One Of The Market's Biggest Healthcare REITs: Should You Buy?

Shares of Biomed Realty Trust Inc (NYSE: BMR) surged roughly 5 percent on Wednesday, after the company reported second-quarter funds from operations (FFO) per share of $0.58, surpassing the Street’s estimate of $0.48 per share.

In a report issued Wednesday, Cowen & Co. analysts James Sullivan and Tom Catherwood reiterated an Outperform rating and $24.00 price target on the stock, as the company beat their estimate for FFO of $0.55 per share.

The analysts note, however, that this was a low quality beat since the REIT surpassed estimates on gains from the sale of an equity investment -- and not on ameliorated operating performance.

On the other hand, rental revenues came in below expectations and sequentially lower. The analysts find this surprising since BioMed completed two developments, acquired a building in San Diego, and did not sell any operating properties during the period.

In the call, management also tightened and raised its fiscal 2015 Core FFO guide from $1.61-$1.69 per share to $1.75-$1.81 per share. The boost was driven by $0.10 higher expected gains on the sale of equity investments. Cowen’s analysts note that, “Lumpy lease expirations/commencements impede 2015 SSNOI growth, although growth should accelerate in 2016.”

About Biomed Realty Trust

Biomed Realty Trust is a $4.24 billion market cap real estate investment trust focused on laboratory and office space for the life science industry. The company’s properties are scattered across at least nine U.S. states and the UK. Its interests in properties comprise roughly 17.5 million rentable square feet.