	1,258			—
Common stock dividends	—			—	—		—			—			(39,727		)	(39,727		)	—			(39,727		)
OP unit distributions	—			—	—		—			—			—			—			(686		)	(686		)
Net income	—			—	—		—			—			17,312			17,312			146			17,458
Preferred stock dividends	—			—	—		—			—			(2,393		)	(2,393		)	—			(2,393		)
Foreign currency translation adjustment	—			—	—		—			(2,145		)	—			(2,145		)	(37		)	(2,182		)
Unrealized loss on equity securities	—			—	—		—			(165		)	—			(165		)	(3		)	(168		)
Amortization of deferred interest costs	—			—	—		—			1,689			—			1,689			29			1,718
Unrealized loss on derivative instruments, net	—			—	—		—			(134		)	—			(134		)	(3		)	(137		)
Balance at March 31, 2013	$	—		169,054,707	$	1,691	$	3,065,589		$	(55,480	)	$	(474,619	)	$	2,537,181		$	8,447		$	2,545,628

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



	Three Months Ended
	March 31,
	2013			2012

Operating activities:
Net income	$	17,458		$	2,282
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	60,764			45,026
Allowance for doubtful accounts	501			213
Non-cash revenue adjustments	5,803			3,469
Other non-cash adjustments	6,457			7,696
Compensation expense related to restricted common stock and LTIP units	3,011			2,689
Distributions representing a return on capital from unconsolidated partnerships	59			1,031
Changes in operating assets and liabilities:
Accounts receivable	(31,822		)	902
Accrued straight-line rents	(3,555		)	(4,427		)
Deferred leasing costs	(1,520		)	(2,517		)
Other assets	314			(146		)
Accounts payable, accrued expenses and other liabilities	2,823			8,376
Net cash provided by operating activities	60,293			64,594
Investing activities:
Purchases of investments in real estate and related intangible assets	(123,841		)	(113,985		)
Capital expenditures	(39,250		)	(42,070		)
Draws on construction loan receivable	(34,310		)	—
Contributions to unconsolidated partnerships, net	(336		)	(1,107		)
Purchases of debt and equity securities	(5,395		)	(1,125		)
Proceeds from the sale of equity securities	—			79
Deposits to escrow for acquisitions	—			(1,000		)
Net cash used in investing activities	(203,132		)	(159,208		)
Financing activities:
Proceeds from common stock offering	299,402			—
Payment of offering costs	(12,410		)	—
Redemption of Series A preferred stock	(198,000		)	—
Payment of deferred loan costs	—			(3,071		)
Unsecured line of credit proceeds	284,000			176,000
Unsecured line of credit payments	(187,000		)	(418,000		)
Principal payments on mortgage notes payable	(2,073		)	(28,322		)
Proceeds from unsecured senior term loan	—			400,000
Distributions to operating partnership unit and LTIP unit holders	(689		)	(596		)
Dividends paid to common stockholders	(36,268		)	(30,821		)
Dividends paid to preferred stockholders	(6,044		)	(3,651		)
Net cash provided by financing activities	140,918			91,539
Effect of exchange rate changes on cash and cash equivalents	497			—
Net decrease in cash and cash equivalents	(1,424		)	(3,075		)
Cash and cash equivalents at beginning of period	19,976			16,411

Table of Contents



	Three Months Ended
	March 31,
	2013		2012

Cash and cash equivalents at end of period	$	18,552	$	13,336
Supplemental disclosure of cash flow information:
Cash paid during the period for interest (net of amounts capitalized of $2,840 and $2,360 during the three months ended March 31, 2013 and 2012, respectively)	$	16,654	$	13,077
Supplemental disclosure of non-cash investing and financing activities:
Accrual for preferred stock dividends declared	$	—	$	3,651
Accrual for common stock dividends declared	39,727		33,145
Accrual for distributions declared for operating partnership unit and LTIP unit holders	686		636
Accrued additions to real estate and related intangible assets	31,928		34,651

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY, L.P.

CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)



	March 31, 2013			December 31, 2012
	(Unaudited)
ASSETS
Investments in real estate, net	$	4,424,867		$	4,319,716
Investments in unconsolidated partnerships	32,118			32,367
Cash and cash equivalents	18,552			19,976
Accounts receivable, net	35,888			4,507
Accrued straight-line rents, net	155,591			152,096
Deferred leasing costs, net	167,648			172,363
Other assets	164,968			133,454
Total assets	$	4,999,632		$	4,834,479
LIABILITIES AND CAPITAL
Mortgage notes payable, net	$	569,390		$	571,652
Exchangeable senior notes	180,000			180,000
Unsecured senior notes, net	894,397			894,177
Unsecured senior term loan	395,486			405,456
Unsecured line of credit	215,000			118,000
Accounts payable, accrued expenses and other liabilities	199,731			180,653
Total liabilities	2,454,004			2,349,938
Capital:
Partners’ capital:
Preferred units, 7.375% Series A cumulative redeemable preferred units, no units issued and outstanding as of March 31, 2013; and 7,920,000 units issued and outstanding as of December 31, 2012, $198,000 liquidation preference ($25.00 per unit)	—			191,469
Limited partners' capital, 2,919,362 and 2,932,758 units issued and outstanding at March 31, 2013 and December 31, 2012, respectively	8,707			7,937
General partner's capital, 169,054,707 and 154,327,818 units issued and outstanding at March 31, 2013 and December 31, 2012, respectively	2,591,027			2,338,464
Accumulated other comprehensive loss	(53,846		)	(53,077		)
Total partners’ capital	2,545,888			2,484,793
Noncontrolling interests deficit	(260		)	(252		)
Total capital	2,545,628			2,484,541
Total liabilities and capital	$	4,999,632		$	4,834,479

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except unit data)

(Unaudited)



	For the Three Months Ended
	March 31,
	2013			2012
Revenues:
Rental	$	102,956		$	91,475
Tenant recoveries	32,637			28,453
Other revenue	24,857			84
Total revenues	160,450			120,012
Expenses:
Rental operations	40,553			36,729
Depreciation and amortization	60,764			44,934
General and administrative	10,028			8,614
Acquisition-related expenses	2,236			633
Total expenses	113,581			90,910
Income from operations	46,869			29,102
Equity in net loss of unconsolidated partnerships	(319		)	(355		)
Interest expense, net	(25,902		)	(22,219		)
Other (expense) / income	(3,190		)	174
Income from continuing operations	17,458			6,702
Loss from discontinued operations	—			(4,420		)
Net income	17,458			2,282
Net loss attributable to noncontrolling interests	8			4
Net income attributable to the Operating Partnership	17,466			2,286
Preferred unit distributions	(2,393		)	(3,651		)
Cost on redemption of preferred units	(6,531		)	—
Net income / (loss) available to unitholders	$	8,542		$	(1,365	)
Income from continuing operations per unit available to unitholders:
Basic and diluted earnings per unit	$	0.05		$	0.02
Loss from discontinued operations per unit available to unitholders:
Basic and diluted earnings per unit	$	—		$	(0.03	)
Net income / (loss) per unit available to unitholders:
Basic and diluted earnings per unit	$	0.05		$	(0.01	)
Weighted-average units outstanding:
Basic	162,612,998			155,592,535
Diluted	162,710,786			155,592,535

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)



	Three Months Ended
	March 31,
	2013			2012
Net income	$	17,458		$	2,282
Other comprehensive income:
Foreign currency translation adjustments	(2,182		)	—
Unrealized loss from derivative instruments, net	(137		)	(225		)
Amortization of deferred interest costs	1,718			1,743
Reclassification on sale of equity securities	—			28
Unrealized loss on equity securities	(168		)	(265		)
Total other comprehensive (loss) / income	(769		)	1,281
Comprehensive income	16,689			3,563
Comprehensive loss attributable to noncontrolling interests	8			4
Comprehensive income attributable to the Operating Partnership	$	16,697		$	3,567

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY, L.P.

CONSOLIDATED STATEMENT OF CAPITAL

(In thousands, except unit data)

(Unaudited)



	Preferred Series A					Limited Partners' Capital					General Partner's Capital				Accumulated Other Comprehensive (Loss)/Income			Total Partners' Equity			Noncontrolling Interests			Total Equity
	Units		Amount			Units		Amount			Units	Amount			Accumulated Other Comprehensive (Loss)/Income			Total Partners' Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2012	7,920,000		$	191,469		2,932,758		$	7,937		154,327,818	$	2,338,464		$	(53,077	)	$	2,484,793		$	(252	)	$	2,484,541
Proceeds from issuance of OP units	—		—			—		—			14,605,000	286,992			—			286,992			—			286,992
Net issuances of unvested restricted OP units	—		—			—		—			108,493	(4,799		)	—			(4,799		)	—			(4,799		)
Conversion of OP units	—		—			(13,396	)	58			13,396	(58		)	—			—			—			—
Redemption of Series A Preferred Units	(7,920,000	)	(198,000		)	—		—			—	—			—			(198,000		)	—			(198,000		)
Vesting of share-based awards	—		—			—		—			—	3,011			—			3,011			—			3,011
Reallocation of equity to limited partners	—		—			—		1,244			—	(1,244		)	—			—			—			—
Distributions	—		(2,393		)	—		(686		)	—	(39,727		)	—			(42,806		)	—			(42,806		)
Net income	—		8,924			—		154			—	8,388			—			17,466			(8		)	17,458
Foreign currency translation adjustment	—		—			—		—			—	—			(2,182		)	(2,182		)	—			(2,182		)
Unrealized loss on equity securities	—		—			—		—			—	—			(168		)	(168		)	—			(168		)
Amortization of deferred interest costs	—		—			—		—			—	—			1,718			1,718			—			1,718
Unrealized loss on derivative instruments, net	—		—			—		—			—	—			(137		)	(137		)	—			(137		)
Balance at March 31, 2013	—		$	—		2,919,362		$	8,707		169,054,707	$	2,591,027		$	(53,846	)	$	2,545,888		$	(260	)	$	2,545,628

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



	Three Months Ended
	March 31,
	2013			2012

Operating activities:
Net income	$	17,458		$	2,282
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	60,764			45,026
Allowance for doubtful accounts	501			213
Non-cash revenue adjustments	5,803			3,469
Other non-cash adjustments	6,457			7,696
Compensation expense related to share-based payments	3,011			2,689
Distributions representing a return on capital from unconsolidated partnerships	59			1,031
Changes in operating assets and liabilities:
Accounts receivable	(31,822		)	902
Accrued straight-line rents	(3,555		)	(4,427		)
Deferred leasing costs	(1,520		)	(2,517		)
Other assets	314			(146		)
Accounts payable, accrued expenses and other liabilities	2,823			8,376
Net cash provided by operating activities	60,293			64,594
Investing activities:
Purchases of investments in real estate and related intangible assets	(123,841		)	(113,985		)
Capital expenditures	(39,250		)	(42,070		)
Draws on construction loan receivable	(34,310		)	—
Contributions to unconsolidated partnerships, net	(336		)	(1,107		)
Purchases of debt and equity securities	(5,395		)	(1,125		)
Proceeds from the sale of equity securities	—			79
Deposits to escrow for acquisitions	—			(1,000		)
Net cash used in investing activities	(203,132		)	(159,208		)
Financing activities:
Proceeds from issuance of OP units	286,992			—
Redemption of Series A preferred units	(198,000		)	—
Payment of deferred loan costs	—			(3,071		)
Unsecured line of credit proceeds	284,000			176,000
Unsecured line of credit payments	(187,000		)	(418,000		)
Principal payments on mortgage notes payable	(2,073		)	(28,322		)
Proceeds from unsecured senior term loan	—			400,000
Distributions paid to unitholders	(36,957		)	(31,417		)
Distributions paid to preferred unitholders	(6,044		)	(3,651		)
Net cash provided by financing activities	140,918			91,539
Effect of exchange rate changes on cash and cash equivalents	497			—
Net decrease in cash and cash equivalents	(1,424		)	(3,075		)

Table of Contents



	Three Months Ended
	March 31,
	2013		2012

Cash and cash equivalents at beginning of period	19,976		16,411
Cash and cash equivalents at end of period	$	18,552	$	13,336
Supplemental disclosure of cash flow information:
Cash paid during the period for interest (net of amounts capitalized of $2,840 and $2,360 during the three months ended March 31, 2013 and 2012, respectively)	$	16,654	$	13,077
Supplemental disclosure of non-cash investing and financing activities:
Accrual for unit distributions declared	$	40,413	$	33,781
Accrual for preferred unit distributions declared	—		3,651
Accrued additions to real estate and related intangible assets	31,928		34,651

See accompanying notes to consolidated financial statements.

Table of Contents

BIOMED REALTY TRUST, INC.

BIOMED REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization of the Parent Company and Description of Business

BioMed Realty Trust, Inc., a Maryland corporation (the “Parent Company”), operates as a fully integrated, self-administered and self-managed real estate investment trust (“REIT”) focused on acquiring, developing, owning, leasing and managing laboratory and office space for the life science industry principally through its subsidiary, BioMed Realty, L.P., a Maryland limited partnership (the “Operating Partnership” and together with the Parent Company referred to as the “Company”). The Company’s tenants primarily include biotechnology and pharmaceutical companies, scientific research institutions, government agencies and other entities involved in the life science industry. The Company’s properties are generally located in markets with well-established reputations as centers for scientific research, including Boston, Maryland, San Francisco, San Diego, New York/New Jersey, Pennsylvania and Seattle.

The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, 2013, owned a 98.3% interest in the Operating Partnership. The remaining 1.7% interest in the Operating Partnership is held by limited partners. Each partner’s percentage interest in the Operating Partnership is determined based on the number of operating partnership units and long-term incentive plan units (“LTIP units” and together with the operating partnership units, the “OP units”) owned as compared to total OP units (and potentially issuable OP units, as applicable) outstanding as of each period end and is used as the basis for the allocation of net income or loss to each partner.

In March 2013, the Company entered into a definitive agreement to merge with Wexford Science & Technology, LLC, a private real estate investment and development company that owns approximately 1.6 million square feet of laboratory and office space located in U.S. educational and research centers, such as Baltimore, Chicago, Miami, Philadelphia, St. Louis and Winston-Salem, and which are occupied primarily by universities and university-related institutions either on campus or nearby land that carries the university brand or direct sponsorship. The acquisition also includes three properties that are currently under construction and that are expected to comprise approximately 935,000 square feet of rentable space upon completion, as well as other pipeline projects. The aggregate consideration for the merger is approximately $640 million, excluding transaction costs and subject to adjustment based on working capital levels and construction and development costs incurred prior to closing. Approximately $551 million of the initial consideration is for Wexford Science & Technology's current operating portfolio and approximately $89 million of the initial consideration is for the projects currently under development. The acquisition is subject to the receipt of lender, ground lessor and other third-party consents, waivers of rights of first offer and customary closing conditions, and the Company can offer no assurances that the acquisition will close on the terms described herein, or at all.

2. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying interim financial statements are unaudited, but have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, they do not include all the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments and eliminations, consisting of normal recurring adjustments necessary for a fair presentation of the financial statements for these interim periods have been recorded. These financial statements should be read in conjunction with the audited consolidated financial statements and notes therein included in the Company's annual report on Form 10-K for the year ended December 31, 2012.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, partnerships and limited liability companies it controls, and variable interest entities ("VIEs") for which the Company has determined itself to be the primary beneficiary. All material intercompany transactions and balances have been eliminated. The Company consolidates entities the Company controls and records a noncontrolling interest for the portions not owned by the Company. Control is determined, where applicable, by the sufficiency of equity invested and the rights of the equity holders, and by the ownership of a majority of the voting interests, with consideration given to the existence of approval or veto rights granted to the minority stockholder. If the minority stockholder holds substantive participating rights, it overcomes the presumption of control by the

Table of Contents

majority voting interest holder. In contrast, if the minority stockholder simply holds protective rights (such as consent rights over certain actions), it does not overcome the presumption of control by the majority voting interest holder.

Assets and liabilities of subsidiaries outside the United States with non-U.S. dollar functional currencies are translated into U.S. dollars using exchange rates as of the balance sheet dates. Income and expenses are translated using the average exchange rates for the reporting period. Foreign currency translation adjustments are recorded as a component of other comprehensive income. For the three months ended March 31, 2013, total revenues from properties outside the United States were $4.5 million, which represented 2.8% of the Company’s total revenues during the same period. The Company’s net investment in properties outside the United States was $191.8 million and $188.8 million at March 31, 2013 and December 31, 2012, respectively.

Investments in Partnerships and Limited Liability Companies

The Company has determined that it is the primary beneficiary in six VIEs, consisting of single-tenant properties in which the tenant has a fixed-price purchase option, which are consolidated and reflected in the accompanying consolidated financial statements. Selected financial data of the VIEs at March 31, 2013 and December 31, 2012 consist of the following (in thousands):



	March 31, 2013		December 31, 2012
Investment in real estate, net	$	394,483	$	397,542
Total assets	433,025		434,105
Total debt	144,414		144,889
Total liabilities	152,130		150,330

Investments in Real Estate, Net

Investments in real estate, net consisted of the following (in thousands):



	March 31, 2013			December 31, 2012
Land	$	711,431		$	702,993
Land under development	88,570			48,744
Buildings and improvements	4,151,971			4,028,089
Construction in progress	117,469			143,340
	5,069,441			4,923,166
Accumulated depreciation	(644,574		)	(603,450		)
	$	4,424,867		$	4,319,716

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed

The Company reviews long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on an estimate of the future undiscounted cash flows (excluding interest charges) expected to result from the long-lived asset’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a long-lived asset, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair-value of the property. The Company is required to make subjective assessments as to whether there are impairments in the values of its investments in long-lived assets. These assessments have a direct impact on the Company’s net income because recording an impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. Although the Company’s strategy is to hold its properties over the long-term, if the Company’s strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to the lower of the carrying amount or fair-value, and such loss could be material.

In April 2012, the Company completed the exchange of a property for another real estate operating property. As a result, the property disposed of was reclassified as a discontinued operation. This property was written down to its estimated fair-value of $28.0 million, less costs to sell, which resulted in an impairment loss of $4.6 million that is included in loss from discontinued

Table of Contents

operations for the three months ended March 31, 2012. The parties to the exchange determined and agreed upon the fair-value of the property received in the transaction, which the Company considers to be a level 2 input in the fair-value hierarchy. See Note 11 for discussion of discontinued operations.

Deferred Leasing Costs, Net

Leasing commissions and other direct costs associated with obtaining new or renewal leases are recorded at cost and amortized on a straight-line basis over the terms of the respective leases, with remaining terms ranging from less than one year to approximately 20 years as of March 31, 2013. Deferred leasing costs also include the net carrying value of acquired in-place leases and acquired management agreements.

Deferred leasing costs, net at March 31, 2013 consisted of the following (in thousands):



	Balance at		Accumulated
	March 31, 2013		Amortization			Net
Acquired in-place leases	$	310,196	$	(200,812	)	$	109,384
Acquired management agreements	25,827		(17,463		)	8,364
Deferred leasing and other direct costs	75,060		(25,160		)	49,900
	$	411,083	$	(243,435	)	$	167,648

Deferred leasing costs, net at December 31, 2012 consisted of the following (in thousands):



	Balance at		Accumulated
	December 31, 2012		Amortization			Net
Acquired in-place leases	$	303,521	$	(185,463	)	$	118,058
Acquired management agreements	24,963		(15,242		)	9,721
Deferred leasing and other direct costs	68,175		(23,591		)	44,584
	$	396,659	$	(224,296	)	$	172,363

Investments

Investments in equity securities, which are included in other assets on the accompanying consolidated balance sheets, consisted of the following (in thousands):



	March 31, 2013			December 31, 2012
Available-for-sale securities, historical cost	$	275		$	275
Unrealized (loss) / gain	(53		)	115
Available-for-sale securities, fair-value (1)	222			390
Privately-held securities, cost basis	15,796			12,280
Total equity securities	$	16,018		$	12,670

____________


(1)	Determination of fair-value is classified as Level 1 in the fair-value hierarchy based on the use of quoted prices in active markets.

The Company holds investments in available-for-sale securities of three publicly traded companies. Certain of these investments have fair-values less than the Company's cost basis, net of previous other-than-temporary impairment in these securities due to decreases in their respective stock prices during the three months ended March 31, 2013. However, management has the intent and ability to retain the investments for a period of time sufficient to allow for an anticipated recovery in their market value. Management will continue to periodically evaluate whether any investment, the fair-value of which is less than the Company’s cost basis, should be considered other-than-temporarily impaired. If other-than-temporary impairment is considered to exist, the related unrealized loss will be reclassified from accumulated other comprehensive loss and recorded as a reduction of net income.

Table of Contents

The Company’s remaining investments consisted of securities in privately held companies or funds, which are recorded at cost basis due to the Company’s lack of control or significant influence over such companies or funds. The Company owned equity securities of six privately-held companies and four privately held funds during the three months ended March 31, 2013.

During the three months ended March 31, 2013, the Company recorded $2.8 million in impairment charges, which are included in other (expense) / income in the consolidated statements of operations. The impairment charges related to the Company's investment in a privately-held company, comprising a $2.0 million cost basis equity investment and $825,000 related to notes receivable that were included in other assets on the consolidated balance sheets. Other than this investment there were no identified events or changes in circumstances that may have a significant adverse effect on the carrying value of the Company’s cost basis investments and therefore, no evaluation of impairment was performed during the three months ended March 31, 2013 on the Company’s remaining cost basis investments.

Construction Loan Receivable

The Company has a $255.0 million interest in a $355.0 million construction loan secured by first priority mortgages on a 1.1 million square foot laboratory, office and retail development project located in Boston, Massachusetts, which is 95% leased to Vertex Pharmaceuticals Incorporated to serve as its new corporate headquarters.

The construction loan matures on September 30, 2014, with two one-year extension options exercisable at the borrower’s election after paying the lenders an extension fee on the then-outstanding principal amount. The construction loan bears interest on the outstanding principal amount at a floating rate equal to the greater of (1) reserve adjusted LIBOR plus 550 basis points and (2) 6.5%. In addition, the borrower is required to pay a fee to the lenders based on a specified percentage of the average daily unfunded amount of the construction loan. The borrower may prepay the construction loan in part under certain circumstances, and may prepay the construction loan in full with prior notice and a prepayment fee to the lenders. As of March 31, 2013, the Company had invested approximately $56.0 million in the construction loan. The Company expects to have fully funded its obligation in early 2014.

Lease Termination

During the three months ended March 31, 2013, the Company recorded approximately $21.6 million of lease termination revenue, net or write offs of lease intangibles, included in other revenue on the consolidated statement of operations, related to the termination of a lease with Elan Corporation (“Elan”) at the Company's Science Center at Oyster Point property for which Elan will pay the Company $46.5 million. The impact of the Elan lease termination will be recognized through the date of termination of the lease in April 2013.

Management’s Estimates

Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reporting of revenue and expenses during the reporting period to prepare these consolidated financial statements in conformity with GAAP. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and reported amounts of revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions or conditions.

3. Equity of the Parent Company

During the three months ended March 31, 2013, the Parent Company issued restricted stock awards to the Company’s employees and directors totaling 374,047 and 4,139 shares of common stock, respectively (240,093 shares of common stock were surrendered to the Company and subsequently retired in lieu of cash payments for taxes due on the vesting of restricted stock and 29,600 shares were forfeited during the same period), which are included in the total of common stock outstanding as of the period end.

The Parent Company awarded units to certain of its executive officers (the “Performance Units”), which represent a contingent right to receive one share of the Parent Company’s common stock if vesting conditions are satisfied. Performance Units vest ratably over one, two or three year periods (each, a “Performance Period”) based upon the Parent Company’s total stockholder return relative to its peer group (the "Market Conditions"). The grant date fair-value of the Performance Units was estimated using a Monte Carlo simulation which considered the likelihood of achieving the Market Conditions. The expected value of the Performance Units on the grant date was determined by simulating the total stockholder return for the Company and the peer group, considering the stock price variance for each of the peer group companies compared to each other and the Company. No

Table of Contents

dividends will be paid or accrued on the Performance Units, and shares of the Parent Company’s common stock will not be issued until vesting of the Performance Units occurs. In January 2013, 136,296 Performance Units, which were originally granted to certain executive officers in January 2012 and represent the maximum number of Performance Units that could have vested, were forfeited as a result of the Parent Company's total stockholder return relative to its peer group in 2012 being below the threshold for any payout. During the three months ended March 31, 2013, the Parent Company awarded 406,288 performance units which vest ratably over two and three year performance periods, which represent the maximum number of Performance Units that may vest. The grant date fair-value of these awards of approximately $3.6 million will be recognized as compensation expense on a straight-line basis over each respective Performance Period. The total compensation remaining on the Performance Units granted during the three months ended March 31, 2013 to be expensed in future periods as of March 31, 2013 was $3.3 million over a weighted-average of approximately 2.3 years. No dividends will be paid or accrued on the Performance Units, and shares of the Parent Company's common stock will not be issued until vesting of the Performance Units occurs.

In February 2013, the Parent Company issued 14,605,000 shares of common stock and contributed net proceeds of approximately $287.0 million, after deducting the underwriters' discounts and commissions and offering expenses, to the Operating Partnership in exchange for the issuance of 14,605,000 operating partnership units. The net proceeds to the Operating Partnership were utilized to fund the acquisition of the Woodside Technology Park property in Redwood City, California, to fund a portion of the redemption of all 7,920,000 outstanding shares of the Parent Company's 7.375% Series A Cumulative Redeemable Preferred Stock ("Series A preferred stock"), to repay a portion of the outstanding indebtedness under its unsecured line of credit and for other general corporate and working capital purposes.

In April 2013, the Parent Company issued 17,250,000 shares of common stock and contributed net proceeds of approximately $354.1 million, after deducting the underwriters' discounts and commissions and offering expenses, to the Operating Partnership in exchange for the issuance of 17,250,000 operating partnership units. The net proceeds to the Operating Partnership are expected to be utilized to repay a portion of the outstanding indebtedness under its unsecured line of credit, to fund a portion of the purchase price of the pending merger with Wexford Science & Technology and for other general corporate and working capital purposes.

Common Stock, Operating Partnership Units and LTIP Units

As of March 31, 2013, the Company had outstanding 169,054,707 shares of the Parent Company’s common stock and 2,579,788 and 339,574 operating partnership and LTIP units, respectively (excluding operating partnership units held by the Parent Company). A share of the Parent Company’s common stock and the operating partnership and LTIP units have essentially the same economic characteristics as they share equally in the total net income or loss and distributions of the Operating Partnership.

7.375% Series A Cumulative Redeemable Preferred Stock

On March 15, 2013, the Company redeemed all 7,920,000 outstanding shares of its Series A preferred stock for approximately $198.0 million, or $25.00 per share, net of accrued dividends of approximately $2.4 million, or $0.30217 per share. The redemption of the Series A preferred stock resulted in the recognition of costs on redemption of preferred stock of approximately $6.5 million for the three months ended March 31, 2013 as a result of the difference between the carrying value and the price paid to redeem the Series A preferred stock.

Dividends and Distributions

The following table lists the dividends and distributions declared by the Parent Company and the Operating Partnership during the three months ended March 31, 2013:

Declaration Date

Securities Class

Amount Per

Share/Unit

Period Covered

Dividend and

Distribution

Payable Date

Dividend and

Distribution Amount

(In thousands)

March 15, 2013

Common stock and OP units

0.23500

January 1, 2013 to March 31, 2013

April 15, 2013

40,413

Total 2013 dividends and distributions declared through March 31, 2013 (in thousands):



Common stock and OP units	$	40,413
Series A preferred stock/units (1)	$	2,393
	$	42,806

Table of Contents

____________


(1)	On March 15, 2013, the Company redeemed all 7,920,000 outstanding shares of its Series A preferred stock for approximately $198.0 million, or $25.00 per share, net of accrued dividends of approximately $2.4 million, or $0.30217 per share.

Changes in Accumulated Other Comprehensive Loss by Component



	Foreign currency translation adjustments			Unrealized gains/(losses) on available for-sale securities			Gain/(loss) on derivative instruments			Total
	Foreign currency translation adjustments			Unrealized gains/(losses) on available for-sale securities			Gain/(loss) on derivative instruments			Total
Balance at December 31, 2012	$	3,543		$	114		$	(58,382	)	$	(54,725	)
Other comprehensive (loss) before reclassifications	(2,182		)	(168		)	(697		)	(3,047		)
Amounts reclassified from accumulated other comprehensive income (1)	—			—			2,278			2,278
Net other comprehensive (loss)/income	(2,182		)	(168		)	1,581			(769		)
Net other comprehensive loss/(income) allocable to noncontrolling interests	$	37		$	3		$	(26	)	$	14
Balance as of March 31, 2013	$	1,398		$	(51	)	$	(56,827	)	$	(55,480	)

____________


(1)	Amounts reclassified from loss on derivative instruments are included in interest expense, net in the consolidated statements of operations. See Note 9 for further information.

Noncontrolling Interests

Noncontrolling interests on the consolidated balance sheets of the Parent Company relate primarily to the OP units in the Operating Partnership that are not owned by the Parent Company. With respect to the noncontrolling interests in the Operating Partnership, noncontrolling interests with redemption provisions that permit the issuer to settle in either cash or common stock at the option of the issuer are further evaluated to determine whether temporary or permanent equity classification on the balance sheet is appropriate. Because the OP units comprising the noncontrolling interests contain such a provision, the Company evaluated this guidance, including the requirement to settle in unregistered shares, and determined that the OP units meet the requirements to qualify for presentation as permanent equity.

The Company evaluates individual redeemable noncontrolling interests for the ability to continue to recognize the noncontrolling interest as permanent equity in the consolidated balance sheets. Any redeemable noncontrolling interest that fails to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (1) the carrying amount, or (2) its redemption value at the end of the period in which the determination is made.

The redemption value of the OP units not owned by the Parent Company, had such units been redeemed at March 31, 2013, was approximately $63.9 million based on the average closing price of the Parent Company’s common stock of $21.90 per share for the ten consecutive trading days immediately preceding March 31, 2013.

The following table shows the vested ownership interests in the Operating Partnership were as follows:

Table of Contents



	March 31, 2013			December 31, 2012
	Operating Partnership Units and LTIP Units	Percentage of Total		Operating Partnership Units and LTIP Units	Percentage of Total
BioMed Realty Trust	167,812,947	98.3	%	152,853,368	98.1	%
Noncontrolling interest consisting of:
Operating partnership and LTIP units held by employees and related parties	2,354,311	1.4	%	2,339,314	1.5	%
Operating partnership and LTIP units held by third parties	565,051	0.3	%	565,051	0.4	%
Total	170,732,309	100.0	%	155,757,733	100.0	%

4. Capital of the Operating Partnership

Operating Partnership Units and LTIP Units

As of March 31, 2013, the Operating Partnership had outstanding 171,634,495 operating partnership units and 339,574 LTIP units. The Parent Company owned 98.3% of the partnership interests in the Operating Partnership at March 31, 2013, is the Operating Partnership’s general partner and is responsible for the management of the Operating Partnership’s business. As the general partner of the Operating Partnership, the Parent Company effectively controls the ability to issue common stock of the Parent Company upon a limited partner’s notice of redemption. In addition, the Parent Company has generally acquired OP units upon a limited partner’s notice of redemption in exchange for shares of its common stock. The redemption provisions of OP units owned by limited partners that permit the Parent Company to settle in either cash or common stock at the option of the Parent Company are further evaluated in accordance with applicable accounting guidance to determine whether temporary or permanent equity classification on the balance sheet is appropriate. The Operating Partnership evaluated this guidance, including the requirement to settle in unregistered shares, and determined that these OP units meet the requirements to qualify for presentation as permanent equity.

The redemption value of the OP units owned by the limited partners, not including the Parent Company, had such units been redeemed at March 31, 2013, was approximately $63.9 million based on the average closing price of the Parent Company’s common stock of $21.90 per share for the ten consecutive trading days immediately preceding March 31, 2013.

Changes in Accumulated Other Comprehensive Loss by Component



	Foreign currency translation adjustments			Unrealized gains/(losses) on available for-sale securities			Gain/(loss) on derivative instruments			Total
	Foreign currency translation adjustments			Unrealized gains/(losses) on available for-sale securities			Gain/(loss) on derivative instruments			Total
Balance at December 31, 2012	$	3,611		$	115		$	(56,803	)	$	(53,077	)
Other comprehensive (loss) before reclassifications	(2,182		)	(168		)	(697		)	(3,047		)
Amounts reclassified from accumulated other comprehensive income (1)	—			—			2,278			2,278
Net other comprehensive (loss)/income	(2,182		)	(168		)	1,581			(769		)
Balance as of March 31, 2013	$	1,429		$	(53	)	$	(55,222	)	$	(53,846	)

____________


(1)	Amounts reclassified from loss on derivative instruments are included in interest expense, net in the consolidated statements of operations. See Note 9 for further information.

5. Debt

Debt of the Parent Company

The Parent Company does not hold any indebtedness. All debt is held directly or indirectly by the Operating Partnership; however, the Parent Company has guaranteed the Operating Partnership’s mortgage loan secured by the Company’s Center for

Table of Contents

Life Science | Boston property, Exchangeable Senior Notes due 2030 (the “Exchangeable Senior Notes”), Unsecured Senior Notes due 2016 (the “Notes due 2016”), Unsecured Senior Notes due 2020 (the “Notes due 2020”), Unsecured Senior Notes due 2022 (the “Notes due 2022”), Unsecured Senior Term Loan (the “Term Loan”) and unsecured line of credit.

Debt of the Operating Partnership

The following is a summary of the Operating Partnership’s outstanding consolidated debt as of March 31, 2013 and December 31, 2012 (dollars in thousands):



	Stated Interest Rate		Effective Interest Rate		Principal Balance
	Stated Interest Rate		Effective Interest Rate		March 31, 2013			December 31, 2012			Maturity Date
Mortgage Notes Payable
9900 Belward Campus Drive	5.64	%	3.99	%	$	10,732		$	10,767		July 1, 2017
9901 Belward Campus Drive	5.64	%	3.99	%	13,216			13,260			July 1, 2017
Center for Life Science \| Boston	7.75	%	7.75	%	337,476			338,447			June 30, 2014
500 Kendall Street (Kendall D)	6.38	%	5.45	%	59,617			60,164			December 1, 2018
Shady Grove Road	5.97	%	5.97	%	144,414			144,889			September 1, 2016
					565,455			567,527
Unamortized premiums					3,935			4,125
Mortgage notes payable, net					569,390			571,652
Exchangeable Senior Notes	3.75	%	3.75	%	180,000			180,000			January 15, 2030
Notes due 2016	3.85	%	3.99	%	400,000			400,000			April 15, 2016
Notes due 2020	6.13	%	6.27	%	250,000			250,000			April 15, 2020
Notes due 2022	4.25	%	4.36	%	250,000			250,000			July 15, 2022
					900,000			900,000
Unamortized discounts					(5,603		)	(5,823		)
Unsecured senior notes, net					894,397			894,177
Term Loan - U.S. dollar (1)	1.85	%	2.64	%	243,596			243,596			March 30, 2017
Term Loan - GBP (1)	2.14	%	2.39	%	151,890			161,860			March 30, 2017
Term Loan					395,486			405,456
Unsecured line of credit (2)	1.75	%	1.75	%	215,000			118,000			July 13, 2015
Total consolidated debt					$	2,254,273		$	2,169,285

____________

(1)

In August 2012, the Operating Partnership converted approximately $156.4 million of outstanding borrowings into British pounds sterling (“GBP”) equal to £100.0 million, which was designated as a net investment hedge to mitigate the risk of fluctuations in foreign currency exchange rates. The principal balance represents the U.S. dollar amount based on the exchange rate of $1.52 to £1.00 and $1.62 to £1.00 at March 31, 2013 and December 31, 2012, respectively. The effective interest rate includes the impact of interest rate swap agreements (see Note 9 for further discussion of interest rate swap agreements).


(2)	At March 31, 2013, the Operating Partnership had additional borrowing capacity under the unsecured line of credit of up to approximately $535.0 million.

Net Investment Hedge

The Operating Partnership designated the GBP denominated debt under the Term Loan as a net investment hedge. The Operating Partnership entered into this net investment hedge to protect a designated amount of the Operating Partnership’s net investment in a GBP functional currency subsidiary against the risk of adverse changes in the GBP/U.S. dollar exchange rate (foreign exchange risk). Variability in the GBP/U.S. dollar exchange rate impacts the Operating Partnership (a U.S. dollar functional currency entity) as the financial statements of the GBP functional currency subsidiary are translated each period, with the effect of changes in the GBP/U.S. dollar exchange rate being recorded in accumulated other comprehensive income. When the net investment is sold or substantially liquidated, the balance of the cumulative translation adjustment accumulated in other comprehensive income will be

Table of Contents

reclassified into earnings. The Operating Partnership is hedging the risk of changes in the U.S. dollar equivalent value of a portion of its net investment in its GBP subsidiary attributable to changes in the GBP/U.S. dollar exchange rate during the period of investment during which the hedging instrument is outstanding.

As of March 31, 2013, principal payments due for the Operating Partnership’s consolidated indebtedness (excluding debt premiums and discounts) were as follows (in thousands):



2013	$	6,292
2014	339,088
2015	221,482
2016	543,784
2017	422,824
Thereafter (1)	722,471
	$	2,255,941

____________


(1)	Includes $180.0 million in principal payments of the Exchangeable Senior Notes based on a contractual maturity date of January 15, 2030.

6. Earnings Per Share of the Parent Company

Through March 31, 2013 all of the Company’s participating securities (including the OP units) received dividends/distributions at an equal dividend/distribution rate per share/unit. As a result, the portion of net income allocable to the weighted-average unvested restricted stock outstanding for the three months ended March 31, 2013 and 2012 has been deducted from net income available to common stockholders to calculate basic earnings per share. The calculation of diluted earnings per share for the three months ended March 31, 2013 and 2012 includes the outstanding OP units (both vested and unvested) in the weighted-average shares, and net income attributable to noncontrolling interests in the Operating Partnership has been added back to net income available to common stockholders. For the three months ended March 31, 2013, the Performance Units were dilutive to the calculation of diluted earnings per share as calculated, assuming that March 31, 2013 was the end date of the Performance Units' Performance Period. For the three months ended March 31, 2012, the Performance Units were anti-dilutive to the calculation of diluted earnings per share as calculated, assuming that March 31, 2012 was the end date of the Performance Units' Performance Period. For the three months ended March 31, 2013 and 2012 the unvested restricted stock was anti-dilutive to the calculation of diluted earnings per share and was therefore excluded. As a result, diluted earnings per share was calculated based upon net income available to common stockholders less net income allocable to unvested restricted stock and distributions in excess of earnings attributable to unvested restricted stock. In addition, 10,259,496 and 10,127,232 shares issuable upon settlement of the exchange feature of the Exchangeable Senior Notes were anti-dilutive and were not included in the calculation of diluted earnings per share based on the “if converted” method for the three months ended March 31, 2013 and 2012, respectively. No other shares were considered anti-dilutive for the three months ended March 31, 2013 or 2012.

Computations of basic and diluted earnings per share (in thousands, except share data) were as follows:

Table of Contents



	Three Months Ended
	March 31,
	2013			2012
Basic earnings per share:
Income from continuing operations	$	17,458		$	6,702
Income from continuing operations attributable to noncontrolling interests	(146		)	(58		)
Preferred stock dividends	(2,393		)	(3,651		)
Cost on redemption of preferred stock	(6,531		)	—
Net income allocable and distributions in excess of earnings to participating securities (continuing operations)	(345		)	(319		)
Income from continuing operations available to common stockholders - basic	8,043			2,674

Loss from discontinued operations	—			(4,420		)
Loss from discontinued operations attributable to noncontrolling interests	—			83
Loss from discontinued operations available to common stockholders - basic	—			(4,337		)

Net income / (loss) available to common stockholders - basic	$	8,043		$	(1,663	)
Diluted earnings per share:
Income from continuing operations available to common stockholders - basic	8,043			2,674
Income from continuing operations attributable to noncontrolling interests in Operating Partnership	159			58
Income from continuing operations available to common stockholders - diluted	8,202			2,732

Loss from discontinued operations available to common stockholders - basic	—			(4,337		)
Loss from discontinued operations attributable to noncontrolling interests in the Operating Partnership	—			(83		)
Loss from discontinued operations available to common stockholders - diluted	—			(4,420		)

Net income / (loss) available to common stockholders - diluted	$	8,202		$	(1,688	)
Weighted-average common shares outstanding:
Basic	159,692,470			152,659,258
Incremental shares from assumed conversion:
Performance units	97,788			—
Operating partnership and LTIP units	2,923,419			2,965,946
Diluted	162,713,677			155,625,204
Basic and diluted earnings per share:
Income from continuing operations per share available to common stockholders - basic and diluted	$	0.05		$	0.02
Loss from discontinued operations per share available to common stockholders - basic and diluted	$	—		$	(0.03	)
Net income / (loss) per share available to common stockholders - basic and diluted	$	0.05		$	(0.01	)

7. Earnings Per Unit of the Operating Partnership

Through March 31, 2013 all of the Operating Partnership’s participating securities received distributions at an equal distribution rate per unit. As a result, the portion of net income allocable to the weighted-average unvested OP units outstanding for the three months ended March 31, 2013 and 2012 has been deducted from net income available to unitholders to calculate basic earnings per unit. For the three months ended March 31, 2013 and 2012 the unvested OP units were anti-dilutive to the calculation of earnings per unit and were therefore excluded from the calculation of diluted earnings per unit, and diluted earnings per unit is calculated based upon net income attributable to unitholders. For the three months ended March 31, 2013, the Performance Units

Table of Contents

were dilutive to the calculation of diluted earnings per unit as calculated, assuming that March 31, 2013 was the end date of the Performance Units’ Performance Period. For the three months ended March 31, 2012, the Performance Units were anti-dilutive to the calculation of diluted earnings per unit as calculated, assuming that March 31, 2012 was the end date of the Performance Units' Performance Period. In addition 10,259,496 and 10,127,232 units issuable upon settlement of the exchange feature of the Exchangeable Senior Notes were anti-dilutive and were not included in the calculation of diluted earnings per unit based on the “if converted” method for the three months ended March 31, 2013 and 2012, respectively. No other units were considered anti-dilutive for the three months ended March 31, 2013 or 2012.

Computations of basic and diluted earnings per unit (in thousands, except unit data) were as follows:



	Three Months Ended
	March 31,
	2013			2012
Basic and diluted earnings per unit:
Income from continuing operations	$	17,458		$	6,702
Loss from continuing operations attributable to noncontrolling interests	8			—
Preferred unit distributions	(2,393		)	(3,651		)
Cost on redemption of preferred unit	(6,531		)	—
Net income allocable and distributions in excess of earnings to participating securities (continuing operations)	(345		)	(326		)
Income from continuing operations available to unitholders - basic and diluted	8,197			2,725

Loss from discontinued operations - basic and diluted	—			(4,420		)

Net income / (loss) available to unitholders - basic and diluted	$	8,197		$	(1,695	)
Weighted-average units outstanding:
Basic	162,612,998			155,592,535
Incremental units from assumed conversion:
Performance units	97,788			—
Diluted	162,710,786			155,592,535