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, 2011

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

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 o 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.:

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

BioMed Realty, L.P.:

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o
				(Do not check if a smaller reporting company)

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 5, 2011 was 131,248,832.

 

 

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended March 31, 2011 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 the general partner of BioMed Realty, L.P. As of March 31, 2011, BioMed Realty Trust, Inc. owned an approximate 97.8% partnership interest and other limited partners, including some of our directors, executive officers and their affiliates, owned the remaining 2.2% 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 the 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:

	•		Debt,
	•		Equity / Partners’ Capital, and
	•		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, 2011
TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION			5
Item 1 Consolidated Financial Statements			5
Consolidated Financial Statements of BioMed Realty Trust, Inc.:			5
Consolidated Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010			5
Consolidated Statements of Income for the three months ended March 31, 2011 and 2010 (Unaudited)			6
Consolidated Statements of Equity for the three months ended March 31, 2011 (Unaudited)			7
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2011 and 2010 (Unaudited)			8
Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010 (Unaudited)			9
Consolidated Financial Statements of BioMed Realty, L.P.:			11
Consolidated Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010			11
Consolidated Statements of Income for the three months ended March 31, 2011 and 2010 (Unaudited)			12
Consolidated Statements of Capital for the three months ended March 31, 2011 (Unaudited)			13
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2011 and 2010 (Unaudited)			14
Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010 (Unaudited)			15
Notes to Consolidated Financial Statements of BioMed Realty Trust, Inc. and BioMed Realty, L.P. (Unaudited)			17
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations			42
Item 3 Quantitative and Qualitative Disclosures About Market Risk			54
Item 4 Controls and Procedures			55
PART II — OTHER INFORMATION			56
Item 1 Legal Proceedings			56
Item 1A Risk Factors			56
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds			56
Item 3 Defaults Upon Senior Securities			56
Item 4 Reserved			56
Item 5 Other Information			56
Item 6 Exhibits			57
SIGNATURES			58
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I — FINANCIAL INFORMATION

ITEM 1.		CONSOLIDATED FINANCIAL STATEMENTS

BIOMED REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

		March 31,				December 31,
		2011				2010
		(Unaudited)
ASSETS
Investments in real estate, net		$	3,538,560			$	3,536,114
Investments in unconsolidated partnerships			56,287				57,265
Cash and cash equivalents			19,351				21,467
Restricted cash			6,687				9,971
Accounts receivable, net			7,358				5,874
Accrued straight-line rents, net			110,981				106,905
Acquired above-market leases, net			28,069				30,566
Deferred leasing costs, net			121,658				125,060
Deferred loan costs, net			13,473				11,499
Other assets			56,656				55,033
Total assets		$	3,959,080			$	3,959,754
LIABILITIES AND EQUITY
Mortgage notes payable, net		$	629,640			$	657,922
Exchangeable senior notes, net			199,613				199,522
Unsecured senior notes, net			645,081				247,571
Unsecured line of credit			51,000				392,450
Security deposits			11,585				11,749
Dividends and distributions payable			31,086				27,029
Accounts payable, accrued expenses and other liabilities			88,116				98,826
Derivative instruments			2,231				3,826
Acquired below-market leases, net			7,565				7,963
Total liabilities			1,665,917				1,646,858
Equity:
Stockholders’ equity:
Preferred stock, $.01 par value, 15,000,000 shares authorized: 7.375% Series A cumulative redeemable preferred stock, $230,000,000 liquidation preference ($25.00 per share), 9,200,000 shares issued and outstanding at March 31, 2011 and December 31, 2010			222,413				222,413
Common stock, $.01 par value, 200,000,000 shares authorized, 131,239,482 and 131,046,509 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively			1,312				1,310
Additional paid-in capital			2,369,922				2,371,488
Accumulated other comprehensive loss			(68,908	)			(70,857	)
Dividends in excess of earnings			(241,894	)			(221,176	)
Total stockholders’ equity			2,282,845				2,303,178
Noncontrolling interests			10,318				9,718
Total equity			2,293,163				2,312,896
Total liabilities and equity		$	3,959,080			$	3,959,754

See accompanying notes to consolidated financial statements.

BIOMED REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)

		For the Three Months Ended
		March 31,
		2011				2010
Revenues:
Rental		$	80,217			$	70,600
Tenant recoveries			24,581				20,826
Other income			747				1,330
Total revenues			105,545				92,756
Expenses:
Rental operations			20,517				17,851
Real estate taxes			10,681				8,722
Depreciation and amortization			33,835				28,915
General and administrative			7,421				6,269
Acquisition related expenses			320				150
Total expenses			72,774				61,907
Income from operations			32,771				30,849
Equity in net loss of unconsolidated partnerships			(648	)			(277	)
Interest income			125				20
Interest expense			(21,316	)			(21,260	)
(Loss)/gain on derivative instruments			(1,011	)			150
Loss on extinguishment of debt			(43	)			(821	)
Net income			9,878				8,661
Net income attributable to noncontrolling interests			(107	)			(121	)
Net income attributable to the Company			9,771				8,540
Preferred stock dividends			(4,241	)			(4,241	)
Net income available to common stockholders		$	5,530			$	4,299
Net income per share available to common stockholders:
Basic and diluted earnings per share		$	0.04			$	0.04
Weighted-average common shares outstanding:
Basic			129,771,733				98,229,996
Diluted			132,764,842				102,577,329

See accompanying notes to consolidated financial statements.

BIOMED REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share data)
(Unaudited)

																		Accumulated
		Series A												Additional				Other				Dividends in				Total
		Preferred				Common Stock								Paid-In				Comprehensive				Excess of				Stockholders’				Noncontrolling
		Stock				Shares				Amount				Capital				(Loss)/Income				Earnings				Equity				Interests				Total Equity
Balance at December 31, 2010		$	222,413				131,046,509			$	1,310			$	2,371,488			$	(70,857	)		$	(221,176	)		$	2,303,178			$	9,718			$	2,312,896
Net issuances of unvested restricted common stock			—				180,792				2				(2,390	)			—				—				(2,388	)			—				(2,388	)
Conversion of OP units to common stock			—				12,181				—				(30	)			—				—				(30	)			30				—
Vesting of share-based awards			—				—				—				1,871				—				—				1,871				—				1,871
Reallocation of equity to noncontrolling interests			—				—				—				(1,017	)			—				—				(1,017	)			1,017				—
Common stock dividends			—				—				—				—				—				(26,248	)			(26,248	)			—				(26,248	)
OP unit distributions			—				—				—				—				—				—				—				(598	)			(598	)
Net income			—				—				—				—				—				9,771				9,771				107				9,878
Preferred stock dividends			—				—				—				—				—				(4,241	)			(4,241	)			—				(4,241	)
Unrealized loss on marketable securities			—				—				—				—				(2,266	)			—				(2,266	)			(51	)			(2,317	)
Amortization of deferred interest costs			—				—				—				—				1,726				—				1,726				39				1,765
Unrealized gain on derivative instruments, net			—				—				—				—				2,489				—				2,489				56				2,545
Balance at March 31, 2011		$	222,413				131,239,482			$	1,312			$	2,369,922			$	(68,908	)		$	(241,894	)		$	2,282,845			$	10,318			$	2,293,163

See accompanying notes to consolidated financial statements.

BIOMED REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)

		Three Months Ended
		March 31,
		2011				2010
Net income available to common stockholders and noncontrolling interests		$	5,637			$	4,420
Other comprehensive income:
Unrealized gain on derivative instruments, net			2,569				2,927
Amortization of deferred interest costs			1,765				1,786
Equity in other comprehensive income/(loss) of unconsolidated partnerships			28				(14	)
Deferred settlement payments on interest rate swaps, net			(52	)			(245	)
Reclassification on sale of marketable securities			—				(538	)
Unrealized loss on marketable securities			(2,317	)			—
Total other comprehensive income			1,993				3,916
Comprehensive income			7,630				8,336
Comprehensive income attributable to noncontrolling interests			(151	)			(113	)
Comprehensive income attributable to common stockholders		$	7,479			$	8,223

See accompanying notes to consolidated financial statements.

BIOMED REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

		Three Months Ended
		March 31,
		2011				2010
Operating activities:
Net income		$	9,878			$	8,661
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain)/loss on extinguishment of debt			(398	)			821
Loss/(gain) on derivative instruments			1,011				(150	)
Gain on sale of marketable securities			—				(865	)
Depreciation and amortization			33,835				28,915
Allowance for doubtful accounts			324				115
Revenue reduction attributable to acquired above-market leases			2,497				306
Revenue recognized related to acquired below-market leases			(398	)			(1,201	)
Revenue reduction attributable to lease incentives			518				500
Compensation expense related to restricted common stock and LTIP units			1,871				1,789
Amortization of deferred loan costs			1,058				1,204
Amortization of debt premium on mortgage notes payable			(497	)			(467	)
Amortization of debt discounts			141				177
Loss from unconsolidated partnerships			945				277
Distributions representing a return on capital from unconsolidated partnerships			192				348
Amortization of deferred interest costs			1,765				1,786
Changes in operating assets and liabilities:
Restricted cash			3,284				51
Accounts receivable			(1,570	)			1,519
Accrued straight-line rents			(4,314	)			(6,915	)
Deferred leasing costs			(2,462	)			(379	)
Other assets			(6,174	)			(11,036	)
Security deposits			(164	)			74
Accounts payable, accrued expenses and other liabilities			62				2,195
Net cash provided by operating activities			41,404				27,725
Investing activities:
Purchases of interests in and additions to investments in real estate and related intangible assets			(41,898	)			(71,727	)
Proceeds from the sale of marketable securities			—				1,227
Funds held in escrow for acquisitions			(875	)			—
Net cash used in investing activities			(42,773	)			(70,500	)
Financing activities:
Proceeds from common stock offering			—				15,797
Payment of common stock offering costs			—				(371	)
Payment of deferred loan costs			(2,383	)			(5,773	)
Unsecured line of credit proceeds			70,200				178,742
Unsecured line of credit payments			(411,650	)			(181,844	)

		Three Months Ended
		March 31,
		2011				2010
Principal payments on mortgage notes payable			(27,292	)			(1,812	)
Secured term loan repayments			—				(100,000	)
Repurchases of exchangeable senior notes due 2026			—				(6,311	)
Proceeds from exchangeable senior notes due 2030			—				180,000
Proceeds from unsecured senior notes			397,460				—
Deferred settlement payments on interest rate swaps, net			(52	)			(245	)
Distributions to operating partnership unit and LTIP unit holders			(509	)			(429	)
Dividends paid to common stockholders			(22,280	)			(13,860	)
Dividends paid to preferred stockholders			(4,241	)			(4,241	)
Net cash (used in)/provided by financing activities			(747	)			59,653
Net (decrease)/increase in cash and cash equivalents			(2,116	)			16,878
Cash and cash equivalents at beginning of period			21,467				19,922
Cash and cash equivalents at end of period		$	19,351			$	36,800
Supplemental disclosure of cash flow information:
Cash paid during the period for interest (net of amounts capitalized of $1,494 and $1,645, respectively)		$	16,452			$	17,507
Supplemental disclosure of non-cash investing and financing activities:
Accrual for preferred stock dividends declared		$	4,241			$	4,241
Accrual for common stock dividends declared			26,248				14,043
Accrual for distributions declared for operating partnership unit and LTIP unit holders			598				425
Accrued additions to real estate and related intangible assets			21,755				10,588

See accompanying notes to consolidated financial statements.

BIOMED REALTY, L.P.

CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)

		March 31,				December 31,
		2011				2010
		(Unaudited)
ASSETS
Investments in real estate, net		$	3,538,560			$	3,536,114
Investments in unconsolidated partnerships			56,287				57,265
Cash and cash equivalents			19,351				21,467
Restricted cash			6,687				9,971
Accounts receivable, net			7,358				5,874
Accrued straight-line rents, net			110,981				106,905
Acquired above-market leases, net			28,069				30,566
Deferred leasing costs, net			121,658				125,060
Deferred loan costs, net			13,473				11,499
Other assets			56,656				55,033
Total assets		$	3,959,080			$	3,959,754
LIABILITIES AND CAPITAL
Mortgage notes payable, net		$	629,640			$	657,922
Exchangeable senior notes, net			199,613				199,522
Unsecured senior notes, net			645,081				247,571
Unsecured line of credit			51,000				392,450
Security deposits			11,585				11,749
Distributions payable			31,086				27,029
Accounts payable, accrued expenses and other liabilities			88,116				98,826
Derivative instruments			2,231				3,826
Acquired below-market leases, net			7,565				7,963
Total liabilities			1,665,917				1,646,858
Capital:
Partners’ capital:
Preferred units, 7.375% Series A cumulative redeemable preferred units, $230,000,000 liquidation preference ($25.00 per unit), 9,200,000 units issued and outstanding at March 31, 2011 and December 31, 2010			222,413				222,413
Limited partners’ capital, 2,989,069 and 3,001,250 units issued and outstanding at March 31, 2011 and December 31, 2010, respectively			10,536				9,918
General partner’s capital, 131,239,482 and 131,046,509 units issued and outstanding at March 31, 2011 and December 31, 2010, respectively			2,127,988				2,150,314
Accumulated other comprehensive loss			(67,556	)			(69,549	)
Total partners’ capital			2,293,381				2,313,096
Noncontrolling interests deficit			(218	)			(200	)
Total capital			2,293,163				2,312,896
Total liabilities and capital		$	3,959,080			$	3,959,754

See accompanying notes to consolidated financial statements.

BIOMED REALTY, L.P.

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except unit data)
(Unaudited)

		For the Three Months Ended
		March 31,
		2011				2010
Revenues:
Rental		$	80,217			$	70,600
Tenant recoveries			24,581				20,826
Other income			747				1,330
Total revenues			105,545				92,756
Expenses:
Rental operations			20,517				17,851
Real estate taxes			10,681				8,722
Depreciation and amortization			33,835				28,915
General and administrative			7,421				6,269
Acquisition related expenses			320				150
Total expenses			72,774				61,907
Income from operations			32,771				30,849
Equity in net loss of unconsolidated partnerships			(648	)			(277	)
Interest income			125				20
Interest expense			(21,316	)			(21,260	)
(Loss)/gain on derivative instruments			(1,011	)			150
Loss on extinguishment of debt			(43	)			(821	)
Net income			9,878				8,661
Net loss attributable to noncontrolling interests			18				6
Net income attributable to the Operating Partnership			9,896				8,667
Preferred unit distributions			(4,241	)			(4,241	)
Net income available to the unitholders		$	5,655			$	4,426
Net income per unit attributable to unitholders:
Basic and diluted earnings per unit		$	0.04			$	0.04
Weighted-average units outstanding:
Basic			132,701,731				101,135,825
Diluted			132,701,731				102,577,329

See accompanying notes to consolidated financial statements.

BIOMED REALTY, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL
(In thousands, except unit data)
(Unaudited)

																										Accumulated
										Limited Partners’																Other
		Preferred Series A								Capital								General Partner’s Capital								Comprehensive				Total Partner’s				Noncontrolling
		Units				Amount				Units				Amount				Units				Amount				(Loss)/Income				Equity				Interests Deficit				Total Equity
Balance at December 31, 2010			9,200,000			$	222,413				3,001,250			$	9,918				131,046,509			$	2,150,314			$	(69,549	)		$	2,313,096			$	(200	)		$	2,312,896
Net issuances of unvested restricted OP units			—				—				—				—				180,792				(2,388	)			—				(2,388	)			—				(2,388	)
Conversion of OP units			—				—				(12,181	)			30				12,181				(30	)			—				—				—				—
Vesting of share-based awards			—				—				—				—				—				1,871				—				1,871				—				1,871
Reallocation of equity to limited partners			—				—				—				1,061				—				(1,061	)			—				—				—				—
Distributions			—				(4,241	)			—				(598	)			—				(26,248	)			—				(31,087	)			—				(31,087	)
Net income			—				4,241				—				125				—				5,530				—				9,896				(18	)			9,878
Unrealized loss on marketable securities			—				—				—				—				—				—				(2,317	)			(2,317	)			—				(2,317	)
Amortization of deferred interest costs			—				—				—				—				—				—				1,765				1,765				—				1,765
Unrealized gain on derivative instruments, net			—				—				—				—				—				—				2,545				2,545				—				2,545
Balance at March 31, 2011			9,200,000			$	222,413				2,989,069			$	10,536				131,239,482			$	2,127,988			$	(67,556	)		$	2,293,381			$	(218	)		$	2,293,163

See accompanying notes to consolidated financial statements.

BIOMED REALTY, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)

		Three Months Ended
		March 31,
		2011				2010
Net income available to unitholders and noncontrolling interests		$	5,637			$	4,420
Other comprehensive income:
Unrealized gain on derivative instruments, net			2,569				2,927
Amortization of deferred interest costs			1,765				1,786
Equity in other comprehensive income/(loss) of unconsolidated partnerships			28				(14	)
Deferred settlement payments on interest rate swaps, net			(52	)			(245	)
Reclassification on sale of marketable securities			—				(538	)
Unrealized loss on marketable securities			(2,317	)			—
Total other comprehensive income			1,993				3,916
Comprehensive income		$	7,630			$	8,336

See accompanying notes to consolidated financial statements.

BIOMED REALTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

		Three Months Ended
		March 31,
		2011				2010
Operating activities:
Net income		$	9,878			$	8,661
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain)/loss on extinguishment of debt			(398	)			821
Loss/(gain) on derivative instruments			1,011				(150	)
Gain on sale of marketable securities			—				(865	)
Depreciation and amortization			33,835				28,915
Allowance for doubtful accounts			324				115
Revenue reduction attributable to acquired above-market leases			2,497				306
Revenue recognized related to acquired below-market leases			(398	)			(1,201	)
Revenue reduction attributable to lease incentives			518				500
Compensation expense related to share-based payments			1,871				1,789
Amortization of deferred loan costs			1,058				1,204
Amortization of debt premium on mortgage notes payable			(497	)			(467	)
Amortization of debt discounts			141				177
Loss from unconsolidated partnerships			945				277
Distributions representing a return on capital from unconsolidated partnerships			192				348
Amortization of deferred interest costs			1,765				1,786
Changes in operating assets and liabilities:
Restricted cash			3,284				51
Accounts receivable			(1,570	)			1,519
Accrued straight-line rents			(4,314	)			(6,915	)
Deferred leasing costs			(2,462	)			(379	)
Other assets			(6,174	)			(11,036	)
Security deposits			(164	)			74
Accounts payable, accrued expenses and other liabilities			62				2,195
Net cash provided by operating activities			41,404				27,725
Investing activities:
Purchases of interests in and additions to investments in real estate and related intangible assets			(41,898	)			(71,727	)
Proceeds from the sale of marketable securities			—				1,227
Funds held in escrow for acquisitions			(875	)			—
Net cash used in investing activities			(42,773	)			(70,500	)
Financing activities:
Proceeds from issuance of OP units			—				15,426
Payment of deferred loan costs			(2,383	)			(5,773	)
Unsecured line of credit proceeds			70,200				178,742

		Three Months Ended
		March 31,
		2011				2010
Unsecured line of credit payments			(411,650	)			(181,844	)
Principal payments on mortgage notes payable			(27,292	)			(1,812	)
Secured term loan repayments			—				(100,000	)
Repurchases of exchangeable senior notes due 2026			—				(6,311	)
Proceeds from exchangeable senior notes due 2030			—				180,000
Proceeds from unsecured senior notes			397,460				—
Deferred settlement payments on interest rate swaps, net			(52	)			(245	)
Distributions paid to unitholders			(22,789	)			(14,289	)
Distributions paid to preferred unitholders			(4,241	)			(4,241	)
Net cash (used in)/provided by financing activities			(747	)			59,653
Net (decrease)/increase in cash and cash equivalents			(2,116	)			16,878
Cash and cash equivalents at beginning of period			21,467				19,922
Cash and cash equivalents at end of period		$	19,351			$	36,800
Supplemental disclosure of cash flow information:
Cash paid during the period for interest (net of amounts capitalized of $1,494 and $1,645, respectively)		$	16,452			$	17,507
Supplemental disclosure of non-cash investing and financing activities:
Accrual for unit distributions declared		$	26,846			$	14,468
Accrual for preferred unit distributions declared			4,241				4,241
Accrued additions to real estate and related intangible assets			21,755				10,588

See accompanying notes to consolidated financial statements.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization of the Parent Company and Description of Business

BioMed Realty Trust, Inc., a Maryland corporation (the “Parent Company”), was incorporated in Maryland on April 30, 2004. On August 11, 2004, the Parent Company commenced operations after completing its initial public offering. 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, San Diego, San Francisco, Seattle, Maryland, Pennsylvania and New York/New Jersey.

The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, 2011, owned a 97.8% percentage interest in the Operating Partnership. The remaining 2.2% percentage 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.

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 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, 2010.

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 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 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.

Investments in Partnerships and Limited Liability Companies

The Company evaluates its investments in limited liability companies and partnerships to determine whether such entities may be a variable interest entity, or VIE, and, if a VIE, whether the Company is the primary beneficiary. Generally, an entity is determined to be a VIE when either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest, (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The primary beneficiary is the entity that has both (1) the power to direct matters that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company considers a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. In addition, the Company considers the rights of other investors to participate in policy making decisions, to replace or remove the manager and to liquidate or sell the entity. The obligation to absorb losses and the right to receive benefits when a reporting entity is affiliated with a VIE must be based on ownership, contractual, and/or other pecuniary interests in that VIE. The Company has determined that it is the primary beneficiary in five 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, 2011 and December 31, 2010 consist of the following:

		March 31,				December 31,
		2011				2010
Investment in real estate, net		$	386,297			$	375,428
Total assets			425,360				414,993
Total debt			147,000				147,000
Total liabilities			159,089				161,697

If the foregoing conditions do not apply, the Company considers whether a general partner or managing member controls a limited partnership or limited liability company. The general partner in a limited partnership or managing member in a limited liability company is presumed to control that limited partnership or limited liability company. The presumption may be overcome if the limited partners or members have either (1) the substantive ability to dissolve the limited partnership or limited liability company or otherwise remove the general partner or managing member without cause or (2) substantive participating rights, which provide the limited partners or members with the ability to effectively participate in significant decisions that would be expected to be made in the ordinary course of the limited partnership’s or limited liability company’s business and thereby preclude the general partner or managing member from exercising unilateral control over the partnership or company. If these criteria are met and the Company is the general partner or the managing member, as applicable, the consolidation of the partnership or limited liability company is required.

Except for investments that are consolidated, the Company accounts for investments in entities over which it exercises significant influence, but does not control, under the equity method of accounting. These investments are recorded initially at cost and subsequently adjusted for equity in earnings and cash contributions and distributions. Under the equity method of accounting, the Company’s net equity in the investment is reflected in the consolidated balance sheets and its share of net income or loss is included in the Company’s consolidated statements of income.

On a periodic basis, management assesses whether there are any indicators that the carrying value of the Company’s investments in unconsolidated partnerships or limited liability companies may be impaired on an other than temporary basis. An investment is impaired only if management’s estimate of the fair-value of the investment is less than the carrying value of the investment on an other than temporary basis. To the extent impairment has occurred, the loss is measured as the excess of the carrying value of the investment over the fair-value of the investment. Management does not believe that the value of any of the Company’s unconsolidated investments in partnerships or limited liability companies was impaired as of March 31, 2011.

Investments in Real Estate

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

		March 31,				December 31,
		2011				2010
Land		$	578,753			$	578,753
Land under development			47,920				47,920
Buildings and improvements			3,186,329				3,160,392
Construction in progress			94,218				91,027
			3,907,220				3,878,092
Accumulated depreciation			(368,660	)			(341,978	)
		$	3,538,560			$	3,536,114

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. As of and through March 31, 2011, no assets have been identified as impaired and no such impairment losses have been recognized.

Deferred Leasing Costs

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 21 years as of March 31, 2011. 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, 2011 consisted of the following (in thousands):

		Balance at
		March 31,				Accumulated
		2011				Amortization				Net
Acquired in-place leases		$	216,674			$	(132,269	)		$	84,405
Acquired management agreements			18,557				(11,514	)			7,043
Deferred leasing and other direct costs			44,191				(13,981	)			30,210
		$	279,422			$	(157,764	)		$	121,658

Deferred leasing costs, net at December 31, 2010 consisted of the following (in thousands):

		Balance at
		December 31,				Accumulated
		2010				Amortization				Net
Acquired in-place leases		$	216,674			$	(126,484	)		$	90,190
Acquired management agreements			18,557				(11,132	)			7,425
Deferred leasing and other direct costs			40,531				(13,086	)			27,445
		$	275,762			$	(150,702	)		$	125,060

Revenue Recognition

The Company commences revenue recognition on its leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. In determining what constitutes the leased asset, the Company evaluates whether the Company or the lessee is the owner, for accounting purposes, of the tenant improvements. If the Company is the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If the Company concludes that it is not the owner, for accounting purposes, of the tenant improvements (the lessee is the owner), then the leased asset is the unimproved space and any tenant improvement allowances funded under the lease are treated as lease incentives, which reduce revenue recognized on a straight-line basis over the remaining non-cancelable term of the respective lease. In these circumstances, the Company begins revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct improvements. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. The Company considers a number of different factors to evaluate whether it or the lessee is the owner of the tenant improvements for accounting purposes. These factors include:

•

whether the lease stipulates how and on what a tenant improvement allowance may be spent;

•

whether the tenant or landlord retain legal title to the improvements;

•

the uniqueness of the improvements;

•

the expected economic life of the tenant improvements relative to the length of the lease;

•

the responsible party for construction cost overruns; and

•

who constructs or directs the construction of the improvements.

The determination of who owns the tenant improvements, for accounting purposes, is subject to significant judgment. In making that determination, the Company considers all of the above factors. However, no one factor is determinative in reaching a conclusion.

All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the term of the related lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in accrued straight-line rents on the accompanying consolidated balance sheets and contractually due but unpaid rents are included in accounts receivable. Existing leases at acquired properties are reviewed at the time of acquisition to determine if contractual rents are above or below current market rents for the acquired property. An identifiable lease intangible asset or liability is recorded based on the present value (using a discount rate that reflects the risks associated with the acquired leases) of the difference between (1) the contractual amounts to be paid pursuant to the in-place leases and (2) the Company’s estimate of the fair market lease rates for the corresponding in-place leases at acquisition, measured over a period equal to the remaining non-cancelable term of the leases and any fixed rate renewal periods (based on the Company’s assessment of the likelihood that the renewal periods will be exercised). The capitalized above-market lease values are amortized as a reduction of rental revenue on a straight-line basis over the remaining non-cancelable terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental revenue on a straight-line basis over the remaining non-cancelable terms of the respective leases and any fixed-rate renewal periods, if applicable. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off.

Acquired above-market leases, net consisted of the following (in thousands):

		March 31,				December 31,
		2011				2010
Acquired above-market leases		$	43,138			$	43,138
Accumulated amortization			(15,069	)			(12,572	)
		$	28,069			$	30,566

Acquired below-market leases, net consisted of the following (in thousands):

		March 31,				December 31,
		2011				2010
Acquired below-market leases		$	40,156			$	40,156
Accumulated amortization			(32,591	)			(32,193	)
		$	7,565			$	7,963

Lease incentives, net, which is included in other assets on the accompanying consolidated balance sheets, consisted of the following (in thousands):

		March 31,				December 31,
		2011				2010
Lease incentives		$	30,065			$	27,062
Accumulated amortization			(6,216	)			(5,698	)
		$	23,849			$	21,364

Rental operations expenses, consisting of real estate taxes, insurance and common area maintenance costs, are subject to recovery from tenants under the terms of lease agreements. Amounts recovered are dependent on several factors, including occupancy and lease terms. Revenues are recognized in the period the expenses are incurred. The reimbursements are recorded in revenues as tenant recoveries, and the expenses are recorded in rental operations expenses, as the Company is generally the primary obligor with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the credit risk.

On an ongoing basis, the Company evaluates the recoverability of tenant balances, including rents receivable, straight-line rents receivable, tenant improvements, deferred leasing costs and any acquisition intangibles. When it is determined that the recoverability of tenant balances is not probable, an allowance for expected losses related to tenant receivables, including straight-line rents receivable, utilizing the specific identification method, is recorded as a charge to earnings. Upon the termination of a lease, the amortization of tenant improvements, deferred leasing costs and acquisition intangible assets and liabilities is accelerated to the expected termination date as a charge to their respective line items and tenant receivables are written off as a reduction of the allowance in the period in which the balance is deemed to be no longer collectible. For financial reporting purposes, a lease is treated as terminated upon a tenant filing for bankruptcy, when a space is abandoned and a tenant ceases rent payments, or when other circumstances indicate that termination of a tenant’s lease is probable (e.g., eviction). Lease termination fees are recognized in other income when the related leases are canceled, the amounts to be received are fixed and determinable and collectability is assured, and when the Company has no continuing obligation to provide services to such former tenants. The effect of lease terminations for the three months ended March 31, 2011 and 2010 was as follows (in thousands):

		Three Months Ended
		March 31,
		2011				2010
Rental revenues		$	—			$	—
Other income			729				78
Total revenue			729				78
Rental operations expense			238				9
Depreciation and amortization			282				—
Total expenses			520				9
Net effect of lease terminations		$	209			$	69

Investments

The Company, through its Operating Partnership, holds investments in equity securities in certain publicly-traded companies and privately-held companies primarily involved in the life science industry. The Company does not acquire investments for trading purposes and, as a result, all of the Company’s investments in publicly-traded companies are considered “available-for-sale” and are recorded at fair-value. Changes in the fair-value of investments classified as available-for-sale are recorded in other comprehensive income. The fair-value of the Company’s equity securities in publicly-traded companies is determined based upon the closing trading price of the equity security as of the balance sheet date. Investments in equity securities of privately-held companies are generally accounted for under the cost method, because the Company does not influence any operating or financial policies of the companies in which it invests. The classification of investments is determined at the time each investment is made, and such determination is reevaluated at each balance sheet date. The cost of investments sold is determined by the specific identification method, with net realized gains and losses included in other income. For all investments in equity securities, if a decline in the fair-value of an investment below its carrying value is determined to be other-than-temporary, such investment is written down to its estimated fair-value with a non-cash charge to earnings. The factors that the Company considers in making these assessments include, but are not limited to, market prices, market conditions, available financing, prospects for favorable or unfavorable clinical trial results, new product initiatives and new collaborative agreements.

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

		March 31,				December 31,
		2011				2010
Equity securities in publicly-traded companies, initial cost basis		$	4,557			$	4,133
Unrealized loss			(2,391	)			(73	)
Equity securities in publicly-traded companies, fair-value(1)			2,166				4,060
Equity securities in privately-held companies, initial cost basis(2)			—				—
Total equity securities, fair-value(3)		$	2,166			$	4,060

The Company’s investments in two publicly traded securities currently have a fair market value that is less than the Company’s initial cost basis in these securities due to decreases in their respective stock prices during the three months ended March 31, 2011. However, management has the intent and ability to retain the investments for a period of time sufficient to allow for an anticipated recovery in market value. Management will continue to periodically evaluate whether any investments, the market value of which is less than the Company’s initial cost basis, should be considered other-than-temporarily-impaired.

The Company’s remaining investments consisted of equity securities in privately-held companies, which were determined to have a de minimis fair-value at receipt. This was the result of substantial doubt about the ability to realize value from the sale of such investments due to an illiquid or non-existent market for the securities and the ongoing financial difficulties of the companies that issued the equity securities.

Share-Based Payments

All share-based payments to employees are recognized in the income statement based on their fair-value. Through March 31, 2011, the Company had only awarded restricted stock of the Parent Company and LTIP units of the Operating Partnership under its incentive award plan, which are valued based on the closing market price of the underlying common stock on the date of grant, and had not granted any stock options. The fair-value of all share-based payments is amortized to general and administrative expense and rental operations expense over the relevant service period, adjusted for anticipated forfeitures.

Assets and Liabilities Measured at Fair-Value

The Company measures financial instruments and other items at fair-value where required under GAAP, but has elected not to measure any additional financial instruments and other items at fair-value as permitted under fair-value option accounting guidance.

Fair-value measurement is determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, there is a fair-value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The Company has used interest rate swaps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair-values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair-value measurements. In adjusting the fair-value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair-value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2011, the Company has determined that the impact of the credit valuation adjustments on the overall valuation of its derivative positions is not significant. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair-value hierarchy (see Note 9).

The valuation of the Company’s investments in equity securities of publicly-traded companies utilizes Level 1 inputs, based on the closing trading price of the securities as of the balance sheet date. The valuation of the Company’s investments in equity securities of private companies utilizes Level 3 inputs (including any discounts applied to the valuations). However, as of March 31, 2011, the Company’s aggregate investment in equity securities of private companies was immaterial.

No other assets or liabilities are measured at fair-value on a recurring basis, or have been measured at fair-value on a non-recurring basis subsequent to initial recognition, in the accompanying consolidated balance sheets as of March 31, 2011.

Derivative Instruments

The Company records all derivatives on the consolidated balance sheets at fair-value. In determining the fair-value of its derivatives, the Company considers the credit risk of its counterparties and the Company. These counterparties are generally larger financial institutions engaged in providing a variety of financial services. These institutions generally face similar risks regarding adverse changes in market and economic conditions, including, but not limited to, fluctuations in interest rates, exchange rates, equity and commodity prices and credit spreads. The ongoing disruptions in the financial markets have heightened the risks to these institutions. While management believes that its counterparties will meet their obligations under the derivative contracts, it is possible that defaults may occur.

The accounting for changes in the fair-value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair-value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair-value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair-value of the hedged asset or liability that are attributable to the hedged risk in a fair-value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair-value of the derivative is initially reported in accumulated other comprehensive income (outside of earnings) and subsequently reclassified to earnings in the period in which the hedged transaction affects earnings. If charges relating to the hedged transaction are being deferred pursuant to redevelopment or development activities, the effective portion of changes in the fair-value of the derivative are also deferred in other comprehensive income on the consolidated balance sheet, and are amortized to the income statement once the deferred charges from the hedged transaction begin again to affect earnings. The ineffective portion of changes in the fair-value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction. For derivatives that are not classified as hedges, changes in the fair-value of the derivative are recognized directly in earnings in the period in which the change occurs.

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known or expected cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

The Company’s primary objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. During the three months ended March 31, 2011, such derivatives were used to hedge the variable cash flows associated with the Company’s unsecured line of credit. During the three months ended March 31, 2010, such derivatives were used to hedge the variable cash flows associated with the Company’s unsecured line of credit and secured term loan (see Note 9). The Company formally documents the hedging relationships for all derivative instruments, has historically accounted for its interest rate swap agreements as cash flow hedges, and does not use derivatives for trading or speculative purposes.

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.

Segment Information

The Company’s properties share the following similar economic and operating characteristics: (1) they have similar forecasted returns (measured by capitalization rate at acquisition), (2) they are generally occupied almost exclusively by life science tenants that are public companies, government agencies or their subsidiaries, (3) they are generally located near areas of high life science concentrations with similar demographics and site characteristics, (4) the majority of properties are designed specifically for life science tenants that require infrastructure improvements not generally found in standard properties, and (5) the associated leases are primarily triple-net leases, generally with a fixed rental rate and scheduled annual escalations, that provide for a recovery of close to 100% of operating expenses. Consequently, the Company’s properties qualify for aggregation into one reporting segment.

3. Equity of the Parent Company

During the three months ended March 31, 2011, the Parent Company issued restricted stock awards to the Company’s employees totaling 321,044 shares of common stock (129,342 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 10,910 shares were forfeited during the same period), which are included in the total of common stock outstanding as of the period end (see Note 6).

The Parent Company also maintains a Dividend Reinvestment Program and a Cash Option Purchase Plan (collectively, the “DRIP Plan”) to provide existing stockholders of the Parent Company with an opportunity to invest automatically the cash dividends paid upon shares of the Parent Company’s common stock held by them, as well as permit existing and prospective stockholders to make voluntary cash purchases. Participants may elect to reinvest a portion of, or the full amount of cash dividends paid, whereas optional cash purchases are normally limited to a maximum amount of $10,000. In addition, the Parent Company may elect to establish a discount ranging from 0% to 5% from the market price applicable to newly issued shares of common stock purchased directly from the Parent Company. The Parent Company may change the discount, initially set at 0%, at its discretion, but may not change the discount more frequently than once in any three-month period. Shares purchased under the DRIP Plan shall be, at the Parent Company’s option, purchased from either (1) authorized, but previously unissued shares of common stock, (2) shares of common stock purchased in the open market or privately negotiated transactions, or (3) a combination of both. As of and through March 31, 2011, all shares issued to participants in the DRIP Plan have been acquired through purchases in the open market.

Common Stock, Operating Partnership Units and LTIP Units

As of March 31, 2011, the Company had outstanding 131,239,482 shares of the Parent Company’s common stock and 2,593,538 and 395,531 operating partnership and LTIP units, respectively. 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. The operating partnership and LTIP units are further discussed below in this Note 3.

7.375% Series A Cumulative Redeemable Preferred Stock

As of March 31, 2011, the Parent Company had outstanding 9,200,000 shares of 7.375% Series A cumulative redeemable preferred stock, or Series A preferred stock. Dividends are cumulative on the Series A preferred stock from the date of original issuance in the amount of $1.84375 per share each year, which is equivalent to 7.375% of the $25.00 liquidation preference per share. Dividends on the Series A preferred stock are payable quarterly in arrears on or about the 15th day of January, April, July and October of each year. Following a change of control, if the Series A preferred stock is not listed on the New York Stock Exchange, the American Stock Exchange or the Nasdaq Global Market, holders will be entitled to receive (when and as authorized by the board of directors and declared by the Parent Company) cumulative cash dividends from, but excluding, the first date on which both the change of control and the delisting occurs at an increased rate of 8.375% per annum of the $25.00 liquidation preference per share (equivalent to an annual rate of $2.09375 per share) for as long as the Series A preferred stock is not listed. The Series A preferred stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, the Series A preferred stock will rank senior to the Parent Company’s common stock with respect to the payment of distributions and other amounts. The Parent Company is not allowed to redeem the Series A preferred stock before January 18, 2012, except in limited circumstances to preserve its status as a REIT. On or after January 18, 2012, the Parent Company may, at its option, redeem the Series A preferred stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends on such Series A preferred stock up to, but excluding the redemption date. Holders of the Series A preferred stock generally have no voting rights except for limited voting rights if the Parent Company fails to pay dividends for six or more quarterly periods (whether or not consecutive) and in certain other circumstances. The Series A preferred stock is not convertible into or exchangeable for any other property or securities of the Parent Company.

Dividends and Distributions

The following table lists the dividends and distributions declared by the Company and the Operating Partnership during the three months ended March 31, 2011:

Dividend and

Dividend and

Amount Per

Distribution

Distribution

Declaration Date

Securities Class

Share/Unit

Period Covered

Payable Date

Amount

(in thousands)

March 14, 2011

Common stock and OP units

$

0.20000

January 1, 2011 to March 31, 2011

April 15, 2011

$

26,846

March 14, 2011

Series A preferred stock/units

$

0.46094

January 16, 2011 to April 15, 2011

April 15, 2011

$

4,241

Total 2011 dividends and distributions declared through March 31, 2011:

Common stock and OP units		$	26,846
Series A preferred stock/units			4,241
		$	31,087

Noncontrolling Interests

Noncontrolling interests on the consolidated balance sheets relate primarily to the OP units in the Operating Partnership that are not owned by the Parent Company. In conjunction with the formation of the Company, certain persons and entities contributing interests in properties to the Operating Partnership received operating partnership units. In addition, certain employees of the Operating Partnership received LTIP units in connection with services rendered or to be rendered to the Operating Partnership. Limited partners who have been issued OP units have the right to require the Operating Partnership to redeem part or all of their OP units, which right with respect to LTIP units is subject to vesting and the satisfaction of other conditions. The Parent Company may elect to acquire those OP units in exchange for shares of the Parent Company’s common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of stock rights, specified extraordinary distributions and similar events, or pay cash based upon the fair market value of an equivalent number of shares of the Parent Company’s common stock at the time of redemption. With respect to the noncontrolling interests in the Operating Partnership, noncontrolling interests with the 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. Since 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 noncontrolling interests for the ability to continue to recognize the noncontrolling interest as permanent equity in the consolidated balance sheets. Any 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 as of 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, 2011, was approximately $54.5 million based on the average closing price of the Parent Company’s common stock of $18.22 per share for the ten consecutive trading days immediately preceding March 31, 2011.

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

		March 31, 2011								December 31, 2010
		Operating								Operating
		Partnership Units				Percentage of				Partnership Units				Percentage of
		and LTIP Units				Total				and LTIP Units				Total
BioMed Realty Trust			129,844,404				97.8	%			129,603,445				97.8	%
Noncontrolling interest consisting of:
Operating partnership and LTIP units held by employees and related parties			2,341,408				1.8	%			2,268,873				1.7	%
Operating partnership and LTIP units held by third parties			588,801				0.4	%			588,801				0.5	%
Total			132,774,613				100.0	%			132,461,119				100.0	%