Long-Term Outlook and Possible Plays
Biomed Realty Trust Inc (NYSE:BMR) is financing part of this deal with the proceeds from a secondary public offering. Under the terms of the offering, BioMed will issued about 15 million shares of its common stock at a price of $21.40 per share, which should yield approximately $321 million in cash for the company. While BioMed has not specified the exact amount that it will put towards Wexford’s cash price, it has explicitly stated that it would use some of the offering’s proceeds to pay down unrelated debts that have languished on its books.
While this move is not particularly surprising, it may give investors pause. Since the company is a REIT, BioMed’s capital structure cannot be accurately compared to that of a typical health firm. In general, REITs do not attract outside worry or attention for making secondary public offerings. On the other hand, BioMed does admit that it requires the offering’s proceeds to fund “everyday corporate operations” and “general expenses.” This may indicate that the company’s balance sheet is struggling and highlight the need for investors perform their own due diligence before reaching such a conclusion.
In sum, this deal promises to turn Biomed Realty Trust Inc (NYSE:BMR) into one of the United States’ most powerful life sciences REITs. While the transaction has not yet been completed, investors should assume that it will go through as planned. Those who believe that the life sciences industry will continue to build momentum in the coming years may wish to initiate long positions in BioMed or attempt to get in on its secondary public offering. By contrast, those who feel uncomfortable at the thought of an additional offering may wish to avoid the stock. Either way, BioMed bears watching at these levels.
The article Massive REIT In The Making originally appeared on Fool.com and is written by Mike Thiessen.
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