##### Table of Contents



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 September 30, 2008.
 Commission File Number: 1-32261
 
 BIOMED REALTY TRUST, INC.
 (Exact name of registrant as specified in its charter)
 Maryland(State or other jurisdiction of 
incorporation or organization)
    
    20-1142292(I.R.S. Employer
Identification No.)17190 Bernardo Center DriveSan Diego, California
    
    92128(Address of Principal Executive Offices)
    
    (Zip Code)
 (858) 485-9840  (Registrants telephone number, including area code)
 þ o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



BIOMED REALTY TRUST, INC.
 FORM 10-Q  QUARTERLY REPORT
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1 Consolidated Financial Statements
    
    
    3Consolidated Balance Sheets as of September 30, 2008 (Unaudited) and December 31, 2007
    
    
    3Consolidated Statements of Income for the three and nine months ended September 30, 2008
and 2007 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and
2007 (Unaudited)
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4 Controls and Procedures
    
    
    34PART II  OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    35Item 1A Risk Factors
    
    
    35Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 3 Defaults Upon Senior Securities
    
    
    35Item 4 Submission of Matters to a Vote of Security Holders
    
    
    35Item 5 Other Information
    
    
    35Item 6 Exhibits
    
    
    36SIGNATURES
    
    
    37EX-3.1EX-31.1EX-31.2EX-32.1
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 
 BIOMED REALTY TRUST, INC.
 CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 September 30, 2008
    
    
    December 31, 2007(Unaudited)ASSETSInvestments in real estate, net
    
    $
    2,915,675
    
    
    $
    2,805,983Investments in unconsolidated partnerships
    
    
    20,296
    
    
    
    22,588Cash and cash equivalents
    
    
    23,451
    
    
    
    13,479Restricted cash
    
    
    8,291
    
    
    
    8,867Accounts receivable, net
    
    
    7,284
    
    
    
    4,457Accrued straight-line rents, net
    
    
    52,721
    
    
    
    36,415Acquired above-market leases, net
    
    
    4,661
    
    
    
    5,745Deferred leasing costs, net
    
    
    107,145
    
    
    
    116,491Deferred loan costs, net
    
    
    12,057
    
    
    
    15,567Other assets
    
    
    70,837
    
    
    
    27,676Total assets
    
    $
    3,222,418
    
    
    $
    3,057,268LIABILITIES AND STOCKHOLDERS EQUITYMortgage notes payable, net
    
    $
    354,828
    
    
    $
    379,680Secured construction loan
    
    
    500,998
    
    
    
    425,160Secured term loan
    
    
    250,000
    
    
    
    250,000Exchangeable senior notes
    
    
    175,000
    
    
    
    175,000Unsecured line of credit
    
    
    266,660
    
    
    
    270,947Security deposits
    
    
    7,469
    
    
    
    7,090Dividends and distributions payable
    
    
    29,441
    
    
    
    25,596Accounts payable, accrued expenses, and other liabilities
    
    
    106,553
    
    
    
    95,871Acquired below-market leases, net
    
    
    19,212
    
    
    
    23,708Total liabilities
    
    
    1,710,161
    
    
    
    1,653,052Minority interests
    
    
    14,968
    
    
    
    17,280Stockholders equity:Preferred stock, $.01 par value, 15,000,000 shares
authorized: 7.375% Series A cumulative redeemable
preferred stock, $230,000,000 liquidation preference
($25.00 per share), 9,200,000 shares issued and
outstanding at September 30, 2008 and December 31,
2007
    
    
    222,413
    
    
    
    222,413Common stock, $.01 par value, 100,000,000 shares
authorized, 71,720,258 and 65,571,304 shares issued
and outstanding at September 30, 2008 and December
31, 2007, respectively
    
    
    717
    
    
    
    656Additional paid-in capital
    
    
    1,432,350
    
    
    
    1,277,770Accumulated other comprehensive loss
    
    
    (35,657
    )
    
    
    (21,762
    )Dividends in excess of earnings
    
    
    (122,534
    )
    
    
    (92,141
    )Total stockholders equity
    
    
    1,497,289
    
    
    
    1,386,936Total liabilities and stockholders equity
    
    $
    3,222,418
    
    
    $
    3,057,268
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BIOMED REALTY TRUST, INC.
 CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)Revenues:Rental
    
    $
    59,381
    
    
    $
    49,382
    
    
    $
    163,946
    
    
    $
    146,351Tenant recoveries
    
    
    20,911
    
    
    
    15,084
    
    
    
    53,297
    
    
    
    47,264Other income
    
    
    519
    
    
    
    366
    
    
    
    1,697
    
    
    
    8,445Total revenues
    
    
    80,811
    
    
    
    64,832
    
    
    
    218,940
    
    
    
    202,060Expenses:Rental operations
    
    
    17,027
    
    
    
    12,789
    
    
    
    44,345
    
    
    
    38,784Real estate taxes
    
    
    6,763
    
    
    
    5,079
    
    
    
    16,948
    
    
    
    16,538Depreciation and amortization
    
    
    21,506
    
    
    
    17,665
    
    
    
    58,525
    
    
    
    54,556General and administrative
    
    
    4,589
    
    
    
    5,283
    
    
    
    16,428
    
    
    
    15,990Total expenses
    
    
    49,885
    
    
    
    40,816
    
    
    
    136,246
    
    
    
    125,868Income from operations
    
    
    30,926
    
    
    
    24,016
    
    
    
    82,694
    
    
    
    76,192Equity in net loss of unconsolidated
partnerships
    
    
    (208
    )
    
    
    (261
    )
    
    
    (338
    )
    
    
    (694
    )Interest income
    
    
    110
    
    
    
    239
    
    
    
    370
    
    
    
    809Interest expense
    
    
    (13,035
    )
    
    
    (7,043
    )
    
    
    (28,600
    )
    
    
    (21,013
    )Income from continuing
operations before minority
interests
    
    
    17,793
    
    
    
    16,951
    
    
    
    54,126
    
    
    
    55,294Minority interests in continuing
operations of consolidated partnerships
    
    
    (11
    )
    
    
    51
    
    
    
    (4
    )
    
    
    (61
    )Minority interests in continuing
operations of operating partnership
    
    
    (559
    )
    
    
    (545
    )
    
    
    (1,767
    )
    
    
    (1,821
    )Income from continuing operations
    
    
    17,223
    
    
    
    16,457
    
    
    
    52,355
    
    
    
    53,412Income from discontinued operations
before gain on sale of assets and
minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    639(Loss)/gain on sale of real estate assets
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    1,087Minority interests attributable to
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74
    )(Loss)/income from discontinued
operations
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    1,652Net income
    
    
    17,223
    
    
    
    16,456
    
    
    
    52,355
    
    
    
    55,064Preferred stock dividends
    
    
    (4,241
    )
    
    
    (4,241
    )
    
    
    (12,722
    )
    
    
    (12,628
    )Net income available to
common stockholders
    
    $
    12,982
    
    
    $
    12,215
    
    
    $
    39,633
    
    
    $
    42,436Income from continuing operations per share
available to common stockholders:Basic and diluted earnings per share
    
    $
    0.18
    
    
    $
    0.19
    
    
    $
    0.57
    
    
    $
    0.62Net income per share available to common
stockholders:Basic and diluted earnings per share
    
    $
    0.18
    
    
    $
    0.19
    
    
    $
    0.57
    
    
    $
    0.65Weighted-average common shares outstanding:Basic
    
    
    71,513,333
    
    
    
    65,308,702
    
    
    
    68,995,015
    
    
    
    65,300,802Diluted
    
    
    74,714,841
    
    
    
    68,274,908
    
    
    
    72,120,329
    
    
    
    68,262,086
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BIOMED REALTY TRUST, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Nine Months EndedSeptember 30,2008
    
    
    2007(Unaudited)Operating activities:Net income
    
    $
    52,355
    
    
    $
    55,064Adjustments to reconcile net income to net cash provided by operating activities:Gain on sale of real estate asset
    
    
    
    
    
    
    (1,087
    )Depreciation and amortization, including amounts for discontinued operations
    
    
    58,525
    
    
    
    54,784Minority interests in consolidated partnerships
    
    
    4
    
    
    
    61Minority interests in operating partnership and discontinued operations
    
    
    1,767
    
    
    
    1,895Allowance for doubtful accounts
    
    
    104
    
    
    
    281Revenue reduction attributable to acquired above-market leases
    
    
    1,084
    
    
    
    1,857Revenue recognized related to acquired below-market leases
    
    
    (4,496
    )
    
    
    (4,347
    )Compensation expense related to restricted common stock and LTIP units
    
    
    4,334
    
    
    
    4,064Amortization of deferred loan costs
    
    
    2,837
    
    
    
    2,278Amortization of debt premium on mortgage notes payable
    
    
    (886
    )
    
    
    (596
    )Loss from unconsolidated partnerships
    
    
    338
    
    
    
    694Distributions representing return on capital from unconsolidated partnerships
    
    
    627
    
    
    
    328Ineffectiveness recognized on interest rate swaps
    
    
    727
    
    
    
    Distributions to minority interest in consolidated partnerships
    
    
    
    
    
    
    (108
    )Changes in operating assets and liabilities:Restricted cash
    
    
    576
    
    
    
    (3,577
    )Accounts receivable
    
    
    (2,931
    )
    
    
    1,982Accrued straight-line rents
    
    
    (16,306
    )
    
    
    (11,566
    )Deferred leasing costs
    
    
    (8,427
    )
    
    
    (7,267
    )Other assets
    
    
    (6,292
    )
    
    
    (3,971
    )Security deposits
    
    
    379
    
    
    
    (164
    )Accounts payable, accrued expenses and other liabilities
    
    
    (2,503
    )
    
    
    (7,450
    )Net cash provided by operating activities
    
    
    81,816
    
    
    
    83,155Investing activities:Purchases of interests in and additions to investments in real estate and related
intangible assets
    
    
    (176,108
    )
    
    
    (313,081
    )Distributions representing return of capital from unconsolidated partnerships
    
    
    1,373
    
    
    
    Contributions to unconsolidated partnerships, net of intercompany eliminations
    
    
    65
    
    
    
    (20,327
    )Proceeds from sale of real estate assets, net of selling costs
    
    
    
    
    
    
    19,389Minority interest investment in consolidated partnerships
    
    
    
    
    
    
    205Receipts of master lease payments
    
    
    86
    
    
    
    696Additions to non-real estate assets
    
    
    (7,790
    )
    
    
    (307
    )Funds held in escrow for acquisitions
    
    
    
    
    
    
    (12,399
    )Net cash used in investing activities
    
    
    (182,374
    )
    
    
    (325,824
    )Financing activities:Proceeds from preferred stock offering
    
    
    
    
    
    
    230,000Payment of preferred stock offering costs
    
    
    
    
    
    
    (7,587
    )Proceeds from common stock offering
    
    
    156,289
    
    
    
    Payment of common stock offering costs
    
    
    (6,682
    )
    
    
    Payment of deferred loan costs
    
    
    (140
    )
    
    
    (3,809
    )Unsecured line of credit proceeds
    
    
    145,251
    
    
    
    232,137Unsecured line of credit repayments
    
    
    (149,538
    )
    
    
    (243,455
    )Principal payments on mortgage notes payable
    
    
    (23,244
    )
    
    
    (4,547
    )Secured construction loan proceeds
    
    
    75,838
    
    
    
    103,549Deferred settlement payments, net on interest rate swaps
    
    
    (4,823
    )
    
    
    Distributions to operating partnership unit and LTIP unit holders
    
    
    (3,373
    )
    
    
    (2,914
    )Dividends paid to common stockholders
    
    
    (66,326
    )
    
    
    (59,558
    )Dividends paid to preferred stockholders
    
    
    (12,722
    )
    
    
    (8,387
    )Net cash provided by financing activities
    
    
    110,530
    
    
    
    235,429Net increase/(decrease) in cash and cash equivalents
    
    
    9,972
    
    
    
    (7,240
    )Cash and cash equivalents at beginning of period
    
    
    13,479
    
    
    
    25,664Cash and cash equivalents at end of period
    
    $
    23,451
    
    
    $
    18,424Supplemental disclosure of cash flow information:Cash paid during the period for interest (net of amounts capitalized of $34,615 and
$40,642, respectively)
    
    $
    29,192
    
    
    $
    21,582Supplemental disclosure of non-cash investing and financing activities:Accrual for preferred stock dividends declared
    
    $
    4,241
    
    
    $
    4,241Accrual for common stock dividends declared
    
    
    24,026
    
    
    
    20,294Accrual for distributions declared for operating partnership unit and LTIP unit holders
    
    
    1,174
    
    
    
    1,022Accrued additions to real estate and related intangible assets
    
    
    41,834
    
    
    
    52,174
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BIOMED REALTY TRUST, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Organization and Description of Business
  2. Basis of Presentation and Summary of Significant Accounting Policies
  Principles of Consolidation
  Investments in Partnerships
 Consolidation of Variable Interest Entities Consolidated Financial Statements
 Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited
Partnership or Similar Entity When the Limited Partners Have Certain Rights
 6




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Investments in Real Estate
  September 30, 2008
    
    
    December 31, 2007Land
    
    $
    390,685
    
    
    $
    313,685Land under development
    
    
    29,054
    
    
    
    103,743Buildings and improvements
    
    
    2,137,926
    
    
    
    1,675,530Construction in progress
    
    
    357,437
    
    
    
    750,460Tenant improvements
    
    
    145,095
    
    
    
    67,0093,060,197
    
    
    
    2,910,427Accumulated depreciation
    
    
    (144,522
    )
    
    
    (104,444
    )$
    2,915,675
    
    
    $
    2,805,983
  Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
  7




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Deferred Leasing Costs
   Balance atSeptember 30,
    
    
    Accumulated2008
    
    
    Amortization
    
    
    NetAcquired in-place leases
    
    $
    168,391
    
    
    $
    (86,893
    )
    
    $
    81,498Acquired management agreements
    
    
    12,921
    
    
    
    (8,039
    )
    
    
    4,882Deferred leasing and other direct costs
    
    
    23,909
    
    
    
    (3,144
    )
    
    
    20,765$
    205,221
    
    
    $
    (98,076
    )
    
    $
    107,145
  Balance atDecember 31,
    
    
    Accumulated2007
    
    
    Amortization
    
    
    NetAcquired in-place leases
    
    $
    167,664
    
    
    $
    (71,412
    )
    
    $
    96,252Acquired management agreements
    
    
    12,921
    
    
    
    (6,603
    )
    
    
    6,318Deferred leasing and other direct costs
    
    
    15,541
    
    
    
    (1,620
    )
    
    
    13,921$
    196,126
    
    
    $
    (79,635
    )
    
    $
    116,491
 Revenue Recognition
  
    
    whether the lease stipulates how and on what a tenant improvement allowance may be spent;
    
    whether the tenant or landlord retain legal title to the improvements;
    
    the uniqueness of the improvements;
    
    the expected economic life of the tenant improvements relative to the length of the
lease;
    
    the responsible party for construction cost overruns; and
    
    who constructs or directs the construction of the improvements.
  8




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September 30,
    
    
    December 31,2008
    
    
    2007Acquired above-market leases
    
    $
    12,729
    
    
    $
    12,729Accumulated amortization
    
    
    (8,068
    )
    
    
    (6,984
    )$
    4,661
    
    
    $
    5,745
  September 30,
    
    
    December 31,2008
    
    
    2007Acquired below-market leases
    
    $
    37,961
    
    
    $
    37,961Accumulated amortization
    
    
    (18,749
    )
    
    
    (14,253
    )$
    19,212
    
    
    $
    23,708
 Reporting Revenue Gross as a Principal
versus Net as an Agent
  Share-Based Payments
 Share-Based
Payment
 9




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Assets and Liabilities Measured at Fair-Value
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities
      10




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Derivative Instruments
    Managements Estimates
  Segment Information
 Disclosures about Segments of an Enterprise and Related Information
 Reclassifications
  11




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3. Minority Interests
   September 30, 2008
    
    
    December 31, 2007Partnership Units
    
    
    Percentage of
    
    
    Partnership Units
    
    
    Percentage ofand LTIP Units
    
    
    Total
    
    
    and LTIP Units
    
    
    TotalBioMed Realty Trust
    
    
    71,513,333
    
    
    
    95.9
    %
    
    
    65,308,702
    
    
    
    95.7
    %Minority interest consisting of:Partnership and LTIP units held by
employees and related parties
    
    
    2,887,644
    
    
    
    3.9
    %
    
    
    2,726,172
    
    
    
    4.0
    %Partnership units held by third parties
    
    
    190,392
    
    
    
    0.2
    %
    
    
    190,392
    
    
    
    0.3
    %Total
    
    
    74,591,369
    
    
    
    100.0
    %
    
    
    68,225,266
    
    
    
    100.0
    %
   4. Stockholders Equity
   12




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Common Stock, Partnership Units and LTIP Units
  7.375% Series A Cumulative Redeemable Preferred Stock
  13




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Dividends and Distributions
  Dividend and
    
    Dividend andAmount Per
    
    
    
    Distribution
    
    Distribution AmountDeclaration Date
    
    Securities Class
    
    Share/Unit
    
    Period Covered
    
    Payable Date
    
    (in thousands)March 14, 2008
    
    Common stock and
partnership and
LTIP units
    
    $
    0.33500
    
    
    January 1, 2008 to
March 31, 2008
    
    April 15, 2008
    
    $
    23,145March 14, 2008
    
    Series A preferred
stock
    
    $
    0.46094
    
    
    January 16, 2008 to
April 15, 2008
    
    April 15, 2008
    
    $
    4,240June 16, 2008
    
    Common stock and
partnership and
LTIP units
    
    $
    0.33500
    
    
    April 1, 2008 to
June 30, 2008
    
    July 15, 2008
    
    $
    25,200June 16, 2008
    
    Series A preferred
stock
    
    $
    0.46094
    
    
    April 16, 2008 to
July 15, 2008
    
    July 15, 2008
    
    $
    4,241September 15, 2008
    
    Common stock and
partnership and
LTIP units
    
    $
    0.33500
    
    
    July 1, 2008 to
September 30, 2008
    
    October 15, 2008
    
    $
    25,200September 15, 2008
    
    Series A preferred
stock
    
    $
    0.46094
    
    
    July 16, 2008 to
October 15, 2008
    
    October 15, 2008
    
    $
    4,241
  Common stock, partnership units, and LTIP units
    
    $
    73,545Series A preferred stock
    
    
    12,722$
    86,267
 Accumulated Other Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    17,223
    
    
    $
    16,456
    
    
    $
    52,355
    
    
    $
    55,064Preferred stock dividends
    
    
    (4,241
    )
    
    
    (4,241
    )
    
    
    (12,722
    )
    
    
    (12,628
    )Net income available to common stockholders
    
    
    12,982
    
    
    
    12,215
    
    
    
    39,633
    
    
    
    42,436Other comprehensive income:Unrealized loss on interest rate swap agreements
    
    
    (7,681
    )
    
    
    (19,606
    )
    
    
    (9,182
    )
    
    
    (1,472
    )Equity in other comprehensive (loss)/income of
unconsolidated partnerships
    
    
    (202
    )
    
    
    
    
    
    
    110
    
    
    
    Deferred settlement payments, net on interest
rate swaps (see Note 2)
    
    
    (1,996
    )
    
    
    
    
    
    
    (4,823
    )
    
    
    Comprehensive income/(loss)
    
    $
    3,103
    
    
    $
    (7,391
    )
    
    $
    25,738
    
    
    $
    40,964
 14




---



##### Table of Contents



5. Mortgage Notes Payable
  Stated Fixed
    
    
    Effective
    
    


    Principal BalanceInterest
    
    
    Interest
    
    
    September 30,
    
    
    December 31,Rate
    
    
    Rate
    
    
    2008
    
    
    2007
    
    
    Maturity DateArdentech Court
    
    
    7.25
    %
    
    
    5.06
    %
    
    $
    4,490
    
    
    $
    4,564
    
    
    July 1, 2012Bayshore Boulevard
    
    
    4.55
    %
    
    
    4.55
    %
    
    
    15,028
    
    
    
    15,335
    
    
    January 1, 2010Bridgeview Technology Park I
    
    
    8.07
    %
    
    
    5.04
    %
    
    
    11,417
    
    
    
    11,508
    
    
    January 1, 2011Eisenhower Road
    
    
    5.80
    %
    
    
    4.63
    %
    
    
    
    
    
    
    2,113
    
    
    May 5, 200840 Erie Street
    
    
    7.34
    %
    
    
    4.90
    %
    
    
    
    
    
    
    17,625
    
    
    August 1, 2008500 Kendall Street (Kendall D)
    
    
    6.38
    %
    
    
    5.45
    %
    
    
    68,226
    
    
    
    69,437
    
    
    December 1, 2018Lucent Drive
    
    
    5.50
    %
    
    
    5.50
    %
    
    
    5,393
    
    
    
    5,543
    
    
    January 21, 2015Monte Villa Parkway
    
    
    4.55
    %
    
    
    4.55
    %
    
    
    9,148
    
    
    
    9,336
    
    
    January 1, 20106828 Nancy Ridge Drive
    
    
    7.15
    %
    
    
    5.38
    %
    
    
    6,718
    
    
    
    6,785
    
    
    September 1, 2012Road to the Cure
    
    
    6.70
    %
    
    
    5.78
    %
    
    
    15,258
    
    
    
    15,427
    
    
    January 31, 2014Science Center Drive
    
    
    7.65
    %
    
    
    5.04
    %
    
    
    11,189
    
    
    
    11,301
    
    
    July 1, 2011Shady Grove Road
    
    
    5.97
    %
    
    
    5.97
    %
    
    
    147,000
    
    
    
    147,000
    
    
    September 1, 2016Sidney Street
    
    
    7.23
    %
    
    
    5.11
    %
    
    
    29,390
    
    
    
    29,986
    
    
    June 1, 20129885 Towne Centre Drive
    
    
    4.55
    %
    
    
    4.55
    %
    
    
    20,895
    
    
    
    21,323
    
    
    January 1, 2010900 Uniqema Boulevard
    
    
    8.61
    %
    
    
    5.61
    %
    
    
    1,396
    
    
    
    1,509
    
    
    May 1, 2015345,548
    
    
    
    368,792Unamortized premiums
    
    
    
    
    
    
    
    
    
    
    9,280
    
    
    
    10,888$
    354,828
    
    
    $
    379,680
   6. Credit Facilities, Exchangeable Senior Notes, and Other Debt Instruments
 Unsecured Line of Credit
  15




---



##### Table of Contents



Secured Term Loan
   Exchangeable Senior Notes
  Secured Construction Loan
  16




---



##### Table of Contents



2008
    
    $
    1,2102009
    
    
    506,0242010
    
    
    47,4462011
    
    
    292,8802012
    
    
    291,421Thereafter(1)
    
    
    399,225$
    1,538,206
 
 (1)
    
    Includes $175.0 million in principal payments of the Notes based on a contractual maturity
date of October 1, 2026. 7. Earnings Per Share
  Earnings
per Share
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Income from continuing operations and net income
available for common stockholders (basic earnings
per share):Income from continuing operations
    
    $
    17,223
    
    
    $
    16,457
    
    
    $
    52,355
    
    
    $
    53,412Preferred stock dividends
    
    
    (4,241
    )
    
    
    (4,241
    )
    
    
    (12,722
    )
    
    
    (12,628
    )Income from continuing operations available to
common stockholders
    
    
    12,982
    
    
    
    12,216
    
    
    
    39,633
    
    
    
    40,784(Loss)/income from discontinued operations
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    1,652Net income available to common stockholders
    
    $
    12,982
    
    
    $
    12,215
    
    
    $
    39,633
    
    
    $
    42,436Income from continuing operations and net income
available for common stockholders (diluted
earnings per share):Income from continuing operations available to
common stockholders
    
    $
    12,982
    
    
    $
    12,216
    
    
    $
    39,633
    
    
    $
    40,784Minority interests in continuing operations of
operating partnership
    
    
    559
    
    
    
    545
    
    
    
    1,767
    
    
    
    1,821Income from continuing operations available to
common stockholders before minority interests in
continuing operations
    
    
    13,541
    
    
    
    12,761
    
    
    
    41,400
    
    
    
    42,605(Loss)/income from discontinued operations
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    1,652Minority interest in discontinued operations of
operating partnership
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74Net income available to common stockholders before
minority interests
    
    $
    13,541
    
    
    $
    12,760
    
    
    $
    41,400
    
    
    $
    44,331Weighted-average common shares outstanding:Basic
    
    
    71,513,333
    
    
    
    65,308,702
    
    
    
    68,995,015
    
    
    
    65,300,802Incremental shares from assumed
conversion/vesting:Unvested restricted stock and LTIP units
using the treasury method
    
    
    40,159
    
    
    
    49,642
    
    
    
    29,262
    
    
    
    45,044Operating partnership and LTIP units
    
    
    3,161,349
    
    
    
    2,916,564
    
    
    
    3,096,052
    
    
    
    2,916,240Diluted
    
    
    74,714,841
    
    
    
    68,274,908
    
    
    
    72,120,329
    
    
    
    68,262,086Basic and diluted earnings per share:Income per share  basic and diluted:Income per share from continuing operations
available to common stockholders
    
    $
    0.18
    
    
    $
    0.19
    
    
    $
    0.57
    
    
    $
    0.62Income per share from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.03Net income per share available to common
stockholders
    
    $
    0.18
    
    
    $
    0.19
    
    
    $
    0.57
    
    
    $
    0.65
 17




---



##### Table of Contents



8. Incentive Award Plan
    18




---



##### Table of Contents



Weighted-Restricted Shares and
    
    Average Grant-LTIP Units
    
    Date Fair-ValueBalance at January 1, 2008
    
    
    664,318
    
    
    $
    27.81Granted
    
    
    199,115
    
    
    
    22.29Vested
    
    
    (227,103
    )
    
    
    23.93Balance at March 31, 2008
    
    
    636,330
    
    
    
    26.37Granted
    
    
    18,300
    
    
    
    25.75Forfeited
    
    
    (12,327
    )
    
    
    25.93Vested
    
    
    (10,000
    )
    
    
    28.50Balance at June 30, 2008
    
    
    632,303
    
    
    
    26.33Granted
    
    
    500
    
    
    
    26.34Forfeited
    
    
    (200
    )
    
    
    28.56Balance at September 30, 2008
    
    
    632,603
    
    
    $
    26.33
 Weighted-Restricted Shares and
    
    Average Grant-LTIP Units
    
    Date Fair-ValueBalance at January 1, 2007
    
    
    424,380
    
    
    $
    23.79Granted
    
    
    302,500
    
    
    
    29.83Forfeited
    
    
    (3,809
    )
    
    
    28.16Vested
    
    
    (199,818
    )
    
    
    19.96Balance at March 31, 2007
    
    
    523,253
    
    
    
    28.71Granted
    
    
    25,000
    
    
    
    27.49Forfeited
    
    
    (4,450
    )
    
    
    28.18Vested
    
    
    (10,000
    )
    
    
    28.59Balance at June 30, 2007
    
    
    533,803
    
    
    
    28.66Granted
    
    
    3,000
    
    
    
    26.01Balance at September 30, 2007
    
    
    536,803
    
    
    $
    28.65
 9. Property Acquisitions
  Acquisition
    
    Investments
    
    In-Place
    
    Total CashProperty
    
    Date
    
    in Real Estate
    
    Lease
    
    Consideration500 Fairview Avenue
    
    January 28, 2008
    
    $
    3,286
    
    
    $
    727
    
    
    $
    4,013Intangible amortization life (in months)
    
    
    
    
    
    
    
    
    57
 10. Investment in Unconsolidated Partnerships
  19




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##### Table of Contents



Companys
    
    CompanysOwnership
    
    EconomicName
    
    Partner
    
    Interest
    
    Interest
    
    Date AcquiredPREI I LLC(1)
    
    PREI
    
    
    20
    %
    
    
    20
    %
    
    April 4, 2007PREI II LLC(2)
    
    PREI
    
    
    20
    %
    
    
    20
    %
    
    April 4, 2007McKellar Court(3)
    
    Quidel Corporation
    
    
    21
    %
    
    
    21
    %(4)
    
    September 30, 2004
 
 (1)
    
    PREI I LLC acquired a portfolio of properties in Cambridge, Massachusetts comprised of a
stabilized laboratory/office building totaling 184,445 square feet located at 320 Bent Street,
a partially leased laboratory/office building totaling 420,000 square feet located at 301
Binney Street, a 37-unit apartment building, an operating garage facility on Rogers Street
with 503 spaces, an operating below grade garage facility at Kendall Square with approximately
1,400 spaces, and a building currently under construction at 650 East Kendall Street that the
Company believes can support up to 280,000 rentable square feet of laboratory and office
space. The 650 East Kendall Street site will also include a below grade parking facility that
the Company estimates can support up to 560 spaces upon completion.Each of the PREI operating agreements includes a put/call option whereby either member can cause
the limited liability company to sell certain properties in which it holds leasehold interests
to the Company at any time after the fifth anniversary and before the seventh anniversary of the
acquisition date. However, the put/call option may be terminated prior to exercise under certain
circumstances. The put/call option purchase price is based on a predetermined return on capital
invested by PREI. If the put/call option is exercised, the Company believes that it would have
adequate resources to fund the purchase price and also has the option to fund a portion of the
purchase price through the issuance of Company common stock.The PREI limited liability companies jointly entered into a secured acquisition and interim loan
facility with KeyBank and utilized approximately $427.0 million of that facility to fund a
portion of the purchase price for the properties acquired in April 2007. The remaining funds
available are being utilized to fund construction costs at certain properties currently under
development. Pursuant to the loan facility, the Company executed guaranty agreements in which it
guaranteed the full completion of the construction and any tenant improvements at the 301 Binney
Street property if PREI I LLC is unable or unwilling to complete the project. The secured
acquisition and interim loan facility matures on April 3, 2009.(2)
    
    PREI II LLC acquired a portfolio of properties comprised of a development parcel in Houston,
Texas; a laboratory/office building totaling 259,706 rentable square feet and fee simple and
leasehold interests in surrounding land parcels located at the Science Park at Yale in New
Haven, Connecticut; and 25,000 rentable square feet of retail space and additional pad sites
for future development in Cambridge, Massachusetts. On August 2, 2007, PREI II LLC completed
the disposition of the 25,000 square feet of retail and additional pad sites in Cambridge,
Massachusetts. The total sale price included approximately $4.0 million contingently payable
in June 2012 pursuant to a put/call option, exercisable on the earlier of the extinguishment
or expiration of development restrictions placed on a portion of the development rights
included in the disposition. On September 28, 2007, PREI II LLC completed the disposition of
the laboratory/office building and the fee simple and leasehold interests in surrounding land
parcels in New Haven, Connecticut. On December 28, 2007, PREI II LLC completed the disposition
of the development parcel in Houston, Texas. None of the sales resulted in the recognition of
a material gain or loss. The Companys remaining investment in PREI II LLC (maximum exposure
to losses) was approximately $819,000 at September 30, 2008.(3)
    
    The McKellar Court partnership holds a property comprised of a two-story laboratory/office
building totaling 72,863 rentable square feet located in San Diego, California. The Companys
investment in the McKellar Court partnership (maximum exposure to losses) was approximately
$2.4 million at September 30, 2008.(4)
    
    The Companys economic interest in the McKellar partnership entitles it to 75% of the gains
upon a sale of the property and 21% of the operating cash flows.   September 30,
    
    
    December 31,2008
    
    
    2007Assets:Investments in real estate, net
    
    $
    580,656
    
    
    $
    522,277Cash and cash equivalents (including restricted cash)
    
    
    5,893
    
    
    
    8,430Intangible assets, net
    
    
    15,725
    
    
    
    17,552Other assets
    
    
    17,487
    
    
    
    8,488Total assets
    
    $
    619,761
    
    
    $
    556,747Liabilities and equity:Mortgage notes payable
    
    $
    499,056
    
    
    $
    426,914Other liabilities
    
    
    23,830
    
    
    
    23,215Members equity
    
    
    96,875
    
    
    
    106,618Total liabilities and equity
    
    $
    619,761
    
    
    $
    556,747Companys net investment in unconsolidated partnerships
    
    $
    20,296
    
    
    $
    22,588
 20




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Total revenues
    
    $
    7,620
    
    
    $
    6,800
    
    
    $
    22,496
    
    
    $
    12,701Rental operations expense
    
    
    1,944
    
    
    
    2,389
    
    
    
    5,074
    
    
    
    4,564Real estate taxes
    
    
    1,854
    
    
    
    678
    
    
    
    5,407
    
    
    
    1,285Depreciation and amortization
    
    
    2,615
    
    
    
    1,827
    
    
    
    7,110
    
    
    
    3,709Interest expense, net of interest income
    
    
    2,433
    
    
    
    3,153
    
    
    
    7,128
    
    
    
    6,559Total expenses
    
    
    8,846
    
    
    
    8,047
    
    
    
    24,719
    
    
    
    16,117Net loss
    
    $
    (1,226
    )
    
    $
    (1,247
    )
    
    $
    (2,223
    )
    
    $
    (3,416
    )Companys equity in net loss of
unconsolidated partnerships
    
    $
    (208
    )
    
    $
    (261
    )
    
    $
    (338
    )
    
    $
    (694
    )
 11. Discontinued Operations
  OriginalProperty
    
    Date of Sale
    
    Acquisition Date
    
    Sales Price
    
    Gain on SaleColorow Drive
    
    May 30, 2007
    
    December 22, 2005
    
    $
    20,000
    
    
    $
    1,087
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Total revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,111Total expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    472Income before minority interests and gain on sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    639(Loss)/gain on sale of real estate assets
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    1,087Minority interests attributable to discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74
    )Income from discontinued operations
    
    $
    
    
    
    $
    (1
    )
    
    $
    
    
    
    $
    1,652
 21




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##### Table of Contents



12. Derivatives and Other Financial Instruments
    Current
    
    
    
    
    
    
    
    
    
    
    
    Fair-Value(1)Notional Amount
    
    
    Strike Rate
    
    
    Effective Date
    
    Expiration Date
    
    September 30, 2008
    
    
    December 31, 2007$
    250,000
    
    
    
    4.157
    %
    
    June 1, 2005
    
    June 1, 2010
    
    $
    (3,844
    )
    
    $
    (2,830
    )150,000
    
    
    
    5.162
    %
    
    December 30, 2008
    
    December 30, 2018
    
    
    (7,707
    )
    
    
    (4,254
    )50,000
    
    
    
    5.167
    %
    
    December 30, 2008
    
    December 30, 2018
    
    
    (2,591
    )
    
    
    (1,437
    )100,000
    
    
    
    5.167
    %
    
    December 30, 2008
    
    December 30, 2018
    
    
    (5,183
    )
    
    
    (2,874
    )150,000
    
    
    
    5.152
    %
    
    December 30, 2008
    
    December 30, 2018
    
    
    (7,673
    )
    
    
    (4,139
    )115,000
    
    
    
    4.673
    %
    
    October 1, 2007
    
    August 1, 2011
    
    
    (3,553
    )
    
    
    (3,261
    )35,000
    
    
    
    4.700
    %
    
    October 10, 2007
    
    August 1, 2011
    
    
    (1,126
    )
    
    
    (1,019
    )330,000
    
    
    
    4.825
    %
    
    September 25, 2007
    
    September 25, 2008
    
    
    
    
    
    
    (1,700
    )55,000
    
    
    
    4.760
    %
    
    September 20, 2007
    
    September 20, 2008
    
    
    
    
    
    
    (254
    )$
    1,235,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (31,677
    )
    
    $
    (21,768
    )
 
 (1)
    
    On January 1, 2008, the Company adopted SFAS 157, which requires the Company to disclose the
framework utilized for measuring the fair-value of assets and liabilities measured at
fair-value on a recurring basis (see Note 2). The Company has determined that its derivative
valuations for the nine months ended September 30, 2008 in their entirety are classified in
Level 2 of the fair-value hierarchy.   22




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##### Table of Contents



13. New Accounting Standards
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements
  Disclosures about Derivative Instruments and
Hedging Activities Accounting for Derivative
Instruments and Hedging Activities
 Accounting for Convertible Debt
Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement) , Accounting for Convertible Debt and Debt Issued
with Stock Purchase Warrants
 Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
 23




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    Overview
   24




---



##### Table of Contents



Consolidated Portfolio
    
    Unconsolidated Partnership Portfolio
    
    Total PortfolioPercent of
    
    
    
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    
    
    
    Percent ofRentable
    
    Rentable
    
    
    
    
    
    Rentable
    
    Rentable
    
    
    
    
    
    Rentable
    
    RentableSquare
    
    Square
    
    
    
    
    
    Square
    
    Square
    
    
    
    
    
    Square
    
    SquareProperties
    
    Feet
    
    Feet Leased
    
    Properties
    
    Feet
    
    Feet Leased
    
    Properties
    
    Feet
    
    Feet LeasedStabilized properties
    
    
    43
    
    
    
    5,340,037
    
    
    
    99.4
    %
    
    
    4
    
    
    
    257,308
    
    
    
    100.0
    %
    
    
    47
    
    
    
    5,597,345
    
    
    
    99.5
    %Lease up properties
    
    
    13
    
    
    
    1,287,626
    
    
    
    63.6
    %
    
    
    2
    
    
    
    420,000
    
    
    
    26.8
    %
    
    
    15
    
    
    
    1,707,626
    
    
    
    54.6
    %Total operating portfolio
    
    
    56
    
    
    
    6,627,663
    
    
    
    92.5
    %
    
    
    6
    
    
    
    677,308
    
    
    
    54.6
    %
    
    
    62
    
    
    
    7,304,971
    
    
    
    89.0
    %Repositioning and redevelopment properties
    
    
    3
    
    
    
    1,676,651
    
    
    
    20.1
    %
    
    
    
    
    
    
    
    
    
    
    n/a
    
    
    
    3
    
    
    
    1,676,651
    
    
    
    20.1
    %Construction in progress
    
    
    3
    
    
    
    1,157,000
    
    
    
    70.0
    %
    
    
    1
    
    
    
    280,000
    
    
    
    n/a
    
    
    
    4
    
    
    
    1,437,000
    
    
    
    56.4
    %Total portfolio
    
    
    62
    
    
    
    9,461,314
    
    
    
    76.9
    %
    
    
    7
    
    
    
    957,308
    
    
    
    38.6
    %
    
    
    69
    
    
    
    10,418,622
    
    
    
    73.4
    %Land parcels
    
    
    n/a
    
    
    
    1,367,000
    
    
    
    n/a
    
    
    
    
    
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    
    1,367,000
    
    
    
    n/aTotal proforma portfolio(1)
    
    
    62
    
    
    
    10,828,314
    
    
    
    n/a
    
    
    
    7
    
    
    
    957,308
    
    
    
    n/a
    
    
    
    69
    
    
    
    11,785,622
    
    
    
    n/a
 
 (1)
    
    Percent of rentable square feet leased excludes undeveloped land parcels. Factors Which May Influence Future Operations
    Critical Accounting Policies
  New Accounting Standards
  25




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##### Table of Contents



Results of Operations
 Comparison of the Three Months Ended September 30, 2008 to the Three Months Ended September 30,
2007
  Redevelopment/DevelopmentSame Properties
    
    
    Properties
    
    
    New Properties
    
    
    Corporate2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Rental
    
    $
    48,836
    
    
    $
    47,204
    
    
    $
    9,410
    
    
    $
    1,827
    
    
    $
    1,139
    
    
    $
    356
    
    
    $
    (4
    )
    
    $
    (5
    )Tenant recoveries
    
    
    15,701
    
    
    
    14,412
    
    
    
    4,802
    
    
    
    618
    
    
    
    233
    
    
    
    57
    
    
    
    175
    
    
    
    (3
    )Other income
    
    
    71
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    448
    
    
    
    373Total revenues
    
    $
    64,608
    
    
    $
    61,609
    
    
    $
    14,212
    
    
    $
    2,445
    
    
    $
    1,372
    
    
    $
    413
    
    
    $
    619
    
    
    $
    365
 Rental Revenues. th
 Tenant Recoveries.
 Other Income.
  Redevelopment/DevelopmentSame Properties
    
    
    Properties
    
    
    New Properties
    
    
    Corporate2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Rental operations
    
    $
    11,842
    
    
    $
    11,554
    
    
    $
    4,160
    
    
    $
    491
    
    
    $
    420
    
    
    $
    25
    
    
    $
    605
    
    
    $
    719Real estate taxes
    
    
    5,103
    
    
    
    4,792
    
    
    
    1,560
    
    
    
    239
    
    
    
    119
    
    
    
    48
    
    
    
    (19
    )
    
    
    Depreciation and
amortization
    
    
    16,761
    
    
    
    16,508
    
    
    
    4,149
    
    
    
    1,021
    
    
    
    596
    
    
    
    136
    
    
    
    
    
    
    
    Total expenses
    
    $
    33,706
    
    
    $
    32,854
    
    
    $
    9,869
    
    
    $
    1,751
    
    
    $
    1,135
    
    
    $
    209
    
    
    $
    586
    
    
    $
    719
 Rental Operations Expense.
 26




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##### Table of Contents



Real Estate Tax Expense.
 Depreciation and Amortization Expense.
 General and Administrative Expenses.
 Equity in Net Loss of Unconsolidated Partnerships.
 Interest Expense.
 Minority Interests.
 Comparison of the Nine Months Ended September 30, 2008 to the Nine Months Ended September 30, 2007
  Redevelopment/DevelopmentSame Properties
    
    
    Properties
    
    
    New Properties
    
    
    Corporate2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Rental
    
    $
    135,464
    
    
    $
    132,370
    
    
    $
    16,881
    
    
    $
    9,129
    
    
    $
    11,614
    
    
    $
    4,862
    
    
    $
    (13
    )
    
    $
    (10
    )Tenant recoveries
    
    
    44,871
    
    
    
    41,658
    
    
    
    6,669
    
    
    
    5,099
    
    
    
    1,315
    
    
    
    510
    
    
    
    442
    
    
    
    (3
    )Other income
    
    
    228
    
    
    
    488
    
    
    
    2
    
    
    
    7,171
    
    
    
    
    
    
    
    
    
    
    
    1,467
    
    
    
    786Total revenues
    
    $
    180,563
    
    
    $
    174,516
    
    
    $
    23,552
    
    
    $
    21,399
    
    
    $
    12,929
    
    
    $
    5,372
    
    
    $
    1,896
    
    
    $
    773
 27




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##### Table of Contents



Rental Revenues.
 Tenant Recoveries.
 Other Income.
  Redevelopment/DevelopmentSame Properties
    
    
    Properties
    
    
    New Properties
    
    
    Corporate2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Rental operations
    
    $
    34,884
    
    
    $
    33,539
    
    
    $
    5,897
    
    
    $
    3,319
    
    
    $
    1,369
    
    
    $
    192
    
    
    $
    2,195
    
    
    $
    1,734Real estate taxes
    
    
    13,775
    
    
    
    14,060
    
    
    
    2,350
    
    
    
    2,076
    
    
    
    840
    
    
    
    402
    
    
    
    (17
    )
    
    
    Depreciation and amortization
    
    
    46,579
    
    
    
    46,006
    
    
    
    7,718
    
    
    
    6,859
    
    
    
    4,228
    
    
    
    1,691
    
    
    
    
    
    
    
    Total expenses
    
    $
    95,238
    
    
    $
    93,605
    
    
    $
    15,965
    
    
    $
    12,254
    
    
    $
    6,437
    
    
    $
    2,285
    
    
    $
    2,178
    
    
    $
    1,734
 Rental Operations Expense.
 Real Estate Tax Expense.
 Depreciation and Amortization Expense.
 28




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##### Table of Contents



General and Administrative Expenses.
 Equity in Net Loss of Unconsolidated Partnerships.
 Interest Expense.
 Minority Interests.
 Discontinued Operations.
 Cash Flows
 Comparison of the Nine Months Ended September 30, 2008 to the Nine Months Ended September 30, 2007
 2008
    
    2007
    
    Change(In thousands)Net cash provided by operating activities
    
    $
    81,816
    
    
    $
    83,155
    
    
    $
    (1,339
    )Net cash used in investing activities
    
    
    (182,374
    )
    
    
    (325,824
    )
    
    
    143,450Net cash provided by financing activities
    
    
    110,530
    
    
    
    235,429
    
    
    
    (124,899
    )Ending cash and cash equivalents balance
    
    
    23,451
    
    
    
    18,424
    
    
    
    5,027
    29




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##### Table of Contents



Funds from Operations
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income available to common stockholders
    
    $
    12,982
    
    
    $
    12,215
    
    
    $
    39,633
    
    
    $
    42,436Adjustments:Minority interests in operating partnership
    
    
    559
    
    
    
    545
    
    
    
    1,767
    
    
    
    1,895Loss/(gain) on sale of real estate assets
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    (1,087
    )Depreciation and amortization 
unconsolidated partnerships
    
    
    524
    
    
    
    366
    
    
    
    1,425
    
    
    
    745Depreciation and amortization 
consolidated entities-discontinued
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    228Depreciation and amortization 
consolidated entities-continuing
operations
    
    
    21,506
    
    
    
    17,665
    
    
    
    58,525
    
    
    
    54,556Depreciation and amortization  allocable
to minority interest of consolidated joint
ventures
    
    
    (8
    )
    
    
    
    
    
    
    (25
    )
    
    
    Funds from operations available to common
shares and partnership and LTIP units
    
    $
    35,563
    
    
    $
    30,792
    
    
    $
    101,325
    
    
    $
    98,773Funds from operations per share  diluted
    
    $
    0.48
    
    
    $
    0.45
    
    
    $
    1.40
    
    
    $
    1.45Weighted-average common shares outstanding 
diluted
    
    
    74,714,841
    
    
    
    68,274,908
    
    
    
    72,120,329
    
    
    
    68,262,086
 Liquidity and Capital Resources
   30




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##### Table of Contents



Aggregate PrincipalAmount orShares/Units at
    
    
    Dollar Value
    
    
    Percent of TotalSeptember 30, 2008
    
    
    Equivalent
    
    
    Capitalization(In thousands)Debt:Mortgage notes payable (1)
    
    
    
    
    
    $
    354,828
    
    
    
    9.4
    %Secured construction loan
    
    
    
    
    
    
    500,998
    
    
    
    13.3
    %Secured term loan
    
    
    
    
    
    
    250,000
    
    
    
    6.6
    %Exchangeable senior notes
    
    
    
    
    
    
    175,000
    
    
    
    4.6
    %Unsecured line of credit
    
    
    
    
    
    
    266,660
    
    
    
    7.1
    %Total debt
    
    
    
    
    
    
    1,547,486
    
    
    
    41.0
    %Equity:Common shares outstanding (2)
    
    
    71,720,258
    
    
    
    1,897,001
    
    
    
    50.5
    %7.375% Series A Preferred shares outstanding (3)
    
    
    9,200,000
    
    
    
    230,000
    
    
    
    6.1
    %Operating partnership units outstanding (4)
    
    
    2,863,564
    
    
    
    75,741
    
    
    
    2.0
    %LTIP units outstanding (4)
    
    
    640,150
    
    
    
    16,932
    
    
    
    0.4
    %Total equity
    
    
    
    
    
    
    2,219,674
    
    
    
    59.0
    %Total capitalization
    
    
    
    
    
    $
    3,767,160
    
    
    
    100.0
    %
 
 (1)
    
    Amount includes debt premiums of $9.3 million recorded upon the assumption of the outstanding
indebtedness in connection with our purchase of the corresponding properties.(2)
    
    Based on the market closing price of our common stock of $26.45 per share on the last trading
day of the quarter (September 30, 2008).(3)
    
    Based on the liquidation preference of $25.00 per share for our 7.375% Series A preferred
stock.(4)
    
    Based on common stock equivalents of our partnership and LTIP units, which are each
individually convertible into one share of common stock using the market closing price of our
common stock of $26.45 per share on the last trading day of the quarter (September 30, 2008). 31




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##### Table of Contents



Off Balance Sheet Arrangements
      Principal Amount (1)OwnershipName
    
    Percentage
    
    
    Interest Rate (2)
    
    
    September 30, 2008
    
    
    December 31, 2007
    
    
    Maturity DatePREI I and PREI II(3)
    
    
    20
    %
    
    
    3.44
    %
    
    $
    72,338
    
    
    $
    83,285
    
    
    April 3, 2009PREI I(4)
    
    
    20
    %
    
    
    4.35
    %
    
    
    25,395
    
    
    
    
    
    
    August 13, 2010McKellar Court(5)
    
    
    21
    %
    
    
    4.63
    %
    
    
    2,182
    
    
    
    2,203
    
    
    January 1, 2010Total
    
    
    
    
    
    
    
    
    
    $
    99,915
    
    
    $
    85,488
 
 (1)
    
    Amount represents our proportionate share of the total outstanding indebtedness for each of
the unconsolidated partnerships.(2)
    
    Effective or weighted average interest rate of the outstanding indebtedness as of September
30, 2008.(3)
    
    Amount represents our proportionate share of the total draws outstanding under a secured
acquisition and interim loan facility, which bears interest at a LIBOR-indexed variable-rate.
The secured acquisition and interim loan facility was utilized by both PREI I LLC and PREI II
LLC to acquire a portfolio of properties (initial borrowings of approximately $427.0 million)
on April 4, 2007 (see Note 10 in the accompanying consolidated financial statements). The
remaining balance is being utilized to fund construction costs at certain properties currently
under development. On February 19, 2008, the maturity date was extended to April 3, 2009.(4)
    
    Amount represents our proportionate share of a secured construction loan, which bears
interest at a LIBOR-indexed variable-rate. The secured construction loan was executed by a
wholly owned subsidiary of PREI I LLC in connection with the construction of the 650 East
Kendall Street property (initial borrowings of $84.0 million on February 13, 2008 were used in
part to repay a portion of the secured acquisition and interim loan facility). The remaining
balance is being utilized to fund construction costs at the property.(5)
    
    Amount represents our proportionate share of the principal balance outstanding on a mortgage
note payable, which is secured by the McKellar Court property (excluding $126,000 of
unamortized debt premium). Accounting for Asset Retirement Obligations
 32




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##### Table of Contents



Cash Distribution Policy
 i.e.
  Dividend
    
    DividendQuarter Ended
    
    Date Declared
    
    Date Paid
    
    per Common Share
    
    per Preferred ShareMarch 31, 2006
    
    February 27, 2006
    
    April 17, 2006
    
    $
    0.2900
    
    
    $
    June 30, 2006
    
    May 19, 2006
    
    July 17, 2006
    
    
    0.2900
    
    
    
    September 30, 2006
    
    September 14, 2006
    
    October 16, 2006
    
    
    0.2900
    
    
    
    December 31, 2006
    
    December 13, 2006
    
    January 16, 2007
    
    
    0.2900
    
    
    
    March 31, 2007
    
    March 15, 2007
    
    April 16, 2007
    
    
    0.3100
    
    
    
    0.45582June 30, 2007
    
    June 15, 2007
    
    July 16, 2007
    
    
    0.3100
    
    
    
    0.45582September 30, 2007
    
    September 14, 2007
    
    October 15, 2007
    
    
    0.3100
    
    
    
    0.46094December 31, 2007
    
    December 12, 2007
    
    January 15, 2008
    
    
    0.3100
    
    
    
    0.46094March 31, 2008
    
    March 14, 2008
    
    April 15, 2008
    
    
    0.3350
    
    
    
    0.46094June 30, 2008
    
    June 16, 2008
    
    July 15, 2008
    
    
    0.3350
    
    
    
    0.46094September 30, 2008
    
    September 15, 2008
    
    October 15, 2008
    
    
    0.3350
    
    
    
    0.46094
 Inflation
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Effective InterestPercent of
    
    
    Rate atDebt Summary (1)
    
    
    Total Debt
    
    
    End of QuarterFixed interest rate (2)
    
    $
    529,828
    
    
    
    34.2
    %
    
    
    5.17
    %Variable interest rate (3)
    
    
    1,017,658
    
    
    
    65.8
    %
    
    
    5.45
    %Total/effective interest rate
    
    $
    1,547,486
    
    
    
    100.0
    %
    
    
    5.35
    %
 
 (1)
    
    Debt summary includes only consolidated indebtedness.(2)
    
    Includes 13 mortgage notes payable secured by certain of our properties (including $9.3
million of unamortized premium) and our exchangeable senior notes.(3)
    
    Includes our unsecured line of credit, secured term loan, and secured construction loan,
which bear interest based on a LIBOR-indexed variable interest rate, plus a credit spread.
However, we are party to two interest rate swaps, which were intended to have the effect of
initially fixing the interest rates on $150.0 million of our unsecured line of credit at 5.9%.
We have also entered into an interest rate swap agreement that is intended to fix the interest
rate on the entire $250.0 million outstanding balance of the secured term loan at a rate of
5.8% until the interest rate swap expires in 2010. We have also entered into four forward
starting swap agreements, which are intended to have the effect of fixing the interest rate on
$450.0 million of forecasted debt issuance (after retirement of the secured construction loan)
at approximately 5.2%. At September 30, 2008, the total amount of unhedged variable-rate debt
was approximately $617.7 million, with an effective weighted average interest rate of 4.3%. 33




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
    34




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  General
  Article II  Meetings of Stockholders
 Section 3. Special Meetings.
 Section 4. Notice.
 35




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##### Table of Contents



Section 10. Inspectors.
 Section 11. Advance Notice of Stockholder Nominees for Director and Other Stockholder Proposals th th
 Article III  Directors
 Section 15. Reliance.
 Section 16. Ratification.
 Article V  Officers
 Section 11. Treasurer.
 Section 12. Assistant Secretaries and Assistant Treasurers.
 Article VII  Stock
 Section 1. Certificates.
 Section 2. Transfers.
 Section 3. Replacement Certificate.
 Section 4. Fixing of Record Date.
 
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description of Exhibit3.1
    
    
    Second Amended and Restated Bylaws of BioMed Realty Trust, Inc.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.
 36




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##### Table of Contents



SIGNATURES
  BioMed Realty Trust, Inc./s/      ALAN D. GOLDAlan D. Gold Chairman of the Board,President and Chief Executive Officer
(Principal Executive Officer)/s/      KENT GRIFFINKent GriffinChief Financial Officer
(Principal Financial Officer)  37




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit3.1
    
    
    Second Amended and Restated Bylaws of BioMed Realty Trust, Inc.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.