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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
  
 FORM 10-Q QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005. Commission File Number: 1-32261   BIOMED REALTY TRUST, INC. (Exact name of registrant as specified in its charter)
 Maryland
    
    20-1142292(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 17140 Bernardo Center Drive, Suite 222San Diego, California
    
    92128(Address of Principal Executive Offices)
    
    (Zip Code)
 (858) 485-9840(Registrants telephone number, including area code)   Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the 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
þ No
o Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act). Yes
o No
þ The number of outstanding shares of the registrants common stock, par value $0.01 per share,
as of May 13, 2005 was 31,434,558.




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BIOMED REALTY TRUST, INC. FORM 10-Q  QUARTERLY REPORT
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005 TABLE OF CONTENTS PagePART I  FINANCIAL INFORMATION
    
    
    3Item 1 Consolidated Financial Statements
    
    
    3Consolidated Balance Sheets for BioMed Realty Trust, Inc. as of March 31, 2005 (Unaudited) and December 31, 2004 (Unaudited)
    
    
    3Consolidated Statements of Income for BioMed Realty Trust, Inc. for the three months ended March 31, 2005 (Unaudited), and for
Inhale 201 Industrial Road, L.P. (Predecessor) for the three months ended March 31, 2004 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for BioMed Realty Trust, Inc. for the three months ended March 31, 2005
(Unaudited) and for Inhale 201 Industrial Road, L.P. (Predecessor) for the three months ended March 31, 2004 (Unaudited)
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4 Controls and Procedures
    
    
    19PART II  OTHER INFORMATION
    
    
    20Item 1 Legal Proceedings
    
    
    20Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3 Defaults Upon Senior Securities
    
    
    20Item 4 Submission of Matters to a Vote of Security Holders
    
    
    20Item 5 Other Information
    
    
    20Item 6 Exhibits
    
    
    20SIGNATURES
    
    
    21EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
 2




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PART 1  FINANCIAL INFORMATION 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 BIOMED REALTY TRUST, INC. 
 CONSOLIDATED BALANCE SHEETS  March 31, 2005
    
    
    December 31, 2004(In thousands, except per share data)ASSETSRental property, net
    
    $
    489,136
    
    
    $
    468,488Property under development
    
    
    5,373
    
    
    
    Investment in unconsolidated partnership
    
    
    2,505
    
    
    
    2,470Cash and cash equivalents
    
    
    15,570
    
    
    
    27,869Restricted cash
    
    
    2,572
    
    
    
    2,470Accounts receivable, net
    
    
    5,255
    
    
    
    1,837Accrued straight-line rents, net
    
    
    4,224
    
    
    
    3,306Acquired above market leases, net
    
    
    7,543
    
    
    
    8,006Deferred leasing costs, net
    
    
    60,950
    
    
    
    61,503Deferred loan costs, net
    
    
    1,605
    
    
    
    1,700Prepaid expenses
    
    
    2,154
    
    
    
    1,531Other assets
    
    
    4,730
    
    
    
    2,543Total assets
    
    $
    601,617
    
    
    $
    581,723LIABILITIES AND STOCKHOLDERS EQUITYMortgage notes payable, net
    
    $
    101,594
    
    
    $
    102,236Unsecured line of credit
    
    
    19,500
    
    
    
    Security deposits
    
    
    5,227
    
    
    
    4,831Due to affiliates
    
    
    
    
    
    
    53Dividends and distributions payable
    
    
    9,262
    
    
    
    9,249Accounts payable and accrued expenses
    
    
    9,466
    
    
    
    7,529Acquired lease obligations, net
    
    
    14,209
    
    
    
    13,741Total liabilities
    
    
    159,258
    
    
    
    137,639Minority interests
    
    
    22,486
    
    
    
    22,267Stockholders equity:Preferred stock, $.01 par value, 15,000,000
shares authorized, none issued or outstanding
    
    
    
    
    
    
    Common stock, $.01 par value, 100,000,000
shares authorized, 31,432,558 and 31,386,333
shares issued and outstanding at March 31,
2005 and December 31, 2004, respectively
    
    
    314
    
    
    
    314Additional paid-in capital
    
    
    435,010
    
    
    
    434,075Deferred compensation
    
    
    (4,410
    )
    
    
    (4,182
    )Dividends in excess of earnings
    
    
    (11,041
    )
    
    
    (8,390
    )Total stockholders equity
    
    
    419,873
    
    
    
    421,817Total liabilities and stockholders equity
    
    $
    601,617
    
    
    $
    581,723
 See accompanying notes to consolidated financial statements. 3




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BIOMED REALTY TRUST, INC. AND
INHALE 201 INDUSTRIAL ROAD, L.P. (PREDECESSOR) 
 CONSOLIDATED STATEMENTS OF INCOME  INHALE 201BIOMED REALTY
    
    
    INDUSTRIAL ROAD,TRUST, INC.
    
    
    L.P. (PREDECESSOR)Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2005
    
    
    March 31, 2004(In thousands, except per share data)Revenues:Rental
    
    $
    14,214
    
    
    $
    1,562Tenant recoveries
    
    
    7,254
    
    
    
    150Other income
    
    
    3,003
    
    
    
    Total revenues
    
    
    24,471
    
    
    
    1,712Expenses:Rental operations
    
    
    6,395
    
    
    
    65Real estate taxes
    
    
    1,788
    
    
    
    88Depreciation and amortization
    
    
    6,191
    
    
    
    242General and administrative
    
    
    2,550
    
    
    
    Total expenses
    
    
    16,924
    
    
    
    395Income from operations
    
    
    7,547
    
    
    
    1,317Equity in net income of unconsolidated partnership
    
    
    51
    
    
    
    Interest income
    
    
    78
    
    
    
    Interest expense
    
    
    (1,411
    )
    
    
    (686
    )Income before minority interests
    
    
    6,265
    
    
    
    631Minority interests
    
    
    (429
    )
    
    
    Net income
    
    $
    5,836
    
    
    $
    631Basic earnings per share
    
    $
    0.19Diluted earnings per share
    
    $
    0.19Weighted-average common shares outstanding:Basic
    
    
    31,129,613Diluted
    
    
    34,148,820
 See accompanying notes to consolidated financial statements. 4




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BIOMED REALTY TRUST, INC. AND
INHALE 201 INDUSTRIAL ROAD, L.P. (PREDECESSOR) 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  INHALE 201BIOMED
    
    
    INDUSTRIALREALTY
    
    
    ROAD,L.P.TRUST, INC.
    
    
    (PREDECESSOR)Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2005
    
    
    March 31, 2004(in thousands)Operating activities:Net income
    
    $
    5,836
    
    
    $
    631Adjustments to reconcile net income to net cash provided by operating
activities:Minority interests
    
    
    429
    
    
    
    Depreciation and amortization
    
    
    6,191
    
    
    
    242Revenue reduction attributable to acquired above market leases
    
    
    463
    
    
    
    Revenue recognized related to acquired lease obligations
    
    
    (310
    )
    
    
    Vesting of restricted common stock
    
    
    707
    
    
    
    Amortization of loan costs
    
    
    129
    
    
    
    21Interest expense reduction for amortization of debt premium
    
    
    (261
    )
    
    
    Income from unconsolidated partnership
    
    
    (51
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (3,418
    )
    
    
    Accrued straight-line rents
    
    
    (918
    )
    
    
    (134
    )Deferred leasing costs
    
    
    (320
    )
    
    
    Prepaid expenses
    
    
    (623
    )
    
    
    Other assets
    
    
    38
    
    
    
    (66
    )Due to affiliates
    
    
    (53
    )
    
    
    Restricted cash
    
    
    (102
    )
    
    
    Accounts payable and accrued expenses
    
    
    1,937
    
    
    
    (7
    )Security deposits
    
    
    388
    
    
    
    Net cash provided by operating activities
    
    
    10,062
    
    
    
    687Investing activities:Purchases of interests in and additions to rental property and related
intangible assets
    
    
    (25,409
    )
    
    
    Purchase of interests in and additions to property under development
    
    
    (5,373
    )
    
    
    Security deposits received from prior owners of rental property
    
    
    8
    
    
    
    Receipts of master lease payments (reduction to rental property)
    
    
    786
    
    
    
    Distributions received from unconsolidated partnership
    
    
    16
    
    
    
    Funds held in escrow for acquisitions (other assets)
    
    
    (2,225
    )
    
    
    Net cash used in investing activities
    
    
    (32,197
    )
    
    
    Financing activities:Payment of loan costs
    
    
    (34
    )
    
    
    Line of credit proceeds
    
    
    19,500
    
    
    
    Principal payments on mortgage notes payable
    
    
    (381
    )
    
    
    (246
    )Distributions to operating partnership unit holders
    
    
    (775
    )
    
    
    Dividends paid
    
    
    (8,474
    )
    
    
    Distributions to owners of Predecessor
    
    
    
    
    
    
    (510
    )Net cash provided by (used in) financing activities
    
    
    9,836
    
    
    
    (756
    )Net decrease in cash and cash equivalents
    
    
    (12,299
    )
    
    
    (69
    )Cash and cash equivalents at beginning of period
    
    
    27,869
    
    
    
    157Cash and cash equivalents at end of period
    
    $
    15,570
    
    
    $
    88Supplemental disclosure of cash flow information:Cash paid during the period for interest (net of amounts capitalized of
$25 and $0, respectively)
    
    $
    1,273
    
    
    $
    676Supplemental disclosure of non-cash investing and financing activities:Accrual for dividends declared
    
    
    8,487
    
    
    
    Accrual for distributions declared for operating partnership unit holders
    
    
    775
    
    
    
    Restricted stock awards
    
    
    935
    
    
    
    
 See accompanying notes to consolidated financial statements. 5




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BIOMED REALTY TRUST, INC. AND
INHALE 201 INDUSTRIAL ROAD, L.P. (PREDECESSOR) 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 1. Organization and Description of Business As used herein, the terms we, us, our or the Company refer to BioMed Realty Trust,
Inc., a Maryland corporation and any of our subsidiaries, including BioMed Realty, L.P., a Maryland
limited partnership (our Operating Partnership), and 201 Industrial Road, L.P. (Industrial Road
or our Predecessor). We operate as a fully integrated, self-administered and self-managed real
estate investment trust (REIT) focused on acquiring, developing, owning, leasing and managing
laboratory and office space for the life science industry. The Companys tenants include
biotechnology and pharmaceutical companies, scientific research institutions, government agencies
and other entities involved in the life science industry. The Companys primary acquisition targets
and current properties are located in markets with well established reputations as centers for
scientific research, including San Diego, San Francisco, Seattle,
Maryland, Pennsylvania, New York/New Jersey and Boston. The Company was incorporated in Maryland on April 30, 2004. On August 11, 2004, the Company
commenced operations after completing its initial public offering (the 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 Offering costs, were approximately $429.3
million. In addition, simultaneously with the Offering, the Company obtained a $100.0 million
revolving unsecured credit facility (Note 5), which is used to finance acquisitions and for other
corporate purposes. The Company issued a stock warrant in connection with the Offering to the lead
underwriter for the right to purchase 270,000 common shares at $15.00 per share, which equals the
estimated fair value at the date of grant. The warrant became exercisable six months after the
Offering date and expires five years after the Offering date. From inception through August 11,
2004, neither the Company nor its Operating Partnership had any operations. At March 31, 2005, we owned or had interests in 19 properties, located in San Diego, San
Francisco, Seattle, Maryland, Pennsylvania, New York and New Jersey, consisting of 36 buildings
with approximately 2.8 million rentable square feet of laboratory and office space. We also owned
undeveloped land that we estimate can support up to 548,000 rentable square feet of laboratory and
office space. Industrial Road is the largest of the properties contributed in the Offering and therefore has
been identified as the accounting acquirer pursuant to paragraph 17 of Statement of Financial
Accounting Standards (SFAS) No. 141, Business Combinations(SFAS 141). As such, the historical
financial statements presented herein for Industrial Road were prepared on a stand-alone basis up
to and including the acquisition date, August 17, 2004. Upon completion of the Offering, the
interest in the Predecessor acquired from affiliates was recorded at historic cost. The
acquisitions of the unaffiliated interests in the Predecessor and the interests in all of the other
properties have been accounted for as a purchase in accordance with SFAS 141. 2. Basis of Presentation and Summary of Significant Accounting Policies The accompanying interim financial statements are unaudited, but have been prepared in
accordance with U.S. generally accepted accounting principles (GAAP) for interim financial
information and in conjunction with the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all the disclosures required by GAAP for complete
financial statements. In the opinion of management, all adjustments necessary for a fair
presentation of the financial statements for these interim periods have been included. These
financial statements should be read in conjunction with the audited consolidated financial
statements and notes therein included in our annual report on Form 10-K for the year ended December
31, 2004. Principles of Consolidation The consolidated financial statements include the accounts of the Company, its wholly owned
subsidiaries, and partnerships and limited liability companies it controls. All material
intercompany transactions and balances have been eliminated. The Company consolidates entities the
Company controls and records a minority interest for the portions not owned by the Company. Control
is determined, where applicable, by the sufficiency of equity invested and the rights of the equity
holders, and by the ownership of a 6




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majority of the voting interests, with consideration given to the existence of approval or
veto rights granted to the minority shareholder. If the minority shareholder holds substantive
participation rights, it overcomes the presumption of control by the majority voting interest
holder. In contrast, if the minority shareholder simply holds protective rights (such as consent
rights over certain actions), it does not overcome the presumption of control by the majority
voting interest holder. With respect to the partnerships and limited liability companies, the
Company determines control through a consideration of each partys financial interests in profits
and losses and the ability to participate in major decisions such as the acquisition, sale or
refinancing of principal assets. Investments in Rental Property Rental property, net consists of the following (in thousands): March 31, 2005
    
    
    December 31, 2004Land
    
    $
    70,285
    
    
    $
    68,755Ground lease
    
    
    14,210
    
    
    
    14,217Buildings and improvements
    
    
    409,686
    
    
    
    388,502Tenant improvements
    
    
    720
    
    
    
    283494,901
    
    
    
    471,757Accumulated depreciation
    
    
    (5,765
    )
    
    
    (3,269
    )$
    489,136
    
    
    $
    468,488
 Revenue Recognition Lease termination fees are recognized when the related leases are canceled and we have no
continuing obligation to provide services to such former tenants. A gain on early termination of
lease of $3.0 million for the three months ended March 31, 2005 is included in other income on the
consolidated statements of income and was due to the early termination of a portion of the Nektar
lease at our Industrial Road property. Accordingly, the related lease
commissions and other related intangible assets have been fully
amortized. Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed The Company reviews long-lived assets and certain identifiable intangibles for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows, undiscounted and without interest, expected
to be generated by the asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets exceeds the fair
value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell. Income Taxes We will elect to be taxed as a REIT under the Code commencing with our taxable year ended
December 31, 2004. We believe we have qualified and continue to qualify as a REIT. As a REIT, we
will be permitted to deduct distributions paid to our stockholders and generally will not be
required to pay federal corporate income taxes on such income. Accordingly, no provision has been
made for federal income taxes in the accompanying consolidated financial statements. Managements Estimates Management of the Company has made a number of estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements and the reporting of revenue and expenses during the reporting
period to prepare these financial statements in conformity with GAAP. The Company bases its
estimates on historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities and reported amounts of revenue and expenses that are
not readily apparent from other sources. Actual results could differ from those estimates under
different assumptions or conditions. 3. Minority Interests Minority interests on the consolidated balance sheet relate to the limited partnership units
in the Operating Partnership (Units) that are not owned by the Company, which at March 31, 2005
amounted to 8.44% of Units outstanding. In conjunction with the 7




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formation of the Company, certain persons and entities contributing interests in properties to
the Operating Partnership received Units. Limited partners who were issued Units in the formation
transactions have the right, commencing approximately one year after the Offering, to require the
Operating Partnership to redeem part or all of their Units for cash based upon the fair market
value of an equivalent number of shares of the Companys common stock at the time of redemption.
Alternatively, the Company may elect to acquire those Units in exchange for shares of the Companys
common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock
dividends, issuance of stock rights, specified extraordinary distributions and similar events.
Minority interests also include an 11% interest of a limited partner, in the limited partnership
that owns the King of Prussia property and a 10% interest by a limited partner in the limited
liability company that owns the Waples property, which are consolidated entities of the Company. 4. Mortgage Notes Payable A summary of our outstanding consolidated secured indebtedness as of March 31, 2005 is as
follows (in thousands): StatedFixed
    
    
    Effective
    
    
    
    
    
    
    Unamortized
    
    
    Carrying
    
    
    CarryingInterest
    
    
    Interest
    
    
    Principal
    
    
    Premium
    
    
    Value at
    
    
    Value atRate
    
    
    Rate
    
    
    Amount
    
    
    Amount
    
    
    March 31, 2005
    
    
    December 31, 2004
    
    
    Maturity DateArdentech Court
    
    
    7.25
    %
    
    
    5.06
    %
    
    $
    4,807
    
    
    $
    591
    
    
    $
    5,398
    
    
    $
    5,440
    
    
    July 1, 2012Bayshore Boulevard
    
    
    4.55
    %
    
    
    4.55
    %
    
    
    16,378
    
    
    
    
    
    
    
    16,378
    
    
    
    16,438
    
    
    January 1, 2010Bridgeview
    
    
    8.07
    %
    
    
    5.04
    %
    
    
    11,798
    
    
    
    1,780
    
    
    
    13,578
    
    
    
    13,681
    
    
    January 1, 2011Eisenhower Road
    
    
    5.80
    %
    
    
    4.63
    %
    
    
    2,244
    
    
    
    73
    
    
    
    2,317
    
    
    
    2,331
    
    
    May 5, 2008Elliott Avenue
    
    
    7.38
    %
    
    
    4.63
    %
    
    
    16,881
    
    
    
    1,017
    
    
    
    17,898
    
    
    
    18,107
    
    
    November 24, 2007Monte Villa Parkway
    
    
    4.55
    %
    
    
    4.55
    %
    
    
    9,971
    
    
    
    
    
    
    
    9,971
    
    
    
    10,007
    
    
    January 1, 2010Science Center Drive
    
    
    7.65
    %
    
    
    5.04
    %
    
    
    11,667
    
    
    
    1,613
    
    
    
    13,280
    
    
    
    13,376
    
    
    July 1, 2011Towne Centre Drive
    
    
    4.55
    %
    
    
    4.55
    %
    
    
    22,774
    
    
    
    
    
    
    
    22,774
    
    
    
    22,856
    
    
    January 1, 2010$
    96,520
    
    
    $
    5,074
    
    
    $
    101,594
    
    
    $
    102,236
 Premiums were recorded upon assumption of the notes payable at the time of acquisition to
account for above-market interest rates. Amortization of these premiums is recorded as a reduction
to interest expense over the remaining term of the respective note. 5. Line of Credit On August 11, 2004, the Company entered into a $100.0 million revolving unsecured loan
agreement, which bears interest at LIBOR plus 1.20%, or higher depending on the leverage ratio of
the Company at the time of any draw, or a reference rate, and expires on August 11, 2007. The
Company, at its sole discretion, may extend the maturity date to August 11, 2008 after satisfying
certain conditions and paying an extension fee totaling 0.20% of the then outstanding commitment.
The Company may increase the amount of the commitment up to $200.0 million upon satisfying certain
conditions and with agreement of the lender. The credit facility requires payment of a quarterly
unused commitment fee ranging from 0.15% to 0.25% depending on the total unused commitment and an
annual administrative fee equal to $10,000 times the number of banks participating in the facility.
As of March 31, 2005, borrowings outstanding on the credit facility were $19.5 million and the
weighted-average interest rate was 4.03%. The terms of the credit facility include certain restrictions and covenants, which limit,
among other things, the payment of dividends, and the incurrence of additional indebtedness and
liens. The terms also require compliance with financial ratios relating to the minimum amounts of
net worth, fixed charge coverage, unsecured interest expense coverage, leverage ratio, cash flow
coverage, the maximum amount of unsecured, secured and recourse indebtedness, and certain
investment limitations. The dividend restriction referred to above provides that, except to enable
the Company to continue to qualify as a REIT for federal income tax purposes, the Company will not
during any four consecutive quarters make distributions with respect to common stock or other
equity interests in an aggregate amount in excess of 95% of funds from operations, as defined, for
such period, subject to other adjustments. Management believes that it was in compliance with the
covenants as of March 31, 2005. 6. Earnings Per Share Earnings per share is calculated based on the weighted-average number of shares of our common
stock outstanding during the period. The effect of the outstanding Units, vesting of unvested
restricted stock that has been granted or has been committed to be granted, and the assumed
exercise of the stock warrant, using the treasury method, were dilutive and included in the
calculation of diluted weighted-average shares for the three months ended March 31, 2005. The following sets forth information related to the computations of basic and diluted earnings
per share in accordance with SFAS No. 128, Earnings per Share(in thousands, except per share
amounts): 8




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For the ThreeMonths EndedMarch 31, 2005Net income attributable to common shares
    
    $
    5,836Operating
partnership unit share in earnings of minority interest (1)
    
    
    538Adjusted net income attributable to common shares
    
    $
    6,374Weighted-average common shares outstanding:Basic
    
    
    31,129,613Incremental shares from assumed conversion/exercise:Stock warrant
    
    
    75,047Vesting of restricted stock
    
    
    73,596Operating Partnership Units
    
    
    2,870,564Diluted
    
    
    34,148,820Earnings per share  basic and diluted
    
    $
    0.19
   (1)
    
    Does not include minority interest
for the limited partners interest in the King of Prussia
property of $(109,000).
 7. Incentive Award Plan During the three months ended March 31, 2005, the Company granted 46,225 shares of restricted
stock under the BioMed Realty Trust, Inc. and BioMed Realty, L.P. 2004 Incentive Award Plan. As a
result, an additional $935,000 was added to deferred compensation. For the three months ended
March 31, 2005, $707,000 of stock-based compensation expense was recognized in general and
administrative expense. 8. Segment Information The Companys segments are based on its method of internal reporting which classifies its
operations by geographic area. The Companys segments by geographic area are San Francisco, San
Diego, Seattle, New York and New Jersey, Pennsylvania and Maryland. The rental operations expenses
at the Corporate and Other segment consists primarily of the corporate level management of the
properties. The principal financial measure of the performance of a segment used by the Company is Net
Operating Income. Net Operating Income is not a measure of operating results or cash flows from
operating activities as measured by GAAP, and it is not indicative of cash available to fund cash
needs and should not be considered an alternative to cash flows as a measure of liquidity. All
companies may not calculate Net Operating Income in the same manner. The Company considers Net
Operating Income to be an appropriate supplemental measure to net income because it helps both
investors and management to understand the core operations of the Companys properties. Net
Operating Income is derived by deducting rental operations and real
estate tax expenses from rental
revenues and tenant recoveries. The Predecessor operated in one geographic area  San Francisco. Information by geographic area (dollars in thousands): New York
    
    
    
    
    
    
    
    
    
    
    CorporateSan
    
    
    
    
    
    
    
    
    
    
    and
    
    
    
    
    
    
    
    
    
    
    andFrancisco
    
    
    San Diego
    
    
    Seattle
    
    
    New Jersey
    
    
    Pennsylvania
    
    
    Maryland
    
    
    Other
    
    
    TotalRental revenues and tenant recoveries
    
    $
    3,547
    
    
    $
    3,728
    
    
    $
    2,233
    
    
    $
    7,887
    
    
    $
    3,053
    
    
    $
    1,020
    
    
    $
    
    
    
    $
    21,468% of total revenues
    
    
    16.5
    %
    
    
    17.4
    %
    
    
    10.4
    %
    
    
    36.7
    %
    
    
    14.2
    %
    
    
    4.8
    %
    
    
    0.0
    %
    
    
    100.0
    %Rental operations and real estate tax expenses
    
    $
    534
    
    
    $
    728
    
    
    $
    287
    
    
    $
    4,778
    
    
    $
    1,609
    
    
    $
    81
    
    
    $
    166
    
    
    $
    8,183% of total rental operations expenses
    
    
    6.5
    %
    
    
    8.9
    %
    
    
    3.5
    %
    
    
    58.4
    %
    
    
    19.7
    %
    
    
    1.0
    %
    
    
    2.0
    %
    
    
    100.0
    %Net operating income
    
    $
    3,013
    
    
    $
    3,000
    
    
    $
    1,946
    
    
    $
    3,109
    
    
    $
    1,444
    
    
    $
    939
    
    
    $
    (166
    )
    
    $
    13,285% of total net operating income
    
    
    22.7
    %
    
    
    22.6
    %
    
    
    14.6
    %
    
    
    23.4
    %
    
    
    10.9
    %
    
    
    7.1
    %
    
    
    (1.3
    )%
    
    
    100.0
    %Equity in net income of unconsolidated
partnership
    
    
    
    
    
    $
    51
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    51
 9




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##### Table of Contents



New York
    
    
    
    
    
    
    
    
    
    
    CorporateSan
    
    
    
    
    
    
    
    
    
    
    and
    
    
    
    
    
    
    
    
    
    
    andFrancisco
    
    
    San Diego
    
    
    Seattle
    
    
    New Jersey
    
    
    Pennsylvania
    
    
    Maryland
    
    
    Other
    
    
    Total% of total equity income of unconsolidated
partnership
    
    
    
    
    
    
    100.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100.0
    %Gain on early termination of lease
    
    $
    3,003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,003% of total gain on early termination of lease
    
    
    100.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100.0
    %Interest and other income
    
    $
    31
    
    
    $
    2
    
    
    
    
    
    
    $
    1
    
    
    $
    1
    
    
    
    
    
    
    $
    43
    
    
    $
    78% of total interest income
    
    
    39.7
    %
    
    
    2.6
    %
    
    
    
    
    
    
    1.3
    %
    
    
    1.3
    %
    
    
    
    
    
    
    55.1
    %
    
    
    100.0
    %Depreciation and amortization
    
    $
    (1,335
    )
    
    $
    (1,449
    )
    
    $
    (796
    )
    
    $
    (1,539
    )
    
    $
    (896
    )
    
    $
    (176
    )
    
    
    
    
    
    $
    (6,191
    )% of total depreciation and amortization
    
    
    (21.6
    )%
    
    
    (23.4
    )%
    
    
    (12.8
    )%
    
    
    (24.8
    )%
    
    
    (14.5
    )%
    
    
    (2.9
    )%
    
    
    
    
    
    
    (100.0
    )%General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,550
    )
    
    $
    (2,550
    )% of total general and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100.0
    )%
    
    
    (100.0
    )%Interest expense
    
    $
    (422
    )
    
    $
    (411
    )
    
    $
    (336
    )
    
    
    
    
    
    $
    (27
    )
    
    
    
    
    
    $
    (215
    )
    
    $
    (1,411
    )% of total interest expense
    
    
    (29.9
    )%
    
    
    (29.1
    )%
    
    
    (23.8
    )%
    
    
    
    
    
    
    (1.9
    )%
    
    
    
    
    
    
    (15.3
    )%
    
    
    (100.0
    )%Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    109
    
    
    
    
    
    
    $
    (538
    )
    
    $
    (429
    )% of total minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25.4
    %
    
    
    
    
    
    
    (125.4
    )%
    
    
    (100.0
    )%Net income
    
    $
    4,290
    
    
    $
    1,193
    
    
    $
    814
    
    
    $
    1,571
    
    
    $
    631
    
    
    $
    763
    
    
    $
    (3,426
    )
    
    $
    5,836% of total net income
    
    
    73.5
    %
    
    
    20.4
    %
    
    
    14.0
    %
    
    
    26.9
    %
    
    
    10.8
    %
    
    
    13.1
    %
    
    
    (58.7
    )%
    
    
    100.0
    %Investment in unconsolidated partnership
    
    
    
    
    
    $
    2,505
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,505Total assets
    
    $
    153,670
    
    
    $
    136,749
    
    
    $
    70,700
    
    
    $
    109,558
    
    
    $
    93,088
    
    
    $
    32,409
    
    
    $
    5,443
    
    
    $
    601,617
 9. Property Acquisitions The Company acquired interests in three properties during the three months ended March 31,
2005 (in thousands): PurchasePrice
    
    
    Acquisition DateWaples  San Diego
    
    $
    5,100
    
    
    March 1, 2005Bridgeview  San Francisco
    
    
    16,200
    
    
    March 16, 2005Graphics Drive  New Jersey
    
    
    7,700
    
    
    March 17, 2005$
    29,000
 10. Subsequent Events On April 5, 2005, the Company, through the Operating Partnership, completed the acquisition of
Fresh Pond Research Park located in Cambridge, Massachusetts for cash consideration of
approximately $20.7 million. The purchase price was funded with borrowings under our $100.0 million
revolving unsecured loan agreement. On April 5, 2005, the Company, through the Operating Partnership, completed the acquisition of
a property on Coolidge Avenue located in the Boston area in Watertown, Massachusetts for cash
consideration of approximately $10.8 million. The purchase price was funded with borrowings under
our $100.0 million revolving unsecured loan agreement. On April 5, 2005, the Company, through the Operating Partnership, completed the acquisition of
a property located on Phoenixville Pike in Malvern, Pennsylvania for cash consideration of
approximately $13.0 million. The purchase price was funded with borrowings under our $100.0 million
revolving unsecured loan agreement and cash on hand. On April 15, 2005, the Company signed a definitive purchase and sale agreement to acquire a
portfolio of seven properties and one parking structure in Cambridge, Massachusetts and an
additional property in Lebanon, New Hampshire for a total purchase price of $531.0 million,
including estimated closing costs. The purchase price is to be paid in cash and through the
assumption of approximately $130.0 million of indebtedness. In order to finance the acquisition and
provide additional working capital, the Company has secured a commitment from KeyBank National
Association, under which the Company intends to borrow up to $600.0 million under three credit
facilities, including a three-year, senior unsecured revolving credit facility of $250.0 million, a
three-year, senior unsecured term loan facility of $100.0 million, and a five-year, secured term
loan facility of $250.0 million. The new $250.0 million senior unsecured revolving credit
facility, which contains an accordion option up to $400.0 million, will replace the Companys
existing $100.0 million revolving unsecured credit facility. 10




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##### Table of Contents



On April 19, 2005, the Company entered into a lease amendment with Centocor, Inc., a
subsidiary of Johnson & Johnson. Under the amendment, Centocor has agreed to lease an additional
79,667 rentable square feet at the Companys King of Prussia property located in Radnor,
Pennsylvania from May 1, 2005 through March 31, 2010. The new lease replaces the existing portion
of the master lease with an affiliate of The Rubenstein Company, the original seller of the
property, with respect to this space. Annualized base rent of approximately $1.3 million and
certain tenant reimbursements received under the new lease will correspondingly reduce the rent
received under the master lease. On April 21, 2005, the Company, through the Operating Partnership, completed the acquisition
of a property located on Nancy Ridge Drive in San Diego for cash consideration of approximately
$5.8 million and the assumption of approximately $7.0 million in debt. The cash portion of the
purchase price was funded with borrowings under our $100.0 million revolving unsecured loan
agreement. 11




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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 (including the proposed acquisition of
the Lyme portfolio) 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. The risks included here are not exhaustive, and additional factors could adversely affect our
business and financial performance, including factors and risks included in other sections of this
report. In addition, we discussed a number of material risks in our annual report on Form 10-K for
the year ended December 31, 2004. Those risks continue to be relevant to our performance and
financial condition. Moreover, we operate in a very competitive and rapidly changing environment.
New risk factors emerge from time to time and it is not possible for management to predict all such
risk factors, nor can it assess the impact of all such risk factors on our companys business or
the extent to which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements. Given these risks and
uncertainties, investors should not place undue reliance on forward-looking statements as a
prediction of actual results. A more complete discussion of our critical accounting policies can be found in our annual
report on Form 10-K for the year ended December 31, 2004. Overview We operate as a REIT focused on acquiring, developing, owning, leasing and managing laboratory
and office space for the life science industry. Our tenants include biotechnology and
pharmaceutical companies, scientific research institutions, government agencies and other entities
involved in the life science industry. The companys primary acquisition targets and current
properties are located in markets with well established reputations as centers for scientific
research, including San Diego, San Francisco, Seattle, Maryland, Pennsylvania, New York/New Jersey
and Boston. At March 31, 2005, we owned or had interests in 19 properties, located in San Diego, San
Francisco, Seattle, Maryland, Pennsylvania, New York and New Jersey, consisting of 36 buildings
with approximately 2.8 million rentable square feet of laboratory and office space. We also owned
undeveloped land that we estimate can support up to 548,000 rentable square feet of laboratory and
office space. We were formed on April 30, 2004 and commenced operations on August 11, 2004, after completing
our initial public offering. Factors Which May Influence Future Operations 12




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##### Table of Contents



As of March 31, 2005, our property portfolio was 91.5% leased to 57 tenants. Of the remaining
unleased space, approximately 105,000 square feet, or 3.7% of the companys total rentable square
footage, was under redevelopment. Approximately 4.5% of our leased square footage expires during
2005 and approximately 5.1% of our leased square footage expires during 2006. Our leasing strategy
for 2005 focuses on leasing currently vacant space and negotiating renewals for leases scheduled to
expire during the year, and identifying new tenants or existing tenants seeking additional space to
occupy the spaces for which we are unable to negotiate such renewals. Additionally, we will seek to
lease space that is currently under master lease arrangements at our Bayshore and King of Prussia
properties, which expire in 2006 and 2008, respectively. Our corporate strategy is to continue to focus on acquiring, developing, owning, leasing and
managing laboratory and office space for the life science industry. Our leasing strategy focuses on
executing long-term leases with creditworthy tenants. We also intend to proceed with new
developments, when prudent. The success of our leasing and development strategy will be dependent upon the general
economic conditions in the United States and in our target markets of San Diego, San Francisco,
Seattle, Maryland, Pennsylvania, New York/New Jersey and Boston. We are optimistic that market
conditions will continue to improve during 2005 as evidenced by reduced vacancy rates for life
science space in 2004. However, this is contingent upon continued strong job growth in our markets. We believe that, on a portfolio basis, rental rates on leases expiring in 2005 and 2006 are at
or below market rental rates that are currently being achieved in our markets. However, we cannot
give any assurance that leases will be renewed or that available space will be released at rental
rates equal to or above the current contractual rental rates or at all. Results of Operations The
following is a comparison of the three months ended March 31,
2005 of the consolidated
operating results of BioMed Realty Trust, Inc., to the combined operating results of 201 Industrial
Road, L.P., our predecessor, and Bernardo Center Drive, Science Center Drive and Balboa Avenue for
the three months ended March 31, 2004. We refer to Bernardo Center Drive, Science Center Drive and
Balboa Avenue as the Combined Contribution Properties. As part of our formation transactions, our
predecessor was contributed to us in exchange for 1,461,451 units in our Operating Partnership, and
the Combined Contribution Properties, which were under common management with our predecessor, were
contributed to us in exchange for 1,153,708 units in our Operating Partnership. Our predecessor is considered for accounting purposes to be our acquirer. As such, the
historical financial statements presented herein for our predecessor were prepared on a stand-alone
basis. The financial information of the Combined Contribution Properties are presented herein on an
historical combined basis. Management does not consider the operating
results of our predecessor on a stand-alone basis to be indicative of the historical operating
results of our company taken as a whole. Therefore, the following discussion relates to the
operating results of our predecessor and the Combined Contribution Properties, the other properties
contributed to us over which our management has provided continuous common management throughout
the applicable reporting periods, on a combined historical basis. Subsequent to the dates they were
contributed to us, the financial information for each of our predecessor and the Combined
Contribution Properties is included in the financial information for BioMed Realty Trust, which
commenced operations on August 11, 2004. Management believes this presentation provides a more
meaningful discussion of the operating results of BioMed Realty Trust, our predecessor and the
Combined Contribution Properties. 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 our predecessor which was not owned by management. 13




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##### Table of Contents



The following table sets forth the basis for presenting the historical financial information. Three Months
    
    
    Three Months EndedEnded
    
    
    March 31, 2004March 31, 2005
    
    
    
    
    
    
    CombinedBioMed Realty
    
    
    
    
    
    
    Contribution
    
    
    CombiningTrust, Inc.
    
    
    Predecessor
    
    
    Properties
    
    
    Entries
    
    
    TotalRevenues:Rental
    
    $
    14,214
    
    
    $
    1,562
    
    
    $
    1,046
    
    
    
    
    
    
    $
    2,608Tenant recoveries
    
    
    7,254
    
    
    
    150
    
    
    
    182
    
    
    
    
    
    
    
    332Other income
    
    
    3,003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    
    24,471
    
    
    
    1,712
    
    
    
    1,228
    
    
    
    
    
    
    
    2,940Expenses:Rental operations
    
    
    6,395
    
    
    
    65
    
    
    
    74
    
    
    
    
    
    
    
    139Real estate taxes
    
    
    1,788
    
    
    
    88
    
    
    
    56
    
    
    
    
    
    
    
    144Depreciation and amortization
    
    
    6,191
    
    
    
    242
    
    
    
    204
    
    
    
    
    
    
    
    446General and administrative
    
    
    2,550
    
    
    
    
    
    
    
    58
    
    
    
    
    
    
    
    58Total expenses
    
    
    16,924
    
    
    
    395
    
    
    
    392
    
    
    
    
    
    
    
    787Income from operations
    
    
    7,547
    
    
    
    1,317
    
    
    
    836
    
    
    
    
    
    
    
    2,153Equity in net income of unconsolidated partnership
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    78
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Interest expense
    
    
    (1,411
    )
    
    
    (686
    )
    
    
    (613
    )
    
    
    
    
    
    
    (1,299
    )Income before minority interests
    
    
    6,265
    
    
    
    631
    
    
    
    228
    
    
    
    
    
    
    
    859Minority interests
    
    
    (429
    )
    
    
    
    
    
    
    (72
    )
    
    
    (370
    )
    
    
    (442
    )Net income
    
    $
    5,836
    
    
    $
    631
    
    
    $
    156
    
    
    $
    (370
    )
    
    $
    417
 Comparison of Three Months Ended March 31, 2005 to Three Months Ended March 31, 2004 Rental Revenues. Rental revenues increased $11.6 million to $14.2 million for the three months
ended March 31, 2005 compared to $2.6 million for the three months ended March 31, 2004. The
increase was primarily due to the inclusion of rental revenues for the properties acquired in
connection with our initial public offering as well as acquisitions subsequent to our initial
public offering. Tenant Recoveries. Revenues from tenant reimbursements increased $7.0 million to $7.3 million
for the three months ended March 31, 2005 compared to $332,000 for the three months ended March 31,
2004. The increase was primarily due to the inclusion of tenant reimbursements for the properties
acquired in connection with our initial public offering as well as acquisitions subsequent to our
initial public offering. Other Income.Other income is comprised of a gain on early termination of lease of a portion
of the Nektar lease at Industrial Road of $3.0 million for the three months ended March 31, 2005
compared to $0 for the three months ended March 31, 2004. Rental Operations Expense. Rental operations expenses increased $6.3 million to $6.4 million
for the three months ended March 31, 2005 compared to $139,000 for the three months ended March 31,
2004. The increase was primarily due to the inclusion of rental property operations expenses for
the properties acquired in connection with our initial public offering as well as acquisitions
subsequent to our initial public offering. Real Estate Tax Expense.Real estate tax expense increased $1.7 million to $1.8 million for
the three months ended March 31, 2005 compared to $144,000 for the three months ended March 31,
2004. The increase was primarily due to the inclusion of property taxes for the properties acquired
in connection with our initial public offering as well as additional property acquisitions
subsequent to our initial public offering. Depreciation and Amortization Expense. Depreciation and amortization expense increased $5.8
million to $6.2 million for the three months ended March 31, 2005 compared to $446,000 for the
three months ended March 31, 2004. The increase was primarily due to the inclusion of depreciation
and amortization expense for the properties acquired in connection with our initial public offering
as well as acquisitions subsequent to our initial public offering. 14




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##### Table of Contents



General and Administrative Expenses.General and administrative expenses increased to $2.6
million for the three months ended March 31, 2005 from $58,000 for the three months ended March 31,
2004. The increase was primarily due to the initial public offering, the hiring of new personnel
after the initial public offering, the addition of expenses relating to operating as a public
company, compensation expense related to unvested restricted stock compensation awards accrued
during the three months ended March 31, 2005 and higher consulting and professional fees associated
with corporate governance and Sarbanes-Oxley Section 404 implementation. Interest Income. Interest income increased to $78,000 for the three months ended March 31,
2005 from $5,000 for the three months ended March 31, 2004. This is primarily due to interest
earned on an increase of funds held by us during the three months ended March 31, 2005. Interest Expense.Interest expense increased $100,000 to $1.4 million for the three months
ended March 31, 2005 compared to $1.3 million for the three months ended March 31, 2004. The
increase in interest is a result of more overall debt outstanding after the consummation of the
initial public offering partially offset by a reduction of interest expense in 2005 due to the
accretion of debt premium, which decreased interest expense by $261,000. Minority Interests.Minority interests decreased to $429,000 for the three months ended March
31, 2005 from $442,000 for the three months ended March 31, 2004. The minority interest allocations
for the three months ended March 31, 2005 and 2004 are not comparable due to the initial public
offering. The 2004 allocation was a result of the percentage allocation to non-controlling
interests of the Combined Contribution Properties and for our predecessor. The 2005 allocation was
allocated to the limited partner unit holders of our Operating Partnership. Cash Flows Comparison of Three Months Ended March 31, 2005 to Three Months Ended March 31, 2004 Three Months Ended March 31,Predecessor andBioMed
    
    
    CombinedRealty Trust,
    
    
    ContributionInc.
    
    
    Properties2005
    
    
    2004
    
    
    ChangeNet cash provided by operating activities
    
    $
    10,062
    
    
    $
    1,137
    
    
    $
    8,925Net cash used in investing activities
    
    
    (32,197
    )
    
    
    
    
    
    
    (32,197
    )Net cash provided by (used in) financing activities
    
    
    9,836
    
    
    
    (1,254
    )
    
    
    11,090Ending cash balance
    
    
    15,570
    
    
    
    238
    
    
    
    15,332
 Cash and cash equivalents were $15.6 million and $238,000, respectively, at March 31, 2005 and
March 31, 2004. Net cash provided by operating activities increased $8.9 million to $10.0 million for the
three months ended March 31, 2005 compared to $1.1 million for the three months ended March 31, 2004. The
increase was primarily due to the increases in operating income before depreciation and
amortization, and changes in other operating assets and liabilities. Net cash used in investing activities was $32.2 million for the three months ended March 31,
2005 compared to $0 for the three months ended March 31, 2004. The increase was primarily due to
$33.0 million paid to acquire interests in real estate entities and funds held in escrow for
acquisitions partially offset by receipts of master lease payments. Net cash provided by financing activities increased $11.1 million to $9.8 million for the
three months ended March 31, 2005 compared to cash used of $1.3 million for the three months ended
March 31, 2004. The increase was primarily due to borrowings under our revolving unsecured loan
agreement offset by principal payments on mortgage loans, and payments of dividends and
distributions. Funds from Operations We present funds from operations, or FFO, because we consider it an important supplemental
measure of our operating performance and believe it is frequently used by securities analysts,
investors and other interested parties in the evaluation of REITs, many of which present FFO when
reporting their results. FFO is intended to exclude GAAP historical cost depreciation and
amortization of real estate and related assets, which assumes that the value of real estate assets
diminishes ratably over time. 15




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Historically, however, real estate values have risen or fallen with market conditions. Because
FFO excludes depreciation and amortization unique to real estate, gains and losses from property
dispositions and extraordinary items, it provides a performance measure that, when compared year
over year, reflects the impact to operations from trends in occupancy rates, rental rates,
operating costs, development activities and interest costs, providing perspective not immediately
apparent from net income. We compute FFO in accordance with standards established by the Board of
Governors of the National Association of Real Estate Investment Trusts, or NAREIT, in its March
1995 White Paper (as amended in November 1999 and April 2002). As defined by NAREIT, FFO represents
net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property,
plus real estate related depreciation and amortization (excluding amortization of loan origination
costs) and after adjustments for unconsolidated partnerships and joint ventures. Our computation
may differ from the methodology for calculating FFO utilized by other equity REITs and,
accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts
available for managements discretionary use because of needed capital replacement or expansion,
debt service obligations, or other commitments and uncertainties. FFO should not be considered as
an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our
financial performance or to cash flow from operating activities (computed in accordance with GAAP)
as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs,
including our ability to pay dividends or make distributions. The following table provides the calculation of our FFO and a reconciliation to net income for
the three months ended March 31, 2005 (in thousands, except per share amounts): Net income
    
    $
    5,836AdjustmentsOperating
partnership unit share in earnings of minority interest
    
    
    538Depreciation and amortization  real estate assets
    
    
    6,180Funds from operations
    
    $
    12,554Funds from operations per share  diluted
    
    $
    0.37Weighted-average common shares outstanding  diluted
    
    
    34,148,820
 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
    capital expenditures, tenant improvements and leasing commissions. We expect to satisfy 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. We
expect to satisfy our long-term liquidity requirements through our existing working capital, cash
provided by operations, long-term secured and unsecured indebtedness, the issuance of additional
equity or debt securities and the use of net proceeds from the disposition of non-strategic assets.
We also expect to use funds available under our revolving unsecured loan agreement to finance
acquisition and development activities and capital expenditures on an interim basis. Our total market capitalization at March 31, 2005 was approximately $822.7 million based on
the market closing price of our common stock at March 31, 2005 of $20.60 per share (assuming the
conversion of 2,870,564 operating partnership units into common stock) and our debt outstanding was
approximately $116.0 million (exclusive of unamortized debt premium and accounts payable and 16




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##### Table of Contents



accrued expenses). As a result, our debt to total market capitalization ratio was
approximately 14.1% at March 31, 2005. Our board of directors adopted a policy of limiting our
indebtedness to approximately 60% of our total market capitalization. However, our board of
directors may from time to time modify our debt policy in light of current economic or market
conditions including, but not limited to, the relative costs of debt and equity capital, market
conditions for debt and equity securities and fluctuations in the market price of our common stock.
Accordingly, we may increase or decrease our debt to market capitalization ratio beyond the limit
described above. On August 11, 2004, we entered into a $100.0 million revolving unsecured loan agreement, which
bears interest at LIBOR plus 1.20%, or higher depending on our leverage ratio at the time of any
draw, or a reference rate, and expires on August 11, 2007. We, at our sole discretion, may extend
the maturity date to August 11, 2008 after satisfying certain conditions and paying an extension
fee totaling 0.20% of the then outstanding commitment. We may increase the amount of the commitment
up to $200.0 million upon satisfying certain conditions and with agreement of the lender. The
credit facility requires payment of a quarterly unused commitment fee ranging from 0.15% to 0.25%
depending on the total unused commitment and an annual administrative fee equal to $10,000 times
the number of banks participating in the facility. As of March 31, 2005, borrowing outstanding on
the credit facility totaled $19.5 million and the weighted-average interest rate was 4.03%. The terms of the credit facility include certain restrictions and covenants, which limit,
among other things, the payment of dividends, and the incurrence of additional indebtedness and
liens. The terms also require compliance with financial ratios relating to the minimum amounts of
net worth, fixed charge coverage, unsecured interest expense coverage, leverage ratio, cash flow
coverage, the maximum amount of unsecured, secured and recourse indebtedness, and certain
investment limitations. The dividend restriction referred to above provides that, except to enable
us to continue to qualify as a REIT for federal income tax purposes, we will not during any four
consecutive quarters make distributions with respect to common stock or other equity interests in
an aggregate amount in excess of 95% of funds from operations, as defined, for such period, subject
to other adjustments. Management believes that we were in compliance with the covenants as of March
31, 2005. A summary of our outstanding consolidated secured indebtedness as of March 31, 2005 is as
follows (in thousands): StatedFixed
    
    
    Effective
    
    
    
    
    
    
    Unamortized
    
    
    TotalInterest
    
    
    Interest
    
    
    Principal
    
    
    Premium
    
    
    CarryingRate
    
    
    Rate
    
    
    Amount
    
    
    Amount
    
    
    Value
    
    
    Maturity DateArdentech Court
    
    
    7.25
    %
    
    
    5.06
    %
    
    $
    4,807
    
    
    $
    591
    
    
    $
    5,398
    
    
    July 1, 2012Bayshore Boulevard
    
    
    4.55
    %
    
    
    4.55
    %
    
    
    16,378
    
    
    
    
    
    
    
    16,378
    
    
    January 1, 2010Bridgeview
    
    
    8.07
    %
    
    
    5.04
    %
    
    
    11,798
    
    
    
    1,780
    
    
    
    13,578
    
    
    January 1, 2011Eisenhower Road
    
    
    5.80
    %
    
    
    4.63
    %
    
    
    2,244
    
    
    
    73
    
    
    
    2,317
    
    
    May 5, 2008Elliott Avenue
    
    
    7.38
    %
    
    
    4.63
    %
    
    
    16,881
    
    
    
    1,017
    
    
    
    17,898
    
    
    November 24, 2007Monte Villa Parkway
    
    
    4.55
    %
    
    
    4.55
    %
    
    
    9,971
    
    
    
    
    
    
    
    9,971
    
    
    January 1, 2010Science Center Drive
    
    
    7.65
    %
    
    
    5.04
    %
    
    
    11,667
    
    
    
    1,613
    
    
    
    13,280
    
    
    July 1, 2011Towne Centre Drive
    
    
    4.55
    %
    
    
    4.55
    %
    
    
    22,774
    
    
    
    
    
    
    
    22,774
    
    
    January 1, 20106.01
    %
    
    
    4.71
    %
    
    $
    96,520
    
    
    $
    5,074
    
    
    $
    101,594
 As
of March 31, 2005, borrowings outstanding on the credit facility totaled $19.5 million,
which matures in 2007. Premiums were recorded upon assumption of the notes at the time of the related acquisition to
account for above-market interest rates. Amortization of these premiums is recorded as a reduction
to interest expense over the remaining term of the respective note. As of March 31, 2005, principal payments due for our total consolidated indebtedness were as
follows (in thousands): 2005
    
    $
    1,4562006
    
    
    2,0172007
    
    
    37,1122008
    
    
    3,7322009
    
    
    1,716Thereafter
    
    
    69,987$
    116,020
 17




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We may in the future enter into derivative financial instruments such as interest rate swaps,
caps and treasury locks in order to mitigate our interest rate risk on a related financial
instrument; however, we were not a party to any derivative financial instruments at March 31, 2005.
Further, we do not enter into derivative or interest rate transactions for speculative or trading
purposes. Off Balance Sheet Arrangements As of March 31, 2005, we had an investment in McKellar Court, L.P., which owns a single tenant
occupied property located in San Diego. The acquisition of the investment in McKellar Court closed
on September 30, 2004. McKellar Court is a variable interest entity as defined in Financial
Accounting Standards Board Interpretation No. 46 (revised December 2003), Consolidation of Variable
Interest Entities; however, we are not the primary beneficiary. The limited partner is also the
only tenant in the property and will bear a disproportionate amount of any losses. We, as the
general partner, will receive 21% of the operating cash flows and 75% of the gains upon sale of the
property. We account for our general partner interest using the equity method. Significant
accounting policies used by the unconsolidated partnership that owns this property are similar to
those used by us. At March 31, 2005, our share of the debt related to this investment was equal to
approximately $2.3 million (excluding unamortized debt premium). The assets and liabilities of
McKellar Court were $18.9 million and $12.9 million, respectively, at March 31, 2005. The table
below summarizes our share of the outstanding debt (based on our respective ownership interests) of
this investment at March 31, 2005 (in thousands): StatedFixed
    
    
    Effective
    
    
    
    
    
    
    Unamortized
    
    
    TotalInterest
    
    
    Interest
    
    
    Principal
    
    
    Premium
    
    
    BookRate
    
    
    Rate
    
    
    Amount
    
    
    Amount
    
    
    Value
    
    
    Maturity DateMcKellar Court
    
    
    8.56
    %
    
    
    4.63
    %
    
    $
    2,271
    
    
    $
    385
    
    
    $
    2,656
    
    
    January 1, 2010
 Cash Distribution Policy We will elect to be taxed as a REIT under the Code commencing with our taxable year ended
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. Since our initial public offering through March 31, 2005, we have declared aggregate dividends
on our common stock and distributions on our operating partnership units of $0.6897 per common
share and unit, representing two full quarterly dividends for the fourth quarter of 2004 and first
quarter of 2005 of $0.27 each and a partial third quarter dividend for 2004 of $0.1497 per common
share and unit. The dividends are equivalent to an annual rate of $1.08 per common share and unit. 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. Our revolving loan agreement bears interest at a variable rate, which will be influenced by
changes in short-term interest rates, and will be sensitive to inflation. 
 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 18




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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 March 31, 2005, our consolidated debt consisted of eight fixed-rate notes with a
carrying value of $101.6 million (including $5.1 million of unamortized premium) and a
weighted-average effective interest rate of 4.71% and our credit facility with an outstanding
balance of $19.5 million and a weighted-average variable interest rate of 4.03%. To determine fair
value, the fixed-rate debt is discounted at a rate based on an estimate of current lending rates,
assuming the debt is outstanding through maturity and considering the notes collateral. At March
31, 2005, the fair value of the fixed-rate debt was estimated to be $99.0 million compared to the
net carrying value of $101.6 million (including $5.1 million of unamortized premium). We do not
believe that the interest rate risk represented by our fixed rate debt was material as of March 31,
2005 in relation to total assets of $601.6 million and equity market capitalization of $706.7
million of our common stock and operating units. At March 31, 2005, the fair value of the debt of
our investment in unconsolidated partnership approximated the carrying value. If interest rates were to increase by 10%, or 40 basis points, the increase in interest
expense on our $19.5 million in variable rate debt would decrease future annual earnings and cash
flows by approximately $72,000. If interest rates were to decrease by 10%, or 40 basis points, the
decrease in interest expense on our $19.5 million in variable rate debt would increase our future
annual earnings and cash flows by approximately $72,000. These amounts were determined by considering the impact of hypothetical interest rates on our
financial instruments. These analyses do not consider the effect of any change in overall economic
activity that could occur in that environment. Further, in the event of a change of the magnitude
discussed above, we may take actions to further mitigate our exposure to the change. However, due
to the uncertainty of the specific actions that would be taken and their possible effects, these
analyses assume no changes in our financial structure. 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 and treasury locks in order to mitigate our
interest rate risk on a related financial instrument. 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. We do not
enter into such contracts for speculative or trading purposes. For the period from August 11, 2004
to March 31, 2005, we were not a party to any such financial instruments. 
 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. Also, we have investments in an unconsolidated entity. As we manage this entity,
our disclosure controls and procedures with respect to such entity are essentially consistent with
those we maintain with respect to our consolidated entities. 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 period 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 control over financial reporting during the quarter
ended March 31, 2005 that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting. 19




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##### Table of Contents



PART II  OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS We are not currently a party to any legal proceedings nor, to our knowledge, is any legal
proceeding threatened against us that would have a material adverse effect on our financial
position, results of operations or liquidity. 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 
 ITEM 5. OTHER INFORMATION None. 
 ITEM 6. EXHIBITS ExhibitNumber
    
    Description10.1
    
    BioMed Realty 401(k) Retirement Savings Plan. (1)10.2
    
    First Amendment to the BioMed Realty 401(k) Retirement Savings Plan. (1)10.3
    
    Second Amendment to the BioMed Realty 401(k) Retirement Savings Plan. (1)10.4
    
    Amendment to Amended and Restated Built-to-Suit Lease dated as of January 11, 2005 between BMR-201
Industrial Road LLC and Nektar Therapeutics. (1)10.5
    
    Form of Restricted Stock Award Agreement under the 2004 Incentive Award Plan. (1)31.1
    
    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 herein by reference to BioMed Realty Trust Inc.s Current Report on Form 8-K
filed with the Securities and Exchange Commission on January 14, 2005. 20




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##### Table of Contents



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: May 13, 2005
    /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) 21