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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
 _______________ FORM 10-Q (Mark One) [X]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2004 OR [   ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to Commission File Number: 1-32261 BIOMED REALTY TRUST, INC.  Maryland
(State or other jurisdiction of
incorporation or organization)
    
    20-1142292
(I.R.S. Employer
Identification No.)
 17140 Bernardo Center Drive, Suite 195, San Diego, California
(Address of principal executive offices)
    
    92128
(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 Securities Exchange Act of
1934 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. [   ]
Yes [X] No Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). [   ]
Yes [X] No The number of outstanding shares of the registrants common stock, par
value $0.01 per share, as of August 31, 2004, was 31,383,333.




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BIOMED REALTY TRUST, INC. FORM 10-Q  QUARTERLY REPORT
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004 TABLE OF CONTENTS PagePART I  FINANCIAL INFORMATIONItem 1 Financial StatementsBioMed Realty Trust, Inc.Balance
Sheet as of June 30, 2004 and April 30, 2004 (Unaudited)
    
    
    2Notes to Balance Sheet (Unaudited)
    
    
    3Inhale 201 Industrial Road, L.P.Balance Sheets as of June 30, 2004 and December 31, 2003 (Unaudited)
    
    
    5Statements of Income for the three and six months ended June 30, 2004 and 2003 (Unaudited)
    
    
    6Statements of Cash Flows for the six months ended June 30, 2004 and 2003 (Unaudited)
    
    
    7Notes to Financial Statements (Unaudited)
    
    
    8Bernardo PropertiesCombined Balance Sheets as of June 30, 2004 and December 31, 2003 (Unaudited)
    
    
    12Combined Statements of Income for the three and six months ended June 30, 2004 and 2003 (Unaudited)
    
    
    13Combined Statements of Cash Flows for the six months ended June 30, 2004 and 2003 (Unaudited)
    
    
    14Notes to Combined Financial Statements (Unaudited)
    
    
    15Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4 Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    27Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3 Defaults upon Senior Securities
    
    
    27Item 4 Submission of Matters to a Vote of Security Holders
    
    
    27Item 5 Other Information
    
    
    27Item 6 Exhibits
    
    
    28SIGNATURES
    
    
    30EXHIBIT 3.1EXHIBIT 3.2EXHIBIT 10.1EXHIBIT 10.2EXHIBIT 10.3EXHIBIT 10.4EXHIBIT 10.5EXHIBIT 10.6EXHIBIT 10.7EXHIBIT 10.23EXHIBIT 10.24EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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PART I   FINANCIAL INFORMATION 
 Item 1. Financial Statements BIOMED REALTY TRUST, INC. 
 BALANCE SHEETS (Unaudited)
 June 30,2004
    
    April 30,2004AssetsCash
    
    $
    1,000
    
    
    $
    1,000Pre-paid offering and acquisition costs
    
    
    1,925,000
    
    
    
    Deposits towards acquisitions
    
    
    2,150,000
    
    
    
    Total assets
    
    $
    4,076,000
    
    
    $
    1,000Liabilities and Stockholders EquityPayable to related party
    
    $
    3,184,000
    
    
    $
    Accrued offering costs
    
    
    891,000
    
    
    
    Total liabilities
    
    
    4,075,000
    
    
    
    Stockholders equity:Common stock, par value $0.01 per share; 1,000 shares authorized, issued and outstanding
    
    
    10
    
    
    
    10Additional paid-in capital
    
    
    990
    
    
    
    990Total stockholders equity
    
    
    1,000
    
    
    
    1,000Total liabilities and stockholders equity
    
    $
    4,076,000
    
    
    $
    1,000
 See accompanying notes to
balance sheets. 2




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BIOMED REALTY TRUST, INC. 
 NOTES TO BALANCE SHEETS June 30, 2004 and
April 30, 2004
 (Unaudited)
 1. Organization, Description of Business and Summary of Accounting Policies BioMed Realty Trust, Inc. (the Company) was incorporated in Maryland on
April 30, 2004. On August 11, 2004, the Company completed an initial public
offering of 27,000,000 shares of its common stock, par value $.01 per share.
The offering price was $15.00 per share resulting in gross proceeds of $405.0
million. On August 16, 2004, in connection with the exercise of the
underwriters over-allotment option, the Company issued an additional 4,050,000
shares of common stock and received gross proceeds of $60.8 million. The
aggregate proceeds to the Company, net of underwriting discounts and
commissions and estimated offering expenses, were approximately $428.2 million.
In addition, simultaneously with the initial public offering, the Company
obtained a $100.0 million revolving unsecured credit facility, which will be
used to finance acquisitions and for other corporate purposes. The Company
intends to qualify and be taxed as a real estate investment trust (REIT) under
Sections 856 through 860 of the Internal Revenue Code, as amended (the Code),
commencing with its taxable year ending December 31, 2004. The Company is the majority owner and sole general partner of BioMed
Realty, L.P. (the Operating Partnership), which also was formed on April 30,
2004. The Company contributed the net proceeds from the initial public
offering to the Operating Partnership, through which the Company will carry on
its primary operations. From
the completion of its initial public offering on August 11, 2004
through September 17, 2004, the Company, through the Operating
Partnership, completed the acquisition of eleven of the 13 properties
previously described in the Companys initial public offering
prospectus. The Company acquired the Industrial Road, Bernardo Center
Drive, Balboa Avenue and Eisenhower Road properties from affiliates
for an aggregate of approximately 2.3 million limited
partnership units in the Operating Partnership, aggregate cash
consideration of approximately $76.0 million using net proceeds
of the Companys initial public offering and the assumption of
$2.3 million of debt. In addition, the Company acquired seven
properties from unaffiliated third parties: Landmark at Eastview,
King of Prussia, Elliott Avenue, Monte Villa Parkway, Bridgeview,
Bayshore Boulevard and Towne Centre Drive. The Company acquired these
properties for aggregate cash consideration of approximately
$322.9 million using net proceeds of the Companys initial
public offering and the assumption of $29.0 million of debt.
Together, the eleven properties represent a total of 2.2 million
rentable square feet. The acquisitions of the general partnership
interest in McKellar Court, the Science
Center Drive property and one building on the Bridgeview property have not yet
been completed. The Company expects to complete the acquisitions of
the general partnership interest in McKellar Court and the Science
Center drive property within the next 30 days. The seller of the Bridgeview property exercised its
right to extend the closing date on a portion of the property,
consisting of one building representing $16.1 million (or
approximately 50% of the purchase price), to May 2005 to facilitate a
like-kind exchange under Section 1031 of the Code. We have prepared the accompanying interim financial statement in
accordance with accounting principles generally accepted in the United States
and in conformity with the rules and regulations of the Securities and Exchange
Commission. In our opinion, the interim financial statement presented herein
reflects all adjustments, consisting solely of normal and recurring
adjustments, which are necessary to fairly present the interim financial
statement. This financial statement should be read in conjunction with the
financial statements included in our registration statement on Form S-11, as
amended, declared effective by the Securities and Exchange Commission on August
5, 2004. The financial statement includes the accounts of the Company. Through June
30, 2004, there have been no intercompany balances or transactions. 2. Income Taxes The Company believes that it is organized and will operate in a manner
that will allow it to be taxed as a REIT in accordance with Sections 856
through 860 of the Code. As a REIT, the Company will be permitted to deduct distributions paid to
its stockholders, eliminating the federal taxation of income represented by
such distributions at the Company level. REITs are subject to a number of
organizational and operational requirements. If the Company fails to qualify as
a REIT in any taxable year, the Company will be subject to federal income tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate tax rates. 3




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3. Tax Indemnification Agreements and Minimum Debt Requirements As a result of the contribution of properties to the Operating
Partnership, the Company has indemnified the contributors of the properties
against adverse tax consequences if it directly or indirectly sells, exchanges
or otherwise disposes of the properties in a taxable transaction before the
tenth anniversary of the completion of the Companys initial public offering.
The Company also has agreed to use its reasonable best efforts to maintain at
least $8.0 million of debt for a period of ten years following the date of the
Companys initial public offering to enable certain contributors to guarantee
the debt in order to defer potential taxable gain they may incur if the
Operating Partnership repays the existing debt. 4. Prepaid offering costs and payable to related party In connection with the initial public offering discussed in Note 1, the
Company had unsecured borrowings, through June 30, 2004, of approximately $3.2 million from
Bernardo Property Advisors, Inc. (BPA) (an affiliate of the Company) to fund
offering and acquisition costs incurred prior to the offering, including legal,
accounting and other related costs of approximately $1.0 million and deposits
required on asset acquisitions of approximately $2.2 million. In August 2004,
following the completion of the offering, the Company repaid the advance to
BPA including the interest charged to BPA (Prime Rate  4.25% at
June 30, 2004). 4




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INHALE 201 INDUSTRIAL ROAD, L.P. 
 BALANCE SHEETS (Unaudited)
 (In thousands)
 June 30,
    
    December 31,2004
    
    2003AssetsRental properties, net
    
    $
    46,559
    
    
    $
    47,025Cash
    
    
    57
    
    
    
    157Due from affiliate
    
    
    
    
    
    
    16Accrued rent
    
    
    2,708
    
    
    
    2,427Other receivable
    
    
    100
    
    
    
    100Other assets
    
    
    367
    
    
    
    331Total assets
    
    $
    49,791
    
    
    $
    50,056Liabilities and Partners CapitalSecured note payable
    
    $
    33,762
    
    
    $
    34,208Related party loan
    
    
    3,000
    
    
    
    3,000Due to tenant
    
    
    26
    
    
    
    26Accounts payable and accrued liabilities
    
    
    299
    
    
    
    363Total liabilities
    
    
    37,087
    
    
    
    37,597Partners capital:General partners
    
    
    1
    
    
    
    Limited partners
    
    
    12,703
    
    
    
    12,459Total liabilities and partners capital
    
    $
    49,791
    
    
    $
    50,056
 See accompanying notes to financial statements. 5




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INHALE 201 INDUSTRIAL ROAD, L.P. 
 STATEMENTS OF INCOME (Unaudited)
 (In thousands, except unit data)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Revenues:Rental
    
    $
    1,575
    
    
    $
    1,575
    
    
    $
    3,137
    
    
    $
    3,137Tenant recoveries
    
    
    141
    
    
    
    178
    
    
    
    284
    
    
    
    357Management fees
    
    
    8
    
    
    
    7
    
    
    
    15
    
    
    
    141,724
    
    
    
    1,760
    
    
    
    3,436
    
    
    
    3,508Expenses:Rental operations
    
    
    154
    
    
    
    247
    
    
    
    304
    
    
    
    435Depreciation and amortization
    
    
    236
    
    
    
    237
    
    
    
    478
    
    
    
    475General and administrative
    
    
    
    
    
    
    2
    
    
    
    3
    
    
    
    5390
    
    
    
    486
    
    
    
    785
    
    
    
    915Income from operations
    
    
    1,334
    
    
    
    1,274
    
    
    
    2,651
    
    
    
    2,593Interest income
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Interest expense
    
    
    (703
    )
    
    
    (718
    )
    
    
    (1,389
    )
    
    
    (1,443
    )Net income
    
    $
    631
    
    
    $
    556
    
    
    $
    1,263
    
    
    $
    1,150Basic and diluted pro forma historical net income per unit
    
    $
    0.12
    
    
    
    
    
    
    $
    0.24Units used in computing basic and diluted pro forma historical net income per unit
    
    
    5,212,251
    
    
    
    
    
    
    
    5,212,251
 See accompanying notes to financial statements. 6




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INHALE 201 INDUSTRIAL ROAD, L.P. 
 STATEMENTS OF CASH FLOWS (Unaudited)
 (In thousands)
 Six MonthsEnded June 30,2004
    
    2003Operating activities:Net income
    
    $
    1,263
    
    
    $
    1,150Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    478
    
    
    
    475Amortization of loan costs
    
    
    42
    
    
    
    42Changes in operating assets and liabilities:Due from affiliate
    
    
    16
    
    
    
    (8
    )Accrued rent
    
    
    (281
    )
    
    
    (337
    )Other assets
    
    
    (90
    )
    
    
    (11
    )Due to tenant
    
    
    
    
    
    
    (26
    )Accounts payable and accrued liabilities
    
    
    (64
    )
    
    
    (349
    )Net cash provided by operating activities
    
    
    1,364
    
    
    
    936Investing activitiesConstruction costs of rental property
    
    
    
    
    
    
    (87
    )Net cash used in investing activities
    
    
    
    
    
    
    (87
    )Financing activities:Borrowings on secured notes payable
    
    
    
    
    
    
    122Principal reductions on secured notes payable
    
    
    (446
    )
    
    
    (257
    )Distributions to partners
    
    
    (1,018
    )
    
    
    (1,051
    )Net cash used in financing activities
    
    
    (1,464
    )
    
    
    (1,186
    )Net decrease in cash
    
    
    (100
    )
    
    
    (337
    )Cash at beginning of period
    
    
    157
    
    
    
    512Cash at end of period
    
    $
    57
    
    
    $
    175Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    1,381
    
    
    $
    1,039Income taxes paid
    
    $
    1
    
    
    $
    1
 See accompanying notes to financial statements. 7




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INHALE 201 INDUSTRIAL ROAD, L.P. 
 NOTES TO FINANCIAL STATEMENTS As of June 30, 2004 and December 31, 2003 and for the Three and
 Six Month Periods Ended June 30, 2004 and June 30, 2003
 (Unaudited)
 (Tabular dollar amounts in thousands) 1. Background Inhale 201 Industrial Road, L.P., a California limited partnership (201
Industrial), was formed in October 2000 for the purpose of acquiring,
developing, operating and managing a 171,965 square foot building in San
Carlos, California. The building contains a combination of office and
laboratory space. We refer to this property primarily as a life science
facility. The property is 73% leased to one tenant with an original lease term
of 16 years. The agreement of limited partnership provides that 201 Industrial
will continue until December 31, 2050 unless sooner dissolved as provided by
the agreement. On August 11, 2004, BioMed Realty Trust, Inc. (the Company) completed an
initial public offering of 27,000,000 shares of its common stock, par value
$.01 per share. The offering price was $15.00 per share resulting in gross
proceeds of $405.0 million. On August 16, 2004, in connection with the
exercise of the underwriters over-allotment option, the Company issued an
additional 4,050,000 shares of common stock and received gross proceeds of
$60.8 million. The aggregate proceeds to the Company, net of underwriting
discounts and commissions and estimated offering expenses, were approximately
$428.2 million. The Company is the majority owner and sole general partner of BioMed
Realty, L.P. (the Operating Partnership), which also was formed on April 30,
2004. The Company contributed the net proceeds from the initial public
offering to the Operating Partnership, through which the Company will carry on
its primary operations. On August 13, 2004, the Company, through the Operating Partnership,
acquired 201 Industrial from affiliates for aggregate cash consideration of
approximately $56.5 million using net proceeds of the Companys initial public
offering and an aggregate of approximately 1.5 million limited partnership
units in the Operating Partnership. The cash consideration included $36.8
million related to the repayment of debt and $19.5 million paid to Nektar
Therapeutics, the tenant, for its 49% limited partnership interest in 201
Industrial. The Company also amended and restated its lease with Nektar
Therapeutics, so that a portion of the lease consisting of 45,574 rentable
square feet will expire three years after the closing of the initial public
offering, and the remaining portion of the lease consisting of 126,391 rentable
square feet will expire in October 2016, subject to the tenants option to
renew the lease for two additional ten-year periods. We have prepared the accompanying interim financial statements in
accordance with accounting principles generally accepted in the United States
and in conformity with the rules and regulations of the Securities and Exchange
Commission. The results of operations for the interim periods are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2004. These financial statements should be read in conjunction
with the financial statements included in our registration statement on Form
S-11, as amended, declared effective by the Securities and Exchange Commission
on August 5, 2004. 2. Basis of Presentation and Summary of Significant Accounting Policies Net Income per Unit The partnership agreement does not state the limited partnership interests
on a unit basis, therefore income per limited partnership unit cannot be
computed. Pro Forma Historical Net Income per Unit The pro forma units used to compute basic and diluted net income
per unit represent the number of units issued and assumed to be issued by 201
Industrial. Pro forma units include 1,461,451 units issued to certain
executive officers and directors of the Company in exchange for their interests
in the partnership, 1,300,000 units assumed to be issued at the $15.00 per unit
offering price to fund the $19.5 million used to acquire the interest of the
limited partner who did not receive units, and 2,450,800 units assumed to be
issued at the $15.00 per unit offering price to fund the $36.8 million used to
repay debt related to 201 Industrial. 8




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Rental Property and Impairment of Long Lived Assets Rental properties are recorded at cost. Costs associated with acquiring
and renovating properties are capitalized as incurred. At such times that
events or circumstances indicate that the carrying amount of a property may be
impaired, management makes an assessment of its recoverability by estimating
the future undiscounted cash flows, excluding interest charges, of the
property. If the net carrying amount exceeds the aggregate future cash flows,
201 Industrial would recognize an impairment loss to the extent the net
carrying amount exceeds the fair value of the property. Based upon such
periodic assessments, no impairment has been determined and no rental property
carrying amounts have been adjusted. Major replacements and betterments are capitalized and depreciated over
their estimated useful lives. The cost of maintenance and repairs is expensed
as incurred. Depreciation is provided using the straight-line method using an estimated
life of 40 years for buildings and improvements. Construction Loan Fees and Costs Construction loan fees and extension costs are amortized over the terms of
the related loan on a straight-line basis. Loan fees and costs, net of related
amortization, totaled $71,000 and $29,000 as of June 30, 2004 and December 31,
2003, respectively, and are included in other assets in the accompanying
balance sheets. Rental Revenue and Tenant Recoveries Rental revenue is recognized on a straight-line basis over the lease term.
We include amounts currently recognized as revenue, and expected to be received
in later years, in accrued rent in the accompanying balance sheets. The lease agreement also contains provisions that require the tenant to
reimburse 201 Industrial for real estate taxes, insurance and common area
maintenance costs. Such amounts are included in both revenues and operating
expenses as 201 Industrial is the primary obligor for these expenses and
assumes the risks and rewards of a principal under these arrangements. Leasing Commissions Leasing commissions are amortized on a straight-line basis over the term
of the lease. Leasing commissions, net of related accumulated amortization,
totaled $275,000 and $287,000 as of June 30, 2004 and December 31, 2003,
respectively, and are included in other assets in the accompanying balance
sheets. Fair Value of Financial Instruments The carrying amount of cash, due from affiliates, accrued rent, other
receivables, related party loans, and accounts payable and accrued liabilities
approximate fair value due to the short term nature of these instruments. The
fair value of secured note payable approximated its carrying amount
as of June 30, 2004 and December 31, 2003 and was estimated using discounted cash
flow analyses based on borrowing rates we believe we could obtain with similar
terms and maturities. Income Taxes 201 Industrial has elected to be taxed as a partnership. As a partnership,
201 Industrials income or loss flows through to the partners who are
responsible for including the taxable results of operations on their income tax
returns. 201 Industrial is responsible for a minimum state tax payment of $800
annually, which is included in general and administrative expenses in the
accompanying statements of income. Partners Capital The accompanying financial statements of 201 Industrial include the total
of partners capital for the limited partnership. The partners capital balance
is increased for capital contributions made by the partners and any net income
of 201 Industrial and is reduced for distributions made to the partners and any
net losses of 201 Industrial. The partnership operating agreement contains
provisions for the allocation of profits, losses and proceeds from capital
transactions. Such amounts are generally allocated in accordance with the
partners respective percentage interests. 9




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Operating Segment 201 Industrial operates in one industry segment  real estate ownership,
management and development. Concentration of Credit Risk We maintain our cash at insured financial institutions. The combined
account balances at each institution periodically exceed FDIC insurance
coverage, and, as a result, there is a concentration of credit risk related to
amounts in excess of FDIC limits. We believe that the risk is not significant. We are dependent on rental income from one tenant. The inability of the
tenant to make its lease payments could adversely affect our operations. Use of Estimates The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Unaudited Interim Financial Statements The financial statements as of June 30, 2004 and for the three and six
months ended June 30, 2004 and 2003 are unaudited. In the opinion of
management, such financial statements reflect all adjustments necessary for a
fair presentation of the results of the respective interim periods. All such
adjustments are of a normal, recurring nature. 3. Rental Property Rental property consists of the following: June 30,
    
    December 312004
    
    2003Land
    
    $
    12,000
    
    
    $
    12,000Building and improvements
    
    
    37,588
    
    
    
    37,58849,588
    
    
    
    49,588Less accumulated depreciation
    
    
    (3,029
    )
    
    
    (2,563
    )$
    46,559
    
    
    $
    47,025
 As of June 30, 2003, our rental property is encumbered by deeds of trust
and assignments of rents and leases associated with the property (see note 4).
The net book value of the encumbered property as of June 30, 2004 and December
31, 2003 is $46.6 million and $47.0 million, respectively. We lease space to the tenant under a triple-net lease which expires
October 2016. The lease requires the tenant to pay their portion of all
operating costs, property taxes and insurance. 10




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4. Secured Note Payable Secured note payable is as follows: June 30,
    
    December 312004
    
    2003Note payable (construction loan in the
committed amount of $47.5 million) to a
financial institution, secured by a first trust
deed on a rental property, bearing interest at
the six-month LIBOR rate plus 3.5%, with a
minimum rate of 7% and a maximum rate of 6%
above LIBOR plus 3.5% (an effective rate of 7%
at June 30, 2004), due May 2005
    
    $
    33,762
    
    
    $
    34,208Future principal payments due on secured note payable, as of December 31,
2003, are as follows:2004
    
    
    
    
    
    $
    2005
    
    
    
    
    
    
    33,762$
    33,762
 5. Related Party Loan Related party loan is as follows: June 30,
    
    December 312004
    
    2003Loan payable to limited partner tenant, unsecured, with interest only at 10.5%, due March 2005
    
    $
    3,000
    
    
    $
    3,000
 Interest paid to the related party totaled $79,000 for each of the three
months ended June 30, 2004 and 2003, and $158,000 for each of the six months
ended June 30, 2004 and 2003. 6. Related Party Transactions Management Fees 201 Industrial pays management fees to Bernardo Property Advisors, Inc.
(BPA) and to the general partner, SciMed Prop III, Inc. (SciMed). Both BPA and
SciMed have owners in common with 201 Industrial. Management fees paid to BPA
totaled $8,000 and $7,000 for the three months ended June 30, 2004 and 2003,
respectively, and $15,000 and $14,000 for the six months ended June 30, 2004
and 2003, respectively. Management fees paid to SciMed totaled $3,000 for each
of the three months ended June 30, 2004 and 2003, and $7,000 for each of the
six months ended June 30, 2004 and 2003. Due from Affiliate 201 Industrial has amounts due from tenant (limited partner) related to
expenses which were paid for by 201 Industrial. These amounts totaled $0 and
$16,000 at June 30, 2004 and December 31, 2003, respectively. Due to Tenant 201 Industrial had amounts due to its limited partner primarily related to
accrued interest on the related party loan. As of June 30, 2004 and December
31, 2003, due to tenant amounted to $26,000. Rental Revenue and Tenant Recoveries from Related Party Our tenant is a limited partner in 201 Industrial. As such, all rental
revenue and tenant recoveries are received from a related party. 7. Commitments and Contingencies Litigation To managements knowledge, no litigation is pending against 201
Industrial. Tenant Improvements 201 Industrial has a commitment to pay for a portion of the tenant
improvements under its existing lease. The total amount of 201 Industrials
commitment is approximately $4.6 million. These funds are available under the
existing construction loan and are to be drawn upon once the tenant designs and
builds out the related space. 11




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BERNARDO PROPERTIES 
 COMBINED BALANCE SHEETS (Unaudited)
 (In thousands)
 June 30,
    
    December 31,2004
    
    2003AssetsRental properties, net
    
    $
    45,677
    
    
    $
    46,236Cash
    
    
    677
    
    
    
    416Tenant receivables (including $2 and $7 from related parties at 2004 and 2003, respectively)
    
    
    48
    
    
    
    51Due from affiliates
    
    
    3,193
    
    
    
    8Accrued rent (including $798 and $745 from related parties at 2004 and 2003, respectively)
    
    
    2,277
    
    
    
    2,263Other receivables
    
    
    111
    
    
    
    239Intangible assets, net
    
    
    266
    
    
    
    314Other assets
    
    
    919
    
    
    
    851Total assets
    
    $
    53,168
    
    
    $
    50,378Liabilities and Owners EquitySecured notes payable
    
    $
    41,478
    
    
    $
    41,979Line of credit
    
    
    3,451
    
    
    
    Related party loans
    
    
    200
    
    
    
    100Unsecured term loan
    
    
    175
    
    
    
    175Due to tenants
    
    
    278
    
    
    
    203Accounts payable and accrued liabilities
    
    
    305
    
    
    
    420Assumed lease obligations, net
    
    
    840
    
    
    
    878Total liabilities
    
    
    46,727
    
    
    
    43,755Minority interests
    
    
    5,675
    
    
    
    5,848Owners equity
    
    
    766
    
    
    
    775Total liabilities and owners equity
    
    $
    53,168
    
    
    $
    50,378
 See accompanying notes to combined financial statements. 12




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##### Table of Contents



BERNARDO PROPERTIES 
 COMBINED STATEMENTS OF INCOME (Unaudited)
 (In thousands)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Revenues:Rental (including $436 from
related parties for the three
months ended June 30, 2004 and
2003 and $872 for the six months
ended June 30, 2004 and 2003)
    
    $
    1,486
    
    
    $
    1,484
    
    
    $
    2,968
    
    
    $
    2,966Tenant recoveries (including $3
from related parties for the
three months ended June 30, 2004
and 2003 and $5 for the six
months ended June 30, 2004 and
2003)
    
    
    160
    
    
    
    154
    
    
    
    312
    
    
    
    310Management fees
    
    
    32
    
    
    
    34
    
    
    
    64
    
    
    
    701,678
    
    
    
    1,672
    
    
    
    3,344
    
    
    
    3,346Expenses:Rental operations
    
    
    160
    
    
    
    153
    
    
    
    300
    
    
    
    296Depreciation and amortization
    
    
    284
    
    
    
    294
    
    
    
    568
    
    
    
    587General and administrative
    
    
    51
    
    
    
    49
    
    
    
    109
    
    
    
    107495
    
    
    
    496
    
    
    
    977
    
    
    
    990Income from operations
    
    
    1,183
    
    
    
    1,176
    
    
    
    2,367
    
    
    
    2,356Interest income
    
    
    5
    
    
    
    10
    
    
    
    10
    
    
    
    18Interest expense (including $3 to
related parties for the three
months ended June 30, 2004 and
2003 and $6 for the six months
ended June 30, 2004 and 2003)
    
    
    (826
    )
    
    
    (855
    )
    
    
    (1,678
    )
    
    
    (1,713
    )Income before minority interests
    
    
    362
    
    
    
    331
    
    
    
    699
    
    
    
    661Minority interests
    
    
    (157
    )
    
    
    (150
    )
    
    
    (315
    )
    
    
    (301
    )Net income
    
    $
    205
    
    
    $
    181
    
    
    $
    384
    
    
    $
    360
 See accompanying notes to combined financial statements. 13




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##### Table of Contents



BERNARDO PROPERTIES 
 COMBINED STATEMENTS OF CASH FLOWS (Unaudited)
 (In thousands)
 Six MonthsEnded June 30,2004
    
    2003Operating activities:Net income
    
    $
    384
    
    
    $
    360Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    568
    
    
    
    587Amortization of loan costs
    
    
    30
    
    
    
    30Amortization of acquired leases to rental revenue
    
    
    10
    
    
    
    10Minority interests
    
    
    315
    
    
    
    301Changes in operating assets and liabilities:Tenant receivables
    
    
    3
    
    
    
    Due from affiliates
    
    
    (1
    )
    
    
    Accrued rent
    
    
    (14
    )
    
    
    (110
    )Other receivables
    
    
    128
    
    
    
    119Other assets
    
    
    (107
    )
    
    
    73Due to tenants
    
    
    75
    
    
    
    (162
    )Accounts payable and accrued liabilities
    
    
    (115
    )
    
    
    (59
    )Net cash provided by operating activities
    
    
    1,276
    
    
    
    1,149Financing activities:Borrowings on secured notes payable
    
    
    
    
    
    
    6Advance to affiliate for offering costs
    
    
    (3,184
    )
    
    
    Principal reductions on secured notes payable
    
    
    (501
    )
    
    
    (451
    )Principal draws (paydowns) on line of credit
    
    
    3,451
    
    
    
    144Borrowings from related parties
    
    
    100
    
    
    
    Distributions to minority interests
    
    
    (488
    )
    
    
    (345
    )Distributions to owners
    
    
    (393
    )
    
    
    (415
    )Net cash used in financing activities
    
    
    (1,015
    )
    
    
    (1,061
    )Net increase in cash
    
    
    261
    
    
    
    88Cash at beginning of period
    
    
    416
    
    
    
    248Cash at end of period
    
    $
    677
    
    
    $
    336Supplemental disclosure of cash flow information:Cash paid during the year for interest
    
    $
    1,707
    
    
    $
    1,699Income taxes paid
    
    $
    4
    
    
    $
    12
 See accompanying notes to combined financial statements. 14




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##### Table of Contents



BERNARDO PROPERTIES 
 NOTES TO COMBINED FINANCIAL STATEMENTS
As of June 30, 2004 and December 31, 2003 and for the Three and
Six Month Periods Ended June 30, 2004 and June 30, 2003
(Unaudited) (Tabular dollar amounts in thousands) 1. Organization, Description of Business and Summary of Significant Accounting
Policies Bernardo Properties is not a legal entity but rather a combination of
Bernardo Property Advisors, Inc. (BPA) and three real estate limited
partnerships and a limited liability company (together, the Real Estate
Entities) and their operations as described below. Bernardo Properties is
engaged in the business of acquiring, owning, leasing, managing and selectively
developing laboratory and office space for lease to life science tenants,
including biotechnology and pharmaceutical companies, scientific research
institutions, government agencies and other entities involved in the life
science industry. During all periods presented in the accompanying combined
financial statements, Bernardo Properties consisted of BPA as the management
company and the Real Estate Entities that owned the properties to be contributed to the Operating Partnership (discussed below). Bernardo Properties
had responsibility for the day-to-day operations of such entities. The ultimate
owners of Bernardo Properties were Mr. Alan Gold, Mr. Gary Kreitzer and certain
others (including Mr. John Wilson) who had general partner and minority
ownership interests. On August 11, 2004, BioMed Realty Trust, Inc. (the Company) completed an
initial public offering of 27,000,000 shares of its common stock, par value
$.01 per share. The offering price was $15.00 per share resulting in gross
proceeds of $405.0 million. On August 16, 2004, in connection with the
exercise of the underwriters over-allotment option, the Company issued an
additional 4,050,000 shares of common stock and received gross proceeds of
$60.8 million. The aggregate proceeds to the Company, net of underwriting
discounts and commissions and estimated offering expenses, were approximately
$428.2 million. The Company is the majority owner and sole general partner of BioMed
Realty, L.P. (the Operating Partnership). The Company contributed the net proceeds from the initial public
offering to the Operating Partnership, through which the Company will carry on
its primary operations. From
the completion of its initial public offering on August 11, 2004
through September 17, 2004, the Company, through the Operating
Partnership, completed the acquisition of eleven of the 13 properties
previously described in the Companys initial public offering
prospectus. The acquisitions of the general partnership interest in McKellar Court, the Science Center Drive
property and one building on the Bridgeview property have not yet been
completed. The properties acquired include two of the properties
owned by the Real Estate Entities:  
    
    Bernardo Center Drive, owned by 17190 Bernardo Center Drive,
L.P., was acquired for aggregate cash consideration of approximately
$14.3 million using net proceeds of the Companys initial
public offering and an aggregate of approximately 336,000 limited
partnership units in the Operating Partnership.
    
    Balboa Avenue, owned by 8808 Balboa Avenue, LLC, was acquired
for aggregate cash consideration of approximately $5.0 million
using net proceeds of the Companys initial public offering and
an aggregate of approximately 443,000 limited partnership units in
the Operating Partnership. The
Company expects to acquire the following interests in the two remaining properties owned by the
Real Estate Entities within the next 30 days:  
    
    The general partnership interest in 10165 McKellar Court, L.P., which owns the McKellar Court property, will be
acquired for an aggregate of approximately 167,000 limited
partnership units in the Operating Partnership and the assumption of
approximately $10.9 million of debt. The acquisition of the general partnership interest
will entitle the Company to 75.0% of the gains upon a sale of the property and 21.0% of the operating cash flows.
    
    Science Center Drive, owned by 10255 Science Center Drive,
L.P., will be acquired for aggregate cash consideration of approximately $1.0 million
using net proceeds of the Companys initial public offering, an
aggregate of approximately 375,000 limited partnership units in the
Operating Partnership and the assumption of approximately $11.7 million of debt. We have prepared the accompanying interim financial statements in
accordance with accounting principles generally accepted in the United States
and in conformity with the rules and regulations of the Securities and Exchange
Commission. The results of operations for the interim periods are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2004. These financial statements should be read in conjunction
with the financial statements included in our registration statement on Form
S-11, as amended, declared effective by the Securities and Exchange Commission
on August 5, 2004. 15




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##### Table of Contents



As of June 30, 2004 and December 31, 2003, the Real Estate Entities owned
the following rental properties: Number
    
    Numberof
    
    of
    
    RentableOwner
    
    Property Name
    
    Location
    
    Buildings
    
    Tenants
    
    Square Feet17190 Bernardo Center Drive, L.P
    
    17190 Bernardo Center Drive
    
    San Diego, California
    
    
    1
    
    
    
    1
    
    
    
    61,28610255 Science Center Drive, L.P.
    
    10255 Science Center Drive
    
    San Diego, California
    
    
    1
    
    
    
    1
    
    
    
    52,8008808 Balboa Avenue, LLC.
    
    8808 Balboa Avenue
    
    San Diego, California
    
    
    1
    
    
    
    2
    
    
    
    35,34410165 McKellar Court, L.P.
    
    10165 McKellar Court
    
    San Diego, California
    
    
    1
    
    
    
    1
    
    
    
    72,863222,293
 Principles of Combination The combined financial statements represent the historical financial
statements of Bernardo Properties. They include the accounts of BPA and the
Real Estate Entities. All significant intercompany accounts and transactions
have been eliminated in the combined financial statements. Rental Properties and Impairment of Long Lived Assets Rental properties are recorded at cost (see Purchase Accounting for
Acquisition of Rental Properties). Costs associated with acquiring and
renovating properties are capitalized as incurred. At such times that events or
circumstances indicate that the carrying amount of a property may be impaired,
management makes an assessment of its recoverability by estimating the future
undiscounted cash flows, excluding interest charges, of the property. If the
net carrying amount exceeds the aggregate future cash flows, Bernardo
Properties would recognize an impairment loss to the extent the net carrying
amount exceeds the fair value of the property. Based upon such periodic
assessments, no impairment has been determined and no rental property carrying
amounts have been adjusted. Major replacements and betterments are capitalized and depreciated over
their estimated useful lives. The cost of maintenance and repairs is expensed
as incurred. Depreciation is provided using the straight-line method using an estimated
life of 40 years for buildings and improvements. Purchase Accounting for Acquisition of Rental Properties Bernardo Properties allocates the purchase price of properties to tangible
and identified intangible assets acquired based on their fair values. In making
estimates of fair value for purposes of allocating purchase price, management
utilizes a number of sources, including independent appraisals that may be
obtained in connection with the acquisition or financing of the respective
property and other market data. Management also considers information obtained
about each property as a result of its pre-acquisition due diligence, marketing
and leasing activities in estimating the fair value of the tangible and
intangible assets acquired. Intangible assets are evaluated when a property is purchased with a lease
or leases in place. Of the four properties, two were purchased with leases in
place. The intangible portion of the fair value was allocated to above-market
and below-market leases. Above-market and below-market in-place lease values for owned properties
are recorded based on the present value (using an interest rate which reflects
the risks associated with the leases acquired) of the difference between (i)
the contractual amounts to be paid pursuant to the in-place leases and (ii)
managements estimate of fair market lease rates for the corresponding in-place
leases, measured over a period equal to the remaining non-cancelable term of
the lease. Of the two properties acquired with in-place leases, management
concluded, based on the factors discussed above, that one lease was
above-market and one was below-market. The above-market lease value (included
in intangible assets in the accompanying combined balance sheets) is amortized
as a reduction of rental revenue over the remaining non-cancelable terms of the
respective lease. The below-market lease value (presented in the accompanying
combined balance sheets as assumed lease obligations) is amortized as an
increase to rental revenue over the remaining non-cancelable term of the
respective lease. For any properties purchased subsequent to June 30, 2001, Bernardo
Properties will calculate the aggregate value of intangible assets acquired
based on the difference between (i) the property valued with existing in-place
leases adjusted to market rental rates and (ii) the property valued as if
vacant. The total amount of other intangible assets acquired is allocated to
in-place lease values and then to customer relationship value, if any. Factors
considered by management in their analysis of in-place lease values include an
estimate of cash flows received during the expected lease-up periods, carrying
costs during expected lease-up periods considering current market conditions,
and costs to execute similar leases. In estimating carrying costs, management
includes real estate taxes, insurance and other operating expenses and
estimates of lost rental at market rates during the expected lease-up periods.
Management also estimates costs to execute similar leases including leasing
commissions, legal and other related expenses. Customer relationship intangible
value is based on managements evaluation of the specific characteristics of
each tenants lease and Bernardo Properties 16




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##### Table of Contents



overall relationship with that respective tenant. Characteristics
considered by management include relationships with the tenant, growth
prospects for developing new business with the tenant, the tenants credit
quality and expectations of lease renewals, among other factors. As all of our
properties were acquired prior to June 30, 2001, there was no value allocated
to in-place leases or to customer relationship value for either of the two
properties acquired with leases in-place. Restricted Cash Restricted cash of $85,000 as of June 30, 2004 and December 31, 2003
consists of funds held by Bernardo Properties as required by a lender for
future debt service requirements, and is included in cash in the accompanying
combined balance sheets. Loan Fees and Costs Fees and costs incurred in obtaining long-term financing are amortized
over the related loan terms on a straight-line basis, which approximates the
effective interest method. Loan fees and costs, net of related accumulated
amortization, totaled $271,000 and $301,000 as of June 30, 2004 and December
31, 2003, respectively, and are included in other assets in the accompanying
combined balance sheets. Rental Revenue and Tenant Recoveries Rental revenue is recognized on a straight-line basis over the lease term.
We include amounts currently recognized as revenue, and expected to be received
in later years, in accrued rent in the accompanying balance sheets. The lease agreements also contain provisions that generally require the
tenants to reimburse Bernardo Properties for real estate taxes, insurance and
common area maintenance costs. Such amounts are included in both revenues and
operating expenses as Bernardo Properties is the primary obligor for these
expenses and assumes the risks and rewards of a principal under these
arrangements. Interest Income Interest income was $5,000 and $10,000 for the three months ended June 30,
2004 and 2003, respectively, and $10,000 and $18,000 for the six months ended
June 30, 2004 and 2003, respectively. Leasing Commissions Leasing commissions are amortized on a straight-line basis over the term
of the lease. Leasing commissions, net of related accumulated amortization,
totaled $86,000 and $95,000 as of June 30, 2004 and December 31, 2003,
respectively, and are included in other assets in the accompanying balance
sheets. Fair Value of Financial Instruments The carrying amount of cash, due from affiliates, accrued rent, other
receivables, related party loans, accounts payable and accrued liabilities and
line of credit approximate fair value due to the short term nature of these
instruments. The fair value of secured notes payable approximated their
carrying amounts as of June 30, 2004 and December 31, 2003. Fair value was
estimated using discounted cash flow analyses based on borrowing rates we
believe we could obtain with similar terms and maturities. Income Taxes Bernardo Properties holds each of its four owned properties in separate
entities. Bernardo Properties elected to have three of these entities taxed as
partnerships and one as a limited liability company. BPA, with the
consent of its shareholders, elected to be taxed as an S
corporation. As such, the related
income or loss flows through to the partners, members and
shareholders who are responsible
for including the taxable results of operations in their income tax returns.
Bernardo Properties principal responsibility relates to the annual minimum
state tax liability. These tax expenses are included in general and
administrative expenses in the accompanying combined statements of income. Owners Equity The accompanying combined financial statements of Bernardo Properties
include the total of stockholders equity for BPA, members equity for the
limited liability company and partners equity for the limited partnerships.
The combined owners equity balance is increased for capital contributions made
by the owners and any net income of Bernardo Properties and is reduced for 17




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##### Table of Contents



distributions made to the owners and any net losses of Bernardo
Properties. The various S-corporation, partnership and operating agreements of
the entities comprising Bernardo Properties contain provisions for the
allocation of profits, losses and proceeds from capital transactions. Such
amounts are generally allocated in accordance with the owners respective
percentage interests. Operating Segment Bernardo Properties operates in one industry segment  real estate
ownership, management and development. Concentration of Credit Risk We maintain our cash at insured financial institutions. The combined
account balances at each institution periodically exceeds FDIC insurance
coverage, and, as a result, there is a concentration of credit risk related to
amounts on deposit in excess of FDIC limits. We believe that the risk is not
significant. We are dependent on rental payments from a limited number of tenants and
the inability of any single tenant to make its lease payments could adversely
affect our operations. Bernardo Properties currently has five leases with
tenants, and three of Bernardo Properties four properties are single-tenant
properties. At June 30, 2004 and December 31, 2003, three of Bernardo
Properties five tenants account for 91.9% and 92.2%,
respectively, of total accrued rent. For each of
the three and six month periods ended June 30, 2004, three of Bernardo
Properties five tenants accounted for 89.1% of total rental revenue. All of
the properties are located in the State of California. Use of Estimates The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires us to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Unaudited Interim Financial Statements The financial statements as of June 30, 2004 and for the three and six
months ended June 30, 2004 and 2003 are unaudited. In the opinion of
management, such financial statements reflect all adjustments necessary for a
fair presentation of the results of the respective interim periods. All such
adjustments are of a normal, recurring nature. 2. Rental Properties Rental properties are as follows: June 30,
    
    December 31,2004
    
    2003Land
    
    $
    6,515
    
    
    $
    6,515Buildings and improvements
    
    
    44,983
    
    
    
    44,98351,498
    
    
    
    51,498Less accumulated depreciation
    
    
    (5,821
    )
    
    
    (5,262
    )$
    45,677
    
    
    $
    46,236
 All of Bernardo Properties rental properties are encumbered by deeds of
trust and assignments of the rents and leases associated with the properties.
The net book value of the encumbered properties as of June 30, 2004 and
December 31, 2003 was $45.7 million and $46.2 million, respectively. Bernardo
Properties generally leases space under non-cancelable leases which have
remaining terms of three to 13 years. Certain tenants are also obligated to pay
for expenses under absolute net leases or to reimburse Bernardo Properties for
specific operating expenses. 3. Intangible Assets and Assumed Lease Obligations Bernardo Properties intangible assets and assumed lease obligations are
as follows: June 30,
    
    December 31,2004
    
    2003Intangible assets:Above-market lease
    
    $
    798
    
    
    $
    798Less accumulated amortization
    
    
    (532
    )
    
    
    (484
    )
 18




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##### Table of Contents



June 30,
    
    December 31,2004
    
    2003Intangible assets, net
    
    $
    266
    
    
    $
    314Assumed lease obligations:Below-market lease
    
    $
    1,217
    
    
    $
    1,217Less accumulated amortization
    
    
    (377
    )
    
    
    (339
    )Assumed lease obligations, net
    
    $
    840
    
    
    $
    878
 4. Secured Notes Payable Secured notes payable are as follows: June 30,
    
    December 31,2004
    
    2003Notes payable to financial institutions,
secured by first trust deeds on rental
properties, bearing interest at fixed
rates ranging from 7.65% to 8.56% and due
at various dates through 2011
    
    $
    36,402
    
    
    $
    36,784Notes payable to savings and loan,
secured by first and second trust deeds
on rental properties, bearing interest at
the three-month LIBOR rate plus 2.75%,
with a minimum rate of 6.25% and a
maximum rate of 12.75% (an effective rate
of 6.25% at June 30, 2004), due at
various dates through 2007
    
    
    4,792
    
    
    
    4,911Note payable to bank, guaranteed by
certain officers of Bernardo Properties,
bearing interest at prime plus 1.25% and
due in 2009
    
    
    284
    
    
    
    284$
    41,478
    
    
    $
    41,979
 5. Line of Credit On April 6, 2004, BPA obtained an unsecured revolving credit facility from
U.S. Bank, National Association to fund offering costs and acquisition deposits
for the Company. The facility provides for borrowings up to $3.5 million,
bears interest at the prime rate (an effective rate of 4.25% at June 30, 2004)
and matures on the earlier of April 4, 2005 or the date of the Companys
initial public offering. The facility was personally guaranteed by the three
principal officers of BPA. As of June 30, 2004, BPA had drawn $3.4 million on the credit facility and
advanced $3.2 million to the Company to cover offering costs and acquisition
deposits. In August 2004, following the completion of the offering, the
Company repaid the advance to BPA, and BPA repaid and cancelled the credit
facility. 6. Related Party Loans Related party loans are as follows: June 30,
    
    December 31,2004
    
    2003Loans payable to certain officers family members, unsecured, with interest only at 11%, due January 2005
    
    $
    100
    
    
    $
    100Loans payable to certain officers
    
    
    100
    
    
    
    $
    200
    
    
    $
    100
 Interest paid to related parties totaled $3,000 for each of the three
months ended June 30, 2004 and June 30, 2003 and $6,000 for each of the six
months ended June 30, 2004 and June 30, 2003. 7. Unsecured Term Loan In conjunction with the purchase of one of the properties, Bernardo
Properties entered into an unsecured note payable in the amount of $175,000.
The note requires payment of interest only, paid monthly at 8.75% per annum
through August 2004, at which time the principal balance of the note was
repaid. 8. Related Party Transactions Management Fees Management fees paid to BPA by each of the properties, which were
eliminated in combination, totaled $37,000 and $35,000 for the three months
ended June 30, 2004 and 2003, respectively, and totaled $75,000 and $70,000 for
the six months ended June 30, 2004 and 2003, respectively. Additionally,
management fees are paid to the properties by certain of our tenants. These
fees amounted to $40,000 and $39,000 for the three months ended June 30, 2004
and 2003, respectively, and $80,000 and $78,000 for the six months ended June
30, 2004 and 2003, respectively. 19




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##### Table of Contents



Tenant Receivables Bernardo Properties had amounts due from tenants for certain costs of
rental operations which had not yet been reimbursed at June 30, 2004 and
December 31, 2003. As of June 30, 2004 and December 31, 2003, related party
tenant receivables amounted to $2,000 and $7,000, respectively. Due from Affiliates Bernardo Properties had amounts due from the general partner of two Real
Estate Entities as a result of the payment of minimum state taxes for the
general partner. As of June 30, 2004 and December 31, 2003, the amounts due
from the general partner of $9,000 and $8,000, respectively, are included in
due from affiliates in the accompanying combined balance sheets. In
connection with the initial public offering discussed in Note 1,
BPA loaned approximately $3.2 million to the Company to fund offering
and acquisition costs incurred prior to the offering. In August 2004, following
completion of the offering, the Company repaid the advance to BPA. Due to Tenants Bernardo Properties had amounts due to two of its limited partner tenants
primarily related to refunds of overpaid property taxes and insurance and
accrued interest on related party loans. As of June 30, 2004 and December 31,
2003, due to tenants amounted to $278,000 and $203,000, respectively. Rental Revenue and Recoveries from Related Parties One of our tenants is a limited partner in the limited partnership that
owns the property it occupies. This tenant incurred rents amounting to
$436,000 for each of the three months ended June 30, 2004 and 2003 and
$872,000 for each of the six months ended June 30, 2004 and 2003. This tenant
also paid tenant recoveries amounting to $3,000 for each of the three months
ended June 30, 2004 and 2003 and $5,000 for each of the six months ended June
30, 2004 and 2003. 9. Commitments and Contingencies Litigation To managements knowledge, no litigation is pending against Bernardo
Properties. Lease Commitment BPA subleases the office space for its principal executive offices. The
sublease, which expires in November 2005, requires BPA to pay annual rental
payments of approximately $52,000 and $56,000 for the years ending December 31,
2004 and 2005, respectively. 20




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report. We make
statements in this report that are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. In particular,
statements pertaining to our capital resources, portfolio performance and
results of operations contain forward-looking statements. Forward-looking
statements involve numerous risks and uncertainties and you should not rely on
them as predictions of future events. Forward-looking statements depend on
assumptions, data or methods which may be incorrect or imprecise, and we may
not be able to realize them. We do not guarantee that the transactions and
events described will happen as described (or that they will happen at all).
You can identify forward-looking statements by the use of forward-looking
terminology such as believes, expects, may, will, should, seeks,
approximately, intends, plans, estimates or anticipates or the
negative of these words and phrases or similar words or phrases. You can also
identify forward-looking statements by discussions of strategy, plans or
intentions. The following factors, among others, could cause actual results
and future events to differ materially from those set forth or contemplated in
the forward-looking statements: general risks affecting the real estate
industry (including, without limitation, the inability to enter into or renew
leases, dependence on tenants financial condition, and competition from other
developers, owners and operators of real estate); adverse economic or real
estate developments in the life science industry or the California region;
risks associated with the availability and terms of financing and the use of
debt to fund acquisitions and developments; failure to manage effectively our
growth and expansion into new markets, or to complete or integrate acquisitions
successfully; risks and uncertainties affecting property development and
construction; risks associated with downturns in the national and local
economies, increases in interest rates, and volatility in the securities
markets; potential liability for uninsured losses and environmental
contamination; risks associated with our potential failure to qualify as a REIT
under the Internal Revenue Code of 1986, as amended, or the Code, and possible
adverse changes in tax and environmental laws; and risks associated with our
dependence on key personnel whose continued service is not guaranteed. We
disclaim any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise. Critical Accounting Policies The following discussion and analysis of financial condition and results
of operations are based upon our financial statements, and the notes thereto,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America, or GAAP. The preparation of these
financial statements requires us to make a number of estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
On an ongoing basis, we evaluate our estimates and assumptions based upon
historical experience and various other factors and circumstances. We believe
that our estimates and assumptions are reasonable for our current
circumstances; however, actual results may differ from these estimates and
assumptions under different future conditions. We believe that the estimates and assumptions that are most important to
the portrayal of our financial condition and results of operations, in that
they require our most subjective judgments, form the basis for the accounting
policies deemed to be most critical. These critical accounting policies include
our estimates of useful lives in calculating depreciation expense on our rental
properties and the ultimate recoverability, or impairment, of each rental
asset. If actual useful lives are different from our estimates this could
result in changes to the results of our operations. Future adverse changes in
market conditions or poor operating results of our rental properties could
result in losses or an inability to recover the carrying value of the
properties that may not be reflected in the properties current carrying value,
thereby possibly requiring an impairment charge in the future. A more complete discussion of our critical accounting policies can be
found in our registration statement on Form S-11, as amended, declared
effective by the Securities and Exchange Commission on August 5, 2004. Overview BioMed Realty Trust, Inc. is a Maryland corporation formed in April 2004
to succeed to the business of Bernardo Property Advisors, Inc. and its
affiliated entities, or Bernardo. We intend to focus on acquiring, owning,
leasing, managing and selectively developing laboratory and office space for
lease to life science tenants, including biotechnology and pharmaceutical
companies, scientific research institutions, government agencies and other
entities involved in the life science industry. Following our initial public offering completed in August 2004, affiliates
of Bernardo will have contributed five properties that were under their common management
to us in exchange for 2,870,565 units in our operating partnership of which we
are the majority owner and sole general partner and through which we will carry
on our primary operations. We refer to these properties as the contribution
properties, and the owner of one of these properties, Inhale 201 Industrial
Road, L.P., or 201 Industrial, is considered for accounting purposes to be our
acquirer. As such, the historical financial statements presented herein for 201
Industrial were prepared on a stand-alone basis. The financial statements of
the four remaining contribution properties are presented herein on an
historical combined basis. Management does not consider the financial condition
and operating results of 201 Industrial on a stand-alone basis to be indicative
of the operating results of Bernardo taken as a whole. Therefore, the following
discussion relates to the financial condition 21




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##### Table of Contents



and operating results of Bernardo and the five contribution properties
under Bernardos common management on a combined historical basis, which we
refer to as the Combined Contribution Properties. Management believes this
presentation provides a more meaningful discussion of the financial condition
and operating results of Bernardo and the five properties over which it has
provided continuous common management throughout the applicable reporting
periods. In order to present these results on a meaningful combined basis, the
historical combined financial information for all periods presented includes
combining entries to reflect the partners capital of 201 Industrial which was
not owned by management. The following table sets forth the basis for presenting the historical
combined financial information of the Combined Contribution Properties. Inhale
    
    
    
    
    
    
    
    
    
    Combined201 Industrial
    
    Bernardo
    
    Combining
    
    ContributionRoad, L.P.
    
    Properties
    
    Entries
    
    PropertiesThree Months ended June 30, 2004:Revenues:Rental
    
    $
    1,575
    
    
    $
    1,486
    
    
    
    
    
    
    $
    3,061Tenant recoveries
    
    
    141
    
    
    
    160
    
    
    
    
    
    
    
    301Management fees
    
    
    8
    
    
    
    32
    
    
    
    
    
    
    
    401,724
    
    
    
    1,678
    
    
    
    
    
    
    
    3,402Expenses:Rental operations
    
    
    154
    
    
    
    160
    
    
    
    
    
    
    
    314Depreciation and amortization
    
    
    236
    
    
    
    284
    
    
    
    
    
    
    
    520General and administrative
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    51390
    
    
    
    495
    
    
    
    
    
    
    
    885Income from operations
    
    
    1,334
    
    
    
    1,183
    
    
    
    
    
    
    
    2,517Interest income
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Interest expense
    
    
    (703
    )
    
    
    (826
    )
    
    
    
    
    
    
    (1,529
    )Income before minority interests
    
    
    631
    
    
    
    362
    
    
    
    
    
    
    
    993Minority interests
    
    
    
    
    
    
    (157
    )
    
    
    (370
    )
    
    
    (527
    )Net income
    
    $
    631
    
    
    $
    205
    
    
    $
    (370
    )
    
    $
    466
 Inhale
    
    
    
    
    
    
    
    
    
    Combined201 Industrial
    
    Bernardo
    
    Combining
    
    ContributionRoad, L.P.
    
    Properties
    
    Entries
    
    PropertiesThree Months ended June 30, 2003:Revenues:Rental
    
    $
    1,575
    
    
    $
    1,484
    
    
    
    
    
    
    $
    3,059Tenant recoveries
    
    
    178
    
    
    
    154
    
    
    
    
    
    
    
    332Management fees
    
    
    7
    
    
    
    34
    
    
    
    
    
    
    
    411,760
    
    
    
    1,672
    
    
    
    
    
    
    
    3,432Expenses:Rental operations
    
    
    247
    
    
    
    153
    
    
    
    
    
    
    
    400Depreciation and amortization
    
    
    237
    
    
    
    294
    
    
    
    
    
    
    
    531General and administrative
    
    
    2
    
    
    
    49
    
    
    
    
    
    
    
    51486
    
    
    
    496
    
    
    
    
    
    
    
    982Income from operations
    
    
    1,274
    
    
    
    1,176
    
    
    
    
    
    
    
    2,450Interest income
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Interest expense
    
    
    (718
    )
    
    
    (855
    )
    
    
    
    
    
    
    (1,573
    )Income before minority interests
    
    
    556
    
    
    
    331
    
    
    
    
    
    
    
    887Minority interests
    
    
    
    
    
    
    (150
    )
    
    
    (326
    )
    
    
    (476
    )Net income
    
    $
    556
    
    
    $
    181
    
    
    $
    (326
    )
    
    $
    411
 22




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##### Table of Contents



Inhale
    
    
    
    
    
    
    
    
    
    Combined201 Industrial
    
    Bernardo
    
    Combining
    
    ContributionRoad, L.P.
    
    Properties
    
    Entries
    
    PropertiesSix Months ended June 30, 2004:Revenues:Rental
    
    $
    3,137
    
    
    $
    2,968
    
    
    
    
    
    
    $
    6,105Tenant recoveries
    
    
    284
    
    
    
    312
    
    
    
    
    
    
    
    596Management fees
    
    
    15
    
    
    
    64
    
    
    
    
    
    
    
    793,436
    
    
    
    3,344
    
    
    
    
    
    
    
    6,780Expenses:Rental operations
    
    
    304
    
    
    
    300
    
    
    
    
    
    
    
    604Depreciation and amortization
    
    
    478
    
    
    
    568
    
    
    
    
    
    
    
    1,046General and administrative
    
    
    3
    
    
    
    109
    
    
    
    
    
    
    
    112785
    
    
    
    977
    
    
    
    
    
    
    
    1,762Income from operations
    
    
    2,651
    
    
    
    2,367
    
    
    
    
    
    
    
    5,018Interest income
    
    
    1
    
    
    
    10
    
    
    
    
    
    
    
    11Interest expense
    
    
    (1,389
    )
    
    
    (1,678
    )
    
    
    
    
    
    
    (3,067
    )Income before minority interests
    
    
    1,263
    
    
    
    699
    
    
    
    
    
    
    
    1,962Minority interests
    
    
    
    
    
    
    (315
    )
    
    
    (740
    )
    
    
    (1,055
    )Net income
    
    $
    1,263
    
    
    $
    384
    
    
    $
    (740
    )
    
    $
    907
 Inhale
    
    
    
    
    
    
    
    
    
    Combined201 Industrial
    
    Bernardo
    
    Combining
    
    ContributionRoad, L.P.
    
    Properties
    
    Entries
    
    PropertiesSix Months ended June 30, 2003:Revenues:Rental
    
    $
    3,137
    
    
    $
    2,966
    
    
    
    
    
    
    $
    6,103Tenant recoveries
    
    
    357
    
    
    
    310
    
    
    
    
    
    
    
    667Management fees
    
    
    14
    
    
    
    70
    
    
    
    
    
    
    
    843,508
    
    
    
    3,346
    
    
    
    
    
    
    
    6,854Expenses:Rental operations
    
    
    435
    
    
    
    296
    
    
    
    
    
    
    
    731Depreciation and amortization
    
    
    475
    
    
    
    587
    
    
    
    
    
    
    
    1,062General and administrative
    
    
    5
    
    
    
    107
    
    
    
    
    
    
    
    112915
    
    
    
    990
    
    
    
    
    
    
    
    1,905Income from operations
    
    
    2,593
    
    
    
    2,356
    
    
    
    
    
    
    
    4,949Interest income
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    18Interest expense
    
    
    (1,443
    )
    
    
    (1,713
    )
    
    
    
    
    
    
    (3,156
    )Income before minority interests
    
    
    1,150
    
    
    
    661
    
    
    
    
    
    
    
    1,811Minority interests
    
    
    
    
    
    
    (301
    )
    
    
    (666
    )
    
    
    (967
    )Net income
    
    $
    1,150
    
    
    $
    360
    
    
    $
    (666
    )
    
    $
    844
 Results of Operations of Our Combined Contribution Properties Following is a comparison, for the three months ended June 30, 2004 and
2003 and for the six months ended June 30, 2004 and 2003 of the combined
operating results of the Combined Contribution Properties. The Combined
Contribution Properties were owned or controlled by Bernardo Property Advisors,
Inc., Inhale 201 Industrial Road, L.P., 10255 Science Center Drive, L.P., 8808
Balboa Avenue, LLC, 17190 Bernardo Center Drive, L.P., and 10165 McKellar Court
L.P. Comparison of Three Months Ended June 30, 2004 to Three Months Ended June 30,
2003 Rental revenue remained constant at approximately $3.1 million for the
three months ended June 30, 2004 and for the three months ended June 30, 2003.
This is due to the company recognizing revenue on a straight-line basis as
required by GAAP. Tenant recoveries, which includes insurance, property taxes and other
operating expenses paid by the tenants, decreased $31,000, or 9.3%, to $301,000
for the three months ended June 30, 2004 compared to $332,000 for the three
months ended June 30, 2003. The decrease resulted from a reduction in the
property tax assessment at the 201 Industrial property due to a property tax
appeal process concluded in October 2003 and a reduction in the cost of
earthquake insurance. 23




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##### Table of Contents



Management fees are primarily comprised of fees paid by the tenants to the
property owner pursuant to the leases. These management fees were $40,000 for
the three months ended June 30, 2004 compared to $41,000 for the three months
ended June 30, 2003. Rental operations expenses decreased by $86,000, or 21.5%, to $314,000 for
the three months ended June 30, 2004 compared to $400,000 for the three months
ended June 30, 2003. The decrease in operating expenses, which are
substantially all recoverable from the tenants, resulted primarily from a
decrease in assessed property taxes and a decrease in the cost of earthquake
insurance at the 201 Industrial property. Depreciation and amortization decreased by $11,000 to $520,000 for the
three months ended June 30, 2004 compared to $531,000 for the three months
ended June 30, 2003. General and administrative expenses remained constant at $51,000 for the
three months ended June 30, 2004 and for the three months ended June 30, 2003. Interest income was $5,000 for the three months ended June 30, 2004
compared to $10,000 for the three months ended June 30, 2003. The decrease was
a result of lower cash balances in 2004. Interest expense decreased by $44,000, or 2.8%, for the three months ended
June 30, 2004 compared to the three months ended June 30, 2003. The decrease
resulted from reductions in the principal balances of secured notes payable
outstanding during the applicable periods. Minority interests increased by $51,000, or 10.7%, to $527,000 for the
three months ended June 30, 2004 compared to $476,000 for the three months
ended June 30, 2003. The increase in minority interests is a result of
allocation of net income to non-controlling interests. Comparison of Six Months Ended June 30, 2004 to Six Months Ended June 30, 2003 Rental revenue remained constant at approximately $6.1 million for the six
months ended June 30, 2004 and for the six months ended June 30, 2003. This is
due to the company recognizing revenue on a straight-line basis as required by
GAAP. Tenant recoveries, which includes insurance, property taxes and other
operating expenses paid by the tenants, decreased $71,000, or 10.6%, to
$596,000 for the six months ended June 30, 2004 compared to $667,000 for the
six months ended June 30, 2003. The decrease resulted from a reduction in the
property tax assessment at the 201 Industrial property due to a property tax
appeal process concluded in October 2003 and a reduction in the cost of
earthquake insurance. Management fees are primarily comprised of fees paid by the tenants to the
property owner pursuant to the leases. These management fees were $79,000 for
the six months ended June 30, 2004 compared to $84,000 for the six months ended
June 30, 2003. Rental operations expenses decreased by $127,000, or 17.4%, to $604,000
for the six months ended June 30, 2004 compared to $731,000 for the six months
ended June 30, 2003. The decrease in operating expenses, which are
substantially all recoverable from the tenants, resulted primarily from a
decrease in assessed property taxes and a decrease in the cost of earthquake
insurance at the 201 Industrial property. Depreciation and amortization remained constant at approximately $1.0
million for the six months ended June 30, 2004 and for the six months ended
June 30, 2003. General and administrative expenses remained constant at $112,000 for the
six months ended June 30, 2004 and for the six months ended June 30, 2003. Interest income was $11,000 for the six months ended June 30, 2004
compared to $18,000 for the six months ended June 30, 2003. The decrease was a
result of lower cash balances in 2004. Interest expense decreased by $89,000, or 2.8%, for the six months ended
June 30, 2004 compared to the six months ended June 30, 2003. The decrease
resulted from reductions in the principal balances of secured notes payable
outstanding during the applicable periods. 24




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##### Table of Contents



Minority interests increased by $88,000, or 9.1%, to approximately $1.1
million for the six months ended June 30, 2004 compared to $967,000 for the six
months ended June 30, 2003. The increase in minority interests is a result of
allocation of net income to non-controlling interests. Liquidity and Capital Resources Our short-term liquidity requirements consist primarily of funds to pay
for operating expenses and other expenditures directly associated with our
properties, including:  
    
    interest expense and scheduled principal payments on outstanding indebtedness,
    
    general and administrative expenses,
    
    future distributions expected to be paid to our stockholders, and
    
    unanticipated capital expenditures, tenant improvements and leasing commissions. We historically have satisfied our short-term liquidity requirements
through our existing working capital and cash provided by our operations. Our
rental revenue, provided by our triple-net leases, and minimal unreimbursed
operating expenses generally provide cash inflows to meet our debt service
obligations, pay general and administrative expenses, and fund regular
distributions. Our long-term liquidity requirements consist primarily of funds to pay for
scheduled debt maturities, renovations, expansions and other non-recurring
capital expenditures that need to be made periodically and the costs associated
with acquisitions of properties that we pursue. Historically, we have satisfied
our long-term liquidity requirements through various sources of capital,
including our existing working capital, cash provided by operations and
long-term mortgage debt. Following our initial public offering completed in August 2004, we
obtained an unsecured revolving credit facility with a group of banks led by
U.S. Bank, National Association. The facility provides for borrowings up to
$100.0 million and bears interest at a rate ranging between LIBOR plus 1.20%
and LIBOR plus 1.80%, depending on our overall leverage. The facility matures
in August 2007 with an option to extend the term for one year. The facility
includes an accordion feature which would allow us to increase the borrowings
up to $200.0 million, subject to the lenders ability to syndicate the
additional portion of the facility. We have not yet drawn any funds on this revolving credit facility. Cash Distribution Policy We will elect to be taxed as a REIT under the Code commencing as of our
taxable year ending December 31, 2004. To qualify as a REIT, we must meet a
number of organizational and operational requirements, including the
requirement that we distribute currently at least 90% of our ordinary taxable
income to our stockholders. It is our intention to comply with these
requirements and maintain our REIT status. As a REIT, we generally will not be
subject to corporate federal, state or local income taxes on taxable income we
distribute currently (in accordance with the Code and applicable regulations)
to our stockholders. If we fail to qualify as a REIT in any taxable year, we
will be subject to federal, state and local income taxes at regular corporate
rates and may not be able to qualify as a REIT for subsequent tax years. Even
if we qualify for federal taxation as a REIT, we may be subject to certain
state and local taxes on our income and to federal income and excise taxes on
our undistributed taxable income, i.e., taxable income not distributed in the
amounts and in the time frames prescribed by the Code and applicable
regulations thereunder. Inflation Some of our leases contain provisions designed to mitigate the adverse
impact of inflation. These provisions generally increase rental rates during
the terms of the leases either at fixed rates or indexed escalations (based on
the Consumer Price Index or other measures). We may be adversely impacted by
inflation on the leases that do not contain indexed escalation provisions. In
addition, most of our leases require the tenant to pay an allocable share of
operating expenses, including common area maintenance costs, real estate taxes
and insurance. This may reduce our exposure to increases in costs and operating
expenses resulting from inflation, assuming our properties remain leased and
tenants fulfill their obligations to reimburse us for such expenses. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk Our future income, cash flows and fair values relevant to financial
instruments depend upon prevailing market interest rates. Market risk is the
exposure to loss resulting from changes in interest rates, foreign currency
exchange rates, commodity prices and equity prices. The primary market risk to
which we believe we are exposed is interest rate risk. Many factors, including
governmental 25




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##### Table of Contents



monetary and tax policies, domestic and international economic and
political considerations and other factors that are beyond our control
contribute to interest rate risk. As of June 30, 2004, our debt included fixed-rate notes with a carrying
value of $39.8 million. Changes in market interest rates impact the fair value
of our fixed-rate debt but have no impact on interest incurred or cash flow.
The sensitivity analysis related to our fixed-rate debt assumes an immediate
100 basis point move in interest rates from their actual June 30, 2004 levels,
with all other variables held constant. A 100 basis point increase in market interest rates would result in a
decrease in the fair value of our fixed-rate debt by approximately $1.4 million
at June 30, 2004. A 100 basis point decrease in market interest rates would
result in an increase in the fair value of our fixed-rate debt by approximately
$1.5 million at June 30, 2004. As of June 30, 2004, a 100 basis point increase
or decrease in interest rates on our variable rate loans would have increased
or decreased our interest expense by approximately $3,000 annually. This
nominal impact reflects the fact that three of our four variable-rate loans
have interest rate floors whereby a 100 basis point increase or decrease in the
associated interest rates has no impact on the related interest expense. In order to modify and manage the interest rate characteristics of our
outstanding debt and to limit the effects of interest rate risks on our
operations, we may utilize a variety of financial instruments, including
interest rate swaps, caps, floors and other interest rate exchange contracts.
The use of these types of instruments to hedge our exposure to changes in
interest rates carries additional risks, including counterparty credit risk,
the enforceability of hedging contracts and the risk that unanticipated and
significant changes in interest rates will cause a significant loss of basis in
the contract. To limit counterparty credit risk we will seek to enter into such
agreements with major financial institutions with high credit ratings. There
can be no assurance that we will be able to adequately protect against the
foregoing risks and will ultimately realize an economic benefit that exceeds
the related amounts incurred in connection with engaging in such hedging
activities. 
 Item 4. Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commissions rules and forms and that such
information is accumulated and communicated to our management, including our
chief executive officer and chief financial officer, as appropriate, to allow
for timely decisions regarding required disclosure. In designing and evaluating
the disclosure controls and procedures, management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and
management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. As required by Securities and Exchange Commission Rule 13a-15(b), we
carried out an evaluation, under the supervision and with the participation of
our management, including our chief executive officer and chief financial
officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the quarter covered by this report.
Based on the foregoing, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures were effective at the
reasonable assurance level. There has been no change in our internal controls over financial reporting
during our most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal controls over financial
reporting. 26




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##### Table of Contents



PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings None. 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Upon our formation on April 30, 2004, Bruce A. Ives was issued 1,000
shares of our common stock for total consideration of $1,000 in cash in order
to provide our initial capitalization. We repurchased these shares at cost upon
completion of our initial public offering. The issuance of such shares was
effected in reliance upon an exemption from registration provided by Section
4(2) under the Securities Act of 1933, as amended. Our initial public offering of common stock was effected through a
Registration Statement on Form S-11 (File No. 333-115204) that was declared
effective by the Securities and Exchange Commission on August 5, 2004. On
August 11, 2004, 27,000,000 shares of common stock were sold on our behalf at
an initial public offering price of $15.00 per share, for an aggregate offering
price of $405.0 million. Raymond James & Associates, Inc. was the sole lead
book-running manager, with Friedman, Billings, Ramsey & Co., Inc., KeyBanc
Capital Markets, a division of McDonald Investments Inc., Legg Mason Wood
Walker, Incorporated, and RBC Capital Markets Corporation acting as
co-managers. On August 16, 2004, in connection with the exercise of the
underwriters over-allotment option, 4,050,000 additional shares of common
stock were sold on our behalf at the initial public offering price of $15.00
per share, for an aggregate offering price of $60.8 million. Following the sale
of the 31,050,000 shares, which occurred after the period covered by this
report, the offering terminated. We paid to the underwriters an aggregate of approximately $32.6 million in
underwriting discounts and commissions in connection with the offering. In
addition, we estimate that we incurred additional expenses of approximately
$5.0 million in connection with the offering, which when added to the
underwriting discounts and commissions paid by us, amounts to total estimated
expenses of approximately $37.6 million. Thus, the net offering proceeds to us,
after deducting underwriting discounts and commissions and estimated offering
expenses, were approximately $428.2 million. No offering expenses were paid
directly or indirectly to any of our directors or officers (or their
associates) or persons owning ten percent or more of any class of our equity
securities or to any other affiliates. We contributed the net proceeds from the offering to our operating
partnership. We expect that our operating partnership will use the proceeds
received from us as described in the Registration Statement. Pending
application of the proceeds, we will invest the proceeds in interest-bearing
accounts and short-term, interest-bearing securities, which are consistent with
our intention to qualify for taxation as a REIT. 
 Item 3. Defaults Upon Senior Securities None. 
 Item 4. Submission of Matters to a Vote of Security Holders On June 21, 2004, our sole stockholder acted by written consent to approve
an increase in the number of units to be received by certain contributors of
interests in the entities that own certain properties and other assets to be
contributed to our operating partnership. 
 Item 5. Other Information None. 27




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##### Table of Contents



Item 6. Exhibits ExhibitNumber
    
    Description3.1
    
    Articles of Amendment and Restatement.3.2
    
    Amended and Restated Bylaws.10.1
    
    Second Amended and Restated Agreement of Limited Partnership of BioMed Realty, L.P. dated as of August 13, 2004.10.2
    
    Registration Rights Agreement dated as of August 13, 2004 among BioMed Realty Trust, Inc. and the persons named
therein.10.3
    
    2004 Incentive Award Plan.10.4
    
    Employment Agreement dated as of August 6, 2004 between BioMed Realty Trust, Inc. and Alan D. Gold.10.5
    
    Employment Agreement dated as of August 6, 2004 between BioMed Realty Trust, Inc. and Gary A. Kreitzer.10.6
    
    Employment Agreement dated as of August 6, 2004 between BioMed Realty Trust, Inc. and John F. Wilson, II.10.7
    
    Employment Agreement dated as of August 6, 2004 between BioMed Realty Trust, Inc. and Matthew G. McDevitt.10.8(1)
    
    Contribution Agreement between Alan D. Gold and BioMed Realty, L.P. dated as of May 4, 2004.10.9(1)
    
    Contribution Agreement between Gary A. Kreitzer and BioMed Realty, L.P. dated as of May 4, 2004.10.10(1)
    
    Contribution Agreement between John F. Wilson, II and BioMed Realty, L.P. dated as of May 4, 2004.10.11(1)
    
    Contribution Agreement between Matthew G. McDevitt and BioMed Realty, L.P. dated as of May 4, 2004.10.12(1)
    
    Form of Contribution Agreement between the additional contributors and BioMed Realty, L.P. dated as of May 4, 2004.10.13(1)
    
    Agreement to Enter Lease of Real Property between Eastview Holdings LLC and BMR-Landmark at Eastview LLC dated as of June 21, 2004.10.14(1)
    
    First Amendment to Agreement to Enter Lease of Real Property between Eastview Holdings LLC and BMR-Landmark at Eastview LLC dated as of June 23, 2004.10.15(1)
    
    Agreement of Purchase and Sale for Partnership Interests among Radnor Properties Associates-II, L.P., Radnor GP-145 KOP, L.L.C., BMR-145 King of Prussia Road GP LLC
and BioMed Realty, L.P. dated as of June 24, 2004.10.16(1)
    
    Purchase and Sale Agreement and Escrow Instructions among F&S Hayward, Inc., Foster Enterprises, Syme Family Partners L.P. and BMR-Bridgeview Technology Park LLC dated
as of June 10, 2004.10.17(1)
    
    Purchase Agreement among Douglas P. Wilson, BMR-Bayshore Boulevard LLC, GAL-Brisbane L.P., Brisbane Tech LLC and Roger C. Stuhlmuller dated as of May 24, 2004.10.18(1)
    
    Amendment to Purchase Agreement among Douglas P. Wilson, BMR-Bayshore Boulevard LLC, GAL-Brisbane L.P., Brisbane Tech LLC and Roger C. Stuhlmuller dated as of June 16,
2004.10.19(1)
    
    Agreement of Purchase and Sale between Elliott Park LLC and BMR-201 Elliott Avenue LLC dated as of June 3, 2004.10.20(1)
    
    Purchase and Sale Agreement and Escrow Instructions between Illumina, Inc. and BMR-9885 Towne Centre Drive LLC dated as of June 18, 2004.10.21(1)
    
    Purchase and Sale Agreement and Escrow Instructions among Phase 3 Science Center LLC, Ahwatukee Hills Investors, LLC, J. Alexanders LLC and BMR-3450 Monte Villa
Parkway LLC dated as of June 2, 2004.10.22(1)
    
    Redemption Agreement among Nektar Therapeutics (formerly known as Inhale Therapeutic Systems, Inc.), SciMed Prop III, Inc., 201 Industrial Partnership and Inhale 201
Industrial Road, L.P. dated as of June 23, 2004.10.23
    
    Amended and Restated Build-to-Suit Lease dated as of August 13, 2004 between Inhale 201 Industrial Road, L.P.
and Nektar Therapeutics (formerly known as Inhale Therapeutic Systems, Inc.).10.24
    
    Revolving Loan Agreement dated as of August 11, 2004 by and among BioMed Realty Trust, Inc., BioMed Realty,
L.P., the other borrowers and lenders party thereto, U.S. Bank National Association, as Administrative Agent,
Lead Arranger and Swing Loan Bank, Keybank National Association, as Syndication Agent, and Royal Bank of
Canada, as Documentation Agent.
 28




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ExhibitNumber
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
    (1)
    
    Incorporated by reference to BioMed Realty Trust, Inc.s Registration
Statement on Form S-11, as amended (File No. 333-115204), filed with the
Securities and Exchange Commission on May 5, 2004. 29




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. BIOMED REALTY TRUST, INC.Dated: September 20, 2004/s/ ALAN D. GOLDAlan D. GoldChairman of the Board, President and
Chief Executive Officer(Principal Executive Officer)/s/ JOHN F. WILSON, IIJohn F. Wilson, IIChief Financial Officer(Principal Financial Officer)
 30