Biotech REITs Under the Microscope

Moore of KeyBanc Capital Markets thinks BioMed is a better play than Alexandria because of the company's cheap valuation and stronger earnings growth rate. BioMed's one-year PEG ratio is 0.89, compared with 1.57 for office REITs in general, Moore said.

With BioMed's acquisition pipeline standing at $500 million, Moore expects the company's FFO growth rate to be 15.6% over the next year, compared with 9% at Alexandria. Both rates are significantly better than the 7% to 8% earnings growth rate the REIT industry as a whole is expected to average over the next year.

Moore rates BioMed a buy with a $27 price target. BioMed's stock price remained unchanged at $24 Thursday. "The industry they're in is clearly an industry that has got a lot of legs to it ... that gives me confidence they are not a flash in the pan," Moore said.

KeyBanc has an investment-banking relationship with BioMed. J.P Morgan has provided non-investment-banking services to Alexandria and expects to do investment banking for the company within the next three months.