Industry Pulse: $640m bio real estate merger could impact HRE

A proposed combination of BioMed Realty Trust and Wexford Science & Technology could affect HCP, HCN and perhaps others.

The healthcare and bioscience real estate markets are largely independent. Both segments owe their fundamental existence to healthcare. But they include very different property types: mostly medical office buildings (MOBs) and senior living facilities in the healthcare segment, and mostly biotechnology and pharmaceuticals office, lab and manufacturing space in the bio world. The users are different, too. Healthcare tenants tend to be hospitals, health systems and physician practice groups, whereas bioscience tenants are usually biotech and pharma firms, as well as universities and other research institutions.

But there has some been some crossover over the years. MOBs and research facilities frequently stand side by side on the campuses of academic medical centers, and those functions often share buildings. Many A/E/C practice in both sectors, a few HRE developers have completed bioscience projects, and at least two major healthcare REITs have diversified into bio properties, including HCP Inc. (NYSE: HCP) and Health Care REIT.

So it caught our eye last month when one of the largest bio REITs, Biomed Realty Trust Inc. (NYSE: BMR), agreed to merge with one of the leading bio real estate developers, Wexford Science & Technology LLC. While there would appear to be no immediate implications for the HRE sector, the $640 million combination would create a firm that could become an even more dominant player in the bio space. That could make it more difficult for HCP, HCN and other investors to compete for bio development and investment opportunities in the future.

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